/raid1/www/Hosts/bankrupt/TCR_Public/090522.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, May 22, 2009, Vol. 13, No. 140
Headlines
ABITIBIBOWATER INC: Seeks to Hike Receivables Program by $300MM
ABITIBIBOWATER INC: ACCC Lenders Demand Protection for Collateral
ABITIBIBOWATER INC: Seeks June 30 Extension of Schedules Filing
ABITIBIBOWATER INC: Sec. 341 Meeting Adjourned Sine Die
ABITIBIBOWATER INC: CCAA Court Extends Protection Until Sept. 4
ABITIBIBOWATER INC: CCAA Court Approves Montreal Bank DIP Loan
AGN GROUP: Voluntary Chapter 11 Case Summary
AGT CRUNCH: Wants to Sell Substantially All Assets to CH Fitness
ALLEGIANCE CROSSROADS: Section 341(a) Meeting Slated for June 2
AMERICAN REPROGRAPHICS: S&P Cuts Corporate Credit Rating to 'BB-'
ASARCO LLC: AMC Wants Final Judgment on SCC Stock Transfer Stayed
ASARCO LLC: Asbestos Panel, AMC File Appeal on Sterlite Sale
ASARCO LLC: Parent Offers $1.55-Bil for Operating Assets
ASARCO LLC: Seeks to Abandon Silver Inventory at Two Sites
ASARCO LLC: Seeks to Rush Discovery on Asbestos Claimants
ASARCO LLC: To Sell Perth Amboy Property to RLF/TRC for $2 Mil.
ATA AIRLINES: Court Allows $5,079,731 Claim to Castle 2003-1BLLC
ATA AIRLINES: Haynes and Boone Bills $7.6MM for Legal Work
ATA AIRLINES: Plan Confirmation Cues Court to Dismiss WARN Suits
ATA AIRLINES: Plan Trustee to Conduct Probe on $3.8MM DFS Claim
ATA AIRLINES: San Antonio Aerospace Insists Lien on Equipment
BACHRACH ACQUISITION: May File Schedules and Statements by June 22
BLACK PRESS: Moody's Downgrades Corporate Family Rating to 'B1'
BANKUNITED FSB: Closed, Sold by FDIC to WL Ross-Led Investor Group
CABLEVISION SYSTEMS: Moody's Raises Corp. Family Rating to 'Ba2'
CALHOUN CBO: Moody's Downgrades Ratings on $240 Mil. Notes to 'B2'
CENTRO NP: S&P Affirms Long-Term Corporate Credit Rating at 'CCC+'
CHRYSLER LLC: Committee Proposes Kramer Levin As Counsel
CHRYSLER LLC: To Eliminate All Dealers If Court Denies Fiat Sale
COMMSCOPE INC: Moody's Comments on Equity Issuance and New Notes
COMMSCOPE INC: S&P Affirms Corporate Credit Rating at 'BB-'
CONGOLEUM CORP: American Biltrite Incurs $5.5-Mil Q1 Net Loss
COPANS MOTORS: Taps Genovese Joblove as General Bankruptcy Counsel
COYOTES HOCKEY: Court Directs Mediation on Control Dispute
COYOTES HOCKEY: Wants to Hire Squire Sanders as Bankruptcy Counsel
COYOTES HOCKEY: Proposal to Sell Phoenix Coyotes for $212 Million
CROWN VILLAGE: Wants to Hire Richards Layton as Bankruptcy Counsel
CROWN VILLAGE: Wants to Set July 16 as General Claims Bar Date
CRUCIBLE MATERIALS: Taps K&L Gates as General Bankruptcy Counsel
CRUCIBLE MATERIALS: Wants Schedules Filing Extended Until July 3
CRUCIBLE MATERIALS: Wants to Hire Saul Ewing as Bankr. Co-Counsel
DEL FRISCO'S: Weakened Credit Ratios Cue S&P's Rating Cut to 'B-'
DELTA AIR: Air France Joint Venture to Boost Profits by $150MM
DRUG FAIR: CDI Group Files Schedules of Assets and Liabilities
DRUG FAIR: Files Schedules of Assets and Liabilities
E & H TOPANGA: Voluntary Chapter 11 Case Summary
EARTH STRUCTURES: Case Summary & 20 Largest Unsecured Creditors
ECOVENTURE WIGGINS: Can't Force Sale of Some Units, Ruling Says
EDDIE BAUER: Revenues Down, Records $44MM Net Loss in Q1
EDDIE CABACUNGAN HIQUIANA: Voluntary Chapter 11 Case Summary
FAIRCHILD CORP: Files Schedules of Assets and Liabilities
FAIRCHILD CORP: May Sell Banner Assets to Greenwich Aerogroup
FAIRCHILD CORP: Panel Can Retain Butler Rubin as Counsel
FAIRCHILD CORP: Panel May Hire Elliott Greenleaf as Local Counsel
FILENE'S BASEMENT: Auction for 36 Stories Scheduled for June 5
FILENE'S BASEMENT: Fendi Wants to Pursue Trademark Suit
FILENE'S BASEMENT: Court to Consider Cash Collateral Use on May 26
FILENE'S BASEMENT: Proposes Pachulski Stan as Bankruptcy Counsel
FILENE'S BASEMENT: U.S. Trustee Appoints 7-Member Creditors' Panel
FILENE'S BASEMENT: Wants to Crown-Led Auction for Store Leases
FREEDOM FIRE: Case Summary & 20 Largest Unsecured Creditors
GEORGE'S CONCRETE: Case Summary & 20 Largest Unsecured Creditors
GOLDEN STATE: Case Summary & 8 Largest Unsecured Creditors
GREEKTOWN CASINO: Detroit Seeks to Issue Default Notice
GREEKTOWN CASINO: MGCB Says April 2009 Revenues Total $28.5MNM
GREEKTOWN CASINO: Might Abandon Sale After Getting Low Bids
GREEKTOWN CASINO: Schafer Seeks $457,045 for 3 Months' Work
GREEKTOWN CASINO: Seeks to Hire Jackier as Special Counsel
HDGIANTS: Case Summary & 20 Largest Unsecured Creditors
HEALTH MANAGEMENT: Fitch Affirms Issuer Default Rating at 'B+'
HEALTHSOUTH CORP: Former CEO Denies Involvement in Fraud
HUGHES NETWORK: Moody's Rates $150 Mil. Note Offering at 'B1'
JARDEN CORPORATION: Moody's Lifts Ratings on Sr. Facility to 'Ba2'
JG WENTWORTH: Case Summary & 1 Largest Unsecured Creditor
LEHMAN BROTHERS: Role in Securities Selling Probed by DOJ & SEC
LEHMAN BROTHERS: Court Says DnB Transfer Made Post-Bankruptcy
LEHMAN BROTHERS: Asks Court to Approve Americor Loan Agreement
LEHMAN BROTHERS: To Transfer Assets to Firm Owned by Ex-Employees
LEHMAN BROTHERS: Swaps Interests in Loans With State Street
LEHMAN BROTHERS: Has Protocol for Disposing of Corporate Loans
LEHMAN BROTHERS: Marsal Says Creditors May Get 18% Recovery
LEHMAN BROTHERS: Trade Creditors Assign 7 Claims Totaling $26MM
LEHMAN BROTHERS: Sues to Recover $17MM on Swap with Metropolitan
LEHMAN BROTHERS: Propose Canyon Ranch Condo Loans Deal
LEHMAN BROTHERS: Proposes De Minimis Assets Sale Protocol
MARKWEST ENERGY: Moody's Affirms Corporate Family Rating at 'B1'
MEGA POWER CORPORATION: Case Summ. & 20 Largest Unsec. Creditors
METRO GOLDWYN: Bank Debt Trades at 46% Off in Secondary Market
METRO GOLDWYN: In Talks to Refinance $3.7BB in Debt, Hires Moelis
NEIMAN MARCUS: Bank Debt Trades at 28% Off in Secondary Market
NEUMANN HOMES: Sells Easement to Commonwealth Edison FOR $300,000
NEUMANN HOMES: Settles Construction Project Rift with Wheatlands
NEUMANN HOMES: Court Grants Rule 2004 Requests for Discovery
NEUMANN HOMES: To Employ Bracewell as Special Counsel
NEUMANN HOMES: Bankruptcy Court Keeps Tax Refund Suit vs. Owners
PACIFIC ETHANOL: Can Borrow $7-Mil. Portion of WestLB Facility
QIMONDA NA: Obtains October 18 Extension of Plan Filing Deadline
RAINBOW NATIONAL: Moody's Raises Corporate Family Rating to 'Ba2'
RIVER REAL: Case Summary & 1 Largest Unsecured Creditor
ROGERS COMMUNICATIONS: Moody's Lifts Senior Bond Rating from 'Ba1'
SAKS INCORPORATED: Note Offering Won't Affect Moody's 'B3' Rating
SMURFIT-STONE: Bank Debt Trades at 20% Off in Secondary Market
SOLO CUP: Fitch Affirms Issuer Default Rating at 'B-'
SOUND ON SOUND: Case Summary & 7 Largest Unsecured Creditors
SWIFT TRANSPORTATION: Bank Debt Trades at 32% Discount
TROLLEY'S LLC: Files for Chapter 11 Bankruptcy Protection
TROPICANA LANDCO: Bank Debt Trades at 76% Off in Secondary Market
UAL CORP: Unit's Bank Debt Trades at 42% Off in Secondary Market
W A BOTTING COMPANY: Case Summary & 20 Largest Unsec. Creditors
WORKFLOW MANAGEMENT: Moody's Changes Default Rating to 'Caa3/LD'
YOUNG BROADCASTING: Bank Debt Trades at 58% Discount
YOUNG OIL CORPORATION: Case Summary & 20 Largest Unsec. Creditors
* April Housing Starts Fall to Record Low Rate of 458,000 a Year
* BankUnited Closing Hikes 2009 Failed Banks to 34
* Initial Jobless Claims Unexpectedly Rise by 32,000
* Liquidation World Appoints W. Wolf as Board Chairman
* Vethan Law Firm Adds Houston Bankruptcy Division
* BOOK REVIEW: Corporate Recovery - Managing Companies in Distress
*********
ABITIBIBOWATER INC: Seeks to Hike Receivables Program by $300MM
---------------------------------------------------------------
AbitibiBowater, Inc., and it debtor affiliates sought authority
from the U.S. Bankruptcy Court for the District of Delaware in a
motion dated May 18, 2008, to enter into an amendment of their
existing Securitization Program with Citibank, N.A., and Barclays
Capital Inc., which provides among others for an increased
purchase limit of receivables by Citibank of up to $300 million,
on an interim basis.
At the Debtors' behest, Judge Carey will conduct a preliminary
hearing on May 27, 2009, to consider interim approval of the
Amended Securitization Program. Objections, if any, must be filed
on or before May 22.
The Existing Securitization Program is essentially a "receivables
purchase facility" among (1) Abitibi-Consolidated, Inc. and
Abitibi Consolidated Sales Corporation or "the Abitibi Group" as
Originators, (2) Abitibi Consolidated U.S. Funding Corp. and
Donohue Group as Guarantors, (3) Citibank, as Agent, and (4)
Barclays Capital Inc., as Syndication Agent. ACI and ACSC
originate accounts receivables under an Amended and Restated
Receivables Purchase Agreement with ACI Funding, Eureka
Securitization, PLC, Citibank, Citibank, N.A., London Branch, as
agent. As originators, ACI and ACSC sell and contribute those
receivables to Abitibi-Consolidated U.S. Funding Corp., a non-
debtor special-purpose vehicle, at a discount based on the
outstanding balance on the accounts receivable. ACI Funding pays
ACI and ACSC for the receivables using money from (i) collections
on the accounts receivable it already owns, and (ii) pooling
acquired receivables and selling an undivided percentage ownership
interest in the pool to Citibank. For purchases from ACSC, ACI
Funding may also pay for receivables purchased by increasing the
Deferred Purchase Note or returning capital contributions to ACSC.
The maximum outstanding balance of the Deferred Purchase Note is
$35 million. Citibank, for its part, committed as of the Petition
Date to purchase receivables from ACI Funding in an aggregate
principal amount of up to $210 million.
At the first day hearing of these cases, the Bankruptcy Court
permitted the Debtors to:
(1) keep the Existing Securitization Program in place for an
extended 45 days after the Petition Date or through
June 1, 2009, and
(2) continue to perform their obligations under the Existing
Securitization Program.
"Maintaining [the] securitization program at ACI Funding, a non-
debtor entity, has been, and continues to be, an integral
component of the Company's capital structure," Sean T. Greecher,
Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington,
Delaware, asserts.
Thus, with the looming June 1 termination date of the Existing
Program, the Debtors seek a further amendment of the
Securitization Program, which provides, among others, that:
-- The Debtors may obtain financing of up to the $300 million
purchase limit under the Amended Securitization Program, on
an interim basis.
-- Pursuant to an asset based borrowing base formula,
availability to the Seller under the Facility will be equal
to (i) the lesser of (x) the "Collateral Availability" and
(y) the then effective Purchase Limit minus (ii) the
aggregate amount of the outstanding capital.
-- ACI Funding and the Donohue Group will guarantee all
obligations under the Amended Securitization Program.
-- Citibank, as Agent, is allowed superpriority claims
pursuant to Section 364(c)(1) of the Bankruptcy Code for
the payment of all obligations. ACSC will also cause ACI
Funding to grant a first priority perfected security
interest in the Collateral to secure all amounts owing by
the Sellers. In the U.S. Debtors' cases, the Banks will be
granted a superpriority administrative claim under Section
364(c)(1) for the payment of the obligations of the
Guarantors with priority above all other administrative
claims; and
-- The Superpriority Receivables Claims will be payable from
and have recourse to all of ACI's and ACSC's property,
except that the Claims will not be satisfied from avoidance
actions of the Guarantors arising under the Bankruptcy
Code. Similarly, the Superpriority Guaranty Claims will be
payable from and have recourse to all of ACI's and ACSC's
property.
-- ACSC will cause ACI Funding to pay certain fees in
consideration of the Arrangers' services in structuring,
negotiating and syndicating the Amended and Restated
Securitization Program. Fees for the Arrangers' services,
aggregating $9,950,000, are due and payable at the closing.
-- The Amended and Restated Securitization Program will
terminate on the earliest of:
(i) 364 days after the Closing Date;
(ii) the substantial consummation of a confirmed plan of
reorganization; and
(iii) the occurrence of an event of termination as noted
under the Facility Documents.
-- ACI Funding has the option to extend the Securities
Facility to 15 months and 18 months upon the satisfaction
of certain conditions.
A summary of the materials terms of the Amended and Restated
Securitization Program is available for free at:
http://bankrupt.com/misc/ABH_Amended&RestatedSecuritization.pdf
Essentially, ACI, ACSC and other Debtors, as applicable, seek
authority pursuant to Section 363(c) of the Bankruptcy Code to use
the proceeds of the Amended Securitization Program as "cash
collateral."
The Debtors note that certain lenders, which provided a $400
million senior secured term loan to Abitibi-Consolidated Company
of Canada, ACI's Canadian subsidiary, under an April 1, 2008
credit agreement, have an interest lien on the "Cash Collateral."
The collateral securing the ACCC Term Loan includes all property
of the Donohue Group and certain current assets of ACCC and ACI.
The Debtors thus also seek to grant adequate protection to the
ACCC Term Lenders.
The Debtors further ask the Court to modify the automatic stay to
permit the set-off and netting of "Repayment Amounts," which are
deducted by ACI Funding from the purchase price it pays for
receivables amounts payable by ACI and ACSC with respect to
violations of representations and warranties and dilution items.
Absent approval of the proposed restatement and amendment, the
Existing Securitization Program will terminate on June 1 during
which all obligations will be due in full, Steven Zelin, a
managing director of Blackstone Advisory Services L.P., the
Debtors' proposed global alternative asset manager and financial
advisor, said in a declaration filed with the Court. If the
Existing Securitization Program terminates, he averred, it will
"immediately unwind" and permit Citibank to apply all current and
future amounts collected in the Securitization Lock Box Accounts
to the approximately $124,000,000 of capital currently extended to
the Abitibi and Donohue Groups pursuant to the Securitization
Program, thereby leaving the Abitibi and Donohue Groups without
enough cash to operate their businesses.
About AbitibiBowater Inc.
Headquartered in Montreal, Canada, AbitibiBowater Inc. --
http://www.abitibibowater.com/-- produces a wide range of
newsprint, commercial printing papers, market pulp and wood
products. It is the eighth largest publicly traded pulp and paper
manufacturer in the world. AbitibiBowater owns or operates 27
pulp and paper facilities and 34 wood products facilities located
in the United States, Canada, the United Kingdom and South Korea.
Marketing its products in more than 90 countries, the Company is
also among the world's largest recyclers of old newspapers and
magazines, and has more third-party certified sustainable forest
land than any other company in the world.
Out-of-Court Restructuring Effort
AbitibiBowater tried to renegotiate about $2.9 billion in the
debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion
of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and
Abitibi-Consolidated commenced a recapitalization proposal which
was intended to reduce the Company's net debt by roughly $2.4
billion, lower its annual interest expense by roughly $162 million
and raise roughly $350 million through the issuance of new notes
of ACI and common stock and warrants of the Company.
On February 9, Bowater Finance II LLC, an indirect wholly owned
subsidiary of AbitibiBowater, commenced private offers with
respect to six series of outstanding debt securities issued by
either Bowater Incorporated or Bowater Canada Finance Corporation,
a wholly owned subsidiary of Bowater, to exchange the old notes
for new notes. BowFin also intended for a concurrent private
offering of new 15.5% First Lien Notes due November 15, 2011, to
holders of Bowater Notes who tender notes in the exchange offers.
The Company moved the exchange offer deadlines several times after
failing to garner enough support from bondholders. It ultimately
abandoned the exchange offer on March 31.
Bankruptcy Filing
The Company and several affiliates filed for protection under
Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr.
D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides
over the case. The Company and its Canadian affiliates commenced
parallel restructuring proceedings under the Companies' Creditors
Arrangement Act before the Quebec Superior Court Commercial
Division the next day. Alex F. Morrison at Ernst & Young, Inc.,
was appointed CCAA monitor.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the
Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as
the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in
Wilmington, Delaware, serves as the Debtors' co-counsel, while
Troutman Sanders LLP in New York, serves as the Debtors' conflicts
counsel in the Chapter 11 proceedings. The Debtors' financial
advisors are Advisory Services LP, and their noticing and claims
agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's
counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario.
Abitibi-Consolidated Inc. and various Canadian subsidiaries filed
for protection under Chapter 15 of the U.S. Bankruptcy Code on
April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles
the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T.
Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in
Wilmington, represent the Chapter 15 Debtors.
As of September 30, 2008, the Company had $9,937,000,000 in total
assets and $8,783,000,000 in total debts.
Bankruptcy Creditors' Service, Inc., publishes Abitibibowater
Bankruptcy News. The newsletter provides gavel-to-gavel coverage
of the Chapter 11 proceedings and parallel proceedings under the
Companies' Creditors Arrangement Act in Canada undertaken by
Abitibibowater Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
ABITIBIBOWATER INC: ACCC Lenders Demand Protection for Collateral
-----------------------------------------------------------------
Parties who provided loans to AbitibiBowater, Inc.'s units in
Canada seek payment of interest on their loans, payment of fees
and expenses for their agent and retained professionals and
replacement liens to protect them from any diminution in value of
their collateral.
The ACCC Term Lenders provided a $400 million senior secured
term loan to Abitibi-Consolidated Company of Canada, Abitibi-
Consolidated, Inc.'s Canadian subsidiary, under an April 1, 2008
credit agreement, have an interest lien on the "Cash Collateral."
The collateral securing the ACCC Term Loan includes all property
of the Donohue Group and certain current assets of ACCC and ACI.
The ACCC Term Lenders contend that ACCC and ACI or the "Chapter
15 Debtors" refuse to provide any adequate protection for their
use of substantial the Lenders' cash collateral. The ACCC Term
Lenders elaborate that the Chapter 11 Debtors offered them
limited adequate protection for the use of a portion of the Cash
Collateral, representing accounts receivable proceeds and
inventory; but no adequate protection from the Chapter 15 Debtors
was offered for the reason that "the aggregate value of their
U.S. assets on the Petition Date was only $7 million."
The Chapter 15 Debtors' position is patently unacceptable and
contrary to the requirement under Section 1520(a)(2) of the
Bankruptcy Code, which requires them to comply with Section 363 of
the Bankruptcy Code with respect to assets located within the
territorial jurisdiction of the U.S., Adam G. Landis, Esq., at
Landis Rath & Cobb LLP, in Wilmington, Delaware, argues. "Section
363 clearly requires that the Term Loan Lenders' interest in cash
collateral be adequately protected if it is to be used by the
Chapter 15 [Debtors]."
The ACCC Term Loan Agreement matured on its own terms on March 30,
2009. As of the Petition Date, about $347 million in principal
obligations, plus accrued and unpaid interest and fees, are past
due and owing under the ACCC Loan Agreement, according to Mr.
Landis. He maintains that the Term Loan Obligations are secured
by valid, first priority liens on, among other things, the Loan
Parties' inventory, accounts receivable and the proceeds.
Mr. Landis further argues that the Chapter 15 Debtors' contention
completely disregard that fact (i) the Term Loan Lenders have
valid, perfected and enforceable liens on and security interests
in all of ACI's inventory and receivables, which Liens continue
after the filing of the CCAA cases, and (ii) all U.S.-dollar
denominated proceeds of ACI's accounts receivable are paid into a
U.S. bank account that is within the territorial jurisdiction of
the U.S. In this light, the value of the Chapter 15 Debtors' U.S.
assets is proceeds paid or payable by ACI Funding in connection
with the purchase of ACI receivables, Mr. Landis asserts.
Mr. Landis further informs the Court that on the Petition Date,
the Debtors had about of $98.2 million cash on hand, which was
subject to the Term Loan Lenders' Lien. As of May 10, 2009, the
aggregate amount of cash on hand has declined to $85.3 million.
"The $12.9 million drop in value unequivocally demonstrates that
the Term Loan Lenders' collateral is decreasing in value and the
remaining collateral must be protected," Mr. Landis says.
Specifically, the Term Loan Lenders seek these forms of adequate
protection from the Chapter 15 Debtors:
(a) Postpetition replacement liens on the Chapter 15 Debtors'
assets in the U.S. or in Canada that are not part of the
Term Loan Lenders' prepetition collateral package;
(b) Payment of reasonable fees and expenses of the Agent's and
Term Loan Lenders' professionals, including Canadian
counsel; and
(c) Payment of current interest at the contractual non-default
rate on the Term Loan Obligations.
To the extent the Chapter 15 Debtors cannot or will not provide
Adequate Protection, the Term Lenders ask the Court to deny the
request for recognition under the Chapter 15 cases, and prevent
the Chapter 15 Debtors from availing of the protection under the
Bankruptcy Code, including the automatic stay.
The Court will hear the Term Lenders' Adequate Protection Request
on May 27.
Creditors Committee Reacts
The Official Committee of Unsecured Creditors wants to ensure that
"in the process of providing adequate protection to the Agent,
CitiBank and Eureka and ACCC Term Lenders, the Court [will] (i)
not approve certain overreaching or otherwise inappropriate
requests, and (ii) include certain safeguards and protections that
will protect the interests of the Debtors' other creditors."
Representing the Creditors' Committee, Jamie L. Edmonson, Esq., at
Bayard, P.A., in Wilmington, Delaware, asserts that the Committee
should not be precluded form challenging the findings of the
validity of the Financing Documents, and the authorization of
payment of certain fees and other provisions. The Financing
Document provisions, the Committee asserts, reflect that Citibank
and the Agent are not in control of operations of the Debtors, do
not owe any fiduciary duties, and are not responsible persons or
owner or operators of the Debtors.
The Creditors' Committee seeks the Court's authority to
investigate the Financing Documents until July 27, 2009.
Mr. Edmonson further asserts that the $50,000 allocated for the
Committee to investigate the Financing Documents "is insufficient
given the numerous substantive amendments and modifications of the
Amended Securitization Facility as well as the complex U.S. and
Canadian issues associated with the Financing Documents."
Mr. Edmonson adds that the Superpriority Claims of the Agent
Obligations and Receivables Obligations should be allocated
against each of the Originators' estates to the extent they arise
from the particular Originator. To the extent any Originator
receives proceeds from avoidance actions under Chapter 5 of the
Bankruptcy Code, the proceeds should not be applied to the
Superpriority Claims, he says.
About AbitibiBowater Inc.
Headquartered in Montreal, Canada, AbitibiBowater Inc. --
http://www.abitibibowater.com/-- produces a wide range of
newsprint, commercial printing papers, market pulp and wood
products. It is the eighth largest publicly traded pulp and paper
manufacturer in the world. AbitibiBowater owns or operates 27
pulp and paper facilities and 34 wood products facilities located
in the United States, Canada, the United Kingdom and South Korea.
Marketing its products in more than 90 countries, the Company is
also among the world's largest recyclers of old newspapers and
magazines, and has more third-party certified sustainable forest
land than any other company in the world.
Out-of-Court Restructuring Effort
AbitibiBowater tried to renegotiate about $2.9 billion in the
debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion
of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and
Abitibi-Consolidated commenced a recapitalization proposal which
was intended to reduce the Company's net debt by roughly $2.4
billion, lower its annual interest expense by roughly $162 million
and raise roughly $350 million through the issuance of new notes
of ACI and common stock and warrants of the Company.
On February 9, Bowater Finance II LLC, an indirect wholly owned
subsidiary of AbitibiBowater, commenced private offers with
respect to six series of outstanding debt securities issued by
either Bowater Incorporated or Bowater Canada Finance Corporation,
a wholly owned subsidiary of Bowater, to exchange the old notes
for new notes. BowFin also intended for a concurrent private
offering of new 15.5% First Lien Notes due November 15, 2011, to
holders of Bowater Notes who tender notes in the exchange offers.
The Company moved the exchange offer deadlines several times after
failing to garner enough support from bondholders. It ultimately
abandoned the exchange offer on March 31.
Bankruptcy Filing
The Company and several affiliates filed for protection under
Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr.
D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides
over the case. The Company and its Canadian affiliates commenced
parallel restructuring proceedings under the Companies' Creditors
Arrangement Act before the Quebec Superior Court Commercial
Division the next day. Alex F. Morrison at Ernst & Young, Inc.,
was appointed CCAA monitor.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the
Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as
the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in
Wilmington, Delaware, serves as the Debtors' co-counsel, while
Troutman Sanders LLP in New York, serves as the Debtors' conflicts
counsel in the Chapter 11 proceedings. The Debtors' financial
advisors are Advisory Services LP, and their noticing and claims
agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's
counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario.
Abitibi-Consolidated Inc. and various Canadian subsidiaries filed
for protection under Chapter 15 of the U.S. Bankruptcy Code on
April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles
the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T.
Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in
Wilmington, represent the Chapter 15 Debtors.
As of September 30, 2008, the Company had $9,937,000,000 in total
assets and $8,783,000,000 in total debts.
Bankruptcy Creditors' Service, Inc., publishes Abitibibowater
Bankruptcy News. The newsletter provides gavel-to-gavel coverage
of the Chapter 11 proceedings and parallel proceedings under the
Companies' Creditors Arrangement Act in Canada undertaken by
Abitibibowater Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
ABITIBIBOWATER INC: Seeks June 30 Extension of Schedules Filing
---------------------------------------------------------------
In light of the more than 200 creditors in AbitibiBowater Inc. and
its affiliates' cases, Rule 1007-1(b) of the Local Rules of
Bankruptcy Practice and Procedure of the United States Bankruptcy
Court for the District of Delaware requires the Debtors to file
their schedules of assets and liabilities and statements of
financial affairs with the court within 30 days to the Petition
Date. Accordingly, the Debtors' initial deadline to file their
Schedules and Statements was on May 15, 2009.
While the Debtors have started to assemble the necessary data to
prepare their Schedules and Statements, they anticipate that they
will not be able to completely accumulate, review and analyze the
information within the Initial Deadline, due to the size and
complexity of their Chapter 11 cases. "Compiling and
consolidating the data required for the Schedules and Statements
presents a complex and time-intensive task," Sean T. Greecher,
Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington,
Delaware, relates.
Mr. Greecher asserts that preparing the Schedules and Statements
will require considerable attention from the Debtors' personnel
and advisors, which would distract them from the Debtors' business
operations at a sensitive time when the business cannot afford any
disturbance.
Accordingly, the Debtors ask the Court to extend their Schedules
Filing Period for 45 days, or through and including June 30, 2009.
The Debtors aver that their creditors and other parties-in-
interest will not be significantly harmed by the proposed
Extension because "the Schedules and Statements would be filed
well in advance of any planned bar date or other significant event
in the Chapter 11 Cases."
The Court will convene a hearing to consider approval of the
Schedules Filing Extension request on June 4, 2009. Objections,
if any, must be filed by May 28. Pursuant to Rule 9006-2 of the
Local Rules of Bankruptcy Practice and Procedure of U.S.
Bankruptcy Court for the District of Delaware, the Debtors'
Schedules Filing Deadline is automatically extended until the
conclusion of that hearing.
About AbitibiBowater Inc.
Headquartered in Montreal, Canada, AbitibiBowater Inc. --
http://www.abitibibowater.com/-- produces a wide range of
newsprint, commercial printing papers, market pulp and wood
products. It is the eighth largest publicly traded pulp and paper
manufacturer in the world. AbitibiBowater owns or operates 27
pulp and paper facilities and 34 wood products facilities located
in the United States, Canada, the United Kingdom and South Korea.
Marketing its products in more than 90 countries, the Company is
also among the world's largest recyclers of old newspapers and
magazines, and has more third-party certified sustainable forest
land than any other company in the world.
Out-of-Court Restructuring Effort
AbitibiBowater tried to renegotiate about $2.9 billion in the
debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion
of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and
Abitibi-Consolidated commenced a recapitalization proposal which
was intended to reduce the Company's net debt by roughly $2.4
billion, lower its annual interest expense by roughly $162 million
and raise roughly $350 million through the issuance of new notes
of ACI and common stock and warrants of the Company.
On February 9, Bowater Finance II LLC, an indirect wholly owned
subsidiary of AbitibiBowater, commenced private offers with
respect to six series of outstanding debt securities issued by
either Bowater Incorporated or Bowater Canada Finance Corporation,
a wholly owned subsidiary of Bowater, to exchange the old notes
for new notes. BowFin also intended for a concurrent private
offering of new 15.5% First Lien Notes due November 15, 2011, to
holders of Bowater Notes who tender notes in the exchange offers.
The Company moved the exchange offer deadlines several times after
failing to garner enough support from bondholders. It ultimately
abandoned the exchange offer on March 31.
Bankruptcy Filing
The Company and several affiliates filed for protection under
Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr.
D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides
over the case. The Company and its Canadian affiliates commenced
parallel restructuring proceedings under the Companies' Creditors
Arrangement Act before the Quebec Superior Court Commercial
Division the next day. Alex F. Morrison at Ernst & Young, Inc.,
was appointed CCAA monitor.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the
Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as
the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in
Wilmington, Delaware, serves as the Debtors' co-counsel, while
Troutman Sanders LLP in New York, serves as the Debtors' conflicts
counsel in the Chapter 11 proceedings. The Debtors' financial
advisors are Advisory Services LP, and their noticing and claims
agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's
counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario.
Abitibi-Consolidated Inc. and various Canadian subsidiaries filed
for protection under Chapter 15 of the U.S. Bankruptcy Code on
April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles
the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T.
Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in
Wilmington, represent the Chapter 15 Debtors.
As of September 30, 2008, the Company had $9,937,000,000 in total
assets and $8,783,000,000 in total debts.
Bankruptcy Creditors' Service, Inc., publishes Abitibibowater
Bankruptcy News. The newsletter provides gavel-to-gavel coverage
of the Chapter 11 proceedings and parallel proceedings under the
Companies' Creditors Arrangement Act in Canada undertaken by
Abitibibowater Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
ABITIBIBOWATER INC: Sec. 341 Meeting Adjourned Sine Die
-------------------------------------------------------
David Klauder, Esq., trial attorney of the Office of U.S. Trustee
for Region 3, notified the Clerk of the Court that the meeting of
creditors of AbitibiBowater Inc. and its debtor-affiliates
pursuant to Section 341 of the Bankruptcy Code has been postponed
to a date yet to be determined.
The Section 341 Meeting was previously set for May 14, 2009, at
the Office of the U.S. Trustee of the District of Delaware, at J.
Caleb Boggs Federal Building, at 844 King Street, Room 2112, in
Wilmington, Delaware.
Attendance by the Debtors' creditors at the meeting is welcome,
but not required.
Mr. Klauder also noted that the Court has extended the time by
which the Debtors must file their schedules of assets and
liabilities to June 4, 2009.
About AbitibiBowater Inc.
Headquartered in Montreal, Canada, AbitibiBowater Inc. --
http://www.abitibibowater.com/-- produces a wide range of
newsprint, commercial printing papers, market pulp and wood
products. It is the eighth largest publicly traded pulp and paper
manufacturer in the world. AbitibiBowater owns or operates 27
pulp and paper facilities and 34 wood products facilities located
in the United States, Canada, the United Kingdom and South Korea.
Marketing its products in more than 90 countries, the Company is
also among the world's largest recyclers of old newspapers and
magazines, and has more third-party certified sustainable forest
land than any other company in the world.
Out-of-Court Restructuring Effort
AbitibiBowater tried to renegotiate about $2.9 billion in the
debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion
of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and
Abitibi-Consolidated commenced a recapitalization proposal which
was intended to reduce the Company's net debt by roughly $2.4
billion, lower its annual interest expense by roughly $162 million
and raise roughly $350 million through the issuance of new notes
of ACI and common stock and warrants of the Company.
On February 9, Bowater Finance II LLC, an indirect wholly owned
subsidiary of AbitibiBowater, commenced private offers with
respect to six series of outstanding debt securities issued by
either Bowater Incorporated or Bowater Canada Finance Corporation,
a wholly owned subsidiary of Bowater, to exchange the old notes
for new notes. BowFin also intended for a concurrent private
offering of new 15.5% First Lien Notes due November 15, 2011, to
holders of Bowater Notes who tender notes in the exchange offers.
The Company moved the exchange offer deadlines several times after
failing to garner enough support from bondholders. It ultimately
abandoned the exchange offer on March 31.
Bankruptcy Filing
The Company and several affiliates filed for protection under
Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr.
D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides
over the case. The Company and its Canadian affiliates commenced
parallel restructuring proceedings under the Companies' Creditors
Arrangement Act before the Quebec Superior Court Commercial
Division the next day. Alex F. Morrison at Ernst & Young, Inc.,
was appointed CCAA monitor.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the
Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as
the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in
Wilmington, Delaware, serves as the Debtors' co-counsel, while
Troutman Sanders LLP in New York, serves as the Debtors' conflicts
counsel in the Chapter 11 proceedings. The Debtors' financial
advisors are Advisory Services LP, and their noticing and claims
agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's
counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario.
Abitibi-Consolidated Inc. and various Canadian subsidiaries filed
for protection under Chapter 15 of the U.S. Bankruptcy Code on
April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles
the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T.
Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in
Wilmington, represent the Chapter 15 Debtors.
As of September 30, 2008, the Company had $9,937,000,000 in total
assets and $8,783,000,000 in total debts.
Bankruptcy Creditors' Service, Inc., publishes Abitibibowater
Bankruptcy News. The newsletter provides gavel-to-gavel coverage
of the Chapter 11 proceedings and parallel proceedings under the
Companies' Creditors Arrangement Act in Canada undertaken by
Abitibibowater Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
ABITIBIBOWATER INC: CCAA Court Extends Protection Until Sept. 4
---------------------------------------------------------------
At the behest of the Canadian affiliates of AbitibiBowater Inc.,
the Honorable Judge Clement Gascon, J.S.C., of the Quebec Superior
Court Commercial Division, extended the period within which no
right may be exercised and no proceeding may be commenced or
proceeded against the CCAA Applicants or any of their property,
assets, rights and undertakings, through and including
September 4, 2009.
The Stay Period was previously set by the Canadian Court until
May 15, 2009.
Representing the CCAA Applicants, Stikeman Elliott LLP, in
Montreal, Canada, relates that the Applicants have continued to
make significant efforts to address the concerns of all
stakeholders, and have obtained the Canadian Court's approvals
with respect to:
(a) the recognition of the Chapter 11 Debtors' $40,000,000
debtor-in-possession loan facility;
(b) the Abitibi Group's $100,000,000 DIP facility with the
Bank of Montreal as lender and Investissement Quebec as
guarantor, in the CCAA proceedings; and
(c) the CCAA Applicants' suspension of past service
contributions to their funded pension plans.
The Canadian Court determined that an extension of the Stay
Period until September 4, 2009, is justified, as it will provide
the CCAA Applicants with adequate time to:
-- complete the stabilization of their business, given the
Abitibi Group's DIP Facility; and
-- deal with the maturity of the Securitization Facility and
commence negotiations with their stakeholders, with a
view to presenting a plan of compromise or arrangement
under the CCAA.
Stikeman Elliott further notes that Ernst & Young, Inc., as
monitor in the CCAA Proceedings, has indicated that given the
cash flow forecast for the CCAA Applicants for the period from
May 4 to September 6, 2009, they "should have sufficient
liquidity to sustain ordinary course operations during the
proposed extended Stay Period."
Full-text copies of the E&Y's 18-Week Cash Flow Forecasts Ending
September 6, 2009, are available at no charge at:
http://bankrupt.com/misc/ACI_Sept18CashFlowForecast.pdf
http://bankrupt.com/misc/BCFPI_Sept18CashFlowForecast.pdf
Headquartered in Montreal, Canada, AbitibiBowater Inc. --
http://www.abitibibowater.com/-- produces a wide range of
newsprint, commercial printing papers, market pulp and wood
products. It is the eighth largest publicly traded pulp and paper
manufacturer in the world. AbitibiBowater owns or operates 27
pulp and paper facilities and 34 wood products facilities located
in the United States, Canada, the United Kingdom and South Korea.
Marketing its products in more than 90 countries, the Company is
also among the world's largest recyclers of old newspapers and
magazines, and has more third-party certified sustainable forest
land than any other company in the world.
Out-of-Court Restructuring Effort
AbitibiBowater tried to renegotiate about $2.9 billion in the
debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion
of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and
Abitibi-Consolidated commenced a recapitalization proposal which
was intended to reduce the Company's net debt by roughly $2.4
billion, lower its annual interest expense by roughly $162 million
and raise roughly $350 million through the issuance of new notes
of ACI and common stock and warrants of the Company.
On February 9, Bowater Finance II LLC, an indirect wholly owned
subsidiary of AbitibiBowater, commenced private offers with
respect to six series of outstanding debt securities issued by
either Bowater Incorporated or Bowater Canada Finance Corporation,
a wholly owned subsidiary of Bowater, to exchange the old notes
for new notes. BowFin also intended for a concurrent private
offering of new 15.5% First Lien Notes due November 15, 2011, to
holders of Bowater Notes who tender notes in the exchange offers.
The Company moved the exchange offer deadlines several times after
failing to garner enough support from bondholders. It ultimately
abandoned the exchange offer on March 31.
Bankruptcy Filing
The Company and several affiliates filed for protection under
Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr.
D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides
over the case. The Company and its Canadian affiliates commenced
parallel restructuring proceedings under the Companies' Creditors
Arrangement Act before the Quebec Superior Court Commercial
Division the next day. Alex F. Morrison at Ernst & Young, Inc.,
was appointed CCAA monitor.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the
Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as
the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in
Wilmington, Delaware, serves as the Debtors' co-counsel, while
Troutman Sanders LLP in New York, serves as the Debtors' conflicts
counsel in the Chapter 11 proceedings. The Debtors' financial
advisors are Advisory Services LP, and their noticing and claims
agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's
counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario.
Abitibi-Consolidated Inc. and various Canadian subsidiaries filed
for protection under Chapter 15 of the U.S. Bankruptcy Code on
April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles
the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T.
Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in
Wilmington, represent the Chapter 15 Debtors.
As of September 30, 2008, the Company had $9,937,000,000 in total
assets and $8,783,000,000 in total debts.
Bankruptcy Creditors' Service, Inc., publishes Abitibibowater
Bankruptcy News. The newsletter provides gavel-to-gavel coverage
of the Chapter 11 proceedings and parallel proceedings under the
Companies' Creditors Arrangement Act in Canada undertaken by
Abitibibowater Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
ABITIBIBOWATER INC: CCAA Court Approves Montreal Bank DIP Loan
--------------------------------------------------------------
The Honorable Mr. Justice Clement Gascon, J.S.C., of the Superior
Court Commercial Division in Quebec, Canada, authorized and
empowered Abitibi-Consolidated Inc., Abitibi Consolidated Company
of Canada and their affiliates to obtain a $100,000,000
superpriority secured debtor-in-possession credit facility, with
the Abitibi Group and Donohue Group as borrowers, the Bank of
Montreal as lender, and Investissement Quebec, as guarantor or
sponsor.
The DIP Facility is subject to a minimum availability of
$12,500,000 to be maintained at all times.
The DIP Facility will expire on April 30, 2010. It must be repaid
by the earliest of (i) November 1, 2009, or (ii) the filing of a
plan either of the CCAA Applicants in Canada or the Chapter 11
Debtors in the United States.
The Abitibi Group expects the DIP Financing to supplement their
relatively low level of liquidity and allow them to maintain
stability of their current operations. The DIP Financing is also
to be guaranteed by certain of the Abitibi Group's wholly owned
subsidiaries.
The Fee Structure of the DIP Facility includes:
-- Upfront Fees of $4,400,000;
-- An interest rate of LIBOR plus 1.75%, subject to a 3% LIBOR
Floor and daily interests to be paid monthly in arrears;
and
-- An undrawn fee of 0.525% per year.
The Borrowers assume all legal and out-of-pocket expenses of the
Bank of Montreal and Investissement Quebec.
In a 47-page opinion, the Honorable Judge Gascon held that the
DIP Facility is relatively short-termed and the loan amounts are
reasonable, as compared to other large restructurings, including
Quebecor World or Air Canada. "In stabilizing the continued
operations of the CCAA Applicants, the benefits of the DIP
Facility 'outweigh the potential prejudice' to Term Lenders under
the Securitization Program, which is intended to fund the working
capital requirements of ACI and Donohue Corp.," the Honorable
Judge Gascon opined.
Citing the Monitor's reports, the Canadian Court held that market
cycles, movements, variances and volatility within the industry
necessitate the urgent need for the DIP Facility. The Canadian
Court also acknowledged that the DIP Facility has gained huge
support from most stakeholders, as well as favorable endorsement
from the Monitor, the Canadian Court ruled.
"One cannot expect an organization [like those of the Borrowers]
to wait to the last minute and call the fireman once the fire has
started. Reasonable caution is required," Honorable Judge Gascon
opined.
The Bank of Montreal DIP Loan Order is available for free at:
http://bankrupt.com/misc/ABH_CCAACourtDIPOpinion.pdf
The Honorable Judge Gascon held, in a subsequent amended initial
order, that the claims of Bank of Montreal and Investissement
Quebec, pursuant to the DIP Facility, will not be compromised or
arranged. The Canadian Court authorizes The Bank of Montreal to
take steps, as it may deem necessary, to register, record or
perfect the charges under the DIP Facility in all jurisdictions,
as may be appropriate.
Upon the occurrence of a specified Event of Default or a
Termination Event, the Bank of Montreal may refuse to make any
advance to the Abitibi Group, and terminate, reduce or restrict
any further commitment. The Canadian Court also entitles the
Bank of Montreal to seize and retain proceeds from the sale of
the property or the cash flow of the Abitibi Group, to repay
amounts owing to the Bank.
The Canadian Court, however, restricts the Bank of Montreal from
taking any enforcement steps with respect to the DIP Facility
absent a five-day notice period of an occurrence of Default, to
be served on the Abitibi Group and Ernst & Young, Inc., as the
Court-appointed Monitor.
The Canadian Court rules that all copies of borrowing requests
and all financial information and reports required by the Bank of
Montreal and Investissement Quebec under the DIP Facility will be
provided to the Monitor, the secured creditors and their
financial advisors and the Ad Hoc Committee of Unsecured
Noteholders. All advances will be subject to prior approval of
the Monitor and any Notice Party may submit to the Canadian Court
any objection to the Borrowing Request.
Court Addresses Objections
Prior to the approval of the DIP Facility approval, DDJ Capital
Management LLC, Newstart Factors, Inc., Sitchting Pensioenfonds
ABP, The Foothill Group, Inc., Foothill CLO I, Ltd., as requisite
term lenders who represent 50% of the aggregate term loan
exposure of all lenders, sought to be compensated for the
"inevitable deterioration" of their position and the use of their
security by the Abitibi Group on an ongoing basis. The Term
Lenders also required that an adequate protection charge be
granted in their favor.
Specifically, the Term Lenders proposed that each Impaired
Secured Creditor, as subrogee, will be entitled to realize in
priority of the collateral of each other Impaired Secured
Creditor, by multiplying the amount with respect to which an
Impaired Secured Creditor is a subrogee, by a fraction, where:
-- the numerator is the debt owing to the other Impaired
Secured Creditor; and
-- the denominator is the aggregate indebtedness owing to all
Impaired Secured Creditors.
In response, the Honorable Judge Gascon acknowledged that holders
of Secured Notes, the Lenders and the Term Loan Facility, as
secured creditors hold security over assets that are subject to
the DIP Charges. They will be subrogated to the DIP Charge to
the extent of the lesser of:
* any net proceeds from the Existing Security from the
disposition of assets that result from the collection of
accounts receivable or other claims;
* unpaid amounts due or becoming due, owing to the impaired
Secured Creditor that is secured by its existing Security.
The Honorable Judge Gascon noted that "it is better to leave open
and subject to future determination . . . the best formula for
the most equitable outcome" relating to Securities that the Term
Lenders have brought before the Canadian Court.
As for the Term Lenders' proposal for Adequate Protection Charge,
the Canadian Court held that the request is "unfounded, and in
fact questionable," noting that the value of the Term Lenders'
collateral, with respect to the DIP Facility, is better served by
the ongoing operations than by an immediate liquidation of the
CCAA Applicants.
