/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090526.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 26, 2009, Vol. 13, No. 144 Headlines 7622 MEDICAL CENTER: Case Summary & 17 Largest Unsecured Creditors ACCEPTANCE INSURANCE: 8th Cir. Says Granite Can Collect on Refund ACTIVE RIDE: Seeks Court Nod on Sale of Assets to Zumiez Unit ADVANCED MICRO: Fitch Changes Senior Debt Rating to 'CC/RR6' ADVANTA CORP: To Close Customers' Accounts Effective May 30 AGS LLC: Moody's Raises Probability of Default Rating to 'Caa3/LD' ALERIS INT'L: Courts Extends Plan Filing Deadline Until Dec. 9 ALLIS-CHALMERS ENERGY: Auction Tender Offer Cues S&P's Junk Rating ANCHOR PROPERTIES: Case Summary & Four Largest Unsecured Creditors AIRTRAN HOLDINGS: Shareholders Re-Elect Directors, Incentive Plan ASYST TECHNOLOGIES: To Be Delisted From Nasdaq Effective May 29 ATRIUM COMPANIES: Moody's Changes Default Rating to 'Ca/LD' BALLY TOTAL: AP Services Bills $898,633 for December-March Work BALLY TOTAL: Court Approves Additional Roles for Deloitte BALLY TOTAL: Court Extends Cash Collateral Order Until June 26 BALLY TOTAL: Court Extends Removal Period to September 1 BALLY TOTAL: Files Suit vs. Waterways Plaza for Breach of Lease BALLY TOTAL: Kramer Levin Seeks $2.4MM for December-March Work BANK OF AMERICA: Has Modified Mortgages for Over 50,000 Borrowers BANKUNITED FINANCIAL: Files for Chapter 11 Bankruptcy Protection BANKUNITED FINANCIAL: Case Summary & 10 Largest Unsec. Creditors BERRY PLASTICS: S&P Downgrades Corporate Credit Rating to 'SD' BOYD GAMING: Moody's Downgrades Corporate Family Rating to 'B1' CANWEST MEDIA: Sells C$100MM in 12% Notes, Gets C$75MM Loan CABLEVISION SYSTEMS: To Raise $423.8MM in Common Stock Offering CAPMARK FINANCIAL: Extends Closing Date for $1.15-Bil. Facility CHRYSLER LLC: Responds to Indiana State Treasurer Protest CHRYSLER LLC: Proposes Tax Settlement Deal with Daimler, et al. CHRYSLER LLC: Proposes GMAC, Treasury Deal to Give Dealer Loans CHRYSLER LLC: Court Approves Jones Day as Lead Bankruptcy Counsel CHRYSLER LLC: Court OKs Capstone Engagement as Financial Advisor CHRYSLER LLC: Gets Green Light to Hire Togut as Conflicts Counsel CHRYSLER LLC: Court Approves Schulte as Corporate Counsel CHRYSLER LLC: Seeks to Hire Cahill as Counsel to Board Managers CHRYSLER LLC: Creditors Panel Proposes Mesirow as Fin'l Advisors CHRYSLER LLC: Proposes Sale Protocol for De Minimis Assets CHRYSLER LLC: Seeks to Pay $400,000 to National Training Center CINRAM INTERNATIONAL: S&P Raises Corporate Credit Rating to 'B' CIRCUIT CITY: Systemax Completes Purchase, Re-Launches Web Site CITY OF VALLEJO: Misses $26,000 Bond Payment COMMERCIAL CAPITAL: WestLB Wants Adequate Protection on Loans COMPASS MINERALS: Prices $100MM of 8% Senior Notes Due 2019 CONSTAR INT'L: Expects to Emerge From Chapter 11 by May 29 CORRECTIONS CORP: S&P Assigns 'BB/B+' Senior Debt Ratings COYOTES HOCKEY: U.S. Trustee Forms Five-Member Creditors' Panel COYOTES HOCKEY: Secured Lenders Cry Foul on S&E $17-Mil. DIP Loan CRUCIBLE MATERIALS: U.S. Trustee Forms 5-Member Creditors' Panel DANA HOLDING: S&P Raises 'SD' Corporate Credit Rating to 'B-' DAYTON SUPERIOR: To Be Delisted From Nasdaq Effective May 29 DELPHI CORP: Court Orders Mediation Among Delphi Key Stakeholders DELPHI CORP: Court OKs $4.35BB JPMorgan DIP Loan on Final Basis DELPHI CORP: Files Documents in Harbinger Suit Under Seal DELPHI CORP: Court OKs BeijingWest Deal; Amended Pact Filed DELPHI CORP: Settles EEOC Lawsuit, Agrees to Pay $80,000 DFI PROCEEDS: Court Sets July 15 Plan Confirmation Hearing EZRI NAMVAR: Seeks to Convert Case to Chapter 7 Liquidation FIRST MIDWEST: Fitch Downgrades Preferred Stock Rating to 'BB+' FLEETWOOD ENTERPRISES: Court OK Sale of Mexicali Assets to Krystal FLEETWOOD ENTERPRISES: Seeks Sale of Military Housing Business FOOTHILLS RESOURCES: Deregisters Unissued Common Shares FREDDIE MAC: May Sell Almost $1BB of Commercial-Mortgage Bonds FREMONT GENERAL: Court OKs Massachusetts, California Settlements FREMONT GENERAL: Settles $27MM D&O Claims, Insurance Agency Suit FREMONT GENERAL: Still Evaluating Proponents for Ch. 11 Plan FRONTIER AIRLINES: Asks Court to Approve Amended WestLB Facility FRONTIER AIRLINES: Court Extends Exclusivity Periods to October 9 FRONTIER AIRLINES: Primeflight Sells $1.4MM Claim to ASM Capital FRONTIER AIRLINES: US Trustee Wants Reports Before Fees Are Paid GENERAL MOTORS: Restructuring Deal Ratified by CAW Members GENERAL MOTORS: Gov't May Name Preferred Opel Bidder by Wednesday GENERAL MOTORS: Magna Int'l Submits EUR700 Million Offer for Opel GENESIS WORLDWIDE: Closes Private Placement of C$1.500 Million GEORGIA GULF: Moody's Downgrades Default Rating to 'Caa3/LD' GHOST TOWN: May Obtain DIP Financing of Up To $500,000 GLOBAL GROUP: Has Until May 29 to File Schedules and Statements GLOBAL GROUP: Proposes Forshey & Prostok as Bankruptcy Counsel GLOBAL GROUP: Wants Access to Prepetition Lender's Cash Collateral GLOBAL GROUP: Wants to Hire Decker Jones as Corporate Counsel GUROSA CORPORATION: Court Prohibits Use of Compass Cash Collateral HALO TECHNOLOGY: U.S. Trustee Wants Cases Converted to Chapter 7 HARTMAX CORP: Enters Stalking Horse Deal with Emirisque HERBST GAMING: Court Approves Goldman Sachs as Financial Advisor HERBST GAMING: Court OKs Brown Rudnick as Committee's Co-Counsel HERBST GAMING: Court OKs XRoads Solutions as Restructuring Advisor HERBST GAMING: Creditors Committee Can Hire S&MLF as Counsel HERTZ GLOBAL: S&P Assigns 'B' Long-Term Corporate Credit Rating HILL COUNTRY: Court Extends Schedules Deadline to June 9 HUNTINGTON BANCSHARES: Offers to Purchase Securities IDEARC FIRM: Firm Leads 8% Bondholders in Class Suit IED PINNACLE: Case Summary & 20 Largest Unsecured Creditors J&D COMPANY: Case Summary & 30 Largest Unsecured Creditors JENNIFER RENEE LEE: Case Summary & 12 Largest Unsecured Creditors JUNE HAVOC: Stamford, Conn., Home Being Auctioned on June 1 KA & KM: Files for Chapter 11 Bankruptcy Protection KABOOSE INC: Gets Ontario Court Nod for Plan Arrangement KABUTO ARIZONA: Voluntary Chapter 11 Case Summary LEXINGTON PRECISION: Sees $100,000 Loss From Operations for Q1 LOCALBIZUSA: Case Summary & 20 Largest Unsecured Creditors M&D 1 LLC: Case Summary & 6 Largest Unsecured Creditors MAHALO ENERGY: Case Summary & 20 Largest Unsecured Creditors MCCLATCHY CO: S&P Downgrades Corporate Credit Rating to 'CC' MERCEDES HOMES: Proofs of Claim Must be Filed by June 29 MERUELO MADDUX: Expects to Report $5.9MM in Revenues for Q1 MGM MIRAGE: MRI to Redeem $100-Mil. in 7.25% Debentures Due 2017 MGM MIRAGE: Raises $1.42BB in Private Offer of 2014, 2017 Notes MGM MIRAGE: Kerkorian Buys 14.2MM Shares, Raises Stake to 37% MID RIVER MINERALS: Case Summary & 20 Largest Unsecured Creditors MONACO COACH: Court Approves Sale of Resort Assets to Four Buyers MONACO COACH: Court OKs Sale of RV Biz. to Navistar Unit MTI TECHNOLOGY: Court Extends Plan Filing Deadline to June 15 NCCS INC: Case Summary & 8 Largest Unsecured Creditors NCI BUILDING: Obtains Waivers Until July 15 from Sr. Lenders NOBLE INT'L: 691 Employees to Get Incentives Upon Sale of Assets NORTEL NETWORKS: Court Extends Plan Deadline to Sept. 11 ORBITZ WORLDWIDE: S&P Puts 'B' Corporate Rating on Negative Watch ORTHOFIX INTERNATIONAL: Moody's Comments on B1' Corporate Rating OSCIENT PHARMA: Recieves Notice From NASDAQ on Delayed 10-Q Filing PLANT INSULATION: Files Ch. 11 to Deal with Asbestos Claims PLANT INSULATION: Wants to Keep Renfrew as Futures Representative PLANT INSULATION: Wants Suit vs. Insurers to Proceed PLANT INSULATION: Case Summary & 20 Largest Unsecured Creditors POTTER'S LANDSCAPING: Case Summary & 24 Largest Unsec. Creditors PRESERVE LLC: Wants Plan Filing Period Extended to September 23 PRINCETON COMMUNITY: Moody's Upgrades Bond Rating to 'Ba3' RAILPOWER HYBRID: Monitor Has C$5.1 Million Bid for Assets REDCORP VENTURES: Announces Reduction in Corporate Management S&K FAMOUS: Will Shut Down 105 Stores; GOB Sales Has Started S-TRAN HOLDINGS: Plan Filing Period Extended to June 1 SCHIMMEL'S RESTAURANT: Voluntary Chapter 11 Case Summary SHANE SENTER: Files for Chapter 7 Liquidation SHERIDAN GROUP: S&P Cuts Corporate Credit Rating to 'B' From 'B+' SILICON GRAPHICS: Files Docs With SEC to Deregister Unsold Shares SL GREEN: Fitch Assigns Issuer Default Rating at 'BB+' SNOQUALMIE ENTERTAINMENT: S&P Junks Issuer Credit Rating From 'B' SOURCE INTERLINK: Shareholders Want Plan Hearing Delayed 45 Days SOURCECORP INC: S&P Gives Stable Outlook; Affirms 'B' Rating SOUTH SOUND: Case Summary & 20 Largest Unsecured Creditors SOUTHERN AUTOMOTIVE: Case Summary & 20 Largest Unsecured Creditors STANLEY MEADOWS: Voluntary Chapter 11 Case Summary TEREX CORP: S&P Downgrades Corporate Credit Rating to 'BB-' TJ'S TREES & MORE: Voluntary Chapter 11 Case Summary TRONOX INC: Asks Court to Set August 12 as Claims Bar Date TRONOX INC: Court Denies Creditors' Bid to Scrap Equity Panel TRONOX INC: Court Extends Plan Filing Deadline to Sept. 15 TRONOX INC: Court to Consider DIP Amendments at May 28 Hearing TRONOX INC: Says Kerr-McGee Knew Spun-Off Company Won't Survive TRONOX INC: Govt. Seeks to Join in Suit vs. Anadarko, Kerr-McGee TRONOX INC: Seeks to Implement Severance, Incentive Programs TXCO RESOURCES: Receives Nod to Loan $12.5-Mil. on Interim US ENERGY: Proposes Aug. 26 Extension of Plan Solicitation Period VINE INVESTMENTS: Voluntary Chapter 11 Case Summary W WALT LOWE REVOCABLE: Case Summary & 20 Largest Unsec. Creditors WINSTAR COMMUNICATIONS: Ch. 7 Trustee to Make $240MM Distribution WINSTAR COMMUNICATIONS: Ch. 7 Trustee Modifies Herrick's Role WINSTAR COMMUNICATIONS: Kasowitz Represents Prepetition Lenders WINSTAR COMMUNICATIONS: Liberty Executes $30MM Individual Bond WINSTAR COMMUNICATIONS: Lucent Withdraws Petition for Rehearing WR GRACE: Court Denies Banks $100MM Interest Claims Under Sec. 502 WR GRACE: Paul Weiss Represents Bank Debt Holders' Group WR GRACE: Seeks Approval of Venable Engagement as Special Counsel WR GRACE: To Contribute $30.3 Million to Retirement Plans WR GRACE: U.S. Trustee, Creditors Object to Plan Confirmation * Initial Unemployment Insurance Claims Rise Again * Large Companies With Insolvent Balance Sheets ********* 7622 MEDICAL CENTER: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: 7622 Medical Center, P.C. dba 7622 Medical Center dba Allied Medical Group dba 1900 S.G. Associates 7620-24 Ogontz Avenue Bankruptcy Case No.: 09-13782 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: Jami B. Nimeroff, Esq. Brown Stone Nimeroff LLC 1818 Market Street, Suite 2300 Philadelphia, PA 19103 Tel: (267) 861-5330 Fax: (267) 350-9050 Email: jnimeroff@bsnlawyers.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 17 largest unsecured creditors is available for free at: http://bankrupt.com/misc/paeb09-13782.pdf The petition was signed by Arnold S. Lincow, president of the Company. ACCEPTANCE INSURANCE: 8th Cir. Says Granite Can Collect on Refund ----------------------------------------------------------------- Granite Reinsurance Company, Ltd., a Barbados reinsurer, filed a proof of claim against Acceptance Insurance Companies, Inc., in its Chapter 11 proceeding claiming AICI owed it $9,000,000 of premium, plus interest, pursuant to an MPCI Stop Loss Reinsurance Contract issued by Granite Re. Subsequently, Granite Re filed a complaint in the United States District Court for the District of Nebraska against AICI's wholly owned subsidiary, Acceptance Insurance Company, alleging AIC also was liable to Granite Re on the same Contract. By consent, the district court transferred Granite Re's proceeding against AIC to the United States Bankruptcy Court for the District of Nebraska, which consolidated the proceeding with proceedings in AICI's Chapter 11 proceeding as Adversary Proceeding No. A06-8015. AICI initiated a separate adversary proceeding against Granite Re asserting a claim for unjust enrichment. (Adv. Pro. No. A06-8115). AICI asserted the Contract lacked consideration, and that Granite Re had been unjustly enriched by the $6,000,000 AICI paid to Granite Re for reinsurance Granite Re did not in fact provide. All issues associated with Granite Re's proof of claim asserted against AICI, Granite Re's adversary complaint against AIC, and AICI's adversary complaint against Granite Re were consolidated for discovery and trial. On May 9, 2007 the Bankruptcy Court ruled that: (i) Granite Re has no right to premiums claimed and AICI and AIC have no right to a refund of premiums paid; (ii) the adversary proceedings of Granite Re and AICI will be dismissed and (iii) the Granite Re claim filed in the bankruptcy case will be denied. The ruling was appealed by Granite Re to the United States Bankruptcy Appellate Panel for the Eighth Circuit. On March 12, 2008, the Appellate Court (i) reversed the Bankruptcy Court's judgment that Granite Re was not entitled to receive the $9 million of premium, plus interest and (ii) affirmed that AICI has no right to the refund of the premiums paid (In re: Acceptance Insurance Companies Inc., United States Bankruptcy Appellate Panel for the Eighth Circuit, Nos. 07-6027, 6029). On April 10, 2008, the District Court for Lancaster County, Nebraska (Case No: CI 08-1434) entered an order of rehabilitation authorizing the rehabilitation of AIC, appointed a rehabilitator and granted an injunction. Pursuant to the order, among other things, the rehabilitator has all the power of the directors and officers of AIC, the rehabilitator took possession and control of AIC's assets and administers them and the rehabilitator is vested with title to all of the property, contracts, rights of action and all of the books and records of AIC. Under the injunction, among other things, AIC is enjoined from transacting further business except as directed by the rehabilitator, transferring its assets and property or instituting or further prosecuting any actions or proceedings. AICI appealed the Appellate Court's rulings to the United States Court of Appeals for the Eighth Circuit. On May 18, 2009, the Circuit Court affirmed the rulings of the Appellate Court (Case No. 08-1933.) There can be no assurance at this time what actions may be taken in AICI's Chapter 11 bankruptcy proceeding or by the Nebraska Department of Insurance with respect to AIC as a result of the Circuit Court's decision. About Acceptance Insurance Headquartered in Council Bluffs, Iowa, Acceptance Insurance Companies, Inc. -- http://www.aicins.com/-- owns, either directly or indirectly, several companies, one of which is an insurance company that accounts for substantially all of the business operations and assets of the corporate groups. The Company filed for Chapter 11 protection on January 7, 2005 (Bankr. D. Nebr. Case No. 05-80059). The Debtor's affiliates -- Acceptance Insurance Services, Inc., and American Agrisurance, Inc. -- each filed Chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 and 05-80058) on January 7, 2005. John J. Jolley, Esq., at Kutak Rock LLP, represents the Debtor in its restructuring efforts. Lawyers at McGrath North Mullin & Kratz PC, LLO, represent the Official Committee of Unsecured Creditors in Acceptance Insurance's case. ACTIVE RIDE: Seeks Court Nod on Sale of Assets to Zumiez Unit ------------------------------------------------------------- Erin Barajas at ApparelNews.net reports that Active Ride Shop has sought approval from the U.S. Bankruptcy Court for the Central District of California for the sale of its assets to Zumiez Inc.'s subsidiary, Active Acquisition. ApparelNews.net relates that the deal is valued at up to $7.2 million. Active Ride operates 21 stores and an online shop. According to ApparelNews.net, Active Ride closed eight stores and laid off approximately 50 workers after its debt totaled more than $15 million and the Company had to file for bankruptcy. Court documents say that Active Ride has been searching for a buyer since August 2008 with the help of its investment banker, PCG Capital Growth. Active Acquisition, says ApparelNews.net, would purchase Active Ride's assets for "an amount greater than liquidation value" and $100,000 per store it acquires. Active Ride said that the cost of its entire inventory was approximately $5.2 million on March 30, 2009, ApparelNews.net reports. ApparelNews.net states that a hearing on the proposed sale is set for June 4. About The Active Wallace Group Headquartered in Mira Loma, California, The Active Wallace Group, doing business as Active Mail-Order, Inc., Active Sweats, Active Sweats and Surf and Active Ride Shop, is a retailer. Active Wallace filed for Chapter 11 protection on March 23, 2009 (Bankr. Case No. 09-15370). Garrick A. Hollander, Esq., and Marc J. Winthrop, Esq., represent the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor said it had assets of $10 million to $50 million and debts of $10 million to $50 million. ADVANCED MICRO: Fitch Changes Senior Debt Rating to 'CC/RR6' ------------------------------------------------------------ Consistent with Fitch's updated ratings definitions, Fitch has revised the senior unsecured debt rating on Advanced Micro Devices Inc.'s to 'CC/RR6' from 'CCC/RR6'. At the same time, Fitch has affirmed AMD's Issuer Default Rating at 'B-'. The Rating Outlook is Negative. As of March 28, 2009, AMD's total consolidated debt was approximately $5.6 billion. The senior unsecured debt includes these rated notes: -- $1.5 billion of 5.75% senior notes due 2012; -- Approximately $2.0 billion of 6% senior notes due 2015; and -- $390 million of 7.75% senior notes due 2012. ADVANTA CORP: To Close Customers' Accounts Effective May 30 ----------------------------------------------------------- Advanta Corp. said Friday that its securitization transactions will effectively stop funding new receivables as of June 1, 2009, and the Company expects to close its customers' accounts to future use and activity effective May 30, 2009. The Company had expected to close its customers' accounts to future use on June 10, 2009. The Company noted, however, that upon further evaluation, it has been advised that, although the determination of whether the three-month average excess spread is below the contractually required minimum to avoid early amortization may not be formalized until on or about June 10, 2009, the securitization transactions will effectively stop funding new receivables as of June 1, 2009 if the early amortization event occurs. As a result, the Company expects to close its customers' accounts to future use and activity effective May 30, 2009. Advanta on May 11, 2009, said its Board of Directors has approved a plan designed to dramatically limit the Company's credit loss exposure and maximize its capital and its liquidity measures. The plan includes: -- not preventing an early amortization of the Company's securitization transactions, -- closing customers' accounts to future use, and -- executing a tender offer by Advanta Corp. for the outstanding trust preferred securities issued by Advanta Capital Trust I and a tender offer by Advanta Bank Corp. for a portion of the AdvantaSeries securitization notes issued by the Advanta Business Card Master Trust, the Company's securitization trust. The Company expected to use tools at its disposal to avoid early amortization of the securitization trust unless it concluded there was a better plan to maximize its capital and liquidity. As part of the plan, Advanta Corp. commenced a tender offer for any and all of the $100 million of outstanding Advanta Capital Trust I 8.99% Capital Securities. The Capital Securities Tender Offer will expire at 5:00 p.m. EDT, on June 10, 2009, unless extended or earlier terminated by Advanta Corp. Also as part of the plan, Advanta Bank Corp., a wholly owned subsidiary of Advanta Corp., commenced a tender offer for up to $1.4 billion of Advanta Business Card Master Trust's Class A senior securitization notes. The ABCMT Notes Tender Offer has an Early Participation Date of Wednesday, May 27, 2009 at 5:00 p.m. EDT and an expiration date of June 10, 2009 at 5:00 p.m. EDT, unless extended or earlier terminated. The Company will be communicating with its customers in accordance with applicable requirements and the Company remains committed to assisting its customers during this account closure process. Earlier this month, management disclosed that as of April 30, 2009 the Advanta Business Card Master Trust Receivables balance was $4.5 billion. The default rate for the April 2009 Monthly Period was 20.15% compared to 17.31% for the March 2009 Monthly Period. The aggregate outstanding balance of the Accounts which were delinquent 90 days or greater as of the end of the April 2009 Monthly Period was 5.97% of total Receivables as compared to 5.96% as of the end of the March 2009 Monthly Period. The aggregate outstanding balance of the Accounts which were delinquent 30 days or greater as of the end of the April 2009 Monthly Period was 11.54% of total Receivables as compared to 11.92% as of the end of the March 2009 Monthly Period. Management also said that, regarding the AdvantaSeries Class A (2006-A3) note maturity under early amortization, which management expects will be determined on June 10, 2009, the note would not be paid in full on its Expected Final Principal Payment Date of June 22, 2009, but rather would share in the payments allocated to the Class A senior notes on a pro-rata basis, in accordance with the terms of the AdvantaSeries Indenture Supplement. About Advanta Corp. Advanta Corp. -- http://www.advanta.com/-- is one of the nation's largest credit card providers, through Advanta Bank Corp., in the small business market. Advanta's focus on this market as well as its size, experience, and service tailored to the needs of small businesses differentiates the company from other credit card companies. Founded in 1951, Advanta has long been an innovator in developing and introducing many of the marketing techniques that are common in the financial services industry. At March 31, 2009, the Company had $3.39 billion in total assets, $2.97 billion in total liabilities and $427.7 million in stockholders' equity. The Company had $75.9 million in net loss for the three months ended March 31, 2009, compared to net income of $18.3 million for the same period in 2008. * * * As reported by the Troubled Company Reporter on May 14, 2009, Standard & Poor's Ratings Services lowered its ratings on Advanta Corp., including lowering the long-term counterparty credit rating to 'CC' from 'CCC'. At the same time, S&P lowered the counterparty credit rating on Advanta's primary operating subsidiary, Advanta Bank Corp., to 'CC' from 'B-'. The rating on the preferred stock of Advanta Capital Trust I remains at 'C'. The outlook is negative. The rating action, S&P said, follows Advanta's announcement that its securitization trust, its primary funding vehicle, will go into early amortization on June 10, 2009. Also, the Company does not plan to fund any activity for the accounts in the trust on its balance sheet; therefore, it will shut these accounts down. Earlier in May 2009, Moody's Investors Service downgraded the long-term ratings of Advanta Corp. (senior unsecured rating to Caa3 from Caa1). The trust preferred securities rating of Advanta Capital Trust I was lowered to C from Caa3. The outlook for the senior unsecured rating is negative; the outlook for the trust preferred rating is stable. The rating action reflects Moody's view that Advanta's intrinsic credit quality has eroded as the result of continued deterioration in asset quality, heightened pressures on funding and liquidity, and the adverse effects of these factors on the firm's core profitability. Fitch Ratings also downgraded the long-term Issuer Default Rating and outstanding debt ratings of Advanta Corp. and Advanta Bank Corp. earlier in May 2009. Advanta Corp.'s Long-term IDR was lowered to 'CC' from 'BB-'; short-term IDR was lowered to 'C' from 'B'; and senior unsecured was lowered to 'CC/RR4' from 'BB-'. Advanta Bank Corp.'s long-term IDR was lowered to 'CCC' from 'BB-'; Short-term IDR was lowered to 'C' from 'B'; and Long-term deposits was lowered to 'B-' from 'BB'. Advanta Capital Trust I's Trust preferred stock was lowered to 'C/RR6' from 'B'. Roughly $2.7 billion of debt, deposits and preferred securities are affected by these actions. The downgrade, Fitch said, reflects significant deterioration in profitability and portfolio credit quality and the heightened risk of breaching early amortization triggers on off-balance sheet ABS transactions, which could lead to a possible shut-down of the business. AGS LLC: Moody's Raises Probability of Default Rating to 'Caa3/LD' ------------------------------------------------------------------ Moody's Investors Service raised AGS, LLC's Probability of Default rating to Caa3/LD (Limited Default) from Ca reflecting the closing of AGS's debt repurchase. AGS repurchased $10 million of existing term loans at a significant discount to par. Moody's upgraded AGS's term loan and delayed draw term loan ratings to Caa2 to reflect the new post-debt exchange capital structure. In approximately three business days, Moody's will remove the LD designation from the PD rating. AGS's Caa2 Corporate Family Rating reflects concerns with the company's liquidity given tight financial covenants, as well as the higher probability that AGS may pursue further debt repurchases that Moody's would deem to be distressed exchanges. Additionally, ratings consider the company's very small scale, considerable business risks, and higher than expected debt/EBITDA relative to original expectations. The negative outlook reflects the risk of additional distressed exchanges going forward as well as the potential need to renegotiate covenants in an adverse credit market, or rely on equity cure rights to maintain compliance. Ratings upgraded -- Probability of Default Rating to Caa3/LD from Ca -- $30 million 6-year secured and guaranteed delayed draw term loan to Caa2 (LGD 3, 34%) from Ca (LGD 4, 50%) -- $125 million 6-year secured and guaranteed term loan to Caa2 (LGD 3, 34%) from Ca (LGD 4, 50%) Ratings affirmed: -- Corporate Family Rating at Caa2 -- $20 million 5-year secured and guaranteed revolving credit facility at Caa2 (LGD 3, 34%) Moody's latest rating action was on May 8, 2009, when the AGS LLC's CFR and PDR were each downgraded to Caa2 and Ca, respectively. AGS LLC designs, manufactures, and distributes gaming machines for the Native American casino market. ALERIS INT'L: Courts Extends Plan Filing Deadline Until Dec. 9 -------------------------------------------------------------- At the behest of Aleris International, Inc. and its debtor- affiliates, Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware extended the period within which the Debtors may exclusively file a Chapter 11 plan of reorganization until Dec. 9, 2009, and the period within which they have the exclusive right to solicit acceptances for that plan to Feb. 7, 2010. The Debtors' counsel, Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New York, said Aleris intends to implement operational initiatives and see some more stability in their key markets -- the automotive, building and construction and aircraft markets -- before they can develop a business plan that forms the basis of a plan of reorganization. With more stability in the marketplace and postpetition performance metrics, the Debtors hope to develop a business plan that focuses on longer-term viability that is not skewed by the shorter-term economic crisis affecting the company and its many key customers, he notes. Mr. Karotkin further disclosed that the Debtors have consulted and coordinated with the Official Committee of Unsecured Creditors and representatives of their other creditor constituencies, on every major issue in their cases. Mr. Karotkin assured that Court that the Debtors are working in good faith towards the filing of a Chapter 11 plan. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALLIS-CHALMERS ENERGY: Auction Tender Offer Cues S&P's Junk Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its long- term corporate credit rating on Houston, Texas-based, Allis- Chalmers Energy Inc. to 'CC' from 'B'. At the same time, S&P lowered the ratings on Allis' senior notes to 'CC' from 'B'. S&P also placed the ratings on CreditWatch with negative implications. This rating action follows the company's announcement that it will conduct a modified Dutch auction tender offer for approximately $100 million of its senior notes due 2014 and $25 million of its senior notes due 2017 (roughly 25% of face value in total) at a discount to par. Under S&P's criteria, S&P views a formal cash tender offer or exchange offer at discount by a company under substantial financial pressure as a distressed exchange and tantamount to a default. "Our downgrade does not reflect S&P's view of a perceived increase in Allis-Chalmers' bankruptcy risk," said Standard & Poor's credit analyst Amy Eddy. "Rather, S&P bases its downgrade on the financial pressure S&P believes Allis is under to reduce its debt burden by retiring debt for less than originally contracted." The company plans to apply estimated proceeds of slightly more than $120 million from a common stock rights offering and convertible perpetual preferred stock offering to repay the approximately $40 million of outstanding debt under its $90 million nonborrowing base revolving credit facility due 2012. Allis will use the remainder amount from the stock offerings to repurchase $80 million of its senior unsecured notes (up to $100 million of face value of its senior notes due 2014 and up to $25 million of its senior notes due 2017). The ratings on Allis will remain on CreditWatch with negative implications until the debt repurchase is finalized. When and if this happens, barring other factors, S&P expects to lower the corporate credit rating on Allis to 'SD' (selective default) and lower its ratings on issues repurchased under the tender offer to 'D' (default). S&P expects the auction will end by June 18, 2009, and shortly thereafter, S&P expects to assign a new corporate credit rating and issue-level rating to Allis, representative of S&P's assessment of its credit risk and capital structure following the completion of the debt repurchase. Although this proposed transaction will eliminate debt and reduce interest expense, due to unfavorable industry conditions it is S&P's preliminary expectation that S&P will only raise the corporate credit rating back to the previous 'B' level. ANCHOR PROPERTIES: Case Summary & Four Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Anchor Properties, Inc. PO Box 640001 Beverly Hills, FL 34464-0001 Bankruptcy Case No.: 09-04113 Chapter 11 Petition Date: May 21, 2009 Debtor-affiliates that filed Chapter 11 petitions: Petition Entity Case No. Date ------ -------- -------- Beverly Hills Development Corporation 09-04111 05/21/09 Beverly Hills Waste Management Corp 09-4074 05/20/09 Rolling Oaks Utilities, Inc. 09-3861 05/13/09 Ronald J. Collins, chairman 09-13648 05/03/09 Type of Business: Anchor Properties is one of the Midwest's premier developers of regional shopping centers and quality single-tenant retail properties. Anchor Properties was founded in 1987 by Steve Hemberger and Doug Hynden in Cincinnati, Ohio as a commercial development company specializing in high-quality retail development. Court: Middle District of Florida (Jacksonville) Judge: Jerry A. Funk Debtors' Counsel: Scott A. Underwood, Esq. sunderwood@mws-law.com Messana Weinsterin & Stern PA Post Office Drawer 2485 Fort Lauderdale, FL 33303 Tel: (954) 712-7406 Fax: (954) 712-7401 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtors' Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ United Bank, Inc. financing $3,118,334 1085 Van Voorhis Rd # 150 Morgantown, WV 26505 MONY Life of America policy $794 P.O. Box 4720 Syracuse, NY 13221 Ronald J. Collins contribution unknown 35 St. George Place Palm Beach Gardens, FL 33418 Veolia Water N. America damages unknown Anchor's petition was signed by John W. Patton, III, president. AIRTRAN HOLDINGS: Shareholders Re-Elect Directors, Incentive Plan ----------------------------------------------------------------- AirTran Airways, a subsidiary of AirTran Holdings, Inc., said shareholders re-elected Don L. Chapman, Geoffrey T. Crowley and Lewis H. Jordan as Class 1 directors for a term ending in 2012. The shareholders also voted to approve the company's fourth amended and restated long-term incentive plan. Additionally, the shareholders ratified the appointment of Ernst & Young, LLP as the company's independent public accounting firm for fiscal year 2009. AirTran held its annual shareholders' meeting in Orlando, Florida, on May 20, 2009. The Plan increases the number of shares of the Company's common stock authorized for the granting of awards to 13,500,000, extends the term of the Plan to 2019, re-sets certain sublimits in light of the increase in the number of authorized shares and makes other changes the Company does not believe are material. The Plan was approved by the Company's board of directors on January 27, 2009, subject to the approval of the stockholders. At the close of business on March 23, 2009, the record date for the Annual Meeting, there were 119,908,521 shares of the Company's common stock outstanding and eligible to be voted. At the annual meeting 110,068,454 shares of the Company's common stock were represented in person or by proxy. A full-text copy of management's presentation at the 2009 shareholders' meeting is available at no charge at: http://ResearchArchives.com/t/s?3d3e At March 31, 2009, the Company had $2.09 billion in total assets and $2.40 billion in total liabilities and $309.6 million in stockholders' equity. The Company posted a net income of $28.7 million for the three months ended March 31, 2009, compared to a net loss of $35.3 million, as adjusted, for the same period in 2008. About AirTran Holdings Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways Inc., which offers more than 700 daily flights to 56 U.S. destinations. * * * The Troubled Company Reporter said on Aug. 29, 2008, that Standard & Poor's Ratings Services has lowered its ratings on AirTran Holdings Inc., including the corporate credit rating, which it lowered to 'CCC+' from 'B-'. At the same time, S&P removed the ratings from CreditWatch, where they had been placed with negative implications on May 22, 2008. The outlook is stable. ASYST TECHNOLOGIES: To Be Delisted From Nasdaq Effective May 29 --------------------------------------------------------------- The Nasdaq Stock Market, Inc., has determined to remove from listing the common stock of Asyst Technologies, Inc., effective at the opening of the trading session on May 29, 2009. Based on a review of the information provided by the Company, Nasdaq Staff determined that the Company no longer qualified for listing on the Exchange pursuant to Marketplace Rules 5100, 5110(b) and IM-5100-1. The Company was notified of the Staffs determination on April 21, 2009. The Company did not appeal the Staff determination to the Hearings Panel, and the Staff determination to delist the Company became final on April 30, 2009. Headquartered in Fremont, California, Asyst Technologies, Inc. -- http://www.asyst.com/-- makes, sells and supports integrated hardware and software systems primarily for semiconductor and flat panel display manufacturing industries. The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D. Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., at the Law Offices of Baker and McKenzie, represents the Debtor in its restructuring efforts. As of December 31, 2008, the Debtor had total assets of $295,782,000 and total debts of $315,364,000. ATRIUM COMPANIES: Moody's Changes Default Rating to 'Ca/LD' ----------------------------------------------------------- Moody's Investors Service changed ACIH's Probability of Default Rating to Ca/LD from Ca, and affirmed all other ratings. The ratings downgrade reflects Atrium Companies, Inc. announcement that it did not make certain interest payments that were due on May 11 under its credit agreement and that it entered into a forbearance agreement. Moody's considers the missed interest payment to be a "limited default" and will maintain the LD designation until the default is resolved. These ratings/assessments for Atrium Companies, Inc. have been affirmed: -- $190 million sr. subordinated notes due 2012 affirmed at C (LGD5, 88%); -- $42.3 million sr. subordinated notes due 2012 affirmed at C (LGD5-73%); -- $334.5 million gtd. senior secured term loan B, due 2012, affirmed at Caa3 (LGD3, 31%); -- $45.5 million senior secured revolving credit facility, due 2011, affirmed at Caa3 (LGD3, 31%). The rating outlook is negative. These ACIH ratings/assessments have been affirmed or changed: (ACIH is an intermediate holding company that is structurally below Atrium Corporation, the ultimate parent company, but resides above Atrium Companies, Inc., the primary operating company) -- Probability of Default Rating, downgraded to Ca/LD; -- Corporate Family Rating, affirmed at Ca; -- $174 million ($4.6m outstanding) senior discount notes due 2012, affirmed at C (LGD5, 88%). -- Speculative Grade Liquidity Rating affirmed at SGL-4. The rating outlook is negative. The last rating action was April 22, 2009 when Moody's downgraded various instrument ratings and also downgraded ACIH's Corporate Family Rating to Ca from Caa2, and its Probability of Default Rating, to Ca from Caa2. Headquartered in Dallas, Texas, Atrium Companies, Inc. is one of the largest window manufacturers in North America. Revenues for the trailing twelve months ended September 30, 2008 $665 million. BALLY TOTAL: AP Services Bills $898,633 for December-March Work --------------------------------------------------------------- AP Services, LLC, the crisis managers for Bally Total Fitness Holding Corporation and its debtor-affiliates, filed with the U.S. Bankruptcy Court for the Southern District of New York staffing reports for these periods: (a) for the Staffing Period from February 1 to February 28, 2009: Professional Function Hourly Rate ------------ -------- ----------- Harvey Rubinson Interim CFO $650 Michael Feder Advisor 790 Ryan Clark Operational Restructuring 365 Clifford Chen Operational Restructuring 335 (b) for the Staffing Period March 1 to March 31, 2009: Professional Function Hourly Rate ------------ -------- ----------- Harvey Rubinson Interim CFO $650 Michael Feder Advisor 790 Ryan Clark Operational Restructuring 365 Clifford Chen Operational Restructuring 365 APS was engaged to assist in, among other matters, evaluating and implementing strategic and tactical options through the Debtors' restructuring process. In this regard, APS has agreed to provide certain temporary employees to assist the Debtors in their restructuring efforts, led by Mr. Rubinson, a director of AlixPartners LLP, and associated with APS. According to Michael Feder, Esq., at AP Services LLC, in Southfield, Missouri, the Temporary Staff are tasked to (i) work with the Company and its team to provide oversight to, and manage, the Company's business operations, and (ii) provide leadership to financial function, finance organization, planning, general accounting, and financial reporting information management. Mr. Feder noted that all Staffing is subject to review by the Court in the event an objection is filed. AP Files Summary of Staffing Report In a summary of staffing reports for the period from December 3, 2008, through March 31, 2009, Mr. Feder disclosed that the Debtors were invoiced $898,633 in aggregate fees and expenses in connection with their Chapter 11 cases. The Debtors also made payments totaling $945,658 to these professionals during the Reporting Period: Professional Total Amount Paid ------------ ----------------- Mr. Rubinson $582,240 Mr. Feder 7,819 Mr. Clark 253,346 Mr. Chen 102,252 During the Reporting Period, the Debtors' expenses aggregated $39,525, Mr. Feder disclosed. Mr. Feder further said that AP has provided the Debtors with services, during the Reporting Period, which detailed time entries will be served upon the Office of the U.S. Trustee. A full-text copy of the Staffing Report from December 3, 2008, to March 31, 2009, is available for free at: http://bankrupt.com/misc/BallyII_APReportDec3-March31.pdf Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S.D.N.Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Court Approves Additional Roles for Deloitte --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Bally Total Fitness Holding Corporation and its debtor- affiliates to engage Deloitte Tax to render additional advisory and compliance services, as their tax service providers in their Chapter 11 cases. Deloitte will: -- continue ongoing background analysis and initial planning of the Debtors' restructuring progress; -- conduct a study to determine the tax basis in the Company's assets on an entity basis; -- compute Cancellation of Debt Income and providing corresponding implications of debt and other liability restructurings on an entity basis; -- prepare a model that effects the Debtors existing limitation under Section 382 of the Bankruptcy Code, the impact of built in gains/losses and other various elements of the debt restructuring; -- assist the Debtors in determining the state of the reorganization, specifically for selected states with material presence; and -- perform a detailed tax stock basis study for purposes of executing the entity rationalization analysis without triggering tax issues. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Court Extends Cash Collateral Order Until June 26 -------------------------------------------------------------- Pursuant to an eighth interim order, Judge Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York authorized Bally Total Fitness Holding Corporation and its debtor- affiliates to use their cash collateral in accordance with their budget, consisting of a consolidated nine-week forecast from the period from April 24 to June 26, 2009. The Court allowed the Debtors to use the Cash Collateral from the Petition Date through the earlier of (a) the date a further order is entered granting or denying the Motion and (b) 11:59 p.m., Eastern Time, on June 4, 2009. Judge Lifland clarified that the Cash Collateral may be used during the Specified Period solely up to the amounts, not to exceed 115% of the amounts set forth in the Budget on a cumulative, aggregate rolling basis measured weekly as of the close of business on Friday of each week. The authorization for the Debtors to use Cash Collateral will terminate at the expiration of the Specified Period. The Court further authorized, but not directed, Wells Fargo Foothill, LLC, as revolving credit agent to the Credit Agreement among the Debtors, Morgan Stanley Senior Funding, Inc., and the CIT Group/Business Credit, Inc., to extend, amend, replace, renew or reissue any Letter of Credit outstanding under the Agreement as of the Petition Date, provided that: (i) the aggregate face amount of the sum of Letters of Credit outstanding after any Amendment does not exceed the aggregate face amount of the L/Cs outstanding as of the Petition Date; and (ii) the Amendment is on substantially the same terms and conditions as any L/Cs outstanding under the Agreement as of the Petition Date. No action taken by the Revolving Agent will adversely affect the validity of the claims, or the validity and priority of the liens of the Senior Secured Creditors in the Debtors' cases, the Court ruled. Pursuant to Section 362(a) of the Bankruptcy Code, the Court granted Prepetition Secured Creditors with: (1) interest payments for the benefit of the lenders under the Revolver Facility; (2) reimbursement of administrative expenses and professional fees in connection with monitoring the Debtors' use of Cash Collateral and the Chapter 11 Cases, on a monthly basis and in accordance with the Budget. (3) Letter of Credit fees under the Credit Agreement in connection with L/Cs that have been extended, amended, replaced, renewed or reissued; (4) Senior Secured Lenders' Replacement Liens on all of the Debtors' rights in property acquired postpetition of the same type as the prepetition collateral; and the encumbered leases in the same relative priority as the prepetition liens of the Prepetition Secured Creditors; (5) Senior Secured Notes Replacement Liens for Senior Secured Noteholders, or second priority perfected replacement Liens on all of the Debtors' rights in the Postpetition Collateral; (6) Senior Secured Lenders' Real Estate Liens, which provides for first priority perfected liens on all of the Debtors' rights in the unencumbered leases in the same relative priority as the Prepetition Liens; and (7) Senior Secured Notes Real Estate Liens, or second priority perfected liens on the Unencumbered Leases. A full-text copy of Bally II's Eight Interim Cash Collateral Order is available for free at: http://bankrupt.com/misc/BallyII_8thInterimCashCollOrder.pdf Judge Lifland will convene a hearing to consider the Debtors' Cash Collateral Motion, on a final basis, on June 3, 2009. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Court Extends Removal Period to September 1 -------------------------------------------------------- At the behest of Bally Total Fitness Holding Corporation and its debtor-affiliates, Judge Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York extended the period within which the Debtors may remove civil actions and proceedings in state and federal courts pending on or before the Petition Date, to the later of: (a) September 1, 2009; or (b) 30 days after the entry of an order terminating the automatic stay with respect to the particular Civil Action sought to be removed. The Order is without prejudice to (i) any position the Debtors may take regarding whether Section 362 of the Bankruptcy Code applies to stay any Actions, and (ii) the Debtors' right to seek from further extensions of the Removal Period under Rule 9027(a) of the Federal Rules of Bankruptcy Procedure, Judge Lifland ruled. According to Bradley O'Neill, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, the Debtors have devoted substantially all their time and resources towards stabilizing their operations and moving their Chapter 11 cases toward an expeditious and efficient exit. However, he says, due to the number of Civil Actions involved and the complex nature of the Civil Actions, the Debtors require additional time to determine which, if any, of the Civil Actions should be removed and, if appropriate, transferred. Mr. O'Neill assures the Court that the Debtors' Removal Period Extension request will not prejudice the rights of the adverse parties pursuant to the stayed Civil Actions because the parties may not prosecute the Civil Actions absent relief from the automatic stay. Furthermore, if the Debtors remove any Civil Action to a federal court, the affected adverse party will retain its right to seek remand of the removed Civil Action back to state court under Section 1452(b) of the Judiciary and Judicial Procedures Code. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Files Suit vs. Waterways Plaza for Breach of Lease --------------------------------------------------------------- Bally Total Fitness of Midwest, Inc., and Waterways Plaza, LLC, are parties to a lease dated July 9, 1997, relating to a commercial center located at 3455 NE 207th Street, in Aventura, Florida. The Premises, which Waterways owns, is leased by the Debtors for their Aventura Club fitness center. Jordan Kaye, Esq., at Frankel LLP, in New York, relates that in May 2007, Waterways advised the Debtors regarding the need to make necessary repairs on the roof of the Leased Premises. Under the terms of the Lease, Bally is obligated to ensure that the Leased Premises, including its roof, are maintained in "good repair", in "substantially equivalent in quality and workmanship as the original work." The Debtors subsequently notified Waterways that they desired to install and pay for a new roof system. In June 2007, Waterways filed an eviction action in Miami-Dade County Court to recover possession of the Premises on the grounds that Bally had defaulted in its obligation under the Lease to maintain the premises in good repair. While the Lease does not require the Debtors to obtain Waterways' consent or approval regarding the planning or implementation of the repair work, the City of Aventura requires a landlord's signature on the permitting documents necessary for a roof installation. Accordingly, the Debtors sought Waterways' approval of a proposal to permit the immediate installation of the new roof system. However, Waterways refused to sign the Permitting Documents, effectively obstructing the Debtors' right under the Lease to install a new roof, Mr. Kaye says. Pursuant to a complaint filed by the Debtors for injunctive relief and damages against Waterways, the Miami-Date Circuit Court directed the Debtors and Waterways to "work together to permit the necessary limited repairs to resolve the current roof leaks on an interim basis without prejudice to either party." But Waterways still refused to sign the necessary Permits. Mr. Kaye believes that Waterways desires to initiate a major reconstruction and reconfiguration of the commercial complex in which the Aventura Club is located. For this plan to be implemented, Waterways needs the Debtors to vacate the Leased Premises so that the existing structure can be torn down. However, because the Lease does not expire until 2017 and Bally has several tenant options to extend the term of the Lease, Waterways is "wrongfully interfering" with the Debtors' efforts to replace the roof in an effort to gain additional leverage in its attempt to convince the Debtors to relocate the Aventura Club, Mr. Kaye maintains. Pursuant to an agreement, Waterways agreed to temporary roof repairs on the Premises in June 2008. However, the temporary repairs now prove insufficient to withstand another wet season, and the roof is in need of immediate and complete replacement. In this regard, the Debtors are being "irreparably harmed" because the damaged roofs are causing and will continue to: -- cause damage to the Debtors' property; -- affect the Debtors' ability to generate new business; and -- affect the Debtors' ability to maintain goodwill with existing customers. Accordingly, the Debtors seek entry on an order: (1) enjoining Waterways from obstructing the Debtors' efforts to install a new roof on the Leased Premises; and (2) directing payment of damages arising from Waterways' breach of the Lease. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Kramer Levin Seeks $2.4MM for December-March Work -------------------------------------------------------------- Eight bankruptcy professionals in the Chapter 11 cases of Bally Total Fitness Holding Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to award them payment of their fees and reimbursement of their expenses on account of services rendered to the Debtors and the Official Committee of Unsecured Creditors during these fee periods: Professional Fees Expenses Fee Period ------------ ---- -------- ---------- BDO Seidman, LLP, as $558,516 $8,988 12/03/08 auditors for the Debtors to 03/31/09 Butler Rubin Saltarelli 124,275 1,369 12/19/08 & Boyd LLP, as conflicts to 03/31/09 counsel to the Committee Curtis, Mallet-Prevost, 683,814 42,881 12/03/08 Colt & Mosle LLP, as to 03/31/09 conflicts counsel for the Debtors Deloitte Tax LLP, as 792,267 0 12/03/08 tax services providers to 03/31/09 to the Debtors FTI Consulting, Inc. 517,741 4,009 12/31/08 as financial advisors to 03/31/09 to the Committee Houlihan Lokey Howard 590,322 28,884 12/03/08 & Zukin Capital to 03/31/09 as financial advisors to the Debtors Kramer Levin Naftalis 2,432,184 85,986 12/03/08 & Frankel LLP, as to 03/31/09 attorneys for the Debtors Hilco Real Estate, LLC 262,500 56 12/15/08 as real estate consultants to 03/31/09 to the Debtors Hilco previously requested payment of fees amounting to $300,000, and subsequently filed an updated Fee Application reflecting $262,500 as the corrected amount. U.S. Trustee Reacts Diana G. Adams, United States Trustee for Region 2 contends that there should be a "significant percentage fee reduction . . . or "hold back" of the Professionals' requested fees. Ms. Adams says that a Chapter 11 plan and disclosure statement have not been filed in the Debtors' cases. Similarly, the Debtors' statements of operations consistently report losses aggregating more than $9 million for the months of December 2008 and January and February 2009. In March 2009, the Debtors reported losses of more than $4.8 million. Consequently, the ultimate benefit to the estates of the Professional Fees being requested simply cannot be assessed yet. In the same manner, fees that have been previously awarded, but were "held back", should not be paid at this time, she says. The final outcome of the Debtors' cases is an important factor in evaluating the results achieved by the Fee Applicants. Because those results still are unknown, the imposition of a significant percent interim hold back is appropriate, Ms. Adams tells the Court, citing In re Child World, Inc., 185 B.R. 14, 18 (Bankr. S.D.N.Y. 1995). About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BANK OF AMERICA: Has Modified Mortgages for Over 50,000 Borrowers ----------------------------------------------------------------- Ruth Simon at The Wall Street Journal reports that Bank of America Corp. has modified mortgages for more than 50,000 borrowers as part of a settlement with state attorneys general against Countrywide Financial Corp. The move potentially saves financially troubled homeowners as much as $823 million, WSJ said, citing a report provided to state officials this week. The settlement covers 390,000 borrowers, according to WSJ. About 42 states have signed on to the settlement, the report states. As reported by the Troubled Company Reporter on April 28, 2009, Countrywide Financial had been blamed for aggressive lending practices that helped, in part, to fuel the housing boom. Countrywide faces a federal probe and several lawsuits concerning its business practices. BofA decided to let go of the Countrywide name and to rebrand the home mortgage lender as Bank of America Home Loans. WSJ relates that as agreed with the state attorneys general, BofA will modify the terms of certain subprime mortgages and option adjustable-rate mortgages serviced by Countrywide. It covers modifications offered or made between December 2008 and March 2009, says WSJ. The report states that about 42 states have signed on to the settlement. The modifications -- 93% of which involved subprime mortgages -- done are saving borrowers an average of $195 per month in principal and interest payments, WSJ says, citing BofA. According to WSJ, investors who own securities backed by Countrywide Financial mortgages complained that BofA has shifted the cost of the settlement to them. BofA, says WSJ, owns 12% of the loans at issue in the settlement. An investor already filed a complaint with the U.S. District Court for the Southern District of New York on who should pay the modifications, WSJ states. Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The Company serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers support to more than 4 million small business owners. The company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. The bank needed the government's financial help in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management. Merrill Lynch's operations are organized into two business segments: Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BANKUNITED FINANCIAL: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------------- BankUnited Financial Corporation, the holding company to BankUnited, FSB, has filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the Southern District of Florida. As reported by the Troubled Company Reporter, the Office of Thrift Supervision on May 21 closed BankUnited FSB, the largest among 36 banks so far closed this year, and the Federal Deposit Insurance Corporation was appointed as receiver. The FDIC has facilitated a sale of the bank to a management team headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank, and a group of investors led by W.L. Ross & Co. BankUnited, FSB, had assets of $12.80 billion and deposits of $8.6 billion as of May 2, 2009. Under the deal with the FDIC, the purchasing entity, to be named BankUnited, will assume $12.7 billion in assets and $8.3 billion in nonbrokered deposits. BankUnited FSB was not included in the Chapter 11 filings. A news release by BankUnited Financial Corp. stated that the FDIC, as receiver, by operation of law succeeds to "all rights, titles, powers, and privileges of the insured depository institution, and of any stockholder, member, accountholder, depositor, officer, or director of such institution with respect to the institution and the assets of the institution; and title to the books, records, and assets of any previous conservator or other legal custodian of such institution." 12 U.S.C. 1821(d)(2). "Given the financial condition of the Bank, it is unlikely that the Company will be entitled to any distribution from the FDIC as receiver for the Bank," BUFC said. In its bankruptcy petition, BankUnited Financial Corp. said it has assets of $37,729,520 against debts of $559,740,185. On May 15, 2009, BankUnited Financial Corp. received a non- compliance notice from the Nasdaq Stock Market stating that, because the Company did not timely file its Quarterly Report on Form 10-Q for the period ended March 31, 2009, it does not comply with the rules for continued listing, including Rule 5250(c)(1), which require the Company to file with Nasdaq, on a timely basis, all reports and other documents required to be filed with the Securities and Exchange Commission. The Company received on December 17, 2008 a non-compliance notice from the Nasdaq in connection with its Form 10-K, and a similar non-compliance letter in connection with its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2008. On February 18, 2009, the Company submitted a plan to regain compliance through the filing of its Annual Report on Form 10-K for the period ended September 30, 2008 and the 2009 First Quarter Form 10-Q, and was granted 180 calendar days from the due date of the Form 10-K, or until June 15, 2009, to regain compliance for its delinquent filings. The May 15 Notice requires the Company to provide by June 1, 2009, an update to its original plan to regain compliance and restates the date of June 15, 2009 as the deadline for the filing of its 2008 Form 10-K and its Quarterly Reports on Forms 10-Q. BANKUNITED FINANCIAL: Case Summary & 10 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: BankUnited Financial Corporation c/o Shutts & Bowen LLP 201 South Biscayne Blvd. Miami, FL 33131 Bankruptcy Case No.: 09-19940 Debtor-affiliates filing Chapter 11 petitions: Entity Case No. ------ -------- BankUnited Financial Services Incorporated 09-19941 CRE America Corporation 09-19942 Type of Business: BankUnited Financial Corp. -- http://www.bankunited.com/-- was the holding company for BankUnited FSB, the largest banking institution headquartered in Coral Gables, Florida. On May 21, 2009, BankUnited FSB was closed by regulators and the Federal Deposit Insurance Corporation facilitated a sale of the bank to a management team headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank, and a group of investors led by W.L. Ross & Co. BankUnited, FSB, had assets of $12.80 billion and deposits of $8.6 billion as of May 2, 2009. BankUnited is the largest among 36 banks so far closed this year. Chapter 11 Petition Date: May 22, 2009 Court: Southern District of Florida (Miami) Judge: Laurel M Isicoff Debtor's Counsel: Stephen P. Drobny, Esq. Peter Levitt, Esq. Shutts & Bowen LLP 1500 Miami Center 201 S. Biscayne Blvd. Miami, FL 33131 Tel: (305) 347-7362 The Debtors' financial condition as of March 31, 2009: Total Assets: $37,729,520 Total Debts: $559,740,185 The Debtors have $237,261,000 trust preferred securities, $120,000,000 convertible subordinated senior notes, $12,500,000 junior subordinated debentures, and $184,000,000 convertible subordinated senior HiMEDS. The Debtors listed 1,226,853 noncumulative convertible prefereed stock, Series B; and $35,507,988 Class A and 719,947 Class B shares of common stock. The Debtors' Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York HiMEDS $184,000,000 101 Barclay St. - 8W New York, NY 10286 Tel: (212) 815-5845 Fax: (732) 667-9317 US Bank - Corporate Trust senior notes $120,000,000 Services 60 Livington Avenue St. Paul, MN 55107 Tel: (651) 495-3800 Wilmington Trust Co. securities $118,171,000 1100 N. Market Street Wilmington, DE 19890 Tel: (302) 636-6043 US Bank National Association securities $82,765,000 PO Box 960778 Boston, MA 02196 Tel: (617) 603-6599 Wells Fargo Delaware Trust securities $51,547,000 Company 919 North Market St., Ste 1600 Wilmington, DE 19801 Tel: (302) 575-2010 Waterford Township litigation unliquidated Stearns Weaver legal unknown Tew Cardenas legal unknown Coffey Burlington legal unknown Robert Morris vendor unknown BankUnited Financial Corp.'s petition was signed by Bradley S. Weis, chief restructuring officer. BERRY PLASTICS: S&P Downgrades Corporate Credit Rating to 'SD' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Berry Plastics Group Inc. to 'SD' from 'CC', and its rating on Group's senior unsecured term loan to 'D' from 'C'. This action follows the announcement that BP Parallel LLC, a subsidiary of Group, agreed to pay about $147 million to purchase assignments of $472.9 million principal amount of Group's senior unsecured term loan, and that as of May 8, 2009, the company had closed on $105.9 million of these assignments. Management expects to close on the remainder in the fiscal third quarter ending approximately June 30, 2009. The principal amount of the term loan, which is currently pay-in-kind, was $580 million as of March 28, 2009. "We view the transaction as a distressed exchange because debtholders will receive significantly less than the accreted principal amount of the loan," said Standard & Poor's credit analyst Cynthia Werneth. "Once the transaction has been completed, S&P plan to reassess Group's default risk and recovery prospects." At the same time, S&P affirmed all its ratings on Berry Plastics Corp. (Berry; B-/Stable/--). At March 28, 2009, Group's total adjusted debt was about $4.3 billion. S&P adjust debt to include about $270 million of capitalized operating leases and unfunded postretirement liabilities. The ratings on Evansville, Indiana-based Berry reflect risks associated with the company's very highly leveraged financial profile and acquisition-driven growth strategy as well as its weak business risk profile. Berry is a leading producer of rigid plastic packaging products for relatively stable dairy, food, beverage, health care, and other consumer product applications. It also manufactures plastic film products for which demand is somewhat more cyclical. Pro forma for the transaction, consolidated leverage (including Group debt) declines slightly but remains very aggressive at near 8x total adjusted debt to EBITDA. Funds from operations to adjusted total debt also remains weak in the mid-single-digit percentage area. As of March 28, 2009, Berry had $135 million of cash and $252 million of unused availability under a committed asset-based credit facility (after accounting for outstanding letters of credit and an $18.3 million reduction of the facility size to $381.7 million following the bankruptcy of one of the lenders). The facility is subject to a borrowing base of eligible accounts receivable and inventory, and matures in 2013. This facility has no maintenance covenants unless availability falls below 10%. Liquidity and free cash flow have improved in recent months, helped by a significant decline in plastic resin costs. S&P expects raw material costs to remain lower in 2009 than 2008. In addition, benefits from significant operating cost reductions and recent acquisitions should offset continued market softness. S&P expects capital spending to remain at about current levels (about $100 million in the first half of fiscal 2009) as the company continues to expand its thermoforming operations. Debt maturities are minimal during the next few years, with only $17 million to $21 million maturing in each of the next few years. Despite very aggressive debt leverage, S&P believes that, in the absence of additional sizable debt repurchases or large acquisitions, current operating trends and lower plastic resin costs should result in sufficient liquidity to meet foreseeable needs. S&P could lower the ratings if demand for Berry's products deteriorates beyond S&P's expectations, or if liquidity declines meaningfully because of an unexpected spike in raw material costs, acquisitions, or additional debt repurchases. BOYD GAMING: Moody's Downgrades Corporate Family Rating to 'B1' --------------------------------------------------------------- Moody's Investors Service lowered the ratings of Boyd Gaming Corporation. Boyd's Corporate Family Rating and Probability of Default Rating were lowered to B1 from Ba3. The company's senior subordinated notes were lowered to B3 from B2, and its Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-2. The rating outlook is negative. This rating action concludes the review process that was initiated on February 24, 2009. The downgrade was in response to Moody's expectation that there will be a continuation of weak gaming demand trends in the Las Vegas Locals market. This will make it difficult for Boyd to meaningfully reduce leverage over the near to medium term to levels acceptable to the prior rating. Debt/EBITDA (including Borgata cash distributions only) is currently about 7 times. This high leverage reflects a considerable amount of debt-financed development spending related Boyd's Echelon development, which has been delayed indefinitely. The Las Vegas Locals market accounts for close to 50% of Boyd's wholly-owned property EBITDA and has experienced a significant decline in EBITDA since the beginning of 2008. The negative outlook acknowledges that Boyd remains weakly positioned within its current rating category. The continuation or acceleration of weak gaming demand trends could pressure credit metrics enough to prompt a downgrade. The negative outlook also incorporates the continued uncertainty regarding Boyd's bid to acquire all or a portion of Station Casinos, Inc. The revision of Boyd's Speculative Grade Liquidity rating to SGL-3 (adequate liquidity) from SGL-2 (good liquidity) considers Moody's expectation that weak demand trends in the Las Vegas Locals market will continue to pressure Boyd's operating cash flow and possibly its ability to maintain compliance with its financial covenants. These ratings were lowered: -- Corporate Family Rating to B1 from Ba3 -- Probability of Default Rating to B1 from Ba3 -- Speculative Grade Liquidity rating to SGL-3 from SGL-2 -- 7.125% senior subordinated notes due 2016 to B3 (LGD 6, 92%) from B2 (LGD 5, 89%) -- 7.750% senior subordinated notes due 2012 to B3 (LGD 6, 92%) from B2 (LGD 5, 89%) -- 6.750% senior subordinated notes due 2014 to B3 (LGD 6, 92%) from B2 (LGD 5, 89%) The last rating action for Boyd was on February 24, 2009 when Moody's placed the company's Ba3 Corporate Family Rating, Ba3 Probability of Default Rating, and B2 senior subordinate notes on review for possible downgrade. Boyd Gaming Corporation wholly-owns and operates gaming and entertainment facilities located in Nevada, Mississippi, Illinois, Louisiana, and Indiana. The company is also 50% partner in a joint venture that owns and operates the Borgata Hotel Casino in Atlantic City, New Jersey. The company generates about $2 billion of annual net revenue. CANWEST MEDIA: Sells C$100MM in 12% Notes, Gets C$75MM Loan ----------------------------------------------------------- Canwest Global Communications Corp. on Friday said its subsidiaries, Canwest Media Inc. and Canwest Television Limited Partnership, have closed transactions with certain members of the ad hoc committee of 8% senior subordinated noteholders and CIT Business Credit Canada Inc. The Purchasers bought the U.S. dollar equivalent of C$105 million principal amount of 12% senior secured notes of CMI and Canwest Television Limited Partnership for an aggregate purchase price of the U.S. dollar equivalent of C$100 million. CIT will provide a C$75 million senior secured revolving asset-based loan facility to CMI. These facilities are intended to provide Canwest with sufficient credit availability to operate its business in the ordinary course as it continues its work to effect a recapitalization transaction. CMI has used proceeds from the two facilities to, among other things, repay the current lenders all amounts owing under CMI's existing senior credit facility and settle related obligations. Senior lenders under the Company's existing credit facility extended their waiver agreement until June 2, 2009, and also agreed to defer certain payments aggregating roughly $10 million until June 2, 2009, which will allow completion of the new facilities. CMI and the members of the Ad Hoc Committee have entered into a further agreement and forbearance until June 15, 2009, subject to completion of the issuance of the Senior Secured Notes. CMI has agreed to satisfy certain milestones within certain time frames, including: * On or before June 15, 2009, reaching an agreement in principle with members of the Ad Hoc Committee in respect of a recapitalization transaction. * On or before July 15, 2009, entering into a definitive agreement with members of the Ad Hoc Committee with respect to the recapitalization transaction. Earlier this month, CMI agreed to sell its indirect interests in four Turkish radio stations. Completion of the sale is expected to occur on or before June 2, 2009. Terms of the sale of Super FM, Metro FM, Joy Turk, and Joy FM to Spectrum Medya, a Turkey-based company, were not disclosed. Net proceeds will be applied to reduce obligations under the CMI credit facility. About Canwest Global Canwest Global Communications Corp. -- http://www.canwest.com/-- (TSX: CGS and CGS.A,) an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and/or holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey,Indonesia, Singapore, the United Kingdom and the United States. * * * As reported in the Troubled Company Reporter on May 5, 2009, Standard & Poor's Ratings Services said it assigned its 'CCC' long-term corporate credit rating to Toronto-based newspaper publisher Canwest Limited Partnership. The outlook is negative. At the same time, S&P lowered the senior secured debt rating on the company to 'CCC' (the same as the corporate credit rating) from 'CCC+'. S&P also revised the recovery rating on Canwest LP's senior secured debt to '3' from '2'. The '3' recovery rating indicates S&P's opinion of an expectation of meaningful (50%-70%) recovery in the event of a default, in contrast to a '2' recovery rating, which indicates S&P's opinion of an expectation of substantial (70%-90%) recovery. Standard & Poor's revised the recovery rating due to S&P's use of a lower EBITDA amount andEBITDA multiple in the event of default. CABLEVISION SYSTEMS: To Raise $423.8MM in Common Stock Offering --------------------------------------------------------------- Cablevision Systems Corp. filed a Form S-8 Registration Statement with the Securities and Exchange Commission to register roughly 23,000,000 shares of Cablevision NY Group Class A Common Stock. Cablevision will offer the shares at $18.43 apiece, and expects to raise $423,890,000. Cablevision early this month reported that consolidated net revenues grew 10.6% to $1.903 billion for the first quarter ended March 31, 2009, compared to the prior year period, reflecting solid revenue growth in Telecommunications Services and the addition of Newsday and Sundance in the 2009 results. Consolidated adjusted operating cash flow increased 14.3% to $590.0 million and consolidated operating income grew 21.3% to $297.8 million, both compared to the prior year period. Cablevision posted net income of $19.9 million for the first quarter. At March 31, 2009, Cablevision had $9.55 billion in total assets and $14.90 billion in total liabilities resulting in $5.36 billion in stockholders' deficit. The Board of Directors of Cablevision has authorized the company's management to explore the spin-off of its Madison Square Garden business. Cablevision Systems Corporation -- http://www.cablevision.com/-- is one of the nation's leading media and entertainment companies. Its cable television operations serve more than 3 million households in the New York metropolitan area. The company's advanced telecommunications offerings include its iO: Interactive Optimum digital television, Optimum Online high-speed Internet, Optimum Voice digital voice-over-cable, and its Optimum Lightpath integrated business communications services. Cablevision operates several programming businesses, including AMC, IFC, Sundance Channel and WE tv, through Rainbow Media Holdings LLC, and serves the New York area as publisher of Newsday and other niche publications through Newsday LLC. In addition to these businesses, Cablevision owns Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty. The company also operates New York's famed Radio City Music Hall, the Beacon Theatre, and The Chicago Theatre, and owns and operates Clearview Cinemas. * * * As reported by the Troubled Company Reporter on May 22, 2009, 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. CAPMARK FINANCIAL: Extends Closing Date for $1.15-Bil. Facility --------------------------------------------------------------- Capmark Financial Group Inc. said that the anticipated closing date for its new term loan facility of up to $1.5 billion has been extended to allow additional time to finalize the loan documentation. Capmark has been working with the lenders to prepare definitive agreements for the Facility and the parties agreed that additional time was required to complete the work. Proceeds from the Facility, along with $75.0 million in cash, will be used to refinance a portion of Capmark's bridge loan agreement and senior credit facility. To facilitate the closing of the Facility and certain related amendments to Capmark's bridge loan agreement and senior credit facility to be executed in connection with the closing of the Facility, Capmark has obtained a further extension of the maturity date of 100% of the outstanding principal balance under its bridge loan agreement until May 29, 2009, and a further waiver, which will be effective until May 29, 2009, of its compliance with the leverage ratio covenants in its bridge loan agreement and senior credit facility for the quarters ended December 31, 2008, and March 31, 2009. The closing of the Facility is subject to the negotiation and execution of mutually agreeable definitive documentation with respect to the Facility and the bridge loan and senior credit facility amendments, as well as other closing conditions. Capmark expects to execute the amendments and close the Facility by May 29, 2009; however, there can be no assurances that Capmark will be able to complete these transactions in this timeframe or at all. About Capmark Based in Horsham, Pennsylvania, Capmark Financial Group Inc. -- http://www.capmark.com/-- is a diversified company that provides a broad range of financial services to investors in commercial real estate-related assets. Capmark has three core businesses: lending and mortgage banking, investments and funds management, and servicing. Capmark operates in North America, Europe and Asia. As reported by the TCR on Apr. 30, 2009, Moody's Investors Service downgraded the senior unsecured ratings of Capmark Financial Group Inc. to 'Caa1' from 'B2', with the rating remaining under review for possible downgrade. The rating action reflects the explanatory note in Capmark's 10-K filing in which its auditors raise doubt about the company's ability to continue as a going concern, as well as the still unresolved nature of Capmark's efforts to modify the terms of its bridge loan agreement and senior credit facility, which could have implications for its liquidity and funding. CHRYSLER LLC: Responds to Indiana State Treasurer Protest --------------------------------------------------------- Indiana State Treasurer Richard Mourdock is protesting Chrysler LLC's Chapter 11 proceeding and sale on behalf of three state pension funds that he oversees. Chrysler strongly believes Indiana Treasurer Mourdock's position is wrong. Satisfying the Indiana Treasurer's demands would lead to the liquidation of Chrysler, resulting in the loss of more than 4,000 Chrysler jobs and 9,000 retiree pensions in Indiana alone. The combined Chrysler-related investments in the three state pension funds in question totaled approximately $17 million. The cumulative loss on these investments under the proposed transaction would be approximately $2 million. Chrysler's liquidation analysis shows first lien lenders would get between zero and 18 cents on the dollar in liquidation, versus 29 cents in the proposed transaction. However, Chrysler believes this range is unlikely and that there is low probability of a high-side outcome. The Company believes it is more likely to be on the very low end, as for the entire time that Chrysler has been in Chapter 11, it has had very few bids for its assets. Thus, under a liquidation scenario, the loss to Chrysler's employees, suppliers and dealers would be far more: in the tens of billions of dollars. Treasurer Mourdock has expressed that he takes his "oath of office and fiduciary responsibilities very, very seriously." Chrysler believes Treasurer Mourdock is risking significantly further loss, and would be living up to his fiduciary responsibilities by accepting the terms that 98 percent of other creditors accepted. The Treasurer's actions lead one to wonder if his motives are financial or political. Chrysler is committed to supporting its operations in Indiana, where more than $150 million are paid annually to Chrysler employees, $20 million in state taxes are paid by Chrysler employees, $3 billion of materials are purchased from more than 200 Indiana-based suppliers, and approximately 3,750 people are employed at 75 Chrysler dealerships. Additionally, Chrysler has donated more than $6.5 million to non-profit and community organizations in Indiana statewide in the past 10 years. The three funds Treasurer Mourdock oversees are: * Indiana State Teachers Retirement Fund -- This is a reported $7.8 billion fund. The Chrysler debt is less than 1% of the fund ($32.2 million or 0.466% of Chrysler first lien debt) * Indiana State Police Pension Trust -- This is a reported $250 million fund. The Chrysler debt is less than 1% of the fund. ($1.3 million or 0.019% of Chrysler first lien debt) * Indiana Major Move Construction -- This is a reported $2.5 billion fund. The Chrysler debt is less than 1% of the fund ($8.8 million or 0.128% of Chrysler first lien debt) The combined Chrysler debt to the three funds is $42.3 million (0.6% of Chrysler's first lien debt). While the three funds have a face value of $42.3 million, the purchase price was approximately $17 million. They would receive $15 million, for a total investment loss of $2 million. Under Chapter 11, Chrysler's first lien creditors were allocated $2 billion (instead of the $7 billion in original debt). About 98% of the first lien creditors have agreed to this allocation. The Indiana Treasurer is willing to put Chrysler in liquidation over less than 1% of the three funds assets. 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 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Proposes Tax Settlement Deal with Daimler, et al. --------------------------------------------------------------- Chrysler LLC and its affiliated debtors ask the U.S. Bankruptcy Court for the Southern District of New York to approve a tax settlement agreement with: * Daimler AG; * Daimler North America Finance Corporation; * Daimler Investments US Corporation; and * CG Investment Group LLC, a division of Cerberus Investment Advisors L.P. The settlement deal was hammered out by the companies to resolve the dispute among Chrysler, Chrysler Holding LLC, Chrysler Canada Inc., Daimler North and Daimler Investments regarding Chrysler entities' rights to indemnification for taxes under a contribution agreement dated May 14, 2007. The companies disputed over certain transfer pricing issues that have arisen in Canada, and a dispute over the amount of the deductible that Chrysler entities are required to satisfy to claim tax indemnity payments from Daimler AG pursuant to the contribution agreement. The contribution agreement was inked as part of Cerberus' acquisition of a controlling interest in Chrysler and Chrysler Financial from Daimler AG. Under the deal, Daimler North and Daimler Investments agreed to indemnify Chrysler for "excluded taxes" for the period ending on or before August 2007, and are entitled to receive tax refunds for that period. The transactions contemplated by the contribution agreement closed and the Daimler divestiture became effective on August 3, 2007. Attorney for Chrysler, Corinne Ball, Esq., at Jones Day, in New York, says that approval of the tax settlement agreement will assist in facilitating the deal that Chrysler entered into with Italy-based automaker, Fiat S.p.A. and New CarCo Acquisition LLC. "[The settlement] provides for [Chrysler's] rights to tax indemnification on a going forward basis, and specifies that those rights are fully assignable to [New CarCo] without being subject to any third party consent," Ms. Ball says in court papers. She adds that the settlement would also eliminate uncertainties regarding Chrysler's continued operations in Canada and would provide Chrysler with an immediate cash flow benefit. A copy of the tax settlement agreement is available without charge at http://bankrupt.com/misc/ChryslerTaxSettlement.pdf The hearing to consider approval of the settlement is scheduled for May 27, 2009. Creditors and other concerned parties have until May 26, 2009 to file their objections. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Pursuant to the U.S. Government's Automotive Industry Financing Program, the U.S. Department of the Treasury made emergency loans to General Motors Corp., Chrysler Holding LLC, and Chrysler Financial Services Americas LLC. The Treasury purchased senior preferred stock from GMAC LLC. In exchange, Chrysler and GM submitted restructuring plans to the Treasury on February 17, 2009. Upon submission, President Obama's Designee on the Auto Industry determined that the restructuring plans did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans to comply with the requirements set forth under the Automotive Industry Financing Program. The U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders,including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Proposes GMAC, Treasury Deal to Give Dealer Loans --------------------------------------------------------------- Chrysler LLC and its affiliates sought and obtained approval from Judge Arthur Gonzalez, pursuant to Sections 105, 363(b) and 364(b) of the Bankruptcy Code, to enter into the Master Transaction Agreement, dated May 20, 2009, among Chrysler, GMAC LLC, the United States Department of the Treasury and the U.S. Dealer Automotive Receivables Transition LLC. The Debtors filed the GMAC MTA under seal. The Debtors said the documents contain proprietary and sensitive information that reflects the detailed terms and agreements among the parties. They also noted that public release of the information would compromise the arrangement and provide third parties with an improvident glimpse into the confidential nature of the GMAC transaction and of the parties to the GMAC MTA. Corinne Ball, Esq., at Jones Day, in New York, said the Debtors entered into the GMAC MTA to facilitate provision of financing to the Debtors' dealers and retail customers, who are crucial to the Debtors' ability to assure that the eventual purchaser of the Debtors' assets is able to generate revenue once the assets are sold, and New Chrysler recommences operations. Following Chrysler LLC's bankruptcy filing, Chrysler Financial Services Americas LLC, which provided wholesale financing to approximately 62% of the Dealers as of the Petition Date, announced that it would no longer provide additional funding under the wholesale lines of the Dealers, because the filing of the Chapter 11 cases caused Chrysler Financial's conduit sources of financing to cease. To address the lack of funding, Ms. Balls said, Chrysler, GMAC and certain other parties entered into a binding term sheet of a master autofinance agreement contemplating a series of agreements to enable GMAC to provide substitute wholesale financing to dealers previously financed by Chrysler Financial. In conjunction, Chrysler, Chrysler Financial and certain other parties entered into a risk sharing arrangement, whereby Chrysler Financial, which has liens on most of the Dealers' assets, agreed to grant consents and waivers for Chrysler and GMAC to begin operating under the GMAC MAFA. The GMAC MTA, which is the product of numerous intense and complicated negotiations among the parties, is designed to address the loss sharing arrangement contemplated in the GMAC MAFA, Ms. Ball said to Judge Gonzalez. She said the LSA protects GMAC from certain potential losses that it may incur due to its obligations under the GMAC MAFA, hence, facilitating dealer financing that is of crucial benefit to the bankruptcy estates. Without the LSA, GMAC is not obligated to perform under the GMAC MAFA. The GMAC MAFA contemplated that GMAC would be provided with an LSA to reimburse GMAC for certain losses, if any, which may be incurred in connection with making financing available under the GMAC MAFA. Ms. Ball said Chrysler will be lent an additional $600 million in accordance with the terms of the debtor-in-possession financing facility. Pursuant to the GMAC MTA, the funds will be transferred to U.S. Dealer Automotive and will be utilized for the sole purpose of reimbursing GMAC and its subsidiaries for certain losses, if any, that GMAC and its subsidiaries may incur in connection with the financing arranged under the terms of the previously approved GMAC MAFA. Ms. Ball argued that the GMAC MTA provides GMAC with credit support and a means to protect it against potential losses that it could incur in connection with the financing it is providing pursuant to the GMAC MAFA. She said the protection will enable GMAC to provide financing to the Debtors' dealer network so that the Dealers can continue to operate, and thus, preserve the going concern value for the benefit of the estates. Put simply, the GMAC MTA is essential for the Debtors to preserve their estates and provide enterprise value to the eventual purchaser of their assets as contemplated by the proposed purchase agreement with Fiat, or a sale on substantially comparable terms, Ms. Ball says. She points out that the Debtors' businesses cannot survive and the sale process contemplated in the cases cannot work without sufficient financing for the Dealers, and the GMAC MAFA may be terminated without an efficient and otherwise satisfactory LSA. 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 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Court Approves Jones Day as Lead Bankruptcy Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Chrysler LLC and its affiliates to employ Jones Day as counsel in their Chapter 11 cases, nunc pro tunc to the petition date. Jones Day will be paid for its services and reimbursed for any related expenses in accordance with applicable provisions of Sections 330 and 331 of the Bankruptcy Code. Jones Day is authorized to: (a) complete its reconciliation of prepetition fees and expenses actually incurred through the Petition Date no later than the date of filing of its first interim fee application; and (b) make a corresponding adjustment to the amount and application of the Retainer. However, Jones Day will not apply any portion of the Retainer to fees and expenses incurred from and after the Petition Date unless and until authorized to do so by a further Court order. If Jones Day's standard hourly billing rates change during the Chapter 11 cases, Jones Day will notify the U.S. Trustee and any official committee appointed in the Cases and file a notice of the rate changes with the Court. Jones Day Files Supplemental Declaration Prior to the Court's entry of its order approving Jones Day's representation of the Debtors, the firm, as part of its ongoing disclosure responsibilities under Rule 2014 of the Federal Rules of Bankruptcy Procedure, reexamined its relationships with interested parties in the Debtors' Chapter 11 cases. According to the firm, it researched its client database for the past two years to determine whether any entities not identified in the Prior Disclosure, but that (a) were unknown to Jones Day at the time of the Prior Disclosure or (b) may have taken a role in matters relating to the Chapter 11 cases since the completion of the Prior Conflict Searches, are current or former clients of the firm. The list of the Additional Parties is available for fee at: http://bankrupt.com/misc/Chrysler_JonesDApp_1stSuppD_AdditionalParties.pdf Corrine Ball, Esq., at Jones Day, in New York, said her firm does not represent any of the Additional Parties in matters relating to the Debtors or their Chapter 11 cases. Furthermore, Jones Day filed an additional list of interested parties that currently employ or have formerly employed Jones Day in matters unrelated to the Debtors' Chapter 11 cases. A list of these parties is available for fee at: http://bankrupt.com/misc/Chrysler_JonesDApp_1stSuppD_Sched2.pdf Ms. Ball disclosed that Jones Day has represented Chrysler Corporation, the predecessor of Debtor Chrysler LLC, in several transactional matters. These representations occurred sporadically over a number of years. The most notable was the restructuring of the Hayden paint facility at the Debtors' Toledo "supply park," a matter that lasted approximately two months. In the Prior Declaration, Jones Day disclosed past or current client relationships with these parties: (a) certain suppliers; (b) certain of the Prepetition Secured Lenders; (c) certain of the Debtors' competitors; (d) General Motors Corporation; (e) Cerberus Bavarian Investments, B.V. Daimler AG. Jones Day's work for each of these entities represented less than 1% of the Firm's revenues for the past 12 months, Ms. Ball relates. Ms. Ball attested that no Jones Day employee holds equity in the Debtors, which are privately held entities, and insofar has been able to ascertain that Jones Day has no connection with the Debtors, their creditors, the U.S. Trustee or any other party with an actual or potential interest in the Chapter 11 cases, or their attorneys or accountants. Jones Day has applied the Retainer proceeds to actual fees and expenses and, in one instance immediately prior to the Petition Date, to estimated fees and expenses. According to Ms. Ball, these Prepetition Draws totaled $13,098,207. A more detailed summary of Jones Day's invoices and the related Prepetition Draws for the 12 months prior to the Petition Date shows: Invoice Date Invoice Fees Invoice Expenses Invoice Total ------------ ------------ ---------------- ------------- 11/30/2008 $942,373 $15,981 $958,355 12/15/2008 $877,165 $8,450 $885,615 12/22/2008 $2,732,076 $42,227 $2,774,303 12/29/2008 $375,000 $- $375,000 01/21/2009 $857,443 $167,255 $1,024,699 02/28/2009 $1,465,815 $77,124 $1,542,939 04/09/2009 $418,509 $20,042 $438,551 04/10/2009 $819,101 $12,269 $831,371 04/27/2009 $1,508,848 $39,396 $1,548,245 04/28/2009 $2,700,274 $18,851 $2,719,125 ------------ ---------------- ------------- Total $12,696,608 $401,599 $13,098,207 Ms. Ball said the Debtors constitute a multinational enterprise with potentially millions of creditors and other relationships. Consequently, although every reasonable effort has been made to discover and eliminate the possibility of any conflicts, Jones Day is unable to state with certainty whether every client representation or other connection has been disclosed. In this regard, Ms. Ball said, if Jones Day discovers additional information that requires disclosure, Jones Day will file an additional supplemental disclosure with the Court as promptly as possible. Accordingly, Ms. Ball ascertained Jones Day has no interest adverse to the Debtors or their estates in the matters for which the Firm has been retained in the Chapter 11 cases. Jones Day continues to be a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, she said. As reported by the TCR on May 21, Chrysler withdrew its request that Jones Day's and Capstone Advisory Group, LLC's "fees and expenses incurred in its representation of the [automaker be] granted superpriority status, pursuant to section 364(c)(1) of the Bankruptcy Code" after the Honorable Arthur J. Gonzalez signaled at Wednesday's hearing that he would not be inclined to approve that unusual provision absent evidence that no other competent law firm or financial advisor would represent Chrysler in its Chapter 11 restructuring on normal payment terms. Neither Judge Gonzalez nor any other party-in-interest raised any complaint about Jones Day's or Capstone's qualifications or disinterestedness. The Judge's discomfort focused solely on the issue of according superpriority administrative expense claim status to Jones Day's and Capstone's fees and expenses under 11 U.S.C. Sec. 364(c)(1) -- something that appears to have never happened in any chapter 11 case to date. Judge Gonzalez entered orders on Wed., May 20, 2009 (Docs. 1311 and 1301) approving Jones Day's and Capstone's employment . . . but without the superpriority administrative claims expense status originally requested. As a result, Jones Day and Capstone will share and share alike with all other professionals representing Chrysler and its creditors' committee. If Chrysler's estate is administratively insolvent, Jones Day, Capstone and all other professionals employed and retained by Chrysler and its creditors' committee may receive less than 100 cents-on-the-dollar for their services. Court records suggest that Jones Day collected less than 100 cents-on-the-dollar in Levitz's Furniture's second chapter 11 filing (Bankr. S.D.N.Y. Case No. 07-13532). 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 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Court OKs Capstone Engagement as Financial Advisor ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Chrysler LLC and its affiliates to employ Capstone Advisory Group, LLC, nunc pro tunc to the petition date, as their financial advisor. The Engagement Letter between the parties has been further amended to provide that Capstone will continue to provide professional services to the Debtors' estates after the consummation of the Fiat Transaction, including services relating to the winddown of the Debtors' estates and the development of an orderly liquidation plan or other alternative liquidation scenario. Capstone will be compensated for the Post-Sale Services on an hourly basis at rates indicated in the Amended Engagement Letter, plus reimbursement of Capstone's actual, necessary expenses incurred. Capstone will maintain time records for Post-Sale Services in accordance with the U.S. Trustee's guidelines for compensation and reimbursement of expenses. Capstone has agreed not to be reimbursed on a monthly, interim or final basis in connection with the Post-Sale Services until after September 30, 2009; provided that the Transaction Fee will be paid at the closing of the underlying sale transaction subject to subsequent review of the Official Committee of Unsecured Creditors, and the U.S. Trustee. Capstone will be compensated for its services and reimbursed for any related expenses in accordance with applicable provisions of Sections 328, 330 and 331 of the Bankruptcy Code. The unapplied portion of the Retainer will constitute a general security retainer for postpetition services and expenses, and will be held by Capstone subject to further Court order. Upon an Order approving an interim and final fee application, Capstone will apply the Retainer against its then-unpaid fees and expenses in respect of Capstone's fee applications filed and approved in accordance with the applicable provisions of the Bankruptcy Code. Furthermore, prior to seeking reimbursement for any outstanding fees and expenses against any carve-outs established in any financing orders, Capstone will apply the remaining portion of its Retainer against those outstanding fees. The Retainer will not be replenished as it is depleted during the course of the Chapter 11 cases. The Debtors will indemnify Capstone, and hold Capstone harmless against any claims to which Capstone may become subject arising in connection with the rendering of services by Capstone under the Amended Engagement Letter in a lawful manner, unless it is finally judicially determined that the claims resulted from Capstone's gross negligence, willful misconduct or breach of fiduciary duty. As reported by the TCR on May 21, Chrysler withdrew its request that Jones Day's and Capstone Advisory Group, LLC's "fees and expenses incurred in its representation of the [automaker be] granted superpriority status, pursuant to section 364(c)(1) of the Bankruptcy Code" after the Honorable Arthur J. Gonzalez signaled at Wednesday's hearing that he would not be inclined to approve that unusual provision absent evidence that no other competent law firm or financial advisor would represent Chrysler in its Chapter 11 restructuring on normal payment terms. Neither Judge Gonzalez nor any other party-in-interest raised any complaint about Jones Day's or Capstone's qualifications or disinterestedness. The Judge's discomfort focused solely on the issue of according superpriority administrative expense claim status to Jones Day's and Capstone's fees and expenses under 11 U.S.C. Sec. 364(c)(1) -- something that appears to have never happened in any chapter 11 case to date. Judge Gonzalez entered orders on Wed., May 20, 2009 (Docs. 1311 and 1301) approving Jones Day's and Capstone's employment . . . but without the superpriority administrative claims expense status originally requested. As a result, Jones Day and Capstone will share and share alike with all other professionals representing Chrysler and its creditors' committee. If Chrysler's estate is administratively insolvent, Jones Day, Capstone and all other professionals employed and retained by Chrysler and its creditors' committee may receive less than 100 cents-on-the-dollar for their services. Court records suggest that Jones Day collected less than 100 cents-on-the-dollar in Levitz's Furniture's second chapter 11 filing (Bankr. S.D.N.Y. Case No. 07-13532). 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 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 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: Gets Green Light to Hire Togut as Conflicts Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Chrysler LLC and its affiliates to employ Togut, Segal & Segal, LLP as their conflicts counsel on matters for which Jones Day or the Debtors' other professionals cannot handle because the matters involve their clients and could present a conflict of interest, and other discrete duties. As soon as a bankruptcy-related matter concerning any Counsel's Client is identified in the Debtors' cases, Jones Day, in addition to any duty it has under applicable statute or rule concerning conflict matters, will have the duty to notify Togut of that fact so that Togut may promptly advise the Debtors as it involves the Counsel's Client. If the Debtors are adverse to any Counsel's Client, Togut, and not Jones Day, will represent the Debtors in the matter. Togut will be paid in accordance with the standards and procedures set forth in Sections 330 and 331 of the Bankruptcy Code. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Pursuant to the U.S. Government's Automotive Industry Financing Program, the U.S. Department of the Treasury made emergency loans to General Motors Corp., Chrysler Holding LLC, and Chrysler Financial Services Americas LLC. The Treasury purchased senior preferred stock from GMAC LLC. In exchange, Chrysler and GM submitted restructuring plans to the Treasury on February 17, 2009. Upon submission, President Obama's Designee on the Auto Industry determined that the restructuring plans did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans to comply with the requirements set forth under the Automotive Industry Financing Program. The U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders,including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Court Approves Schulte as Corporate Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Chrysler LLC and its affiliates to employ Schulte Roth & Zabel LLP as their corporate counsel, nunc pro tunc to the Petition Date. The Firm will perform these services on behalf of the Debtors: (a) Schulte Roth will assist Jones Day in connection with these matters, whether in connection with the proposed transactions with Fiat or with respect to the post-closing winddown of the Debtors' estates,: * Completion of negotiations with Fiat regarding the various commercial agreements to be entered into in connection with the closing, including the Management Services Agreement, the Master Industrial Agreement, the Joint Procurement Agreement, the Master Product and Technology Agreement, the Global Distribution Agreement and the Information Technology Cooperation Agreement and their related agreements, and all schedules; * Completion of the Voluntary Employees' Beneficiary Association Trust indenture, the registration rights agreement for the common stock to be provided to the VEBA; * Completion of the negotiation and documentation of the Purchase Agreement; * Domestic and foreign antitrust clearance; * Documentation with respect to the transfer of real property and the preparation of documents to effectuate collateral for debtor-in-possession and exit financing; * Negotiation of transitional leases between Chrysler and the Purchaser for properties to be temporarily occupied by, but not acquired by, the Purchaser; * Advice on specialized areas of law, including tax, litigation and employment, where Schulte Roth has substantial pre-existing knowledge from its prior representation of the Debtors; * The Daimler Settlement pursuant to the Binding Term Sheet, dated as of April 27, 2009, by and among Daimler North America Finance Corporation, Daimler Investments US Corporation, Daimler AG, CG Investment Group, LLC, CG Investor, LLC, Chrysler Holding LLC, Chrysler LLC, Pension Benefit Guaranty Corporation. * The Tax Settlement pursuant to the Term Sheet, dated as of April 17, 2009, by and among DNAF, DIUS, Daimler, Investor, HoldCo, Chrysler LLC and Chrysler Canada Inc.; * Negotiation, documentation and implementation of those transaction documents for which Schulte Roth had, prior to the commencement of the Chapter 11 cases, primary responsibility; and * The consummation of the transactions contemplated by the Purchase Agreement. (b) Schulte Roth will not have any direct involvement in any matter that involves direct or indirect negotiations with (a) Cerberus Capital Management, L.P. or any of its affiliates, (b) Investor, (c) CGI, (d) HoldCo, or (e) Chrysler Financial Services Americas LLC. (c) Schulte Roth and Jones Day will use reasonable best efforts to avoid duplication or overlap of services. Paragraph 5 of the parties' Engagement Letter dated April 21, 2009, is deleted in its entirety. Schulte Roth will file fee applications for interim and final allowance of compensation and disbursement of expenses pursuant to the procedures set forth in Sections 330 and 331 of the Bankruptcy Code. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Pursuant to the U.S. Government's Automotive Industry Financing Program, the U.S. Department of the Treasury made emergency loans to General Motors Corp., Chrysler Holding LLC, and Chrysler Financial Services Americas LLC. The Treasury purchased senior preferred stock from GMAC LLC. In exchange, Chrysler and GM submitted restructuring plans to the Treasury on February 17, 2009. Upon submission, President Obama's Designee on the Auto Industry determined that the restructuring plans did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans to comply with the requirements set forth under the Automotive Industry Financing Program. The U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders,including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Seeks to Hire Cahill as Counsel to Board Managers --------------------------------------------------------------- Chrysler LLC and its affiliates seek permission from Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to employ Cahill Gordon & Reindel LLP as special counsel for three independent members of the board of managers of Chrysler LLC in the Chapter 11 cases, nunc pro tunc to the Petition Date. The Independent Managers -- James N. Chapman, George J. Zahringer III, and Jonathan Gallen -- currently serve on the board of managers of Chrysler, notes Holly E. Leese, senior vice president, general counsel and secretary of Chrysler LLC. The Independent Managers are unaffiliated with the Debtors, and in general, their role is to supervise and review actions of the Debtors and their affiliates, Ms. Leese notes. Cahill has represented the Independent Managers since December 2008. According to Ms. Leese, the Debtors will engage Cahill to provide legal services to the Independent Managers in connection with their Chapter 11 cases. The services will relate to the responsibilities or obligations of the Independent Managers with respect to a potential restructuring of the Debtors through their proposed asset sale and otherwise, and any other issues likely to be presented to or considered by the Independent Managers, including: (a) reviewing documents, interviewing relevant personnel, and reporting to the Independent Managers regarding the Debtors' Chapter 11 cases; (b) advising the Independent Managers on bankruptcy and corporate law and other issues relating to the Debtors' Chapter 11 cases; (c) advising and assisting the Independent Managers in board and other meetings and communications with the Debtors, the Debtors' counsel, and other entities; (d) to the extent necessary, representing and advising the Independent Managers in any investigations or actions that may arise in connection with the Independent Manager's service on the board prior to and during the Chapter 11 cases; and (e) performing the full range of services normally associated with matters specified. Ms. Leese further notes that the Debtors will request that Cahill undertake additional matters beyond the scope of responsibilities disclosed. Should Cahill agree in its discretion to undertake any matter, the Debtors will take further appropriate action in connection with the new scope of responsibilities. By contrast to the roles to be served by the firms employed in the Debtors' Cases, Cahill's postpetition work representing the Independent Managers will not involve the conduct of the Chapter 11 cases themselves, Ms. Leese explains. Accordingly, the services rendered and the functions to be performed by Cahill will not be duplicative of any bankruptcy-related work performed by any other law firms employed by the Debtors, she says. Furthermore, Cahill will coordinate with the Debtors' other professionals to ensure that its services are, to the maximum extent possible, complementary to other professionals' services. The Debtors will pay Cahill its fees, and reimburse Cahill of actual and necessary out-of-pocket expenses. Certain of the amounts that may be incurred by Cahill in connection with the proposed representation may be reimbursable by one or more insurance policies, Ms. Leese points out. Cahill's hourly rates are: Professional Hourly Rate ------------ ----------- Attorneys $368 and $888 Paraprofessionals $184 and $296 Cahill will maintain detailed contemporaneous time records and apply to the Court for allowance of compensation and reimbursement of expenses. Disinterestedness Ms. Leese informs the Court that Cahill has represented and may continue to represent certain parties-in-interest in matters unrelated to the Debtors' Cases and the matters upon which the Firm will be retained. A list of this Potential Creditors and Parties-in-Interest can be found at the declaration of Joel H. Levitin, Esq., a partner at Cahill. A full-text copy of the Declaration is available for free at: http://bankrupt.com/misc/Chrysler_LevitinDec_CahillApp.pdf Mr. Levitin further discloses that William T. Lifland, a retired Cahill partner, is the cousin of the Honorable Burton R. Lifland, United States Bankruptcy Judge for the Southern District of New York; Thomas Kavaler, a Cahill partner, is the husband of the Honorable Loretta Preska, United States District Judge for the Southern District of New York; and David Owen, a Cahill Partner, is the son of the Honorable Richard Owen, United States District Judge for the Southern District of New York. Mr. Levitin assures the Court that no other partner, associate, or employee of Cahill is related to any current United States Bankruptcy Judge or District Judge in the Southern District of New York or is related to any employee of the United States Trustee's office serving the Southern District of New York. The Debtors believe that Cahill does not represent or hold any interest adverse to them or their estates with respect to the matters upon which it is to be employed. The Court will convene a hearing to consider the Application on June 3, 2009, at 11:00 a.m. (New York time). Objections are due on May 29, 2009, at 4:00 p.m. (New York time). 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 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 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: Creditors Panel Proposes Mesirow as Fin'l Advisors ---------------------------------------------------------------- The official committee of unsecured creditors in Chrysler LLC's Chapter 11 cases seeks the U.S. Bankruptcy Court for the Southern District of New York's authority to retain Mesirow Financial Consulting, LLC, as its financial advisors, nunc pro tunc to May 8, 2009. As financial advisors to the Committee, Mesirow is expected to: (a) review and analyze the Debtors' sale procedures and proposed Fiat Alliance, including assets and liabilities retained by the Debtors and transferred to New Chrysler; (b) review and analyze potential recoveries to unsecured creditors and related liquidation analyses; (c) review and analyze cash flow budgets, including wind down costs and other transitional costs; (d) assist in the review of reports or filings as required by the Bankruptcy Court or the Office of the United States Trustee, including schedules of assets and liabilities, statements of financial affairs and monthly operating reports; (e) review of the Debtors' financial information, including analyses of cash receipts and disbursements, DIP budget, wind down budget, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; (f) evaluate employee issues, including potential employee retention and severance plans, review and analyze pension funding and related liabilities, and other union related issues; (g) analyze assumption and rejection issues regarding executory contracts and leases, including dealers, suppliers, and other counterparties; (h) validate the Debtors' proposed restructuring and sale plan and the business and financial condition of the Debtors generally; (i) advice and assist the Committee in negotiations and meetings with the Debtors, the banks and other lenders, the United States Treasury, Cerberus Capital Management LC and its affiliates, Daimler-Benz AG and its affiliates, any other stakeholders and the financial and legal advisors for these parties; (j) advice and assist on the tax consequences of proposed transactions, including the Fiat Alliance and other asset sales; (k) assist with the claims resolutions and procedures, including analyses of creditors' claims by type and entity; (l) review and analyze potential fraudulent transfers, including specific transaction and forensic analyses; (m) provide litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions or other matters; (n) review and analyze exit and other new financing, including collateral analysis and cash flow validation; and (o) other functions as requested by the Committee or its counsel to assist the Committee in the chapter 11 cases. The Firm will be paid based on its current normal and customary hourly rates for financial advisory services: Level Rates ----- ----- Senior Managing Director, Managing Director and Director $700 - $750 Senior Vice-President $610 - $670 Vice President $510 - $570 Senior Associate $410 - $470 Associate $220 - $350 Paraprofessional $100 - $195 These are the professionals who will be working in connection with Mesirow's representation of the Committee, together with their hourly billing rate: Professional Hourly Rate ------------ ----------- Larry H. Lattig, Senior Managing Director $750 Ben Pickeirng, Senior Managing Director $750 Edna Lee, Managing Director $700 Krysten Thomas, Senior Vice President $640 Kate McGlynn, Vice President $570 Scott Baker, Associate $350 Gregory Pierce, Associate $220 David Neziroski, Paraprofessional $160 The Debtors will pay Mesirow for fees it incurred in the Chapter 11 cases and reimburse Mesirow for necessary expenses and other out-of-pocket expenses incurred in providing professional services. The Firm will also be indemnified by the Debtors. Larry Lattig, senior managing director of Mesirow, discloses that Mesirow Financial Holdings, Inc., parent company of Mesirow, has established an "Ethical Wall" between Mesirow and its other subsidiaries, divisions and units. The Ethical Wall prohibits Mesirow from sharing confidential or non-public information concerning the Debtors with any other employees of Mesirow Financial. Mesirow Financial has also implemented certain "Trading Wall" procedures to ensure that information concerning transactions by the Mesirow BD/IA Subsidiaries in Related Securities, as well as other securities transactions by the Mesirow BD/IA Subsidiaries, will not be available to the employees of Mesirow. The securities transacted by the Mesirow BD/IA Subsidiaries may include securities issued by the Debtors, creditors, stakeholders or other parties-in-interest in the Chapter 11 cases. Mr. Lattig assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mesirow does not hold or represent an interest adverse to the estates with respect to the matter on which it will be employed, he says. Mesirow has also submitted to the Court a list of parties that the firm have had business relationships with, currently render or have previously rendered services in matters unrelated to the Chapter 11 case. A full-text copy of the list is available for free at http://bankrupt.com/misc/Chrysler_MesirowApp_ExB.pdf 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 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Proposes Sale Protocol for De Minimis Assets ---------------------------------------------------------- Pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, Chrysler LLC and its affiliates seek authority to implement procedures by which they may, from time to time, sell miscellaneous assets that are no longer needed in their ongoing business activities by private sale or public auction and pay applicable broker commissions or auctioneer fees in the ordinary course of business in connection with the sales without need for further court approval, but subject to notice procedures. Corinne S. Ball, Esq., at Jones Day, in New York, tells the U.S. Bankruptcy Court for the Southern District of New York that the Debtors continue to assess, evaluate and pursue opportunities for further asset dispositions in an effort to maximize the value of their estates and minimize excess costs. In connection with these efforts, the Debtors anticipate that they will dispose of certain property on an ongoing basis. She notes that given the relatively de minimis value of the assets to be sold and the potential for a significant number of sales, it is appropriate to establish streamlined procedures for notice and approval of each transaction. Ms. Ball further submits that the use of brokers and auctions in certain circumstances will significantly aid in the timely disposition and realization of the maximum possible value for the De Minimis Assets. If the aggregate consideration for a De Minimis Asset is less than or equal to $2,000,000 or the book value of assets to be sold at an Auction is less than or equal to $2,000,000, the Debtors ask that no notice or hearing be required for them to consummate a sale or transfer. Ms. Ball notes that the Debtors will maintain records for all sales or transfers. For the sale of De Minimis Assets outside the ordinary course of business, the Debtors further propose that if (a) the aggregate consideration to be provided for De Minimis Assets to be sold by Private Sale or (b) the book value of De Minimis Assets to be sold at an Auction, is greater than $2 million but less than $15 million, these procedures be approved and implemented in lieu of a separate motion and hearing being conducted for each sale or transfer: (a) The Debtors will serve a notice of each proposed sale on: (i) the Office of the United States Trustee for the Southern District of New York; (ii) counsel to any official committees appointed in the Chapter 11 cases; (iii) counsel to the DIP Lender; (iv) counsel to the administrative agent for the First Lien Prepetition Lenders; (v) any known holder of Other Liens asserted against the specific assets to be sold or transferred; (vi) the proposed purchaser or transferee if the transaction is to be completed by Private Sale; (vii) any known interested party in the De Minimis Assets proposed to be sold or transferred; and (viii) if applicable, the nondebtor counterparties to all executory contracts or unexpired leases that the Debtors propose to assume, assume and assign or reject in connection with the Proposed Sale. The Sale Notice will be served by facsimile or e-mail, if possible, and by overnight mail. (b) The Sale Notice Parties will have until 5:00 p.m. New York Time on the fifth business day following the service of the Sale Notice to object to the Proposed Sale and the payment of any Commissions. (c) If no Objection is properly filed and served by the Objection Deadline, the Debtors will be authorized, without further notice and without further Court approval to: (i) either (A) for De Minimis Assets to be sold by Private Sale, consummate the Proposed Sale in accordance with the terms and conditions of the underlying contract or contracts or (B) for De Minimis Assets to be sold at Auction, conduct the Auction and sell the assets at the Auction, provided, however, that no sale at an Auction may be completed for consideration below the Minimum Bid identified in the applicable Sale Notice; and (ii) take other actions as are necessary to close the transaction and collect the proceeds of the sale, including, payment of any Commissions, and assumption, assumption and assignment or rejection of the executory contracts and unexpired leases described in the Sale Notice and payment of the Cure Claims proposed in the notice. (d) If a Sale Notice Party files and serves an Objection to the Proposed Sale by the Objection Deadline, the Debtors and the objecting party will use good faith efforts to resolve the objection consensually. If the Debtors and the objecting Sale Notice Party are unable to resolve the objection, the Debtors will not consummate the proposed transaction without first obtaining Court approval of the Proposed Sale, including the payment of any Commissions, upon notice and a hearing; provided, however, that, with the agreement of the proposed purchaser, the Debtors may consummate any portion of the Proposed Sale that is not a subject of the Objection. (e) Any valid and enforceable liens on the property to be sold will attach to the net proceeds of the Proposed Sale in the same priority as existed prior to sale and subject to any claims and defenses that the Debtors may possess with respect thereto. Net sale proceeds will be utilized by the Debtors in accordance with the terms of the DIP Financing Agreement, the Interim DIP Order, any Final DIP Order, the Interim Cash Collateral Order and any Final Cash Collateral Order or other financing arrangements as are in effect at the time. (f) If the sale transaction is to be completed by a Private Sale, to the extent that a competing bid is received for the purchase of De Minimis Assets in a particular Proposed Sale after service of the Sale Notice that, in the Debtors' sole discretion in the exercise of their business judgment, materially exceeds the value of the purchase price contained in the Sale Notice, then the Debtors may file and serve an amended Sale Notice for the Proposed Sale to the subsequent bidder pursuant to the Sale Notice Procedures, even if the proposed purchase price exceeds the Sale Cap. (g) The relevant Debtor or Debtors may consummate a Proposed Sale prior to the expiration of the applicable Objection Deadline if the Debtor or Debtors obtain each Notice Party's written consent to the Proposed Sale. The applicable Proposed Sale, including the assumption, assumption and assignment or rejection of executory contracts and unexpired leases proposed in connection with the sale, will be deemed final and fully authorized by the Court upon either (i) for a Private Sale, (A) the expiration of the Objection Deadline without the assertion of any Objections or (B) the written consent of all Notice Parties; or (ii) for a sale by Auction, (A) the expiration of the Objection Deadline without the assertion of any Objections or the written consent of all Notice Parties and (B) the Debtors' acceptance of a qualifying bid in excess of the Minimum Bid at the Auction. (h) If the sale transaction is completed at an Auction, the applicable Debtor or Debtors will file with the Court and serve upon the Notice Parties a report of the results of the Auction within 10 days after the conclusion of the Auction. Except as expressly set forth in any applicable Prepetition Sale Agreement, all purchasers or transferees will take De Minimis Assets sold or transferred by the Debtors "as is" and "where is" without any representations or warranties from the Debtors as to quality or fitness for either their intended purposes or any particular purposes. Nothing in the Sale Notice Procedures would prevent the Debtors, in their sole discretion, from seeking Court approval of any proposed sale transaction upon notice and a hearing or, if necessary to comply with a condition on a sale imposed by a purchaser, to submit a separate order to the Court along with a notice of presentment to be entered without need for a hearing on the matter. Judge Arthur Gonzales will conduct a hearing of the Debtors' request on June 3, 2009. All objections must be filed on or before May 29, 2009. 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 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 says that as of December 31, 2008, it had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Seeks to Pay $400,000 to National Training Center --------------------------------------------------------------- The UAW-Chrysler National Training Center was created as part of the Debtors' collective bargaining agreements with the United Auto Workers. Currently, NTC oversees more than 30 joint programs that provide education, training and support services for UAW- represented employees at Chrysler. Under the UAW CBAs, the NTC receives its funding exclusively from the Debtors pursuant to a formula pegged to hours worked in Chrysler's U.S. plants. Corinne Ball, Esq., at Jones Day, in New York, tells the Court that after meeting its most recent payroll, the NTC has become perilously under funded, with a negative cash balance of $19,000. Given that the Debtors' manufacturing plants are currently idled, no postpetition amounts are currently accruing to the NTC. Thus, in order for the NTC to be able to continue to operate, it requires $400,000 in cash over the next 45 days to pay operating expenses, including payroll, utilities, taxes and insurance. According to Ms. Ball, the Debtors owed at least $17.2 million to the NTC, as of the Petition Date. As has been represented by the Debtors in numerous pleadings filed with the court, the UAW CBAs will be assumed and assigned to New Chrysler as part of the Fiat Transaction, meaning that the NTC Prepetition Claim will have to be satisfied in full as a condition of assumption and assignment. Pursuant to Sections 363(b)(1) and 105(a) of the Bankruptcy Code, the Debtors ask the Court to authorize (a) them to make the NTC Payment totaling $400,000 in the ordinary course of business and (b) direct banks and other financial institutions to honor checks or electronic payments made to the NTC. Ms. Ball says that the payment of the $400,000 is warranted pursuant to Section 363(b) of the Bankruptcy Code. Section 363(b)(1) authorizes, after notice and a hearing, the Debtors to "use, sell, or lease, other than in the ordinary course of business, property of the estate." Moreover, Ms. Ball says, the NTC Payment will ensure that the Debtors' UAW workforce continues to receive vital training and other aid, especially at a time when the Debtors' manufacturing operations remain idled. Because the Fiat Transaction provides that the UAW CBAs will be assumed and assigned to New Chrysler, the entire NTC Prepetition Claim will necessarily have to be cured. Thus, no party-in-interest will be prejudiced by the request. At the Debtors' behest, the Court will consider their Request, on an expedited basis, on May 26, 2009, at 10:30 a.m. Objections are due on May 22, 2009, at 4:00 p.m. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Pursuant to the U.S. Government's Automotive Industry Financing Program, the U.S. Department of the Treasury made emergency loans to General Motors Corp., Chrysler Holding LLC, and Chrysler Financial Services Americas LLC. The Treasury purchased senior preferred stock from GMAC LLC. In exchange, Chrysler and GM submitted restructuring plans to the Treasury on February 17, 2009. Upon submission, President Obama's Designee on the Auto Industry determined that the restructuring plans did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans to comply with the requirements set forth under the Automotive Industry Financing Program. The U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders,including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler 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 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) CINRAM INTERNATIONAL: S&P Raises Corporate Credit Rating to 'B' --------------------------------------------------------------- Standard & Poor's Ratings Services said it raised its long-term corporate credit rating on Scarborough, Ontario-based Cinram International Inc., a wholly owned indirect subsidiary of Cinram International Income Fund, to 'B' from 'SD' (selective default). The outlook is negative. At the same time, S&P raised the senior secured revolving credit facility rating on the company two notches to 'B' (the same as the corporate credit rating) from 'CCC+'. Furthermore, the 'D' (default) rating on the senior secured term loan rating is unchanged, and S&P expects to keep the 'D' rating in place until March 29, 2010, or upon completion of Cinram's US$150 million cash buyback. The '4' recovery rating on the senior secured debt is also unchanged, indicating S&P's expectation of an average (30%- 50%) recovery in the event of a payment default. "The upgrade reflects the application of Standard & Poor's revised criteria regarding distressed exchange offers," said Standard & Poor's credit analyst Lori Harris. "The revised criteria indicate that the corporate credit rating should be raised to reflect Cinram's credit risk after completion of the first debt buyback below par, despite the fact that The Company has approval from its bank group through an amendment to the credit agreement to buy back debt below par until March 29, 2010," Ms. Harris added. (See "Rating Implications of Exchange Offers and Similar Restructurings, Update," published May 12, 2009, on RatingsDirect.) This is in contrast to S&P's previous criteria, which indicated that the corporate credit rating would remain at 'SD' until completion of the debt buyback program. The ratings on Cinram reflect what S&P views as the company's weak operating performance, limited financial flexibility, and vulnerable business risk profile (resulting from customer and product concentration, seasonality, and the commodity-like nature of the media replication industry). Furthermore, the ratings reflect Standard & Poor's concerns about long-term industry fundamentals, including limited pricing power and S&P's expectation that digital distribution will become a larger source of studio revenues. S&P believes these factors are partially offset by Cinram's strong market position as the world's largest manufacturer of prerecorded multimedia products and solid credit protection measures for the ratings. The negative outlook reflects Standard & Poor's view of Cinram's challenges, including tight financial covenants and the expectation of continued declining revenue and EBITDA, largely resulting from difficult industry fundamentals and demand uncertainty in the current economic recession. S&P could consider lowering S&P's ratings on Cinram if the company suffers a worse- than-expected decline in EBITDA this year, which could pose a renewed possibility of a covenant breach. On the other hand, S&P could revise the outlook to stable if there is a material increase in covenant headroom as Cinram reduces debt leverage. CIRCUIT CITY: Systemax Completes Purchase, Re-Launches Web Site --------------------------------------------------------------- Systemax Inc. has completed the acquisition of the Circuit City e- commerce business and launched the new and improved CircuitCity.com Web site. The new CircuitCity.com features low everyday prices, great deals, a wide selection of products, fast shipping, world-class 24/7 customer service, advanced search capabilities, and enhanced content, including photo galleries and videos of thousands of the most popular consumer electronics and computer products. Richard Leeds, Chairman and Chief Executive Officer of Systemax, commented, "This acquisition and quick launch of the all new CircuitCity.com further solidifies Systemax's position as a leader in online retailing of value-priced, branded computers and consumer electronics. Circuit City is one of the iconic brands in U.S. electronics retailing with a 60-year legacy. With the longstanding leadership of our TigerDirect.com business and the growing contribution of our CompUSA business acquired last year, we think Systemax is uniquely positioned to best carry forward the great Circuit City brand in the online space." On May 19, 2009, Systemax closed on its agreement to acquire certain trademarks, trade names, domains including www.CircuitCity.com, customer lists and information, and other intangible assets of Circuit City's e-commerce business. The purchase price was $14 million in cash plus a share of future revenue generated utilizing those assets over a 30-month period. Under the terms of the agreement, the minimum future revenue guaranteed to Circuit City is $3 million. The Bankruptcy Court issued its order approving the transaction on May 15, 2009, following a public auction conducted on May 11, 2009. About Systemax Inc. Systemax Inc. -- http://www.systemax.com/-- a Fortune 1000 company, sells personal computers, computer supplies and accessories, consumer electronics and industrial products through branded e-commerce web sites, direct mail catalogs, relationship marketers and retail stores in North America and Europe. The primary brands are TigerDirect, CompUSA, Misco and Global Industrial. It also manufactures and sells computers and accessories under the Systemax and Ultra brands and develops and markets ProfitCenter Software, a web-based application for multichannel direct marketing companies. About Circuit City Stores Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- was a specialty retailer of consumer electronics, home office products, entertainment software and related services in the U.S. and Canada. Circuit City Stores together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (Bankr. E.D. Va. Lead Case No. 08- 35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc., and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. Circuit City has opted to liquidate its 721 stores. It has obtained the Bankruptcy Court's approval to pursue going-out-of- business sales, and sell its store leases. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Circuit City Stores Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CITY OF VALLEJO: Misses $26,000 Bond Payment ---------------------------------------------- Bloomberg's Bill Rochelle reports that the City of Vallejo, in California, told the indenture trustee for bondholders that it won't make a $26,000 payment that was due May 1 on certificates of participation sold in 1999. Vallejo is currently undergoing reorganization under Chapter 9 of Bankruptcy Code. The U.S. Bankruptcy Court for the Eastern District of California ruled in March that the city has the right to terminate contracts with labor unions. The bankruptcy judge also ruled that the more cumbersome provisions for terminating labor contracts applicable to companies in Chapter 11 don't apply to municipalities reorganizing in Chapter 9. The judge has directed parties to engage in talks to resolve their contract disputes. Vallejo -- http://www.ci.vallejo.ca.us/GovSite-- is a city in Solano County, in California. As of the 2000 census, the city had a total population of 116,760. It is located in the San Francisco Bay Area on the northern shore of San Pablo Bay. The City is a charter city organized and exercising governmental functions under its charter and the laws and constitution of the state. Its governing body is its City Council. The City filed for protection under Chapter 9 of the U.S. Bankruptcy Code on May 23, 2008 (Bankr. E.D. Calif. Case No. 08-26813). Marc A. Levinson, Esq., and Norman C. Hile, Esq., at Orrick, Herrington & Sutcliffe LLP in Sacramento, California, represent the City. According to Vallejo's comprehensive annual report for the year ended June 30, 2007, the city has $983 million in assets and $358 million in debts. COMMERCIAL CAPITAL: WestLB Wants Adequate Protection on Loans ------------------------------------------------------------- WestLB AG, New York Branch, asks the U.S. Bankruptcy Court for the District of Colorado to direct Commercial Capital Inc. and CCI Funding I LLC to provide adequate protection for the diminution in value of its collateral in light of: -- all foreclosure proceedings pending as of the Debtors' bankruptcy filing relating to all properties securing the mortgage loans; -- all properties the Debtors have by foreclosure, deed in lieu of foreclosure, or any other means; and -- the Debtors' use of its cash collateral. WestLB AG says it provided to Debtors about $150 million in secured loans credit and security agreement dated January 5, 2007, which was used to purchase about 54 mortgage loans. Among other things, the credit agreement is secured by a first priority security interest in the mortgage loans, WestLB AG notes. About 35 of these loans are now in default and the Debtors have completed foreclosure proceedings with respect to 13 of the properties, WestLB AG relates. According to WestLB AG, the Debtors have taken some of the properties and may be using its cash collateral under the credit agreement without providing adequate protection of its security interests. WestLB AG tells the Court that the Debtors have filed the appropriate requesting seeking permission to use its cash collateral at present. It has not consented to the use of cash collateral under the credit agreement, WestLB AG says. Christopher L. Richardson, Esq., at Davis Graham & Stubbs LLP, and Lester M. Kirshenbaum, Esq., at Kaye Scholer LLP, represents WestLB AG. About Commercial Capital, Inc. Greenwood Village, Colorado-based Commercial Capital, Inc. -- http://www.commercialcapitalinc.com/-- and its affiliate, CCI Funding I, LLC, are commercial real estate lenders and investment partners engaging in short-term commercial mortgage. Commercial Capital and CCI Funding filed for separate Chapter 11 on April 22, and April 27, 2009, (Bankr. D. Colo. Case No. 09-17238 and Bankr. D. Colo. Case No. 09-17437). Robert Padjen, Esq., at Laufer and Padjen LLC, assists Commercial Capital in its restructuring efforts. In their bankruptcy petitions, the Debtors each listed $100 million to $500 million in assets. Commercial Capital listed $50 million to $100 million in debts, wile CCI Funding listed $100 million to $500 million in liabilities. COMPASS MINERALS: Prices $100MM of 8% Senior Notes Due 2019 ----------------------------------------------------------- Compass Minerals International, Inc., has priced its private placement offering of $100.0 million in aggregate principal amount of 8% Senior Notes due 2019. The Notes will be sold at a price equal to 97.497% of their face value, with an effective yield of 8.375%. The Notes Offering is expected to close on June 5, 2009, subject to the satisfaction or waiver of customary closing conditions. The net proceeds of the Notes Offering are intended to be used to fund the concurrent tender offer announced on May 21, 2009, to purchase any and all of Compass Minerals' outstanding $89.6 million in aggregate principal amount 12% Senior Subordinated Discount Notes due 2013, including any redemption of any 2013 Notes that remain outstanding after the expiration of the Tender Offer, and for general corporate purposes. The senior notes being offered by Compass Minerals in the Notes Offering will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The senior notes are being offered only to qualified institutional buyers under Rule 144A and outside the United States in compliance with Regulation S under the Securities Act. About Compass Minerals Overland Park, Kansas-based Compass Minerals International, Inc., through its subsidiaries produces and markets inorganic mineral products with manufacturing sites in North America and Europe. Its principal products are salt, which includes sodium chloride and magnesium chloride, and sulfate of potash, a specialty fertilizer. As reported by the Troubled Company Reporter on May 25, 2009, Moody's Investors Service affirmed Compass Minerals' Corporate Family Rating of 'Ba2.' Moody's also assigned a 'B1' rating to Compass' proposed $100 million senior unsecured notes due 2019. Proceeds from the new notes will be used to refinance $89.8 million of the 12% senior subordinated notes due 2013. Moody's gave a positive outlook to Compass' ratings, citing that it reflects the expectation of a sustained increase in earnings from its fertilizer segment. CONSTAR INT'L: Expects to Emerge From Chapter 11 by May 29 ---------------------------------------------------------- Constar International Inc. said in a regulatory filing that the effective date of its confirmed plan of reorganization is anticipated to be on or about May 29, 2009. Constar, however, cautioned that there's no assurance as to when, or ultimately if, the Plan will become effective. It is also possible that additional technical amendments could be made to the Plan prior to effectiveness, Constar said in its filing with the Securities and Exhange Commission. The U.S. Bankruptcy Court for the District of Delaware on May 14, 2009, entered an order confirming the Debtors' Second Amended Joint Plan of Reorganization, as further modified. Under the Plan, holders of Senior Subordinated Note Claims in Class 4, holders of Section 510(b) claims in Class 6, and holders of Equity Interests in Class 7 are impaired. Each Allowed Senior Subordinated Note Claim will receive payment with pro rata share of new Common Stock issued on the Effective Date. Claimants in Classes 6 and 7 get nothing. Holders of Other General Unsecured Claims in Class 6 will receive either reinstatement in full or payment in the ordinary course of business of their Claims. The Debtors entered into a Senior Secured Super-Priority Debtor in Possession and Exit Credit Agreement, dated as of December 31, 2008, among Constar as Borrower, the other Debtors as Guarantors, Citicorp USA Inc., as Administrative Agent, Wells Fargo Foothill, LLC, as Sole Syndication Agent and Sole Documentation Agent, and Citigroup Global Markets Inc. as Book Manager and Arranger. As part of the Confirmation Order, the Bankruptcy Court approved the conversion of the DIP Facility into the Exit Facility. The Exit Facility may be used for any purpose permitted by the Exit Facility, including the funding of obligations under the Plan, such as the payment of Administrative Claims and the satisfaction of ongoing working capital requirements. Pursuant to the Restated Certificate of Incorporation of Constar, 70,000,000 shares of common stock in Reorganized Constar will be initially authorized for issuance, par value $0.01 per share, of which up to 1,750,000 shares will be initially issued and outstanding pursuant to the Plan as of the Effective Date. Ten shares of New Constar Common Stock will be issued for each $1,000 in face amount of the Senior Subordinated Notes to the holders of Class 4 Claims. In addition, 194,444 shares will be reserved for issuance under the Management Incentive Plan. The New Constar Common Stock, when issued or distributed as provided in the Plan, will be duly authorized, validly issued, and, if applicable, fully paid and nonassessable. A full-text copy of the Debtors' Second Amended Joint Plan of Reorganization, as Further Modified, Pursuant to Chapter 11 of the Bankruptcy Code (as confirmed), is available at no charge at: http://ResearchArchives.com/t/s?3d3a A full-text copy of the Findings of Fact, Conclusions of Law and Order Confirming the Debtors' Second Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the United States Bankruptcy Code, is available at no charge at: http://ResearchArchives.com/t/s?3d3b Headquartered in Philadelphia, Pennsylvania, Constar International Inc. (NASDAQ: CNST) -- http://www.constar.net/-- produces polyethylene terephthalate plastic containers for food, soft drinks and water. The Company provides full-service packaging services. The Company and five of its affiliates filed for Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-13432). Attorneys at Bayard, P.A., are the Debtors' counsel in the Chapter 11 cases, and attorneys at Wilmer Cutler Pickering Hale and Dorr LLP are co-counsel. Goodwin Procter LLP, and Young, Conaway, Stargatt & Taylor, LLP, are the Official Committee of Unsecured Creditors' bankruptcy counsel. CORRECTIONS CORP: S&P Assigns 'BB/B+' Senior Debt Ratings --------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its preliminary 'BB/B+' senior unsecured/subordinated debt ratings to Nashville, Tennessee-based Corrections Corp. of America's unlimited Rule 415 shelf registration. S&P also assigned its 'BB' senior unsecured debt rating to the company's proposed $465 million 7.75% notes due June 2017, which CCA will issue under the new shelf filing. S&P expects that the company will use the proceeds from the new note issuance to repay its $450 million 7.5% senior unsecured notes due 2011. S&P also assigned this debt a recovery rating of '3', indicating that lenders could expect meaningful (50%-70%) recovery in the event of a payment default or bankruptcy. (For the complete recovery rationale, please see the recovery report on CCA, to be published after this media release.) At the same time, Standard & Poor's withdrew its preliminary 'BB/B+' senior unsecured/subordinated debt ratings on CCA's previous shelf filing, which has expired. The outlook is stable. As of March 31, 2009, CCA had about $1.27 billion debt. Standard & Poor's believes CCA's existing inmate population levels and reduced near-term capital expenditure plans should enable the company to sustain credit measures close to current levels. Over the next year, S&P expects adjusted leverage to remain in the low- 3x area and funds from operations to total debt to decline to the high-teens level. However, S&P estimate that if inmate population levels begin to decline, margins fall by an amount greater than S&P expected, or financial policy becomes more aggressive (including share repurchases or increased capital expenditures) resulting in adjusted leverage of 3.5x, S&P would consider an outlook revision to negative. Ratings List Corrections Corp. of America Corp. credit rating BB/Stable/-- Ratings Assigned Senior unsecd debt sub debt BB/B+ (prelim) Senior unsecd $465 million 7.75% notes BB Recovery rating 3 Ratings Withdrawn Senior unsecured/subordinated debt BB/B+ (prelim) COYOTES HOCKEY: U.S. Trustee Forms Five-Member Creditors' Panel --------------------------------------------------------------- Ilene J. Lashinsky, United States Trustee for Region 14, appointed five creditors to serve on the Official Committee of Unsecured Creditors of Coyotes Hockey LLC and its debtor-affiliates. The members of the Committee are: a) Clear Channel Radio Attn: Jason Weinmeister 4686 E. Van Buren Street, #300 Phoenix, AZ 85008 Tel: (602) 374-6013 Fax: (602) 374-6015 b) Climatec Building Technologies Group, LLC Attn: Jimeen Hamblen 10802 N. 23rd Avenue Phoenix, AZ 85029 Tel: (602) 944-3330 Fax: (602) 944-4759 c) Coyotes Ice, LLC Attn: R. Taylor Burke, Jr. 9375 E. Bell Road, #101 Scottsdale, AZ 85260 Tel: (480) 483-7444 Fax: (480) 619-6350 d) Landcorp Property Maintenance I, Inc. Attn: Ricardo Landaburu 3230 E. Broadway Road, #130 Phoenix, AZ 85042 Tel: (480) 212-0032 Fax: (480) 212-0033 e) Maintenance Mart Attn: Al Kraus 4648 N. 7th Avenue Phoenix, AZ 85013 Tel: (602) 252-9402 Fax: (602) 252-9086 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. 