/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090513.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, May 13, 2009, Vol. 13, No. 131 Headlines 200 PIER: Proposes Steinberg Nutter as General Bankruptcy Counsel ACCREDITED HOME: Taps Kurtzman Carson as Claims and Noticing Agent ACCREDITED HOME: Wants to Sell De Minimis Assets for $250,000 ADARE HOMES: Case Summary & 2 Largest Unsecured Creditors ALLIANCE BANCORP: California Bank Must Produce Account Records AMARAVATHI LTD: Wants Access to Cash Securing Wells Fargo Notes AMERICAN INT'L: Changes to Board Would be Swift, Trustees Say AMERISTAR CASINOS: Moody's Assigns 'B2' Rating on $500 Mil. Notes AMERISTAR CASINOS: S&P Assigns 'B+' Rating on $500 Mil. Notes ARROWHEAD GENERAL: S&P Affirms Counterparty Credit Rating at 'B-' ASYST TECHNOLOGIES: Court Moves SAL Filing Deadline to June 4 ASYST TECHNOLOGIES: Court Sets Cash Collateral Hearing for May 14 ASYST TECHNOLOGIES: U.S. Trustee Picks 5-Member Creditors Panel ASYST TECHNOLOGIES: Wants Baker & McKenzie as Bankruptcy Counsel BADANCO ACQUISITION: Case Summary & 20 Largest Unsecured Creditors BANK OF AMERICA: Aims to Repay Govt. Debt in Months, Not Years BENNINGTON COLLEGE: Moody's Withdraws 'Ba1' Rating on 1999 Bonds BERNARD L MADOFF: Irving Picard Sues Harley International BERNARD L MADOFF: Trustee Creates Hardship Program BERNARD L MADOFF: May 27 Hearing on UK Unit's Chapter 15 Petition BLAIR FARMS: Case Summary & 11 Largest Unsecured Creditors CABLEVISION SYSTEMS: Won't Sell Madison Square Garden Unit for Now CALPINE CONSTRUCTION: Moody's Assigns 'B1' Rating on Senior Notes CAPITAL CORP: Case Summary & 20 Largest Unsecured Creditors CARAUSTAR INDUSTRIES: Missed Payment Won't Affect Moody's Ratings CHEMTURA CORP: Court Directs Noteholders to File 2019 Statement CHEMTURA CORP: Eyes Sale of Non-Core Assets, Outlines Protocol CHEMTURA CORP: Has Until June 1 to File Schedules and Statements CHEMTURA CORP: Posts $94,000,000 Net Loss for 1st Quarter 2009 CHEMTURA CORP: Receives Final Authority to Use Lenders' Collateral CHEMTURA CORP: Section 341 Meeting of Creditors Set for June 17 CHRYSLER LLC: Retirees to Start Fighting for Benefits This Week CHRYSLER LLC: Suppliers Demand Broader Assistance for Industry CHRYSLER LLC: To Be Headed by Fiat CEO After Bankruptcy CHRYSLER LLC: U.S. Trustee Names Consumer Privacy Ombudsman CHRYSLER LLC: Court Approves Fiat-Led Sale Process for All Assets CHRYSLER LLC: Seeks Approval of JPMorgan L/C Stipulation CHRYSLER LLC: Vorys Sater Represents Worthington Steel, et al. CHRYSLER LLC: Russell R. Johnson Represents Edison Utilities CHRYSLER LLC: Utilities Demand More Protection from Non-Payment CMATT LLC: Voluntary Chapter 11 Case Summary CONTECH LLC: Wants Exclusive Plan Filing Period Extended to July 9 CRUCIBLE MATERIALS: Can Access Secured Loans Until May 28 D&E COMMUNICATIONS: S&P Puts 'BB-' Rating on Positive CreditWatch DANA HOLDING: Tender Offer Cues S&P to Junk Corporate Rating DAYTON SUPERIOR: Taps Edward Howard as PR Consultant DAYTON SUPERIOR: Wants Latham & Watkins as Bankruptcy Counsel DAYTON SUPERIOR: Wants Moelis & Company as Financial Advisor DBSI INC: Files Joint Chapter 11 Plan of Liquidation DEAN FOODS: Moody's Changes Outlook on 'B1' Rating to Positive DELPHI CORP: Appaloosa Asks Court to Dismiss Claims DELPHI CORP: Computer Science Seeks Payment of $28,823,485 Claim DELPHI CORP: Exit Woes May Cue Additional Losses at GM DELPHI CORP: Retiree Groups Dismiss Appeal on OPEB Termination DELPHI CORP: Tokico Balks at Bid to Assume Purchase Order DIAL-A-MATTRESS: Bid Deadline Moved to May 21; Auction on May 26 DREIER LLP: Marc Dreier Pleads Guilty to Money Laundering EDISON FUNDING: S&P Gives Stable Outlook; Keeps 'BB+/B' Rating ENERGY PARTNERS: Court Limits Securities Trading to Protect NOLs ENOS LANE: Files for Chapter 11 Bankruptcy Protection ENOS LANE: Case Summary & 20 Largest Unsecured Creditors EVERYTHING BUT WATER: Sale to Lender Okayed; Committee Appeals FIRST METALS: Obtains MCTO Due to Late Filing of Financial Report FOCUS ENHANCEMENTS: Exits Chapter 11 as Private Company FLOWSERVE CORPORATION: Fitch Raises Issuer Default Rating to 'BB+' FLYING J: Can Access Pipeline $20 Million Loan on Final Basis FORD MOTOR: Auto Suppliers Demand Broader Assistance for Industry FORD MOTOR: Says There's No Doubt About Going Concern Ability FRONTIER AIRLINES: Wants Plan Filing Deadline Moved to Oct. 9 FRONTIER AIRLINES: Seeks to Expand Scope of KPMG's Services FRONTIER AIRLINES: Davis Polk Seeks Payment of $1.9MM in Fees FREDDIE MAC: Posts $9.9 Billion First Quarter Net Loss GENERAL GROWTH: Farallon Wins DIP Loan Face-Off with Pershing GENERAL MOTORS: Delphi Exit Woes May Cue Additional Losses GENERAL MOTORS: Says It Would Miss a $1BB Debt Payment on June 1 GENERAL MOTORS: Bank Debt Slides in Secondary Market Trading GENERAL MOTORS: RHJ Int'l Mulls Bidding for European Units GENERAL MOTORS: 'Main Street' Bondholders Want to Join Talks GENERAL MOTORS: Suppliers Demand Broader Assistance for Industry GENERAL MOTORS: Falls to 76-Year Low After Executives Sell Stock GEORGIA GULF: Lenders Consent to Non-Payment; Noteholders' Pending GIBRALTAR INDUSTRIES: Likely Violation Won't Move S&P's B+ Rating GMAC LLC: Won't Be Pushed to Ch. 11 if GM Restructuring Fails GOODMAN GLOBAL: Note Repurchase Won't Change S&P's 'B+' Rating GREGORY DAILY: Voluntary Chapter 11 Case Summary GWLS HOLDINGS: Sale-Related Pact Approved; Panel to Get $1.5 Mil. HAIGHTS CROSS: Houlihan Lokey Hired for Debt Restructuring HEXCEL CORP: S&P Keeps B+ Issue-Level Rating on $225MM Sr. Notes HOUGHTON MIFFLIN: Moody's Withdraws Ratings for Business Reasons INDALEX HOLDINGS: Section 341(a) Meeting Set for May 28 INTERNATIONAL COAL: S&P Junks Ratings on Senior Unsecured Notes INVESTCORP BANK: Fitch Downgrades Issuer Default Rating to 'BB+' ISTAR FINANCIAL: Challenged Liquidity Cues Moody's Junk Rating ITE-INNOVATIVE: Case Summary & 20 Largest Unsecured Creditors LANDAMERICA FINANCIAL: PBGC to Cover $36MM Pension Plan Shortfall LAW DEVELOPERS: Court Prohibits Deed of Trust Reformation LEHMAN BROTHERS: Collapse Cues UK Treasury to Fix Insolvency Law LEHMAN BROTHERS: Employee-Led Group Completes Buy-Out of Neuberger LEHMAN BROTHERS: HKMA Reports Progress of Investigations LEHMAN BROTHERS: Inks Pact Allowing HSBC Bank to Set Off Claim LEHMAN BROTHERS: LBI Trustee Seeks Approval of Wells Fargo Deal LEHMAN BROTHERS: Local Units Seek US Government's Aid After Losses LEHMAN BROTHERS: Retired Teacher Complains of Weil Gotshal's Fees LEHMAN BROTHERS: Teva Entities Seek Payments to Non-Lehman Account LEHMAN BROTHERS: Wants to Assume Libra Credit Swap Agreement LORBER INDUSTRIES: 9th Cir. Rules on Workers Compensation Claim LORDSHIP DEVELOPMENT: Bankruptcy Tolls Forclosure Upset Period MANITOWOC COMPANY: Moody's Downgrades Corp. Family Rating to 'B2' MARVIN M PHELPS: Case Summary & 4 Largest Unsecured Creditors MASONITE INT'L: Court Caps Unsecured Claims Payment at $56MM MASONITE INT'L: Gets Green Light to Pay $28MM in Employee Costs MASONITE INT'L: Reports 1st Quarter 2009 Financial Results MASONITE INT'L: Seeks to Establish July 6 as Claims Bar Date MASONITE INT'L: Sr. Sub Noteholders Band Together, Hire Lawyers MERISANT WORLDWIDE: Solicits Exit Funding, Keeps Control of Case MGM MIRAGE: Fitch Affirms Issuer Default Rating at 'C' MIDLAND FOOD: Talks with Capmark on Plan; Seeks Aug. 31 Extension MIRANT CORP: Asks Court for Final Decree Closing 11 Cases MIRANT CORP: Files March 31 Post-Confirmation Report MOTION MARKETING: Court Declines to Avoid Federal Tax Lien MULTIPLAN INC: Moody's Gives Positive Outlook; Keeps 'B2' Rating NEW JERUSALEM: Case Summary & 17 Largest Unsecured Creditors NORWOOD PROMOTIONAL: Can Access Wachovia $30MM DIP Loan on Interim NORWOOD PROMOTIONAL: Court Approves $30,000,000 Wachovia DIP Loan NOVEMBER 2005: Chapter 11 Filing Cues S&P's Rating Cut to 'D' NOVEMBER 2005: Moody's Cuts Ratings to 'D' on Bankruptcy Filing NRG ENERGY: Must Recalculate Retiree Pension Benefits NTK HOLDINGS: Moody's Affirms 'Caa2' Corporate Family Rating OPUS SOUTH: Wants to Reject Eight Leases and Abandon Properties PANOLAM INDUSTRIES: Taps Weil, Perella for Debt Restructuring PARKLEX ASSOCIATES: Voluntary Chapter 11 Case Summary PGI COS: Files Chapter 11 in Minneapolis PHAR-MOR, INC.: U.S. Sup. Ct. Declines to Review Reclamation Claim PILGRIM'S PRIDE: No Special Rules for Chicken Grower Claims PILGRIM'S PRIDE: Incurs $58.77-Mil. Net Loss for Fiscal Q2 2009 POMARE LTD: Court Delays Ruling on Ch. 11 Trustee Appointment PROSPECT THERAPEUTICS: Joseph F. Finn to Auction Assets on June 29 QIMONDA NA: Simpson Thacher Helped Get $60MM in DIP Financing QUEBECOR WORLD: Seeks OK of Disclosure Statement, Voting Protocol QUEBECOR WORLD: Plan Liquidation & Valuation Analysis, Projections QUEBECOR WORLD: Seeks July 21 Extension of Exclusive Periods QUEBECOR WORLD: Gets Court OK to Enter Into $750MM Exit Financing QUIGLEY CO: Asbestos Claimants Want "Bought" Votes Disallowed RADIO ONE: High Liquidity Concerns Cues Moody's to Junk Ratings RANGE RESOURCES: Moody's Affirms Corporate Family Rating at 'Ba2' RANGE RESOURCES: S&P Assigns 'BB' Rating on $300 Mil. Notes REGAL JETS: Asks Court to Okay Sale of Assets to MLT Development REFCO INC: Files Q1 2009 Post-Confirmation Quarterly Report REFCO INC: Chase London Balks at Bid to Abandon Unsold Securities REGAL JETS: Files Schedules of Assets and Liabilities RIVER WOODS: Case Summary & 7 Largest Unsecured Creditors ROMA FOODS: Case Summary & 20 Largest Unsecured Creditors RUFFIN ROAD VENTURE: Case Summary & 6 Largest Unsecured Creditors SANDERSON INDUSTRIES: Case Summary & 20 Largest Unsec. Creditors SANDRIDGE ENERGY: Moody's Assigns 'B3' Rating on $300 Mil. Notes SANDRIDGE ENERGY: S&P Assigns 'B-' Rating on $300 Mil. Notes SCUBA TECH: Case Summary & 20 Largest Unsecured Creditors SEAHAWK PROPERTIES: Case Summary & 2 Largest Unsecured Creditors SEEQPOD INC: Seeks to Sell Part of Firm to Microsoft SEMGROUP LP: Judge Halts Catsimatidis Suit vs. Management SOLUTIA INC: Appeals Order on Nitro Claimants' $267,745 Claim SOLUTIA INC: Discloses Status of Litigation as of March 2009 SOLUTIA INC: Flexsys's Monongahela Plant to Shut Down Temporarily SOLUTIA INC: Harbinger Entities Hold 16.7% Equity Stake SOLUTIA INC: Reduces Bonuses of 1,400 Salaried Employees SOURCE INTERLINK: Protocol Re: Transfer of Common Shares Okayed SPANSION INC: Asks Court to Set Deadline for Filing Claims SPANSION INC: CFO Thoroddsen Resigns, Sarkisian Steps In SPANSION INC: Latham & Watkins Seeks $1.2MM in Fees for March Work SPANSION INC: Panel Taps Garden City as Communications Agent SPANSION INC: Seeks June 15 Extension of Schedules Filing Deadline SPECTRUM BRANDS: Battle Looms with Equity Panel, Lenders Over Plan SPECTRUM BRANDS: Confirmation Hearing to Commence on June 15 STOCK BUILDING: Wins Interim Approval for Wolseley DIP Loan SUN-TIMES MEDIA: Court OKs Fee Changes for Rothschild Inc. TALLYGENICOM LP: German Unit, Printronix Agree on Sale TEKNEK, LLC: 7th Cir. Lets Creditor Pursue Collection Efforts THORNBURG MORTGAGE: Wants Schedules Deadline Moved to June 30 TILE WITH STYLE: Voluntary Chapter 11 Case Summary TRF N.A. LLC: Voluntary Chapter 11 Case Summary TRICOM SA: June 9 Hearing on Amended Disclosure Statement TROLLEY'S LLC: Case Summary & 20 Largest Unsecured Creditors TRONOX INC: Mary Mikkelson Steps Down as SVP and CFO TRONOX INC: Sues Anadarko, Kerr-McGee for Fraudulent Conveyance TVI CORP: Retains Buccino & Associates as Financial Advisors UNI-MARTS LLC: Cumulative Net Loss Grows to $11.5 Million US EXPRESS: Moody's Affirms Corporate Family Rating at B3' VAIL PLAZA: Files Chapter 11 Plan, to Sell Hotel VISTEON CORP: Bank Debt Sells at 75% Off in Secondary Market VP PHASE IV: Fifth Third Wants Ch. 11 Dismissed, Cites Bad Faith WESTERN REFINING: Moody's Affirms 'B3' Corporate Family Ratings WHITE ENERGY: In Bankruptcy Due to Adverse Market Conditions WINDSTREAM CORPORATION: D&E Deal Won't Affect Fitch's 'BB+' Rating WINDSTREAM CORP: D&E Agreement Won't Affect S&P's 'BB+' Rating WINDSTREAM CORPORATION: Moody's Affirms 'Ba2' Corp. Family Rating WINPAR HOSPITALITY: District Ct. to Hear Forfeiture Action ZOHAR WATERWORKS: May 27 Auction Set; Competing Bids Due May 26 * Auto Suppliers Demand Broader Assistance from U.S. Government * S&P Says Default Rate Continues Ascent Through April 2009 * Judge Hardin Retires, Gives White Plains Cases to Judge Drain * Transworld Named International Investment Advisor of Beijing * Upcoming Meetings, Conferences and Seminars ********* 200 PIER: Proposes Steinberg Nutter as General Bankruptcy Counsel ----------------------------------------------------------------- 200 Pier Avenue, LP, asks the U.S. Bankruptcy Court for the Central District of California for permission to employ Steinberg, Nutter and Brent, Law Corporation, as general bankruptcy counsel. SN&B will, among other things: -- assist the Debtor in the administration of its estate; and -- facilitate the Debtor's performance of other administrative matters as hiring of professionals to allow the Debtor to function in the Chapter 11 proceeding, if necessary, potentially selling assets of the estate, and assist in the preparation and filing of a disclosure statement and plan of reorganization. Peter T. Steinberg, Esq., a founding member of SN&B, tells the Court that the firm received $20,000 for attorneys' fees and $1,039 filing fee as a general retainer, which has been placed in a segregated client trust account. The hourly rates of SN&B personnel are: Partners $350 Associates $250 Law Assistants $125 Paralegals $95 Mr. Steinberg assures the Court that SN&B is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Steinberg can be reached at: Steinberg, Nutter and Brent 23801 Calabasas Rd., Ste. 2031 Calabasas, CA 91302 Tel: (818) 876-8535 Fax: (818) 876-8536 About 200 Pier Avenue, LP, Hermosa Beach, California-based 200 Pier Avenue, LP, filed for Chapter 11 on April 23, 2009 (Bankr. C. D. Calif. Case No. 09- 19494). Peter T. Steinberg, Esq., at Steinberg, Nutter and Brent, represents the Debtor in its restructuring efforts. The Debtor says it has assets and debts both ranging from $10 million to $50 million. ACCREDITED HOME: Taps Kurtzman Carson as Claims and Noticing Agent ------------------------------------------------------------------ Accredited Home Lenders Holding Co. and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. KCC will, among other things: -- provide certain noticing, claims and processing and balloting administration services; and -- assist the Debtors in (a) maintaining and updating the master mailing list of creditors; (b) to the extent necessary, gathering data in conjunction with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs; (c) tracking and administration of claims; and (d) performing other administrative tasks pertaining to the administration of the Chapter 11 cases, as may be requested by the Debtors or the Clerk's Office. Michael Frishberg, vice president of corporate restructuring services of KCC, tells the Court that the hourly rates of KCC personnel are: Senior Managing Consultant $295 - $325 Senior Consultant $255 - $275 Consultant $165 - $245 Technology/Programming Consultant $145 - $195 Project Specialist $80 - $140 Clerical $45 - $65 Weekend, holidays and overtime Waived Mr. Frishberg adds that KCC's retainer fee for services and expenses is $25,000. Mr. Frishberg assures the Court that KCC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Accredited Home Lenders Headquartered in San Diego, California, Accredited Home Lenders Holding Co. -- http://www.accredhome.com/-- offers sub-prime mortgage products for wholesale mortgage brokers. The Company and its affiliates filed for Chapter 11 on May 1, 2009 (Bankr. D. Del. Lead Case No. 09-11516). The Debtors propose to employ Hunton & Williams LLP as their bankruptcy counsel; Meade Monger as chief restructuring officer; and Michael Murphy as chief administrative officer. The Debtors' assets range from $10 million to $50 million and its debts from $100 million to $500 million. ACCREDITED HOME: Wants to Sell De Minimis Assets for $250,000 ------------------------------------------------------------- Accredited Home Lenders Holding Co. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to: -- approve the sale of de minimis assets; and -- establish sales procedures to sell the de minimis assets outside the ordinary course of business without the need to file separate motions to approve each sale. As the Debtors are in the process of winding down their operations, they will continue to identify surplus assets -- generally furniture, fixtures and equipment -- that are not necessary to support operations. The current book value of the de minimis assets is less than $250,000. The de minimis assets are primarily located at the Debtors' facilities in San Diego, California, although there maybe some assets at other locations. The Debtors' de minimis assets are unencumbered by any liens, claims, or security interests. About Accredited Home Lenders Headquartered in San Diego, California, Accredited Home Lenders Holding Co. -- http://www.accredhome.com/-- offers sub-prime mortgage products for wholesale mortgage brokers. The Company and its affiliates filed for Chapter 11 on May 1, 2009 (Bankr. D. Del. Lead Case No. 09-11516). The Debtors propose to employ Hunton & Williams LLP as their bankruptcy counsel; Meade Monger as chief restructuring officer; and Michael Murphy as chief administrative officer. The Debtors' assets range from $10 million to $50 million and its debts from $100 million to $500 million. ADARE HOMES: Case Summary & 2 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Adare Homes Potomac Farms 2, LLC 7950 East Prentice Avenue, #103 Greenwood Village, CO 80111 Bankruptcy Case No.: 09-18864 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Colorado (Denver) Judge: Sidney B. Brooks Debtor's Counsel: Benjamin H. Shloss, Esq. 303 E. 17th Ave., Ste. 500 Denver, CO 80203 Tel: (303) 832-2400 Fax: (303) 832-1510 Email: bhs@kutnerlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Troy Forming $50,000 957 Salida Way Aurora, CO 80111 MH Construction $50,000 11234 Corona Drive Northglenn, CO 80233 The petition was signed by William M. Purcell, manager of the company. ALLIANCE BANCORP: California Bank Must Produce Account Records -------------------------------------------------------------- The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware has ordered Union Bank of California to produce Alliance Bancorp's account record for the months leading up to the Debtor's bankruptcy filing, granting the request by the trustee overseeing the Debtor's case, according to Law360. Headquartered in Brisbane, California, Alliance Bancorp -- http://www.alliancebancorp.net/-- is a residential mortgage lender. The Company and two of its affiliates made a voluntary Chapter 7 filing on July 13, 2007 (Bankr. D. Del. Lead Case No. 07-10942). Mark D. Collins, Esq., Richards Layton & Finger, represents the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy from their creditors, they listed both assets and debts of more than $100 million. AMARAVATHI LTD: Wants Access to Cash Securing Wells Fargo Notes --------------------------------------------------------------- Amaravathi Limited Partnership and Amaravathi Keerthi, LLC, ask the U.S. Bankruptcy Court Southern District of Texas to: i) authorize the use of up to $244,248 of Wells Fargo Bank, N.A., cash collateral; and (ii) grant adequate protection to Wells Fargo and other noteholders. In December 2006, the Debtors entered into four promissory notes for properties designated as the Green I Property, Green II Property, Canyon Creek Property and Steiner Ranch Property, with Column Financial, Inc., in the cumulative original principal amount of $180,234,000. Each of the notes is secured by a separate Deed of Trust and Security Agreement, Cash Management Agreement, and Assignment of Leases and Rents. Pursuant to various assignments, endorsements and transfers, the notes and underlying security interests are held by Wells Fargo, as trustee for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Pass-Through Certificates, Series 2007-C1. The current outstanding principal balance on the Wells Fargo Notes is $180,234,000. In addition to its secured creditor, the Debtors owe $9.5 million to unsecured creditors. In April 2009, the Noteholders, acting by and through Midland Loan Services, Inc. as special servicer, alleged certain defaults on the Wells Fargo Notes, and initiated proceedings in Williamson County, Texas to obtain a temporary restraining order against the Debtors and appoint a receiver for the Properties. On April 22, 2009, the Williamson County Court entered the temporary restraining order and ordered the appointment of receiver for the Properties. Upon appointment, Jay Parmmelee, the receiver, commenced actions to gain possession of the Properties, including changing locks at certain of the Properties. The Wells Fargo Notes are secured by first priority liens on substantially all of the Debtors' assets. The Debtors propose to use the Wells Fargo Cash Collateral on a daily basis to repay preexisting liabilities and to fund operations in the ordinary course of the Debtors' business. The Debtors propose to grant the Noteholders replacement liens on the assets on which the Noteholders have a valid security interest. The replacement liens will have the same priority as the Noteholders' prepetition liens and not be primed or subordinated to any postpetition financing or liens obtained or granted by the Debtors in this case. A full-text copy of the Budget is available for free at: http://bankrupt.com/misc/ALP_Budget.doc About Amaravathi Limited Partnership Headquartered in Houston, Texas, Amaravathi Limited Partnership dba Monterone Round Rock, Mansions at Steiner Ranch, Monterone Canyone Creek, Mansions on the Green II, Monterone Steiner Ranch, Mansions at Canyon Creek and Mansions on the Green I owns and operates four apartment complexes in Round Rock and Austin, Texas. The Company and Amaravathi Keerthi, LLC, its affiliate, filed for separate Chapter 11 on April 23, 2009 (Bankr. S.D. Tex. Case No.: 09-32754). Kyung Shik Lee, Esq., at Diamond McCarthy Taylor and Finley represents the Debtors in their restructuring efforts. The Debtors have assets and debts both ranging from $100 million to $500 million. AMERICAN INT'L: Changes to Board Would be Swift, Trustees Say ------------------------------------------------------------- Meena Thiruvengadam at The Wall Street Journal reports that trustees overseeing the government's almost 80% ownership of American International Group Inc. have said that changes to the Company's board would be swift. WSJ states that the three trustees selected to oversee the government's AIG holdings are: -- Jill M. Considine, a recent board member of the Federal Reserve Bank of New York; -- Chester B. Feldberg, a recently retired chairman of Barclays America and New York Fed veteran; and -- Douglas L. Foshee, chairman and chief executive of El Paso Corp. and chair of the Houston branch of the Federal Reserve Bank of Dallas. According to WSJ, the trustees are asking for lawmakers' cooperation as AIG aims to formulate "a fair and effective compensation system." The three trustees said in a prepared statement for a hearing of the U.S. House Committee on Oversight and Government Reform that they are seeking new board members for AIG and will be making an announcement regarding those efforts shortly. "It is imperative that we continue to support AIG's efforts for the additional reason that if we do not, billions of dollars in taxpayer money could be lost," the trustees said in the statement. Trustees, WSJ relates, promise to ensure that compensation including bonuses at AIG is addressed "in a thoughtful, prudent and fair manner." WSJ says that the trustees are protected from liability related to losses the government could suffer as a result of its AIG holdings. 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. AMERISTAR CASINOS: Moody's Assigns 'B2' Rating on $500 Mil. Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Ameristar Casinos, Inc.'s new $500 million unsecured notes due 2014 and affirmed the company's Ba3 Corporate Family Rating. At the same time, Moody's raised Ameristar's Probability of Default Rating to Ba3 from B1, and its $1.4 billion senior secured revolver and $388 million senior secured term loan ratings to Ba2 from Ba3. Additionally, the company's Speculative Grade Liquidity rating was raised to SGL-2 from SGL-3. The rating outlook is stable. The net proceeds from the new unsecured notes will be used to repay a portion of the $1.26 billion currently outstanding under the company's $1.4 billion revolver that expires in November 2010. Rating assigned: -- $500 million unsecured notes due 2014 at B2 (LGD 5, 89%) Rating affirmed: -- Corporate Family Rating at Ba3 Ratings upgraded: -- Probability of Default Rating to Ba3 from B1 -- $1.4 billion senior secured revolver to Ba2 (LGD 3, 38%) from Ba3 (LGD 3, 35%) -- $388 million senior secured term loan to Ba2 (LGD 3, 38%) from Ba3 (LGD 3, 35%) Speculative Grade Liquidity rating to SGL-2 from SGL-3 The Ba3 Corporate Family Rating considers Ameristar's very profitable operations. It also recognizes several catalysts that should help grow its earnings and cash flow and make it possible for the company to achieve and sustain debt/EBITDA at or below 5 times. Debt/EBITDA for the latest 12-month period ended March 31, 2009 was 5.1 times. These catalysts include the Black Hawk expansion that will open later this year, expanded casino operating hours and higher maximum bet limits that go into effect in Colorado in July 2009, and lower development capital expenditures going forward. Key credit concerns include Ameristar's moderate cash flow diversification, expectation that weak gaming demand trends will continue in the foreseeable future, and the November 2010 expiration of its $1.4 billion revolver which still accounts for a significant part of the company's capitalization. The upgrade of the Ameristar's $1.4 billion revolver reflects the credit cushion provided to it by the new senior unsecured notes that will rank junior to the revolver. The upgrade of the Probability of Default Rating to Ba3 from B1 reflects the decrease in Ameristar's family recovery rate assumption to 50% from 65%. The decrease in the family recovery rate acknowledges that Ameristar will no longer have an all bank debt capital structure, and was made in accordance with Moody's Loss Given Default methodology. The upgrade of Ameristar's Speculative Grade Liquidity rating to SGL-2 from SGL-3 acknowledges the improved availability under the company's revolver resulting from the repayment of amounts outstanding. The stable outlook incorporates Ameristar's good overall liquidity profile and recent and substantial improvement in earnings. It also anticipates that the company will address the November 2010 expiration of its $1.4 billion revolver well before it expires. Moody's last rating action for Ameristar was on May 5, 2009 when Ameristar's rating outlook was revised to stable from negative and its Ba3 Corporate Family Rating, B1 Probability of Default Rating, and SGL-3 Speculative Grade Liquidity rating were affirmed. Ameristar Casinos, Inc. owns and operates eight hotel/casinos in six jurisdictions. The company generates approximately $1.3 billion of consolidated net revenues. AMERISTAR CASINOS: S&P Assigns 'B+' Rating on $500 Mil. Notes ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its issue-level and recovery ratings to Ameristar Casinos Inc.'s planned $500 million senior unsecured notes due 2014. The securities were rated 'B+' (two notches lower than the 'BB' corporate credit rating on the company) with a recovery rating of '6', indicating S&P's expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default. (These ratings are based upon preliminary terms and conditions.) The issue-level rating on Ameristar's senior secured credit facilities remains unchanged at 'BB+' (one notch higher the 'BB' corporate credit rating). The recovery rating on these loans remains at '2', indicating S&P's expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default. However, upon closing of the senior unsecured notes offering, S&P plan to revise S&P's recovery rating on the credit facilities to '1', indicating S&P's expectation of very high (90% to 100%) recovery for lenders in the event of a payment default. This would lead us to raise S&P's issue-level rating on these loans to 'BBB-' (two notches higher than the 'BB' corporate credit rating), in accordance with S&P's notching criteria for a recovery rating of '1'. Ameristar intends to use the proceeds from the senior unsecured notes to prepay the revolving credit facility and to permanently reduce the commitment by the amount of the offering. Consequently, there would be less senior secured debt outstanding in S&P's simulated default scenario, resulting in improved recovery prospects for the credit facilities. The corporate credit rating on Ameristar is 'BB' and the rating outlook is stable. The stable rating outlook reflects S&P's expectation that the company's market-leading position across several markets, combined with recent investments in the portfolio and a focus on cost savings, will continue to provide a stable source of cash flow that supports current credit measures. This is notwithstanding the challenges that the currently weak economic conditions pose to the U.S. gaming industry and the competitive nature of the markets in which Ameristar operates. Ratings List Ameristar Casinos Inc. Corporate Credit Rating BB/Stable/-- Senior Secured BB+ Recovery Rating 2 New Ratings Ameristar Casinos Inc. $500M sr unsecd nts due 2014 B+ Recovery Rating 6 ARROWHEAD GENERAL: S&P Affirms Counterparty Credit Rating at 'B-' ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B-' counterparty credit rating on San Diego, California-based Arrowhead General Insurance Agency Inc. Standard & Poor's also said that it removed the rating from CreditWatch with negative implications. The outlook on Arrowhead is negative. At the same time, S&P revised its recovery rating on Arrowhead's senior secured credit facilities to '3', indicating S&P's expectation of meaningful (50%-70%) recovery for lenders in the event of a payment default, from '2'. S&P lowered its issue-level rating on these loans to 'B-' (the same level as the 'B-' counterparty credit rating on the company) from 'B', in accordance with S&P's notching criteria for a recovery rating of '3'. The revised recovery rating reflects S&P's expectation for a more significant decline in cash flow in S&P's simulated default scenario than that used in S&P's previous analysis. "The rating actions reflect the receipt of Arrowhead's 2008 financial information, the receipt of amended credit agreements and covenants, discussions with Arrowhead's management and its primary private equity investor, and our updated analysis," noted Standard & Poor's credit analyst Michael Gross. Arrowhead delayed its 2008 financial filing with Standard & Poor's because of noncompliance with some of its restrictive bank loan covenants at year-end 2008 and ongoing discussions to amend its credit agreements with its lenders. Although there has been no interruption in the company's scheduled debt and interest payments, the Company -- and compliance with its loan covenants -- has been adversely affected by declining premium rates in the property/casualty industry and some carrier disruption. The company reported an after-tax net loss of $1 million for 2008, and its adjusted EBITDA fixed-charge coverage was 1.7x. The company's total debt outstanding as of Dec. 31, 2008, was $171 million. A number of corrective actions should benefit the organization, including streamlining its programs, reducing expenses, and repaying $11 million of its $15 million revolving credit facility (all of which it did last year) as well as the $7.6 million repayment of first-lien bank loan in May 2009. "The negative outlook reflects our concerns about the recessionary impact on insurance purchasing and the company's ability to manage through the trough of the premium rate cycle," Mr. Gross added. The company's liquidity profile in particular is weaker than in prior years, as its reduced operating cash flow and reduced cash balance demonstrate. The outlook also reflects the company's lack of progress in replacing its former CFO, who resigned in July 2008. S&P could revise the outlook to stable over the next 12 months if management were to be successful in performing in line with existing bank loan covenants, secure a new CFO, and provide evidence of more stable operating performance and improved liquidity. Alternatively, S&P could lower the ratings if the company's financial performance were to deteriorate further. Although unlikely in the near term, S&P would consider raising the ratings if market conditions get better and the company can sustain an improved level of financial performance. ASYST TECHNOLOGIES: Court Moves SAL Filing Deadline to June 4 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California extended until June 4, 2009, the time within which the Asyst Technologies, Inc., must file its schedules of assets and liabilities, schedules of current income and expenditures, schedule of executory contracts and unexpired leases, and statement of financial affairs. The Debtor related that it needed more time to prepare the schedules carefully, thoroughly and accurately. The Debtor asserts the extension is for its best interest. Headquartered in Fremont, California, Asyst Technologies, Inc. -- http://www.asyst.com/-- makes, sell and support integrated hardware and software systems primarily for semiconductor and flat panel display manufacturing industries. The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D. Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., at the Law Offices of Baker and McKenzie, represents the Debtor in its restructuring efforts. As of December 31, 2008, the Debtor had total assets of $295,782,000 and total debts of $315,364,000. ASYST TECHNOLOGIES: Court Sets Cash Collateral Hearing for May 14 ----------------------------------------------------------------- The Hon. Randall J. Newsome of the U.S. Bankruptcy Court for the Northern District of California authorized, on an interim basis, Asyst Technologies, Inc., to use cash collateral securing repayment of loan from prepetition lenders. The approval of the stipulation for the use of cash collateral is set for a final hearing before the Court at 10:30 a.m. on May 14, 2009, at which time any party-in-interest may present any timely filed objections to the entry of the final order, in form and substance acceptable to agent and lenders, approving the use of cash collateral. As reported in the Troubled Company Reporter on April 30, 2009, the Debtor reached an agreement Keybank National Association, as agent for the prepetition lenders, for the use cash to fund its Chapter 11 case. The agreement with Keybank requires the Debtor to seek approval of the sale of all assets by May 29. Entities with interest in the cash collateral are Keybank, as agent, and lenders Citibank, N.A., Silicon Valley Bank, and RBS Citizens Bank. The Debtor is indebted to the lenders pursuant to a credit agreement dated as of July 27, 2007, as amended, in the principal amount of $77 million, as of the petition date, plus accrued prepetition interest, costs and fees and other obligations. Pursuant to a loan agreement, the prepetition obligations to the lenders are secured by a continuing perfected lien upon all of the Debtor's assets. The agent is willing to consent the Debtor's use of cash collateral only to the extent provided for in the budget until June 30, 2009. In exchange for the cash collateral use, the Debtor has agreed to grant (i) a replacement lien in favor of Keybank and other lenders; (ii) a superpriority claim; and (iii) payment of certain fees and expenses of the agent's counsel and financial advisor. The Debtor's use of cash collateral, and the agent's willingness to allow use, will immediately and automatically terminate upon the earliest to occur of these: i) May 15, 2009, if the Court has not entered a final order approving the stipulation; ii) the dismissal or conversion to Chapter 7 of the case; iii) the entry by the Court of an order granting relief from the automatic stay; iv) the appointment of any trustee or any examiner; v) the final indefeasible payment and satisfaction in full in cash of the prepetition obligations; vi) the effective date of any Chapter 11 plan of reorganization; vii) the Debtor's total expenditures at the end of any month exceed 105% of the Debtor's budgeted expenditure; viii) the failure of the Debtor to deliver to the agent any documents or other information required to be delivered pursuant to the interim order within 5 days after receiving notice from the agent; ix) the consummation of the sale of all or substantially all of the assets of the Debtor; x) the failure by the Debtor to observe or perform any of the terms or provisions contained herein or in the prepetition loan documents; xi) without the consent of the agent, the entry of an order of the court approving the terms of any debtor-in-possession financing for the Debtor unless the prepetition obligations are indefeasibly paid in full; xii) the entry of an order of any court reversing, staying, vacating or otherwise modifying in any material respect the terms of the interim order; or xiii) May 29, 2009, if the Debtor has not filed a motion to sell substantially all of its assets on or before the date, provided, however, the date mat be extended by written agreement between then agent and the Debtor on or prior to the occurrence of the date. The agent's and the lenders' liens on and security interest in the collateral will be subject only to payments not to exceed $50,000, which amount may be used only to pay fees. A full-text copy of the budget is available for free at: http://bankrupt.com/misc/ASYST_Budget.pdf About Asyst Technologies, Inc. Headquartered in Fremont, California, Asyst Technologies, Inc. -- http://www.asyst.com/-- makes, sell and support integrated hardware and software systems primarily for semiconductor and flat panel display manufacturing industries. The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D. Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., at the Law Offices of Baker and McKenzie, represents the Debtor in its restructuring efforts. As of December 31, 2008, the Debtor had total assets of $295,782,000 and total debts of $315,364,000. ASYST TECHNOLOGIES: U.S. Trustee Picks 5-Member Creditors Panel -------------------------------------------------------------- The U.S. Trustee for Region 17 appointed five creditors to serve on the official committee of unsecured creditors in Asyst Technologies, Inc.'s Chapter 11 cases: The Committee members are: 1. Saguaro Technologies, Inc. Attn: Doina Mazilu, President & CEO 30188 Morning View Drive Malibu, CA 90265 Tel: (310) 589-5516 Fax: (310) 589-0900 2. Bowne Of Los Angeles, Inc. Attn: Brian Donahue, VP Finance 1931 Market Ctr. Blvd. Dallas, TX 75207 Tel: (214) 651-1001 Fax: (866) 857-2005 3. Applied Ceramics, Inc. Attn: Matt Sertic, President 48630 Milmont Drive Fremont, CA 94538 Tel: (510) 249-9700 Fax: (510) 249-9797 4. Aeronet, Inc. Attn: John V. Baisey, Vice President 42 Corporate Park, Suite 150 Irvine, CA 92606 Tel: (949) 474-3000 Fax: (800) 559-7090 5. Elite Network, Inc. Attn: Neil D. Glatzer, Partner 444 Castro Street, Suite 920 Mountain View, CA 94041 Tel: (650) 938-4100 Fax: (650) 938-0727 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 Asyst Technologies, Inc. Headquartered in Fremont, California, Asyst Technologies, Inc. -- http://www.asyst.com/-- makes, sell and support integrated hardware and software systems primarily for semiconductor and flat panel display manufacturing industries. The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D. Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., at the Law Offices of Baker and McKenzie, represents the Debtor in its restructuring efforts. As of December 31, 2008, the Debtor had total assets of $295,782,000 and total debts of $315,364,000. ASYST TECHNOLOGIES: Wants Baker & McKenzie as Bankruptcy Counsel ---------------------------------------------------------------- Asyst Technologies, Inc., asks the U.S. Bankruptcy Court for the Northern District of California for permission to employ Baker & McKenzie LLP as counsel. Baker & McKenzie will, among other things: a) advise the Debtor of its powers and duties as debtor-in- possession; b) assist, advise and represent the Debtor in its consultation with parties-in-interest regarding the administration of the Chapter 11 case; and c) prepare on behalf of the Debtor any necessary applications, motions, pleadings, orders and other legal papers. Pre-bankruptcy, the firm billed $1,279,280 for services and expenses. It received a $600,000 retainer with a $132,367 balance as of the petition date. The hourly rates of Baker & McKenzie personnel are: Ali M.M. Mojdehi, partner $620 Janet D. Gertz, associate $385 Rayla D. Boyd, associate $305 Partners $550 - $850 Associates $250 - $500 Paralegals $195 - $250 To the best of the Debtor's knowledge, Baker & McKenzie is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Baker & McKenzie LLP 12544 High Bluff Drive, Third Floor San Diego, CA 92130-3051 Tel: +1 858 523 6200 Fax: +1 858 259 8290 About Asyst Technologies, Inc. Headquartered in Fremont, California, Asyst Technologies, Inc. -- http://www.asyst.com/-- makes, sell and support integrated hardware and software systems primarily for semiconductor and flat panel display manufacturing industries. The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D. Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., at the Law Offices of Baker and McKenzie, represents the Debtor in its restructuring efforts. As of December 31, 2008, the Debtor had total assets of $295,782,000 and total debts of $315,364,000. BADANCO ACQUISITION: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Badanco Acquisition LLC 994 Riverview Drive Totowa, NJ 07512 Bankruptcy Case No.: 09-11638 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Randa Luggage Inc. 09-11639 Randa Luggage Holdings Corp. 09-11640 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtor's Counsel: Edwin J. Harron, Esq. Young, Conaway, Stargatt & Taylor The Brandywine Building 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 Tel: (302) 571-6600 Fax : (302) 571-1253 Email: bankfilings@ycst.com Kenneth J. Enos, Esq. Young, Conaway, Stargatt & Taylor 1000 West Street 17th Floor Wilmington, DE 19801 Tel: (302) 571-6600 Email: bankfilings@ycst.com Robert F. Poppiti, Jr., Esq. Young, Conaway, Stargatt & Taylor, LLP The Brandywine Building 1000 West Street 17th Floor Wilmington, DE 19801 Tel: (302) 571-6600 Email: bankfilings@ycst.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/deb09-11638.pdf The petition was signed by John J. Hastings. BANK OF AMERICA: Aims to Repay Govt. Debt in Months, Not Years -------------------------------------------------------------- Marshall Eckblad at Dow Jones Newswires reports that Bank of America Corp. CEO Ken Lewis said that he would like to repay the U.S. government's investment in the Company within "months, not years." 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. Dow Jones notes that this would make it less clear when the bank will be able to repay the government. According to Dow Jones, Mr. Lewis told Calyon Securities bank analyst Mike Mayo that BofA may have to raise prices across the board for clients if Congress moves to limit the ways lenders can increase interest rates for credit cards. Dow Jones relates that lawmakers are reviewing proposals to restrict the ability of banks and card companies to raise rates on existing clients and ban other controversial practices. Citing Mr. Lewis, Dow Jones states that the proposed legislation "is actually just going to cause us...to raise pricing in general. That's the only way I know we can cover our costs." Mr. Lewis, Dow Jones relates, said that "business is really good" at Merrill Lynch and BofA had no specific plans to officially assume Merril Lynch's debt. Mr. Lewis admitted that BofA has "lost some (Merrill) people that we did not want to lose," Dow Jones says. Citing people familiar with the matter, Laura Santini and Costas Paris at The Wall Street Journal reports that Wall Street companies are seeking buyers for part of BofA's stake in China Construction Bank Corp. valued at $8.5 billion. According to WSJ, BofA, seeking capital to meet a U.S. government stress test, can sell one-third of its 16.7% stake in China Construction Bank after the expiration of a lockup period on Thursday. The sources said that banks acting on the U.S. lender's behalf are approaching institutions and hedge funds, the report states. Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers support to more than 4 million small business owners. The company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. The bank needed the government's financial help in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management. Merrill Lynch's operations are organized into two business segments: Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BENNINGTON COLLEGE: Moody's Withdraws 'Ba1' Rating on 1999 Bonds ---------------------------------------------------------------- Moody's Investors Service has withdrawn its Ba1 long-term rating assigned to Bennington College's Series 1999 bonds, issued through the Vermont Educational and Health Buildings Financing Agency. The rating has been withdrawn due to the defeasance of all of the maturities of the bonds. The College no longer has any debt with a Moody's rating. The last rating action and report with respect to the long-term rating of Bennington College was published on March 20, 2008, when the Ba1 rating of Bennington College was affirmed and the outlook was revised to negative from stable. BERNARD L MADOFF: Irving Picard Sues Harley International --------------------------------------------------------- Amir Efrati at The Wall Street Journal reports that Irving Picard, the trustee for Bernard L. Madoff Investment Securities Inc., has filed a more than $1 billion lawsuit against hedge-fund investor Harley International (Cayman) Ltd., claiming that the fund "should have known" about the fraud. Harley ignored warning signs that should have alerted it to the fraud, WSJ says, citing Mr. Picard. Mr. Picard, according to WSJ, alleged that Harley invested more than $2 billion with Mr. Madoff, receiving an average annual return of 13.5%. Mr. Picard said in court documents that Harley withdrew more than $1 billion from the Madoff firm in the two years before its collapse on December 11, 2008, including $425 million in the three months before that date. 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. BERNARD L MADOFF: Trustee Creates Hardship Program -------------------------------------------------- Irving Picard, the trustee for Bernard L. Madoff Investment Securities Inc., unveiled the creation of a program for an accelerated determination of claims for those customers facing "hardships." Customers eligible to join in the program include those (i) declaring personal bankruptcy, (ii) unable to pay for living or medical expenses, and (iii) needing to return to work after retirement. The Securities Investor Protection will pay a maximum of $500,000 for each claim. Details of the Hardship Program are available at: http://www.madofftrustee.com/HardshipProgram.html Bloomberg reported April 24 that Mr. Picard has sent letters to 223 investors demanding the return of $735 million. The trustee said he's not seeking to recover money from investors who made larger deposits than they withdrew. Bloomberg's Bill Rochelle said that demand letters are usually sent in bankruptcy cases to initiate settlement discussions; trustees typically file suits against those who don't settle. The Madoff trustee's claims to recover the withdrawals can be based on several theories, including the law on fraudulent transfer. Market Making Business Mr. Picard on April 28 completed an auction where Castor Pollux Securities LLC emerged as the winning bidder for the acquisition of the assets related to the market making business of BLMIS. Castor Pollux will pay $1,000,000 at closing and up to $24.5 million in deferred compensation through December 2013. Three bidders competed in the auction. One entity that had submitted a bid on April 22, 2009 withdrew its bid prior to the auction. On March 27, 2009, the Trustee entered into a definitive agreement with Castor Pollux, but the deal was subject to higher and better offers. Castor's offers was for $500,000 to be paid at closing and payments of up to $15 million based on gross revenues generated and shares traded through 2012. As a result of the auction, the closing date cash consideration is twice what was initially proposed and the earn-out consideration is also substantially higher than the original bid. The U.S. Bankruptcy Court for the Southern District of New York has approved the sale. About Bernard L Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on 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. BERNARD L MADOFF: May 27 Hearing on UK Unit's Chapter 15 Petition ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on May 27, 2009, to consider a request for recognition of Madoff Securities International Ltd.'s case in the United Kingdom as the "foreign main proceeding". The Chapter 15 petition by the liquidators of MSIL was filed in the U.S. Bankruptcy Court for the District of Florida but was transferred to Manhattan, where the involuntary Chapter 7 case of Bernard L. Madoff and the SIPA proceedings for his firm BLMIS are pending. MSIL was Madoff's European money management business. Its liquidators are seeking, among other things, to recover certain amounts and property transferred to Mr. Madoff's brother, Peter Madoff. Chapter 15 of U.S. Bankruptcy Code is designed to block U.S. lawsuits against foreign companies with U.S. operations while they reorganize overseas. Irving Picard, the trustee charged with unraveling Bernard L. Madoff Investment Securities LLC, gained power of attorney over Madoff's London business through a March 23 order by a U.S. judge, Bloomberg said. About Bernard L Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on 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. BLAIR FARMS: Case Summary & 11 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Blair Farms, Inc. 24168 County Road 28 Glenwood, MN 56334 Bankruptcy Case No.: 09-60504 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Minnesota (Fergus Falls) Judge: Dennis O'Brien Debtor's Counsel: David C. McLaughlin, Esq. Fluegel Helseth McLaughlin Anderson 25 2nd St. SW, Suite 102 Ortonville, MN 56278 Tel: (320) 839-2549 Fax: (320) 839-2540 Email: david.fhmab@midconetwork.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Central MN Credit Union $54,192 320 E. Main St. Melrose, MN 56352 Ashby Equity $49,690 PO Box 40 Ashby, MN 56309-0040 Pro-Ag Farmers Coop $20,509 601 E. Soo St. - Suite A Parkers Prairie, MN 56361 Stearns Bank $19,500 Klimek Bros. Well Drilling, Inc. $375 Maney International, Inc. $140 Griffco Viking $114 Red Horizon $131 Johnshoy Plumbing & Heating $104 Red Horizon $87 The Hatchery $44 The petition was signed by James Blair, vice president of the company. CABLEVISION SYSTEMS: Won't Sell Madison Square Garden Unit for Now ------------------------------------------------------------------ Nat Worden at The Wall Street Journal reports that Cablevision Systems Corp. said that it isn't considering selling its Madison Square Garden unit or any of its businesses for now. According to WSJ, Cablevision Systems had said that it was reviewing a possible spinoff of MSG, which includes: -- the New York Knicks basketball team, -- the Rangers ice hockey team, -- Radio City Music Hall, -- the Beacon Theater, and -- other entertainment properties. Cablevision Systems said that it is "exploring the possibility of spinning off the MSG business to Cablevision stockholders," WSJ relates. WSJ notes that the prospect would likely entail Cablevision separating MSG from its other businesses and distributing equity in MSG to its existing shareholders. WSJ quoted Gabelli & Co. analyst Christopher Marangi as saying, "This looks like an effort by Cablevision to isolate MSG from its other businesses, so it's not using cash generated from its other operations." The key question now is whether Cablevision Systems will provide MSG with cash from its other operations before a spinoff transaction, WSJ states, citing Mr. Marangi. About Cablevision Systems Corp. Headquartered in Bethpage, New York, Cablevision Systems Corp. (NYSE: CVC) is a cable operator in the United States that operates cable programming networks, entertainment businesses and telecommunications companies. Through its wholly owned subsidiary, Rainbow Media Holdings LLC, Cablevision owns interests in and manages numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses, and cable television advertising sales companies. Through Cablevision Lightpath Inc., its wholly owned subsidiary, the Company provides telephone services and Internet access to the business market. As of December 31, 2008, the Company's balance sheet showed total assets of $9,383,208,000 and total liabilities of $14,745,455,000, resulting in total stockholders' deficit of $5,362,247,000. * * * As reported by the Troubled Company Reporter on February 11, 2009, Standard & Poor's Ratings Services said it assigned its 'BB' issue-level and '3' recovery ratings to CSC Holdings Inc.'s proposed $500 million senior notes due 2019. The '3' recovery rating indicates the expectation for meaningful (50%-70%) recovery of principal in the event of payment default. At the same time, S&P placed the 'BB+' rating on $650 million of senior secured debt of majority-owned Newsday LLC on CreditWatch with negative implications. The 'BB' corporate credit rating on parent Cablevision Systems Corp. remains unchanged. Bethpage, New York- based Cablevision is a major cable operator in the New York metropolitan area. CALPINE CONSTRUCTION: Moody's Assigns 'B1' Rating on Senior Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Calpine Construction Finance Company, L.P.'s planned issuance of senior secured notes due 2016. Moody's also affirmed Calpine Corporation's ratings including its Corporate Family Rating, Probability of Default Rating, secured revolver and secured term loan at B2 as well as its speculative grade liquidity rating of SGL-2. The B1 senior secured CCFC rating reflects the significant interrelationship between Calpine and CCFC as more than 80% of the company's future operating revenues are derived from capacity payments from Calpine to CCFC under newly entered 10 year tolling arrangements. These capacity payments along with separate contractual arrangements between subsidiaries of CCFC and two electric cooperatives provide a high degree of steady, predictable cash flow over the life of the debt. The rating also considers the strong collateral coverage at CCFC as debt/KW will be less than $300/KW providing bondholders with substantial protection, particularly given the age and efficiency of the CCFC assets. Through various subsidiaries, Calpine is responsible for the maintenance, operation, and delivery of fuel to the CCFC plants through bilateral agreements, all of which are guaranteed by Calpine. CCFC's external liquidity's needs, while not expected to be material, will ultimately be provided by Calpine as up to $200 million of the company's $1 billion revolver can be used for working capital requirements of certain of Calpine's subsidiaries, including CCFC. Moody's observes that CCFC's historical and projected standalone credit metrics are relatively strong for the B rating category as cash flow (CFO pre W/C) to adjusted debt averaged in the high teens during the past two years and is expected to exceed 14% over the next several years. Notwithstanding these strong standalone metrics, Moody's believes that the rating for CCFC senior secured debt should be closely aligned with the CFR at Calpine. Proceeds from the financing along with cash on hand at CCFC and at Calpine will be used satisfy all of the debt obligations at CCFC and its parent, CCFCP, which aggregates $1.07 billion. Completion of the refinancing will substantially enhance the debt maturity profile for Calpine over the next several years. The debt will be secured by the assets owned by CCFC, which includes six combined cycle natural gas-fired generating plants aggregating 3,616 megawatts located in the western US, Texas, New England, and Florida. The rating affirmation for Calpine, including its B2 CFR, reflects the on-target performance of the company since its February 2008 emergence from bankruptcy, and the likelihood of a similar financial performance for the foreseeable future, particularly given the company's hedging program and factoring in an expected softening of electric demand caused by the recession. Adjusting for certain one-time bankruptcy related charges incurred in 2008, Moody's calculates the ratio of Calpine's 2008 cash flow to adjusted debt at around 5%, its cash flow coverage of interest approaching 2.0x and its free cash flow to debt at 3%. All of these metrics should modestly improve during 2009. These financial measures, which incorporate Moody's standard adjustments, are consistent with the financial measures of other B-rated independent wholesale power companies. The speculative grade rating of SGL-2 reflects Moody's view that Calpine will have good liquidity over the next 12 months based upon internal cash flow generation, balance sheet liquidity, and headrooom under the company's covenants. During 2008, Moody's calculates Calpine generated free cash flow of around $400 million and expects the company's 2009 internal cash flow generation to be in line with last year's results. As of May 8, 2009, Calpine has hedged forward 93% of its expected 2009 electric volume reducing the potential for margin and related cash flow compression over the next several months from low natural gas prices. During 2010, Calpine has largely mitigated its exposure to lower natural gas prices through hedges and through a natural gas collar which provides a floor for natural gas prices but enables Calpine's margins to benefit if natural gas prices increase. While future cash flow may be affected by lower market heat rates caused principally by the recession, Moody's does not expect a decline in market heat rates to materially impact Calpine's cash flow generation particularly during the next four quarters. Calpine's internal liquidity position is aided by the company's cash position ($1.6 billion at first quarter 2009) which was bolstered by the October 2008 draw of $725 million under the company's $1 billion secured revolver (matures March 2014). Liquidity has also been aided by the use of right-way hedges which helps reduce collateral requirements during periods of higher natural gas prices. Moody's expects the company to be able to satisfy maturing debt requirements over the next 12 months from internal sources, and expects the company to remain comfortably in compliance with the three financial covenants in its credit facilities. With respect to other forms of liquidity, virtually all of the company's assets are pledged to creditors under either project level subsidiary agreements or under the company's first lien credit agreements, thereby limiting the extent to which asset sales could provide a meaningful source of additional liquidity for the company. The stable outlook also reflects Moody's view that due to Calpine's hedging strategy, the company's near-term results should not be materially affected by lower natural gas prices or by lower market heat rates caused by the slowdown in the economy. In light of the fact that debt levels are not likely to appreciably decline until after 2009 coupled with a challenging economic environment for a commodity company, limited prospects exist for the company's CFR to be upgraded during the next eighteen months. However, to the extent that Calpine exceeds cash flow projections, the company's CFR could be upgraded, particularly if the company continues to be free cash flow positive and cash flow to adjusted debt is sustainable in the high single digits, while maintaining careful implementation of its current hedging program. The rating could be downgraded if poor operating performance emerges or weaker than expected energy markets lead to a decline in expected cash flows for Calpine resulting in the ratio of cash flow to interest expense falling below 1.5 x or cash flow to total adjusted debt approaching 3% or below for an extended period. Moody's last rating action on Calpine occurred on March 30, 2009 when the ratings were affirmed and the speculative grade liquidity rating was upgraded to SGL-2 from SGL-3. This is the first time that Moody's is assigning a rating to a CCFC obligation. Calpine's and CCFC's ratings were assigned by evaluating factors believed to be relevant to its credit profile, such as i) the business risk and competitive position of Calpine and CCFC versus others within its industry or sector, ii) the capital structure and financial risk of Calpine and CCFC, iii) the projected performance of Calpine and CCFC over the near to intermediate term, and iv) Calpine's and CCFC's history of achieving consistent operating performance and meeting financial plan goals. These attributes were compared against other issuers both within and outside of Calpine's and CCFC's core peer group and Calpine's and CCFC's ratings are believed to be comparable to ratings assigned to other issuers of similar credit risk. The ratings for Calpine's and for CCFC's individual securities were determined using Moody's Loss Given Default model. Based upon Calpine's B2 CFR and PDR, the LGD model would suggest a B2 for CCFC's senior secured notes. The B1 rating assigned to CCFC senior secured notes incorporates the substantial collateral coverage of CCFC debt given the modest amount of subsidiary debt relative to asset value at CCFC. Assignments: Issuer: Calpine Construction Finance Company, L.P. * Senior Secured Regular Bond/Debenture, Assigned a range of 44 - LGD3 to B1 Headquartered in Houston, Texas, Calpine is a major U.S. independent power company with assets of $20.7 billion and an aggregate generating capacity of 24,187 megawatts, including partnership interests at December 31, 2008. The company owns, leases, and operates natural gas-fueled and renewable geothermal power plants. CCFC consists of a portfolio of six combined cycle natural gas-fired power plants with a combined peak generation capacity of approximately 3,616 MW. Located in five different states throughout the U.S., the projects are all in commercial operation and sell the majority of the power output to four different power pools; ERCOT, FRCC, WECC, NEPOOL. CCFC is 100% owned by Calpine. CAPITAL CORP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Capital Corp of the West 2801 G. St. Merced, CA 95340 Bankruptcy Case No.: 09-14298 Type of Business: The Debtor is a bank holding company incorporated under the laws of the State of California on April 26, 1995. On Nov. 1, 1995, the Debtor became registered as a bank holding company and is the holder of all of the capital stock of County Bank. Chapter 11 Petition Date: May 11, 2009 Court: Eastern District of California (Fresno) Judge: W. Richard Lee Debtor's Counsel: Paul J. Pascuzzi, Esq. Feiderstein Fitzgerald Willoughby & Pascuzzi LLP 400 Capitol Mall #1450 Sacramento, CA 95814-4434 Tel: (916) 329-7400 Total Assets: $6,789,058 Total Debts: $68,096,190 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wilmington Trust Company Trust Preferred $25,774,000 Rodney Square North Indentures I 100 North Market Street Group IV Wilmington, DA 19890-1600 Tel: (302)636-6019 U.S. Bank National Association Trust Preferred $15,474,000 One Federal Street, 3rd Floor Indentures Boston, Massachusetts 02110 Groups I, II & III U.S. Bank NA Trust Preferred $10,310,000 225 Asylum Street Indentures I Goodwin Square Groups I, II & III Hartford, Connecticut 06103 State Street Bank and Trust Preferred $6,186,000 Trust Company of Connecticut Indentures National Association Group I 225 Asylum Street Hartford, Connecticut, 06103 Thomas L. Hawker SERP Participant $2,250,000 2954 Greenfield Drive Merced, California 95340 Ed Rocha SERP Participant $1,275,000 1101 Whispering Pines Drive Turlock, California 95382 Roger Dale McKinney SERP Participant $892,500 PO Box 641056 San Jose 95164 Kathy Wohlford SERP Participant $765,000 3321 Doncaster Court Merced, California 95340 John Incandela SERF Participant $765,000 2517 Revere Lane Modesto, California 95355 Vince Narez Deferred Purchase $741,786 465 Via Dichosa Santa Barbara CA 93110 Funding Winmark Capital Corporation Lease $652,881 4200 Dahlberg Drive, Suite 100 Minneapolis, MN 55422-4837 Janey Boyce Cabral SERF Participant $637,500 5675 Jeremy Court Merced, California 95340 Robert Perry SERF Participant $613,500 4100 Campus Green Drive NE Lacey WA 98516 Mike Ryan SERF Participant $450,000 Becky Perez SERF Participant $420,000 Jerome Murphy SERF Participant $419,883 Carol Wix 916-408-1028 SERP Participant $364,980 James Sherman SERP Participant $195,555 Howard Koenig Deferred Purchase $142,827 SAS Institute Inc. Software License $132,457 The petition was signed by David A. Heaberlin, chief financial officer. CARAUSTAR INDUSTRIES: Missed Payment Won't Affect Moody's Ratings ----------------------------------------------------------------- Moody's Investors Service said the missed interest payment due May 1, 2009 on Caraustar's senior notes does not currently impact the ratings, due to a 30 day grace period contained in the indenture. The previous rating action on Caraustar occurred on March 3, 2009 when Moody's downgraded the Corporate Family Rating to Caa2 and the Probability of Default Rating to Caa3. Caraustar Industries, Inc., headquartered in Austell, Georgia, is an integrated manufacturer of recycled paperboard and converted paperboard products. CHEMTURA CORP: Court Directs Noteholders to File 2019 Statement --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York ordered certain holders of certain notes issued by Chemtura Corp. due 2016, and their counsel, Milbank, Tweed, Hadley & McCloy LLP, to file a statement required under Rule 2019 of the Federal Rules of Bankruptcy Procedure no later than May 8, 2009. Accordingly, Milbank Tweed delivered to the Court a Rule 2019 statement to disclose the identities of the investment managers or advisers to the beneficial holders of the 6.875% notes due 2016 issued by Chemtura Corporation. Abhilash M. Raval, Esq., of Milbank Tweed, Hadley & McCloy LLP, in New York, reported that these Noteholders are the beneficial owners of certain 2016 Notes: Face Amount Noteholder of 2016 Notes Acquired ---------- ---------------------- Beach Point Capital $39,560,000 11755 Wilshire Blvd. Suite 1400 Los Angeles, California Management LP Post 40,853,000 Advisory Group, LLC 11755 Wilshire Blvd. Suite 1400 Los Angeles, California York Capital Management 12,895,000 767 Fifth Avenue, 17th Floor New York R3 Capital Management, LLC 7,000,000 c/o 40 East 52nd Street New York Mr. Raval related that the 2016 Noteholders individually retained Milbank Tweed to represent their individual interests with respect to the 2016 Notes. The Noteholders consist of creditors that, in an effort to reduce legal expenses, agreed to retain common counsel to facilitate a potential proposal for the Debtors from a competing DIP lender. The Noteholders do not purport to represent the interests of any third party or parties, including beneficial owners of, or holders of investment authority with respect to, the 2016 Notes. Furthermore, the Noteholders owe no fiduciary duty to one another, and no individual Noteholder is bound by the decisions of any other, Mr. Raval tells the Court. The Noteholders have at all times been supportive of the Debtors' stated initiative of maximizing recoveries for all stakeholders, Mr. Raval avers. They have also not been active in the Debtors' Chapter 11 cases. They have filed one limited objection with respect to the Debtors' DIP financing, and joined the subsequent objection filed by the Official Committee of Unsecured Creditors, he informs the Court. Milbank Tweed does not hold any claims against, or interest in, the Debtors, Mr. Raval assures the Court. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Eyes Sale of Non-Core Assets, Outlines Protocol -------------------------------------------------------------- Chemtura Corp. and its affiliates maintain an array of assets, including a significant amount of personal and intangible property and other property interests. Before the Petition Date, the Debtors sold or otherwise disposed of non-core assets that were unnecessary to their operations in the ordinary course of business. The Debtors anticipate continuing to sell non-core assets postpetition The Debtors tell the U.S. Bankruptcy Court for the Southern District of New York that sales of non-core assets, in some cases, would constitute transactions outside their ordinary course of business that typically would require individual Court approval pursuant to Section 363(b)(1) of the Bankruptcy Code. To streamline the sale process, the Debtors ask the Court to approve uniform procedures to effectuate, from time to time, sales or transfers of surplus of certain assets. All other sale transactions outside the ordinary course of the Debtors' businesses would remain subject to Court approval on an individual basis pursuant to Section 363(b)(1). The Debtors propose to make the Non-Core Asset Sale Procedures applicable to non-core asset sales for which total consideration does not exceed $5,000,000, as measured by cash and other consideration to be received by the Debtors, including any assumption of liabilities or payment by the buyer of aggregate cure costs in connection with the assumption and assignment of any related executory contracts and unexpired leases. The Debtors also seek to be allowed to use the Non-Core Asset Sale Procedures to sell assets that are encumbered by liens, encumbrances or other interests only if the holders of those liens and interests consent to the sale, either expressly or by implied consent after notice and an opportunity for hearing. Similarly, the Debtors seek to sell assets co-owned by another Debtor and a third party pursuant to the Non-Core Asset Sale Procedures only upon the express or implied consent of the co- owner. For covered sales, the Debtors propose that after a Debtor enters into a contract or contracts contemplating a covered sale of $5,000,000 or less, they will serve a notice of the proposed sale by e-mail, facsimile or overnight delivery service on: * the Office of the U.S. Trustee for Region 2, * counsel to the Official Committee of Unsecured Creditors, * counsel to the DIP Lenders, * counsel to the Prepetition Credit Facility Agent, * the indenture trustee for Chemtura outstanding bonds, and * if applicable, the non-debtor parties to all executory contracts the Debtors propose to assume and assign in connection with the proposed sale and their counsel, if known. The Debtors further propose that each Non-Core Asset Sale Notice include: (a) a description of the assets subject of the proposed sale and their locations; (b) the identity of the non-debtor party or parties to the proposed sale and any relationships between the party or parties and the Debtors; (c) the identities of any parties holding liens on, or other interests in, the assets that are proposed to be sold, and a statement indicating that all liens or interests are capable of monetary satisfaction; (d) the material economic terms and conditions of the proposed sale; (e) identification of the executory contracts, if any, that the applicable Debtor or Debtors propose to assume and assign pertaining to the proposed sale and the related cure amounts that the applicable Debtor or Debtors propose to pay with respect to each contract or lease; (f) instructions consistent with the terms regarding the procedures to assert objections to the proposed sale; and (g) the Debtors' basis for believing that the consideration for the sale is fair and equitable or that donation or abandonment is appropriate. With respect to each Sale Notice, interested parties have through 5:00 p.m. prevailing Eastern Time on the 10th calendar day after the date of service to object to the proposed sale pursuant to the objection procedures. If no objections are properly asserted before the notice period expires, the Debtors would be authorized, without further notice and without further Court approval, to consummate the proposed sale pursuant to the terms of the contracts. If each interested party timely consents in writing to the proposed sale, the Debtors would be authorized to consummate the proposed sale prior to expiration of the notice period. Upon either the expiration of the Notice Period without the receipt of any Objections, or the written consent of all Interested Parties, the proposed sale would be deemed final and fully authorized by the Court. The Debtors may submit a proposed sale order, together with a declaration stating that no objections were received, to the Court. If there are amendments to the economic terms of the proposed sale after transmittal of the sale notice but before the expiration of the notice period, the Debtors must send a revised sale notice to all interested parties describing the amended proposed sale and extending the notice period for an additional five calendar days. Objections to any proposed sale must be in writing, and must be served on the interested parties and proposed counsel to the Debtors so as to be received before the notice period expires. Grounds for the objections must be specified. The Debtors and the objecting Interested Party would use good faith efforts to resolve the objection. If the parties fail to resolve the objection, the Debtors cannot proceed with the proposed sale, but would have to ask the Court's approval of the proposed sale upon expedited notice and an opportunity for a hearing. De Minimis Asset Sales Procedure The Debtors may consummate a de minimis asset sale for covered sales (i) of $250,000 or less, in one or a series of related transactions; (ii) with no proposed assumption and assignment of any executory contracts; and (iii) no known parties other than the DIP Lenders and the Debtors' Prepetition Secured Lenders holding or asserting liens or other interests in the assets that are the subject of the transactions, without the need to follow notice procedures under the Non-Core Asset Sale Procedures and without further notice and further Court approval. The Debtors will provide interested parties, within 30 days after the end of each quarter, a report on assets sold and consideration received for de minimis sale completed during that quarter. The Court will consider the Debtors' request at a hearing on May 15, 2009. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Has Until June 1 to File Schedules and Statements ---------------------------------------------------------------- At the behest of Chemtura Corp. and its affiliates, the U.S. Bankruptcy Court for the Southern District of New York extended the Debtors' deadline to file schedules and statements until June 1, 2009. The Debtors relate that Alvarez & Marsal North America, LLC, their crisis managers, Kurtzman Carson Consultants LLC, their notice and claim agents, are assisting them in preparing their Schedules of Assets and Liabilities and Statements of Financial Affairs. The Debtors add that a number of their employees are preparing the Schedules and Statements, while performing their ordinary workplace duties. Although progress has been made, M. Natasha Labovitz, Esq., at Kirkland & Ellis, in New York, said the Debtors need more time beyond the current May 2, 2009 deadline to complete the Schedules and Statements, given the size and complexity of their business operations, the number of creditors, and their operations' geographical spread. The Court signed an order twice, as it initially entered an extension order for May 2, 2009 in error. The U.S. Trustee for Region 2 has consented to the extension. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Posts $94,000,000 Net Loss for 1st Quarter 2009 -------------------------------------------------------------- Chemtura Corporation filed its Quarterly Report on Form 10-Q for the first quarter of 2009. The Company recorded a net loss of $94 million, or $0.39 per share, for the first quarter of 2009 and a net loss on a managed basis of $26 million, or $0.11 per share for the quarter. The following is a summary of first quarter results on a GAAP basis: ---------------------------------------------------------- (In millions, except per share data) First Quarter ------------------------------ --------------------------- 2009 2008 % Change -------- ------- ---------- Net Sales $517 $909 (43%) Operating (loss) profit ($29) ($6) NM* Net (loss) earning ($94) ($21) NM* Net (loss) earnings per share ($0.39) ($0.09) NM* * not meaningful The following is a summary of first quarter results on a managed basis: ---------------------------------------------------------- (In millions, except per share data) First Quarter ------------------------------ --------------------------- 2009 2008 % Change -------- ------- ---------- Net Sales $517 $909 (43%) Operating (loss) profit ($22) $41 NM* Net (loss) earning ($26) $23 NM* Net (loss) earnings per share ($0.11) $0.10 NM* * not meaningful U.S. Chapter 11 Proceedings * On March 18, 2009, Chemtura Corporation, the parent company, and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The Chapter 11 cases are being jointly administered by the Court. The Company's non-U.S. subsidiaries and certain U.S. subsidiaries were not included in the filing and are not subject to the requirements of the U.S. Bankruptcy Code. The Company's U.S. and worldwide operations are expected to continue without interruption during the bankruptcy reorganization process. A discussion of the events leading to the Chapter 11 filing can be found in the Management Discussion and Analysis section of the First Quarter 10-Q. * On March 20, 2009, as previously announced, the Court approved all the Company's "first day" motions, allowing for the continuation of normal business operations during the reorganization process. The Debtors received from the Court, among other things, interim approval to access $190 million of its $400 million senior secured debtor-in- possession credit facility agreement and approval to pay outstanding employee wages, health benefits, and certain other employee obligations. Additionally, the Debtors are authorized to continue to honor their current customer policies and programs, in order to ensure the reorganization process will not adversely impact their customers. On April 29, 2009, the Court entered a final order providing full access to the $400 million DIP Credit Facility. * With the benefit of the additional liquidity provided by the DIP Credit Facility and cash flows following the filing for Chapter 11, the Company has restored the supply of raw materials to its manufacturing facilities and restored production to the levels required to serve customers' requirements. The Company's financial restructuring process is on track with its plans to emerge successfully from Chapter 11 as soon as practicable. First Quarter 2009 Business Segment Highlights * This quarter, the Company made component realignments within its reporting segments, which were also renamed. These modifications reflect the changes to its organizational structure announced on January 19, 2009. The renamed reporting segments are as follows: Consumer Performance Products, Industrial Performance Products, Crop Protection Engineered Products and Industrial Engineered Products. Industrial Engineered Products is the former Polymer Additives segment excluding the Company's antioxidant product line and Industrial Performance Products is the former Performance Specialties segment now including the Company's antioxidant product line. The Other segment has been eliminated and absorbed into the Industrial Performance Products and Industrial Engineered Products segments. The presentation of the Consumer Products and Crop Protection segments is unchanged. * The fourth quarter of 2008 had seen an unprecedented reduction in orders for the Company's products as the global recession deepened and customers saw or anticipated reductions in demand in the industries they served. January saw no improvement in customer demand from the depressed levels in December 2008, and some business segments saw further deterioration. While February and March of 2009 saw incremental improvement in net sales compared with January, business conditions remained difficult, particularly for business segments serving cyclically exposed industries as is evidenced by the 43% reduction in sales in the first quarter of 2009 compared with the first quarter of 2008. * Consumer Performance Products revenues declined 21% or $22 million compared with the first quarter of 2008 due to reduced sales volume of $20 million, unfavorable foreign currency translation of $5 million and a $5 million reduction due to exiting the sale of products to distributors in 2008. These decreases were partially offset by higher selling prices of $8 million. Operating profit increased $3 million primarily due to higher selling prices, lower distribution cost and selling, general and administrative, and research and development costs savings, partially offset by the impact of unfavorable volume and mix. * Industrial Performance Products revenues declined 47% or $180 million due to lower volume of $176 million and unfavorable foreign currency translation of $8 million, partially offset by higher selling prices of $4 million. Operating profit on a managed basis decreased $27 million primarily driven by the impact of lower sales volumes and unfavorable product mix of $53 million which was partially offset by lower manufacturing costs of $8 million, lower distribution costs of $5 million, higher selling prices of $4 million and $9 million of lower SGA&R and other costs. On a GAAP basis, operating profit decreased $26 million. * Crop Protection Engineered Products revenues declined 22% or $20 million due to lower volume of $15 million and unfavorable foreign currency translation of $7 million, partially offset by higher selling prices of $2 million. Operating profit decreased $5 million primarily driven by the lower sales volumes and unfavorable product mix. * Industrial Engineered Products revenues decreased by 52% or $170 million due to lower volume of $142 million, the divestiture of the oleochemicals business of $31 million and unfavorable foreign currency translation of $4 million partially offset by higher selling prices of $7 million. Operating profit on a managed basis decreased $38 million primarily due to lower volume and unfavorable manufacturing costs resulting from lower plant utilization. On a GAAP basis, operating profit decreased $24 million which included $14 million of accelerated depreciation in 2008. * Corporate expense for the quarter was $28 million compared with $32 million in the prior year. Corporate expense included amortization expense related to intangibles of $9 million and $10 million for the first quarter ended 2009 and 2008, respectively. First Quarter Results -- GAAP * Revenue for the quarter was $517 million compared with first quarter 2008 revenue of $909 million. The decrease in revenue was attributable to reduced sales volumes of $358 million (primarily due to the global recession), the impact of the divestiture of the oleochemicals business of $31 million and unfavorable foreign currency translation of $24 million, partially offset by higher selling prices of $21 million. * Gross profit for the first quarter was $99 million, a decrease of $85 million compared with the same quarter last year. Gross profit as a percentage of sales decreased to 19% in the quarter from 20% in the prior year. The decrease in gross profit was primarily driven by $110 million from volume and product mix, $14 million from unfavorable manufacturing costs (primarily due to lower plant utilization), $4 million from unfavorable foreign currency translation and $1 million in higher raw material and energy costs, offset by $21 million from higher selling prices, $13 million in lower distribution costs, a $7 million non-cash charge in 2008 relating to an assumed lease and $3 million from the divestiture of the oleochemicals business. * The operating loss for the first quarter of 2009 was $29 million compared with a loss of $6 million for the first quarter of 2008. The increase in operating loss reflects an $85 million decrease in gross profit discussed above; a $3 million increase in facility closures, severance and related costs; a $2 million increase in antitrust costs; and $1 million in lower equity income. These unfavorable impacts were partially offset by a $25 million decrease in depreciation and amortization primarily due to lower accelerated depreciation of property, plant and equipment; a $23 million decrease in loss on the sale of businesses; and a $20 million decrease in SGA&R costs due to savings from the Company's restructuring programs. * Other income, net decreased by $14 million in the first quarter of 2009 as compared with the same quarter last year. The decrease primarily reflects non-recurring foreign exchange gains in 2008. * Reorganization items, net represent items realized or incurred by the Company as a direct result of the Debtors petition filing under Chapter 11 of the U.S. Bankruptcy Code. Reorganization items, net primarily include the write-off of discounts and premiums associated with debt instruments of $24 million, the write-off of debt issuance costs of $7 million, professional fees directly related to the reorganization of $5 million and other charges of $4 million. * Net loss attributable to Chemtura Corporation for the first quarter of 2009 was $94 million, or $0.39 per share, compared with a loss of $21 million, or $0.09 per share, for the first quarter of 2008. The decrease primarily reflects the $40 million in reorganization items, net; a $23 million increase in operating loss discussed above; and a $14 million decrease in other income, net; partially offset by a $3 million decrease in income tax expense and a $1 million decrease in adjustment for income attributable to non-controlling interests. First Quarter Results -- Managed Basis * On a managed basis, first quarter 2009 gross profit was $99 million, or 19% of net sales, as compared with first quarter 2008 managed basis gross profit of $186 million, or 20% of net sales. Increases in manufacturing costs due to lower plant utilization are the primary drivers in the reduction in margin percentage. * On a managed basis, first quarter 2009 operating loss was $22 million as compared with first quarter 2008 operating profit of $41 million. The decrease in operating profit primarily reflects the decrease in gross profit, partially offset by decreases in SGA&R costs primarily due to the benefit of the Company's restructuring programs. * Loss before income taxes on a managed basis in 2009 and 2008 excludes pre-tax GAAP charges of $47 million. These charges are primarily related to costs associated with the reorganization; accelerated depreciation of property, plant and equipment; facility closures, severance and related costs; antitrust costs; loss on sale of businesses; and accelerated recognition of asset retirement obligations. * Chemtura's managed basis tax rate of 35% represents a standard tax rate for the Company's core operations to simplify comparison of underlying operating performance during the course of the Chapter 11 proceedings. The Company has chosen to apply this rate to pre-tax income on a managed basis. Cash Flows -- GAAP * Net cash used by operations in the quarter ended March 31, 2009 was $77 million as compared with net cash provided by operations of $16 million in 2008 primarily driven by the reduction in proceeds from the sale of receivables under the Company's accounts receivable facilities. * The balance of accounts receivable sold under the Company's accounts receivable facilities as of March 31, 2009 was $10 million compared with $103 million as of December 31, 2008 and $337 million as of March 31, 2008. * The reduction in proceeds from the sale of accounts receivable was $93 million in the first quarter of 2009 compared with a $98 million increase in proceeds in the first quarter of 2008. Excluding the effect of accounts receivable facilities, net cash provided by operations for the first quarter of 2009 was $16 million as compared with $82 million of net cash used in operations in the first quarter of 2008. * As of March 31, 2009, the Company's accounts receivable balances before the sale of accounts receivable were $452 million as compared with $495 million as of December 31, 2008. The decrease was primarily due to a decline in sales as a result of the current economic conditions primarily for the Industrial Performance Products and Industrial Engineered Products segments. * As of March 31, 2009, the Company's inventory balance was $530 million as compared with $611 million at December 31, 2008. The decrease was due to optimizing production levels with industry demand, changes in foreign exchange rates and liquidity constraints. * Capital expenditures for the quarter ended March 31, 2009 were $8 million compared with $23 million in 2008 which is in line with the Company's $60 million target for 2009 that was set to conserve cash during this period of depressed demand. * The Company's total debt as of March 31, 2009 was $1,400 million as compared with $1,204 million as of December 31, 2008. Total debt increased primarily due to accounts receivable now being mainly financed with bank debt rather than through the sale of accounts receivable under the Company's accounts receivable facilities. Cash and cash equivalents were $135 million as of March 31, 2009 compared with $68 million as of December 31, 2008. A full-text copy of Chemtura Corporation's First Quarter 2009 Financial Results filed on Form 10-Q is available for free at: http://ResearchArchives.com/t/s?3cae Chemtura Corporation and Subsidiaries Unaudited Consolidated Balance Sheets As of March 31, 2009 ASSETS Current Assets Cash and cash equivalents $135,000,000 Accounts receivable 442,000,000 Inventories 530,000,000 Other current assets 152,000,000 -------------- Total Current Assets 1,259,000,000 Non-current Assets Properties and equipment, net 820,000,000 Goodwill 260,000,000 Intangible assets, net 495,000,000 Other assets 198,000,000 -------------- Total Assets $3,032,000,000 ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Short-term borrowings 169,000,000 Current portion of long-term debt - Accounts payable 76,000,000 Accrued expenses 167,000,000 Income taxes payable 24,000,000 ------------- Total Current Liabilities 436,000,000 Non-current Liabilities Long-term debt 2,000,000 Pension & post-retirement health care liabilities 156,000,000 Other liabilities 126,000,000 ------------- Total Liabilities Not Subject to Compromise 720,000,000 Liabilities Subject to Compromise 1,974,000,000 Stockholders' Equity Common stock 3,000,000 Paid-in capital 3,037,000,000 Accumulated deficit (2,284,000,000) Accumulated other comprehensive loss (263,000,000) Treasury stock (167,000,000) -------------- Total Stockholders' Equity 326,000,000 Non-controlling interest 12,000,000 -------------- Total stockholders' equity 338,000,000 -------------- Total liabilities and stockholders' equity $3,032,000,000 ============== Chemtura Corporation and Subsidiaries Unaudited Consolidated Statements of Operations For the Quarter Ended March 31, 2009 Net sales $517,000,000 Cost of goods sold 418,000,000 Selling, general and administrative expenses 70,000,000 Depreciation and amortization 44,000,000 Research and development 9,000,000 Facility closures severance and related costs 3,000,000 Antitrust costs 2,000,000 Loss on sale of business - Equity income - -------------- 546,000,000 -------------- Operating Loss (29,000,000) Interest expense (20,000,000) Other income, net 1,000,000 Reorganization items, net (40,000,000) -------------- Loss before income taxes (88,000,000) Income tax expense (6,000,000) -------------- Net loss (94,000,000) Less: Net income attributable to non-controlling interest - -------------- Net loss attributable to Chemtura Corporation ($94,000,000) ============== Chemtura Corporation and Subsidiaries Unaudited Consolidated Statements of Cash For the Quarter Ended March 31, 2009 Cash Flows from Operating Activities Net loss ($94,000,000) Reconciliation to net cash provided by (used for) operating activities: Loss on sale of business - Depreciation and amortization 44,000,000 Stock-based compensation expense 1,000,000 Reorganization items, net 40,000,000 Equity income - Changes in assets and liabilities, net of assets acquired and liabilities assumed: Accounts Receivable 30,000,000 Impact of sale of accounts receivable (93,000,000) Inventories 59,000,000 Accounts payable (40,000,000) Pension and post-retirement health care debt (4,000,000) Other (20,000,000) -------------- Net cash (used in) operating activities (77,000,000) Cash flows from Investing Activities Net proceeds from divestments 3,000,000 Payments for acquisitions, net of cash acquired (5,000,000) Capital expenditures (8,000,000) -------------- Net cash (used in)investing activities (10,000,000) Cash flows from Financing Activities Proceeds fom DIP Credit Facility, net 165,000,000 Proceeds from credit facility, net 9,000,000 Payment on long term borrowings - Dividends paid 1,000,000 Payment for debt issuance costs (19,000,000) Other financing activities - ------------- Net cash provided by financing activities 156,000,000 Effect of exchange rates on cash and cash equivalents (2,000,000) ------------- Change in cash and cash equivalents 67,000,000 Cash and cash equivalents, beginning of period 68,000,000 ------------- Cash and cash equivalents, end of period $135,000,000 ============= About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Receives Final Authority to Use Lenders' Collateral ------------------------------------------------------------------ Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York authorized Chemtura Corporation and its debtor-affiliates to use the cash collateral of their prepetition lenders, on a final basis. Citibank, N.A., as agent to the prepetition lenders, is entitled to adequate protection for the use of the cash collateral, the Court held. To ensure the appropriate use of the Cash Collateral, the Debtors prepared and presented to the Court a 13-week cash budget covering the period from May 2, 2009 to July 25, 2009, a copy of which can be accessed at no charge at: http://bankrupt.com/misc/chemtura_DIPbudgetApr27.pdf As reported by the Troubled Company Reporter, the Court granted final approval of the Debtors' $400 million debtor-in-possession credit facility on April 29, 2009. The facility is arranged by Citibank, N.A., as administrative agent. The Company previously received interim approval from the Court to access $190 million under the DIP financing facility on March 20, 2009. The DIP financing, combined with cash from the Company's ongoing operations, will continue to provide Chemtura with financial flexibility to operate its business in the ordinary course, the Company stated in a press release. This financing will allow the Company to continue funding employee wages and benefits, payments to suppliers and other customary business obligations as Chemtura proceeds with its financial restructuring. Additionally, in connection with the final approval of the DIP facility, Chemtura obtained approval of an amendment to that facility, which significantly increases Chemtura's ability to provide additional liquidity to its foreign non-debtor subsidiaries and affiliates if and when it is needed. In a separate regulatory filing, Chemtura disclosed to the U.S. Securities and Exchange Commission details of Court-approved Amendment No. 1 of the DIP Credit Agreement. The DIP Facility is amended to: (a) increase the outstanding amount of intercompany loans Chemtura could make to its non-debtor foreign subsidiaries from $7.5 million to $40 million; (b) reduce the required level of borrowing availability under the minimum availability covenant; and (c) eliminate the required additional interest expense if a specified level of accounts receivable financing was not available to Chemtura's European subsidiaries. The DIP Credit Agreement matures on the earlier of April 29, 2010, the effective date of a reorganization plan, or the date of termination in whole of the commitments. The DIP Facility is comprised of: (i) 250 million of non-amortizing term loans, (ii) a $63.5 million revolving credit facility, and (iii) an approximately $86.5 million revolving credit facility representing the "roll-up" of certain outstanding secured amounts owed to lender under the existing prepetition senior credit facility who have commitments under the DIP Credit Agreement. In addition, a letter of credit subfacility for letters of credit in an aggregate amount of $50 million is available under the unused commitments of the revolving credit facilities. All amounts owing by Chemtura and the guarantors under the DIP Credit Agreement and certain hedging arrangements and cash management services are secured, subject to a carve-out as set forth in the DIP Credit Agreement for professional fees and expenses by (i) a first priority perfected pledge of all notes and all capital stock owned by the Company and the guarantors subject to certain exceptions, and (ii) a first priority perfected security interest in all other assets owned by the Company and the guarantors, in each case, junior only to liens as set forth in the DIP Credit Agreement and the Carve-Out. Chemtura Secretary Billie S. Flaherty relates to the SEC that availability of credit under the DIP Facility is equal to (i) the lesser of the Borrowing Base and the effective commitments under the DIP Credit Agreement minus (ii) the aggregate amount of advances under the DIP Credit Agreement and any undrawn or unreimbursed letters of credit. "Borrowing Base" is the sum of (i) 80% of the Debtors' eligible accounts receivable, plus (ii) the lesser of 85% of the net orderly liquidation value percentage of the Debtors' eligible inventory and 75% of the cost of the Debtors' eligible inventory, plus (iii) $125 million, less certain reserves. Borrowings under the term loans and the approximately $63.5 million revolving facility bear interest at a rate per annum equal to, at Company's election, (i) 6.5% plus the Base Rate or (ii) 7.5% plus the Eurodollar Rate. Borrowings under the approximately $86.5 million revolving facility bear interest at a rate per annum equal to, at Company's election, (i) 2.5% plus the Base Rate or (ii) 3.5% plus the Eurodollar Rate. Additionally, the Company will pay a unused commitment fee of 1.5% per annum on the average daily unused portion of the revolving facilities and a letter of credit fee on the average daily balance of the maximum daily amount available to be drawn under letters of credit equal to the applicable margin above the Eurodollar Rate applicable for borrowings under the applicable revolving facility. Moreover, Mr. Flaherty relates that the DIP Credit Agreement requires the Debtors to meet these financial covenants: (a) minimum cumulative monthly earnings before interest, taxes, and depreciation or EBITDA, after certain adjustments, on a consolidated basis; (b) a maximum variance of the weekly cumulative cash flows of the Debtors, compared to an agreed upon forecast; (c) minimum borrowing availability of $25 million until June 30, 2009, and $30 million thereafter; and (d) maximum quarterly capital expenditures. The DIP Credit Agreement also contains covenants which limit the incurrence of additional debt, operating leases, issuance of capital stock, issuance of guarantees, liens, investments, disposition of assets, dividends, certain payments, mergers, change of business, transactions with affiliates, prepayments of debt, repurchases of stock and redemptions of certain other indebtedness and other matters customarily restricted in such agreements. The DIP Credit Agreement contains events of default, including, among others, payment defaults, breaches of representations and warranties, and covenant defaults. Prior to the Final DIP Hearing, the Official Committee of Unsecured Creditors, joined by certain holders of 6.875% notes due 2016 issued by the Debtors, filed an objection to the proposed postpetition financing and sought to eliminate the proposed Revolver Loan. The Debtors, supported by the DIP Agent, asserted that approval of the "roll-up" is the only opportunity for them to obtain a postpetition financing. The 2016 Noteholders, shortly, withdrew their joinder. Citibank, N.A., also previously sought to adjourn the Final DIP hearing, wary that it may be unable to respond adequately to a new financing request for the Debtors. The Court denied Citibank's request. The Court also previously signed a second amended DIP interim order, reflecting that the Final DIP Order will have been entered no later than April 29, 2009. Craig A. Rogerson, Chemtura's chairman, president and chief executive officer, said in a company statement dated April 29, 2009, "We are pleased to have received final Court approval of our DIP credit facility and the important amendment to the facility. We believe that the final DIP approval provides the Company with the financial flexibility necessary to continue running our operations as normal through the remainder of the restructuring process. I would like to thank all our DIP lenders, led by Citibank, and the members of the Unsecured Creditors' Committee for their focus on the needs of Chemtura and their continued support throughout this process. Importantly, I believe the Court's final approval of our DIP facility, which gives Chemtura full access to those funds, will reinforce the confidence that our customers and suppliers have shown in our company in recent weeks, helping us to maintain and build on these important relationships." Mr. Rogerson concluded, "I would like to thank all of our employees for their hard work and support, and our suppliers and customers for their loyalty during this process. We look forward to emerging from our restructuring as a strong, viable, and profitable competitor in the specialty chemicals marketplace." A full-text copy of the April 29 Final DIP Order is available for free at http://bankrupt.com/misc/chemtura_FinalDIPorder.pdf About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Section 341 Meeting of Creditors Set for June 17 --------------------------------------------------------------- The U.S. Trustee for Region 2 will convene a meeting of the creditors of Chemtura Corporation and its debtor-affiliates on June 17, 2009, at 2:30 p.m. (Eastern Time), at the office of the U.S. Trustee, 4th Floor, at 80 Broad Street, in New York. This is the first meeting of creditors under Section 341(a) of the Bankruptcy Code. The meeting offers creditors a one-time opportunity to examine the Debtors' representative under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. Attendance by the Debtor's creditors at the meeting is welcome, but not required. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Retirees to Start Fighting for Benefits This Week --------------------------------------------------------------- Tom Hals at Reuters reports that Chrysler LLC's 16,000 salaried retirees will begin fighting for their benefits this week. About 1,171 salaried retirees weren't receiving the portion of their benefits that didn't qualify under IRS retirement rules for pre-tax savings, Reuters states, citing Chrysler. The benefits would remain as part Chrysler to satisfy creditors, the report says. Reuters quoted Trent Cornell, an attorney for Stahl Cowen in Chicago representing the National Chrysler Retirement Organization, as saying, "The constituents I represent are salaried retirees who spent their career at Chrysler. They're willing to negotiate but no one has talked to them." According to Reuters, Mr. Cornell will ask the U.S. Bankruptcy Court for the Southern District of New York this week to recognize a committee to represent nonunion retirees. "We want to hear clarity and have answers to salaried retiree benefits and whether they move to the new company or not," Reuters quoted NCRO spokesperson Mike Aberlich as saying. Reuters relates that Chrysler has proposed selling its healthiest operations to a new company owned by a union-aligned trust and Fiat SpA, with small stakes held by the U.S. Treasury and Canadian government. According to the report, the new company will provide benefits for the 90,000 union retirees. The union and nonunion retirees should be in the same class in the bankruptcy and should be treated equally, Reuters relates, citing Mr. Cornell. Reuters states that Mr. Cornell said that the group could ask Chrysler to form a trust that takes on their pension and benefits. A Chrysler spokesperson, according to Reuters, said that the Company will address retiree benefits through the bankruptcy process. Workers Ask Co. to Keep Twinsburg Plant Open Robert Schoenberger at Plain Dealer Reporter states that workers at Chrysler's Twinsburg stamping plant have asked Sen. Sherrod Brown and other politicians for help to keep the plant open. Plain Dealer relates that after the United Auto Workers members approved earlier this month contract changes intended to keep the Twinsburg plant open, Chrysler sought bankruptcy protection and quietly slipped plans to close the plant into its court filings. Plain Dealer says that Chrysler officials repeatedly declined to explain their decision to close the Twinsburg plant. Chrysler signed off on April 26 the UAW contract revisions. That same day, the Company Chrysler received a bankruptcy adviser's report that called for closing the stamping plant, the report states. Chrysler, Plain Dealer relates, admitted last week that it could have done a better job explaining the need for plant closings to the affected communities. Chrysler said in a statement, "Numerous documents have been filed with the court, and the process is not complete. Given that, it would be inappropriate for us to comment on this topic further." Car Dealers to Hold Strike to Save Sales Outlets Sholnn Freeman at Washington Post reports that more than 150 car dealers will lobby on Capitol Hill to try saving their sales outlets as General Motors Corp. and Chrysler move to sharply cut back operations. Washington Post relates that GM CEO Fritz Henderson said that the Company will start notifying dealers later this week whether their stores will survive the Company's latest restructuring. GM, says Washington Post, has disclosed plans to cut about 2,600, or 40% of its 6,200 dealerships. Chrysler dealers, according to Washington Post, fear that 800 to 1,000 of 3,200 sales centers could be closed. Chrysler executives said in court documents that half of the Company's 3,200 dealers account for 90% of the cars sold in the U.S. Washington Post says that state dealer associations are preparing their members for the fallout, and are advising dealers on what rights they have in Chrysler's bankruptcy case. They direct dealers to law firms to help them navigate the case, and assist individual dealers in their own bankruptcy filings, Washington Post relates. According to Washington Post, the dealer groups said that their members have assumed much of the risk for ensuring their operations are profitable. U.S. Bankruptcy Filing Won't Affect Global Operations Chrysler said in a statement that its global operations, including those in China, won't be affected by the Company's bankruptcy proceedings in the U.S. Chrysler said in a letter to clients published in the Economic Observer, "Chrysler's international businesses, including the Asia-Pacific region and China, are not included in the scope of the bankruptcy protection petition. Daily operations won't be impacted." Chrysler said in a statement that it will continue to pay suppliers in China and honor service warranties. Citing Chrysler, Dow Jones Newswires relates that dealerships will continue to operate, and the quality of Chrysler's vehicles won't be affected. 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 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: Suppliers Demand Broader Assistance for Industry -------------------------------------------------------------- The Motor & Equipment and Manufacturers Association, a group of manufacturers of motor vehicle components, tools and equipment, automotive chemicals and related products, has urged the U.S. Congress to provide "broader assistance" for the supplier industry and the passage of a short-term incentive for vehicle purchases. On March 19, 2009, the U.S. Treasury launched a $5 billion program to help auto parts suppliers that "are unable to access credit and are facing growing uncertainty about the prospects for their businesses and for the auto companies that rely on the parts they ship." The program provided suppliers with access to government- backed protection that money owed to them for the products they ship will be paid no matter what happens to the recipient car company. The program is run through American auto companies that agree to participate in the program. In its new request for more assistance for auto suppliers, the MEMA pointed out that the Auto Supplier Assistance Program launched by the Treasury in March only targets the first tier suppliers to General Motors Corp. and Chrysler LLC. Only GM and Chrysler, both recipients to federal aid, have participated in the program. It added, "Significant limitations restricted the reach of this program. Since it was not fully operational when Chrysler filed for Chapter 11, many suppliers were left significantly exposed. Smaller suppliers in financial distress are completely dependent upon their first tier customer to provide financial assistance down through the supply chain. Suppliers that manufacture parts in the U.S. but ship to Canada and Mexico for vehicle assembly are not covered. Bank restrictions and loan covenants prevented many eligible suppliers from participating in the program. Aftermarket suppliers directly providing replacement parts to the vehicle manufacturers are not eligible." The MEMA proposes that Congress pass a short-term incentive program, which will help bolster the U.S. economy with new car sales at a time when light vehicle production and sales are at an all time low. Reduced Business for Auto Suppliers The MEMA noted that in April, vehicle sales plunged by 34.4% when compared to the same month last year. For three months ended March 31, industry vehicle sales decreased by 3.7 million vehicles (or 20.6%) to 14.4 million vehicles due to continued weakness in the global economy. North America decreased by 1.6 million vehicles (or 36.1%) to 2.8 million vehicles, Europe decreased by 1.4 million vehicles (or 23.7%) to 4.5 million vehicles, the Asia Pacific region decreased by 531,000 vehicles (or 8.9%) to 5.4 million vehicles, and the Latin America / Africa / Middle East (LAAM) region decreased by 219,000 vehicles (or 11.9%) to 1.6 million vehicles. GM said that the decline is due to continued weakness in the economy which is directly attributable to the recession in the United States brought about by tightening of the credit markets and turmoil in the mortgage markets resulting in reductions in housing values, all of which contributed to declining consumer confidence. In the United States, GM sold 413,000 vehicles during the first quarter of 2009, a decline of approximately 49% compared to the corresponding period in 2008. Chrysler filed for Chapter 11 on April 30 after failing to obtain enough concessions from constituents, which was a requirement for additional U.S. government that would back an out-of-court restructuring. General Motors said that in the event that it does not receive prior to June 1, 2009 enough tenders of its public unsecured debt to consummate exchange offers, it expects to follow Chrysler to bankruptcy protection. Both GM and Chrysler have previously warned that a bankruptcy filing would hurt sales and would result to shutdowns, both of which would further hurt suppliers. Chrysler has already halted production at many of its U.S. manufacturing facilities until its bankruptcy court- sanctioned merger with Fiat SpA is completed. General Motors has also announced that it will extend its usual mid-year down time at many of its North America manufacturing facilities during the spring and summer of 2009. GM in a regulatory filing on May 8 acknowledged that Chrysler's bankruptcy filing are threatening the viability of the suppliers, many are producing parts for both GM and Chrysler. Chrysler announced that most of its manufacturing operations will be temporarily idled beginning May 4, 2009. "The resulting decline in automotive production volumes and the risk that payments owed to suppliers by Chrysler LLC may be disrupted as a result of Chrysler LLC's bankruptcy filing will increase the financial and liquidity pressures facing automotive suppliers, many of which are common to Chrysler LLC and us," GM said. Ford Motor Company, the only member of the Big 3 Detroit automakers that has so far not sought federal aid, has reported lower sales for the first quarter of 2009. For the second quarter, Ford expects to report sales of 435,000 units in North America, a 250,000 decline from 2008. Ford has said it might require a bride loan from the government, in the event of "a significantly deeper economic downturn or a significant industry event, such as the uncontrolled bankruptcy of a major competitor or important suppliers to Ford, that causes major disruption to our supply base, dealers or creditors and cannot be funded by other forms of capital." Standard & Poor's ratings Services said May 11 that it expects continued heavy cash losses in Ford's automotive oeprations for at least the next year. It added that its 'CCC+/Negative' rating on Ford reflect concerns that "GM (CC/Negative/--) could file for bankruptcy in the coming weeks and that low production levels by many automakers broadly are risks to Ford's liquidity, given the interwoven auto sector supplier base." "With a continued drop in vehicle production, Chrysler's recent bankruptcy announcement, and GM's planned summer plant shutdowns, this crisis is only deepening and more jobs will be lost," the MEMA said. Part suppliers directly employ 685,892 workers in the U.S. Auto Supplier Bankruptcies Wheel producer Hayes Lemmerz International Inc., which obtains 29% of revenues from General Motors and Ford, filed for bankruptcy protection Monday, blaming the global meltdown in the automobile sector. Hayes expects global EBITDA to be less than one-half of the $157 million it recorded in 2008. Lear Corp., which provides automotive seat systems and other products, has said that it might file for Chapter 11, if it fails to obtain relief from lenders regarding a looming May 16, 2009 default under its primary credit facility. General Motors and Chrysler accounted for 23% and 3% of Lear's net sales in 2008. Former Ford unit Visteon Corp, supplier of climate, interiors and electronics systems to automakers, is exploring various strategic and financing alternatives, including a bankruptcy filing. It has obtained waivers though, but they are set to expire May 30. Visteon's net sales during the three months ended March 31, 2009 decreased $1.51 billion or 53% when compared to the same period of 2008. "Lower production levels globally and increases in raw material, energy and commodity costs during 2008 have resulted in severe financial distress among many companies within the automotive supply base," said Lear Corp., which incurred a net loss of $689.9 million in 2008, compared with a net profit of $241.5 million the year before. "Several large automotive suppliers have filed for bankruptcy protection or ceased operations," Lear said in March. "Without immediate action, communities throughout this country will needlessly lose essential manufacturing jobs and the U.S. auto industry will not have a sufficient supply base to manufacture vehicles in this country," the MEMA said. Ratings Actions Ratings agencies have lowered ratings of some auto suppliers due to the expected weak auto sales for 2009, circumstances facing GM and Chrysler and/or other related factors: ArvinMeritor, Inc. S&P lowered issuer credit rating to 'CCC+' from 'B' on February 12, 2009. Fitch lowered the LTD issuer default rating to 'CCC' from 'B-' on March 9, 2009. Visteon Corp. S&P lowered issuer credit rating to 'CCC+' from 'B-' in January 30 2009 American Axle & Manufacturing Holdings Inc. Moody's lowered the corporate family rating to 'Caa1' from 'B2' on Dec. 16, 2008. S&P lowered the issuer credit rating to 'CCC+' from 'B' on Jan. 12, 2009. Fitch lowered American Axle's LT issuer default rating to 'CCC' from 'B-' on April 28, due to GM's shutdown of 13 of its manufacturing plants in North America during the second and third quarters of 2009. BorgWarner Inc. Moody's issued a 'Ba1' LT corporate family rating, with a 'negative' outlook, on March 18, 2009. S&P issued a downgrade of the issuer credit rating to 'BBB' from 'A-' on January 12, 2009. Magna Int'l Inc. S&P downgraded the issuer credit rating to 'BBB' from 'A-' on April 30, 2009. DBRS downgraded the unsecured debt rating to 'BBBH' from 'A' on May 1, 2009. Dana Holdings S&P lowered its corporate credit rating to 'CC' from 'B' on May 11, 2009. Tenneco Inc. Fitch lowered the issuer default rating to 'B-' from 'B' in April 29, 2009 due to extended shutdowns scheduled by GM later in 2009, and other factors. Continental AG Fitch on April 30, 2009, placed LT issuer default rating to 'BB' on rating watch negative, citing, among other things, the slump in global vehicle production. TRW Automotive Holdings Corp. Fitch on April 28 lowered the issuer default rating from 'B+' to 'B', remaining in watch negative due to uncertain production or sales ramifications of near-term events at General Motors and Chrysler, including bankruptcy filings. MetoKote Corporation Moody's on May 5, 2009, lowered the corporate family rating to 'Caa1' from 'B3', noting that while the Company has diversified its industry concentration, it still generates 49% of sales from the automotive end markets, including 19% from the Detroit-3 automakers. Stoneridge Inc. Moody's on May 5 said the corporate rating will remain at 'B2' despite Chrysler's bankruptcy filing. Outlook is negative. S&P said May 11 it believes "financial risks will remain relatively high for most rated auto suppliers this year and next because of severe and volatile auto markets in North America and Europe." "Weak economic conditions are forcing consumers to restrain spending resulting in a sharp decline in auto sales and production," said Moody's VP-Senior Analyst Timothy Harrod on April 30. According to Moody's, this loss of millions of units of production is severely pressuring revenue, profitability and cash flow for the auto parts suppliers. CHRYSLER LLC: To Be Headed by Fiat CEO After Bankruptcy ------------------------------------------------------- In light of Chrysler LLC CEO Bob Nardelli's plan to leave Chrysler following the Company's emergence from Chapter 11, Sergio Marchionne, chief executive officer of Fiat Group, will become New Chrysler's chief executive officer, The Associated Press reports, citing a Fiat spokesman, as saying. Mr. Marchionne, the 56-year-old dual Canadian and Italian citizen, has reportedly been eyed for the job since Fiat made a deal with Chrysler, notes AP. Mr. Marchionne, meanwhile, is reportedly in talks to take over General Motor's operations in Europe including Germany's Opel, Britain's Vauxhall and Sweden's Saab. Unlike its deal with Chrysler where it assumed no debt, Fiat said talks in Germany include assuming Opel's debt, AP reports. Fiat confirmed that it is also interested in GM's Latin American operations, the report notes. Fiat to Decide on Dealers' Fate Reports note that while the Non-TARP lenders' withdrawal of their objection to the Fiat Transaction clears a major obstacle to the Chrysler-Fiat Deal, the obstacles are not entirely gone. Chrysler LLC's lenders who are not part of the U.S. Government's Troubled Asset Relief Program, the same group of parties branded by U.S. President Barack Obama as "speculators" for refusing to join Chrysler's banks in the government-brokered deal to wipe out $6.9 billion debt and move forward with an out-of-court alliance with Fiat, previously objected to the transaction, noting that some unsecured creditors will be paid in full while first lien lenders only 30 cents on the dollar, a violation of bankruptcy law. "Now it's on to dealers and suppliers, and that little issue of product line-up," Jonathon Ramsey of Autoblog points out. With regards the dealers, Chrysler is working on the list of dealerships it plans to eliminate, and the dealers may learn their fate in the next few days, according to Sharon Terlep and Jeff Bennett of The Wall Street Journal. Citing people familiar with the situation, Doron Levin and Mike Ramsey of Bloomberg News, note that Fiat, not Chrysler, will decide which dealers will be brought along to the new company. The report further said an initial list of the retailers to be retained will be filed in Court by May 14, with some dealers to be added after the May 14 filing. "I disagree with terminating dealers, but if that's what's happening, then Fiat should be involved," said Chuck Eddy, an owner of Bob & Chuck Eddy Chrysler-Dodge-Jeep in Youngstown, Ohio, and a member of the U.S. automaker's national council, reports Bloomberg News. Chrysler, says WSJ, hasn't said how many of its 3,188 U.S dealers it wants to close. wftv.com, however, notes that Chrysler may close around 650 to 800 dealerships nationwide. Chrysler wants fewer dealers so those remaining will be more profitable. It had a plan last year to trim the number in major metro areas by as much as 50%, Bloomberg News points out. Kate Linebaugh at WSJ relates that some car dealers see opportunity amid the industry's wreckage, aiming to grab market share and boost profits by buying up struggling competitors. Wes Lutz, owner of a Dodge store, hopes he will make the cut and has been hoarding cash to expand his business if he does, according to WSJ. Mr. Lutz, says the report, wants to buy out the other local Chrysler dealer to grab the two sister brands he doesn't represent -- Jeep and Chrysler. WSJ states that Mr. Eddy also sees opportunity in the industry's decline. Mr. Eddy said that he has been able to produce record sales by increasing his inventory and offering discounted prices, WSJ relates. Competitors have scaled back the number of new cars on their lots, reducing choice for potential clients, WSJ says, citing Mr. Eddy. Chrysler Clarifies Issues on Plant Closings To address confusion regarding Chrysler plant closures, the company disclosed in an official statement the status of certain of its facilities in connection with its restructuring plan, in the context of consummating the Chrysler-Fiat alliance. According to the statement, the plants currently scheduled for closing are: * Sterling Heights Assembly Plant: A severe decline in the market has resulted in reduction of volumes and thus made operation of this plant not possible. The plant is expected to continue operation through December 2010. * Kenosha Engine: Unprecedented reduction in volume and demand for products has resulted in the decision to idle the plant in December 2010. * Detroit Axle: All required work will be moved to a new facility that is being developed in nearby Marysville, Mich. The plant will be idled in December 2010. * Twinsburg Stamping: Due to deteriorating volumes and in order to optimize capacity, existing volume will be transferred to Warren Stamping and Sterling Stamping plants effective March 2010. * Conner Avenue Assembly Plant: The facility and vehicle platform has been for sale since 2008. The site is scheduled to idle December 2009. * St. Louis North Assembly Plant: Due to volume reduction in the truck segment, capacity will be optimized by moving RamBox production to Warren Truck Assembly Plant effective third quarter of 2009. * Newark Assembly Plant (closed December 2008) * St. Louis South Assembly Plant (closed October 2008) Chrysler noted that while most manufacturing operations have been temporarily idled in order to reduce dealer inventory and as part of the restructuring process, the idling was not the result of the bankruptcy filing, and the company expects that most workers will be back on the job following the bankruptcy proceedings and the formation of the new company. "It is expected that virtually all employees associated with these facilities will be offered employment with the new company," the company statement explained. It further noted that the Jefferson North Assembly Plant is scheduled to add a second shift which represents 1,200 jobs coinciding with the introduction of the all-new Jeep Grand Cherokee. While the company continues to address difficult market conditions, the alliance will ultimately provide Chrysler customers and dealers with a broader and more competitive lineup of fuel-efficient vehicles and technology, the statement said. "We are committed to working with every Chrysler community throughout this restructuring process," Chrysler said in the statement. In response, a member of the United Auto Workers' national bargaining committee for Chrysler LLC called the automaker "despicable" for announcing the planned closing of the eight U.S. plants less than 24 hours after UAW-represented Chrysler workers agreed to accept more concessions, reports The Detroit News. "It is despicable that a company can simply abandon its communities, not because the company is ceasing productions, but because they can produce it cheaper elsewhere," Detroit News reports citing Bill Parker, a member of the UAW's bargaining unit and president of Local 1700, which represents workers at the Sterling Heights Assembly Plant, as saying. Mr. Parker said the UAW intends to discuss with Fiat the possibility of keeping the plants open. To recall, Chrysler LLC submitted its Viability Plan to the U.S. Treasury and the President's Auto Task Force on Feb. 17, 2009. As part of this plan, a number of restructuring actions were designed to address significant declines in the Seasonally Adjusted Annual Rate (SAAR) of auto sales -- from 15.6 million in January 2008 to 9.8 million in January 2009 -- and position Chrysler for future success. Chrysler's stand-alone plan contemplated several plant closings based on continued volume deterioration trends as well as a plan that contemplated a global alliance with Fiat that enhanced its stand-alone plan, and included significant concessions from all stakeholders. According to Chrysler, the specific plant actions were not made public because "it would have been presumptuous to assume that the plan was going to be approved, and inappropriate to communicate prior to thorough discussion with the United Auto Workers union." On March 30, 2009, the U.S. Treasury and the President's Auto Task Force rejected Chrysler's stand-alone Viability Plan. However, the Task Force agreed that Chrysler could submit a plan that would be evaluated with a decision made by April 30, provided that it include a global alliance with Fiat and more aggressive sacrifices by all stakeholders. Between March 30 and April 29, 2009, Chrysler diligently pursued this path. Consequently, Chrysler was able to secure an alliance with Fiat. The capacity reductions in the new alliance framework mirrored the Feb. 17 plan, though some of the timing was changed due to continued shift in volume trends and consumer demand. As a result, on April 30, Chrysler announced that it reached a definitive agreement to establish a global strategic alliance with Fiat to form a vibrant new company. "This alliance will save Chrysler, more than 50,000 jobs worldwide, including the preservation of more than 30,000 U.S. and 9,000 Canadian jobs, along with thousands of employees at dealers and suppliers," Chrysler pointed out. "This far outweighs the alternative of liquidation." In order to effectuate this plan, Chrysler filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code. Chrysler also filed a motion under Section 363 of the Bankruptcy Code, requesting the swift approval by the court of the agreement with Fiat and the sale of Chrysler's principal assets to the new company. The substantial majority of Chrysler's assets, operations, plants and people will be transferred to the new company, while assets and liabilities that are not consistent with Chrysler's business plan will remain with the old company for disposition. Under the supervision of the court, and with the support of the U.S. Treasury and the President's Auto Task Force, New Chrysler intends to quickly emerge from bankruptcy as a restructured and financially healthy organization. Asia-Pacific Operations Not Affected by Ch. 11 According to The Wall Street Journal, Chrysler said in a statement that its global operations, particularly in China, won't be affected by the company's Chapter 11 cases in the U.S. Chrysler's businesses in the Asia-Pacific region and China are not included in the scope of the bankruptcy protection petition and daily operations won't be impacted, Chrysler explained. Chrysler said it intends to continue paying suppliers and honor service warranties; dealerships will continue to operate as usual, and the quality of Chrysler's vehicles won't be affected. Chrysler, which mainly imports vehicles into the country, sold 8,237 units in China last year, according to market research firm JD Power & Associates, the Journal reports. 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: U.S. Trustee Names Consumer Privacy Ombudsman ----------------------------------------------------------- The Bankruptcy Code provides that if a hearing is required under Section 363(b)(1)(B) of the Bankruptcy Code, the court will order the U.S. Trustee to appoint a consumer privacy ombudsman in the case and will require that notice of that hearing be timely given to that ombudsman. The consumer privacy ombudsman may appear and be heard at that hearing and will provide to the Court information to assist the Court in its consideration of facts, circumstances, and conditions of the proposed sale or lease of personally identifiable information. In line with this, Diana G. Adams, the U.S. Trustee for Region 2, has appointed Alan Chapell, CIPP, as Consumer Privacy Ombudsman in Chrysler LLC's Chapter 11 cases. Ms. Adams relates that she has delivered to Mr. Chapell the order approving the Debtors' proposed bidding procedures for the sale of substantially all of their assets. According to Ms. Adams, the Bidding Procedures Order sets forth the date and time of the hearing seeking approval of the contemplated sale transaction. In a verified statement filed in Court, Mr. Chapell disclosed that his firm has not represented and will not represent any Debtors, creditors, or parties-in-interest in the Debtors' Chapter 11 cases. Mr. Chapell said his Company does not have any financial relationship with any entities that would be adverse to the Debtors or their estates with respect to his service as Consumer Privacy Ombudsman. Mr. Chapell assures the Court that he is a "disinterested person" within the meaning of Sections 101(14)and 332(a) of the Bankruptcy Code. Mr. Chapell is the president of Chapell & Associates, a research and consulting firm focusing on issues of consumer privacy. Mr. Chapell graduated from the University of Connecticut and Fordham University School of Law. He is a member of the New York Bar and the New York State Bar Association's International Privacy Law Subcommittee. Mr. Chapell's office is located at Chapell & Associates, LLC, 297 Driggs Avenue, Suite 3A, in Brooklyn, New York. 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: Court Approves Fiat-Led Sale Process for All Assets ----------------------------------------------------------------- Chrysler LLC and its affiliated debtors obtained approval from the U.S. Bankruptcy Code for the Southern District of New York of the bidding procedures for the sale of substantially all of their assets. A full-text copy of the Bidding Procedures is available for free at http://bankrupt.com/misc/ChryslerBiddingProcedures.pdf "The bidding procedures constitute a reasonable, sufficient, adequate and proper means to provide potential competing bidders with an opportunity to submit and pursue higher and better offers for all or substantially all of the assets," Judge Arthur Gonzalez said in his order dated May 7, 2009. The assets to be sold include facilities, executory contracts and leases, intellectual property rights, and those related to the research, production and distribution of vehicles under brand names including Chrysler, Jeep(R) and Dodge. The Debtors offered to sell their assets to New CarCo Acquisition LLC, a Delaware company formed by Fiat S.p.A., subject to higher and better bids, as part of the Master Transaction Agreement that Chrysler signed with Fiat and New CarCo on April 30, 2009. The Fiat group's $2 billion offer for the assets will be the lead bid in a court-supervised auction to be held on May 27, 2009. Fiat will receive a $35 million breakup fee in case it is outbid at the auction. Prior to the Court's approval of the bidding procedures, Chrysler argued in Court that it is imperative that the process be completed expeditiously in order to secure the maximum value for the company's stakeholders through the Chapter 11 process. Chrysler said that given the stress on all aspects of the automotive industry and the current idling of its manufacturing facilities, key relationships with suppliers, dealers, and other business partners cannot be preserved if the sale process is not concluded quickly. In addition, Chrysler noted that substantial new financial commitments from the U.S. and Canadian governments require the consummation of a transaction with Fiat within 60 days and make DIP financing available for only that period. The recently announced agreements with the UAW and CAW providing for modifications to the collective bargaining agreement for active employees and for a new schedule of contributions to a VEBA that will provide retiree medical benefits is also conditioned on the expeditious consummation of the Fiat transaction. "While Chrysler has already conducted discussions with Nissan, GM, Volkswagen, Tata motors, Magna, GAZ, Hyundai, Honda and Toyota and others over an extended period of time, these discussions have not produced any viable alternative to the proposed alliance with Fiat," the company disclosed in an official statement. In connection with the proposed sale, the Court approved the procedures governing the assumption and assignment of executory contracts and unexpired leases to New Carco. A full-text copy of the notice containing the procedures is available for free at: http://bankrupt.com/misc/ChryslerAssignmentNotice.pdf The procedures may be modified by further court order if a company other than New CarCo is the winning bidder, or if a transaction other than the proposed sale is consummated for the sale of the Debtors' assets, says Judge Gonzalez. A Sale Notice will also be circulated widely, and notice will also be published in major newspapers to provide opportunity for any interested party to emerge. Full-text copies of the court- approved Sale Notice, Publication Notice and the UAW Retiree Notices, are available for free at: http://bankrupt.com/misc/ChryslerSaleNotice.pdf http://bankrupt.com/misc/ChryslerPublicationNotice.pdf http://bankrupt.com/misc/ChryslerUAWRetireeNotices.pdf The Court will convene a hearing on May 27, 2009, at 10:00 a.m. (Eastern Time), to approve the winning bid. The Court set May 26, 2009, as the deadline for the notice of designation of lead bidder. Companies interested to acquire the assets have until May 20, 2009 to submit competing bids. All parties-in-interest, including the Debtors' prepetition senior secured lenders, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and the Official Committee Of Unsecured Creditors have until May 19, 2009, 4:00 p.m. (Eastern Time), to object to the approval of the Sale Transaction and the UAW Retiree Settlement Agreement. If a determination is made at the Sale Hearing that the Successful Bidder is a bidder other than New CarCo, parties-in- interest may object solely to the determination at the Sale Hearing. The Court will also consider approval of the UAW Retiree Settlement Agreement at the May 27, 2009 Sale Hearing. A full- text copy of the UAW Retiree Settlement Agreement is available for free at: http://bankrupt.com/misc/Chrysler_UAWRetireeSettlementPact.pdf A full-text copy of the Equity Recapture Agreement with the voluntary employees' beneficiary association trust is which is available for free at: http://bankrupt.com/misc/Chrysler_EquityRecapAgreement.PDF The Debtors relate that New Chrysler has agreed to enter into the Non-Pension Retiree Settlement Agreement on terms and conditions that differ from those established by a certain settlement agreement, dated March 30, 2008, in a class action of International Union, UAW, et al. v. Chrysler LLC. The Non-Pension Retiree Settlement Agreement will include, among other things, the funding of benefits with a combination of an equity interest in New Chrysler and a new $4,587,000,000 note. Under the UAW Settlement Agreement, certain benefit reductions will take effect July 1, 2009, assuming consummation of the Sale Transaction. 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: Seeks Approval of JPMorgan L/C Stipulation -------------------------------------------------------- Chrysler LLC and its affiliates ask Judge Gonzalez to approve, pursuant to Sections 105 and 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, a stipulation regarding their letters of credit with JPMorgan Chase Bank, N.A. Pursuant to "Applications and Agreements for Irrevocable Standby Letter of Credit" each dated July 20, 2007 -- the Reimbursement Agreements -- among the Debtors and JPMorgan, JPMorgan has issued two letters of credit: (i) letter of credit reference number TPTS-346618 in the face amount of $4,740,871 issued to Liberty Mutual Insurance Company, and (ii) letter of credit reference number TPTS-346619 in the face amount of $14,300,000 issued to Illinois Workers Compensation Commission, for the account of the Debtor. All present and future obligations of the Debtors with respect to the Letters of Credit and under the Reimbursement Agreements are secured and cash collateralized under a Cash Collateral Agreement dated as of July 30, 2007, between the Debtors and JPMorgan pursuant to which JPMorgan holds $19,612,226 in account number *****57961 -- the Cash Collateral Account -- which account is subject to JPMorgan's sole dominion and control. The Debtors have requested that JPMorgan permit the extension for a period of 12 months of the Illinois LC as the failure to extend the Illinois LC would entitle the beneficiary to draw upon it. Accordingly, the parties entered into a Stipulation which provides that: (a) The Debtors are authorized to request, and JPMorgan is authorized to permit, the extension for a period of 12 months of the Illinois LC in accordance with its terms; (b) The Debtors are authorized to execute and deliver all documents and agreements reasonably requested by JPMorgan in connection with the extension of the Letters of Credit and are authorized to pay, when due, all obligations with respect to the L/Cs, including all issuance fees and any margin or interest charges, in each case at the rates applicable to the Letters of Credit immediately prior to the Petition Date; (c) In the event that JPMorgan will honor a drawing request of a beneficiary under a Letter of Credit and the Debtors will not have reimbursed JPMorgan in full and in cash for the drawing within two business days, the automatic stay provisions of Section 362 of the Bankruptcy Code will be deemed vacated without further notice or court order to the extent necessary to permit JPMorgan to apply amounts in the Cash Collateral Account against all Obligations then due in accordance with the Reimbursement Agreement and the Cash Collateral Agreement; and (d) Any payments or proceeds remitted to JPMorgan pursuant to the provisions of the Stipulation or any subsequent Court order will be received free and clear of any claim, charge, assessment or other liability. The Debtors expect that the beneficiary of the Illinois LC would be entitled to draw on the Illinois LC and will do so, absent a replacement or extension. Although there can be no assurances that the beneficiary will actually draw against the Illinois LC, the Debtors believe that the extension of it pursuant to the Stipulation will benefit the Debtors' estates by providing a basis for the beneficiary to further delay any draw against the Illinois LC. At the Debtors' behest, the Court will consider approval of the request today, at 9:30 a.m. 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: Vorys Sater Represents Worthington Steel, et al. -------------------------------------------------------------- Tiffany Strelow Cobb, Esq., at Vorys, Sater, Seymour and Pease LLP, in Columbus, Ohio, discloses that her firm represents these creditors in Chrysler LLC's Chapter 11 cases: (a) The Worthington Steel Company c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com (b) The Gerstenslager Company c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com (c) TWB Company, LLC c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com (d) TWB de Mexico, S.A. de C.V. c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com (e) Worthington Specialty Processing c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com (f) Turner Broadcasting Systems, Inc. c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com (g) AOL LLC c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com (h) Hirschvogel Inc. c/o Vorys, Sater, Seymour and Pease LLP Tiffany Strelow Cobb, Esq. 52 East Gay Street Columbus, OH 43215 E-mail: tscobb@vorys.com Ms. Cobb discloses that The Worthington Steel Company, The Gerstenslager Company, TWB Company, LLC, TWB de Mexico, S.A. de C.V., Worthington Specialty Processing, Turner Broadcasting Systems, Inc., AOL LLC, and Hirschvogel Inc., and certain of their related entities creditors and parties-in-interest hold prepetition claims, and postpetition administrative claims for executory contract rights in the Debtors' Chapter 11 case. Ms. Cobb says that his firm has been retained by these creditors to represent them in all matters regarding the Chapter 11 case proceeding at its normal and customary hourly rates. 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: Russell R. Johnson Represents Edison Utilities ------------------------------------------------------------ Russell R. Johnson III, Esq., at Russell R. Johnson III, PLC, discloses that her firm represents these creditors in Chrysler LLC's Chapter 11 cases: (a) Commonwealth Edison Company Attn: LaShonda A. Hunt Exelon Business Services Company 10 South Dearborn S1. P.O. Box 5930 Chicago, IL 60680-5930 (b) Detroit Edison Company, and Michigan Consolidated Gas Company Attn: Michael T. Wood, Esq. 2000 Second Avenue Suite 688 WCB Detroit, MI 48226 (c) The East Ohio Gas Company doing business as Dominion East Ohio Attn: Sherry Ward 701 East Cary Street P.O. Box 26666 Richmond, VA 23261-6666 (d) Duke Energy Indiana, Inc. Attn: Tanya A. Schweitzer Duke Energy Shared Services, Inc. 139 East Fourth Street Room 25, Atrium II P.O. Box 960 Cincinnati, OH 45201-0960 (e) Orange and Rockland Utilities Attn: Leon Z. Mener, Esq. 4 Irving Place - Room 1875S New York, NY 10003 (f) Southern California Edison Company Attn: Douglas DiTonto 2244 Walnut Grove Ave., Suite 331 Rosemead, CA 91770 Johnson relates that Detroit Edison Company, Michigan Consolidated Gas Company, Duke Energy Indiana, Inc., Orange and Rockland Utilities, and The East Ohio Gas Company d/b/a Dominion East Ohio have unsecured claims against one or more of the Debtors arising from prepetition utility usage. Commonwealth Edison Company holds a prepetition deposit that secures all of the debt owed by the Debtors arising from prepetition utility usage. Southern California Edison Company also holds a prepetition surety bond that secures all of the debt owed by the Debtors arising from prepetition utility usage. 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: Utilities Demand More Protection from Non-Payment --------------------------------------------------------------- The proposal by Chrysler LLC to deposit a total of $6 million to cover an estimated two weeks' reduced usage of utilities is facing objections from power companies. The power companies, according to Bloomberg's Bill Rochelle, said the deposit isn't sufficient, noting that two weeks of utility usage costs more than $8 million. According to Bill Rochelle, Congress changed bankruptcy law in 2005 by requiring companies in reorganization to make deposits or post letters of credit to prevent utilities from suffering losses if the business in Chapter 11 can't pay its bills. The wholly-owned subsidiaries of Verizon Communications Inc., contend that the escrow account proposed by the Debtors is grossly insufficient to provide it with adequate assurance payment under Section 366. Verizon asks the Court to require the Debtors to provide it with adequate assurance by posting a deposit equal to two months of average usage of its services by the Debtors, or $4,120,000. The wholly-owned subsidiaries of Verizon include Verizon Services Corp., Verizon Network Integration Corp., Verizon Business Global LLC, Verizon Business Network Services Inc., Verizon Select Services Inc., MCI Communications Services, Inc., f/k/a MCI WorldCom Communications, Inc., and the operating telephone company subsidiaries of Verizon Communications Inc. Commonwealth Edison Company, Detroit Edison Company, Michigan Consolidated Gas Company, Duke Energy Indiana Inc., Orange and Rockland Utilities, The East Ohio Gas Company, and Southern California Edison Company criticize the Debtors' request to create an escrow account as a form of adequate assurance of payment to utility companies. The companies say that the escrow account is not a recognized form of adequate assurance under the U.S. bankruptcy law despite the Debtors' claim that a deposit in the escrow account somehow constitutes a cash deposit. Nicor Gas relates it intends to submit a request for an adequate assurance of $2,499,512, while the Debtors only have scheduled it to receive an adequate assurance deposit of $13,000. Thus, Nicor requests that the Court increase the Adequate Assurance Deposit Fund from $5,991,487 to $8,171,999 to account for the Utility Motion's underfunding of the Adequate Assurance Deposit Fund. Various firms, like DTE Energy Center, LLC, KGF Trading Company, and Chevron Natural Gas, said that they are not utilities covered by Section 366 of the Bankruptcy Code. Chrysler's Utilities Motion Chrysler has asked the Court to issue an order: (a) prohibiting third-party utility companies currently providing utility services, or that will provide services, to the Debtors from altering, refusing or discontinuing services to the Debtors on account of the filing of the Chapter 11 cases or on account of unpaid prepetition invoices, pending entry of a final order granting the relief sought; (b) determining that the Utility Companies have received adequate assurance of payment for future utility services on the terms provided in the request, pending entry of the Final Order; (c) establishing certain procedures for determining requests for additional assurance for most of the Utility Companies; (d) permitting the Utility Companies subject to the procedures to opt out of the procedures established in the request; and (e) scheduling a final hearing on the request within 30 days of the Petition Date. The Debtors also seek the entry of a Final Order granting the requested relief on a permanent basis. The Debtors currently use electric, natural gas, heat, water, sewer and other similar services pursuant to hundreds of separate accounts provided by 62 different Utility Companies. The Debtors estimate that their average monthly obligations to the Utility Companies on account of services rendered postpetition will total approximately $16.1 million prior to and pending the anticipated transfer of the Debtors' operating assets pursuant to the sale transaction with Fiat S.p.A. or similar other sale transaction. A full-text copy of the list of the Utility Companies is available for free at: http://bankrupt.com/misc/Chrysler_List_Utility_Companies.pdf Corinne Ball, Esq., at Jones Day, in New York, proposed counsel to the Debtors, asserts that uninterrupted utility service is necessary for the Debtors to preserve and maintain their assets pending consummation of the Sale Transaction. She notes that as a leading global automobile manufacturer, temporary or permanent discontinuation of utility services could irreparably disrupt the Debtors' ability to maintain the facilities in a safe and prudent manner and, as a result, fundamentally undermine the Debtors' ability to maximize value for stakeholders and achieve their restructuring goals. The Debtors intend to pay their postpetition obligations to the Utility Companies in a timely manner through cash reserves as of the Petition Date and from anticipated access to a new debtor in possession financing facility, Ms. Ball assures Judge Gonzalez. Adequate Assurance Deposit The Debtors propose to deposit, as adequate assurance under Section 366(c)(2), $5,991,487 into a newly created, segregated, interest bearing escrow account by May 20, 2009. The Adequate Assurance Deposit equals approximately two weeks of the Debtors' estimated aggregate postpetition utility expenses, excluding utility expenses subject to a certain "Daimler Guarantee," pursuant to which Daimler North America Corporation unconditionally and irrevocably guaranteed to DTE Energy Center LLC, as primary obligor and not merely as surety, the prompt and complete performance by Debtor Utility Assets LLC of all its obligations under certain utility service agreements. DNAC is formerly known as DaimlerChrysler North America Holding Corporation. The Debtors submit that the Adequate Assurance Deposit, in conjunction with the Debtors' ability to pay for future utility services in the ordinary course of business constitutes sufficient adequate assurance of future payment to the Utility Companies that are not subject to the Daimler Guarantee to satisfy the requirements of Section 366. Nonetheless, if any Utility Company believes additional assurance is required, they may request that assurance pursuant to the Debtors' proposed procedures. Adequate Assurance Procedures To address the right of any Utility Company under Section 366(c)(2) to seek additional adequate assurance satisfactory to it, the Debtors propose that these procedures be adopted: -- Any Utility Company desiring assurance of future payment for utility service beyond the Proposed Adequate Assurance must serve an additional assurance request no later than May 30, 2009; -- Any Additional Assurance Request must specify the amount and nature of assurance of payment that would be satisfactory to the Utility Company and must, among other things, explain why the requesting Utility Company believes the Proposed Adequate Assurance is not sufficient adequate assurance as future payment; -- Upon the Debtors' receipt of an Additional Assurance Request, the Debtors will have the greater of (i) 20 days from the receipt of an Additional Assurance Request, or (ii) 40 days from the Petition Date to negotiate with the requesting Utility Company to resolve its Additional Assurance Request; -- The Debtors, in their discretion, may resolve any Additional Assurance Request by mutual agreement with the requesting Utility Company and without further Court order, and may, in connection with any resolution, provide the requesting Utility Company with additional assurance of future payment in a form satisfactory to the Utility Company; -- If the Debtors determine that an Additional Assurance Request is not reasonable, and the parties are not able to resolve that request during the Resolution Period, the Debtors will request a hearing before the Court to determine the adequacy of assurances of payment made to the requesting Utility Company; -- Pending the resolution of the Additional Assurance Request at a Determination Hearing, the Utility Company making the request will be restrained from discontinuing, altering or refusing service to the Debtors on account of unpaid charges for prepetition services or on account of any objections to the Proposed Adequate Assurance; and -- Other than through the Debtors' proposed "Opt-Out Procedures," any Utility Company that does not comply with the Adequate Assurance Procedures is deemed to find the Proposed Adequate Assurance satisfactory to it and is prohibited from discontinuing, altering or refusing service on account of any unpaid prepetition charges, or requiring additional assurance of payment. The Interim Order will be deemed the Final Order with respect to all Utility Companies that do not timely file and serve an objection on the proposed adequate assurance procedures. Daimler Guarantee Ms. Ball relates that DCNAC was not released of its Daimler Guarantee when Daimler sold its controlling interest in the Chrysler Companies to affiliates of Cerberus Capital Management LC. In conjunction with that transaction, however, Chrysler agreed to reimburse DCNAC for any payment made by DCNAC pursuant to the Daimler Guarantee. To secure Chrysler's reimbursement obligations, Chrysler deposited funds into certain accounts at JPMorgan Chase Bank and granted a security interest in the account to DCNAC. Although the Daimler Guarantee to DTE remains outstanding, Chrysler must maintain funds in the accounts equal to the Daimler Guarantee and other credit support documents. As of December 1, 2008, the amount required to be maintained in the account equaled $302 million, of which $250 million was earmarked for the Daimler Guarantee. The Debtors submit that DCNAC's Daimler Guarantee and the Utility Security Interest constitutes sufficient adequate assurance of future payment to DTE in accordance with the Utility Service Agreements for these manufacturing plants, and thus, satisfies the requirements of Section 366: * Indiana Transmission, Plant 1 (Kokomo); * Indiana Transmission, Plant 2 (Kokomo); * Mack Avenue Engine, Plant 1; * Mack A venue Engine, Plant 2; * Sterling Heights, Assembly Plant; * Sterling Heights, Stamping Plant; * Toledo North Assembly Plant; and * Warren Truck Assembly Plant. The Debtors propose that DTE will be deemed to have adequate assurance for the locations for which there are Utility Service Agreements on an interim basis until the Final Hearing. If DTE disagrees that the Daimler Guarantee and the Utility Security Interest constitute adequate assurance within the meaning of Section 366, the Debtors propose that DTE be required to file a written objection at least eight days prior to the Final Hearing and that the issue be heard and determined at the Final Hearing. If, in the course of the bankruptcy cases, DCNAC is released of the Daimler Guarantee, the Debtors will increase the Adequate Assurance Deposit by an amount equal to two weeks of the Debtors' estimated utility obligations to DTE for utility services to the manufacturing facilities, which amount may be modified as necessary. Opt-Out Procedures Under the Adequate Assurance Procedures, the Debtors may seek a determination of appropriate adequate assurance at a Determination Hearing held more than 30 days after the Petition Date without providing interim assurances deemed "satisfactory" to the Utility Company. If any Utility Companies wish to opt out of the Adequate Assurance Procedures, the Debtors submit that the Court should schedule a hearing and issue a ruling on the amount of adequate assurance to be provided to the Utility Companies within 30 days of the Petition Date. The Debtors propose certain opt out procedures, pursuant to which a Utility Company that desires to opt-out of the Adequate Assurance Procedures must file an objection with the Court within 11 days of entry of the Interim Order identifying and explaining the basis of the Utility Company's proposed adequate assurance requirement under Section 366(c)(2). The Debtors, in their discretion, may resolve any Procedures Objection by mutual agreement with the objecting Utility Company and without further Court order, and may provide a Utility Company with assurance of future payment. If the Debtors determine that a Procedures Objection is not reasonable and are not able to reach a prompt alternative resolution with the objecting Utility Company, the Procedures Objection will be heard at the Final Hearing. It is possible that, despite the Debtors' efforts, certain Utility Companies have not yet been identified by the Debtors or included on the Utility Service List, Ms. Ball tells Judge Gonzalez. Thus, she says, promptly upon the discovery of an Additional Utility Company, the Debtors will increase the Adequate Assurance Deposit by an amount equal to approximately two weeks of the Debtors' estimated aggregate postpetition utility expense for each Additional Utility Company and will file with the Court a supplement to the Utility Service List incorporating the new information. Upon the consummation of the Sale Transaction that results in the discontinuation of or decreased level of utility services to the Debtors, the Debtors seek the Court's authority to reduce the Adequate Assurance Deposit to an amount equal to approximately two weeks of the Debtors' estimated aggregate utility expense based on their anticipated decreased level of utility service. 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) CMATT LLC: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: CMATT, LLC 1629 Route 206 Tabernacle, NJ 08088 Bankruptcy Case No.: 09-21992 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of New Jersey (Trenton) Debtor's Counsel: David A. Kasen, Esq. Kasen & Kasen 1874 East Route 70, Suite 3 Cherry Hill, NJ 08003 Tel: (856) 424-4144 Fax: (856) 424-7565 Email: dkasen@kasenlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Company says it does not have unsecured creditors who are non insiders when they filed their petition. The petition was signed by Audrey Neubert, member of the Company. CONTECH LLC: Wants Exclusive Plan Filing Period Extended to July 9 ------------------------------------------------------------------ Contech LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Michigan to extend their exclusive period to file a plan until July 9, 2009, and their exclusive period to solicit acceptances of a plan to September 7, 2009. The Debtors' exclusive periods to propose and solicit acceptances of a plan are set to expire on June 1, 2009, and July 29, 2009, respectively. The Debtors tell the Court that they have not completed the sale of their Casting Group and United Kingdom assets and that it would be impossible to formulate a Chapter 11 plan by June 1, 2009. Moreover, the Debtors will need time to discuss any plan with the official committee of unsecured creditors before submitting this to the Court for approval. Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com/-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The company also manufactures safety steel forged automotive components and tube fabrications through its Steel Products Group primarily for commercial truck OEM's. The company has approximately 1,000 employees. The company and two of its affiliates filed for Chapter 11 protection on Jan. 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09-42392). Richard A. Chesley, Esq., and Kimberly D. Newmarch, Esq., at Paul, Hastings, Janofsky & Walker, LLP, represent the Debtors as counsel. Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., represent the Debtors as local counsel. Kurtzman Carson Consultants LLC is the claims, noticing and balloting agent for the Debtors. When the Debtors filed for Chapter 11 protection from their creditors, they listed assets and debts between $100 million and $500 million. CRUCIBLE MATERIALS: Can Access Secured Loans Until May 28 --------------------------------------------------------- Crucible Materials Corp. received permission from the U.S. Bankruptcy Court for the District of Delaware (Wilmington) to continue receiving secured loans from prepetition lenders, Bloomberg's Bill Rochelle said. The Court will convene a final hearing on the proposed DIP loan on May 28. According to the report, the maximum credit, initially $69.4 million, will begin decreasing after May 29. Secured lenders owed $64.5 million will provide the DIP financing. Crucible Materials Corp. 