ABH's Statement
AbitibiBowater Inc. and its Abitibi-Consolidated Inc. subsidiary
related in a press release that an order from the Quebec Superior
Court in Canada has been obtained authorizing Abitibi to enter
into a loan agreement with Bank of Montreal for debtor-in-
possession financing which will be guaranteed by Investissement
Quebec. The Abitibi DIP Agreement will support AbitibiBowater's
business continuity by providing additional short-term liquidity
while the Company continues to develop its restructuring plan.
The Abitibi DIP Agreement will be among Abitibi, as borrower, and
Bank of Montreal, as lender, and will be guaranteed by
Investissement Quebec, as sponsor. The Abitibi DIP Agreement
will provide for borrowings in an aggregate principal amount of
up to $100 million for Abitibi, of which a minimum undrawn
availability of $12.5 million must be maintained at all times.
The outstanding principal amount of loans under the DIP Facility,
plus accrued and unpaid interest, will be payable in full at the
earliest of: (i) November 1, 2009; (ii) the effective date of a
plan of reorganization under the Companies' Creditors Arrangement
Act in Canada or Chapter 11 of the United States Bankruptcy Code
in the U.S.; and (iii) certain other events.
More information about AbitibiBowater's restructuring process can
be found at http://www.abitibibowater.comor by calling toll-free
888-266-9280. International callers should dial 503-597-7698.
AbitibiBowater produces a wide range of newsprint, commercial
printing papers, market pulp and wood products. It is the eighth
largest publicly traded pulp and paper manufacturer in the world.
AbitibiBowater owns or operates 23 pulp and paper facilities and
30 wood products facilities located in the United States, Canada,
the United Kingdom and South Korea. Marketing its products in
more than 90 countries, the Company is also among the world's
largest recyclers of old newspapers and magazines, and has third-
party certified 100% of its managed woodlands to sustainable
forest management standards. AbitibiBowater's shares trade over-
the-counter on the Pink Sheets under the stock symbol ABWTQ.
AGN GROUP: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: AGN Group, Inc.
dba A GA Corp
dba Gaye Wilson
dba Natalie M Wilson
dba Emanuel Group & Co
dba A Georgia Limited Liability Corp.
1155 Virginia Avenue
Atlanta, GA 30354
Bankruptcy Case No.: 09-72654
Chapter 11 Petition Date: May 15, 2009
Court: United States Bankruptcy Court
Northern District of Georgia (Atlanta)
Debtor's Counsel: J. L. Jordan, Esq.
J. L. Jordan & Associates
Suite 100
2565 Jolly Road
College Park, GA 30349
Tel: (404) 766-1274
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of its 20 largest unsecured
creditors when it filed its petition.
The petition was signed by Natalie Alexander, CEO and managing
member of the Company.
AGT CRUNCH: Wants to Sell Substantially All Assets to CH Fitness
----------------------------------------------------------------
AGT Crunch Acquisition LLC and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Southern District of New York to:
a) establish bidding procedures in connection with sale of
substantially all of their assets;
b) approve the form and manner of notices;
c) authorize the sale of the assets free and clear of all
liens, claims, and encumbrances, subject to bigger and
better offers; and
d) authorize the assumption and assignment of certain executory
contracts and unexpired leases.
Pre-bankruptcy, the Debtors engaged FocalPoint Securities LLC to
provide financial advisory services in connection with a
restructuring of their business and capital structure. In
consultation with FocalPoint and the Debtors' restructuring and
legal advisors, the Debtors and their independent director
concluded that the most viable and cost-effective means of
implementing a restructuring of their operational and capital
structure to maximize value for creditors was through a going
concern sale of substantially all of their assets.
CH Fitness Investors, LLC, agreed to provide the Debtors with up
to $6 million in debtor-in-possession financing and to serve as a
stalking horse bidder in connection with the sale with a credit
bid which will consist of the release of the Company and any
guarantors of obligations, claims, rights, actions, causes of
action, suits, liabilities, damages, debts, costs, expenses and
demands whatsoever, in law or in equity, arising under, or
otherwise relating to, (i) the DIP Facility and (ii) the Credit
Facility from Goldman Sachs Credit Partners L.P., in an aggregate
amount equal to $40,000,000.
Notwithstanding the proposed credit bid from CH Fitness, the
Debtors intend to engage in a marketing, bidding, and auction
process for their assets and business under the circumstances.
All qualified bids are due, no later than 5:00 p.m. (Eastern Time)
on June 25, 2009, unless either extended by the Debtors, in
consultation with the Official Committee of Unsecured Creditors.
The Debtors will communicate their determinations to all qualified
bidders, including the buyer, not later than June 27, 2009.
The auction will take place June 30, 2009, at 10:00 a.m. (Eastern
Time) at the offices of Dechert LLP, 1095 Avenue of the Americas,
New York City or the later time or other place as the Debtors will
determine in consultation with the Official Committee of Unsecured
Creditors. If, as of the Bid Deadline, the only Qualified Bid
received by the Debtors is the Stalking Horse Bid, the Debtors
will not conduct the auction.
The Debtors propose that the sale hearing take place no later than
July 2, 2009. Objections, if any, are due on June 29, 2009.
New York-based AGT Crunch Acquisition LLC and its affiliates filed
for Chapter 11 on May 6, 2009 (Bankr. S. D. N.Y. Lead Case No.
09-12889). Davin J. Hall, Esq., at Dechert LLP represents the
Debtors in their restructuring efforts. The Debtors have assets
and debts both ranging from $100 million to $500 million.
ALLEGIANCE CROSSROADS: Section 341(a) Meeting Slated for June 2
---------------------------------------------------------------
The U.S. Trustee for Region 6 will convene a meeting of creditors
in Allegiance Crossroads, LP's Chapter 11 case on June 2, 2009, at
10:00 a.m. The meeting will be held at the Office of the U.S.
Trustee, 1100 Commerce St.,Room 976, Dallas, Texas.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Dallas, Texas-based Allegiance Crossroads, LP filed for Chapter 11
on May 4, 2009 (Bankr. N. D. Tex. Case No. 09-32802). Marc W.
Taubenfeld, Esq., at McGuire, Craddock & Strother represents the
Debtor in its restructuring efforts. The Debtor has assets and
debts both ranging from $10,000,001 to $50,000,000.
AMERICAN REPROGRAPHICS: S&P Cuts Corporate Credit Rating to 'BB-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on Walnut Creek, California-based American
Reprographics Co. LLC, the largest U.S. provider of outsourced
reprographics and related business services, by one notch. The
corporate credit rating was lowered to 'BB-' from 'BB'. At the
same time, S&P removed all ratings from CreditWatch, where they
were placed with negative implications February 25, 2009. The
rating outlook is negative.
"The rating downgrade reflects our expectation that the severe
decline in domestic construction spending and its impact on
American Reprographics' revenue and profitability will be more
significant than S&P previously anticipated," explained Standard &
Poor's credit analyst Liz Fairbanks. "Thus, our view of relative
creditworthiness is somewhat below the previous level."
While S&P notes that amortization payments, capital lease
obligations, and seller note maturities could exceed internally
generated free operating cash flow in 2010 (according to S&P's
estimates), S&P expects the company to have adequate revolver
availability to meet these obligations. The lower rating and
negative outlook reflect the severity of the current downturn and
the uncertainty around the pace and timing of recovery.
Standard & Poor's currently forecasts that nonresidential
construction spending will decline 21.3% and 12.4% in 2009 and
2010, respectively.
ARC's revenue base is narrow, with approximately 80% of its net
sales coming from the architecture, engineering, and construction
markets. During the last commercial construction downturn, ARC's
same-store revenues declined by an estimated 15%-plus in total
from its peak in 2000 to year-end 2003.
The 'BB-' rating incorporates S&P's rating assumptions that ARC's
revenue could decline by about 25% in 2009 and in the mid-single-
digit percentage area in 2010. S&P therefores expect EBITDA to
decline in the high-30% area in 2009 and in the mid-to high-
single-digit percentage area in 2010. Despite these declines, S&P
believes that ARC will gain market share and further strengthen
its market position throughout this cycle as smaller competitors
with less resources experience exit the market.
ASARCO LLC: AMC Wants Final Judgment on SCC Stock Transfer Stayed
-----------------------------------------------------------------
Americas Mining Corporation asks the U.S. District Court for the
Southern District of Texas to stay the execution of Judge Andrew
Hanen's final judgment on the transfer dispute with ASARCO LLC of
certain stock of Southern Peru Copper Company, now known as
Southern Copper Corporation, to AMC, pending the Parent's appeal
under Rule 62 of the Federal Rules of Civil Procedure.
AMC seeks a stay of the Final Judgment from June 5, 2009, through
the conclusion of its appeal. The Court previously granted a stay
of the Final Judgment through June 5.
AMC urges the Court to allow it to obtain a stay pending appeal
without the need for a full supersedeas bond covering the monetary
portion of the judgment because the value of the SCC Shares far
exceeds any possible shortfall in the ASARCO LLC bankruptcy
proceedings based on ASARCO's own disclosure statement. Because a
return of the SCC Shares would result in payment of creditors in
full and because any excess recovery should be returned to AMC as
ASARCO's 100% equity holder, AMC should not be required to incur
the substantial costs of securing a portion of the judgment that
should only flow back to itself, asserts Brian Antweil, Esq., at
Haynes & Boone, LLP, in Houston, Texas.
AMC's request for a stay of the portion of the judgment ordering
the return of the SCC Shares must be evaluated under the four-
pronged test governing relief under Civil Rule 62(c), Mr. Antweil
contends. He says that AMC can show that:
(1) AMC has presented a "substantial case on the merits"
relating to "serious legal questions," as the Court
acknowledged in its liability opinion;
(2) AMC would suffer irreparable harm if the stay were not
granted, because the SCC Shares would be transferred to
ASARCO LLC's bankruptcy estate and ASARCO would be free to
sell, transfer, or encumber or the shares;
(3) Granting the stay would not substantially harm ASARCO and
its creditors because during the pendency of the appeal,
AMC agree not to sell, transfer, or encumber the shares
and to extend the voting restrictions contained in
the agreed order implementing the temporary stay of
execution; and
(4) Granting the stay would serve and not harm the public
interest, because the public interest favors having legal
matters decided on the merits, particularly in the present
case where there exists numerous issues of first
impression or upon which courts had not clearly spoken.
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on August 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for Chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for Chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
Chapter 11 case. On October 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-
20774 to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and ASARCO LLC has obtained Court
approval of a settlement and release contained in the new PSA for
the sale of the ASARCO assets for $1.1 billion in cash and a
$600 million note.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted its own plan which allows it to keep its equity
interest in ASARCO LLC by offering full payment to ASARCO's
creditors. AMC offered provide up to $2.7 billion in cash and a
$440 million guarantee to assure payment of all allowed creditor
claims, including payment of liabilities relating to asbestos and
environmental claims. AMC's plan is premised on the estimation of
the approximate allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Asbestos Panel, AMC File Appeal on Sterlite Sale
------------------------------------------------------------
The Official Committee of Asbestos Claimants in the bankruptcy
cases of ASARCO LLC notified the U.S. Bankruptcy Court for the
Southern District of Texas that it would take an appeal to the
U.S. District Court for the Southern District of Texas of Judge
Richard Schmidt's order entered on April 22, 2009, approving the
proposed form of the Renewed Purchase and Sale Agreement between
ASARCO LLC and certain of its subsidiaries, and Sterlite (USA),
Inc., including the agreement provisions on a conditional release
of Sterlite and bid protections for Sterlite.
Americas Mining Corporation and Asarco Incorporated have made
known their intention to appeal the Sterlite Settlement Order.
The Parent wants the District Court to review whether the
Bankruptcy Court erred, as a matter of law:
(1) in granting ASARCO LLC's request to approve the proposed
form of the New Sterlite PSA, including provisions on a
conditional release of Sterlite and bid protections for
Sterlite;
(2) in approving the New Sterlite PSA and its terms to the
extent the PSA constitute a violation of (i) ASARCO LLC's
fiduciary duties and (ii) the Parent's rights under the
Bankruptcy Code to retain the value of its 100% equity
ownership of ASARCO LLC and insist that claims be paid
only to the extent they are legally owed;
(3) in entering the Sterlite Settlement Order, which
prematurely and impermissibly locks the estate into a sub
rosa plan of reorganization;
(4) in approving the settlement and compromise under the New
Sterlite PSA under Rule 9019 of the Federal Rules of
Bankruptcy Procedure or Section 363(b)(1) of the
Bankruptcy Code;
(5) in approving the New Sterlite PSA's Break-Up Fee and
Expense Reimbursement and in allowing the Break-Up Fee or
Expense Reimbursement to be deemed an administrative
expense pursuant to Section 503(b);
(7) in approving the Revised Bid Protections, No-Shop Covenant
and the Back-Up Bid Option;
(8) in concluding that the settlement and compromise contained
in the New Sterlite PSA is the result of good-faith,
arm's-length bargaining, and represents a reasonable, fair
and equitable resolution of the controversy between ASARCO
LLC and Sterlite relating to the Original Sterlite PSA;
(9) in finding that ASARCO LLC and its board of directors:
-- met its fiduciary obligations,
-- acted on an informed basis and in good faith,
-- demonstrated compelling and sound business
justifications, and
-- acted in the best interests of the Debtors and their
creditors,
in negotiating and approving the New Sterlite PSA;
(10) in denying the Parent's request to exclude testimony and
strike proffer of Jay L. Westbrook as expert at the
Sterlite Settlement hearing;
(11) in excluding the Parent's "Exhibit 37" from admission
into evidence at the hearing;
(12) in imposing limitations on the Parent's direct
examination of Carlos Ruiz, chairman of the ASARCO LLC
Board at the hearing; and
(13) in denying the Parent the opportunity to re-cross examine
Joseph Lapinsky, president and ASARCO LLC's chief
executive officer.
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on August 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for Chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for Chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
Chapter 11 case. On October 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-
20774 to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and ASARCO LLC has obtained Court
approval of a settlement and release contained in the new PSA for
the sale of the ASARCO assets for $1.1 billion in cash and a
$600 million note.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted its own plan which allows it to keep its equity
interest in ASARCO LLC by offering full payment to ASARCO's
creditors. AMC offered provide up to $2.7 billion in cash and a
$440 million guarantee to assure payment of all allowed creditor
claims, including payment of liabilities relating to asbestos and
environmental claims. AMC's plan is premised on the estimation of
the approximate allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Parent Offers $1.55-Bil for Operating Assets
--------------------------------------------------------
Asarco Incorporated and Americas Mining Corporation delivered to
the U.S. Bankruptcy Court for the Southern District of Texas a
Third Amended Plan of Reorganization and Disclosure Statement for
ASARCO LLC, Southern Peru Holdings, LLC, AR Sacaton, LLC, and
ASARCO Master, Inc. on May 15, 2009. ASARCO Inc. and AMC, an
affiliate of Grupo Mexico SAB de C.V., is the parent company of
the ASARCO LLC Debtors.
The Parent filed the Third Amended Plan "to retain its equity
interest in its wholly-owned indirect subsidiary, ASARCO LLC," the
company related in a public statement. The Parent noted that it
has been seeking to reclaim full equity ownership of ASARCO LLC
since the Debtor filed for Chapter 11 protection in August 2005.
Under the terms of the Third Amended Plan, the Parent is offering
a total consideration of more than $1.6 billion, including
$1.3 billion in cash and a $250 million fully-committed loan to
ASARCO LLC. In contrast, the Parent points out, the competing
plan under consideration by the Court offered by Vedanta Resources
plc's subsidiary, Sterlite (USA), Inc., offers only $1.1 billion
in cash and a non-interest bearing so-called "copper note," which
Vedanta values at $200 million, backstopped only by a $100 million
letter of credit.
In addition to the superior economic value, the Parent points out
that the Third Amended Plan has the full support of ASARCO LLC's
asbestos creditors, one of the most important creditor groups
involved in ASARCO LLC's bankruptcy. The Parent asserts that
Vedanta's Plan is conditioned on it obtaining the support of the
asbestos creditors, which limits its ability to be confirmed by
the Court.
"AMC's plan is superior to Vedanta's proposal in every way," said
Alberto de la Parra, Esq., Grupo Mexico's general counsel. "It
offers exceptional value and enjoys the full support of the
asbestos creditors, which is essential to receiving ultimate
approval by the Courts. We look forward to the Court's decision
in this process and to regaining control of our subsidiary," Mr.
de la Parra said in a press release.
The Parent's Third Amended Plan contemplates confirmation of the
plan no later than July 31, 2009, and the plan being declared
effective no later than August 31, except as may be otherwise
agreed by the Parent and asbestos representatives.
The Third Amended Plan is premised on the Parent contributing new
value to the ASARCO Debtors' bankruptcy estates in the form of a
$1.3 billion Parent contribution, in exchange for new equity
interests in Reorganized ASARCO. Pursuant to the Parent's
agreement in principle with the Official Committee of Asbestos
Claimants and the Future Claims Representative, the Parent will
establish an escrow account with the Bank of New York into which
it will deposit the Parent Contribution in cash or cash
equivalent, which may include unencumbered shares of Southern
Copper Corporation, no later than May 26, 2009. The escrow
agreement will be in form and substance satisfactory to the
asbestos representatives.
As additional consideration for the New Equity Interests, if the
Third Amended Plan is confirmed, the Parent:
(a) together with the Parent's affiliates, will waive all
Administrative and General Unsecured Claims against the
Debtors and the Parent will cause the Tax Refund to be
transferred to Reorganized ASARCO;
(b) will provide for distributions to holders of Asbestos
Personal Injury Claims and Demands, in addition to other
consideration set forth in the Third Amended Plan, in the
form of a $250 million ASARCO Note supported by a pledge
of 51% of the New Equity Interests;
(c) will cause Reorganized ASARCO to retain the Debtors'
liabilities with respect to reinstated Claims, if any; and
(d) will cause Reorganized ASARCO to assume the Debtors'
environmental liabilities with respect to certain "Owned
Strategic Properties" and other real property.
Moreover, the distributable cash will be made available for
distribution under the Third Amended Plan, and a possible claim
against Sterlite of up to $3 billion will be available to fund the
working capital needs of Reorganized ASARCO.
If approved, the Third Amended Plan provides that it will
implement a reorganization that will address the Debtors'
liabilities, including environmental and asbestos-related
liabilities, in a comprehensive and complete manner. The Parent
asserts that it has sought to formulate a plan of reorganization
that is fair and equitable to all parties-in-interest, while
allowing the Debtors to restructure and channel all unsecured
asbestos-related claims to a trust. The Parent believes that its
objectives have been met and that the Third Amended Plan provides
for the maximum recoveries to, and expeditious and equitable
treatment of, all holders of Claims.
The Plan Administrator to appointed by the Parent and approved by
the Court will hold the Parent Contribution, the Distributable
Cash, and all non-cash assets available for distribution under
the Third Amended Plan, and will be responsible for making all
distributions under the Parent's Plan and prosecuting objections
to Claims.
Various trusts will be established under the Parent's Third
Amended Plan to liquidate certain of the Debtors' assets, assume
certain of the Debtors' liabilities, and assume responsibility
for distributions to certain Classes of Claims, including a trust
under Section 524(g) of the Bankruptcy Code, an Environmental
Liquidation Trust and Environmental Custodial Trusts.
The Third Amended Plan and Disclosure Statement are also updated
with the recent activities and rulings in the Debtors' bankruptcy
cases, including:
-- the final judgment in the adversary complaint commenced by
ASARCO LLC against AMC on a transfer dispute of certain
stocks of Southern Peru Copper Company, now known as
Southern Copper Corporation, to AMC;
-- the Parent's arguments regarding Sterlite's refusal to
close the original sale agreement for the ASARCO LLC
operating assets. The Parent insists that claims against
Sterlite could be as high as $3 billion; and
-- the Parent's objection to the Debtors' request to settle
certain environmental claims, which the Parent calls as
"grossly inflated settlements."
Designation & Treatment of Claims
The Third Amended Plan provides for the designation and treatment
of claims asserted against the Debtors:
Class Description Estimated Recovery
----- ----------- ------------------
N/A Administrative Claims 100%
N/A Priority Tax Claims 100%
N/A Demands 75%
1 Priority Claims 100%
2 Secured Claims 100% or Reinstated
3 Bondholders' Claims 75%
4 Asbestos Personal Injury Claims 75%
5 General Unsecured Claims 75%
6 Environmental Unsecured Claims 75%
7 Environmental Trust Fund Claims Reinstated or
Transferred to
Custodial Trusts
8 Environmental Reinstated Claims Reinstated
9 Late-Filed Claims 0%
10 Subordinated Claims 0%
11 Interests in ASARCO 0%
On the Effective Date, holders of Allowed Administrative,
Priority Tax, and Priority Claims will be paid in full. Holders
of Allowed Secured Claims, at the election of the Parent, will
receive Cash equal to the value of the collateral securing the
Secured Claims, will have their claims reinstated, or will
receive the collateral securing the Secured Claims.
The Asbestos Personal Injury Claims will be channeled to, assumed
and satisfied by a Section 524(g) Trust funded with $500 million
in Cash, the $250 million ASARCO Note, the Asbestos Insurance
Recoveries, and $27.5 million in administrative funding.
Environmental Trust Claims will be reinstated and assumed by the
Environmental Liquidation Trust or, at the unanimous election of
the federal and state agencies holding Environmental Trust Claims
with respect to an applicable Designated Property, the Designated
Property will be transferred to, and all environmental
liabilities associated with the Designated Property will be
assumed by, the applicable Environmental Custodial Trust in
accordance with the applicable Environmental Custodial Trust
Agreement.
Environmental Reinstated Claims will be reinstated and satisfied
by Reorganized ASARCO in the ordinary course. Late Filed and
Subordinated Claims will not receive any distributions under the
Third Amended Plan. Interests in ASARCO LLC will be canceled and
in exchange for the Parent Contribution, ASARCO Inc. or its
designee will receive the New Equity Interests.
Following the implementation of the Third Amended Plan, the
Reorganized ASARCO will remain liable for Reinstated
Environmental Claims, any Reinstated Claims, and its obligations
under the $250 million ASARCO Note. The Parent avers that its
Plan's definition of "Reinstatement" mirrors Section 1124(2) of
the Bankruptcy Code, which provides requirements for reinstating
classes of claims and interests without impairing them. The
Parent assures the Court and parties-in-interest that it is
confident there will be sufficient cash to address all Reinstated
obligations in the ordinary course of business.
Injunctions and Releases
The Third Amended Plan also provides for the entry of various
releases and permanent injunctions, which will limit the rights
of holders of Asbestos Personal Injury Claims, in favor of the
ASARCO Protected Parties that include:
-- the Debtors and their predecessors;
-- Reorganized ASARCO;
-- the ASARCO Protected Non-Debtor Affiliates and their
predecessors;
-- the Parent and its affiliates and predecessors;
-- Grupo Mexico and its affiliates and predecessors;
-- the Trusts and its Trustees;
-- the Section 524(g) Trust Advisory Committee;
-- the FCR;
-- the Asbestos Claimants Committee, including its members;
-- the Parent's Plan Administrator;
-- the Examiner;
-- ASARCO LLC's Official Committee of Unsecured Creditors;
-- ASARCO LLC's unsecured creditors; and
-- the present and former directors, officers, agents,
attorneys, accountants, consultants, financial
advisors, investment bankers, professionals, experts, and
employees.
The ASARCO Protected Parties will not be responsible for any
obligations of the Debtors except those expressly assumed in the
Parent's Third Amended Plan, provided that if the Parent and
Grupo Mexico do not receive all protections provided for in the
Parent's Plan, then the protections in the Plan's injunction and
releases article with respect to ASARCO Protected Parties other
than Reorganized ASARCO will not go into effect.
Full-text copies of the Parent's Third Amended Plan and
Disclosure Statement are available for free at:
http://bankrupt.com/misc/AsarcoInc_3rd_Amended_Plan.pdf
http://bankrupt.com/misc/AsarcoInc_3rd_Amended_DS.pdf
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on August 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for Chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for Chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
Chapter 11 case. On October 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-
20774 to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and ASARCO LLC has obtained Court
approval of a settlement and release contained in the new PSA for
the sale of the ASARCO assets for $1.1 billion in cash and a
$600 million note.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted its own plan which allows it to keep its equity
interest in ASARCO LLC by offering full payment to ASARCO's
creditors. AMC offered provide up to $2.7 billion in cash and a
$440 million guarantee to assure payment of all allowed creditor
claims, including payment of liabilities relating to asbestos and
environmental claims. AMC's plan is premised on the estimation of
the approximate allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Seeks to Abandon Silver Inventory at Two Sites
----------------------------------------------------------
Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas,
tells Judge Richard Schmidt of the U.S. Bankruptcy Court for the
Southern District of Texas relates that Mitsui & Co. (U.S.A.)
asserted that it has a valid secured claim against ASARCO LLC for
approximately $26 million. The claim is alleged to be secured by
all silver inventory as of the Petition Date and the related
proceeds, including about $21 million in the Mitsui Cash
Collateral Account and alleged unsold silver inventory embedded in
process equipment or the "Work-In-Process Silver" located at the
El Paso smelter, Texas and the East Helena, Montana facility.
While ASARCO's historic inventory records from the time operations
at the El Paso and East Helena smelters were suspended suggest the
possibility of work-in-process silver inventory embedded in
process equipment at both sites -- about 96,000 ounces at East
Helena and 190,000 ounces at El Paso -- ASARCO has done no
physical testing to confirm whether any Work-In-Process Silver in
fact exists, according to Mr. Kinzie. Nevertheless, even if any
Work-In-Process Silver exists, ASARCO believes that the cost of
removing that Work-In-Process Silver exceeds its potential value.
In addition, there is a dispute between Mitsui and the Debtors as
to whether Mitsui has valid liens securing its claim and whether
Mitsui's lien is avoidable under Chapter 5 of the Bankruptcy Code,
Mr. Kinzie adds. Those claims, he points out, are currently the
subject of a tolling agreement between Mitsui and the Debtors.
However, the Debtors agree that the cash in the Mitsui Cash
Collateral Account will not be removed from the account without a
Court order.
Mr. Kinzie continues that on March 12, 2009, the Debtors filed a
Rule 9019 Environmental Claims Settlement Motion, which seeks
approval of a global settlement between the Debtors and
governmental environmental claimants. Under the settlement, the
El Paso and East Helena sites would be transferred and assigned to
certain environmental custodial trusts upon confirmation of a
Chapter 11 Plan. Mitsui objected to the 9019 Motion, asserting
that Court approval of the Settlement will result in the transfer
of the El Paso and East Helena sites to the environmental
custodial trusts, "free and clear of all claims, liens and
encumbrances -- including a lien in favor of Mitsui on silver
located at the El Paso and East Helena facilities."
To address Mitsui's objection and without admitting the validity
of Mitsui's lien, ASARCO asks the Court to authorize Mitsui to
foreclose on, and to obtain possession of, the Work-In-Process
Silver located at the El Paso smelter and East Helena facility,
subject to certain restrictions.
Specifically, pursuant to Section 554 of the Bankruptcy Code,
ASARCO asks Judge Schmidt to:
(a) permit it to abandon the Work-In-Process Silver embedded
in process equipment located at the El Paso and East
Helena facilities, subject to certain limitations;
(b) in order to obtain possession of the Work-In-Process
Silver, compel Mitsui to comply with these restrictions
and procedural requirements:
-- Mitsui shall physically remove the Work-In-Process
Silver prior to 30 days before the effective date of
the Plan;
-- Mitsui will remove the Work-In-Process Silver pursuant
to a work plan pre-approved by the lead environmental
agencies at the El Paso and East Helena sites;
-- the removal will not increase the cost to the custodial
trustee of performing the work contemplated by the
custodial trust for each site;
-- Mitsui will foreclose on the Work-In-Process Silver
pursuant to applicable law and its security agreements,
if any; and
-- upon removal, Mitsui will promptly provide an
accounting to ASARCO of the value of the Work-In-
Process Silver and the cost of foreclosure;
(c) value the extracted Work-In-Process Silver, pursuant to
Section 506 of the Bankruptcy Code, for purposes of
determining (i) Mitsui's alleged oversecured status and
(ii) the allowed amount of Mitsui's claim for distribution
under the Plan; and
(d) rule that Mitsui's security interests in all property
located at the El Paso and East Helena sites are forever
released and extinguished.
The Debtors clarify that they reserve all rights to object to the
validity of Mitsui's asserted liens and to dispute Mitsui's status
as a secured creditor.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on August 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for Chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for Chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
Chapter 11 case. On October 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-
20774 to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and ASARCO LLC has obtained Court
approval of a settlement and release contained in the new PSA for
the sale of the ASARCO assets for $1.1 billion in cash and a
$600 million note.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted its own plan which allows it to keep its equity
interest in ASARCO LLC by offering full payment to ASARCO's
creditors. AMC offered provide up to $2.7 billion in cash and a
$440 million guarantee to assure payment of all allowed creditor
claims, including payment of liabilities relating to asbestos and
environmental claims. AMC's plan is premised on the estimation of
the approximate allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Seeks to Rush Discovery on Asbestos Claimants
---------------------------------------------------------
ASARCO LLC asks the U.S. Bankruptcy Court for the Southern
District of Texas for expedited discovery in connection with its
first set of Interrogatories for Asbestos Claimants.
ASARCO LLC served on May 15, 2009, two short interrogatories to
all individuals, who have asserted a claim against the Debtors for
injuries allegedly related to exposure to asbestos. The purpose
of the Interrogatories is to determine the number of direct claims
against ASARCO LLC that exist, as opposed to the much more common
claim for relief against ASARCO LLC's subsidiaries, like Lac
d'Amiante due Quebec Ltee, formerly known as Lake Asbestos of
Quebec, Ltd., and CAPCO Pipe Company, Inc., formerly known as
Cement Asbestos Products Company.
The information sought by the Interrogatories is critical for the
Court to estimate ASARCO LLC's asbestos liability, relates Jack L.
Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas. As the
trial for the estimation of ASARCO LLC's derivative asbestos
liability is set for June 22, 2009, ASARCO LLC asks the Court to
direct Asbestos Claimants to respond to the Interrogatories by
June 5 so that the parties can proceed efficiently in their
preparation for the trial.
ASARCO LLC also urges the Court to set an expedited hearing on its
request for expedited discovery for May 29, 2009.
Mr. Kinzie contends that no creditors will be prejudiced by the
expedited discovery regarding the types of claims asserted against
ASARCO. "Rather, all parties should have an interest in
determining the number of direct asbestos claims versus derivative
asbestos claims as expeditiously as possible because it affects
the substance of the impending estimation trial," he points out.
Asbestos Committee Objects
On behalf of the Official Committee of Asbestos Claimants, Sander
L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, in
Dallas, Texas, relates that procedures for obtaining hearings in
complex Chapter 11 cases adopted by the Court provide that a
request for an expedited hearing "must comply with the usual court
requirements for explanation and verification of the need for
expedited or emergency hearing." In this light, he contends that
the Debtors' request does not provide an adequate explanation for
the need for an expedited hearing and is not verified. He argues
that the request for expedited discovery merely states in
conclusory fashion that the information sought by the
Interrogatories "is critical for the Court to estimate ASARCO's
asbestos liability," in connection with the estimation of ASARCO's
derivative asbestos liability currently set for June 22, 2009.
Notably, the request for expedited discovery does not provide any
explanation whatsoever regarding why ASARCO "waited until this
late date to decide it needed this purportedly 'critical'
information when the hearing to estimate ASARCO's derivative
asbestos liability has been set for over a month, and the
estimation proceeding itself has been pending for years," Mr.
Esserman points out.
Mr. Esserman insists that asbestos claimants from whom ASARCO
seeks last minute discovery and their counsel are entitled to
reasonable notice and opportunity to be heard on a request to
require them to respond to discovery on an expedited basis. He
adds that similarly, the Asbestos Committee is entitled to
reasonable notice and an opportunity to be heard on whether cause
exists for an expedited hearing or for expedited discovery.
"In this instance, any purported emergency is entirely of ASARCO
LLC's own making and is completely inexcusable," Mr. Esserman
says. "The due process rights of the asbestos claimants, their
counsel and the Asbestos Committee should not be disregarded to
allow ASARCO LLC to take advantage of a contrived emergency in
order to ramrod discovery on nonparties," he adds.
Hence, the Asbestos Committee asks Judge Richard Schmidt to deny
the request to shorten the notice period for ASARCO's Expedited
Discovery Motion.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on August 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for Chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for Chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
Chapter 11 case. On October 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-
20774 to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and ASARCO LLC has obtained Court
approval of a settlement and release contained in the new PSA for
the sale of the ASARCO assets for $1.1 billion in cash and a
$600 million note.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted its own plan which allows it to keep its equity
interest in ASARCO LLC by offering full payment to ASARCO's
creditors. AMC offered provide up to $2.7 billion in cash and a
$440 million guarantee to assure payment of all allowed creditor
claims, including payment of liabilities relating to asbestos and
environmental claims. AMC's plan is premised on the estimation of
the approximate allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: To Sell Perth Amboy Property to RLF/TRC for $2 Mil.
---------------------------------------------------------------
ASARCO LLC filed a renewed motion with the U.S. Bankruptcy Court
for the Southern District of Texas on May 15, 2009, seeking
permission to sell a 70-acre New Jersey real property to RLF Perth
Amboy Properties, LLC, and TRC Companies, Inc., for $2 million,
subject to better and higher bids. The Property for sale is
situated in the City of Perth Amboy, County of Middlesex, State of
New Jersey.
ASARCO tells Judge Richard Schmidt that it entered into an
agreement with RLF/TRC in October 2008, and obtained approval of
bidding procedures regarding that sale by a November 4, 2008
order. Under the 2008 Agreement, RLF/TRC was committed to pay
ASARCO the greater of $10 million or a Remediation Reimbursement,
with a $5 million non-recourse financing. RLF/TRC, however,
terminated that Agreement in December 20, 2008, during the
feasibility period. The parties thereafter continued negotiations
regarding the Property and were ultimately able to enter into a
renewed Agreement.
Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas,
relates that although there have been other inquiries concerning
the acquisition of the Property, the redevelopment status has
limited ASARCO's ability to sell the Property. Subsequently,
ASARCO entered into a renewed sale agreement with RLF/TRC. ASARCO
says it intends to serve the Renewed Sale Motion on each of the
entities that had previously expressed a bona fide interest in the
Property, including PA-PDC.
The salient terms of the Renewed Sale Agreement for the Perth
Amboy Property are:
(a) RLF will pay ASARCO $2 million to acquire the Property.
(b) TRC will assume of certain of ASARCO's liabilities and
obligations.
(c) RLF/TRC will release, defend and indemnity ASARCO for the
Assumed Liabilities and Obligations, in consideration for
a Remediation Reimbursement equal to $12.85 million. At
closing, ASARCO will pay the Remediation Reimbursement to
TRC.
RLF has delivered a earnest money deposit in the amount of
$500,000 to General Land Abstract Co., Inc. for the benefit of
ASARCO, Mr. Kinzie tells the Court.
If the Court approves ASARCO's entry into the Renewed Sale
Agreement, TRC's assumption of certain of ASARCO's liabilities and
obligations would be effectuated from the agreement effective date
through 60 days following entry of a Court approval of the
proposed sale by RLF/TRC's negotiation of:
(1) An Administrative Consent Order with the State of New
Jersey Department of Environmental Protection or NJDEP for
the performance of remedial investigations and remedial
actions as required by the NJDEP for the Assumed
Liabilities and Obligations;
(2) A remediaition funding source in an amount satisfactory to
NJDEP to secure RLF/TRC's obligations pursuant to an
Administrative Consent Order; and
(3) An environmental insurance policy as described in the
Renewed Agreement.
ASARCO would negotiate, during the Environmental Approval Period,
a settlement agreement with the NJDEP to provide a full covenant
not to sue and release with regard to the Assumed Liabilities and
Obligations.
A full-text copy of the 2009 Sale Agreement for the Perth Amboy
Property is available for free at:
http://bankrupt.com/misc/ASARCO_2009perthamboyPSA.pdf
Mr. Kinzie emphasizes that if approved, the sale will bring in
substantial value for assets that are not necessary to the
Debtors' reorganization.
ASARCO also seeks to assume certain permits and contracts to the
successful bidder. To the extent any defaults exist, they will be
cured upon assumption and assignment.
RLF and TRC have represented that they are financially capable of
consummating the sale and satisfying all future obligations under
the permits and contracts to be assumed and assigned, Mr. Kinzie
adds.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection on August 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When ASARCO LLC filed for protection from its creditors, it listed
US$600 million in total assets and US$1 billion in total debts.
ASARCO LLC has five affiliates that filed for Chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for Chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
Chapter 11 case. On October 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-
20774 to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
ASARCO LLC filed a plan of reorganization on July 31, 2008,
premised on the sale of the Debtors' assets to Sterlite USA for
$2.6 billion. By October 2008, ASARCO LLC informed the Court that
Sterlite refused to close the proposed sale and thus, the Original
Plan could not be confirmed. The parties has since renewed their
purchase and sale agreement and ASARCO LLC has obtained Court
approval of a settlement and release contained in the new PSA for
the sale of the ASARCO assets for $1.1 billion in cash and a
$600 million note.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted its own plan which allows it to keep its equity
interest in ASARCO LLC by offering full payment to ASARCO's
creditors. AMC offered provide up to $2.7 billion in cash and a
$440 million guarantee to assure payment of all allowed creditor
claims, including payment of liabilities relating to asbestos and
environmental claims. AMC's plan is premised on the estimation of
the approximate allowed amount of the claims against ASARCO.
Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by ASARCO LLC and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
ATA AIRLINES: Court Allows $5,079,731 Claim to Castle 2003-1BLLC
----------------------------------------------------------------
Judge Basil Lorch III of the U.S. Bankruptcy Court for the
Southern District of Indiana modified and reclassified Claim No.
4194 filed by Castle 2003-1BLLC against ATA Airlines, Inc., as a
general unsecured non-priority claim for $5,079,731. Castle 2003-
1BLLC filed Claim No. 4194 for $5,729,731 and asserted a right of
set-off based on a $650,000 security deposit it is holding. The
Court also authorized the company to apply the deposit against its
claim.
Meanwhile, Castle 2003-2ALLC, which filed Claim No. 4196 for
$4,594,790 and asserted a set-off right based on a $650,000
security deposit it is holding, was authorized to apply those
funds against its claim. Claim No. 4196 has also been modified
and reclassified as a general unsecured non-priority claim for
$3,944,790.
All other claims asserted by Castle 2003-1BLLC and Castle 2003-
2ALLC against ATA Airlines, including any amount listed in the
airline's schedules of assets and liabilities, and any proofs of
claim are disallowed in their entirety. They are not also
entitled to any distributions from ATA Airlines' estate on account
of those claims.
Meanwhile, ATA Airlines' objection to Claim No. 3935 of Triumph
Air Repair, which asserts a secured claim for $500,235 on account
of repairs performed on two auxiliary power units, has been
resolved by granting the claimant relief from the automatic stay
with respect to the equipment. Triumph Air was also permitted, at
its election, to foreclose its statutory lien on the equipment; to
receive the proceeds of the equipment and apply them to its claim;
or to retain the equipment.
The Court will convene a hearing on June 3, 2009, to consider ATA
Airlines' objections to Claim No. 2524 filed by American Aerospace
Inc., and Claim No. 4051 filed by USA Latin Air. American
Aerospace has asked the Court to overrule ATA Airlines' objection,
and grant it an allowed general unsecured claim for $42,460, on
account of the software and equipment that the airline leased from
the company. American Aerospace also has asked the Court to grant
it a secured claim equal to the value of the software and
equipment being leased.
The Court also issued an order disallowing and expunging in their
entirety the claims of these creditors:
Creditors Claim No. Claim Amount
--------- --------- ------------
Airport Pristina Vrelle
Lipjan-Kosova 4469 $172
American Home Assurance
Company, et al. 4029 $0
Quinn, Lawrence 3992 $350
Ragasa, Alice 411 $445
Texeira, Florence 410 $467
Trevino, Jose 2811 $10,000
The Court reclassified these claims as general unsecured non-
priority claims:
Claim Claim
Creditors Number Amount Treatment
--------- ------ ------ ---------
AAR Services Inc. 2222 $15,617 Entire claim
reclassified as
general unsecured
nonp-riority claim
for $15,617
AT Systems 1612 $865 Entire claim
reclassified as
general unsecured
non-priority claim
for $865
Evergreen Maintenance 3706 $46,583 Entire claim
Center Inc. reclassified as
general unsecured
non-priority claim
for $46,583
Fokker AirInc 3833 $15,619 Entire claim
reclassified as
general unsecured
non-priority claim
for $12,152
GMAC 1641 $1,454 Entire claim
reclassified as
general unsecured
non-priority claim
for $1,454
Lifeline Data Centers LLC 1786 $139,600 Entire claim
reclassified as
general unsecured
non-priority claim
for $139,600
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
October 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on January 31, 2006. The Debtors
emerged from bankruptcy on February 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition listed assets and liabilities each in the
range of $100 million to $500 million.
The Debtor was represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., served as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acted as the panel's
financial advisors.
The Court confirmed ATA Airlines' First Amended Chapter 11 Plan on
March 26, 2009. Under the Amended Plan, unsecured creditors would
be paid about 1.3 percent of their claims totaling about
$420 million while secured creditors whose claims total
$365 million, would receive about 13.9 percent. Secured creditors
also agreed to share proceeds from potential lawsuits against
suppliers that could yield as much as $12.2 million in damages.
The First Amended Plan became effective March 31, 2009.
The Plan also embodies the terms of the global settlement ATA
reached with the Creditors Committee, Global Aero Logistics,
Jefferies Finance, JPMorgan Chase Bank and its terminated
employees. Part of the settlement is the dismissal of the
lawsuits filed by the labor unions and the terminated employees
against the airline.
The Plan also provides for the sale of ATA Airlines' $7.5 million
worth of assets to Southwest Airlines Co., including its 14
takeoff and landing slots at LaGuardia Airport in New York.
Bankruptcy Creditors' Service, Inc., publishes ATA Airlines
Bankruptcy News. The newsletter tracks the Chapter 11 case of
ATA Airlines, Inc. (http://bankrupt.com/newsstand/or
215/945-7000)
ATA AIRLINES: Haynes and Boone Bills $7.6MM for Legal Work
----------------------------------------------------------
Eight professionals retained in the Chapter 11 case of ATA
Airlines Inc., seek before the U.S. Bankruptcy Court for the
Southern District of Indiana final allowance of compensation for
their fees, and reimbursement of expenses for services rendered:
Period Fees Expenses
------ ---- --------
Baker & Daniels LLP 04/02/08 to $162,554 $6,333
04/10/09
FTI Consulting Inc. 04/22/08 to $174,090 $132
03/31/09
Haynes and Boone, LLP 04/02/08 to $7,425,771 $200,592
04/10/09
Hoover Hull LLP 12/01/08 to $33,775 $293
04/10/09
Huron Consulting 01/28/09 to $136,369 -
Services LLC 04/10/09
Hostetler & Kowalik PC 12/01/08 to $18,078 $493
03/31/09
Mesirow Financial 10/07/08 to $1,258,969 $7,736
Consulting LLC 04/10/09
Otterbourg Steindler 04/21/08 to $826,134 $12,128
Houston & Rosen PC 04/10/09
Court Approves Mesirow's First Interim Fee Application
The Court approved Mesirow Financial's interim application for
payment of $514,943 in fees and reimbursement of $2,173 in
expenses, for the services it provided to ATA Airlines Inc. for
the period October 7, 2008, through January 31, 2009.
The Court authorized ATA Airlines to pay $102,634 to Mesirow,
which represents the balance of the holdback amount for
professional fees incurred during the period.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
October 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on January 31, 2006. The Debtors
emerged from bankruptcy on February 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition listed assets and liabilities each in the
range of $100 million to $500 million.
The Debtor was represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., served as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acted as the panel's
financial advisors.
The Court confirmed ATA Airlines' First Amended Chapter 11 Plan on
March 26, 2009. Under the Amended Plan, unsecured creditors would
be paid about 1.3 percent of their claims totaling about
$420 million while secured creditors whose claims total $365
million, would receive about 13.9 percent. Secured creditors also
agreed to share proceeds from potential lawsuits against suppliers
that could yield as much as $12.2 million in damages. The First
Amended Plan became effective March 31, 2009.
The Plan also embodies the terms of the global settlement ATA
reached with the Creditors Committee, Global Aero Logistics,
Jefferies Finance, JPMorgan Chase Bank and its terminated
employees. Part of the settlement is the dismissal of the
lawsuits filed by the labor unions and the terminated employees
against the airline.
The Plan also provides for the sale of ATA Airlines' $7.5 million
worth of assets to Southwest Airlines Co., including its 14
takeoff and landing slots at LaGuardia Airport in New York.
Bankruptcy Creditors' Service, Inc., publishes ATA Airlines
Bankruptcy News. The newsletter tracks the Chapter 11 case of
ATA Airlines, Inc. (http://bankrupt.com/newsstand/or
215/945-7000)
ATA AIRLINES: Plan Confirmation Cues Court to Dismiss WARN Suits
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
dismissed various lawsuits commenced against ATA Airlines, Inc.,
and Global Aero Logistics Inc. in view of the confirmation of ATA
Airlines' first amended Chapter 11 plan:
1. The Court dismissed a lawsuit filed by Kevin Batman, a
former employee of ATA Airlines. He brought the lawsuit on
behalf of himself and more than 1,000 other employees who
had been terminated by the airline without 60 days' advance
notice of termination in violation of the Worker Adjustment
and Retraining Notification Act.
The Court also approved the application of Nichols Kaster
LLP, for (i) payment of $193,900 in attorney's fees from the
first settlement distribution and 25% of each subsequent
distribution, and (ii) reimbursement of $56,976 in expenses.