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: Secured Lenders Cry Foul on S&E $17-Mil. DIP Loan ----------------------------------------------------------------- Three secured lenders object to Coyotes Hockey LLC and its debtor- affiliates' proposal to obtain postpetition financing and use cash collateral. SOF Investments LP, White Tip Investments LLC and Donatello Investments LLC tell the U.S. Bankruptcy Court for the District of Arizona that the Debtors' use of cash collateral and the priming of their liens in favor of the DIP lender would further diminish the value of their collateral. They say that the proposed "adequate protection" consisting solely of a junior claim and liens on asset in which they have a security interest and budgeted amounts for regular payments of interest is inadequate. The Debtors owe $79.6 million plus interests to SOF, et al., under a certain credit agreement dated December 31, 2003. The loans are secured by substantially all of the Debtors' assets including cash collateral. The loan matured on December 31, 2008, and the facility has been in default, according to papers filed with the Court. Attorneys at Vinson & Elkins LLP, in New York, represent SOF, et al. S&E Interim Facility Corporation has agreed to provide to the Debtors as much as $17 million in financing, which will mature by June 30, 2009, unless extended by the lender. The facility incurs interest at 7% per annum. Proceeds of the facility will be used to pay a postpetition retainer of $5 million for the benefit of the Debtors' professionals, among others things. The Court has set May 27, 2009, at 9:00 a.m., to consider approval of the Debtors' access to postpetition financing. About Coyotes Hockey 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 CRUCIBLE MATERIALS: U.S. Trustee Forms 5-Member Creditors' Panel ---------------------------------------------------------------- Roberta A. DeAngelis, United States Trustee for Region 3, appointed five creditors to serve on the Official Committee of Unsecured Creditors of Crucible Materials Corporation and its debtor-affiliates. The members of the Committee are: a) The Bank of New York Mellon Trust Co., N.A. Attn: Bridget Schessler 525 William Penn Place, 7th Floor Pittsburgh, PA 15259 Tel: (412) 234-7967 Fax: (412) 236-9271 b) Sims Metal Management Inc. Attn: James Nathan 500 Flatbush Ave. Hartford, CT 06106 Tel: (860) 550-7241 Fax: (860) 724-9245 c) United Steelworkers Attn: David R. Jury Five Gateway Center Pittsburgh, PA 15222 Tel: (412) 562-2546 Fax: (412) 562-2429 d) Purther Recycling Inc. Attn: Don Purther 31000 Northwestern Hwy., Ste. 250 Farmington Hills, MT 48334 Tel: (248) 865-6700 Fax: (248) 865-6702 e) Climax Molybdenum Marketing Corp. Attn: Georgeann Weinhandl One North Central Ave. Phoenix, AZ 85004 Tel: (602) 366-8557 Fax: (602) 366-7322 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 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. DANA HOLDING: S&P Raises 'SD' Corporate Credit Rating to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services said it has raised its corporate credit rating on Toledo, Ohio-based Dana Holding Corp. to 'B-' from 'SD' (selective default) and raised its rating on the company's outstanding $1.26 billion term loan bank facility to 'B' from 'D'. The recovery rating on the term loan is unchanged, at '2', indicating S&P's expectation that lenders would receive substantial (70% to 90%) recovery in the event of a payment default. The issue and recovery ratings on Dana's asset-backed loan revolving facility are unchanged, at 'B+' and '1', indicating S&P's expectation that lenders would receive very high (90% to 100%) recovery in the event of a payment default. The rating action reflects S&P's review of Dana's prospects following the completion of its dutch auction tender offer in which it repurchased less than 10% of its term loan facility at a substantial discount to par (at a price of 40% to 44% of face value). S&P viewed this action as a distressed debt exchange and tantamount to a default. "The ratings on Dana reflect our view that very weak market conditions in most of Dana's business segments will pressure the company's covenant compliance this year by reducing EBITDA, even as Dana continues to realign overhead costs and refine operational capacity," said Standard & Poor's credit analyst Nancy Messer. "We believe Dana will be at risk of breaching its 2009 covenants - - which tighten in the second half of the year -- given weak industry conditions," she continued. S&P also believe financial risk will remain relatively high for most rated auto suppliers this year and next because of severe and volatile auto markets in North America and Europe. S&P expects Dana's revenues to be reduced by weak auto production in North America and Europe and the stalled recovery of commercial truck demand because of the weak economy. For 2009, S&P expects light- vehicle sales in the U.S. to fall to 9.6 million units, down 27% year over year. Although S&P expects sales to improve to 11.4 million units in 2010, this level would still be significantly below last year's weak level of 13.2 million units. Dana has significant exposure to light trucks and SUVs, the sales of which have fallen even more dramatically than sales in the overall market. Dana's customers for its axles, driveshafts, and other structural, sealing, and thermal products are original equipment manufacturers in the light-, heavy-duty commercial, and heavy off-road vehicle markets. Although the three Michigan-based OEMs account for about 27% of Dana's global sales, its axle and driveshaft businesses depend substantially on continued business from Ford Motor Co., which is cutting production significantly. In the first quarter of 2009, Dana reported that EBITDA had declined precipitously, to $16 million compared to $134 million in the first quarter of 2008. The poor results were attributed to low light-vehicle production and product mix combined with a significant 47% decline in off-highway vehicle revenues, year over year. Dana had $1.2 billion of balance sheet debt at March 31, 2009, reduced by only a small amount as a result of the recent debt exchange. The capital structure also includes $771 million of 4% cash-pay convertible preferred stock. Liquidity is limited because S&P does not expect the company to generate meaningful free cash flow this year, and the covenants tighten in the second half of 2009. Dana had $191 million available on its asset-based revolving credit facility as of March 31, 2009, after accounting for $191 million in letters of credit and no borrowings. S&P assume that Lehman Brothers Inc., as a member of Dana's lending group, will not fund its $65 million commitment, so S&P view the revolving commitment as $585 million rather than the original $650 million. At March 31, 2009, Dana had $412 million in unrestricted balance sheet cash, a certain amount of which was used to repurchase less than 10% of the term loan under the recent tender offer, with 48% of the cash in the U.S. The outlook on Dana is negative. S&P could lower the ratings if Dana's liquidity begins to tighten because of greater cash use than S&P expects or if EBITDA remains weak because of ongoing adverse market conditions. S&P could also lower the ratings if Dana is unable to remain in compliance with covenants, after taking account of any waivers that may become necessary. In S&P's opinion, Dana needs to achieve adjusted EBITDA of $400 million annually to maintain the current rating, given its pension- and lease-adjusted total debt of $2.4 billion. S&P does not expect the company to pursue transforming acquisitions or large dividend payouts that could pressure credit ratios in the year ahead. S&P is unlikely to revise the outlook to stable or raise the ratings in the next year because S&P does not expect market conditions to improve materially. DAYTON SUPERIOR: To Be Delisted From Nasdaq Effective May 29 ------------------------------------------------------------ The Nasdaq Stock Market, Inc., has determined to remove from listing the common stock of Dayton Superior Corporation, effective at the opening of the trading session on May 29, 2009. Based on a review of the information provided by the Company, Nasdaq Staff determined that the Company no longer qualified for listing on the Exchange pursuant to Marketplace Rules 5100, 5110(b) and IM-5100-1. The Company was notified of the Staffs determination on April 20, 2009. The Company did not appeal the Staff determination to the Hearings Panel, and the Staff determination to delist the Company became final on April 29, 2009. About Dayton Superior Headquartered in Dayton, Ohio, Dayton Superior Corporation -- http://www.daytonsuperior.com/-- makes and distributes construction products. Aztec Concrete Accessories Inc., Dayton Superior Specialty Chemical Corporation, Dur-O-Wa Inc., Southern Construction Products Inc., Symons Corporation and Trevecca Holdings Inc. were merged with the Company on December 31, 2004. The Company filed for Chapter 11 protection on April 19, 2009 (Bankr. D. Del. Case No. 09-11351). Keith A. Simon, Esq., Jude M. Gorman, Esq., and Joseph S. Fabiani, Esq., at Latham & Watkins LLP also represent the Debtor as counsel. Russell C. Silberglied, Esq., John H. Knight, Esq., Paul N. Heath, Esq., and Lee E. Kaufman, Esq., at Richards, Layton & Finger, P.A., represent the Debtor as Delaware counsel. The Debtor posted $288,709,000 in total assets and $405,867,000 in total debt as of February 27, 2009. DELPHI CORP: Court Orders Mediation Among Delphi Key Stakeholders ----------------------------------------------------------------- Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York directed the mediation of Delphi Corporation and its key constituents before Judge Cecila G. Morris. The parties are: 1. Delphi Corporation Attn: John Wm. Butler, Jr., Esq. Skadden, Arps, Slate, Meagher & Flom LLP 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606 (312) 407-0730 jack.butler@skadden.com 2. Official Committee of Unsecured Creditors Attn: Robert J. Rosenberg, Esq. Latham & Watkins LLP 885 Third Avenue New York, New York 10022 (212) 906-1370 robert.rosenberg@lw.com 3. General Motors Corporation Attn: Jeffrey L. Tanenbaum, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8276 jeff.tanenbaum@weil.com 4. Certain lenders under Delphi's DIP Credit Facility or Tranche C Lenders Counsel for DIP Agent Attn: Donald S. Bernstein, Esq. Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 (212) 450-4092 donald.bernstein@dpw.com Counsel for the Tranche C Collective Lenders Marc Abrams Wilkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 (212) 728-8200 mabrams@wilkie.com 5. U.S. Department of the Treasury Auto Task Force Attn: Assistant U.S. Attorney Joseph N. Cordaro, Esq. 86 Chambers Street, 3rd Floor New York, New York 10007 (212) 637-2800 joseph.cordaro@usdoj.gov Assistant U.S. Attorney Matthew L. Schwartz, Esq. 86 Chambers Street, 3rd Floor New York, New York 10007 (212) 637-2800 matthew.schwartz@us.doj.gov John J. Rapisardi, Esq. Cadwalader, Wickersham & Taft LLP One World Financial Center New York, New York 10281 (212) 504-5585 john.rapisardi@cwt.com The Court entered the Mediation Order on May 20, 2009, upon consideration of certain matters during a May 18 status conference conducted in the Debtors' Chapter 11 cases. The Court ordered that under the mediation: (1) Representatives of each Party with authority to negotiate a settlement and all other persons necessary to negotiate a settlement must attend the mediation; (2) The results of the mediation are non-binding, unless the parties agree otherwise; (3) There will be an absolute mediation privilege and all communications made during the mediation will be confidential, protected from disclosure, and will not constitute a waiver of any existing privileges and immunities, may not be disclosed to any third party for any reason, and may not be used for any purpose other than the mediation; and (4) At the end of the mediation, Judge Morris will send to the clerk of the Bankruptcy Court a memorandum reporting that she conducted a mediation, the names, addresses and telephone numbers of counsel who participated in the mediation, and whether the mediation was successful. Moreover, each counsel will serve as contact representative for each party and will receive directions from Judge Morris regarding the scheduling of submissions and the initial mediation session. Judge Drain says the Court is satisfied with how the parties are conducting themselves in good faith regarding the "subject matters" referred to Judge Morris, and understands that the parties will proceed with their analyses and negotiations. Judge Drain nevertheless believes that mediation may contribute to a consensual resolution of these Chapter 11 cases within the "Accommodation Period" afforded by the DIP Lenders to the Debtors. Subsequently, on May 21, 2009, Judge Drain approved, on a final basis, the "third amendment" to the Debtors' DIP Accommodation Agreement with JP Morgan Chase Bank, N.A., and certain lenders under a $4.35 billion DIP Credit Facility. Under the DIP Accommodation Third Amendment, the Debtors were required to submit a term sheet detailing their emergence from Chapter 11 and GM's role in the reorganization by May 21, and the current Accommodation Period is to terminate June 2 if the requisite lenders do not find the required term sheet to be entered among the Debtors, General Motors Corporation and the U.S. Department of Treasury's Auto Task Force satisfactory. Delphi Given Until May 29 to Submit Term Sheet At a May 21, 2009 omnibus hearing, Mr. Butler informed the Court that mediation has begun, Bloomberg News reports. More importantly, Mr. Butler said that Delphi's deadline to submit a term sheet has been extended through May 29, 2009, according to Bloomberg. Hearing on approval of proposed modifications to Delphi's First Confirmed Joint Plan of Reorganization is also scheduled on the same day. Other than the Court-mandated mediation, Mr. Butler said negotiations among Delphi, GM, the Auto Task Force, Delphi's DIP Lenders and creditors on related matters are also ongoing, the Associated Press relates in a separate report. "It is our anticipation that there will be amendments to our proposals filed next week and we would expect to be able to provide more information to the court as far as our next steps at that time," AP quoted Mr. Butler as saying. GM Likely to Assume Certain Delphi Operations GM is in talks with Delphi regarding its acquisition of certain operations of Delphi to avoid interruption of essential auto parts, Reuters reports, citing a source privy to GM's plan. GM was in negotiation talks with Delphi in February 2009 for possible reclamation of five Delphi plants to avoid disruption of supply of auto parts. It was believed that GM's reclamation of the plants might help Delphi get exit financing and ensure GM's supply of parts won't be affected by any liquidation. In May 2009, New York Senator Charles also called for GM and Delphi to reach an agreement for GM's quick reclamation of the plants to avoid shutdown of GM's operations. Exclusivity Periods Extended, Hearings Adjourned Judge Drain further extended the exclusivity periods, solely as between the Debtors and the Court-approved Statutory Committees, to: (a) file a plan of reorganization, through and including July 31, 2009; and (b) solicit acceptances of that plan, through and including September 30, 2009. The Court adjourned hearings on Delphi's motions for approval of the Option Agreement with GM for its purchase of Delphi's Global Steering Business as well as the Fourth and Fifth Amendments to GM's Liquidity Support Agreement to May 29, 2009. Hearings on the GM-related matters have been adjourned several times to give way to continued negotiations among the Debtors, GM and the Auto Task Force. The Auto Task Force has continuously blocked the GM-Delphi deals, saying it needs additional time to review the Delphi and GM relationship. Indeed, GM Chief Executive Officer Frederick A Henderson previously disclosed in a Form S-4 submitted to the Securities and Exchange Commission dated April 27, 2009, that the Auto Task Force disapproved of the contemplated increases of GM's liquidity commitments to Delphi. Mr. Henderson also commented that given the current challenges facing the auto-industry, it is unlikely that Delphi will emerge from bankruptcy without government support. Mr. Henderson pointed to the possibility of Delphi's non-emergence from bankruptcy. In its first quarter of 2009 results filed with the SEC on From 10Q dated May 11, 2009, Delphi disclosed that until a term sheet is agreed upon and even assuming that the Term Sheet comprehends additional liquidity, liquidity is expected to remain constrained for the Company through the remainder of the year. Delphi avers it must continue implementing and executing its cash savings initiatives to preserve liquidity in the current difficult economic environment. The Auto Task Force is yet to announce its decision on whether to approve the additional $150 million to be provided by GM under the GM-Delphi Liquidity Support Agreement, Bloomberg notes. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 168; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court OKs $4.35BB JPMorgan DIP Loan on Final Basis --------------------------------------------------------------- Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York approved on a final basis, on May 21, 2009, of a "fourth amendment" to the $4.35 billion DIP Facility entered into by Delphi Corp. and its affiliates with JP Morgan Chase Bank, N.A., as administrative agent, and certain lenders, and a "first amendment" of the parties' related Security and Pledge Agreement. The U.S. Department of Treasury's Auto Task Force is funding up to $5 billion for a program, wherein participating suppliers would be able to sell receivables owing from participating Original Equipment Manufacturers at a modest discount to special purpose vehicles supported by Treasury Department-funded credit facilities at third party servicers. The Debtors intend to participate in the Auto Supplier Program by selling, pursuant to a Payment Option 2, qualifying receivables owed to it by Chrysler LLC and its affiliates to Chrysler Receivables SPV, LLC. As a prerequisite under the Auto Supplier Program, the Debtors are required to grant Chrysler SPV a first priority security interest in the transferred receivables. However, the Debtors are restricted from transferring those eligible receivables under the Amended DIP Credit Agreement. Thus, to facilitate the Debtors' participation in the Auto Supplier Support Program, the Debtors entered into the Fourth DIP Credit Agreement Amendments with the DIP Agent and the DIP Lenders. Pursuant to the Fourth DIP Credit Agreement Amendments, the DIP Agent is authorized to execute and deliver agreements and instruments, evidencing: (i) the release of the DIP Lenders' Liens on the Chrysler receivables sold to Chrysler SPV; and (ii) the subordination of the DIP Lenders' Liens on the Chrysler receivables sold to the Liens granted by the Debtors on the receivables to Chrysler SPV. The DIP Financing Order will be deemed supplemented by the May 21, 2009 Order, and will continue in full force and effect as supplemented, by the DIP Financing Extension Order, the Second DIP Extension Order and the DIP Accommodation Order. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 168; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Files Documents in Harbinger Suit Under Seal --------------------------------------------------------- Delphi Corp. and its affiliates seek authority from Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York to file in redacted form and under seal certain papers in opposition to (i) the Partial Summary Judgment Motion filed by Appaloosa Management L.P. and A- D Acquisition Holdings, LLC's, and (ii) the Summary Judgment Motions filed by Harbinger Capital Partners Master Fund I, Ltd., and Harbinger Del-Auto Investment Company Ltd., Pardus DPH Holding LLC and Pardus Special Opportunities Master Fund L.P., Merrill Lynch, Pierce, Fenner & Smith Inc., and UBS Securities LLC. Specifically, the Debtors will file under seal these Summary Judgment Opposition Papers: * Memorandum of law in opposition to Motions for Summary Judgment submitted by all Appaloosa Defendants other than Goldman Sachs & Co. * Counterstatement of additional disputed material facts in opposition to the Summary Judgment Motions under Rule 7056-1 of the Federal Rules of Bankruptcy Procedure * Response to AMLP and ADAH's Rule 7056-1 Statement * Response to Rule 7056-1 statement of Harbinger, Pardus, Merrill Lynch and UBS * Declaration of Andrew W. Schilling in opposition to Motions for Summary Judgment and the accompanying exhibits. Edward A. Friedman, Esq., at Friedman Kaplan Seiler & Adelman LLP, in New York, notes that certain materials included or referenced in the Summary Judgment Opposition Papers have been designated "confidential" or "highly confidential" pursuant to a Stipulation and Agreed Protective Order Governing Production and Use of Confidential Information, and are considered "Confidential Discovery Material." Although the Debtors do not believe that all of the materials so designated are indeed confidential or highly confidential within the meaning of the Confidentiality Order or are entitled to protection under Section 107(b) of the Bankruptcy Code, certain parties that produced those materials have refused to waive the designations as to those materials, he points out. Moreover, he informs the Court that the Debtors are currently working with all parties that have designated materials confidential or highly confidential to obtain agreement to file those materials publicly. The Debtors say their goal is to have as few redactions as possible in the Summary Judgment Opposition Papers. The Debtors add that they intend to serve the unredacted Summary Judgment Opposition Papers with the Court, the Appaloosa Defendants, and certain other parties to the Confidentiality Order. The Debtors reserve their right to seek permission from the Court to unseal the Summary Judgment Opposition Papers. As of May 18, 2009, the Summary Judgment Opposition Papers as well as the Debtors' pre-trial disclosures pursuant to Rule 26(a)(3) of the Federal Rules of Civil Procedure, have been filed under seal in the Appaloosa adversary dockets. In a separate filing, the Debtors seek the Court's authority to file under seal papers in opposition to Goldman Sachs & Co.'s partial summary judgment motion, which include: * A memorandum of law in opposition to the Partial Summary Judgment Motion; * A declaration of Andrew W. Schilling in opposition to the Partial Summary Judgment Motion and the accompanying exhibits; and * A response to Rule 7056-1 Statement of Goldman Sachs. Jacob W. Buchdahl, Esq., at Susman Godfrey LLP, in New York, notes that a certain exhibit 6 of the Schilling Declaration is an e-mail that has been designated "confidential" by Goldman Sachs pursuant to the Confidentiality Order and is thus considered "Confidential Discovery Material. He says that although the Debtors do not believe that the Exhibit is Confidential under the Confidentiality Order or is entitled to protection under Section 107(b), Goldman Sachs has refused to withdraw its Confidential designation. Thus, the Debtors seek the Court's authority to file the Exhibit to the Shilling Declaration under seal and redact references of the Exhibit in the Summary Judgment Opposition Papers. Mr. Buchdahl adds that the Debtors served, on May 22, 2009, the unredacted Summary Judgment Opposition Papers with the Court, the Appaloosa Defendants, and certain other parties to the Confidentiality Order. AMLP and ADAH Seek Telephonic Conference In a letter addressed to Judge Drain, AMLP, ADAH and all of other Appaloosa Defendants except Goldman Sachs, ask the Court to schedule a telephonic conference to address the trial schedule, the timing of pretrial submissions, and how any trial may be appropriately tailored to any issues remaining for trial after the summary judgment decision. Glenn M. Kurtz, Esq., at White & Case LLP, in New York, reminds the Court that the hearings on the Summary Judgment Motions are scheduled for June 5 and 8, 2009, only a week or so before the trial-ready date on June 15. He notes that the summary judgment papers filed by the parties make clear that there a significant number of issues ripe for adjudication, including issues of contract interpretation as to which the parties' disputes are purely legal. He adds that a ruling on summary judgment may eliminate or significantly narrow the issues for trial and save considerable resources. However, maintaining a June 15 trial-ready date would require the parties, including the Debtors' estates, to prepare at great expense, for a trial before the issues are set, Mr. Kurtz points out. He discloses that in the Debtors' pretrial disclosures served on May 15, 2009, the Debtors expect to call 20 witnesses at trial and may call 46 witnesses, plus rebuttal witnesses. Clearly the time and cost of preparing for an extensive trial, as well as the Court's setting aside weeks of trial time should be avoided, if at all possible, he asserts. Mr. Kurtz says a question exists as to when pretrial disclosures are due. The pretrial disclosures deadline is either as set by the Court or 30 days before trial pursuant to Civil Rule 26(a)(3). There is no trial date yet, only a trial-ready date, yet the Debtors have served pretrial disclosures without any guidance from the Court or agreement of the Appaloosa Defendants, he continues. The Appaloosa Defendants aver that during the hearing of the Debtors' Motion for Leave to Amend Complaint, they raised the need to address matters after the summary judgment papers were filed and the Court agreed. The Court stated that it may be that the trial could be very narrowly tailored if the Debtors defeat some portion, but not all, of the Complaint. The Court further noted that until the summary judgment motions are filed, it is hard to decide on whether the trial should be postponed or not and thus, the Court wants the parties to assume that it's still a trial- ready date. With the service of the Debtors' Summary Judgment Opposition Papers, the Appaloosa Defendants believe that the issue is ripe and should be addressed in a telephonic conference. As reported by the Troubled Company Reporter, the Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. Delphi commenced the lawsuit to force the Plan Investors to perform under their agreement. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. (Delphi Bankruptcy News, Issue No. 168; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Court OKs BeijingWest Deal; Amended Pact Filed ----------------------------------------------------------- Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York approved the sale of Delphi Corp. and its affiliates' brakes and ride dynamics businesses to BeijingWest Industries Co., Ltd., free and clear of all liens, for $90 million pursuant to the MSPA, on May 21, 2009. The Sale is expected to close by the end of 2009. The Brakes Businesses employ 3,000 workers, primarily located in Poland, China, Mexico, France and the United States. The Debtors' March 2006 transformation identified the brakes and suspension business as non-core product lines that no longer fit into the Debtors' future strategic framework and could become more profitable and competitive as stand-alone businesses or as part of another organization with the working capital to invest in and support those businesses. On behalf of Delphi, John Wm. Butler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, submitted to the Court on May 20, 2009: * a "first amendment" to the Master Sale and Purchase Agreement entered between the Debtors and BeijingWest Industries Co., Ltd., a full-text copy of which is available for free at: http://bankrupt.com/misc/Delphi_BrakesMSPAAmendment.pdf * a revised proposed Sale Order, a full-text copy of which is available for free at: http://bankrupt.com/misc/Delphi_BrakesBizSaleRevOrder.pdf The First Amendment to the MSPA contains, among others, a language stating that the "PBGC Purported Liens" refers to any lien or liens claimed by the Pension Benefit Guaranty Corporation to exist against acquired assets of the sellers who are non- debtor affiliates in these Chapter 11 cases, including those purported liens described in the PBGC's response to the Debtors' Motion. These provisions are inserted in the Revised Sale Order: (1) Withdrawal of Tokico (USA), Inc.'s objection to the Debtors' assumption and assignment of its purchase order to BeijingWest under the Brakes Business Sale; and (2) At any time after the entry of the sale order, (i) BeijingWest may not refuse to close or terminate the MSPA by reason of the existence of the PBGC Purported Liens unless the PBGC Purported Liens have been enforced in any local and applicable jurisdiction, and (ii) if any of the PBGC Purported Liens are enforced in any local and Applicable jurisdiction, only then do the PBGC Purported Liens constitute an encumbrance entitling BeijingWest, regardless of materiality of the encumbrance, by notice to the Debtors within 30 days after the date BeijingWest becomes aware of an enforcement, to refuse to close or to terminate the MSPA due to the encumbrance and entitle BeijingWest to the Break-Up Fee. Neither BeijingWest nor the Debtors make any admission as to the extent, validity, priority, or enforceability of the PBGC Purported Liens. In a separate filing, Tokico formally withdrew its objection to the sale motion on May 19, 2009. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 168; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Settles EEOC Lawsuit, Agrees to Pay $80,000 -------------------------------------------------------- Delphi Corporation will pay $80,000 and agree to injunctive relief to settle a disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission, the agency announced. The EEOC had charged that the company violated federal law by subjecting employees to unlawful inquiries into their medical conditions and retaliating against those who objected to the inquiries. In its lawsuit, the EEOC said that Delphi violated the Americans With Disabilities Act because it required workers returning from sick leave to sign releases permitting company representatives to access their medical information. In the case of an employee at Delphi's Rochester-based facility, the EEOC said, his protest of Delphi's policy resulted in his immediate dismissal. The consent decree resolving the case, submitted for approval to U.S. District Judge Michael A. Telesca, provides $80,000 to the dismissed employee and injunctive relief, including changes in Delphi's sick leave policy, training, and monitoring. The lawsuit was filed in U.S. District Court for the Western District of New York on September 28, 2007 (Civil Action No. 07 CV 6430), after the agency investigated, found that discrimination had occurred, and first attempted to reach a voluntary settlement. "The EEOC hopes this settlement encourages employers to review their sick leave policies to ensure that they do not violate the ADA's prohibitions on medical inquiries and examinations," said Spencer Lewis, director of the EEOC's New York District Office. "These provisions are intended to protect all employees from discrimination based on disability or perceived disability." Margaret A. Malloy, the EEOC trial attorney assigned to the case, added, "The EEOC will continue to seek full relief from employers whose policies violate the ADA." According to company information, Troy, Mich.-based Delphi has approximately 133,000 employees and operates 138 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its Web site at http://www.eeoc.gov/ About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi technology is also found in computing, communications, consumer accessories, energy and medical applications. Delphi has approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on December 20, 2007. The Court confirmed the Debtors' First Amended Plan on January 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News, Issue No. 168; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DFI PROCEEDS: Court Sets July 15 Plan Confirmation Hearing ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Indiana will hold a hearing on July 15, 2009, at 11:10 a.m. to consider confirmation of the Joint Plan of Liquidation proposed by DFI Proceeds, Inc., and its official committee of unsecured creditors. Objections to confirmation of the proposed plan must be filed with the Court on or before June 24, 2009. The Court also fixed June 24, 2009, as the last day for the submission of ballots accepting or rejecting the proposed plan. On April 27, 2009, the Court approved the adequacy of the joint disclosure statement filed by the Debtor and the Committee. Plan Terms The Plan implements the distribution of the proceeds from the sale of the Debtor's assets to Land-O-Sun Dairies, LLC, after the payment of Allowed Secured Claims. The sale closed on September 22, 2008. On the Plan's Effective Date, all remaining assets of the Debtor and its estate, including all unencumbered assets and all Cash, shall be transferred to and vest in the Liquidating Trust. From the proceeds held in the Liquidating Trust, the Liquidating Trustee is to make distribution to claims in accordance with the Plan terms. The Plan segregates the claims against and interests in the Debtor into 6 classes: Class 1 Secured Claims Unimpaired Class 2 Non-Tax Priority Claims Unimpaired Class 3 General Unsecured Claims Impaired; Entitled to Vote Class 4 Subordinated 510(c) Claims Impaired and Deemed to Reject Class 5 Subordinated 510(b) Claims Impaired and Deemed to Reject Class 6 Old Equity Interests Impaired and Deemed to Reject General Unsecured Claims will receive from the Liquidating Trustee, in full satisfaction of its claim, its Pro Rata share of the Class 3 Distribution Amount. General Unsecured Claims is the only Class that is entitled to vote to accept or reject the Plan. On the Plan's Effective Date, the Old Equity Interests will be cancelled and each holder thereof will not receive or retain any property or interest on account of said Interests. Holders of Subordinated 510(c) Claims under Class 4 and Subordinated 510(b) Claims under Class 5 will not receive or retain any property under the Plan and are deemed to reject the Plan, and, therefore, are not entitled to vote to accept or reject the Plan. A full-text copy of the disclosure statement explaining the Debtors' Joint Chapter 11 Plan of Reorganization is available at: http://bankrupt.com/misc/DFIProceeds.DSPart1.pdf http://bankrupt.com/misc/DFIProceeds.DSPart2.pdf http://bankrupt.com/misc/DFIProceeds.DSPart3.pdf The Debtors reserve the right to seek confirmation of the Plan pursuant to the "cramdown" provisions under Sec. 1129(b) of the Bankruptcy Code. Under said provision of the Bankruptcy Code, a plan may still be confirmed notwithstanding the non-acceptance thereof by one or more impaired classes, provided that it does not "discriminate unfairly" and is "fair and equitable" with respect to each non-accepting class. About DFI Proceeds Based in Decatur, Ind., Driggs Farms of Indiana Inc. nka. DFI Proceeds, Inc., manufactures frozen desserts & novelties and dairy products. The Company filed for Chapter 11 protection on June 20, 2008 (N.D. Indiana Case No. 08-11955). Daniel J. Skekloff, Esq., Sarah Mustard Heil, Esq., and Scot T. Skekloff, Esq., at Skekloff, Adelsperger & Kleven, LLP, are bankruptcy counsel to the Debtor. Mark A. Warsco, Esq., and Christine M. Marcuccilli, Esq., at Rothberg Logan & Warsco L.L.P., represent the official committee of unsecured creditors. When the Debtor filed for protection from its creditors, it listed assets of $10 million to $50 million and debts of $10 million to $50 million. EZRI NAMVAR: Seeks to Convert Case to Chapter 7 Liquidation ----------------------------------------------------------- Daniel Miller at Los Angeles Business Journal reports that Ezri Namvar is seeking to convert his Chapter 11 reorganization case to Chapter 7 liquidation. Business Journal relates that Mr. Namvar's counsel said in a May 13 hearing that a Chapter 11 bankruptcy, which typically results in a long-term payment plan for creditors, would constrain Mr. Namvar to "a lifetime of servitude" and would make him fail to provide for his family. A hearing will be held on June 3 on the conversion request, says Business Journal. Creditors generally are against the bankruptcy conversion, which could net them next to nothing since Mr. Namvar's properties are encumbered with debt, Business Journal relates, citing people familiar with the matter. Ezri Namvar, Chairman, CEO, is founder and principal shareholder of Namco Capital Group, Inc., a privately held holding company for companies engaged in real estate investments and financial services. Creditors with $7.7 million in claims filed involuntary Chapter 11 petitions on December 22, 2008, against Mr. Namvar and Namco Capital (Bankr. C.D. Calif. Case No. 08-32349, and 08-32333. FIRST MIDWEST: Fitch Downgrades Preferred Stock Rating to 'BB+' --------------------------------------------------------------- Fitch Ratings has downgraded the long-term Issuer Default Ratings of First Midwest Bancorp, Inc. and its subsidiary, First Midwest Bank to 'BBB' from 'BBB+'. The short-term IDRs of 'F2' have been affirmed. The Rating Outlook is Negative. A complete list of ratings follows the end of this release. Fitch has lowered FMBI's long-term ratings and assigned a Negative Rating Outlook based on FMBI's deteriorating credit quality and Fitch's expectation of higher credit costs over the near term. FMBI began reporting deteriorating asset quality in its residential land and development portfolio a year ago as the housing market in the Chicagoland area began to experience significant stress. This portfolio has continued to exhibit considerable weakness, and now represents nearly 60% of the company's nonaccrual assets. However, more recently, signs of weakness in other portfolios have emerged. Most notably, nonaccruing commercial loans increased 113% in the first quarter of 2009, and now represent 2.20% of this portfolio segment. In addition, several commercial real estate categories, including office, retail, and industrial, have deteriorated. Although FMBI has a history of solid operating performance, the need to build reserves given the level of asset quality deterioration will likely erode earnings through higher provisioning expenses. Accordingly, Fitch has downgraded the company's ratings to reflect a weaker credit profile, and assigned a Negative Rating Outlook given the uncertainty surrounding the economic environment and its effects on the bank's credit quality and earnings. Fitch has also widened the notching on FMBI's outstanding hybrid equity, which includes $193 million of preferred stock issued under the Capital Purchase Program and $125 million in trust preferred securities. The widened notching to two notches below the IDR is typical for issuers at the 'BBB' IDR level. Fitch acknowledges several mitigating factors, including solid levels of capital and parent company liquidity; albeit both are enhanced by the recent government preferred stock investment. Prior to considering any narrower notching of preferred securities in the future, Fitch would like to see stabilization in the company's profitability profile. In resolving the Rating Outlook, Fitch will also seek evidence that any credit deterioration is not translating into higher loan losses. Fitch views FMBI's solid capital base, diversified and stable funding profile, and stable net interest margin as areas that help mitigate the aforementioned areas of weakness and help support the ratings at the newly assigned level. FMBI maintains solid levels of regulatory capital, which were augmented in the fourth quarter 2008 with the issuance of nearly $200 million in preferred stock to the U.S. Treasury. FMBI also recently cut its common dividend to $0.01 per share, which will facilitate capital accumulation through annual savings of $42 million. FMBI's funding profile remains good given its core deposit franchise, large investment portfolio, and access to multiple sources of liquidity. Profitability has been pressured in recent periods due to higher provisioning expenses and securities losses; however, FMBI's margin has remained relatively stable during this difficult operating environment and the company's cost structure highlights an efficient operation for the mix of FMBI's business activities. Fitch downgrades these ratings: First Midwest Bancorp, Inc. -- Long-term Issuer Default Rating to 'BBB' from 'BBB+'; -- Individual to 'C' from 'B/C'; -- Subordinated debt to 'BBB-' from 'BBB'; -- Preferred stock to 'BB+' from 'BBB'. First Midwest Bank -- Long-term IDR to 'BBB' from 'BBB+'; -- Individual to 'C' from 'B/C'; -- Long-term deposits to 'BBB+' from 'A-'. First Midwest Capital Trust I -- Preferred stock to 'BB+' from 'BBB'. Fitch affirms these ratings: First Midwest Bancorp, Inc. -- Short-term IDR 'F2'; -- Support '5'; -- Support floor 'NF'. First Midwest Bank -- Short-term IDR 'F2'; -- Short-term deposits 'F2'; -- Support '5'; -- Support floor 'NF'. FLEETWOOD ENTERPRISES: Court OK Sale of Mexicali Assets to Krystal ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California has granted Fleetwood International, Inc., and Fleetwood Travel Trailers of California, Inc. permission to sell their shares of stock in Fleetwood De Mexico S.A. de C.V. and other assets related to Fleetwood Enterprises, Inc.'s non-operating travel trailer manufacturing facility in Mexico to Krystal Enterprises, LLC, and to a principal of Krystal, Mr. Edward P. Grech. Pursuant to the Stock Purchase Agreement, Krystal agreed to arrange the release or indemnification of Fleetwood Enterprises regarding FEI's potential liability as guarantor of the Mexicali Lease. Krystal is a California corporation that manufactures stretch limousines, professional vehicles, and luxury mid-size buses. The Debtors tell the Court that in order to commence production for its summer 2009 sales season, Krystal needs to close on the proposed purchase of the Mexicali Assets by mid-May 2009. As reported in the Troubled Company Reporter on May 11, 2009, Krystal offered to pay $150,000 in cash for the Mexicali Assets. Fleetwood International Inc. owns 49,999 out of the 50,000 outstanding shares of Fleetwood Mexico. Fleetwood Travel Trailers of California, Inc., owns the remaining one share in Fleetwood Mexico. Fleetwood Mexico in not a Chapter 11 debtor. About Fleetwood Enterprises Headquartered Riverside, California, Fleetwood Enterprises -- http://www.fleetwood.com/-- produces recreational vehicles and manufactured homes. Fleetwood motor home products are distributed through a nationwide network of approximately 150 dealers. The Company and 19 of its affiliates filed for Chapter 11 protection on March 10, 2009 (Bankr. C.D. Calif. Lead Case No. 09-14254). Craig Millet, Esq., at Gibson, Dunn & Crutcher LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Ernst & Young LLP as auditor, FTI Consulting Inc. as consultant, and Greenhill & Co. LLC as financial advisor. FLEETWOOD ENTERPRISES: Seeks Sale of Military Housing Business -------------------------------------------------------------- Fleetwood Enterprises, Inc., et al., ask the U.S. Bankruptcy Court for the Central District of California to approve the expedited sale of assets related to their military housing business in Belton, Texas, to CMH Manufacturing, Inc., free and clear of all liens and encumbrances, for the purchase price of $4,500,000, plus: (i) purchaser's agreement to relieve the Debtors of about $4,000,000 of the Debtors' bonding obligations relating to certain work in progress that CMH will complete, and (ii) purchaser's agreement to assume approximately $1,000,000 of the Debtors' warranty obligations with respect to completed military housing projects. There will be no formal auction or overbidding for these assets. The sale is contingent upon CMH being awarded the Fort Sam Houston III Contract in place of the Debtor. The new contract is scheduled to begin May 26, 2009. The Debtors state that as a result of the transaction and the obligations assumed by CMH, they will be able to reduce their existing $25 million in bonding obligations to less than $6 million. The Debtors have been informed that, assuming the reduction in bonding is achieved, its prepetition secured lender and the official committee of unsecured creditors consent to the sale of the Military Housing Assets as well as the consideration of the motion on shortened time. A copy of the Asset Purchase Agreement between CMH, as purchaser, and the Debtors dated as of May 22, 2009, attached as Exhibit A to the motion, is available at: http://bankrupt.com/misc/Fleetwood.CMH.APA.pdf The Court has set a hearing on the motion for Wednesday, May 27, 2009, at 1:30 p.m. (Pacific Time). Headquartered Riverside, California, Fleetwood Enterprises -- http://www.fleetwood.com/-- produces recreational vehicles and manufactured homes. Fleetwood motor home products are distributed through a nationwide network of approximately 150 dealers. The Company and 19 of its affiliates filed for Chapter 11 protection on March 10, 2009 (Bankr. C.D. Calif. Lead Case No. 09-14254). Craig Millet, Esq., at Gibson, Dunn & Crutcher LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Ernst & Young LLP as auditor, FTI Consulting Inc. as consultant, and Greenhill & Co. LLC as financial advisor. FOOTHILLS RESOURCES: Deregisters Unissued Common Shares ------------------------------------------------------- Foothills Resources, Inc., in separate regulatory filings said it would deregister shares of common stock registered under certain registration statements that remain unissued. On June 23, 2008, Foothills Resources filed a Registration Statement on Form S-1, File No. 333-137925, registering 48,700,960 shares of the Company's common stock, par value $0.001 per share, and warrants to acquire 20,597,532 shares of Common Stock. Foothills Resources early this month filed a Post-Effective Amendment No. 2 with the Securities and Exchange Commission to deregister all shares of Common Stock that remain unissued. On July 7, 2008, Foothills Resources filed a Registration Statement on Form S-8, File No. 333-152157, registering 2,000,000 shares of the Company's common stock, par value $0.001 per share available for issuance under the Company's 2006 Equity Incentive Plan and 5,000,000 shares of the Company's Common Stock available for issuance under the Company's 2007 Equity Incentive Plan. The Company also filed a Post-Effective Amendment No. 1 early this month to deregister all shares of Common Stock that remain unissued. Foothills Resources also filed a Form 15 with the SEC canceling its duty to file reports. Foothills Resources, Inc., is engaged in the acquisition, exploration and development of oil and natural gas properties. The company's operations are primarily through its wholly owned subsidiaries, Foothills California, Inc., Foothills Texas, Inc., and Foothills Oklahoma, Inc. On February 11, 2009, Foothills Resources and its wholly owned subsidiaries, Foothills California, Foothills Oklahoma, and Foothills Texas, filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 09-10452). Judge Christopher S. Sontchi handles the Chapter 11 cases. Akin Gump Strauss Hauer & Feld LLP is the Debtors' lead bankruptcy counsel. Norman L. Pernick, Esq., and Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, represent the Debtors as Delaware counsel. The Garden City Group, Inc., is the claims agent for the Debtors. Foothills Resources had $41.1 million in total assets; $79.3 million in current liabilities, and $809,000 in asset retirement obligations; resulting in $39.0 million in stockholders' deficit at December 31, 2008. Foothills Resources listed assets of $89.5 million and debts totaling $78.8 million as of Sept. 30, with $71.2 million owed to secured creditors on term loan and revolving credit agreements. FREDDIE MAC: May Sell Almost $1BB of Commercial-Mortgage Bonds -------------------------------------------------------------- Freddie Mac may sell almost $1 billion of commercial-mortgage bonds backed by multifamily loans on Tuesday to boost the battered apartment sector, Prabha Natarajan at The Wall Street Journal reports, citing a person familiar with the matter. WSJ notes that the transaction would open up a new way for Freddie to support lending in the multifamily market. WSJ relates that apartment and condominium complexes have been the most troubled in the real-estate sector. According to WSJ, Freddie Mac and its sibling Fannie Mae have held multifamily loans on their books without securitizing them. WSJ relates that Fannie Mae has begun securitizing home loans it holds in its portfolio, but hasn't sold them to investors yet. Freddie, by packaging the multifamily loans into tradable bonds, will free up capital so that it can invest in more multifamily loans, WSJ notes. According to the report, Freddie Mac has sold the multifamily loans held in its investment portfolio to a Deutsche Bank Trust, which will package and sell these bonds. The report, citing a person familiar with the matter, states that the deal will be led by Deutsche Bank. The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At December 31, 2008, the Company's balance sheet showed total assets of $850.9 billion and total liabilities of $881.6 billion, resulting in a stockholders' deficit of $30.7 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. Being under Conservatorship, Freddie Mac said it is dependent upon the continued support of Treasury and FHFA to continue operating its business. FREMONT GENERAL: Court OKs Massachusetts, California Settlements ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California on May 14, 2009, approved from the bench: (i) the Final Judgment By Consent between the Commonwealth of Massachusetts, Fremont General Corporation and Fremont Reorganizing Corporation, the Company's indirect wholly- owned subsidiary; and (ii) the Stipulation and Agreement regarding the global and integrated settlement and release of all claims and disputes by and among the Company; FRC; Fremont Compensation Insurance Group, Inc., which is a direct subsidiary of the Company; and the State of California Insurance Commissioner, as statutory liquidator of Fremont Indemnity, and as statutory conservator of Fremont Life Insurance Company in Conservation, an indirect subsidiary of the Company. (A) Massachusetts Attorney General Action In October 2007, the Commonwealth filed a lawsuit in Massachusetts Superior Court in Suffolk County alleging that the Company and FRC, formerly known as Fremont Investment & Loan, engaged in unfair or deceptive practices in connection with the origination and servicing of residential mortgage loans made to residents of Massachusetts. The lawsuit was brought on behalf of the Commonwealth and such borrowers. The complaint sought injunctive relief, equitable relief for such Massachusetts borrowers and civil penalties. Since February 25, 2008, the Company and FRC have been operating under a preliminary injunction issued by the Superior Court, as modified on March 31, 2008, which enjoined the Company and FRC from foreclosing on certain loans made to Massachusetts residents without the approval of the Superior Court and prevented the Company and FRC from selling, transferring, or assigning any Massachusetts residential mortgage loan unless certain conditions were met. Pursuant to the Final Judgment -- entered into on April 17, 2009 -- FRC will pay $10 million to the Commonwealth on the Effective Date. If neither FRC nor Fremont General Credit Corporation, a subsidiary of the Company, is the subject of a bankruptcy proceeding under the Bankruptcy Code as of a date which is approximately 95 days after the Effective Date, and no court has determined that either the Company or FRC has violated any of the terms of the Final Judgment, the Commonwealth will withdraw with prejudice the proof of claim in the estimated amount of $20 million that it previously filed with the Bankruptcy Court on December 12, 2008. In the event that either FRC or FGCC are in bankruptcy proceedings on such date, then the Commonwealth may void the Final Judgment and refund the $10 million as more fully discussed below. To the extent the Final Judgment becomes effective, the Preliminary Injunction will be modified and will become a permanent injunction that will only apply to loans to Massachusetts residents or to loans secured by property in Massachusetts. The parties agree that the entry of the Permanent Injunction may not be construed as, evidence that FRC or the Company used or employed unfair or deceptive acts or practices. Pursuant to the Permanent Injunction, the Company or FRC must provide the Massachusetts Attorney General with prior notice before initiating or advancing a foreclosure on any mortgage loan originated by FRC. If the Attorney General does not provide a written objection, the Company or FRC may proceed with the foreclosure. Before the Company or FRC may sell, transfer or assign any mortgage loan originated by FRC that is secured by any residential property in Massachusetts, they must (i) provide the Attorney General prior notice; (ii) a purchaser or assignee from FRC must agree to be bound by the foreclosure and sale restrictions of the Permanent Injunction; and (iii) a copy of the written assignment must be provided to the Attorney General. In consideration of the Company and FRC's compliance with the provisions of the Final Judgment, upon the entry of Final Judgment by the Superior Court, the Commonwealth will release and forever discharge the Company and FRC from the claims set forth in the Massachusetts Action. If either FRC or FGCC is the subject of a bankruptcy proceeding under the Bankruptcy Code as of a date which is approximately 95 days after the Effective Date, then the Commonwealth may elect to void the release and file a notice with the Superior Court to recommence the Massachusetts Action, provided, however, that the notice must be filed on or before 125 days following the Effective Date. Upon the filing of the notice, the Commonwealth will have the right to