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 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. D&E COMMUNICATIONS: S&P Puts 'BB-' Rating on Positive CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services said it placed its ratings on D&E Communications Inc., including its 'BB-' corporate credit rating, on CreditWatch with positive implications. This follows Windstream Corp.'s (BB+/Negative/--) announcement that it has entered a definitive agreement to acquire Ephrata, Pennsylvania- based local telephone carrier D&E Communications in a transaction consisting of cash ($73 million), stock (approximately $86 million) and D&E's net debt ($171 million). "D&E Communications' pending acquisition by Windstream will provide D&E debtholders the benefits of Windstream's much larger scale and more diverse geographic telephone footprint," said Standard & Poor's credit analyst Catherine Cosentino. S&P has placed D&E's ratings on CreditWatch with positive implications due to Windstream's stronger credit profile. The transaction is subject to federal and state regulatory approvals, and upon completion of the acquisition, expected in the second half of 2009, D&E's debt is likely to be raised to reflect ownership by the higher rated Windstream, if it is still outstanding following the transaction. The ratings for the debt itself will be reevaluated at that time to reflect any structural and recovery-related issues of the prospective capital structure, as well. DANA HOLDING: Tender Offer Cues S&P to Junk Corporate Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Toledo, Ohio-based Dana Holding Corp. to 'CC' from 'B'. S&P also lowered its rating on the company's outstanding $1.26 billion term loan bank facility to 'CCC-' from 'B+', while leaving the issue-level ratings on Dana's asset-backed loan revolving facility unchanged. The recovery rating on the term loan is unchanged, at '2', indicating S&P's expectation that lenders would receive substantial (70% to 90%) recovery in the event of a payment default. The outlook on Dana is negative. These actions follow the company's announcement that it has initiated a dutch auction tender offer, at 40% to 44% of face value, to repurchase with available cash up to 10% of the existing $1.26 billion under its term loan facility. Under S&P's criteria, S&P view an exchange offer at a discount to par by a company under substantial financial pressure as a distressed debt exchange and tantamount to a default. "We will lower our corporate credit rating on Dana to 'SD' [selective default] and lower our rating on the issue repurchased under the exchange to 'D' [default] upon completion of the offer," said Standard & Poor's credit analyst Nancy Messer. "We will then, shortly thereafter, assign a new corporate credit rating, representative of the default risk, after this financial restructuring," she continued. S&P's downgrades do not reflect an increase in Dana's risk of bankruptcy in S&P's view, and S&P recognize that this tender offer improves the company's debt leverage ratio. However, S&P believes Dana will be at risk of breaching its 2009 covenants, which tighten in the second half of the year, if industry conditions worsen. As S&P has noted previously, S&P believes financial risk will remain relatively high for most rated auto suppliers this year and next because of severe and volatile auto markets in North America and Europe. The outlook is negative. S&P would expect to lower the corporate credit rating to 'SD' and the affected issue rating to 'D' upon completion of the tender offer. S&P would then, shortly thereafter, assign a new corporate credit rating to Dana based on, among other things, S&P's assessment of the company's new capital structure, maturity schedule, liquidity profile, and other financial and business risk factors following the financial restructuring. S&P's preliminary expectation is that Dana's corporate credit rating would unlikely be higher than 'B' immediately following the consummation of the transaction because S&P believes very weak market conditions in most of Dana's business segments in 2009 will hinder its post-bankruptcy restructuring efforts. DAYTON SUPERIOR: Taps Edward Howard as PR Consultant ---------------------------------------------------- Dayton Superior Corporation asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Edward Howard & Co. as corporate communications consultants. Edward Howard will, among other things: a) develop and implement communications programs and related strategies and initiatives for communications with the Debtor's key constituencies and the media regarding the Debtor's operations, financial performance and progress through the Chapter 11 process; b) develop public relations initiatives for the Debtor to maintain public confidence and internal morale during the Chapter 11 case; and c) prepare press releases and other public statements for the Debtor, including statements relating to asset sales and other major Chapter 11 events. The hourly rates of Edward Howard's personnel are: Chairman and CEO $425 President $400 Executive Vice Presidents $375 Senior Counselors $375 Senior Vice Presidents $350 Senior Chapter 11 Specialists/ Vice Presidents $300 Senior Account Managers $230 Art Director $215 Account Managers $200 Senior Account Executives/ Senior Designers $180 Account Executives $150 Designers $145 Account Coordinators $110 Junior Account Coordinators $80 Donald C. Hohmeier, chief financial officer of Edward Howard, tells the Court that pre-bankruptcy, the Debtors paid the firm $45,000 and a $25,000 retainer. The Debtors do not owe Edward Howard any amount for services rendered prepetition. Mr. Hohmeier assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Dayton Superior Corporation Headquartered in Dayton, Ohio, Dayton Superior Corporation -- httpp://www.daytonsuperior.com/ -- makes and distributes construction products. Aztec Concrete Accessories Inc., Dayton Superior Specialty Chemical Corporation, Dur-O-Wa Inc., Southern Construction Products Inc., Symons Corporation and Trevecca Holdings Inc. were merged with the Company on December 31, 2004. The Company filed for Chapter 11 protection on April 19, 2009 (Bankr. D. Del. Case No. 09-11351). Andrew C. Irgens, Esq., John H. Knight, Esq., Paul N. Heath, Esq., and Paul Noble Heath, Esq., Richards, Layton & Finger, represent the Debtor in its restructuring effort. Latham & Watkins LLP also represents the Debtor. The Debtor posted $288,709,000 in total assets and $405,867,000 in total debt as of February 27, 2009. DAYTON SUPERIOR: Wants Latham & Watkins as Bankruptcy Counsel ------------------------------------------------------------- Dayton Superior Corporation asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Latham & Watkins LLP as counsel. L&W will, among other things: a) advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and properties; b) attend meetings and negotiate with representative of creditors and other parties-in-interest; and c) take all necessary action to protect and preserve the Debtor's estate including prosecuting actions on the Debtor's behalf, defending any action commenced against the Debtor, and represent the Debtor's interest in negotiations concerning all negotiations concerning all litigation in which the Debtor is involved, including objections to claims filed against the estate. Richards, Layton & Finger, the proposed co-counsel and L&W will work closely to avoid duplication of efforts. The hourly rates of L&W personnel are: Partners $750 - $1,050 Counsel $675 - $975 Associates $370 - $725 Paraprofessionals $105 - $620 L&W with primary responsibility in the Chapter 11 case are Kirk A., Davenport II, Kim Desmarais, Jude Gorman, Joseph Fabiani and Keith Simon. Mitchell A. Seider, Esq., a partner at L&W tells the Court that the Debtor advanced $1,100,000 to L&W as retainer. After applying prepetition fees and expenses, the retainer balance as of the petition date was $125,687. Mr. Seider assures the Court that L&W is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Seider can be reached at: Latham & Watkins LLP 885 Third Avenue, Suite 1200 New York, NY 10022 About Dayton Superior Corporation Headquartered in Dayton, Ohio, Dayton Superior Corporation -- httpp://www.daytonsuperior.com/ -- makes and distributes construction products. Aztec Concrete Accessories Inc., Dayton Superior Specialty Chemical Corporation, Dur-O-Wa Inc., Southern Construction Products Inc., Symons Corporation and Trevecca Holdings Inc. were merged with the Company on December 31, 2004. The Company filed for Chapter 11 protection on April 19, 2009 (Bankr. D. Del. Case No. 09-11351). Andrew C. Irgens, Esq., John H. Knight, Esq., Paul N. Heath, Esq., and Paul Noble Heath, Esq., Richards, Layton & Finger, represent the Debtor in its restructuring effort. Latham & Watkins LLP also represents the Debtor. The Debtor posted $288,709,000 in total assets and $405,867,000 in total debt as of February 27, 2009. DAYTON SUPERIOR: Wants Moelis & Company as Financial Advisor ------------------------------------------------------------- Dayton Superior Corporation asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Moelis & Company LLC as financial advisor. Moelis will, among other things: a) perform a customary business and financial analysis of the Debtor, undertaken in consultation with members of management of the Debtor; b) review and analyze the Debtor's assets and its operating and financial strategies; and c) review and analyze the business plans and financial projections prepared by the Debtor including the testing of assumptions and comparison of those assumptions to historical Dayton Superior and industry trends. Mark Hootnik, managing director of Moelis, tells the Court that the Debtor paid Moelis the first monthly fee of $150,000 and on April 17, the Debtor paid Moelis a pro rate portion of the second monthly fee of $20,000. The Debtor proposes to pay Moelis: a) a cash fee of $150,000 per month; b) a cash fee of $3.5 million immediately upon the consummation of a restructuring transaction or a sale of the Debtor through merger, exchange, or sale of all or majority of the assets, business, or stock of the Debtor in a single or series of related transactions; and c. reimbursement of all reasonable expenses incurred by Moelis. Mr. Hootnik assures the Court that Moelis is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Dayton Superior Corporation Headquartered in Dayton, Ohio, Dayton Superior Corporation -- httpp://www.daytonsuperior.com/ -- makes and distributes construction products. Aztec Concrete Accessories Inc., Dayton Superior Specialty Chemical Corporation, Dur-O-Wa Inc., Southern Construction Products Inc., Symons Corporation and Trevecca Holdings Inc. were merged with the Company on December 31, 2004. The Company filed for Chapter 11 protection on April 19, 2009 (Bankr. D. Del. Case No. 09-11351). Andrew C. Irgens, Esq., John H. Knight, Esq., Paul N. Heath, Esq., and Paul Noble Heath, Esq., Richards, Layton & Finger, represent the Debtor in its restructuring effort. Latham & Watkins LLP also represents the Debtor. The Debtor posted $288,709,000 in total assets and $405,867,000 in total debt as of February 27, 2009. DBSI INC: Files Joint Chapter 11 Plan of Liquidation ---------------------------------------------------- DBSI Inc. and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware a joint Chapter 11 plan of liquidation, which creates a liquidating trust on the plan's effective date. Under the plan, among other things, holders of unsecured claims against the Debtors will receive a pro rata share. However, the Debtors' plan did not indicate the estimated recovery that holders would receive. A full-text copy of the Debtors' Joint Chapter 11 Plan of Liquidation is available for free at: http://ResearchArchives.com/t/s?3cbd Headquartered in Meridian, Idaho, DBSI Inc. -- http://www.dbsi.com/-- operates a real estate company. On November 10, 2008, and other subsequent dates, DBSI and 167 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-12687). Lawyers at Young Conaway Stargatt & Taylor LLP represent the Debtors as counsel. The Official Committee of Unsecured Creditors tapped Greenberg Traurig, LLP, as its bankruptcy counsel. Kurtzman Carson Consultants LLC is the Debtors' notice claims and balloting agent. When the Debtors filed for protection from their creditors, they listed assets and debts both between $100 million and $500 million. DEAN FOODS: Moody's Changes Outlook on 'B1' Rating to Positive -------------------------------------------------------------- Moody's changed the rating outlook on Dean Foods's long-term ratings (CFR at B1) to positive and upgraded its Speculative Grade Liquidity Rating to SGL-2 from SGL-3. The company's other ratings were affirmed. Moody's said that the outlook change and rating action follow the company's issuance of nearly $400 million in common stock last week, which will help fund upcoming cash needs and accelerate improvement in credit metrics, and also follows an improving trend in operating results as milk prices have moderated and corporate cost cutting initiatives have begun to bear fruit. Dean Foods B1 corporate family rating and positive outlook are based on its i) national market share and scale in the US dairy industry, with a favorable cost position, ii) relatively stable earnings and cash flow, iii) improving leverage, liquidity and cash flows, iv) potential for further cost efficiencies and productivity improvements as management focuses on internal integration and streamlining operations, and v) strong distribution network with comprehensive refrigerated direct store delivery system offset by limited geographic/customer diversification, the potential for volatility in milk prices to erode profitability, challenges in the organic milk business, and weak albeit improving credit metrics including high leverage and low margins. Additionally, corporate governance constrains Dean's rating level given the board's approval of aggressive shareholder return policies in the past and Moody's concern around the heavy presence of insider directors. The company's recent common stock issuance with net proceeds of $394 million intended mostly for debt repayment marks a significant positive development after a historical track record of acquisition activity, share repurchases and comfort with relatively high leverage as demonstrated by the $1.94 billion special dividend paid in the second quarter of 2007. Liquidity was also enhanced through the stock issuance, improving the company's covenant cushion over the next 12 months even considering scheduled covenant step-downs, and reducing the likelihood that the company will need to tap into its revolver. The last rating action on Dean Foods was taken on December 18, 2007 when Moody's lowered the company's CFR to B1. Headquartered in Dallas, Texas, Dean Foods had sales in the last twelve months ending March 31, 2009 of approximately $12.1 billion. DELPHI CORP: Appaloosa Asks Court to Dismiss Claims --------------------------------------------------- Appaloosa Management L.P. and A-D Acquisition Holdings, LLC, ask the U.S. Bankruptcy Court for the Southern District of New York to grant them partial summary judgment, dismissing each of Delphi Corp.'s claims against them. Glenn M. Kurtz, Esq., at White & Case LLP, in New York, reminds the Court that the Debtors have alleged that AMLP (i) orchestrated an attempt to convince exit lenders to withdraw their financing commitments to the Debtors, and (ii) somehow was responsible for short-selling Delphi securities, supposedly designed to drive down prices, again in order to frustrate Delphi's ability to raise financing. The Court has referred to those two allegations as "jaw-dropping" conduct, he says. He notes that the Court has dismissed the Debtors' claims to invalidate the liability caps, to pierce the corporate veil and for equitable subordination and disallowance against every plan Investor, except AMLP and ADAH. The Debtors, Mr. Kurtz argues, do not have and never had any evidence of any conduct by AMLP and ADAH that interfered with the Delphi exit financing. In fact, Delphi Corp. Vice President and Chief Executive Officer John D. Sheehan admitted that there was nothing linking AMLP and ADAH to any of the jaw-dropping conduct alleged in the Complaint. Similarly, Delphi Corp. general counsel David Sherbin, Esq., testified that the Debtors have no evidence that AMLP was involved in any way with any short sale of the Debtors' securities. Indeed, those allegations have been deleted from the Original Complaint. "Accordingly, AMLP and ADAH should be entitled to the same rulings made in favor of the other Appaloosa Defendants," Mr. Kurtz contends. AMLP and ADAH refute the Debtors' intention to invalidate the liability caps in the Equity Purchase and Commitment Agreement and the Commitment Letter. While the Court suggested that ADAH and AMLP might each be independently liable to the Debtors for up to $250 million in damages, the EPCA specifies that the aggregate liability of all of the Plan Investors under the EPCA for any reason will not exceed $250 million, Mr. Kurtz clarifies. He further elaborates that since ADAH is merely an acquisition vehicle, it has no independent ability to fund a closing or satisfy any liabilities. Moreover, AMLP itself has no obligation to the Debtors under the Commitment Letter because AMLP's obligation under the Commitment Letter runs only to ADAH. "Simply put, ADAH has a maximum liability to the Debtors of $250 million for willful breach, and AMLP has a maximum liability to ADAH to fund ADAH's liability, if any," Mr. Kurtz stresses. Moreover, Mr. Kurtz says, the lack of any evidence of any identifiable extra-contractual misconduct by AMLP and ADAH undermines the Debtors' equitable subordination claim. The Court previously recognized that where, a non-insider or non-fiduciary is involved, a claimant's conduct must be "egregious and severely unfair" to other creditors before its claims will be subordinated under Section 510(c) of the Bankruptcy Code, Mr. Kurtz notes. With respect to punitive damages, he relates that the EPCA provides that under no circumstances will any Plan Investor be liable to the Debtors for any punitive damages under the EPCA or any equity commitment letter. He cites New York law that provides where sophisticated parties agree to waive the right to seek punitive damages, that waiver must be enforced. Punitive damages, Mr. Kurtz continues, would not be available in any event because the egregious misconduct required by New York courts is not present in these adversary cases. Thus, the Debtors' claim for punitive damages against AMLP and ADAH should be dismissed as a matter of law, he asserts. Mr. Kurtz further argues that the Debtors' fraud claim is based on a baseless allegation that AMLP's David Tepper "knowingly falsely represented AMLP and ADAH's intention to perform the EPCA and that Debtors reasonably relied upon those representations in entering into agreement." He contends that the fraud claim fails for these reasons: (i) The facts adduced by the Debtors in discovery fail to support a claim for fraud as a matter of law; and (ii) The Debtors have the burden of proving fraud by clear and convincing evidence at trial, and must meet the standard in resisting AMLP and ADAH's Motion for Summary Judgment. The Debtors, Mr. Kurtz emphasizes, have no evidence that any fraud occurred and have even acknowledged that no one from AMLP and ADAH ever represented that it would close the transaction irrespective of whether the investment was underwater. He tells the Court that Mr. Tepper's statement in his declaration that AMLP agreed to commit a minimum of $1.1 billion of its own capital in support of the transaction does not suffice. "That statement is not fraudulent or even false. Mr. Tepper's statement, taken in the context of the entire declaration, cannot be interpreted as a commitment to close under all circumstances and regardless of economics, and the Debtors admit that they understood that fact." Mr. Kurtz also points out the Debtors also cannot establish reliance. He believes the Debtors did not rely on any purported understanding about AMLP and ADAH's intention to close as they thought at all times, including prior to execution of the EPCA, that AMLP and ADAH would not close if the securities were underwater. The Debtors fully documented the EPCA before Mr. Tepper spoke in court, and never relied on any of his statements, so the evidence is irrelevant to the claim, Mr. Kurtz maintains. AMLP and ADAH also seek summary judgment on the Debtors' contract claims, asserting that the Debtors failed to satisfy all of their conditions precedent to the Plan Investor's liability. Mr. Kurtz notes that the Debtors failed to satisfy at least seven of their conditions by the stipulated closing date. As confirmed in the testimonies of John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP and other key Delphi witnesses, the Debtors were and are well aware of their requirement to comply with the EPCA's conditions but still, they failed to satisfy these conditions under the EPCA: (i) interest expense condition, (ii) the exit financing condition, (iii) the prohibition on material agreements with GM, (iv) the claims cap condition, and (v) the capitalization conditions. Accordingly, the Plan Investors' obligations under the EPCA were excused and the Debtors' contract claims fail, Mr. Kurtz maintains. Mr. Kurtz further contends that summary judgment is unaffected by the Debtors' new claims of estoppel or alleged best efforts violations. He notes that after the close of discovery, the Debtors now posit that the EPCA can be interpreted, under certain circumstances, as prohibiting the Plan Investors from claiming non-compliance with closing conditions that were clearly not met. The Debtors are wrong as a matter of law, because they cannot vary the terms of the EPCA without a writing signed by the Plan Investors, Mr. Kurtz argues. Moreover, the Plan Investors' rights and obligations under the EPCA cannot be changed based on delay by any party, he maintains. Mr. Kurtz adds that the EPCA makes the Plan Investors' right to insist on the Debtors' compliance with the conditions subject only to waivers by ADAH under the EPCA. The Debtors did not partially perform or detrimentally rely on any modification, rather, they failed to comply with the conditions because they could not do so, he says. "At every turn, management and counsel tried to sneak provisions into the Court and SEC filings to trick the Plan Investors into unknowing waivers," he asserts. Pursuant to Bankruptcy Rule 7056-1, J. Christopher Shore, Esq., at White & Case LLP, in New York, submitted to the Court a statement of undisputed material facts asserting that it is clear from the record that: (a) The Debtors failed to comply with their exit financing Obligations; (b) The Debtors failed to satisfy the EPCA's capitalization Requirements; (c) The Debtors impermissibly entered into agreements with GM and General Motors Product Services Inc.; (d) The Debtors failed to satisfy the interest cap condition; and (e) The Debtors failed to resolve trade and unsecured claims. Douglas P. Baumstein, Esq., of White & Case LLP, filed with the Court a declaration containing attachments of copies of the Debtors' Original Complaint, a First Amended Disclosure Statement, the EPCA, as well excerpts from the deposition transcripts of Messrs. Sheehan and Sherbin, and other documents relevant to and in furtherance of AMLP and ADAH's Partial Summary Judgment Motion. Judge Robert Drain will consider AMLP and ADAH's Partial Summary Judgment Motion on June 5, 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, Issue No. 166; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Computer Science Seeks Payment of $28,823,485 Claim ---------------------------------------------------------------- Computer Sciences Corporation asks the U.S. Bankruptcy Court for the Southern District of New York to allow it an administrative expense priority claim against Delphi Corp. for postpetition obligations under Section 503(b)(1)(A) of the Bankruptcy Code. Computer Sciences and the Debtors are parties to a Master Services Agreement, whereby Computer Sciences provides technology services to the Debtors, including worldwide telecommunication and network support services and application development and maintenance services. Computer Sciences argues that the Debtors have defaulted on the obligations under the Agreement by, among other things, failing to pay substantial amounts when due, including charges that are defined by the Agreement as "undisputed." Computer Sciences specifically asserts that the Debtors' refusal to comply with the Agreement has resulted in arrearages of (i) $15,665,101 in undisputed, past due charges under the Agreement, and (ii) $13,158,384 in disputed charges under the Agreement, totaling $28,823,485 due and owing to Computer Sciences. While Computer Sciences believes other significant amounts are owed pursuant to other unresolved disputes, it does not seek payment of those amounts at this time. Computer Sciences maintains that the Agreement requires the Debtors to deposit, by May 12, 2009, about $1,247,210 into escrow to which it has the right to demand an additional deposit of $6,158,579 into escrow. Computer Sciences also cites that it has contractual obligations to provide Termination Assistance Services pursuant to the Agreement, and that it intends to abide by those obligations provided that the Debtors fully comply with their duties and obligations under the Agreement. The Agreement requires mandatory payment in advance of the month for which Termination Assistance Services are asked. Computer Sciences asserts that the Debtors must immediately remit payment of the Termination Assistance Services for the month of May 2009. Computer Sciences estimates the costs of the monthly Termination Assistance Services, based on current volumes, to aggregate $8 million per month. Against this backdrop, Computer Sciences tells the Court that on May 5, 2009, it delivered a notice of termination of the Agreement effective May 5, 2009 to the Debtors. Notwithstanding the delivery of the Termination Notice and lack of payment, Computer Sciences notes that it is not, at this time, seeking to abandon its duties under the Agreement. However, in light of the very substantial amounts at stake, Computer Sciences argues that it should not be expected to continue providing services under the Agreement under current conditions and without compensation. Computer Sciences asserts that the Debtors must fulfill their postpetition obligations under the Agreement and applicable law going forward, or procure alternative services. Specifically, Computer Sciences asks the Court to direct the Debtors to: (i) promptly and timely pay to the Undisputed Charges and Disputed Charges; (ii) fulfill their escrow obligations with respect to outstanding Disputed Charges pending their resolution; and (iii) in the event the Debtors seek Termination Assistance Services, prepay Computer Sciences for all services in the United States prior to the first day of each month in which the services asked are to be performed, as an express precondition of any obligation by Computer Sciences to provide services and to authorize Computer Sciences to terminate the provision of all services by the 15th day of the month if prepayment is not timely received. Computer Sciences also seeks the Court's authority to file under seal certain exhibits in support of its Administrative Claim Motion. Computer Sciences asserts that the exhibits contain competitively sensitive, proprietary and confidential business information that if publicly disclosed would adversely affect the Debtors' and its business interests. DELPHI CORP: Exit Woes May Cue Additional Losses at GM ------------------------------------------------------ General Motors Corp. said in a regulatory filing with the Securities and Exchange Commission that, due to the uncertainties surrounding Delphi Corp.'s ability to emerge from bankruptcy it is reasonably possible that additional losses, which may be material to GM's financial condition and results of operations, could arise in the future. GM, however, said it is currently unable to estimate the amount or range of those losses, if any. GM has recorded $274 million in charges with respect to its agreements with Delphi for the three months ended March 31, 2009, lower compared to $776 million in charges for the same period in 2008. GM said cumulative to date, it has recorded $13.2 billion in Delphi-related charges. Delphi's debtor-in-possession financing was scheduled to mature on December 31, 2008 and Delphi has been operating under a forbearance agreement with its DIP Financing lenders since December 12, 2008, which contains various milestone requirements that, if not satisfied, trigger termination of the forbearance. Delphi was unable to satisfy some of these milestones, resulting in further amendments to the Accommodation Agreement in each of January, February, March and April 2009. On May 7, 2009, the U.S. Bankruptcy Court approved another amendment to the Accommodation Agreement, subject to certain conditions to effectiveness, which provides that the Delphi DIP Accommodation Agreement is scheduled to terminate on June 2, 2009 unless a term sheet between Delphi, GM and the United States Treasury is agreed upon on or before May 21, 2009 and deemed satisfactory to the Delphi DIP lenders on or before June 1, 2009. In 1999, GM spun-off Delphi Automotive Systems Corporation, which became Delphi. Delphi is GM's largest supplier of automotive systems, components and parts, and GM is Delphi's largest customer. From 2005 to 2008, GM's annual purchases from Delphi have ranged from approximately $6.5 billion to approximately $10.2 billion. Delphi and GM have entered into various settlement agreements. The more significant items contained in the parties' Settlement Agreements, as amended, included GM's commitment to: * Reimburse Delphi for its costs to provide OPEB to certain of Delphi's hourly retirees from December 31, 2006, through the date that Delphi ceases to provide such benefits and will assume responsibility for OPEB going forward; * Reimburse Delphi for the normal cost of credited service in Delphi's pension plan between January 1, 2007, and the date its pension plans are frozen; * First Hourly Pension Transfer -- Transfer, under IRS Code Section 414(l), net liabilities of $2.1 billion from the Delphi hourly rate employee pension plan (Delphi HRP) to GM's U.S. hourly pension plan on September 29, 2008; * Second Hourly Pension Transfer -- Transfer the remaining Delphi HRP net liabilities, which are estimated to be $3.2 billion to $3.5 billion at March 31, 2009, upon Delphi's substantial consummation of its Plan that provides for the consideration to be received by GM and is consistent with other terms of the Amended Delphi-GM Settlement Agreements. Actual amounts of the Second Hourly Pension Transfer will depend on, among other factors, the valuation of the pension liability at the transfer date, the proportion of the obligation assumed by the PBGC and performance of pension plan assets; * Reimburse Delphi for all retirement incentives and half of the buyout payments made pursuant to the various attrition program provisions and to reimburse certain U.S. hourly buydown payments made to certain hourly employees of Delphi; * Award certain future product programs to Delphi, provide Delphi with ongoing preferential sourcing for other product programs, eliminate certain previously agreed upon price reductions, and restrict GM's ability to re-source certain production to alternative suppliers; * Labor Cost Subsidy -- Reimburse certain U.S. hourly labor costs incurred to produce systems, components and parts for GM from October 1, 2006, through September 14, 2015, at certain U.S. facilities owned or to be divested by Delphi; * Production Cash Burn Support -- Reimburse Delphi's cash flow deficiency attributable to production at certain U.S. facilities that continue to produce systems, components and parts for GM until the facilities are either closed or sold by Delphi; * Facilitation Support -- Pay Delphi $110 million in both 2009 and 2010 in quarterly installments in connection with certain U.S. facilities owned by Delphi; * Temporarily accelerate payment terms for Delphi's North American sales to GM upon substantial consummation of its Plan, until 2012; * Reimburse Delphi, beginning January 1, 2009, for actual cash payments related to workers compensation, disability, supplemental employment benefits and severance obligations for all current and former UAW-represented hourly active and inactive employees; and * Guarantee a minimum recovery of the net working capital that Delphi has invested in certain businesses held for sale. Additionally, the Amended GSA provides that GM will receive: * An administrative claim regarding the First Hourly Pension Transfer of $1.6 billion, of which GM will share equally with the general unsecured creditors up to only the first $600 million in recoveries in the event Delphi does not emerge from bankruptcy; * An administrative claim for $2.1 billion for the total Delphi HRP transfer (inclusive of the administrative claim for the First Hourly Pension Transfer) to be paid in preferred stock upon substantial consummation of Delphi's Plan in which Delphi emerges with: (1) its principal core businesses; (2) exit financing that does not exceed $3.0 billion (plus a revolving credit facility); and (3) equity securities that are not senior to or pari passu with the preferred stock issued to GM; and * A general unsecured claim in the amount of $2.5 billion that is subordinated until general unsecured creditors receive recoveries equal to 20% of their general unsecured claims after which GM will receive 20% of its general unsecured claim in preferred stock, with any further recovery shared ratably between GM and general unsecured creditors. The ultimate value of any consideration that GM may receive is contingent on the fair value of Delphi's assets in the event Delphi fails to emerge from bankruptcy or upon the fair market value of Delphi's securities if Delphi emerges from bankruptcy. 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, Issue No. 166; 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. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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: Retiree Groups Dismiss Appeal on OPEB Termination --------------------------------------------------------------- The Delphi Salaried Retirees Association and other non-union salaried retirees of Delphi Corp. and its affiliates and the Official Committee of Eligible Salaried Retirees have reached an agreement with the Debtors, in an effort to settle disputes at issue in (i) the DSRA's appeal to the Provisional Salaried OPEB Order before the U.S. District Court for the Southern District of New York, and (ii) the Retiree Committee's appeal to the Final Salaried OPEB Order before the District Court. As reported by the Troubled Company Reporter, Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York on March 11, 2009, gave final authority to Delphi to terminate salaried other post-employment benefits for non-union retirees, amidst strong opposition from a group of Delphi salaried retirees. The Court held that Delphi has made a substantial showing that none of the Salaried OPEB have vested with regard to any Eligible Salaried Retiree or group. The Committee of Eligible Salaried Retirees has not presented any competent evidence, consistent with a bench ruling the Court issued March 10, 2009, and applicable law, to establish otherwise, Judge Drain opined. Accordingly, Judge Drain ruled, Delphi's Salaried OPEB was not vested and Delphi has reserved the right to modify or terminate those benefits. Delphi will continue to provide benefits for claims incurred by each Salaried Retiree through the termination date of the retiree's participation in the applicable welfare program, provided that the retiree (i) has timely paid all requisite contributions for the applicable welfare program, and (ii) will not be required to file proofs of claim with the Court. Delphi was also authorized and directed to make provisions for, and contingent upon occurrence of a triggering event under Section 1341 or 1342 of the Labor Code implement, a Voluntary Employee's Beneficiary Association under Section 501(c)(9) of the Internal Revenue Code for the purpose of qualifying covered employees who have retired or will retire for the tax credit available under Section 35(e)(1)(K) of the Internal Revenue Code; provided that the Debtors: -- will have no obligation to fund or contribute to any VEBA in any respect and the funding or contributions will come solely from participants in the VEBA; and -- the Debtors will be required to maintain the VEBA only through the later of the month ending prior to January 1, 2011 or later date as may be established under Section 35(e)(1)(K). The Debtors will maintain flexibility to implement changes to the VEBA. The Debtors were also authorized and directed to mail a follow-up notice to all Eligible Salaried Retirees who do not elect continuation of coverage prior to March 28, 2009, explaining the consequences of the election and offering a second and final chance for the individuals, until April 15, 2009, to elect for continuation of coverage, in which case the coverage will be reinstated retroactively to April 1, 2009 upon payment of the applicable full cost by the individual retiree. The two employee groups took an appeal to the District Court from Judge Drain's order. The U.S. Bankruptcy Court approved a settlement among the Debtors, the DSRA and the Retiree Committee on April 3, 2009. Pursuant to parties' Stipulation and the order continuing related appeals pending payment of certain sums pursuant to the Bankruptcy Court's Settlement Order entered by the District Court on April 6, 2009, the Appeals were continued pending the Debtors' payment of certain amounts due at the beginning of May 2009. In this regard, the Debtors, the DSRA and the Retiree Committee agreed on May 4, 2009, to dismiss the Appeals. District Court Judge Deborah A. Batts approved the parties' recent stipulation. 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, Issue No. 166; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Tokico Balks at Bid to Assume Purchase Order --------------------------------------------------------- Tokico (USA) Inc. opposes Delphi Corp.'s assumption and assignment of Purchase Order No. 55069884 to Beijingwest Heavy Industries Co., Ltd. Tokico asserts that the Purchase Order is not an executory contract because it expired by its own terms December 31, 2008. Against this backdrop, the Purchase Order is not capable of being assumed and assigned by the Debtors pursuant to Section 365 of the Bankruptcy Code, Tokico stresses. Accordingly, Tokico asks the U.S. Bankruptcy Court for the Southern District of New York to deny the Debtors' request to assume and assign the Purchase Order to Beijingwest. As reported by the Troubled Company Reporter on May 8, 2009, Judge Robert D. Drain approved 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. 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. 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, Issue No. 166; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DIAL-A-MATTRESS: Bid Deadline Moved to May 21; Auction on May 26 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York amended on April 28, 2008, certain dates set forth in the sale procedures order dated March 31, 2009, pertaining to the sale of substantially all of the assets of Dial-a-Mattress Operating Corp., et al. The deadline to object to the sale has been moved from May 13, 2009, at 4:00 p.m. to May 18, 2009, at 12:00 p.m. The deadline for submission of competing bids has been moved from May 16, 2009, at 12:00 p.m. to May 21, 2009, at 12:00 p.m. The date of the auction sale, if one is necessary, has been moved from May 18, 2009, at 9:00 a.m., to May 26, 2009, at 9:00 a.m. The sale hearing is adjourned from May 19, 2009, at 10:00 a.m. to May 28, 2009, at 10:00 a.m. As reported in the Troubled Company Reporter on April 22, 2009, Dial-a-Mattress Operating Corp. and affiliate 1-800-Mattress Corp. agreed to sell their key assets to competitor Sleepy's LLC for $2.1 million, subject to higher and better offers at an auction. Rival bids are due May 16, two days before the auction. The Debtors will seek approval of the sale to the highest bidder at a hearing on May 19. About Dial-A-Mattress Founded in 1976, 1800mattress.com -- http://www.1800mattress.com/ -- is the leading national multi-channel (internet, chat, call center and showrooms) retailer of mattresses, box springs and bedding products. It features products by all major brands, including custom sizes, sofa beds, Murphy beds, futons, and adjustable and organic beds. As reported by Troubled Company Reporter on March 23, 2009, creditors filed a Chapter 7 petition for Dial-A-Mattress Operating Corp. et al. (Bankr. E.D. N.Y. Case No. 09- 41966). 1-800- Mattress Corp. and Dial-A-Mattress countered by filing voluntary chapter 11 petitions. Marc L. Hamroff, Esq., Leslie A. Berkoff, Esq., and Theresa A. Driscoll, Esq., at Moritt Hock Hamroff & Horowitz LLP, serve as the Debtors' counsel. DREIER LLP: Marc Dreier Pleads Guilty to Money Laundering --------------------------------------------------------- Chad Bray at The Wall Street Journal reports that Marc Dreier has plead guilty to fraud and other charges in an alleged scheme to sell $700 million in fictitious promissory notes and misuse client funds. According to WSJ, Mr. Dreier pleaded guilty to: -- conspiracy, -- securities fraud, -- money laundering, and -- five counts of wire fraud. Bloomberg previously reported that Marc Dreier will plead guilty to all charges against him at the May 11 hearing. There is no plea agreement, Bloomberg said. WSJ relates that Mr. Dreier admitted, "From in or about 2004 to in or about 2008, I engaged in a scheme to sell fictitious promissory notes." The report says that Mr. Dreier faces up to 20 years on each count of the most serious charges of securities fraud, wire fraud and money laundering. According to the report, prosecutors have indicated that Mr. Dreier should face a life sentence under federal sentencing guidelines. The court will sentence Mr. Dreier on July 13, the report states. Mr. Dreier sold $700 million in fake promissory notes to at least 13 different funds and at least four different people and misappropriated client funds from his law firm, WSJ says, citing prosecutors. The government claimed that loss to investors and clients when the fraud was discovered in December 2008 went beyond $400 million, WSJ states. WSJ reports that the scheme allegedly ran from 2004 to 2008. According to WSJ, the government claimed that Mr. Dreier used money obtained from the scheme to support a lavish lifestyle, including purchasing numerous homes, a yacht, luxury vehicles, expensive art work, and funding the operations of his law firm. WSJ relates that prosecutors are seeking that Mr. Dreier forfeit $700 million, including many of those assets. Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On December 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier has been charged by the U.S. government for conspiracy, securities fraud and wire fraud before the U.S. District Court for the Southern District of New York (Manhattan) (Case No. 09-cr-00085-JSR). Dreier LLP filed for Chapter 11 on December 16, 2008 (Bankr. S.D. N.Y., Case No. 08-15051). Judge Robert E. Gerber handles the case. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, has been retained as counsel. The Debtor listed assets between $100 million and $500 million, and debts between $10 million and $50 million in its filing. Wachovia Bank National Association, Sheila M. Gowan as trustee for Chapter 11 estate of Dreier LLP, and Steven J. Reisman as post- confirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that sent Mr. Dreier to bankruptcy under Chapter 7 on January 26, 2009 (Bankr. S.D. N.Y., Case No. 09-10371). EDISON FUNDING: S&P Gives Stable Outlook; Keeps 'BB+/B' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on Edison Funding Co. to stable from negative. S&P also affirmed its ratings on Edison, including the 'BB+/B' counterparty credit rating. Edison Funding is a wholly owned, unregulated subsidiary of Edison Capital, a subsidiary of Edison Mission Group Inc., which is in turn a wholly owned subsidiary of Edison International (EIX; BBB-/Stable/--). This rating action follows the announcement that EIX and the Internal Revenue Service (IRS) have formally concluded a global settlement that will resolve federal tax disputes related to cross-border, leveraged leases formerly held by Edison Funding. "Although the agreement with the IRS will significantly weaken Edison Funding's stand-alone credit profile, S&P believes that EIX has the financial capacity and incentive to meet Edison Funding's obligations if additional support is needed," said Standard & Poor's credit analyst Rian M. Pressman, CFA. Management has also indicated its intent to provide additional liquidity if necessary, despite the lack of a formal support agreement. From a consolidated perspective, S&P expects the resolution of the settlement to be net cash positive for EIX. Management estimates that the termination of cross-border leases and consummation of the global settlement will result in an after- tax earnings charge at Edison Capital of approximately $550 million to $600 million in second-quarter 2009. (Edison Funding will bear substantially all of these losses.) S&P expects actual cash outflows to occur gradually, with tax payments owed to the IRS being funded by the proceeds received from the lease terminations, prior tax deposits, and other cash. Edison Funding may also be required to pay outstanding obligations related to medium-term notes ($100 million at March 31, 2009) and guarantees in certain affordable housing projects ($20 million). Maintenance of the current rating is contingent upon implied support from EIX. The stable outlook reflects S&P's expectation that EIX will support Edison Funding's obligations as needed. S&P might lower the rating by one or more notches if S&P determine that such support could no longer be expected or if EIX's ability to provide such support is reduced. ENERGY PARTNERS: Court Limits Securities Trading to Protect NOLs ---------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Texas, Houston Division entered an interim order on May 8, 2009, granting a request by Energy Partners, Ltd., and certain of its domestic subsidiaries to restrict certain equity trading in order to assist the Debtors in preserving their net operating losses and other tax attributes. Pursuant to the Court order, any purchase, sale, trade or other transfer of equity securities in Debtor Energy Partners, Ltd., that is subject to the notification procedures, but which violates them, will be null and void and will confer no rights on the transferee. Any prohibited transaction may also face sanctions by the Bankruptcy Court. A hearing on the Debtors' request for a final order approving the Notification Procedures will be held June 10, 2009 at 10:30 a.m., Central Standard Time, before the Honorable Jeff Bohm at 515 Rusk Street, Courtroom 600, Houston, Texas. Objections to entry of the Final Order must be filed with the Court and be served so as to be actually received by 4:00 p.m., Central Standard Time, on June 5, 2009, by: (a) The office of the United States Trustee for the Southern District of Texas, (b) the Debtors, at 201 St. Charles Avenue, Suite 3400, New Orleans, Louisiana 70170 (Attn: T.J. Thom) and (c) counsel to EPL, Vinson & Elkins LLP, at 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201 (Attn: Paul E. Heath). Pursuant to the Order, these procedures apply to holding and trading in equity securities of EPL: -- Procedure for Trading in Equity Securities (A) a "Substantial Equityholder" is any person or entity that beneficially owns at least 1,448,881 shares (representing approximately 4.5% of the 32,197,360 issued and outstanding shares) of the common stock of EPL; (B) "beneficial ownership" of equity securities will be determined in accordance with applicable rules under section 382 of the IRC and regulations promulgated thereunder and, to the extent provided therein, will include direct and indirect ownership (e.g., a holding company would be considered to beneficially own all shares owned or acquired by its subsidiaries), ownership by such holder's family members and persons acting in concert with such holder to make a coordinated acquisition of stock and ownership of shares that such holder has an option to acquire; and (C) an "option" to acquire stock includes any contingent purchase, warrant, convertible debt, put, stock subject to risk of forfeiture, contract to acquire stock or similar interest, regardless of whether it is contingent or otherwise not currently exercisable. -- Notice of Substantial Equityholder Status Any person or entity who currently is or becomes a Substantial Equityholder will (a) file with the Court, and (b) serve upon: (i) the Debtors at Energy Partners, Ltd. 201 St. Charles, Suite 3400 New Orleans, LA 70170 Attn: T.J. Thom; and (ii) bankruptcy counsel to the Debtors at: Vinson & Elkins LLP 2001 Ross Avenue, Suite 3700 Dallas, Texas 75201 Attn: Paul E. Heath, Esq., a notice of such status on or before the later of: (A) 20 days after entry of the Interim Order, for Substantial Equityholders as of entry of the Interim Order; (B) 20 days after entry of the Final Order, for persons or entities who become Substantial Equityholders after entry of the Interim Order but before 11 days after entry of the Final Order; or (C) 10 days after becoming a Substantial Equityholder. -- Stock Accumulation Notice Prior to any transfer of equity securities (including options to acquire stock) that would result in an increase in the amount of common stock of EPL beneficially owned by a Substantial Equityholder or would result in a person or entity becoming a Substantial Equityholder, such Substantial Equityholder or potential Substantial Equityholder shall file with the Court, and serve on the Debtors and counsel to the Debtors, advance written notice of the intended transfer of equity securities. -- Stock Disposition Notice Prior to any transfer of equity securities (including options to acquire stock) that would result in a decrease in the amount of common stock of EPL beneficially owned by a Substantial Equityholder or would result in a person or entity ceasing to be a Substantial Equityholder, such Substantial Equityholder will file with the Court, and serve on the Debtors and counsel to the Debtors, advance written notice of the intended transfer of equity securities. -- Objection Procedures The Debtors will have 30 days after receipt of a Stock Accumulation Notice or a Stock Disposition Notice to file with the Court and serve on the party filing the Transfer Notice an objection to the proposed transfer on the grounds that such transfer may adversely affect the Debtors' ability to utilize their NOLs or other tax attributes. If the Debtors file an objection, the proposed transaction will not be effective unless and until approved by a final and non-appealable Court order. If the Debtors do not object within such 30-day period, the transaction may proceed solely as set forth in the Transfer Notice. Further transactions within the scope of this paragraph must comply with the same noticing and 30-day objection procedures. The requirements set forth in this Notice are in addition to the requirements of Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and applicable securities, corporate and other laws, and do not excuse compliance therewith. About Energy Partners Based in New Orleans, Louisiana, Energy Partners, Ltd. (Pink Sheets: ERPLQ.PK) is an independent oil and natural gas exploration and production company. The Company had interests in 24 producing fields, six fields under development and one property on which drilling operations were then being conducted, all of which are located in the Gulf of Mexico Region. The Company and five affiliates filed for bankruptcy on May 1, 2009 (Bankr. S.D. Tex. Case No. 09-32957). Paul E. Heath, Esq., at Vinson & Elkins LLP, in Dallas, serves as bankruptcy counsel. EPL also has retained Parkman Whaling LLC as financial advisor. As of December 31, 2008, the Debtors had total assets of $770,445,000 and total debts of $708,370,000. ENOS LANE: Files for Chapter 11 Bankruptcy Protection ----------------------------------------------------- Turnto23.com reports that Enos Lane Farm Properties, LLC, dba Kern River Raceway, said hat it has filed for Chapter 11 bankruptcy protection. Courtenay Edelhart at The Californian relates that Enos Lane filed for bankruptcy to prevent a foreclosure auction on May 11. The report says that lenders were preparing to sell the partially built race track, Kern River Raceway, which broke ground in February 2007, at auction to pay off a $4.5 million loan. The report states that a group of private investors had made the loan about a year ago. Court documents say that Enos Lane listed $10,000,001 to $50 million in assets and $10,000,001 to $50 million in liabilities. According to court documents, Enos Lane owed an estimated 50 to 99 creditors, who are mostly contractors and subcontractors who worked on Kern River Raceway. The Californian relates that Enos Lane's largest unsecured creditor is from M.S. Walker & Associates, which is owed more than $2.7 million. According to The Californian, the construction of the $30 million half-mile paved racetrack stopped more than a year ago due to increasing debt. The Californian states that Enos Lane is now seeking a buyer or bridge loan to help it emerge from Chapter 11 bankruptcy protection. The Californian quoted Tim Elrod, chief financial officer of Destefani Farms, the track's primary developer, as saying, "(The bankruptcy) allows us some time to come up with a reorganization plan and resolve outstanding issues with all of our creditors, not just a few of them." Mr. Elrod, according to The Californian, said that talks are underway with a potential buyer who failed to complete due diligence in time to prevent the bankruptcy. The Californian notes that Enos Lane is hoping a private investor will step up with a bridge loan if the deal with the potential buyer falls through. Citing Mr. Elrod, the report states that a bank loan isn't likely due to the credit crunch. Enos Lane Farm Properties, LLC, dba Kern River Raceway, is a partially completed auto racetrack located at Enos Lane and I5. When completed, the racetrack is said to be used at least 30 times per year, and spectator capacity is expected to exceed 5,000 people. ENOS LANE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Enos Lane Farm Properties, LLC P.O. Box 20968 Bakersfield, CA 93390 dba Kern River Raceway Bankruptcy Case No.: 09-14229 Chapter 11 Petition Date: May 8, 2009 Court: United States Bankruptcy Court Eastern District of California (Fresno) Judge: W. Richard Lee Debtor's Counsel: Riley C. Walter, Esq. 7110 N. Fresno St., #400 Fresno, CA 93720 Tel: (559) 435-9800 Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MS Walker & Associates Inc. $2,735,872 3551 Pegasus Way Bakersfield, CA 93308 American Engineering & Asphalt $584,280 4175 Cincinnati Ave. Rocklin, CA 95765 Golden Construction & Excavation $377,449 PO Box 8138 Bakersfield, CA 93380 Southern Bleacher Construction $363,941 HPS Mechanical Inc. $248,085 Musco Lighting $186,261 Park West Cos. $106,665 Columbian TecTank $99,119 Kern Bros. Trucking Inc. $60,726 Johasee Rebar Inc. $56,960 ConCast Co. Inc. $44,605 Temp Rents $43,524 Ken Masonry Structures $39,220 RLH Fire Protection $38,712 Kleinfelder Inc. $31,000 Braaten Electric $19,147 American Stair Corp. $18,152 Geocon Inland Empire Inc. $16,555 J. Noble Binns Plumbing $4,106 The petition was signed by Alan Destefani, manager of the Company. EVERYTHING BUT WATER: Sale to Lender Okayed; Committee Appeals -------------------------------------------------------------- The official committee of unsecured creditors takes an appeal from the U.S. Bankruptcy Court for the District of Delaware's order approving the sale of substantially all assets of Everything But Water, LLC, et al., to Orlando Bathing Suit, LLC. According to the asset purchase agreement signed by the parties, Orlando Bathing will pay for the assets in the form of a (i) a $12,500,000 credit bid of debt owed to D.B. Zwirn Special Opportunities Fund LP, agent for prepetition and DIP Lenders, and (ii) assumption of certain liabilities including amounts owed to counterparties assigned contracts. A copy of the APA is available for free at http://bankrupt.com/misc/Everything_Sale_Pact.pdf Everything But Water received no qualified bids to compete with the offer by the secured lender D.B. Zwirn to buy the swimwear retailing business in exchange for debt. Accordingly an April 28 auction was cancelled, and the Debtor went to the Bankruptcy Court on April 30 to seek approval of the sale to D.B. Zwirn. According to Bloomberg's Bill Rochelle, the Committee sought to rescheduled the auction for July 6 so there will be sufficient time to market the assets. The Court, however, denied the Committee's proposal. The Debtor insisted on a quick sale, noting that its $11 million DIP financing was set to mature May 4. With the completion of the sale of all of their assets to Orlando Bathing Suit, LLC, on May 4, the Debtor has proposed a change of its name to WBE, LLC, and the caption of its Chapter 11 case to bear that name. The Creditors Committee is represented by: Andrew I. Silfen, Esq. Heike M. Vogel, Esq. Ronni Arnold, Esq. Arent Fox LLP 1675 Broadway New York, NY 10019 (212) 484-3900 -and- David B. Stratton, Esq. Leigh-Anne M. Raport, Esq. Pepper Hamilton LLP Hercules Plaza, Suite 5100 1313 Market Street P.O. Box 1709 Wilmington, DE 19899-1709 (302) 777-6566 About Everything But Water Based in Orlando, Florida, Everything But Water, LLC -- http://www.everythingbutwater.com/-- owns and operates a chain of women's swim and resort-wear stores in the United States. The Company was acquired in April 2006 by a subsidiary of Bear Stearns Cos., which has since been taken over by JPMorgan Chase & Co. Everything But Water and its affiliate, Just Add Water, Inc., filed for Chapter 11 bankruptcy protection on February 25, 2009 (Bankr. D. Del. Case Nos. 09-10649 and 09-10650). Judge Mary F. Walrath presides over the case. Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliott Greenleaf, in Wilmington, serve as bankruptcy counsel. Donlin Recano serves as claims agent. When it filed for bankruptcy, Everything But Water disclosed $50,001 to $100,000 in assets and $1,000,001 to $10,000,000 in debts. FIRST METALS: Obtains MCTO Due to Late Filing of Financial Report ----------------------------------------------------------------- First Metals Inc. provided a Notice of Default further to National Policy 12-203 advising that it was not able to file its annual financial statements for the year ending December 31, 2008 on or before the prescribed deadline of March 31, 2009. In accordance with NP 12-203, the Corporation has submitted an application for a Management Cease Trade Order in respect of the late filing, which has been accepted by the Ontario Securities Commission. First Metals' failure to file its audited financial statements within the prescribed period of time was due to ongoing restructuring proceedings commenced by the Corporation under the Bankruptcy and Insolvency Act. A meeting of First Metals' creditors was held May 6, 2009, at which time the Corporation's proposal was accepted by its creditors. The Corporation expects that a motion to the court to approve the proposal will be heard on or about June 11, 2009. The Corporation expects that its audit financial statements for the fiscal year ended December 31, 2008, will be filed on or before the date of the court approval motion. The Corporation confirms that it intends to satisfy the requirements to file the appropriate Default Status Reports as prescribed by NP 12-203 so long as it remains in default of its requirements to file its financial statements within the prescribed period of time. First Metals also confirms that there is no other material information concerning the affairs of First Metals that has not been generally disclosed to date. First Metals has approximately 42.8 million shares issued and outstanding. As reported by the Troubled Company Reporter on April 20, 2009, First Metals filed with the Official Receiver a proposal to its creditors pursuant to Part III of the Bankruptcy and Insolvency Act. The proposal has been made to facilitate First Metals' ability to implement a restructuring plan. Based in Toronto, Ontario, First Metals Inc. (CA:FMA) -- http://www.firstmetalsinc.com-- produces Copper from its Fabie Mine, near Rouyn-Noranda and has the advanced Magusi Copper, Zinc, Gold and Silver deposit , located approximately 1.2 km from the Fabie Mine The Company has approximately 42.8 million shares issued and outstanding. FOCUS ENHANCEMENTS: Exits Chapter 11 as Private Company ------------------------------------------------------- Focus Enhancements, Inc., said its Second Amended Plan of Reorganization became effective, May 11, 2009, allowing the company to emerge from Chapter 11 bankruptcy protection. Brett Moyer, President and CEO of Focus Enhancements, Inc., stated, "Emerging from Chapter 11, Focus Enhancements is in a much stronger financial position to manage its worldwide operations, drive technical innovation and ship its industry leading solutions worldwide." In connection with the Plan of Reorganization, $2.5 million of Debtor in Possession financing will be converted to equity and, Carl E. Berg and Ingalls & Snyder LLC as agent for a group of investors will own 100 percent of Focus Enhancements Inc. outstanding stock. In accordance with the Plan of Reorganization, all equity interests in Focus Enhancements Inc. including holders of common stock, preferred stock, stock options and warrants, outstanding immediately prior to effective date (May 11, 2009), are deemed cancelled, terminated, rejected and of no further force and effect and no longer constitute an equity interest in Focus Enhancements Inc. without the need for either Focus Enhancements Inc. or the equity interest holders to take any further action. With fewer than 300 stockholders, Focus Enhancements Inc. plans to immediately seek to remove itself from the reporting requirements under the Securities and Exchange Act and operate as a private company. About Focus Enhancements Headquartered in Campbell, California, Focus Enhancements, Inc. (NASDAQ:FCSE) -- http://www.focusinfo.com/-- designs video and wireless AV technologies. Its semiconductor group develops wireless IC chip sets based on WiMedia UWB and 802.11a standards, and design as well as markets portable ICs to the video convergence, portable media, navigation systems and smartphone markets. The company's system group develops video products for the digital media markets, with customers in the broadcast, video production, digital signage and digital asset management markets. Focus Enhancements, Inc. filed for chapter 11 protection Sept. 16, 2008, (Bankr. N.D. C. Case No. 08-55216) Gregory A. Rougeau, Esq. at Law Offices of Manasian and Rougeau represented the Debtor. The Debtor has total assets of $9,695,000 and total debts of 37,429,000 when they filed for bankruptcy FLOWSERVE CORPORATION: Fitch Raises Issuer Default Rating to 'BB+' ------------------------------------------------------------------ Fitch Ratings has upgraded Flowserve Corporation's Issuer Default Rating and senior secured bank facilities: -- IDR to 'BB+' from 'BB'; -- Senior secured bank facilities to 'BB+' from 'BB'. The Rating Outlook is revised to Stable from Positive. FLS had approximately $569 million of debt outstanding at March 31, 2009 including $548 million under a bank term loan. The upgrade recognizes FLS' improved operating profile related to strong demand in its energy and infrastructure markets, increasing profit margins, and the company's attention to controlling itscost structure. The oil and gas, chemicals and power sectors have all contributed to sales growth in the range of 12-15% annually during the past two years. FLS' backlog stood at $2.7 billion as of March 31, 2009. While high by historical standards, the backlog was 5% lower than the end of 2008 as economic concerns began to affect the pace of new bookings in the fourth quarter of 2008. Orders could continue to decline for the foreseeable future, and there is significant uncertainty about the level at which demand might stabilize. Concerns about the risk of weaker future performance are mitigated by FLS' low leverage, its high backlog, the long-cycle nature of many of the projects in which FLS participates, and after-market business that is supported by previous sales growth. Over the long term, FLS can be expected to benefit from growth trends in its infrastructure and industrial markets and from the company's focus on technology and engineering content that support its competiveness and operating margins. When excluding special charges, FLS achieved its long term margin target of 15% in the first quarter of 2009, compared to a margin of approximately 8% as recently as 2006. Margins could deteriorate if sales decline materially in future periods, but Fitch believes FLS will be able to reduce its cost structure as necessary to offset at least part of the impact of lower volumes. The company continues to take actions to realign its operations, move or close facilities, reduce the number of employees and reorganize engineering and IT functions to improve efficiency. The growth in margins, combined with higher sales, has contributed to higher free cash flow that has enabled FLS to limit its use of debt. FLS reported strong financial measures for the last 12 months ended March 31, 2009 including Debt to EBITDA of 0.8 times (x) and Free Cash Flow to Total Adjusted Debt of 20%. The consistent improvement in these measures largely reflects benefits from operating leverage related to strong demand as well as FLS's operating performance. Some deterioration in the company's ratios is possible due to the weak global economy. However, the ratings would not be affected unless financial measures were to weaken significantly from current levels. The current ratings also incorporate FLS's debt levels that Fitch does not anticipate will change materially in the near-term. FLS has not made significant acquisitions for several years, partly due to ample opportunities for internal growth. Recently, FLS acquired Calder AG, a business with sales of $23 million that expands FLS's presence in the desalination market. Future acquisitions could potentially become more important if internal growth begins to slow. In the absence of large acquisitions in 2008, FLS deployed excess cash for net share repurchases that totaled $153 million. It previously resumed paying dividends in 2007. Rating concerns include the potential impact of the global recession on FLS's future results, higher net pension obligations, and contingent litigation liabilities. Contingent liabilities include asbestos, compliance with U.S. export controls, shareholder lawsuits, the United Nations Oil-for-Food Program, and environmental remediation. A material adverse outcome from these contingent liabilities seems unlikely but is possible. The ratings incorporate Fitch's assumption that FLS' net litigation liabilities are not likely to result in a substantial use of cash. At March 31, 2009 FLS' liquidity included $201 million of cash and a $400 million revolver that matures in 2012, offset by $25 million of current debt and $98 million of Letter of Credit usage under the revolver. Nearly all of FLS' debt consists of a $548 million bank term loan that has no significant scheduled payments until 2011. The bank facilities are secured by substantially all of FLS' domestic assets and 65% of the capital stock of certain foreign subsidiaries. The facilities would become unsecured if the company maintains investment grade ratings, as defined in the agreement, for at least 90 days. Following a substantial increase in FLS' pension obligations in 2008 due to market losses, FLS expects to increase its pension contributions modestly in 2009 to $55-$75 million. Depending on future asset returns, such contributions could become larger in later years. FLYING J: Can Access Pipeline $20 Million Loan on Final Basis ------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorized Flying J, Inc., Longhorn Partners Pipeline, L.P., and Longhorn Pipeline Holdings, LLC, and affiliated debtors, on an final basis, to obtain $20 million in postpetition secured financing from Pipeline Investors Capital, LLC. The DIP Loan will be used to fund operating expenses of LPP and LPH in accordance with a 4-week budget. Troubled Company Reporter said on May 4, 2009, as collateral, the DIP Lender is granted first priority post-petition security interest in all assets of LPP and LPH, and their respective estates, but excluding any Merrill Lynch pre-petition collateral. The significant terms of the proposed DIP Credit Agreement are: Facility Size: $20 Million Borrower : Longhorn Pipeline Partners, L.P. Guarantor : Longhorn Pipeline Holdings LLC Lenders : Pipeline Investors Capital, LLC, or another single funding vehicle controlled by investors in Longhorn Pipeline Investors, LLC Structure : Senior Secured Multiple Draw Term Loan Facility Interest Rate: 11% p.a. payable at maturity. Default rate of 14% Facility Fee : 2% of all amounts actually funder under the DIP Facility, payable on the date of the applicable funding. Exit Fee : 1% of the total amount advanced under the DIP Facility Collateral : All assets, properties and rights of LPP, LPH, their respecting subsidiaries and their bankruptcy estates, including all assets currently subject to the lien of Longhorn Pipeline Investors, LLC Maturity : The earlier of: (i) consummation of a sale of the Longhorn Pipeline; or (ii) August 1, 2009 The facility is also subject to customary Affirmative and Negative Covenants and Events of Default. A full-text copy of the Debtors' debtor-in-possession budget is available at http://ResearchArchives.com/t/s?3cc1 Based in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com/-- operates an oil company with operations in the field of exploration and refining of petroleum products. It also operates about 200 travel plazas in 41 states and six Canadian provinces. The Company and six of its affiliates filed for Chapter 11 protection on December 22, 2008 (Bankr. D. Del. Lead Case No. 08- 13384). Attorneys at Kirkland & Ellis LLP represent the Debtors as counsel. Young, Conaway, Stargatt & Taylor LLP is the Debtors' Delaware Counsel. Blackstone Advisory Services L.P. is the Debtors' investment banker and financial advisor. Epiq Bankruptcy Solutions LLC is the Debtors' notice, claims and balloting agent. In its formal schedules submitted to the Bankruptcy Court, Flying J listed assets of $1,433,724,226 and debts of $640,958,656. An official committee of unsecured creditors has been appointed in the case. Pachulski Stang Ziehl & Jones LLP has been tapped as counsel for the creditors' panel FORD MOTOR: Auto Suppliers Demand Broader Assistance for Industry ----------------------------------------------------------------- The Motor & Equipment and Manufacturers Association, a group of manufacturers of motor vehicle components, tools and equipment, automotive chemicals and related products, has urged the U.S. Congress to provide "broader assistance" for the supplier industry and the passage of a short-term incentive for vehicle purchases. On March 19, 2009, the U.S. Treasury launched a $5 billion program to help auto parts suppliers that "are unable to access credit and are facing growing uncertainty about the prospects for their businesses and for the auto companies that rely on the parts they ship." The program provided suppliers with access to government- backed protection that money owed to them for the products they ship will be paid no matter what happens to the recipient car company. The program is run through American auto companies that agree to participate in the program. In its new request for more assistance for auto suppliers, the MEMA pointed out that the Auto Supplier Assistance Program launched by the Treasury in March only targets the first tier suppliers to General Motors Corp. and Chrysler LLC. Only GM and Chrysler, both recipients to federal aid, have participated in the program. It added, "Significant limitations restricted the reach of this program. Since it was not fully operational when Chrysler filed for Chapter 11, many suppliers were left significantly exposed. Smaller suppliers in financial distress are completely dependent upon their first tier customer to provide financial assistance down through the supply chain. Suppliers that manufacture parts in the U.S. but ship to Canada and Mexico for vehicle assembly are not covered. Bank restrictions and loan covenants prevented many eligible suppliers from participating in the program. Aftermarket suppliers directly providing replacement parts to the vehicle manufacturers are not eligible." The MEMA proposes that Congress pass a short-term incentive program, which will help bolster the U.S. economy with new car sales at a time when light vehicle production and sales are at an all time low. Reduced Business for Auto Suppliers The MEMA noted that in April, vehicle sales plunged by 34.4% when compared to the same month last year. For three months ended March 31, industry vehicle sales decreased by 3.7 million vehicles (or 20.6%) to 14.4 million vehicles due to continued weakness in the global economy. North America decreased by 1.6 million vehicles (or 36.1%) to 2.8 million vehicles, Europe decreased by 1.4 million vehicles (or 23.7%) to 4.5 million vehicles, the Asia Pacific region decreased by 531,000 vehicles (or 8.9%) to 5.4 million vehicles, and the Latin America / Africa / Middle East (LAAM) region decreased by 219,000 vehicles (or 11.9%) to 1.6 million vehicles. GM said that the decline is due to continued weakness in the economy which is directly attributable to the recession in the United States brought about by tightening of the credit markets and turmoil in the mortgage markets resulting in reductions in housing values, all of which contributed to declining consumer confidence. In the United States, GM sold 413,000 vehicles during the first quarter of 2009, a decline of approximately 49% compared to the corresponding period in 2008. Chrysler filed for Chapter 11 on April 30 after failing to obtain enough concessions from constituents, which was a requirement for additional U.S. government that would back an out-of-court restructuring. General Motors said that in the event that it does not receive prior to June 1, 2009 enough tenders of its public unsecured debt to consummate exchange offers, it expects to follow Chrysler to bankruptcy protection. Both GM and Chrysler have previously warned that a bankruptcy filing would hurt sales and would result to shutdowns, both of which would further hurt suppliers. Chrysler has already halted production at many of its U.S. manufacturing facilities until its bankruptcy court- sanctioned merger with Fiat SpA is completed. General Motors has also announced that it will extend its usual mid-year down time at many of its North America manufacturing facilities during the spring and summer of 2009. GM in a regulatory filing on May 8 acknowledged that Chrysler's bankruptcy filing are threatening the viability of the suppliers, many are producing parts for both GM and Chrysler. Chrysler announced that most of its manufacturing operations will be temporarily idled beginning May 4, 2009. "The resulting decline in automotive production volumes and the risk that payments owed to suppliers by Chrysler LLC may be disrupted as a result of Chrysler LLC's bankruptcy filing will increase the financial and liquidity pressures facing automotive suppliers, many of which are common to Chrysler LLC and us," GM said. Ford Motor Company, the only member of the Big 3 Detroit automakers that has so far not sought federal aid, has reported lower sales for the first quarter of 2009. For the second quarter, Ford expects to report sales of 435,000 units in North America, a 250,000 decline from 2008. Ford has said it might require a bride loan from the government, in the event of "a significantly deeper economic downturn or a significant industry event, such as the uncontrolled bankruptcy of a major competitor or important suppliers to Ford, that causes major disruption to our supply base, dealers or creditors and cannot be funded by other forms of capital." Standard & Poor's ratings Services said May 11 that it expects continued heavy cash losses in Ford's automotive oeprations for at least the next year. It added that its 'CCC+/Negative' rating on Ford reflect concerns that "GM (CC/Negative/--) could file for bankruptcy in the coming weeks and that low production levels by many automakers broadly are risks to Ford's liquidity, given the interwoven auto sector supplier base." "With a continued drop in vehicle production, Chrysler's recent bankruptcy announcement, and GM's planned summer plant shutdowns, this crisis is only deepening and more jobs will be lost," the MEMA said. Part suppliers directly employ 685,892 workers in the U.S. Auto Supplier Bankruptcies Wheel producer Hayes Lemmerz International Inc., which obtains 29% of revenues from General Motors and Ford, filed for bankruptcy protection Monday, blaming the global meltdown in the automobile sector. Hayes expects global EBITDA to be less than one-half of the $157 million it recorded in 2008. Lear Corp., which provides automotive seat systems and other products, has said that it might file for Chapter 11, if it fails to obtain relief from lenders regarding a looming May 16, 2009 default under its primary credit facility. General Motors and Chrysler accounted for 23% and 3% of Lear's net sales in 2008. Former Ford unit Visteon Corp, supplier of climate, interiors and electronics systems to automakers, is exploring various strategic and financing alternatives, including a bankruptcy filing. It has obtained waivers though, but they are set to expire May 30. Visteon's net sales during the three months ended March 31, 2009 decreased $1.51 billion or 53% when compared to the same period of 2008. "Lower production levels globally and increases in raw material, energy and commodity costs during 2008 have resulted in severe financial distress among many companies within the automotive supply base," said Lear Corp., which incurred a net loss of $689.9 million in 2008, compared with a net profit of $241.5 million the year before. "Several large automotive suppliers have filed for bankruptcy protection or ceased operations," Lear said in March. "Without immediate action, communities throughout this country will needlessly lose essential manufacturing jobs and the U.S. auto industry will not have a sufficient supply base to manufacture vehicles in this country," the MEMA said. Ratings Actions Ratings agencies have lowered ratings of some auto suppliers due to the expected weak auto sales for 2009, circumstances facing GM and Chrysler and/or other related factors: ArvinMeritor, Inc. S&P lowered issuer credit rating to 'CCC+' from 'B' on February 12, 2009. Fitch lowered the LTD issuer default rating to 'CCC' from 'B-' on March 9, 2009. Visteon Corp. S&P lowered issuer credit rating to 'CCC+' from 'B-' in January 30 2009 American Axle & Manufacturing Holdings Inc. Moody's lowered the corporate family rating to 'Caa1' from 'B2' on Dec. 16, 2008. S&P lowered the issuer credit rating to 'CCC+' from 'B' on Jan. 12, 2009. Fitch lowered American Axle's LT issuer default rating to 'CCC' from 'B-' on April 28, due to GM's shutdown of 13 of its manufacturing plants in North America during the second and third quarters of 2009. BorgWarner Inc. Moody's issued a 'Ba1' LT corporate family rating, with a 'negative' outlook, on March 18, 2009. S&P issued a downgrade of the issuer credit rating to 'BBB' from 'A-' on January 12, 2009. Magna Int'l Inc. S&P downgraded the issuer credit rating to 'BBB' from 'A-' on April 30, 2009. DBRS downgraded the unsecured debt rating to 'BBBH' from 'A' on May 1, 2009. Dana Holdings S&P lowered its corporate credit rating to 'CC' from 'B' on May 11, 2009. Tenneco Inc. Fitch lowered the issuer default rating to 'B-' from 'B' in April 29, 2009 due to extended shutdowns scheduled by GM later in 2009, and other factors. Continental AG Fitch on April 30, 2009, placed LT issuer default rating to 'BB' on rating watch negative, citing, among other things, the slump in global vehicle production. TRW Automotive Holdings Corp. Fitch on April 28 lowered the issuer default rating from 'B+' to 'B', remaining in watch negative due to uncertain production or sales ramifications of near-term events at General Motors and Chrysler, including bankruptcy filings. MetoKote Corporation Moody's on May 5, 2009, lowered the corporate family rating to 'Caa1' from 'B3', noting that while the Company has diversified its industry concentration, it still generates 49% of sales from the automotive end markets, including 19% from the Detroit-3 automakers. Stoneridge Inc. Moody's on May 5 said the corporate rating will remain at 'B2' despite Chrysler's bankruptcy filing. Outlook is negative. S&P said May 11 it believes "financial risks will remain relatively high for most rated auto suppliers this year and next because of severe and volatile auto markets in North America and Europe." "Weak economic conditions are forcing consumers to restrain spending resulting in a sharp decline in auto sales and production," said Moody's VP-Senior Analyst Timothy Harrod on April 30. According to Moody's, this loss of millions of units of production is severely pressuring revenue, profitability and cash flow for the auto parts suppliers. FORD MOTOR: Says There's No Doubt About Going Concern Ability ------------------------------------------------------------- Ford Motor Co. on Friday filed with the Securities and Exchange Commission its quarterly report on Form 10-Q for the three months ended March 31, 2009. Ford Motor has concluded that there is no substantial doubt about its ability to continue as a going concern, and its financial statements have been prepared on a going concern basis. Ford Motor said that at March 31, 2009, its Automotive sector had total cash, cash equivalents, and marketable securities of $21.6 billion, including about $300 million of Temporary Asset Account securities. Ford Motor said it has experienced substantial negative cash flows in recent periods, and had negative equity of $16.5 billion at March 31, 2009. Based on its current planning assumptions, Ford Motor expects net Automotive operating cash flows in 2009 to be negative, but significantly improved from 2008. The dramatic decline in industry sales volume during 2008, and Ford Motor's reduced production to match demand, had a substantial negative effect on cash flows. Trade payables and other elements of working capital have improved in the first quarter of 2009 and should continue to improve as industry sales volume stabilizes and begins to grow, contributing to the expected improvement in operating cash flow, according to Ford Motor. Ford Motor says it continues to face many risks and uncertainties, however, related to the global economy, its industry in particular, and the credit environment which could materially impact its plan. Of these potentialities, Ford Motor believes that the two risks that are reasonably possible to have a material impact on the Company are (i) a decline in industry sales volume to levels below its current planning assumptions, and (ii) actions necessary to ensure an uninterrupted supply of materials and components. Ford Motor's current planning assumptions forecast that industry sales volume will stabilize in the first half of 2009 and begin to improve soon thereafter, culminating in full-year 2009 U.S. industry sales volume in the lower end of the range of 10.5 million units to 12.5 million units, and industry sales volume for the 19 markets we track in Europe in the range of 13.5 million units to 14.5 million units. Based on Ford Motor's analysis of the market, it believes that these assumptions are reasonable. There is a risk, however, that industry sales volume may not stabilize in the United States in the first half of 2009 or begin to improve in the United States and Europe as soon thereafter as Ford Motor forecasts. In addition to the risk related to industry sales volume, Ford Motor's plan also could be negatively impacted by pressures affecting its supply base. Its suppliers have experienced increased economic distress due to the sudden and substantial drop in industry sales volume that affected all automobile manufacturers. Dramatically lower industry sales volumes have made existing debt obligations and fixed cost levels difficult for many suppliers to manage, especially with the tight credit market, resulting in an increase in distressed suppliers and supplier bankruptcies. As a result, it is reasonably possible that Ford Motor's costs to ensure an uninterrupted supply of materials and components could be higher than our present planning assumptions by a material amount. Ford Motor believes that even a combination of these two reasonably possible scenarios, however, as measured by a decline to 9.2 million units in the United States and 11.7 million units in Europe, combined with its assessment of the necessary cost to ensure an uninterrupted supply of materials and components (absent a significant industry event in 2009 such as an uncontrolled bankruptcy of a major competitor or important suppliers to Ford which we believe is remote), would not exceed its present available liquidity. Ford Motor believes that the risk of decline in industry sales volume below these levels (i.e., below 9.2 million units in the United States and 11.7 million units in Europe) is remote. Therefore, Ford Motor does not believe that these reasonably possible scenarios cause substantial doubt about its ability to continue as a going concern for the next year. With regard to Ford Motor's Financial Services sector, Ford Credit expects the majority of its funding in 2009 will consist of eligible issuances pursuant to government-sponsored programs. It is reasonably possible that credit markets could continue to constrain Ford Credit's funding or that Ford Credit will not be eligible for government-sponsored programs. In these circumstances, Ford Credit could mitigate these funding risks by reducing the amount of finance receivables and operating leases they purchase or originate. At Ford Motor's current industry sales volume assumption, this would not have a material impact on our going concern analysis. If industry sales volume were to decline to the reduced levels described, the risk of Ford Credit not being able to support the sale of Ford products would be remote. Notwithstanding this conclusion, in this environment a number of scenarios could put severe pressure on Ford Motor's short- and long-term Automotive liquidity, including a worsening of the scenarios described. "We presently believe that the likelihood of such an event is remote. In such a scenario, however, or in response to other unanticipated circumstances, we could take additional mitigating actions or require additional financing to improve our liquidity," Ford Motor said. Worldwide net loss attributable to Ford Motor Company was $1.4 billion or $0.60 per share of Common and Class B Stock in the first quarter of 2009, a decline of $1.5 billion from net income attributable to Ford Motor of $70 million or $0.03 per share of Common and Class B Stock in the first quarter of 2008. Ford had $203.1 billion in total assets and $219.6 billion in total liabilities as of March 31, 2009, resulting in $16.4 billion in stockholders' deficit. A full-text copy of Ford Motor's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3cc9 About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The Company provides financial services through Ford Motor Credit Company. The Company has operations in Japan in the Asia Pacific region. In Europe, the Company maintains a presence in Sweden, and the United Kingdom. The Company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * As reported by the Troubled Company Reporter on April 15, 2009, Standard & Poor's Ratings Services said it raised its ratings on Ford Motor Co. and related entities, including the corporate credit rating, to 'CCC+' from 'SD-'. The ratings on Ford Motor Credit Co. are unchanged, at 'CCC+', and the ratings on FCE Bank PLC, Ford Credit's European bank, are also unchanged, at 'B-', maintaining the one-notch rating differential between FCE and its parent Ford Credit. S&P said that the outlook on all entities is negative. Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently-approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. FRONTIER AIRLINES: Wants Plan Filing Deadline Moved to Oct. 9 ------------------------------------------------------------- Frontier Airlines Inc., and its affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to extend until October 9, 2009, their exclusive period to file a Chapter 11 plan. The Debtors also want their plan solicitation period extended to December 9, 2009. This is Frontier's third request for an extension. Without an extension, parties will have the right to file a Chapter 11 plan for Frontier after June 4. Damian S. Schaible, Esq., at Davis Polk & Wardwell, in New York, notes that after only a year of restructuring, Frontier's businesses and operations are in impressive shape. In March 2009, the Debtors achieved an operating profit for their fifth consecutive month. The Debtors aim to develop and propose a plan of reorganization that will receive support from their various constituencies. "However, as would be expected at this stage for businesses as large and complex as the Debtors', there is still work to be done," Mr. Schaible said. He explained that an extension will be necessary to, among other things, develop a Chapter 11 plan and structure exit financing. Frontier says that it is on track for a successful emergence from Chapter 11 during 2009. About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Seeks to Expand Scope of KPMG's Services ----------------------------------------------------------- Frontier Airlines Inc. and its debtor-affiliates ask Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to authorize a limited expansion of the scope of services to be rendered by KPMG LLP as their independent auditor and international executive tax advisor. Pursuant to the Retention Order authorizing the Debtors to employ KPMG, the firm is authorized to provide the Debtors with additional tax consulting services. However, the Engagement Letter between the parties contemplated that a new engagement letter would be required if the expected fees for any additional services to be rendered by KPMG would exceed $50,000. In this regard, the Debtors and KPMG entered into a Supplemental Engagement Letter dated April 21, 2009, which provides that the Debtors anticipate KPMG to render these services: (1) Determining whether any of the Debtors have experienced one or more "ownership changes" within the meaning of Section 382 of the U.S. Internal Revenue Code, and the regulations promulgated by the Department of Treasury during the period beginning March 31, 1994, and ending March 6, 2008. (2) Allocating and assessing any net operating losses to the pre- and post-change of ownership periods, as applicable, pursuant to a Section 382 Analysis. (3) Preparing a tax memorandum that summarizes KPMG's relevant findings. Frontier Chief Financial Officer Edward M. Christie III relates that the Debtors are authorized to retain Deloitte Tax LLP to render the tax advisory services that the Debtors propose to be provided by KPMG. However, Deloitte Tax's estimated fees to perform the Section 382 Analysis "substantially exceed KPMG's estimated fees." According to Mr. Christie, the customary hourly rates and discounted rates for the Additional Services to be rendered by KPMG in connection with a Section 382 Analysis include: Designation Standard Rates Discounted Rates ----------- -------------- ---------------- Partner $900 $540 Managing Director $850 $510 Senior Manager $825 $495 Manager $700 $420 Senior Associates $525 $315 Associates $325 $195 Paraprofessional $200 $120 The Debtors will also reimburse KPMG for necessary out-of-pocket expenses. Susan D. Heitmann, a partner at KPMG, assures the Court that her firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Judge Drain will convene a hearing on May 27, 2009, to consider approval of the Debtors' Supplemental Application. Objections, if any, must be filed by May 18. About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008 (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299). Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Davis Polk Seeks Payment of $1.9MM in Fees ------------------------------------------------------------- Nine professionals engaged in the bankruptcy cases of Frontier Airlines Inc. and its affiliates ask Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to approve payment of fees and reimbursement of expenses for services they rendered to the Debtors or the Official Committee of Unsecured Creditors for the period from December 1, 2008 through March 31, 2008: Professional Fees Expenses ------------ ---- -------- Davis Polk & Wardwell $1,926,312 $44,221 Deloitte Tax LLP 223,471 4,557 Faegre & Benson LLP 27,450 442 Houlihan Lokey Howard 600,000 9,542 & Zukin Capital, Inc. Jefferson Wells 354,077 5,233 International, Inc. KPMG LLP 186,406 2,761 Seabury Transportation 1,775,116 57,426 Holdings LLC Togut, Segal & Segal LLP 20,486 267 Wilmer Cutler Pickering 170,721 4,722 Hale and Dorr LLP Togut Segal filed with the Court a schedule detailing its fees totaling $20,846, a full-text copy of which is available for free at http://bankrupt.com/misc/Togut_FeeAppSchedules.pdf About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008 (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299). Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FREDDIE MAC: Posts $9.9 Billion First Quarter Net Loss ------------------------------------------------------ Freddie Mac reported a net loss of $9.9 billion, or $3.14 per diluted common share, for the quarter ended March 31, 2009, compared to a net loss of $23.9 billion, or $7.37 per diluted common share, for the fourth quarter of 2008. "This was another difficult quarter for Freddie Mac, as declining home prices and the weak economy continued to take a toll on our results," said Freddie Mac Interim Chief Executive Officer John Koskinen. "Despite these challenges, we continued to play a leading role in the housing recovery by injecting $148 billion of liquidity into the market, helping to drive mortgage rates to historic lows and preventing foreclosures for 40,000 homeowners. "All of us at Freddie Mac remain focused on our most important mission -- preserving homeownership for America's families. We have aligned our resources to support the Administration's Making Home Affordable Program, which will help us keep millions more borrowers in their homes. We are committed to continuing to help borrowers lower their payments through refinancing and to employ innovative loss mitigation strategies whenever possible to prevent foreclosures. "While we expect the coming quarters to be difficult, we are seeing preliminary signs of slowing in home price declines as low mortgage rates and high affordability take hold, and conforming mortgage credit to prime borrowers continues to be widely available." First quarter 2009 results were driven primarily by $9.1 billion in credit-related expenses related to the continued severe economic conditions during the first quarter, including declines in home prices, further deterioration in labor markets, and a drop in consumer confidence to record lows. In addition, the company recorded $7.1 billion in security impairments on available-for- sale securities primarily due to sustained deterioration in the performance of the collateral underlying the company's non-agency mortgage-related securities. These results were partially offset by net mark-to-market gains of $3.8 billion on the company's derivative portfolio, guarantee asset and trading securities mainly due to impacts of increases in long-term interest rates and spread tightening. In the first quarter of 2009, the Company recognized an additional valuation allowance of $3.1 billion against its net deferred tax assets. The Company had a net worth deficit of $6.0 billion at March 31, 2009, as a result of the first quarter 2009 net loss, partially offset by a decrease in unrealized losses on available-for-sale securities recorded in accumulated other comprehensive income (loss) (AOCI). Net worth represents the difference between the company's assets and liabilities under generally accepted accounting principles (GAAP) and is equal to the Company's total equity (deficit). Pursuant to Treasury's funding commitment under the Purchase Agreement, the Director of the Federal Housing Finance Agency (FHFA) has submitted a request to Treasury for funding in the amount of $6.1 billion, which reflects rounding of the Company's net worth deficit up to the nearest $100 million. The Company expects to receive such funds by June 30, 2009. On May 6, 2009, Treasury and FHFA, acting on Freddie Mac's behalf in its capacity as conservator, entered into an amendment to the Purchase Agreement between the company and Treasury. Under the amendment, Treasury increased its funding commitment to $200 billion from $100 billion, increased the size of the mortgage-related investments portfolio allowed under the agreement by $50 billion to $900 billion at December 31, 2009, and increased the allowable debt outstanding to $1,080 billion until December 31, 2010. As a result of the $6.1 billion draw, the aggregate liquidation preference of the company's senior preferred stock will increase to $51.7 billion. In addition, the amount remaining under Treasury's $200 billion funding commitment will be $149.3 billion, which does not include the $1 billion of senior preferred stock issued to Treasury as initial consideration for its funding commitment. Based on the aggregate liquidation preference of $51.7 billion, Treasury, the holder of the senior preferred stock, will be entitled to annual cash dividends of approximately $5.2 billion. The Company paid a quarterly dividend of $370 million in cash on the senior preferred stock to Treasury on March 31, 2009, at the direction of the Conservator. The Company's net worth, and consequently draws under the Purchase Agreement, could vary significantly in future periods due to changes in market and credit conditions and other factors. Freddie Mac is under conservatorship and is dependent upon the continued support of Treasury and FHFA in order to continue operating its business. GAAP Results Three Months Ended March 31, December 31, March 31, 2009 2008(1) 2008(1) ($in millions) Net interest income $3,859 $2,625 $798 Management and guarantee income 780 992 789 Other non-interest loss (3,868) (19,434) (175) Total revenues 771 (15,817) 1,412 Administrative expenses (372) (396) (397) Credit-related expenses (9,097) (7,244) (1,448) Other non-interest expense (2,090) (1,362) (138) Total expenses (11,559) (9,002) (1,983) Loss before income tax benefit (10,788) (24,819) (571) Income tax benefit 937 967 422 Net loss $(9,851) $(23,852) $(149) Less: Net (income) attributable to noncontrolling interest - - (2) Net loss attributable to Freddie Mac $(9,851) $(23,852) $(151) Senior preferred stock dividends declared $(370) $(172) $- Total equity (deficit)/GAAP net worth (at period end)(2) $(6,008) $(30,634) $16,160 AOCI, net of taxes (at period end) $(28,303) $(32,357) $(22,296) (1) Certain amounts in prior periods have been reclassified to conform to the current presentation. (2) Net worth represents the difference between the Company's assets and liabilities under GAAP. With the Company's adoption of SFAS 160, "Noncontrolling Interests in Consolidated Financial Statements -- an amendment of ARB No. 51" (SFAS 160) on January 1, 2009, its net worth is now equal to its total equity (deficit). Prior to adoption of SFAS 160, the Company's total stockholders' equity (deficit) was substantially the same as its net worth except that it excluded noncontrolling interests (previously referred to as minority interests). As a result of SFAS 160, noncontrolling interests are now classified as part of total equity (deficit). Prior periods have been restated to reflect this adoption. Net interest income for the first quarter of 2009 was $3.9 billion, up $1.2 billion from $2.6 billion in the fourth quarter of 2008. The increase in net interest income for the first quarter of 2009, compared to the fourth quarter of 2008, was primarily driven by lower short- and long-term funding costs and continued funding of fixed-rate assets with a higher portion of short-term debt in a steepening yield curve environment. Management and guarantee income for the first quarter of 2009 was $780 million, compared to $992 million in the fourth quarter of 2008. This decrease reflects reduced amortization income related to certain pre-2003 deferred fees due to the increase in forecasted interest rates resulting in a decrease in projected prepayments. Other non-interest loss for the first quarter of 2009 was $3.9 billion, compared to $19.4 billion in the fourth quarter of 2008. During the first quarter of 2009, the Company recognized net mark-to-market gains of $3.8 billion on its derivative portfolio, guarantee asset and trading securities mainly driven by increased long-term interest rates and spread tightening, compared to net mark-to-market losses of $13.3 billion incurred in the fourth quarter of 2008 as a result of declining interest rates and widening spreads. Other non-interest loss for the first quarter of 2009 included $7.1 billion related to other-than-temporary impairments on the Company's available-for-sale securities, compared to $7.5 billion in the fourth quarter of 2008, primarily due to sustained deterioration in the performance of the collateral underlying the Company's non-agency mortgage-related securities. Income on the guarantee obligation for the first quarter of 2009 was $0.9 billion, compared to $2.1 billion in the fourth quarter of 2008. The decrease reflected the accelerated amortization income the company recognized on its guarantee obligation during the fourth quarter of 2008 due to significant declines in home prices. Administrative expenses totaled $372 million for the first quarter of 2009, compared to $396 million for the fourth quarter of 2008. The decrease was due to a reduction in employee short-term performance compensation and a decrease in the company's use of consultants. Credit-related expenses, consisting of provision for credit losses and real estate owned (REO) operations expense, were $9.1 billion for the first quarter of 2009, compared to $7.2 billion for the fourth quarter of 2008. In November 2008, the Company announced a suspension of foreclosure transfers of occupied homes, which remained in effect until January 31, 2009, and was renewed from February 14, 2009, through March 6, 2009. Beginning March 7, 2009, the company suspended foreclosure transfers of owner- occupied homes where the borrower is eligible for modification under the MHA Program. While suspensions of foreclosure transfers reduced the company's actual charge-offs during the first quarter, the company's reserve for credit losses included expected losses on those foreclosure transfers that are currently suspended but are expected to occur in future periods. Provision for credit losses was $8.8 billion for the first quarter of 2009, compared to $7.0 billion for the fourth quarter of 2008. The provision in the first quarter reflects continued credit deterioration in the company's single-family mortgage portfolio. The Company recorded a $7.1 billion increase in its reserves for credit losses as a result of higher counts of delinquent loans, increases in delinquency rates as well as delinquency transition rates, and a higher severity of losses on a per-property basis. Freddie Mac expects its provision for credit losses will likely remain high in 2009. REO operations expense was $306 million for the first quarter of 2009, up from $291 million in the fourth quarter of 2008. The increase was driven by higher disposition losses as a result of increased disposition volumes during the first quarter, partially offset by a decrease in market-based write-downs. Other non-interest expense for the first quarter of 2009 was $2.1 billion, compared to $1.4 billion in the fourth quarter of 2008. The increased expense was primarily related to losses of $2.0 billion on delinquent and modified loans purchased from PC pools for the first quarter of 2009, compared to $1.2 billion for the fourth quarter of 2008, due to both a significant increase in the volume and, to a lesser extent, a decline in the fair value of loans purchased from PC pools. Freddie Mac expects these losses to continue to increase in 2009, especially as the company begins to purchase single-family loans modified under the Home Affordable Modification program. Income tax benefit for the first quarter of 2009 was $937 million, compared to a $967 million income tax benefit in the fourth quarter of 2008. The tax benefit for the first quarter primarily resulted from current year tax deductions related to expected credit-related principal losses on the company's non-agency mortgage-related securities. Freddie Mac established a partial valuation allowance against its net deferred tax assets during the third quarter of 2008, and recorded an additional allowance during the fourth quarter of 2008, as a result of the events and developments related to the conservatorship of the Company, other events in the market, and related difficulty in forecasting future profit levels on a continuing basis. The Company is required to continually assess the deferred tax asset valuation allowance for impairment. In the first quarter of 2009, an additional valuation allowance of $3.1 billion was recorded against the company's net deferred tax assets. After recording the valuation allowance in the first quarter of 2009, the Company had a remaining deferred tax asset of $13.3 billion representing the tax effect of net unrealized losses on its available-for-sale securities, which management currently believes is more likely than not to be realized because of its intent and ability to hold these securities until the unrealized losses are recovered. Loss per diluted common share was $3.14 for the first quarter of 2009, compared to a loss of $7.37 for the fourth quarter of 2008. The per-share figures take into account the dilutive effect of the common stock warrant issued to Treasury in connection with the execution of the Purchase Agreement in September 2008. AOCI, net of taxes as of March 31, 2009, was a loss of $28.3 billion, compared to a loss of $32.4 billion as of December 31, 2008. The decreased losses recorded in AOCI of $4.1 billion for the first quarter of 2009 were attributable to mark-to-market effects related to the company's available-for-sale securities that are reported at fair value as a component of AOCI and the recognition of certain unrealized losses as other-than- temporary impairments. Foreclosure Prevention and Refinancing Activities On March 4, 2009, Freddie Mac launched the Freddie Mac Relief Refinance Mortgage(SM) and implemented the Home Affordable Modification program, two new mortgage initiatives under the MHA Program. These initiatives will help families with Freddie Mac- owned mortgages that are delinquent, at-risk of default or struggling to refinance because of declining property values. In addition, Freddie Mac will play an important role in administering the MHA Program, acting as the program compliance agent for foreclosure prevention activities. During the first quarter, Freddie Mac undertook these initiatives to keep borrowers in their homes whenever possible: -- suspension of foreclosure transfers on occupied properties; -- an extension of the suspension of foreclosure transfers for mortgages eligible for the Home Affordable Modification program; -- the introduction of the REO Rental initiative that allows qualified owner-occupants and tenants who reside in homes that the Company has acquired through foreclosure the option to lease the homes on a month-to-month basis; and -- a pilot workout strategy for high-risk loans designed to keep more at-risk borrowers in their homes by employing third-party servicers that specialize in servicing Alt-A and other types of high-risk loans. During the first quarter, Freddie Mac's foreclosure prevention efforts (including those undertaken in conjunction with its servicers) helped approximately 40,000 borrowers stay in their homes or sell their properties using the following delinquency resolution methods (measured in number of loans): -- total loan modifications of 24,623; -- repayment plans of 10,459; -- forbearance agreements of 1,853; and -- pre-foreclosure sales of 3,093. The Company's single-family foreclosure starts ratio, which reflects the number of single-family loans that entered the foreclosure process during the quarter as a percentage of the total number of loans in the Company's single-family portfolio at the end of the quarter, was 61 basis points in the first quarter of 2009. The single-family foreclosure starts ratio for the fourth quarter of 2008 was 41 basis points. The Company's refinance-loan purchase volume for the first quarter of 2009 was approximately $95 billion, compared to approximately $24 billion during the fourth quarter of 2008. The Company estimates that overall more than 1.6 million borrowers refinanced into conventional, conforming loans during the first quarter. By doing so, these borrowers lowered their mortgage payments by more than $2.3 billion in the coming year. Freddie Mac began the purchase of refinance mortgages originated under the MHA Program in April 2009. About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At December 31, 2008, the Company's balance sheet showed total assets of $850.9 billion and total liabilities of $881.6 billion, resulting in a stockholders' deficit of $30.7 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. Being under Conservatorship, Freddie Mac said it is dependent upon the continued support of Treasury and FHFA to continue operating its business. GENERAL GROWTH: Farallon Wins DIP Loan Face-Off with Pershing ------------------------------------------------------------- Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York granted final approval of various first day motions filed by General Growth Properties -- including payment of prepetition wages, and granting adequate assurance to utilities -- following a hearing on May 8. Judge Gropper, however, has not granted final approval to General Growth's proposed DIP financing. At the May 8 hearing, General Growth presented to the Court a proposal to obtain $400 million of DIP financing from a group of holders of unsecured obligations of the Debtors led by Farallon Capital Management, L.L.C. The Farallon loan will replace 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. According to Bloomberg's Bill Rochelle, Judge Gropper was unable to decide on the competing proposals of Pershing Square and Farallon Capital at the conclusion of the May 8 hearing. Judge Gropper, according to Reuters, delayed his ruling to give him and creditors more time to consider the competing DIP loan offers. Dow Jones said Judge Gropper indicated during the hearing that he is likely to side with the Debtors. Bloomberg's Daniel Taub said May 12 that Farrallon, et al., will be providing the DIP loan to General Growth. William Ackman, head of Pershing, said he is satisfied with the outcome regardless if his group didn't win the bidding to provide the DIP loan. He said he's pleased with the Farrallon loan because it provided the mall owner the best terms. Judge Gropper will resume the hearing on the DIP Loan on May 13, 2009. 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. According to General Growth, 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 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 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: Delphi Exit Woes May Cue Additional Losses ---------------------------------------------------------- General Motors Corp. said in a regulatory that due to the uncertainties surrounding Delphi Corp.'s ability to emerge from bankruptcy it is reasonably possible that additional losses, which may be material to GM's financial condition and results of operations, could arise in the future. GM, however, said it is currently unable to estimate the amount or range of those losses, if any. GM has recorded $274 million in charges with respect to its agreements with Delphi for the three months ended March 31, 2009, lower compared to $776 million in charges for the same period in 2008. GM said cumulative to date, it has recorded $13.2 billion in Delphi-related charges. Delphi's debtor-in-possession financing was scheduled to mature on December 31, 2008 and Delphi has been operating under a forbearance agreement with its DIP Financing lenders since December 12, 2008, which contains various milestone requirements that, if not satisfied, trigger termination of the forbearance. Delphi was unable to satisfy some of these milestones, resulting in further amendments to the Accommodation Agreement in each of January, February, March and April 2009. On May 7, 2009, the U.S. Bankruptcy Court approved another amendment to the Accommodation Agreement, subject to certain conditions to effectiveness, which provides that the Delphi DIP Accommodation Agreement is scheduled to terminate on June 2, 2009 unless a term sheet between Delphi, GM and the United States Treasury is agreed upon on or before May 21, 2009 and deemed satisfactory to the Delphi DIP lenders on or before June 1, 2009. In 1999, GM spun-off Delphi Automotive Systems Corporation, which became Delphi. Delphi is GM's largest supplier of automotive systems, components and parts, and GM is Delphi's largest customer. From 2005 to 2008, GM's annual purchases from Delphi have ranged from approximately $6.5 billion to approximately $10.2 billion. Delphi and GM have entered into various settlement agreements. The more significant items contained in the parties' Settlement Agreements, as amended, included GM's commitment to: * Reimburse Delphi for its costs to provide OPEB to certain of Delphi's hourly retirees from December 31, 2006, through the date that Delphi ceases to provide such benefits and will assume responsibility for OPEB going forward; * Reimburse Delphi for the normal cost of credited service in Delphi's pension plan between January 1, 2007, and the date its pension plans are frozen; * First Hourly Pension Transfer -- Transfer, under IRS Code Section 414(l), net liabilities of $2.1 billion from the Delphi hourly rate employee pension plan (Delphi HRP) to GM's U.S. hourly pension plan on September 29, 2008; * Second Hourly Pension Transfer -- Transfer the remaining Delphi HRP net liabilities, which are estimated to be $3.2 billion to $3.5 billion at March 31, 2009, upon Delphi's substantial consummation of its Plan that provides for the consideration to be received by GM and is consistent with other terms of the Amended Delphi-GM Settlement Agreements. Actual amounts of the Second Hourly Pension Transfer will depend on, among other factors, the valuation of the pension liability at the transfer date, the proportion of the obligation assumed by the PBGC and performance of pension plan assets; * Reimburse Delphi for all retirement incentives and half of the buyout payments made pursuant to the various attrition program provisions and to reimburse certain U.S. hourly buydown payments made to certain hourly employees of Delphi; * Award certain future product programs to Delphi, provide Delphi with ongoing preferential sourcing for other product programs, eliminate certain previously agreed upon price reductions, and restrict GM's ability to re-source certain production to alternative suppliers; * Labor Cost Subsidy -- Reimburse certain U.S. hourly labor costs incurred to produce systems, components and parts for GM from October 1, 2006, through September 14, 2015, at certain U.S. facilities owned or to be divested by Delphi; * Production Cash Burn Support -- Reimburse Delphi's cash flow deficiency attributable to production at certain U.S. facilities that continue to produce systems, components and parts for GM until the facilities are either closed or sold by Delphi; * Facilitation Support -- Pay Delphi $110 million in both 2009 and 2010 in quarterly installments in connection with certain U.S. facilities owned by Delphi; * Temporarily accelerate payment terms for Delphi's North American sales to GM upon substantial consummation of its Plan, until 2012; * Reimburse Delphi, beginning January 1, 2009, for actual cash payments related to workers compensation, disability, supplemental employment benefits and severance obligations for all current and former UAW-represented hourly active and inactive employees; and * Guarantee a minimum recovery of the net working capital that Delphi has invested in certain businesses held for sale. Additionally, the Amended GSA provides that GM will receive: * An administrative claim regarding the First Hourly Pension Transfer of $1.6 billion, of which GM will share equally with the general unsecured creditors up to only the first $600 million in recoveries in the event Delphi does not emerge from bankruptcy; * An administrative claim for $2.1 billion for the total Delphi HRP transfer (inclusive of the administrative claim for the First Hourly Pension Transfer) to be paid in preferred stock upon substantial consummation of Delphi's Plan in which Delphi emerges with: (1) its principal core businesses; (2) exit financing that does not exceed $3.0 billion (plus a revolving credit facility); and (3) equity securities that are not senior to or pari passu with the preferred stock issued to GM; and * A general unsecured claim in the amount of $2.5 billion that is subordinated until general unsecured creditors receive recoveries equal to 20% of their general unsecured claims after which GM will receive 20% of its general unsecured claim in preferred stock, with any further recovery shared ratably between GM and general unsecured creditors. The ultimate value of any consideration that GM may receive is contingent on the fair value of Delphi's assets in the event Delphi fails to emerge from bankruptcy or upon the fair market value of Delphi's securities if Delphi emerges from bankruptcy. 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, Issue No. 166; 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. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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: Says It Would Miss a $1BB Debt Payment on June 1 ---------------------------------------------------------------- Reuters reports that General Motors Corp. CEO Fritz Henderson said that the Company has told bondholders that it would miss a $1 billion debt payment on June 1. According to Reuters, the Canadian Auto Workers union said that GM was likely to seek Chapter 11 bankruptcy protection, as well as CCAA bankruptcy protection. Reuters quoted Canadian Industry Minister Tony Clement as saying, "One of the options that is clearly on the table is a scheduled, surgical Chapter 11/CCAA process where they go in, some changes are made, and they go out again.... What we've always said is that if Chapter 11/CCAA is inevitable, what we don't want to see happening is that that process just happens all of a sudden without warning, because that's the biggest risk for our auto parts suppliers and dealers and so forth." Citing Minister Clement, Reuters states that GM would have to provide adequate warning if it planned to file for bankruptcy protection or it would risk bringing further distress to the automotive industry. Mr. Clement, Reuters reports, said that with or without bankruptcy protection, GM will have to prove its viability to receive government loans. A Chapter 11 bankruptcy filing by GM would likely be best for the struggling parts suppliers, Marty Schladen at The Journal Gazette relates, citing Congressman Mark Souder, who met with representatives of about 15 auto parts suppliers at Tom Kelley Buick Pontiac GMC on Fort Wayne's west side. "The parts suppliers will be better treated in bankruptcy," the report quoted Rep. Souder as saying. Citing Mr. Souder, The Journal Gazette states that the bankruptcy court is likely to work to make sure parts suppliers survive because the success of the automakers depends on them. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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: Bank Debt Slides in Secondary Market Trading ------------------------------------------------------------ Participations in a syndicated loan under which General Motors Corp. is a borrower traded in the secondary market at 59.15 cents- on-the-dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 5.50 percentage points from the previous week, the Journal relates. The loan matures November 27, 2013. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's CCC rating. 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. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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: RHJ Int'l Mulls Bidding for European Units ---------------------------------------------------------- RHJ International, a European buyout firm with holdings in the auto-parts industry, is considering bidding for General Motors' European operations, which include Adam Opel GmbH, Dana Cimilluca at The Wall Street Journal report, citing a person familiar with the matter. WSJ notes that RHJ, which owns stakes in some auto-parts makers around the world, is likely to try integrating those operations with GM's in Europe if it strikes a deal. Other Possible Bidders According to WSJ, Fiat SpA and Magna International Inc. are also eyeing the operations. German politicians, according to Sharon Terlep and Jeff Bennett at Dow Jones Newswires, have said that Fiat's plans are more advanced, but Magna's offer is viewed as a viable option and is receiving serious consideration. Dow Jones notes that Magna's interest could frustrate efforts by Fiat to acquire GM assets in Europe, Latin America, and South Africa. "We are in talks with Opel, GM and German government officials regarding potential alternatives for the future of Opel, which could include Magna taking a minority stake," Dow Jones quoted Magna CEO Donald Waker as saying. Globe & Mail states that Magna has proposed taking a 20% stake in Opel, alongside 35% held by other partners. Dow Jones relates that under the proposal, GM would have a 35% stake, while workers would hold 10%. According to Dow Jones, GM CEO Fritz Henderson said that the Company would consider holding a minority stake in the unit. Globe & Mail reports that Magna's investment would be around $260 million. Dow Jones says that Russian auto maker OAO GAZ Group confirmed its interest in partnering with Magna on an Opel deal. Dow Jones, citing a person familiar with the matter, reports that talks with Magna are taking place in Europe, while Fiat's talks are centered in Detroit. 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. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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: 'Main Street' Bondholders Want to Join Talks ------------------------------------------------------------ The "Main Street" Bondholders Coalition, a project of 60 Plus Association, gathered yesterday to voice concerns over their exclusion in the General Motors Corp. bankruptcy negotiations and to advocate for a fair and equitable solution. Small bondholders, many of whom are relying on their stake in the company for future financial security, have the most to lose if GM turns to bankruptcy. Thousands of seniors, retirees and small bondholders have sent letters to Congress voicing their concerns. "Bankruptcy is the worst possible solution in this situation," Bill, a semi-retired attorney and small bondholder from Harrisburg, PA, said at the Philadelphia event. "We've invested in GM bonds and now risk losing a portion of our retirement savings. The only way to reconcile this situation equitably is to give small bondholders a voice in this process. The government needs to listen to the concerns of small bondholders to reach the best conclusion to the GM negotiation process." "No one is talking to the small bondholders, because the Treasury is negotiating with GM and GM is negotiating with the UAW," said Jim, representing his mother, a retired GM employee, at the "Main Street" Bondholder event in Tampa. "The government's refusal to negotiate with small bondholders is inexcusable. It's not fair that our retirement savings may be wiped out and we're not even given a seat at the negotiating table. This bankruptcy will affect us much more than it will affect any other group of investors, so we deserve the chance to tell the decision makers our side of the story." After a recent gathering in Warren, MI, the 60 Plus Association has received hundreds of emails from individuals worried about the GM bankruptcy. The small bondholders fear that their retirement savings will disappear if GM enters bankruptcy proceedings. "We urge the Administration to consider the small bondholders, who represent 20 percent of GM investors, as a group that is greatly affected by the future of the GM Corporation," 60 Plus President Jim Martin said in Tampa. "Small bondholders, especially seniors and retirees, should not be shut out of the GM bankruptcy negotiations. They're a part of the company too and deserve the chance to have their voices heard." 60 Plus Vice President Amy Noone Frederick represented small bondholders in Philadelphia as well. Many small bondholders feel that the Administration has taken advantage of them by shutting them out of GM's bankruptcy negotiations. Financing their retirements, medical expenses, children's college savings funds with GM bonds, these individuals could lose everything without ever being represented in the negotiation talks. "Main Street" Bondholders -- http://www.mainstreetbondholders.com/ -- a project of 60 Plus Association, is a nationwide coalition of small GM small bondholders. GENERAL MOTORS: Suppliers Demand Broader Assistance for Industry ---------------------------------------------------------------- The Motor & Equipment and Manufacturers Association, a group of manufacturers of motor vehicle components, tools and equipment, automotive chemicals and related products, has urged the U.S. Congress to provide "broader assistance" for the supplier industry and the passage of a short-term incentive for vehicle purchases. On March 19, 2009, the U.S. Treasury launched a $5 billion program to help auto parts suppliers that "are unable to access credit and are facing growing uncertainty about the prospects for their businesses and for the auto companies that rely on the parts they ship." The program provided suppliers with access to government- backed protection that money owed to them for the products they ship will be paid no matter what happens to the recipient car company. The program is run through American auto companies that agree to participate in the program. In its new request for more assistance for auto suppliers, the MEMA pointed out that the Auto Supplier Assistance Program launched by the Treasury in March only targets the first tier suppliers to General Motors Corp. and Chrysler LLC. Only GM and Chrysler, both recipients to federal aid, have participated in the program. It added, "Significant limitations restricted the reach of this program. Since it was not fully operational when Chrysler filed for Chapter 11, many suppliers were left significantly exposed. Smaller suppliers in financial distress are completely dependent upon their first tier customer to provide financial assistance down through the supply chain. Suppliers that manufacture parts in the U.S. but ship to Canada and Mexico for vehicle assembly are not covered. Bank restrictions and loan covenants prevented many eligible suppliers from participating in the program. Aftermarket suppliers directly providing replacement parts to the vehicle manufacturers are not eligible." The MEMA proposes that Congress pass a short-term incentive program, which will help bolster the U.S. economy with new car sales at a time when light vehicle production and sales are at an all time low. Reduced Business for Auto Suppliers The MEMA noted that in April, vehicle sales plunged by 34.4% when compared to the same month last year. For three months ended March 31, industry vehicle sales decreased by 3.7 million vehicles (or 20.6%) to 14.4 million vehicles due to continued weakness in the global economy. North America decreased by 1.6 million vehicles (or 36.1%) to 2.8 million vehicles, Europe decreased by 1.4 million vehicles (or 23.7%) to 4.5 million vehicles, the Asia Pacific region decreased by 531,000 vehicles (or 8.9%) to 5.4 million vehicles, and the Latin America / Africa / Middle East (LAAM) region decreased by 219,000 vehicles (or 11.9%) to 1.6 million vehicles. GM said that the decline is due to continued weakness in the economy which is directly attributable to the recession in the United States brought about by tightening of the credit markets and turmoil in the mortgage markets resulting in reductions in housing values, all of which contributed to declining consumer confidence. In the United States, GM sold 413,000 vehicles during the first quarter of 2009, a decline of approximately 49% compared to the corresponding period in 2008. Chrysler filed for Chapter 11 on April 30 after failing to obtain enough concessions from constituents, which was a requirement for additional U.S. government that would back an out-of-court restructuring. General Motors said that in the event that it does not receive prior to June 1, 2009 enough tenders of its public unsecured debt to consummate exchange offers, it expects to follow Chrysler to bankruptcy protection. Both GM and Chrysler have previously warned that a bankruptcy filing would hurt sales and would result to shutdowns, both of which would further hurt suppliers. Chrysler has already halted production at many of its U.S. manufacturing facilities until its bankruptcy court- sanctioned merger with Fiat SpA is completed. General Motors has also announced that it will extend its usual mid-year down time at many of its North America manufacturing facilities during the spring and summer of 2009. GM in a regulatory filing on May 8 acknowledged that Chrysler's bankruptcy filing are threatening the viability of the suppliers, many are producing parts for both GM and Chrysler. Chrysler announced that most of its manufacturing operations will be temporarily idled beginning May 4, 2009. "The resulting decline in automotive production volumes and the risk that payments owed to suppliers by Chrysler LLC may be disrupted as a result of Chrysler LLC's bankruptcy filing will increase the financial and liquidity pressures facing automotive suppliers, many of which are common to Chrysler LLC and us," GM said. Ford Motor Company, the only member of the Big 3 Detroit automakers that has so far not sought federal aid, has reported lower sales for the first quarter of 2009. For the second quarter, Ford expects to report sales of 435,000 units in North America, a 250,000 decline from 2008. Ford has said it might require a bride loan from the government, in the event of "a significantly deeper economic downturn or a significant industry event, such as the uncontrolled bankruptcy of a major competitor or important suppliers to Ford, that causes major disruption to our supply base, dealers or creditors and cannot be funded by other forms of capital." Standard & Poor's ratings Services said May 11 that it expects continued heavy cash losses in Ford's automotive oeprations for at least the next year. It added that its 'CCC+/Negative' rating on Ford reflect concerns that "GM (CC/Negative/--) could file for bankruptcy in the coming weeks and that low production levels by many automakers broadly are risks to Ford's liquidity, given the interwoven auto sector supplier base." "With a continued drop in vehicle production, Chrysler's recent bankruptcy announcement, and GM's planned summer plant shutdowns, this crisis is only deepening and more jobs will be lost," the MEMA said. Part suppliers directly employ 685,892 workers in the U.S. Auto Supplier Bankruptcies Wheel producer Hayes Lemmerz International Inc., which obtains 29% of revenues from General Motors and Ford, filed for bankruptcy protection Monday, blaming the global meltdown in the automobile sector. Hayes expects global EBITDA to be less than one-half of the $157 million it recorded in 2008. Lear Corp., which provides automotive seat systems and other products, has said that it might file for Chapter 11, if it fails to obtain relief from lenders regarding a looming May 16, 2009 default under its primary credit facility. General Motors and Chrysler accounted for 23% and 3% of Lear's net sales in 2008. Former Ford unit Visteon Corp, supplier of climate, interiors and electronics systems to automakers, is exploring various strategic and financing alternatives, including a bankruptcy filing. It has obtained waivers though, but they are set to expire May 30. Visteon's net sales during the three months ended March 31, 2009 decreased $1.51 billion or 53% when compared to the same period of 2008. "Lower production levels globally and increases in raw material, energy and commodity costs during 2008 have resulted in severe financial distress among many companies within the automotive supply base," said Lear Corp., which incurred a net loss of $689.9 million in 2008, compared with a net profit of $241.5 million the year before. "Several large automotive suppliers have filed for bankruptcy protection or ceased operations," Lear said in March. "Without immediate action, communities throughout this country will needlessly lose essential manufacturing jobs and the U.S. auto industry will not have a sufficient supply base to manufacture vehicles in this country," the MEMA said. Ratings Actions Ratings agencies have lowered ratings of some auto suppliers due to the expected weak auto sales for 2009, circumstances facing GM and Chrysler and/or other related factors: ArvinMeritor, Inc. S&P lowered issuer credit rating to 'CCC+' from 'B' on February 12, 2009. Fitch lowered the LTD issuer default rating to 'CCC' from 'B-' on March 9, 2009. Visteon Corp. S&P lowered issuer credit rating to 'CCC+' from 'B-' in January 30 2009 American Axle & Manufacturing Holdings Inc. Moody's lowered the corporate family rating to 'Caa1' from 'B2' on Dec. 16, 2008. S&P lowered the issuer credit rating to 'CCC+' from 'B' on Jan. 12, 2009. Fitch lowered American Axle's LT issuer default rating to 'CCC' from 'B-' on April 28, due to GM's shutdown of 13 of its manufacturing plants in North America during the second and third quarters of 2009. BorgWarner Inc. Moody's issued a 'Ba1' LT corporate family rating, with a 'negative' outlook, on March 18, 2009. S&P issued a downgrade of the issuer credit rating to 'BBB' from 'A-' on January 12, 2009. Magna Int'l Inc. S&P downgraded the issuer credit rating to 'BBB' from 'A-' on April 30, 2009. DBRS downgraded the unsecured debt rating to 'BBBH' from 'A' on May 1, 2009. Dana Holdings S&P lowered its corporate credit rating to 'CC' from 'B' on May 11, 2009. Tenneco Inc. Fitch lowered the issuer default rating to 'B-' from 'B' in April 29, 2009 due to extended shutdowns scheduled by GM later in 2009, and other factors. Continental AG Fitch on April 30, 2009, placed LT issuer default rating to 'BB' on rating watch negative, citing, among other things, the slump in global vehicle production. TRW Automotive Holdings Corp. Fitch on April 28 lowered the issuer default rating from 'B+' to 'B', remaining in watch negative due to uncertain production or sales ramifications of near-term events at General Motors and Chrysler, including bankruptcy filings. MetoKote Corporation Moody's on May 5, 2009, lowered the corporate family rating to 'Caa1' from 'B3', noting that while the Company has diversified its industry concentration, it still generates 49% of sales from the automotive end markets, including 19% from the Detroit-3 automakers. Stoneridge Inc. Moody's on May 5 said the corporate rating will remain at 'B2' despite Chrysler's bankruptcy filing. Outlook is negative. S&P said May 11 it believes "financial risks will remain relatively high for most rated auto suppliers this year and next because of severe and volatile auto markets in North America and Europe." "Weak economic conditions are forcing consumers to restrain spending resulting in a sharp decline in auto sales and production," said Moody's VP-Senior Analyst Timothy Harrod on April 30. According to Moody's, this loss of millions of units of production is severely pressuring revenue, profitability and cash flow for the auto parts suppliers. GENERAL MOTORS: Falls to 76-Year Low After Executives Sell Stock ---------------------------------------------------------------- Bloomberg News said shares of General Motors Corp., which faces a deadline to restructure or file for bankruptcy, fell to its lowest in New York trading since 1933 after GM reported May 11 that six executives sold their shares. Katie Max at Bloomberg said May 12 that GM declined 29 cents, or 20 percent, to $1.15 at 4:15 p.m. in New York Stock Exchange composite trading. According to MarketWatch, the stock has now shed almost 95% of its value in the past year. "The market is saying bankruptcy is probably what's going to happen," said Kevin Tynan, an analyst at Argus Reseachr in New York. He has issued a "sell" rating on the shares. Shawn Langlois at MarketWatch said, "The proceeds of the sale may have been relatively insignificant but the message they sent to shareholders clearly was not, if Tuesday's stock drop is any indication." The TCR, citing MarketWatch, reported yesterday that a group of top GM executives have sold what was left of their personal stakes. According to filings with the Securities and Exchange Commission, the six executives sold nearly 205,000 shares in the aggregate between Friday and Monday, for $1.45 and $1.61 a share. "Our shareholders are obviously facing some pretty severe dilution if the bond exchange goes through or we end up in bankruptcy," GM spokesperson Julie Gibson said, according to MarketWatch. "Either way, no matter the outcome, we'll essentially be issuing new stock." Ms. Gibson acknowledged that the executives took advantage of a trading window to sell their shares while there's still some value "like most reasonable people would do." General Motors CEO Fritz Henderson said at a May 11 conference that it is now "more probable" for the automaker to file for bankruptcy protection. GM, in its quarterly report where it said it incurred a net loss of $5,899,000,000 on sales of $22,431,000,000 for three months ended March 31, 2009, warned that if it does not receive prior to June 1, 2009 enough tenders of its public unsecured debt to consummate the exchange offers, it expects to seek relief from the Bankruptcy Code. GM is trying to rid itself of $27 billion in debt by convincing thousands of creditors to exchange their bonds for 10% in GM stock, MarketWatch said. 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. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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. GEORGIA GULF: Lenders Consent to Non-Payment; Noteholders' Pending ------------------------------------------------------------------ Georgia Gulf Corporation received from its senior secured lenders an amendment to its senior secured credit agreement that allows the Company to continue to withhold interest payments due on its 2014 senior notes and 2016 senior subordinated notes without constituting a default under such credit agreement until the earlier of June 15, 2009, or the first day holders of such notes or its 2013 senior notes may accelerate the indebtedness under such notes. Georgia Gulf had withheld payment of $34.0 million of interest due April 15, 2009 for the 2014 senior notes and 2016 senior subordinated notes. All three of the Company's note issues are the subject of pending private exchange offers. Under the indentures governing the 2014 senior notes and 2016 senior subordinated notes, Georgia Gulf has a 30-day grace period to pay the withheld interest before the note holders can seek remedies. The Company is currently in discussions with principal holders of each issue of its notes seeking forbearance agreements to provide more time to negotiate the exchange offers. If the Company does not obtain such forbearance agreements (and there can be no assurance that such agreements will be obtained), and does not pay the withheld interest, the indebtedness under the notes may be accelerated by the holders on or after May 15, 2009. The Company's current liquidity remains essentially unchanged from the previously disclosed $100 million as of March 31, 2009. An acceleration of indebtedness under any issue of the notes would constitute cross defaults under the Company's other note issues and its senior secured credit facility, permitting the holders of such debt to accelerate same. In the event of any such acceleration, the Company would be required to immediately explore alternatives which could include a potential reorganization or restructuring under the bankruptcy laws. Further, in light of the security interests the Company has granted to its senior secured lenders in its assets, including its current assets, a default under the Company's senior secured credit facility could materially adversely affect the Company's liquidity. About Georgia Gulf Georgia Gulf Corporation is a manufacturer and international marketer of two integrated chemical product lines, chlorovinyls and aromatics. The Company's primary chlorovinyls products are chlorine, caustic soda, vinyl chloride monomer (VCM), vinyl resins and vinyl compounds. Its aromatics products are cumene, phenol and acetone. The Company has four business segments: chlorovinyls; window and door profiles, and moldings products; outdoor building products, and aromatics. As of December 31, 2008, the Company's balance sheet showed total assets of $1.61 billion and total liabilities of $1.75 billion resulting in total stockholders' deficit of $139.92 million. As of December 31, 2008, the Company had $90 million of cash on hand as well as $143 million of borrowing capacity available under its revolving credit facility. The Company reduced net debt by $83 million during 2008 and was in compliance with its debt covenants for the quarter ended December 31, 2008. * * * As reported by the Troubled Company Reporter on April 2, 2009, Fitch Ratings has downgraded Georgia Gulf's Issuer Default Rating to 'C' from 'CC' following its announcement of an exchange offer of $250 million in second lien notes for all of its senior unsecured and subordinated notes with a par amount of $794.6 million. A minimum threshold of the exchange offer is 95% of the aggregate outstanding senior unsecured and senior subordinated notes. Fitch has also downgraded Georgia Gulf's senior secured credit facility to 'B-/RR1' from 'B/RR1'. The downgrade reflects Fitch's view that the proposed transaction constitutes a Coercive Debt Exchange in accordance with Fitch's CDE Criteria published March 3, 2009, and that a CDE or other form of default is imminent. Should the exchange prevail in full, interest expense would be reduced by about $38 million annually and debt net of cash would be reduced by $530 million. The exchange incorporates payment of accrued interest on the notes in cash. Fitch notes that $38 million in interest is due April 15, 2009 on the 9.5% senior unsecured notes due October 15, 2014 and on the 10.75% senior subordinated notes due October 15, 2016. Early exchange by April 14, 2009, is encouraged by additional consideration in the form of a pro rata share of 6.9 million shares of common stock representing 19.9% of existing equity. GIBRALTAR INDUSTRIES: Likely Violation Won't Move S&P's B+ Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said its ratings and outlook on Gibraltar Industries Inc. (B+/Negative/--) are currently unaffected by the company's announcement that there is an increased likelihood of noncompliance with its financial covenants governing its existing bank credit facility. This is a result of significantly lower net sales and operating income generated during the first quarter of 2009. First quarter 2009 revenue and pro forma operating income declined about 30% and 190%, respectively, versus the prior year as a result of appreciably lower sales volumes. Given S&P's expectations for challenging operating conditions in the company's residential, commercial, and automotive end markets to persist over the next several quarters, Gibraltar could breach its total leverage ratio covenant of 4.25x and/or interest coverage ratio covenant of 2.75x in either the June-end or September-end quarter. S&P's expectation is that if a breach was to occur, the most likely outcome would be an amendment, leading to a repricing of the credit facility, thus weakening EBITDA coverage of interest until operating performance improves. GMAC LLC: Won't Be Pushed to Ch. 11 if GM Restructuring Fails ------------------------------------------------------------- Bree Fowler at The Associated Press reports that GMAC Financial Services said that it won't automatically be forced to file for bankruptcy protection if General Motors Corp. fails to restructure itself by June 1. GMAC chief financial officer Robert Hull, according to The AP, said that while a Chapter 11 filing at GM would have a negative effect on GMAC, the two are separate companies and don't guarantee each other's debt. The report quoted Mr. Hull as saying, "We want to see GM succeed, that's for sure, but we're taking the steps we need to prepare GMAC for whatever happens." The AP relates that GMAC will benefit from additional business from Chrysler LLC dealers and customers, as it will become the preferred lender for that company's clients and will start taking Chrysler business by the middle of May. Dennis K. Berman at The Wall Street Journal reports that GMAC would likely join Fannie Mae, Freddie Mac, American International Group and Citigroup in the government's investment portfolio. According to WSJ, the Treasury is in the middle of a plan to turn privately held GMAC into an auto-lender, financed with taxpayer dollars and likely falling under taxpayer control. WSJ relates that GMAC is set to receive two new injections of government capital, with the first to come by Friday, when the government will back up GMAC after it takes on the business. It could cost the government some $4 billion, the report states, citing a person familiar with the matter. According to the report, the government will also fill an $11.5 billion capital deficit identified in the "stress test" last week. The report says that GMAC's existing capital is around $22 billion. GMAC, WSJ states, has until November to find funds, with about $9.5 billion of coming from fresh sources. About GMAC LLC GMAC Financial Services -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a bank holding company with operations in North America, South America, Europe and Asia- Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of December 31, 2008, the Company had $189 billion in assets and serviced 15 million customers around the world. GMAC is the biggest lender to GM's 6,500 dealers nationwide, most of which get the financing they need to operate and buy vehicle inventory from the automaker, CNNMoney.com notes. GMAC Financial Services is wholly owned by GMAC LLC. Cerberus Capital Management LP led a group of investors that bought a 51% stake in GMAC LLC from General Motors Corp. in December 2006 for $14 billion. On December 24, 2008, GMAC Financial Services' application to become a bank holding company under the Bank Holding Company Act of 1956, as amended, was approved by the Board of Governors of the Federal Reserve System. In addition, GMAC Bank received approval from the Utah Department of Financial Institutions to convert to a state bank. As reported by the Troubled Company Reporter on May 12, 2009, Standard & Poor's Ratings Services said that its ratings on GMAC LLC and Residential Capital LLC (both CCC/Negative/C) aren't affected by the U.S. Federal Reserve's announcement that GMAC would need to raise $11.5 billion of additional capital in the coming months. GOODMAN GLOBAL: Note Repurchase Won't Change S&P's 'B+' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Goodman Global Inc., including its 'B+' corporate credit rating, are unchanged by the company's report that it has repurchased $76 million of its senior subordinated notes in April 2009. While the company acquired the loans at less than par for $59 million, S&P does not consider these transactions to be distressed. S&P views this as an opportunistic offer by the company, with excess liquidity utilized to complete the transaction. Although noteholders who accepted the offer received a discount to principal value, Goodman's financial and operating performance is not indicative of a distressed situation. The company has reduced its debt leverage since Hellman & Friedman acquired it in February 2007, cash flows are sufficient to meet all obligations, and there are no near-term maturities or covenant compliance issues. As a result, Goodman redeemed the subordinated notes at a relatively robust purchase price of $0.75, which in S&P's view is not indicative of a distressed obligation. GREGORY DAILY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Gregory Scott Daily 5353 Hillsboro Pike Nashville, TN 37215 Bankruptcy Case No.: 09-05337 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: William L. Norton, Esq. Bradley Arant Boult Cummings LLP PO Box 340025 Nashville, TN 37203 Tel: (615) 252-2397 Fax: (615) 252-6397 Email: bnorton@babc.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $100,000,001 to $500,000,000 The Debtor did not file a list of 20 largest unsecured creditors together with its petition. GWLS HOLDINGS: Sale-Related Pact Approved; Panel to Get $1.5 Mil. ----------------------------------------------------------------- The Hon. Peter J. Walsh, of the U.S. Bankruptcy Court for the District of Delaware approved an agreement among GWLS Holdings Inc. and its debtor-affiliates, the Official Committee of Unsecured Creditors, UBS AG Stanford Branch and certain financial institution, and Transportation 100 LLC. The agreement resolved the Committee's objections with respect to the sale of substantially all of the Debtors' assets to Transportation 100 LLC. The Committee will receive about $1.5 million from the sale of the Debtors' assets, according to papers filed with the Court. About GWLS Holdings Headquartered in Dallas, Texas, GWLS Holdings Inc. -- http://www.greatwide.com/-- operate trucking and logistics company. The company and 50 of its affiliates filed for Chapter 11 protection on October 20, 2008 (Bankr. D. Del. Lead Case No. 08-12430). Robert S. Brady, Esq., Matthew B. Lunn, Esq., at Young, Conaway, Stargatt & Taylor LLP, represents the Debtors' counsel. Willkie Farr Gallagher LLP is the Debtors' co-counsel. Miller Buckfire & Co., LLC, is the Debtors' financial advisor. The U.S. Trustee for Region 3 appointed two creditors to serve on the Official Committee of Unsecured Creditors. Pepper Hamilton LLP represents the Committee. When the Debtors filed for protection from their creditors, they listed assets and debts between $500 million and $1 billion each. HAIGHTS CROSS: Houlihan Lokey Hired for Debt Restructuring ---------------------------------------------------------- Haights Cross Communications Inc. has engaged Houlihan Lokey Howard & Zukin Capital, Inc. as financial advisors to help implement amendments to its credit agreement and to explore other potential debt restructuring alternatives. As of May 11, 2009, Haights has not filed its 2008 annual report on Form 10-K. Haights said that it has violated terms of the credit agreement for its senior secured term loan after it failed to file the 10-K by April 15. In connection with the defaults under the Credit Agreement, the Company has entered into a short- term forbearance with its lenders. Under the terms of the forbearance, the Lenders have agreed not to exercise their rights under the Credit Agreement as a result of these and certain related defaults during the forbearance period, subject to certain conditions and provided that no further defaults arise during the forbearance period. In addition, commencing April 15, 2009, the Company has agreed to pay the Lenders the default rate of interest under the Credit Agreement, an increase of 2% over the stated variable rate. Upon expiration of the forbearance period, the forbearance will be immediately and automatically terminated and be of no further force or effect. The Company is currently in discussions with its Lenders to extend the forbearance and amend its Credit Agreement to, among other things, avoid further defaults under that agreement. The Company is continuing to work towards completing its financial statements and filing its Annual Report. Haights, in its Form NT- 10K submitted to the Securities and Exchange Commission said it requires additional time to file its Annual Report to appropriately review the valuation of its intangible assets and goodwill pursuant to Statement of Financial Accounting Standards ("SFAS") 142, "Goodwill and Other Intangible Assets," and SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." Haights' third quarter results disclosed that it incurred a net income of $5,854,000 on net revenues of $135,087,000 for nine months ended Sept. 30, 2008. It had assets of $283,825,000 on debts of $425,112,000 as of Sept. 30, 2008. Its Form 10-Q/A for the third quarter of 2008 filed May 7, 2009, is available at: http://researcharchives.com/t/s?3cc8 White Plains, New York-based Haights Cross Communications -- http://www.haights.com-- is a developer and publisher of products for the K-12 Education and library markets. The Company was a leading publisher of test preparation and supplemental education materials before it sold most of its operating assets. Its imprints included Buckle Down, Sundance Publishing, and Triumph Learning. As reported by the TCR on April 29, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating and issue- level ratings on Haights Cross Communications Inc. and related entities by one notch. S&P lowered the corporate credit rating to 'CCC-' from 'CCC'. The rating outlook is negative. "The downgrade reflects the company's announcement that it is exploring potential debt restructuring alternatives," said Standard & Poor's credit analyst Tulip Lim. "Additionally, HCC has not filed its audited annual 10-K report, which was due on April 15, 2009, as specified in its credit agreement." HEXCEL CORP: S&P Keeps B+ Issue-Level Rating on $225MM Sr. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' issue-level rating to Hexcel Corp.'s (BB/Stable/--) proposed senior secured credit facilities, two notches above the corporate credit rating on the company. In addition, S&P assigned a '1' recovery rating to both tranches (the $100 million revolving credit facility due 2013 and the $200 million term loan due 2014), indicating an expectation of very high (90%-100%) recovery of principal and prepetition interest in the event of a payment default. The new facilities replace Hexcel's current revolving credit facility, which matures March 2010, and term loan tranches B and C, which mature in 2012. S&P also affirmed the 'B+' issue-level rating on Hexcel's outstanding $225 million 6.75% senior subordinated notes (two notches below the corporate credit rating). The '6' recovery rating on these notes remains unchanged, reflecting an expectation of negligible (0%-10%) recovery in the event of a payment default. This analysis assumes the successful closing of the proposed credit facilities and that proceeds from the new credit facilities will be used to repay the Hexcel's existing credit facilities, the ratings on which will be withdrawn upon closing. For the full recovery analysis, see the recovery report on Hexcel to be published on RatingsDirect following release of this report. "The corporate credit rating on Hexcel reflects its participation in the competitive and cyclical commercial aerospace industry, now in a downturn, and the company's need to make significant investment in additional carbon-fiber capacity to support increased demand from newer, wide-body planes," said Standard & Poor's credit analyst Roman Szuper. "Those factors are partly offset by Hexcel's position as a leading global manufacturer of advanced composite materials and a financial profile that is somewhat better than average for the rating." Stamford, Connecticut-based Hexcel is a leader in the composites industry, producing lightweight, high-performance carbon fibers, industrial fabrics, specialty reinforcements, carbon prepregs, structural adhesives, honeycomb, and composite structures for the commercial aerospace, defense and space, and industrial sectors. The company concentrates on serving growing markets in which it has a competitive advantage. Ratings List Hexcel Corp. Corporate Credit Rating BB/Stable/-- Ratings Assigned Hexcel Corp. Senior Secured US$100 mil. revolving credit fac due 2013 BBB- Recovery Rating 1 US$200 mil. term loan due 2014 BBB- Recovery Rating 1 Ratings Affirmed Hexcel Corp. Subordinated Local Currency B+ Recovery Rating 6 HOUGHTON MIFFLIN: Moody's Withdraws Ratings for Business Reasons ---------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings of Houghton Mifflin Harcourt Publishing Company for business reasons. These ratings were withdrawn: -- Corporate Family rating -- Probability of Default rating -- Senior secured first lien revolving credit facility -- Senior secured first lien term loan B -- Senior secured second lien term loan The most recent rating action occurred on April 10, 2009, when Moody's downgraded HMH's Corporate Family rating and Probability of Default ratings each to Caa3 from Caa1. HMH's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected financial and operating performance of the company over the near-to-intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of HMH's core industry and HMH's ratings are believed to be comparable to those of other issuers of similar credit risk. Headquartered in Boston, Massachusetts, Houghton Mifflin Harcourt Publishing Company is one of the largest U.S. educational publishers with revenues of approximately $2.1 billion. INDALEX HOLDINGS: Section 341(a) Meeting Set for May 28 ------------------------------------------------------- Roberta A. DeAngelis, the Acting United States Trustee for Region 3, will convene a meeting of creditors of Indalex Holdings Finance, Inc., and its debtor-affiliates on May 28, 2009, at 10:00 a.m. (prevailing Eastern Time), at the J. Caleb Boggs Federal Building, 844 North King Street, 2nd Floor, Room 2112, Wilmington, Delaware 19801. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. About Indalex Holdings Indalex Holding Corp., a wholly-owned subsidiary of Indalex Holdings Finance Inc., through its operating subsidiaries Indalex Inc. and Indalex Ltd., with headquarters in Lincolnshire, Illinois, is the second largest producer of soft alloy extrusion products in North America. The company's aluminum extrusion products are widely used throughout industrial, commercial and residential applications and are customized to meet specific end- user requirements. Indalex operates 10 extrusion facilities, 29 extrusion presses with circle sizes up to 20 inches, a variety of fabrication and close tolerance capabilities, two anodizing operations, two billet casting facilities, and six electrostatic paint lines, including powder coat capability. Indalex is indirectly controlled by private-equity investor Sun Capital Partners Inc. Sun Capital purchased Indalex in 2005 from Honeywell International Inc. for $425 million. Indalex is the 12th investment by Boca Raton, Florida-based Sun Capital to file in Chapter 11 since January 2006. Indalex Holdings and four affiliates filed for Chapter 11 on March 20 (Bankr. D. Del., Lead Case No. 09-10982). Donald J. Bowman, Jr., Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, has been tapped as counsel. Epiq Bankruptcy Solutions LLC is the claims and noticing agent. In its bankruptcy petition, Indalex listed assets of $356 million against debt totaling $456 million. INTERNATIONAL COAL: S&P Junks Ratings on Senior Unsecured Notes --------------------------------------------------------------- Standard & Poor's Ratings Services said that it corrected its issue-level and recovery ratings on International Coal Group Inc.'s senior unsecured notes due 2014. S&P is lowering the rating on these notes to 'CCC' (two notches below the corporate credit rating) from 'B-' and revising the recovery rating to '6' from '4'. The ratings indicate S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. On September 15, 2008, S&P incorrectly revised S&P's ratings on these notes based on S&P's treatment of these securities as priority obligations relative to the company's existing senior unsecured convertible notes due 2012. In fact, these securities rank pari passu within ICG's capital structure and S&P's revised ratings reflect this. (See "Outlook on International Coal Group LLC Revised To Developing From Negative," published September 15, 2008.) The issue-level and recovery ratings on ICG's senior secured revolving credit facility and senior convertible notes due 2012 remain unchanged. The issue-level rating on the senior secured revolving credit facility is 'B+' (two notches above the corporate credit rating) with a recovery rating of '1', indicating S&P's expectation of very high (90% to 100%) recovery in the event of a payment default. The issue-level rating on the senior convertible notes is 'CCC' (two notches below the corporate credit rating) with a recovery rating of '6' indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. Ratings List International Coal Group LLC Corporate credit rating B-/Negative/-- Ratings Revised International Coal Group Inc. To From -- ---- Senior unsecured notes due 2014 CCC B- Recovery rating 6 4 INVESTCORP BANK: Fitch Downgrades Issuer Default Rating to 'BB+' ---------------------------------------------------------------- Fitch Ratings has downgraded the long- and short-term Issuer Default Ratings respectively of Investcorp Bank BSC and its subsidiaries Investcorp SA and Investcorp Capital Ltd to 'BB+' and 'B'. The long-term IDRs remain on Rating Watch Negative. The downgrade reflects Investcorp's weakened capital position and Fitch's concerns regarding its ability to raise additional capital to maintain an ample cushion around earnings volatility. To date, capital commitments have not yet been sufficient to maintain its current ratings, a key rating driver that Fitch noted in its last commentary on Feb. 12, 2009. Fitch recognizes that the firm has aggressively reduced leverage and exposure to hedge funds however; the firm faces significant debt maturities over the next two years and refinancing opportunities have been more difficult in this environment. Current liquidity will satisfy near-term obligations although the firm's cash cushion will decline. The firm's ability to meet longer-term obligations will remain under pressure absent additional capital as liquidity and market value of private equity and real estate investments are expected to remain highly variable. Fitch believes that exits from private equity and real estate investments are unlikely over the near term and assets will continue to experience some declines in value. Any further material declines in client assets under management from redemptions and asset value depreciation will reduce revenue generation. AUM is a key component of the company's earnings performance via fees. Investcorp remains on Rating Watch Negative due to lingering concerns about its capital levels and lower earnings performance. The Rating Watch may be resolved at fiscal year end pending further capital raises and financial performance. Ratings may face an additional notch downgrade if additional capital is not raised or in the case of negative financial performance and diminished liquidity. Additional capital raised accompanied by stabilization in the firm's client AUM levels, asset values, and earnings performance will likely stabilize the ratings. While there has been some improvement in the firm's fund of hedge fund performance, Fitch believes it remains too early to be indicative of an overall trend. Investcorp's current ratings are supported by the strength of its Gulf-based franchise, diversified funding mix (by tenor and source), and demonstrated alternative investment expertise. Fitch has downgraded these ratings which remain on Rating Watch Negative: Investcorp Bank BSC -- Long-term Issuer Default Rating (IDR) to 'BB+' from 'BBB-'; Investcorp SA -- Long-term IDR to 'BB+' from 'BBB-'; Investcorp Capital Ltd. -- Long-term IDR to 'BB+' from 'BBB-'; -- Senior debt to 'BB+' from 'BBB-'. Fitch has downgraded and removed these ratings from Rating Watch Negative. Investcorp Bank BSC -- Short-term IDR to 'B' from 'F3'; Investcorp SA -- Short-term IDR to 'B' from 'F3'; Investcorp Capital Ltd. -- Short-term IDR to 'B' from 'F3'. Fitch has not changed these ratings which remain on Rating Watch Negative: Investcorp Bank BSC -- Individual at 'C'; Investcorp SA -- Individual at 'C'; Investcorp Capital Ltd. -- Individual at 'C'. Fitch has affirmed these ratings: Investcorp Bank BSC -- Support '5'; -- Support floor 'NF'. Investcorp SA -- Support '5'; -- Support floor 'NF'. Investcorp Capital Ltd. -- Support '5'. ISTAR FINANCIAL: Challenged Liquidity Cues Moody's Junk Rating -------------------------------------------------------------- Moody's Investors Service downgraded the senior unsecured ratings of iStar Financial to Caa1 from B2. The rating outlook remains negative. The rating action is based on the REIT's challenged liquidity and the limited visibility surrounding its ability to meet its short- term funding obligations. During its recent 1Q09 earnings call, the REIT indicated that it had $500 million in cash and $500 million bank line availability to fund its $1 billion debt maturities and $800 million funding commitments remaining in 2009. iStar has approximately $540 million of unsecured bonds maturing in 1Q10. Additional sources include loan repayments and asset sales; however, loan repayments are unpredictable given the continued lack of liquidity in the real estate debt markets and asset sales have relatively long lead times. In addition, iStar only retains 30% of any loan repayments from the Fremont portfolio until the $1 billion A-participation interest is repaid. The negative outlook reflects the risks surrounding asset repayments, asset sales, and resolution of its non-performing assets in the face of continued challenges in the debt capital markets, especially for commercial real estate. Moody's expects iStar's non-performing assets to growth further and credit metrics to remain weak. A rating downgrade would likely result if iStar's liquidity continues to be challenged, with a multi-notch downgrade possible should vagueness remain about the sources available to meet its 2009 obligations. In addition, any breach of bond or bank covenants would also result in a downgrade. Moody's stated that a return to a stable outlook would be predicated upon iStar's demonstrated ability to meet its funding needs over the next twelve months. These ratings were downgraded with a negative outlook: * iStar Financial Inc. -- Senior unsecured debt to Caa1 from B2; preferred stock to Caa3 from Caa1; senior debt shelf to (P)Caa1 from (P)B2; subordinated debt shelf to (P)Caa2 from (P)B3; preferred stock shelf to (P)Caa3 from (P)Caa1. Moody's last rating action with respect to iStar Financial Inc. was on February 27, 2009 when Moody's downgraded the senior unsecured ratings to B2 from Ba3. The rating outlook was negative. iStar Financial Inc. is a property finance company that elects REIT status. iStar provides structured mortgage, mezzanine and corporate net lease financing. iStar Financial is headquartered in New York City, and had assets of $14.8 billion and equity of $2.3 billion as of March 31, 2009. iStar Financial's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of iStar's core industry and the company's ratings are believed to be comparable to those of other issuers of similar credit risk. ITE-INNOVATIVE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: ITE-Innovative Truck & Equipment, Inc. dba Innovative Truck & Equipment, Inc. 1651 Columbus Parkway Opelika, AL 36804 Bankruptcy Case No.: 09-31239 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Middle District of Alabama (Montgomery) Judge: Dwight H. Williams Jr. Debtor's Counsel: James L. Day, Esq. Memory & Day P.O. Box 4054 Montgomery, AL 36103-4054 Tel: (334) 834-8000 Fax: (334) 834-8001 Email: jlday@memorylegal.