Nichols Kaster served as counsel for Mr. Batman and other
former employees of ATA Airlines who are not members of the
labor unions. The Court held that the fees and expenses
should be paid from the distribution made for Mr. Batman and
the employees he represents pursuant to ATA Airlines' First
Amended Chapter 11 Plan.
2. The Court dismissed the lawsuit filed by the Association of
Flight Attendants-CWA. AFA-CWA brought the lawsuit against
the companies for terminating their employees, including 840
flight attendants, without 60 days' advance notice as
required by the Worker Adjustment and Retraining
Notification Act.
3. The Court also dismissed the lawsuit filed by the Air Line
Pilots Association, a labor union serving as the collective
bargaining representative of ATA Airlines' pilots. The
union filed the case after the airline allegedly violated
the Worker Adjustment and Retraining Notification Act by
terminating its employees without 60 days' advance notice.
4. The Court dismissed the lawsuit brought by the International
Association of Machinists and AeroSpace Workers, AFL-CIO,
and District Lodge 142. IAM filed the lawsuit on behalf of
46 employees who were among those terminated by ATA Airlines
without 60 days' advance notice of termination as required
by the Worker Adjustment and Retraining Notification Act.
5. The Court dismissed the lawsuit brought by Transport Workers
Union of America, a labor union serving as the collective
bargaining representative of flight dispatchers working at
ATA Airlines' Indianapolis headquarters. The union filed
the case after the airline laid off its employees without 60
days' advance notice in violation of the Worker Adjustment
and Retraining Notification Act.
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
October 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on January 31, 2006. The Debtors
emerged from bankruptcy on February 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition listed assets and liabilities each in the
range of $100 million to $500 million.
The Debtor was represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., served as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acted as the panel's
financial advisors.
The Court confirmed ATA Airlines' First Amended Chapter 11 Plan on
March 26, 2009. Under the Amended Plan, unsecured creditors would
be paid about 1.3 percent of their claims totaling about
$420 million while secured creditors whose claims total
$365 million, would receive about 13.9 percent. Secured creditors
also agreed to share proceeds from potential lawsuits against
suppliers that could yield as much as $12.2 million in damages.
The First Amended Plan became effective March 31, 2009.
The Plan also embodies the terms of the global settlement ATA
reached with the Creditors Committee, Global Aero Logistics,
Jefferies Finance, JPMorgan Chase Bank and its terminated
employees. Part of the settlement is the dismissal of the
lawsuits filed by the labor unions and the terminated employees
against the airline.
The Plan also provides for the sale of ATA Airlines' $7.5 million
worth of assets to Southwest Airlines Co., including its 14
takeoff and landing slots at LaGuardia Airport in New York.
Bankruptcy Creditors' Service, Inc., publishes ATA Airlines
Bankruptcy News. The newsletter tracks the Chapter 11 case of
ATA Airlines, Inc. (http://bankrupt.com/newsstand/or
215/945-7000)
ATA AIRLINES: Plan Trustee to Conduct Probe on $3.8MM DFS Claim
---------------------------------------------------------------
Judge Basil Lorch III of the U.S. Bankruptcy Court for the
Southern District of Indiana directed DFS Services LLC to produce
copies of claims assignment letters it maintains in New Albany,
Ohio, for copying by IKON Office Solutions Inc., or another copy
service provider agreeable to DFS Services and ATA Airlines.
Judge Lorch directed IKON Office or any other copy service
provider to redact information including the address of
cardholders, credit card numbers other than the last four digits,
and signatures of the cardholders.
Steven Turoff, the trustee under the confirmed First Amended
Chapter 11 Plan of ATA Airlines, asked the Court to compel DFS
Services to produce a set of documents in connection with its
claim against the airline.
DFS Services filed Claim No. 3851 as reimbursement for the money
it paid to ATA Airlines and later refunded to holders of the
discover card whose flights had been canceled. DFS Services seeks
payment of $3,869,945, which consists of an asserted secured claim
of $1,337,046, priority claim of $1,094,996, and general unsecured
claim of $1,437,903.
To verify the validity of DFS Services' assertion, ATA Airlines
requested the company to produce a set of documents for inspection
on February 17, 2009.
Attorney for Mr. Turoff, Terry Hall, Esq., at Baker & Daniels LLP,
in Indianapolis, Indiana, complained that DFS Services has
documents in its custody, which it did not produce and make
available for investigation on grounds that they are confidential.
"DFS has acknowledged it has responsive documents in possession
that it is withholding because it believes it is too burdensome to
determine and identify which ones are confidential or proprietary
and which ones are not," Ms. Hall said.
Ms. Hall pointed out that DFS Services has already produced some
of the documents requested but they are not helpful in resolving
the company's dispute with ATA Airlines. "The documents that are
at the core of the issues in dispute remain in DFS' possession,"
she added.
Mr. Turoff also asked the Court to direct DFS Services to provide
a privilege log for any documents withheld under an assertion of
privilege, and identify the documents withheld and the basis for
the action.
Pursuant to the Court's scheduling order dated February 19, 2009,
ATA Airlines has only until June 2, 2009 to conduct the
investigation.
DFS Services, however, told the Court that rather than addressing
the concerns of the company about protecting the confidential
information, Mr. Turoff filed an unnecessary motion.
"Rather than engage in any meaningful dialogue to address the
concerns of DFS, [ATA Airlines] insists that DFS immediately
produce all documents and individually mark all confidential and
proprietary documents," said Catherine Guastello, Esq., at Quarles
& Brady LLP, in Phoenix, Arizona. She added that ATA Airlines'
demands are impossible to meet and will delay production.
According to Ms. Guastello, DFS Services is willing to immediately
produce the documents, provided the airline keeps the documents
confidential.
"When asked repeatedly to identify the prejudice to [ATA Airlines]
by protecting DFS' documents as confidential, or otherwise
addressing confidentiality with respect to exhibits which may be
used at trial, [ATA Airlines] has offered no response," she
pointed out.
DFS Services asked the Court to deny the motion and issue an order
directing ATA Airlines to keep all information produced
confidential until the airline identifies the select documents
that it will use as exhibits at trial.
In his ruling, Judge Lorch said the cost invoiced by the copy
service provider for redaction, bates numbering, and related costs
will be apportioned and borne evenly among the Plan Trustee and
DFS Services. Both parties are responsible for their own costs as
to any other services requested from the copy service provider,
Judge Lorch held.
As for other documents that are in its custody, DFS Services was
directed to bates number and produce those documents immediately
to the Plan Trustee. The Court directed the Plan Trustee to treat
the documents as confidential subject to further agreement by DFS
Services or the Court's ruling as to specific documents not being
confidential.
Judge Lorch also directed DFS Services to provide a privilege log
to the Plan Trustee.
In the event the Plan Trustee seeks to file responsive documents
with the Court, he may file those documents under seal, Judge
Lorch said. The filing of the documents under seal, however, does
not constitute an admission by the Plan Trustee that the documents
are confidential or a waiver of his right to argue that the
documents are not confidential.
To the extent the Plan Trustee wants to dispute the
confidentiality of specific responsive documents prior to filing
them under seal, he has to confer with DFS Services to reach an
agreement as to the non-confidentiality of those documents, the
Court held. If no agreement is reached as to the non-
confidentiality of the documents within 14 days of the initial
conference, either of them may seek a court ruling as to the
confidentiality of the documents by motion that attaches the
documents at issue under seal, Judge Lorch added.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
October 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on January 31, 2006. The Debtors
emerged from bankruptcy on February 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition listed assets and liabilities each in the
range of $100 million to $500 million.
The Debtor was represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., served as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acted as the panel's
financial advisors.
The Court confirmed ATA Airlines' First Amended Chapter 11 Plan on
March 26, 2009. Under the Amended Plan, unsecured creditors would
be paid about 1.3 percent of their claims totaling about
$420 million while secured creditors whose claims total
$365 million, would receive about 13.9 percent. Secured creditors
also agreed to share proceeds from potential lawsuits against
suppliers that could yield as much as $12.2 million in damages.
The First Amended Plan became effective March 31, 2009.
The Plan also embodies the terms of the global settlement ATA
reached with the Creditors Committee, Global Aero Logistics,
Jefferies Finance, JPMorgan Chase Bank and its terminated
employees. Part of the settlement is the dismissal of the
lawsuits filed by the labor unions and the terminated employees
against the airline.
The Plan also provides for the sale of ATA Airlines' $7.5 million
worth of assets to Southwest Airlines Co., including its 14
takeoff and landing slots at LaGuardia Airport in New York.
Bankruptcy Creditors' Service, Inc., publishes ATA Airlines
Bankruptcy News. The newsletter tracks the Chapter 11 case of
ATA Airlines, Inc. (http://bankrupt.com/newsstand/or
215/945-7000)
ATA AIRLINES: San Antonio Aerospace Insists Lien on Equipment
-------------------------------------------------------------
Wells Fargo Bank Northwest N.A., Wilmington Trust Company,
International Lease Finance Corporation and World Airways Inc.,
filed requests for summary judgment with the U.S. Bankruptcy Court
for the Southern District of Indiana to seek dismissal of the
lawsuit filed by San Antonio Aerospace LP against them.
Wells Fargo et al., disputed in particular SAA's assertion that it
has a lien under Texas law on certain aircraft and reserve funds
on account of the services it provided to ATA Airlines Inc.,
pursuant to their maintenance agreement. Wells Fargo et al.,
which are the owners or owner trustees for those aircraft,
asserted that the maintenance agreement is governed by New York
law and that SAA's lien on the aircraft is void since it has
already surrendered possession of those aircraft.
On March 16, 2009, the Court entered an order granting the
requests for summary judgment and finding that New York law
governed SAA's dispute with Wells Fargo et al. The Court also
concluded that under New York's lien law, SAA did not have a valid
mechanic's lien on the aircraft.
A week after, SAA filed a motion asking the Court to alter or
amend its order on the summary judgment motions by deleting its
conclusion that SAA does not have a valid lien on the aircraft
under New York law, and to make a finding that SAA holds a valid
lien under New York law against the owner of the aircraft but not
to other security interests therein. SAA argued that the Court's
application of the New York laws to the case was outside the scope
of the proposed summary judgment.
On April 6, 2009, the Court issued an order granting SAA's motion
and deleting a portion of its conclusion that under New York law,
SAA does not have valid mechanics' lien on the aircraft "inasmuch
as the validity and priority of the liens remains to be
determined."
In response, World Airways and Wells Fargo filed motions to alter
or amend the April 6 court order. Wells Fargo et al., argued that
SAA's motion for reconsideration should have been denied because
the issue of the validity of SAA's alleged lien under New York law
was placed before the Court by the summary judgment motions and
because SAA's arguments misstated New York law and are without
merit.
In a separate statement to the Court, ILFC and WTC said that SAA
sought to reargue an issue of law properly presented to the Court
under the guise of a motion to alter or amend the prior order.
They said that if SAA believes that the Court has made an error in
law, the proper venue is to appeal that ruling.
On April 23, 2009, the Court, however, denied the motions of World
Airways and Wells Fargo. It directed SAA to file additional case
law in support of its position as to whether its continuing
possession of the collateral is required to maintain a lien under
section 184 of New York law as to the owner of the collateral.
In accordance with the April 23 order, SAA filed on May 14, 2009,
a copy of its supplemental brief on the New York lien law, asking
the Court to deny the motions for summary judgment.
Attorney for SAA, Michael Hile, Esq., at Katz & Korin PC, in
Indianapolis, Indiana, argues that the loss of possession voids a
lien only as against all security interests pursuant to section
184 of the New York lien law.
"The unambiguous language of the statute at issue does not require
possession to maintain a lien as against the owners or owner
trustees, but voids such liens upon relinquishment of possession
only as against all security interests," Mr. Hile points out.
According to Mr. Hile, the statute omits any reference to other
interests such as a lessee or ownership interest, and thus, there
is an inference that possession is not required to hold and
maintain a lien against a lessee or owner who contracted for the
services.
"The lien, therefore, is not void as to others, such as the owners
or owner trustees in this case who seek to reap the benefit of the
work performed on the aircraft while avoiding payment for such
services," Mr. Hile contends.
Meanwhile, Airbase Services Inc., ATA Airlines and WTC sought and
obtained court approval of their agreement to dismiss their claims
and counterclaims on grounds that they have already been settled.
The companies also agreed that the dismissal of the claims and
counterclaims does not affect, release or compromise the claim of
Airbase as scheduled by ATA Airlines in its bankruptcy case.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for Chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D.
Ind. Case No. 08-03675), citing the unexpected cancellation of a
key contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition listed assets and liabilities each in the
range of $100 million to $500 million.
The Debtor was represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., served as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acted as the panel's
financial advisors.
The Court confirmed ATA Airlines' First Amended Chapter 11 Plan on
March 26, 2009. Under the Amended Plan, unsecured creditors would
be paid about 1.3 percent of their claims totaling about
$420 million while secured creditors whose claims total
$365 million, would receive about 13.9 percent. Secured creditors
also agreed to share proceeds from potential lawsuits against
suppliers that could yield as much as $12.2 million in damages.
The First Amended Plan became effective March 31, 2009.
The Plan also embodies the terms of the global settlement ATA
reached with the Creditors Committee, Global Aero Logistics,
Jefferies Finance, JPMorgan Chase Bank and its terminated
employees. Part of the settlement is the dismissal of the
lawsuits filed by the labor unions and the terminated employees
against the airline.
The Plan also provides for the sale of ATA Airlines' $7.5 million
worth of assets to Southwest Airlines Co., including its 14
takeoff and landing slots at LaGuardia Airport in New York.
Bankruptcy Creditors' Service, Inc., publishes ATA Airlines
Bankruptcy News. The newsletter tracks the Chapter 11 case of
ATA Airlines, Inc. (http://bankrupt.com/newsstand/or
215/945-7000)
BACHRACH ACQUISITION: May File Schedules and Statements by June 22
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended until June 22, 2009, Bachrach Acquisition, LLC's time to
file its schedules of assets and liabilities and statement of
financial affairs.
The extension is in the best interest of the Debtor, creditors and
parties-in-interest.
Headquartered in New York City, Bachrach Acquisition, LLC --
http://www.bachrach.com/-- sells men's apparel.
The Company filed for Chapter 11 on May 6, 2009 (Bankr. S. D. N.Y.
Case No. 09-12918). Clifford A. Katz, Esq., Evan J. Salan, Esq.,
Henry G. Swergold, Esq., and Teresa Sadutto-Carley, Esq., at
Platzer, Swergold, Karlan, Levine, Goldberg & Jaslow, LLP,
represent the Debtor in its restructuring efforts. The Debtor's
assets and debts both range from $10 million to $50 million.
BLACK PRESS: Moody's Downgrades Corporate Family Rating to 'B1'
---------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating
and senior secured credit facility ratings of Black Press Ltd. to
B1 from Ba3. Concurrently, the Probability of Default Rating was
lowered to B2 from B1 and the ratings outlook was changed to
negative from stable.
The CFR downgrade to B1 reflects recent deterioration in Black
Press' revenue, earnings and liquidity profile and Moody's
expectation that operating results and key credit measures will
not improve materially over the medium term. Demand for
advertising in western Canadian community newspapers had remained
fairly resilient to economic pressures through the third quarter
of fiscal 2009, but experienced weakness in the fourth quarter
ended February 28, 2009. The company's US operations, which
represent about one-fourth of consolidated revenues, have been
more persistently impacted over the past year. As a result, Black
Press reported a consolidated decline in same store revenues of
approximately 4% in FY09 and 12% in the fourth quarter. Margins
have also deteriorated, resulting in a larger percentage decline
in EBITDA. Recently implemented cost-cutting initiatives are
expected to only partially offset near-term revenue softness,
leading to credit metrics that are weak for the rating category.
The downgrade and negative outlook further reflect Black Press'
weak liquidity profile, in which a leverage covenant default over
the next four quarters is considered highly likely by Moody's. At
February 28, 2009, the company's leverage covenant calculation was
approximately 5.3 times versus a current requirement of 5.5 times
that steps down to 5.25 times at August 31, 2009. Reported debt,
denominated mostly in US dollars, has increased materially over
the last several quarters due predominantly to the conversion
impact of the stronger US dollar. Deterioration in EBITDA has
further exacerbated covenant tightness, leaving little margin for
an unexpected shortfall in results. A covenant violation could
limit access to the company's revolver and accelerate repayment of
the credit facility, absent an amendment or waiver. Nevertheless,
free cash flow is expected to remain modestly positive over the
next year, despite difficult market conditions. Cash on hand was
approximately C$15 million at February 28, 2009 while C$40 million
was outstanding on the C$55 million revolver, partly used for
acquisitions.
The ratings could be downgraded if revenue and earnings
deteriorate further or the company makes a material change in its
capital structure. Additionally, the ratings would likely be
downgraded if near-term cash requirements for costs such as
interest expense, capital expenditures, dividends, funding for the
non-consolidated subsidiary, or working capital are greater than
currently anticipated. For further information, please refer to
the credit opinion located on moodys.com.
These ratings (assessments) were downgraded:
-- C$55 million senior secured revolver due 2011, to B1 (LGD3,
32%) from Ba3 (LGD3, 34%)
-- C$57 million senior secured term loan A due 2011, to B1
(LGD3, 32%) from Ba3 (LGD3, 34%)
-- US$23 million senior secured term loan A-1 due 2013, to B1
(LGD3, 32%) from Ba3 (LGD3, 34%)
-- US$131 million term loan B-1 due 2013, to B1 (LGD3, 32%) from
Ba3 (LGD3, 34%)
-- US$80 million term loan B-2 due 2013, to B1 (LGD3, 32%) from
Ba3 (LGD3, 34%)
Black Press Ltd.'s restricted group is a privately-held community
newspapers and printing company headquartered in British Columbia,
Canada. The company publishes 170 newspapers in British Columbia,
Alberta, Washington and Ohio. The Hawaii operations are not part
of the rated entity. For the year ended February 28, 2009, Black
Press generated revenues of approximately C$408 million.
BANKUNITED FSB: Closed, Sold by FDIC to WL Ross-Led Investor Group
------------------------------------------------------------------
BankUnited, a newly chartered federal savings bank, acquired the
banking operations, including all of the nonbrokered deposits, of
BankUnited, FSB, Coral Gables, Florida, in a transaction
facilitated by the Federal Deposit Insurance Corporation. As a
result of this transaction, BankUnited, FSB, offices and branches
will be operated as BankUnited offices and branches.
BankUnited's 86 offices will be open May 22 during normal business
hours. BankUnited, the successor institution, will be the largest
independent bank in Florida, as was its predecessor. The
management team is headed by John Kanas, a veteran of the banking
industry and former head of North Fork Bank.
Deposits will be insured by the FDIC. Customers can continue to
use BankUnited, FSB's checks, ATM cards and debit cards. Checks
drawn on the bank will continue to be processed. Loan customers
should continue to make their payments as usual.
Bank United, FSB, had assets of $12.80 billion and deposits of
$8.6 billion as of May 2, 2009. The new BankUnited will assume
$12.7 billion in assets and $8.3 billion in nonbrokered deposits.
The FDIC and BankUnited entered into a loss-share transaction and
will share in the losses on approximately $10.7 billion in assets
covered under the agreement. The loss-sharing arrangement is
projected to maximize returns on the covered assets by keeping
them in the private sector. The agreement also is expected to
minimize disruptions for loan customers as they will maintain a
banking relationship. BankUnited will recapitalize the institution
with $900 million in new capital.
BankUnited will not assume the approximately $348 million in
brokered deposits. The FDIC will pay the brokers directly.
Customers who placed money with brokers should contact them
directly for more information about the status of their deposits.
Customers who have questions about the transaction can call the
FDIC toll-free at 1-800-451-1093. The phone number will be
operational this evening until 9:00 p.m., Eastern Daylight Time
(EDT); on Friday from 8:00 a.m. to 8:00 p.m., EDT; on Saturday
from 9:00 a.m. to 6:00 p.m. EDT; on Sunday from noon to 6:00 p.m.,
EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested
parties can also visit the FDIC's Web site at:
http://www.fdic.gov/bank/individual/failed/bankunited.html.
The FDIC facilitated the transaction with John Kanas and a
consortium of investors after BankUnited, FSB, was closed by the
Office of Thrift Supervision, which appointed the FDIC as
receiver. The FDIC estimates that the cost to its Deposit
Insurance Fund will be $4.9 billion. BankUnited's acquisition of
all the deposits and assets of BankUnited, FSB was the "least
costly" resolution for the DIF compared to alternatives.
In addition to the management team led by John Kanas, ownership
includes WL Ross & Co. LLC; Carlyle Investment Management L.L.C.;
Blackstone Capital Partners V L.P.; Centerbridge Capital Partners,
L.P. LeFrak Organization, Inc; The Wellcome Trust; Greenaap
Investments Ltd.; and East Rock Endowment Fund.
Due to the interest of private equity firms in the purchase of
depository institutions in receivership, the FDIC has been
evaluating the appropriate terms for such investments. In the
near future, the FDIC will provide generally applicable policy
guidance on eligibility and other terms and conditions for such
investments to guide potential investors.
BankUnited, FSB is the 34th FDIC-insured institution to fail in
the nation this year, and the third in Florida. The last bank to
be closed in the state was Riverside Bank of the Gulf Coast, Cape
Coral on February 13, 2009.
CABLEVISION SYSTEMS: Moody's Raises Corp. Family Rating to 'Ba2'
----------------------------------------------------------------
Moody's Investors Service upgraded Cablevision Systems
Corporation's Corporate Family Rating and Probability of Default
Rating, each to Ba2 from Ba3. In addition, Moody's upgraded the
instrument ratings of Cablevision's and its subsidiaries' debt as
detailed below. Cablevision's speculative grade liquidity rating
remains at SGL-2 and the rating outlook is stable.
Moody's has taken these rating actions:
Issuer: Cablevision Systems Corporation
* Corporate Family Rating - Upgraded to Ba2 from Ba3
* Probability of Default Rating - Upgraded to Ba2 from Ba3
* Senior Unsecured Notes - Upgraded to B1 (LGD6-93%) from B2
(LGD6-93%)
* Speculative Grade Liquidity Rating - remains at SGL-2
* Rating Outlook - remains Stable
Issuer: CSC Holdings, Inc. (CSC, a wholly-owned subsidiary of
Cablevision)
* Senior Secured Bank Credit Facilities - Upgraded to Baa3 (LGD2-
17%) from Ba1 (LGD2-18%)
* Senior Unsecured Notes / Debentures - Upgraded to Ba3 (LGD4-69%)
from B1 (LGD4-69%)
* Rating Outlook - remains Stable
Issuer: Newsday LLC (Newsday, an approximately 97%-owned
subsidiary of CSC)
* Senior Secured Fixed Rate Term Loan (gtd. by CSC on a senior
unsecured basis) - Upgraded to Ba3 (LGD4-69%) from B1 (LGD4-69%)
The upgrades are principally driven by ongoing strength in
operating performance, improving liquidity and ensuing
improvements in financial flexibility and balance sheet strength,
along with a notably higher level of perceived fiscal
conservatism. "Moody's believes that the historically
shareholder-oriented predisposition and often non-core investment
strategies of the controlling Dolan family have lessened somewhat
in response to difficult credit and economic conditions and, more
importantly, will remain less of a consideration in favor of a
stronger credit profile in future periods," noted Senior Vice
President Russell Solomon. Recent commentary with respect to more
prudent management and continued deleveraging of the company's
balance sheet by Cablevision's senior officers bolsters this
sentiment. Moody's expects the company's business profile to
remain strong and its financial profile to strengthen further as
leverage of about 5.2x (on a debt-to-EBITDA basis as of 3/31/2009,
incorporating Moody's standard adjustments) drops below 5.0x this
year through a combination of both absolute debt reduction and
EBITDA growth.
The company's decision to contemplate the spin-off of MSG (and the
financing of that operation's heavy capital expenditure
requirements on a wholly free-standing basis) and proactively
address its debt maturity profile by seeking to extend the
maturity of its term loan B facility both lend further support to
Moody's view of management's increased financial responsibility
during challenging times. The extension of the maturity profile
would allow Cablevision the flexibility to either conserve its
free cash flow ahead of its 2011 maturities or tender for the
maturing debt, thereby reducing future refinancing needs. A
potential spin-off of MSG, which Moody's expects may occur by
year-end, would simplify Cablevision's business model, reduce some
of the dependence on the company's now solidly positive cash flow
generating businesses to fund potentially meaningful losses and
growth initiatives in businesses that are not necessarily core,
decrease operational volatility and improve the predictability of
capital requirements.
Cablevision's Ba2 Corporate Family Rating and stable rating
outlook reflect the industry-leading performance and relative
stability demonstrated within its core cable business operations,
as now further supported by a perceived commitment to a more
fiscally conservative financial profile. In addition, the rating
is further supported by the high perceived underlying value of the
company's assets, including its content and other media
properties.
The SGL-2 speculative grade liquidity rating is driven by the
company's solid internal cash flow generation and its ability to
meet its debt amortization requirements over the next twelve
months with free cash flow. The rating also reflects Moody's
expectation of limited reliance on the CSC revolving credit
facility and adequate covenant compliance cushion.
The last rating action was on February 9, 2009 when Moody's raised
Cablevision's speculative grade liquidity rating to SGL-2 from
SGL-3. Please see the credit opinion posted to www.moodys.com for
additional information on Cablevision's ratings.
Headquartered in Bethpage, New York, Cablevision Systems
Corporation is predominantly a domestic cable TV multiple system
operator serving approximately 3.1 million subscribers in and
around the New York metropolitan area. Among other entertainment-
and media-related business ventures, the company also owns and
distributes programming to cable television and direct broadcast
satellite providers throughout the United States through its
Rainbow National Services subsidiary.
CALHOUN CBO: Moody's Downgrades Ratings on $240 Mil. Notes to 'B2'
------------------------------------------------------------------
Moody's Investors Service announced that it has downgraded the
rating on this note issued by Calhoun CBO, Limited:
-- US$240,000,000 Senior Secured Floating Rate Notes, Due
2010, Downgraded to B2; previously on September 1, 2006,
Upgraded to Baa3
According to Moody's, the rating actions taken on the notes are a
result of applying Moody's revised assumptions with respect to
default probability, the treatment of ratings on "Review for
Possible Downgrade" or with a "Negative Outlook," and the
calculation of the Diversity Score. The actions also reflect
consideration of credit deterioration of the underlying portfolio.
The revised assumptions that have been applied to all corporate
credits in the underlying portfolio are described in the press
release dated February 4, 2009, titled "Moody's updates key
assumptions for rating CLOs."
Credit deterioration of the collateral pool is observed in, among
others, a decline in the average credit rating (as measured
through the weighted average rating factor), an increase in the
dollar amount of defaulted securities, an increase in the
proportion of securities from issuers rated Caa1 and below. As
per the April 24, 2009 dated trustee report, the transaction's
Weighted Average Rating Factor of the transaction was 3747 versus
a trigger level of 2720. The transaction also has over 30% of its
assets rated at Caa1 or below. Finally, Moody's noted that the
portfolio includes a number of investments in securities that
mature after the maturity date of the notes. These investments
potentially expose the notes to market risk in the event of
liquidation at the time of the notes' maturity. As per the April
trustee report, these assets represented over 29% of the
portfolio.
Calhoun CBO, Limited, issued in July of 1998, is a collateralized
bond obligation backed by a portfolio of senior unsecured bonds
issued by emerging market sovereign and corporate entities as well
as US entities.
CENTRO NP: S&P Affirms Long-Term Corporate Credit Rating at 'CCC+'
------------------------------------------------------------------
Standard & Poor's Ratings Services said that it had affirmed its
'CCC+' long-term corporate credit rating on U.S.-based shopping-
center owner Centro NP LLC. Centro NP's senior unsecured note
ratings were also affirmed at 'CCC+', and a recovery rating of '3'
was assigned to these notes, reflecting S&P's expectation of
meaningful recovery prospects for bondholders in the event of a
default. At the same time, the ratings were removed from
CreditWatch with developing implications, where they were
initially placed on January 3, 2008. The rating outlook on the
long-term rating is negative.
These rating actions follow the recent agreement on debt
stabilization between the lenders to Centro NP, its immediate
parent-Super LLC, and the ultimate Australian parent-Centro
Properties Group. The rating affirmation factors in: the
vulnerability that Centro NP creditors face with sizeable near-
term debt maturities; a U.S.-based retail asset portfolio that is
being buffeted by weak economic conditions and fragile consumer
sentiment; the potential for further tenant defaults to weaken the
group's income and debt-servicing capacity; and a highly leveraged
parent.
"In our view, these debt extensions increase Centro NP
management's ability to manage the assets through these difficult
economic conditions," Standard & Poor's credit analyst Craig
Parker said. "However, S&P note that Centro NP's access to
readily available liquidity is dependant on the support from Super
LLC."
The negative rating outlook factors in S&P's expectation that the
Centro NP rating will continue to come under pressure from these:
tenants remain vulnerable to continued weak economic conditions;
asset valuations may encounter further stress; refinancing of
maturing indebtedness remains challenging; and debt covenants are
tested at Centro NP and its parent entity. As Centro NP
approaches the December 31, 2010 maturity date for its revolving
bank debt, S&P would look to evidence that management are able to
position the company's capital structure on a more stable footing;
if this occurs, the outlook may be revised to stable.
CHRYSLER LLC: Committee Proposes Kramer Levin As Counsel
--------------------------------------------------------
The Official Committee of Unsecured Creditors seeks the Court's
authority to retain Kramer Levin Naftalis & Frankel LLP as its
counsel effective as of May 5, 2009.
Kramer Levin is expected to render legal services as the Committee
may consider desirable to discharge the Committee's
responsibilities and further the interests of the Committee's
constituents in the Debtors' Chapter 11 cases. In addition to
acting as primary spokesman for the Committee, it is expected that
Kramer Levin's services will include assisting, advising and
representing the Committee with respect to these matters:
(a) The administration of the Chapter 11 cases and the
exercise of oversight with respect to the Debtors' affairs
including all issues in connection with the Debtors, the
Committee or the Chapter 11 Cases;
(b) The preparation on behalf of the Committee of necessary
applications, motions, memoranda, orders, reports and
other legal papers;
(c) Appearances in Court and at statutory meetings of
creditors to represent the interests of the Committee;
(d) The negotiation, formulation, drafting and confirmation of
a plan or plans of reorganization or liquidation and
related matters;
(e) Investigation, if any, as the Committee may desire
concerning, among other things, the assets, liabilities,
financial condition, sale of any of the Debtors'
businesses, and operating issues concerning the Debtors
that may be relevant to the Chapter 11 cases;
(f) Communications with the Committee's constituents and
others at the direction of the Committee in furtherance of
its responsibilities, including communications required
under Section 1102 of the Bankruptcy Code; and
(g) The performance of all of the Committee's duties and
powers under the Bankruptcy Code and the Bankruptcy Rules
and the performance of other services as are in the
interests of those represented by the Committee.
Kramer Levin will be paid based on the firm's hourly rates:
Professional Hourly Rate
------------ ------------
Partners $645 - $955
Counsel $650 - $995
Special Counsel $605 - $695
Associates $325 - $680
Legal Assistants $135 - $275
These are the rates of professionals anticipated to work with the
Committee:
Professional Hourly Rate
------------ ------------
Kenneth H. Eckstein, Partner $930
Thomas Moers Mayer, Partner $930
Robert T. Schmidt, Partner $735
Gregory G. Plotko, Associate $660
Elan Daniels, Associate $520
Yekaterina Chernyak, Associate $485
Andrea Chouprouta, Paralegal $275
The Debtors will pay Kramer Levin expenses and disbursements
incurred in connection with the Debtors' case, including word
processing, secretarial time, telecommunications, photocopying,
postage and package delivery charges, court fees, transcript
costs, travel expenses, expenses for "working meals" and
computer-aided research.
Thomas Moers Mayer, Esq., a member of Kramer Levin, tells the
Court that his Firm does not hold or represent an interest that is
adverse to the Debtors' estates, is a disinterested person who
does not hold or represent any interest adverse to and has no
connection with the Debtors, their creditors, the U.S. Trustee or
any party-in-interest in the matters upon which Kramer Levin is to
be retained, and is a "disinterested person" within the meaning of
Section 101(14) of the Bankruptcy Code, subject to these material
disclosures:
(a) American International Group and certain of its affiliates
are listed as major insurers or major insurance brokers of
the Debtors. In matters unrelated to the Debtors, Kramer
Levin represents AIG in connection with certain corporate
and litigation matters.
(b) Before the Petition Date, Kramer Levin represented a group
of five lenders under a Second Lien Credit Agreement,
dated as of August 3, 2007, by and among Chrysler
Financial Services Americas LLC "Finco", JPMorgan Chase
Bank, N.A., as administrative agent, and other financial
institutions party thereto, in connection with a
review of certain relevant prepetition documents and the
Chapter 11 cases. Chrysler Financial was a source of
automotive financing for the Debtors' dealers and
customers and holds significant prepetition claims against
the Debtors arising out of loss sharing agreements.
Kramer Levin no longer represents the Finco Lenders in
connection with the Chapter 11 cases, although it may
represent certain of the Finco Lenders in matters
unrelated to the Chapter 11 cases.
(c) Affiliates of Credit Suisse First Boston are listed as
prepetition lenders to the Debtors. In matters unrelated
to the Debtors, Kramer Levin represents Credit Suisse and
certain affiliates in connection with bankruptcy,
employment, real estate, corporate and litigation matters.
(d) Dana Holding Company is listed as a major supplier to the
Debtors. In matters unrelated to the Debtors, Kramer
Levin has represented the Official Committee of Unsecured
Creditors in the Chapter 11 cases of Dana and
certain of its affiliates.
(e) Dura Automotive Systems, Inc. is listed as a major
supplier to the Debtors. In matters unrelated to the
Debtors, Kramer Levin has represented the Official
Committee of Unsecured Creditors in the Chapter 11 cases
of Dura and certain of its affiliates.
(f) Deloitte & Touche, Inc. is providing tax and accounting
services to the Debtors. In matters unrelated to the
Debtors, Kramer Levin represents or has represented
Deloitte and its affiliates in corporate, bankruptcy and
litigation engagements. Furthermore, Deloitte provides
certain audit and consulting services to Kramer Levin on a
continuing basis.
(g) Deutsche Bank New York and Deutsche Bank Trust Company of
the Americas are listed as prepetition secured lender to
the Debtors. In matters unrelated to the Debtors, Kramer
Levin represents or has represented Deutsche Bank and its
affiliates in various litigation, corporate and bankruptcy
matters.
(h) Goldman Sachs is listed as a prepetition secured lender to
the Debtors. In matters unrelated to the Debtors, Kramer
Levin represents or has represented Goldman Sachs and its
affiliates in various litigation and bankruptcy
engagements.
(i) JPMorgan Chase is listed as a prepetition secured lender
to the Debtors. Kramer Levin currently represents
JPMorgan as the trustee of a decedent's estate. In
addition, Kramer Levin has represented or currently
represents the independent directors of certain funds that
are managed or sponsored by JPMorgan.
(j) Magna International and Magna Powertrain, Inc. are listed
as major suppliers to the Debtors. In matters unrelated
to the Debtors, Kramer Levin currently represents the
Official Committee of Unsecured Creditors of Magna
Entertainment, Inc., which is an affiliate of Magna
International.
(k) Merrill Lynch is listed as a prepetition secured lender to
the Debtors. In matters unrelated to the Debtors, Kramer
Levin represents or has represented affiliates of Merrill
Lynch in various litigation, employment and bankruptcy
matters.
(l) Morgan Stanley is listed as a prepetition secured lender
to the Debtors. In matters unrelated to the Debtors,
Kramer Levin represents or has represented Morgan Stanley
and its affiliates in various litigation, corporate and
bankruptcy matters.
(m) Sirius Satellite Radio is listed as a major supplier to
the Debtors. In matters unrelated to the Debtors, Kramer
Levin represents or has represented Sirius in litigation
and intellectual property matters. Before the Petition
Date, Kramer Levin provided limited advice to Sirius with
respect to potential membership on the Committee.
(n) Jonathan Gallen is listed as a current Manager of Chrysler
LLC and Ahab Capital Management is listed as an affiliate
of a Manager. Mr. Gallen is a principal of Ahab. In
matters unrelated to the Debtors, Kramer Levin represents
or has represented Ahab in corporate and bankruptcy
matters.
(o) By order dated May 13, 2009, the Bankruptcy Court approved
the terms of a Master Financial Services Agreement between
the Debtor and GMAC LLC. As of the Petition Date,
Mr. Mayer held approximately $200,000 in face value of
GMAC "SmartNotes" in a personal investment account.
Promptly upon the selection of Kramer Levin as Committee
counsel, Mr. Mayer directed my investment advisor to
liquidate that position.
(p) As part of Kramer Levin's corporate restructuring and
bankruptcy practice, Kramer Levin represents agent banks,
bank groups, shareholder groups, bondholder groups and
creditors' committees in connection with bankruptcy and
corporate matters unrelated to the Debtors. Kramer Levin
may have in the past represented, and may presently or in
the future represent or be deemed adverse to, creditors or
parties-in-interest in addition to those disclosed in
matters unrelated to the Debtors' Cases.
(q) Kramer Levin's corporate restructuring and bankruptcy
practice also involves representing holders of debt and
equity securities issued by financially distressed
businesses and buyers and sellers of distressed debt
and securities. One or more clients of the Firm may now
own or later purchase secured or unsecured claims against
one or more Debtors.
(r) Kramer Levin is also a full service law firm with active
real estate, intellectual property, corporate and
litigation practices. Kramer Levin appears in cases,
proceedings and transactions involving many different
attorneys, accountants, financial consultants and
investment bankers, some of which now or may in the future
represent claimants in the Debtors' cases.
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: To Eliminate All Dealers If Court Denies Fiat Sale
----------------------------------------------------------------
Kerry E. Grace at The Wall Street Journal reports that a Chrysler
LLC executive said that if the U.S. Bankruptcy Court for the
Southern District of New York doesn't allow the Company to sell
most of its operations to Fiat SpA, the Company's remaining 3,181
dealers will be eliminated.
"The auto industry cannot support the number of dealers in the
marketplace," WSJ quoted Steven J. Landry, Chrysler's executive
vice president for North American marketing, as saying. The
dealers didn't make a profit in 2008, posting an average loss of
$3,184, WSJ states, citing Mr. Landry.
WSJ relates that Chrysler has notified about 789 dealers that it
will drop them from its retail network in June, as part of its
restructuring. WSJ states that some of those dealers will
challenge the move in court.
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)
COMMSCOPE INC: Moody's Comments on Equity Issuance and New Notes
----------------------------------------------------------------
Moody's Investors Service commented that CommScope Inc.'s
announced intentions to issue equity and new convertible notes,
pay down approximately $400 million of senior debt, induce
conversion of existing convertible notes along with completion of
an amendment of financial covenants in their senior secured credit
agreement should improve the company's overall financial
flexibility and liquidity profile and will likely result in a
stabilization of the ratings outlook if successful. The company
is planning to issue approximately $200 million of senior
subordinated convertible notes and 8 million shares of additional
equity and use proceeds to pay down approximately $400 million in
senior secured debt. The current Ba3 rating and negative outlook
reflect the company's debt load incurred from the Andrew
acquisition, deterioration in performance due to the economic
downturn and financial covenant tightness.
CommScope continues to face a challenging macroeconomic
environment through year end. However, the anticipated capital
structure improvements, alleviation of near term covenant
tightness and the company's ongoing cost reductions remove some of
the pressures that led to the negative outlook. If the company
successfully completes its proposed capital markets transactions,
Moody's anticipates revising the outlook to stable.
Moody's most recent action was on March 2, 2009 when Moody's
revised CommScope's ratings outlook to negative from stable.
CommScope Inc., headquartered in Hickory, North Carolina, is a
leading global provider of wired and wireless connectivity
solutions targeted towards cable and telecom service providers as
well as the enterprise market. The company had 2008 sales of $4.0
billion.
COMMSCOPE INC: S&P Affirms Corporate Credit Rating at 'BB-'
-----------------------------------------------------------
Standard & Poor's Ratings Services said it affirmed its ratings on
Hickory, North Carolina-based CommScope Inc., including the 'BB-
'corporate credit rating. S&P removed the ratings from
CreditWatch, where they had been placed with negative implications
on March 5, 2009. CommScope is a leading provider of
communication network infrastructure. Debt outstanding at
March 31, 2009, totaled about $1.8 billion. The outlook is
stable.
At the same time, S&P raised its issue-level ratings on
CommScope's $2.5 billion senior secured credit facility and
revised the recovery rating to '2' from '3'. The '2' recovery
rating indicates expectations for substantial (70%-90%) recovery
in the event of a payment default. The revised recovery rating
reflects the prepayment of approximately more than $800 million of
first-lien term loan debt over the past year which reduces total
outstanding debt in S&P's projected year of default.
S&P also assigned a 'B' rating and a '6' recovery rating to
$200 million of senior subordinated convertible notes due 2015.
The '6' recovery rating indicates S&P's expectation for negligible
(0%-10%) recovery in the event of a payment default. Proceeds
from the notes, along with approximately $200 million of
additional proceeds from a proposed equity offering, will be used
to repay $400 million of senior secured term loan borrowings.
"The affirmation reflects our expectation that CommScope's recent
amendment of its senior secured credit facility's financial
maintenance covenants," said Standard & Poor's credit analyst
Susan Madison, "coupled with debt paydown, provides sufficient
covenant headroom to withstand a challenging operating environment
over the next year."
CONGOLEUM CORP: American Biltrite Incurs $5.5-Mil Q1 Net Loss
-------------------------------------------------------------
American Biltrite Inc. (NYSE Amex: ABL) said that net sales for
the three months ended March 31, 2009 were $70.1 million, compared
with $95.8 million in the first quarter of 2008. The net loss for
the three months ended March 31, 2009 was $5.5 million or $1.60
per share (basic and diluted) compared with net income of
$972 thousand or $0.28 per share (basic and diluted) in the first
quarter of 2008. American Biltrite's consolidated results include
the results of its 55% owned subsidiary Congoleum Corporation,
which is in Chapter 11 bankruptcy reorganization proceedings.
Under the terms of the pending proposed plan of reorganization for
Congoleum, American Biltrite's ownership interest in Congoleum
would be eliminated. Accordingly, American Biltrite believes its
financial results excluding Congoleum to be a more meaningful
presentation to investors. Excluding the results of Congoleum,
American Biltrite's net sales for the three months ended March 31,
2009, were $40.0 million, down 16.9% from $48.1 million for the
three months ended March 31, 2008, and its net loss for the three
months ended March 31, 2009 was $3.3 million compared with a net
loss of $715 thousand for the three months ended March 31, 2008.
Congoleum comprises the flooring products segment in American
Biltrite's reported results.
Roger S. Marcus, Chairman of the Board, commented, "Business
conditions were extremely difficult in the first quarter. Our tape
business fared the worst due to weakness in demand in many of the
markets it serves, which include graphics on RV's and capital
goods, protective film on consumer durables including automotive
applications, and insulation tapes and protective films for the
construction industry. Our jewelry business sales were only down
slightly from year earlier levels, and our first quarter
performance in that business was better than last year. Our
Canadian business reported lower sales in the first quarter of
2009 than in 2008 primarily due to the weaker Canadian dollar and
was modestly profitable in both periods."
Mr. Marcus continued "While we are operating under the assumption
that there will be little or no improvement in the economy for the
balance of 2009, we have picked up some new automotive customers
for our tape business and some holiday business in jewelry that we
did not have last year. This business, together with the cost
reduction and pricing steps taken in the second half of 2008 and
additional cost reductions in the first quarter of 2009, should
permit us to show improved results over the balance of the year."
Mr. Marcus concluded with "As we reported at the end of March, we
are working on obtaining a new, three year credit facility that
would provide up to $38 million in revolving and term debt, and
would replace our existing credit facility with our current
lender. I am pleased to report that we have made considerable
progress on the due diligence and believe we will have a new loan
agreement in place by the end of the second quarter."
About American Biltrite
American Biltrite Inc.'s (ABI) operations include its Tape
Division; a controlling interest in K&M Associates L.P., a Rhode
Island limited partnership (K&M), and ownership of a Canadian
subsidiary, American Biltrite (Canada) Ltd. (AB Canada). The Tape
Division produces adhesive-coated, pressure-sensitive papers and
films used to protect material during handling or storage or to
serve as a carrier for transferring decals or die-cut lettering.
K&M is a designer, supplier, distributor and servicer of a variety
of adult, children's and specialty items of fashion jewelry and
related accessories throughout the United States and Canada. AB
Canada produces resilient floor tile, rubber tiles and rolled
rubber flooring and industrial products (including conveyor
belting, truck and trailer splash guards and sheet rubber
material) and imports certain rubber and tile products from China
for resale.
About Congoleum
Based in Mercerville, New Jersey, Congoleum Corporation (OTC:
CGMC) -- http://www.congoleum.com/-- manufactures and sells
resilient sheet and tile floor covering products with a wide
variety of product features, designs and colors.
The Company filed for Chapter 11 protection on December 31, 2003
(Bankr. N.J. Case No. 03-51524) as a means to resolve claims
asserted against it related to the use of asbestos in its products
decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and
Kerry A. Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP,
and Paul S. Hollander, Esq., and James L. DeLuca, Esq., at Okin,
Hollander & DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
Various entities have filed bankruptcy plans for the Debtors. In
February 2008, the legal representative for future asbestos-
related claimants; the asbestos claimants' committee; the official
Committee of holders of the Company's 8-5/8 % Senior Notes due
August 1, 2008; and Congoleum jointly filed a joint plan of
reorganization. Various objections to the Joint Plan were filed.
In June 2008, the Bankruptcy Court issued a ruling that the Joint
Plan was not legally confirmable.
In August 2008, the Bondholders' Committee, the ACC, the FCR,
representatives of holders of prepetition settlements and
Congoleum entered into a term sheet describing the proposed
material terms of a new plan of reorganization and a settlement of
avoidance litigation with respect to prepetition claim settlement.
Certain insurers and a large bondholder filed objections to the
Litigation Settlement or reserved their rights to object to
confirmation of the Amended Joint Plan. The Bankruptcy Court
approved the Litigation Settlement in October 2008. The Amended
Joint Plan was filed in November 2008.