immediately recommence litigation against the Company and FRC for any alleged misconduct, including for the conduct set forth in the Massachusetts Action. Before filing the notice with the Superior Court, the Commonwealth must repay to FRC the entirety of the $10 million paid by FRC on the Effective Date. In addition, if the Commonwealth exercises its right to recommence the litigation, then nothing in the Final Judgment will limit the total amount of the claim that may be sought by the Commonwealth in any FRC bankruptcy or the rights of the Company, FRC or FGCC to object to any claim sought by the Commonwealth. (B) Fremont Indemnity Company (In Liquidation) v. Fremont General Corporation, et al.; Fremont Indemnity Company (In Liquidation as Successor in Interest to Comstock Insurance Company) v. Fremont General Corporation, et al.; and Insurance Commissioner of the State of California v. Fremont General Corp. et al. In June 2004, the Commissioner, as statutory liquidator of Fremont Indemnity, filed suit in Los Angeles Superior Court against the Company alleging it improperly utilized certain net operating loss deductions allegedly belonging to Fremont Indemnity. In 2005, the Commissioner filed an additional and separate complaint against the Company on behalf of Fremont Indemnity as successor in interest to Comstock Insurance Company, a former affiliate of Fremont Indemnity, which was subsequently merged into Fremont Indemnity. This case alleged similar causes of action regarding the utilization of the NOLs as in the Fremont Indemnity Case as well as assertions of improper transactions with other insurance subsidiaries and affiliates of Fremont Indemnity. In 2008, FRC was added as a defendant in both the Fremont Indemnity Case and the Comstock Action. As a result of disagreements as to whether Fremont Indemnity, which is in liquidation, or its subsidiaries could be considered as part of the Company's consolidated taxpayer group for federal tax purposes, the Commissioner requested that the Internal Revenue Service issue a private letter ruling to resolve the dispute, which the IRS issued on July 26, 2006. Based upon this IRS private letter ruling, the Commissioner has taken the position that Fremont Indemnity and its subsidiaries should be included in the Company's consolidated taxpayer group and the Company has maintained its objection to such tax treatment. In March 2008, the Commissioner filed a lawsuit in California state court asserting, on behalf of Fremont Indemnity, claims of ownership of substantial portions of certain artwork, including any related proceeds from the sale of such artwork, that at any time were in the possession or control of the Company or any of its affiliates. That state court lawsuit was removed to the Bankruptcy Court on July 11, 2008, and is now a pending adversary proceeding wherein the Commissioner has asserted ownership rights to such artwork and related proceeds. In connection with the actions, the Commissioner filed four proofs of claim with the Bankruptcy Court asserting against the Company all of the claims set forth in the Fremont Indemnity Case, the Comstock Action, the Art Adversary Dispute, and the Tax Consolidation Dispute. Collectively, the liquidated amount of the claims asserted by the Commissioner are approximately $489 million, as well as claims based upon various alleged unliquidated components. On April 17, 2009, the Company, FRC, Fremont Compensation Insurance Group, Inc., which is a direct subsidiary of the Company, and the Commissioner, as the statutory liquidator of Fremont Indemnity and the statutory conservator of Life, entered into a Stipulation and Agreement regarding the global and integrated settlement and release of all claims and disputes. The Fremont Entities and the Commissioner agreed to: -- Tax Matters: Within 20 days of the Stipulation Effective Date, the Fremont Entities will make any necessary requests, enter into any agreements or make any necessary filings with the IRS to document that Fremont Indemnity has been deconsolidated from the group of affiliates of the Company that elect to participate in a consolidated federal taxpayer group so that Fremont Indemnity may utilize on its separate tax returns without limitation or restriction any NOL generated by Fremont Indemnity on or after January 1, 2003. In addition, after the Stipulation Effective Date, the Company will reasonably cooperate with the Commissioner in the preparation, filing, approval and consummation of the statutory liquidation case involving Fremont Indemnity as more fully set forth in the Stipulation. -- Life Stock: On the Stipulation Effective Date, FCIG, as the holder of all of the issued and outstanding stock of Life, will transfer to Fremont Indemnity all of its right, title, and interest in the stock of Life. -- Proofs of Claim: On the Stipulation Effective Date, each of the proofs of claim filed by the Commissioner with the Bankruptcy Court will be withdrawn, disallowed, and expunged in their entirety, with prejudice. The Commissioner will be allowed a $5 million general unsecured non-priority claim in the Company's bankruptcy proceeding, which claim will be the sole and exclusive right to payment the Commissioner, Fremont Indemnity and Life will have against the Company's bankruptcy estate. -- Disposition of the Artwork Adversary Dispute: On the Stipulation Effective Date, the Commissioner will receive $4.1 million of the funds, presently held in escrow, from the sale of certain of the Company's artwork. The Company will receive the remaining proceeds held in an escrow account (approximately $300,000) and ownership rights to all of the remaining artwork, including any future proceeds from the sale or disposition of such artwork. -- Cash Payment: On the Stipulation Effective Date, FRC will pay to Fremont Indemnity $5.0 million in cash. -- Dismissal of Pending Litigation: As soon as practicable after the Stipulation Effective Date, the Commissioner will cause to be dismissed with prejudice all of the aforementioned actions, including any counterclaim or cross -complaint filed, and the Fremont Entities will cause to be dismissed with prejudice any proofs of claim filed in connection with the statutory liquidation case involving Fremont Indemnity. -- Exchange of Releases: Except for the agreements and obligations expressly undertaken or to be performed under the Stipulation, on the Stipulation Effective Date, in consideration of the payments and other consideration recited in the Stipulation, the Commissioner, Fremont Indemnity, Life and the Fremont Entities will mutually release, acquit, and forever discharge each party and certain related parties (subject to specified exceptions) from the claims set forth in the aforementioned actions. Bankruptcy Court approval was the first step in the effectiveness of the settlement agreements. The Final Judgment will become effective once (i) the Bankruptcy Court's order approving the Final Judgment becomes a final, non- appealable order, which can only occur following entry of the order and the expiration of a 10-day period to allow for the filing of any appeal; and (ii) the Massachusetts Superior Court in Suffolk County approves and enters the Final Judgment. The Insurance Stipulation will become effective once (i) the Superior Court of the State of California for the County of Los Angeles assigned to preside over the statutory liquidation case involving Fremont Indemnity and the state court overseeing the conservation of Life approve the Insurance Stipulation; and (ii) the Bankruptcy Court's order, the Liquidation Court's order and the Life Court's order approving the Insurance Stipulation become final, non-appealable orders, following the expiration of any applicable waiting periods. About Fremont General Based in Santa Monica, Calif., Fremont General Corp. (OTC: FMNTQ) -- http://www.fremontgeneral.com/-- was a financial services holding company with $8.8 billion in total assets at September 30, 2007. Fremont General ceased being a financial services holding company on July 25, 2008, when its wholly owned bank subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont Investment & Loan) completed the sale of its assets, including all of its 22 branches, and 100% of its $5.2 billion of deposits to CapitalSource Bank. Fremont General filed for Chapter 11 protection on June 18, 2008, (Bankr. C.D. Calif. Case No. 08-13421). Robert W. Jones, Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq., at Stutman Treister & Glatt, represent the Debtor as counsel. Kurtzman Carson Consultants LLC is the Debtor's Noticing Agent/Claims Processor. Lee R. Bogdanoff, Esq., Jonathan S. Shenson, Esq., and Brian M. Metcalf, at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Official Committee of Unsecured Creditors as counsel. The Debtor filed with the Court an amended schedule of its assets and liabilities on October 30, 2008, disclosing $330,036,435 in total assets and $326,560,878 in total debts. FREMONT GENERAL: Settles $27MM D&O Claims, Insurance Agency Suit ---------------------------------------------------------------- Fremont General Corporation entered into a trilateral stipulation and agreement on May 15, 2009, with Louis J. Rampino, James A. McIntyre, Wayne R. Bailey, John A. Donaldson, Ronald A. Groden, W. Brian O'Hara, and Raymond G. Meyers and the State of California Insurance Commissioner, as statutory liquidator of Fremont Indemnity Company, an indirect subsidiary of the Company that is in liquidation. The parties agree to settle the outstanding litigation between the Rampino Defendants, as former officers and directors of the Company or of Fremont Indemnity, and the Commissioner, as the statutory liquidator of Fremont Indemnity, and to resolve 15 proofs of claim, asserting liquidated amounts that, in the aggregate, exceed $27 million, and that contain substantial contingent and unliquidated components, which were filed by the Rampino Defendants in the Company's bankruptcy proceedings. This Rampino Stipulation has been entered into as part of the Company's initiative to resolve contingent and unliquidated claims, including various litigation matters. The Rampino Stipulation is subject to Bankruptcy Court approval. On October 12, 2006, the Commissioner, as statutory liquidator of Fremont Indemnity, filed a First Amended Complaint in the Los Angeles Superior Court (Case No. BC357691) against the Rampino Defendants, as former directors and officers of Fremont Indemnity, that alleged the Rampino Defendants breached their fiduciary duties by allowing Fremont Indemnity to engage in an inappropriate underwriting scheme that caused injury to Fremont Indemnity's reinsurers, which in turn injured Fremont Indemnity by settlements it made with those reinsurers. Although neither the Company nor any of its affiliates are defendants in the D&O Case, it is possible that the Company could have indemnification obligations to some or all of the Rampino Defendants pursuant to the Company's governing documents and applicable state law. After the Company commenced the Bankruptcy Case, each of the Rampino Defendants filed one or more proofs of claim based upon, among other things, the theory that the Company is liable to indemnify each of the Rampino Defendants for any settlement amounts or judgment that may be entered against the Rampino Defendants in the D&O Case. The Rampino Stipulation will only become effective after the occurrence of these events: (i) the Company files a motion requesting that the Bankruptcy Court approve the Rampino Stipulation, which the Company expects to timely file; (ii) the Commissioner files a motion requesting that the Superior Court of the State of California for the County of Los Angeles assigned to preside over the statutory liquidation case involving Fremont Indemnity approve the Rampino Stipulation; (iii) the Bankruptcy Court and the Liquidation Court each issue orders approving the Rampino Stipulation; (iv) the Bankruptcy Court's order and the Liquidation Court's order approving the Rampino Stipulation become final, non-appealable orders, following the expiration of any applicable waiting periods. The parties agreed to exercise their reasonable best efforts to complete all of these events before June 30, 2009. In accordance with the terms of the Rampino Stipulation and in consideration of the settlement of all claims and disputes among them, the Commissioner, Fremont Indemnity, the Company and the Rampino Defendants agreed to: -- $35 Million Allowed General Unsecured Commissioner Claim On the Effective Date, the Commissioner will be allowed for purposes of voting on any proposed plan of liquidation or reorganization, as the case may be, in the Bankruptcy Case and receiving any distributions made pursuant to the Chapter 11 Plan or otherwise in the Company's bankruptcy case, a general unsecured non-priority claim against the Company for $35 million. However, upon the Commissioner's actual receipt of distributions from the Company's bankruptcy estate totaling $22.0 million, the Allowed Commissioner Claim will be deemed to be satisfied in full, and the Commissioner will have no further right to any distributions or payment from the Company's bankruptcy estate on account of the D&O Case. The Allowed Claim will be the sole and exclusive right to payment that the Commissioner will have against the Company's bankruptcy estate on account of the D&O Case. The Allowed Claim will be in addition to the $5 million general unsecured non- priority claim against the Company's bankruptcy estate for an unrelated pending settlement of outstanding disputes between the Company and the Commissioner, in its capacity as statutory liquidator of Fremont Indemnity and statutory conservator of Fremont Life Insurance Company in Conservation, an indirect subsidiary of the Company. -- Final Disallowance of the Proofs of Claim On the Effective Date, each of the Rampino Defendants' proofs of claim will be deemed to have been withdrawn, disallowed, and expunged in their entirety and with prejudice. -- Allowed General Unsecured SERP Claims On the Effective Date, Messrs. Bailey, Rampino, McIntyre, Meyers will each be allowed for purposes of voting on any Chapter 11 Plan and receiving any distributions made pursuant to such Chapter 11 Plan or otherwise in the Company's bankruptcy case, a general unsecured non-priority claim against the Company: Bailey $4.6 million Rampino $5.6 million McIntyre $5.2 million Meyers $2.3 million However, upon Messrs. Bailey, Rampino, McIntyre, and Meyers' actual receipt of distributions from the Company's bankruptcy estate totaling: Bailey $2.874 million Rampino $3.470 million McIntyre $3.227 million Meyers $1.420 million, the Allowed SERP Claims will be deemed to be satisfied in full, and Messrs. Bailey, Rampino, McIntyre, and Meyers will have no further right to any distributions or payment from the Company's bankruptcy estate. The Allowed SERP Claims will constitute only general unsecured non-priority claims and Messrs. Bailey, Rampino, McIntyre, and Meyers will have no right to any distribution or payment from either the Fremont General Corporation Supplemental Executive Retirement Plan, as amended, or the Fremont General Corporation Supplemental Executive Retirement Plan II, as amended. -- Dismissal of Pending Litigation As soon as is practicable after the Effective Date, the Commissioner and Fremont Indemnity will cause the D&O Case to be dismissed with prejudice, with all parties thereto to bear their own respective attorneys' fees and costs. In addition, Messrs. Bailey, Rampino, McIntyre, and Meyers will cause each of their respective adversary proceedings pending before the Bankruptcy Court to be dismissed with prejudice against all defendants thereto other than the Company, with all parties thereto to bear their own respective attorneys' fees and costs, with dismissal against the Company conditioned upon Messrs. Bailey, Rampino, McImyre, and Meyers receiving full payment on their Allowed SERP Claims. -- Exchange of Releases Except for the agreements and obligations expressly undertaken or to be performed under the Rampino Stipulation, on the Effective Date, in consideration of the payments and other consideration recited in the Rampino Stipulation, the Commissioner, Fremont Indemnity, the Company and the Rampino Defendants will mutually release, acquit, and forever discharge each other and certain related parties from any and all past, present, and future claims, arising in whole or in part out of any facts, circumstances, or events in existence on or before the Effective Date provided, however, that nothing in the Rampino Stipulation is intended to release any claims that any of the parties may have with respect to any insurance policy issued by any insurer of any of the parties. In addition, the Rampino Stipulation will not operate to release any claims that the Rampino Defendants' may have against the Company's bankruptcy estate as a result of their ownership of Company common stock or other securities of the Company or any of its affiliates. About Fremont General Based in Santa Monica, Calif., Fremont General Corp. (OTC: FMNTQ) -- http://www.fremontgeneral.com/-- was a financial services holding company with $8.8 billion in total assets at Sept. 30, 2007. Fremont General ceased being a financial services holding company on July 25, 2008, when its wholly owned bank subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont Investment & Loan) completed the sale of its assets, including all of its 22 branches, and 100% of its $5.2 billion of deposits to CapitalSource Bank. Fremont General filed for Chapter 11 protection on June 18, 2008, (Bankr. C.D. Calif. Case No. 08-13421). Robert W. Jones, Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq., at Stutman Treister & Glatt, represent the Debtor as counsel. Kurtzman Carson Consultants LLC is the Debtor's Noticing Agent/Claims Processor. Lee R. Bogdanoff, Esq., Jonathan S. Shenson, Esq., and Brian M. Metcalf, at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Official Committee of Unsecured Creditors as counsel. The Debtor filed with the Court an amended schedule of its assets and liabilities on October 30, 2008, disclosing $330,036,435 in total assets and $326,560,878 in total debts. FREMONT GENERAL: Still Evaluating Proponents for Ch. 11 Plan ------------------------------------------------------------ Fremont General Corporation failed to file its Quarterly Reports on Form 10-Q for the quarter ended March 31, 2009, by the May 15, 2009 due date and does not expect to make that filing within the 15-day extension permitted by the rules of the U.S. Securities and Exchange Commission. Fremont General noted that it is still evaluating prospective plan proponents for a plan of reorganization to determine whether the implementation of any plan is in the best interest of the Company, its creditors and its various other constituencies. Fremont General currently has the exclusive right to file and solicit acceptances of a reorganization plan. The Exclusive Periods end June 1, 2009. The Company said it cannot provide any assurance that any plan would be acceptable to the Company's constituents or that any plan of reorganization will be confirmed by the Bankruptcy Court. The Company also has not completed its consolidated financial statements for the year ended December 31, 2008, and the quarters ended March 31, 2008, June 30, 2008, and September 30, 2008. The Company said it is reviewing the feasibility of completing its 2008 consolidated financial statements in the context of the Company's bankruptcy filing. As a result of these matters confronting the Company, the Company is not able to determine when it will be able to file its March 10-Q with the SEC. The Company also is not in a position to quantify any significant change in results of operations for the quarter ended March 31, 2009, as compared to the prior year at this time. About Fremont General Based in Santa Monica, Calif., Fremont General Corp. (OTC: FMNTQ) -- http://www.fremontgeneral.com/-- was a financial services holding company with $8.8 billion in total assets at Sept. 30, 2007. Fremont General ceased being a financial services holding company on July 25, 2008, when its wholly owned bank subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont Investment & Loan) completed the sale of its assets, including all of its 22 branches, and 100% of its $5.2 billion of deposits to CapitalSource Bank. Fremont General filed for Chapter 11 protection on June 18, 2008, (Bankr. C.D. Calif. Case No. 08-13421). Robert W. Jones, Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq., at Stutman Treister & Glatt, represent the Debtor as counsel. Kurtzman Carson Consultants LLC is the Debtor's Noticing Agent/Claims Processor. Lee R. Bogdanoff, Esq., Jonathan S. Shenson, Esq., and Brian M. Metcalf, at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Official Committee of Unsecured Creditors as counsel. The Debtor filed with the Court an amended schedule of its assets and liabilities on October 30, 2008, disclosing $330,036,435 in total assets and $326,560,878 in total debts. FRONTIER AIRLINES: Asks Court to Approve Amended WestLB Facility ---------------------------------------------------------------- Frontier Airlines Holdings, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York under Section 363(b) of the Bankruptcy Code to perform under these amended agreements with WestLB AG, New York Branch: (a) Amendment No. 4 to the WestLB Facility or Credit Agreement dated as of March 21, 2005; (b) Amendment No. 1 to the Spare Parts Mortgage and Security Agreement dated as of March 21, 2005; and (c) Amendment No. 1 to the Amended and Restated Secured Superpriority Debtor-in-Possession Credit Agreement dated as of April 1, 2009, between and among the Debtors, the lenders party and Wells Fargo Bank Northwest, National Association, as administrative agent. Full text copies of the Amended Agreements are available for free at: * http://bankrupt.com/misc/FAH_AmendmentNo4WestLBFacility.pdf * http://bankrupt.com/misc/FAH_AmendmentNo1MortgagePact.pdf * http://bankrupt.com/misc/FAH_AmendmentNo1CreditPact.pdf Damian S. Schaible, Esq., at Davis Polk & Wardwell, in New York, relates that pursuant to the WestLB Facility, WestLB has issued letters of credit on the Debtors' behalf that are required in the ordinary course of the Debtors' businesses. There is presently $12,053,579 worth of L/Cs outstanding under the WestLB Facility, which are principally issued to state and local governmental authorities as part of airport lease agreements and workers' compensation insurance underwriters. Pursuant to the WestLB Mortgage, substantially all of the Debtors' spare aircraft and engine parts serve as collateral for the WestLB Facility. According to Mr. Schaible, the WestLB Facility presently matures on July 31, 2009, prior to which, the Debtors must replace each of the L/Cs outstanding. Two of the outstanding L/Cs are scheduled to be renewed even prior to the Maturity Date, consisting of: (1) an L/C in the face amount of $4,500,000 issued to AIG Aviation, Inc.; and (2) an L/C in the face amount of $1,500,000 issued to ACE American Insurance Company. At the Debtors' request, WestLB has agreed to renew these letters of credit in order to provide the Debtors sufficient time to replace them in the ordinary course. Since WestLB's exposure under the Remaining Letters of Credit will be significantly smaller than it was under all of the L/Cs previously issued under the WestLB Facility, the Debtors and WestLB will amend the WestLB Mortgage to release WestLB's lien on a portion of the Spare Parts. Mr. Schaible reasons out that the extension of the Remaining Letters of Credit, pursuant to the WestLB Amendment, "will permit the Debtors to comply with letter of credit or surety requirements in vital operating agreements on terms not generally available in the current market." The WestLB Facility and the WestLB Mortgage are prepetition obligations of the Debtors. None of the Amendments constitute (i) the Debtors' assumption of the WestLB Facility or the WestLB Mortgage, (ii) an agreement to assume the WestLB Facility or the WestLB Mortgage, or (iii) a postpetition reaffirmation of the WestLB Facility or the WestLB Mortgage, Mr. Schaible clarifies. Mr. Schaible further relates that the DIP Credit Facility has been amended in various respects, including on April 1, 2009, in order to, among other things, obtain postpetition refinancing of up to $40 million with an outside maturity date of December 1, 2009. Because the DIP Credit Facility, as previously amended, contemplated that the WestLB Facility would not be extended past its original maturity date, the DIP Amendment is required in order to permit the Debtors to enter into the WestLB Amendment. Furthermore, the Debtors seek to reinstate, as against Frontier Airlines Holdings, Inc., WestLB's Claim Nos. 1361 and 1634 in connection with the WestLB Mortgage and certain aircraft transactions between the parties. The Claims were previously expunged by the Court in November 2008, at the Debtors' behest. Mr. Schaible elaborates that the Debtors and WestLB recognize that the Debtors' objection to the Claims was based upon the classification of the Claims as being asserted against Frontier, instead of against Frontier Holdings. Accordingly, the Debtors have agreed that although the Claims were expunged against Frontier, the Claims should be reinstated against Frontier Holdings, without prejudice. Since the Claims are merely "contingent guaranty Claims" that relate to the Agreements and are protected under Section 1110 of the Bankruptcy Code, reinstating the Claims against Frontier Holdings is appropriate, Mr. Schaible tells Judge Drain. However, Mr. Schaible says, the reinstatement of the Claims will not constitute an allowance of the Claims or prejudice in any way the right of the Debtors to object to the Claims on any grounds. The Debtors also ask the Court to convene an expedited hearing on May 27, 2009, to consider their request. "It is important that the Debtors receive the relief requested . . . expediently because [they] need to have assurance that the Remaining Letters of Credit need not be replaced and will be extended past their present expiry dates," Mr. Schaible avers. About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Court Extends Exclusivity Periods to October 9 ----------------------------------------------------------------- Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District New York extended the periods within which Frontier Airlines Holdings, Inc., and its debtor-affiliates may: (1) file a plan of reorganization through October 9, 2009; and (2) solicit and obtain acceptances of that plan through December 9, 2009. The Debtors have noted that the Extensions will allow them to: * continue to refine and implement their business model to deliver both a more efficient cost structure and future revenue growth; * finish the implementation of the Debtors' successful Restructuring initiatives; * finish the process of analyzing, rationalizing and, where appropriate, renegotiating with parties to the Debtors' executory contracts and related obligations; * continue the evaluation and reconciliation of the more than 1,400 proofs of claim filed in the Chapter 11 cases; * structure, secure and negotiate exit financing sufficient to permit emergence from Chapter 11 and a successful and sustained operations post-emergence; and * develop a plan of reorganization reflecting and effectuating the Debtors' initiatives and providing value to their stakeholders. Ultimately, the Extended Exclusive Periods will prevent the necessity of having to formulate a Chapter 11 plan prematurely, while ensuring that the plan best addresses the interests of the Debtors, their employees, creditors and estates. The Debtors also filed with the Court a declaration stating that there were no objections or responses to their Extension request. About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Primeflight Sells $1.4MM Claim to ASM Capital ---------------------------------------------------------------- The Clerk of Court Vito Genna informed parties-in-interest in the bankruptcy cases of Frontier Airlines Holdings, Inc., and its debtor-affiliates that Claim No. 367, filed by Primeflight Aviation Services, Inc., has been transferred as of May 6, 2009, to ASM Capital LP. Primeflight asserted that it is transferring "all of its right, title, benefit and interest in Claim No. 367 for $1,40,133," to ASM Capital. Absent any objections, ASM Capital will be substituted as the original Claimant without further Court order, Mr. Genna noted. About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: US Trustee Wants Reports Before Fees Are Paid --------------------------------------------------------------- Diana G. Adams, United States Trustee for Region 2, objects to the payment -- as opposed to the allowance -- of compensation and reimbursement of expenses for the period December 1, 2008 through March 31, 2009, in the bankruptcy cases of Frontier Airlines Holdings, Inc., and its debtor-affiliates "until the Debtors are current with the filing of all monthly operating reports and the payment of all quarterly fees." Ms. Adams relates that the Debtors' consolidated monthly operating report for the period ended March 31, 2009, reported a net loss of $129 million, and a cumulative net loss of $237 million since the Petition Date. The Debtors also disclosed "Cash and cash equivalents" of $71 million as of March 31, 2009, she added. As of May 2009, Frontier Airlines Holdings, Inc., and Lynx Aviation, Inc., have outstanding quarterly fees of $325 and $20,000, due for the first quarter of 2009, pursuant to Section 1930(a)(6) of the Judiciary and Judicial Procedures Code, Ms. Adams told the Court. Ms. Adams also asks the Court to reduce any fees awarded to the Debtors' professionals "by a percent reduction pending the final resolution of [the Chapter 11 cases]." She explains that the results that will be achieved serve as an important factor in determining the success of the efforts of the Applicants. "However, because these results are still unknown . . . a percentage reduction is proper at this time," Ms. Adams contends, citing In re Bank of New England Corp., 134 B.R. 450, 459 (Bankr. D. Mass. 1991). About Frontier Airlines Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provides air transportation for passengers and freight. It operates jet service carriers linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, as well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No. 08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Restructuring Deal Ratified by CAW Members ---------------------------------------------------------- CAW members working at General Motors in Oshawa, Windsor, St. Catharines and Woodstock, Ontario have voted overwhelmingly in favour of a new collective agreement, ratifying the deal by 86 per cent after a series of meetings were held over the past two days. CAW President Ken Lewenza said this new deal should provide a much-needed sense of security to the thousands of active members and tens of thousands of retirees at General Motors in Canada. "This has been a grueling restructuring process, and no one has felt that more than our members and retirees," Lewenza said. "Although we were forced to make a number of important sacrifices, the support we received from our members is proof that they recognize the incredible challenges the industry is facing, but more importantly that they are prepared to stand by each other and stand with their union." Lewenza credited the solidarity and activism of CAW members who held demonstrations across the province in recent weeks as having played a critical role in pushing the restructuring talks forward. The deal includes cost-saving provisions affecting cash compensation, health benefits, other non-wage benefits, work practices and productivity improvements as well as a comprehensive restructuring of the company's pension plan. CAW Local 222 President and CAW-GM Master Bargaining Committee Chairperson Chris Buckley said the restructuring deal will help secure the company's financial footing in Canada and protect thousands of Canadian jobs in the face of a possible bankruptcy protection filing. "This deal has provided us the path on which we can move forward, to ensure not only our members but all workers impacted by the auto industry feel a bit more secure at a time of tremendous economic uncertainty," Buckley said. The ratification results for each location are: -- CAW Local 636, Woodstock -- Production: 87 per cent in favour -- Skilled Trades: 75 per cent in favour -- Combined total: 86.5 per cent in favour -- CAW Local 1973, Windsor -- Production: 97.2 per cent in favour -- Skilled Trades: 96.2 per cent in favour -- Combined total: 97 per cent in favour -- CAW Local 199, St. Catharines -- Production: 86.5 per cent in favour -- Skilled Trades: 87 per cent in favour -- Combined total: 86.7 per cent in favour -- CAW Local 222, Oshawa -- Production: 85 per cent in favour -- Skilled Trades: 73 per cent in favour -- Combined total: 82 per cent in favour -- Overall combined total: 86 per cent in favour About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the Company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors presented the U.S. Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the Company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 Going Concern Doubt Deloitte & Touche LLP, has said there is substantial doubt about GM's ability to continue as a going concern after reviewing GM's 2008 financial report. Deloitte cited the Company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the Company's obligations and sustain the its operations. It said GM's future is dependent on the Company's ability to execute the Company's Viability Plan successfully or otherwise address these matters. If the Company fails to do so for any reason, the Company would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code. Standard & Poor's Ratings Services on April 10 lowered its issue- level rating on GM's $4.5 billion senior secured revolving credit facility to 'CCC-' (one notch above the 'CC' corporate credit rating on the company) from 'CCC'. It revised the recovery rating on this facility to '2' from '1', indicating its view that lenders can expect substantial (70% to 90%) recovery in the event of a payment default. The corporate credit rating remains unchanged, at 'CC', reflecting its view of the likelihood that GM will default -- through either a bankruptcy or a distressed debt exchange. Moody's Investors Service said February 18 that the risk of a bankruptcy filing by GM and Chrysler remains high. The last rating action on GM and Chrysler was a downgrade of their Corporate Family Ratings to Ca on December 3, 2008. GENERAL MOTORS: Gov't May Name Preferred Opel Bidder by Wednesday ----------------------------------------------------------------- Marcus Walker and John D. Stoll at The Wall Street Journal report that the German government is hoping to name its preferred bidder for General Motors Corp.'s Adam Opel GmbH by Wednesday night. According to WSJ, German Chancellor Angela Merkel said on Monday that decisions were needed by the middle of the week so that Opel wouldn't be caught up in possible GM insolvency proceedings in the U.S. WSJ notes that the revelation of a favored bidder would open the way for the German government to provide interim financing that would let Opel continue operating. WSJ states that several high-ranking German politicians and Opel labor leaders expressed their support for the firm, making that company the front-runner in the the bidding for Opel's assets. According to WSJ, Magna International is bidding jointly with OAO Sberbank. It is proposing to acquire Opel, its British sister company Vauxhall, and Chevrolet assets in Russia, says WSJ. Magna International, WSJ relates, also wants to form a car-production alliance with Russian car maker OAO GAZ. Fiat SpA, WSJ notes, has drawn skepticism from Opel workers and some German politicians, even though Fiat already scaled down its job-cutting plans. According to WSJ, the outlook for a third bidder, RHJ International SA, dimmed when the chancellor's spokesperson, Ulrich Wilhelm, said that the company's proposals weren't as detailed as Magna's or Fiat's. RHJ has met with German officials, but not with the chancellor, WSJ says, citing Mr. Wilhelm. Opel Is Better Off Bankrupt, Minister Says The Local reports that German Economy Minister Karl-Theodor zu Guttenberg said that all three bids for Opel have shortcomings. He suggested that it might be better if Opel filed for bankruptcy, The Local states, citing Minister Guttenberg. According to The Local, Minister Guttenberg said that he wasn't convinced that the three bidders would ensure that bridge loans provided by the German government wouldn't be wasted. The repot quoted Minister Guttenberg as saying, "We must first have a high degree of certainty that the significant tax money we will have to provide is not lost. From my point of view, none of the three offers so far provides this certainty in a sufficient way.... If these deficits were to remain, an orderly insolvency would clearly be the better solution -- it also could open opportunities for the future of Opel." About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the Company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors presented the U.S. Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the Company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 Going Concern Doubt Deloitte & Touche LLP, has said there is substantial doubt about GM's ability to continue as a going concern after reviewing GM's 2008 financial report. Deloitte cited the Company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the Company's obligations and sustain the its operations. It said GM's future is dependent on the Company's ability to execute the Company's Viability Plan successfully or otherwise address these matters. If the Company fails to do so for any reason, the Company would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code. Standard & Poor's Ratings Services on April 10 lowered its issue- level rating on GM's $4.5 billion senior secured revolving credit facility to 'CCC-' (one notch above the 'CC' corporate credit rating on the company) from 'CCC'. It revised the recovery rating on this facility to '2' from '1', indicating its view that lenders can expect substantial (70% to 90%) recovery in the event of a payment default. The corporate credit rating remains unchanged, at 'CC', reflecting its view of the likelihood that GM will default -- through either a bankruptcy or a distressed debt exchange. Moody's Investors Service said February 18 that the risk of a bankruptcy filing by GM and Chrysler remains high. The last rating action on GM and Chrysler was a downgrade of their Corporate Family Ratings to Ca on December 3, 2008. GENERAL MOTORS: Magna Int'l Submits EUR700 Million Offer for Opel ----------------------------------------------------------------- Magna International Inc. confirmed that, together with Sberbank Rossii, it has submitted a non-binding indicative offer for Opel. The offer contemplates a total investment by Magna and Sberbank of Euro 700 million, a portion of which would be guaranteed by the German government. Under the offer, the proposed equity interests in Opel would be: General Motors -- 35%; Sberbank -- 35%; Magna -- 20%; and Opel employees -- 10%. General Motors and the German government are reviewing and considering offers submitted this week and will determine the next steps in the sale process. There is no assurance that any transaction will result from Magna's current involvement. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on November 10, 2008, General Motors Corporation's balance sheet at September 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on November 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, Dominion Bond Rating Service placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. GENESIS WORLDWIDE: Closes Private Placement of C$1.500 Million -------------------------------------------------------------- Genesis Worldwide Inc. has closed its previously announced private placement of C$1,500,000 principal amount of secured convertible debentures. The proceeds of the private placement will be used for working capital purposes. The Debentures were issued to Codding Enterprises, L.P., as to $1,200,000 Cdn. principal amount, Bradley Baker as to $50,000 Cdn. principal amount, Codding Baker Investments Inc. as to $25,000 Cdn. principal amount, the Constance L. Codding Trust as to $25,000 principal amount, the Baker Family Trust as to $25,000 Cdn. principal amount and an arm's length party as to $175,000 Cdn. principal amount. The Debentures will mature on November 22, 2010, bear simple interest at the rate of 10% per annum (payable on the earlier of conversion or maturity) and be convertible, at any time, at the option of the holders into an aggregate of 6,198,347 common shares of the Corporation at a conversion price of $0.242 Cdn. per share, subject to standard anti-dilution provisions. The common shares of the Corporation issuable upon the conversion of the Debentures will represent approximately 20.01% of the 30,982,858 currently issued and outstanding common shares of the Corporation on a non- diluted basis. Each Debenture is secured by a general security interest in all of the assets of Genesis which ranks subsequent to the security interest previously granted by Genesis to its secured lender and pari passu with the security interest securing the $1,534,742 Cdn. principal amount secured convertible debenture (the "Original Debenture") of the Corporation currently held by Codding and the security interests securing the other Debentures. The Debentures will automatically convert into common shares of the Corporation at a conversion price of $0.242 Cdn. per share, subject to standard anti-dilution provisions, if the Corporation completes an equity financing or financings raising aggregate gross proceeds of $1,500,000 Cdn. or greater. In addition to the Original Debenture, which is currently convertible into 6,341,909 common shares of the Corporation, Codding is also the registered and beneficial holder of 1,051,400 common shares in the capital of the Corporation. Prior to the private placement, assuming only the conversion of the Original Debenture, Codding held an aggregate of 7,393,309 common shares of the Corporation representing approximately 19.81% of the issued and outstanding common shares of the Corporation. As a result of the issuance to Codding of $1,200,000 Cdn. principal amount of the Debentures, on a partially-diluted basis, assuming only the conversion of the Original Debenture and all of the Debentures, Codding holds 12,351,987 common shares of Genesis, representing approximately 28.38% of the issued and outstanding shares of Genesis. Codding currently has two representatives on the board of directors of the Corporation, being Bradley E. Baker and Richard E. Pope. Bradley E. Baker, the CEO of Codding and a director of Genesis, exercises control or direction over the securities of Genesis held by Codding, and also exercises control or direction over the securities of Genesis owned by Codding Baker Investments Inc., the Constance L. Codding Trust and the Baker Family Trust. As a result, on a partially-diluted basis, assuming only the conversion of the Original Debenture and all of the Debentures, Bradley E. Baker exercises control or direction over an additional 516,528 common shares of Genesis, representing approximately 1.20% of the issued and outstanding shares of Genesis. Due to the fact that Bradley E. Baker, Codding, and certain other entities, the securities owned by which are subject to the control and direction of Bradley E. Baker, the private placement was a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. The Corporation relied on the exemptions from the valuation and minority approval requirements of MI 61-101 contained in paragraph (a) of Section 5.5 and paragraph (a) of Section 5.7, respectively, of MI 61-101 as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the private placement exceeded 25% of the Corporation's market capitalization. The closing occurred on May 22, 2009, as the Corporation requires the working capital that will be provided by the proceeds of the private placement. About Genesis Worldwide Headquartered in Callery, Pennsylvania, Genesis Worldwide II, Inc. -- http://www.gen-world.com/-- designs, engineers and manufactures high-quality metal coil processing equipment through its Herr-Voss Stamco(R) business unit. The company also provides mill roll reconditioning, texturing and grinding services in addition to its rebuild, repair and spare parts business. Genesis II operates seven manufacturing facilities located in Pennsylvania, Ohio, Indiana and California. Headquartered in Dayton, Ohio, Genesis Worldwide Inc. (TSX/AIM: GWI) -- http://www.genesisworldwide.com/-- fka The Monarch Machine Tool Company, engineers and manufactures high quality metal coil processing and roll coating and electrostatic oiling equipment. Genesis Worldwide and its debtor-affiliates filed for chapter 11 protection on Sept. 17, 2001 (Bankr. S.D. Ohio Case No. 01-36605). Nick V. Cavalieri, Esq., at Bailey Cavalieri LLC, represents the Debtors in their chapter 11 proceedings. Daniel M Anderson, Esq., at Schottenstein Zox & Dunn represents the Official Committee of Unsecured Creditors. As of June 30, 2001, the Debtors reported assets totaling $122,766,000 and debts totaling $121,999,000. At June 30, 2007, Genesis WorldWide Inc. balance sheet total assets of $15,994,774 and total liabilities of $19054,251 resulting to a $3,059,477 total shareholders' deficit. GEORGIA GULF: Moody's Downgrades Default Rating to 'Caa3/LD' ------------------------------------------------------------ Moody's Investors Service lowered Georgia Gulf Corporation's Probability of Default Rating from Caa3 to Caa3/LD reflecting the deemed limited default due to the non-payment of interest on its 9.5% Guaranteed Sr. Unsecured Notes due 2014 and the 10.75% Sr. Subordinated Notes due 2016. Georgia Gulf is currently operating under a forbearance agreement with these noteholders and this debt is subject to an exchange offer. Moody's also affirmed GGC's Corporate Family Rating of Caa2, the B3 ratings on its senior secured first lien debt and the C ratings on its unsecured and subordinated notes. The outlook remains negative. On March 31, 2009, Georgia Gulf commenced a private exchange offer. This offer, which Moody's has deemed to be a distressed exchange, could exchange up to $800 million of the company's senior unsecured and subordinated notes (all of the notes outstanding) for $250 million of second lien notes. On April 14, 2009, the company announced it would withhold $34 million interest payments on the 2014 and 2016 notes. The indentures for these notes allowed for a 30-day grace period prior to issuing a notice of default and accelerating the debt. GGC also amended it secured facilities to permit it to withhold this interest payment. On May 13, 2009, GGC announced that it had entered into forbearance agreements with all senior unsecured and subordinated noteholders that would delay the acceleration of any notes prior to June 15, 2009. Coincident with the forbearance agreements, GGC extended the early participation deadline and the expiration date of their exchange offers to June 1, 2009 (noteholders who tendered by the early participation deadline would also get a proportionate share of 6.9 million shares of common stock). These exchange offers are subject to certain conditions, which GGC may waive, including the condition that it receives tenders and consents for at least 95% of each of the outstanding unsecured and subordinated note issues. Moody's notes that Georgia Gulf only needs tenders and consents for 50.1% of each issue to modify their respective covenants. If GGC has not reached agreement with noteholders on the terms of the tender offer before June 15, 2009, noteholders could accelerate their indebtedness and this would constitute a cross default under GGC's other note issue and senior secured credit facility, permitting all debt holders to accelerate their indebtedness. In the event of an acceleration, GGC would be required to immediately explore alternatives including a potential reorganization or restructuring under bankruptcy laws. A successful completion of the tender offer on the current terms could potentially have a positive impact on GGC's CFR as credit metrics would improve significantly (pro forma 2008 Net Debt/EBITDA would decline to 5.2x from 7.7x; these metrics incorporate Moody's Standard Analytical Adjustments). However, the terms of this exchange offer are subject to modification and there is significant uncertainty over GGC's ability to obtain tenders and consents for 95% of each issue (only 3% of the notes have been tendered). Ratings lowered: Georgia Gulf Corporation -- Probability of Default Rating to Caa3/LD from Caa3 Ratings affirmed: Georgia Gulf Corporation -- Corporate Family Rating at Caa2 -- Guaranteed Senior Secured Revolving Credit Facility at B3 -- Guaranteed Senior Secured Term Loan at B3 -- Guaranteed Senior Unsecured Notes at C -- Guaranteed Senior Subordinated Notes at C The last rating action on Georgia Gulf Corporation was on April 1, 2009 when Moody's downgraded the ratings of Georgia Gulf's senior unsecured notes of and its subordinated notes to C (from Caa3 and Ca, respectively) following the announcement of an exchange offer by the company. Georgia Gulf Corporation, headquartered in Atlanta, Georgia, is a producer of commodity chemicals including chlorovinyls (chlorine, caustic soda, vinyl chloride monomer, polyvinyl chloride resins and vinyl compounds), PVC fabricated products (pipe, siding, window profiles, plastic lumber, etc.), and aromatics (cumene, phenol and acetone). GHOST TOWN: May Obtain DIP Financing of Up To $500,000 ------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of North Carolina has granted Ghost Town Partners, LLC, permission to obtain secured postpetition financing of up to $500,000 from Resurrection Partners, LLC. The DIP Lenders' secured position will be subject to and junior to the first lien of Branch Banking & Trust Company. The financing is being made in anticipation of the park's special mechanical needs in time for the opening in May 2009. The park will require expenditures significantly in excess of $100,000. Based in Waynesville, North Carolina, Ghost Town Partners, LLC, operates an amusement park. The Debtor filed for Chapter 11 protection on March 11, 2009 (Bankr. W. D. N.C. Case No. 09- 10271). David G. Gray, Esq., at Westall, Gray, Connolly & Davis, P.A., and William E. Cannon, Jr., at Brown, Ward & Haynes P.A., represent the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor listed total assets of $13,035,300 and total debts of $12,305,672. GLOBAL GROUP: Has Until May 29 to File Schedules and Statements --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas extended until May 29, 2009, Global Group, Inc., time to file its schedules of assets and liabilities, schedules of current income and expenditures, schedules of executory contracts and unexpired leases, statements of financial affairs, and lists of the Debtor's equity security holders. The Debtor related that the extension is in the best interest of the estate, creditors and parties in interest. Fort Worth, Texas-based Global Group, Inc., filed for Chapter 11 protection on May 4, 2009 (Bankr. N. D. Tex. Case No. 09-42719). Jeff P. Prostok, Esq., at Forshey & Prostok, LLP represents the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $10 million to $50 million. GLOBAL GROUP: Proposes Forshey & Prostok as Bankruptcy Counsel -------------------------------------------------------------- Global Group, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas for authority to employ Forshey & Prostok, LLP, as counsel. F&P will, among other things: a) advise the Debtor of its rights, powers and duties as debtor and debtor-in-possession; b) advise the Debtor concerning, and assist in the negotiation and documentation of, agreements, debt restructurings and related transactions; and c) review the nature and validity of liens asserted against the property of the Debtor and advise the Debtor concerning the enforceability of the liens. Jeff P. Prostok tells the Court that the hourly rates of F&P personnel are: Partners $475 Associates $225 - $350 Of Counsel $195 - $375 Paralegals $125 - $175 Pre-bankruptcy, F&P received a $91,758 general retainer for prepetition services and costs. F&P has not received any other payment for professional services rendered or expenses incurred on behalf of the Debtor. Mr. Prostok assures the Court that F&P is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Prostok can be reached at: Forshey & Prostok, LLP 777 Main St., Suite 1290 Ft. Worth, TX 76102 Tel: (817) 877-8855 About Global Group, Inc. Fort Worth, Texas-based Global Group, Inc., filed for Chapter 11 protection on May 4, 2009 (Bankr. N. D. Tex. Case No. 09-42719). Jeff P. Prostok, Esq., at Forshey & Prostok, LLP, represents the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $10 million to $50 million. GLOBAL GROUP: Wants Access to Prepetition Lender's Cash Collateral ------------------------------------------------------------------ Global Group, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas for authority to: -- access the cash collateral in which the prepetition lender assets a security interest; and -- grant adequate protection. The Debtor has unpaid obligations to Bank of Texas, N.A., pursuant to four promissory notes: a) $1 million pursuant to that promissory note dated April 17, 2002; b) $3.5 million pursuant to that promissory note dated September 2, 2004; c) $1.2 million pursuant to that promissory note dated September 30, 2004; and d) $2.5 million pursuant to that promissory note dated March 15, 2005. The loans are secured by the Debtor's inventory, accounts and proceeds from the same. The Debtor was indebted $4.3 million to the prepetition lender as of the petition date. The Debtor assets that the interest of the prepetition lender is adequately protected. In the course of its operations, the Debtor is selling its inventory, collecting prepetition accounts receivable and using the proceeds of the same to acquire new inventory, perform new services and pay operating expenses. About Global Group, Inc. Fort Worth, Texas-based Global Group, Inc., filed for Chapter 11 protection on May 4, 2009 (Bankr. N. D. Tex. Case No. 09-42719). Jeff P. Prostok, Esq., at Forshey & Prostok, LLP represents the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $10 million to $50 million. GLOBAL GROUP: Wants to Hire Decker Jones as Corporate Counsel ------------------------------------------------------------- Global Group, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas for authority to employ Decker, Jones, Mcmackin, McClane, Hall & Bates, P.C., as corporate counsel. Decker Jones will, among other things: a) advise the Debtor in connection with various corporate governance considerations; b) advise the Debtor regarding employee benefit plans and matters related thereto; and c) advise or represent the Debtor on all matters and undertakings with respect to which Decker Jones may be requested to either undertake or advise the Debtor. The hourly rates of Decker Jones personnel are: Shareholders $250 - $350 Associates $150 - $285 Paralegals $85 - $125 Pre-bankruptcy, Decker Jones performed certain legal services for the Debtor and has been paid in full for the services except for $630 which remains unpaid. Decker Jones agrees to waive the prepetition claim owed by the Debtor. All funds paid to Decker Jones prepetition were applied to prepetition legal fees. To the best of the Debtor's knowledge, Decker Jones is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Decker, Jones, Mcmackin, McClane, Hall & Bates, P.C. Burnett Plaza 801 Cherry Street, Suite 2000, Unit No. 46 Fort Worth, TX 76102-6836 Tel: (817) 336-2400 (817) 429-5260 Fax: (817)332-3043 About Global Group, Inc. Fort Worth, Texas-based Global Group, Inc., filed for Chapter 11 protection on May 4, 2009 (Bankr. N. D. Tex. Case No. 09-42719). Jeff P. Prostok, Esq., at Forshey & Prostok, LLP represents the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $10 million to $50 million. GUROSA CORPORATION: Court Prohibits Use of Compass Cash Collateral ------------------------------------------------------------------ Hon. Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas prohibited Gurosa Corporation to use its lenders' cash collateral. The Court granted the motion of Compass Bank, as successor by merger to Texas State Bank, to prohibit the Debtor's use of cash collateral derived from property subject to bank's deed of trust. The Court also ordered the Debtor to provide Compass Bank: -- a detailed written accounting of all unauthorized postpetition use of the cash collateral; and -- a copy of all notes, leases and contracts pertaining to the real property. Compass Bank, as successor by merger to Texas State Bank, is the owner and holder of a certain real estate promissory note dates June 25, 2001, in the original amount of $170,000. As of Gurusa Corporation's petition date, the total payoff due on the note is $109,759 plus costs of collection and interests which continue to accrue. As security for the payment of note, the Debtor granted a lien in 2 tracts of improved real property as evidenced by a deed of trust executed on June 29, 2001. The Debtor was also ordered to segregate and deposit in debtor-in- possession bank account at Compass Bank all cash collateral received from real property, including but not limited to monies received from Zandra Fernandez, tenants and insurance companies pursuant to any and all leases and contract with real property, and will provide the counsel of Compass every 15th of month commencing June 15, 2009, a monthly accounting of the cash collateral received and a copy of the monthly bank statement for the DIP Cash Collateral account. About Gurosa Corporation Brownsville, Texas-based Gurosa Corporation filed for Chapter 11 on May 4, 2009 (Bankr. S.D. Tex. Case No. 09-10261). Soliz Law Firm PLLC represents the Debtor in its restructuring efforts. The Debtor listed $100 million to $500 million in assets and $100,000 to $500,000 in debts. HALO TECHNOLOGY: U.S. Trustee Wants Cases Converted to Chapter 7 ---------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, asks the U.S. Bankruptcy Court for the District of Connecticut to convert the Chapter 11 cases of Halo Technology Holdings, Inc., et al., to cases under Chapter 7 of the Bankruptcy Code, or in the alternative, dismiss the Debtors' bankruptcy cases, for failure to file any monthly operating reports during the pendency of their respective Chapter 11 cases and for failure to pay the quarterly fees pursuant to Sec. 1930(a)(6) of the U.S. Code. Greenwich, Connecticut-based Halo Technology Holdings, Inc. fka Warp Technology Holdings Inc. -- http://www.haloholdings.com/-- is a holding company whose subsidiaries operate enterprise software and information technology businesses. The company and its affiliates filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Conn. Lead Case No. 07-50480). David Wallman, Esq., at The Wallman Law Firm, LLC; lawyers at Zeisler & Zeisler P.C.; and Jeffrey R. Gleit, Esq., at Kasowitz Benson Torres & Friedman, LLP, serve as the Debtors' counsel. James C. Graham, Esq., Kristin B. Mayhew, Esq., at Pepe & Hazard; and Patrick M. Birney, Esq., at Robinson & Cole LLP, represent the pfficial committee of unsecured creditors as counsel. At March 31, 2007, the company reported total assets of $47,344,373 and total liabilities of $45,494,297. HARTMAX CORP: Enters Stalking Horse Deal with Emirisque ------------------------------------------------------- Hartmarx Corporation has entered into a "stalking horse" asset purchase agreement with Emerisque Brands U.K. Limited and SKNL North America, B.V. for substantially all assets of Hartmarx. Hartmarx said it filed motions late Thursday with the Bankruptcy Court for the Northern District of Illinois to conduct what is known as a 363 sale of assets, which allows for an expedited sale process with the aim of preserving maximum value for all stakeholders. Under the terms of the agreement, which is subject to court approval and certain other closing conditions, the buyer will acquire substantially all of the assets for $70.5 million in cash and a Junior Secured Note with a face value of $15.0 million, subject to adjustment as of the closing date for changes in the company's borrowing base. The buyer has also agreed to assume certain liabilities of Hartmarx estimated to total approximately $33.5 million. Homi B. Patel, chairman and chief executive officer of Hartmarx Corporation, commented, "We are very pleased to have taken this first yet very important step in resolving the future of Hartmarx as a continuing enterprise. In this challenging economic environment, at the present time the Emerisque offer is the best and highest offer we have received and sets a base-line for a transaction to be completed consistent with our DIP financing agreement. However, we will need continuing lender and other stakeholder support to meet the significant challenges of closing this or any alternative transaction." "We are extremely grateful to all our stakeholders, in particular, our loyal retail customers who have gone out of their way to place orders with us in this difficult period, our suppliers who have continued to work with us, and most importantly, our almost 3,000 employees, both union and non-union who continue to be the backbone of this company through thick and thin. We hope that the new owners, whoever they may ultimately be, understand that in addition to our 120-year history and time-honored brands, our customers, suppliers and employees are assets that you don't see on our balance sheet," Mr. Patel concluded. Michael Buenzow, senior managing director at FTI Consulting, Inc., and Hartmarx's chief restructuring officer, stated, "This is a key step in a process designed to enhance the value of the Hartmarx estates. Hartmarx and its advisors will continue to work with all potential bidders to maximize value for the benefit of all stakeholders." Moelis & Company LLC and FTI Consulting, Inc., are the Company's financial advisors. Skadden, Arps, Slate, Meagher & Flom, LLP, are the company's legal advisors. On January 23, 2009, Hartmarx Corporation and 50 of its wholly- owned U.S. subsidiaries filed voluntary petitions for protection under chapter 11 of the United States Bankruptcy Code. Prior to court approval of the Agreement, there will be a competitive bidding process which is intended to achieve the highest possible value for the Company's stakeholders. Once the bidding procedures have been approved by the court, the Company will announce the initiation of the formal bidding process. The bidding procedures, if approved, call for qualified interested parties to submit binding offers to acquire all or some of Hartmarx's assets within approximately four weeks of court approval of the bidding procedures. Assuming qualified bids are submitted, an auction would be held and then followed by a court hearing to approve the sale to the winning bidder or bidders. About Hartmax Corp Hartmarx's Chapter 11 case in the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division, has been assigned the number 09-02046, the Honorable Judge Black presiding. Based in Chicago, Illinois, Hartmarx Corporation (HTMXQ) -- http://www.hartmarx.com/-- produces and markets business, casual and golf apparel under its own brands, including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace, Eye, Christopher Blue, Worn, One Girl Who . . . and b.chyll. In addition, the company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Burberry men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Lyle & Scott, Golden Bear, Jag and Dr. Martens. The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs. Hartmarx and certain affiliates filed for bankruptcy protection on January 23, 2009 (Bankr. N.D. Ill. Lead Case No. 09-02046). George N. Panagakis, Esq., Felicia Gerber Perlman, Esq., and Eric J. Howe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed $483,108,000 in total assets and $261,220,000 in total debts as of August 31, 2008. HERBST GAMING: Court Approves Goldman Sachs as Financial Advisor ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada authorized Herbst Gaming Inc. and its debtor-affiliates to employ Goldman, Sachs & Co. as financial advisor. Goldman Sachs is expected to, among other things: a) assist the Debtors in seeking confirmation and consummation of the prearranged Plan; b) review and analyze the Debtors' business Plan and financial projections; and c) advise the Debtors regarding their capital structure and debt capacity. Goldman Sachs' compensation structure includes: a) an advisory fee of no less that $4,500,000, payable on the effective date of any Plan of Reorganization, in cash, by wire transfer of immediately available funds; b) reimbursement of expenses; and c) indemnification, contribution and related obligations of the indemnity provisions. Pre-bankruptcy, Goldman Sachs received $9,500,000 in fee for prepetition services and expenses. To the best of the Debtors' knowledge, Goldman Sachs is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Herbst Gaming Inc. Headquartered in Reno, Nevada, Herbst Gaming Inc. -- http://www.herbstgaming.com/-- is an established casino and slot route operator that operates casinos located in Nevada, Missouri and Iowa. The Debtors own and operate approximately 6,800 slot machines in its slot route business and is a slot machine operator in Nevada. The Company and 17 of its affiliates filed for Chapter 11 protection on March 22, 2009 (Bankr. D. Nev. Lead Case No. 09- 50752). Thomas H. Fell, Esq., Gordon Silver, represents the Debtors in their restructuring efforts. As of September 30, 2008, the Debtors have $1,021,956,000 in total assets and $1,241,937,000 in total debts. HERBST GAMING: Court OKs Brown Rudnick as Committee's Co-Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada authorized the Official Committee of Unsecured Creditors in Herbst Gaming Inc. and its debtor-affiliates' Chapter 11 cases to employ Brown Rudnick LLP As co-counsel. Brown Rudnick is expected to: a. assist and advise the Committee in its discussions with the Debtors and other parties-in-interest regarding the overall administration of these cases; b. represent the Committee at hearings to be held before this Court and communicate with the Committee regarding the matters heard and the issues raised well as the decisions and considerations of this Court; c. assist and advise the Committee in its examination and analysis of the conduct of the Debtors' affairs; d. review and analyze pleadings, orders, schedules, and other documents filed and to be filed with this Court by interested parties in these cases, advise the Committee as to the necessity, propriety, and impact of the foregoing upon these cases and consent or object to pleadings or orders on behalf of the Committee, as appropriate; e. assist the Committee in preparing applications, motions, memoranda, proposed orders, and other pleadings as may be required in support of positions taken by the Committee, including all trial preparation as may be necessary; f. confer with the professionals retained by the Debtors and other parties-in-interest, well as with other professionals as may be selected and employed by the Committee; g. coordinate the receipt and dissemination of information prepared by and received from the Debtors' professionals, well as information as may be received from professionals engaged by the Committee or other parties-in-interest in these cases; h. participate in examinations of the Debtors and other witnesses as may be necessary in order to analyze and determine, among other things, the Debtors' assets and financial condition, whether the Debtors have made any available transfers of property, or whether causes of action exist on behalf of the Debtors' estates; and i. negotiate and formulate a Plan of Reorganization for the Debtors; and assist the Committee generally in performing other services as may be desirable or required for a discharge of the Committee's duties. The hourly rates of Brown Rudnick personnel are: Edward S. Weisfelner, Esq., member $950 Steven D. Pohl, Esq., member $780 Partners $515 - $950 Associates $325 - $605 Paraprofessionals $100 - $295 Mr. Weisfelner assured the Court that Brown Rudnick is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Weisfelner can be reached at: Brown Rudnick LLP Seven Times Square New York, NY 10036 Tel: (212) 209-4800 About Herbst Gaming Inc. Headquartered in Reno, Nevada, Herbst Gaming Inc. -- http://www.herbstgaming.com/-- is an established casino and slot route operator that operates casinos located in Nevada, Missouri and Iowa. The Debtors own and operate approximately 6,800 slot machines in its slot route business and is a slot machine operator in Nevada. The Company and 17 of its affiliates filed for Chapter 11 protection on March 22, 2009 (Bankr. D. Nev. Lead Case No. 09- 50752). Thomas H. Fell, Esq., Gordon Silver, represents the Debtors in their restructuring efforts. As of September 30, 2008, the Debtors have $1,021,956,000 in total assets and $1,241,937,000 in total debts. HERBST GAMING: Court OKs XRoads Solutions as Restructuring Advisor ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Nevada authorized Herbst Gaming Inc. and its debtor-affiliates to employ XRoads Solutions Group, LLC, as financial and restructuring advisor. XRoads is expected to, among other things,: a) work with management to refine and update the Debtors' financial projections from time to time and analyze the Debtors' cash flow generating capacity under various operating/strategic scenarios; b) assist the management with refining and modifying the business plans for the Debtors' operating units; and c) facilitate due diligence when and if performed by potential third party investors, the Debtors' bank group and the Debtors' bondholders and interfacing with the principals and advisors for the parties. XRoads will cooperate with the Debtors and their general bankruptcy counsel, Gordon Silver, to avoid duplication of efforts. Pre-bankruptcy, XRoads received $2,148,352 for advisory services. XRoads is currently holding a $168,214 retainer. To the best of the Debtors' knowledge, XRoads is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Herbst Gaming Inc. Headquartered in Reno, Nevada, Herbst Gaming Inc. -- http://www.herbstgaming.com/-- is an established casino and slot route operator that operates casinos located in Nevada, Missouri and Iowa. The Debtors own and operate approximately 6,800 slot machines in its slot route business and is a slot machine operator in Nevada. The Company and 17 of its affiliates filed for Chapter 11 protection on March 22, 2009 (Bankr. D. Nev. Lead Case No. 09- 50752). Thomas H. Fell, Esq., Gordon Silver, represents the Debtors in their restructuring efforts. As of September 30, 2008, the Debtors have $1,021,956,000 in total assets and $1,241,937,000 in total debts. HERBST GAMING: Creditors Committee Can Hire S&MLF as Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Nevada authorized the Official Committee of Unsecured Creditors in Herbst Gaming Inc. and its debtor-affiliates' Chapter 11 cases to employ Schwartzer & McPherson Law Firm as counsel to the committee. S&MLF is expected to: i) advise the committee of its rights and obligations and performance of its duties during administration of the bankruptcy cases; ii) represent the committee in all proceedings before the Court or other courts of jurisdiction over the Chapter 11 cases; iii) assist the committee in developing legal positions and strategies with respect to all facets of the proceedings; and iv) provide other counsel and advise as the committee may require in connection with the proceeding. The hourly rates of S&MLF personnel are: Lenard Schwartzer $475 Jeannette E. McPherson $425 Jason A. Imes $275 Lia Allen, paralegal $150 Angela Hosey, legal assistant $125 Laura Kern, legal assistant $125 S&MLF related that the firm did not request for a retainer. Ms. McPherson assures that S&MLF is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Ms. McPherson can be reached at: Schwartzer & McPherson Law Firm 2850 South Jones Boulevard, Suite 1 Las Vegas, NV 89146-5308 About Herbst Gaming Inc. Headquartered in Reno, Nevada, Herbst Gaming Inc. -- http://www.herbstgaming.com/-- is an established casino and slot route operator that operates casinos located in Nevada, Missouri and Iowa. The Debtors own and operate approximately 6,800 slot machines in its slot route business and is a slot machine operator in Nevada. The Company and 17 of its affiliates filed for Chapter 11 protection on March 22, 2009 (Bankr. D. Nev. Lead Case No. 09- 50752). Thomas H. Fell, Esq., Gordon Silver, represents the Debtors in their restructuring efforts. As of September 30, 2008, the Debtors have $1,021,956,000 in total assets and $1,241,937,000 in total debts. HERTZ GLOBAL: S&P Assigns 'B' Long-Term Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B' long-term corporate credit rating to Hertz Global Holdings Inc. and a 'CCC+' rating to the company's 5.25% $450 million convertible senior notes due 2014. In addition, S&P assigned a '6' recovery rating to the notes. Hertz Global Holdings is the parent of car renter Hertz Corp. "The ratings on Hertz Global Holdings Inc. and Hertz Corp. reflect an aggressive financial profile following its $14 billion leveraged acquisition in December 2005 and the price-competitive and cyclical nature of on-airport car rentals and equipment rentals," said Standard & Poor's credit analyst Betsy Snyder. "Ratings also take into account its exposure to the troubled automobile manufacturing industry; and significant refinancing risk-with close to $5 billion of debt maturities through 2010." In addition, ratings incorporate the company's position as the largest global car rental company and the strong cash flow its businesses generate. The rating incorporates S&P's expectation that Hertz's financial profile will remain under pressure through 2009 due to anticipated weaker earnings and cash flow. The negative outlook reflects refinancing risk. The company's liquidity was aided by proceeds of approximately $949 million from the sale of $450 million of convertible senior notes and equity on May 20, 2009. However, if it appears that Hertz will be unable to refinance more of the $4.9 billion in debt that matures through 2010, which could be due to a variety of reasons (including continued constrained credit markets and the ongoing negative effect from problems related to the auto manufacturers), S&P would likely lower ratings. If the company makes significant progress on refinancing its debt, S&P could revise the outlook to stable. While a bankruptcy of one or the other auto manufacturers, in addition to Chrysler, could cause some cash flow delays or further declines in used car values, these would not necessarily cause sufficient damage to result in a downgrade. If the company purchases a portion of its term loan at a discounted price through a tender offer, S&P would evaluate whether S&P considered this a distressed debt purchase, which could ultimately result in a downgrade to 'SD' (selective default), if completed. HILL COUNTRY: Court Extends Schedules Deadline to June 9 -------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas extended until June 9, 2009, Hill Country Galleria, L.P.'s time to file its schedules of assets and liabilities, lists, and statement of financial affairs. The Debtor related that the extension is in the best interest of the estate, creditors and parties-in-interest. Bee Cave, Texas-based Hill Country Galleria, L.P., is a single asset real estate company. The company was formed for the purpose of acquiring land and constructing, operating, managing, leasing and disposing of a real estate development project known as Hill Country Galleria. The Company filed for Chapter 11 on May 4, 2009 (Bankr. W. D. Tex. Case No. 09-11175). Bryan L. Elwood, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $100 million to $500 million. HUNTINGTON BANCSHARES: Offers to Purchase Securities ---------------------------------------------------- Huntington Bancshares Incorporated commenced an offer to purchase for cash trust-preferred securities listed in the table: Accept- Aggregate Tender ance Liquidation Offer Early Total Title of CUSIP Priority Amount Consid- Tender Consid- Security Numbers Level Outstanding eration Premium eration -------- ------- ------ ----------- ------- -------- ------- Huntington Capital III 6.65% Trust Preferred Securities 44628M AA9 1 $250,000,000 $570 $30 $600 Huntington Capital I Floating Rate Capital Securities 446283 AD5, 446283 AA1 or U44558 AA9 2 $152,180,000 $420 $30 $450 Huntington Capital II Floating Rate Capital Securities, Series B 446284 AA9 2 $68,000,000 $420 $30 $450 The offer to purchase, which is part of a broader series of capital actions recently announced by Huntington, is being made to registered holders of the above trust preferred securities on the terms and subject to the conditions set forth in the Offer to Purchase dated May 21, 2009, and related letter of transmittal. Huntington is offering to purchase the trust preferred securities as set forth in the table above for an aggregate purchase price of up to $200 million, not including any accrued and unpaid distributions. The tender offer will expire at 11:59 p.m., New York City time, on June 18, unless extended or terminated. The tender offer consideration for each $1,000 liquidation amount of each issue of the trust preferred securities tendered and accepted for purchase pursuant to the offer will be the applicable tender offer consideration for such issue of trust preferred securities set forth in the table. Holders of trust preferred securities that are validly tendered on or before the Early Tender Date, not validly withdrawn on or before the Withdrawal Date and accepted for purchase will receive the applicable Tender Offer Consideration plus the applicable early tender premium for each issue of trust preferred securities set forth in the table and, together with the Tender Offer Consideration. In order to receive the Early Tender Premium, holders of trust preferred securities must tender their trust preferred securities on or before 5:00 p.m., New York City time, on June 4, 2009, unless extended by Huntington. Holders who tender their trust preferred securities after the Early Tender Date will receive only the Tender Offer Consideration. Holders who tender their trust preferred securities may withdraw such trust preferred securities at any time on or before 5:00 p.m., New York City time, on June 4, 2009, unless extended by Huntington. To the extent that the Maximum Tender Amount that Huntington would otherwise pay would exceed the net proceeds of the $350 million discretionary equity issuance program (DEIP) announced May 20, 2009, Huntington will accept for payment only the aggregate liquidation amount of securities that does not result in an aggregate purchase price exceeding such proceeds, and the securities will be purchased in accordance with the acceptance priority level in the table above. If some but not all of an applicable acceptance priority level issue of trust preferred securities is accepted for purchase, the securities within that issue will be prorated based on the aggregate liquidation amount tendered with respect to such issue. Trust preferred securities with a lower acceptance priority level than the prorated issue of trust preferred securities will not be accepted for purchase. Completion of the tender offer is subject to, and conditioned upon, the satisfaction or, where applicable, waiver of certain conditions set forth in the Offer to Purchase. Huntington may amend, extend or terminate the tender offer at any time. The complete terms and conditions of the Tender Offer are set forth in the Offer to Purchase and the letter of transmittal that are being sent to registered holders of the trust preferred securities. Holders are urged to read the Offer to Purchase and the letter of transmittal carefully when they become available. About Huntington Huntington Preferred Capital, Inc. -- http://www.huntington.com/ -- is a real estate investment trust (REIT). HPCI acquires, holds and manages mortgage assets and other authorized investments. HPCI is owned by four related parties: Huntington Capital Financing LLC (HCF), Huntington Preferred Capital II, Inc. (HPCII), Huntington Preferred Capital Holdings, Inc. (Holdings) and Huntington Bancshares Incorporated (Huntington). * * * * As reported by the Troubled Company Reporter on April 29, 2009, the Dominion Bond Rating Service placed the long- and short-term ratings of Huntington Bancshares Inc. and its related entities, including Huntington's Issuer & Senior Debt rating of BBB (high) and Preferred Stock rating of BB(low), Under Review with Negative Implications. The review will focus on Huntington ability to cope with the continued asset deterioration. Over the past year Huntington has struggled with elevated credit costs and earnings erosion associated with both the Company's non-core Franklin Credit Management (Franklin) relationship and core loan portfolios, particularly those related to the commercial real estate and commercial & industrial loan lending. Additionally, the Company's recent performance has been negatively impacted by a narrowing net interest margin (NIM), and recurrent other-than-temporary- impairment (OTTI) charges related to its asset backed securities portfolio. IDEARC FIRM: Firm Leads 8% Bondholders in Class Suit ---------------------------------------------------- Walden Law Firm, PLLC, reported that a class action has been commenced in the United States District Court for the Eastern District of Arkansas on behalf of purchasers of Idearc bonds styled "8% Senior Notes Due 2016" CUSIP/ISIN 451663AC2 between March 27, 2008, and March 30, 2009. The complaint charges Idearc and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Idearc is a media company that manages and delivers print, online and wireless publishing and advertising services on multiple platforms. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's ability to service its debt. Specifically, defendants failed to disclose that Idearc was suffering from a terminally ill balance sheet, which it subsequently admitted before filing for bankruptcy. As a result of defendants' false and misleading statements, Idearc's bonds traded at artificially inflated prices during the Class Period, reaching a high of $74.250 on April 24, 2008. On March 31, 2009, the Company issued a press release announcing that it had initiated a voluntary Chapter 11 petition under the United States Bankruptcy Code, stating specifically that the Company had "good potential," but was "being held back by a terminally ill balance sheet." Walden Law Firm, PLLC, is a law firm with an office in Little Rock, Arkansas, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors. The Walden Web site (http://www.waldenlawfirm.com)has more information about the firm. About Idearc Inc. Headquartered in DFW Airport, Texas, Idearc Inc. (NYSE: IAR) -- http://www.idearc.com/-- fka Verizon Directories Disposition Corporation, provides yellow and white page directories and related advertising products in the United States and the District of Columbia. Products include print yellow pages, print white pages, Superpages.com, Switchboard.com and LocalSearch.com, the company's online local search resources, and Superpages Mobile, their information directory for wireless subscribers. Idearch is the exclusive official publisher of Verizon print directories in the markets in which Verizon is currently the incumbent local exchange carrier. Idearc uses the Verizon brand on their print directories in their incumbent markets, well as in their expansion markets. Idearc and its affiliates filed for Chapter 11 protection on March 31, 2009 (Bankr. N. D. Tex. Lead Case No. 09-31828). Toby L. Gerber, Esq., at Fulbright & Jaworski, LLP, represents the Debtors in their restructuring efforts. The Debtors propose Moelis & Company as their investment banker; Kurtzman Carson Consultants LLC as their claims agent. William T. Neary, the United States Trustee for Region 6, appointed six creditors to serve on an official committee of unsecured creditors of Idearc Inc. and its debtor-affiliates. The Committee selected Mark Milbank, Tweed, Hadley & McCloy LLP, as counsel, and Haynes and Boone, LLP, co-counsel. The Debtors' financial condition as of December 31, 2008, showed total assets of $1,815,000,000 and total debts of $9,515,000,000. IED PINNACLE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: IED Pinnacle/Miller, LLC 5920 S. Rainbow Blvd., Suite 11 Las Vegas, NV 89119 Bankruptcy Case No.: 09-11222 Chapter 11 Petition Date: May 22, 2009 Court: District of Arizona (Phoenix) Judge: Redfield T. Baum, Sr. Debtor's Counsel: Eric Slocum Sparks, Esq. eric@ericslocumsparkspc.com Eric Slocum Sparks PC 110 S. Church Ave., #2270 Tucson, AZ 85701 Tel: (520) 623-8330 Fax: (520) 623-9157 Total Assets: $30,000,000 Total Debts: $27,600,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ American Bankers Insurance trade debt unknown 20410 N. 19TH AVE. SUITE 170 Phoenix, AZ 85027 AR Mays trade debt unknown 6900 E. INDIAN SCHOOL RD. Scottsdale, AZ 85251 Arizona Business Magazine trade debt unknown 3101 N. CENTRAL AVE. SUITE 1070 Phoenix, AZ 85012 Black Eagle Nursery trade debt unknown Business Real Estate Weekley trade debt unknown Cactus Asphalt trade debt unknown City of Scottsdale trade debt unknown Consolidated Reprographics trade debt unknown Coreslab Structures trade debt unknown CoStar Realty trade debt unknown Courier Graphics Corp. trade debt unknown Creative Environments trade debt unknown CT Corporation trade debt unknown Deaner, Deaner, Scan, Malan legal services unknown and Larsen Dick & Fritsche Design Group trade debt unknown Fennemore Craig PC legal services unknown Frazier Masonry trade debt unknown Fugro Consultants trade debt unknown HC Beck trade debt unknown Maricopa County Treasurer trade debt unknown The petition was signed by Dale Dowers, manager. J&D COMPANY: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: J&D Company, LLC 600 Hunter Lane Middletown, PA 17057 Bankruptcy Case No.: 09-11751 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Interlake Material Handling, Inc. 09-10019 United Fixtures Company, Inc. fka National Store Fixtures fka J&D Associates and Retail Service 09-10020 Solutions Conco-Tellus, Inc. 09-10022 UFC Interlake Holding Co. 09-10021 Chapter 11 Petition Date: May 20, 2009 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Kevin J. Carey Debtor's Counsel: Kenneth J. Enos, Esq. Young, Conaway, Stargatt & Taylor 1000 West Street, 17th Floor Wilmington, DE 19801 Tel: (302) 571-6600 Email: bankfilings@ycst.com M. Blake Cleary, Esq. Young, Conaway, Stargatt & Taylor 1000 West Street, 17th Floor P. O. Box 391 Wilmington, DE 19899-0391 Tel: (302) 571-6600 Fax: (302) 571-1253 Email: bankfilings@ycst.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 30 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/deb09-11751.pdf The petition was signed by Daniel P. Wikel, chief restructuring officer of the Company. JENNIFER RENEE LEE: Case Summary & 12 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Jennifer Renee Lee 1822 Webster Street Baltimore, MD 21230 Bankruptcy Case No.: 09-19180 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court District of Maryland (Baltimore) Judge: Nancy V. Alquist Debtor's Counsel: Howard M. Heneson, Esq. 810 Glen Eagles Court, Suite 301 Towson, MD 21286 Tel: (410) 494-8388 Fax: (410) 494-8389 Email: hheneson@bankruptcymd.com Total Assets: $2,464,416 Total Debts: $2,598,200 A full-text copy of Ms. Lee's petition, including a list of her 12 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mdb09-19180.pdf The petition was signed by Ms. Lee. JUNE HAVOC: Stamford, Conn., Home Being Auctioned on June 1 ----------------------------------------------------------- The Hon. Alan H.W. Shiff will oversee an auction of June Havoc's five-bedroom, four-bath, 3,739 square-foot 1756 Federal Colonial- style home located at 405 Long Ridge Road, Stamford, Conn., at 3:00 p.m. on June 1, 2009, pursuant to an Order of the Bankruptcy Court signed on May 19, 2009. The property was recently advertised in The Wall Street Journal's real estate section for $1,500,000. At the auction and sale hearing, Judge Shiff will consider offers for the purchase of all right, title and interest in and to the real property of the Debtor, to be sold "as is" with no warranties or contingencies being provided to the successful buyer. The Auction and Sale will be conducted in accordance with the provisions of Section 363(b), (f) and (k) of the U.S. Bankruptcy Code, and these additional terms and conditions: (1) Any party interested in bidding on said property may inspect the property on May 28, 2009, and May 29, 2009, between the hours of 10:00 a.m. and 5:00 p.m. by scheduling an appointment with counsel for the Debtor: Wanda Borges, Esq. Borges & Associates, LLC 575 Underhill Blvd. Syosset, New York 11791 Telephone (516) 677-8200 ext. 225 (2) The auction sale of the real property will be by open bid in open court, with the minimum acceptable bid being set at $750,000 and each subsequent bid to be in incremental amounts of no less than $10,000. (3) Any interested party wishing to bid at the hearing must produce a bank check in the amount of $125,000 prior to the commencement of the auction and must be prepared to close on the sale of the Debtor's real property on or before June 30, 2009. In the event the successful bidder does not close on the sale by June 30, then the Deposit will be forfeited and liquidated for the benefit of the estate and the bidder offering the second highest bid will be given the opportunity to close on the sale of said real property. Each Deposit received by Counsel for the Debtor on or prior to the day of the auction will be maintained in an interest bearing segregated account until the closing on said sale has taken place. (4) The bidder offering the highest dollar amount for the real property will be deemed the successful bidder, with the court having the right to reject the highest bid, for cause shown. (5) The sale of the real property will be free and clear of liens, claims and encumbrances, with such liens to attach to the proceeds of the Sales in their respective order of priority. June Havoc filed for Chapter 11 protection (Bankr. D. Conn. Case No. 08-51132) on November 24, 2008. KA & KM: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------- Richard Bilbao at Orlando Business Journal reports that KA and KM Development, Inc., has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida. Court documents say that KA and KM owes $45.2 million to creditors. According to Business Journal, KA and KM failed to secure financing for potential buyers of its 176-unit Villas at Lake Eve condos. Business Journal relates that KA and KM had 157 of the property's condo units under contract to sell, mostly to overseas investors, but a lack of financing available to the buyers resulted in the sales being lost. Orlando-based KA and KM Development Inc. is the developer behind the 176-unit Villas at Lake Eve condos at 12388 International Drive South in Orlando. The Company filed for Chapter 11 bankruptcy protection on May 6, 2009 (Bankr. M.D. Fla. Case No. 09-06245). Elizabeth A. Green, Esq., assists the Company in its restructuring efforts. The Cjompany listed $10 million to $50 million in assets. KABOOSE INC: Gets Ontario Court Nod for Plan Arrangement -------------------------------------------------------- Kaboose Inc. received approval from the Ontario Superior Court of Justice of its statutory plan of arrangement under section 182 of the Business Corporations Act, Ontario. The plan of arrangement was previously approved by the shareholders of Kaboose at a special meeting held on May 21, 2009. With the Court's approval of the Plan Arrangement, Kaboose will sell substantially all of its North American assets to Disney Online for approximately $23.3 million in cash (subject to a working capital adjustment). The North American Transaction is expected to close on June 1, 2009, following the closing, on the same day, of the sale of Kaboose's UK subsidiary, Kaboose Acquisition (UK) Company, to Romeo Bidco Limited, an affiliate of Barclays Private Equity Limited, for a purchase price of GBP54 million in cash less third- party debt outstanding at closing (expected to be approximately GBP10 million); and Following the completion of a court-approved creditor claims Process and liquidation, pursuant to which Kaboose expects to distribute approximately $0.65 in aggregate per common share to shareholders, Kaboose will be dissolved. The first distribution, following the completion of the creditor claims process, is expected to occur during the third quarter of 2009, depending on the nature of claims that are made during the creditor claims process. To the extent that, among other things: (i) transaction and wind-up costs; (ii) Kaboose's net cash position at closing of the UK Transaction and North American Transaction; (iii) the absence of unidentified claims; (iv) working capital of the North American business at the time of closing; or (v) foreign exchange rates, are different than assumptions made by management, shareholders may receive aggregate distributions amounting to less than $0.65 per common share. Accordingly, Kaboose can give no assurances as to the total amount or timing of distributions to shareholders. About Kaboose Inc. Kaboose Inc. is a global media company fully dedicated to meeting the needs of moms and their families. Kaboose ranks as one of the world's top five family destinations and is a respected leader in the online parenting category in three of the largest English speaking countries - the United States, Canada and the United Kingdom. Kaboose provides parents with an extensive array of relevant information, resources, tools and community that support their efforts during the parenting life cycle. Kaboose's websites include its award winning flagship, Kaboose.com, which gives moms the tools they need to plan an active, healthy and rewarding family life; Bounty, the UK's favourite parenting club, providing information, support and products for young families; BabyZone.com, serving the needs of expectant and new moms; ParentZone.com, a family-focused local resource and event site; AmazingMoms.com, providing simple and easy solutions for birthday parties, family crafts and special occasions; and Funschool.com which promotes learning while helping kids have fun. Kaboose trades on the Toronto Stock Exchange under the symbol "KAB". KABUTO ARIZONA: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Kabuto Arizona Properties, LLC 300 East Wigwam Boulevard Litchfield Park, AZ 85340 Bankruptcy Case No.: 09-11282 Chapter 11 Petition Date: May 22, 2009 Court: District of Arizona (Phoenix) Debtor's Counsel: David W.M. Engelman, Esq. dwe@engelmanberger.com Engelman Berger, P.C. 3636 N. Central Ave., #700 Phoenix, AZ 85012 Tel: (602) 271-9090 Fax: (602) 222-4999 Estimated Assets: $50 million to $100 million Estimated Debts: $50 million to $100 million The Debtor did not file a list of 20 largest unsecured creditors. The petition was signed by Kun Sam Kim, chief financial officer. LEXINGTON PRECISION: Sees $100,000 Loss From Operations for Q1 -------------------------------------------------------------- Lexington Precision Corporation expects to report net sales for the three-month period ended March 31, 2009, of $14,165,000, compared to net sales of $21,352,000 for the three-month period ended March 31, 2008. Lexington Precision said in a regulatory filing with the Securities and Exchange Commission that the decrease in net sales was primarily the result of a decline in net sales of automotive components used by original equipment manufacturers. Lexington Precision expects loss from operations for the three- month period ended March 31, 2009, to be roughly $100,000, compared to income from operations of $1,337,000 for the three- month period ended March 31, 2008. The decline in income from operations was primarily due to the reduction in net sales. Lexington Precision has not been able to file its Quarterly Report on Form 10-Q for the period ended March 31, 2009, within the prescribed time period without unreasonable effort and expense due to the additional demands placed on its accounting professionals because the Company, on April 1, 2008, filed for Chapter 11 protection. The Company intends to file the Form 10-Q as soon as reasonably practicable. The Company is slated to hold its annual meeting of stockholders at the offices of Nixon Peabody LLP, 437 Madison Avenue, 24th Floor, New York, on, May 28, 2009, at 11:00 A.M. The purpose of the meeting is to consider: 1. The election of six directors by the holders of Common Stock and $8 Cumulative Convertible Preferred Stock, Series B; 2. The ratification of Malin, Bergquist & Company, LLP, as independent auditors of the Company for the year ending December 31, 2009; and 3. The transaction of such other business as may properly come before the meeting and any adjournments thereof. The Board of Directors has fixed the close of business April 13, 2009, as the record date for determining the stockholders of the Company entitled to receive notice of and to vote at the meeting. About Lexington Precision Headquartered in New York, Lexington Precision Corp. -- http://www.lexingtonprecision.com/-- manufactures tight-tolerance rubber and metal components for use in medical, automotive, and industrial applications. As of February 29, 2008, the Company employed about 651 regular and 22 temporary personnel. The Company and its affiliate, Lexington Rubber Group Inc., filed for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead Case No.08-11153). Christopher J. Marcus, Esq., and Victoria Vron, Esq., at Weil, Gotshal & Manges, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Systems - Bankruptcy Solutions LLC as claims agent. The U.S. Trustee for Region 2 appointed six creditors to serve on an Official Committee of Unsecured Creditors. Paul N. Silverstein, Esq., and Jonathan Levine, Esq., at Andrews Kurth LLP, represent the Committee as counsel. At December 31, 2008, the Debtors had total assets of $53,354,000, total liabilities of $100,061,000, and a stockholders' deficit of $46,707,000. LOCALBIZUSA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: LocalbizUSA, Inc., a New Jersey Corporation 1 Orient Way Ste. 336 Rutherford, NJ 07070 Bankruptcy Case No.: 09-23093 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court District of New Jersey (Newark) Debtor's Counsel: Barry W. Frost, Esq. Teich Groh 691 State Highway 33 Trenton, NJ 08619-4407 Tel: (609) 890-1500 Email: bfrost@teichgroh.com Estimated Assets: $100,001 to $500,000 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/njb09-23093.pdf The petition was signed by Pat Giglio, president and CEO of the Company. M&D 1 LLC: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------- Debtor: M&D 1, LLC 11704 Sugarland Rd. Herndon, VA 20170 Bankruptcy Case No.: 09-14067 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Eastern District of Virginia (Alexandria) Debtor's Counsel: John Paul Forest, II, Esq. 11350 Random Hill Rd., Suite 700 Fairfax, VA 22030 Tel: (703) 691-4940 Email: j.forest@stahlzelloe.