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/almb09-31239.pdf The petition was signed by Tim Baker, president of the Company. LANDAMERICA FINANCIAL: PBGC to Cover $36MM Pension Plan Shortfall ----------------------------------------------------------------- The Pension Benefit Guaranty Corporation is taking responsibility for the underfunded pension plan covering some 9,600 employees and retirees of LandAmerica Financial Group Inc. of Glen Allen, Va., a bankrupt real estate services firm. The PBGC's move to assume the pension plan comes ahead of a May 14 bankruptcy court hearing on the sale of stock in LandAmerica subsidiaries. By the agency's action to end the pension plan before the sale, the company's subsidiaries remain liable for the plan's unfunded benefit liabilities. Under the Employee Income Retirement Security Act of 1974 (ERISA), the federal legislation that created the PBGC, the agency is empowered to collect claims from members of a plan sponsor's controlled group, such as the subsidiaries of LandAmerica that may be sold this week. Such entities are directly or indirectly 80-percent owned by their parent company. The LandAmerica Cash Balance Plan is 85 percent funded, with assets of $210 million and benefit liabilities of $246 million, according to PBGC estimates. The agency expects to cover the entire $36 million shortfall. The plan was frozen as of March 16, 2005. The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ends on May 11, 2009. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire. Within the next several weeks, the PBGC will send notification letters to all participants in the LandAmerica plan. Under provisions of the Pension Protection Act of 2006, the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore participants in this pension plan are subject to the limits in effect on November 26, 2008, which set a maximum guaranteed amount of $51,750 for a 65-year-old. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed. Workers and retirees with questions may consult the PBGC Web site, -- http://www.pbgc.gov/-- or call toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1- 800-877-8339 and ask for 800-400-7242. Retirees of LandAmerica Financial Group Inc. who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Assumption of the plan's unfunded liabilities will increase PBGC's claims by $31 million and was not previously included in the agency's fiscal year 2008 financial statements. The PBGC is a federal corporation created under ERISA. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns. About LandAmerica Financial LandAmerica Financial Group, Inc. is a leading provider of real estate transaction services with offices nationwide and a vast network of active agents. LandAmerica and its affiliates operate through approximately 700 offices and a network of more than 10,000 active agents throughout the world, including Mexico, Canada, the Caribbean, Latin America, Europe and Asia. LandAmerica Financial Group and its affiliate LandAmerica 1031 Exchange Services, Inc. filed for Chapter 11 protection November 26, 2008 (Bankr. E.D. Va. Lead Case No. 08-35994). Dion W. Hayes, Esq., and John H. Maddock III, Esq., at McGuireWoods LLP, are the Debtors' bankruptcy counsel. In its bankruptcy petition, LFG listed total assets of $3,325,100,000, and total debts of $2,839,800,000 as of September 30, 2008. On March 6, 2009, affiliate LandAmerica Assessment Corporation, aka National Assessment Corporation, filed its own petition for Chapter 11 relief. Affiliate LandAmerica Title Company filed for for Chapter 11 relief on March 27, 2009. Bankruptcy Creditors' Service, Inc., publishes LandAmerica Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by LandAmerica Financial and its affiliate LandAmerica 1031 Exchange Services, Inc. (http://bankrupt.com/newsstand/or 215/945-7000) LAW DEVELOPERS: Court Prohibits Deed of Trust Reformation --------------------------------------------------------- WestLaw reports that under heavily criticized, but nonetheless governing Fourth Circuit precedent, the actual knowledge that a Chapter 11 debtor possessed, as a party to the deed of trust documents, of the real property that the parties meant to encumber prevented the debtor from assuming the status of an innocent bona fide purchaser for purposes of cutting off whatever reformation rights the deed of trust creditor otherwise had to reform an erroneous legal description of the property in the deed of trust documents. Nonetheless, the creditor's reformation rights were cut off, as of the date of commencement of the bankruptcy case, based on the debtor-in-possession's status, not as a bona fide purchaser, but as a judicial lien creditor presumed not to have any knowledge of the mistake. In re Law Developers, LLC, --- B.R. ----, 2008 WL 2570863 (Bankr. E.D.N.C.). Law Developers, L.L.C., filed for chapter 11 protection on Feb. 14, 2008 (Bankr. E.D.N.C. Case No. 08-00965), estimating its assets and liabilities between $1 million and $10 million. Trawick H Stubbs, Jr., at Stubbs & Perdue, P.A., in New Bern, N.C., represents the Debtor. LEHMAN BROTHERS: Collapse Cues UK Treasury to Fix Insolvency Law ---------------------------------------------------------------- The United Kingdom Treasury will overhaul its insolvency law after the demise of Lehman Brothers Holdings, Inc., various news reports stated May 11, 2009. The Treasury issued a document acknowledging the need for the country's insolvency laws to be revised. The document, according to Edmund Conway at Telegraph U.K., is likely to be followed by legislation in the coming years. The document, the Financial News Online said, was made in answer when an industry body chaired by the Chancellor of the Exchequer called for large-scale reform to the way domestic bank failures are managed. Only minor changes are required to improve the system, the news agency said citing the U.K. Treasury document. The U.K. Treasury, Gonzalo Vina at Bloomberg News said, calls for faster payments to creditors and greater clarity on trades in the event an investment bank collapses. Investors in the revised insolvency law, he stated, will have more protection and information to determine the legal position of outstanding trades once liquidators have been called in. After Lehman's collapse in September 2008, Mr. Conway at the Telegraph U.K. related, many criticized the bankruptcy arrangements in the U.K., which, he pointed out, make no allowance for the type of institution affected and was being harsher on creditors than the analogous regimes overseas. He added that many analysts have said that Lehman has moved many of its London assets to New York because of the protections afforded by Chapter 11 of the U.S. Bankruptcy Code. "The reforms considered in this report demonstrate the [U.K.] government's commitment both to financial stability, and to the future of London as a global investment banking hub," Treasury minister Paul Myners in a statement today. A full-text copy of the U.K. Treasury document is available for free at http://ResearchArchives.com/t/s?3cb5 The U.K. overhaul would allow creditors early access to some unsecured assets instead of having to wait until the whole liquidation process is complete, Bloomberg said. That shift is designed to strengthen financial stability, Mr. Myners stated in the press release. A second pillar of the reform would seek to force investment banks to make more use of clearing houses for trades, Bloomberg added. It would also require greater legal clarity on trades so that counterparties understand their position in case of administration. About 1.5 million over-the-counter cash equity trades, exchange- traded derivatives and other derivative contracts were open in the U.K. when Lehman's European unit ceased trading in September, Bloomberg related. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Employee-Led Group Completes Buy-Out of Neuberger ------------------------------------------------------------------ Lehman Brothers Holdings Inc. and its affiliates informed the U.S. Bankruptcy Court for the Southern District of New York that it has completed the sale of Neuberger Berman Group LLC to NBSH Acquisition LLC on May 4, 2009. NBSH Acquisition is the Delaware limited liability company formed by certain senior managers of Neuberger Berman. The Debtors also filed with the Court a full-text copy of the second amendment to their unit purchase agreement available for free at http://bankrupt.com/misc/Lehman2ndAmendedAgreement.pdf The management group submitted a bid that is $176 million more than the $2.15 billion bid submitted by Bain Capital LLC and Hellman & Friedman LLC. The sale of Neuberger Berman to the management group provides $922 million in proceeds to the Debtors' estate before a break-up fee of $52.5 million. NBSH in a statement said the completion of the Neuberger Berman creates one of the world's largest private, independent money managers with approximately $158 billion in assets under management for institutions and individuals. "New York-based Neuberger Berman is now majority-owned by an employee group consisting of portfolio managers and senior professionals of the newly independent company. The firm's previous owner, Lehman Brothers Holdings Inc., retains the remainder," NBSH said. Formed in 1939, Neuberger Berman employs approximately 1,600 people, including more than 250 investment professionals, and is a leading provider of global equity, fixed income and alternative investment solutions to institutions and individuals through customized separately managed accounts and funds. Approximately 50% of the assets are managed in core and specialty fixed income and liquidity portfolios, approximately 40% in a broad range of equity portfolios, and approximately 10% in alternative investment products including hedge funds and private equity funds. "We are thrilled to begin this new chapter in Neuberger Berman's rich investment history," said George Walker, chairman and chief executive officer of Neuberger Berman. "Our newly independent company offers enduring qualities for all investment seasons: deep experience, solid performance, and a lasting partnership with our clients." "Neuberger Berman brings to the marketplace seven decades of experience in managing the valued assets of families and institutions," said Joseph V. Amato, president of Neuberger Berman. "We are confident our clients and colleagues will continue to benefit from our distinct investment culture, intense focus on research, and commitment to client service." "This is a particularly proud day for me," said Roy R. Neuberger, who co-founded Neuberger Berman in 1939. "It is wonderful to see the firm independent once again, and moving forward with a continuing commitment to common-sense investing and putting its clients first." William J. Fox and Jack D. McCarthy, Jr., managing directors of Alvarez & Marsal, the professional services firm overseeing Lehman Brothers Holdings and working to maximize value for creditors, will both serve on the board of the newly independent firm. "This transaction represents a superb outcome for the Lehman estate and its creditors, as well as for Neuberger Berman's clients and employees," said Mr. Fox. "We are pleased to be able to support Neuberger Berman as it re-establishes its independence." "For seven decades -- including more than 60 years as an independent company -- Neuberger Berman has been a highly successful asset management business," said Mr. McCarthy. "The firm's strong management, long-term track record and stability position it well for great opportunities ahead." Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: HKMA Reports Progress of Investigations -------------------------------------------------------- The Hong Kong Monetary Authority on Friday said there are currently 48 Lehman-Brothers-related cases under disciplinary consideration. These are cases that have gone through detailed investigation by the HKMA. "A number of cases are at a very advanced stage of the enforcement process. Before making a final determination in these cases, we have to go through due process to ensure fairness, including giving the subjects of investigation an opportunity to be heard," said by an HKMA spokesperson. The HKMA has referred no cases to the Securities and Futures Commission (SFC) this week. Since 17 October 2008 the HKMA has referred a total of 445 Lehman-Brothers-related cases, involving 16 banks, to the SFC for further action. These cases have been reviewed by the HKMA, which has determined that there are sufficient grounds for referring them to the SFC to facilitate its investigations into banks. The HKMA has, up to 7 May 2009, received 20,913 complaints concerning Lehman-Brothers-related products, of which 20,744 complaints have gone through the preliminary assessment process. As a result of the assessment, the HKMA is currently investigating 5,915 cases and seeking further information on 13,791 cases. A total of 990 complaints have been closed as there was no sufficient prima facie evidence found after the preliminary assessment process or no sufficient grounds and evidence found after the detailed investigation. "The closure of these cases will not affect the top-down investigations being undertaken by the SFC at the bank level," the HKMA spokesman said. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Inks Pact Allowing HSBC Bank to Set Off Claim -------------------------------------------------------------- Prior to its bankruptcy filing, Lehman Brothers Holdings Inc. entered into an agreement dated September 9, 2008, with HSBC Bank Plc. The agreement provides that, under certain circumstances, funds held by HSBC in three accounts in the name of LBHI may be used to secure debts, including potential overdrafts and debit balances that LBHI, Lehman Brothers International (Europe), or Lehman Brothers Limited may owe to HSBC resulting from the operation of their customer accounts. As of April 28, 2009, one of these accounts has a balance in the sum of EUR343,446,459. On October 31, 2008, Royal Bank of Scotland caused a misdirected payment in the sum of GBP605,000 to be deposited in one of the customer accounts in the name of LBHI. As of April 23, 2009, this customer account is overdrawn in the sum of GBP99,992,714 plus accrued interest in the sum of GBP69,347. LBHI and HSBC agree that HSBC can setoff the amount it is owed on account of (i) the GBP605,000, and the (ii) GBP99,992,714, plus accrued interest and all costs and expenses it incurred in connection thereto, against the EUR343,446,459. The parties also agree to address issues surrounding HSBC's additional alleged setoff rights against the Debtors. To materialize their agreements, LBHI and HSBC entered into a stipulation, which permits HSBC to (i) convert the EUR343,446,459 to British pounds in an amount equal to its claim; (ii) to setoff its claim against the EUR343,446,459; and (iii) to close the customer account. Under the stipulation, HSBC is required to provide written notice to Alvarez and Marsal, and Weil Gotshal & Manges LLP, containing a final accounting of the amount of its claim and its various components. LBHI is given three days after receipt of the notice to contest the amount. If LBHI objects to the amount, HSBC cannot setoff its claim unless and until they reach an agreement or there is a court order authorizing the setoff. Upon resolution, HSBC is required to remit the GBP605,000 to Royal Bank. LBHI and HSBC are also required under the stipulation to release each other from all liabilities in connection with HSBC's claim. The stipulation, however, does not affect any other claims between the companies including HSBC's additional claim; and does not limit the right of HSBC to impose an administrative freeze on the three accounts it or LBHI's right to contest such action. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: LBI Trustee Seeks Approval of Wells Fargo Deal --------------------------------------------------------------- Wells Fargo Bank, N.A., serves as Trustee of the T&W Lease-Backed Notes, Series 1998-A, T&W Lease-Backed Notes, Series 1998-B, and T&W Funding Company XII, L.L.C. Lease-Backed Notes, Series 1999-A. These Indentures were entered into among Wells Fargo, Lehman Receivables III, L.L.C. The Notes are formally registered in the name of Cede & Co. The parties believe that the beneficial holders of the Notes are United of Omaha Life Insurance Company, Transamerica Life Insurance Company, Transamerica Financial Life Insurance Company, Aviva Life and Annuity Company, The Northwestern Mutual Life Insurance Company, and LBI. Accel Capital Corporation and Venstar Leasing, Inc., acted as subservicer to T&W Financial with respect to certain Canadian leases that were part of the security for the Notes. T&W Financial ceased operations early in 2000 and eventually filed for bankruptcy. FINOVA Loan Administration was appointed to replace T&W Financial as servicer of the Accel Leases. KPMG LLP was appointed receiver of the Venstar Leases but Venstar continued to service the Venstar Leases. LeaseDimensions Inc. replaced FINOVA as servicer of the Accel Leases as of December 1, 2001. LeaseDimensions is currently the servicer of the Leases. In 2000, FINOVA deposited money into an escrow account at the Bank of Montreal. On April 2, 2008, Bank of Montreal transferred the escrowed funds to LeaseDimensions, which transferred the funds to Wells Fargo on April 4, 2008. The amount of the funds relating to the Accel Leases is $457,931. As Venstar collected payments on the Venstar Leases, it would transfer the collected money to Wells Fargo. LeaseDimensions would include the payments from Venstar on its monthly servicer reports, which dictated the amounts of money that would be distributed to the various parties who had an interest in the money collected. In June 2002, LeaseDimensions inadvertently failed to include one month's worth of collections on the Venstar Leases on its monthly servicer report. Thus, that one month's worth of collections was never distributed to the Noteholders who were entitled to receive those proceeds. The amount of the funds that were not distributed due to the oversight in June 2002 is $26,753. On December 11, 2008, Wells Fargo filed a Complaint for Interpleader and Declaratory Relief, commencing Civil No. 08- 6349, in the United States District Court for the District of Minnesota to resolve disputes that arose as to the proper distribution of the Venstar Funds and Accel Funds. In connection with the Action, Wells Fargo deposited the Venstar Funds and Accel Funds with the Clerk of the District Court. To resolve the disputes, James W. Giddens, as Trustee for the SIPA liquidation of the business of Lehman Brothers Inc., Wells Fargo, LeaseDimensions, and the Noteholders ask the U.S. Bankruptcy Court for the Southern District of New York to approve an agreement they entered into. The agreement states that: (a) The attorneys' fees of Faegre and Benson for Wells Fargo in connection with the negotiation, execution and performance of the Agreement and to file and maintain the Action, and the attorneys' fees of DLA Piper to draft and revise the Agreement, will be subtracted pro rata from the Accel and Venstar Funds before distribution. The Accel and Venstar Funds left after these fees are subtracted will be referred to as the "Remaining Accel Funds" and the "Remaining Venstar Funds." (b) Holders of the 1998-A Class A Notes will receive 2.66% of the Remaining Accel Funds, which funds will be distributed pro-rata, as: Original Holder Principal Balance % ------ ----------------- ----- Aviva $7,389,500 9.55% NMLIC $20,000,000 25.84% United of Omaha $15,000,000 19.38% LBI $35,000,000 45.23% (c) Holders of the 1999-A Class A Notes will receive 52.49% of the Remaining Accel Funds, which funds will be distributed pro-rata as: Original Holder Principal Balance % ------ ----------------- ----- LBI $73,049,000 70.89% TLIC $20,000,000 19.41% TFLIC $10,000,000 9.70% (d) Holders of the 1998-B Notes will receive 44.85% of the Remaining Accel Funds. Of the amount, 92.2% will be distributed pro-rata to the holders of the 1998-B Class A Notes, as: Original Holder Principal Balance % ------ ----------------- ----- NMLIC $23,715,000 33.11% Northwestern Long Term Care Insurance Co. $1,100,000 1.54% TLIC $12,947,000 18.08% JPMorgan Chase $33,849,405 47.27% and 7.8% will be distributed pro-rata to the 1998-B Class B Notes, as: Original Holder Principal Balance % ------ ----------------- ----- United of Omaha $4,721,631 100% (e) Holders of the 1998-B Class A Notes will receive 100% of the Remaining Venstar Funds, as: Original Holder Principal Balance % ------ ----------------- ----- NMLIC $23,715,000 33.11% NLTCIC $1,100,000 1.54% TLIC $12,947,000 18.08% JPMorgan Chase $33,849,405 47.27% (f) In addition to seeking approval from the Bankruptcy Court, Wells Fargo will also ask the Minnesota Court to approve the agreement and dismiss the Action with prejudice. (g) Immediately after the Court delivers the Venstar Funds and Accel Funds to Wells Fargo, Wells Fargo will distribute all of the Accel and Venstar Funds as described in the Agreement; provided that Wells Fargo will distribute the portion of the Remaining Accel Funds and Remaining Venstar Funds allocable to JPMorgan Chase to the Trustee, who will in turn distribute those funds to JPMorgan Chase. (h) Each of the Parties, by executing the Agreement, releases all claims that it or they may have against any of the other Parties related to the Venstar Funds and the Accel Funds, except for each of their rights and obligations, if any, under the Agreement. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Local Units Seek US Government's Aid After Losses ------------------------------------------------------------------ State and local governments that lost $1.7 billion in investments related to Lehman Brothers Inc.'s collapse in September 2008 are seeking help from the U.S. Government to use its $700 billion Troubled Asset Relief Program to let rescue them. That step, according to Michael Crittenden of The Wall Street Journal, would be a departure from U.S. Treasury Department policy, which has primarily focused on propping up the struggling banking industry. But local government officials say the government's decision to let Lehman fail where other firms were rescued makes it a special case. "The decision to treat Lehman Brothers' financial situation differently than other financial institutions resulted in devastating consequences on state and local governments," Karen Rushing, clerk of the circuit court and comptroller for Sarasota County in Florida, said before the U.S. House Financial Services Committee. She added that the county was holding $40 million in Lehman bonds at the time the firm filed for bankruptcy. A county study found that for every $10 million in losses, the local government loses roughly 95 jobs and $12.7 million in economic output, she said, the Journal related. Ron Galatolo, chancellor of the San Mateo Community College District in California, also told the Committee that losses on Lehman assets consumed most of the district's operating reserves and reduced the budget by roughly 10%. "As a result of our reserves being eliminated by the Lehman bankruptcy, we have no viable option other than to immediately reduce our teachers and support staff in addition to our shrinking academic programs and services," Mr. Galatolo told the Journal. "TARP has helped our private industries, it should also help our local communities," Rich Gordon, a supervisor from San Mateo County, in California, told the Senate Committee, Mercury News related. San Mateo County's investment pool -- a portfolio used by cities, school districts and other public entities in the county -- took a $155 million hit after Lehman declared bankruptcy, the newspaper related. San Mateo has sued Lehman executives and is also trying to recover funds in the bankruptcy court overseeing Lehman's case. The Journal said some House Democrats are pushing legislation that would require the U.S. Treasury to buy up the Lehman assets from municipal governments at face value. The Treasury is authorized to purchase those assets under the $700 billion TARP but has yet to do so, the Journal pointed out. On the other side of the fence, top panel Republicans, according to the Journal, expressed concern about the prospect of rescuing local governments from their mistakes, even as government policy is to not let any major financial institutions fail. Rep. Spencer Bachus of Alabama, the panel's top GOP member, said constituents are in a state of "bailout fatigue," while Rep. Ed Royce of California said the government shouldn't be picking winners and losers, the Journal quoted them as saying. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Retired Teacher Complains of Weil Gotshal's Fees ----------------------------------------------------------------- Edith S. Hall sent a letter dated April 17, 2009, to Judge Stuart M. Bernstein, chief bankruptcy judge of the U.S. Bankruptcy Court for the Southern District of New York, to object to the "exorbitant payment" requested by Weil, Gotshal & Manges LLP for the firm's work in the bankruptcy cases of Lehman Brothers Holdings, Inc., and its affiliates. "At a time when the economy is in crisis and executive bonuses are being questioned, I feel these fees are excessive and should be capped," Ms. Hall said in the letter. Weil Gotshal asked for the allowance of $55,140,791 for fees for the services the firm rendered to Lehman Brothers as the financial institution's lead bankruptcy counsel for the period beginning September 15, 2008, to January 31, 2009. Weil Gotshal also sought reimbursement of $1,336,880 for other expenses. Ms. Hall said she is a retired teacher who purchased $50,000 of Lehman's corporate bonds, dated February 15, 2005. Maria Parks, Courtroom Deputy of Judge Bernstein's chambers, notified Ms. Hall that her letter is forwarded to Judge Peck's chambers. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Teva Entities Seek Payments to Non-Lehman Account ------------------------------------------------------------------ Teva Pharmaceutical Works Company and Teva Hungary Pharmaceutical Marketing Privat Limited Company separately seek authority from the U.S. Bankruptcy Court for the Southern District of New York to direct postpetition dividend payments for the benefit of TPW to an account other than one maintained at Lehman Brothers Inc. If applicable, the Teva Entities ask the Court to lift the automatic stay to effectuate its request. The Teva Entities are Hungarian companies that, prior to the Petition Date, entered into separate corporate client agreements with LBI pursuant to which LBI agreed to act as the entities' broker and dealer. The Accounts remain with LBI and were not transferred to Barclays in connection with the sale of LBI to Barclays in September 2008. As of the Petition Date, the TPW Account holds, among others, 1,066,680 shares of Teva Pharmaceutical Industries, Ltd.-ADR, and cash or cash equivalents of not less than $687,590. The aggregate value of the Account, as of the Petition Date, was not less than $51,184,221. The Teva Hungary Account holds 472,886 shares of TPI and cash or cash equivalents of not less than $304,826 as of the Petition Date. TPI has informed the Teva Entities that it has declared a further dividend to shareholders and may make future dividend distributions to shareholders. The Teva Entities assert that LBI has no interest in those future transfers and the funds at issue are not assets of LBI's estate. If the Court does not approve their requests, the Teva Entities contend that the dividend distributions would result in a forced transfer to the Accounts. Any requirement to force the Teva Entities to receive the future transfers into the Accounts would be tantamount to a forced advance of funds by TPW to LBI, the Teva Entities say. They add that that forced deposit would further cause them immediate harm and deprive them from access to their property. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Wants to Assume Libra Credit Swap Agreement ------------------------------------------------------------ Lehman Brothers Holdings Inc. and its affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to assume and assign a credit default swap agreement to Deutsche Bank AG, London Branch, and a letter of agreement with the bank. The Credit Default Swap Agreement was inked in 2006 by Debtor Lehman Brothers Special Financing and Libra CDO Limited. Under the deal, Libra sold credit protection to LBSF to limit exposure associated with losses and other credit impairment with respect to residential mortgage-backed securities. In connection with the agreement, Libra signed a senior credit default swap agreement with Societe Generale, under which SocGen is required to advance funds to Libra when needed to meet Libra's obligations to LBSF. Attorney for the Debtors, Ralph Miller, Esq., at Weil Gotshal & Manges LLP, in New York, says LBSF's interest in the Credit Default Swap Agreement is a valuable asset of its estate, the value of which will be realized through the proposed assumption and assignment. He relates that LBSF's estate is expected to receive about $694 million to $733 million in net payments through the assignment of the Credit Default Swap Agreement, including about $325 million that accrued under the agreement but not yet paid. The proposed assumption and assignment of the Credit Default Swap Agreement to Deutsche Bank, however, is subject to a determination by the Court that the agreement has not been terminated on October 10, 2008, as asserted by Libra and LaSalle Bank National Association. Libra and LaSalle Bank have stated that the agreement has been terminated as a consequence of LBHI's bankruptcy filing, and that the termination should result in no payments actually made to LBSF. LBHI and LBSF have already filed an adversary proceeding against Libra and three other companies seeking nullification of the termination of their credit default swap agreement. Libra CDO Limited, LaSalle, BofA, and SocGen also filed an adversary proceeding against LBSF asking the Court to declare that the termination of the Credit Default Swap Agreement is valid. Letter Agreement In connection with the proposed assignment, LBSF, Lehman Brothers Holdings, Inc., and Deutsche Bank entered into a letter agreement, which commits Deutsche Bank to the assignment for at least 90 days beginning on May 5, 2009, and prohibits it from entering into any other transactions related to the Credit Default Swap Agreement. The letter agreement, however, does not prohibit LBSF from entering into another agreement in connection with the assignment of the Credit Default Swap Agreement that may provide greater value for its estate. In case LBSF does not assign the Credit Default Swap Agreement to Deutsche Bank and enters into a similar arrangement with another party, Deutsche Bank will be paid a break-up fee of $20 million. Under the letter agreement, if the Court does not approve the agreement including its break-up fee provision by June 19, 2009, Deutsche Bank will be released from its commitment to assume the Credit Default Swap Agreement. To secure this commitment, LBHI and LBSF ask the Court first to approve the letter agreement before resolving issues related to whether the Credit Default Swap Agreement may be assigned. The Court will convene a hearing on May 28, 2009, to consider approval of the letter agreement and the proposed assignment of the Credit Default Swap Agreement. Creditors and other concerned parties have until May 22 to file their objections. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LORBER INDUSTRIES: 9th Cir. Rules on Workers Compensation Claim --------------------------------------------------------------- WestLaw reports that a reimbursement claim asserted by the California Self-Insurers' Security Fund, for workers' compensation claims that it was required to pay on behalf of a Chapter 11 debtor's employees after the debtor defaulted on its obligations as self-insurer for workers' compensation benefits, was not an "excise tax," of kind payable on a priority basis under 11 U.S.C. Sec. 507(a)(8)(E). Under the California workers' compensation scheme, it was possible to hypothesize a similarly situated private creditor. In re Lorber Industries of California, --- F.3d ----, 2009 WL 1176307 (9th Cir.), 09 Cal. Daily Op. Serv. 5441. About Lorber Industries Headquartered in Gardena, California, Lorber Industries of California -- http://www.lorberind.com/-- manufactures texturized and knitted fabrics. The company filed for chapter 11 protection on February 10, 2006 (Bankr. C.D. Calif. Case No. 06-10399). Joseph P. Eisenberg, Esq., at Jeffer, Mangels, Butler & Marmaro LLP, represents the Debtor in its restructuring efforts. Reem J. Bello, Esq., at Weiland, Golden, Smiley, Wang Ekvall & Strok, LLP represents the Official Committee of Unsecured Creditors. The Debtor's schedules show $25,580,387 in assets and $24,740,726 in liabilities. The Court confirmed the Debtor's plan on October 20, 2006. LORDSHIP DEVELOPMENT: Bankruptcy Tolls Forclosure Upset Period -------------------------------------------------------------- WestLaw reports that the period allowed under North Carolina for upset bids following a foreclosure sale conducted pursuant to a power of sale in a deed of trust was suspended when the deed of trust debtor filed for bankruptcy during that period. Moreover, it remained suspended for the life of the bankruptcy or until the court lifted the automatic stay, whereupon, pursuant to a North Carolina statute providing extra protection to a debtor against a power of sale foreclosure [West's N.C.G.S.A. Sec. 45-21.22(c)], the original foreclosure sale was effectively nullified and the trustee had to resell the property. A bankruptcy judge thus denied a motion for stay relief to complete the transfer of the debtor's rights in the property. In re Lordship Development, LLC, --- B.R. ----, 2008 WL 4526830 (Bankr. E.D.N.C.), 60 Collier Bankr. Cas. 2d 1241, 50 Bankr. Ct. Dec. 183. Wilmington, North Carolina-based Lordship Development, LLC filed its chapter 11 petition on July 24, 2008 (Bankr. E.D.N.C. Case No. 08-04965). Judge J. Rich Leonard presides over the case. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it estimated assets between $1 million and $10 million and debts between $1 million and $10 million. MANITOWOC COMPANY: Moody's Downgrades Corp. Family Rating to 'B2' ----------------------------------------------------------------- Moody's Investors Service lowered the ratings of The Manitowoc Company, Inc. -- Corporate Family and Probability of Default Ratings to B2 from Ba3; senior secured bank credit facility to B1 from Ba2; senior subordinated notes to Caa1 from B1. The rating outlook is negative. The downgrade reflects the reduced prospects for earnings over the near term and erosion in Manitowoc's credit metrics beyond Moody's expectations. The continued downturn in the global economy is adversely influencing Manitowoc's end markets, resulting in a diminished outlook for its cranes and foodservice businesses. Moody's believes that the construction industry, the main driver of the company's cranes, will remain weak well into 2010. Unadjusted operating income for the crane business declined to 8.4% for 1Q09 from about 12.7% for the previous quarter and backlog declined by about 28% over the same time period. Further dampening construction spending is the current disruption in the credit markets and the lack of third-party funding for new projects and for new equipment. The company's food service business is under considerable pressures as well. Manitowoc indicated that it is taking a 1Q09 goodwill impairment charge of $700 million associated with its foodservice business. Moody's believes that the charge indicates that the level of cash flow that can reasonably be expected from the acquired Enodis plc operations is lower than previously projected at the time of acquisition. Manitowoc also indicated that lower projected earnings combined with lower than expected proceeds from the sale of the Enodis ice business has led it to seek financial covenant relief under its bank credit agreement beginning with its 2Q09 covenant certification. Moody's notes that Manitowoc is presently in discussions with its bank group for financial covenant relief. Manitowoc is stepping up its restructuring initiatives and working capital improvements in order to lessen the impact of the global economic downturn on its operating margins and cash generation. Manitowoc is adjusting its global production and capacity, rationalizing its cost structure, and aggressively integrating Enodis. However, these efforts are unlikely to fully offset declining demand for its products and operating margins are likely to come under more pressure as the company may take more restructuring charges to right size its businesses. Moody's view is that Manitowoc's operating performance is likely to breech credit metric levels that were previously identified by the rating agency as being potentially in-line with a lower rating. These metrics include EBITA/interest expense below 2.0x or debt/EBITDA above 5.0x (ratios adjusted per Moody's methodology). Moody's believes that the company's future credit metrics are more indicative of the B2 Corporate Family Rating. These ratings/assessments were affected by this action: -- Corporate Family Rating lowered to B2 from Ba3; -- Probability of Default lowered to B2 from Ba3; -- $2.8 billion senior secured credit facility lowered to B1 (LGD3, 38%) from Ba2 (LGD3, 37%); and, -- $150 million senior unsecured notes due 2013 lowered to Caa1 (LGD5, 89%) from B2 (LGD5, 89%). The last rating action was on March 25, 2009 at which time Moody's affirmed lowered Manitowoc's Corporate Family Rating to Ba3 and changed the outlook to negative. The Manitowoc Company, Inc., headquartered in Manitowoc, Wisconsin, is a diversified global manufacturer supporting the construction and foodservice end markets. Revenues for the last twelve months through March 31, 2009 totaled approximately $4.7 billion. MARVIN M PHELPS: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------- Joint Debtors: Marvin Melvin Phelps Shirley Nell Phelps P. O. Box 550 Cottonwood, AZ 86326 Bankruptcy Case No.: 09-09999 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Debtors' Counsel: Pernell W. Mcguire, Esq. Mcguire Gardner, Pllc 320 N. Leroux, Suite A Flagstaff, AZ 86001 Tel: (928) 779-1173 Fax: (928) 779-1175 Email: pmcguire@mcguiregardner.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 4 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/azb09-09999.pdf The petition was signed by the Joint Debtors. MASONITE INT'L: Court Caps Unsecured Claims Payment at $56MM ------------------------------------------------------------ Pursuant to Sections 105(a) and 363 of the Bankruptcy Code, Judge Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware authorized, but not directed, the Debtors to pay prepetition amounts owed to unsecured creditors on account of accounts payable claims in the ordinary course of business; provided that the Debtors reserve the right to require the reinstatement or continuance of terms from those holders of Accounts Payable Claims that do not have contracts with the Debtors or are otherwise free to change their terms or have changed their terms; provided further, however, that the aggregate of the payments pursuant to the final Order will not exceed $56,000,000. The Debtors are authorized to issue postpetition checks, or to effect postpetition fund transfer requests, in replacement of any checks or fund transfer requests in respect of the unsecured claims that are dishonored or rejected. Daniel J. DeFranceschi, Esq., at Richards, Layton, & Finger, P.A., in Wilmington, Delaware, has informed the Court, prior to the entry of the order, that no parties in interest have objected to the Motion to pay prepetition claims of general unsecured creditors in the ordinary course of business. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Gets Green Light to Pay $28MM in Employee Costs --------------------------------------------------------------- Judge Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware granted the amended motion and authorized Masonite International, Inc., and its affiliates to honor and pay, in the ordinary course of business and in accordance with their prepetition policies and practices, employee wages and benefits, including amounts owed in connection with the Employee Obligations totaling $28,437,160. The Debtors are authorized, but not directed, to continue the Incentive Plans in the ordinary course of business. Pursuant to Section 362(d) of the Bankruptcy Code, Employees are authorized to continue with their Workers' compensation claims in the appropriate judicial or administrative forum under the Workers' Compensation Programs and the Debtors are authorized to continue the Workers' Compensation Programs and pay all prepetition amounts relating to it in the ordinary course of business. The Debtors are authorized, but not directed, to (i) forward any unpaid amounts on account of Deductions or Payroll Taxes to the appropriate third-party recipients or taxing authorities; and (ii) pay costs and expenses incidental to payment of the Employee Obligations, including all administrative and processing costs and payments to outside professionals in the ordinary course of business. The Debtors are further authorized, but not directed, to issue postpetition checks, or to effect postpetition fund transfer requests, in replacement of any checks or fund transfer requests that are dishonored as a consequence of the Chapter 11 cases with respect to prepetition amounts owed to their Employees and in respect of the Employee Obligations that are dishonored or rejected. Prior to the entry of the order, Daniel J. DeFranceschi, Esq., at Richards, Layton, & Finger, P.A., in Wilmington, Delaware, has informed the Court no parties in interest have objected to the amended Motion to pay employee prepetition claims. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Reports 1st Quarter 2009 Financial Results ---------------------------------------------------------- Masonite International Inc. reported unaudited financial information for the first quarter of 2009. First Quarter Highlights Q1 2009 Q1 2008 Increase/ (in millions) (in millions) (Decrease) Net Sales $334.1 $464.4 (28.1%) Gross Profit 51.4 90.4 (43.1%) Selling general and administrative expenses 41.9 43.7 (4.1%) Operating EBITDA 9.6 46.7 (79.4%) Adjusted EBITDA 12.0 53.5 (77.6%) 3/31/2009 12/31/2008 Cash on hand $163.2 $194.3 ($31.1) Net debt 2,078.5 2,064.6 (13.9) Accounts receivable 229.8 238.5 (8.7) Inventory 222.8 233.7 (10.9) Accounts payable and accrued liabilities (excluding accrued interest) 197.2 192.1 5.1 2009 Cash flow recap Q109 Q108 Source (Use) of cash ($ millions) ($ millions) Operating EBITDA $9.6 $46.7 Non-cash EBITDA expenses 0.4 0.6 Change in operating working capital 5.8 (21.0) Capital expenditure (9.2) (7.3) ----- ------ 6.6 19.1 Proceeds on disposal of assets 1.3 0.1 Acquisitions - (13.7) Distributions to minority interests - (6.0) Restructuring payments (4.2) (7.9) Financial and legal advisor payments (7.0) - ----- ------ (3.3) (8.5) Cash interest (19.0) (22.0) Cash taxes (0.5) (1.2) Change in Indebtedness (19.7) 89.7 Change in sold accounts receivable 13.4 14.2 Pension funding (0.4) (0.3) FX and other (1.6) (3.1) ------- ------ Increase / (Decrease) in cash ($31.1) $68.8 ======= ====== "We continue to be impacted by weak market conditions in most of our regions, which has had a significant impact on our top line," said Fred Lynch, President and CEO of Masonite. "Thanks to our continuing efforts to right-size the business in light of market conditions and driving cost productivity in manufacturing and business overheads, the EBITDA and Cash flow performance was better than the internal quarterly projections used in the formulation of our recently published five year projections." Masonite said 2009 sales were $334.1 million, a decline of 28.1% compared to sales of $464.4 million in the first quarter of 2008. Operating EBITDA decreased 79.4% to $9.6 million from $46.7 million in the first quarter of 2008. Sales to external customers from facilities in North America decreased 24.3% to $223.1 million in the first quarter of 2009 from $294.8 million in the first quarter of 2008. Sales decreased 20.8% in North America excluding the impact of unfavorable foreign exchange movements. Sales to external customers from facilities outside of North America, primarily in Western Europe, decreased approximately to $111.0 million in the first quarter of 2009 from $169.6 million in the prior year period. Unfavorable foreign currency movements negatively impacted comparative consolidated sales by $10.5 million in North America and $25.7 million in rest of world. Excluding the unfavorable exchange impact, sales in Masonite's Europe and Other segment decreased 19.4% compared with the prior year period as Masonite continued to see deteriorating market conditions, most significantly in Western Europe, and to a somewhat lesser degree in Eastern Europe. Operating EBITDA in the first quarter of 2009 decreased to $9.6 million from $46.7 million in the prior year primarily due to lower sales volumes and carryover input cost inflation from the prior year that were not fully offset by savings from plant closures, price increases and a reduction in selling, general and administration expenses versus the prior year. In the first quarter of 2009, the Company was operating seven fewer sites than in the first quarter of 2008 due to closure and consolidation activities completed during the last twelve months. In the first quarter of 2009, cash flow after changes in operating working capital and capital expenditure was $6.6 million compared to $19.1 million in the prior year. In the current year, changes in working capital were a source of $5.8 million versus a use of $21.0 million in the prior year. Reductions in inventory were relatively consistent in both periods, however receivables in 2009 did not increase as significantly as in the prior year due to seasonal influences being offset by economic conditions and reduction in customer payment terms. In addition, following the announcement of the restructuring plan, the Company has experienced an improvement in vendor terms. The Company was required to repay indebtedness at certain foreign subsidiaries upon maturity which combined with other scheduled debt payments resulted in a use of cash of $19.7 million. Amounts sold under the Company's accounts receivable facility increased by approximately $13.4 million. Restructuring Plan The Company reported that it continues to make good progress in implementing its "pre-negotiated" debt restructuring plan and is on track to complete its financial reorganization within the next few months. On April 14, the Company received final court authorization to continue to meet its obligations to trade suppliers on normal terms in the ordinary course of business. The Company also received final court authorization to continue to utilize its cash collateral to help meet its obligations to suppliers, employees and customers. This authorization was initially granted on an interim basis on March 17. On April 17 the U.S. court approved the process of formally soliciting acceptances for the plan of reorganization from the requisite creditor groups. The Company has already entered into lock-up agreements supporting the restructuring plan with holders of more than 75 percent in principal amount of its senior secured obligations and more than 80 percent in principal amount of its senior subordinated notes due 2015. The minimum threshold required for acceptance by a class of creditors of the proposed plan of reorganization is 66 2/3 percent in value of claims of creditors who vote and more than 50 percent in number of creditors who vote. On April 20 the Company received comparable relief from the Canadian courts. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Seeks to Establish July 6 as Claims Bar Date ------------------------------------------------------------ Masonite International, Inc., and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to set July 6, 2009, at 5:00 p.m. (Eastern Time) as the deadline by which proofs of claim must be filed by the Debtors' creditors, and September 13, 2009, at 5:00 p.m. (Eastern Time) as the deadline by which governmental units must file proofs of claims against the Debtors. The Debtors also ask the Court to approve the proposed Proof of Claim Form, the proposed Bar Date Notice, and the proposed publication notice. Rule 3003(c)(3) of the Federal Rules of Bankruptcy Procedure provides that the Court will fix the time within which proofs of claim must be filed in a Chapter 11 case pursuant to Section 501 of the Bankruptcy Code. Moreover, Rule 3003(c)(2) provides that any creditor who has a claim against any of the Debtors that arose prior to the Petition Date, and whose claim is not scheduled in the Debtors' schedules of assets and liabilities, schedules of executory contracts, and unexpired leases and statements of financial affairs or whose claim is listed on the Schedules as disputed, contingent, or unliquidated, must file a Proof of Claim. Section 502(b)(9) provides that governmental units will have a minimum of 180 days after the entry of the order for relief to file Proofs of Claim. The Debtors propose to give all creditors more than 30 days' notice of the Claims Bar Date and governmental units 106 days' notice of the Governmental Bar Date. The Debtors filed their Schedules on April 15, 2009. Therefore, creditors will have ample time to review the Schedules and their own records and file a Proof of Claim if necessary, Daniel J. DeFranceschi, Esq., at Richards, Layton, & Finger, P.A., in Wilmington, Delaware, says. In accordance with Local Bankruptcy Rule 1009-2, in the event the Debtors amend their Schedules, the Debtors ask the Court to establish the later of (a) the Claims Bar Date or the Governmental Bar Date, as applicable, to the claim, and (b) 20 days from the date on which the Debtors provided notice of the amendment to the Schedules as the deadline by which claimants holding claims affected by the amendment must file Proofs of Claim with respect to the claim. Entities Entitled To File Proofs of Claim These entities holding claims against the Debtors arising prior to the Petition Date be required to file proofs of claim on or before the applicable Bar Date: (a) any entity whose claim against a Debtor is not listed in the applicable Debtor's Schedules or is listed as contingent, unliquidated, or disputed; (b) any entity who desires to participate in any of the Chapter 11 cases or share in any distribution in any of the Chapter 11 cases; and (c) any entity who believes that its claim is improperly classified in the Schedules or is listed in an incorrect amount and who desires to have its claim allowed in a different classification or amount. Entities Not Required to File Proofs of Claim These entities whose claims otherwise would be subject to the Claims Bar Date need not file proofs of claim: (a) any entity that already has filed a signed Proof of Claim against the applicable Debtors with the Clerk of the Court in a form substantially similar to Official Bankruptcy Form B-10; (b) any entity whose claim is listed on the Schedules if (i) the claim is not scheduled as any of "disputed," "contingent," or "unliquidated;" (ii) the entity agrees with the amount, nature, and priority of the claim as set forth in the Schedules; and (iii) the entity does not dispute that its claim is an obligation only of the specific Debtor against which the claim is listed in the Schedules; (c) a holder of a claim that previously has been allowed by a Court order or that is allowed pursuant to the Plan, including claims of the Debtors' prepetition secured lenders, the agent for the prepetition secured lenders, the senior subordinated noteholders, and the indenture trustee for the senior subordinated notes; (d) Senior Secured Claims and Senior Subordinated Notes Claims or claims of the Senior Subordinated Notes Indenture Trustee or the Senior Secured Agent; (e) a holder of a claim that has been paid in full by any of the Debtors pursuant to the Bankruptcy Code or in accordance with a Court order; (f) a holder of a claim for which a specific deadline previously has been fixed by the Court; (g) any Debtor or wholly-owned affiliate having a claim against a Debtor; (h) a current employee or director of the Debtors, if an order of the Court authorized the Debtors to honor the claim in the ordinary course of business as a wage or benefit; provided, however, that a current employee must submit a Proof of Claim by the Claims Bar Date for all other claims arising before the Petition Date; (i) a customer of the Debtors if the claim is for an obligation that the Debtors are authorized to pay under the Order Authorizing the Debtors to Maintain and Administer Customer Programs and Honor Prepetition Obligations Related Thereto [Docket No. 48]; (j) any holder of a claim for which a separate deadline is fixed by the Court; and (k) any holder of a claim allowable under Sections 503(b) and 507(a)(2) of the Bankruptcy Code as an expense of administration, including claims arising under Section 503(b)(9). The Debtors prepared and ask the Court to approve a Proof of Claim form based on Official Form 10, available for free at http://bankrupt.com/misc/Masonite_POCForm.pdf With the assistance of their notice and claims agent, Kurtzman Carson Consultants LLC, the Debtors propose to provide each of the creditors listed on their Schedules with a "personalized" Proof of Claim Form, which will indicate how the Debtors have scheduled the creditor's claim in the Schedules, including (a) the identity of the Debtor against which the entity's claim is scheduled; (b) the amount of the scheduled claim, if any; and (c) whether the claim is listed as contingent, unliquidated, or disputed; and (d) whether the claim is listed as secured, unsecured priority, or unsecured non-priority. Creditors may choose not to use the personalized Proof of Claim Form and instead submit Proofs of Claim on Official Form 10. Claim Filing Requirements With respect to preparing and filing of Proofs of Claim, the Debtors propose that proofs of claim be required to be consistent with these requirements: (a) Each proof of claim must (i) be written in English; (ii) include a claim amount denominated in United States dollars or Canadian dollars; (iii) conform substantially with the Proof of Claim Form provided by the Debtors or Official Form No. 10; and (iv) be signed by the claimant or by an authorized agent or legal representative. (b) Only original Proofs of Claim may be deemed acceptable for purposes of claims administration. Copies of Proofs of Claim or Proofs of Claim sent by facsimile or electronic mail will not be accepted. (c) Each Proof of Claim must clearly identify the Debtor against which a claim is asserted. A proof of claim filed under the joint administration case number (No. 09-10844), or otherwise without identifying a Debtor, will be deemed as filed only against Debtor Masonite Corporation. (d) Each Proof of Claim must state a claim against only one Debtor and clearly indicate the Debtor against which the claim is asserted. To the extent more than one Debtor is listed on the proof of claim, that claim may be treated as if filed only against the first-listed Debtor. (e) Each Proof of Claim must include supporting documentation. If the documentation is voluminous, the Proof of Claim may include a summary or an explanation as to why the documentation is not available; provided, however, that any creditor that received the written consent will be required to transmit the writings to the Debtors' counsel upon request no later than 10 days from the date of the request. (f) Each Proof of Claim must be filed, including supporting documentation, by U.S. Mail or other hand delivery system, so as to be actually received by KCC on or before the Claims Bar Date or the Governmental Bar Date at this address: Masonite Claims Processing c/o Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, California 90245 Proofs of claim submitted by facsimile or electronic mail will not be accepted. (g) Claimants wishing to receive acknowledgment that their Proofs of Claim were received by KCC must submit (i) a copy of the Proof of Claim Form and (ii) a self-addressed, stamped envelope. Any entity who is required, but fails, to file a Proof of Claim on or before the applicable Bar Date will be forever barred, estopped, and enjoined from asserting the claim against the Debtors and are prohibited from voting to accept or reject any plan of reorganization, participate in any distribution in the Chapter 11 cases on account of the claim, or receive further notices regarding the claim. Mailing of Bar Date Notices No later than five business days after the Court enters the Bar Date Order, the Debtors propose to mail written notice of the Bar Dates and a Proof of Claim Form to these entities: (a) the U.S. Trustee; (b) counsel to the agent for the Debtors' prepetition secured lenders; (c) the indenture trustee for the Debtors' senior subordinated notes; (d) counsel to the ad hoc committee of senior subordinated noteholders; (e) all creditors and other known holders of claims against the Debtors as of the date of the Bar Date Order, including all entities listed in the Schedules as holding claims against the Debtors; (f) all entities that have requested notice of the proceedings in the Cases pursuant to Bankruptcy Rule 2002 as of the date of the Bar Date Order; (g) all entities that have filed proofs of claim in the Chapter 11 cases as of the date of the Bar Date Order; (h) all known equity holders of the Debtors as of the date the Bar Date Order is entered; (i) all entities who are party to executory contracts and unexpired leases with the Debtors; (j) all entities who are party to litigation with the Debtors; (k) the District Director of the Internal Revenue Service for the District of Delaware; (1) all other taxing authorities for the jurisdictions in which the Debtors maintain or conduct business; (m) the Pension Benefit Guaranty Corporation; and (n) the Securities and Exchange Commission. A full-text copy of the proposed Bar Date Notice is available for free at http://bankrupt.com/misc/Masonite_BarDateNO.pdf The Debtors also ask the Court to permit them to make supplemental mailings of the Bar Date Package at any time up to 20 days in advance of the Bar Date, with any mailings deemed timely and the Bar Date being applicable to the recipient creditors. In the interest of ensuring all potential claimants receive adequate notice of the Bar Dates, in addition to providing the Bar Date Notice to known creditors, the Debtors will provide notice of the Bar Dates by publication, on one occasion in The Wall Street Journal (national edition), the Globe and Mail (National Edition), and Le Presse, on or before June 15, 2009. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASONITE INT'L: Sr. Sub Noteholders Band Together, Hire Lawyers --------------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, Andrew N. Rosenberg, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, informs the U.S. Bankruptcy Court for the District of Delaware that his firm represents an Informal Group of Holders of Masonite Senior Subordinated Notes, which is composed of: (a) Carlyle Investment Management, LLC on behalf of certain Funds and Accounts 520 Madison Avenue 39th Floor New York, New York 10022 (b) Certain Funds and Accounts Managed by DDJ Capital Management, LLC 130 Turner Street, LLC Waltham, Massachusetts 02453 (c) Oaktree Capital Management. L.P. for certain Funds and Accounts 333 South Grand Avenue, 28th Floor Los Angeles, California 90071 (d) Deans Knight Capital Management 730-999 West Hastings Street Vancouver, BC Canada V6C 2W2 (e) Caspian Capital Partners LP 500 Mamaroneck Avenue Harrison, New York 10528 (f) AIG Investments, as Investment Adviser for Certain Funds and Accounts 70 Pine Street, 10th Floor New York, New York 10270 (g) Invesco Trimark Ltd., in its capacity as Manager of Various Funds and Portfolios 120 Bloor Street East, Suite 700 Toronto, Ontario Canada M4W 187 (h) TPG Credit Management, L.P. on behalf of accounts which it serves as Investment Manager 4600 Wells Fargo Center 90 South Seventh Street Minneapolis, Minnesota 55402 Mr. Rosenberg relates that the nature of the claims held by the Informal Noteholder Group against the Debtors includes claims in connection with: -- the 11% senior subordinated notes due April 6, 2015, issued by Masonite Corporation pursuant to an Exchange Note Indenture, dated October 6, 2006, by Masonite Corporation, as the issuer, and certain of its affiliates, as guarantors, and The Bank of New York, as trustee; and -- the 11% senior subordinated notes due April 6, 2015 issued by Masonite International Corporation pursuant to an Exchange Note Indenture, dated October 6, 2006, by Masonite International Corporation, as issuer, and certain of its affiliates, as guarantors, and the Trustee. The Informal Noteholder Group collectively holds approximately $562.4 million out of approximately $769.8 million principal outstanding, or 73% percent, of the Senior Subordinated Notes, Mr. Rosenberg says. Meanwhile, Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP in Wilmington, Delaware, discloses that her firm serves as the local Delaware counsel of the Informal Group of Holders of Masonite Senior Subordinated Notes, which is also represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MERISANT WORLDWIDE: Solicits Exit Funding, Keeps Control of Case ---------------------------------------------------------------- Judge Peter J. Walsh extended Merisant Worldwide Inc. and its affiliates' exclusive period to file a Chapter 11 plan until September 5, 2009. The Court also extended the plan solicitation period, if the Debtors file a Plan by that deadline, until November 4. In their request for an extension of the exclusive periods, the Debtors said they have drafted and distributed a management presentation to potential debt and equity investors and engaged in a "road show" involving senior management aimed at a securing exit financing necessary for the formulation of a reorganization plan. The Debtors have already obtained final approval of a $20 million junior debtor-in-possession financing to fund their Chapter 11 cases. Headquartered in Chicago, Illinois, Merisant Worldwide Inc. -- http://www.merisant.com/-- sells low-calorie tabletop sweetener. The Debtor's brands are Equal(R) and Canderel(R). The Debtor has principal regional offices in Mexico City, Mexico; Neuchatel, Switzerland; Paris, France; and Singapore. In addition, the Debtor owns and operates manufacturing facilities in Manteno, Illinois, and Zarate, Argentina, and own processing lines that are operated exclusively for the Debtor at plants located in Bergisch and Stendal, Germany and Bangkrason, Thailand. As of March 28, 2008, the Debtor has 20 active direct and indirect subsidiaries, including five subsidiaries in the United States, six subsidiaries in Europe, five subsidiaries in Mexico, Central America and South America, and three subsidiaries in the Asia Pacific region, including Australia and India. Furthermore, the Debtor's Swiss subsidiary holds a 50% interest in a joint venture in the Philippines. Merisant Worldwide holds 100% interest in Merisant Company. Merisant Worldwide and five of its units filed for Chapter 11 protection on January 9, 2009 (Bankr. D. Del. Lead Case No. 09- 10059). Sidley Austin LLP represents the Debtors in their restructuring efforts. Young, Conaway, Stargatt & Taylor LLP represents the Debtors' as co-counsel. Blackstone Advisory Services LLP is the Debtors' financial advisor. Epiq Bankruptcy Solutions, LLC is the Debtors' Claims and Noticing Agent. Winston & Strawn LLP represents the Official Committee of Unsecured Creditors as counsel. Ashby & Geddes, P.A. is the Committee's Delaware counsel. The Debtors have $331,077,041 in total assets and $560,742,486 in total debts as of November 30, 2008. MGM MIRAGE: Fitch Affirms Issuer Default Rating at 'C' ------------------------------------------------------ Fitch Ratings has affirmed MGM MIRAGE's Issuer Default Rating at 'C' and downgraded the company's senior unsecured debt following the CityCenter financing agreement, credit facility amendment, and first-quarter 2009 results. Fitch's rating actions are: -- IDR affirmed at 'C'; -- Senior secured notes affirmed at 'CCC/RR2' (71%-90% recovery band); -- Senior credit facility affirmed at 'CC/RR3' (51%-70%); -- Senior unsecured notes downgraded to 'C/RR4' (31%-50%) from 'CC/RR3'; -- Senior subordinated notes affirmed at 'C/RR6' (0%-10%). The rating actions affect MGM's $7 billion credit facility, $6.2 billion of outstanding senior unsecured debt, $848 million of outstanding senior subordinated debt, and $750 million of senior secured notes. Fitch has not assigned a Rating Outlook. MGM's 'C' IDR reflects Fitch's continued view that as part of the company's restructuring efforts, there is a high probability of a Coercive Debt Exchange, which would be considered a restricted default. A debt exchange would be an extremely helpful step in an overall financial restructuring aimed at avoiding a bankruptcy filing, which would be considered a negative outcome by most major constituents, in Fitch's view. The downgrade of the senior unsecured bonds reflects the collateral granted to bank lenders on April 29, 2009, which reduced unsecured debt recovery values. Addressing the CityCenter financing overhang on April 29 was MGM's first step in repairing the parent company's balance sheet. MGM will now focus on its various restructuring alternatives that may include debt exchanges, raising additional debt/equity capital, and/or asset sales. When considering these alternatives, the company was able to retain much of its available collateral in negotiating the most recent credit facility amendment, which will support its position in future negotiations with creditors. However, MGM did not receive any new capital or address 2009 and 2010 maturities in exchange for the collateral it granted. Debt Exchange Likely a Part of Overall Restructuring When considering the company's alternatives, Fitch believes a CDE is a likely part of a solution to fix the balance sheet for the long term, which underpins Fitch's rationale for the 'C' IDR, since a CDE is considered a restricted default. A CDE would help MGM to stave off a potential bankruptcy, and would be viewed positively by the major constituents including the bank lending group, company management, Dubai World (CityCenter joint venture partner and major shareholder), and Kirk Kerkorian (MGM's majority equity shareholder). Even some unsecured bondholders may view a debt exchange positively. However, recent spread tightening might make an exchange more difficult to execute. Obviously, long-term bondholders would have to prefer the terms of an exchange to a potential outcome in bankruptcy court. Bank Lenders Are in Front Bank lenders maintain negotiating power, enabling them to press for near-term action, since MGM is out of compliance with financial covenants. The bank lenders remain in front of bondholders in that the bank group extended the financial covenant waiver period only to June 30, 2009, prior to the July 31, 2009 bond maturity payment of $226 million and the Oct. 1, 2009 $820 million bond maturity payment. Another $1.5 billion of bond maturities is due in 2010-2011 prior to the October 2011 expiration of the $7 billion credit facility, which provides incentive for bank lenders to address long-term capital structure issues now. In the past two credit agreement amendments, the banks recovered $400 million of borrowings from MGM, and the re-borrowing of those funds require lender consent. Therefore, the bank lenders could potentially consent to release the funds to help meet near-term maturities. However, Fitch believes they would be unlikely do so without confidence in the longer-term sustainability of the company's capital structure. In other words, it is unlikely that bank lenders would allow for near-term bondholders to be made whole without forcing some concessions, providing further support for the likelihood of a near-term debt exchange, in Fitch's view. For example, bank lenders could allow MGM to provide security interests to bondholders, in exchange for reducing outstanding debt levels or extending maturities. Other Restructuring Alternatives Regarding other restructuring alternatives, capital markets have become more accommodating in recent weeks, which could prove beneficial to MGM's capital raising efforts. Although Fitch believes a CDE is likely to be part of MGM's restructuring, the broader restructuring could include multiple other options: -- New Equity Issuance: Driven by the recent equity market rally, related sectors (e.g. REITs), have seen an increase in issuance activity. In addition, there have been some signs recently across multiple industries that declines in travel demand trends have started to moderate. Given that MGM's stock price is at its highest level since early January 2009, an equity issuance becomes more plausible and attractive. The main issue surrounding an equity deal is how sizeable one could be executed, and whether majority-owner Kerkorian and major holder Dubai World would be willing to dilute their stakes, or participate in an offering. -- New Debt Issuance: Although an unsecured deal is unlikely, MGM might be able to use available collateral to support a secured debt issuance. However, MGM likely used much of the credit facility's 5% Consolidated Net Tangible Asset carveout while issuing the 13% NY-NY secured notes last November. Therefore, bank lenders would likely need to support any sizable secured debt issuance, which would benefit liquidity and help meet near-term maturities, but would not help the company's leverage level or long-term credit profile, and it would use up valuable collateral. Therefore, Fitch believes that bank lenders would resist a secured debt issuance, unless it was a part of a broader CDE that reduces overall debt levels, as indicated above. -- Asset Sales: The credit facility amendment agreed to in March 2009 provided for lender consent on selling assets, so bank lenders would need to approve of any asset sale. Selling an operating asset at an unattractive multiple to meet near-term maturities would be detrimental to the longer-term credit profile, so it is unlikely bank lenders would consent, in Fitch's view. Since taxes would minimize the benefit of an asset sale, Fitch believes that an operating asset sale is likely to be only part of the restructuring if MGM can get a multiple similar to the Treasure Island sale. That is unlikely until to occur until MGM's restructuring is clarified and its financial position (and therefore negotiating position) is improved. (However, a Detroit asset sale could be viewed positively by bank lenders as discussed below.) Non-operating or land asset sales would be more beneficial to MGM's credit profile, but more difficult to execute due to lower demand. MGM Granted Some Collateral, But Much Retained; Banks Will Be Able to Squeeze More After obtaining some collateral in the recent amendments, bank lenders remain minimally secured at the moment, reducing the likelihood of a near-term, bank-forced bankruptcy filing. However, the position of the bank lenders is strengthened by their ability to exchange covenant waivers for additional collateral, thereby further diluting unsecured bond recovery prospects. Fitch believes that in the April 29 agreements, MGM preserved much of the $2-plus billion of availability provided by the 15% CNTA carveout in the unsecured bonds. Fitch believes MGM might be able to provide security interests in additional collateral beyond the CNTA carveout, but it is unclear how much more would be available. As part of the April 29 credit agreement amendment, MGM Grand Detroit, which is a separate co-borrower under the facility, granted a security interest in its assets. Detroit is an excluded subsidiary in both the unsecured and 13% NY-NY secured notes indentures, so Detroit's security interest was outside of the CNTA carveouts and provided solely to the bank lenders. Accordingly, MGM is required to increase its Detroit borrowing under the facility to $450 million by the end of May (from $404 million as of Dec. 31, 2008), and thereafter to make "reasonable and best efforts" to cause Detroit's borrowings to increase above $500 million. Therefore, as Detroit's borrowings under the facility increase, so does the bank group's security interest. Furthermore, if MGM were to sell Detroit, the proceeds are required to pay down the credit facility, and re-borrowing of those funds would require lender consent. MGM also granted security interests in Gold Strike Tunica and certain undeveloped land on the LV Strip, up to $300 million, as part of the credit agreement amendment. As part of the CityCenter financing agreement, MGM pledged the assets of Circus Circus and adjacent land to support its obligations with respect to CityCenter construction costs, including $224 million in letters of credit and potential cost overruns. Although the 13% NY-NY secured notes indenture provides that those holders share equally and ratably with additional security granted, Fitch believes much of this collateral went only to the banks due to the 1.5% CNTA carveout in the secured notes indenture. As it relates to the unsecured debt, this collateral may have been granted outside of the CNTA carevout in the unsecured notes indentures due to a liberal definition of "Principal Property" in the unsecured indentures. As a result, MGM likely still has comfortably more than $2 billion of collateral available under just the existing unsecured bond indentures' general CNTA carveout, which is likely to be used in future negotiations. It is unclear how much collateral MGM might be able to provide outside of the CNTA carveout. The 13% NY-NY secured noteholders are likely to share in any additional collateral granted. Future Issuer Default Rating Actions An upgrade of MGM's IDR from 'C' could be supported by the company executing on its various non-debt exchange alternatives which reduce the likelihood of a CDE or other types of default. An upgrade could also be supported if a debt exchange is executed, but Fitch did not view the exchange as a CDE. A downgrade to 'RD' would occur if a debt exchange is executed successfully, and results in a material reduction in terms and is considered to be coercive or defacto necessary even if technically voluntary. Concurrent with a downgrade to 'RD' resulting from a CDE, Fitch would raise the rating to a level appropriate for MGM's prospects on a going-forward basis immediately after the effective date of the exchange. Recovery Ratings Updated: Reduced Unsecured Debt Recovery Fitch continues to estimate superior recovery in the 71%-90% range for the NY-NY secured notes, which results in 'CCC/RR2' rating, or a two-notch positive differential from MGM's 'C' IDR, based on the current capital structure. The secured notes share equally and ratably in additional secured collateral, so recovery prospects could improve if additional secured collateral is granted. Fitch continues to estimate good recovery in the 51%-70% range for MGM's senior credit facility, which results in the 'CC/RR3' rating, or a one-notch positive differential from MGM's 'C' IDR, based on the current capital structure. Fitch's estimated recovery is toward the lower end of this range, and actual recovery could benefit if MGM grants additional secured collateral to bank lenders in exchange for additional covenant waivers. Fitch downgraded MGM's senior unsecured debt due to the collateral that was released to lenders on April 29. Fitch estimates average recovery toward the high end of the 31%-50% range, which results in the 'C/RR4' rating, on par with MGM's 'C' IDR, based on the current capital structure. However, actual recovery could be affected meaningfully, depending on the amount of collateral MGM may grant to lenders. Fitch continues to estimate poor recovery in the 0%-10% range for MGM's subordinated debt, resulting in the 'C/RR6' rating, which would result in a two-notch negative differential from MGM's 'C' IDR, but 'C' is the lowest rating before default ratings of 'RD' and 'D'. MIDLAND FOOD: Talks with Capmark on Plan; Seeks Aug. 31 Extension ----------------------------------------------------------------- Midland Food Services LLC has filed a third request for an extension of its exclusive period to file a Chapter 11 plan. Midland wants its plan filing deadline moved from June 2, 2009, to August 31. It also wants its plan solicitation deadline moved by 90 days, until November 29. The Court will consider approval of the request at a May 27 hearing. Midland said its goal is to reach a consensual plan of reorganization, and that it has been engaged in discussions with its franchisor and its major secured creditor, Capmark Finance Inc. The Debtor stated it is continuing to negotiate with GE Capital Finance Corporation as servicer for CNL American Properties Fund, Inc., concerning leases for Midland's restaurants. These talks have been ongoing and progress has been made since the inception of the case, Midland said. The parties have not yet reached a final written agreement. The Debtor believes that the resolution of this issue will be helpful in facilitating the formulation of a plan of reorganization. In addition, the Debtor has negotiated a number of interim consensual cash collateral orders and budgets, and during the week of April 27, 2009, met with Capmark to discuss the terms of a consensual plan of reorganization. Pursuant to Section 1121(d)(1) of the Bankruptcy Code, as amended by the Bankruptcy Abuse Protection and Consumer Protection Act, the plan filing period may not be extended beyond a date that is 18 months after the commencement of a Chapter 11 case. For Midland, that date is January 6, 2010. About Midland Food Services Independence, Ohio-based Midland Food Services, L.L.C., is a Pizza Hut franchisee, operating 88 Pizza Hut restaurants in Ohio, West Virginia, Kentucky, Michigan, Maryland and Virginia. Net sales were $64 million for the year ended July 7, 2008. Midland Food filed for Chapter 11 bankruptcy before the United States Bankruptcy Court for the District of Delaware on August 6, 2008 (Bankr. D. Del. 08-11802). Tara L. Lattomus, Esq., and Margaret F. England, at Eckert Seamans Cherin & Melot, L.L.C., represent the Debtor in its restructuring efforts. Gary D. Bressler, Esq., at McElroy, Deutsch, Mulvaney & Carpenter, LLP, has been tapped as co-counsel. . Midland's formal lists of assets and debt show property claimed to be worth $5.8 million against liabilities totaling $34.6 million, including $27.4 million in secured claims. The Debtor first filed for Chapter 11 in October 2000. It emerged from bankruptcy one year later on August 7, 2001. MIRANT CORP: Asks Court for Final Decree Closing 11 Cases --------------------------------------------------------- Pursuant to Section 350 of the Bankruptcy Code, certain affiliates of Mirant Corp. ask the U.S. Bankruptcy Court for the Northern District of Texas to close 11 Chapter 11 cases, effective on a date as decreed by the Court. Ian T. Peck, Esq., at Haynes and Boone, LLP in Forth Worth, Texas, relates the 11 Debtors' Plans of Reorganization have been substantially consummated and payments to be made under the Plans are largely completed. To the extent that any claims remain pending against any of the Administered Entities, these claims will remain pending against the debtor group to which the entity belonged, as provided for in the Plans. The rights of creditors will in no way be adversely affected by the closing of the Administered Entities chapter 11 cases, Mr. Peck assures the Court. The Administered Entities are: Debtor Case No. ------ -------- Mirant Americas Energy Marketing. LP 03-46591 Mirant California, LLC 03-46592 Mirant MD Ash Management, LLC 03-46621 Mirant Special Procurement, Inc. 03-46626 MLW Development, LLC 03-46629 Mirant Americas, Inc. 03-46634 Mint Farm Generation, LLC 03-46593 Mirant Americas Procurement, Inc. 03-46642 Mirant Capital, Inc. 03-46645 Mirant Chalk Point Development, LLC 03-46647 Mirant Dickerson Development, LLC 05-90365 Mr. Peck tells Judge D. Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas that under Section 1930 of the Judiciary and Judicial Procedure Code, the Administered Entities are incurring fees, and will continue to incur the fees until the Chapter 11 case of each entity is closed. The United States Trustee for Region 6 did not oppose the request, according to Mr. Peck. As of the Chapter 11 Closing Effective Date, there are six cases remaining in the Administratively Consolidated Cases of the New Mirant Entities: Debtor Case No. ------ -------- Hudson Valley Gas Corporation 03-46595 Mirant Bowline, LLC 03-46618 Mirant Corporation 03-46590 Mirant Lovett, LLC 03-46636 Mirant New York, Inc. 03-46641 Mirant Potrero, LLC 03-46648 About Mirant Corp. Mirant Corporation -- http://www.mirant.com/-- produces and sells electricity in the United States. Mirant owns or leases approximately 10,097 megawatts of electric generating capacity. The company operates an asset management and energy marketing organization from its headquarters in Atlanta, Georgia. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. On March 7, 2007, the Court entered a final decree closing 46 Mirant cases. Mirant NY-Gen LLC, Mirant Bowline LLC, Mirant Lovett LLC, Mirant New York Inc., and Hudson Valley Gas Corporation, were not included in the parent's bankruptcy exit plan. In February 2007, Mirant NY-Gen filed its Chapter 11 Plan of Reorganization and Disclosure Statement. The Court confirmed an amended version of the Plan on May 7, 2007. Mirant NY-Gen emerged from Chapter 11 on May 7, 2007. On July 13, 2007, Mirant Lovett filed its Chapter 11 Plan. The Court confirmed Mirant Lovett's Plan on Sept. 19, 2007. Mirant Lovett emerged from bankruptcy on Oct. 2, 2007. Bankruptcy Creditors' Service, Inc., publishes Mirant Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Mirant Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the Troubled Company Reporter on March 23, 2009, Fitch Ratings affirmed Mirant Corp. and its subsidiaries' Issuer Default Ratings at 'B+'. Fitch also affirmed the companies' other existing ratings as shown in the list of rating actions at the end of this release. The Rating Outlook for MIR and each of its listed subsidiaries remains Stable. In December 2008, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Mirant and its subsidiaries, Mirant North America LLC and Mirant Americas Generating LLC following a full review of the company. S&P rated Mirant and all of its subsidiaries, including Mirant Mid-Atlantic, on a consolidated basis. Mirant has a weak business profile, reflecting exposure to merchant power commodity markets, environmental emissions compliance due to coal fuel use, and debt refinancing, according to S&P. These risks are mitigated by a large, base-load coal asset position, some geographic diversity, and solid plant operations. MIRANT CORP: Files March 31 Post-Confirmation Report ---------------------------------------------------- Angela Nagy, vice president and assistant controller for Mirant Corporation, reports that the company had zero balance in its checking account with the Bank of America under Account No. 3751745682, and zero balance per bank statement and month end balance per books for the quarter ending December 31, 2008. Mirant's Post Confirmation quarterly operating report ending March 31, 2009, also reflects zero balances: Account title Amount ------------- ------ Beginning of quarter cash balance $0 Cash receipts from other sources 0 Total cash receipts 0 Total disbursements this quarter 0 End of quarter cash balance 0 Mirant Americas Generation, LLC, also filed its post-confirmation report. Mirant Americas Generation, LLC Post Confirmation Quarterly Bank Reconcilement For the Quarter Ending March 31, 2009 Bank Reconciliations Balance Per Bank Statement at Bank of America, Acct. No. 3751381897 $143,089 Add: Total Deposits Not Credited 0 Subtract: Outstanding Checks 0 Other Reconciling Items 0 Month End Balance Per Books 143,089 Number of Last Check Written Cash: Currency on Hand 0 ----------- Total Cash - End of Month 143,089 Cash In: Investment Accounts: Merrimac Funds - 3625 0 Federated Investments - 4537497 19,179,635 ----------- Total Cash Investments 19,179,635 ----------- Total Cash $19,322,724 =========== Mirant Americas Generation, LLC Post Confirmation Quarterly Operating Report For the Quarter Ending March 31, 2009 Beginning of Quarter Cash Balance: $76,232 Cash Receipts (Includes affiliate transactions): Cash Receipts During Current Quarter: Cash receipts from business operations, net $99 Cash receipts from loan proceeds, net 0 Cash receipts from contributed capital, net 0 Cash receipts from tax refunds, net 0 Cash receipts from other sources, net 19,253,010 ----------- Total Cash Receipts, net 19,253,109 Cash Disbursements (Third party disbursements only): Payments Made Under the Plan: Administrative Secured Creditors Priority Creditors Unsecured Creditors Additional Plan Payments Other Payments Made this Quarter General Business Other Disbursements $6,616 ----------- Total Disbursements this Quarter $6,616 ----------- Cash Balance End of Quarter $19,322,724 =========== About Mirant Corp. Mirant Corporation -- http://www.mirant.com/-- produces and sells electricity in the United States. Mirant owns or leases approximately 10,097 megawatts of electric generating capacity. The company operates an asset management and energy marketing organization from its headquarters in Atlanta, Georgia. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. On March 7, 2007, the Court entered a final decree closing 46 Mirant cases. Mirant NY-Gen LLC, Mirant Bowline LLC, Mirant Lovett LLC, Mirant New York Inc., and Hudson Valley Gas Corporation, were not included in the parent's bankruptcy exit plan. In February 2007, Mirant NY-Gen filed its Chapter 11 Plan of Reorganization and Disclosure Statement. The Court confirmed an amended version of the Plan on May 7, 2007. Mirant NY-Gen emerged from Chapter 11 on May 7, 2007. On July 13, 2007, Mirant Lovett filed its Chapter 11 Plan. The Court confirmed Mirant Lovett's Plan on Sept. 19, 2007. Mirant Lovett emerged from bankruptcy on Oct. 2, 2007. Bankruptcy Creditors' Service, Inc., publishes Mirant Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Mirant Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the Troubled Company Reporter on March 23, 2009, Fitch Ratings affirmed Mirant Corp. and its subsidiaries' Issuer Default Ratings at 'B+'. Fitch also affirmed the companies' other existing ratings as shown in the list of rating actions at the end of this release. The Rating Outlook for MIR and each of its listed subsidiaries remains Stable. In December 2008, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Mirant and its subsidiaries, Mirant North America LLC and Mirant Americas Generating LLC following a full review of the company. S&P rated Mirant and all of its subsidiaries, including Mirant Mid-Atlantic, on a consolidated basis. Mirant has a weak business profile, reflecting exposure to merchant power commodity markets, environmental emissions compliance due to coal fuel use, and debt refinancing, according to S&P. These risks are mitigated by a large, base-load coal asset position, some geographic diversity, and solid plant operations. MOTION MARKETING: Court Declines to Avoid Federal Tax Lien ---------------------------------------------------------- WestLaw reports that a bankruptcy judge in Texas has held that, if a statutory lien is perfected, so as to be valid against bona fide purchasers, at any time prior to the commencement of a bankruptcy case, then the lien is not avoidable by the trustee under 11 U.S.C. Sec. 545(2). Moreover, if the statutory lien is not one that is avoidable under Sec. 545(2), then it is also outside trustee's power to avoid as a preferential transfer. The judge held that the term "fixing," as used in a Code provision excepting from the trustee's preference-avoiding power the "fixing of a statutory lien" that is not avoidable under Sec. 545(2), is not limited merely to the attachment of liens, but is broad enough to include lien perfection. In re Motion Marketing Solutions, Inc., --- B.R. ----, 2009 WL 1037579 (Bankr. N.D. Tex.). MULTIPLAN INC: Moody's Gives Positive Outlook; Keeps 'B2' Rating ---------------------------------------------------------------- Moody's Investors Service changed the outlook of Multiplan, Inc. to positive and affirmed the B2 Corporate Family Rating. The change in outlook reflects strong interest coverage and cash flow generation for the ratiing, substantial progress with debt repayment, and Moody's expectation that free cash flow will continue to improve in relation to debt even in an environment where revenues are likely to be pressured by economic weakness generally, and higher unemployment in particular. The rating remains constrained by lack of organic growth in a mature niche within the health care management market, the company's relatively small size, relatively high leverage and history of acquisitions. The B2 Corporate Family Rating is supported by the successful integration of PHCS, financial performance and cash flow generation at the high end of Moody's expectations in recent quarters, and the company's scale and covered lives within a niche market. The ratings also take into account the company's progress in paying down debt since the PHCS transaction was completed, as well as the realization of significant expense synergies by reducing staffing redundancies in network development, information technology, account management and elsewhere. Moody's took these rating actions: -- Affirmed the B2 Corporate Family Rating; -- Affirmed the B2 Probability of Default Rating; -- Affirmed the B1 (LGD3, 35%) rated $50 million senior secured revolving credit facility due 2012; -- Affirmed the B1 (LGD3, 35%) rated $606 million Senior Secured Term Loan B and Term Loan C due 2013; and -- Affirmed the Caa1 (LGD5, 86%) rated $219 million 10.375% Senior Subordinated Notes due 2016. The outlook for the ratings was changed to positive from stable. The last rating actions on Multiplan were taken on September 22, 2006 and September 29, 2006, when the B2 Corporate Family Rating was affirmed. MultiPlan Inc., based in New York, New York, operates principally in the health care benefits field as a Preferred Provider Organization, providing health care cost management via contract arrangements between health care providers and insurance carriers, HMO's, third party administrators and Taft-Hartley benefit funds ("payers") throughout the United States. Fees are generated from discounts provided for payers that access the company's network. The company reported $356 million in revenues in 2008. NEW JERUSALEM: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: The New Jerusalem Deliverance Church dba Life Worship and Training Center 830 Auburn Rd Pontiac, MI 48342 Bankruptcy Case No.: 09-54891 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Marci B. McIvor Debtor's Counsel: Michael A. Stevenson, Esq. 29200 Southfield Road Suite 210 Southfield, MI 48076 Tel: (248) 423-8200 Fax: (248) 423-8201 Email: mas@stevensonbullockplc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 17 largest unsecured creditors is available for free at: http://bankrupt.com/misc/mieb09-54891.pdf The petition was signed by Robert E. Joyce, senior pastor and director of the Company. NORWOOD PROMOTIONAL: Can Access Wachovia $30MM DIP Loan on Interim ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorized Norwood Promotional Products Holdings Inc. and its affiliated debtors to access, on an interim basis, $30 million under a superpriority revolving credit facility from Wachovia Bank National Association. The Court also allowed the Debtors to use cash collateral. The DIP facility will expire on the earliest to occur of (i) Aug. 3, 2009; (ii) confirmation of a plan; and (iii) a sale of the Debtors' assets. Proceeds of the DIP facility will be used to (i) pay costs, expenses and fees incurred, and (ii) provide working capital and for other general corporate purposes. The DIP facility incurs interest at Base Rate -- including floor of 3.25% -- plus 3.5. Default rate is Base Rate plus 5.5%. The Debtors will pay a host of fees including monthly $3,500 servicing fee and $100,000 DIP facility fee to the lender as part of the transaction. The DIP facility is subject to $1.5 million carve-out to pay fees and expenses incurred by professionals retained by the Debtors or any committee. To secured their DIP obligations, the lenders will be granted an allowed superpriority administrative claim over any and all other obligations The DIP facility contains customary and appropriate events of default. A hearing is set for June 1, 2009, at 2:00 p.m., to consider final approval of the Debtors' DIP request. Objections, if any, are due May 28, 2009. A full-text copy of the Debtors' DIP agreement is available for free at http://ResearchArchives.com/t/s?3cbe A full-text copy of the Debtors' DIP budget is available for free at http://ResearchArchives.com/t/s?3cbf Headquartered in Indianapolis, Indiana, Norwood Promotional Products Holdings Inc. -- http://www.norwood.com/-- make and prints promotional items with corporate logos and messages. The company and six of its affiliates filed for Chapter 11 protection on May 5, 2009 (Bankr. D. Del. Lead Case No. 09-11547). Young, Conaway, Stargatt & Taylor, and Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. The Debtors selected Mackinax Partners LLC as restructuring consultant; Houlihan Lokey Howard & Zukin Capital Inc. as investment and financial advisor; and Epiq Bankruptcy Solutions LLC claims agent. When the Debtors filed for protection from their creditors, they listed both assets and debt between $100 million to $500 million. NORWOOD PROMOTIONAL: Court Approves $30,000,000 Wachovia DIP Loan ----------------------------------------------------------------- Bloomberg's Bill Rochelle reports that Norwood Promotional Products Holdings Inc. received from the U.S. Bankruptcy Court for the District of Delaware (Wilmington) interim approval of a $30 million loan package from Wachovia Bank N.A. The Court will consider final approval of the DIP loan on June 1. The Bankruptcy Court, according to Mr. Rochelle, will hold a hearing on May 21 to consider the proposed procedures for the sale of its assets. Norwood has signed a contract to sell its assets for $132 million, including $101 million in cash, to an affiliate of Aurora Capital Group, subject to higher and better offers at an auction. The Debtor is proposing a June 16 deadline for competing bids, a June 18 auction, and a June 19 sale hearing. Norwood said in a statement that it has secured an extension of its existing revolving credit line to avoid any disruption to the business. 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. 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. NOVEMBER 2005: Chapter 11 Filing Cues S&P's Rating Cut to 'D' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and all issue-level ratings on November 2005 Land Investors LLC to 'D' following the company's announcement that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Nevada. The recovery ratings on the company's senior secured first-lien and second-lien debt are unchanged at a '4' and '6', respectively. The bankruptcy filing affects roughly $231 million in rated bank debt. It is S&P's understanding that the voluntary bankruptcy filing relates to the company's need to restructure its secured bank loans. The residential development project in Las Vegas that serves as collateral for the rated loans has been under stress due to the severe deterioration of the Las Vegas housing market. This has delayed the company's ability to sell land, upon which it is reliant to repay its bank debt. The borrower is a joint venture formed for the purpose of acquiring and entitling 2,140 net acres located approximately 12 miles northwest of the Las Vegas Strip, and for constructing the necessary infrastructure improvements for the development. Ratings Lowered November 2005 Land Investors LLC Rating ------ To From -- ---- Issuer credit D/NM/-- CC/Negative/-- First-lien term facility D CC Recovery rating 4 4 Second-lien term facility D C Recovery rating 6 6 NOVEMBER 2005: Moody's Cuts Ratings to 'D' on Bankruptcy Filing --------------------------------------------------------------- Moody's Investors Service lowered the probability of default rating of November 2005 Land Investors, LLC to D from Ca following its filing for protection under Chapter 11 of the US Bankruptcy Code. Subsequent to this rating action, Moody's will withdraw all of the ratings of November 2005 Land Investors. These rating actions were taken: -- Probability of Default rating, lowered to D from Ca; -- First lien debt rating, unchanged at Caa3 (LGD3, 31%) -- Second lien debt rating, unchanged at C (LGD5, 85%). Moody's most recent announcement concerning the ratings for November 2005 Land Investors was on December 30, 2008, at which time Moody's lowered the company's corporate family rating to Ca from Caa1, with similar reductions in the ratings on the different issues of debt. November 2005's previous ratings were assigned by evaluating factors that Moody's believed were relevant to the company's risk profile, such as the company's (i) sponsorship/ownership, (ii) level of presales vs. spec sales, (iii) inflection point in its development cycle, and (iv) capital withdrawals. These attributes were compared against other issuers within the company's core industry, and the company's ratings were believed to be comparable to those of other issuers with similar credit risk. November 2005 Land Investors, LLC is a single-purpose entity that was formed to bid on 2,675 acres of land in the City of North Las Vegas, Nevada at a U.S. Bureau of Land Management auction that was held in November 2005. As the successful bidder at a price of $639 million, NLV has been constructing major community infrastructure, preparing to bring a portion of the property to "super pad" status for its four individual members: affiliates of the Olympia group of companies (which is acting as the project manager), Standard Pacific Corp. (rated Caa1 negative), Astoria Homes, and American West Homes, as well as originally to D.R. Horton, Inc. Although not a party to the joint venture structure formed by NLV or to the bank credit agreement used to finance the structure, D.R. Horton purchased approximately 20% of the acreage for $127.8 million and had been paying a portion of its 20% pro rata share of total development expenses. D.R. Horton has since sold its land to a third party. NRG ENERGY: Must Recalculate Retiree Pension Benefits ----------------------------------------------------- A federal court ordered NRG Energy, Inc., to recalculate pension benefits for retired employees despite the Company's claim that a Chapter 11 confirmed in 2003 precludes any responsibility to the retirees, according to Law360. Headquartered in Princeton, NRG Energy, Inc., owns and operates power generating facilities, primarily in Texas and the northeast, south central and western regions of the United States. NRG also owns generating facilities in Australia and Germany. * * * According to the Troubled Company Reporter on March 5, 2009, Fitch Ratings is maintaining its Rating Watch Evolving on NRG Energy Inc. following the announcement that NRG would be acquiring Reliant Energy Inc.'s Texas retail business for $287.5 million plus working capital. These ratings remain on Rating Watch Evolving by Fitch (i) Issuer Default Rating at 'B'; (ii) Senior secured term loan B at 'BB/RR1'; (iii) Senior secured revolving credit facility at 'BB/RR1'; (iv) Senior notes at 'B+/RR3'; and; (v) Convertible preferred stock at 'CCC+/RR6'. Approximately $8.1 billion of debt is affected. NTK HOLDINGS: Moody's Affirms 'Caa2' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service affirmed NTK Holdings' Caa2 CFR and affirmed the ratings at its wholly owned subsidiary Nortek. At the same time, NTK's Probability of default was changed to Caa2 from Caa2/LD. The ratings outlook remains negative. These ratings/assessments have been affected: Issuer: NTK Holdings, Inc. -- Corporate family rating affirmed at Caa2; -- Probability of default (PDR) changed to Caa2 from Caa2/LD; -- $403 million senior discount notes due 2014, affirmed at Ca (LGD5, 89%) previously at (LGD6, 90%); Issuer: Nortek, Inc. -- $750 million Senior Secured Notes, due 2013, affirmed at B3 (LGD2, 28%); -- $625 million 8 1/2% Senior Subordinated Notes due 2014, affirmed Caa3 (LGD4, 69%). The ratings outlook remains negative. Moody's last rating action for NTK Holdings occurred on May 6, 2009, at which time Moody's changed NTK's PDR to Caa2/LD following the company's 10k disclosure that THL Advisors and certain executive officers of Nortek Inc. (the operating subsidiary of NTK Holdings) purchased $78.5 million face amount of senior unsecured bridge loan facility for $29.1 million in the fourth quarter of 2008. Nortek, Inc., headquartered in Providence, Rhode Island, is a leading diversified manufacturer of innovative, branded, residential and commercial ventilation, HVAC, and home technology convenience and security products. Its products include range hoods and other ventilation products, heating and air conditioning systems, indoor air quality systems, and home technology products. Revenues for 2008 were approximately $2.3 billion. OPUS SOUTH: Wants to Reject Eight Leases and Abandon Properties --------------------------------------------------------------- Opus South Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to: -- reject certain leases nunc pro tunc to 11:59 p.m. on April 30, 2009; and -- abandon certain personal property. The Debtors proposes to reject the leases on these properties: Property Landlord -------- -------- 401 Cleveland Street Capel Properties, Inc. Clearwater, Florida 4th Floor of the building Teachers Insurance and Annuity 4200 Cypress Street, Suite 444 Association of America Tampa, Florida Unit 6 Graeme R. Hunter, Trustee of the 9200 Corkscrew Road, Unit 6 Graeme R. Hunter Trust Estero, Florida Units 7 and 8 Roorda Estero Park Commons, LLC 9200 Corkscrew Road, Unit 7 and 8 and J&S Estero, LLC Estero, Florida Condominium Unit 1213 Cherie L. Connolly 2305 Edgewater Drive Orlando, Florida Office Suites No. 11, 12, 24 Your-Office-Orlando and 63 2 12' Wide trailers for use at Williams Scotsman, Inc. I85 Lawrence Suwanee Road Suwanee, Georgia The Debtors relate that the leases are burdensome to their estates and that is in the best interest of their estates to reject the Debtor leases and reduce their administrative expenses. 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. PANOLAM INDUSTRIES: Taps Weil, Perella for Debt Restructuring ------------------------------------------------------------- Panolam Industries International Inc. has retained Perella Weinberg Partners LP as its financial advisor and Weil, Gotshal & Manges LLP as its legal advisor in its discussions with the senior lenders and the ad hoc group and restructuring efforts generally. The Company has also agreed to pay certain fees incurred by the financial and legal advisors to the senior lenders and the financial and legal advisors to the ad hoc group of noteholders. Panolam Industries said May 5 it is discussing a restructuring of the Company's capital structure with an ad hoc group representing a substantial majority of the Company's 10-3/4% Senior Subordinated Notes due 2013. These discussions are in addition to the previously announced ongoing restructuring discussions the Company has been having with its senior lenders under the Company's senior secured credit facility. As previously reported by the TCR, the Company entered into a forbearance agreement with the senior lenders on March 31, 2009 pursuant to which the senior lenders have agreed, subject to certain conditions, to forbear through June 30, 2009 from exercising their rights and remedies under the Credit Agreement governing the senior debt. The terms of the forbearance agreement prohibit the Company from, among other things, paying the April 1, 2009 interest payment on the Notes. Under the indenture governing the Notes, the failure to make the interest payment within a 30- day grace period following the interest payment date constitutes an event of default. As a result of the expiration of this grace period on April 30, 2009, the holders of 25% of the Notes or the indenture trustee may, upon delivery of proper notice to the Company, accelerate the Company's obligations under the Notes. The Company has not received an acceleration notice from the holders of the Notes or the indenture trustee. As of May 4, 2009, the Company had approximately $43 million of cash on hand. "Given our strong liquidity position, we anticipate conducting business with our customers and suppliers in the ordinary course and on customary terms while we negotiate a restructuring of our indebtedness," stated Robert J. Muller, the Company's Chief Executive Officer. "We believe that by promptly restructuring our balance sheet, we will be able to preserve our core business without disruption and emerge as a stronger company," he added. Panolam Industries disclosed assets of $412,283,000 and debts of $440,162,000 as of December 31, 2008. Panolam incurred a net loss of $121,656,000 on $366,709,000 of net sales in the year ended December 31, 2008, compared with a net income of $8,324,000 on $424,397,000 of net sales the year before. The decrease in sales is primarily attributable to lower thermally fused melanine panels sales resulting from the slowdown in the residential housing market and the closing of two Nevamar TFM manufacturing facilities in Chino, California in June 2006 and a TFM manufacturing facility in Tarboro, North Carolina in February 2007. The Company said that based on its significant loss in 2008, stockholder's deficit, and debt covenant violations there is substantial doubt about its ability to continue as a going concern. About Panolam Industries Based in Shelton, Connecticut, Panolam Industries International, Inc. -- http://www.panolam.com/-- designs, manufactures and distributes decorative overlay products, primarily thermally fused melamine panels (TFMs) and high-pressure laminate sheets (HPLs), throughout Canada and the United States. The Company primarily designs, manufactures, markets and distributes decorative laminate products. Its products are manufactured and primarily sold in North America. As reported by the TCR on May 11, 2009, Moody's Investors Service lowered the probability of default rating of Panolam Industries International, Inc., to Ca/LD from Ca. In addition, Moody's lowered the rating on the term loan and revolver to Caa3 from Caa2 and affirmed all other ratings. The rating action reflects Panolam's failure to make the interest payment on the 10.75% senior subordinated notes within the 30 day grace period following the April 1, 2009 interest payment date. Moody's deems a default to have occurred when an interest payment is not made by the end of a grace period, regardless of whether an Event of Default has been declared by noteholders. PARKLEX ASSOCIATES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Parklex Associates Inc 244 east 62nd street New York, NY 10065 Bankruptcy Case No.: 09-12996 Debtor-affiliate filing separate Chapter 11 petition: Entity Case No. ------ -------- Parklex Associates L.P. 09-12997 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Debtor's Counsel: Isaac Nutovic, Esq. Nutovic & Associates 488 Madison Avenue 16th Floor New York, NY 10022 Tel: (212) 421-9100 Fax: (212) 421-8618 Email: INutovic@Nutovic.com Estimated Assets: $0 to $50,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Fred Deutsch, president of the Company. PGI COS: Files Chapter 11 in Minneapolis ---------------------------------------- PGI Cos. filed a Chapter 11 petition on May 7 before the U.S. Bankruptcy Court for the District of Minnesota (Minneapolis). The Company said asset is less than $10 million while debt exceeds $10 million. PGI Cos. is a direct-mail services provider from Hopkins, Minnesota. PHAR-MOR, INC.: U.S. Sup. Ct. Declines to Review Reclamation Claim ------------------------------------------------------------------ WestLaw reports that an administrative expense claim granted to a vendor whose timely assertion of a state law right of reclamation against goods previously sold to an insolvent debtor-buyer had been denied was not effectively extinguished when the goods subject to reclamation were sold and the proceeds were used to satisfy the superpriority claims of lenders that provided postpetition, debtor-in-possession financing, the Sixth Circuit Court of Appeals previously held in a case in which the United States Supreme Court has now denied certiorari. The vendor had a valid state law right of reclamation that not subject to the rights of secured creditors. Section 546(c)(2) of the Bankruptcy Code grants the bankruptcy court the power to deny a properly reclaiming vendor its right to reclaim the goods, but only by granting the denied vendor either an administrative expense priority in the amount of the goods or a lien on the proceeds resulting from the use of those goods by the debtor. In so ruling, the Court of Appeals abrogated the decisions in In re Pittsburgh-Canfield Corp., 309 B.R. 277 (6th Cir. B.A.P. 2004), and In re Steinberg's, Inc., 226 B.R. 8 (Bankr. S.D. Ohio 1998). In its petition for a writ of certiorari, the creditor argued that the decision below, that the Uniform Commercial Code permits an unpaid supplier, asserting a right to reclaim goods sold on credit, to strip a secured lender of its lien rights in those same goods, undermined the integrity of the banking system and was in conflict with the holdings of the Fifth Circuit and numerous federal courts in other circuits. The case below is Phar-Mor, Inc. v. McKesson Corp., 534 F.3d 502 (6th Cir. 2008). See Phar- Mor, Inc. v. McKesson Corp., U.S. Sup. Ct. No. 08-938, --- S.Ct. - --, 2009 WL 192476, 77 USLW 3441 (2009). Phar-Mor was represented by: Peter B. Grinstein, Esq. Nadler Nadler & Burdman Co. L.P.A. 20 Federal Plaza West, Suite 600 Youngstown, OH 44503 and McKesson was represented by: Jeffrey K. Garfinkle, Esq. Buchalter Nemer PC 18400 Von Karman Avenue, Suite 800 Irvine, CA 92612 About Phar-Mor Phar-Mor, Inc., operated a chain of discount retail drugstores. Phar-Mor and its eight operating subsidiaries sought protection from their creditors under Chapter 11 of the Bankruptcy Code on September 24, 2001 (Bankr. S.D. Ohio Case Nos. 01-44007 through 01-44015) The Court entered an order confirming the Debtors' First Amended Joint Plan of Liquidation on March 13, 2003. PILGRIM'S PRIDE: No Special Rules for Chicken Grower Claims ----------------------------------------------------------- WestLaw reports that regardless of the precise contours of the "public policy" exception to the ordinary "business judgment" rule, under which a court must in certain circumstances consider the public policy implications of allowing a debtor to reject an executory contract, the exception was not implicated by Chapter 11 debtors' motion to reject their executory contracts with certain growers that raised the debtors' baby chicks until they were ready for slaughter, despite allegedly retaliatory nature of the motion to reject based on claims that growers had made under the Packers and Stockyards Act (PASA), and despite the impact that rejection of the executory growers' agreements would have on the local economy. No national policy existed respecting chicken growers at all similar to that implicated by collective bargaining agreements. Rejection did not encroach on matters committed to any federal regulator. Nor were the health and safety of the public implicated by rejection of the agreements. In re Pilgrim's Pride Corp., --- B.R. ----, 2009 WL 1080162 (Bankr. N.D. Tex.). 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) PILGRIM'S PRIDE: Incurs $58.77-Mil. Net Loss for Fiscal Q2 2009 --------------------------------------------------------------- Pilgrim's Pride Corp., incurred a net loss of $58,765,000 on net sales of $1,698,102,000 for three months ended March 28, 2009, compared with a net loss of $143,777,000 on sales of $4,148,147,000 during the same period in 2008. Pilgrim's Pride had $3,165,409,000 in total assets; $675,443,000 in total current liabilities, $891,491,000 in total liabilities not subject to compromise, and $2,208,893,000 in liabilities subject to compromise; and $65,025,000 in stockholders' equity as of March 28, 2009. Pilgrim's Pride's report on Form 10-Q for its fiscal second quarter also noted that the Company's exclusive period to file a plan ends September 30, 2009, and its related plan solicitation period expires November 30. It said that it might file "one ore more motions" to request further extension of the Exclusive Periods. "The timing of filing a plan of reorganization by us will depend on the timing and outcome of numerous other ongoing matters in the Chapter 11 proceedings," the regulatory filing said. Pilgrim's Pride said its management is addressing the Company's ability to return to profitability by conducting profitability reviews at certain facilities in an effort to reduce inefficiencies and manufacturing costs. In April 2009, the Company reduced headcount by approximately 115 non-production employees and announced the upcoming closure of a processing complex in Dalton, Georgia that will reduce headcount by approximately 280 production employees. During the fiscal second quarter of 2009, the Company (1) announced the upcoming closures of processing complexes in Douglas, Georgia; El Dorado, Arkansas; Farmerville, Louisiana and Franconia, Pennsylvania, (2) closed a distribution center in Houston, Texas and (3) reduced or consolidated production at various facilities throughout the US. These actions will ultimately result in a headcount reduction of approximately 3,560 production employees. During the first fiscal quarter of 2009, the Company reduced headcount by approximately 265 non-production employees and announced an upcoming reduction in production at its processing complex in Live Oak, Florida that will result in a headcount reduction of approximately 220 production employees. A copy of the Quarterly Report is available for free at: http://ResearchArchives.com/t/s?3cc2 About Pilgrim's Pride 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) POMARE LTD: Court Delays Ruling on Ch. 11 Trustee Appointment ------------------------------------------------------------- Janis L. Magin at Pacific Business News reports that the Hon. Robert Faris of the U.S. Bankruptcy Court for the District of Hawaii has delayed ruling on whether to appoint a trustee to take over Hilo Hattie in its Chapter 11 bankruptcy proceedings. As reported by the Troubled Company Reporter on April 17, 2009, the Official Committee of Unsecured Creditors of Hilo Hattie asked the Court to appoint a Chapter 11 trustee of the Debtor. Pacific Business relates that the committee said that Hilo Hattie's failure to file a plan of reorganization and projections for new stores, coupled with ongoing losses, warranted the appointment of a trustee. Jim Wagner, the attorney for Hilo Hattie, argued that appointing a trustee would make a difficult case more complicated, and asked Judge Faris to continue the request until the June 22 hearing, Pacific Business says. According to Pacific Business News, Judge Faris will rule on the committee of unsecured creditors' request for a trustee on June 22, the same day that the court will consider a request by the U.S. trustee to convert Hilo Hattie's case to a Chapter 7 liquidation. The TCR reported on May 1, 2009, that acting U.S. Trustee Tiffany Carroll and assistant trustee Curtis Ching filed a motion seeking to convert Hilo Hattie's Chapter 11 reorganization case to Chapter 7 liquidation. Judge Faris, Pacific Business News states, suggested to the creditors' attorneys that the only choice a Chapter 11 trustee would have would be to do a quick sale of Hilo Hattie or convert it to Chapter 7 liquidation. Hilo Hattie has received rent relief in the form of abatements from all but one of its landlords, Pacific Business News says, citing Mr. Wagner. Judge Faris said that was the only reason Hilo Hattie is able to pay its vendors and not paying its landlords was "not viable over the long term," according to Pacific Business News. Based in Honolulu, Hawaii, Pomare Ltd. dba. Hilo Hattie, makes and sells men's clothing. The company filed for Chapter 11 relief on October 2, 2008 (Bankr. D. Hawaii Case No. 08-01448). Chuck C. Choi, Esq., and James A. Wagner, Esq., at Wagner Choi & Verbrugge, represent the Debtor as counsel. Alexis M. McGinness, Esq., and Ted N. Pettit, Esq., at Case Lombardi & Pettit, represent The Official Committee of Unsecured Creditors as counsel. In its schedules, the Debtor listed total assets of $15,825,657, and total debts of $13,767,047. PROSPECT THERAPEUTICS: Joseph F. Finn to Auction Assets on June 29 ------------------------------------------------------------------ Joseph F. Finn, Jr., C.P.A., said the assets of Prospect Therapeutics, Inc. have been assigned to him for the benefit of Prospect's creditors. Prospect's lead product candidate, GCS-100, is a carbohydrate molecule designed to inhibit the activity of galectin-3, a protein found in high concentration in a broad range of human cancers and whose over-expression is associated with poor prognosis in cancer patients. It is presently in Phase 2 clinical trials. The intellectual property, regulatory dossier, fixed assets and clinical inventory will be sold at auction on Monday, June 29, 2009 at 12:00 noon. Persons interested in bidding must sign a Confidentiality Agreement obtained from Finn's Office: jffinnjr@earthlink.net -- or -- Tel: (781) 237-8840 They will then receive a bid package. Joseph F. Finn, Jr., C.P.A. is the founding partner of the firm, Finn, Warnke & Gayton, Certified Public Accountants of Wellesley Hills, Massachusetts. He works primarily in the area of management consulting for distressed enterprises, bankruptcy accounting and related matters, such as assignee for the benefit of creditors and liquidating agent for a corporation. He has been involved in a number of loan workouts and bankruptcy cases for 35 years. His most recent Assignment for the Benefit of Creditors in the biotech field was Spherics, Inc. and ActivBiotics, Inc. QIMONDA NA: Simpson Thacher Helped Get $60MM in DIP Financing ------------------------------------------------------------- Law firm Simpson Thacher has represented semiconductor parts maker Qimonda AG's North American units in obtaining $60 million in debtor-in-possession financing to continue funding operations while they seek a buyer for the U.S. manufacturing facilities. Qimond's North American units filed for Chapter 11 protection this past February 20 in U.S. Bankruptcy Court in Delaware. The parent Company, headquartered in Dresden, Germany, is one of the world's leading producers of dynamic random access memory for the semiconductor industry. Its operations ran into severe liquidity problems in the past year in the face of a worldwide glut for DRAM chips. The European parent was unable to obtain additional capital, causing both it and the American units to initiate insolvency proceedings. A fund managed by GB Merchant Partners, an affiliate of Gordon Brothers, the noted business appraisal and liquidation firm, led the DIP financing, which included a $40 million interim loan secured in late March and an additional $20 million to ensure the company has sufficient time to locate a buyer for its manufacturing site in Richmond, Virginia. "Rather than lose value in a fire sale of assets, the DIP financing provides the company enough liquidity to seek buyers in an orderly fashion," explained Simpson Thacher bankruptcy partner Mark Thompson, who led the team advising Qimonda. Mr. Thompson noted that the company's Richmond plant was completed only recently at a cost of approximately $3 billion, and includes highly sophisticated equipment for producing 200mm and 300mm memory chips. A consortium of ATREG (a division of Collier International), Emerald Technologies and Gordon Brothers has been authorized by the Bankruptcy Court to conduct the search for a buyer. Qimonda is the second noteworthy debtor engagement completed by Simpson Thacher in recent weeks. In April, the firm helped leading U.S. bus manufacturer Motor Coach Industries complete a $430 million financial restructuring allowing it to emerge from Chapter 11 in only seven months. That funding package included a $200 million equity investment by funds managed by Franklin Mutual Advisors, as well as $230 million in exit financing from certain of its existing lenders, including $75 million in senior credit from GE Capital, and an additional $155 million second lien loan from affiliates of existing term debtholders. About Simpson Thacher Simpson Thacher & Bartlett LLP -- http://www.simpsonthacher.com/- - is a leading global law firm with offices in New York, Beijing, Hong Kong, London, Los Angeles, Palo Alto, Tokyo, and Washington, D.C. Established in 1884, the Firm has more than 800 lawyers. Globally, the Firm provides coordinated legal advice on the world's largest and most complex corporate transactions and litigation matters. QUEBECOR WORLD: Seeks OK of Disclosure Statement, Voting Protocol ----------------------------------------------------------------- Quebecor World, Inc., and its debtor affiliates ask Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to approve the Disclosure Statement explaining their Joint Plan of Reorganization as having "adequate information" as defined in Section 1125(b) of the Bankruptcy Code. The Debtors also ask the Court to approve their proposed solicitation, noticing, and tabulation procedures, and their ballot forms. The Debtors also ask the Court to establish the deadline for filing objections to the Plan and schedule the hearing to consider confirmation of the Plan. The Debtors propose this dates for the approval of their Disclosure Statement and the confirmation of their Plan: May 5, 2009 -- Deadline to File Disclosure Statement Exhibits May 8, 2009 -- Voting Record Date May 12, 2009 -- Disclosure Statement Objection Deadline May 15, 2009 -- Disclosure Statement Hearing May 21, 2009 -- Distribution of Solicitation Packages June 8, 2009 -- Deadline for Filing Exhibits to Plan June 18, 2009 -- Plan Voting Deadline June 19, 2009 -- Plan Confirmation Objection Deadline June 26, 2009 -- Deadline for Debtors' Reply to Plan Confirmation Objections June 30, 2009 -- U.S. and Canadian Plan Confirmation Hearings Donlin, Recano & Company, Inc., will serve as the Debtors' Voting Agent. Section 1125(b) requires that a plan proponent provide "adequate information" regarding a debtor's proposed Chapter 11 plan. Section 1125(a)(1) defines adequate information means information about the nature and history of the debtor and the condition of the debtor's books and records, including a discussion of the potential material Federal tax consequences of the plan to the debtor, any successor to the debtor, and a hypothetical investor typical of the holders of claims or interests in the case, that would enable such a hypothetical investor of the relevant class to make an informed judgment about the plan, but adequate information need not include such information about any other possible or proposed plan and in determining whether a disclosure statement provides adequate information, the court shall consider the complexity of the case, the benefit of additional information to creditors and other parties-in-interest, and the cost of providing additional information. The Debtors' Disclosure Statement satisfies these standards, stresses Michael J. Canning, Esq., at Arnold & Porter LLP, in New York. Amended Plan The Debtors filed a first amendment to their Joint Plan of Reorganization and the Disclosure Statement explaining the Plan on May 5, 2009. The Amended Plan contemplates that solely for voting confirmation and distribution purposes (i) each and every Claim against any Debtor in the Chapter 11 cases will be treated as if it were a single Claim against all Debtors; and (ii) to the extent that a creditor has Claim in respect of the same underlying obligation against one or more Debtors in the Chapter 11 cases or against Quebecor World, Inc., in its insolvency proceedings under the Canadian Companies' Creditors Arrangement Act, the creditor will receive a single recovery in respect of the Claim, which Claim will be satisfied as set forth in the Amended Plan and in the Canadian Plan. The Debtors stated that they are not seeking, and neither the Amended Plan nor the Confirmation Order will effectuate, substantive consolidation of the Debtors' estates. The Amended Plan and Disclosure Statement incorporate these additional provisions: (a) Change of Corporate Name On the Effective Date, each of the Reorganized Debtor will change its name to delete reference to the word "Quebecor" or any deceptively similar names. No later than the date of the Confirmation Hearing, the Debtors will file with the Court the new names to be adopted by the Reorganized QWI and the Reorganized Debtors intended to survive the Restructuring Transactions. Commencing on the Effective Date, Reorganized QWI and the Reorganized Debtors will transition and phase out and cease the use of their prior corporate names and any names, trademarks, trade names, or logos bearing the name "Quebecor" or any similar names, variations, derivations, trademarks, trade names or logos that are deceptively similar to "Quebecor." These restrictions, however, will not be applicable for a 90-day period of transition commencing on the Confirmation Date to allow far the sale of inventory existing at or around the Confirmation Date and to use any labeling letterhead packaging shipping, billing and other processes that use the name "Quebecor" and any names trademarks trade names or logos bearing the name " Quebecor." Reorganized QWI and the Reorganized Debtors will have until the first anniversary of the Effective Date to replace all signage on each of their buildings and facilities that use the "Quebecor" name, which replacement will be done first with respect to all buildings and facilities in Canada and thereafter in the United States and Latin America. (b) Board of Directors of Reorganized QWI The initial Board of Directors of QWI as of the Effective Date will be determined through a search process designed to obtain board participation from independent, respected individuals having the experience, reputation, contacts and skills which are relevant to the success of Quebecor World's business. Industry expertise and contacts as well as geographical diversity and knowledge of QWI's customer base are to be considered in the process. The search committee will include four representatives of the Syndicate Committee two representatives of the Ad Hoc Committee of Noteholders and one representative of the Creditors' Committee. Details of the search process including identification of ancillary governance issues to be addressed by the search committee are to be established in consultation with OWI and appropriate interim reports will be made to QWI the Syndicate Committee the Creditors' Committee and the Ad Hoc Committee of Noteholders. (c) Management of the Litigation Trust A litigation trust will be created on the Effective Date. The Litigation Trust will be managed and operated by the Litigation Trustee. A Governing Board composed of 10 members will have certain approval rights on key issues relating to the operation and management of the Litigation Trust. The Governing Board will be comprised of three members selected by the Syndicate Agreement Agent six members selected by the Ad Hoc Group of Noteholders and one member selected by the Official Committee of Unsecured Creditors. (d) Private Notes Reserve The Private Notes Reserve will be held in reserve by the Debtors or the Reorganized Debtors pending resolution of the Private Notes Adversary Proceeding by the Final Order of the Bankruptcy Court, whereupon, to the extent that the holders of the Private Notes any amounts to the Litigation Trust regarding which they do not waive any resulting Claim, holders of the Private Notes will be deemed holders of Class 4 Claims entitled to participate in the treatment accorded holders of Class 4 Claims of the Amended Plan and will receive shares of New Common Stock and Warrant Bundles held in the Private Note Reserve. Private Notes Reserve means the aggregate of the Syndicate Private Notes Contribution, the SocGen Private Notes Contribution and the Class 4 Private Notes Contribution, which amounts will be held and distributed as set forth in the Plan. (e) U.S. Pension Plans The U.S. Pension Plans will not he modified or affected by any provision of the Amended Plan and will be continued after the Effective Date in accordance with their terms. (f) Syndicate Compromise On the Effective Date, the Syndicate Compromise Amount otherwise allocable to the holders of Allowed Syndicate Claims will be transferred to the holders of Class 4 Claims in full satisfaction, settlement, release and discharge of all possible claims against the Syndicated Release Parties. (g) Special Voting Procedures for Senior Notes With respect to the Senior Notes held through Cede & Co. as registered holder, the Claims Agent will distribute to the Depository Trust Company and its proxy participants sufficient solicitation packages with appropriate Ballots and Master Ballots to allow solicitation packages to be delivered to each Beneficial Holder. The Nominees or their agents through which the Beneficial Holders hold Senior Notes will forward the Solicitation Package including appropriate Ballots to each Beneficial Holder for voting purposes. Each Nominee or Nominee's Agent will then summarize the individual votes of each of their Beneficial Holders from a Beneficial Holders' Ballot and then return the Ballots to the Claims Agent prior to the Voting Deadline. Any Beneficial Holder who holds Senior Notes in its own name as of the Voting Record Date should vote on the Plan by completing and signing the Ballots and returning it directly to the Claims Agent on or before the Voting Deadline. The Debtors believe that the new capital structure for the Company resulting from the Plan will enable Reorganized Quebecor World to retain its important business and customer relationships compete more effectively for future and expended business opportunities and participate successfully in industry consolidating activities for the benefit of its stakeholders. A blacklined copy of the First Amended Plan is available for free at http://bankrupt.com/misc/QWI_1stAmendedPlan.pdf A blacklined copy of the First Amended Disclosure Statement explaining the First Amended Plan is available for free at http://bankrupt.com/misc/QWI_1stAmendedDS.pdf Treatment & Classification of Claims Under Amended Plan The First Amended Joint Plan and the Disclosure Statement explaining that Plan filed by the Debtors contemplate this classification and treatment of claims: * Class 1 - Syndicate Claims/SocGen Claims The Syndicate Claims will be allowed as of the Effective of the Amended Plan in an amount equal to $[] in respect to the secured portion of the Syndicate Claims and provided that $[] of the Syndicate Claim held by BNP, which relates to certain foreign exchange transactions and is further described in the proofs of claim filed in the Chapter 11 cases by BNP, will constitute a Disputed Claim and shall be held in the Distribution Reserve pending final resolution of all objections to that portion of BNP's Syndicate Claim. Notwithstanding the treatment of the Debtors and QWI as if they were consolidated for voting, confirmation and distribution purposes, the Syndicate Claims will be finally allowed against each of the applicable Debtor obligors under the Syndicate Agreement and QWI as of the Effective Date but will only be entitled to single recovery provided the Amended Plan and the Canadian Plan. The Debtors estimate that the aggregate allowed amount of the Syndicate Claims is $741 million and estimate the percentage of recovery at 85% to 88%. Total allowed amount of the SocGen Claims is estimated at $153 million. * Class 2 - Secured Claims The Debtors estimate that holders of Class 2 Secured Claims will recover 100% of their claim amounts. Secured Claims consist of any claim, other than a DIP Facility Claim, SocGen Claim, or Syndicate Claim, secured by a security interest in or a lien on property in which a Debtor's estate has an interest or lien. * Class 3 - General Unsecured Claims against Operating Debtors The Debtors estimate that holders of Class 3 Claims will recover 50% of the amount of their claims. * Class 4 - Senior Notes Claims and General Unsecured Claims against Non-Operating Debtors Class 4 Claims are deemed impaired under the Plan. * Class 5 - Convenience Claims Estimated percentage recovery for holders of Class 5 Claims is 100% or less to the extent holders of Allowed Claims in excess of $2,500 elect to reduce their Claims to participate in Class 5. * Class 6 - Intercompany Claims Intercompany Claims under the Plan are impaired. These claims will either be reinstated or discharged at the Debtors' election. * Class 7 - Debtor Interests Debtor Interests are unimpaired under the Plan. On the Effective Date, the Debtor Interests will be reinstated. Creditors to Vote on Canadian Plan on June 18 Ernst & Young, Inc., the court-appointed monitor of Quebecor World, Inc., and its affiliates' reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, has asked the Honorable Robert Mongeon of the Quebec Superior Court of Justice to convene a creditors' meeting at which each class of affected creditors under QWI's Canadian Plan will be asked to consider and pass resolutions to approve the Canadian Plan. The Meeting is proposed to be held at the Marriott Chateau Champlain, Salle de Bal, at 1 Place du Canada in the City of Montreal, Quebec, on June 18, 2009, at 10:00 a.m. The Canadian Plan contemplates that the Affected Creditors will be segregated into (1) Affected Syndicate/SocGen Class and (2) Affected Unsecured Creditor Class. The Monitor has asked that "Creditors with Excluded Claims" as defined in the Canadian Plan will not be entitled to vote at the Creditors' Meeting or receive distributions under the Canadian Plan. The Monitor will distribute a Notice of Creditors of the Creditors' Meeting, a form of Proxy and Election Notice, a Creditors' Instruction Letter and a copy of the Circular, at the address appearing on an Affected Creditors' Proof of Claim no later than May 25, 2009. With regards to Beneficial Senior Noteholders, the Monitor will communicate with these Noteholders through the Nominees and the Depository Trust Corporation Participants and obtain their participation in the voting process. On or before July 10, 2009, the Monitor will file a report on the Canadian Plan and on QWI's business and financial affairs with the Canadian Court and will publish that report on its Web site at http://www.ey.com/ca/quebecorworld/ Provisions under the Canadian Plan In accordance with the Canadian Plan, Holders of Affected Syndicate Claims will receive (i) the Syndicate Pro Rata share of [2,637,500] QWI Class A Preferred Shares and 5,770,328 QWI Common Shares; and (ii) [18.8]% of any recovery obtained by the Litigation trust on account of the Contributed Claims net of the costs of administration of the Litigation Trust. In the event that the security claims by Societe Generale (Canada) is determined to be valid and enforceable, Holders of the Affected SocGen Claims will receive (i) the SocGen Pro Rata share of [2,637,500] QWI Class A Preferred Shares and 5,770,328 QWI Common Shares, and (ii) [4.45]% of any recovery obtained by the Litigation Trust. Each member of the Affected Unsecured Creditor Class who has filed an Election Notice with the Monitor by the Election Deadline will receive a cash distribution in an amount equal to the lesser of C$2,500 and the amount of its Proven Claim. Member of the Affected Unsecured Creditor Class who has not filed an Election Notice with the Monitor by the Election Deadline will receive its Pro Rata share of (i) 16,277,308 QWI Common Shares, (ii) 10,723,019 Warrant Bundles; and (iii) 76.75% of any recovery obtained by the Litigation Trust. If the Plan is approved at the Creditors' Meeting by entities representing 66-2/3% of the Affected Creditors, QWI will bring a motion before the Canadian Court on June [30], 2009, seeking an order sanctioning the Canadian Plan pursuant to CCAA. Any objection to the sanction order motion must be filed with the Canadian Court on June [25]. A full-text copy of the Canadian Circular is available for free at http://bankrupt.com/misc/qwi_ccaacircular.pdf About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (CA:IQW) -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina, and the British Virgin Islands. Ernst & Young, Inc., the monitor of Quebecor World Inc., and its affiliates' reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, filed a petition under Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court for the Southern District of New York on September 30, 2008, on behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The Chapter 15 case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at Allen & Overy LLP, in New York, serves as counsel to the Chapter 15 petitioner. QWI and certain of its subsidiaries commenced the CCAA proceedings before the Quebec Superior Court (Commercial Division) on January 20, 2008. The following day, 53 of QWI's U.S. subsidiaries, including Quebecor World (USA), Inc., filed petitions under Chapter 11 of the U.S. Bankruptcy Code. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Southern District of New York (Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP, represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective January 28, 2008. QWI is the only entity involved in the CCAA proceedings that is not a Debtor in the Chapter 11 Cases. As of June 30, 2008, Quebecor World's unaudited consolidated balance sheet showed total assets of US$3,412,100,000 total liabilities of US$4,326,500,000 preferred shares of US$62,000,000 and total shareholders' deficit of US$976,400,000. QUEBECOR WORLD: Plan Liquidation & Valuation Analysis, Projections ------------------------------------------------------------------ Quebecor World, Inc., and certain of its U.S. subsidiaries, with the assistance of Ernst & Young, Inc., in its capacity as court- appointed monitor in QWI and certain of its affiliates' insolvency proceedings pursuant to the Canadian Companies' Creditors Arrangement Act, prepared an analysis of a hypothetical liquidation of the QWI Entities. Quebecor World, Inc., and its affiliates also prepared, together with their financial advisors, projected financial information, which includes projected and consolidated statements of income, balance sheets, and condensed statements of cash flows, based on (a) QWI's audited consolidated financial statements for 2008 prepared in accordance with Canadian GAAP; and (b) consolidated projected results of operations, cash flows and financial condition for Reorganized QWI for the four-year period from 2009 through 2010. To assist the Quebecor World Inc. Board of Directors in evaluating the U.S. Plan of Reorganization and the distributions that the holders of Claims and Interests will receive under the U.S. Plan, the Board determined that it was necessary to estimate the going concern enterprise value of QWI following implementation of the U.S. Plan as of the scheduled effective date of that Plan. Liquidation Analysis Under Plan The Liquidation Analysis provides an estimate of the realizable value of the QWI Entities' assets through liquidation and the resulting distribution to creditors in accordance with their priorities in the context of a liquidation as opposed to the implementation of the Plan of Reorganization. Quebecor World, Inc. Illustrative Analysis of Hypothetical Liquidation As of December 31, 2008 (In U.S.$000's) Net High Low Book Realization Realization Asset Realization Value Estimate Estimate ----------------- ----- ----------- ----------- Proceeds from assets Cash and cash equivalents $27,296 $27,296 $27,296 Trade accounts receivable 106,202 52,252 25,725 Inventories 30,200 21,768 10,848 Land and buildings 21,732 27,649 20,784 Printing equipment and other fixed assets 82,186 42,682 24,827 Prepaids, non-trade receivables and other assets 125,473 20,933 9,948 --------- ----------- ------------ 393,089 192,579 119,428 Proceeds from intercompany assets Postpetition intercompany receivables 43,505 30,859 13,480 Prepetition intercompany receivables 30,399 26,018 25,924 Intercompany receivables 4,168,884 279,128 55,924 --------- ----------- ------------ $4,242,788 336,005 95,328 Liquidation costs Net cash flow from operations wind down (171) - Holding and asset realization costs (23,085) (21,542) Professional fees (20,621) (15,521) ----------- ------------ Funds available for distribution $484,706 $177,693 =========== ============ High Low High Low Claim Distri- Claim Distri- Creditor Distributions Value bution Value bution ----- ------- ----- ------ Secured claims Bank Syndicate & SocGen $- $- $10,848 $10,848 DIP Lenders 61,525 61,525 69,894 69, 894 Other creditors 110 110 110 110 --------- -------- --------- -------- 61,635 61,635 80,851 80,851 Administrative, reclamation and other priority claims Postpetition creditors 68,820 68,820 68,820 68,820 Postpetition intercompany payables 24,687 24,687 24,687 24,687 Prepetition creditors - - - - --------- -------- --------- -------- 93,506 93,506 93,506 93,506 Unsecured claims Postpetition creditors 206,293 18,854 206,293 191 Bank Syndicate & SocGen 748,469 68,407 737,621 684 Noteholders 1,275,261 116,554 1,275,261 1,183 Prepetition intercompany payables 1,250,221 114,265 1,250,221 1,160 Prepetition creditors 125,662 11,485 125,662 117 --------- -------- --------- -------- 3,605,609 329,565 3,595,058 3,335 Funds distributed to creditors $484,706 $177,693 ======== ======== Residual equity value, if any $- $- A full-text copy of the Liquidation Analysis is available for free at http://bankrupt.com/misc/qwi_liquidation.pdf Financial Projections Under Amended Plan The Financial Projections assume a fresh start date of July 1, 2009, with allowed Claims treated in accordance with the Plan. Expenses incurred as a result of the Chapter 11 Cases and the Canadian Proceedings are assumed to be paid on the Effective Date of the Plan. If the Company does not emerge from Chapter 11 in the United States and CCAA in Canada within a short period after the assumed Effective Date of July 10, 2009, additional reorganization item costs will be incurred until the time the Plan is confirmed. These expenses, the Debtors stated, could significantly impact the Company's results of operations and cash flows. Quebecor World, Inc., and Subsidiaries Projected Consolidated Balance Sheets At December 31, 2008 to 2012 (In US$000,000) Actual Projected ------ ---------------------------- Assets 2008 2009 2010 2011 2012 ------ ------ ------ ------ ------ Current assets: Cash & cash equivalents $209 $62 $72 $117 $274 Accounts receivable 694 620 627 629 549 Inventories 233 206 217 226 237 Income taxes receivable 31 14 14 14 14 Future income taxes 14 24 22 23 23 Prepaid expenses and deposits 41 32 32 32 32 ------ ------ ------ ------ ------ Total current assets 1,222 958 964 1,041 1,229 Property, plant and equipment 1,161 998 953 873 810 Intangible assets - 333 292 251 214 Restricted cash 97 50 50 50 50 Future income taxes 6 26 20 14 8 Other assets 334 113 122 135 144 ------ ------ ------ ------ ------ Total assets $2,820 $2,478 $2,421 $2,364 $2,455 ====== ====== ====== ====== ====== Liabilities and Shareholders' Equity Current liabilities: Bank indebtedness $3 $17 $13 $13 $13 Trade payables and accrued debts 480 447 445 452 459 Income and other taxes payable 41 59 59 53 54 Other current debts - - - - - Current portion of long-term debt 583 19 14 14 15 Liabilities subject to compromise 2,883 - - - - ------ ------ ------ ------ ------ Total current liabilities 3,990 542 531 532 541 Long-term debt 61 522 486 412 418 Other liabilities 246 466 437 361 306 Future income taxes 43 197 178 179 198 Preferred shares 35 225 255 289 327 Shareholders' equity (deficit): Capital stock 1,595 542 542 542 542 Contributed surplus 103 - - - - Retained earnings (3,490) (16) (9) 48 122 Accumulated other comprehensive income 237 - 1 1 1 ------ ------ ------ ------ ------ (1,555) 526 534 591 665 Total liabilities and shareholders' equity (deficit) $2,820 $2,478 $2,421 $2,364 $2,455 ====== ====== ====== ====== ====== A full-text copy of the Financial Projections is available for free at http://bankrupt.com/misc/qwi_projections.pdf Valuation Analysis Under Plan To assist the Quebecor World Inc. Board of Directors in evaluating the U.S. Plan of Reorganization and the distributions that the holders of Claims and Interests will receive under the U.S. Plan, the Board determined that it was necessary to estimate the going concern enterprise value of QWI following implementation of the U.S. Plan as of the scheduled effective date of that Plan. To that end, the Board asked UBS Securities Canada, Inc., to undertake an analysis of the estimated range of the going concern enterprise value of the Reorganized Debtor. UBS completed its analysis on May 4, 2009. In preparing its analysis, UBS, among others: (a) reviewed certain publicly available business and historical financial information relating to the Company; (b) reviewed certain internal financial information, analysis and other data relating to the business and financial prospects of the Reorganized Debtor, including the projected financial statements covering the period from 2009 to 2013 and other projected information regarding the Reorganized Debtor prepared by management of the Company that were provided to UBS by the Company; (c) conducted discussions with members of the Company's senior management concerning the business and financial prospects of the Reorganized Debtor; (d) reviewed publicly available financial and stock market data with respect to certain other companies that UBS believed to be generally relevant; (e) reviewed the financial terms, to the extent publicly available, of certain transactions that UBS believed to be generally relevant; (f) considered certain industry and economic information relevant to the business of the Reorganized Debtor; (g) reviewed a draft version of the U.S. Plan and the Disclosure Statement dated April 19, 2009; and (h) conducted other financial studies, analyses and investigations, and considered those other information, as UBS deemed necessary or appropriate. Based on UBS' analysis and review and subject to several assumptions, the estimated going concern enterprise value of the Reorganized Debtor, as of the assumed Effective Date of July 10, 2009, would be in a range between US$1.25 billion and US$1.75 billion. A full-text copy of the Valuation Analysis is available for free at http://bankrupt.com/misc/qwi_valuation.pdf About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (CA:IQW) -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina, and the British Virgin Islands. Ernst & Young, Inc., the monitor of Quebecor World Inc., and its affiliates' reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, filed a petition under Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court for the Southern District of New York on September 30, 2008, on behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The Chapter 15 case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at Allen & Overy LLP, in New York, serves as counsel to the Chapter 15 petitioner. QWI and certain of its subsidiaries commenced the CCAA proceedings before the Quebec Superior Court (Commercial Division) on January 20, 2008. The following day, 53 of QWI's U.S. subsidiaries, including Quebecor World (USA), Inc., filed petitions under Chapter 11 of the U.S. Bankruptcy Code. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Southern District of New York (Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP, represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective January 28, 2008. QWI is the only entity involved in the CCAA proceedings that is not a Debtor in the Chapter 11 Cases. As of June 30, 2008, Quebecor World's unaudited consolidated balance sheet showed total assets of US$3,412,100,000 total liabilities of US$4,326,500,000 preferred shares of US$62,000,000 and total shareholders' deficit of US$976,400,000. QUEBECOR WORLD: Seeks July 21 Extension of Exclusive Periods ------------------------------------------------------------ Quebecor World, Inc., and its debtor affiliates ask Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to further extend the period in which they have exclusive right to file a plan of reorganization and solicit votes to accept or reject the Plan through and including July 21, 2009. Pursuant to the Court's March 26, 2009 Bridge Order, the exclusive period during which only the Debtors may file and solicit and obtain acceptances of the Plan currently expires on June 26, 2009. In connection with the Debtors' request to approve their proposed solicitation procedures, they seek further extension of the Solicitation Period until July 21, 2009. Michael J. Canning, Esq., at Arnold & Porter LLP, in New York, asserts that cause exists to extend the Solicitation Period. The Debtors have filed the Plan within the timeframe contemplated by the Bankruptcy Code and the Solicitation Bridge Order, and are proceeding toward a June 30, 2009 confirmation hearing. To permit the Debtors to focus on confirming and consummating the Plan consistent with the proposed solicitation timeframe, the Debtors seek an extension of the Solicitation Period, he further asserts. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (CA:IQW) -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina, and the British Virgin Islands. Ernst & Young, Inc., the monitor of Quebecor World Inc., and its affiliates' reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, filed a petition under Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court for the Southern District of New York on September 30, 2008, on behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The Chapter 15 case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at Allen & Overy LLP, in New York, serves as counsel to the Chapter 15 petitioner. QWI and certain of its subsidiaries commenced the CCAA proceedings before the Quebec Superior Court (Commercial Division) on January 20, 2008. The following day, 53 of QWI's U.S. subsidiaries, including Quebecor World (USA), Inc., filed petitions under Chapter 11 of the U.S. Bankruptcy Code. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Southern District of New York (Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP, represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective January 28, 2008. QWI is the only entity involved in the CCAA proceedings that is not a Debtor in the Chapter 11 Cases. As of June 30, 2008, Quebecor World's unaudited consolidated balance sheet showed total assets of US$3,412,100,000 total liabilities of US$4,326,500,000 preferred shares of US$62,000,000 and total shareholders' deficit of US$976,400,000. QUEBECOR WORLD: Gets Court OK to Enter Into $750MM Exit Financing ----------------------------------------------------------------- Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York has authorized Quebecor World, Inc., and its debtor affiliates to enter into and perform obligations under the exit financing engagement letter they entered into with Credit Suisse Securities (USA) LLC, GE Capital Markets, Inc., and Wachovia Capital Markets LLC. The Honorable Robert Mongeon of the Quebec Superior Court of Justice entered into a parallel order authorizing Quebecor World, Inc., and its affiliates to enter into the Exit Financing Agreement. Under the Exit Financing Letter, the Debtors and Quebecor World, Inc., will have access to approximately $750 million in senior secured credit facilities to be effective at or following the effective date of the Plan of Reorganization with exit financing amount consisting of any combination of: (a) term financing in the aggregate principal amount of $300 million to $400 million, less the amount of any debt securities issued by the Debtors or QWI; and (b) a senior secured asset-based revolving credit facility with a letter of credit subfacility in an aggregate principal amount of $350 million to $450 million. The Debtors will use the proceeds from the Exit Facility for, among others, refinancing of their existing $1 billion DIP Credit Facility. Advances under the DIP Facility, including issued but undrawn letters of credit, totaled $589 million as of April 26, 2009, and are expected to reach $609 million on July 5, 2009. The Debtors are also authorized to pay the fees and expenses as set forth in the Amended Engagement Letter. The Debtors are authorized to reimburse from time to time, upon presentation of a summary statement, all reasonable out-of-pocket expenses payable pursuant to the terms of the Engagement Letter. Due to the commercially sensitive nature of the fees payable pursuant to the Engagement Letter, the document has been redacted to not publicly disclose the fees contemplated under the document. A full-text copy of the Exit Facility Engagement Letter in redacted form is available for free at: http://bankrupt.com/misc/qwi_exitfacilityletter.pdf About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (CA:IQW) -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina, and the British Virgin Islands. Ernst & Young, Inc., the monitor of Quebecor World Inc., and its affiliates' reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, filed a petition under Chapter 15 of the Bankruptcy Code before the U.S. Bankruptcy Court for the Southern District of New York on September 30, 2008, on behalf of QWI (Bankr. S.D.N.Y. Case No. 08-13814). The Chapter 15 case is before Judge James M. Peck. Kenneth P. Coleman, Esq., at Allen & Overy LLP, in New York, serves as counsel to the Chapter 15 petitioner. QWI and certain of its subsidiaries commenced the CCAA proceedings before the Quebec Superior Court (Commercial Division) on January 20, 2008. The following day, 53 of QWI's U.S. subsidiaries, including Quebecor World (USA), Inc., filed petitions under Chapter 11 of the U.S. Bankruptcy Code. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy before the U.S. Bankruptcy Court for the Southern District of New York (Lead Case No. 08-10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP, represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective January 28, 2008. QWI is the only entity involved in the CCAA proceedings that is not a Debtor in the Chapter 11 Cases. As of June 30, 2008, Quebecor World's unaudited consolidated balance sheet showed total assets of US$3,412,100,000 total liabilities of US$4,326,500,000 preferred shares of US$62,000,000 and total shareholders' deficit of US$976,400,000. QUIGLEY CO: Asbestos Claimants Want "Bought" Votes Disallowed ------------------------------------------------------------- A group representing asbestos claimants who have not reached settlements with Quigley Co. Inc. and Pfizer Inc. asks the U.S. Bankruptcy Court for the Southern District of New York to disallow the votes of certain "settling plaintiffs" in favor of the fourth amended Chapter 11 plan of Quigley. The Ad Hoc Committee of Tort Victims wants the votes disallowed for purposes of determining whether the requirements of Section 524(g)(2)(B)(ii)(IV)(bb) (acceptance by 75% in number) and Section 1126(c) (acceptance by two-thirds in amount) have been satisfied -- which are among the requirements for confirmation of the Plan. Prior to the commencement of Quigley's bankruptcy, and in contemplation of the bankruptcy, Pfizer engaged in extensive efforts to settle its derivative liability with the holders of asbestos-related personal injury claims. The negotiations culminated in a settlement agreement between Pfizer and more than 80% of the Asbestos PI Claimants. Pfizer agreed to pay the aggregate approximate amount of $430 million, to be divided among the settling claimants based on disease category and exposure. In exchange, the settling claimants agreed to release their claims against Pfizer and the Pfizer-protected parties, but did not agree to release their claims against Quigley. Counsel to the Ad Hoc Committee, Gregory T. Arnold, Esq., at Brown Rudnick LLP, asserts that that the votes cast by the Settling Plaintiffs were not cast in good faith, as Pfizer "bought" the Plaintiffs' votes through moneys provided by Pfizer under the settlements. "Pfizer has engaged in a long and tortured process to buy enough votes (on the cheap) with the hope that by doing so it will be able to walk away from its responsibilities to thousands of sick and dying victims for mere pennies on the dollar. Too financially healthy to make its own bankruptcy filing, Pfizer resurrected a defunct subsidiary to use as the vehicle by which it could obtain a channeling injunction and escape billions of dollars in current and future asbestos liability," Mr. Arnold said. According to the Ad Hoc Committee, to push through its scheme, Pfizer concentrated its effort on law firms representing clients who historically had settled for very low dollars or with whom Pfizer had never settled claims at all. Pfizer, according to the dissenting asbestos claimants, severely distorted the voting process by ensuring that acceptance of the Proposed Plan was based -- not on the Plan's treatment of the voters as creditors of Quigley -- but rather on improper "ulterior motives." "Because of the manner in which Pfizer blatantly bought and exercised complete control over the Settling Plaintiffs' votes in favor of the Proposed Plan, the Court must treat these votes as though they were, in fact, cast by Pfizer itself," the Ad Hoc Committee said. Pfizer, the group said, is voting solely to obtain a collateral benefit for itself - i.e., protection from more than $4 billion in liability for what amounts to zero dollars out of Pfizer's coffers. Even if the Court views the votes as having been cast by the Settling Plaintiffs themselves (notwithstanding Pfizer's unabashed control over their votes), it is clear that Pfizer's scheme left them no choice but to vote in favor of the Proposed Plan because the economic value of the pre-petition settlement payments far outweighed any nominal value that might one day be received as creditors of Quigley under an approved plan, Mr. Arnold points out. He notes that even under conservative estimates, claimants are unlikely to be paid under the Quigley trust for up to 20 years after confirmation. The current members of the Ad Hoc Committee are Weitz & Luxenberg, PC, Cooney & Conway and the Law Offices of Peter G. Angelos, PC, who collectively represent more than 34,100 individual asbestos claimants. These three firms have been representing asbestos victims against Pfizer and Quigley for decades. According to the Ad Hoc Committe, if the Settling Plaintiffs' votes are properly designated and excluded from the results, only 66.27% in number of the holders of Asbestos PI Claims would have voted in favor of the Proposed Plan, well short of the 75% in number required by Section 524(g). Objections to the Ad Hoc Committee's proposal are due May 29, 2009, and rebuttals are due June 9. The Court will consider the Ad Hoc Committee's motion at the confirmation hearing, which is scheduled on or after June 9. Attorney-Client Privilege Judge Stuart M. Bernstein has issued an opinion memorandum that would direct Pfizer and Quigley to produce documents not covered by attorney-client privilege, common interest privilege, joint defense privilege or work product privilege. Judge Bernstein identified which documents from Chrysler and Quigley are covered by privilege, and thus need not be produced to the Ad Hoc Committee. Among the documents that the Ad Hoc Committee will receive copies of are (i) e-mail exchanges between and among Pfizer's in house counsel and Pfizer's employees concerning the identification of products that Pfizer planned to transfer to Quigley to satisfy the "on-going" business requirement, (ii) copies of e-mails in connection with, and drafts of, the Disclosure Statement that were shared to the Committee and FCR. A copy of the Memorandum Decision and Order is available for free at http://bankrupt.com/misc/Quigley_Opinion_Privilege.pdf About Quigley Company Quigley Company, Inc., a division of Pfizer Inc., sold asbestos- containing insulation products until the early 1970s. Quigley filed for protection under chapter 11 on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) in order to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Asbestos victims and Pfizer have been negotiating a settlement deal which calls for Pfizer to pay $430 million to 80% of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20% of current plaintiffs with claims against Pfizer and Quigley. The compensation deal is worth $965 million all up. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. Attorneys from Cadwalader, Wickersham & Taft LLP and Greenberg Traurig, LLP, represent Pfizer in the Chapter 11 case. Attorneys from Brown Rudnick Berlack Israels LLP represent the Ad Hoc Committee of Tort Victims. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. RADIO ONE: High Liquidity Concerns Cues Moody's to Junk Ratings --------------------------------------------------------------- Moody's Investors Service has downgraded Radio One, Inc.'s Corporate Family Rating to Caa1 from B3 and its Probability of Default rating to Caa2 from Caa1 prompted by heightening concern regarding liquidity and default risk. Details of the rating action are: Ratings downgraded: * Corporate Family rating -- to Caa1 from B3 * Probability of Default rating -- to Caa2 from Caa1 * $500 million Secured revolver -- to B2, LGD2, 18% from Ba3, LGD2, 13% * $300 million Secured term loan -- to B2, LGD2, 18% from Ba3, LGD2, 13% * $200 million 6 3/8% senior subordinated notes -- to Caa3, LGD4, 69% from Caa2, LGD4, 63% * $300 million 8 7/8% senior subordinated notes -- to Caa3, LGD4, 69% from Caa2, LGD4, 63% The rating outlook remains negative. The downgrade of the CFR to Caa1 reflects Moody's heightening concern that recessionary market conditions will continue in most of Radio One's served broadcast markets over the near-to- intermediate term, compressing the company's cash flow and squeezing its liquidity. The downgrade of the PDR to Caa2 incorporates Moody's view that there is a heightened probability that Radio One will soon default under its financial covenants, absent an amendment. The rating action also reflects Moody's concerns surrounding the company's ability to refinance its senior secured credit facilities which are scheduled to mature on January 1, 2011, unless the 8 7/8% senior notes have been fully repurchased or retired prior to such date. Moreover, the downgrade underscores Moody's view that Radio One will generate insufficient free cash flow to satisfy the funding requirements of its scheduled term loan amortization payments, which step up significantly in the second half of 2009. The negative outlook reflects Moody's concerns that double-digit declines of market spending on radio advertising will persist over the near term and that secular pressure will continue as listeners are provided an increasing array of alternative forms of entertainment and information media. Radio One's Caa1 CFR reflects the company's reliance upon advertising spending on broadcast radio, its dependence upon a single format for most of its sales, its reliance upon four markets for approximately 50% of radio station net revenues, the willingness of management to continue repurchasing stock and the company's high leverage (which Moody's estimates will significantly exceed 8x times total debt to EBITDA by the end of 2009). The rating is supported, nonetheless, by the company's diverse geographic presence, its complementary properties targeting the African-American audience and the preponderance of local advertising sales in its radio revenue mix. The last rating action occurred on November 14, 2008 when Moody's downgraded Radio One's CFR to B3 from B2. Radio One, Inc., headquartered in Lanham, Maryland operates broadcasting, publishing and Internet-based properties, largely targeting the African-American audience. The company reported sales of approximately $316 million in 2008. RANGE RESOURCES: Moody's Affirms Corporate Family Rating at 'Ba2' ----------------------------------------------------------------- Moody's Investors Service affirmed the Ba2 Corporate Family Rating, the Ba2 Probability of Default Rating, and the Ba3 and LGD 5 (point estimate changed to 76% from 72%) ratings on the existing senior subordinated notes for Range Resources. Simultaneously, Moody's rated the new $300 million senior subordinated notes offering Ba3 (LGD 5; 76%). The outlook remains stable. Proceeds from the new notes offering will be used to repay revolver borrowings and is therefore viewed as liquidity enhancing with no anticipated impact on consolidated leverage. RRC has publicly stated its intention to maintain capital spending within cash flow during 2009. Further liquidity has been raised through the recently announced sale of its West Texas Fuhrman Mascho properties for anticipated gross proceeds of $190 million (including the liquidation of associated hedges) subject to standard industry closing adjustments. The affirmation reflects RRC's overall operating and financial metrics that compare favorably to similarly rated exploration and production companies. Range continues to demonstrate positive sequential quarter production trends, maintains a comparatively good unit cost structure, has a clear track record of reserve growth at very competitive reserve replacement costs, and has a history of issuing common equity in conjunction with significant acquisitions in order to maintain leverage commensurate with the Ba2 rating. The stable outlook incorporates the expectation of continued positive production and reserve replacement trends and a reduction in leverage back below the $6 range. While leverage is currently high for the rating with debt / proved developed reserves at $7.53/boe, RRC's plans to spend within cash flow during 2009 which would result in leverage reduction if reserves and production increase during the course of the year in line with current trends without the addition of new debt. RRC has strong liquidity with a cash balance (pro-forma the West Texas sale) of roughly $190 million and undrawn borrowing base revolver capacity of approximately $743 million (pro-forma the $300 million note offering), bringing total liquidity to nearly $1 billion. Given plans to keep capital spending within cash flow and the lack of any debt maturities until 2012, the company has ample resources to cover its foreseeable cash needs over the next twelve months. The credit facility currently has an approved borrowing base of $1.5 billion, which is in excess of the $1.25 billion committed amount of the facility. This, along with the small amount of borrowings relative to the $1.25 billion, provides substantial cushion should the facility experience a commodity price driven reduction in borrowing base. The last rating action was on April 30, 2008 when Moody's affirmed the existing debt ratings for Range with a stable outlook and rated its new note issue. Range Resources Corporation is headquartered in Fort Worth, Texas, and is engaged in the exploration, development and acquisition of oil and gas properties, primarily in the Southwestern, Appalachian and Gulf Coast regions of the United States. RANGE RESOURCES: S&P Assigns 'BB' Rating on $300 Mil. Notes ----------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'BB' issue rating and '3' recovery rating to Range Resources Corp.'s $300 million senior subordinated notes due 2019. The ratings indicate that lenders can expect meaningful (50% to 70%) recovery in the event of default. The exploration and production company will use the proceeds to repay borrowings under its $1.25 billion revolving facility, which had $807 million outstanding as of March 31, 2009. Ratings List Range Resources Corp. Corporate credit rating BB/Stable/-- New Rating $300 million senior subordinated notes due 2019 BB Recovery rating 3 REGAL JETS: Asks Court to Okay Sale of Assets to MLT Development ---------------------------------------------------------------- Regal Jets, LLC, asks the U.S. Bankruptcy Court for the District of Delaware for authority to sell substantially all of its assets to MLT Development Co., the Debtor's landlord at Love Field, Dallas, free and clear of all liens and encumbrances. Under the MLT Asset Purchase Agreement, dated March 27, 2009, the estate would receive $1,285,000, net of all cure costs to assume and assign certain executory contracts and unexpired leases. At the auction on April 16, 2009, MLT Development, or its assignee, was determined to have submitted the highest and best offer and was declared the winning bidder. MLT has assigned its rights under the APA to its wholly-owned subsidiary Textar Aviation, LLC. Sovereign and the other secured lenders which assert security interests in the assets senior to all other claims have consented to the sale of the assets. Based in Dallas, Texas, Regal Jets, LLC, filed for bankruptcy on February 25, 2009 (Bankr. D. Del. Case No. 09-10648). John D. McLaughlin, Jr., Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP in Wilmington, represent the Debtor. When it filed for bankruptcy, the Debtor reported $10 million to $50 million in assets, and $100 million to $500 million in debts. REFCO INC: Files Q1 2009 Post-Confirmation Quarterly Report ----------------------------------------------------------- Refco, Inc., and its affiliates, including Refco Capital Markets, Ltd., delivered to the U.S. Bankruptcy Court for the Southern District of New York a copy of their post-confirmation quarterly report for the period from January 1 to March 31, 2009. Valerie E. DePiro, chief financial officer of Refco Inc. and Refco Capital Markets, Ltd., reports that cash balance of $146,403,000 at the start of December 2008 decreased to $81,414,000 at the end of the reporting period. The Reorganized Debtors received $871,000 in total cash and disbursed $5,548,000 for the first quarter of 2009. Unaudited Schedule of Cash Receipts and Disbursements (in thousands) Inter- Beginning Company Ending Debtor Balance Receipts Transfers Disbursements Balance ------ --------- -------- --------- ------------- - ------ Refco Capital Markets $25,076 $334 $0 ($2,498) $22,912 Refco Capital LLC 13,240 523 (151) (2,871) 10,741 Refco Commodity Mgt. 3 - (3) - - Refco F/X Assoc. 6,753 2 - (32) 6,723 Refco Global Holdings 36,226 12 - (2) 36,236 Refco Inc. 116 0 154 (145) 125 Other Debtors - - - - - --------- -------- ------- ------------ - ------ Totals $81,414 $871 $0 ($5,548) $76,737 ========= ======== ======= ============ ======= The Reorganized Debtors served as paying agent for certain non- Debtors and Refco, LLC. The $334,000 in receipts for RCM includes proceeds from miscellaneous asset recoveries and interest income, Ms. DePiro states. According to Ms. DePiro, during the quarter ended March 2008, the Debtors did not make an interim distribution of the RCM Cash Distribution during the first quarter. As of the company's emergence to date, the Contributing Debtors have distributed $520.3 million to RCM, net of $15 million RCM Wind-Down Reserve and RCM's share of the Refco Litigation Trust funding. RCM's $2.5 million in disbursements includes distributions to creditors for $1.8 million and payment of operating expenses, including professional fees. Cash balances at March 31, 2009 and December 31, 2008, included approximately $2.4 million and $4.22 million, related to outstanding checks from the Interim Distributions of Assets in Place and Interim Distributions of Additional Property. The March 31, 2009 cash balance also includes (i) Capped Claims Special Reserve of $4.0 million, (ii) 502(h) Special Reserve of $3.0 million and (iii) the Disputed Claim Reserves of approximately $6.6 million. Mr. DePiro reports that on March 4, 2009, Refco Capital Markets sold securities through VR Capital, as broker. The net proceeds from the Sales totaled $146,357. She adds that as of the Reporting Period, tax claims and notices were received by the Debtors from the IRS and State taxing authorities in the aggregate amount of approximately $20 million. All original 47 claims filed have been expunged or resolved. Allowed claims total approximately $1.6 million. Schedule of Cash Distributions to Creditors (in thousands) Quarter Ended Emergence March 31, 2009 to Date -------------- --------- Administrative and Operating Expenses $3,423 $93,352 TREATMENT OF CONTRIBUTING DEBTORS' CREDITORS AND INTEREST HOLDERS Priority Tax Claims - 1,557 Class 1 - Non Tax Priority Claims - - Class 2 - Other Secured Claims - - Class 3 - Secured Lender Claims - 703,967 Class 4 - Senior Subordinated Note Claims - 335,985 Class 5(a) - Contributing Debtors General Unsecured Claims 145 137,425 Class 5(b) - Related Claims - - Class 6 - RCM Intercompany Claims - - Class 7 - Subordinated Claims - - Class 8 - Old Equity Interests - - TREATMENT OF FXA CREDITORS Priority Tax Claims - 90 Class 1 - FXA Non-Tax Priority Claims - - Class 2 - FXA Other Secured Claims - - Class 3 - FXA Secured Lender Claims - - Class 4 - FXA Sr. Subordinated Note Claims - - Class 5(a) - FXA General Unsecured Claims - 19,453 Class 5(b) - Related Claims - - Class 6 - FXA Convenience Claims - 4,827 Class 7 - FXA Subordinated Claims - - TREATMENT OF RCM CREDITORS Priority Tax Claims - - Class 1 - RCM Non-Tax Priority Claims - - Class 2 - RCM Other Secured Claims - - Class 3 - RCM FX/Unsecured Claims 1,079 382,994 Class 4 - RCM Securities Customer Claims 720 2,594,889 Class 5 - RCM Leuthold Metals Claims - 19,364 Class 6 - Related Claims - - Class 7 - RCM Subordinated Claims - - A full-text copy of the Reorganized Debtors' Post-Confirmation Quarterly Report for the First Quarter 2009 is available at no charge at http://bankrupt.com/misc/Refco1stQ2009PostCon.pdf About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represented the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) REFCO INC: Chase London Balks at Bid to Abandon Unsold Securities ----------------------------------------------------------------- Chase London Securities contends that proposal of Refco Plan Administrator Marc S. Kirschner, with respect to the sale of certain of Refco Capital Markets, Ltd.'s securities held in custody accounts of Merrill Lynch Global Prime Broker Services and Chase London "would go further than merely authorizing the abandonment." Mr. Kirschner had determined that the Unsold Securities are of inconsequential value and of no benefit to RCM or its creditors and should therefore be abandoned. Mr. Kirschner, as RCM Plan Administrator, is authorized to liquidate RCM's assets. The Unsold Securities are held in these Custody Accounts: * Merrill Lynch Global Prime Broker Services Account Security Name Type Number ------------- ---- ------ BMA Gold Equity 40,000 Suntech Environmental Equity 82,080 Treasureland Environmental Equity 6,156,000 First Strike Diamonds Equity 27,071 Mispec Resources, Inc. Equity 509,000 Osprey Energy Ltd Equity 2,100 Handelfinanz CCF BK 30 Nov 02 10.5 Pct Bond 40,000 Sairgroup Zuerich Equity 2,300 * Chase London Securities Account Security Name Type Number ------------- ---- ------ North Borneo Corp MYR 1 Equity Equity 1,000 Prolexus Berhard MYR 1 Equity 2,500 Repco Holdings Berhard MYR 1 Equity 1,858,000 Middle Egypt Flour Mills Equity 100 Alpargatas SAIC Bond 221 Media Plus Public Co. Equity 800,000 Media Plus Public Co. Equity 500,000 Thai Press & Print Ltd Equity 7,000,000 Jared R. Clark, Esq., at Bingham McCutchen LLP, in New York, had told the Court the RCM estate continues to incur charges for the maintenance of the Custody Accounts that will not be offset by value realized through sale of the Unsold Securities. Moreover, he said, Merrill Lynch Global Prime Broker Services is holding a deposit valued at approximately $2,504,065 as of January 31, 2008, which it will not release while that Custody Account remains open. The RCM Plan Administrator has been unable to liquidate the Unsold Securities, Mr. Clark noted. Representing Chase London, Philip D. Anker, Esq., at Wilmer Cutler Pickering Hale and Dorr LLP, in New York, asserts that the Sale would impose affirmative obligations with respect to Chase London, including to "delete all electronic entries relating to the Unsold Securities," which would be akin to extinguishing the Unsold Securities, which Chase London, as custodian of the Securities, cannot do without direction from the issuers of those Securities. Chase London asked Judge Robert Drain to deny the Plan Administrator's request to the extent it pertains to Chase London. In the alternative, Chase London asks the Court, as a condition for any obligation imposed on it, direct the Plan Administrator to revise his records to reflect that the Unsold Securities have been "deleted," after obtaining appropriate direction from the Issuers. Court Rules on Merrill Lynch Account In an order, Judge Drain authorized the sale of the Unsold Securities as to Merrill Lynch: Security Name Type Number ------------- ---- ------ BMA Gold Equity 40,000 Suntech Environmental Equity 82,080 Treasureland Environmental Equity 6,156,000 First Strike Diamonds Equity 27,071 Mispec Resources, Inc. Equity 509,000 Osprey Energy Ltd Equity 2,100 Handelfinanz CCF BK 30 Nov 02 10.5 Pct Bond 40,000 Sairgroup Zuerich Equity 2,300 The Court permitted the transfer all of the Unsold Securities to an account at Merrill Lynch that is designated to hold Abandoned Property, and the disposal of the Unsold Securities consistent with Merrill Lynch's policies. The consideration of the Sale Request with respect to Chase London has been adjourned by agreement between Mr. Kirschner and Chase London on May 14, 2009, the Court noted. About Refco Inc. Headquartered in New York, Refco Inc. -- http://www.refco.com/ -- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The company has operations in Bermuda. The company and 23 of its affiliates filed for Chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represented the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on Dec. 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. (Refco Bankruptcy News, Issue No. 94; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) REGAL JETS: Files Schedules of Assets and Liabilities ----------------------------------------------------- Regal Jets, LLC, filed with the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ------------ A. Real Property B. Personal Property $1,768,729 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $104,729,247 E. Creditors Holding Unsecured Priority Claims $33,737 F. Creditors Holding Unsecured Non-priority Claims $506,284 ------------ ------------ TOTAL $1,768,729 $105,269,269 Based in Dallas, Texas, Regal Jets, LLC, filed for bankruptcy on February 25, 2009 (Bankr. D. Del. Case No. 09-10648). John D. McLaughlin, Jr., Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP in Wilmington, represent the Debtor. When it filed for bankruptcy, the Debtor reported $10 million to $50 million in assets, and $100 million to $500 million in debts. RIVER WOODS: Case Summary & 7 Largest Unsecured Creditors --------------------------------------------------------- Debtor: River Woods, LLC P.O. Box 2617 Boise, ID 83701 Bankruptcy Case No.: 09-01263 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Idaho (Boise) Judge: Jim D. Pappas Debtor's Counsel: Howard R. Foley, Esq. Foley Freeman PLLC P.O. Box 10 Meridian, ID 83680 Tel: (208) 888-9111 Email: hrfoley@foleyfreeman.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $100,000,001 to $500,000,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ FDIC $6,797,515 1021 Whitney Ranch Henderson, NV 89014 City of Cascade $31,439 PO Box 649 cascade, ID 83611 United Pipe & Supply $6,735 PO Box 6326 Portland, OR 97228 Hawley Troxell $6,046 Hawley Troxell $3,816 William Scotsman $565 Idaho Power $47 The petition was signed by Karl T. Bonar, president of the company. ROMA FOODS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Roma Foods of Oklahoma, Inc. 1101 West Waterloo Road Edmond, OK 73025 Bankruptcy Case No.: 09-12488 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Hestia Holdings, LLC 09-12497 Eateries, Inc. 09-12499 Best Restaurants, LLC 09-12501 Best Restaurants II, LLC 09-12502 Fiesta Holdings, Inc. 09-12503 Fiesta Holdings, LLC 09-12505 Fiesta Fulton Ranch, LLC 09-12506 Garcia's-Mills, LLC 09-12507 GRP of Fayetteville, LLC 09-12510 GRP of Ft. Smith, LLC 09-12511 GRP of Harrisburg, LLC 09-12512 GRP of Muskogee, LLC 09-12513 Eateries of MD, LLC 09-12514 Eateries, Inc. of West Virginia 09-12516 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Western District of Oklahoma (Oklahoma City) Judge: Richard L. Bohanon Debtor's Counsel: Steven K. Balman, Esq. Sneed Lang PC One West Third Street Suite 1700 Tulsa, OK 740103 Tel: (918) 583-3145 Email: Sbalman@sneedlang.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,001 to $500,000 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/okwb09-12488.pdf The petition was signed by Preston Stockton, president of the Company. RUFFIN ROAD VENTURE: Case Summary & 6 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Ruffin Road Venture Lot 6 800 East Charleston Blvd. Las Vegas, NV 89104 Bankruptcy Case No.: 09-17528 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsel: Nancy L. Allf, Esq. Gonzalez Saggio & Harlan, LLP 411 E. Bonneville, Ste 100 Las Vegas, NV 89101 Tel: (702) 366-1866 Fax : (702) 366-1945 Email: nancy_allf@gshllp.com Total Assets: $4,502,000 Total Debts: $2,285,469 According to its schedules of assets and liabilities, $2,236,896 of the debt is owing to secured creditors, $31,081 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 6 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-17528.pdf The petition was signed by Kevin Tucker, president of the Company. SANDERSON INDUSTRIES: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Sanderson Industries, Inc. 3550 Atlanta Industrial Pkwy. Atlanta, GA 30331 Bankruptcy Case No.: 09-72311 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: David G. Bisbee, Esq. Law Office of David G. Bisbee 2929 Tall Pines Way Atlanta, GA 30345 Tel: (770) 939-4881 Fax: (770) 783-8595 Email: bisbeed@bellsouth.net Total Assets: $12,895,000 Total Debts: $16,513,276 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rory Sanderson $4,320,000 3450 Industrial Pkwy Atlanta, GA 30331 Guelph Tool, Inc. $3,984,037 39 Royal Road Guelph, Ontario, Canada Guelph Tool Sales, Inc. $470,000 21450 Gibson Dr Warren, MI 48089 Daimler Chrysler Corp. $369,821 Guelph Tool, Inc. $250,000 Heidtman Steel Products Inc. $166,090 Welded Tubes, Inc. $132,418 Eastern Plating $103,114 Thompson Dayton Steel Service $81,355 Sivaco Qubec $72,837 Aetna $69,572 Olympic Steel $62,252 Georgia Plating $55,207 WRI/Atlanta Park LP $53,708 CBIZ Accounting $51,515 Wico Metal Products $48,990 GEXPRO $47,121 Ogihara America $41,265 Georgia Power Co. $40,790 Tubular Steel Inc. $39,770 The petition was signed by Rory Sanderson, CEO of the company. SANDRIDGE ENERGY: Moody's Assigns 'B3' Rating on $300 Mil. Notes ---------------------------------------------------------------- Moody's Investors Service assigned a B3 (LGD; 75%) rating to SandRidge Energy, Inc.'s pending $300 million senior unsecured note offering. Moody's also affirmed SD's B2 Corporate Family Rating, B2 Probability of Default Rating, and B3 senior unsecured note rating. The LGD point estimates were changed to LGD5; 75% from LGD 5; 70%. The rating outlook remains stable. "The affirmation reflects SandRidge's delivery of the expected greatly improved liquidity, modestly reduced leverage, and positive production trends that had already been built into the ratings", commented Andrew Oram, Moody's Vice President. Liquidity is improved by the pending note offering. Both liquidity and leverage are improved with the combination of an April $108 million offering of common stock, the announced $60 million East Texas property sale and potential $200 million midstream asset sale, and the first quarter $243 million preferred stock offering. The proceeds from these transactions have and will be used to pay off nearly all of SD previously heavy bank revolver borrowings. These transactions also demonstrate a willingness and ability to issue equity and near equity to maintain balance sheet integrity. SD drillbit productivity has been steady so far, driving a rising sequential quarter production trend. However, this trend was supported by very heavy 2008 and first quarter 2009 drilling and development spending. Accordingly, it may take a few quarters to discern how the production trend responds to sharply curtailed capital spending. Budgeted 2009 capital spending is roughly one quarter to one third of 2008 levels. Furthermore, the sharply reduced drilling program also implies that drilling risk will be statistically less diversified during 2009. The B2 CFR and stable outlook reflect SD's high leverage relative to its peers and a risk of substantial capital dissipation if its comparatively undiversified exploration and development program disappoints. Though posting positive operating trends overall, production in particular, the principle rating restraints are a still small production scale, the comparative reliance on one geologic play for sustained drilling success and production growth, and high leverage on production and on proven developed and total proven reserves. Debt / daily production has been rising quarterly. However, pro-forma for the equity offering and non-producing asset sales, leverage on production would decrease. The path of this important metric will also partly be a function of the relative productivity of SD capital spending program. However, the ratings are supported by a strong industry-seasoned management team, previous strong front-end equity funding that underpinned SD's large accelerated drilling program in the established Pinon Field and comparatively strong drilling results and sustained sequential quarter production gains. While SD's intense concentration on the geologically complex West Texas Overthrust belt limits drilling risk diversification, this concentration also accelerates its move up the learning curve of that complex petroleum system. Performance is enhanced further by its ownership of the rig fleet it employs and by the fact that it is the operator of the high majority of its properties. The last rating action was on May 14, 2008 when Moody's affirmed the existing debt ratings for SD's with a stable outlook and rated its new note issue. SandRidge Energy, Inc. is headquartered in Oklahoma City, Oklahoma. SANDRIDGE ENERGY: S&P Assigns 'B-' Rating on $300 Mil. Notes ------------------------------------------------------------ Standard & Poor's Ratings Services said that it assigned its 'B-' rating and '5' recovery rating (indicating S&P's expectation of 10%-30% principal recovery in the event of default) to oil and gas exploration and production company SandRidge Energy Inc.'s proposed $300 million senior unsecured note issuance. SandRidge's corporate credit rating is 'B' and the outlook is stable. As of March 31, 2009, Oklahoma City-based SandRidge had $2.4 billion in balance sheet debt. "The ratings on SandRidge reflect its highly leveraged financial profile and geographic concentration in the Pinon Field in West Texas, as well as S&P's expectation that near-term natural gas prices will remain weak," said Standard & Poor's credit analyst David Lundberg. SandRidge's competitive finding and development costs, strong hedge positions, and experienced management team only partially offset the weaknesses. The outlook is stable. The company's recent actions alleviate many of S&P's previous liquidity concerns, making a negative ratings action less likely. Nonetheless, S&P would consider a negative action if credit measures or liquidity unexpected worsen, perhaps due to a significant further fall in natural gas prices or increase in capital expenditures. S&P could consider raising the outlook to positive if financial leverage moderates from current levels (particularly if debt/EBITDA falls to less than 4x and EBITDA/interest stays above the mid 3x area) and S&P remains confident that the company will maintain sufficient liquidity to execute its business plan in the near-to-intermediate term. SCUBA TECH: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Scuba Tech, Inc. 130 Aqua Alley Holly Ridge, NC 28445 Bankruptcy Case No.: 09-03877 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Eastern District of North Carolina (Wilson) Debtor's Counsel: Algernon L. Butler, Jr., Esq. Butler & Butler, L.L.P. Post Office Box 38 Wilmington, NC 28402 Tel: (910) 762-1908 Fax: (910) 762-9441 Email: aprilch@bellsouth.net Total Assets: $1,192,406 Total Debts: $2,313,577 According to its schedules of assets and liabilities, $420,936 of the debt is owing to secured creditors, $25,962 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/nceb09-03877.pdf The petition was signed by James A. Singleton III, president of the Company. SEAHAWK PROPERTIES: Case Summary & 2 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Seahawk Properties, LLC PO Box 12350 Wilmington, NC 28405-0110 Bankruptcy Case No.: 09-03869 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: T. Allen Gardner, Jr., Esq. P. O. Box 566 Louisburg, NC 27549 Tel: (919) 496-6003 Fax: (919) 496-4270 Email: lynn@normanandgardner.com Total Assets: $1,176,500 Total Debts: $808,135 According to its schedules of assets and liabilities, $757,289 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 2 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nceb09-03869.pdf The petition was signed by Archie S. Raynor, Jr., manager of the Company. SEEQPOD INC: Seeks to Sell Part of Firm to Microsoft ---------------------------------------------------- SeeqPod Inc. CEO Kasian Franks has confirmed to Wired.com that the Company was negotiating with Microsoft on a sale of part of the Company. Mr. Franks, according to Wired.com, said that SeeqPod "has been in talks with Microsoft for the last year." Other parts of SeeqPod's search engine could be sold off to other parties, Wired.com states, citing Mr. Franks. Mr. Franks said that the new plan is to sell the "core code" to a large company like Microsoft, and for the current team of SeeqPod developers to offer support to companies use or license that code, Wired.com relates. Saratoga, California-based SeeqPod, Inc., is a "playable media" search service that many music sites use as the foundation for their core offering. The Company filed for Chapter 11 bankruptcy protection on March 30, 2009 (Bankr. N.D. Calif. Case No. 09- 52226). Scott L. Goodsell, Esq., at Campeau, Goodsell Smith, assists the Company in its restructuring efforts. The Company listed $1,000,001 to $10,000,000 in assets and $1,000,001 to $10,000,000 in debts. SEMGROUP LP: Judge Halts Catsimatidis Suit vs. Management --------------------------------------------------------- According to Bloomberg, the U.S. Bankruptcy Court for the District of Delaware has entered an order granting a temporary injunction against John A. Catsimatidis and his associates, enjoining him from proceeding with a lawsuit he filed in federal district court in Tulsa, Oklahoma against SemGroup CEO Terrence Ronan. The bankruptcy judge, according to Bloomberg's Bill Rochelle, was careful to say he wasn't deciding who's entitled to control the direction of the bankruptcy. In its complaint, SemGroup alleged that Mr. Catsimatidis, the owner of Girstedes' Supermarkets and United Refining Company, is attempting to acquire SemGrroup not through the well established bidding process, which is open, transparent, and orderly, but by trying to seize control of the management committee of SemGroup's general partner to force through his own self-interested proposal. SemGroup also alleged that that (i) Mr. Catsimatidis has blatantly and openly violated material terms of their confidentiality agreement by making public announcements regarding the Debtors' reorganization and attempting to influence or control the Debtors' management (ii) he has attempted to hijack and control management's reorganization efforts by publicly proclaiming that he himself would reorganize the Debtors. According to SemGroup, after filing the adversary proceeding, Mr. Catsimatidis and other defendants initially indicated their desire to be more cooperative with the Debtors. In reliance on their representations, the Debtors agreed to several extensions of the Defendants' answer deadline. However, without prior notice, the Defendants file a separate suit on April 2, 2009 in federal district court in Tulsa, Oklahoma against SemGroup CEO Terrence Ronan. The Defendants' lawsuit seeks, among other things, a declaratory judgment that they have "the authority to direct the actions of Defendant Ronan with respect to any and all bankruptcy issues," and that "Ronan does not have the authority to act without supervision, direction and corporate governance of the Management Committee." In that light, the Debtors on April 3, 2009, filed before the Bankruptcy Court a motion for preliminary injunction ordering the Mr. Catsimatidis and other defendants in the adversary proceeding to (i) cease and desist from further violations of the Confidentiality Agreement; (ii) withdraw from their positions on the Management Committee and (iii) refrain from continuing to obstruct the bankruptcy process. According to SemGroup, Mr. Catsimatidis is attempting to use the Oklahoma court to control SemGroup's CEO and the reorganization process. A copy of SemGroup's Injunction Motion is available for free at: http://bankrupt.com/misc/SemGroup_InjunctionMotion.pdf A copy of SemGroup's complaint is available for free at: http://bankrupt.com/misc/SemGroup_SuitvsCatsimatidis.pdf About SemGroup LP SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SOLUTIA INC: Appeals Order on Nitro Claimants' $267,745 Claim ------------------------------------------------------------- Solutia Inc. has taken appeal under Section 158(a) of the Judiciary and Judicial Procedure Code and F.R.B.P. Rule 8001(a) to the U.S. District Court for the Southern District of New York from the March 24 final order entered by Bankruptcy Judge Prudence Carter Beatty granting the Nitro, West Virginia Tort Claimants' application for payment and reasonable fees and expenses. Judge Beatty held that the Nitro, West Virginia Tort Claimants have an allowed $267,745 administrative expense claim pursuant to Section 503(b)(4) of the Bankruptcy Code. In her memorandum decision, Judge Beatty found that the Nitro Claimants did make a substantial contribution to Solutia's bankruptcy cases within the meaning of Section 503(b) of the Bankruptcy Code in connection with the drafting of the Disclosure Statement and the Plan for which compensation should be allowed. Judge Beatty said it was clear from the outset of the Chapter 11 filings that any plan would have to deal with the Debtors' inherited liabilities for environmental damage and personal injuries due to exposure to various chemical products. The issues raised by the Nitro Claimants were ones that affected the holders of all of the thousands of tort claimants, Judge Beatty said. The services rendered by the Nitro Claimants' attorneys were ones that the Debtors' attorneys were unwilling to perform. They did not necessarily enlarge the administrative expenses in these cases. The clarifications to the Plan that resulted produced an actual benefit to the Debtors, the creditors, and to stockholders, Judge Beatty stated. Solutia wants the District Court to determine: (a) Whether the United States Bankruptcy Court for the Southern District of New York erred when it granted the Nitro Tort Claimants' Application. (b) Whether the Bankruptcy Court erred in finding that the Nitro Tort Claimants made a substantial contribution within the meaning of Section 503(b) of the Bankruptcy Code. (c) Whether the Bankruptcy Court erred in finding that the Nitro Tort Claimants' actions led directly to tangible benefits to the creditors, Debtors or estates. (d) Whether the Bankruptcy Court erred in finding that the Nitro Tort Claimants' actions were not designed primarily to serve their own interest. (e) Whether the Bankruptcy Court erred in finding that the Nitro Tort Claimants' actions were not duplicative of services performed by others. In a separate filing, the Nitro Tort Claimants designated certain additional items to be included in the record on appeal from the Nitro Payment Order. The Debtors also filed a copy of the cover sheet of the appeal, which has been assigned to Judge Thomas P. Griesa in the United States District Court for the Southern District of New York, Case No. 09-04145. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The Company and 15 debtor-affiliates filed for Chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On February 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on October 19, 2007. On October 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on November 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from Chapter 11 protection February 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. According to the TCR on April 6, S&P said its ratings and outlook on Solutia (B/Watch Neg/--) remain unchanged following Solutia's announcement that it has entered into a definitive agreement to sell its nylon business to an affiliate of SK Capital Partners II L.P., a New York-based private equity firm. The transaction is expected to close in the second quarter of 2009. SOLUTIA INC: Discloses Status of Litigation as of March 2009 ------------------------------------------------------------ Timothy J. Spihlman, vice president and controller of Solutia Inc., disclosed in the company's quarterly report for period March 31, 2009, on Form 10-Q filed with the U.S. Securities and Exchange Commission, the status of litigations involving the company. Legacy Tort Claims Except for the potential effect of an unfavorable outcome with respect to Solutia's Legacy Tort Claims litigation, Solutia opines that the aggregate of all claims and lawsuits will not have a material adverse impact on the Company's financial statements, according to Mr. Spihlman. Pursuant to the Amended and Restated Settlement Agreement effective February 28, 2008, entered into by Solutia and Monsanto Company in connection with Solutia's emergence from Chapter 11, Monsanto is responsible to defend and indemnify Solutia for any Legacy Tort Claims as that term is defined in the agreement, while Solutia retains responsibility for tort claims arising out of exposure occurring after the Solutia Spinoff. Solutia or Flexsys have been named as defendants in certain actions, and have submitted the matters to Monsanto as Legacy Tort Claims. However, to the extent these matters relate to post Solutia Spinoff exposure or these matters are not within the meaning of "Legacy Tort Claims" within the Monsanto Settlement Agreement, Solutia would potentially be liable, Mr. Spihlman said. All claims in the Flexsys tort litigation matters concern alleged conduct occurring while Flexsys was a joint venture of Solutia and Akzo Nobel, and any potential damages in these cases would be evenly apportioned between Solutia and Akzo Nobel. In addition to the actions, Monsanto has sought indemnity from Solutia for certain tort and workers' compensation claims in which Monsanto has been named a defendant. Solutia have rejected that demand pursuant to the Monsanto Settlement Agreement. There are no pending legal actions regarding these alleged indemnification rights, Mr. Spihlman related. According to Mr. Spihlman, the tort litigation matters are: (1) Putnam Country, West Virginia Litigation In December 2004, a purported class action lawsuit was filed in the Circuit Court of Putnam County, West Virginia against Flexsys, Pharmacia Corporation, Monsanto and Akzo Nobel alleging exposure to dioxin from Flexsys' Nitro, West Virginia facility, which is now closed. The relevant production activities at the facility occurred during Pharmacia's ownership and operation of the facility and well before the creation of the Flexsys joint venture between Pharmacia -- then known as Monsanto, whose interest was subsequently transferred to Solutia in the Solutia Spinoff -- and Akzo Nobel. The plaintiffs are seeking damages for loss of property value, medical monitoring and other equitable relief. Beginning in February 2008, Flexsys, Monsanto, Pharmacia, Akzo Nobel and another third party were named as defendants in approximately 75 individual lawsuits, and Solutia was named in two individual lawsuits, filed in Putnam County, West Virginia, by residents of that county. The largely identical complaints allege that the residents were exposed to potentially harmful levels of dioxin particles from the Nitro facility. Plaintiffs did not specify the amount of their alleged damages in their complaints. (2) Escambia County, Florida Litigation On June 6, 2008, a group of approximately 50 property owners and business owners in the Pensacola, Florida area filed a lawsuit in the Circuit Court for Escambia County, Florida against Monsanto, Pharmacia, Solutia, and the plant manager at Solutia's Pensacola plant. The lawsuit, entitled John Allen, et al. v. Monsanto Company, et al., alleges that the defendants are responsible for elevated levels of PCBs in the Escambia River and Escambia Bay due to past and allegedly continuing releases of PCBs from the Pensacola plant. The plaintiffs seek (i) damages associated with alleged decreased property values caused by the alleged contamination, and (ii) remediation of the alleged contamination in the waterways. The plaintiffs did not specify the amount of their alleged damages in their complaints. (3) St. Clair County, Illinois Litigation In February 2009, a purported class action lawsuit was filed in the Circuit Court of St. Clair County, Illinois, against Solutia, Pharmacia, Monsanto, and two other unrelated defendants alleging the contamination of their property from PCBs, dioxins, furans, and other alleged hazardous substances emanating from the defendants' facilities in Sauget, Illinois, including Solutia's W.G. Krummrich site in Sauget. The proposed class is comprised of residents who live within a two-mile radius of the Sauget facilities. The plaintiffs are seeking damages for medical monitoring and the costs associated with remediation and removal of alleged contaminants for their property. The plaintiffs have not identified a specific amount of alleged damages in their complaint. Upon assessment of the terms of the Monsanto Settlement Agreement and other defenses available to us, Solutia believes the probability of an unfavorable outcome on the Putnam County, West Virginia, Escambia County, Florida, and St. Clair County, Illinois litigation is remote and, accordingly, has not recorded a loss contingency. Nonetheless, if it were subsequently determined these matters are not within the meaning of "Legacy Tort Claims," as defined in the Monsanto Settlement Agreement, or other defenses to us were unsuccessful, it is reasonably possible Solutia would be liable for an amount which cannot be estimated but which could have a material adverse effect on its consolidated financial statements. Solutia Inc. Employees' Pension Plan Litigation Since October 2005, current or former participants in Solutia's Plan have filed three class actions alleging the Company's cash balance pension plan is discriminatory based upon age and the lump sum values of individual account balances in the Solutia Plan have been, and continue to be, miscalculated. Neither Solutia, nor any individual or entity other than the Solutia Plan has been named as a defendant in any of these cases. However, a judgment against the Solutia Pension Plan could result in an increase in the Company's contributions to the Plan, according to Mr. Spihlman. Two of these cases, captioned Davis, et al. v. Solutia, Inc. Employees' Pension Plan and Hammond, et al. v. Solutia, Inc. Employees' Pension Plan, are still pending against the Solutia Plan, and were consolidated in September 2006 with similar cases pending in the Southern District of Illinois against Monsanto Company and Monsanto Company Pension Plan (Walker et al. v. The Monsanto Pension Plan, et al.) and Pharmacia Cash Balance Pension Plan, Pharmacia Corporation, Pharmacia and Upjohn, Inc., and Pfizer Inc. (Donaldson v. Pharmacia Cash Balance Pension Plan, et al.). A Consolidated Class Action Complaint was filed by all of the plaintiffs in the consolidated case on September 4, 2006. The plaintiffs alleged in the Complaint three separate causes of action against the Solutia Plan: (i) the Plan violates ERISA by terminating interest credits on Prior Plan Accounts at the age of 55; (ii) the Plan is improperly backloaded in violation of ERISA; and (iii) the Plan is discriminatory on the basis of age. The plaintiffs seek to obtain injunctive and other equitable relief on behalf of themselves and the nationwide putative class of similarly situated current and former participants in the Solutia Plan. The court has dismissed the plaintiffs' claims that the Solutia Plan is improperly backloaded in violation of ERISA, and that the Plan is discriminatory on the basis of age, Mr. Spihlman related. By consent of the parties, the court certified a class in September 2007 against the Solutia Plan only with respect to the plaintiffs' claim that the Plan violates ERISA by terminating interest credits on Prior Plan Accounts at the age of 55. Discovery has been completed, and the parties filed their motions for summary judgment with respect to liability in July 2008. The motions are pending, and a decision on liability is expected sometime in the first half of 2009. The amount of a potential loss, if any, is not currently determinable, Mr. Spihlman said. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The Company and 15 debtor-affiliates filed for Chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On February 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on October 19, 2007. On October 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on November 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from Chapter 11 protection February 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. According to the TCR on April 6, S&P said its ratings and outlook on Solutia (B/Watch Neg/--) remain unchanged following Solutia's announcement that it has entered into a definitive agreement to sell its nylon business to an affiliate of SK Capital Partners II L.P., a New York-based private equity firm. The transaction is expected to close in the second quarter of 2009. SOLUTIA INC: Flexsys's Monongahela Plant to Shut Down Temporarily ----------------------------------------------------------------- Solutia Inc. will temporarily idle its Flexsys plant in Monongahela, Pennsylvania, because of a "dramatic" drop in demand, RubberNews.com reported. Less than 100 employees will be affected with the plant closure, the report noted. A Solutia spokeswoman told RubberNews.com that employees have been informed on April 15, 2009, that the plant will be progressively shutdown during the coming weeks. Workers will be recalled back to work as needed when demand increases and production returns to normal levels, according to RubberNews.com. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On February 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on October 19, 2007. On October 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on November 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection February 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. According to the TCR on April 6, S&P said its ratings and outlook on Solutia (B/Watch Neg/--) remain unchanged following Solutia's announcement that it has entered into a definitive agreement to sell its nylon business to an affiliate of SK Capital Partners II L.P., a New York-based private equity firm. The transaction is expected to close in the second quarter of 2009. SOLUTIA INC: Harbinger Entities Hold 16.7% Equity Stake ------------------------------------------------------- In its fifth amended Schedule 13D filed with the U.S. Securities and Exchange Commission, Harbinger Capital Partners Master Fund I, Ltd., disclosed that it beneficially owns 15,800,977 shares of Solutia Inc. common stock as of April 24, 2009. The securities are beneficially owned by Harbinger Master Fund I or Harbinger Capital Partners Special Situations Fund, L.P., or both. All other entities and persons included in the report due to their affiliation with the Funds: Aggregate No. Shares Beneficially Reporting Person Owned Class ---------------- ------------ ----- Harbinger Capital Partners Master Fund I, Ltd. 15,800,977 16.7% Harbinger Capital Partners LLC 15,800,977 16.7% Harbinger Capital Partners Special Situations Fund, L.P. 10,672,543 11.3% Harbinger Capital Partners Special Situations GP, LLC 10,672,543 11.3% Harbinger Holdings, LLC 26,473,520 28.0% Philip Falcone 26,473,520 28.0% According to Philip Falcone, Harbinger Master Fund I sold these shares between April 20 and 23, 2009: Date No. Shares Sold Price per Share ---- --------------- --------------- 04/20/09 100,000 $3.00 04/20/09 1,135,500 3.07 04/21/09 796,200 2.96 04/22/09 100,000 3.00 04/22/09 505,500 2.97 04/23/09 3,100,000 2.76 The number of outstanding shares is based on the 94,281,742 shares as reported by Solutia as of April 24, 2009, adjusted for warrants held by the Harbinger Entities. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The Company and 15 debtor-affiliates filed for Chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On February 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on October 19, 2007. On October 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on November 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from Chapter 11 protection February 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. According to the TCR on April 6, S&P said its ratings and outlook on Solutia (B/Watch Neg/--) remain unchanged following Solutia's announcement that it has entered into a definitive agreement to sell its nylon business to an affiliate of SK Capital Partners II L.P., a New York-based private equity firm. The transaction is expected to close in the second quarter of 2009. SOLUTIA INC: Reduces Bonuses of 1,400 Salaried Employees -------------------------------------------------------- In light of current economic conditions and despite the strong financial performance during 2008 from Solutia Inc.'s continuing operations, the Executive Compensation Development Committee of Solutia's board of directors reduced the previously-approved pool for all annual bonuses under the 2008 Annual Incentive Plan by approximately 80% from $30,300,000 to $6,200,000, Paul J. Berra, III, the Company's senior vice president, general counsel, and chief administrative officer, related in a regulatory filing with the U.S. Securities and Exchange Commission on April 22, 2009. Approximately 2,700 of Solutia's employees, including certain executive officers, participate in the 2008 AIP. In connection with the ECDC's decision, the bonuses awarded to approximately 1,400 exempt salaried employees, including the Executive Officers, were reduced to approximately 15% of the amount earned under the 2008 AIP resulting from actual performance relative to pre-established performance metrics under the 2008 AIP, Mr. Berra said. Bonuses for approximately 1,300 non-exempt salaried employees and hourly workers were not reduced by the ECDC. St. Louis Business Journal noted that Solutia had previously frozen salaries for all its workers, including Solutia President, Chief Executive Officer and Chairman Jeffry Quinn. According to Mr. Berra, the amount of the bonus for each named Executive Officer, together with their total cash compensation for 2008, is: 2008 2008 Incentive Total Cash Executive Officer Bonus Amount Compensation ----------------- -------------- ------------ Jeffry Quinn $340,594 $1,205,594 President, CEO and chairman James M. Sullivan 86,625 526,625 Executive vice president, chief financial officer and treasurer James R. Voss 186,750 601,750 Executive vice president, global operations Mr. Berra added that the amount of 2008 Total Compensation recalculated from the Summary Compensation Table set forth in Solutia's definitive proxy statement filed on March 27, 2009, to reflect the inclusion of the 2008 AIP incentive bonuses, annual base salaries as well as equity grants, the change in pension value and nonqualified deferred compensation earnings and all other compensation as defined in accordance with SEC rules for certain executive officers are: (i) Mr. Quinn, $6,238,076, (ii) Mr. Sullivan, $2,355,934, and (iii) Mr. Voss, $1,944,003. As of March 31, 2009, Solutia's total liquidity was $163,000,000. This amount was comprised of $128,000,000 in availability under Solutia's revolving credit facility and $35,000,000 in cash, according to Mr. Berra. He noted that Solutia's December 31, 2008 liquidity position was $145,000,000. Mr. Berra continued that while the borrowing base of Solutia's Revolver was reduced from $370,000,000 to $340,000,000 during the first quarter, the Company's liquidity improved due to strong cash generated by continuing and discontinued operations. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The Company and 15 debtor-affiliates filed for Chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On February 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on October 19, 2007. On October 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on November 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from Chapter 11 protection February 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. According to the TCR on April 6, S&P said its ratings and outlook on Solutia (B/Watch Neg/--) remain unchanged following Solutia's announcement that it has entered into a definitive agreement to sell its nylon business to an affiliate of SK Capital Partners II L.P., a New York-based private equity firm. The transaction is expected to close in the second quarter of 2009. SOURCE INTERLINK: Protocol Re: Transfer of Common Shares Okayed --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved, on an interim basis, notification and hearing procedures for transfers of common stock of Source Interlink Companies, Inc. or of any beneficial interest therein, in order to preserve the Debtors' net operating losses and other tax attributes. Any entity who currently is or becomes a Substantial Shareholder must file with the Bankruptcy Court, and serve upon counsel to the Debtors, a declaration of such status, on or before the later of (a) 30 days after the date of the Notice of Order, or May 10, 2009, and (b) 10 days after becoming a Substantial Shareholder. Before effectuating any transfer of common stock that would result in an increase or decrease in the amount of common stock of which a Substantial Shareholder has beneficial ownership or would result in an entity becoming or ceasing to be a Substantial Shareholder, said Substantial Shareholder must file with the Bankruptcy Court, and serve upon counsel to the Debtors, an advance written declaration of the intended transfer of common stock. Failure to follow the procedures will constitute a violation of, among other things, the automatic stay provisions of Bankruptcy Code Sec. 362. Any prohibited purchase, sale, trade, or other transfer of common stock or an option with respect thereto in violation of the order shall be null and void ab initio and may be punished by contempt or other sanctions imposed by the Bankruptcy Court. For purposes of the procedures, a Substantial Shareholder is any entity that has beneficial ownership of at least 2,500,000 shares of common stock in the aggregate, and beneficial ownership of common stock includes direct and indirect ownership, ownership by said holder's family members and entitites acting in concert with said holder to make a coordinated acquisition of stock and ownership of shares that said holder has an option to acquire. About Source Intelink 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 U.S. -- 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. SPANSION INC: Asks Court to Set Deadline for Filing Claims ---------------------------------------------------------- Some creditors will inevitably assert claims against the estates of which Spansion Inc. and its affiliates currently are unaware, or in amounts that differ from the amounts designated for those entities in the schedules of assets and liabilities currently being prepared by the Debtors pursuant to Section 521 of the Bankruptcy Code, says Sommer L. Ross, Esq., at Duane Morris, LLP, in Wilmington, Delaware. In light of this, Ms. Ross relates, a deadline for filing Proofs of Claim is needed so as to allow the Debtors to accurately determine the amount, nature and priority of Claims in the Chapter 11 cases and to subsequently analyze the impact of those Claims on any proposed plan of reorganization. Accordingly, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to establish the date that is 60 days after service of a bar date notice as the deadline for holders of prepetition claims to file proofs of claim. The Debtors will serve the Bar Date Notice within five business days after the later of (i) entry of the Bar Date Order and (ii) the filing of the Debtors' Schedules. The Debtors further propose that the Court establish August 28, 2009, as the deadline for all governmental units to file Proofs of Claim. The Debtors request that any entity asserting a Claim by reason of the rejection of an executory contract or unexpired lease, the recovery of a voidable transfer or the assessment of certain taxes, pursuant to Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code, will be required to file a Proof of Claim by the later of: (i) the Bar Date; or (ii) the first business day that is at least 60 calendar days after (a) the mailing to the claimant of notice of entry of any order approving the rejection of that executory contract or unexpired lease or the avoidance of that transfer or (b) the date that the tax claim arises under Section 502(i). Any person or entity that has or asserts a Claim prior to the Petition Date must file a Proof of Claim on or before the Bar Date or Governmental Bar Date, except for: (a) a claim against any of the Debtors for which a Proof of Claim has already been filed with the clerk of the Bankruptcy Court or Epiq Bankruptcy Solutions, LLC, the Debtors' claim agent; (b) a claim that is listed in the schedules of assets and liabilities and is not described as disputed, contingent, or unliquidated, provided that the creditor agrees with the amount and nature of the Claim as scheduled; (c) an administrative expense claim pursuant to Section 503(b); (d) an administrative expense claim for postpetition fees and expenses incurred by any professional pursuant to Section 330, 331, and 503(b); (e) a claim that has been paid by the Debtors, including without limitation, any claim paid pursuant to the Debtors' authority under any court order; (f) a claim of a Debtor against another Debtor; (g) a claim that has been allowed by an order of the Court entered on or before the Bar Date; and (h) an equity interest in any of the Debtors, provided, however, that any interest holder who wishes to assert a Claim against any of the Debtors based on any transaction in or relating to any interest in the Debtors, including but not limited to, a claim for damages or rescission based on the purchase or sale of interest, must file a Proof of Claim on or prior to the Bar Date. The Debtors ask the Court to require that each Proof of Claim: (i) be signed; (ii) be written in the English language; (iii) be denominated in lawful currency of the United States; (iv) indicate the particular Debtor against whom the Claim is asserted; and (v) be submitted with copies of any supporting documentation or an explanation of why any documentation is not available. If a Claimant asserts a Claim against more than one of the Debtors, or has a different Claim against each of the Debtors, a separate Proof of Claim Form must be filed with respect to each Debtor. Furthermore, Claimants filing Section 503(b)(9) Claims must attach to the Proof of Claim a supplemental statement setting forth with specificity: (i) the date of shipment of the goods the Claimant contends the Debtors received within 20 days before the Petition Date; (ii) the date, place, and method of delivery of the goods the Claimant contends the Debtors received within 20 days before the Petition Date; (iii) the value of the goods the Claimant contends the Debtors received within 20 days before the Petition Date; and (iv) whether the Claimant timely made a demand to reclaim the goods under Section 546(c) of the Bankruptcy Code, including any documentation identifying that demand. All Claimants must send their Proofs of Claim to: If by first-class mail: Spansion Inc. Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5285 New York, NY 10150-5285 If by hand delivery or overnight mail: Spansion Inc. Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC 757 Third Avenue, 3rd Floor New York, NY 10017 If any holder of a Claim against the Debtors fails to file Proof of Claim: (i) the Claim will be disallowed; (ii) the holder of the Claim will be forever barred, estopped and enjoined from asserting a Claim against the Debtors and their estates; and (iii) the Debtors and their property will be forever discharged from any and all indebtedness or liability with respect to that Claim. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: CFO Thoroddsen Resigns, Sarkisian Steps In -------------------------------------------------------- Thora Thoroddsen resigned as Interim Chief Financial Officer of Spansion Inc., on April 24, 2009, as a result of an ongoing pre- existing business relationship between Spansion's independent auditors, Ernst & Young LLP, and Ms. Thoroddsen's employer, Brincko Associates, according to a filing with the Securities and Exchange Commission. Ms. Thoroddsen was appointed as Spansion's Interim Chief Financial Officer on April 10, 2009. According to the filing, the Audit Committee of the Board of Directors of Spansion and Ernst & Young LLP have each given consideration to whether Ms. Thoroddsen's appointment and service as Interim Chief Financial Officer had an impact on the independence of Ernst & Young as the Company's independent auditors and they have each concluded that Ernst & Young's independence has not been impacted. On April 29, 2009, the Board of Directors appointed Nathan Sarkisian, age 50, to serve as Interim Chief Financial Officer, effective May 20, 2009. Mr. Sarkisian will bring Spansion 23 years experience in senior finance positions. Prior to his retirement in 2006, Mr. Sarkisian spent 11 years as Chief Financial Officer at Altera Corporation, a worldwide leader in the programmable logic segment of the semiconductor industry. Before that, Mr. Sarkisian was corporate controller at Altera, and has held various management and finance positions at high technology companies including Schlumberger and Fairchild Semiconductor. Mr. Sarkisian holds a bachelor's degree in Economics from Stanford University and a master's degree in Business Administration from Harvard University. John H. Kispert, the Company's President and Chief Executive Officer, was appointed Interim Chief Financial Officer by the Board of Directors on April 29, 2009, and will serve until the effectiveness of Mr. Sarkisian's appointment on May 20, 2009, says the filing. In connection with Mr. Sarkisian's appointment as Interim Chief Financial Officer, on April 30, 2009, the Company executed a consulting agreement with Mr. Sarkisian, effective May 20, 2009. Under the Agreement, the Company will pay Mr. Sarkisian a monthly fee of $40,000, plus reimbursement of out-of-pocket expenses for required travel and other necessary business expenses in accordance with the Company's reimbursement policies. The Agreement is terminable by either party upon written notice. The Company and Mr. Sarkisian also executed an indemnification agreement in the form provided to the Company's executive officers, pursuant to which the Company will provide Mr. Sarkisian with customary indemnification rights. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Latham & Watkins Seeks $1.2MM in Fees for March Work ------------------------------------------------------------------ Pursuant to Sections 330 and 331 of the Bankruptcy Code, eight professionals in the Chapter 11 cases of Spansion Inc. and its affiliates seek payment of their fees and reimbursement of their expenses: Professional Period Fees Expenses ------------ ---- -------- Latham & Watkins 03/02/09 to LLP 03/31/09 $1,264,243 $41,150 KPMG LLP 03/01/09 to 03/31/09 381,183 32,105 Baker & McKenzie 03/01/09 to LLP 03/31/09 201,152 2,568 Morgan Stanley & 03/01/09 to Co. Incorporated 03/31/09 200,000 67,483 Duane Morris LLP 03/01/09 to 04/30/09 177,455 9,151 Brincko Associates 03/01/09 to Inc. 03/31/09 156,312 22,755 Gordian Group LLC 03/01/09 to 03/31/09 75,000 8,745 Sitrick and 03/01/09 to Company Inc. 03/31/09 38,256 1,043 Latham & Watkins and Duane Morris serve as counsel to the Debtors. Baker & McKenzie serves as the Debtors' special counsel. Sitrick serves as corporate communications consultant to the Debtors. Brincko Associates is the Debtors' restructuring professional. Morgan Stanley, KPMG and Gordian Group serve as financial advisors to the Debtors. Debtors Pay Gordian's Compensation Gordian Group tells the U.S. Bankruptcy Court for the District of Delaware that prior to the entry of the Interim Compensation Procedures Order, the Debtors did not realize that Monthly Fee Applications were required before payment could be made to professionals. Therefore, Gordian Group discloses, it has received payments for March fees for $75,000 and reimbursement of expenses for $8,745. Moreover, Gordian Group tells the Court it has received $75,000 as payment for April fees. Gordian Group assures the Court that it will apply that portion of the Monthly Fees paid to it in excess of 80% of the amounts earned and approved against future payments until its aggregate Monthly Fees paid subsequent to the Petition Date reach the 80% threshold. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Panel Taps Garden City as Communications Agent ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in the bankruptcy cases of Spansion Inc. and its affiliates seeks authority from the U.S. Bankruptcy Court for the District of Delaware to retain The Garden City Group, Inc., as its communications agent, effective April 8, 2009. The Committee believes that the retention of GCG will assist it in complying with its obligations under Section 1102(b)(3) of the Bankruptcy Code. According to Naomi Obinata, general counsel of TSMC North America, solely in its capacity as co-chair of the Committee, GCG will: (a) establish and maintain an Internet-accessed Web site that may provide: * general information concerning the Debtors, including a link to the Web site maintained by the Debtors' notice, claims and balloting agent at www.epiqbankruptcysolutions.com, which includes case dockets, access to docket filings, and general information concerning significant parties in the cases; * monthly Committee reports summarizing recent proceedings, events and public financial information; * highlights of significant events in the cases; * a calendar with upcoming significant events in the cases; * access to the claims docket as and when established by the Debtors or any claim agent retained in the cases; * a general overview of the Chapter 11 process; * press releases, if any, issued by each of the Committee and the Debtors; * a non-public form to submit creditor questions, comments and requests for access to information; * responses to creditor questions, comments and requests for access to information; provided, that the Committee may privately provide those responses in the exercise of its reasonable discretion, including in light of the nature of the information request and the creditor's agreements to appropriate confidentiality and trading constraints; * answers to frequently asked questions; and * links to other relevant Web sites; (b) establish and maintain a telephone number and electronic mail address for creditors to submit questions and comments. According to the Committee, GCG is one of the country's leading Chapter 11 administrators with expertise in noticing, claims, processing, balloting, and distribution. In the normal course of business, GCG is often called upon to create Web sites for the purpose of providing access to information to creditors, the Committee relates. Ms. Obinata relates the fees and expenses to be incurred by GCG under the proposed engagement would be administrative in nature, and therefore, should not be subject to standard fee application procedures of professionals. Alternatively, the Committee requests that: (i) GCG be exempt from any order establishing procedures for interim compensation and reimbursement of expenses of professionals; and (ii) the Court authorize the Debtors to compensate GCG on a monthly basis in accordance with the terms and conditions of the Retention Agreement, upon GCG's submission to the Committee, the Debtors and the United States Trustee of monthly invoices summarizing in reasonable detail the services rendered and expenses incurred. GCG's hourly billing rates are: Administrative $45-$70 Data Entry Processors $55 Mailroom and Claims Control $55 Project Administration $70-$85 Quality Assurance Staff $80-$125 Project Supervisors $95-110 Systems & Technology Staff $100-$200 Graphic Support $125 Project Managers, Senior Project Managers, and Department Managers $125-$150 Directors, Senior Consultants, and Assistant Vice Presidents $175-$250 Senior Management $250-$295 The Committee, the Debtors, and the United States Trustee will have 10 days to advise GCG of any objection to the monthly invoices. If an objection cannot be resolved, the Committee will schedule a hearing before the Court to consider the disputed invoice. Unless advised of an objection, the Debtors will pay each GCG invoice within 30 days after the tenth day after the receipt of the invoice. If an objection is raised to a GCG invoice, the Debtors will remit to GCG only the undisputed portion of the invoice. Jeffrey S. Stein, vice president of The Garden City Group, Inc., assures the Court that his firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Seeks June 15 Extension of Schedules Filing Deadline ------------------------------------------------------------------ Pursuant to Rule 1007(c) of the Federal Rules of Bankruptcy Procedure, Spansion Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend their deadline to file schedules of assets and liabilities and statements of financial affairs through June 15, 2009. In a separate request, the Debtors ask the Court to extend their deadline to file notices of removal of actions to August 28, 2009. In view of the amount of information that must be assembled and compiled and the fact that, since the Petition Date, the Debtors' employees have been consumed with critical administrative and business matters arising in conjunction with the Chapter 11 cases, ample cause exists for the requested extension, Sommer L. Ross, Esq., at Duane Morris, LLP, in Wilmington, Delaware, asserts. According to Ms. Ross, although the Debtors have mobilized numerous employees to gather, review, and analyze the information necessary to complete the Schedules, the process requires expenditure of substantial time and effort. She adds that the Debtors continue to adjust in response to significant changes in workforce, including the departure of the chief financial officer, the corporate controller, and a significant reduction in the overall number of employees. The Debtors relate that in addition to preparing their Schedules, they have been required to commit significant time, effort, and resources to address additional matters which require immediate and substantial attention, including: (a) the preparation of their 10-Q and 10-K, Rule 2015.3 reports and monthly operating reports; (b) the review and analysis of a substantial number of contracts and leases; (c) preparation of responses to various requests from secured and unsecured creditors; and (d) the stabilization of worldwide business operations. Nevertheless, Ms. Ross maintains, despite the time constraints, the Debtors have still made substantial progress in compiling their Schedules. However, they seek an additional extension to enable them to finalize the reports in an organized manner. The Debtors have engaged Epiq Bankruptcy Solutions, LLC, to provide them with administrative assistance in connection with, among other things, the preparation and maintenance of their Schedules and Statements, Mr. Ross points out. The Debtors further ask the Court to set the hearing on their Extension Motion on May 18, 2009, and to establish May 14 as objection deadline. Extension of Removal Period Section 1452 of the Bankruptcy Code provides that "a party may remove any claim or cause of action in a civil action other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce such governmental unit's police or regulatory power, to the district court for the district where such civil action is pending. . .." Pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedure, a notice of removal may be filed only within the longest of: (a) 90 days after the Petition Date; (b) 30 days after the entry of an order terminating stay, if the claim or cause of action in a civil action has been stayed; or (c) 30 days after a trustee qualifies in a Chapter 11 reorganization case but not later than 180 days after the order for relief. However, Rule 9006 permits the Court to extend the period for "cause" if requested by the Debtors. According to Sommer L. Ross, Esq., at Duane Morris, LLP, in Wilmington, Delaware, the Debtors' attention has been primarily dedicated to reorganizing their business operations. She adds that significant resources of the Debtors have been devoted toward satisfying the numerous requirements of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedures and the Office of the United States Trustee, including the: * preparation of schedules of assets and liabilities; * production of financial reports; * retention of professionals; and * response to vendor and creditor inquiries. As a result, Ms. Ross says, the Debtors have not yet had an opportunity to determine whether removal of any given Action is appropriate. "Granting the Debtors this added time to consider removal of the Action will ensure that the Debtors' decisions are fully informed and consistent with the best interests of the Debtors' estates," Ms. Ross avers. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPECTRUM BRANDS: Battle Looms with Equity Panel, Lenders Over Plan ------------------------------------------------------------------ Since the Chapter 11 plan of reorganization filed by Spectrum Brands Inc. and its affiliates proposes to pay unsecured trade creditors in full and repay noteholders in accordance with an agreement, the U.S. Trustee was unable to form an unsecured creditors' committee in Spectrum's cases. At the request of existing equity holders and with the written support of a senior attorney from the Securities and Exchange Commission, the U.S. Trustee appointed an official committee of equity holders. The Debtors nonetheless are asking the U.S. Bankruptcy Court for the Western District of Texas to deny approval of the Equity Committee's request to hire attorneys and financial advisors, or in the alternative, allow the Debtors' estates to refuse paying these professionals unless their efforts result in recoveries by equity holders. The Debtors' propose Chapter 11 does not provide for any recovery to equity holders. The Debtors, which had opposed the appointment of the Equity Committee, assert that the Equity Committee is not entitled to the advice of bankruptcy counsel and financial advisors because they will be costly to their estates and the costs will be unjustified because they are "hopelessly insolvent." The Equity Committee has submitted applications to hire Alston & Bird LLP as counsel; Jackson Walker LLP, as local counsel; and Allen & Company LLC as financial advisor. The members of the Equity Committee are (a) Mittleman Brothers LLC, the Equity Committee chairperson, (b) Ralston H. Coffin, (c) Cookie Jar LLC, and (d) Peter and Karen Locke, Living Trust. Mittleman had requested for the appointment of the Equity Committee, arguing that it was warranted because, in the view of Mittleman, the range of enterprise value provided by the Debtors in the disclosure statement to the Chapter 11 plan was "unjustifiably low," compelling no recovery for shareholders, whereas its own valuation indicated that shareholders should be entitled to a recovery. Spectrum's "Hopelessly Insolvent" Argument Spectrum Brands asserts that its request to deny approval of the fees of the Equity Committee's professionals is warranted because it is "highly overleveraged and hopelessly insolvent, and that shareholders are not entitled to any distribution under the Plan." The Debtors' counsel, D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, argues that: (a) The Debtors' schedules, when taken collectively and adjusted to avoid double counting duplicate liabilities, reflect that the Debtors have a combined equity deficit of more than $1.7 billion. (b) The closing price of Spectrum's stock was 12 cents per share as of April 30, 2009, and the stock has traded for low prices throughout the Chapter 11 cases, thereby reflecting the market's determination that there is no equity in the Debtors and that any value associated with Spectrum's stock is purely speculative option value. (c) Under the Plan, all creditors other than Spectrum's noteholders will be paid in full. The noteholders, by contrast, will receive new notes representing 20% of the allowed amounts of their claims and 100% of the equity of the reorganized Debtors. However, as of April 30, 2009, the last trading price of Spectrum's 7-3/8% Senior Subordinated Notes due 2015 was 31.5 cents on the dollar (with the last reported trade having been made on April 27, 2009). Moreover, as of April 30, 2009, the last trading price of Spectrum's Variable Rate Toggle Senior Subordinated Notes currently bearing interest at 12.5% per annum and due 2013 was 33 cents on the dollar. Indeed, the Debtors' notes have traded at low values throughout the Chapter 11 cases. These values indicate the market's view that the Debtors are insolvent and that distributions under the Plan will be insufficient to pay noteholders the full amounts of their claims. Of course, noteholder claims must be fully paid before shareholders are entitled to any distribution. (d) The Debtors have separately concluded that they are insolvent and that existing shareholders are out of the money. Perella Weinberg Partners LP, the Debtors' financial advisor, has valued the Debtors' midpoint reorganization value as being approximately $2.3 billion as of an assumed effective date of July 15, 2009, and has calculated that distributions under the Plan will result in estimated recoveries to noteholders of between 55% and 70% of their claims. (e) An analysis of Spectrum's stock issued by BMO CapitalMarkets on December 2, 2008 provided: "We're raising Our rating to MARKET PERFORM but lowering our target to $0 as demand for [Spectrum's] equity has all but disappeared. In our opinion, while the Global Battery & Personal Care and Global Pet segments are viable businesses, [Spectrum's] stock is not given its total debt ($2,523 million) to adjusted EBITDA ($281 million) of 9x and few remaining options to delever. The NYSE sent [Spectrum] another notice regarding another violation of listing standards and the stock, now trading on Arca, may be headed for the pink sheets." D.E. Shaw Laminar Portfolios LLC and Harbinger Capital Partners and certain of its affiliates have echoed the Debtors' objections to the Equity Committee's payment of fees to its professionals. Equity Holders: "Existing Equity Is Substantially In the Money" The Equity Committee asserts that the additional cost of its counsel and financial advisors will have no impact on the Debtors' creditors or on the timing or the financial condition of the Debtors upon emergence from Chapter 11. The Committee argues that Spectrum's purported concern about costs is "offensive." It points out that the Debtors estimate that they will pay $67 million in professional fees -- to attorneys and advisors for the Debtors, the term lenders and the DIP lenders -- for a sojourn in Chapter 11 lasting less than six months. It asserts that the Debtors' actions are a "flagrant attempt to deny "due process" to the sole committee representing the only stakeholder who will receive nothing under the proposed Chapter 11 plan. The Equity Committee notes the equity holders are the only constituency of creditors or interests whom the Debtors are not proposing to pay in full, reinstate or treat on a consensual basis. William Hao, Esq., at Alston Bird, notes that the Debtors -- contrary to their constant refrain of "hopeless insolvency" -- recently increased the estimate of their enterprise value upon the proposed effective date of their reorganization plan to $2.3 billion (an amount which excludes cash on hand). In the midst of (i) the worst economic times in their domestic and international markets since the Great Depression and (ii) Chapter 11, the Debtors' enterprise value has increased to an amount within 11% of putting existing equity in the money -- the "in the money" amount, $2.56 billion, is 11% higher than $2.3 billion. The gap between the Debtors' current $2.3 billion valuation and the $2.56 billion, $260 million, is less than 1 x projected EBITDA for either the Debtors' fiscal year ending September 30, 2009 ($305 million in EBITDA) or September 30, 2010 ($332 million in EBITDA). Even on the Debtors' own valuation, which the Equity Committee believes is substantially low, the Debtors are close to solvency and the shareholders of Spectrum close to being in the money. The Equity Committee said they will present evidence at the June 15 confirmation hearing on the Plan that "existing equity is substantially in the money." The panel asserts that it is premature in the Chapter 11 cases to pre-judge the valuation of the Debtors at a hearing on the retention of Equity Committee professionals when it will be the subject of a full evidentiary hearing in less than six weeks. Secured Lenders Also Object to Plan Aside from the Equity Committee, the secured lenders are also opposing to the Plan. According to Bill Rochelle, secured creditors owed $1.35 billion are opposing the reorganization, contending they will be harmed even though the plan says defaults will be cured and the debt reinstated. The Bankruptcy Court, according to Bloomberg, declined to rule until the confirmation hearing on whether the secured lenders are harmed by the plan and thus should be voting. In the meantime, the judge provisionally allowed the lenders to vote on the plan before he decides at the confirmation hearing whether the vote has any meaning. Under the pre-negotiated Plan, (i) noteholders will take new stock and $218 million in new notes in exchange for $1.09 billion in Debt, for a recovery of between 55 percent and 70 percent, (ii) unsecured creditors owed $28 million are to be paid in full just like holders of $160 million under an existing asset-backed Loanl (iii) the existing secured credit of $1.35 billion is to be Reinstated, (iv) existing stock is to be canceled and stockholders will receive nothing. Spectrum's plan support agreement with noteholders has a June 30 deadline to obtain confirmation of the plan. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc., and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. An official committee of equity security holders -- composed of Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and the Peter and Karen Locke Living Trust -- was appointed by the U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009. The Equity Committee has tapped Alston & Bird LLP as its bankruptcy counsel. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Confirmation Hearing to Commence on June 15 ------------------------------------------------------------ The confirmation hearing on Spectrum Brands, Inc., et al.'s Joint Plan of Reorganization will commence on June 15, 2009, at 10:00 a.m. (Central Time), continuing as necessary on June 16, 2009, at 9:30 a.m., June 22, 2009, at 10:00 a.m., June 23, 2009, at 9:30 a.m., and June 24, 2009, at 9:30 a.m. Objections, if any, to confirmation of the Plan must be filed no later than May 29, 2009, at 4:00 p.m. As reported in the Troubled Company Reporter on April 16, 2009, the U.S. Bankruptcy Court for the Western District of Texas approved the Disclosure Statement filed in connection with Spectrum Brands, Inc.'s proposed pre-negotiated Plan of Reorganization and authorized the Company to begin soliciting approval for its Plan of Reorganization. Pursuant to a decision from the Bankruptcy Court, the Company will be soliciting votes from its senior term lenders as well as its noteholders. Prior to filing voluntary petitions for reorganization under Chapter 11 for Spectrum Brands and its U.S. subsidiaries on February 3, 2009, the Company had reached agreements with noteholders representing, in the aggregate, roughly 70% of the face value of its outstanding bonds to pursue a refinancing that, if approved and implemented as proposed, would enable the Company to reduce the amount of debt on its balance sheet by approximately $840 million -- or approximately one-third -- eliminate a substantial amount in annual cash interest payments and free up additional cash that could be reinvested in its business to support meaningful revenue and profit growth. "Approval of the Disclosure Statement by the Court and authorization to begin the solicitation process for approval of our Plan of Reorganization are two important steps toward emerging from Chapter 11, a process which we expect to strengthen the financial position of this company," said Kent Hussey, CEO of Spectrum Brands. Within the next few weeks, Spectrum will begin mailing notice of the confirmation hearing and will begin the process of soliciting approvals for the Plan of Reorganization. Assuming the requisite approvals are received and the Bankruptcy Court confirms the Plan of Reorganization under the Company's current proposed timetable, Spectrum expects to emerge from Chapter 11 protection by late summer. Based on preliminary indications of interest, the Company currently believes that it will be able to receive commitments for exit financing within the current proposed timetable for emergence. If the Company's Plan of Reorganization is confirmed as proposed, existing common stock will be extinguished under the plan, and no distributions will be made to holders of the Company's current equity. About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc., and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. An official committee of equity security holders -- composed of Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and the Peter and Karen Locke Living Trust -- was appointed by the U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009. The Equity Committee has tapped Alston & Bird LLP as its bankruptcy counsel. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) STOCK BUILDING: Wins Interim Approval for Wolseley DIP Loan ----------------------------------------------------------- According to Bloomberg's Bill Rochelle, Stock Building Supply Holdings LLC received interim approval from the U.S. Bankruptcy Court for the District of Delaware (Wilmington) for a $60 million loan provided by Wolseley Plc. The report relates that the Court will consider approval of the DIP loan provided by the 100% owner of the Debtors on May 28. Wolseley is offering a total of $100 million. Stock Building filed for Chapter 11 protection May 6 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. 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. 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. 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 o16.5 billion and trading profit was o683 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. SUN-TIMES MEDIA: Court OKs Fee Changes for Rothschild Inc. ---------------------------------------------------------- Randall Chase at The Associated Press reports that the U.S. Bankruptcy Court for the District of Delaware has approved fee changes for Rothschild Inc., Sun-Times Media Group, Inc.'s financial adviser and investment banker. According to The AP, among the changes approved involves the Sun- Times Media's request to pay Rothschild a transaction fee of about $2.5 million in the event of a sale or merger. The AP relates that after informal objections by the unsecured creditors committee and the U.S. Trustee, the Sun-Times agreed to cut the fee to about $1.25 million, plus 4% of the aggregate consideration exceeding $25 million. The AP states that Sun-Times Media deleted a provision allowing it to pay Rothschild an additional fee at its discretion. Monthly fees exceeding $600,000 will be applied toward the transaction fee, The AP says, citing Sun-Times Media. Sun-Times Media Group, Inc. -- http://www.thesuntimesgroup.com/-- (Pink Sheets:SUTM) owns media properties including the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities across Chicago. The Company and its affiliates conduct business as a single operating segment which is concentrated in the publishing, printing, and distribution of newspapers in greater Chicago, Illinois, metropolitan area and the operation of various related Web sites. The Company also has affiliates in Canada, the United Kingdom, and Burma. Sun-Times Media's balance sheet at September 30, 2008, showed total assets of $479.9 million, total liabilities of $801.7 million, resulting in a stockholders' deficit of roughly $321.8 million. The Company and its affiliates filed for Chapter 11 bankruptcy protection on March 31, 2009 (Bankr. D. Delaware Case No. 09- 11092). James H.M. Sprayregan, P.C., James A. Stempel, Esq., David A. Agay, Esq., and Sarah H. Seewer, Esq., at Kirkland & Ellis LLP assist the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC is the Debtors' claims agent. As of November 7, 2008, the Debtors listed $479,000,000 in assets and $801,000,000 in debts. TALLYGENICOM LP: German Unit, Printronix Agree on Sale ------------------------------------------------------ Printronix Inc. and TallyGenicom AG confirmed that both companies have reached a definitive agreement to sell TallyGenicom-branded printers and components in Europe and worldwide. Under the terms of the agreement, Printronix will acquire intellectual property from TallyGenicom AG as well as worldwide sales distribution rights for all TallyGenicom line matrix and laser technologies, including printers, supplies and consumables. The acquisition is subject to regulatory approval. In addition, TallyGenicom AG retains all intellectual property and worldwide distribution rights for the TallyGenicom serial-matrix, inkjet and thermal technologies, which includes printers and options, supplies and consumables. TallyGenicom AG will continue to resell TallyGenicom-branded line matrix and laser products purchased from Printronix, and Printronix will resell serial matrix products purchased from TallyGenicom AG. The companies entered into this agreement after TallyGenicom lodged objections to Printronix's March 23, 2009 acquisition of certain assets of TallyGenicom LP, as prescribed by the U.S. Bankruptcy Court for the District of Delaware. The settlement resolves all disputes between Printronix and TallyGenicom AG. As reported by the Troubled Company Reporter on April 22, the Delaware Court approved the sale of U.S. based TallyGenicom LP's business to Printronix Inc. for $36.6 million, including the assumption of $23 million in secured debt, $6.75 million in warranty claims and $4 million in accounts payable. Michale Pluta, the preliminary insolvency administrator of TallyGenicom A.G. sought a stay of the sale pending its appeal, citing that it has rights to some of the property. The Delaware Court, however, refused to issue a stay order. Distributors, resellers and end-user customers of TallyGenicom- branded products can purchase products from their existing TallyGenicom reseller or by contacting Printronix's global sales offices: -- United States: +1 800-665-6210 -- Europe, Middle East, & Africa: +33 (0) 1 46 25 19 00 Customers wishing to contact TallyGenicom AG may call: +49 (0) 731 20 75 0 About Printronix Inc. Since 1974, Printronix Inc. -- http://www.printronix.com/-- has created innovative printing solutions for the industrial marketplace and supply chain. The company is a worldwide leader in enterprise solutions for line-matrix printing and has earned an outstanding reputation for its high-performance thermal bar code and fanfold laser printing solutions. Printronix also has become an established leader in pioneering technologies, including radio frequency identification (RFID) printing, bar code compliance and networked printer management. Printronix is headquartered in Irvine, Calif. About TallyGenicom L.P. Headquartered in Chantilly, Virginia, TallyGenicom L.P. aka Datacom Manufacturing LP -- http://www.tallygenicom.com-- provide an array of business and industrial imaging devices and printer parts. TallyGenicom L.P. and two of its affiliates filed for Chapter 11 protection on January 27, 2009 (Bankr. D. Del. Lead Case No. 09- 10266). Ann C. Cordo, Esq., and Gregory Thomas Donilon, Esq., at Morris Nichols Arsht & Tunnell LLP, represent the Debtors in their restructuring efforts. The Debtors propose Proskauer Rose LLP as their special corporate counsel; CRG Partners Group LLC as financial advisor; and Donlin Recano & Company Inc. as their claims agent. Suzzanne Uhland, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., represent Printronix Inc., the stalking horse bidder. Randall L. Klein, Esq., at Goldberg Kohn Bell Black Rosenbloom & Moritz, Ltd., and Steven K. Kortanek, Esq., at Womble Carlyle Sandridge & Rice, PLLC, represent Dymas Funding Company LLC, agent to Printronix' lenders. When the Debtors filed for protection from their creditors, they listed assets and debts between $10 million to $50 million each. Tallygenicom AG is a Germany based subsidiary of TallyGenicom L.P. Its German liquidator filed a Chapter 15 petition for the comapny on March 19, 2009 (Banrk. D. Mass., Case No. 09-12253). The petitioner, Michale Pluta is the Preliminary Insolvency Administrator and putative foreign representative of TallyGenicom AG under Germany's Insolvenzordnung Insolvency Act pending before the Amtsgericht, the Local Court of Ulm. The petitioner's counsel, is Steven T. Hoort, Esq., at Ropes & Gray, in Boston, Massachusetts. The company estimated assets and debts of $10 million to $50 million. TEKNEK, LLC: 7th Cir. Lets Creditor Pursue Collection Efforts ------------------------------------------------------------- WestLaw reports that a judgment creditor's alter ego claims against a Chapter 7 debtor's sole shareholders and a related holding company were not property of the debtor's bankruptcy estate or related to the debtor's bankruptcy case. Therefore, the bankruptcy court could not enter a preliminary injunction barring the judgment creditor's collection efforts against the alter egos so as to allow the Chapter 7 trustee to pursue the same judgment for the bankruptcy estate's benefit. An additional judgment debtor existed that was directly liable on the judgment to the judgment creditor, and the alter egos also were liable on the judgment to the judgment creditor on the behalf of this additional judgment debtor. Moreover, the judgment creditor was the debtor's only major creditor, such that allowing it to settle its claim against the alter egos outside the bankruptcy case would not derail the case. See In re Teknek, LLC, --- F.3d ----, 2009 WL 1139333 (7th Cir.) THORNBURG MORTGAGE: Wants Schedules Deadline Moved to June 30 ------------------------------------------------------------- Thornburg Mortgage Inc. and its debtor-affiliates ask the U.S. States Bankruptcy Court for the District of Maryland to extend until June 30, 2009, the deadline to file schedules of assets and liabilities, schedules of executory contracts and unexpired leases, and statements of financial affairs. The Debtors submit that they would be unable to complete their schedules by the May 16, 2009, deadline due to the complexity of the its organization, the substantial amount of information that the Debtors must assemble and compile, and the number of employee and professional hours required to complete the schedules. The extension is for the best interest of the estate, creditors and parties-in-interest. 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. TILE WITH STYLE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Tile with Style, Inc. 2856 Buford Highway Suite 3 Dululth, GA 30096 Bankruptcy Case No.: 09-72298 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Evan M. Altman, Esq. Bldg. 2 - Northridge 400 8325 Dunwoody Place Atlanta, GA 30350 Tel: (770) 394-6466 Fax: (770) 620-9042 Email: evan.altman@laslawgroup.com Estimated Assets: $0 to $50,000 Estimated Debts: $100,001 to $500,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Mario Perrucci, president of the Company. TRF N.A. LLC: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: TRF, N.A., LLC fdba Trifus, N.A., LLC fdba Learn University, LLC fdba Learn University.com, LLC 625 Forest Edge Drive Vernon Hills, IL 60061 Bankruptcy Case No.: 09-17065 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Jacqueline P. Cox Debtor's Counsel: Lester A. Ottenheimer, III, Esq. Ottenheimer Teplinsky & Rosenbloom, LLC 750 Lake Cook Rd - Ste 140 Buffalo Grove, IL 60090 Tel: (847) 520-9400 Fax: (847) 520-9411 Email: lottenheimer@otrlaw.com Estimated Assets: $50,001 to $100,000 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 Barrett Moore, managing member of the Company. TRICOM SA: June 9 Hearing on Amended Disclosure Statement --------------------------------------------------------- Tricom S.A. and its primary operating subsidiaries, TCN Dominicana, S.A., and Tricom USA, Inc., filed with the U.S. Bankruptcy Court for the Southern District of New York a First Amended Disclosure Statement relating to its First Amended Prepackaged Joint Chapter 11 Plan of Reorganization. The Debtors held extensive discussions and negotiations with, among others, (i) an ad hoc committee consisting of certain holders of Unsecured Financial Claims; (ii) certain affiliates of Tricom's largest shareholders; and (iii) Banco Multiple Leon S.A., which negotiations lead to significant amendments to the Original Plan. The Amended Plan was filed April 21. The Amended Disclosure Statement was filed May 8. Judge Stuart Bernstein of the U.S. Bankruptcy Court for the Southern District of New York will convene a hearing to consider approval of the Amended Disclosure Statement on June 9, 2009, at 10:00 a.m. (EST). The Ad Hoc Committee is represented by Manatt, Phelps & Phillips LLP, as legal advisors, and Chanin Capital Partners, as financial advisors. The Affiliated Creditors are represented by White & Case LLP, as legal advisors, and Broadspan Capital LLC, as financial advisors. Treatment & Recovery of Claims Under Amended Plan The Amended Plan provides for the substantive consolidation of the Debtors' estates. The Plan classifies claims against and interests in the Debtors in nine classes. Holders of priority claims in Class 1, GE Existing Secured Claims in Class 4, Non- Lender Secured Claims in Class 5, General Unsecured Claims in Class 6 are unimpaired and will recover 100% of their allowed claims. The Debtors have fully satisfied the Secured Claim of Banco Dominicano del Progreso, S.A. in Class 2, pursuant to a Court order in July 2008. In connection with the Plan, upon the Effective Date of the Plan, the holders of the Credit Suisse Existing Secured Claims in Class 3 will receive Pro Rata Shares of the Credit Suisse New Secured Debt to be issued by Tricom in the aggregate principal amount of $25,529,781.88, with such loan to be guaranteed by Tricom USA, and TCN, in exchange for all of the Credit Suisse Existing Secured Claims. Class 3 claimants are expected to receive 100% of what they're owed. Holders of Unsecured Financial Claims in Class 6 will receive their Pro Rata Share of 10 million shares of Holding Company Stock to be issued by Holding Company, a new entity to be formed that will own at a minimum roughly [98%] of the equity of Tricom and, directly or indirectly, roughly [98%] of the equity of TCN and Tricom USA, in exchange for all of their Unsecured Financial Claims. Holders of Unsecured Financial Claims are expected to recover 23% to 28% of the allowed amount of their claims. Holders of Statutorily Subordinated Claims in Class 8 will not receive distributions on account of their Claims and Existing Tricom Equity Interests in Class 9 will be reduced to a de minimis amount with a de minimis value through dilution. As of the Petition Date, the Debtors had roughly (i) $413.3 million of outstanding principal amount of Unsecured Financial Claims, comprised of $200 million of principal under the 11-3/8% Senior Notes, with the balance arising under certain other credit facilities and unsecured debt instruments, and (ii) $35.0 million of secured debt obligations. The accrued and unpaid interest on the Unsecured Financial Claims as of the Petition Date, calculated at the contract or "non-default" rates, is roughly $222.3 million. On account of the settlement of the Claims asserted against the Debtors by Banco Leon and various payments made during the Chapter 11 cases (i) the approximate aggregate amount of the Allowed Unsecured Financial Claims treated under the Plan is $678.3 million inclusive of principal and interest calculated by reference to the applicable contract or non-default rates of interest, and (ii) the Debtors' secured debt obligations under the Plan total roughly $30.1 million. As of the Petition Date, Credit Suisse held $25,529,781.88 of principal amount of Tricom secured debt obligations which it acquired on the secondary market. The Credit Suisse Existing Secured Debt consist of a number of promissory notes issued by Tricom under various agreements. As of the Petition Date, General Electric Credit Corporation of Tennessee and General Electric Capital Corporation de Puerto Rico, Inc. held roughly $4,569,428 of principal amount of Tricom secured debt obligations. Tricom and Tricom USA are jointly and severally liable for the GE Existing Secured Debt under that certain Addendum to Chattel Mortgage Agreement Accessory to the Loan Agreement, dated July 22, 2005, among GE, Tricom and Tricom USA. An amended and restated promissory note for the GE Existing Secured Debt was issued on July 22, 2005, in the amount of $6,000,000. The note bears interest at 9%, and is payable in 84 monthly installments in various amounts as set forth in the note. The GE Existing Secured Debt is secured by a pledge of certain telecommunications equipment. The Debtors have been making monthly adequate protection payments to GE pursuant to a stipulation and order approved by the Bankruptcy Court. Credit Suisse New Secured Debt The salient terms of the Credit Suisse New Secured Debt are: Borrower Tricom, S.A. Face Amount $25,529,781.88 Term Seven years from the effective date of the Plan Amortization Schedule Bullet at maturity. Prepayment Tricom will be entitled to prepay the Credit Suisse New Secured Debt at any time without premium or penalty. Prepayment Offer Upon Change of Control If a change of control occurs at Tricom, Tricom will be required to make an offer to prepay the Credit Suisse New Secured Debt at 100% of its principal amount. Interest 11.0% payable in cash semi-annually. Default Rate If any principal or interest payable in respect of the Credit Suisse New Secured Debt is not paid when due, such overdue amount will accrue interest at a rate equal to 1% in excess of the otherwise applicable interest rate. Ranking The Credit Suisse New Secured Debt will rank (i) pari passu in right of payment with the GE Existing Secured Debt, the Exit Financing, permitted additional senior indebtedness and any refinancing of the Credit Suisse New Secured Debt and (ii) to the extent of the Credit Suisse Existing Collateral, senior to any other indebtedness of Tricom. Security The Credit Suisse New Secured Debt will be secured by a first priority lien in the Credit Suisse Existing Collateral. New Holding Company Stock Pursuant to the Plan, on the Effective Date, 10 million shares of Holding Company Stock consisting of Class A Stock and Class B stock, representing 100% of Holding Company's issued and outstanding stock, will be distributed to the holders of Class 6 Allowed Unsecured Financial Claims. $219.6-Mil. Enterprise Value FTI Consulting estimates that the total enterprise value of the Reorganized Debtors ranges from a minimum of approximately [$198 million] to a maximum of approximately [$239 million.] FTI has further assumed that the enterprise value of the Reorganized Debtors can be estimated at approximately [$219.6 million]. As a result, and taking into account that the value of the total long- term debt of the Reorganized Debtors as of the Effective Date is $28.5 million, which includes $25.5 million of the Credit Suisse New Secured Debt, the GE Existing Secured Debt in the amount of $3.0 million, the equity value of the Reorganized Debtors as of the Effective Date will be equal to approximately [$191.1] million. A full-text copy of Tricom's Amended Disclosure Statement is available at no charge at: http://bankrupt.com/misc/TricomAmendedDS.PDF A full-text copy of Tricom's Amended Plan is available at no charge at: http://bankrupt.com/misc/TricomAmendedPlan.PDF Plan Process Derailed The Debtors filed on March 2, 2008, (a) their Prepackaged Joint Chapter 11 Plan of Reorganization and (b) a Disclosure Statement Relating to the Prepackaged Plan. The Debtors intended to proceed with an expedited confirmation process, and the Court originally scheduled a combined hearing to consider (a) the adequacy of the Disclosure Statement and the Debtors' prepetition procedures by which they solicited acceptances to the Plan; and (b) confirmation of the Plan, for April 15, 2008. Shortly after the Petition Date, however, the liquidator for Bancredit Cayman Limited, the liquidator for Bancredito, S.A., and Banco Multiple Leon S.A., alleged that they held substantial unsecured claims against the Debtors' estates. Subsequently, Bancredit, Bancredito Panama and Banco Leon filed, among other claims, proofs of claim against the Debtors in the respective amounts of $148,726,635.05, $92,000,339.02, and $166,019,348.86. The Debtors dispute each of these claims in their entirety. The Debtors asked the Court to estimate the alleged claims of Bancredit and Bancredito Panama at zero solely for purposes of confirmation of the Plan. The Court has since adjourned the combined Plan and Disclosure Statement Hearing sine die. Judge Bernstein has extended the period within which the Debtors have the exclusive right to solicit acceptances of a Chapter 11 plan until June 9, 2009. The Court will also consider further extension of the Debtors' Exclusive Solicitation Period on that date. Counsel to the Debtors reported to the Court at a status conference on March 31, 2009, that the Debtors had reached an agreement in principle with Banco Leon with respect to the treatment of Banco Leon's claim. Since that time, the parties have worked diligently to finalize the terms of a comprehensive settlement with Banco Leon. Subsequent to the March 31 hearing, the Debtors, the Ad Hoc Committee and the Affiliated Creditors have continued their negotiations with Bancredito Panama. The parties have made substantial progress in their negotiations and have reached agreement on the economic terms of the settlement and most non-economic terms. In April, the Debtors indicated that they were continuing to negotiate certain other non-economic, though significant, terms. While the parties have proceeded in good faith in an effort to find a constructive and mutually acceptable resolution, it is not certain whether they will do so. At the time the Debtors filed their Exclusivity Extension Motion, the Debtors were no longer engaged in discussions with Bancredit. About Tricom S.A. Tricom, S.A., was incorporated in the Dominican Republic on January 25, 1988, as a Sociedad Anonima. Tricom is one of the pre-eminent full service communications services providers in the Dominican Republic. Headquartered in Santo Domingo, Tricom offers local, long distance, and mobile telephone services, cable television and broadband data transmission and Internet services, which are provided to more than 729,000 customers. Tricom's wireless network covers about 90% of the Dominican Republic's population. Tricom's local service network is 100% digital. The company also owns interests in undersea fiber- optic cable networks that connect and transmit telecommunications signals between Central America, the Caribbean, the United States and Europe. Tricom USA, Inc., a wholly owned subsidiary of Tricom, was incorporated in Delaware in 1992, and at that time was known as Domtel Communications. A name change was effected in 1997 and Domtel Communications formally became Tricom USA, Inc. Tricom USA originates, transports and terminates international long-distance traffic using switching stations and other telecommunications equipment located in New York and Florida. Tricom S.A. and its U.S. affiliates filed for Chapter 11 protection on February 29, 2008 (Bankr. S.D. N.Y. Case No. 08- 10720). Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York City, represent the Debtors. When the Debtors' filed for protection from their creditors, they listed total assets of $327,600,000 and total debts of $764,600,000. As of June 30, 2008, Tricom had $316,325,466 in assets and $771,970,349 in liabilities. TROLLEY'S LLC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Trolley's LLC 9100 W. 135th Street Overland Park, KS 66212 Bankruptcy Case No.: 09-21475 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Trolley's Overland Park, LLC 09-21476 Trolley's Real Estate Holdings, LLC 09-21478 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court District of Kansas (Kansas City) Judge: Robert D. Berger Debtor's Counsel: Colin N. Gotham. Esq. Evans & Mullinix, P.A. 7225 Renner Road, Suite 200 Shawnee, KS 66217 Tel: (913) 962-8700 Fax: (913) 962-8701 Email: colin@evans-mullinix.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,001 to $500,000 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/ksb09-21475.pdf The petition was signed by Aaron Buerge, managing partner of the Company. TRONOX INC: Mary Mikkelson Steps Down as SVP and CFO ---------------------------------------------------- Tronox Inc. said that effective May 5, 2009, Mary Mikkelson, senior vice president and chief financial officer, is no longer serving as an officer of the Company. She will continue providing transitional services to the Company through May 31, 2009. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Sues Anadarko, Kerr-McGee for Fraudulent Conveyance --------------------------------------------------------------- Tronox Incorporated yesterday filed an adversary complaint against Kerr-McGee Corporation and its successor, Anadarko Petroleum Corporation, in its Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York. The complaint asserts that Kerr-McGee defrauded Tronox's creditors through its separation and spin-off of its former chemical subsidiary in 2006. Tronox seeks recovery for fraudulent transfers involving valuable oil and gas assets and massive actual and contingent environmental, tort, retiree and other liabilities. The complaint asserts that Tronox was doomed to fail at the time of the spin off, having been grossly undercapitalized, stripped of its most valuable assets and essential cash, and overburdened with legacy environmental, tort and retiree liabilities. Less than three years after the spin-off, Tronox filed for chapter 11 bankruptcy protection on January 12, 2009. Anadarko acquired New Kerr-McGee less than five months after the Spinoff was completed and the Legacy Liabilities severed. New Kerr-McGee's shareholders approved on August 10, 2006, Anadarko's offer of $16.4 billion in cash and assumption of $1.6 billion in debt. New Kerr-McGee became and remains a wholly owned subsidiary of Anadarko. According to TRONOX BANKRUPTCY NEWS, since acquiring New Kerr- McGee, Anadarko has admitted that it could be financially responsible for the Legacy Liabilities should Tronox fail. In both its 2006 and 2007 Annual Reports, Anadarko stated "Kerr-McGee could be subject to joint and several liability for certain costs of cleaning up hazardous substance contamination attributable to the facilities and operations conveyed to Tronox if Tronox becomes insolvent or otherwise unable to pay for certain remediation costs. As a result of the merger, we will be responsible to provide reimbursements to Tronox pursuant to the MSA, and we may be subject to potential joint and several liability, as the successor to Kerr-McGee, if Tronox is unable to perform certain remediation obligations." At the time Tronox filed for bankruptcy, John Christiansen, a spokesman for Anadarko, said in an e-mailed statement to The Houston Chronicle that a reserve of $100 million, the company's maximum obligation to reimburse Tronox, already has been recorded on its balance sheet. "The filing of a bankruptcy petition by Tronox does not alter our liability," the newspaper said quoting Mr. Christiansen as saying. Legacy Liabilities According to TRONOX BANKRUPTCY NEWS, pursuant to the Spinoff Agreements, New Kerr-McGee forced Tronox to assume the Legacy Liabilities, including unknown, implied and contingent Legacy Liabilities and obligations. The Legacy Liabilities are almost entirely unrelated to the operation of Tronox's core titanium dioxide businesses. The most significant of the Legacy Liabilities relate to: (a) environmental remediation and cleanup at allegedly contaminated sites of the Legacy Businesses; (b) defense of tort suits brought by third parties arising from alleged hazardous releases and contamination related to the Legacy Businesses; and (c) welfare, benefit and pension obligations for former Old Kerr-McGee employees who once worked for the Legacy Businesses. Since the Spinoff, Tronox has spent more than $118 million to satisfy the residual Legacy Liability obligations. A nominal amount of that figure relates to titanium dioxide operations, Mr. Barton says. As a result of these Legacy Liabilities, Tronox is required to maintain a large environmental remediation group that is responsible for remediation and other activities on approximately 100 sites related to the Legacy Businesses. As of January 12, 2009, Tronox has spent a total of approximately $148 million on environmental remediation costs. Over time, Tronox has been reimbursed for approximately $75 million of this amount from various third parties. New Kerr-McGee, however, has only contributed approximately $4 million through the indemnity provisions of the MSA. On the petition date, Tronox was defending approximately 120 tort suits related to a variety of hazardous materials that were allegedly released by the Legacy Businesses, including but not limited to creosote, benzene, low-level radioactive substances and asbestos. These suits involve thousands of plaintiffs and have cost Tronox at least $26.9 million (net of reimbursements) to manage since the Spinoff. Significant suits include, among others, claims related to former wood-treatment plants located in Columbus, Mississippi, Avoca, Pennsylvania, and Texarkana, Texas, including a group of 238 federal court suits with more than 2,000 plaintiffs and a group of 35 state court suits with more than 4,000 plaintiffs. In conjunction with the Spinoff, New Kerr-McGee also required Tronox to assume responsibility for retirement and other employee benefit liabilities for current and former employees of the Chemicals Business and the Legacy Businesses pursuant to the terms of an Employee Benefits Agreement. Tronox Inc. was required to sponsor specific employee and retiree benefit plans for the employees and retirees allocated to it during the Spinoff. These programs included defined benefit and retiree medical and life insurance plans. These benefit programs were not competitive but Tronox was required to maintain the programs, and could not modify them, for three years after the completion of the Spinoff. The cost of these benefit programs was more than $6 million per year. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TVI CORP: Retains Buccino & Associates as Financial Advisors ------------------------------------------------------------ Gerald P. Buccino, Chairman and CEO, said his firm -- Buccino & Associates, Inc. -- has been retained to serve as the Financial Advisor to TVI Corporation (Pink Sheets: TVINQ) and its wholly owned subsidiaries, CAPA Manufacturing Corp., Safety Tech International, Inc. and Signature Special Events Services, Inc. The Company filed its voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Maryland (Greenbelt Division) to implement a corporate restructuring and permanently improve the Company's capital structure. As part of this reorganization, the Company has obtained a commitment for Debtor-In-Possession financing from its senior lender, Branch Banking and Trust Company. The DIP financing is anticipated to be adequate to fund the Company's operations and to position the Company for long-term growth. Buccino was originally retained in December 2008, to review the Company's business operations and to provide its findings to the Company's management, its Board of Directors, and BB&T. After focusing on pre-petition options, Buccino concluded that the best option to permanently improve the Company's capital structure was to file a voluntary Chapter 11 petition; the Company's management supported the findings and the Company's Board of Directors authorized a Chapter 11 filing on April 1, 2009. Buccino's retention was approved nunc pro tunc by the Bankruptcy Court on April 29, 2009. Christopher L. Picone, Senior Vice President and Managing Director, is leading the project assisted by Gerard J. Buccino, Senior Vice President and Director, both located in the Firm's Chicago office. About Buccino & Associates, Inc. Founded in 1981, Buccino & Associates, Inc. -- http://www.buccinoassociates.com/-- is a strategic and financial consulting firm, providing clients comprehensive advisory services designed to enhance cash flow and position companies for long-term profitability. Services include strategic and financial assessment of business operations; turnaround consulting; financial advisory services to lenders, creditors and other economic stakeholders; crisis and interim management; valuation; real estate; insolvency and reorganization services; corporate restructuring; forensic analysis; litigation support and expert testimony. Buccino & Associates, Inc. has offices in Chicago and New York. About TVI Corporation Headquartered in Gleen Dale, Maryland, TVI Corporation -- http://www.tvicorp.com/-- supplies military and civilian emergency first responder and first receiver products, personal protection products and quick-erect shelter systems. These products include powered air-purifying respirators, respiratory filters and quick-erect shelter systems used for decontamination, hospital surge systems and command and control. The users of these products include military and homeland defense/homeland security customers. The Company and two of its affiliates filed for Chapter 11 protection on April 1, 2009 (Bankr. D. Md. Lead Case No. 09-15677). Christopher William Mahoney, Esq., at Duane Morris LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Buccino & Associates, Inc. as their financial advisors and consultants. When the Debtors filed for protection from their creditors, they posted assets between $10 million and $50 million, and debts between $1 million and $10 million. UNI-MARTS LLC: Cumulative Net Loss Grows to $11.5 Million --------------------------------------------------------- Since filing for bankruptcy at the end of May 2008, Uni-Marts LLC has incurred a cumulative net loss of $11.5 million on total revenue of $391 million, Bloomberg's Bill Rochelle said, citing a court filing. Uni-Marts reported a $290,000 store-level profit in March on $32.7 million in revenue. The net loss for the month was $3.9 million, according to the report. Uni-Marts said in a court filing last month that it has not yet been able "to secure the financing or other support necessary to fund an emergence plan." Uni-Marts previously obtained approval from the U.S. Bankruptcy Court for the District of Delaware to sell its business to Atlantis Petroleum LLC. But Atlantis reneged on its deal to acquire the business for $17.7 million. During the bankruptcy some 130 leases have been rejected and arrangements on other stores were renegotiated, Bill Rochelle said. According to Bloomberg, Uni-Marts' debt includes $21.5 million owing to trade suppliers and $14.2 million for mortgages on stores in Ohio. About Uni-Marts Headquartered in State College, Pennsylvania, Uni-Marts LLC owns 283 convenience stores and gasoline stations in Pennsylvania, New York and Ohio. It was taken private in 2004 by the Sahakian family and private-equity investors. The Company and six of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. D. Del. Lead Case No.08-11037). Michael Gregory Wilson, Esq., at Hunton & Williams LLP, represents the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims, notice and balloting agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Blank Rome LLP as its counsel. US EXPRESS: Moody's Affirms Corporate Family Rating at B3' ---------------------------------------------------------- Moody's Investors Service has affirmed the B3 corporate family and probability of default ratings of U.S. Xpress Enterprises, Inc. The outlook remains negative. The B3 corporate family rating affirmation reflects a view that volume pressures affecting the truckload sector will cause revenue declines but the company's efforts to lower fixed costs and dramatically scale back capital expenditures should enable funds from operation for debt reduction. The B3 rating incorporates a view that U.S. Xpress' liquidity profile should remain adequate, as expected debt reduction and margin preservation should decrease the risk of near-term covenant breach. The adequate liquidity profile also stems from full availability that currently exists under the company's $50 million revolving credit line, and likelihood that borrowing under the revolver should remain modest in coming months due to low capital expenditures planned and expected moderate fuel prices. The negative outlook reflects a concern that volumes should remain pressured in 2009, and could remain pressured into 2010, causing a prolonged period of unprofitability. Unless volumes stabilize, core pricing could show further deterioration, compromising the company's ability to meet its margin preservation goals, straining credit metrics and covenant compliance headroom. Additional ratings: -- $50 million senior secured revolving credit facility due October 2012 B2, LGD3, 42% -- $165 million senior secured term loan due October 2014 to B2, LGD3, 42% Moody's last rating action on U.S. Xpress occurred July 22, 2008 when the corporate family rating was downgraded to B3 from B2. U.S. Xpress' ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of U.S. Xpress' core industry and U.S. Xpress' ratings are believed to be comparable to those of other issuers of similar credit risk. U.S. Xpress Enterprises, Inc., a Nevada Corporation, headquartered in Chattanooga, Tennessee, provides truckload transportation services in North America, including line-haul, dedicated and inter-modal freight services. The company has 2008 revenues of approximately $1.6 billion. VAIL PLAZA: Files Chapter 11 Plan, to Sell Hotel ------------------------------------------------ According to Bloomberg's Bill Rochelle, Vail Plaza Development Inc. has submitted a Chapter 11 plan calling for the sale of Vail Plaza Hotel & Club in Vail, Colorado, within four months after confirmation. Vail Plaza filed for bankruptcy in October 2008 after lender Capmark Bank commenced foreclosure proceedings. The Debtor disclosed owing $38.3 million owing to Capmark. Headquartered in Vail, Colorado, Vail Plaza Development, LLC, operates the Vail Plaza Hotel & Club in Vail, Colorado. On the Web http://www.vailplazaclub.com/ The Company and affiliate Vail Plaza Mezzanine LLC filed for Chapter 11 on October 27, 2008 (Bankr. D. Colorado Case No.: 08- 26920). Harvey Sender, Esq., at Sender & Wasserman P.C. in Denver, Colorado, represents the Company in its Chapter 11 case. Vail Plaza Development disclosed $138,704,342 in assets and debts of $39,660,347 in its petition. Vail Plaza Mezzanine disclosed $60,761,186 in assets and $38,282,808 in debts. VISTEON CORP: Bank Debt Sells at 75% Off in Secondary Market ------------------------------------------------------------ Participations in a syndicated loan under which Visteon Corp. is a borrower traded in the secondary market at 24.19 cents- on-the- dollar during the week ended May 8, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 3.19 percentage points from the previous week, the Journal relates. The loan matures May 30, 2013. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and S&P's B- rating. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is an automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. * * * As reported by the Troubled Company Reporter on March 31, 2009, Moody's Investors Service lowered Visteon's Probability of Default and Corporate Family Ratings to Caa3 and Ca, respectively. In a related action, Moody's also lowered the ratings of Visteon's senior secured term loan to Caa2 from B3, unguaranteed senior unsecured notes to C from Caa3, and guaranteed senior unsecured notes to Ca from Caa2. Visteon's Speculative Grade Liquidity Rating was also lowered to SGL-4 from SGL-3. The outlook remains negative. On March 11, Fitch Ratings downgraded the Issuer Default Rating of Visteon Corporation to 'C' from 'CC', indicating that a default was imminent or inevitable. The ratings were removed from Rating Watch Negative, where they were placed on Dec. 11, 2008. The TCR said on Jan. 14, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Visteon Corp. to 'CCC' from 'B-' and removed all the ratings from CreditWatch, where they had been placed on Nov. 13, 2008, with negative implications. The outlook is negative. At the same time, S&P also lowered its issue-level ratings on the company's debt. The TCR said May 12 that Standard & Poor's Ratings Services lowered its issue-level rating on Visteon Corp.'s $1.5 billion senior secured term loans maturing 2013 and revised the recovery rating on this debt. The issue rating was lowered to 'CCC+' (one notch above the corporate credit rating on Visteon) from 'B-', and the recovery rating was revised to '2' from '1', indicating S&P's expectation that lenders would receive substantial (70% to 90%) recovery in the event of a payment default. VP PHASE IV: Fifth Third Wants Ch. 11 Dismissed, Cites Bad Faith ---------------------------------------------------------------- VP Phase IV Ltd. filed for Chapter 11 on May 6 before the U.S. Bankruptcy Court for the Middle District of Florida (Orlando) to avert foreclosure by a lender. Bloomberg's Bill Rochelle relates that Cincinnati-based Fifth Third Bank obtained a judgment from a Florida court allowing foreclosure of a $15.3 million mortgage on the partially completed commercial condominium in Orlando, Florida. VP Phase IV filed bankruptcy the afternoon before the scheduled foreclosure sale, thus automatically blocking the bank from taking away title the next day. According to Bloomberg, the bank says the bankruptcy filing was in "bad faith" and should be dismissed. In case the judge doesn't buy the bad-faith-filing idea, Fifth Third wants the so-called automatic stay to be terminated so it can complete foreclosure, the report says. Only one condominium unit out of 50 has been sold. The building is part of the Veranda Park development in the Metro West section of Orlando. The bank contends foreclosure is appropriate because an appraisal says the building is only worth $10 million. WESTERN REFINING: Moody's Affirms 'B3' Corporate Family Ratings --------------------------------------------------------------- Moody's Investors Service affirmed Western Refining, Inc.'s ratings and moved the rating outlook to positive from negative due to a comparatively strong cash flow start in 2009. The speculative grade liquidity rating is upgraded from SGL-4 to SGL- 3. Further positive action during 2009 would await significantly reduced debt. The principal unknown is the pace at which WNR can reduce excessive leverage. If sector margins are sufficiently sound this year, WNR avoids material unscheduled downtime, and can significantly reduce debt, a higher rating could be warranted later this year if the sector outlook at the time is supportive. In spite of sustained gasoline and diesel price weakness and contracting demand, periods of even weaker oil prices provided several periods of major margin capture. The sector's sharply curtailed refining capacity utilization over the last nine months, a first quarter 2009 bottoming and modest firming of gasoline demand, and surging world oil inventories positioned gasoline to be comparatively firmer than oil prices. With that support, WNR navigated a difficult time in the sector while carrying very high leverage and it strengthened its liquidity profile. WNR continues to carry excessive leverage for the capital intensity, working capital intensity, and cyclicality of the refining sector Affirmed ratings include a B3 Corporate Family Rating; B3 Probability of Default Rating; and B3 senior secured Term Loan B rating. The Loss Given Default metrics for Term Loan B have moved to (LGD 3; 46%) from (LGD 3; 31%). With an original balance of $1.4 billion and $1.277 billion still outstanding, TLB matures May 2014. The ratings are restrained by lingering high leverage that originated with its all debt funded $1.5 billion May 2007 acquisition of Giant Industries. Despite a seasonally strong recovery in first quarter 2009 refining margins, sector margin strength came partially from a sharp drop in crude oil prices that has since reversed, and a firming in gasoline prices due to tighter inventories and modest up-tick in demand, rather than fundamental demand strength. By March 2009, margins had already sharply contracted. Furthermore, important crude oil cost differentials between light/sweet and heavy/sour crude oils are at or near the narrowest in several years, temporarily reducing much of the margin benefit of Western's new process units that permit it to run the lower cost sour and heavy crudes. Nevertheless, while Moody's believes that continuing industrial demand weakness for distillates and continued cautious consumer demand for gasoline raise the risk of subpar second and third quarter margins (traditionally the strongest of the year), Moody's also believes that sector capacity utilization discipline will be sufficient to support adequate, though cyclically weak, margins. The ratings are further supported by WNR's refining assets which provide adequate market and unscheduled downtime diversification. With three refineries and significant regional refined product distribution capacity from its wholesale distribution and retail service station networks in Arizona, New Mexico, and Colorado, WNR has meaningful capacity to defend market share in the event of increased product competition from expanded refined product pipeline flows into the region. Moody's believes that WNR needs to be de-levered before regional competition intensifies. More specifically, the El Paso and Four Corners are exposed to industry efforts to capitalize on higher margin opportunities in the western Southwest (currently mostly supplied from high margin, product-short California) by eventually moving larger volumes of refined product by pipeline from the Gulf Coast to New Mexico and Arizona. In particular, with the Longhorn Pipeline in bankruptcy and for sale again, a stronger owner with existing major refined product pipeline systems in the region could become a more significant competitor than Longhorn was under its prior owner. Furthermore, Moody's believes that WNR's Yorktown, Virginia refinery is situated in the most competitive gasoline market in the country. East Coast refineries face direct intense competition from refined product pipelines delivering product from U.S. Gulf Coast refineries and from large import flows from Europe and Latin America. WNR expects 2009 EBITDA to exceed $400 million and to service its debt and capital spending from cash flow. Debt currently totals just under $1.3 billion. Moody's estimate that WNR's 2009 interest expense will exceed $120 million and that capital spending will be close to $150 million. WNR's liquidity upgrade to SGL-3 from SGL-4 liquidity rating reflects at least adequate for the next four quarters. Westerns $429.8 million borrowing base revolver is currently undrawn and it expects to use it solely for letters of credit to purchase crude oil. At current oil prices, WNR estimates its peak letter of credit requirement to be approximately $230 million. Western recently had approximately $74 million in month-end balance sheet cash. Cash flows appear likely to enable it to avoid material revolver borrowings, especially with conversion of inventories and accounts receivables to cash during the summer driving season. Western displays adequate borrowing capacity to support unforeseen borrowing needs. The last rating action for WNR was on August 7, 2008, when Moody's downgraded its Corporate Family Rating to B3 from B1; Probability of Default Rating to B3 from B1; and senior secured amended Term Loan B rating to B3 (LGD 3; 31%) from B1 (LGD 3; 31%). Western Refining, headquartered in El Paso, Texas, is an independent refining and marketing company. Western owns and operates a larger light sweet refinery at El Paso, Texas, a medium sized relatively complex coking refinery located in Yorktown, and two small light sweet crude oil refineries in the Four Corners region of New Mexico. WHITE ENERGY: In Bankruptcy Due to Adverse Market Conditions ------------------------------------------------------------ Another ethanol producer, White Energy Inc., filed for Chapter 11 on May 7, citing adverse market conditions, Reuters said. According to Reuters, the Company said in court filings that while cost of raw materials to produce ethanol were high, excess supply of ethanol in the market has kept ethanol prices low, resulting in "minimal or non-existent profit margins." The Company disclosed principal debt of $294 million owed to secured lenders, Bloomberg said. White Energy hadn't obtained the lenders' consent to using cash before filing in Chapter 11, Bloomberg's Bill Rochelle added. Dallas-based White Energy spent $323 million building two plants in Texas. The filing follows that of VeraSun Energy Corp. (VSUNQ.PK) and Aventine Renewable Energy (AVRNQ.PK), which have sought bankruptcy protection the past year, as a sharp jump in the number of production plants in the industry has put pressure on individual ethanol producer margins. White Energy Inc. -- http://www.white-energy.com/-- owns three ethanol plants, two in Texas, with the third in Kansas. Based in Dallas, Texas, the Company said the three have a combined production capacity of 240 million gallons of ethanol a year. White says it's one of the 10 largest ethanol producers in the U.S. and the second-largest gluten maker. The Company and its affiliates filed for Chapter 11 on May 7 (Bankr. D. Del. Case No. 09-11601). Michael R. Lastowski, Esq., at Duane Morris LLP, in Wilmington, Delaware, has been tapped as counsel to White Energy. Garden City Group is the Company's claims agent. Judge Christopher S. Sontchi handles the Chapter 11 case. The Debtors disclosed in their bankruptcy petitions that total assets and debt both exceed $100 million. WINDSTREAM CORPORATION: D&E Deal Won't Affect Fitch's 'BB+' Rating ------------------------------------------------------------------ Fitch Ratings believes Windstream Corporation's proposed acquisition of D&E Communications, Inc. will not have an impact on its credit profile. Windstream's Issuer Default Rating is 'BB+' and the Rating Outlook is Stable. Windstream announced a definitive agreement to acquire D&E Communications in a transaction valued at $330 million. To finance the acquisition, Windstream will pay $73 million in cash and will issue approximately 9.5 million shares valued at $86 million based on its May 8, 2009 closing stock price. D&E Communications' estimated net debt of $171 million comprises the remainder of the transaction value and consists principally of term loans that may be refinanced. The transaction will be financed by Windstream's existing cash and the current capacity on its revolving credit facility. On a pro forma basis, Fitch believes the transaction has a slightly delevering effect on Windstream's credit metrics even before anticipated synergies are taken into account. D&E generated EBITDA of $64 million for the 12 months ended March 31, 2009, and Windstream anticipates realizing $25 million in annual synergies in operating expenses and capital expenditures savings following the integration of D&E. D&E is a rural local exchange carrier that has approximately 118,000 access lines and 44,000 customers and is based in Ephrata, Pennsylvania. Based on the availability of high speed internet access to 100% of its customer base (and nearly half at 10Mbps [megabits per second]), ongoing capital expenditures are expected to be reasonable. It also operates in several markets as a competitive local exchange carrier, and owns six 700MHz wireless licenses in Central Pennsylvania covering a population approximating 1.3 million. The transaction is expected to close in the second half of 2009, and is subject to the customary regulatory approvals and D&E's shareholders. At March 31, 2009, Windstream had approximately $5.4 billion in outstanding debt and $312 million in cash and short-term investments. Windstream's $500 million five-year revolving credit facility had $150 million outstanding at March 31, 2009. The company does not face any significant maturities until 2011 when its term loan A matures ($283 million outstanding) and the revolving credit facility expires. During 2009 and 2010, there are approximately $24 million in maturities annually. WINDSTREAM CORP: D&E Agreement Won't Affect S&P's 'BB+' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Little Rock, Arkansas-based incumbent local exchange carrier Windstream Corp. (BB+/Negative/--) are not affected by the company's definitive agreement to acquire D&E Communications Inc. (BB-/Watch Pos/--) in a cash- and stock-based transaction valued at approximately $330 million. Windstream will issue $86 million of stock to D&E shareholders and pay $73 million of cash, in addition to $171 million of net debt. Potential operating synergies are modest at about $25 million. S&P does not expect the acquisition of D&E to materially change Windstream's business or financial risk profile. D&E had about 118,000 access lines at the end of the March 2009 quarter, representing only 5% of the combined company's access-line base. S&P does not expect there to be a material change in total leverage at 3.5x, which is still high for the current rating, given current operating conditions. WINDSTREAM CORPORATION: Moody's Affirms 'Ba2' Corp. Family Rating ----------------------------------------------------------------- Moody's affirmed the Ba2 corporate family and probability of default ratings of Windstream Corporation and placed the ratings of D&E Communications Inc. on review for a possible upgrade following the announced acquisition of D&E by Windstream. The acquisition price is about 5.0x D&E's trailing EBITDA of about $64 million, which is in line with recent rural telephone company valuations. Windstream expects to recognize operating synergies from the merger by migrating the acquired lines onto its systems and eliminating redundant overhead, and will expand its presence in Pennsylvania by about one third. The purchase price will be financed by a combination of $73 million in cash, about $86 million in Windstream stock and the assumption of about $171 million in outstanding D&E debt. Windstream will acquire about 118,000 incumbent access lines and nearly 44,000 DSL connections. On Review for Possible Upgrade: Issuer: D&E Communications, Inc. -- Probability of Default Rating, Placed on Review for Possible Upgrade, currently B1 -- Corporate Family Rating, Placed on Review for Possible Upgrade, currently Ba3 -- Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently Ba3 Outlook Actions: Issuer: D&E Communications, Inc. -- Outlook, Changed To Rating Under Review From Stable The review of D&E's ratings will focus on Windstream's plans with regard to the existing D&E debt. Should the debt be unconditionally and irrevocably guaranteed or legally assumed, the ratings will be upgraded to that of Windstream. If Windstream does not provide either an unconditional and irrevocable guarantee of the assumed D&E debt or sufficient financial information for the rated issuers to allow the agency to form an opinion regarding their standalone creditworthiness, D&E's ratings will be withdrawn. Moody's most recent rating action for Windstream was on February 8, 2008. At that time Moody's affirmed Windstream's Ba2 corporate family rating, the individual debt ratings and the SGL-1 rating, upon the company's announcement that it will buy back up to $400 million in stock. Moody's most recent rating action for D&E was on January 7, 2008. At that time Moody's affirmed D&E's Ba3 corporate family rating and upgraded the company's speculative grade liquidity rating to SGL-2, from SGL-3. Windstream, headquartered in Little Rock, Arkansas, is an ILEC providing telecommunications services in 16 states, with proforma for the D&E Communications Inc. acquisition, serves approximately 3.2 million access lines and about $3.3 billion in annual revenues. D&E Communications is an ILEC headquartered in Ephrata, PA. WINPAR HOSPITALITY: District Ct. to Hear Forfeiture Action ---------------------------------------------------------- WestLaw reports that even assuming that the rule in Penn General Casualty regarding jurisdictional conflicts between courts both having in rem or quasi in rem jurisdiction over the same property applied in a situation in which both courts were federal courts, with one being a bankruptcy court with jurisdiction over all assets of bankrupt limited liability company (LLC) and the other being a district court in which the government had filed a civil forfeiture action based on the criminal misconduct of the LLC's principal, it would be an abuse of discretion for the bankruptcy court, as the court first acquiring jurisdiction, to refuse to relinquish its jurisdiction over the res to the district court so that title to the property could be determined, once and for all, in accordance with both federal forfeiture law and bankruptcy law. Accordingly, the government's motion for turnover would be treated as one to relinquish jurisdiction and granted. In re WinPar Hospitality Chattanooga, LLC, --- B.R. ----, 2009 WL 981946 (Bankr. E.D. Tenn.). ZOHAR WATERWORKS: May 27 Auction Set; Competing Bids Due May 26 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved bidding procedures for the sale of substantially all of the assets of Zohar Waterworks, LLC, et al., free and clear of all liens, claims and encumbrances, subject to competitive bidding. Competing bids are due on May 26, 2009, at 10:00 a.m. (ET). If necessary, an auction will be held on May 27, 2009, at 10:00 a.m. (ET) at the offices of Morris, Nicholds, Arsht & Tunnell, LLP, 1201 N. Market Street, 18th Floor, Wilmington, DE 19801. A sale hearing is scheduled for May 28, 2009, at 9:30 a.m. (ET). Objections, if any, to the sale must be filed no later than May 21, 2009, at 4:00 p.m. (ET). As reported in the Troubled Company Reporter on April 16, 2009, Zohar Waterworks, LLC, and B2 International Corporation asked the Bankruptcy Court to: a) authorize the sale of substantially all of the Debtors' assets to Patriarch Partners through LVD Acquisition, LLC, or other party at an auction, free and clear of liens, claims encumbrances, except for certain assumed liabilities; b) authorize the assumption and assignment of executory contracts and unexpired leases in connection with the sale; and c) grant certain related relief. The Debtors have negotiated the terms of an asset purchase agreement with Patriarch Partners, pursuant to which, the buyer agreed to act as a stalking horse bidder. The stalking horse agreement obligates the Debtors to obtain entry of a bidding procedures order acceptable to the buyer by April 17, 2009, and sale order acceptable to the buyer by May 4, 2009. Also the buyer can terminate the stalking horse agreement if the sale has not been consummated by June 1, 2009. In a separate motion, the Debtors sought: i) approval of proposed bidding procedures, as well as the proposed bid protection, for the sale; ii) approve the form and manner of notice of the sale and assumption; iii) establish April 29, 2009, at 4:00 p.m. (Eastern Time) as the deadline of submission of bids; iv) schedule the auction, if necessary, no later than May 1, 2009, at 10:00 a.m. (Eastern Time) at the offices of Morris, Nichols, Arsht & Tunnell, LLP, 1201 N. Market Street, 18th Floor, Wilmington, Delaware; and v) schedule the sale hearing for May 4, 2009, to consider the sale of the assets to the buyer, subject to bigger and better offers. A full-text copy of the bid procedures is available for free at: http://bankrupt.com/misc/bidprocedures.pdf About Zohar Waterworks Headquartered in Columbus, Ohio, Zohar Waterworks, LLC -- http://www.zoharwaterworks.com/-- dba Tri Palm International, LLC, manufactures the Oasis brand water coolers and bottled water coolers. Zohar Waterworks LLC and B2 International Corporation dba Oasis Water, filed for separate Chapter 11 protection on April 2, 2009 (Bankr. D. Del. Lead Case No. 09-11179). The Debtor has tapped Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, as counsel. The Debtors listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. * Auto Suppliers Demand Broader Assistance from U.S. Government --------------------------------------------------------------- The Motor & Equipment and Manufacturers Association, a group of manufacturers of motor vehicle components, tools and equipment, automotive chemicals and related products, has urged the U.S. Congress to provide "broader assistance" for the supplier industry and the passage of a short-term incentive for vehicle purchases. On March 19, 2009, the U.S. Treasury launched a $5 billion program to help auto parts suppliers that "are unable to access credit and are facing growing uncertainty about the prospects for their businesses and for the auto companies that rely on the parts they ship." The program provided suppliers with access to government- backed protection that money owed to them for the products they ship will be paid no matter what happens to the recipient car company. The program is run through American auto companies that agree to participate in the program. In its new request for more assistance for auto suppliers, the MEMA pointed out that the Auto Supplier Assistance Program launched by the Treasury in March only targets the first tier suppliers to General Motors Corp. and Chrysler LLC. Only GM and Chrysler, both recipients to federal aid, have participated in the program. It added, "Significant limitations restricted the reach of this program. Since it was not fully operational when Chrysler filed for Chapter 11, many suppliers were left significantly exposed. Smaller suppliers in financial distress are completely dependent upon their first tier customer to provide financial assistance down through the supply chain. Suppliers that manufacture parts in the U.S. but ship to Canada and Mexico for vehicle assembly are not covered. Bank restrictions and loan covenants prevented many eligible suppliers from participating in the program. Aftermarket suppliers directly providing replacement parts to the vehicle manufacturers are not eligible." The MEMA proposes that Congress pass a short-term incentive program, which will help bolster the U.S. economy with new car sales at a time when light vehicle production and sales are at an all time low. Reduced Business for Auto Suppliers The MEMA noted that in April, vehicle sales plunged by 34.4% when compared to the same month last year. For three months ended March 31, industry vehicle sales decreased by 3.7 million vehicles (or 20.6%) to 14.4 million vehicles due to continued weakness in the global economy. North America decreased by 1.6 million vehicles (or 36.1%) to 2.8 million vehicles, Europe decreased by 1.4 million vehicles (or 23.7%) to 4.5 million vehicles, the Asia Pacific region decreased by 531,000 vehicles (or 8.9%) to 5.4 million vehicles, and the Latin America / Africa / Middle East (LAAM) region decreased by 219,000 vehicles (or 11.9%) to 1.6 million vehicles. GM said that the decline is due to continued weakness in the economy which is directly attributable to the recession in the United States brought about by tightening of the credit markets and turmoil in the mortgage markets resulting in reductions in housing values, all of which contributed to declining consumer confidence. In the United States, GM sold 413,000 vehicles during the first quarter of 2009, a decline of approximately 49% compared to the corresponding period in 2008. Chrysler filed for Chapter 11 on April 30 after failing to obtain enough concessions from constituents, which was a requirement for additional U.S. government that would back an out-of-court restructuring. General Motors said that in the event that it does not receive prior to June 1, 2009 enough tenders of its public unsecured debt to consummate exchange offers, it expects to follow Chrysler to bankruptcy protection. Both GM and Chrysler have previously warned that a bankruptcy filing would hurt sales and would result to shutdowns, both of which would further hurt suppliers. Chrysler has already halted production at many of its U.S. manufacturing facilities until its bankruptcy court- sanctioned merger with Fiat SpA is completed. General Motors has also announced that it will extend its usual mid-year down time at many of its North America manufacturing facilities during the spring and summer of 2009. GM in a regulatory filing on May 8 acknowledged that Chrysler's bankruptcy filing are threatening the viability of the suppliers, many are producing parts for both GM and Chrysler. Chrysler announced that most of its manufacturing operations will be temporarily idled beginning May 4, 2009. "The resulting decline in automotive production volumes and the risk that payments owed to suppliers by Chrysler LLC may be disrupted as a result of Chrysler LLC's bankruptcy filing will increase the financial and liquidity pressures facing automotive suppliers, many of which are common to Chrysler LLC and us," GM said. Ford Motor Company, the only member of the Big 3 Detroit automakers that has so far not sought federal aid, has reported lower sales for the first quarter of 2009. For the second quarter, Ford expects to report sales of 435,000 units in North America, a 250,000 decline from 2008. Ford has said it might require a bride loan from the government, in the event of "a significantly deeper economic downturn or a significant industry event, such as the uncontrolled bankruptcy of a major competitor or important suppliers to Ford, that causes major disruption to our supply base, dealers or creditors and cannot be funded by other forms of capital." Standard & Poor's ratings Services said May 11 that it expects continued heavy cash losses in Ford's automotive oeprations for at least the next year. It added that its 'CCC+/Negative' rating on Ford reflect concerns that "GM (CC/Negative/--) could file for bankruptcy in the coming weeks and that low production levels by many automakers broadly are risks to Ford's liquidity, given the interwoven auto sector supplier base." "With a continued drop in vehicle production, Chrysler's recent bankruptcy announcement, and GM's planned summer plant shutdowns, this crisis is only deepening and more jobs will be lost," the MEMA said. Part suppliers directly employ 685,892 workers in the U.S. Auto Supplier Bankruptcies Wheel producer Hayes Lemmerz International Inc., which obtains 29% of revenues from General Motors and Ford, filed for bankruptcy protection Monday, blaming the global meltdown in the automobile sector. Hayes expects global EBITDA to be less than one-half of the $157 million it recorded in 2008. Lear Corp., which provides automotive seat systems and other products, has said that it might file for Chapter 11, if it fails to obtain relief from lenders regarding a looming May 16, 2009 default under its primary credit facility. General Motors and Chrysler accounted for 23% and 3% of Lear's net sales in 2008. Former Ford unit Visteon Corp, supplier of climate, interiors and electronics systems to automakers, is exploring various strategic and financing alternatives, including a bankruptcy filing. It has obtained waivers though, but they are set to expire May 30. Visteon's net sales during the three months ended March 31, 2009 decreased $1.51 billion or 53% when compared to the same period of 2008. "Lower production levels globally and increases in raw material, energy and commodity costs during 2008 have resulted in severe financial distress among many companies within the automotive supply base," said Lear Corp., which incurred a net loss of $689.9 million in 2008, compared with a net profit of $241.5 million the year before. "Several large automotive suppliers have filed for bankruptcy protection or ceased operations," Lear said in March. "Without immediate action, communities throughout this country will needlessly lose essential manufacturing jobs and the U.S. auto industry will not have a sufficient supply base to manufacture vehicles in this country," the MEMA said. Ratings Actions Ratings agencies have lowered ratings of some auto suppliers due to the expected weak auto sales for 2009, circumstances facing GM and Chrysler and/or other related factors: ArvinMeritor, Inc. S&P lowered issuer credit rating to 'CCC+' from 'B' on February 12, 2009. Fitch lowered the LTD issuer default rating to 'CCC' from 'B-' on March 9, 2009. Visteon Corp. S&P lowered issuer credit rating to 'CCC+' from 'B-' in January 30 2009 American Axle & Manufacturing Holdings Inc. Moody's lowered the corporate family rating to 'Caa1' from 'B2' on Dec. 16, 2008. S&P lowered the issuer credit rating to 'CCC+' from 'B' on Jan. 12, 2009. Fitch lowered American Axle's LT issuer default rating to 'CCC' from 'B-' on April 28, due to GM's shutdown of 13 of its manufacturing plants in North America during the second and third quarters of 2009. BorgWarner Inc. Moody's issued a 'Ba1' LT corporate family rating, with a 'negative' outlook, on March 18, 2009. S&P issued a downgrade of the issuer credit rating to 'BBB' from 'A-' on January 12, 2009. Magna Int'l Inc. S&P downgraded the issuer credit rating to 'BBB' from 'A-' on April 30, 2009. DBRS downgraded the unsecured debt rating to 'BBBH' from 'A' on May 1, 2009. Dana Holdings S&P lowered its corporate credit rating to 'CC' from 'B' on May 11, 2009. Tenneco Inc. Fitch lowered the issuer default rating to 'B-' from 'B' in April 29, 2009 due to extended shutdowns scheduled by GM later in 2009, and other factors. Continental AG Fitch on April 30, 2009, placed LT issuer default rating to 'BB' on rating watch negative, citing, among other things, the slump in global vehicle production. TRW Automotive Holdings Corp. Fitch on April 28 lowered the issuer default rating from 'B+' to 'B', remaining in watch negative due to uncertain production or sales ramifications of near-term events at General Motors and Chrysler, including bankruptcy filings. MetoKote Corporation Moody's on May 5, 2009, lowered the corporate family rating to 'Caa1' from 'B3', noting that while the Company has diversified its industry concentration, it still generates 49% of sales from the automotive end markets, including 19% from the Detroit-3 automakers. Stoneridge Inc. Moody's on May 5 said the corporate rating will remain at 'B2' despite Chrysler's bankruptcy filing. Outlook is negative. S&P said May 11 it believes "financial risks will remain relatively high for most rated auto suppliers this year and next because of severe and volatile auto markets in North America and Europe." "Weak economic conditions are forcing consumers to restrain spending resulting in a sharp decline in auto sales and production," said Moody's VP-Senior Analyst Timothy Harrod on April 30. According to Moody's, this loss of millions of units of production is severely pressuring revenue, profitability and cash flow for the auto parts suppliers. * S&P Says Default Rate Continues Ascent Through April 2009 ----------------------------------------------------------- Amid persisting economic and financial distress, the number of defaults in the U.S. continued to increase through April, said an article published by Standard & Poor's. Relevant credit metrics in the U.S. show continued deterioration of credit quality and restricted lending conditions, contrasted with the first signs of life among new issuance, according to the article, titled "U.S. Credit Metrics Monthly: Default Rate Rises To 7% In April (Premium)." "The number of corporate defaults in 2009 continued the expansion seen at the end of 2008, with 33 more U.S. defaults in April, bringing the year-to-date total to 71," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Defaults are now widespread, with all 13 sectors having defaulters in April." The preliminary estimate for the U.S. 12-month-trailing speculative-grade default rate in April is 7% (subject to revision), up from the 5.4% in March and much higher than the 1.72% reported in April 2008. S&P expects the speculative-grade default rate to escalate to a mean forecast of 14.3% by March 2010, but it could reach as high as 18.5% if economic conditions are worse than expected. * Judge Hardin Retires, Gives White Plains Cases to Judge Drain --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has announced that effective May 1, 2009, Honorable Adlai S. Hardin, Jr. will retire and Honorable Robert D. Drain will assume responsibility of all cases in White Plains. Judge Drain will not relocate permanently to the White Plains courthouse until a chambers and courtroom are prepared. Judge Drain will preside over all chapter 13 confirmation hearings in White Plains but all other cases will be heard in Manhattan until further notice. * Transworld Named International Investment Advisor of Beijing -------------------------------------------------------------- Transworld Capital Group said its founder and CEO Jack Z. Chen has been named the International Investment Advisor of Beijing. Transworld Capital Group will advise leading companies with operations in Beijing on investments made outside of China and on partnerships and joint ventures between foreign companies and Chinese companies. Most recently, Transworld Capital Group advised a Chinese auto parts company on its winning stalking horse bid for Delphi Corp.'s global suspension and brakes business out of bankruptcy. Transworld Capital Group's founder and CEO, Jack Z. Chen said, "We are proud to formalize our relationship with Beijing. After completing one transaction and working on several currently active deals, we recognize the extraordinary and progressive nature of the municipality in its desire to build Beijing into not only a top business oriented city, but one that is environmentally friendly." Beijing desires to build its manufacturing and technology base to increase employment and long-term economic growth. With availability of capital and access to the vast China market, Beijing offers a uniquely attractive business environment for companies seeking growth. Transworld Capital Group seeks companies who have products or technology applicable to the growing Chinese market. Of particular interest are high-tech, auto and components, pharmaceutical, energy, equipment, or infrastructure-related companies. Transworld Capital Group -- http://www.transworldgroups.com/-- is a financial advisory and consulting firm specializing in cross border transactions between the Western World and Greater China, servicing clients both in the West and in China. The company advises both on M&A and capital-raising transactions as well as partnerships to help businesses access the Greater China market. The Company has offices in Los Angeles, Shanghai and Beijing. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- May 12-15, 2009 AMERICAN BANKRUPTCY INSTITUTE Litigation Skills Symposium Tulane University, New Orleans, La. Contact: http://www.abiworld.org/ May 14-16, 2009 ALI-ABA Chapter 11 Business Reorganizations Langham Hotel, Boston, Massachusetts Contact: http://www.ali-aba.org June 10-13, 2009 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 25th Annual Bankruptcy & Restructuring Conference The Ritz-Carlton Orlando Grande Lakes Orlando, Florida Contact: http://www.aria.org/ June 11-14, 2009 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ June 21-24, 2009 INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY & BANKRUPTCY PROFESSIONALS 8th International World Congress TBA Contact: http://www.insol.org/ July 16-19, 2009 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Mt. Washington Inn Bretton Woods, New Hampshire Contact: http://www.abiworld.org/ July 29-Aug. 1, 2009 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Westin Hilton Head Island Resort & Spa, Hilton Head Island, S.C. Contact: http://www.abiworld.org/ Aug. 6-8, 2009 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Conference Hotel Hershey, Hershey, Pa. Contact: http://www.abiworld.org/ Sept. 10-11, 2009 AMERICAN BANKRUPTCY INSTITUTE Complex Financial Restructuring Program Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 2, 2009 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: http://www.abiworld.org/ Oct. 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Oct. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Paris Las Vegas, Las Vegas, Nev. Contact: http://www.abiworld.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: May 10, 2009 ********* 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 ***