In January 2009, certain insurers filed a motion for summary
judgment seeking denial of confirmation of the Amended Joint Plan.
On February 26, 2009, the Bankruptcy Court rendered an opinion
denying confirmation of the Amended Joint Plan. Moreover, the
Bankruptcy Court dismissed Congoleum's bankruptcy case.
On February 27, 2009, Congoleum and the Bondholders' Committee
appealed the Order of Dismissal and the ruling denying plan
confirmation to the U.S. District Court for the District of New
Jersey. On March 3, the Bankruptcy Court stayed the Order of
Dismissal pending entry of a final non-appealable decision
affirming the Order of Dismissal. Appeal proceedings are underway
before the District Court.
COPANS MOTORS: Taps Genovese Joblove as General Bankruptcy Counsel
------------------------------------------------------------------
Copans Motors, Inc., asks the U.S. Bankruptcy Court Southern
District of Florida for permission to employ Genovese Joblove &
Battista, P.A. as general bankruptcy counsel.
GJB will:
a) advise the Debtor with respect to its powers and duties as
debtor and debtor-in-possession in the continued management
and operation of its business and properties;
b) attend meetings and negotiate with representatives of
creditors and other parties-in-interest and advise and
consult on the conduct of the case, including all of the
legal and administrative requirements of operating in
Chapter 11;
c) advise the Debtor in connection with any contemplated sales
of assets or business combinations, including the
negotiation of sales promotion, liquidation, stock purchase,
merger or joint venture agreements, formulate and implement
bidding procedures, evaluate competing offers, draft
appropriate corporate documents with respect to the proposed
sales, and counsel the Debtor in connection with the closing
of the sales;
d) advise the Debtor in connection with postpetition financing
and cash collateral arrangements, provide advice and counsel
with respect to prepetition financing arrangements, and
provide advice to the Debtor in connection with the
emergence financing and capital structure, and negotiate and
draft documents relating thereto;
e) advise the Debtor on matters relating to the evaluation of
the assumption, rejection or assignment of unexpired leases
and executory contracts;
f) provide advice to the Debtor with respect to legal issues
arising in or relating to the Debtor s ordinary course of
business including attendance at senior management meetings,
meetings with the Debtor s financial and turnaround advisors
and meetings of the board of directors, and advice on
employee, workers' compensation, employee benefits, labor,
tax, insurance, securities, corporate, business operation,
contracts, joint ventures, real property, press/public
affairs and regulatory matters;
g) take all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on its
behalf, the defense of any actions commenced against the
estate, negotiations concerning all litigation in which the
Debtor may be involved and objections to claims filed
against the estate;
h) prepare on behalf of the Debtor all motions, applications,
answers, orders, reports and papers necessary to the
administration of the estate;
i) negotiate and prepare on the Debtor s behalf a Plan of
Reorganization, disclosure statement and all related
agreements and documents, and take any necessary action on
behalf of the Debtor to obtain confirmation of the Plan;
j) attend meetings with third parties and participate in
negotiations with respect to the above matters;
k) appear before this Court, any appellate courts, and the U.S.
Trustee, and protect the interests of the Debtor s estate
before the courts and the U.S. Trustee; and
l) perform all other necessary legal services and provide all
other necessary legal advice to the Debtor in connection
with this Chapter 11 case.
On May 6, 2009, GJB received a $50,000 retainer from the Debtor,
which was deposited into the trust account of GJB. GJB has
applied to the retainer $5,000 as payment of fees through the
petition date and $1,039 as filing fee.
To the best of the Debtor's knowledge, GJB is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Copans Motors
Pompano Beach, Florida-based Copans Motors, Inc., dba Champion
Motors, sells automobiles. The Company filed for Chapter 11 on
May 7, 2009 (Bankr. S. D. Fla. Case No. 09-18807). Bart A.
Houston, Esq., represents the Debtor in its restructuring efforts.
The Debtor's assets and debts both range from $10 million to
$50 million.
COYOTES HOCKEY: Court Directs Mediation on Control Dispute
----------------------------------------------------------
Judge Redfield T. Baum of the U.S. Bankruptcy Court for the
District of Arizona directed Coyotes Hockey LLC and the National
Hockey League to mediate their dispute as to who is entitled to
control the Phoenix Coyotes. Judge Baum said he wouldn't decide
about selling the team until the issue of control is determined,
Bloomberg's Bill Rochelle said.
As reported by the Troubled Company Reporter, Coyotes Hockey
intends to sell the team to Jim Balsillie, who would move the
operation to southern Ontario. Mr. Balsillie wants to purchase
the Phoenix Coyotes out of bankruptcy protection for about $212.5
million and move the club to Hamilton. Mr. Balsillie is a founder
of BlackBerry inventor Research in Motion Ltd.
The NHL said in May 13 court papers that the Coyotes own the right
to operate an NHL franchise only in Phoenix, not anywhere else.
The NHL also points out how a transfer of ownership requires
league approval. The NHL also allege that team owner Jerry Moyes,
the chief executive officer of Swift Transportation Co., didn't
have the right to file the Chapter 11 petition and can't control
the team's management. The league says the Mr. Moyes gave up
control when he stopped funding losses in November, compelling the
league to make advances to cover deficits. In exchange for the
funding, Mr. Moyes gave NHL proxy.
The Coyotes responded by filing an antitrust suit before the Court
against the NHL, claiming that the league's "unreasonable
restrictions" on relocating teams is an illegal restraint of
trade. Mr. Moyes filed bankruptcy to carry out a sale of the team
to Mr. Balsille, who intends to move the team to southern Ontario.
Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates,
including Coyotes Hockey LLC, own the Phoenix Coyotes team and
franchise in the National Hockey League.
Dewey Ranch, together with affiliates Arena Management Group, LLC,
Coyotes Holdings, LLC, and Coyotes Hockey, LLC, filed for Chapter
11 bankruptcy protection on May 5, 2009 (Bankr. D. Ariz. Case No.
09-09488), to implement a court-approved sale of Phoenix Coyotes
under the Bankruptcy Code. The filing included a proposed sale of
the franchise to PSE Sports & Entertainment, LP, which would move
the franchise to southern Ontario, Canada. Thomas J. Salerno,
Esq., at Squire, Sanders & Dempsey, LLP, assists the Debtors in
their restructuring efforts. Dewey Ranch listed $100 million to
$500 million in assets and $100 million to $500 million in debts.
COYOTES HOCKEY: Wants to Hire Squire Sanders as Bankruptcy Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona authorized,
on an interim basis, Dewey Ranch Hockey LLC and its debtor-
affiliates to employ Squire, Sanders & Dempsey L.L.P. as counsel.
A final hearing on the Debtors' motion is scheduled for May 27,
2009, at 9:00 a.m. prevailing Arizona Time, before this Court.
Objections are due on May 22, 2009, at 5:00 p.m. prevailing
Arizona Time.
Squire Sanders will:
a. advise the Debtors with respect to their powers and duties
as debtors-in-possession in the continued management and
operation of their business and property;
b. attend meetings and negotiate with representatives of
creditors and other parties-in-interest and advise and
consult on the conduct of the Chapter 11 cases, including
all of the legal and administrative requirements of
operating in Chapter 11;
c. assist the Debtors with the preparation of their schedules
of assets and liabilities and statements of financial
affairs;
d. advise the Debtors in connection with any contemplated sales
of assets or business combinations, including the
negotiation of asset, stock, purchase, merger or joint
venture agreements, formulate and implement appropriate
procedures with respect to the closing of any transactions,
and counsel the Debtors in connection with the transactions;
e. advise the Debtors in connection with any postpetition
financing and cash collateral arrangements and negotiate and
draft documents relating thereto, provide advice and counsel
with respect to prepetition financing arrangements, and
negotiate and draft documents relating thereto;
f) advise the Debtors on matters relating to the evaluation of
the assumption, rejection or assignment of unexpired leases
and executory contracts;
g) advise the Debtors with respect to legal issues arising in
or relating to the Debtors' ordinary course of business
including attendance at senior management meetings, meetings
with the Debtors' financial and turnaround advisors, and
meetings of boards of directors and members;
h) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions on
their behalf, the defense of any actions commenced against
them, negotiations concerning all litigation in which the
Debtors are involved and object to claims filed against the
Debtors' estates;
i) prepare, on the Debtors' behalf, all motions, applications,
answers, orders, reports and papers necessary to the
administration of the estates;
j. negotiate and prepare, on the Debtors' behalf, a Plan of
Reorganization, disclosure statement, and all related
agreements and documents and take any necessary action on
behalf of the Debtors to obtain confirmation of the plan;
k. attend meetings with third parties and participate in
negotiations with respect to these matters;
l) appear before the Court, any appellate courts, and the U.S.
Trustee and protect the interests of the Debtors' estates
before the courts and the U.S. Trustee; and
m. perform all other necessary legal services and provide all
other necessary legal advice to the Debtors in connection
with the Chapter cases.
On April 17, 2009, Squire Sanders received a $75,000 retainer,
which was increased by an additional $105,000 prior to the
petition date, for professional services and charges and
disbursements.
Pre-bankruptcy, Squire Sanders received $197,447 for prepetition
services rendered to the Debtors; and, (b) $180,000 retainer. The
full amount of the retainer was applied for payment of prepetition
services rendered to the Debtors, leaving a $0 balance on the
retainer. As of the petition date, Squire Sanders was owed
approximately $12,600 for prepetition services, which Squire
Sanders has written off.
The hourly rates of Squire Sanders' personnel are:
New Associates $190
Senior Partners $870
Senior Paralegals $300
New Project Assistants $95
Non-Attorney $140 - $220
To the best of the Debtors' knowledge, Squire Sanders is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached at:
Squire, Sanders & Dempsey L.L.P.
Two Renaissance Square
40 North Central Avenue, Suite 2700
Phoenix, AZ 85004
Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates,
including Coyotes Hockey LLC, own the Phoenix Coyotes team and
franchise in the National Hockey League.
Dewey Ranch, together with affiliates Arena Management Group, LLC,
Coyotes Holdings, LLC, and Coyotes Hockey, LLC, filed for Chapter
11 bankruptcy protection on May 5, 2009 (Bankr. D. Ariz. Case No.
09-09488), to implement a court-approved sale of Phoenix Coyotes
under the Bankruptcy Code. The filing included a proposed sale of
the franchise to PSE Sports & Entertainment, LP, which would move
the franchise to southern Ontario, Canada. Thomas J. Salerno,
Esq., at Squire, Sanders & Dempsey, LLP, assists the Debtors in
their restructuring efforts. Dewey Ranch listed $100 million to
$500 million in assets and $100 million to $500 million in debts.
COYOTES HOCKEY: Proposal to Sell Phoenix Coyotes for $212 Million
-----------------------------------------------------------------
Dewey Ranch Hockey LLC and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Arizona to approve the sale
of substantially all of Coyotes Hockey assets, free and clear of
all liens, encumbrances, security interests, claims and adverse
interests.
The Court has said it will defer consideration of the sale until
its disputes with the National Hockey League are resolved. The
NHL claims that Coyotes Hockey doesn't have any right to sell the
team and move the team to Ontario.
In their sale motion, the Debtors said they plan to sell to PSE
Sports & Entertainment L.P., subject to bigger and better offers:
i) the Phoenix Coyotes professional hockey team's National
Hockey League franchise and membership interest in the NHL;
ii) all items of tangible personal property and fixtures owned
by Coyotes Hockey and Coyotes Hockey's interest in all items
of tangible personal property and fixtures leased by Coyotes
Hockey, and in either case, used in connection with the
business;
iii) amount which have been accrued but not yet paid by the NHL
to Coyotes Hockey in connection with the business as of the
closing;
iv) all intellectual property owned by or licensed by Coyotes
Hockey and all licenses of the intellectual property held by
Coyotes Hockey and used in connection with the business;
v) all books and records of Coyotes Hockey relating to the
business;
vi) all rights of Coyotes hockey under contracts for employment
of Phoenix Coyotes players and rights to Phoenix Coyotes
players who are not under assumed player contracts;
vii) all rights of Coyotes Hockey under the other contracts;
ix) all insurance benefits, including rights and proceeds,
arising from or relating to the acquired assets and assumed
liabilities prior to the closing date;
x) all other intangible assets of Coyotes Hockey relating to
the business, including all goodwill associated with the
business;
xi) all of Coyotes Hockey's interest in 3051349 Nova Scotia
Company, a Nova Scotia unlimited liability company; and
xii) prepaid insurance.
Since moving to Phoenix in 1996, the Phoenix Coyotes franchise
operated at significant losses. In November 2008, Jerry Moyes and
Vicky Moyes, the super-majority owners of the franchise, notified
NHL that he would no longer provide the funds to cover Coyotes
Hockey's substantial operating losses.
Citi Private Bank Group at Citibank, N.A. and Scudder Law Firm,
P.C. received and evaluated proposals from interested purchasers
of Coyotes Hockey's assets and investors.
On May 5, 2009, Coyotes Hockey entered into an asset purchase
agreement with PSE Sports & Entertainment L.P., pursuant to which
the buyer agreed to purchase Coyotes Hockey's assets for
$212.5 million consisting of:
a) $20.0 million cash escrow deposit;
b) $170.0 million additional cash payment at closing, subject
to reduction by the amount, if any, by which the chief
financial officer of the Phoenix coyotes determines and
certifies to the proposed buyer and Coyotes Hockey that the
amount that will be recoverable with respect to NHL accounts
will be less that $25.0 million;
c) $8.0 million to be paid directly to Wayne Gretzky on behalf
of Coyotes Hockey to discharge Coyotes Hockey's deferred
compensation obligation to Mr. Gretzky;
d) an additional payment of $14.5 million cash.
The closing date of the proposed sale is on June 30, 2009.
The Debtors relate that the sale is in the best interest of the
estate and its creditors.
The Debtor ask for an expedited hearing on the matter.
Objections of The City of Glendale, Arizona
The City of Glendale, Arizona objected to the Debtors' motion to
sell Coyotes Hockey.
The City asserted that certain provisions of the Arena Management,
Use and Lease Agreement dated Nov. 29, 2001, require that the
Phoenix Coyotes hockey team play all of its home games at
Jobing.com Arena in Glendale Arizona for the full term of the Use
Agreement and that any relocation of the Phoenix Coyotes is
prohibited by law.
The City also objected to the termination fee which the City said,
is not in the best interest of the estates
PSE Sports & Entertainment L.P. is an acquisition vehicle owned by
Jim Balsille, a founder of Research in Motion.
Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates,
including Coyotes Hockey LLC, own the Phoenix Coyotes team and
franchise in the National Hockey League.
Dewey Ranch, together with affiliates Arena Management Group, LLC,
Coyotes Holdings, LLC, and Coyotes Hockey, LLC, filed for Chapter
11 bankruptcy protection on May 5, 2009 (Bankr. D. Ariz. Case No.
09-09488), to implement a court-approved sale of Phoenix Coyotes
under the Bankruptcy Code. The filing included a proposed sale of
the franchise to PSE Sports & Entertainment, LP, which would move
the franchise to southern Ontario, Canada. Thomas J. Salerno,
Esq., at Squire, Sanders & Dempsey, LLP, assists the Debtors in
their restructuring efforts. Dewey Ranch listed $100 million to
$500 million in assets and $100 million to $500 million in debts.
CROWN VILLAGE: Wants to Hire Richards Layton as Bankruptcy Counsel
------------------------------------------------------------------
Crown Village Farm, LLC, asks the U.S. Bankruptcy Court for the
District of Delaware for authority to employ Richards, Layton &
Finger, P.A., as counsel.
RL&F will, among other things:
a) advise the Debtor of its rights, powers and duties as a
debtor and debtor-in-possession in the continued operation
of its business and management of its property;
b) take all necessary action to protect and preserve the
Debtor's estate, including the prosecution of actions on the
Debtor's behalf, defend any actions commenced against the
Debtor, the negotiation of disputes in which the Debtor is
involved, and prepare objections to claims filed against the
Debtor's estates; and
c) prepare on behalf of the Debtor all necessary motions,
applications, answers, orders, reports and papers in
connection with the administration of the Debtor's estate.
Pre-bankruptcy, RL&F received a $359,465 retainer. The Debtor
propose that the retainer not expended for prepetition services
and disbursements be treated as evergreen retainer.
To the best of the Debtor's knowledge, RL&F is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Richards, Layton & Finger
One Rodney Square, P.O. Box 551
Wilmington, DE 19899
Tel: (302) 651-7700
Fax: (302) 651-7701
About Crown Village Farm LLC
The Vienna, Virginia-based Crown Village Farm LLC owns real
property in Gaithersburg, Maryland. It is a joint venture formed
by KB Home Maryland Inc. and Centex Homes Crown LLC, each owning
50% of the membership interests in the venture. Village Farm LLC
filed for Chapter 11 on May 1, 2009 (Bankr. D. Del. Case No. 09-
11522). Chun I. Jang, Esq. and Daniel J. DeFranceschi, Esq., at
Richards, Layton & Finger, have been tapped as counsel. Crown
Village listed debt of as much as $500 million and assets of as
much as $100 million in Chapter 11 documents.
CROWN VILLAGE: Wants to Set July 16 as General Claims Bar Date
--------------------------------------------------------------
Crown Village Farm, LLC, asks the U.S. Bankruptcy Court for the
District of Delaware to establish:
-- July 16, 2009, at 4:00 p.m. (prevailing Eastern Time) as the
deadline for all entities, other than governmental units, to
file proofs of claim; and
-- Nov. 2, 2009, at 4:00 p.m. (prevailing Eastern Time) as the
deadline for all governmental units to file proofs of claim.
The Debtor relate that the bar dates will enable it to efficiently
complete the liquidation of its estate by obtaining complete and
accurate information on the nature, validity, amount, and status
of all claims asserted.
All proofs of claims will be submitted to:
The Clerk of the U.S. Bankruptcy Court
for the District of Delaware
824 North Market Street, 3rd Floor
Wilmington DE 19801
About Crown Village Farm LLC
The Vienna, Virginia-based Crown Village Farm LLC owns real
property in Gaithersburg, Maryland. It is a joint venture formed
by KB Home Maryland Inc. and Centex Homes Crown LLC, each owning
50% of the membership interests in the venture. Village Farm LLC
filed for Chapter 11 on May 1, 2009 (Bankr. D. Del. Case No. 09-
11522). Chun I. Jang, Esq. and Daniel J. DeFranceschi, Esq., at
Richards, Layton & Finger, have been tapped as counsel. Crown
Village listed debt of as much as $500 million and assets of as
much as $100 million in Chapter 11 documents.
CRUCIBLE MATERIALS: Taps K&L Gates as General Bankruptcy Counsel
----------------------------------------------------------------
Crucible Materials Corporation and Crucible Development
Corporation ask the U.S. Bankruptcy Court for the District of
Delaware to employ K&L Gates LLP as general bankruptcy counsel.
K&L Gates will, among other things:
a) assist the Debtor in preparing schedules of assets and
liabilities and statement of financial affairs;
b) provide legal advise with respect to the Debtors' powers and
duties as a debtor-in-possession in the continued operation
of its business and management of its property; and
c) prepare and file all necessary motions, notices, and other
pleadings necessary to sell some or substantially all of the
Debtors' assets.
Jeffrey N. Rich, a partner at K&L Gates, tells the court that the
hourly rates of K&L Gates' personnel are:
Partners $500 - $900
Associates $290 - $520
Paralegals $260 - $270
K&L received certain amounts from the Debtors prepetition, with
$570,000 applied for work in connection with the restructuring. A
balance of $18,000 remains and will be kept by the firm as
advanced security retainer.
Mr. Rich assures the Court that K&L Gates is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Mr. Rich can be reached at:
K&L Gates LLP
559 Lexington Avenue
New York, NY 10022
About Crucible Materials Corporation
Based in Syracuse, New York, Crucible Materials Corporation --
http://www.crucible.com/-- aka Crucible Specialty Metals,
Crucible Service Centers, Crucible Compaction Metals, Crucible
Research and Trent Tube makes stainless and alloy steel for use in
the aircraft, automotive, petrochemical, and other industries.
The Company sold its trent tubes unit to Plymouth Tube in 2007.
The Company and its affiliate, Crucible Development Corporation,
filed for Chapter 11 protection on May 6, 2009 (Bankr. D. Del.
Lead Case No. 09-11582). Mark Minuti, Esq., at Saul Ewing LLP
represents the Debtors in their restructuring efforts. The
Debtors propose to employ Duff & Phelps Securities LLP as
investment banker; RAS Management Advisors LLC as business
advisor; and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors listed assets and debts both ranging from $100 million to
$500 million.
CRUCIBLE MATERIALS: Wants Schedules Filing Extended Until July 3
----------------------------------------------------------------
Crucible Materials Corporation and Crucible Development
Corporation ask the U.S. Bankruptcy Court for the District of
Delaware to extend until July 3, 2009, the time to file their
schedules of assets and liabilities; schedules of executory
contracts and unexpired leases; and statements of financial
affairs.
The Debtors relate that they will be unable to file the schedules
by the prescribed deadline due to the complexity and size of the
Debtors' business and the limited time and resources to prepare
the schedules.
Based in Syracuse, New York, Crucible Materials Corporation --
http://www.crucible.com/-- aka Crucible Specialty Metals,
Crucible Service Centers, Crucible Compaction Metals, Crucible
Research and Trent Tube makes stainless and alloy steel for use in
the aircraft, automotive, petrochemical, and other industries.
The Company sold its trent tubes unit to Plymouth Tube in 2007.
The Company and its affiliate, Crucible Development Corporation,
filed for Chapter 11 protection on May 6, 2009 (Bankr. D. Del.
Lead Case No. 09-11582). Mark Minuti, Esq., at Saul Ewing LLP
represents the Debtors in their restructuring efforts. The
Debtors propose to employ Duff & Phelps Securities LLP as
investment banker; RAS Management Advisors LLC as business
advisor; and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors listed assets and debts both ranging from $100 million to
$500 million.
CRUCIBLE MATERIALS: Wants to Hire Saul Ewing as Bankr. Co-Counsel
-----------------------------------------------------------------
Crucible Materials Corporation and Crucible Development
Corporation ask the U.S. Bankruptcy Court for the District of
Delaware for permission to employ Saul Ewing LLP as general
reorganization and bankruptcy co-counsel.
Saul Ewing will, among other things:
-- represent the Debtors in proceedings and hearings in this
Court;
-- represent the Debtors, and act as primary counsel, in any
matter in which K&L Gates LLP, the Debtors' proposed general
bankruptcy counsel, has a conflict; and
-- provide assistance, advice and representation concerning the
confirmation of any proposed Plan and solicitation of any
acceptances or respond to objections to the Plan.
The hourly rates of Saul Ewing's personnel are:
Mark Minuti, partner $550
Adam H. Isenberg, partner $490
Lucian Murley, associate $235
Melissa W. Rand, associate $215
Anthony J. Iannini, paralegal $175
In addition, other lawyers and paralegals will be involved as
necessary and their hourly rates are.
Partners $335 - $655
Special Counsel $275 - $535
Associates $215 - $390
Paraprofessionals $105 - $240
Pre-bankruptcy, Saul Ewing received an initial retainer of
$102,078 for the planning, preparation of documents and its
proposed postpetition representation of the Debtors, and for the
petition filing fees. Of the retainer amount, $16,850 was applied
to pay prepetition fees and expenses, and $2,078 in filing fees.
The remaining $83,149 constitutes an advance security retainer to
be applied to Saul Ewing's allowed fees and expenses and will be
treated as an evergreen retainer.
Mr. Minuti assures the Court that Saul Ewing is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
Mr. Minuti can be reached at:
Saul Ewing LLP
222 Delaware Avenue, Suite 1200
P.O. Box 1266
Wilmington, DE 19899
Tel: (302) 421-6840
Fax: (302) 421-5873
About Crucible Materials Corporation
Based in Syracuse, New York, Crucible Materials Corporation --
http://www.crucible.com/-- aka Crucible Specialty Metals,
Crucible Service Centers, Crucible Compaction Metals, Crucible
Research and Trent Tube makes stainless and alloy steel for use in
the aircraft, automotive, petrochemical, and other industries.
The Company sold its trent tubes unit to Plymouth Tube in 2007.
The Company and its affiliate, Crucible Development Corporation,
filed for Chapter 11 protection on May 6, 2009 (Bankr. D. Del.
Lead Case No. 09-11582). Mark Minuti, Esq., at Saul Ewing LLP
represents the Debtors in their restructuring efforts. The
Debtors propose to employ Duff & Phelps Securities LLP as
investment banker; RAS Management Advisors LLC as business
advisor; and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors listed assets and debts both ranging from $100 million to
$500 million.
DEL FRISCO'S: Weakened Credit Ratios Cue S&P's Rating Cut to 'B-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its rating on
Wichita, Kansas-based Del Frisco's Restaurant Group Inc. one notch
to 'B-' from 'B' as a result of falling sales leading to lower
profits weakening credit ratios for the year and, in S&P's view,
the possibility of a covenant breach this year.
"The current economic downturn has had a very significant effect
on the company's sales and operating performance," said Standard &
Poor's credit analyst Charles Pinson-Rose. Comparable-store sales
were down double digits at both the Del Frisco's and Sullivan's
restaurant concepts in the first quarter, leading to companywide
sales declines in the mid-single digits. Gross margins improved
in the quarter because of lower food costs, but overall operating
margins were down because of weaker fixed-cost leveraging.
DELTA AIR: Air France Joint Venture to Boost Profits by $150MM
--------------------------------------------------------------
The transatlantic joint venture between Air France-KLM and Delta
Air Lines Inc. will boost each of their profits by $150 million,
Daniel Michaels at The Wall Street Journal reports, citing
executives from the two airlines.
WSJ states that Air France and Delta Air said that the new venture
will include more than 200 transatlantic flights and about 50,000
seats daily. The profit increase includes benefits from the
earlier alliances, says WSJ.
Citing Air France-KLM CEO Pierre-Henri Gourgeon, WSJ relates that
the agreement to pool revenue and costs for flights between Europe
and the U.S. and to cooperate closely on many other flights will
significantly lift the carriers' revenues while reducing costs.
According to WSJ, Mr. Gourgeon said that the $300 million total
should be achieved starting next year, and the pact will offer big
synergies this year.
According to WSJ, the agreement will run for at least 13 years and
builds on a longstanding joint venture between Northwest Airlines
and KLM Royal Dutch Airlines and between Delta Air and Air France.
The merged airlines, WSJ states, had said they planned to
reorganize and expand their cooperation. They said that their
venture represents 25% of the industry's total transatlantic
capacity and will sharpen their ability to compete against Star
and oneworld, the other airline alliances, WSJ relates. The
companies said that based on 2008-2009 data, the yearly joint-
venture revenue is estimated at $12 billion, according to the
report.
With its acquisition of Northwest Airlines, Atlanta, Georgia-based
Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or
http://www.nwa.com/-- is now the world's largest airline. From
its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St.
Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its
Northwest subsidiary and Delta Connection carriers offer service
to more than 376 destinations worldwide in 66 countries and serves
more than 170 million passengers each year. Delta's marketing
alliances allow customers to earn and redeem either SkyMiles or
WorldPerks on more than 16,000 daily flights offered by SkyTeam
and other partners.
The merger closed on October 29, 2008.
Prior to the merger, Delta was the world's second-largest airline
in terms of passengers carried and Northwest was the world's
fourth largest airline.
Northwest and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R.
Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at
Cadwalader, Wickersham & Taft LLP in Washington, represented the
Northwest Debtors in their restructuring efforts. The Official
Committee of Unsecured Creditors retained Scott L. Hazan, Esq., at
Otterbourg, Steindler, Houston & Rosen, P.C., as its bankruptcy
counsel. When the Northwest Debtors filed for bankruptcy, they
listed $14.4 billion in total assets and
$17.9 billion in total debts. On May 21, 2007, the Court
confirmed the Northwest Debtors' amended plan. That amended plan
took effect May 31, 2007. (Northwest Airlines Bankruptcy News;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
Delta and 18 affiliates filed for chapter 11 protection on
September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923).
Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented
the Delta Debtors in their restructuring efforts. Timothy R.
Coleman at The Blackstone Group L.P. provided the Delta Debtors
with financial advice. Daniel H. Golden, Esq., and Lisa G.
Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provided
the Official Committee of Unsecured Creditors with legal advice.
John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and
James S. Feltman at Mesirow Financial Consulting, LLC, served as
the Committee's financial advisors. On April 25, 2007, the Court
confirmed the Delta Debtors' plan. That plan became effective on
April 30, 2007. The Court entered a final decree closing 17 cases
on September 26, 2007. (Delta Air Lines Bankruptcy News;
Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
DRUG FAIR: CDI Group Files Schedules of Assets and Liabilities
--------------------------------------------------------------
CDI Group, Inc., 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 $0
B. Personal Property -
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims -
E. Creditors Holding
Unsecured Priority
Claims -
F. Creditors Holding
Unsecured Non-priority
Claims $21,117,215
----------- ------------
TOTAL $0 $21,117,215
A copy of Drug Fair's schedules of assets and debts is available
at http://www.bankrupt.com/misc/CDIGroup.Schedules.pdf
About Drug Fair Group
Headquartered in Somerset, New Jersey, Drug Fair Group, Inc. --
http://www.drugfair.com/or http://www.costcuttersonline.com/--
fka Community Distributors, Inc., operates pharmacies and general
merchandise stores in northern and central New Jersey. The
Company, with stores in central and northern New Jersey, is
indirectly owned by Sun Capital Partners Inc., a private-equity
investor based in Boca Raton, Florida.
Drug Fair and CDI Group, Inc., filed for Chapter 11 protection on
March 18, 2009 (Bankr. D. Del. Lead Case No. 09-10897). Domenic
E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr
Harrison Harvey Branzburg & Ellers, represent the Debtors in their
restructuring efforts. Warren J. Martin, Jr., Esq., and Brett S.
Moore, Esq., at Porzio Bromberg & Newman, P.C., represent the
official committee of unsecured creditors as counsel. Norman L.
Pernick, Esq., and Patrick J. Reilley, Esq., at Cole, Schotz,
Meisel, Forman & Leonard, P.A., represent the creditors committee
as Delaware counsel. J.H. Cohn LLP is the creditors committee's
financial advisors and forensic accountants. Epiq Bankruptcy
Solutions, LLC, is the Debtors' notice and claims agent. The
Debtors listed assets of $50 million to $100 million and debts of
$100 million to $500 million.
DRUG FAIR: Files Schedules of Assets and Liabilities
----------------------------------------------------
Drug Fair Group, Inc., 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 $59,936,390
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $65,387,938
E. Creditors Holding
Unsecured Priority
Claims -
F. Creditors Holding
Unsecured Non-priority
Claims $43,803,690
----------- -------------
TOTAL $59,936,390 $109,191,628
A copy of Drug Fair's schedules of assets and debts is available
at http://www.bankrupt.com/misc/DrugFair.Schedules.pdf
About Drug Fair Group
Headquartered in Somerset, New Jersey, Drug Fair Group, Inc. --
http://www.drugfair.com/or http://www.costcuttersonline.com/--
fka Community Distributors, Inc., operates pharmacies and general
merchandise stores in northern and central New Jersey. The
Company, with stores in central and northern New Jersey, is
indirectly owned by Sun Capital Partners Inc., a private-equity
investor based in Boca Raton, Florida.
Drug Fair and CDI Group, Inc., filed for Chapter 11 protection on
March 18, 2009 (Bankr. D. Del. Lead Case No. 09-10897). Domenic
E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr
Harrison Harvey Branzburg & Ellers, represent the Debtors in their
restructuring efforts. Warren J. Martin, Jr., Esq., and Brett S.
Moore, Esq., at Porzio Bromberg & Newman, P.C., represent the
official committee of unsecured creditors as counsel. Norman L.
Pernick, Esq., and Patrick J. Reilley, Esq., at Cole, Schotz,
Meisel, Forman & Leonard, P.A., represent the creditors committee
as Delaware counsel. J.H. Cohn LLP is the creditors committee's
financial advisors and forensic accountants. Epiq Bankruptcy
Solutions, LLC, is the Debtors' notice and claims agent. The
Debtors listed assets of $50 million to $100 million and debts of
$100 million to $500 million.
E & H TOPANGA: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: E & H Topanga, LLC
6171 W Century Blvd
Ste 200
Los Angeles, CA 90045-000
Bankruptcy Case No.: 09-22169
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Alan M. Ahart
Debtor's Counsel: Hardy L. Thomas, Esq.
6171 W Century Blvd
Ste 200
Los Angeles, CA 90045
Tel: (310) 848-2521
Fax: (310) 848-2522
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
The Company says it does not have unsecured creditors who are non
insiders when they filed their petition.
The petition was signed by Hardy L. Thomas, manager of the
Company.
EARTH STRUCTURES: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Earth Structures, Inc.
350 Cedar Springs Road
Spartanburg, SC 29302
Bankruptcy Case No.: 09-03768
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
District of South Carolina (Spartanburg)
Judge: Helen E. Burris
Debtor's Counsel: Jane H. Downey, Esq.
Moore Taylor & Thomas PA
1700 Sunset Blvd
PO Box 5709
West Columbia, SC 29171
Tel: (803) 796-9160
Email: jane@mttlaw.com
Estimated Assets: $1,000,001 to $100,000,000
Estimated Debts: $10,000,001 to $50,000,000
A full-text copy of the Debtor's petition, including a list of its
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/scb09-03768.pdf
The petition was signed by Steven Wicker, president of the
Company.
ECOVENTURE WIGGINS: Can't Force Sale of Some Units, Ruling Says
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida has
held that Ecoventure Wiggins Pass Ltd., can't force some parties
to comply with prepetition agreements to purchase luxury
condominum units.
Prepetition, Ecoventure signed contracts to buy units in in
Naples, Florida, known as the Aqua at Pelican Isle Yacht Club,
even though construction has not yet been completed. In some
cases, buyers put up 20% of the sale price under a so-called
accommodation agreement in which the developer had the right to
sell the unit at a higher price.
The Bankruptcy Court ruled that some purchasers effectively
terminated their purchase agreements prepetition, thus the Debtor
can't force the buyers to complete their purchase contracts. The
Court also ruled that an accommodation agreement and a purchase
agreement must be considered one contract -- thus a buyer need not
purchase a unit unless the owner was also able to perform the
accommodation agreement. By reading the two documents together,
the purchasers are entitled to discounts on the purchase price.
Ecoventure had its disclosure statement approved early this year
and originally was scheduled to confirm a Chapter 11 plan in
February. The confirmation hearing most recently was pushed back
to June 2. The company originally expected to generate $138.5
million from selling the remaining units and use the proceeds
first to repay $26.1 million to the lender that financed the
reorganization, followed by the pre-bankruptcy secured creditor
that's owed $94 million and is believed by the debtor to be over-
secured. Unsecured creditors with $7.2 million in claims would be
paid in full if actual sales come in as high as predicted.
Ecoventure Wiggins Pass Ltd. owns a luxury condominium project in
Naples, Florida, known as the Aqua at Pelican Isle Yacht Club.
The Company and two of its affiliates, Aqua at Pelican Isle Yacht
Club Marina Inc. and Pelican Isle Yacht Club Partners, Ltd., filed
for Chapter 11 protection on June 24, 2008 (Bankr. M.D. Fla. Lead
Case No.08-09197). Harley E. Riedel, Esq., and Stephen R. Leslie,
Esq., at Stichter, Riedel, Blain & Prosser, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection against their creditors, they listed assets of
$134,000,000 and debts of $101,000,000.
EDDIE BAUER: Revenues Down, Records $44MM Net Loss in Q1
--------------------------------------------------------
Eddie Bauer Holdings Inc. (NASDAQ: EBH) reported that total
revenues for the quarter ended April 4, 2009, decreased by
$33.4 million to $179.8 million, compared to $213.2 million in the
first quarter of 2008. Operating loss increased by 11.0%, or $2.8
million to $28.2 million in the quarter, primarily due to lower
net merchandise sales and gross margins, which were substantially
offset by increased savings in selling, general and administrative
expenses.
Net loss was $44,461,000 during the quarter, compared to
$19,299,000 last year.
"The first quarter was a difficult one, as the sharp downturn in
the economy took its toll on our sales. We continued to focus on
cost cutting and cash flow management, which helped mitigate the
impact of lower sales." said Neil Fiske, President and Chief
Executive Officer.
The Company had assets of $525,224,000 against debts of
$448,907,000 as of April 4, 2009.
A full-text copy of the Company quarterly report on Form 10-Q is
available at http://researcharchives.com/t/s?3d23
About Eddie Bauer
Eddie Bauer Holdings, Inc. is a specialty retailer that sells
mens' and womens' outerwear, apparel and accessories for the
modern outdoor lifestyle. As of January 3, 2009, the Company
operated 376 stores, consisting of 255 retail stores and 121
outlet stores in the United States and Canada.
Eddie Bauer was formerly known as Spiegel Inc. The Company filed
for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case
No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin,
Esq., at Shearman & Sterling, represented the Debtors in their
restructuring efforts. When the Company filed for protection from
its creditors, it listed $1,737,474,862 in assets and
$1,706,761,176 in debts. The Court confirmed the Debtors'
Modified First Amended Joint Plan of Reorganization on May 23,
2005. Spiegel's sold assets during its bankruptcy case but
retained 440 Bauer stores. Spiegel's reorganization plan gave all
the new stock to unsecured creditors, who were expected to recover
90 percent of their $1.3 billion in claims.
* * *
As reported by the Troubled Company Reporter on May 21, 2009,
Moody's Investors Service downgraded Eddie Bauer, Inc.'s
Probability of Default rating and Corporate Family rating to 'Ca'
from 'Caa2', with a continued negative outlook. The downgrade
reflects that the probability of default has increased
significantly given Eddie Bauer's ongoing efforts to change its
capital structure, particularly, its current discussions with its
convertible note holders to exchange their securities for equity.
EDDIE CABACUNGAN HIQUIANA: Voluntary Chapter 11 Case Summary
------------------------------------------------------------
Debtor: Eddie Cabacungan Hiquiana
3861 Elston Drive
San Bruno, CA 94066
Bankruptcy Case No.: 09-31323
Chapter 11 Petition Date: May 18, 2009
Court: United States Bankruptcy Court
Northern District of California (San Francisco)
Judge: Dennis Montali
Debtor's Counsel: Kenneth R. Graham, Esq.
Law Office of Kenneth R. Graham
171 Mayhew Way #208
Pleasant Hill, CA 94523
Tel: (925) 932-0170
Email: ken@1031focus.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of its 20 largest unsecured
creditors when it filed its petition.
The petition was signed by Mr. Hiquiana.
FAIRCHILD CORP: Files Schedules of Assets and Liabilities
---------------------------------------------------------
The Fairchild Corporation 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 $6,647,233
B. Personal Property $846,668,816
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $2,707
E. Creditors Holding
Unsecured Priority
Claims $80,000
F. Creditors Holding
Unsecured Non-priority
Claims $1,109,816,374
------------ --------------
TOTAL $853,316,049 $1,109,899,081
A copy of the Debtor's schedules of assets and debts is available
at http://www.bankrupt.com/misc/FairchildCorp.Schedules.pdf
Based in McLean, Virginia, The Fairchild Corporation (OTC:FCHD.PK)
-- http://www.fairchild.com/-- operates under three segments:
aerospace, real estate, and motorcycle apparel. Fairchild's
aerospace segment is engaged in the aerospace distribution
business which stocks and distributes a wide variety of parts to
operators and aerospace companies providing aircraft parts and
services to customers worldwide. Fairchild also owns and develops
commercial real estate. Fairchild's motorcycle apparel business
designs and produces apparel under private labels for third
parties, including Harley-Davidson and also owns a 49% interest in
PoloExpress, a business which designs and sells motorcycle
protective apparel, helmets, and a large selection of technical
accessories, for motorcyclists and operates approximately 96
retail shops in Switzerland and Germany.
Fairchild and 60 of its affiliates filed for Chapter 11 protection
on March 18, 2009 (Bankr. D. Del Lead Case No. 09-10899). Steven
J. Reisman, Esq., Timothy A. Barnes, Esq., and Veronique A.
Hodeau, Esq., at Curtis, Mallet-Prevost, Cold & Mosle LLP,
represent the Debtors as counsel. Jason M. Madron, Esq., Michael
J. Merchant, Esq., and Mark D. Collins, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors as co-counsel. At January
31, 2009, the Debtor had $89,433,000 in total assets and
$228,095,000 in total debts.
FAIRCHILD CORP: May Sell Banner Assets to Greenwich Aerogroup
-------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
approved the sale of substantially all of the assets of Banner
Aerospace Holding Company I, Inc., and its subsidiaries to
Greenwich AeroGroup Acquisition Corp., free and clear of all
interests, except for the permitted encumbrances and assumed
liabilities.
A copy of the Asset Purchase Agreement among the Banner Aerospace
and certain of its affiliates, as sellers, and Greenwich
AeroGroup, dated as of May 13, 2009, is available at:
http://www.bankrupt.com/misc/GreenwichAeroGroupAPA.pdf
Greenwich AeroGroup submitted the highest and best offer for the
Banner Assets at the auction on May 18, 2009. Phoenix Banner LLC,
the stalking horse bidder, submitted the next highest and best
offer.
Pursuant to the APA, as consideration of the sale, Greenwich
AeroGroup will:
(i) deliver to the Debtors, by wire transfer of immediately
available funds, an amount in cash equal to (A)
$13,450,000; plus (B) expense reimbursement of $500,000;
plus (C) $1,050,000 break-up fee; minus (D) $1,000,000
Deposit, as may be adjusted pursuant to Section 2.5 of the
APA; minus (E) the $500,00 holdback;
(ii) pay all Cure Costs;
(iii) assume certain liabilities;
(iv) repay the an agreed amount to PNC Bank.
On the closing date, Greenwich will deposit funds equal to
$500,000 into an escrow account at Wilmington Trust Company, to
satisfy, among other things, healthcare claims of the Transferred
Employees.
As reported in the Troubled Company Reporter on April 21, 2009,
the Court approved bidding procedures for the Banner Assets, and a
payment of a break-up fee of $1,050,000 and expense reimbursement
of $500,000 to Phoenix Banner, the stalking horse bidder, in the
event the Debtors consummate a sale with another party.
Based in McLean, Virginia, The Fairchild Corporation (OTC:FCHD.PK)
-- http://www.fairchild.com/-- operates under three segments:
aerospace, real estate, and motorcycle apparel. Fairchild's
aerospace segment is engaged in the aerospace distribution
business which stocks and distributes a wide variety of parts to
operators and aerospace companies providing aircraft parts and
services to customers worldwide. Fairchild also owns and develops
commercial real estate. Fairchild's motorcycle apparel business
designs and produces apparel under private labels for third
parties, including Harley-Davidson and also owns a 49% interest in
PoloExpress, a business which designs and sells motorcycle
protective apparel, helmets, and a large selection of technical
accessories, for motorcyclists and operates approximately 96
retail shops in Switzerland and Germany.
The Debtor and 60 of its affiliates filed for Chapter 11
protection on March 18, 2009 (Bankr. D. Del Lead Case No.
09-10899). Steven J. Reisman, Esq., Timothy A. Barnes, Esq., and
Veronique A. Hodeau, Esq., at Curtis, Mallet-Prevost, Cold & Mosle
LLP, represent the Debtors as counsel. Jason M. Madron, Esq.,
Michael J. Merchant, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A., represent the Debtors as co-counsel. At
Jan. 31, 2009, the Debtor had $89,433,000 in total assets and
$228,095,000 in total debts.
FAIRCHILD CORP: Panel Can Retain Butler Rubin as Counsel
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has granted
the official committee of unsecured creditors of The Fairchild
Corporation, et al., authorization to retain Butler Rubin
Saltarelli & Boyd as its bankruptcy counsel, nunc pro tunc to
April 6, 2009.
As reported in the Troubled Company Reporter on May 5, 2009,
Butler Rubin will, among others:
a) advise the committee with respect to its rights, duties and
powers in the Debtors' cases;
b) assist and advise the committee in its consultation with the
Debtors relative to the administration of the Debtors'
cases; and
c) assist the committee in analyzing the claims of the Debtors'
creditors and the Debtors' capital structure and in
negotiating with holders of claims and equity interests.
Neal L. Wolf, Esq., a partner at Butler Rubin, assured the Court
that the firm does not hold or represent any interest adverse to
the committee or the Debtors, and that the firm is a
"disinterested person" as that term is defined under Sec. 101(14)
of the Bankruptcy Code.
The primary Butler Rubin attorneys who will be representing the
committee and their corresponding rates are:
Hourly Rate
-----------
Neal L. Wolf, Esq. $625
Gerald F. Munitz, Esq. $625
Kevin J. O'Brien, Esq. $465
Karen Borg, Esq. $405
Nathan Larsen, Esq. $270
Anita Jaffe $185
Based in McLean, Virginia, The Fairchild Corporation (OTC:FCHD.PK)
-- http://www.fairchild.com/-- operates under three segments:
aerospace, real estate, and motorcycle apparel. Fairchild's
aerospace segment is engaged in the aerospace distribution
business which stocks and distributes a wide variety of parts to
operators and aerospace companies providing aircraft parts and
services to customers worldwide. Fairchild also owns and develops
commercial real estate. Fairchild's motorcycle apparel business
designs and produces apparel under private labels for third
parties, including Harley-Davidson and also owns a 49% interest in
PoloExpress, a business which designs and sells motorcycle
protective apparel, helmets, and a large selection of technical
accessories, for motorcyclists and operates approximately 96
retail shops in Switzerland and Germany.
Fairchild and 60 of its affiliates filed for Chapter 11 protection
on March 18, 2009 (Bankr. D. Del Lead Case No. 09-10899). Steven
J. Reisman, Esq., Timothy A. Barnes, Esq., and Veronique A.
Hodeau, Esq., at Curtis, Mallet-Prevost, Cold & Mosle LLP,
represent the Debtors as counsel. Jason M. Madron, Esq., Michael
J. Merchant, Esq., and Mark D. Collins, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors as co-counsel. On April 6,
2009, Roberta A. DeAngelis, the Acting U.S. Trustee for Region 3,
appointed three creditors to serve on the official committee of
unsecured creditors of the Debtors.
At Jan. 31, 2009, the Debtor had $89,433,000 in total assets and
$228,095,000 in total debts.
FAIRCHILD CORP: Panel May Hire Elliott Greenleaf as Local Counsel
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has granted
the official committee of unsecured creditors of The Fairchild
Corporation, et al., authorization to retain Elliott Greenleaf as
Delaware and conflicts counsel, nunc pro tunc to April 7, 2009.
As reported in the Troubled Company Reporter on May 5, 2009,
Elliott Greeenleaf will, among others:
a) render legal advice with respect to the powers and duties of
the committee and the other participants in the Debtors'
cases;
b) assist the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the
Debtor's business and any other matter relevant to the
bankruptcy cases, as to the extent the said matters may
affect the Debtors' creditors; and
c) participate in negotiations with parties-in-interest with
respect to any disposition of the Debtors' assets, plan of
reorganization and disclosure statement in connection with
said plan, and otherwise protect and promote the interests
of the Debtors' unsecured creditors.
Rafael X. Zahralddin-Aravena, Esq., a managing shareholder at the
Wilmington office of Elliott Greenleaf, assured the Court that the
firm does not hold or represent any interest adverse to the Debtor
or its estate, and that the firm is a "disinterested person" as
that term is defined under Section 101(14) of the Bankruptcy Code.
The primary Elliott Greenleaf attorneys who will be representing
the committee and their corresponding rates are:
Hourly Rate
-----------
Rafael X. Zahralddin-Aravena, Esq. $575
Henry F. Siedzikowski, Esq. $565
Shelley A. Kinsella, Esq. $385
Brian R. Elias, Esq. $260
Neil R. Lapinski, Esq. $375
William M. Kelleher Esq. $400
Jeffrey M. Rigby, Esq. $225
Elizabeth A. Williams, Esq. $225
Kristin A. McCloskey $200
Aron M. Pillard $200
Based in McLean, Virginia, The Fairchild Corporation (OTC:FCHD.PK)
-- http://www.fairchild.com/-- operates under three segments:
aerospace, real estate, and motorcycle apparel. Fairchild's
aerospace segment is engaged in the aerospace distribution
business which stocks and distributes a wide variety of parts to
operators and aerospace companies providing aircraft parts and
services to customers worldwide. Fairchild also owns and develops
commercial real estate. Fairchild's motorcycle apparel business
designs and produces apparel under private labels for third
parties, including Harley-Davidson and also owns a 49% interest in
PoloExpress, a business which designs and sells motorcycle
protective apparel, helmets, and a large selection of technical
accessories, for motorcyclists and operates approximately 96
retail shops in Switzerland and Germany.
Fairchild and 60 of its affiliates filed for Chapter 11 protection
on March 18, 2009 (Bankr. D. Del Lead Case No. 09-10899). Steven
J. Reisman, Esq., Timothy A. Barnes, Esq., and Veronique A.
Hodeau, Esq., at Curtis, Mallet-Prevost, Cold & Mosle LLP,
represent the Debtors as counsel. Jason M. Madron, Esq., Michael
J. Merchant, Esq., and Mark D. Collins, Esq., at Richards, Layton
& Finger, P.A., represent the Debtors as co-counsel. On April 6,
2009, Roberta A. DeAngelis, the Acting U.S. Trustee for Region 3,
appointed three creditors to serve on the official committee of
unsecured creditors of the Debtors.
At Jan. 31, 2009, the Debtor had $89,433,000 in total assets and
$228,095,000 in total debts.
FILENE'S BASEMENT: Auction for 36 Stories Scheduled for June 5
--------------------------------------------------------------
According to Bloomberg's Bill Rochelle, Filene's Basement Inc.,
will hold an auction on June 5 to determine whether better offers
will emerge for part or all of its 36 stores. An affiliate of
Stanley Chera's Crown Acquisitions is already under contract to
buy 17 stores from Filene's for $22 million. Bids that would
rival Crown must start with $22.8 million, and must be submitted
June 3. The Court will convene a hearing to consider the results
of the auction on June 10.
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot (44,000 m2) distribution center in Auburn,
Massachusetts. The store's name is derived from the subterranean
location of its flagship store, in the basement of the former
Filene's department store at Downtown Crossing in Boston,
Massachusetts.
Filene's Basement, Inc. and its affiliates filed for Chapter 22 on
May 4, 2009, (Bankr. D. Del. Case No. 09-11525) James E. O'Neill,
Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael
Seidl, Esq. and Timothy P. Cairns, Esq. at Pachulski Stang Ziehl &
Jones LLP represents the Debtors in their restructuring effort.
The Debtors listed $50,000,001 to $100,000,000 in assets and
$100,000,001 to $500,000,000 in debts.
Filene's Basement first filed for Chapter 11 bankruptcy protection
in August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000. Retail Ventures in April 2009 transferred
the unit to Buxbaum.
FILENE'S BASEMENT: Fendi Wants to Pursue Trademark Suit
-------------------------------------------------------
Italian handbag maker Fendi Srl asks the U.S. Bankruptcy Court for
the District of Delaware to lift the automatic stay to allow it to
continue a trademark counterfeiting suit originally brought in
January 2006 against Filene's Basement Inc.
Fendi Srl said its request is warranted because the parties have
completed fact investigations and witness examinations and have
filed motions for summary judgment.
Fendi Srl filed the lawsuit against Filene's and its fomer parent
Retail Ventures Inc. before the U.S. District Court for the
Southern District of New York.
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot (44,000 m2) distribution center in Auburn,
Massachusetts. The store's name is derived from the subterranean
location of its flagship store, in the basement of the former
Filene's department store at Downtown Crossing in Boston,
Massachusetts.
Filene's Basement, Inc. and its affiliates filed for Chapter 22 on
May 4, 2009, (Bankr. D. Del. Case No. 09-11525) James E. O'Neill,
Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael
Seidl, Esq. and Timothy P. Cairns, Esq. at Pachulski Stang Ziehl &
Jones LLP represents the Debtors in their restructuring effort.
The Debtors listed $50,000,001 to $100,000,000 in assets and
$100,000,001 to $500,000,000 in debts.
Filene's Basement first filed for Chapter 11 bankruptcy protection
in August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000. Retail Ventures in April 2009 transferred
the unit to Buxbaum.
FILENE'S BASEMENT: Court to Consider Cash Collateral Use on May 26
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized,
on an interim basis, Filene's Basement, Inc., and its debtor-
affiliates to:
-- access cash securing repayment of loan from prepetition
secured lenders; and
-- provide adequate protection to prepetition agent and other
prepetition secured parties, and the prepetition junior
participant.
A final hearing on the Debtors' motion is scheduled for May 26,
2009, at 11:00 a.m. (Eastern Time) before Hon. Mary F. Walrath, at
Courtroom No. 4 at the U.S. Bankruptcy Court for the District of
Delaware. Objections, if any, are due May 19, 2009, at 4:00 p.m.
(Eastern Time.)
Pre-bankruptcy, the Debtors were parties to a Second Amended and
Restated Loan and Agreement dated as of January 23, 2008, with
National City Business Credit, Inc., as administrative agent,
collateral agent, L/C issuer and lender, National City Bank, as
L/C issuer and lead aranger, Wells Fargo Retail Finance, LLC, and
Wachovia Capital Finance Corporation (Central), as co-
documentation agents and the lenders that are parties thereto from
time to time, pursuant to which the prepetition lenders provided
credit and letter of credit facilities to the Debtor and provided
other financial accommodations to the Debtor.
The prepetition revolver facility provided the Debtor with up to
revolving commitments, including $100,000,000 in aggregate maximum
principal amount of letter of credit and swingline loan
commitments, with a sublimit for letters of credit and bankers'
acceptances of $25,000,000.
The Debtors are also party to that certain Last Out Participation
Agreement dated as of February 11, 2009, with the prepetition
agent, as agent, and Retail Ventures, Inc., pursuant to which, the
prepetition junior participant purchased a junior last out
participation in the prepetition revolver facility in the
principal amount of $7,500,000.
As of Feline's Basement's petition date, the outstanding principal
amount of all loans, including the prepetition participation
obligations was $16,981,631. The prepetition obligations are
guaranteed by certain non-debtors.
The Debtors granted security interests in and liens on
substantially all assets of the Debtors to the prepetition agent
and the prepetition liens.
The prepetition agent, the prepetition lenders and the prepetition
junior participant have consented to the Debtor's use of the cash
collateral in which they assert interest solely up to the amounts
and for the purpose identified in the budget.
The use of cash collateral will terminate at 3 business days after
receipt of notice from the prepetition agent that an event of
default ha s occurred and is continuing, or 48 calendar days after
the date of execution of the asset purchase agreement among FB and
FB Leasing and Crown FN LLC.
The prepetition lenders, and the prepetition junior participant,
will receive: (a) the adequate protection liens; (b) the adequate
protection superpriority claim; (c) the adequate protection
payments; and (d) the prepetition indemnity account.
BofA Objects
Bank of America, N.A. and BA Merchant Services LLC, a secured
creditor, object to the Debtors' motion to access cash collateral,
on these grounds:
-- BofA's liens must be included in the definition of
"permitted prior liens";
-- Filene's Basement is only entitled to the net proceeds after
the bank settles all chargebacks due to the bank before
remitting any proceeds to the Debtor;
-- the budget must anticipate to accommodate the bank's prior
rights in the credit card records, receivables and the
proceeds thereof and adjust the revenue budget accordingly;
-- adequate protection liens must be junior to all petition
date valid liens;
-- the proposed order appears to impair the bank's rights on
the Debtors' accounts and the proceeds thereof in which the
bank holds an interest and must be limited so as not to
impair the rights; and
-- the bank requires a replacement lien on postpetition
property of the Debtors' estate of the same kind to which
the bank's lien attached prepetition, plus the establishment
of a funded reserve.
The bank adds that the Debtors must resolve these objections.
About Filene's Basement Corp.
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot (44,000 m2) distribution center in Auburn,
Massachusetts. The store's name is derived from the subterranean
location of its flagship store, in the basement of the former
Filene's department store at Downtown Crossing in Boston,
Massachusetts.
Filene's Basement, Inc. and its affiliates filed for Chapter 22 on
May 4, 2009, (Bankr. D. Del. Case No. 09-11525) James E. O'Neill,
Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael
Seidl, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl
& Jones LLP represents the Debtors in their restructuring effort.
The Debtors listed $50,000,001 to $100,000,000 in assets and
$100,000,001 to $500,000,000 in debts.
Filene's Basement filed for Chapter 11 bankruptcy protection in
August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000.
Retail Ventures in April 2009 transferred the unit to Buxbaum
Group, which appraises and liquidates assets, for no proceeds.
FILENE'S BASEMENT: Proposes Pachulski Stan as Bankruptcy Counsel
----------------------------------------------------------------
Filenes Basement, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware for permission to
employ Pachulski Stang Ziehl & Jones LLP as counsel.
PSZ&J will, among other things:
-- provide legal advice with regards to the Debtors' powers and
duties as debtors-in-possession in the continued operation
of their business and management of their property;
-- prepare on behalf of the Debtors any necessary applications,
motions, answers, orders, reports and other legal papers;
and
-- appear in Court on behalf of the Debtors.
The hourly rates of PSZ&J personnel are:
Laura Davis Jones $795
David M. Bertenthal $645
Joshua M. Fried $535
James E. O'Neill $535
Michael R. Seidl $495
Timothy P. Cairns $395
Mark M. Billion $325
Monica Molitor $225
Lynzy Oberholzer $210
Pre-bankruptcy, PSZ&J received $551,039 in connection with the
prepetition representation of the Debtors. PSZ&J is current as of
the petition date but has not completed a final reconciliation of
its prepetition fees and expenses.
To the best of the Debtors' knowledge, PSZ&J is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Pachulski, Stang, Ziehl & Jones LLP,
919 North Market Street, 17th Floor
Wilmington, DE 19801
Tel: (302) 652-4100
Fax: (302) 652-4400
About Filene's Basement Corp.
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot (44,000 m2) distribution center in Auburn,
Massachusetts. The store's name is derived from the subterranean
location of its flagship store, in the basement of the former
Filene's department store at Downtown Crossing in Boston,
Massachusetts.
Filene's Basement, Inc. and its affiliates filed for Chapter 22 on
May 4, 2009, (Bankr. D. Del. Case No. 09-11525) James E. O'Neill,
Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael
Seidl, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl
& Jones LLP represents the Debtors in their restructuring effort.
The Debtors listed $50,000,001 to $100,000,000 in assets and
$100,000,001 to $500,000,000 in debts.
Filene's Basement filed for Chapter 11 bankruptcy protection in
August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000.
Retail Ventures in April 2009 transferred the unit to Buxbaum
Group, which appraises and liquidates assets, for no proceeds.
FILENE'S BASEMENT: U.S. Trustee Appoints 7-Member Creditors' Panel
------------------------------------------------------------------
Roberta A. DeAngelis, Acting United States Trustee for Region 3,
appointed seven creditors to serve on the official committee of
unsecured creditors in Filene's Basement Corp. and its debtor-
affiliates' Chapter 11 cases:
The Committee members are:
1. Simon Property Group, Inc.
Attn: Ronald Tucker
225 W. Washington St.
Indianapolis, IN 46204
Tel: (317) 263-2346
Fax: (317) 263-7901
2. Boston Globe
Attn: Brent Turner
135 Morrissey Blvd.
Boston, MA 02125
Tel: (617) 929-2160
Fax: (617) 929-7664
3. Phillips-Van Heusen Corporation
Attn: Ann Ralko
1001 Frontier Rd.
Bridgewater, NJ 08807
Tel: (908) 698-6193
Fax: (908) 698-8534
4. Warnaco/Calvin Klein Division
Attn: Therese Sinko
470 Wheelers Farms Rd.
Milford, CT 06461
Tel: (203) 301-7240
Fax: (203) 301-7976
5. Jones Apparel Group, Inc.
Attn: Sharyn Wismann
180 Rittenhouse Circle
Bristol, PA 19007
Tel: (215) 781-5520
Fax: (215) 826-6901
6. Oxford Industries, Inc.
Attn: Michael Scott
222 Piedmont Ave.
Atlanta, GA 30308
Tel: (404) 653-1564
Fax: (404) 424-0801
7. Polo Ralph Lauren Corp.
Attn: Kenneth Cruz
9 Polito Ave.
Lyndhurst, NJ 07071,
Tel: (201) 531-6571
Fax: (201) 531-6915
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 Filene's Basement Corp.
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot (44,000 m2) distribution center in Auburn,
Massachusetts. The store's name is derived from the subterranean
location of its flagship store, in the basement of the former
Filene's department store at Downtown Crossing in Boston,
Massachusetts.
Filene's Basement, Inc. and its affiliates filed for Chapter 22 on
May 4, 2009, (Bankr. D. Del. Case No. 09-11525) James E. O'Neill,
Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael
Seidl, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl
& Jones LLP represents the Debtors in their restructuring effort.
The Debtors listed $50,000,001 to $100,000,000 in assets and
$100,000,001 to $500,000,000 in debts.
Filene's Basement filed for Chapter 11 bankruptcy protection in
August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000.
Retail Ventures in April 2009 transferred the unit to Buxbaum
Group, which appraises and liquidates assets, for no proceeds.
FILENE'S BASEMENT: Wants to Crown-Led Auction for Store Leases
--------------------------------------------------------------
Filenes Basement, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to:
a) approve authorize the sale of certain assets to Crown FB LLC
or its permitted assigns or to a higher and better bidder;
b) authorize the sale of assets free and clear of all liens,
claims, encumbrances and interest;
c) authorize the assumption and assignment of certain excutory
contracts and unexpired leases.
d) approve bid procedures and set bid deadline;
e) set the date and time of the auction at the offices of
Pachulski, Stang, Ziehl & Jones LLP, 919 N. Market St., 17th
Floor, Wilmington, Delaware.
To maximize the value of their business and assets, the Debtors
determined to market and sell certain of their assets through (a)
a sale of the assets to the Purchaser which consist of certain of
the Debtors' real property leases, contracts and property to the
highest or otherwise best bidder; and (b) evaluation of other
possible sales or asset dispositions for the Debtors' remaining
assets.
The sale of the assets will be on an as is, where is basis and
with representations or warranties of any kind, nature, or
description by the Debtors, their agents or their estates.
The terms of the Purchaser's offer to purchase the Assets are:
Purchase Price: 22,000,000 plus (ii) the Security
Deposits
Good Faith Deposit: An amount equal to $5,000,000 to be
funded in the amount of $1,000,000
upon execution of the Agreement and
$4,000,000 on the date that the
Bankptcy Court issues the bid
procedures order containing approval
of the break-up fee.
Assets: The Debtors' assets including certain
(a) assumed leases which include
leases for 16 of the Debtors' store
locations, (b) assumed contracts, (c)
intellectual property, (d) fixed
assets and equipment, (e) customer
information, (f) security deposits,
(g) books and records, (h) permits
and certain other assets.
Assumed Liabilities: Those Liabilities arising with
respect to the performance after the
closing date of the assumed
contracts, excluding any liability
resulting from any breach there of by
the seller on or prior to the closing
date.
Break-Up Fee/Expense
Reimbursement: Break-up fee of $660,000 and an
expense reimbursement up to $150,000
Closing: 2 business days after the
satisfaction or waiver of all
conditions to the obligations of the
parties with an outside closing date
of July 31, 2009.
For more information on the bid procedures, contact:
Laura Davis Jones, Esq.
Pachulski, Stang, Ziehl & Jones LLP,
919 North Market Street, 17th Floor
Wilmington, DE 19801
Tel: (302) 652-4100
Fax: (302) 652-4400
About Filene's Basement Corp.
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot (44,000 m2) distribution center in Auburn,
Massachusetts. The store's name is derived from the subterranean
location of its flagship store, in the basement of the former
Filene's department store at Downtown Crossing in Boston,
Massachusetts.
Filene's Basement, Inc. and its affiliates filed for Chapter 22 on
May 4, 2009, (Bankr. D. Del. Case No. 09-11525) James E. O'Neill,
Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael
Seidl, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl
& Jones LLP represents the Debtors in their restructuring effort.
The Debtors listed $50,000,001 to $100,000,000 in assets and
$100,000,001 to $500,000,000 in debts.
Filene's Basement filed for Chapter 11 bankruptcy protection in
August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000.
Retail Ventures in April 2009 transferred the unit to Buxbaum
Group, which appraises and liquidates assets, for no proceeds.
FREEDOM FIRE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Freedom Fire Protection, Inc.
1501 Iron Street
Kansas City, MO 64116
Bankruptcy Case No.: 09-21564
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
District of Kansas (Kansas City)
Judge: Dale L. Somers
Debtor's Counsel: Richard C. Wallace, Esq.
Evans & Mullinix, P.A.
7225 Renner Road
Ste. 200
Shawnee, KS 66217
Tel: (913) 962-8700
Fax: (913) 962-8701
Email: richard@evans-mullinix.com
Total Assets: $2,583,886
Total Debts: $4,029,540
A full-text copy of the Debtor's petition, including a list of its
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/ksb09-21564.pdf
The petition was signed by Keith A. Kurre, president of the
Company.
GEORGE'S CONCRETE: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: George's Concrete Pumping, Inc.
P.O. Box 33604
Indianapolis, IN 46203
Bankruptcy Case No.: 09-07108
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
Southern District of Indiana (Indianapolis)
Judge: Anthony J. Metz III
Debtor's Counsel: David R. Krebs, Esq.
Hostetler & Kowalik P.C.
101 W. Ohio St.
Suite 2100
Indianapolis, IN 46204
Tel: (317) 262-1001
Fax: (317) 262-1010
Email: drk@hostetler-kowalik.com
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including a list of its
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/innb09-07108.pdf
The petition was signed by George A. Knapp, president of the
Company.
GOLDEN STATE: Case Summary & 8 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Golden State Enterprises, LLC
73-111 El Paseo
Suite 209
Palm Desert, CA 92260
Bankruptcy Case No.: 09-20542
Chapter 11 Petition Date: May 18, 2009
Court: United States Bankruptcy Court
Central District of California (Riverside)
Judge: Meredith A. Jury
Debtor's Counsel: David B. Golubchik, Esq.
Levene Neale Bender Rankin & Brill LLP
10250 Constellation Blvd
Ste 1700
Los Angeles, CA 90067
Tel: (310) 229-1234
Email: dbg@lnbrb.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including a list of its
8 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-20542.pdf
The petition was signed by George Nicholas, Jr., authorized agent
of the Company.
GREEKTOWN CASINO: Detroit Seeks to Issue Default Notice
-------------------------------------------------------
The city of Detroit, Michigan, asks the U.S. Bankruptcy Court for
the Eastern District of Michigan to lift the automatic stay so
that it can issue a notice of default to Greektown Casino and its
debtor-affiliates pursuant to the parties' development agreement.
The City of Detroit clarifies that it only seeks to issue a notice
of default, it does not attempt to claim possession of estate
property, and the Debtors would not be significantly prejudiced by
lifting the automatic stay.
Cezar M. Froelich, Esq., at Shefsky & Froelich Ltd., in Chicago,
Illinois, notes that pursuant to the Court's opinion, one of the
grounds for the granting of the Debtors' request to assume the
parties' agreement was Detroit's alleged failure to provide the
requisite notice under the Development Agreement of certain
defaults.
Detroit believes that issuance of a notice of default to the
Debtors pursuant to the Development Agreement would not be a
violation of the automatic stay. Mr. Froelich, however, points
out that certain courts have held that a landlord who issues a
lease default and termination notice to a debtor has violated the
automatic stay, noting that Section 362(a)(3) of the Bankruptcy
Code operates as a stay against any act to obtain possession of
property of the estate or property from the estate and that
property of the estate includes all legal and equitable interests.
He says Detroit filed the Lift Stay Motion out of an abundance of
caution.
As reported by the Troubled Company Reporter on May 15, 2009, the
Honorable Judge Walter Shapiro issued an opinion declaring
Greektown Casino-Hotel is not in default of the development
agreement it entered into with Detroit and the Economic
Development Corporation of the City of Detroit, and in turn
granted Greektown's motion to assume the development agreement.
Judge Shapiro noted in his opinion, ". . . particularly in this
case, the Court believes the assumption statute contemplates and
favors affording Greektown (and the City as well) the full range
of the benefits and obligations of, and in, their carefully
negotiated bargain." He concluded, ". . . Greektown's motion is
granted and it should present an appropriate order."
The Debtors had argued before the Court that assumption of the
Development Agreement will be beneficial to their estates as it
will allow them to continue operations. The Debtors said the
Development Agreement is also necessary for them to be awarded the
critical Tax Rollback. All these will greatly enhance the value
of Greektown Casino's bankruptcy estate; increase its
profitability; and maximize its competitive ability, Daniel J.
Weiner, Esq., at Schafer and Weiner PLLC, in Bloomfield Hills,
Michigan, had told the Court.
Detroit has claimed that the Debtors are in default of an
obligation under the Development Agreement to pay development
process costs totaling $663,185. Mr. Weiner, however, has argued
that the Debtors are required to pay only costs incurred by the
City that are "proper," "necessary," and "reasonable," as
supported by documentation and detailed as deemed necessary to
verify the costs.
Mr. Weiner has said Detroit failed to produce detailed invoices
and time records of its professionals so that the Debtors may
verify the propriety and reasonableness of the claimed Development
Process Costs.
Detroit has asserted that the Debtors' failure to timely complete
building the casino and conduct a public offering required by the
Development Agreement are both historical non-monetary defaults
incapable of cure and therefore, prevent the Debtors from assuming
the Development Agreement.
In his Opinion on Assumption Request, Judge Shapero noted that
because Detroit did not provide Greektown with a notice of
default, the Development Agreement can be assumed. "It is both
apparent from presented evidence and agreed to by Greektown and
the City that the required notice of default has not yet been
given. The specific evidence is that the City had brought some,
if not all, of the claimed defaults to Greektown's attention at
various times prior to the filing of the assumption motion, both
orally and in writing. However, none of those communications were
tantamount to, or met the contractual requirements of, the
required notice of default," Judge Shapero opined.
However, any tax rollback must be approved by the Michigan Gaming
Control Board. In this regard, the Court clarified that it makes
no ruling or finding on the Debtors' other responsibilities that
may or may not relate to whether or not the Debtors is in default
under the Development Agreement, including the Debtors' duties to
the Gaming Board.
Charles M. Moore, Senior Managing Director at Conway MacKenzie,
Inc., believes the tax rollback may improve Greektown's cash flow
by $4.2 million, according to The Detroit Free Press.
Detroit Seeks Speedy Hearing
In a separate filing, the City asks the Court to conduct an
expedited hearing on the request. The Court, however, denied
Detroit's request. Judge Shapero ruled that the City of Detroit
did not provide enough cause to expedite the hearing.
Subsequently, Detroit made another request to lift the automatic
stay. Mr. Froelich said that at a May 18, 2009 hearing, the Court
directed counsel to the City of Detroit to ask for an expedited
hearing in a new request to lift the automatic stay "rather than
litigate the date of the next omnibus hearing date."
Accordingly, the City asked the Court to conduct a hearing on June
3, 2009, with respect to its current request on notice issuance,
with objections to be filed no later than May 29, 2009.
Without emergency consideration of the matter, Mr. Froelich argued
the City of Detroit will suffer serious prejudice as it would be
required to wait an additional five weeks for the next omnibus
hearing date to have a hearing on its request to lift the
automatic stay to issue a formal default notice.
About Greektown Casino
Based in Detroit, Michigan, Greektown Holdings, LLC, and its
affiliates -- http://www.greektowncasino.com/-- operates world-
class casino gaming facilities located in Detroit's historic
Greektown district featuring more than 75,000 square feet of
casino gaming space with more than 2,400 slot machines, over 70
tables games, a 12,500-square foot salon dedicated to high limit
gaming and the largest live poker room in the metropolitan Detroit
gaming market.
Greektown Casino employs approximately 1,971 employees, and
estimates that it attracts over 15,800 patrons each day, many of
whom make regular visits to its casino complex and related
properties. In 2007, Greektown Casino achieved a 25.6% market
share of the metropolitan Detroit gaming market. Greektown Casino
has also been rated as the "Best Casino in Michigan" and "Best
Casino in Detroit" numerous times in annual readers' polls in
Detroit's two largest newspapers.
The company and seven of its affiliates filed for Chapter 11
protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No.
08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and
Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the
Debtors in their restructuring efforts. Judy B. Calton, Esq., at
Honigman Miller Schwartz and Cohn LLP, represents the Debtors as
their special counsel. The Debtors chose Conway MacKenzie &
Dunleavy as their financial advisor, and Kurtzman Carson
Consultants LLC as claims, noticing, and balloting agent.
When the Debtor filed for protection from its creditors, it listed
consolidated estimated assets and debts of $100 million to
$500 million.
(Greektown Casino Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
GREEKTOWN CASINO: MGCB Says April 2009 Revenues Total $28.5MNM
--------------------------------------------------------------
The Michigan Gaming Control Board stated in its Web site that
Greektown Casino's aggregated revenues for April 2009 is
$28,589,866. Of this revenue, Greektown Casino's state wagering
tax is $3,459,373.
In March 2009, Greektown's aggregate revenue was 29,974,562 while
its state wagering tax was $3,626,922.
The Gaming Board also released the April 2009 revenues of two
other Detroit casinos, MGM Grand Detroit and MotorCity Casino.
The Board notes that MGM Grand Detroit earned $44,249,852 in April
2009 and MotorCity Casino had $38,539,338 in revenues for the same
period.
In March 2009, MGM Grand earned $48,417,844 while MotorCity earned
$41,632,619.
On May 7, 2009, the MGCB announced April earnings -- showing that
Greektown was the only casino in the jurisdiction that achieved a
year-over-year increase in revenue compared to April 2008. The
earnings results released by MGCB also showed Greektown had
increased its market share for the third straight month for a
total increase of 2.9 percent during that period, announced
Greektown officials.
"In April, for the first time since Greektown filed for
bankruptcy, our EBITDA exceeded pre-bankruptcy levels," said
Randall A. Fine, Managing Director of The Fine Point Group and
Chief Executive Officer of Greektown. "We are very pleased with
the numbers and we're working hard to continually achieve these
results month after month. Our year-over-year increase, even
though it was small, is very impressive given that the economy
today is much worse than it was in April 2008," Fine added. "It
shows players in the market are responding to the value we are
providing from $99 room rates and a $9.99 buffet to complimentary
beverages, new promotions and offers that give our customers more
ways to play, more ways to win and more ways to have fun. We are
giving our customers what they want."
On May 5, 2009, continuing a trend that started in February, for
the third consecutive month Greektown Casino-Hotel increased its
market share from 25 percent in March to 25.7 percent in April.
From January, where the property had 22.8 percent share, the net
increase is 2.9 percent, an increase of 13 percent, announced
Greektown officials.
"Despite being at a competitive disadvantage due to the Final Four
and a competitor's offer of cash to any of our customers who
showed their CLUB Greektown card, our strategy of providing
Detroiters more ways to win, more ways to have fun, and more value
for their dollar is resonating in the marketplace. Our hotel is
80 percent full, and we have more than tripled our buffet covers
since implementing our strategy," said Randall A. Fine, Managing
Director of The Fine Point Group and Chief Executive Officer of
Greektown.
"We are particularly pleased that for the first time since The
Fine Point Group became involved in January, our operating income
was higher year-over-year - and that's compared to last year when
we were not in bankruptcy," Fine added. "Moreover, we beat the
independently prepared financial plan for the second month in a
row by 100 percent. May has started strong, and we look forward to
continued success moving forward."
MGCB Approves 2 Execs for Hotel
Greektown Casino-Hotel disclosed the approval of two executives by
the MGCB. While both have been advising Greektown pending
regulatory approval by the MGCB, Randall A. Fine has now been
confirmed as Chief Executive Officer and Amanda Totaro has been
confirmed as Vice President of Marketing. Fine and Totaro are
also the Managing Director and Senior Vice President, Branding
Practice, respectively, at The Fine Point Group, the Las Vegas-
based casino management and consulting firm retained by Greektown
to provide comprehensive operations and marketing management.
"We are very pleased with the Michigan Gaming Control Board
confirmation and are excited to officially assume these roles,"
said Fine in a company statement. "Since commencing our work with
the property in January, The Fine Point Group has helped Greektown
nearly double its profitability plan while substantially
increasing market share. As our involvement moves to the next
level, we are going to push even harder to offer the best value,
the best service, and the best product to each and every customer
in the Detroit market," he added.
Since The Fine Point Group began advising Greektown Casino-Hotel
in January 2009, the property has increased its market share from
22.8 percent in January to 25 percent in March, according to MGCB
figures, a net increase of almost 10 percent.
About Greektown Casino
Based in Detroit, Michigan, Greektown Holdings, LLC, and its
affiliates -- http://www.greektowncasino.com/-- operates world-
class casino gaming facilities located in Detroit's historic
Greektown district featuring more than 75,000 square feet of
casino gaming space with more than 2,400 slot machines, over 70
tables games, a 12,500-square foot salon dedicated to high limit
gaming and the largest live poker room in the metropolitan Detroit
gaming market.
Greektown Casino employs approximately 1,971 employees, and
estimates that it attracts over 15,800 patrons each day, many of
whom make regular visits to its casino complex and related
properties. In 2007, Greektown Casino achieved a 25.6% market
share of the metropolitan Detroit gaming market. Greektown Casino
has also been rated as the "Best Casino in Michigan" and "Best
Casino in Detroit" numerous times in annual readers' polls in
Detroit's two largest newspapers.
The company and seven of its affiliates filed for Chapter 11
protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No.
08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and
Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the
Debtors in their restructuring efforts. Judy B. Calton, Esq., at
Honigman Miller Schwartz and Cohn LLP, represents the Debtors as
their special counsel. The Debtors chose Conway MacKenzie &
Dunleavy as their financial advisor, and Kurtzman Carson
Consultants LLC as claims, noticing, and balloting agent.
When the Debtor filed for protection from its creditors, it listed
consolidated estimated assets and debts of $100 million to
$500 million.
(Greektown Casino Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
GREEKTOWN CASINO: Might Abandon Sale After Getting Low Bids
-----------------------------------------------------------
Charles M. Moore, Senior Managing Director at Conway MacKenzie,
Inc., informed the Michigan Gaming Control Board that offers
received for the Greektown Casino Complex are less than what the
Company and its creditors anticipated, The Detroit News reports.
"There was disappointment at the value of the bids we've seen so
far. Our creditors don't believe [the bids] adequately compensate
for the performance of the property," the newspaper quoted Mr.
Moore as saying.
Conway MacKenzie serves as Greektown's financial adviser and Mr.
Moore is currently assisting the Company in marketing the Casino
Complex to the highest bidder. The Company expects any proceeds
of a casino sale to help in paying off its liabilities.
Greektown's management has undertaken new marketing strategies to
revive business for its casino, including $99-a-night hotel deals
and low-price buffet offers. Still, low offers have been
generated for the Casino Complex.
Two bidders have made known their interest in acquiring the
Greektown Casino Complex, Tom Celani and Penn National Gaming,
Inc. However, details of the purchase proposals have not been
made public.
Greektown's Court-approved postpetition financing deal with
Merrill Lynch requires the Company to submit a bankruptcy plan by
June 1, 2009. Less than two weeks away, the Company either has to
choose between pursuing a sale of its Casino Complex or seek to
restructure its debts and business operations. Mr. Moore says
with the low bids received for the Casino, Greektown might
concentrate more on finding alternatives to restructure its debts,
the report says.
About Greektown Casino
Based in Detroit, Michigan, Greektown Holdings, LLC, and its
affiliates -- http://www.greektowncasino.com/-- operates world-
class casino gaming facilities located in Detroit's historic
Greektown district featuring more than 75,000 square feet of
casino gaming space with more than 2,400 slot machines, over 70
tables games, a 12,500-square foot salon dedicated to high limit
gaming and the largest live poker room in the metropolitan Detroit
gaming market.
Greektown Casino employs approximately 1,971 employees, and
estimates that it attracts over 15,800 patrons each day, many of
whom make regular visits to its casino complex and related
properties. In 2007, Greektown Casino achieved a 25.6% market
share of the metropolitan Detroit gaming market. Greektown Casino
has also been rated as the "Best Casino in Michigan" and "Best
Casino in Detroit" numerous times in annual readers' polls in
Detroit's two largest newspapers.
The company and seven of its affiliates filed for Chapter 11
protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No.
08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and
Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the
Debtors in their restructuring efforts. Judy B. Calton, Esq., at
Honigman Miller Schwartz and Cohn LLP, represents the Debtors as
their special counsel. The Debtors chose Conway MacKenzie &
Dunleavy as their financial advisor, and Kurtzman Carson
Consultants LLC as claims, noticing, and balloting agent.
When the Debtor filed for protection from its creditors, it listed
consolidated estimated assets and debts of $100 million to
$500 million.
(Greektown Casino Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
GREEKTOWN CASINO: Schafer Seeks $457,045 for 3 Months' Work
-----------------------------------------------------------
Professionals retained in the bankruptcy cases of Greektown
Holdings, LLC, and its affiliates submitted certificates of no
objection regarding their requests for payment of services
rendered and expenses incurred for the period from December 2008
through February 2009:
-- Fine Point Consulting, Inc. d/b/a The Fine Point Group
-- Floyd E. Allen & Associates P.C.
-- Conway McKenzie, Inc.
-- Ernst & Young LLP
-- Honigman Miller Schwartz and Cohn LLP
-- Moelis & Company LLC
-- Clark Hills PLC
-- XRoads Solutions Group LLC
The Court granted the interim fee applications of six
professionals for the allowance of fees for services rendered and
reimbursement of expenses incurred for the period from December
2008 through February 2009:
A. Debtors' Professionals
Firm Role Fees Expenses
---- ---- -------- --------
Schafer and General $457,045 $11,799
Weiner, PLLC Counsel
Floyd E. Allen & Special 19,711 2
Associates P.C. Labor
Counsel
Moelis & Co. Investment 450,000 41,485
Banker
Ernst & Young Accountant 231,015 2,665
Fine Consulting, Gaming 225,000 273,987
Inc. d/b/a The Consultant
Fine Point Group
B. Committee's Professionals
XRoads Solutions Financial 228,086 1,755
Group LLC Advisor
Based in Detroit, Michigan, Greektown Holdings, LLC, and its
affiliates -- http://www.greektowncasino.com/-- operates world-
class casino gaming facilities located in Detroit's historic
Greektown district featuring more than 75,000 square feet of
casino gaming space with more than 2,400 slot machines, over 70
tables games, a 12,500-square foot salon dedicated to high limit
gaming and the largest live poker room in the metropolitan Detroit
gaming market.
Greektown Casino employs approximately 1,971 employees, and
estimates that it attracts over 15,800 patrons each day, many of
whom make regular visits to its casino complex and related
properties. In 2007, Greektown Casino achieved a 25.6% market
share of the metropolitan Detroit gaming market. Greektown Casino
has also been rated as the "Best Casino in Michigan" and "Best
Casino in Detroit" numerous times in annual readers' polls in
Detroit's two largest newspapers.
The company and seven of its affiliates filed for Chapter 11
protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No.
08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and
Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the
Debtors in their restructuring efforts. Judy B. Calton, Esq., at
Honigman Miller Schwartz and Cohn LLP, represents the Debtors as
their special counsel. The Debtors chose Conway MacKenzie &
Dunleavy as their financial advisor, and Kurtzman Carson
Consultants LLC as claims, noticing, and balloting agent.
When the Debtor filed for protection from its creditors, it listed
consolidated estimated assets and debts of $100 million to
$500 million.
(Greektown Casino Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
GREEKTOWN CASINO: Seeks to Hire Jackier as Special Counsel
----------------------------------------------------------
Greektown Holdings, LLC, and its affiliates ask the U.S.
Bankruptcy Court for the Eastern District of Michigan for
authority to employ Jackier Gould PC as their special counsel
effective March 18, 2009.
Daniel J. Weiner, Esq., at Schafer and Weiner PLLC, in Bloomfield
Hills, Michigan, tells the Court that Honigman Miller Schwartz and
Cohn LLP, the Debtors' special corporate counsel, notified the
Debtors of a potential conflict of interest of its representation
of two individuals with connections to one of the potentially
interested bidders for the Debtors' assets. The Debtors thus
determined that they need the advice of outside legal counsel to
provide analysis on the potential conflict of interest.
The Debtors aver that they specifically need Jackier Gould to
provide opinions on certain counsel to the Debtors' representation
of two individuals with connections to one of the potentially
interested bidders for the Debtors' assets. They may also need
Jackier Gould's advice on other issues that may arise during the
course of these Chapter 11 cases.
Upon its engagement, Jackier Gould investigated the Potential
Conflict and provided the Debtors' "Restructuring Transaction"
Sub-Committee with its legal analysis and opinion as to whether
the Debtors could waive the Potential Conflict. Upon careful
analysis, Jackier Gould determined that the Debtors could waive
the Potential Conflict. The Sub-Committee subsequently approved
the waiver.
Mr. Weiner asserts that Jackier Gould's services will not
duplicate the services that other professionals provide to the
Debtors, as those services will only pertain to issues of a sub-
committee of directors considering matters related to
restructuring, like potential conflicts of interest. Jackier
Gould has also agreed to use reasonable efforts to coordinate with
the Debtors' other retained professionals to avoid duplication of
services, he adds.
The Debtors propose to pay Jackier Gould for its services in
accordance with the firm's hourly rates as well as reimburse the
firm of all necessary and reasonable out-of-pocket expenses,
including, travel, meals, accommodations and other expenses, in
relation to the contemplation retention.
Lawrence Jackier, Esq., a managing partner of Jackier Gould,
assures the Court that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The Office of the United States Trustee filed a statement
signifying its approval of the Debtors' request to employ Jackier
Gould.
As of May 13, 2009, Mr. Weiner tells the Court that no objections
have been filed with respect to the Jackier Gould Application.
About Greektown Casino
Based in Detroit, Michigan, Greektown Holdings, LLC, and its
affiliates -- http://www.greektowncasino.com/-- operates world-
class casino gaming facilities located in Detroit's historic
Greektown district featuring more than 75,000 square feet of
casino gaming space with more than 2,400 slot machines, over 70
tables games, a 12,500-square foot salon dedicated to high limit
gaming and the largest live poker room in the metropolitan Detroit
gaming market.
Greektown Casino employs approximately 1,971 employees, and
estimates that it attracts over 15,800 patrons each day, many of
whom make regular visits to its casino complex and related
properties. In 2007, Greektown Casino achieved a 25.6% market
share of the metropolitan Detroit gaming market. Greektown Casino
has also been rated as the "Best Casino in Michigan" and "Best
Casino in Detroit" numerous times in annual readers' polls in
Detroit's two largest newspapers.
The company and seven of its affiliates filed for Chapter 11
protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No.
08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and
Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the
Debtors in their restructuring efforts. Judy B. Calton, Esq., at
Honigman Miller Schwartz and Cohn LLP, represents the Debtors as
their special counsel. The Debtors chose Conway MacKenzie &
Dunleavy as their financial advisor, and Kurtzman Carson
Consultants LLC as claims, noticing, and balloting agent.
When the Debtor filed for protection from its creditors, it listed
consolidated estimated assets and debts of $100 million to
$500 million.
(Greektown Casino Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
HDGIANTS: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: Hdgiants, Inc.
926 Incline Way
Ste. 250
Incline Village, NV 89451
Bankruptcy Case No.: 09-51532
Chapter 11 Petition Date: May 18, 2009
Court: United States Bankruptcy Court
District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Stephen R. Harris, Esq.
Belding, Harris & Petroni, Ltd
417 W. Plumb Ln
Reno, NV 89509
Tel: (775) 786-7600
Fax: (775) 786-7764
Email: steve@renolaw.biz
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including a list of its
8 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nvb09-51532.pdf
The petition was signed by Scott Bahneman, president of the
Company.
HEALTH MANAGEMENT: Fitch Affirms Issuer Default Rating at 'B+'
--------------------------------------------------------------
Fitch Ratings has affirmed Health Management Associates, Inc.'s
ratings:
-- Issuer Default Rating at 'B+';
-- Secured bank facility at 'BB/RR2';
-- Senior secured notes at 'BB/RR2';
-- Subordinated convertible notes at 'B-/RR6'.
The Rating Outlook is Stable. The ratings apply to approximately
$3.1 billion in debt outstanding as of March 31, 2009.
The ratings reflect HMA's improving operational and credit profile
offset by a challenging industry environment. After lagging the
industry in organic volume growth (as measured by same store
admissions growth) for the first nine months of 2008, HMA has led
the industry over the past two quarters. New strategies focused
on emergency room services, physician recruiting and business
development appear to be gaining traction under new leadership.
Fitch believes that these strategies, if executed successfully,
could lead to continued volume growth later in 2009 and 2010. In
addition, HMA realized substantial benefits during the first
quarter from recent cost management initiatives, including a 150
basis point year-over-year improvement in labor expense, largely
as a result of headcount reductions. However, Fitch notes that
more time is necessary to fully assess whether recent improvements
will prove sustainable, especially if industry conditions
deteriorate.
HMA's credit metrics have also improved with leverage declining to
4.71 times (x) for the last 12 months ended March 31, 2009 from
5.43x for the LTM ended March 31, 2008. Since Jan. 1, 2008, HMA
has reduced outstanding debt by more than $650 million or 17%, and
Fitch believes the company will continue to apply free cash flow
to debt. As a result, Fitch expects leverage to decline to below
4.0x over the next few years.
HMA's credit profile is also supported by a favorable maturity
schedule and ample liquidity. HMA has no meaningful debt
maturities until 2014 other than the undrawn revolver which
expires in 2013. Liquidity is provided by cash on hand ($103
million at March 31, 2009), availability on the company's $500
million senior secured revolver ($457 million available at March
31, 2009), and free cash flow ($135 million for the LTM March 31,
2009). In 2009, Fitch expects free cash flow to remain relatively
consistent with current levels as the company benefits from recent
cost management efforts and reduced capital expenditures partially
offset by a deteriorating economic and reimbursement environment.
However, free cash flow could weaken in 2010 as a result of
reimbursement pressures if HMA does not gain sufficient traction
from its initiatives.
Although HMA's credit profile has improved, Fitch notes that HMA
was within 19 basis points of triggering its interest coverage
covenant and 63 basis points of its leverage covenant under the
outstanding credit agreement at March 31, 2009 and that these
covenants tighten over time. However, Fitch believes that HMA
will remain in compliance with its covenants over the next few
years and that the company has sufficient visibility into its
performance vs. the covenants to enact contingency plans - such as
asset divestitures or reduced capital spending - in time to avoid
any violations. Furthermore, Fitch expects the covenant
calculated leverage and coverage to improve in 2009 as
discontinued operations divested in 2008 are annualized out of
calculated EBITDA and as interest expense declines due to debt
reductions. However, if HMA's operations deteriorate to the point
where triggering the covenants appears likely and the company has
not taken appropriate measures to address the situation, a
negative ratings action would result.
Fitch remains concerned about the potential for industry
challenges to pressure the credit later in 2009 and 2010.
Although the industry's first quarter performance indicates that
the economic environment is having little, if any, impact on the
sector, Fitch believes that the industry could still be pressured
later in 2009. Fitch expects the rising unemployment rate to
eventually lead to declining volumes and increasing bad debt
expense in the sector, while cost cutting measures taken across
the industry, such as reductions in wage rates and
nondiscretionary spending, may not be fully sustainable.
It should be noted, however, that the hospital industry is
relatively non-cyclical, with the most significant external factor
being regulatory, not economic, changes. The industry is
currently in one of the most active regulatory environments in
years with numerous proposals being discussed that could have
profound positive or negative impacts on the sector. Although the
majority of recent actions (COBRA funding, increased federal
Medicaid matching, SCHIP expansion) have been positive for the
sector, other actions - such as the proposed 2010 inpatient
payment rates for Medicare and the potential for an expanded
public payer - could be negative.
HEALTHSOUTH CORP: Former CEO Denies Involvement in Fraud
--------------------------------------------------------
The Associated Press reports that former HealthSouth Corp. CEO
Richard Scrushy has denied that he was involved in a massive fraud
at the rehabilitation chain that almost forced the Company into
bankruptcy.
According to The AP, Mr. Scrushy is facing a civil lawsuit filed
by shareholders are seeking $2.6 billion payment for his role in
the fraud. The AP relates that witnesses blamed Mr. Scrushy for a
scheme to "cook" HealthSouth's books.
The AP relates that Mr. Scrushy was acquitted of criminal charges
in the case four years ago, despite testimony from former
HealthSouth executives Tadd McVay and Bill Owens, who pleaded
guilty and tried to link him to the fraud. The report says that
Mr. Scrushy is temporarily out of federal prison, where he is
serving time for his conviction in a separate state bribery case.
Mr. Scrushy, The AP states, denied that he was aware of the scheme
in which executives overstated revenues and assets to hide that
the company wasn't meeting Wall Street projections. According to
the report, Mr. Scrushy portrayed himself as a victim of the fraud
right up to an Federal Bureau of Investigation raid on
HealthSouth's suburban Birmingham headquarters in early 2003. The
report says that Mr. Scrushy claimed that Messrs. McVay and Owens
repeatedly assured him that HealthSouth had at least $300 million
in cash. The report states that the former executives had planned
to take HealthSouth private in a leveraged buyout.
Citing Mr. Scrushy, The AP reports that the raid by the FBI
halted plans for the buyout. The AP notes that Mr. Scrushy's
testimony contradicted prosecution claims from his criminal trial,
during which Messrs. McVay and Owens said that Mr. Scrushy knew
the Company's revenues and assets were vastly overstated.
The AP relates that the plaintiff's witnesses said that
HealthSouth killed a merger with nursing-home operator Manorcare
in 1999 which would have revealed the fraud. Mr. Scrushy
countered that HealthSouth canceled the deal because it wasn't
sure it wanted to be in the nursing-home business, and a board
member objected, THE AP reports. Mr. Scrushy, says the report,
agreed that the deal could have resulted in the discovery of bogus
accounting entries.
The AP states that Mr. Scrushy admitted that he was responsible
for locking up HealthSouth's shredding machines to guard against
the destruction of documents after an outside law firm was brought
in to review the Company's finances amid separate accusations of
insider trading in 2002.
Headquartered in Birmingham, Alabama, HealthSouth Corp. (NYSE:
HLS) -- http://www.healthsouth.com/-- provides inpatient
rehabilitation services. Operating in 26 states across the
country and in Puerto Rico, HealthSouth serves more than 250,000
patients annually through its network of inpatient rehabilitation
hospitals, long-term acute care hospitals, outpatient
rehabilitation satellites, and home health agencies.
As of March 31, 2009, HealthSouth reported 1.92 billion in assets;
$708 million in total current liabilities; $1.70 billion in long-
term debt, net of current portion; $163 million in other long-term
liabilities; and $1.04 billion in shareholders' deficit.
HUGHES NETWORK: Moody's Rates $150 Mil. Note Offering at 'B1'
-------------------------------------------------------------
Moody's Investors Service rated Hughes Network Systems LLC's new
$150 million senior unsecured mirror note offering B1.
Concurrently, Moody's also affirmed the B1 corporate family rating
and probability of default rating, along with the company's SGL-2
liquidity rating. The outlook for all of HNS' ratings remains
stable. With the new junior-ranking senior unsecured notes
providing greater loss absorption in the overall waterfall of
debts, the rating for the company's prior-ranking $50 million
senior secured revolving credit facility was raised to Baa3 from
Ba1.
Ratings and Outlook Actions:
Issuer: Hughes Network Systems, LLC
Assignments:
-- Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD4,
53%)
Upgrades:
Issuer: Hughes Network Systems, LLC
-- Senior Secured Bank Credit Facility, Upgraded to Baa3 (LGD2,
11%) from Ba1 (LGD1, 2%)
Affirmations:
-- Corporate Family Rating, Unchanged at B1
-- Probability of Default Rating, Unchanged at B1
-- Speculative Grade Liquidity Rating, Unchanged at SGL-2
-- Ratings Outlook, Unchanged at Stable
-- Senior Unsecured Bank Credit Facility, Unchanged at B1 (LGD4,
53%)
-- Senior Unsecured Regular Bond/Debenture, Unchanged at B1
(LGD4, 53%)
HNS' B1 corporate family rating incorporates a confluence of
several significant rating factors. HNS is one of two North
American companies providing satellite-based broadband services
that have a strong market position in the VSAT enterprise segment
and favorable industry dynamics in the consumer segment where the
company has an advantage over terrestrial networks in offering un-
served and under-served customers with broadband capacity.
However, over the longer term, the rating continues to be
significantly constrained by the as-yet unproven viability of its
business model in light of the threat from evolving technologies
that may render the satellite-based broadband model obsolete. In
addition, the rating recognizes heightened execution risks
following HNS' initiative to backward integrate by providing
broadband services using dedicated wholly-owned satellites instead
of leased transponder capacity, even though this translates into
cost savings. This risk is further complicated by the fact that
to date HNS has consumed cash, and its capital needs (including
its cash burn) have essentially been financed from external
sources. Liquidity, therefore, is of paramount importance and
should the company not be able to start generating free cash flow
within the next 2-3 year timeframe, the capital markets may not
support continued cash flow losses. The company's path to
sustainability will be hindered in the interim by the weak
economic conditions that may pressure the top line and erode
margins, should customer acquisitions and ARPU increases not
materialize. These macro pressures imply that Hughes needs to
quickly display an ability to exploit its market and generate free
cash flow, and in this regard, 2009 and 2010 are critical. The
rating continues to be supported, however, by the sizable backlog
of almost $840 million of non-cancelable enterprise contracts.
HNS' SGL-2 speculative grade liquidity rating reflects Moody's
view that HNS will have good liquidity, with roughly $250 million
of available cash resources to meet cash needs of roughly $30
million over the next 4 quarters to March 31, 2009. Sources of
liquidity include (i) availability of roughly $40 million under
its $50 million revolving credit facility; (ii) cash on hand at 31
March 2009 of roughly $100 million; and (iii) net proceeds of $113
million under its new senior notes offering. Cash uses expected
over the same period are i) mandatory debt repayments of roughly
$8 million and ii) cash burn of approximately $20 million.
Moody's notes that HNS has access to $90 million of cash still
residing at its parent, Hughes Communications Inc., subsequent to
the share issuance at that entity during 2008. Moody's also notes
that the sources of cash do not include the potential receipt of
approximately $44 million of proceeds arising from the settlement
with SeaLaunch in connection with the launch of its SPACEWAY-3
satellite. This uncommitted/uncertain source of cash will clearly
bolster liquidity should it be received.
Moody's most recent rating action related to HNS occurred on 4
June, 2008 when the company's liquidity rating was upgraded to
SGL-2 (indicating good liquidity) from SGL-3 (indicating adequate
liquidity). Concurrently, Moody's had also affirmed HNS' B1 CFR,
Ba1 senior secured and B1 senior unsecured ratings, along with the
stable rating outlook.
Headquartered in Germantown, Maryland, Hughes Network Systems, LLC
is a global provider of broadband satellite networks and services
to the VSAT enterprise market and the largest satellite based
Internet access provider to the North American consumer market.
For the LTM period ended 31 March 2009, the company generated
revenues of roughly $1.06 billion.
JARDEN CORPORATION: Moody's Lifts Ratings on Sr. Facility to 'Ba2'
------------------------------------------------------------------
Moody's Investors Service upgraded the ratings Jarden
Corporation's senior secured credit facility to Ba2 from Ba3 and
its speculative grade liquidity rating to SGL 2 from SGL 3. At
the same time, Moody's affirmed all other existing ratings. The
outlook remains stable.
The upgrade in the senior secured credit facility rating to Ba2
from Ba3 reflects the revised capital structure whereby Jarden
repaid over $280 million of senior secured term loan obligations
with the proceeds from the recent unsecured note offering.
The upgrade in the speculative grade liquidity rating to SGL 2
from SGL 3 reflects the additional cash from Jarden's recent
equity offering, additional cushion under its financial covenants
and the ability to obtain a new revolver upon the maturity of
existing revolver in January 2010. The SGL 2 speculative grade
liquidity rating also reflects Jarden's strong operating cash flow
and good cash balances, offset by over $1 billion of debt maturing
in 2012.
For additional information, please refer to Moody's Credit Opinion
of Jarden published on Moodys.com.
These ratings were upgraded/assessments revised:
* $1.675 billion senior secured term loan to Ba2 (LGD 2 -- 27%)
from Ba3 (LGD 3 -- 30%);
* $225 million senior secured revolver to Ba2 (LGD 2 -- 27%) from
Ba3 (LGD 3 -- 30%);
* Speculative grade liquidity rating to SGL 2 from SGL 3;
These ratings were affirmed/assessments revised:
-- Corporate family rating at B1;
-- Probability of default rating at B1;
-- $250 million senior unsecured notes at B2 (LGD 5, 71% from
LGD 5, 70%);
-- $650 million senior subordinated notes at B3 (LGD 6, 90% from
LGD 5, 88%);
The last rating action was on April 27, 2009, where Moody's
assigned a B2 rating to Jarden's unsecured notes and affirmed all
of the company's ratings.
Jarden Corporation is a manufacturer and distributor of niche
consumer products used in and around the home. The company's
primary segment include Consumer Solutions (which distributes
kitchen appliances, fire detection and suppressant systems, and
home vacuum packaging systems), Branded Consumables (which
distributes playing cards, arts and crafts, plastic cutlery and
firelogs), and Outdoor solutions (which distributes a variety of
outdoor leisure products under the K2, PureFishing, Coleman and
Campignaz brands). Headquartered in Rye, New York the company
reported consolidated net sales of approximately $5.3 billion for
the twelve months ending March 31, 2009.
JG WENTWORTH: Case Summary & 1 Largest Unsecured Creditor
---------------------------------------------------------
Debtor: J.G. Wentworth, Inc.
40 Morris Avenue
Bryn Mawr, PA 19010
Bankruptcy Case No.: 09-11731
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
J.G. Wentworth, LLC 09-11732
JGW Holdco, LLC 09-11731
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Judge: Christopher S. Sontchi
Debtor's Counsel: Norman L. Pernick, Esq.
Cole, Schotz, Meisel, Forman & Leonard
500 Delaware Avenue
Suite 1410
Wilmington, DE 19801
Tel: (302) 652-3131
Fax: (302) 652-3117
Email: bankruptcy@coleschotz.com
Patrick J. Reilley, Esq.
Cole, Schotz, Meisel, Forman & Leonard
500 Delaware Avenue
Suite 1410
Wilmington, DE 19801
Tel: (302) 652-3131
Fax: (302) 652-3117
Email: preilley@coleschotz.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $500,001 to $1,000,000
A full-text copy of the Debtor's petition, including a list of its
1 largest unsecured creditor, is available for free at:
http://bankrupt.com/misc/deb09-11731.pdf
The petition was signed by David Miller, chief executive officer
of the Company.
LEHMAN BROTHERS: To Probe Barclays for Windfall from Quick Sale
---------------------------------------------------------------
Lehman Brothers Holdings Inc., which is now being led by Chief
Executive Officer Bryan Marsal, seeks authority from the U.S.
Bankruptcy Court for the Southern District of New York to conduct
focused discovery against Barclays Capital Inc., concerning
matters of importance to the estate and its creditors.
Barclays purchased substantially all of Lehman's North American
broker-dealer assets in a sale transaction negotiated, approved
and executed within the span of a few days immediately following
LBHI's filing for bankruptcy. The requested discovery, under Fed.
R. Bankr. P. 2004, relates to that highly expedited transaction,
and related matters, and is specifically focused on whether the
estate received appropriate value.
Robert W. Gaffey, Esq., at Jones Day, in New York, relates that
since the completion of the expedited negotiation and sale of one
of the largest investment banks in the world, the Debtor has
become aware of apparent material discrepancies relating to the
liabilities Barclays was to assume and the benefits LBHI (or
related entities) was to receive under this and related
transactions. These apparent discrepancies concern, inter alia,
Barclays' obligation to pay employee bonuses and certain contract
cure amounts (both of which materially impacted the value of the
sale) as well as to certain asset transfers related to repurchase
transactions conducted during the week the Sale Transaction was
negotiated. In the aggregate, these apparent discrepancies may
have resulted in a windfall to Barclays at the expense of the
estate, its creditors and other parties in interest, in an amount
that could reach into the billions of dollars.
Among other things, the Court was told at the sale hearings that,
as part of the value given by Barclays in the transaction,
Barclays would assume in the aggregate $2 billion in liabilities
to pay bonus compensation to Lehman employees who transferred to
Barclays and would also assume approximately $1.5 billion in
contract cure costs. Barclays' assumption of billions of dollars
in liabilities for bonus compensation and contract cures was a
critical component of the consideration Barclays was to
give in the sale transaction in return for the Debtors' assets,
but it appears that these assumed liabilities were significantly
overstated or inaccurate and, further, that Barclays may not have
actually paid these obligations.
Lehman Brothers claims that it has these newly discovered apparent
discrepancies:
(i) In the sale transaction, as part of the overall
consideration Barclays was to have given, Barclays was given
credit for the assumption of a $2 billion obligation to
transferred Lehman employees. The Debtor has attempted to
conduct a preliminary review of this issue but has no
information as to the bonuses Barclays has actually paid to
former Lehman employees. Moreover, it appears that the
expenses on Lehman's books for up to August 2008 for the
transferred employees (reflecting the cash, not the equity,
component of bonuses) was in the range of $600-700 million,
which is substantially less than the $2-2.5 billion amounts
considered by the Court for 2008 bonuses. If there is, in
fact, a large discrepancy between what Barclays paid and
what the Court considered, understanding and reconciling
such discrepancy is of critical importance to the Debtor and
its stakeholders as it goes directly to the value the estate
received in the Sale Transaction.
Exclusive of amounts paid for real estate, and the alleged
"credits" for compensation and cure amounts, Barclays paid
only $250 million in cash for virtually all of Lehman's
North American broker/dealer businesses. If, in fact, the
accrual for bonuses was overstated, or Barclays has paid
less than its full obligation, it is possible there may be
claims the estate should assert to recover the difference
and further investigation is warranted to determine if that
is so.
(ii) The Court's approval of the sale transaction was premised on
Barclays' undertaking an obligation to pay certain contract
"cure" amounts described as being in the range of $1.5
billion to $2.25 billion. There appears to be a large
discrepancy between these stated amounts and the actual
"cure" costs ultimately paid by Barclays. Indeed, the
closing date contract cure amounts publicly posted on
September 19th and October 1st were in the range of only
$100-$200 million. And based on Debtor's preliminary
analysis it appears that Barclays has paid slightly more
than $200 million (as of 2/24/09) in contract cure costs.
The requested discovery seeks information relating to this
apparent material discrepancy concerning the consideration
Barclays was to have given in the sale transaction.
(iii) There appear to be several issues arising from certain
repurchase agreements entered into between LBI and Barclays
and related matters. The Debtor is now conducting a
preliminary review of the assets and liabilities transferred
to Barclays under these agreements or related arrangements,
including (i) billions of dollars worth of collateral
transferred pursuant to a certain repurchase transaction
between Barclays and LBI on September 18, 2008, (ii) assets
transferred upon the closing of the Purchase Agreement, and
(iii) assets transferred pursuant to the December 5, 2008
Settlement Agreement between JPMorgan Chase Bank N.A.,
Barclays, and LBI's Trustee in the SIPA liquidation. This
review seeks to determine what assets were transferred,
whether the Debtor received fair consideration for the
assets, and whether the assets transferred in connection
with the repurchase agreements were, in fact, improperly
transferred to offset the liabilities Barclays assumed as
part of the consideration it gave in the Sale Transaction.
According to Mr. Gaffey, the apparent large size of these
discrepancies appears more troubling to the Debtor when considered
in connection with Barclays' recent announcement of its financial
results for the year ending December 31, 2008. In that regard,
Barclays announced that it had secured a GBP2.262 billion gain
from its acquisition of Lehman's North American business, just
over two months after closing the Sale Transaction (and during a
period when the global economy was essentially frozen), suggesting
that excess assets may have been given to Barclays.
In addition to documents concerning the alleged discrepancies, the
Debtor also will have a need to take testimony from certain former
Lehman executives who are now employed by Barclays and thus
unavailable to the Debtor. These executives include, but are
not limited to, persons who were involved in the negotiations of
the Sale Transaction and/or persons the Debtor understands may
have negotiated lucrative bonus agreements with Barclays
before the transaction closed.
The Court will convene a hearing on the Debtor's request on
June 3. Objections are due May 29.
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: Role in Securities Selling Probed by DOJ & SEC
---------------------------------------------------------------
The U.S. Department of Justice and the U.S. Securities and
Exchange Commission interviewed several former executives of
Lehman Brothers Holdings, Inc.'s auction-rate-securities business
as part of the agencies' ongoing probe into whether the former
Lehman officers sold safe, liquid securities to clients while
knowing that the markets for those securities was drying up, Amir
Efrati of The Wall Street Journal reported.
Auction-rate-securities, Mr. Efrati said, are short-term debt
instruments in which the interest rates reset at periodic
auctions. Pluris Valuation Advisors LLC estimates that Lehman
clients hold about $6 billion of the auction-rate-securities, the
Journal related. Lehman was one of the largest sellers of
auction-rate securities that have turned out to be the most
toxic, or lost the most value, Barry Silbert, chief executive of
SecondMarket Inc., which matches buyers and sellers of auction-
rate securities, told the Journal.
According to the Journal, the DOJ and the SEC have questioned Gia
Rys and Thomas Corcoran, who ran Lehman's auction-rate-securities
unit, and Sanford Haber, a broker who bought the securities for
clients. The agencies are also examining the role of Alex Kirk,
former head of global credit products, and Eric Felder, who
reported to Mr. Kirk, the Journal added, citing people familiar
with the matter.
The inquiry centers on whether Lehman employees defrauded
customers as the market for these securities broke down in 2007,
the Journal related. Authorities, the Journal said, want to know
(i) if Lehman executives got the auction-rate securities off the
firm's books and into client accounts at a time in which the
securities were becoming hard to sell; and (ii) if executives
knew the market was in trouble and sold their own personal
holdings of auction-rate securities, which could constitute
insider trading.
The Journal said the investigation on the auction-rate-securities
began before Lehman filed for bankruptcy on September 15, 2008,
and is separate from the DOJ's probes of Lehman that focus on
whether executives overvalued the firm's commercial real-estate
holdings or mischaracterized its financial condition prior to its
September 2008 collapse.
Prosecutors, the Journal further related, are looking at whether
Lehman executives asked that brokers, who dealt directly with
clients, purchase the hard-to-sell securities to get them off the
firm's books, said people familiar with the issue.
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: Court Says DnB Transfer Made Post-Bankruptcy
-------------------------------------------------------------
Judge James Peck of the U.S. Bankruptcy Court for the Southern
District of New York, in a memorandum decision dated May 12,
2009, ruled that the transfer of money from Lehman Brothers
Holdings, Inc.'s account maintained at DnB NOR ASA was done after
LBHI filed its petition for bankruptcy on September 15, 2008.
DnB had asked the Bankruptcy Court to lift the automatic stay to
effect a set off of the $25,071,256 loan LBHI owed to DnB under a
prepetition revolving credit facility against the more than
$18,000,000 held in an account at DnB maintained by LBHI's
affiliate, Lehman Brothers Commercial Corporation.
LBHI and DnB, however, disputed over the issues relating to the
right of setoff. LBCC issued two separate instructions after 3:00
p.m. on September 12, 2008, to transfer certain funds to an
account maintained by LBHI at the Bank. However, the funds were
not credited to LBHI's account until the morning of September 15,
2008, after LBHI already became a debtor-in-possession. The key
question of the dispute is whether, for purposes of determining
mutuality of obligations, the transfer should be deemed to have
occurred as of the prepetition period when the transfer
instructions were given or as of the postpetition moment when the
funds were received and credited to the LBHI Account.
Section 553 of the Bankruptcy Code preserves any right of setoff
that exists under applicable non-bankruptcy law to the extent that
conditions of Section 553 have been satisfied. Section 553(a)
states that offset of mutual obligations involve a debt and claim,
each of which "arose before the commencement of the case under
this title."
Judge Peck noted that the practices of DnB with respect to the
transfer of funds from one account to another are relevant to
evaluating whether mutuality exists. The Terms and Conditions
relating to the LBHI Account establish that any transfer
instructions received subsequent to the cut-off deadline of 3:00
p.m. CEST will be effected on the next business day. The Transfer
Instructions were received on Friday, September 12, 2008, at 6:03
p.m. and 6:06 p.m. CEST. Consistent with DnB's practices, the
transfer of funds could be effected no earlier than the next
business day, which was Monday, September 15, 2008. In addition,
under the Terms and Conditions, the party originating transfer or
payment instructions for a transfer has the right to revoke or
amend its instructions prior to 10:00 a.m. CEST.
DnB's contention that despite these limitations it nonetheless
could have completed the transfer prior to September 15, 2008, may
be hypothetically possible, but is not at all persuasive, Judge
Peck held as that transfer would be inconsistent with rights of
LBCC to change it directions to DnB.
DnB, Judge Peck added, is unable to overcome a truth that is
plainly inconvenient to its argument and that is impossible to
explain away -- the intrabank transfer to the LBHI Account was not
completed prepetition. Pending the completion of the transfer,
the funds were not property of LBHI's estate and were not
available for setoff purposes, Judge Peck held.
The transfer from one account to another also has consequences for
creditors that are looking to the assets of a particular debtor,
Judge Peck said in his memorandum decision. He related that from
the beginning of LBHI's bankruptcy case, parties-in-interest have
been vocal in expressing concern as to the possible impact on
recoveries of transfers made from the account of one Lehman-
related entity to another. The current record, he said, fails to
provide any explanation concerning the reason that LBCC initiated
the transfer of funds to LBHI, the consequence of the transfer, or
whether the transfer either satisfies or gives rise to an
intercompany claim. The Court also does not know whether the
transfer is an example of ordinary course prepetition cash
management procedures or represents an isolated transaction, he
said. What is apparent, however, is that creditors, other than
DnB, having claims against LBCC and LBHI may be potentially harmed
if DnB is permitted to exercise setoff unless DnB has the clear
legal right to do so.
Judge Peck continued that the Court is also concerned about the
broader implications of DnB's position regarding setoff. DnB
argues for what amounts to a virtual right of setoff arising out
of the fact that the funds were located within its accounting
system before the bankruptcy and all steps needed to cause the
funds to be transferred were in place prepetition. The problem
with that approach, Judge Peck pointed out, is that it overlooks
the fact that the funds remained in the account of LBCC as of the
filing of the LBHI bankruptcy petition. Customers, he said, often
move their cash liberally from account to account as part of a
centralized cash management system, and those transfers are common
practices for managing the financial affairs of large businesses
throughout the world. Given that reality, it is appropriate that
there should be a bright line test for determining which member of
an affiliated group holds and has the right to disburse funds at
the point when a cash payment is to be made or a transaction is
ready to close, Judge Peck stated.
The concern for proper accounting treatment and for the
preservation of intercompany claims within the context of the Cash
Management Order recognizes that the transfer of funds between
accounts may have a material impact on creditor recoveries, Judge
Peck held. Thus, he concluded, given that background, it is most
important that set off only be authorized under circumstances when
it is clearly appropriate to do so.
Judge Peck directed the Debtors and DnB to settle an order
consistent with his decision. The Debtors subsequently filed a
proposed order denying DnB's lift stay motion to effect a set off.
Judge Peck will convene a hearing on May 28, 2009, to consider
approval of the settlement.
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: Asks Court to Approve Americor Loan Agreement
--------------------------------------------------------------
Lehman Brothers Holdings Inc. and its affiliated debtors ask the
U.S. Bankruptcy Court for the Southern District of New York to
approve a mortgage loan purchase agreement they entered into with
Americor Mortgage Inc.
The purchase agreement was hammered out by the Debtors and
Americor to facilitate the sale of the remaining available units
of the Canyon Ranch Living Miami Beach Condominium in Florida,
and the closing of purchase contracts entered into by buyers for
additional condominium units.
The condominium was constructed through the $522 million that
LBHI and its subsidiary, LB Carillon Construction LLC, provided
to Carillon South Joint Venture LLC, North Carillon LLC, Carillon
South Mezz LLC, Carillon North Mezz LLC, and Carillon Miami Beach
Holding LLC. About $418,691,000 in construction loan was
provided to Carillon South and North Carillon while $103,746,224
in mezzanine loan was made available to the three other
companies.
Since construction of the condominium was completed in 2008, only
209 out of the 580 units have been sold. The sale proceeds
generated, according to the Debtors' counsel, Shai Waisman, Esq.,
at Weil Gotshal & Manges LLP, in New York, were not enough for
the borrowers to pay off their loan to LB Carillon and LBHI.
Potential buyers, Mr. Waisman says, have entered into contracts
for an additional 193 condominium units but could not yet close
the deal due to the difficulty with securing mortgages for
residential condominiums in South Florida, among others.
Mr. Waisman says the borrowers of the construction loan could
achieve sufficient cash flow to pay off their debt to LB Carillon
and LBHI through the mortgage financing program that LBHI
developed under the purchase agreement.
Under the deal, LBHI agreed to purchase mortgage loans from
Americor, which would be provided to individuals who would buy
the condominium units. LBHI estimates that for the life of the
mortgage financing program, it has to purchase about $100 to $200
million worth of mortgage loans.
"The increased availability of financing to potential purchasers
increases the likelihood that sale proceeds of the condominium
units would be available for the repayment of LB Carillon's
senior secured construction loans," Mr. Waisman says, adding that
this would in turn increase the likelihood that sale proceeds
would be available for the repayment of LBHI's subordinated
mezzanine loan.
According to Mr. Waisman, LB Carillon needs repayment by Carillon
South and North Carillon of the construction loan so that it
could also pay off its loan from Fortress Credit Corp.
LB Carillon borrowed $238,850,000 from Fortress Credit in
connection with the construction loans. LB Carillon intends to
use the payment from the construction loans to pay off a portion
of its loan from the company.
The Purchase Agreement
The salient terms of the purchase agreement are:
(1) LBHI will purchase from Americor all mortgage loans that
have been originated by Americor; meet the requirements of
the purchase agreement and the underwriting criteria
agreed to by the companies from time to time; have been
approved for purchase by LBHI in accordance with the
agreement; and are closed within 30 days after the date
LBHI provides written notice to Americor that it has
approved the mortgage loan for purchase.
(2) Americor will originate the mortgage loans in accordance
with the purchase agreement for so long as LBHI has not
provided the company 30 days prior notice that it no
longer intends to purchase the mortgage loans.
(3) On the date Americor closes each mortgage loan that has
been approved by LBHI for purchase, LBHI will purchase the
loan at a price equal to the sum of the outstanding
principal balance of that loan; the accrued and unpaid
interest on that loan; and a premium equal to the amount
remaining, if any, after deducting (i) an origination fee
paid by the individual obligor who desires to purchase a
condominium unit with respect to the mortgage loan equal
to 1% of the principal amount of the loan from (ii) an
amount equal to 1% of the outstanding principal amount of
the loan. LBHI agrees to advance the purchase price for
the mortgage loans to Americor on the date of the closing
of those loans.
(4) Within 10 days of LBHI's written request or unless
otherwise mutually agreed upon by LBHI and Americor but
not to exceed an additional 20 days, Americor will
repurchase from LBHI any mortgage loan sold to LBHI if
any warranty or representation made by Americor about the
mortgage loan is untrue and such impairs the value of the
loan, or if Americor has otherwise breached the purchase
agreement with regard to any mortgage loan that impairs
the loan's value, or if Americor has failed to deliver any
document about the mortgage loan requested by LBHI or
required by the purchase agreement that impairs the value
of that loan. Americor will pay to LBHI in immediately
available funds an amount equal to such mortgage loan's
then unpaid principal balance, plus accrued interest.
(5) The purchase agreement may be terminated without cause at
any time by either party after 60 days' prior written
notice to the other party.
A full-text copy of the purchase agreement is available for free
at http://bankrupt.com/misc/LehmanPurchaseAgreementAmericor.pdf
The hearing to consider approval of the purchase agreement is
scheduled for June 3, 2009. Creditors and other concerned
parties have until May 28 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)
LEHMAN BROTHERS: To Transfer Assets to Firm Owned by Ex-Employees
-----------------------------------------------------------------
Debtor Lehman Brothers Holdings Inc. seeks authority from the U.S.
Bankruptcy Court for the Southern District of New York to transfer
two of its subsidiaries' assets and liabilities to companies
formed by its former employees.
The assets to be transferred include the non-participating voting
shares in foreign feeder funds held by Neuberger Berman Asset
Management LLC as well as its interests in master funds that
Lehman Brothers Asset Management Inc. advises. Also to be
transferred are the interests held by LBHI, NBAM and LBAM in the
intellectual property used exclusively in the master funds,
foreign feeder funds, among others.
The assets will be transferred to LibertyView Capital Management,
LLC and LibertyView GP LLC, and will be managed by Richard Meckler
and Randall Hutton. Mr. Meckler is the president and chief
investment officer of the LibertyView division of LBAM while Mr.
Hutton serves as the senior portfolio manager and managing
director of the division.
"LBHI determined that the expense of maintaining such assets and
liabilities would likely exceed the benefit of doing so and,
therefore, a transfer of the assets and liabilities is in the
best interest of LBHI's estate," Lori Fife, Esq., at Weil Gotshal
& Manges LLP, in New York, says in court papers. She adds that
the agreement is also the best available means for disposing the
assets and limiting LBHI's liabilities.
The assets to be transferred were not included by LBHI when it
sold its investment management unit to NBSH Acquisition LLC, the
company formed by senior managers of Neuberger Berman Group LLC.
In return for the proposed transfer, LBHI is required to
indemnify and hold the transferees harmless from any liabilities,
damages, among others, during the period prior to the
consummation of the transfer.
LBHI, NBAM and NBAM will also pay a sum of $680,000 to Messrs.
Meckler and Hutton, and current Lehman workers who have accepted
an offer of employment with the transferees, for the services
they provided connection with the funds for the period January 1,
2009 to the date of consummation of the transfer.
A full text-copy of the agreement is available without charge at
http://bankrupt.com/misc/LehmanTransactionAgreement.pdf
The Court is expected to convene a hearing on June 24, 2009, to
consider approval of the proposed transfer. Creditors and other
concerned parties have until June 8 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)
LEHMAN BROTHERS: Swaps Interests in Loans With State Street
-----------------------------------------------------------
Prior to its bankruptcy, Debtor Lehman Commercial Paper Inc.
entered into a repurchase agreement with State Street Bank and
Trust Company. The agreement established an arrangement wherein
LCPI could transfer certain assets to the company with a
simultaneous agreement by LCPI to repurchase the assets at a
later date.
In September 2008, a dispute ensued between the Debtor and the
Bank compelling State Street to file a lawsuit against LCPI. In
its complaint dated November 19, 2008, State Street alleged that,
together with the Debtor, it entered into a single transaction
under the repurchase agreement wherein State Street purchased from
the company a pool consisting of 37 commercial loans and attendant
servicing rights in exchange for $1 billion.
State Street alleged that LCPI failed to make certain payments and
eventually declared on September 17, 2008, that LCPI was in
default under the repurchase agreement. State Street alleged that
LCPI was required to repurchase the commercial loans but failed to
do so, thereby irrevocably cutting off LCPI's rights with respect
to the loans.
LCPI denied some of State Street's allegations in the lawsuit.
Nevertheless, to avoid the risks and costs of litigation, LCPI and
its affiliated debtors have entered into a number of stipulations
with the company establishing their respective entitlement to 22
of the 37 loans. Attorney for the Debtors, Shai Waisman, Esq., at
Weil Gotshal & Manges LLP, in New York, says that the Debtors want
to continue this process by seeking to enter into an exchange
agreement with State Street, which will resolve certain disputes
between State Street and LCPI in the lawsuit.
"The Debtors and State Street have agreed in principle to the
terms of the exchange agreement, which provides for an exchange of
certain loans," Mr. Waisman says, adding that the deal would allow
the Debtors to acquire certain loans in which State Street asserts
rights pursuant to their repurchase agreement.
According to Mr. Waisman, four of the loans represent positions
that would be beneficial to the Debtors' estates because they
either provide inherent economic value to the estates, or enable
the estates to protect a more senior position by consolidating
ownership of various pieces of the capitalization affecting a
given property.
Under the exchange agreement, the Debtors will receive and State
Street will relinquish interests in loans relating to these
properties:
(1) Carillon: $104,742,224 mezzanine loan. The Carillon
(Canyon Ranch Miami Beach) consists of 5.81 acres of
oceanfront land located at 69th Street and Collins Avenue
in North Miami Beach. The site is improved with 580
condominium units and contains a 62,000 square foot health
spa or treatment and fitness facility, as well as two
restaurants. Debtors already own a $139 million mortgage
note ahead of this $104,742,224 mezzanine loan.
(2) 237 Park Avenue: $220,723,825 loan. 237 Park Avenue is a
21-story, 1,174,500 Class A high-rise building located
between 45th and 46th streets just off Park Avenue in New
York City. The Debtors already own the $225 million
Senior Mezzanine loan ahead of this $220,723,825 loan.
(3) Archstone A (Project Easy Living A): $1,998,821 mezzanine
loan interest. This interest is a component of one of
eleven mezzanine loans associated with Archstone, one of
the premier multifamily developers, owners and operators
in the country, which controls a portfolio of 67,413
operating units in various desirable apartment
communities. Debtors and their partners already hold all
remaining interests in all mezzanine loans associated with
this project.
(4) Archstone B (Project Easy Living B): $5,699,913 mezzanine
loan interest. Another component of one of eleven
mezzanine loans associated with Archstone.
In exchange, State Street will receive from the Debtors three loan
positions that will enable the company to consolidate its own
position in the capitalization of the related assets. State
Street will receive loan positions relating to these properties:
(1) Storage Deluxe - 481 Grand: $164,718 project loan. Storage
Deluxe is a 44,000-square-foot industrial building in
Brooklyn, New York that was converted into a self-storage
facility containing approximately 795 units. State Street
already holds ownership rights in another loan relating to
this property.
(2) Storage Deluxe - Jamaica Avenue: $289,252 project loan.
Storage Deluxe is a 64,515-square-foot industrial building
in Queens, New York that was converted into a self-storage
facility containing approximately 1,038 units. State
Street already holds ownership rights in two loans
relating to this property.
(3) Seaport Center: $6,429,841 mortgage. Seaport Center is a
465,000-square foot, 9-story Class A/B office building in
the Seaport District area of downtown Boston. State
Street holds ownership rights in another loan relating to
this property.
The exchange agreement also provides that any funding the Debtors
advance from May 1, 2009, until closing with respect to the loans
that are the subject of the exchange agreement will be credited to
the Debtors at closing. In addition, the exchange agreement will
contain various representations, warranties, and covenants of each
party.
A hearing to consider approval of the exchange agreement is
scheduled for June 3, 2009. Creditors and other concerned parties
have until May 28 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)
LEHMAN BROTHERS: Has Protocol for Disposing of Corporate Loans
--------------------------------------------------------------
Lehman Brothers Holdings Inc. and Lehman Commercial Paper Inc.
and their affiliated debtors seek approval from the U.S.
Bankruptcy Court for the Southern District of New York to
establish procedures to permit (i) the termination or assignment
of their unfunded commitments with respect to corporate loans and
(ii) restructuring of the terms of corporate loans.
As of September 30, 2008, the Debtors were among the nation's
leading lenders with $46.7 billion1 of committed loans outstanding
to borrowers for use in their general business operations. The
Debtors also had over $4.3 billion of Corporate Loans participated
to other financial institutions in which a Debtor or one of the
Banks was the lender of record. The Corporate Loans held by the
Debtors include both funded loans and unfunded or partially funded
loans which the Debtors were obligated to fund in the future. Of
the total outstanding amount of Corporate Loans held by the
Debtors, approximately $16 billion was funded and approximately
$30.5 billion consisted of unfunded commitments, many of which
were commitments to backstop commercial paper and support
corporate ratings of borrowers where amounts were not intended to
be drawn.
The Debtors provided Corporate Loans to borrowers in all
industries. Such loans typically were unsecured loans to
borrowers whose corporate debt had an investment-grade rating and
secured loans to borrowers whose corporate debt had a below
investment-grade rating. In most cases, Corporate Loans were
provided by the relevant Debtor as a member of a lending
syndicate. In only a small percentage of the cases did the
Debtors hold more than 25% of the outstanding principal amount of
any Corporate Loan.
With respect to most Corporate Loans the applicable Debtor was an
initial lender under the relevant loan agreement; however, in
other situations the Debtor purchased the relevant loan position
in the secondary loan market. In most cases a Debtor was the
lender of record with respect to the Corporate Loans, although in
some cases the relevant Debtor merely owned a participation
interest in the loans. Frequently, where a Debtor was a lender of
record, it may have sold a participation in all of a portion of
such loans to either an affiliate, a securitization issuer, or to
an unrelated third party.
Since the Petition Date, the Debtors have been engaged in these
activities with respect to Corporate Loans:
(a) managing their cash management system on their own behalf
and for any loan participants in accordance with court
stipulations and other agreements;
(b) taking actions as lender, agent and loan participant in
accordance with the underlying loan documentation for over
700 Corporate Loans;
(c) transferring various agency roles to other financial
institutions;
(d) elevating Corporate Loans with respect to which the
Debtors sold a participation to third parties, after
consultation with LBHI's official committee of unsecured
creditors;
(e) negotiating agreements for the termination of over
$12 billion of Unfunded Commitments of the Debtors and the
Banks;
(f) consummating over 600 open purchases or sales of Corporate
Loans (or interests therein) and negotiating settlements
with parties objecting to such purchases and sales;
(g) collecting from over 700 borrowers, interest, principal
and fees owed to the Debtors, the Banks, securitization
issuers, other special purpose vehicles and the hundreds
of financial and investment parties that participated in
Corporate Loans in which a Debtor is the lender of
record;
(h) performing market agency activities for noteholders,
securitization issuers and other special purpose vehicles;
and
(i) performing all credit management and review processes on
all borrowers owing amounts to the Debtors' estates, and
where appropriate, (i) funding certain advances in
accordance with the underlying loan agreements and (ii)
amending certain financial and other non-monetary
covenants and terms of the applicable loan agreement.
In evaluating the appropriate course of action in all these areas,
the Debtors have had numerous discussions with, and provided
regular reporting to, the advisors to the Creditors Committee and
have been mindful that the Bankruptcy Code requires that they
obtain court approval of any transactions outside the ordinary
course of business as well as compromises and settlement of
claims. Thus, for example, the Debtors have sought approval of
the termination of LCPI's unfunded commitments with General
Electric and of the settlement between LCPI and Bankhaus pursuant
to which LCPI and Bankhaus agreed to share equally the proceeds
from the sale of a loan to LBT Varlik Yonetim Anonim Sirketi, an
indirect, non-Debtor subsidiary of LBHI incorporated in the
Republic of Turkey, in which both parties claimed beneficial
ownership.
In many cases, the relevant agreements related to Corporate Loans
provide that the applicable Debtor has the obligation to lend
additional amounts upon request by the borrower as future advances
or in connection with revolving credit facilities (the "Unfunded
Commitments"). Since the Petition Date, the Debtors have, in some
cases, made further loan advances in accordance with the
underlying loan documents, while in other cases the Debtors
have determined, in their business judgment, that making future
advances was not in their best interests. As a result of the
large number of Corporate Loans with Unfunded Commitments held by
the Debtors, rather than seek Court approval for each transaction,
it will be far more efficient and cost effective if the Debtors
are authorized to enter into agreements to terminate or assign
Unfunded Commitments on these terms and conditions:
a. The Debtors may (i) enter into termination agreements with
borrowers of Corporate Loans to terminate Unfunded
Commitments and (ii) assign Corporate Loans with Unfunded
Commitments to a third party who assumes the Unfunded
Commitment.
b. In the each case, the Debtors will either (i) provide notice
of such transaction to the Creditors Committee in accordance
with the approval process previously followed by the Debtors
and the financial advisors to the Creditors Committee or
(ii) file a motion with the Court requesting approval of the
terms of the settlement under Bankruptcy Rule 9019 and/or,
if appropriate, Section 363(b) of the Bankruptcy Code.
In the ordinary course of the Debtor's business, the Debtors would
entertain such requests from borrowers for loan amendments or
modified terms for repayment arising from in-court or out-of-court
restructurings. The Debtors recognize that if they have a Control
Position in a particular Corporate Loan that, depending on the
terms thereof, Court approval for such Restructuring Requests may
be necessary. To that end, in addition to Ordinary Course
Actions, the Debtors request that they be authorized to enter into
restructuring transactions whereby the Debtors would receive an
equity interest in the borrower or other interest or consideration
in exchange for the forgiveness of certain indebtedness and
release of such borrowers of certain obligations with respect
thereto, subject to the following terms and conditions:
a. Without further order of the Court, but with prior notice
to the Creditors Committee, the Debtors may enter into
restructuring transactions with respect to Corporate Loans
for which (i) the Debtors hold at least 25% of the
outstanding principal amount of the portion of such
Corporate Loans affected by such restructuring transaction
and (ii) the outstanding principal amount due to the
Debtors is less than $25 million.
b. Either (i) as approved in accordance with the Committee
Approval Process, or (ii) with approval from the Court, the
Debtors may enter into restructuring transactions with
respect to Corporate Loans for which (x) the Debtors hold
at least 25% of the outstanding principal amount of the
portion of a Corporate Loan affected by such restructuring
transaction and (y) the outstanding principal amount due to
the Debtors is at least $25 million.
c. For the avoidance of doubt, neither the approval of the
Creditors Committee nor an order of the Court will be
required in order for the Debtors to enter into
restructuring transactions if the Debtors do not hold a
Control Position.
The Court will convene a hearing on the Debtors' request on
June 3. Objections are due May 29.
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: Marsal Says Creditors May Get 18% Recovery
-----------------------------------------------------------
According to Linda Sandler at Bloomberg News, reports that Lehman
rothers Holdings Inc. Chief Executive Officer Bryan Marsal said
that creditors of the company may recover a total of $45 billion
for its remaining creditors who are owed $200 billion to
$250 billion.
Mr. Marsal said in an interview with Bloomberg that he plans to
spin off an estimated $34 billion in real estate and private-
equity properties to Lehman creditors. Mr. Marsal said he has
raised about $11 billion in cash from the assets of Lehman in the
eight months since it filed for bankruptcy.
Creditors aren't likely to see any cash from Lehman's real estate
anytime soon. Because the properties couldn't be sold for much,
creditors were given an equity stake they can hold until
prices rise, Mr. Marsal said, according to the report. "It's a
way to intelligently manage a recovery as opposed to fire sale-ing
it," he said.
In a similar way, Lehman spun off its money management business
after failing to find a buyer who would pay enough. The
deal transferred 51 percent of the stock to the executives of
Neuberger Berman Inc., its biggest investment management unit,
for no cash. Lehman retained 49% of the equity in the "hope" that
the value will rise later, Marsal 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: Trade Creditors Assign 7 Claims Totaling $26MM
---------------------------------------------------------------
Three trade creditors transferred seven claims against Lehman
Brothers Holdings Inc. or its affiliates totaling more than
$26,000,000 to:
(a) Sanno Point Master Fund Ltd.:
Claimant Claim No. Claim Amount
-------- --------- ------------
Royal Bank of Scotland, plc 3264 $6,455,505
Royal Bank of Scotland, plc 3265 6,455,505
(b) Contrarian Funds, LLC:
Claimant Claim No. Claim Amount
-------- --------- ------------
Targa Resource Partners, LP 2594 $5,131,151
Targa Resource Partners, LP 1510 5,131,151
Targa Resource Partners, LP 1512 1,664,653
Targa Resource Partners, LP 1511 1,664,653
(c) VonWin Capital Management, LP:
Claimant Claim No. Claim Amount
-------- --------- ------------
Twister Pair Solutions, Inc. Scheduled $5,487
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: Sues to Recover $17MM on Swap with Metropolitan
----------------------------------------------------------------
Lehman Brothers Special Financing, Inc., a unit of Lehman Brothers
Holdings Inc. filed another complaint against Metropolitan West
Asset Management, LLC, and Metropolitan West Low Duration Bond
Fund, to seek:
(a) a declaration establishing the unlawfulness of the MetWest
Entities' purported set off and their obligation to
immediately pay to LBSF the balance of more than
$17 million the Low Duration Fund admittedly owes to LBSF
under the terms of a swap agreement; and
(b) a judgment finding that the Low Duration Fund breached the
terms of the Swap Agreement and awarding LBSF the full
amount to which it is entitled under the Swap Agreement.
LBSF also seeks an award sanction against the MetWest Entities
and monetary and punitive damages to LBSF on account of the
MetWest Entities' knowing, willful and contemptuous violation of
the automatic stay.
LBSF earlier commenced an adversary proceeding against
Metropolitan West Asset Management LLC and Metropolitan West Total
Return Bond Fund seeking payment of more than $46 million. The
lawsuit stemmed from Metropolitan West's failure to pay the sum
owing to LBSF under their Swap Agreement, which governs various
derivative transactions between LBSF and MWTRBF.
Attorney for LBSF, Robert Lemons, Esq., at Weil Gotshal & Manges
LLP, in New York, said that the Metropolitan West Entities have
acknowledged LBSF's entitlement to the payment of more than
$146 million under the Swap Agreement but only paid less than
$100 million. "Defendants . . . wrongfully have withheld payment
of the remaining $46 million on the basis of a purported but
patently unlawful set off against obligations allegedly owing to
[MWTRBF] by an entity other than LBSF under one or more wholly
separate and unrelated transactions," Mr. Lemons asserts.
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: Propose Canyon Ranch Condo Loans Deal
------------------------------------------------------
Lehman Brothers Holdings Inc. and its affiliated debtors ask the
U.S. Bankruptcy Court for the Southern District of New York to
approve a mortgage loan purchase agreement they entered into with
Americor Mortgage Inc.
The purchase agreement was hammered out by the Debtors and
Americor to facilitate the sale of the remaining available units
of the Canyon Ranch Living Miami Beach Condominium in Florida, and
the closing of purchase contracts entered into by buyers for
additional condominium units.
The condominium was constructed through the $522 million that
LBHI and its subsidiary, LB Carillon Construction LLC, provided
to Carillon South Joint Venture LLC, North Carillon LLC, Carillon
South Mezz LLC, Carillon North Mezz LLC, and Carillon Miami Beach
Holding LLC. About $418,691,000 in construction loan was
provided to Carillon South and North Carillon while $103,746,224
in mezzanine loan was made available to the three other
companies.
Since construction of the condominium was completed in 2008, only
209 out of the 580 units have been sold. The sale proceeds
generated, according to the Debtors' counsel, Shai Waisman, Esq.,
at Weil Gotshal & Manges LLP, in New York, were not enough for
the borrowers to pay off their loan to LB Carillon and LBHI.
Potential buyers, Mr. Waisman says, have entered into contracts
for an additional 193 condominium units but could not yet close
the deal due to the difficulty with securing mortgages for
residential condominiums in South Florida, among others.
Mr. Waisman says the borrowers of the construction loan could
achieve sufficient cash flow to pay off their debt to LB Carillon
and LBHI through the mortgage financing program that LBHI
developed under the purchase agreement.
Under the deal, LBHI agreed to purchase mortgage loans from
Americor, which would be provided to individuals who would buy
the condominium units. LBHI estimates that for the life of the
mortgage financing program, it has to purchase about $100 to $200
million worth of mortgage loans.
"The increased availability of financing to potential purchasers
increases the likelihood that sale proceeds of the condominium
units would be available for the repayment of LB Carillon's
senior secured construction loans," Mr. Waisman says, adding that
this would in turn increase the likelihood that sale proceeds
would be available for the repayment of LBHI's subordinated
mezzanine loan.
According to Mr. Waisman, LB Carillon needs repayment by Carillon
South and North Carillon of the construction loan so that it
could also pay off its loan from Fortress Credit Corp.
LB Carillon borrowed $238,850,000 from Fortress Credit in
connection with the construction loans. LB Carillon intends to
use the payment from the construction loans to pay off a portion
of its loan from the company.
The Purchase Agreement
The salient terms of the purchase agreement are:
(1) LBHI will purchase from Americor all mortgage loans that
have been originated by Americor; meet the requirements of
the purchase agreement and the underwriting criteria
agreed to by the companies from time to time; have been
approved for purchase by LBHI in accordance with the
agreement; and are closed within 30 days after the date
LBHI provides written notice to Americor that it has
approved the mortgage loan for purchase.
(2) Americor will originate the mortgage loans in accordance
with the purchase agreement for so long as LBHI has not
provided the company 30 days prior notice that it no
longer intends to purchase the mortgage loans.
(3) On the date Americor closes each mortgage loan that has
been approved by LBHI for purchase, LBHI will purchase the
loan at a price equal to the sum of the outstanding
principal balance of that loan; the accrued and unpaid
interest on that loan; and a premium equal to the amount
remaining, if any, after deducting (i) an origination fee
paid by the individual obligor who desires to purchase a
condominium unit with respect to the mortgage loan equal
to 1% of the principal amount of the loan from (ii) an
amount equal to 1% of the outstanding principal amount of
the loan. LBHI agrees to advance the purchase price for
the mortgage loans to Americor on the date of the closing
of those loans.
(4) Within 10 days of LBHI's written request or unless
otherwise mutually agreed upon by LBHI and Americor but
not to exceed an additional 20 days, Americor will
repurchase from LBHI any mortgage loan sold to LBHI if
any warranty or representation made by Americor about the
mortgage loan is untrue and such impairs the value of the
loan, or if Americor has otherwise breached the purchase
agreement with regard to any mortgage loan that impairs
the loan's value, or if Americor has failed to deliver any
document about the mortgage loan requested by LBHI or
required by the purchase agreement that impairs the value
of that loan. Americor will pay to LBHI in immediately
available funds an amount equal to such mortgage loan's
then unpaid principal balance, plus accrued interest.
(5) The purchase agreement may be terminated without cause at
any time by either party after 60 days' prior written
notice to the other party.
A full-text copy of the purchase agreement is available for free
at http://bankrupt.com/misc/LehmanPurchaseAgreementAmericor.pdf
The hearing to consider approval of the purchase agreement is
scheduled for June 3, 2009. Creditors and other concerned
parties have until May 28 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)
LEHMAN BROTHERS: Proposes De Minimis Assets Sale Protocol
---------------------------------------------------------
Lehman Brothers Holdings Inc. maintains various assets, which are
currently unnecessary for the efficient winding down of their
businesses, Shai Y. Waisman, Esq., at Weil, Gotshal & Manges LLP,
in New York, tells the U.S. Bankruptcy Court for the Southern
District of New York. As a result, the Debtors anticipate that
they will attempt to sell or abandon a number of those assets that
are unproductive, nonessential, or burdensome. The sales or
abandonments will involve assets that, in some cases, are of
relatively de minimis value as compared to the Debtors' total
asset base.
The Debtors anticipate that certain of the contemplated de
minimis asset sales may constitute transactions outside of the
ordinary course of business thereby requiring the Court's
approval pursuant to Section 363(b)(1) of the Bankruptcy Code.
However, Mr. Waisman asserts, obtaining Court approval with
respect to each de minimis asset sale would be administratively
burdensome to the Court and mostly for the Debtors' estates.
Thus, to alleviate the burden and cost of having to file a
separate motion with respect to each proposed sale, which could
potentially jeopardize the consummation of time sensitive deals,
the Debtors seek the Court's approval of the De Minimis Sale
Procedures.
The Debtors propose to utilize the De Minimis Sale Procedures to
obtain more expeditious and cost-effective review by interested
parties of certain sales involving smaller, less-valuable, non-
core assets:
(a) The Debtors seek to sell any asset for an amount less than
or equal to $500,000 without further Court approval, and
without providing notice to any party.
(b) The Debtors seek to sell any asset for an amount greater
than $500,000 but less than or equal to $2,000,000 without
further Court approval, after providing notice to certain
parties in accordance with these procedures:
(i) The Debtors will file a notice of that proposed sale
with the Court and serve the Sale Notice by
facsimile, overnight delivery or hand delivery on:
(a) the U.S. Trustee; (b) the Official Committee of
Unsecured Creditors; and (c) all known parties
holding or asserting liens or encumbrances on the
assets.
(ii) Objections to the Noticed De Minimis Sale should be
made in writing, filed with the Court and served on
the Interested Parties and counsel to the Debtors in
accordance with the order governing case management
and administrative procedures for the Debtors'
cases.
(iii) If an objection to a Noticed De Minimis Sale is
properly filed and served by an Interested Party:
(a) the objection will be deemed a request for a
hearing and will be heard at the next scheduled
omnibus hearing that is at least ten calendar days
after service of the objection; and (b) the Noticed
De Minimis Sale may not proceed absent withdrawal of
the objection or entry of an order by the Court
specifically approving the Noticed De Minimis Sale.
(iv) If no objection is filed and served by an Interested
Party, the Noticed De Minimis Sale will be deemed
final and fully authorized by the Court and no
further notice or Court approval to consummate the
sale will be necessary.
The Debtors propose to that all assets be sold in an "as is" and
"where is" basis, without any representations or warranties as to
the quality or fitness of that assets for their intended purpose.
Buyers will, however, take title to the assets free and clear of
liens, claims, encumbrances and other interests, pursuant to
Section 363(f).
The Debtors relate that on or before the 15th day of every
calendar month, they will file with the Court, in accordance with
the Case Management Order, a report summarizing any Noticed De
Minimis Sales that were consummated pursuant to the De Minimis
Sale Procedures during the immediately preceding calendar month.
De Minimis Abandonment
Moreover, the Debtors also seek approval of asset abandonment
procedures, which are intended to minimize the process for
obtaining Court approval with respect to the abandonment of
particular assets where their continued maintenance is burdensome
or where their sale would otherwise be inefficient or impossible.
The Debtors propose to adopt these procedures for De Minimis
Abandonment:
(a) The Abandonment Notice Parties will have five business
days from the date on which the Abandonment Notice is sent
to object to the proposed abandonment. Any objection must
be in writing and delivered to the attorneys for the
Debtors prior to the expiration of that period. If no
written objection is received by Debtors' counsel prior to
the expiration of that five-day period, the Debtors will
be authorized to abandon the asset. The Debtors may, at
any time, obtain approval to abandon an asset from the
Abandonment Notice Parties. If no written objection is
received by Debtors' counsel in accordance with the
procedures, or if the Debtors obtain approval from the
Abandonment Notice Parties, the Debtors may abandon an
asset promptly.
(b) If any Abandonment Notice Party delivers an objection to
the proposed abandonment so that it is received by
Debtors' counsel on or before the fifth business day after
the Abandonment Notice is sent, the Debtors and the
objecting Abandonment Notice Party will use good faith
efforts to resolve the objection. If the Debtors and the
objecting Abandonment Notice Party are unable to achieve a
consensual resolution, the Debtors will not proceed with
the proposed abandonment, but may seek Court approval upon
an expedited notice and a hearing, subject to the Court's
availability.
(c) Nothing in the procedures will prevent the Debtors from
seeking the Court's approval of any proposed abandonment.
(d) On or before the 15th day of every calendar month, the
Debtors will file with the Court an addendum to the
Monthly Report summarizing all abandonments during that
month.
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)
MARKWEST ENERGY: Moody's Affirms Corporate Family Rating at 'B1'
----------------------------------------------------------------
Moody's Investors Service affirmed MarkWest Energy Partners,
L.P.'s B1 Corporate Family Rating, B1 Probability of Default
Rating, B2 (LGD 4, changed to 65% from 62%) senior unsecured note
ratings, and speculative grade liquidity SGL-3 rating. At the
same time, Moody's rated MarkWest's proposed $150 million senior
unsecured notes offering B2 (LGD 4; 65%). The rating outlook is
stable.
The proposed notes will enhance MarkWest's liquidity profile, as
proceeds from the notes offering will be used to repay revolver
borrowings. The debt offering follows three other liquidity
enhancing transactions thus far in 2009: the 50% sale of
MarkWest's ARKOMA connector pipeline project, which raised $62.5
million; the formation of a joint venture with the company's
Marcellus assets, thereby reducing its growth capital expenditures
for 2009 by $200 million; and the $85.6 million expansion of its
revolver to $435.6 million.
The rating affirmation reflects MarkWest's strong position as the
largest natural gas gatherer and processor in the Woodford and
Marcellus shales, where despite the low commodity price
environment, volumes have continued to grow and drilling activity
is relatively undiminished. Leverage is expected to be somewhat
elevated over the near to medium term due to weak natural gas
processing fundamentals and MarkWest's sizable, albeit reduced,
growth capital expenditure program of $225 million in 2009, which
is expected to be primarily funded through revolver drawings.
However, the leverage profile is in-line with several of the
company's midstream peers.
The ratings are constrained by MarkWest's significant volume and
commodity price exposure, with only 48% of its net operating
margin derived from fee-based contracts for the last three months
ending March 31, 2009. However, with just 25% of its net
operating margin being fee-based in 2008, there has been a
significant increase in fee-based income, which Moody's expect to
continue to grow due to the company's expansion in the Woodford
and Marcellus shales where MarkWest's contracts are primarily fee-
based. In addition, while the company has approximately 80% of
its commodity exposure hedged in 2009, its hedging profile in 2010
is only 55% hedged, and new hedges will likely be at less
favorable price levels due to weaker commodity prices.
The stable rating outlook reflects MarkWest's improved liquidity
profile, increasing fee-based income, its successful execution to
date in the Woodford and Marcellus shales and management's
commitment to issuing equity.
The last rating action on MarkWest was on April 29, 2008 when
Moody's affirmed the company's ratings following a $100 million
senior unsecured notes add-on to its $400 million note issuance on
April 15, 2008.
MarkWest Energy Partners, L.P., headquartered in Denver, Colorado,
is a midstream natural gas limited partnership.
MEGA POWER CORPORATION: Case Summ. & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Mega Power Corporation
PMB 302
PO Box 2020
Barceloneta, PR 00617
Bankruptcy Case No.: 09-04056
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Debtor's Counsel: Winston Vidal-Gambaro, Esq.
Winston Vidal Law Office
PO Box 193673
San Juan, PR 00919-3673
Tel: (787) 751-2864
Fax: (787) 763-6114
Email: wvidal@prtc.net
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including a list of its
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/prb09-04056.pdf
The petition was signed by Carlos Perez Vazquez, president of the
Company.
METRO GOLDWYN: Bank Debt Trades at 46% Off in Secondary Market
--------------------------------------------------------------
Participations in a syndicated loan under which Metro-Goldwyn-
Mayer Inc. is a borrower traded in the secondary market at 54.00
cents-on-the-dollar during the week ended May 15, 2009, according
to data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 3.70 percentage
points from the previous week, the Journal relates. The loan
matures April 8, 2012. The Company pays 275 basis points above
LIBOR to borrow under the facility. The bank debt is not rated by
either Moody's or S&P.
Metro-Goldwyn-Mayer Inc. is an independent, privately-held motion
picture, television, home video, and theatrical production and
distribution company. The company owns the world's largest
library of modern films, comprising approximately 4,000 titles,
and over 10,400 episodes of television programming. MGM is owned
by an investor consortium comprised of Providence Equity Partners,
TPG Capital, Sony Corporation of America, Comcast Corporation, DLJ
Merchant Banking Partners and Quadrangle Group.
Comcast paid about $5 billion in debt and equity in September
2004 to buy MGM from majority owner Kirk Kerkorian. According to
Reuters, merger specialists have said MGM could be worth
$2 billion to $2.5 billion. MGM, however, has reiterated its
commitment to staying independent.
METRO GOLDWYN: In Talks to Refinance $3.7BB in Debt, Hires Moelis
-----------------------------------------------------------------
Metro-Goldwyn-Mayer Inc. said last week it hired Moelis & Co. to
help refinance $3.7 billion debt and is talking with a steering
committee of 140 creditors led by JPMorgan Chase & Co. as part of
the process, Sue Zeidler at Reuters reports.
According to Reuters, the studio said "it was exploring options
for optimizing its capital structure and has begun talks with a
steering committee of its lenders as part of the process."
Ms. Zeidler says bankers estimate MGM is paying north of $250
million a year in interest on debt due in 2012. Sources told
Reuters MGM was potentially seeking a way to make the loan due
later, or reduce it in size.
MGM hired Goldman Sachs in August and said it was exploring
"enhancements" to its long-term capital structure, Ms. Zeidler
says.
Reuters relates that MGM said it had discussed its annual
financial results with lenders last week. MGM said the financial
results were in line with its budget and that it was in compliance
with all loan covenants.
A source told Reuters that MGM finished the year with over $500
million in cash flow from its film and TV library operations, down
about 5% from a year ago.
"Rumors of [MGM's] potential sale surface from time to time and
were recently rekindled with unconfirmed reports that billionaire
financier Carl Icahn was buying MGM debt, which sparked
speculation he may push for a combination of MGM with Lions Gate
Entertainment (LGF.N), another studio Icahn has sought influence
over," Ms. Zeidler says.
"Sale rumors also surfaced last summer with the departure of
producer Paula Wagner from MGM's United Artists studio in August,"
Ms. Zeidler adds.
About Metro-Goldwyn-Mayer
Metro-Goldwyn-Mayer Inc. is an independent, privately-held motion
picture, television, home video, and theatrical production and
distribution company. The Company owns the world's largest
library of modern films, comprising approximately 4,000 titles,
and over 10,400 episodes of television programming. MGM is owned
by an investor consortium comprised of Providence Equity Partners,
TPG Capital, Sony Corporation of America, Comcast Corporation, DLJ
Merchant Banking Partners and Quadrangle Group.
Comcast paid about $5 billion in debt and equity in September
2004 to buy MGM from majority owner Kirk Kerkorian. According to
Reuters, merger specialists have said MGM could be worth
$2 billion to $2.5 billion. MGM, however, has reiterated its
commitment to staying independent.
NEIMAN MARCUS: Bank Debt Trades at 28% Off in Secondary Market
--------------------------------------------------------------
Participations in a syndicated loan under which Neiman Marcus
Group Inc. is a borrower traded in the secondary market at
71.21 cents-on-the-dollar during the week ended May 15, 2009,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents a drop of 3.54
percentage points from the previous week, the Journal relates.
The loan matures April 6, 2013. The Company pays 175 basis points
above LIBOR to borrow under the facility. The bank debt carries
Moody's B3 rating and S&P's BB- rating.
Headquartered in Dallas, Texas, Neiman Marcus Inc.'s --
http://www.neimanmarcusgroup.com/-- operations include the
Specialty Retail Stores segment and the Direct Marketing segment.
The Specialty Retail Stores segment consists primarily of Neiman
Marcus and Bergdorf Goodman stores. The Direct Marketing segment
conducts both online and print catalog operations under the Neiman
Marcus, Horchow and Bergdorf Goodman brand names.
* * *
As reported by the Troubled Company Reporter on March 19, 2009,
Moody's Investors Service downgraded Neiman Marcus Group Inc.'s
long term ratings including its Probability of Default Rating to
Caa1 from B1, its Corporate Family Rating to Caa1 from B1, and its
Speculative Grade Liquidity Rating to SGL-3 from SGL-2. The
rating outlook is negative.
On March 5, 2009, Fitch Ratings affirmed the Issuer Default Rating
on Neiman Marcus, Inc. and its subsidiary, The Neiman Marcus
Group, Inc., at 'B' and revised the Rating Outlook to Negative
from Stable. NMG had $3 billion of debt outstanding as of
January 31, 2009. The TCR said February 9, 2009, that Standard &
Poor's Ratings Services placed its ratings on six department store
companies, including Neiman Marcus ("B+"), on CreditWatch with
negative implications.
NEUMANN HOMES: Sells Easement to Commonwealth Edison FOR $300,000
-----------------------------------------------------------------
Neumann Homes Inc. and its debtor-affiliates seek permission from
the U.S. Bankruptcy Court for the Northern District of Illinois to
sell a certain easement to Commonwealth Edison Company.
The easement is located in one of the Debtors' residential
developments in the village of Gilberts and is pledged as
collateral to IndyMac Bank. Commonwealth Edison has made a cash
offer of $300,000 to purchase the Easement.
"The Debtors are not aware of any other party that has expressed
an interest in the Easement. The Debtors believe that
Commonwealth Edison's offer is the highest and best offer for the
easement," George Panagakis, Esq., at Skadden Arps Slate Meagher &
Flom LLP, in Chicago, Illinois, says. He relates that the Debtors
will hold all proceeds from the sale in escrow pending a
determination of whether IndyMac Bank has an interest in the
proceeds.
A full-text copy of the document executed in connection with the
proposed Easement Sale is available for free at:
http://bankrupt.com/misc/NeumannSaleEasement.pdf
Mr. Panagakis tells the Court that the Easement is no longer
necessary for the Debtors' business operations.
The sale of the Easement is part of the ongoing efforts stepped up
by the Debtors in connection with the liquidation of their
estates, Mr. Panagakis avers. He relates that the Debtors have
discussed potential structures of and time tables with respect to
a plan of liquidation with the Official Committee of Unsecured
Creditors, which has already commenced certain litigation to
recover amounts that would further fund and be distributed
pursuant to the plan. "The Debtors, with important input and
assistance of the Creditors Committee, intend on filing a proposed
plan of liquidation in the near future."
IndyMac & Wells Fargo Respond
IndyMac clarifies that it does not object to the sale price or to
the proposed method in handling the proceeds of the sale. It,
however, asserts that there must be certain basic restrictions on
what can be constructed on the Easement parcel. IndyMac suggests
that the Easement should be limited to permit Commonwealth Edison
to install (i) power lines and other facilities approved by
IndyMac and the Debtors and included in the text of the agreement;
and (ii) additional improvements to be added in the future, which
should be approved by the then owner and mortgage lender.
Wells Fargo Bank N.A., for its part, asks the Court to issue a
ruling providing that no proceeds should be disbursed from escrow
until it and the village of Gilberts receive prior notice and
thus, have an opportunity to assert their rights, claims and
interests to the proceeds as well as an opportunity to object to
any proposed disbursement of the sale proceeds from the escrow.
Attorney for Wells Fargo, David Baddley, Esq., at Greenberg
Traurig LLP, in Chicago, Illinois, asserts that Wells Fargo and
Gilberts have rights, claims and interests in the sale proceeds,
which may be superior to IndyMac's.
Wells Fargo serves as trustee for the Special Service Area 19
Special Tax Bonds that were issued in connection with the Debtors'
residential development in Gilberts. Payment of the bonds is
secured by, among other things, certain special service area taxes
on the residential development. The Easement that will be sold to
Commonwealth Edison pertains to real estate within Special Service
Area 19 that is subject to outstanding special service area taxes,
Mr. Baddley points out. These special service area taxes have not
yet been paid by IndyMac, according to Wells Fargo.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The Company filed for Chapter 11 protection on November 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 29; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
NEUMANN HOMES: Settles Construction Project Rift with Wheatlands
----------------------------------------------------------------
Prior to the Petition Date, Neumann Homes Inc. and its debtor-
affiliates bought a large tract of land located in Aurora,
Colorado, from Wheatlands Development LLC. The Debtors acquired
the property for their residential development project known as
Serenity Ridge, which they eventually transferred to Residential
Funding Company LLC pursuant to an order by the U.S. Bankruptcy
Court for the Northern District of Illinois dated April 15, 2008.
Before the Debtors purchased the land from Wheatlands Development,
they made a deal with its affiliate, Wheatlands Crossing LLC,
which owns a tract of land adjacent to the Debtors' property.
Under the deal, the parties agreed that the Debtors would hire a
contractor to perform earth work and compaction in both properties
and Wheatlands Crossing would reimburse the Debtors for its share
of the cost. The Debtors tapped Hogan Action Services Inc. to
perform grading work from February 2004 to December 2006. Hogan
invoiced the Debtors $2,981,669 for the grading costs and the
Debtors paid those costs in full from February 2004 through
January 2007. Based on the invoices and the Debtors' allocation
of other costs associated with the development of their
residential land and Wheatlands Crossing's commercial land, the
Debtors invoiced Wheatlands Crossing 41,105,808 for its share of
the costs.
By February 13, 2008, the city of Aurora sent a letter, requiring
Wheatlands Crossing to complete the construction of the Arapahoe
Road from Smoky Hill Road to Powhatan Road as a condition to the
approval of Wheatlands Crossing's proposal to develop its land for
commercial purposes. The Arapahoe Road is adjacent to the
Debtors' and Wheatlands Crossing's properties.
The Serenity Ridge Metropolitan District estimated the cost of the
road construction project to total $1,310,142, of which about
$721,812 is allocable to Wheatlands Crossing's land, and $588,330
to the Debtors' land.
Attorney for the Debtors, George Panagakis, Esq., at Skadden Arps
Slate Meagher & Flom LLP, in Chicago, Illinois, says Wheatlands
Crossing has disputed its share of costs for Hogan's services and
the Debtors' allocation of other costs associated with the
development of its commercial land. Wheatlands Crossing also does
not have the financial resources to satisfy in full any judgment
with respect to the Debtors' claims against it as well as pay the
cost of the road construction project, according to Mr. Panagakis.
To resolve their dispute and avoid any litigation, the Debtors and
Wheatlands Crossing reached a consensual settlement, which
provides that:
(1) In full and final settlement of any claims by and between
the Debtors and Wheatlands Crossing, Wheatlands Crossing
will pay the Debtors $300,000 and assign to them its
right, title and interest in and to any lien claims on or
against the Debtors' land property arising from the road
construction project.
(2) In the event Wheatlands Crossing does not substantially
complete the road construction project and has not
purchased or furnished a performance bond, surety bond or
letter of credit sufficient to cover the cost of
completing the project acceptable to Aurora, it will grant
the Debtors a lien in the sum of $600,000 on and against
its land property. The lien will be immediately
enforceable by the Debtors, their successors or assigns.
(3) Within five days after the Court approves the parties'
settlement agreement, Wheatlands Crossing will pay
$300,000 via wire transfer to the Debtors, as full and
final satisfaction of any claims the Debtors may have
against Wheatlands Crossing.
(4) Wheatlands Crossing and the Debtors will release and
discharge each other from any and all claims, damages,
losses and liabilities.
"Through this settlement agreement, the Debtors and [Wheatlands
Crossing] are able to resolve a critical and complex dispute,"
Mr. Panagakis says. He adds that the failure to settle the
parties' dispute could result in costly and time-consuming
litigation.
"Rather than resort to litigation and risk reducing, or even
losing, any possible recovery of funds, the Debtors negotiated the
settlement agreement in an effort to obtain a recovery for the[ir]
estates, expedite the administration of these Chapter 11 cases and
reduce the administrative costs," Mr. Panagakis further says.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The Company filed for Chapter 11 protection on November 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 29; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
NEUMANN HOMES: Court Grants Rule 2004 Requests for Discovery
------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
granted separate requests by Lo Land Assets LP, and the local
officials of the villages of Wonder Lake and Antioch to require
Neumann Homes Inc. to answer interrogatories and produce certain
documents.
Lo Land's Rule 2004 Request
Lo Land is involved in the land banking business. In this
business, a seller of a real property may want to make a complete
sale of its land and a homebuilder may wish to buy large
properties in stages for it to better manage cash flow and land
inventory. A land banker may purchase the land and enter into
pact with the homebuilder where the land banker holds the land in
exchange for the homebuilder agreeing to "take down" the lots at
specific prices and times.
Lo Land entered into an option agreement in June 2005 with Debtor
Neumann Homes Inc., pursuant to which the Debtor obtained the
right and option to acquire 581 lots in Wonder Lake from July 2005
to May 2009. Lo Land maintains that it is the owner of the lots.
The parties also entered into a construction agreement in June
2005. The parties further executed a certain Declaration of
Consent and Waiver to Creation of Special Service Area and
Imposition of Special Service Area Tax in November 2005.
Joseph J. Henderson & Son Inc. is a party that has filed a state
court lawsuit in the 22nd Circuit Court of Illinois against
Neumann Homes Inc. and the village of Wonder Lake related to
agreements and work JHH has performed in the Meadows of West Bay
Development. Lo Land notes that the Bankruptcy Court has granted
JHH authority to conduct a Rule 2004 exam and serve
interrogatories and document requests on the Debtors. Lo Land
maintains that the discovery requested by JJH is also relevant to
it since its lots are located in Wonder Lake and Meadows of West
Bay.
Lo Land, as the owner of the Lots, avers that it requires
information related to the Lots in order to determine what steps
and actions the Debtors have undertaken with respect to the Lo
Land Lots, including completion of work undertaken and directed by
the Debtors, the Debtors' request or use of SSA funds, and the
existence of any third-party liens, claims, or encumbrances on Lo
Land's Lots as a result of an action or inaction by the Debtors.
The Bankruptcy Court authorizes Lo Land to serve on the Debtors
interrogatories and document production requests on the Debtors.
The Court also requires the Debtors to answer Lo Land's requests
no later than June 1, 2009. The June Deadline, however, may be
extended upon written agreement of the parties.
Under its interrogatories, Lo Land wants to determine if the
Debtor obtained or provided a payment bond to benefit
subcontractors and suppliers in connection with their Option and
Construction Agreements. Lo Land also wants the Debtor to
identify all other agreements relating to the Lo Land Lots to
which the Debtor was a party.
Before the Court issued its ruling, JJH objected to Lo Land's
document production request, contending that it would give Lo Land
unfair advantage if the documents were provided to Lo Land but not
to JJH.
The Court grants Lo Land authority to get hold of copies of
documents the Debtor provided to JJH. To address JJH's concern,
the Court also directs the Debtor to provide JJH a copy of its
response to Lo Land's interrogatories. All discovery responses to
Lo Land will also be served on the attorneys representing Wonder
Lake and JJH.
Wonder Lake and Antioch's Rule 2004 Bid
Local officials of the villages of Wonder Lake and Antioch sought
to investigate the claims of contractors and suppliers on account
of the services and materials they provided for the Debtor's
residential development projects in Wonder Lake known as the
Meadows of West Bay, and in Antioch known as Clublands and
NeuHaven. The local governments of the Villages entered into
various agreements with the Debtor in connection with the
Projects.
The Officials want the Debtor to identify all contractors and
suppliers with whom it had direct contracts for the Projects, the
contracts they reached with them, and the amount owing to each
supplier or contractor.
Joseph J. Henderson & Son Inc., a contractor, objected to the
proposed investigation, saying it would give the Officials "unfair
advantage" if the documents were provided to them but not to JJH.
To address JJH's concerns, the Court directs the Debtor to furnish
JJH a copy of its response to the Officials' interrogatories.
The Court also directs the Debtor to furnish Fidelity and Deposit
Company of Maryland, Lake County Grading Company, Merryman
Construction, LO Land Assets LP, Guaranty Bank and Lexon Insurance
Company, a copy of its response to the Wonder lake Officials'
interrogatories. The Debtor is also directed to provide a copy of
its response to the Antioch officials' interrogatories to FDCM,
LCGC, Merryman Excavation Inc. and IndyMac Bank.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The Company filed for Chapter 11 protection on November 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 29; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
NEUMANN HOMES: To Employ Bracewell as Special Counsel
-----------------------------------------------------
Neumann Homes Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the Northern District of Texas for authority
to employ Bracewell & Giuliani LLP as their special counsel.
The Debtors tapped the services of Bracewell because of the need
to pursue potential claims and causes of action on behalf of their
estates, according to Paul Andrews, chief restructuring officer of
Debtor Neumann Homes Inc. He says these include claims and causes
of action against former executive officer Kenneth Neumann and his
wife and disputes involving NeuDearborn.
Bracewell has the necessary background, resources, expertise,
historical performance and dedication to assist the Debtors by
performing legal work in the range of matters that may arise in
the context of this case, Mr. Andrews asserts.
As special counsel to the Debtors, Bracewell is tasked to:
(1) assist and advise the Debtors in analyzing the claims and
causes of action owned by the Debtors against former
officers and directors of Neumann Homes and any other
third parties;
(2) prepare and file pleadings as necessary to pursue the
Debtors' claims and causes of action to recover the value
of certain tax refunds, preferential transfers and other
assets of the Debtors;
(3) conduct appropriate examinations of witnesses, claimants
and other parties in connection with the litigation;
(4) represent the Debtors in any adversary cases and other
proceedings that may affect the Debtors' claims and causes
of action;
(5) collect any judgment that may be entered in the litigation
related to the claims and causes of action;
(6) handle any appeals that may result from the contemplated
litigation; and
(7) perform any other legal services related to the
prosecution of the Debtors' claims and causes of action.
Mr. Andrews says Bracewell will be paid $50,000 for each claim and
cause of action that will be settled by April 30, 2009. If a
claim or cause of action is resolved after that date but before
the Debtors' plan of reorganization is confirmed, the Debtors
propose to entitle Bracewell to receive $450 per hour for its
services.
The Debtors and Bracewell expect to negotiate and present to the
Court at a later date a retention and compensation agreement, if
Bracewell's services are required after confirmation of the
Debtors' plan of reorganization.
Ross Kennedy, Esq., a partner at Bracewell, says his firm does not
have interest materially adverse to the interest of the Debtors'
estates or their creditors. He assures the Court that his firm is
a disinterested person under section 101(14) of the Bankruptcy
Code.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The Company filed for Chapter 11 protection on November 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 29; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
NEUMANN HOMES: Bankruptcy Court Keeps Tax Refund Suit vs. Owners
----------------------------------------------------------------
The U.S. District Court for the Northern District of Illinois
denied a motion for withdrawal of reference filed by Kenneth
Neumann, former chief executive officer of Neumann Homes Inc., on
the lawsuit commenced by the Official Committee of Unsecured
Creditors appointed in the Debtors' cases.
Mr. Neumann and his wife sought a withdrawal of the reference of
the adversary complaint from the U.S. Bankruptcy Court for the
Northern District of Illinois to the District Court. The Neumanns
asserted that the Bankruptcy Court lacks jurisdiction to enter
final orders since the actions alleged by the Creditors Committee
in its complaint are "non-core" and the Bankruptcy Court's
decision will be subject to "de novo review" of the District
Court. They also argued that withdrawal is mandated because the
adversary complaint rests in significant part on the
interpretation of the Internal Revenue Code.
As reported by the Troubled Company Reporter on January 8, 2009,
the Committee sued the Neumanns for allegedly receiving more than
$20 million in tax payment refunds. The Committee argued that the
Neumanns received refunds of tax payments that were made by, and
are the rightful property of, the Debtors.
The Committee has asked the Bankruptcy Court to:
(a) avoid the transfers of any amount or property of the
Debtors' estates to the Neumanns that are considered
fraudulent or preferential pursuant to provisions under
the Bankruptcy Code;
(b) enter a monetary judgment against the Neumanns in the
amount of the tax refunds from 2004 and 2005, plus
interest;
(c) award it damages for claims of unjust enrichment and
breach of fiduciary duty of the Neumanns;
(d) rule on the imposition of a constructive trust to ensure
the ultimate distribution of the tax refunds to the
Debtors' unsecured creditors;
(e) enjoin the Neumanns from dissipating the anticipated tax
refunds;
(f) direct an accounting for the period from January 2004 to
the present to include any refunds received by the
Neumanns from the Internal Revenue Service; any
distributions from the Debtor for purposes of tax
liabilities; and any payments made by the Neumanns to the
Internal Revenue Service; and
(g) award it for attorney's fees and litigation costs.
On behalf of the Creditors Committee, Gregory Otsuka, Esq., at
Paul Hastings Janofsky & Walker, in Chicago, Illinois, said Mr.
Neumann appropriated the amounts for his personal benefit "in the
form of the election of Subchapter C instead of Subchapter S
corporate status and the election to carry back instead of carry
forward" the net operating losses of the Debtors.
Neumann Homes was structured as a Subchapter S corporation for the
period from January 1991 to September 17, 2007, during which time
Mr. Neumann was the sole voting shareholder. As a Subchapter S
corporation, the tax liability for the Debtors' taxable income was
passed through to shareholders.
On September 21, 2007, however, Mr. Neumann caused Neumann Homes
to revoke its status as a Subchapter S corporation and become a
Subchapter C corporation, which made the Debtor responsible for
paying its own federal income taxes. "[Mr.] Neumann took this
step for his personal financial benefit, not for any business
purpose in the interest of Neumann Homes," Mr. Otsuka argued.
The Committee said Mr. Neumann directed Neumann Homes to make
payments for his federal and state income taxes as well as those
of his wife, to fund his tax liabilities attributable to Neumann
Homes' income. "These and other distributions from Neumann Homes
left the company inadequately capitalized," Mr. Otsuka said.
Mr. Otsuka told the Bankruptcy Court that a loan agreement between
Neumann Homes and Residential Funding Corporation, one of the
Debtors' prepetition lenders, restricted the percentage of net
income that could be distributed to Mr. Neumann. Specifically,
the agreement limited payment of a cash dividend to Mr. Neumann to
not more than 30% of Neumann Homes' adjusted net income if the
Debtor's ratio of total liabilities to net worth equaled or
exceeded 3.5 to 1, and not more than 50% of the Debtor's adjusted
net income if its ratio of total liabilities to net worth is less
than 3.5 to 1.
The Committee said Mr. Neumann directed Neumann Homes in 2004 to
make payments for shareholders' tax liabilities attributable to
the Debtor's income for $10,644,327 in 2004, and $13,894,915 in
2005, some or all of which was for his tax liabilities. According
to Mr. Otsuka, the 2005 payment for tax purposes raised dividend
distributions to a level above that permitted under the RFC Loan
Agreement. He noted that the total 2005 dividend to Mr. Neumann
was 54.53% of Neumann Homes' net income, which was out of
compliance with the covenant for 2005 by $1,443,483.
Believing that the excessive 2005 dividend was necessary to pay
taxes attributable to Neumann Homes' earnings, RFC reportedly
waived compliance with the covenant in the RFC Loan Agreement
restricting distribution to Mr. Neumann for 2005 on the condition
that the Debtor further restricts its 2006 dividend payments to
account for the $1,443,483 overpayment in 2005.
Based on Neumann Homes' 2006 financial condition, Mr. Neumann
ultimately repaid the Debtor $1.5 million to satisfy the
conditions of RFC's covenant waiver.
Meanwhile, Neumann Homes experienced substantial net operating
losses in both 2006 and 2007.
Under the Internal Revenue Code, net operating losses can be
carried back to the two prior operating years or carried forward
to offset the earnings of future years. Once such an election is
made, it is irrevocable for that tax year.
Mr. Otsuka argued that having caused Neumann Homes to convert to a
Subchapter C corporation prior to its bankruptcy filing, Mr.
Neumann took the position that he had the sole discretion to make
the election and did so without allegedly consulting Neumann Homes
or considering the Debtor's best interests. "Specifically, on
information and belief, [Mr.] Neumann elected to carry back the
2006 and 2007 NOLs to 2004 and 2005," Mr. Otsuka said. He stated
that Mr. Neumann and his wife, who filed a joint tax return, have
applied to the IRS for total tax refunds based on the net
operating loss carry-backs for 2006 and 2007 of about $25 million
for tax years 2004 and 2005.
Even though Neumann Homes paid the 2004 and 2005 taxes in the
first instance on Mr. Neumann 's behalf, the tax refunds for tax
years 2004 and 2005 either have been or will be issued to Mr.
Neumann and his wife personally, and are no longer available to
the Debtor by virtue of Mr. Neumann's appropriation of the right
to make the carry-back or carry-forward election as well as by
means of his conversion of Neumann Homes to a Subchapter C
corporation, Mr. Otsuka said to the Bankruptcy Court.
Mr. Neumann and his wife allegedly have received a substantial,
multi-million dollar tax refund for 2004 and a substantial multi-
million dollar tax refund for 2005 will be forthcoming at any
time, according to Mr. Otsuka.
"The transfer of the NOL carry-back or carry-forward election and
resulting tax refunds to [the Neumanns] have resulted or will
result in property of Neumann Homes being transferred to the
defendants and that transfer should be avoided," Mr. Otsuka said.
About Neumann Homes
Headquartered in Warrenville, Illinois, Neumann Homes Inc. --
http://www.neumannhomes.com/-- develops and builds residential
real estate throughout the Midwest and West US. The company is
active in the Chicago area, southeastern Wisconsin, Colorado, and
Michigan. The company has built more than 11,000 homes in some
150 residential communities. The company offers formal business
training to employees through classes, seminars, and computer-
based training.
The Company filed for Chapter 11 protection on November 1, 2007
(Bankr. N.D. Ill. Case No. 07-20412). George Panagakis, Esq., at
Skadded, Arps, Slate, Meagher & Flom L.L.P., was selected by the
Debtors to represent them in these cases. The Official Committee
of Unsecured Creditors has selected Paul, Hastings, Janofsky &
Walker LLP, as its counsel in these bankruptcy proceeding. When
the Debtors filed for protection from its creditors, they listed
assets and debts of more than $100 million.
(Neumann Bankruptcy News, Issue No. 29; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000)
PACIFIC ETHANOL: Can Borrow $7-Mil. Portion of WestLB Facility
--------------------------------------------------------------
Pacific Ethanol Inc.'s units obtained interim authorization from
the U.S. Bankruptcy Court for the District of Delaware to borrow
$7 million from a promised $20 million debtor-in-possession loan
provided by secured creditors for whom WestLB AG's New York branch
is the agent. The Court's interim order has permitted the roll up
of $10.5 million owed to the secured lenders into the DIP
financing. The Court will convene a hearing to consider approval
of the DIP loans on June 3.
Certain of the Debtors' existing lenders under the Credit
Agreement dated as of February 27, 2007, by and among the Debtors
and WestLB AG, New York Branch, Amarillo National Bank, the senior
secured lenders and the other parties thereto have agreed to
provide the $20 million loan to Pacific Ethanol's five units that
have filed for Chapter 11.
Pacific Ethanol Inc. has not filed for Chapter 11. However, in
its quarterly report submitted to the Securities and Exchange
Commission, it said, "As a result of ethanol industry conditions
that have negatively affected our business, we believe we have
sufficient liquidity to meet our anticipated working capital, debt
service and other liquidity needs only through the end of June
2009, provided that we are able to timely restructure our $31.5
million indebtedness to Lyles United LLC and Lyles Mechanical Co.
and remain in compliance with Kinergy's credit facility which,
among other things, requires us to obtain certain financing by May
31, 2009. Accordingly, there continues to be substantial doubt as
to our ability to continue as a going concern. We are seeking to
restructure our indebtedness and raise additional debt or equity
financing, or both, but there can be no assurance that we will be
successful. If we cannot restructure our indebtedness and obtain
sufficient capital, we may need to seek protection under the U.S.
Bankruptcy Code, including at the parent-company level."
The Company has suspended operations at three of its four wholly
owned ethanol production facilities due to market conditions and
in an effort to conserve capital. The Company has also taken and
expects to take additional steps to preserve capital.
A full-text copy of Pacific Ethanol's quarterly report is
available at no charge at http://ResearchArchives.com/t/s?3d08
About Pacific Ethanol, Inc.
Pacific Ethanol is the largest West Coast-based marketer and
producer of ethanol. Pacific Ethanol has ethanol plants in Madera
and Stockton, California; Boardman, Oregon; and Burley, Idaho.
Pacific Ethanol also owns a 42% interest in Front Range Energy,
LLC which owns an ethanol plant in Windsor, Colorado. Pacific
Ethanol has achieved its goal of 220 million gallons per year of
ethanol production capacity in 2008. In addition, Pacific Ethanol
is working to identify and develop other renewable fuel
technologies, such as cellulose-based ethanol production and
bio-diesel.
Five indirect wholly owned subsidiaries of Pacific Ethanol, Inc.
-- Pacific Ethanol Holding Co. LLC, Pacific Ethanol Madera LLC,
Pacific Ethanol Columbia, LLC, Pacific Ethanol Stockton, LLC and
Pacific Ethanol Magic Valley, LLC -- commenced a case by filing a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code before the United States Bankruptcy Court for the District of
Delaware on May 17, 2009.
Pacific Ethanol Holding Co. LLC and four affiliates filed for
Chapter 11 on May 17, 2009 (Bankr. D. Del. Case No. 09-11713).
Judge Kevin Gross handles the case. Attorneys at Cooley Godward
Kronish LLP represent the Debtors as counsel. Attorneys at Potter
Anderson & Corroon LLP are co-counsel. Epiq Bankruptcy Solutions
LLC is the claims agent. Pacific Ethanol Holding disclosed
$50 million to $100 million in assets and $100 million to
$500 million in debts in its petition.
Pacific Ethanol Inc. and its marketing subsidiaries, Kinergy
Marketing LLC, and Pacific Ag. Products, LLC, have not filed for
Chapter 11 bankruptcy protection. The Company is expected to
continue to manage the Plant Subsidiaries under an Asset
Management Agreement and Kinergy and PAP are expected to continue
to market and sell the Plant Subsidiaries' ethanol and feed
production under existing Marketing Agreements.
QIMONDA NA: Obtains October 18 Extension of Plan Filing Deadline
----------------------------------------------------------------
Qimonda Richmond LLC and Qimonda North America Corp. obtained from
the U.S. Bankruptcy Court for the District of Delaware an
extension of their exclusive periods to:
a) file a plan until October 18, 2009, and
b) solicit acceptances of that plan until December 17, 2009.
In their request for an extension, the Debtors said they needed
time to (i) initiate a sale process and employ professionals to
assist them in executing the sale plan; (ii) obtain a $60 million
debtor-in-possession facility to provide sufficient liquidity
while the sale process unfolds; (iii) and file their schedules of
assets and liabilities, and statements of financial affairs.
Qimonda NA has recently submitted its formal schedules, disclosing
$480,216,761 in assets and $169,104,253 in debts. Qimonda
Richmond disclosed $1,049,561,077 in assets and $806,813,784 in
debts.
The Debtors have also obtained final Court approval of a
$60 million in secured financing from an affiliate of Gordon
Brother Group LLC named GB Merchant Partners LLC.
About Qimonda NA
Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading
global memory supplier with a diversified DRAM product portfolio.
The company generated net sales of EUR1.79 billion in financial
year 2008 and had -- prior to its announcement of a repositioning
of its business -- approximately 12,200 employees worldwide, of
which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond
(Virginia, USA). The company provides DRAM products with a focus
on infrastructure and graphics applications, using its power
saving technologies and designs. Qimonda is an active innovator
and brings high performance, low power consumption and small chip
sizes to the market based on its breakthrough Buried Wordline
technology.
Qimonda AG filed an application with the local court in Munich,
Germany, on January 23, 2009, to open insolvency proceedings.
QAG's U.S. units, Qimonda North America Corp. and Qimonda Richmond
LLC, filed for Chapter 11 before the Delaware bankruptcy court on
February 20 (Bankr. D. Del., Lead Case No. 09-10589). Mark D.
Collins, Esq., at Richards Layton & Finger PA, has been tapped as
counsel. Roberta A. DeAngelis, the United States Trustee for
Region 3, appointed seven creditors to serve on an Official
Committee of Unsecured Creditors. Jones Day and Ashby & Geddes
represent the Committee. In its bankruptcy petition, Qimonda
estimated assets and debts of more than $1 billion.
RAINBOW NATIONAL: Moody's Raises Corporate Family Rating to 'Ba2'
-----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of Rainbow National
Services LLC, an indirect wholly-owned subsidiary of Cablevision
Systems Corporation (Ba2 Corporate Family Rating), as outlined
below. The rating outlook is stable.
Issuer: Rainbow National Services LLC
* Corporate Family Rating - Upgraded to Ba2 from Ba3
* Probability of Default Rating - Upgraded to Ba2 from Ba3
* Senior Secured Bank Credit Facilities - Upgraded to Ba1 (LGD2-
28%) from Ba2 (LGD2-28%)
* Senior Unsecured Notes - Upgraded to Ba3 (LGD5-74%) from B1
(LGD5-75%)
* Senior Subordinated Notes - Upgraded to B1 (LGD6-91%) from B2
(LGD6-91%)
* Speculative Grade Liquidity Rating - Upgraded to SGL-1 from SGL-
2
"The upgrades primarily reflect Moody's expectation that risks
related to the deployment of excess RNS cash flows and general
debt service capacity to support initiatives beyond its
intermediate parent Rainbow Media Holdings have decreased, and
that the credit profile and related liquidity needs of its
ultimate parent Cablevision and intermediate parent CSC Holdings
(which are now rated at an equivalent Ba2 level) are no longer a
material constraint on RNS ratings," according to Senior Vice
President Russell Solomon. The upgrades are also supported by
ongoing strength in the operating performance of the three core
programming networks (AMC, Moody's tv, and IFC) that ultimately
support the RNS debt obligations, and Moody's belief that the
consolidated Cablevision entity taken as a whole will be managed
with a higher level of fiscal conservatism in future periods than
has been demonstrated historically.
Moody's believes the reduced reliance on RNS liquidity as a means
of subsidizing other Cablevision ventures affords added
flexibility to strategically deploy RNS's financial capital in a
manner that will facilitate business growth by further increasing
awareness of its cable networks through the development of
compelling content that increases ratings and attracts
advertisers. Moody's expects RNS's debt reduction will continue
to be limited to annual term loan amortization as the company will
continue to broadly invest in the Rainbow networks (including
Sundance and News 12). However, RNS's debt-to-EBITDA leverage
should continue to improve from an approximate 5.7x as of
3/31/2009 (incorporating Moody's standard adjustments and
programming expenses on a cash basis) through EBITDA growth
supported by increases in contractual affiliate fees, modest
advertising revenue growth driven by the strength of RNS's
original programming such as Mad Men and programming investments
returning to more normalized levels.
The upgrade of RNS's speculative grade liquidity rating to SGL-1
from SGL-2 is driven by Moody's expectation that RNS's revolver
will not be used to fund debt maturities outside of the Rainbow
umbrella, and that the company's strong free cash flow generation
and significant headroom underneath its financial maintenance
covenants will remain as such over the next twelve months.
RNS's Ba2 CFR broadly incorporates the high perceived underlying
value of its primary assets and the free cash flow they generate,
along with the aforementioned solid liquidity profile. These
strengths are balanced by relatively high financial leverage of
5.7x as of 3/31/2009 (which Moody's believes is largely driven by
unusually large programming investments in 2008 and which should
moderate in 2009-2010; leverage absent the investments is 3.9x),
exposure to greater media fragmentation in future periods and
concentrated asset and customer bases.
The stable rating outlook reflects Moody's expectation that
programming levels will return to more normalized levels over the
next two years, that no further increases in debt will be
undertaken to fund ventures outside of the core subsidiaries which
support the RNS debt, and that debt-to-EBITDA leverage will be
sustained under 4.0x on a normalized basis.
The last rating action was on January 8, 2009 when Moody's lowered
RNS's speculative grade liquidity rating to SGL-2 from SGL-1.
Please see the credit opinion posted to www.moodys.com for
additional information on RNS's ratings.
RNS'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 RNS's core industry and RNS's ratings are believed to
be comparable to those of other issuers of similar credit risk.
Headquartered in Jericho, New York, Rainbow National Services LLC
is a wholly-owned indirect subsidiary of Bethpage, New York-based
Cablevision Systems Corporation through Rainbow Media Holdings.
The company supplies television programming predominantly through
three entertainment programming networks - AMC, Moody's tv, and
IFC - to cable, direct broadcast satellite and telecommunications
service providers throughout the United States.
RIVER REAL: Case Summary & 1 Largest Unsecured Creditor
-------------------------------------------------------
Debtor: River Real, LLC
10 Faraday
Irvine, CA 92618
Bankruptcy Case No.: 09-14681
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
Central District of California (Santa Ana)
Judge: Theodor Albert
Debtor's Counsel: David W. Meadows, Esq.
1801 Century Park East
Suite 1250
Los Angeles, CA 90067
Tel: (310) 557-8490
Email: david@davidwmeadowslaw.com
Estimated Assets: $0 to $50,000
Estimated Debts: $10,000,001 to $50,000,000
A list of the Company's 1 largest unsecured creditor is available
for free at:
http://bankrupt.com/misc/cacb09-14681.pdf
The petition was signed by John D. Gantes, authorized agent of the
Company.
ROGERS COMMUNICATIONS: Moody's Lifts Senior Bond Rating from 'Ba1'
------------------------------------------------------------------
Moody's Investors Service upgraded Rogers Communications Inc.'s
senior unsecured debt rating to Baa2 from Baa3 in response to the
company's public statement that it "has set a target leverage
range for its capital structure of net debt to adjusted operating
profit of 2.0 to 2.5 times" amid continued strong operating
performance, On the basis of Moody's adjusted figures, Rogers'
target is approximately equal to debt-to-EBITDA of 2.25-to-2.75x.
Bill Wolfe, Moody's Vice President / Senior Credit Officer, noted
that "given the company's business attributes, this is within the
parameters of a Baa2-rated telecommunications company." While the
newly announced target leverage range signals that the company is
unlikely to continue on the de-leveraging trajectory that has been
observed over the past several years, Wolfe also noted that given
Moody's expectations that the company's performance will remain
strong, "Rogers has the ability to easily manage within its stated
targets." Concurrent with the ratings upgrade, the ratings
outlook was revised to stable from positive.
Moody's noted that concurrent with Rogers leverage target
announcement, the company also announced a material increase to
its current normal course issuer bid for its Class B Non-Voting
shares. Rogers may now purchase up to the lesser of 48 million
shares (approximately 10% of the public float), and $1.5 billion
of aggregate purchases. Since the maximum dollar amount exceeds
Moody's estimates of the free cash flow that Rogers can generate
during this period, the announcement implies that the company may
be prepared to support share repurchase efforts by increasing its
debt. This reinforces Moody's perception that Rogers is unlikely
to de-lever beyond currently observed levels. However, Wolfe
noted, "We expect the company to respect the leverage targets that
it has disclosed to the market, and accordingly, Moody's expect
Rogers will take a measured approach in returning cash flow to
shareholders."
Ratings and Outlook Actions:
Issuer: Roger Communication Inc.
-- Senior Unsecured Regular Bond/Debenture, Upgraded to Baa2
from Baa3
-- Senior Subordinated Bond/Debenture, Upgraded to Baa3 from Ba1
-- Ratings Outlook, Revised to Stable from Positive
Moody's most recent rating action concerning Rogers was taken on
31 July, 2008, at which time the company's US$1,400 million and
US$350 million senior unsecured notes were rated Baa3 and the
company's Baa3 senior unsecured ratings were affirmed.
Rogers Communications Inc., headquartered in Toronto, Ontario, is
a communications company that owns all of Rogers Wireless,
Canada's largest wireless operator (54% of revenues), Rogers
Cable, Canada's largest cable company (33% of revenues), and
Rogers Media, which owns radio, television, sports and publishing
assets (13% of revenues).
SAKS INCORPORATED: Note Offering Won't Affect Moody's 'B3' Rating
-----------------------------------------------------------------
Moody's Investors Service stated that Saks Incorporated's $80
million convertible notes offering would have no immediate impact
on its B3 Probability of Default rating or the negative outlook.
Moody's last rating action for Sak's occurred on March 17, 2009
when its Probability of Default rating was downgraded to B3 with a
negative outlook.
Saks Incorporated, headquartered in New York, New York, operates
53 Saks Fifth Avenue luxury department stores, 51 Off Fifth off-
price stores, and saks.com. Total revenues are about $3 billion.
SMURFIT-STONE: Bank Debt Trades at 20% Off in Secondary Market
--------------------------------------------------------------
Participations in a syndicated loan under which Smurfit-Stone
Container Corp. is a borrower traded in the secondary market at
79.20 cents-on-the-dollar during the week ended May 15, 2009,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents an increase of 3.10
percentage points from the previous week, the Journal relates.
The loan matures November 1, 2011. The Company pays 200 basis
points above LIBOR to borrow under the facility. Moody's has
withdrawn its rating on the bank debt; S&P has assigned a default
rating.
Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/--
is one of the leading integrated manufacturers of paperboard and
paper-based packaging in North America and one of the world's
largest paper recyclers. The Company operates 162 manufacturing
facilities that are primarily located in the United States and
Canada. The Company also owns roughly one million acres of
timberland in Canada and operates wood harvesting facilities in
Canada and the United States. The Company employs approximately
21,250 employees, 17,400 of which are based in the United States.
For the quarterly period ended September 30, 2008, the Company
reported approximately $7.450 billion in total assets and
$5.582 billion in total liabilities on a consolidated basis.
Smurfit-Stone and its U.S. and Canadian subsidiaries filed to
reorganize under Chapter 11 on January 26, 2009 (Bankr. D. Del.
Lead Case No. 09-10235). Certain of the company's affiliates,
including Smurfit-Stone Container Canada Inc., a wholly owned
subsidiary of SSCE, and certain of its affiliates, filed to
reorganize under the Companies' Creditors Arrangement Act in the
Ontario Superior Court of Justice in Canada.
Smurfit-Stone joined pulp- and paper-related bankruptcies as
rising Internet use hurts magazines and newspapers. Corporacion
Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy
in October. Quebecor World Inc., a magazine printer and Pope &
Talbot Inc., a pulp-mill operator, also sought cross-border
bankruptcies for their operations in the U.S. and Canada.
James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M.
Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in
Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L.
Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington,
Delaware, serve as the Debtors' bankruptcy counsel.
PricewaterhouseCooper LLC, serves as the Debtors' financial and
investment consultants. Lazard Freres & Co. LLC acts as the
Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts
as the Debtors' notice and claims agent.
Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
and ancillary foreign proceedings undertaken by Smurfit-Stone
Container Corp. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
SOLO CUP: Fitch Affirms Issuer Default Rating at 'B-'
-----------------------------------------------------
Fitch Ratings has affirmed Solo Cup Company's Issuer Default
Rating and existing credit ratings:
-- IDR affirmed at 'B-';
-- Senior secured term loan affirmed at 'BB-/RR1';
-- Senior secured revolving credit facility affirmed at 'BB-
/RR1'.
Solo's senior subordinated notes rating has been revised:
-- Senior subordinated notes to 'CCC'/RR5 from 'CCC+/RR5'.
The Rating Outlook is revised to Stable from Positive.
The affirmation recognizes Solo Cup's leading market share across
its product categories, national distribution, strong brand
recognition, diversified raw materials mix and good customer base.
The company has made significant capital investments during the
past several quarters to upgrade plant assets, improve cost
efficiencies, reduce fixed costs through plant closures and
introduce new product lines. This investment will benefit Solo
Cup's competitive position and longer-term potentially enable the
company to improve margins as end markets stabilize. Fitch
believes the company will continue meaningful investment over the
next couple of years to continue the upgrade of its assets to
improve efficiencies.
However, Fitch remains concerned with the significant volume
declines related to the weakened global economies and the
competitive marketplace that has particularly affected certain
foodservice channels. For the first quarter of 2009, volume
declines were approximately 24% with approximately one-third of
the decrease reflecting the de-emphasis of certain unprofitable
product categories. In addition, resin pricing volatility has
created significant unpredictability in product pricing, that when
coupled with excess industry capacity, has created profitability
challenges. If the recession becomes more prolonged, Fitch
believes the company maintains some flexibility to manage through
these challenges by continuing cost savings efforts, by limiting
discretionary spending and taking steps to defer some investments.
Currently, Fitch expects the company's financial performance to
improve over the remaining quarters of 2009 as further cost
efficiencies roll through, additional revenue is realized from
recent contract wins and as new revenue from product introductions
like polypropylene cups begin to ramp up.
Solo Cup must also address its bank credit facility due to its
near-term maturity as well as relatively tight covenant
requirements in 2009. The $150 million revolver with
approximately $77 million available as of the first quarter of
2009 currently matures in February 2010, and the $302 million term
loan matures in February 2011. In 2009, the bank covenants
continue their aggressive step down with maximum leverage of 4.0
times (x) in the third quarter and 3.5x in the fourth quarter.
Solo Cup made a $60 million term loan payment during the first
quarter, more than what was required, to avoid a violation of its
bank covenant by using availability under its revolver and cash on
hand. The company has indicated that it's investigating all of
its options including refinancing the bank debt or
amending/extending the agreements. Fitch will continue to monitor
the developments concerning its credit facility to ensure the
company maintains adequate liquidity.
While Solo Cup's top line revenue will be pressured in 2009,
expectations are for cash from operations and free cash flow to
increase significantly. The majority of the increase is expected
to be related to a reduction in inventory from lower resin costs,
less raw materials, modest improvement in inventory turnover and a
decline in buffer stock for plant closures. In addition, Solo Cup
has several options available for additional liquidity through
potential real estate sales. At the end of the first quarter of
2009, cash on the balance sheet was $47 million. Free cash flow
for the last twelve months was approximately $60 million.
Going forward, Fitch currently believes the ratings have upward
potential. The company has significantly improved its credit
profile during the past two years. This is evidenced by a
reduction in debt, decline in leverage, improved interest
coverages and increased free cash flow. If the company continues
to execute on its strategic initiatives to improve the business,
the economy stabilizes and the capital structure issues are
addressed, Fitch would revisit the current Outlook.
The ratings reflecting the recovery notching on the senior
subordinated notes have been adjusted pursuant to Fitch's revised
rating guidelines.
SOUND ON SOUND: Case Summary & 7 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: SOUND ON SOUND Recording, Inc.
C/O Davil Amlen
13 Woodside Road
Springfield, N.J. 07081
Bankruptcy Case No.: 09-13109
Chapter 11 Petition Date: May 18, 2009
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Judge: Allan L. Gropper
Debtor's Counsel: Avrum J. Rosen, Esq.
The Law Offices of Avrum J. Rosen, PLLC
38 New Street
Huntington, NY 11743
Tel: (631) 423-8527
Fax: (631) 423-4536
Email: ajrlaw@aol.com
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including a list of its
7 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nysb09-13109.pdf
The petition was signed by David Amlen, president of the Company.
SWIFT TRANSPORTATION: Bank Debt Trades at 32% Discount
------------------------------------------------------
Participations in a syndicated loan under which Swift
Transportation Co. Inc. is a borrower traded in the secondary
market at 67.29 cents-on-the-dollar during the week ended May 15,
2009, according to data compiled by Loan Pricing Corp. and
reported in The Wall Street Journal. This represents a drop of
1.51 percentage points from the previous week, the Journal
relates. The loan matures March 15, 2014. The Company pays 275
basis points above LIBOR to borrow under the facility. The bank
debt carries Moody's B3 rating and S&P's B- rating.
Swift Transportation Co, Inc., headquartered in Phoenix, Arizona,
is the largest provider of truckload transportation services in
the United States, with line-haul, dedicated and inter-modal
freight services.
The Troubled Company Reporter said on December 5, 2008, that
Moody's Investors Service has lowered the ratings of Swift
Transportation's Corporate Family Rating to Caa1 from B3. The
rating of the first lien credit facility was lowered to B3 from
B1, while the second lien notes' ratings were lowered to Caa3 from
Caa2. The rating outlook remains negative.
TROLLEY'S LLC: Files for Chapter 11 Bankruptcy Protection
---------------------------------------------------------
Springfield at News-Leader reports that Trolley's LLC has filed
for Chapter 11 bankruptcy protection.
The Company and its affiliates filed for Chapter 11 bankruptcy
protection on May 11, 2009 (Bankr. D. Kan. Case No. 09-21475).
Colin N. Gotham, Esq., at Evans & Mullinix, P.A., assists the
Debtors in their restructuring efforts. The Debtors listed
$1,000,001 to $10,000,000 in assets and $100,001 to $500,000 in
debts.
News-Leader relates that Trolley's bank, Columbian Bank, failed on
August 8, 2008, and was taken over by the Federal Deposit
Insurance Corporation, which protects the first $100,000 of
deposits that are payable in the U.S.
Trolley's Regional Manager Ryan MacDonald said in a statement,
"Due to circumstances beyond Trolley's control, our debt was sold
to a group of non-banking investors. Nerws-Leader quoted Mr.
MacDonald as saying, "As opposed to letting us pay them as normal
under the bank's terms, they called our notes to make a quick
profit."
Mr. MacDonald said in a news release, "Trolley's is pleased to be
filing for protection from this investor group by reorganizing
under federal laws designed to protect our interest and the
interest of you, our customer.
"Trolley's operations will continue with business as usual for all
employees, customers, and suppliers," Mr. MacDonald said in a news
release.
Trolley's LLC has locations at 107 Park Central Square in
Springfield and in Overland Park, Kansas. Trolley is owned by
Aaron Buerge.
TROPICANA LANDCO: Bank Debt Trades at 76% Off in Secondary Market
-----------------------------------------------------------------
Participations in a syndicated loan under which Tropicana LandCo
is a borrower traded in the secondary market at 23.20 cents on-
the-dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents a drop of 1.60 percentage points from
the previous week, the Journal relates. The loan matured
July 3, 2008. The Company pays 275 basis points above LIBOR to
borrow under the facility. The bank debt is unrated by Moody's
and S&P.
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada, and Atlantic City, New Jersey.
Tropicana Entertainment LLC and its debtor-affiliates filed for
Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No.
08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at
Richards Layton & Finger, represent the Debtors in their
restructuring efforts. Their financial advisor is Lazard Ltd.
Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
On April 29, 2009, Adamar of New Jersey, Inc., doing business as
Tropicana Casino and Resort, and its affiliate, Manchester Mall,
Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09-
20711). Judge Judith H. Wizmur presides over the cases. Adamar
and Manchester Mall or the New Jersey Debtors are both affiliates
of Tropicana Entertainment LLC. Manchester Mall is a wholly owned
subsidiary of Adamar that owns and operates certain real property
utilized in the New Jersey Debtors' business operations.
The New Jersey Debtors own and operate one of the largest, and one
of the most established, destination casino resorts in Atlantic
City, New Jersey, known as Tropicana Casino and Resort - Atlantic
City, which ranks third in gaming positions among Atlantic City's
11 casino properties. The New Jersey Debtors initiated the
Chapter 11 cases to effectuate a sale of substantially all their
assets in accordance with a mandate issued by the New Jersey
Casino Control Commission pursuant to the New Jersey Casino
Control Act.
Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz,
Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the
New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their
claims and notice agent. Adamar disclosed $500 million to
$1 billion both in total assets and debts in its petition.
Manchester Mall disclosed $1 million to $10 million in total
assets, and less than $50,000 in total debts in its petition.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the Chapter 11
restructuring proceedings commenced by Tropicana Entertainment LLC
and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
UAL CORP: Unit's Bank Debt Trades at 42% Off in Secondary Market
----------------------------------------------------------------
Participations in a syndicated loan under which United Air Lines
is a borrower traded in the secondary market at 57.25 cents-on-
the-dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 2.75 percentage points
from the previous week, the Journal relates. The loan matures
February 13, 2013. The Company pays 200 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's B3
rating and S&P's B+ rating.
Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA)
-- http://www.united.com/-- is the holding company for United
Airlines, Inc. United Airlines is the world's second largest
air carrier. The airline flies to Brazil, Korea, and Germany.
The Company filed for chapter 11 protection on Dec. 9, 2002
(Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen,
Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and
Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the
Debtors in their restructuring efforts. Fruman Jacobson, Esq.,
at Sonnenschein Nath & Rosenthal LLP represented the Official
Committee of Unsecured Creditors before the Committee was
dissolved when the Debtors emerged from bankruptcy.
Judge Eugene R. Wedoff confirmed the Debtors' Second Amended
Plan on January 20, 2006. The company emerged from bankruptcy
protection on Feb. 1, 2006.
(United Airlines Bankruptcy News; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported in the Troubled Company Reporter on July 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on UAL
Corp. and subsidiary United Air Lines Inc. (both rated B-
/Negative/--), including lowering the long-term corporate credit
ratings on both entities to 'B-' from 'B', and removed the ratings
from CreditWatch, where they had been placed with negative
implications May 22, 2008, as part of an industrywide review. The
outlook is negative.
W A BOTTING COMPANY: Case Summary & 20 Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: W A Botting Company
20300 Woodinville Snohomish Rd NE
Woodinville, WA 98072
Bankruptcy Case No.: 09-14842
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
Western District of Washington (Seattle)
Judge: Samuel J. Steiner
Debtor's Counsel: Marc L. Barreca, Esq.
K&L Gates LLP
925 4th Ave
Ste 2900
Seattle, WA 98104-1158
Tel: (206) 370-7815
Email: marc.barreca@klgates.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/wawb09-14842.pdf
The petition was signed by Peter A. Botting, president of the
Company.
WORKFLOW MANAGEMENT: Moody's Changes Default Rating to 'Caa3/LD'
----------------------------------------------------------------
Moody's Investors Service has changed Workflow Management's
Probability of Default Rating to Caa3/LD, from Caa3, reflecting
the deemed limited default following the recent conclusion of an
amendment which provided for the payment of interest on the
company's second lien loan through March 31, 2010 at a higher
coupon and in-kind rather than in cash as originally scheduled.
Details of the rating action are outlined below:
Rating changed:
* Probability of Default rating -- to Caa3/LD from Caa3
Ratings affirmed
* Corporate Family rating -- Caa3
* Senior secured first lien revolving credit facility, due 2010 --
Caa1, LGD2, 23%
* Senior secured first lien term loan facility, due 2011 -- Caa1,
LGD2, 23%
* Senior secured second lien term loan facility, due 2012 -- Ca,
LGD4, 66%
The rating outlook remains negative.
On April 30, 2009, Workflow concluded an amendment with its senior
secured lenders, which included a provision changing the payment
of second lien interest to PIK through March 31, 2010, rather than
being paid in cash. Moody's deems the agreement to capitalize
interest as tantamount to a default since debt holders will not
receive interest payments in cash as originally specified in the
2005 loan agreement. Moody's expects to remove the "/LD"
designation within three business days as the effectively deemed
distressed exchange has already been completed.
The Caa3 CFR continues to reflect the company's high leverage,
weak cash flow and liquidity (albeit temporarily improved due to
the aforementioned amendment and cash received from asset sales,
sponsor equity contributions and tax refunds). Although recent
cost cutting initiatives, business optimization measures and non-
recurring costs will likely enable a substantial improvement in
EBITDA over the $18 million reported for 2008 (after restructuring
expenses), Moody's nevertheless considers that Workflow will be
unable to generate sufficient EBITDA to cover approximately $13
million of capex, approximately $20 million in cash interest
expense, and $28 million of scheduled term loan amortization
payments which Moody's estimate will require funding over the next
twelve months. According to Moody's calculations, capitalized
interest will lead to an increase in Workflow's debt to more than
$440 million by the end of 2009 (including lease adjustments,
seller notes and underfunded pension obligations), representing
more than an 8 times multiple of EBITDA (and more than 11 times
including the liquidity preference of preferred stock and accrued
dividends). Notably, Moody's expects that Workflow's liquidity
will be further pressured after March 2010 as second lien interest
payments revert back to include a largely cash-pay component, and
after which the company will also need to address the refinancing
of its revolving credit facility which matures in November 2010.
The Caa3 PDR specifically incorporates an ongoing high probability
of near-to-intermediate term payment and covenant default, and the
possibility that management may be forced to consider a complete
restructuring in order to address the company's deemed
unsustainable capital structure.
The negative rating outlook continues to underscore the company's
tight liquidity, weak financial metrics, and the soft market
conditions which continue to restrain customer demand, especially
for Workflow's print and promotional materials.
The last rating action occurred on March 3, 2009 when Moody's
affirmed Workflow's Caa3 Corporate Family Rating and Probability
of Default Rating while revising the rating outlook to negative
from developing.
Workflow'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 the competitive position of the company
versus others within its industry, ii) the capital structure and
financial risk of the company over the near-to-intermediate term,
iii) the projected financial and operating performance of the
company over the near-to-intermediate term, and iv) management's
track record and tolerance of risk. These attributes were
compared against other issuers both within and outside of
Workflow's core industry and Workflow's ratings are believed to be
comparable to those of other issuers of similar credit risk.
Headquartered in Stamford, Connecticut, Workflow Management, Inc.
is a leading provider of managed print and promotional production
and fulfillment solutions sources. For the LTM period ended
December 31, 2008 the company reported sales of approximately $950
million.
YOUNG BROADCASTING: Bank Debt Trades at 58% Discount
----------------------------------------------------
Participations in a syndicated loan under which Young Broadcasting
is a borrower traded in the secondary market at 41.06 cents on-
the-dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 1.97 percentage points
from the previous week, the Journal relates. The loan matures
November 3, 2012. The Company pays 225 basis points above LIBOR
to borrow under the facility. Moody's has withdrawn its rating on
the bank debt; S&P has assigned a default rating.
Young Broadcasting, Inc. -- http://www.youngbroadcasting.com/--
owns 10 television stations and the national television
representation firm, Adam Young Inc. Five stations are affiliated
with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV
- Albany, NY, WRIC-TV - Richmond, VA, WATE-TV - Knoxville, TN, and
WBAY-TV -Green Bay, WI), three are affiliated with the CBS
Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA
and KELO- TV - Sioux Falls, SD), one is affiliated with the NBC
Television Network (KWQC-TV - Davenport, IA) and one is affiliated
with MyNetwork (KRON-TV - San Francisco, CA). In addition, KELO-
TV-Sioux Falls, SD is also the MyNetwork affiliate in that market
through the use of its digital channel capacity.
The Company and its affiliates filed for Chapter 11 protection on
February 13, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10645). Jo
Christine Reed, Esq., at Sonnenschein Nath & Rosenthal LLP,
represents the Debtors in their restructuring efforts. Andrew N.
Rosenberg, Esq., at Paul Weiss Rifkind Wharton & Harrison LLP,
represents the Official Committtee of Unsecured Creditors as
counsel. The Debtors selected UBS Securities LLC as consultant;
Ernst & Young LLP as accountant; Epiq Bankruptcy Solutions LLC as
claims agent; and David Pauker chief restructuring officer.
At February 28, 2009, the Debtors had $334.9 million in total
assets and $936.7 million in total liabilities.
YOUNG OIL CORPORATION: Case Summary & 20 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Young Oil Corporation
154 A. Young Road
Knob Lick, KY 42154
Bankruptcy Case No.: 09-10907
Chapter 11 Petition Date: May 19, 2009
Court: United States Bankruptcy Court
Western District of Kentucky (Bowling Green)
Debtor's Counsel: Scott A. Bachert, Esq.
324 E 10th St
PO Box 1270
Bowling Green, KY 42102
Tel: (270) 782-3938
Email: bachert@hbd-law.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $50,000,001 to $100,000,000
A full-text copy of the Debtor's petition, including a list of its
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/kyb09-10907.pdf
The petition was signed by Anthony Young.
* April Housing Starts Fall to Record Low Rate of 458,000 a Year
----------------------------------------------------------------
The U.S. Department of Commerce said Tuesday that housing starts
fell 12.8% in April to a record low annual rate of 458,000 units.
Starts for single-family homes, rose 2.8% for its second straight
gain, but work on apartments and condominiums plunged 46%. The
second straight gain in starts for single-family properties showed
the worst-hit part of the market was stabilizing, Reuters said.
The slump in homebuilding has brought the supply of new properties
below the rate that new households are being created, offering
prospects of a recovery in the second half of 2009, analysts said,
according to a report by Bob Willis of Bloomberg News. Surging
unemployment and the continuing credit crunch mean the recovery is
likely to be weak, the analysts added.
Mr. Willis notes that Home Depot Inc. and Lowe's Cos. this week
both posted first-quarter earnings that exceeded analysts'
estimates, underscoring signs of a turn in the industry.
Bill Rochelle said that in a separate report, brokers stated
unsold homes in the Hamptons for the first quarter totaled almost
1,700. The Hamptons on the south shore of Long Island are a
popular weekend playground for wealthy New Yorkers during the
summer. At the current rate of sales, the inventory of homes in
the Hamptons would take 34 months to sell, compared with 9.8
months of inventory for the U.S. as a whole.
Barzel Noteholders Agree to Defer Interest Payment
Caraustar Misses May 15 Interest Payment, $190 Million Maturing
* BankUnited Closing Hikes 2009 Failed Banks to 34
--------------------------------------------------
BankUnited, FSB, was closed May 21, raising the total of FDIC-
insured institutions closed this year to 34.
John Kanas and a consortium of investors that include WL Ross &
Co. LLC; Carlyle Investment Management L.L.C.; Blackstone Capital
Partners V L.P.; Centerbridge Capital Partners, L.P. LeFrak
Organization, Inc; The Wellcome Trust; Greenaap Investments Ltd.;
and East Rock Endowment Fund, have signed a deal with FDIC to buy
$12.7 billion in assets and $8.3 billion in nonbrokered deposits
from BankUnited, FSB. The buyers will also provide $900 million
in new capital for their purchased bank, to be named BankUnited, a
newly chartered federal savings bank.
Bloomberg News reported May 19 that WL Ross & Co. and private-
equity firms including Carlyle Group and Blackstone Group LP
submitted a bid to buy BankUnited Financial Corp. assets. Goldman
Sachs Group Inc. and Toronto-Dominion Bank also made a joint bid,
Dow Jones Newswires reported, citing unidentified people.
Jonathan Keehner and Jason Kelly at Bloomberg also said that
bidders were told by U.S. officials that regulators plan to put
the lender into receivership before selling its assets, according
to people familiar with the auction.
Wilbur Ross, founder of WL Ross, had said in September 2008 that
he expects as many as a thousand U.S. bank could close. The bank
closings in 2009 have way outpaced 2008 levels -- there were only
25 closed banks that year. The number of closed banks could rise
further this year as there were 252 financial institutions in the
Federal Deposit Insurance Company's "Problem List" as of the end
of 2008, compared with only 76 in the prior year.
WL Ross made his fortune making investments on distressed
industries. He has restructured $200 billion in failed companies'
assets around the world, starting with the purchase of bankrupt
Bethlehem Steel Corp to form a merger with his International Steel
Group, then sell the company to Indian mogul Lakshmi Mittal to for
$4.5 billion.
$250,000 Insurance Until 2013
The FDIC said May 20 that deposits at its insured institutions
are now insured up to at least $250,000 per depositor through
December 31, 2013. On January 1, 2014, the standard insurance
amount will return to $100,000 per depositor for all account
categories except for IRAs and other certain retirement accounts
which will remain at $250,000 per depositor.
Bloomberg reported last week that the FDIC board is scheduled to
meet May 22 to consider an emergency assessment to replenish its
insurance fund, which has been depleted by bank failures in 16
months. The FDIC expects bank failures could cost $65 billion
through 2013. The assessment the board proposed Feb. 27 was 20
cents per $100 in insured deposits.
Meanwhile, the FDIC Office of Public Affairs, clarified on May 15
that Chairman Sheila Bair, in an interview with Bloomberg, did not
suggest that the federal government will remove the CEOs. The
FDIC statement said that Ms. Bair only said that management
changes could happen based on the capital plans that an
institution must submit to the government. She did not refer to
CEOs specifically and the comment was in the context of capital
plans submitted by the institutions, according to the release.
Failed Banks List
The banks closed this year by regulators are:
Bank Closing Date
---- ------------
BankUnited FSB 05/21/09
Westsound Bank, Bremerton, WA 05/08/09
America West Bank, Layton, UT 05/01/09
Citizens Community Bank, Ridgewood, NJ 05/01/09
Silverton Bank, N.A., Atlanta, GA 05/01/09
First Bank of Idaho, Ketchum, ID 04/24/09
First Bank of Beverly Hills, Calabasas, CA 04/24/09
Heritage Bank, Farmington Hills, MI 04/24/09
American Southern Bank, Kennesaw, GA 04/24/09
Great Basin Bank of Nevada, Elko, NV 04/17/09
American Sterling Bank, Sugar Creek, MO 04/17/09
New Frontier Bank, Greeley, CO 04/10/09
Cape Fear Bank, Wilmington, NC 04/10/09
Omni National Bank, Atlanta, GA 03/27/09
TeamBank, National Association, Paola, KS 03/20/09
Colorado National Bank, Colorado Springs, CO 03/20/09
FirstCity Bank, Stockbridge, Georgia 03/20/09
Freedom Bank of Georgia, Commerce, GA 03/06/09
Security Savings Bank, based in Henderson, Nevada 02/27/09
Heritage Community Bank, Glenwood, Ill. 02/27/09
Silver Falls Bank, Silverton, OR 02/20/09
Pinnacle Bank of Oregon, Beaverton, OR 02/13/09
Corn Belt Bank and Trust Company, Pittsfield, IL 02/13/09
Riverside Bank of the Gulf Coast, Cape Coral, FL 02/13/09
Sherman County Bank, Loup City, NE 02/13/09
County Bank, Merced, CA 02/06/09
Alliance Bank, Culver City, CA 02/06/09
FirstBank Financial Services, McDonough, GA 02/06/09
Ocala National Bank, Ocala, FL 01/30/09
Suburban Federal Savings Bank, Crofton, MD 01/30/09
MagnetBank, Salt Lake City, UT 01/30/09
1st Centennial Bank, Redlands, CA 01/23/09
Bank of Clark County, Vancouver, WA 01/16/09
National Bank of Commerce, Berkeley, IL 01/16/09
The FDIC was appointed as receiver for the closed banks. To
protect the depositors, the FDIC entered into a purchase and
assumption agreement with various banks that agreed to assume the
deposits of the closed banks:
Buyer's FDIC Cost
Assumed to Insurance
Deposits Fund
Closed Bank Buyer (millions) (millions)
----------- ---- -------- -----
BankUnited FSB BankUnited $8,300.0 $4,900.0
Westsound Bank Kitsap Bank $295.1 $108.0
America West Cache Valley Bank $284.1 $119.4
Citizens Community N.J. Community Bank $43.7 $18.1
Silverton Bank -- No Buyer -- - $1,300.0
First Bank of Id US Bank, Minneapolis $261.2 $191.2
First Bank of BH -- No Buyer -- - $394.0
Heritage Bank Level One Bank $101.7 $71.3
American Southern Bank of North Georgia $55.6 $41.9
Great Basin Bank Nevada State Bank $221.4 $42.0
American Sterling Metcalf Bank, Lee Summit $171.9 $42.0
New Frontier Bank -- No Buyer -- - $670.0
Cape Fear Bank First Federal, Charleston $403.0 $131.0
Omni National -- No Buyer -- - $290.0
TeamBank, N.A. Great Southern Bank $474.0 $98.0
Colorado National Herring Bank, Amarillo, TX $82.7 $9.0
FirstCity Bank -- No Buyer -- - $100.0
Freedom Bank Nat'l Georgia Bank, Lavonia $161.0 $36.2
Security Savings Bank of Nevada, L.V. $175.2 $59.1
Heritage Community MB Financial Bank, N.A. $218.6 $41.6
Silver Falls Citizens Bank $116.3 $50.0
Pinnacle Bank Washington Trust Bank $64.0 $12.1
Corn Belt Bank Carlinville Nat'l Bank $142.4 $100.0
Riverside Bank TIB Bank $281.4 $201.5
Sherman County Heritage Bank $85.1 $28.0
County Bank Westamerica Bank $1,300.0 $135.0
Alliance Bank California Bank & Trust $951.0 $206.0
FirstBank Regions Bank $279.0 $111.0
Ocala National CenterState Bank $205.2 $99.6
Suburban Federal Bank of Essex $302.0 $126.0
MagnetBank -- No Buyer -- - $119.4
1st Centennial First California Bank $302.1 $227.0
Bank of Clark Umpqua Bank $523.6 $120-145
Nat'l Commerce Republic Bank of Chicago $402.1 $97.1
A complete list of banks that failed since 2000 is available at:
http://www.fdic.gov/bank/individual/failed/banklist.html
252 Banks in Problem List
No advance notice is given to the public when a financial
institution is closed. The FDIC has a "problem list" of banks,
although the list is not divulged to the public.
As previously reported by the TCR, the number of FDIC-insured
commercial banks and savings institutions reporting financial
results fell to 8,305 at the end of 2008, down from 8,384 at the
end of the third quarter. The net decline of 79 institutions was
the largest since the first quarter of 2002. Fifteen new
institutions were chartered in the fourth quarter, the smallest
number in any quarter since the third quarter of 1994. Seventy-
eight insured institutions were absorbed into other institutions
through mergers, and 12 institutions failed during the quarter
(five other institutions received FDIC assistance in the quarter).
For all of 2008, there were 98 new charters, 292 mergers, 25
failures and 5 assistance transactions. Five institutions with
total assets of $1.3 trillion were assisted by the FDIC in 2008.
This is the largest number of failed and assisted institutions in
a year since 1993, when there were 50.
At year-end, 252 insured institutions with combined assets of
$159 billion were on the FDIC's "Problem List." These totals are
up from 171 institutions with $116 billion in assets at the end of
the third quarter, and 76 institutions with $22 billion in assets
at the end of 2007. The Problem List's 252 institutions at the
end of the fourth quarter of 2008 is the largest number since the
middle of 1995.
"Problem" institutions are those institutions with financial,
operational, or managerial weaknesses that threaten their
continued financial viability. They are rated by the FDIC or
Office of the Thrift Supervision as either a "4" or "5", based on
a scale of 1 to 5 in ascending order of supervisory concern.
A copy of FDIC's Quarterly Banking Profile is available at:
http://researcharchives.com/t/s?3aa5
* Initial Jobless Claims Unexpectedly Rise by 32,000
----------------------------------------------------
In an indication that companies aren't hiring, the number
of citizens collecting unemployment insurance rose in the
previous week to 6.56 million, setting a record for the 15th
straight week, Bloomberg's Bill Rochelle said, citing a U.S. Labor
Department report.
The U.S. Labor Department reported May 14 that in the week ending
May 9, the advance figure for seasonally adjusted initial claims
was 637,000, an increase of 32,000 from the previous week's
revised figure of 605,000. The 4-week moving average was 630,500,
an increase of 6,000 from the previous week's revised average of
624,500.
The advance seasonally adjusted insured unemployment rate was 4.9
percent for the week ending May 2, an increase of 0.1 percentage
point from the prior week's unrevised rate of 4.8 percent.
The advance number for seasonally adjusted insured unemployment
during the week ending May 2 was 6,560,000, an increase of 202,000
from the preceding week's revised level of 6,358,000. The 4-week
moving average was 6,337,250, an increase of 128,750 from the
preceding week's revised average of 6,208,500.
The fiscal year-to-date average for seasonally adjusted insured
unemployment for all programs is 5.011 million.
* Liquidation World Appoints W. Wolf as Board Chairman
------------------------------------------------------
Liquidation World Inc. (TSX:LQW) has appointed William E. Wolf to
the position of Chairman of the board of directors concurrently
with the resignation of Craig Graham from this role. Mr. Graham
will remain a director of Liquidation World.
Mr. Wolf, Chief Operating Officer and Portfolio Manager of Talon
Asset Management LLC ("Talon"), worked closely with Seth Marks,
Liquidation World's CEO and President, to identify and lead
Talon's investment in Liquidation World earlier this year, at
which time Mr. Wolf became a director of Liquidation World. Talon
is a Chicago-based private investment management company that
searches for opportunistic investments in a variety of areas, with
a common objective to first preserve and then enhance the value of
its investments.
Mr. Wolf, whose background combines finance and operating
experience, began his career in 1982 as an investment banker at
Salomon Brothers Inc., and continued his career in a variety of
roles including investment banking and private equity investing.
In addition to his role at Talon, Mr. Wolf serves as a portfolio
manager for several of Talon's private equity funds. Mr. Wolf
also serves on the Board of Directors of Answers Media LLC,
Compliance 11, Inc., Lava Lite, LLC, Mindcrest, Inc., PlayNetwork,
Inc., Talon Merchant Capital, LLC and the National Strategy Forum.
Mr. Wolf received an AB degree, Magna Cum Laude, from Hamilton
College in 1982 and an MBA from the University
of Chicago in 1990.
"Bill Wolf has provided Liquidation World with a new lease on life
by identifying its potential and then providing the initial
financial support that it required earlier this year," commented
Craig Graham, Liquidation World's former Chairman. "We are
delighted that he has accepted the role of Chairman and look
forward to the disciplined insight that he will bring
to ensure Liquidation World's objective of enhancing shareholder
value."
Mr. Wolf commented: "I have spent the past several months - along
with Liquidation World's new management team - learning about the
significant challenges facing Liquidation World and identifying
the actions and efforts required to execute a successful
turnaround. Although we are still in very early days, I am
pleased with the results we are beginning to generate from
various perspectives and am looking forward to working with my
fellow board members, management and employees to ensure that
Liquidation World delivers on its business strategy. I would like
to express my appreciation to Craig Graham for his exceptional
dedication to Liquidation World over the past year as Chairman and
then as interim CEO. His efforts in particularly difficult
circumstances, combined with his ability to engage Talon as a
strategic partner of Liquidation World, are among the most
significant reasons that this Company has such a bright future
ahead of it."
About Liquidation World
Liquidation World liquidates consumer merchandise through 97
stores in Canada and the United States. The Company solves asset
recovery problems in a professional manner for the financial
services industry, insurance companies, manufacturers, wholesalers
and other organizations. Liquidation World is based in Brantford,
Ontario and maintains a number of regional buying offices in
Canada and the United States. The Company opened its first store
in Calgary, Alberta in 1986 and today, with more than 1,200
employees, is Canada's largest liquidator.
* Vethan Law Firm Adds Houston Bankruptcy Division
--------------------------------------------------
Houston business litigation attorney Charles Vethan founded his
firm on the principle of protecting and preserving the business
and personal assets of each client.
The Vethan Law Firm, P.C. has recently added a business bankruptcy
division to its full service areas of legal expertise. The
Houston litigation attorney has served clients across the country
in corporate law, business litigation, intellectually property
protection, family law and estate planning.
The new Houston bankruptcy division will assist companies that
face economic contraction, and yet have significant debt exposure.
The goal of the business bankruptcy division is to take steps to
preserve operations and restructure debt to match company
resources, and allow businesses to emerge from bankruptcy with
manageable debt obligations, and have healthier financial outlook.
For corporations considering filing Chapter 7 or Chapter 13
Bankruptcy, the attorneys at the Vethan Law Firm will guide them
through the necessary steps of reorganization. Businesses who have
to liquidate their assets may be candidates to file Chapter 7.
Chapter 11 is the option should a company choose to stay in
business, but need to reorganize their corporate culture and repay
their debts over a period of years.
"We continue to uphold the highest standard in representing and
protecting our clients," said Charles Vethan. "Enlightening
individuals and businesses on the intricacies of bankruptcy
protection is a high priority for our firm. If large multinational
companies may restructure in bankruptcy, there is absolutely no
reason or rationale for a small or mid sized business not to
benefit from these same conservation strategies. We want to
explore every viable strategy for our clients."
About The Vethan Law Firm, PC
Charles Vethan is a Texas Board of Legal Specification Certified
Attorney in the areas of Consumer Law and Commercial Law, and he
is well prepared to help you protect your intellectual property.
Martindale Hubbel, an agency that rates law firms based on skill
and professional ethics, as given The Vethan Law Firm the highest
possible rating, which demonstrates both our commitment to ethical
practices and our exemplary legal performance. In addition to
Copyright Litigation, Vethan Law Firm also provides representation
in Business and Corporate Law and Contract Disputes.
For more information, please contact:
Charles Vethan
Vethan Law Firm, PC
(713) 526-2222
http://www.bizbankruptcylaw.com
* BOOK REVIEW: Corporate Recovery - Managing Companies in Distress
------------------------------------------------------------------
Authors: Stuart Slatter and David Lovett
Publisher: Beard Books
Softcover: 352 pages
List Price: $34.95
Review by Henry Berry
According to the authors, "turnaround management is everyday
management." There are no miraculous remedies for bringing a
company out of its troubles; no formulas to apply that will
guarantee recovery. Management has to be alert and flexible to
adapt to ever-changing business conditions both outside and within
a company.
Although turnaround management (or "crisis management" as the
authors also call it) is often regarded as a specialized type of
management or a gifted set of management skills, Slatter and
Lovett argue that any good manager should have the skills to be
able to move his or her company toward recovery. Managers often
fail because they do not recognize or acknowledge the warning
signs of a crisis, not because they lacked the relevant management
skills.
Corporate Recovery does not teach managers how to become "crisis
managers." While the book does provide guidance on what
management skills are required if a company slips into a crisis,
for the most part the authors take a broader view. Crisis
management involves applying traditional management techniques in
an environment where the patient is seriously ill, both cash and
time are in short supply, and rapid recovery is required. The
authors suggest that these same skills are necessary when a
company has been acquired and is inevitably undergoing some
changes, improvement of short-time financial performance is
sought, and a company is trying to head off a crisis rather than
pull itself out of one.
The authors give attention to both external and internal factors
and their interrelationship. The reader is taken chapter by
chapter through all of the stages of distress in a company, from
early warning signs through pervasive problems to moving onto
solid ground and emerging from a turnaround. The book does not
offer merely an academic analysis of the distinguishing factors of
each stage. The authors provide relevant, effective action for
each stage of distress. Different stages require different
actions. Under circumstances of distress, the enthusiasm and
morale that are signs of a healthy company in normal times cannot
fix the causes of the problems. Ordinary leadership skills such
as setting a good example and inspiring loyalty will not effect a
turnaround. Fundamental in a successful turnaround is the actions
taken by a company's key decisionmakers. Only they are in a
position to make the crucial decisions that can bring an
organization out of distress.
Corporate Recovery is an incomparable guide for managers of
companies in distress. The book brings clarity to what is often a
clouded, disturbing, and stressful situation, even for the most
experienced decisionmakers. This book can help an organization's
decisionmakers ward off or minimize hazards to its well being.
For ones who find themselves already in worrisome crisis
situations, it can be an invaluable handbook, no matter what stage
of the crisis.
Slatter is founding member of the Society of Turnaround
Professionals. He works with corporations on turnarounds and
provides training for managers and executives. Lovett has
extensive experience in turnarounds and heads his own firm helping
companies improve their operations and financial performance and
restore or increase corporate value.
*********
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 **