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 6 largest unsecured creditors is available for free at: http://bankrupt.com/misc/vaeb09-14067.pdf The petition was signed by Michael A. Iacovacci II, manager of the Company. MAHALO ENERGY: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Mahalo Energy (USA), Inc. Suite 101 5110 South Yale Tulsa, OK 74135 Bankruptcy Case No.: 09-80795 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Eastern District of Oklahoma (Okmulgee) Judge: Tom R. Cornish Debtor's Counsel: Stephen W. Elliott, Esq. Kline, Kline, Elliot & Bryant, PC 720 N.E. 63rd St. Oklahoma City, OK 73105 Tel: (405) 848-4448 Email: selliott@klinefirm.org Estimated Assets: $10 million to $50 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Williams Production Mid Con Co Trade Debt $3,951,424 Black Stone Natural Resources II B LP Trade Debt $514,844 Suite 2020 1001 Fannin Houston, TX 77022 Metro Energy Group Trade Debt $498,764 1783 East 71st Tulsa, OK 74136 Trailblazer Drilling Corp. Trade Debt $433,156 Bravo Construction Inc. Trade Debt $367,565 BSAP II Inc RI/WI $358,248 Rose Resources Oil & Gas Inc Trade Debt $350,948 B and B Gas Well Service LLC Trade Debt $267,480 Williams Production Mid Con Co OR/RI/WI $253,553 Hijet Bit LLC Trade Debt $114,451 Armstrong Tool LLC Trade Debt $110,251 Centerpoint Energy Field Serv Trade Debt $109,030 Multi Chem Group LLC Trade Debt $94,784 Ballard Contracting and Oilfield Service Trade Debt $79,828 West Rock Energy Consultants Ltd Trade Debt $77,670 Baker Hughes Bus Support Serv Trade Debt $68,511 Pason System USA Corp Trade Debt $66,701 Hoffman & Associates Inc Trade Debt $63,343 Bison Gas Company LLC RI/WI $56,479 Wilson Trade Debt $55,296 The petition was signed by James Burns, president and CEO. MCCLATCHY CO: S&P Downgrades Corporate Credit Rating to 'CC' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Sacramento, California-based newspaper publisher The McClatchy Co.: -- The corporate credit rating to 'CC' from 'CCC+' (the rating outlook is negative); -- The secured debt to 'CC' from 'CCC+'; and -- The existing senior unsecured debt issued by Knight Ridder Inc., to 'C' from 'CCC-'. Also, S&P assigned McClatchy's proposed up to $175 million 15.75% senior notes due 2014 an issue-level rating of 'CCC-' -- two notches below the expected corporate credit rating of 'CCC+' following S&P's assessment of the company's post-exchange capital structure. S&P also assigned this debt a recovery rating of '6', indicating S&P's expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default. The rating actions follow McClatchy's announcement that it is offering to exchange up to $60 million in cash and up to $175 million in new 15.75% senior notes due 2014 ("the new notes") for a portion (or potentially all, in some cases) of all of the company's outstanding senior unsecured note issues in the company's capital structure ("the old notes"--five issues in total). The cash offer will be funded by up to $60 million in revolver drawings (availability under the revolver at May 20, 2008 was $141 million), and McClatchy has amended it credit facility to allow this. The cash offer is available only to two notes issues due in 2011 and 2014, which have been given first acceptance priority. The new notes will be senior unsecured obligations guaranteed by McClatchy's existing and future material domestic subsidiaries, and are offered in exchange for all five notes issues. The old notes are not guaranteed. The exchange for cash and new notes would represent a substantial discount to the par amount of the outstanding issues. The rating downgrades reflect S&P's view that the exchange offer is tantamount to a default given the distressed financial condition of the company and S&P's previously stated concern that debt at McClatchy would undergo a restructuring of some form. S&P previously lowered S&P's corporate credit rating for the company on Feb. 6, 2009, following S&P's conclusion that McClatchy would likely violate its 7x total leverage covenant in its credit facility at the end of 2009. In addition, S&P were uncertain that lenders would grant temporary relief, and even if they did, S&P believed that potential leverage of 7x or more would not be manageable over the long term given secular trends in the newspaper industry. Upon completion of the exchange, S&P would lower its rating on the exchanged unsecured notes to 'D' and would lower the corporate credit rating to 'SD' (selective default). As soon as possible thereafter, S&P will reassess McClatchy's post-exchange capital structure and assign ratings based on the amount of notes successfully tendered. "It is our preliminary expectation that, in the event the exchange succeeds, S&P would not raise the corporate credit rating to higher than the previous 'CCC+' level," noted Standard & Poor's credit analyst Emile Courtney. "We acknowledge that the post- exchange capital structure could substantially reduce McClatchy's outstanding debt balances. However, until S&P is confident that there is a substantial and sustainable moderation in the rate of decline in newspaper advertising revenue at the company, S&P is unlikely to consider a rating higher than 'CCC+'. Nonetheless, if the exchange is successful, McClatchy would have greater capacity to weather the current downturn over the next several quarters." MERCEDES HOMES: Proofs of Claim Must be Filed by June 29 -------------------------------------------------------- The Honorable Paul G. Hyman, Jr., directs creditors holding claims arising prior to January 26, 2009, against Mercedes Homes, Inc., and its debtor-affiliates to file proofs of claim on or before 5:00 p.m. on June 29, 2009. The June 29 Bar Date applies to any "claim," as that term is defined in Bankruptcy Code sec. 101(5), including, without limitation (i) unsecured claims incurred by vendors, suppliers, and other trade-related entities involved in the general operation of the Debtors' businesses; (ii) litigation claims, including such claims that have been asserted in litigation where the plaintiffs have sued or joined as co- defendants present or former directors, officers, or employees of one or more of the Debtors, or other individuals or entities, who may have indemnification claims or contribution claims against one or more of the Debtors, or who may expose one or more of the Debtors to vicarious liability under various principles or provisions of applicable state law; (iii) any worker's compensation claims; and (iv) any administrative agency claims or similar kinds of private enforcement claims, including, but not limited to, wage and hour claims, wrongful termination and discharge claims, loss of benefits claims, harassment claims, employment discrimination claims, and other employment related claims. Furthermore, any holder of an equity interest in the Debtors need not file a proof of such equity interest, unless such holder asserts a claim against the Debtors (including a claim relating to an equity interest or the purchase or sale of such equity interest). The deadline for governmental units to filing proofs of claims in this case is fixed as September 27, 2009. Claim forms must be received no later than 5:00 p.m., Pacific Time, on June 29, by Kurtzman Carson Consultants LLC at this address: Mercedes Homes Claims Processing Center c/o Kurtzman Carson Consultants LLC 2335 Alaska Ave. El Segundo, CA 90245 Proofs of claim will be treated as filed only when actually received by the Kurtzman Carson Consultants LLC by mail or hand- delivery. Facsimile and e-mailed proofs of claim will not be accepted. Creditors are advised not to file or send copies of proofs of claim directly to the Debtors, counsel for the Debtors, counsel for any committees that may be appointed in these cases, or to counsel for the United States Trustee. If a creditor wishes to receive an acknowledgement of receipt of its proof of claim, the creditor must provide KCC with an additional copy of the proof of claim with a self-addressed, postage-paid return envelope. Headquartered in Melbourne, Florida, Mercedes Homes Inc. -- http://www.mercedeshomes.com-- operates a homebuilding company that was established in 1983 by Howard Buescher, a 23-year veteran of the homebuilding business and his daughter Susan Girard. The Company employs approximately 400 people who sell, and construct, homes of distinctive quality in over 80 communities in Florida, Texas and North and South Carolina. The Company and 10 affiliates filed for Chapter 11 protection on January 26, 2009 (Bankr. S.D. Fla. Lead Case No. 09-11191). Sean T. Cork, Esq., Tina M. Talarchyk, Esq., and Craig D. Hansen, Esq., at Squire, Sanders & Dempsey, LLP, represent the Debtors in their restructuring efforts. Richard M. Williamson and Alvarez & Marsal North American LLC serve as the Debtors' chief restructuring officer, Odyssey Capital Group LLC as valuation expert, Michael P. Kahn & Associates LLC as financial advisor and Kurtzman Carson Consultants LLC as claims and noticing agent. The Debtors' Schedules of Assets and Liabilities delivered to the bankruptcy court in March 2009 show $309 million in assets available to pay liabilities totalling $280 million, $224 million of which is owed to secured creditors. M. Bryant Gatrell, Esq., at Moore & Van Allen PLLC, represents the agent for the Debtors' prepetition first lien facilities. Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Exelrod, LLP, represents the agent for the Debtors' prepetition second lien facility. MERUELO MADDUX: Expects to Report $5.9MM in Revenues for Q1 ----------------------------------------------------------- Meruelo Maddux Properties, Inc., anticipates reporting total revenue of roughly $5.9 million for the quarter ended March 31, 2009, as compared to total revenues of $6.0 million and a net loss of $4.0 million for the quarter ended March 31, 2008. With the exception of its high-rise apartment project at 717 W. Ninth Street, the Company has suspended all development projects, which will cause its net loss to increase as carrying costs such as interest, property taxes and related development costs are expensed rather than capitalized. Because of the suspension of its development projects, the Company expects combined rental expense, interest expense and general and administrative expenses to increase by roughly $4.0 million. The Company said it is unable to provide an estimate of its net loss for the quarter ended March 31, 2009, primarily because it has not completed its analyses related to real estate impairments. Meruelo Maddux Properties, Inc. (the "Company"), the Company and certain of its direct and indirect subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California, San Fernando Valley Division on March 26 and 27, 2009 (the "Bankruptcy Filing"). Meruelo Maddux has not been able to file its quarterly report for the period ended March 31, 2009. The Company told the Securities and Exchange Commission on May 12, 2009, that in the months leading up to and since its bankruptcy filing, the Company has been principally engaged in addressing bankruptcy-related matters, negotiating with creditors and potential strategic partners, and reformulating its business strategy in an effort to emerge from bankruptcy. The Company said its financial, accounting and administrative personnel have devoted substantially all of their time to the maintenance of the Company's ongoing operations, including the development of the Company's postpetition business strategy, as well as the completion of the year-end audit process and the preparation and filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008. The Company's ability to address all of these matters concurrently has been further hindered by the loss of key personnel in the Company's financial reporting department. "As a result of the increased burdens placed upon the Company's financial, accounting and administrative staff, the Company has been unable to timely complete its quarterly financial reporting process for the fiscal quarter ended March 31, 2009. However, the Company intends to file its quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2009 as soon as practicably possible after completion of its financial reporting processes," the Company told the SEC. About Meruelo Maddux Based in Los Angeles, California, Meruelo Maddux Properties, Inc., -- http://www.meruelomaddux.com/-- together with its affiliates, engage in residential, commercial and industrial development. Meruelo Maddux and its affiliates filed for Chapter 11 protection on March 26, 2009 (Bankr. C. D. Calif. Lead Case No. 09-13356). Aaron De Leest, Esq., John J. Bingham, Jr., Esq., and John N. Tedford, Esq., at Danning Gill Diamond & Kollitz, represent the Debtors in their restructuring efforts. Asa S. Hami, Esq., Tamar Kouyoumjian, Esq., and Victor A. Sahn, Esq., at SulmeyerKupetz, A Prof Corp, represent the official committee of unsecured creditors as counsel. The Debtors' financial condition as of December 31, 2008, showed estimated assets of $681,769,000 and estimated debts of $342,022,000. MGM MIRAGE: MRI to Redeem $100-Mil. in 7.25% Debentures Due 2017 ---------------------------------------------------------------- Mirage Resorts, Incorporated, a wholly owned subsidiary of MGM MIRAGE, on May 18, 2009, provided notice to Wells Fargo Bank, N.A., of MRI's election to redeem all of the outstanding 7.25% senior debentures due 2017. The redemption date will be June 18, 2009. Pursuant to the Indenture dated as of August 17, 1997, as supplemented by a Supplemental Indenture dated as of August 17, 1997, and a Second Supplemental Indenture dated as of October 10, 2000, between MRI and the Trustee (as successor in interest to First Security Bank, National Association), under which the MRI Debentures were issued, MRI will pay an amount equal to the sum of the present values of the remaining scheduled payments of principal and interest, discounted to the redemption date at a rate based on U.S. Treasury securities and described in the Indenture. As of May 18, 2009 the principal amount of outstanding Debentures was $100 million. The Company estimates that, based on current rates of U.S. Treasury securities, MRI will be required to pay approximately $129.5 million on the redemption date of the Debentures. MGM MIRAGE on May 19, 2009, sold, through a private placement exempt from the registration requirements under the Securities Act of 1933, as amended, $650 million in principal amount of its 10.375% Senior Secured Notes due May 2014 and $850 million in principal amount of its 11.125% Senior Secured Notes due November 2017. The Company said it plans to use the net proceeds of the offering -- roughly $1.42 billion after giving effect to discounts, commissions and offering expenses -- together with the net proceeds from a concurrent offering of common stock -- roughly $1.10 billion after giving effect to discounts, commissions and offering expenses and taking into account the underwriters exercise of the over-allotment option -- to: (i) repay a portion of the outstanding amount under the Company's senior credit facility, including a permanent prepayment of roughly $825.5 million from the net proceeds of the Notes; (ii) redeem all of the 7.25% senior debentures due 2017 of Mirage Resorts, Incorporated, a Nevada corporation, a wholly owned subsidiary of the Company; (iii) purchase all of the Company's 6.0% senior notes due 2009 and the 6.5% senior notes due 2009 of Mandalay Resort Group tendered in the pending tender offer; and (iv) for general corporate purposes. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on May 20, 2009, Standard & Poor's Ratings Services raised its corporate credit ratings on MGM MIRAGE and its subsidiaries to 'CCC+' from 'CCC', reflecting the substantial boost to MGM MIRAGE's intermediate-term liquidity profile provided by the recent $2.5 billion capital raise (prior to any over-allotments on the equity offering). S&P also removed all ratings from CreditWatch, where they were placed with positive implications on May 13, 2009, following MGM MIRAGE's announced plans to raise at least $2.5 billion of capital. The rating outlook is developing. The TCR said May 15 that Moody's Investors Service affirmed MGM MIRAGE's Caa2 Corporate Family Rating and Caa3 Probability of Default Rating following the company's announcement it intends to issue $1.0 of new common equity and $1.5 billion of new senior secured notes. A B1 rating was assigned to the proposed $1.5 billion senior secured guaranteed notes. MGM has an SGL-4 Speculative Grade Liquidity rating and a negative rating outlook. MGM MIRAGE: Raises $1.42BB in Private Offer of 2014, 2017 Notes --------------------------------------------------------------- MGM MIRAGE on May 19, 2009, sold, through a private placement exempt from the registration requirements under the Securities Act of 1933, as amended, $650 million in principal amount of its 10.375% Senior Secured Notes due May 2014 and $850 million in principal amount of its 11.125% Senior Secured Notes due November 2017. The Notes are guaranteed on a senior basis by substantially all of the Company's wholly owned U.S. subsidiaries. The Notes and the corresponding guarantees are secured by: (i) a first priority lien on the Bellagio Hotel and Casino, the real property on which Bellagio is located and all existing and future personal property of Bellagio, LLC, a Nevada limited liability, other than cash, deposit accounts, gaming and liquor licenses and other assets and properties in which the grant of security is restricted by law or contract; (ii) a first priority lien on The Mirage Hotel and Casino, the real property on which Mirage is located and all existing and future personal property of The Mirage Casino-Hotel, a Nevada corporation, other than cash, deposit accounts, gaming and liquor licenses and other assets and properties in which the grant of security is restricted by law or contract; and (iii) upon receipt of the necessary gaming approvals, a first priority pledge of the equity interests in (a) Bellagio LLC and (b) TMCH. The Notes were sold in the United States only to accredited investors pursuant to an exemption from the Securities Act of 1933 and subsequently resold by such investors to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons in accordance with Regulation S under the Securities Act. The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company said it plans to use the net proceeds of the offering -- roughly $1.42 billion after giving effect to discounts, commissions and offering expenses -- together with the net proceeds from a concurrent offering of common stock -- roughly $1.10 billion after giving effect to discounts, commissions and offering expenses and taking into account the underwriters exercise of the over-allotment option -- to: (i) repay a portion of the outstanding amount under the Company's senior credit facility, including a permanent prepayment of roughly $825.5 million from the net proceeds of the Notes; (ii) redeem all of the 7.25% senior debentures due 2017 of Mirage Resorts, Incorporated, a Nevada corporation, a wholly owned subsidiary of the Company; (iii) purchase all of the Company's 6.0% senior notes due 2009 and the 6.5% senior notes due 2009 of Mandalay Resort Group tendered in the pending tender offer; and (iv) for general corporate purposes. In connection with the closing of the Private Placement, (i) the Company and the Guarantors entered into an indenture, dated as of May 19, 2009, with U.S. Bank National Association, as the trustee, (ii) Bellagio LLC and TMCH entered into a security agreement, dated May 19, 2009, with U.S. Bank, as the collateral agent, and (iii) the Company and MRI entered into a pledge agreement, dated May 19, 2009, with U.S. Bank, as the collateral agent. Under the Indenture, the Company issued the (i) 2014 Notes bearing an interest rate of 10.375% and maturing on May 15, 2014, and (ii) 2017 Notes bearing an interest rate of 11.125% and maturing on November 15, 2017, to certain initial purchasers of such Notes. Interest on the Notes will be payable semi-annually on May 15 and November 15 of each year, beginning on November 15, 2009. Pursuant to the Indenture, the Notes are guaranteed on a senior basis by the Guarantors. Furthermore, the Indenture contains covenants that will limit the Company's and the Guarantors' ability to (i) pay dividends or distributions, repurchase equity, prepay subordinated debt or make certain investments, (ii) incur additional debt or issue certain disqualified stock and preferred stock, (iii) incur liens on assets (subject to, under certain circumstances, regulatory approval), (iv) merge or consolidate with another company or sell all or substantially all assets, (v) enter into transactions with affiliates, (vi) allow to exist certain restrictions on ability of Guarantors to transfer assets, and (vii) enter into sale and lease-back transactions. Pursuant to the Indenture, if the Company experiences certain change of control or, under certain circumstances, if the Company or a Guarantor sells assets or experiences an event of loss with respect to the Asset Collateral, the Company will be required to offer to repurchase all or a portion, as applicable, of the outstanding Notes. The 2014 Notes will be redeemable at the option of the Company at any time prior to the maturity date at 100% of their principal amount plus any accrued interest and a "make-whole" premium set forth in the Indenture. The 2017 Notes will be redeemable at the option of the Company at any time prior to May 15, 2013 at 100% of their principal amount plus any accrued interest and a "make-whole" premium set forth in the Indenture. The 2017 Notes may be redeemed after May 15, 2013, until May 14, 2014, at a price of 105.563% of their principal amount plus any accrued interest. From May 15, 2014, until May 14, 2015, the 2017 Notes may be redeemed at a price of 102.781% of their principal amount plus any accrued interest. Thereafter, the 2017 Notes may be redeemed at a price of 100% of their principal amount plus any accrued interest. Pursuant to the Security Agreement, Bellagio LLC and TMCH granted a security interest on the Asset Collateral to the collateral agent to secure the obligations by Bellagio LLC and TMCH under their guarantees of the Notes. Pursuant to the Pledge Agreement, the Company and MRI agreed to pledge, upon receipt of the necessary gaming approvals, the Equity Collateral to secure the obligations of the Company under the Notes and the obligations of MRI under its guarantee of the Notes. The Security Agreement and the Pledge Agreement contain customary representations and warranties. The holders of the Company's 13% Senior Secured Notes due 2013 have an equal and ratable lien in the Asset Collateral and will have an equal and ratable lien on the Equity Collateral upon receipt of necessary gaming approvals. U.S. Bank also serves as the trustee under various other indentures governing the terms and conditions of certain of the Company's outstanding debt securities. About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on May 20, 2009, Standard & Poor's Ratings Services raised its corporate credit ratings on MGM MIRAGE and its subsidiaries to 'CCC+' from 'CCC', reflecting the substantial boost to MGM MIRAGE's intermediate-term liquidity profile provided by the recent $2.5 billion capital raise (prior to any over-allotments on the equity offering). S&P also removed all ratings from CreditWatch, where they were placed with positive implications on May 13, 2009, following MGM MIRAGE's announced plans to raise at least $2.5 billion of capital. The rating outlook is developing. The TCR said May 15 that Moody's Investors Service affirmed MGM MIRAGE's Caa2 Corporate Family Rating and Caa3 Probability of Default Rating following the company's announcement it intends to issue $1.0 of new common equity and $1.5 billion of new senior secured notes. A B1 rating was assigned to the proposed $1.5 billion senior secured guaranteed notes. MGM has an SGL-4 Speculative Grade Liquidity rating and a negative rating outlook. MGM MIRAGE: Kerkorian Buys 14.2MM Shares, Raises Stake to 37% ------------------------------------------------------------- Kirk Kerkorian's Tracinda Corp. last week purchased 14,285,714 shares of MGM MIRAGE common stock in an underwritten public offering of 143,000,000 shares of Common Stock for a per share price of $7.00. Tracinda raised its holdings to 163,123,044, or roughly 37%, of the Company's shares. Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on May 20, 2009, Standard & Poor's Ratings Services raised its corporate credit ratings on MGM MIRAGE and its subsidiaries to 'CCC+' from 'CCC', reflecting the substantial boost to MGM MIRAGE's intermediate-term liquidity profile provided by the recent $2.5 billion capital raise (prior to any over-allotments on the equity offering). S&P also removed all ratings from CreditWatch, where they were placed with positive implications on May 13, 2009, following MGM MIRAGE's announced plans to raise at least $2.5 billion of capital. The rating outlook is developing. The TCR said May 15 that Moody's Investors Service affirmed MGM MIRAGE's Caa2 Corporate Family Rating and Caa3 Probability of Default Rating following the company's announcement it intends to issue $1.0 of new common equity and $1.5 billion of new senior secured notes. A B1 rating was assigned to the proposed $1.5 billion senior secured guaranteed notes. MGM has an SGL-4 Speculative Grade Liquidity rating and a negative rating outlook. MID RIVER MINERALS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Mid River Minerals, Inc. 4675-M Weitz Road Morris, IL 60450 Bankruptcy Case No.: 09-18465 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtor's Counsel: Chris D. Rouskey, Esq. Rouskey and Baldacci 151 Springfield Ave Joliet, IL 60435 Tel: (815) 741-2118 Fax: (815) 741-0670 Email: rouskey-baldacci@sbcglobal.net Total Assets: $1,259,804 Total Debts: $1,841,039 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/ilnb09-18465.pdf The petition was signed by Anthony P. Augius, president of the Company. MONACO COACH: Court Approves Sale of Resort Assets to Four Buyers ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved the sale of certain assets related to Monaco Coach Corporation's motorhome resorts and La Quinta, California, real property to 4 separate buyers who submitted the highest and best offers for the "resort assets": -- The resort property located in Las Vegas, Nevada, is sold to Las Vegas Motorcoach Resort Owners Association for the purchase price of $2,500,000. -- The resort property located in Indio, California is sold to Motorcoach Country Club Property Owners Association, Inc., for the purchase price of $400,000. -- The real property located in La Quinta, California is sold to BLF, LLC, for $2,050,000. -- The resort properties located in Naples, Florida, and Bay Harbor, Michigan are sold to Morgan Acquisitions, LLC. Morgan offered $8,520,283 for the Naples Resort and $2,629,716 for the Bay Harbor Resort. About Monaco Coach Monaco Coach Corporation, a national manufacturer of motorized and towable recreational vehicles, is ranked as the number one producer of diesel-powered motorhomes. Headquartered in Coburg, Oregon, with manufacturing facilities in Oregon and Indiana, the Company offers a variety of RVs, from entry-level priced towables to custom-made luxury models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie, and R-Vision brand names. The Company operates motorhome-only resorts in California, Florida, Nevada and Michigan. Monaco Coach is listed on the Pink Sheets under the symbol "MCOAQ". As of September 27, 2008, the Company had $442.1 million in total assets and $208.8 million in total liabilities. Monaco Coach Corporation and its affiliates filed for Chapter 11 on March 5 (Bankr. D. Del., Lead Case No. 09-10750). Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtors as counsel. Dennis A. Meloro, Esq., Diane E. Vuocolo, Esq., Donald J. Detweiler, Esq., Kevin Finger, Esq., Monica Loftin Townsend, Esq., and Sean Bezark, Esq., at Greenberg Traurig, LLP, represent the official committee of unsecured creditors as counsel. Omni Management Group LLC serves as the Debtors' claims, balloting, noticing and administrative agent. MONACO COACH: Court OKs Sale of RV Biz. to Navistar Unit -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved the sale of substantially all of the assets of Monaco Coach related to the Debtors' motorhome, towable recreational vehicle, and chassis manufacturing business to Workhorse International Holding Company who submitted the highest and best offer in accordance with the approved bid procedures. Workhorse is a unit of Navistar, Inc. Pursuant to the Asset Purchase Agreement, dated as of April 23, 2009, Workhorse offered $52 million in cash, subject to certain adjustments, plus the assumed liabilities, for the Acquired Assets. As reported in the Troubled Company Reporter on May 6, 2009, Monaco Coach was scheduled to hold an auction on May 21 to test whether there is a buyer that will pay more than the $52 million offered by Navistar International Corp. for most of its business. According to The Washington Post, no other bids were presented for the assets, and, accordingly, the auction was cancelled. The sale is scheduled to close June 2. Monaco's deal with truck- maker Navistar International Corp. includes certain manufacturing facilities located in Indiana and Oregon. In addition, Navistar will acquire all brands, intellectual property, inventories and equipment relating to Monaco's motorized and towable recreational vehicle segments. Excluded from the transaction are the Motorhome Resorts segment, the Roadmaster Cargo Trailer business and several industrial properties. About Navistar International Based in Warrenville, Illinois, Navistar International Corporation (NYSE: NAV) -- http://www.navistar.com/-- produces International(R) brand commercial and military vehicles, MaxxForce(TM) brand diesel engines, IC brand school and commercial buses, and Workhorse(R) brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Navistar is also a provider of truck and diesel engine parts. Another affiliate offers financing services. About Monaco Coach Monaco Coach Corporation, a national manufacturer of motorized and towable recreational vehicles, is ranked as the number one producer of diesel-powered motorhomes. Headquartered in Coburg, Oregon, with manufacturing facilities in Oregon and Indiana, the Company offers a variety of RVs, from entry-level priced towables to custom-made luxury models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie, and R-Vision brand names. The Company operates motorhome-only resorts in California, Florida, Nevada and Michigan. Monaco Coach is listed on the Pink Sheets under the symbol "MCOAQ". As of September 27, 2008, the Company had $442.1 million in total assets and $208.8 million in total liabilities. Monaco Coach Corporation and its affiliates filed for Chapter 11 on March 5 (Bankr. D. Del., Lead Case No. 09-10750). Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtors as counsel. Dennis A. Meloro, Esq., Diane E. Vuocolo, Esq., Donald J. Detweiler, Esq., Kevin Finger, Esq., Monica Loftin Townsend, Esq., and Sean Bezark, Esq., at Greenberg Traurig, LLP, represent the official committee of unsecured creditors as counsel. Omni Management Group LLC serves as the Debtors' claims, balloting, noticing and administrative agent. MTI TECHNOLOGY: Court Extends Plan Filing Deadline to June 15 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has approved a stipulation reached by MTI Technology Corporation and its official committee of unsecured creditors for an extension of the Debtor's exclusive period to file a plan until June 15, 2009. The Committee and the Debtor told the Court that they will be pursuing avoidance claims under Chapter 5 of the Bankruptcy Code and other litigation claims. The Committee is also exploring the possibility of obtaining a buyer for the Debtor's corporate shell, through a reverse merger transaction, which would be effected through a Chapter 11 plan of reorganization. Headquartered in Tustin, California, MTI Technology Corp. -- http://www.mti.com/-- was a global provider of end-to-end information infastructure for mid to large size companies. At the time of its bankruptcy filing, the Debtor had three primary groups of assets, the majority of which have now been sold: (1) European Subsidiaries - The Debtor owned all of the issued and outstanding capital sock of each of MTI Technology GmbH, incorporated in Germany, MTI Technology Limited, incorporated in Scotland, and MTI France S.A.S., incorporated in France. (2) A U.S.-based service division known as "Collective", which was acquired by the Debtor approximately 18 months ago. (3) A separate, U.S.-based sales and service division other than Collective. The Company filed for Chapter 11 protection on Oct. 15, 2007 (Bankr. C.D. Calif. Case No. 07-13347). Ivan L. Kallick, Esq., at Mannatt Phelps & Phil; Christine M. Fitzgerald, Esq., and Eve A. Marsella, Esq., at Clarkson, Gore & Marsella APLC, represent the Debtor as counsel. Omni Management Group LLC serves as the Debtor's claim, noticing and balloting agent. The U.S. Trustee for Region 16 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in the Debtor's case. Winthrop Couchot Professional Corporation represents the Committee as general insolvency counsel. As of Aug. 21, 2007, the Debtor had total assets of $19,955,578 and total debts of $33,093,308. NCCS INC: Case Summary & 8 Largest Unsecured Creditors ------------------------------------------------------ Debtor: NCCS, Inc. 223A Cumberland Avenue Portland, ME 04101 Bankruptcy Case No.: 09-20735 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Maine (Portland) Debtor's Counsel: James F. Molleur, Esq. Molleur Law Office 419 Alfred Street Biddeford, ME 04005 Tel: (207) 283-3777 Fax: (207) 283-4558 Email: jim@molleurlaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 8 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/meb09-20735.pdf The petition was signed by David O'Donnell. NCI BUILDING: Obtains Waivers Until July 15 from Sr. Lenders ------------------------------------------------------------ NCI Building Systems, Inc., has obtained waivers from its senior credit facility lenders, including waivers of its financial maintenance covenants and of restrictions on the ability of the Company to enter into an agreement for a substantial equity investment in the Company. The waivers are intended to provide the Company with sufficient time to address its comprehensive capital structure plans. The waivers will remain in effect through July 15, 2009, and automatically extend to September 15, 2009, upon the signing of a definitive agreement for an equity investment. NCI Building Systems retained J.P. Morgan Securities Inc. to assist the Company in assessing a comprehensive range of potential alternatives to strengthen its balance sheet and enhance its long term financial position. As a result of this effort, NCI has made significant progress with a leading private equity firm with regard to a substantial equity investment in the Company. While NCI is in advanced stages of negotiations with that private equity firm, any transaction will require considerable cooperation from the Company's lenders and note holders, and will be subject to customary closing conditions, including refinancing of its existing credit facilities and a recapitalization or redemption of its convertible notes. While there can be no assurances that a transaction will be concluded, the Company continues to work diligently towards the successful consummation of a comprehensive solution. Greenhill & Co. has been retained by NCI to advise the Company on these matters. "I am very encouraged by the progress we have made to date in addressing our capital structure," commented Norman C. Chambers, Chairman, President and Chief Executive Officer. "We have made significant progress with an experienced private equity firm to make a substantial investment in the company. Despite the challenges presented by the economy and the credit markets, I am confident that we will finalize a transaction, enabling us to have sufficient liquidity to grow our business as the economy rebounds. While this investment will be very dilutive to our current shareholders, we believe it is in their best interest to address our capital structure." "The waivers announced today provide us additional time to work through various issues with all of the relevant parties," noted Mr. Chambers. "Our team will continue to proceed expeditiously to finalize a transaction within the coming months." NCI Building Systems, Inc., has filed a Form 8-K today with respect to the bank group waivers. About NCI Building Houston, Texas-based NCI Building Systems Inc. manufactures and markets metal products and services for the nonresidential construction industry in North America. * * * * As reported by the Troubled Company Reporter on May 25, 2009, Standard & Poor's Ratings Services lowered its ratings on NCI Building Systems Inc. The corporate credit rating was lowered to 'B+' from 'BB'. All ratings remain on CreditWatch with negative implications where they were placed on March 11, 2009. NOBLE INT'L: 691 Employees to Get Incentives Upon Sale of Assets ---------------------------------------------------------------- Roughly 691 employees of Noble International, Ltd., including Andrew J. Tavi, the Company's Chief Executive Officer and David Fallon, the Company's Chief Financial Officer, may be eligible to earn cash incentive payments under the Company's key employee incentive plan, in the event the Company achieves these payment milestones: (1) the transfer of substantially all of the Company's laser welding business by April 30, 2009; and (2) the sale or transfer of substantially all of the Company's U.S. roll forming business by May 31, 2009. In the event a payment milestone does not occur by the date specified, and the primary reason for the delay was not within the Company's control, each eligible employee will receive the cash payment that would have been due the employee had the payment milestone been achieved. The Company's DIP lenders agreed to the payments as incentives to accomplish the conditions required for the Company to receive its DIP financing. On May 5, 2009, cash payments resulting from the timely transition of the Company's laser-welded blank business were paid to eligible employees, including $38,461 to Mr. Tavi and $33,654 to Mr. Fallon. In the event that substantially all of the Company's U.S. roll forming business is sold or transferred by May 31, 2009, or it is not sold or resourced for a reason other than the fault of the Company, then Mr. Tavi is to receive approximately $39,000 and Mr. Fallon is to receive approximately $34,000, subject to adjustment depending on the number of remaining eligible participants in the Incentive Plan. The U.S. Bankruptcy Court for the Eastern District of Michigan approved Incentive Plan on April 29, 2009. As reported by the Troubled Company Reporter, Noble International on May 8, 2009, entered into a Purchase Agreement with ArcelorMittal S.A. The Purchase Agreement contemplates the sale of the Company's European business, consisting of the shares of Noble European Holdings B.V., together with the direct and indirect holdings and assets of Noble BV. The Transferred Assets include all of the direct and indirect wholly-owned subsidiaries of Noble BV, as well as its interest in certain joint ventures in India, China and Silao, Mexico. The Transferred Assets do not include Noble BV's 49% equity interest in Sumisho Noble (Thailand) Co., Ltd., or the Company's 50% equity interest in WISCO Noble (Wuhan) Laser Welding Technology Co., Ltd. ArcelorMittal agreed to (a) accept the Transferred Assets subject to roughly EUR80 million in borrowed money at the closing, (b) deliver $2.1 million to the Company by wire transfer or other immediately available funds at the closing and (c) allow the Company to retain any consideration received by Noble BV for the transfer of the Thailand Joint Venture prior to closing. At the closing, each of the Company and ArcelorMittal will execute and deliver a mutual general release of substantially all of the claims that such party and its affiliates may have against the other party. The Company will not be released with respect to the subordinated debt owed to ArcelorMittal and its affiliate by the Company in the original principal amount of $65 million. The closing of the transaction contemplated by the Purchase Agreement is subject to the satisfaction of various conditions including bankruptcy court approval. The closing is also subject to the Company not receiving a higher and better bid during the bankruptcy approval process. ArcelorMittal disclosed in the Amendment No. 6 to its Schedule 13D filing that it is the beneficial owner of roughly 16,663,651, or 58.5%, of the Company's common stock. As reported by the TCR on May 21, 2009, Noble International will test ArcelorMittal's offer at an auction on May 28. The Court will convene a hearing May 29 to consider the results of the auction. Meanwhile, Noble International withdrew on May 11 its appeal of the Nasdaq Staff Determinations. Accordingly, the Nasdaq Stock Market informed the Company that it would delist the Company's common stock effective at the open of business on May 13, 2009. In April, the Company received Nasdaq Staff Determination letters indicating certain violations of Nasdaq Listing Rules and subjecting the Company's common stock to delisting. The Company appealed the Nasdaq Staff Determinations to the Nasdaq Listing Qualifications Panel. About Noble International Headquartered in Warren, Michigan, Noble International, Ltd. -- http://www.nobleintl.com/home.html/-- provides flat, tubular, shaped and enclosed formed structures to automotive original equipment manufacturers and their suppliers, for use in automobile applications, including doors, fenders, body side panels, pillars, bumpers, door beams, load floors, windshield headers, door tracks, door frames, and glass channels. Noble International and its affiliates filed for Chapter 11 protection on April 15, 2009 (Bankr. E. D. Mi. Case No. 09-51720). The Debtors proposed Foley & Lardner LLP as their general bankruptcy counsel. Daniel M. McDermott, the United States Trustee for Region 9, appointed three creditors to serve on an official committee of unsecured creditors. The Debtors disclosed total assets of $190,763,000 and total debts of $38,691,000, as of January 10, 2009. NORTEL NETWORKS: Court Extends Plan Deadline to Sept. 11 -------------------------------------------------------- Nortel Networks Inc. and its debtor-affiliates won an extension of their time to file their Chapter 11 plan and solicit votes for that plan. The U.S. Bankruptcy Court for the District of Delaware have extend the period by which the Debtors have the exclusive right to file a plan of reorganization through September 11, 2009, and the period by which they have exclusive right to solicit votes for that plan through November 10, 2009. Attorney for the Debtors, Andrew Remming, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, Delaware, told the Court that the Debtors need more time to coordinate with the Official Committee of Unsecured Creditors and other parties-in-interests to formulate a global plan to evaluate and maximize value for their businesses and to develop a plan of reorganization. The Debtors, Mr. Reming said, are still in the early stages of building a consensus among their constituencies regarding the formulation of a global plan since they have diligently worked on a variety of time-consuming tasks necessary for the administration of their bankruptcy proceedings since the Petition Date. These activities include: -- the creation of a global key employee retention and incentive plan; -- the implementation of procedures to resolve reclamation claims asserted against the Debtors; -- the rejection of certain executory contracts and non-residential leases; -- the negotiation and implementation of a multi- jurisdictional sale of the Debtors' non-core assets to Radware Ltd.; -- efforts aimed at stabilizing the Debtors' business and cash management operations in multiple jurisdictions around the world; -- engaging suppliers and customers of the Nortel companies' worldwide operations; -- the preparation of schedules of assets and liabilities and other reports required in the Debtors' bankruptcy cases, including assisting their publicly reporting Canadian affiliates to continue to timely file periodic reports required of a public company; -- the evaluation and coordination of the Debtors' U.S. restructuring efforts and court proceedings in the context of multi-jurisdictional proceedings; -- solicitation of input and coordination of restructuring efforts with the Creditors Committee; and -- spending substantial time and resources in providing information and due diligence to the Creditors Committee and the ad hoc group of bondholders. In light of the accomplishments the Debtors thus far have achieved in their Chapter 11 cases as well as the extraordinary complexity and breadth of the Debtors' global business model, the Debtors' request for an extension of their Exclusive Periods is justified, Mr. Remming said. Mr. Reming said the extension request is consistent with the purpose of Section 1121 and will not harm creditors. The extension request, he adds, does not preclude parties-in-interest from seeking a reduction or termination of the Exclusive Period for cause. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) ORBITZ WORLDWIDE: S&P Puts 'B' Corporate Rating on Negative Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Orbitz Worldwide Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch placement is based on the company's May 21, 2009, announcement that it is seeking an amendment to its $685 million credit agreement that would permit it to make open market purchases of this debt," said Standard & Poor's credit analyst Betsy Snyder. "If the amendment is approved and the company buys back bank debt at a material discount, S&P believes this could qualify as a distressed debt purchase under our criteria." Ratings on Orbitz Worldwide Inc. reflect the controlling stake in the company held by Travelport and affiliates of the Blackstone Group, one of the owners of Travelport Ltd.; an aggressive financial profile; and the seasonal and cyclical nature of the travel industry. Ratings also incorporate the company's major position in on-line travel distribution and the strong cash flow this business typically generates. In July 2007, Orbitz completed an IPO, which generated $475 million of net proceeds, and closed on a $685 million secured credit facility. Most of the proceeds from these financings were used to reduce Travelport's debt. From the date of the IPO through January 2008, Travelport continued to own approximately 59% of Orbitz. At that time, it divested a portion of its stake so that it no longer owns a controlling interest (just under 50%). However, the shares were transferred to affiliates of the Blackstone Group, one of Travelport's owners, who together still own over 50%. Orbitz is a leading on-line consumer travel distributor through a diverse group of brands that include Orbitz, Cheap Tickets, ebookers, and several others. Orbitz is a major full-service U.S. on-line travel agency. Cheap Tickets is an on-line travel agency focusing on price-sensitive travelers. Ebookers is a U.K. based European on-line and off-line travel agency. If the company's proposed amendment to its credit agreement is approved and it subsequently completes open market purchases of its term loan at a discounted price, S&P will evaluate whether S&P consider this a distressed debt purchase. This could ultimately result in a downgrade to 'SD' (selective default), based on S&P's criteria, if completed. ORTHOFIX INTERNATIONAL: Moody's Comments on B1' Corporate Rating ---------------------------------------------------------------- Moody's commented on the ratings and outlook of Orthofix International NV. Moody's acknowledges several recent developments at Orthofix, which appear to signal early progress in the stabilization of the spinal implant business (i.e, Blackstone) as well as improved liquidity. However, there is currently no change to the rating outlook, which remains negative, as Moody's believe there continues to be risks associated with litigation, near-term product transitions and the continued restructuring of the spine division. There is no change to the B1 Corporate Family Rating or the B2 Probability of Default Rating. The last rating action was on March 26, 2008 when Moody's downgraded the Corporate Family Rating to B1 from Ba3 and changed the outlook to negative. Orthofix is a provider of pre and post operative products to address bone and joint health needs of patients. Orthofix offers surgical and non-surgical products primarily for the spine, orthopedics and sports medicine markets. The company reported revenues of $521 million for the twelve months ended December 31, 2008. OSCIENT PHARMA: Recieves Notice From NASDAQ on Delayed 10-Q Filing ------------------------------------------------------------------ Oscient Pharmaceuticals has received notification from the Listings Qualifications Department of The NASDAQ Stock Market LLC that since the Company has not filed its Form 10-Q for the period ended March 31, 2009, the Company is no longer in compliance with Marketplace Rule 5250(c)(1). The Company has 60 calendar days, or until July 20, 2009, to submit a plan to regain compliance. Following such submission, NASDAQ may provide the Company with up to 180 calendar days from the filing's due date, or until November 11, 2009, to regain compliance. If NASDAQ does not accept the Company's plan to regain compliance, the Company will receive written notification of delisting from NASDAQ and at that time will be entitled to request a hearing before a NASDAQ Listing Qualifications Panel to appeal the NASDAQ decision. The NASDAQ notice has no effect on the listing of the Company's common stock on The NASDAQ Global Market at this time. About Oscient Pharmaceuticals Waltham, Massachusetts-based Oscient Pharmaceuticals Corporation is a commercial-stage pharmaceutical company marketing two FDA- approved products in the United States: ANTARA(R) (fenofibrate) capsules, a cardiovascular product and FACTIVE(R) (gemifloxacin mesylate) tablets, a fluoroquinolone antibiotic. ANTARA is indicated for the adjunct treatment of hypercholesterolemia (high blood cholesterol) and hypertriglyceridemia (high triglycerides) in combination with diet. FACTIVE is approved for the treatment of acute bacterial exacerbations of chronic bronchitis and community-acquired pneumonia of mild to moderate severity. Oscient promotes ANTARA and FACTIVE through a national sales force calling on primary care physicians, cardiologists, endocrinologists and pulmonologists. PLANT INSULATION: Files Ch. 11 to Deal with Asbestos Claims ----------------------------------------------------------- Plant Insulation Co. filed a Chapter 11 petition on May 20 before the U.S. Bankruptcy Court for the Northern District of California. The Company has been haunted by asbestos personal-injury claims arising from products it stopped selling and installing about 35 years ago. The Debtor, formerly known as both Plant Asbestos Company and Asbestos Company of California, was formed to engage in the business of selling, installing and repairing asbestos, brick, cement, concrete, stone and all other types of fire proofing and insulating materials. Plant was an insulation contractor; its work regularly involved installing and removing asbestos products during a wide range of years. From January 1948 through the 1990s, Plant was the exclusive Northern California distributor and contract applicator of Fibreboard Corp.'s "Pabco" and later "CalTemp" brand high-temperature pipe and block insulation. At all times through about September 1971, the Fibreboard products contained asbestos. Plant's installation of asbestos containing Fibreboard products likely ended sometime in 1972. As it had before 1972, Plant thereafter continued to repair, maintain, remove and displace asbestos-containing materials at various job sites where it performed insulation work. Asbestos Related Claims As a result of Plant's sale and installation of asbestos- containing products dating back to the 1930s, Plant has been embroiled in asbestos-related litigation for many years. From early 1978 and continuing through its bankruptcy filing on May 20, Plant had been subjected to thousands of asbestos bodily injury, wrongful death and loss of consortium claims and lawsuits for damages allegedly caused in whole or in part by exposure to asbestos-containing materials installed or supplied by Plant dating back to the 1930s. As of the Petition Date, thousands of Asbestos Cases were pending against Plant in California, primarily in Alameda and San Francisco counties. Prior to the bankruptcy filing, approximately 40 new complaints were being filed against Plant each month, and Plant anticipates that numerous additional asbestos related claims will be asserted against it for many years to come. The potential liabilities represented by present and anticipated future asbestos related claims against Plant far exceed the value of Plant's assets. Plant believes that its historical comprehensive general insurance assets provide coverage for many of the present and future liabilities although Plant's insurers dispute their liability in the Asbestos Cases. Bankruptcy Filing Plant is managing thousands of asbestos cases in numerous unrelated actions and venues. The status quo has numerous inefficiencies: The demand upon the courts is significant and Plant has been unable to consolidate the pending actions in a single or coordinated proceedings; Plant's resources have dwindled to the point that it is challenged in its efforts to fairly respond to plaintiffs' demands for discovery or the needs of counsel and its insurers to properly defend claims; plaintiffs with limited resources lack a streamlined means of submitting claims and having them considered, adjudicated, and paid; and insurers seeking to fully and finally limit their exposure lack the ability to protect themselves against unknown and future claimants that may be entitled to recourse against Plant's policies. In authorizing channeling injunctions pursuant to section 524(g) of the Bankruptcy Code, Congress has established a mechanism by which Plant can serve the legitimate needs of its creditors, essentially plaintiffs holding asbestos claims, and those individuals, now unknown, who will assert asbestos-related personal injury and wrongful death claims in the future. Section 524(g) also provides a vehicle by which those insurers who wish to do so will be able to resolve permanently their prospective liability for existing and future asbestos claims. In filing its chapter 11 case, the Debtor intends to invoke section 524(g) as a means of resolving the otherwise intractable set of issues associated with thousands of claims now pending against it in various jurisdictions, and the future lawsuits on future claims that would certainly be filed but for this bankruptcy case. About Plant Insulation Co. Plant Insulation Co., formerly known as both Plant Asbestos Company and Asbestos Company of California, was formed to engage in the business of selling, installing and repairing asbestos, brick, cement, concrete, stone and all other types of fire proofing and insulating materials. From January 1948 through the 1990s, Plant was the exclusive Northern California distributor and contract applicator of Fibreboard Corp.'s "Pabco" and later "CalTemp" brand high-temperature pipe and block insulation. At all times through about September 1971, the Fibreboard products contained asbestos. Plant Insulation Co. filed a Chapter 11 petition on May 20, 2009 (Bankr. N.D. Calif. Case No. 09-31347) in San Francisco to resolve asbestos personal-injury claims arising from products it stopped selling and installing about 1972. PLANT INSULATION: Wants to Keep Renfrew as Futures Representative ----------------------------------------------------------------- Plant Insulation Company, pursuant to Sections 105(a), 327 and 524(g)(4)(B)(1) of the Bankruptcy Code, asks the U.S. Bankruptcy Court for the Northern District of California to appoint the Honorable Charles B. Renfrew (Ret.) as legal representative for the purpose of protecting the rights of persons who might subsequently assert against the Debtor personal injury or wrongful death claims for damages allegedly caused by the presence of, or exposure to, asbestos or asbestos containing products in connection with Debtor's past operations. After careful consideration concerning the selection of a disinterested, highly qualified individual to represent Future Asbestos Claimants, the Debtor selected Judge Renfrew, a former United States District Judge for the Northern District of California and the former Deputy Attorney General of the United States. He has previously served as the Futures Representative in the jointly administered chapter 11 cases of Thorpe Insulation Company and Pacific Insulation Company in the Central District of California, Los Angeles Division, Case No. 07-19271; In re Western Asbestos Company, Western MacArthur Co. and MacArthur Co. in the Northern District of California, Oakland Division, Case No. 02- 46284; and In re. J.T. Thorpe, Inc. in the Central District of California, Los Angeles Division, Case. No. 02-14216-BB. The Debtor believes that Judge Renfrew is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. On February 13, 2009, the Debtor engaged Judge Renfrew in a contractual capacity to serve as the Futures Representative pursuant to an engagement letter. As part of that engagement, the Debtor expressly acknowledged that Judge Renfrew's sole responsibility as Futures Representative, either in a contractual capacity or as a retained professional under Section 524(g) of the Bankruptcy Code, will be to protect the interests of future holders of asbestos related personal injury claims against the Debtor, or any successor in interest or alter ego, which may require Judge Renfrew to take positions adverse to the Debtor. Prior to the Petition Date, Judge Renfrew was compensated by the Debtor at his current customary hourly rate of $700 per hour, plus out of pocket expenses, in the amount of $6,734.99. Judge Renfrew has retained the services of Gary S. Fergus, Esq., to represent him in his capacity as Futures Representative. Mr. Fergus' prepetition fees and costs were also paid by the Debtor prior to the Petition Date, and Judge Renfrew intends to seek Court approval of his postpetition retention of Mr. Fergus in this chapter 11 case. Mr. Fergus is currently holding in his client trust account, on behalf of Judge Renfrew and professionals to be retained by Judge Renfrew post-petition, approximately $250,000 in funds provided by Plant pre-petition for payment of postpetition services. To date, the proposed Futures Representatives services have consisted primarily of reviewing and being briefed by Debtor on the status of the Debtor's operations as well as its insurance coverage. The Debtor requests that the appointment of a Futures Representative be made on these terms and conditions: (a) Standing: The Futures Representative shall have standing to be heard as a party-in-interest in every matter relevant to the interests of Future Asbestos Claimants in the Debtor's chapter 11 case and in every matter relevant to 11 U.S.C. Sec. 524(g) and any trust established thereunder (whether in the Bankruptcy Court, the District Court or any appellate court), including but not limited to, participating in any claims objection, estimation and plan negotiation processes, and applying to the Court for an order seeking clarification or expansion of his authority or duties. Furthermore, the Futures Representative shall be authorized to exercise the powers and duties delegated to official committees with respect to participation in the formulation of the plan as enumerated in section 1103 of the Bankruptcy Code; (b) Engagement of Professionals: Attorneys and other professionals may be retained by the Futures Representative with prior approval from the Court pursuant to Sections 105(a) and 327 of the Bankruptcy Code, consistent with the treatment afforded other professionals in this case; (c) Compensation: Compensation, including professional fees and reimbursement of expenses, shall be payable to the Futures Representative and the Futures Representative's professionals from the Debtor's estate, subject to approval by the Court, consistent with the treatment afforded to other professionals in this case pursuant to the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the United States Trustee Guidelines, the Local Bankruptcy Rules and any order of this Court. The Debtor understands that the proposed Futures Representative's current hourly rate is $700 per hour and that from time to time his regular hourly rate may increase; (d) Removal of the Futures Representative: The Futures Representative may be removed or replaced at any time by the entry of an order of this Court, either on its own motion or on a motion of any party-in-interest; (e) Liability of Futures Representative: The Futures Representative shall not be liable for any damages, or have any obligations other than the duties prescribed in the order of appointment; provided, however, that nothing shall relieve the Futures Representative from liability arising out of his or her willful misconduct or gross negligence. The Futures Representative shall not be liable to any person as a result of any action or omission taken or made by the Futures Representative in good faith; and (f) Right to Receive Notice: The Futures Representative and his counsel shall be entitled to receive all notices and pleadings that are served upon any committee appointed in this case. According to David J. Gordon, president and chief executive officer of the Debtor, one of the key elements of any plan of reorganization proposed by the Debtor in this case will be to establish a trust and channeling injunction pursuant to which all current and future asbestos-related personal injury and wrongful death claims involving the Debtor will be channeled for liquidation and payment. In order to properly establish such a trust, the interests of both current and future asbestos-related claimants must be assessed and accommodated, Mr. Gordon said. Proposed counsel to the Debtor, Peter J. Benvenutti, Esq., at Jones Day, relates current claimants are claimants who have a "claim" as defined in the Bankruptcy Code against the Debtor during the proceedings leading to the confirmation of the plan. The interests of current asbestos-related claimants are protected in this case by the right of each individual claimant to file a proof of claim and appear and be heard in the case and by the appointment of the Official Committee of Unsecured Creditors. Future Asbestos Claimants are persons and entities that do not currently have an asbestos-related personal injury or wrongful death claim against the Debtor but may in the future have such a claim. The rights of such Future Asbestos Claimants are referred to as "future demands" under Section 524(g) of the Bankruptcy Code. In order to best protect the interests of Future Asbestos Claimants with respect to their asbestos-related Demands, a Futures Representative should be appointed. In particular, a Futures Representative has the responsibility of acting as a legal representative for the purpose of protecting the rights of persons that might subsequently assert Demands. The Debtor believes, based upon the numerous asbestos related bodily injury lawsuits that continue to be filed against it that numerous claims will continue to be asserted in the future. As a result, the Debtor believes it is important to appoint a Futures Representative at the inception of this case. According to Mr. Benvenutti, appointing a Futures Representative at the outset of this chapter 11 case will facilitate negotiations among the various constituencies over the terms of a plan of reorganization and result in a more efficient process by involving the Futures Representative in issues that will affect his constituency, such as any proposed settlements with the Debtor's insurers. The Debtor recognizes that potential conflicts exist between the interests of the Future Asbestos Claimants and those asbestos claimants who currently have claims against the Debtor's estate. These conflicts are the reason for the Debtor's request that an independent Futures Representative be appointed to represent the interests of the Future Asbestos Claimants. Moreover, because the identities of Future Asbestos Claimants are currently unknowable, a Futures Representative is necessary to act as a fiduciary to protect those claimants' interests with regard to the treatment of asbestos claims. About Plant Insulation Co. Plant Insulation Co., formerly known as both Plant Asbestos Company and Asbestos Company of California, was formed to engage in the business of selling, installing and repairing asbestos, brick, cement, concrete, stone and all other types of fire proofing and insulating materials. From January 1948 through the 1990s, Plant was the exclusive Northern California distributor and contract applicator of Fibreboard Corp.'s "Pabco" and later "CalTemp" brand high-temperature pipe and block insulation. At all times through about September 1971, the Fibreboard products contained asbestos. Plant Insulation Co. filed a Chapter 11 petition on May 20, 2009 (Bankr. N.D. Calif. Case No. 09-31347) in San Francisco to resolve asbestos personal-injury claims arising from products it stopped selling and installing about 1972. PLANT INSULATION: Wants Suit vs. Insurers to Proceed ---------------------------------------------------- Plant Insulation Co. has been embroiled in asbestos-related litigation for many years as a result of its sale and installation of asbestos containing products dating back to the 1930s. Thousands of asbestos bodily injury, wrongful death and loss of consortium claims and lawsuits have been pursued against Plant on account of its distribution until 1972 of Fibreboard Corp.'s "Pabco" and later "CalTemp" brand insulation, which contained asbestos. Plant maintained comprehensive general or excess liability insurance from various insurers. Beginning in 1988, certain of Plant's insurers defended Plant against the asbestos cases, and the following year they began to pay settlements or other indemnity amounts. Beginning in 1991, Plant's insurers, however, began advising it that their policies had been "exhausted" and that they would no longer defend or indemnify Plant. Each insurer, in turn professed "exhaustion" of its policies until, by 2001, all of Plant's insurers had stated that they would no longer defend or indemnify Plant against the asbestos cases. Plant had insufficient resources with which to defend itself against the asbestos cases, or to pay settlements or judgments in more than a handful of the cases that were pending against it when the last insurer asserted exhaustion. In addition, new asbestos cases were regularly filed against Plant. Plant was not aware, and did not understand, that its insurance policies operated so as to cover, without any aggregate limit, so called "operations" or "non-product" claims, i.e., bodily injury claims caused by asbestos exposure before a product is relinquished or an operation is completed. Consequently, when Plant's various insurers told it that their policies were "exhausted", Plant accepted the representation and turned to other insurers until, in 2001, all of Plant's then solvent insurers had claimed exhaustion. Declaratory Relief Action In an effort to resolve certain coverage disputes with its Insurers, on January 17, 2006, Plant filed an action in the California Superior Court for the County of San Francisco, captioned Plant Insulation Company v. Fireman's Fund Insurance Company, et al. (No. CGC-06-448618). The Declaratory Relief Action is designated as complex litigation and is assigned for all purposes to the Honorable John E. Munter, Judge of the Superior Court. The current operative pleading seeking relief on behalf of Plant in the Coverage Litigation is the Second Amended Complaint, filed on April 16, 2007. The Amended Complaint names certain insurers, and alleges that those insurers issued insurance policies to Plant over a period of years. The Amended Complaint seeks declaratory relief only in the form of policy interpretations, including approximately 13 separate declarations pertaining to how the policies apply to asbestos injury and death claims asserted against Plant. It does not seek damages. For example, Plant seeks a declaration that, notwithstanding the exhaustion of aggregate limits for products/completed operations, Plant is entitled to additional coverage for asbestos-related bodily injury claims. It also seeks a declaration based on the premise that all such coverage is "occurrence"-based and asserts that certain of the Insurers have acted inequitably toward Plant in certain respects, thereby affecting Plant's rights under the policies issued to it by such Insurers. Certain of the Insurers have filed cross-complaints against Plant which seek, generally speaking, declarations concerning insurance policy interpretation, including that the policies at issue do not provide coverage for the asbestos claims against Plant. The Declaratory Relief Action has been phased or staged for trial. First, after the parties engaged in voluminous discovery, a 22-day "Phase I" trial without a jury commenced on May 6, 2008. The Phase I trial addressed three issues: (1) the existence and material terms of policies allegedly issued by American Automobile Insurance Company to Plant covering the period from July 23, 1942 to July 23, 1952; (2) the material terms of policies issued by American Employers' Insurance Company to Plant from January 1, 1962 to January 1, 1965; and (3) equitable defenses to Plant's Phase I allegations relating to those policies. The trial included 3068 pages of transcript, 20 witnesses (appearing either live or by deposition designation), and over 350 admitted exhibits. A tentative decision was entered by the trial court on the Phase I issues on or about October 29, 2008, and a final decision was entered on or about January 9, 2009. The Phase I decision was unfavorable to Plant in that, among other things, the trial court found that Plant had failed to prove the existence and certain content of the "missing" polices at issue in that trial phase. No final judgment has been entered in the Declaratory Relief Action. Judge Munter has scheduled a Phase II trial to commence on Tuesday, May 26, 2009. That trial involves three affirmative defenses interposed by the Insurers -- "judicial estoppel", "unclean hands" and waiver. It will be tried to the Court without a jury. The Insurers contend that if established, the defenses, or any of them, should result in the dismissal of Plant's complaint in the Declaratory Relief Action. The Insurers have declined to state whether they will continue to prosecute their cross- complaints against Plant if Plant were to lose the Phase II trial, and if Plant's complaint in the declaratory relief action were to be dismissed. The contentions of the parties with respect to the impending Phase II trial are generally as set out in the trial brief of the Insurers. While the relief sought by Plant in the Declaratory Relief Action would substantially advance the parties' ability to finally resolve coverage issues relating to those Policies, Plant believes that coverage issues relating to the Insurers' policies will survive the Declaratory Relief Action regardless of its outcome. CIGA Dispute and Settlement By order entered February 24, 1987, the Los Angeles Superior Court declared two of Plant's asbestos insurers, Mission Insurance Company and Mission National Insurance Company, insolvent and placed such insurers into liquidation. In early 2001, Plant began efforts to convince the California Insurance Guarantee Association that it should provide Plant with statutory "backup" with respect to the policies issued by the Mission Insurers. Plant and CIGA entered into a settlement agreement whereby CIGA agreed to provide statutory coverage to Plant under the Mission Insurers' policies in the amount of $35 million. By letter agreement dated January 28, 2002, CIGA retained Travis & Pon ("T&P") and John M. Gregory to handle Plant asbestos claims and attempt to resolve them without costly litigation. Eventually, Plant established the Plant Insulation Company Asbestos Case Valuation Matrix which provided a vehicle for equitably sharing the limited CIGA funds among deserving claimants with reduced case handling costs, compared to how cases had been handled by Plant's insurers before they all declared exhaustion. In late 2005, Plant retained Morgan Lewis & Bockius LLP. Morgan Lewis was and is a firm with substantial experience with Operations Coverage issues. In January 2006, Plant sued the insurers who had previously claimed exhaustion, and tendered to those insurers several thousand Asbestos Cases then pending against Plant. The Insurers accepted the tender under a full reservation of rights. Asbestos Cases continue to be filed against Plant at a rate of about 40 per month. Since January 2006 asbestos cases newly filed and served on Plant have been referred 18 to the Insurers and have been defended by them. Beginning in March 2007, Plant settled with two of its primary insurers for cash payments in excess of the stated limits of liability in their respective policies. Certain primary insurers have also paid cash to asbestos claimants in settlement of lawsuits against Plant. The Insurers' decision to provide Plant with a defense against Asbestos Cases and to settle a limited number of such claims for cash notwithstanding their prior statements that the policies or aggregate limit thereof had been "exhausted" raised the possibility from CIGA's perspective that insurance was still available to cover certain asbestos claims against Plant, which in turn raised the possibility that certain asbestos claims against Plant which were being evaluated and processed through the Plant Matrix were not "covered claims" within the meaning of Insurance Code section 1063.1. As a result, on August 1, 2007, CIGA and Plant agreed that processing of cases submitted to the Plant Matrix would be suspended for an indefinite period, except for certain claims then subject to a recommendation that they be paid under the Plant Matrix. Accordingly, as of the Petition Date, CIGA settlement proceeds in the amount of approximately $15 million remain available for future distribution to claimants and payment of associated counsel costs, if Plant can provide proof to CIGA that all solvent insurance coverage has been exhausted. Because a substantial quantity of asbestos-containing materials sold and installed by Plant from 1948 through at least the early- 1970s were Pabco and CalTemp pipe and block insulation, a vast majority ofthe claimants with legitimate asbestos health claims against Plant also have claims against Fibreboard. Accordingly, Plant filed a number of indemnification claims against Fibreboard in Alameda County, and a total of 2,211 such asbestos claims were settled and 15 paid between 1994 and October 5, 2000, the date Fibreboard went into bankruptcy. Thereafter, Plant filed its indemnity claims in the Fibreboard bankruptcy case. In the absence of a settlement with the Owens Coming/Fibreboard Asbestos Personal Injury Trust, Plant intends to file and will file indemnity claims against the Fibreboard Trust for more than $103,000,000. Plant believes that the Fibreboard Trust will assert defenses to liability on those claims, but the Fibreboard Trust has not taken a formal position on the Plant indemnity claims as of the Petition Date. Settlement with Insurers Beginning in March 2007, Plant settled with two of its insurers for cash payments in excess of the stated limits of liability in their respective policies. Certain primary insurers have also paid cash to asbestos claimants in settlement of lawsuits against Plant. Thus far, in the aggregate, these settlements have resulted or may result in the Debtor receiving up to $27 million from those insurers for the benefit of asbestos claimants. Certain of the settlements are conditioned upon this Court approving those agreements. Also, the insurers' obligation to fund portions of the settlement amount are conditioned upon this Court confirming a plan that provides protection to the settling insurer pursuant to section 524(g) of the Bankruptcy Code. The Debtor anticipates filing motions seeking the required Court approvals of those settlements. Sale of Plant's Assets and Wind Down of Business Operations On May 17, 2001, Shahram Ameli, who had been Plant's Vice President and manager of operations for a number of years, formed Bayside Insulation, Inc.. Pursuant to an agreement as of that same date, Plant sold substantially all of its business assets to Bayside. By 2002, Plant had ceased active insulation operations, but continued to defend itself against claims and lawsuits and to pursue indemnity claims against Fibreboard. On January 1, 2004, Plant Equitable and Asbestos Claims Enterprise, LLC, a California limited liability company ("PEACE") acquired 100% of the outstanding shares of capital stock of Plant. Travis and Gregory each owned 50% of the outstanding shares of PEACE. On February 18,2009, PEACE transferred all its stock in Plant to The Plant Insulation Trust, which as a result became, and is now, the owner of 100% of the outstanding shares of Plant. David J. Gordon is the President and Chief Executive Officer of Plant. Plant has no other officers or directors. At present, Plant has no material liabilities except for liabilities unrelated to asbestos claims. Plant's assets consist principally of cash derived from settlements with certain insurers and claims against Insurers and the Fibreboard Trust. Lift Stay Motion Plant is managing thousands of asbestos cases in numerous unrelated actions and venues. The status quo has numerous inefficiencies: The demand upon the courts is significant and Plant has been unable to consolidate the pending actions in a single or coordinated proceedings; Plant's resources have dwindled to the point that it is challenged in its efforts to fairly respond to plaintiffs' demands for discovery or the needs of counsel and its insurers to properly defend claims; plaintiffs with limited resources lack a streamlined means of submitting claims and having them considered, adjudicated, and paid; and insurers seeking to fully and finally limit their exposure lack the ability to protect themselves against unknown and future claimants that may be entitled to recourse against Plant's policies. In authorizing channeling injunctions pursuant to section 524(g) of the Bankruptcy Code, Congress has established a mechanism by which Plant can serve the legitimate needs of its creditors, essentially plaintiffs holding asbestos claims, and those individuals, now unknown, who will assert asbestos-related personal injury and wrongful death claims in the future. In filing this chapter 11 case, the Debtor intends to invoke Section 524(g) as a means of resolving the otherwise intractable set of issues associated with thousands of claims now pending against it in various jurisdictions, and the future lawsuits on future claims that would certainly be filed but for this bankruptcy case. As for the Declaratory Relief Action, Plant asks the Bankruptcy Court to enter an order, pursuant to Section 362 of the Bankruptcy Code, modifying the automatic stay to the extent necessary to permit the "Phase II" trial involving the interpretation of certain of the Debtor's insurance policies now pending before the Superior Court of California to proceed through final decision. While the relief sought by Plant in the Declaratory Relief Action would substantially advance the parties' ability to finally resolve coverage issues relating to those Policies, Plant believes that coverage issues relating to the Insurers' policies will survive the Declaratory Relief Action regardless of its outcome. Because of the imminence of the Phase II trial, and in order to avoid either disrupting the long established trial schedule, or placing a cloud on the validity of the Phase II trial proceedings, Plant seeks the modification of the automatic stay - namely, confirmation by this Court that the parties may proceed before Judge Munter solely for the purposes of completing the Phase II trial. Plant or the Insurers may thereafter seek broader relief on full notice to all affected parties (presumably including an official committee of unsecured creditors and a future claims representative). Proposed counsel to the Debtor, Peter J. Benvenutti, Esq., at Jones Day, notes that the Ninth Circuit in Gruntz v. Los Angeles (In re Gruntz), 202 F.3d 1074, 1082-83, has made it clear that the bankruptcy court -- not the state court -- has the exclusive authority to determine the extent to which the automatic stay applies in any particular situation. Plant, according to Mr. Benvenutti, believes it essential to proceed with the Phase II trial on the scheduled timetable: (1) For over three years, Plant and its insurers have litigated the Declaratory Relief Action before the Superior Court, and the case has reached an important stage -- adjudication of certain alleged "defenses" to Plant's request for construction of its policies. The Phase II trial has been scheduled for many months, and the parties -- including Plant -- are prepared to proceed as planned. If the trial cannot go forward as currently scheduled on May 26, 2009, because of the number of parties and counsel and Judge Munter's heavy docket, it will likely be difficult for the Superior Court, the Debtor's professionals, the Insurers, their counsel and all other interested parties involved to establish a new trial date in the near future, and the resulting disruption and delay would impose very substantial costs on all parties, including Plant. The claims at issue are contract claims that arise under non-bankruptcy law. Accordingly, it is most efficient and in the best interests of creditors and the estate to allow the trial to proceed as scheduled. (2) Second, if the Phase II trial is stayed, there could be an associated delay in the Debtor's ability to promptly reorganize. The construction of the insurance policies at issue in the Declaratory Relief Action reflect fundamental disputes between Plant and the Insurers. A delay in the commencement of Phase II trial could impede the Debtor's ability to propose and confirm a plan in this case, and make the likelihood of consensual resolution far more difficult. (3) Neither Debtor nor its creditors will suffer undue prejudice or hardship if the automatic stay is modified. Plant's litigation counsel is serving on a contingency basis. Plant's creditors, the plaintiffs, will get rulings that will clarify the extent to which Plant can respond to their claims. Plant cannot identify any party that will be prejudiced. About Plant Insulation Co. Plant Insulation Co., formerly known as both Plant Asbestos Company and Asbestos Company of California, was formed to engage in the business of selling, installing and repairing asbestos, brick, cement, concrete, stone and all other types of fire proofing and insulating materials. From January 1948 through the 1990s, Plant was the exclusive Northern California distributor and contract applicator of Fibreboard Corp.'s "Pabco" and later "CalTemp" brand high-temperature pipe and block insulation. At all times through about September 1971, the Fibreboard products contained asbestos. Plant Insulation Co. filed a Chapter 11 petition on May 20, 2009 (Bankr. N.D. Calif. Case No. 09-31347) in San Francisco to resolve asbestos personal-injury claims arising from products it stopped selling and installing about 1972. PLANT INSULATION: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Plant Insulation Company c/o Law Offices of Travis & Pon 2271 California Street San Francisco, CA 94115 Tel: (415) 923-1200 Bankruptcy Case No.: 09-31347 Type of Business: The Debtor provides insulation products and services. Chapter 11 Petition Date: May 20, 2009 Court: United States Bankruptcy Court Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: Michaeline H. Correa, Esq. Jones Day 555 California St. 26th Fl San Francisco, CA 94104 (415) 875-5897 Email: mcorrea@jonesday.com Peter J. Benvenutti, Esq. Jones Day 555 California St. 26th Fl. San Francisco, CA 94104 (415) 875-5826 Email: pjbenvenutti@JonesDay.com Tobias S. Keller, Esq. Jones Day 555 California St. 26th Fl. San Francisco, CA 94104 (415) 626-3939 Email: tkeller@jonesday.com Estimated Assets: $500 million to $1 billion Estimated Debts: $500 million to $1 billion The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Christine Collins Judgment $1,920,815 C/o Steve Kazan, Esq. Kazan, McClain, et al., 171 12th st., Suite 300 Oakland, CA 94607 James M. Harris Unpaid Settlement $1,535,155 C/o Paul & Hanley 5716 Corsa Ave., Suite 203 Westlake Village, CA 91362 Franklin Yancy Unpaid Settlement $1,064,736 C/o Paul & Hanley 5716 Corsa Ave., Suite 203 Westlake Village, CA 91362 Nicholas Ernser Asbestos personal Unstated injury and/or wrongful death James Strauss Asbestos personal Unstated injury and/or wrongful death Gina Bennett Unpaid Settlement $375,000 Jim Sullivan Whinery Unpaid Settlement $150,000 Zelina C. Hanson Unpaid Settlement $75,000 Carol A. White Unpaid Settlement $90,000 Ronald Silva Asbestos personal Unstated injury and/or wrongful death Karen Garner Asbestos personal Unstated injury and/or wrongful death Donald Henderson Asbestos personal Unstated injury and/or wrongful death Darden Lyles Asbestos personal Unstated injury and/or wrongful death Joe Radley Asbestos personal Unstated injury and/or wrongful death Allan Edwards Asbestos personal Unstated injury and/or wrongful death Robert Bachman Asbestos personal Unstated injury and/or wrongful death Raymund Jenkins Asbestos personal Unstated injury and/or wrongful death Linda Seiler Asbestos personal Unstated injury and/or wrongful death Tommy Hughes Asbestos personal Unstated injury and/or wrongful death Noble Morris Asbestos personal Unstated injury and/or wrongful death The petition was signed by David J. Gordon, president and CEO. POTTER'S LANDSCAPING: Case Summary & 24 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Potter's Landscaping LLC 359 Paoli Pike Malvern, PA 19355-3309 Bankruptcy Case No.: 09-13791 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: John Albert Wetzel, Esq. One South Church Street, Suite 400 West Chester, PA 19382 Tel: (610) 692-9500 Fax: (610) 692-4936 Email: jwetzel@swartzcampbell.com Total Assets: $355,825 Total Debts: $3,387,333 A full-text copy of the Debtor's petition, including a list of its 24 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/paeb09-13791.pdf The petition was signed by Francis Smith, member and manager of the Company. PRESERVE LLC: Wants Plan Filing Period Extended to September 23 --------------------------------------------------------------- The Preserve, LLC, asks the U.S. Bankruptcy Court for the Central District of California to extend its exclusive period to propose a plan until September 23, 2009, and its exclusive period to solicit acceptances of said plan to November 23, 2009. This is second extension requested by the Debtor in this case. The Debtor states that it requires additional time to formulate its reorganization plan due "in substantial part" to the delaying tactics employed by Point Center Financial in the Point Center Litigation and the as yet unresolved matter of the California Environmental Quality Act (CEQA) Challenge. Point Center Litigation The dispute with Point Center revolves around the nature, extent and validity of the interest Point Center claims as the purported "agent" for other investors in the approximately 700 acres of real property within the "Legacy Highlands" project in West Beaumont, in California, which is the Debtor's most valuable asset. Prior to the Petition Date, in September 2006, the Debtor entered into a loan transaction arranged by Point Center for a $39,000,000 fully funded development loan with 24 months of draws, and was promised 2 one-year extensions (to extend the loan to September 2010), secured by a Deed of Trust on the Legacy Highlands project. Pursuant to the loan terms, $9,650,000 would be retained by Point Center as a 24-month interest reserve. In addition, a further soft cost holdback of $7,251,736 was to be placed in a trust account on behalf of the Debtor. Point Center was paid a loan broker fee of $2,340,000 which was calculated based upon a fully funded $39 million loan. In October 2007 the Debtor was advised by Point Center that the loan was not fully funded as previously represented and that there was a shortfall of approximately $7,675,980. As a direct result of the missing funds of approximately $7,675.890, there were no funds available after the tenth draw to pay for "soft costs" or related interest reserves. A lawsuit was filed by the Debtor against Point Center and others in the Superior Court of California, County of Riverside relating to the transaction which is the subject matter of that claimed interest prior to the Petition Date. The Debtor is asserting claims for significant monetary damages which necessarily will impact the claim filed by Point Peter and its treatment under a plan once a dialog with true investors is opened. The case is presently before the Bankrupty Court as a result of a Notice of Removal filed by the defendants on October 30, 2008. A second status conference is set for May 27, 2009, at 2:00 p.m. The Debtor anticipates that the discovery problems will be addressed at that time. CEQA Challenge The Debtor has been advised by its professionals and consultants that it is likely that the correction activities regarding the portions of CEQA's requirements that were found wanting can be completed within the next 4 to 6 months and then submitted to the Riverside Superior Court for confirmation. The Debtor believes that the CEQA Challenge will be resolved within the next 4 to 6 months either through corrective actions with the City and the Superior Court or through a settlement with the CEQA Challenge plaintiffs. Riverside, California-based The Preserve, LLC, is in the business of acquiring and making real estate investments. The Company filed for Chapter 11 relief on Sept. 25, 2008 (Bankr. C.D. Calif. No. 08-23006). Jeffrey W. Broker, Esq., at Broker & Associates Professional Corporation represents the company as counsel. The company listed assets of $100 million to $500 million and debts of $10 million to $50 million. PRINCETON COMMUNITY: Moody's Upgrades Bond Rating to 'Ba3' ---------------------------------------------------------- Moody's Investors Service has upgraded Princeton Community Hospital's bond rating to Ba3 from B1. The rating applies to $39.6 million of outstanding rated debt (listed at the conclusion of this report) issued by the City of Princeton, West Virginia. The rating upgrade reflects improvement in operating performance and cash position in FY 2008 and the successful closure/reconfiguration of the loss generated at the St. Luke's facility, indicating an improved credit position over the last several years. The outlook remains stable. Legal Security: The bonds are secured by a pledge of gross revenues of PCH Interest Rate Derivatives: None Strengths * A leading 50% market share in Mercer County * Improved operating performance in FY 2008 with a peak $13.8 million operating cash flow (12.2% margin) from $8.3 million (6.8% margin) in FY 2007; although through 8-months FY 2009, performance has shown some weakening but still favorable with operating cash flow of $5.8 million (7.7% margin) * Increased cash flow generation in FY 2008 resulted in improved debt service coverage ratios with 2.9 times Moody's adjusted maximum annual debt service coverage and 3.0 times debt-to- cashflow * Unrestricted cash and investments increased to approximately $28.4 million (101 days cash on hand and 70% cash-to-debt) at fiscal year end 2008; As of February 28, 2009, unrestricted liquidity has declined to approximately $25.3 million (87 days cash on hand and 55% cash-to-debt) * All fixed rate debt outstanding Challenges * Operating in a weak demographic service area characterized by declining population (2.3% decline from 2000 to 2008) and low median income levels compared to state and national levels * High dependence on government payors and self pay (Medicare and Medicaid combined represent 64% and Self pay represents 6% of gross revenues) * History of variable utilization trends, although some inpatient volume growth noted in FY 2008 and has continued through 8- months FY 2009; outpatient visit volume continues to be strong as result of increases in lab and diagnostic imaging services * Despite improved trend line of operating performance and strengthened balance sheet measures over the last several years, financial performance exhibits volatility Recent Developments/Results Following softer operating performance in FY 2007, PCH posted a strong and improved operating income (adjusted for non-recurring items) of $5.9 million (5.2% margin) and operating cash flow of $13.8 million (12.2% margin) from $290,000 (-0.2% margin) operating loss and $8.3 million operating cash flow (6.8% margin) in FY 2007. The improved performance was attributed to the closure of St. Luke's Hospital, price increases of 5%, and good volume growth for inpatient and outpatient services. Inpatient volume grew by 1.6% from a decline of 1.3% in FY 2007. Outpatient visit volume increased by a strong 11.7% from 4.7% in FY 2007, primarily for lab and diagnostic imaging services. However, through 8-months FY 2009, which Moody's believe is more reflective of ongoing performance, operating performance is down from the prior year period with a reported $782,000 operating income (1.0% margin) from $6.7 million (9.1% margin) through 8-months FY 2008. Operating cash flow declined to a still favorable $8.7 million (7.7% margin) through 8-months FY 2009 from $11.9 million (16.4% margin) from the prior period. Despite positive volume growth, the decline in performance is driven largely by high expense growth of 13% particularly in chemotherapy drug costs, supplies, and health benefits. Absolute unrestricted liquidity improved for the fourth consecutive year to $28.4 million at FYE 2008 from $25 million at FYE 2007 due to improved operating cash flow and cash collections. As a result, unrestricted liquidity measures improved to 101 days cash on hand and 70% cash-to-debt in FY 2008 from 79 days cash on hand and 53% cash-to-debt in FY 2007. As of February 28, 2009, absolute unrestricted liquidity has declined slightly to $25.3 million, reducing days cash on hand to 87 days cash on hand and 63% cash-to-debt. The decline in liquidity is primarily due to weaker operating cash flow generation through 8-months FY 2009 and unrealized investment losses. PCH's unrestricted cash and investments is currently held 80% in fixed income securities and cash and 20% in equities with diversification among six fund managers. Management has no plans to change PCH's investment strategy. Due to strong cash flow generation in FY 2008, debt coverage measures improved with Moody's adjusted maximum annual debt service coverage increasing to a good 2.9 times in FY 2008 from 1.90 times in FY 2007 and debt-to-cash flow measuring an improved and favorable 3.0 times in FY 2008 from a high 6.3 times in FY 2007. PCH's trend of improved financial performance, coverage measures, and balance sheet metrics (most exceeding B and Ba rating category levels) are the primary drivers of the rating upgrade. Capital spending has been modest with typically less than one times depreciation over the past several years. In FY 2008, PCH spent approximately $3.5 million and is budgeting to spend about $6.0 million in FY 2009 (PCH has spent approximately $3 million through 8-months FY 2009). In FY 2010, PCH is projecting to spend $8 million in capital primarily for renovations to the former St. Luke's Hospital facility in Bluefield, WV which will be converted into a 95-bed Psychiatric Facility, scheduled to open in January FY 2010. PCH has entered into a management agreement with Diamond Healthcare Corporation, a management and consulting company specialized in behavioral health, to oversee the operations of the facility and will share 50% of the profits of the facility. The estimated cost of the project is approximately $5.5 million primarily for renovations and will be financed from a line of credit with Diamond Healthcare Corporation. PCH is located in the City of Princeton in southern West Virginia approximately nine miles from the Virginia border. The primary service area encompasses Mercer, McDowell, and Monroe County, where PCH maintains 50%, 20%, and 19% market share. PCH's primary competitor in the region is 265-bed Bluefield Regional Medical Center, located 20 miles away in Bluefield, West Virginia. PCH also experiences out migration to tertiary providers in Charleston, West Virginia, and Roanoke, Virginia for select services. The service area exhibits weak demographics characterized by declining population growth, low median income levels compared to state and national levels and high Medicare, Medicaid, and self-pay populations (combined accounting for 70% of PCH's gross revenues). Outlook The stable outlook reflects improved operating performance and strengthening of balance sheet over the past several years, and Moody's expectation PCH will continue to generate and sustain elevated operating cash flow to support debt service and improve cash balance. What could change the rating--UP Growth and stability in inpatient and outpatient volume trends; improvement in operating performance and ability to sustain improved levels for multiple years; growth in liquidity; gain in market share What could change the rating--DOWN Volume declines; material decline in operating performance; deterioration in liquidity; increase in debt without commensurate increase in cash and operating cash flow; loss in market share Key Indicators Assumptions & Adjustments: -- Based on financial statements for Princeton Community Hospital Association, Inc., Subsidary, and Affiliate -- First number reflects audit year ended June 30, 2007 -- Second number reflects audit year ended June 30, 2008 -- Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 7,972, 8,099 * Total operating revenues: $121.8 million; $113.2 million * Moody's-adjusted net revenue available for debt service: $10.7 million; $16.4 million * Total debt outstanding: $48.1 million; $40.3 million * Maximum annual debt service (MADS): $5.7 million; $5.7 million * MADS Coverage with reported investment income: 1.5 times; 2.8 times * Moody's-adjusted MADS Coverage with normalized investment income: 1.9 times; 2.9 times * Debt-to-cash flow: 6.2 times; 3.0 times * Days cash on hand: 79 days; 101 days * Cash-to-debt: 53%; 70% * Operating margin: -0.2%; 5.2% * Operating cash flow margin: 6.8%; 12.2% Rated Debt (debt outstanding as of June 30, 2008) -- Series 1993 Hospital Revenue Bonds fixed rate ($5.6 million outstanding) rated Ba3 -- Series 1999 Hospital Revenue Bonds fixed rate ($34.0 million outstanding) rated Ba3 The last rating action was on March 24, 2008 when the rating of Princeton Community Hospital was upgraded to B1 from B2 and outlook was revised to stable from positive. RAILPOWER HYBRID: Monitor Has C$5.1 Million Bid for Assets ---------------------------------------------------------- The foreign representative of Railpower Hybrid Technologies, Inc., asks the U.S. Bankruptcy Court for the Western District of Pennsylvania for an order authorizing the private sale of substantially all of the debtor's assets free and clear of all liens and encumbrances. A hearing to consider the Sale Motion will be held on May 28, 2009 at 2:00 p.m., in Erie, Pa., at which higher and better offers will be considered. The assets to be sold consist of substantially all of the assets of the Railpower Hybrid Technologies, Inc., and the assets of Railpower Technologies, Inc. The Railpower Entities have accepted, subject to Bankruptcy Court approval, an offer of C$5,100,000. The foreign representative indicates that C$2,388,302 of the Purchase Price will be allocated for Railpower Hybrid Technologies, Inc.'s assets, and C$2,711,698 of the Purchase Price will be allocated to Railpower Technologies, Inc.'s assets. For more information or for a copy of the Sale Agreement, contact: Paul J. Cordaro, Esq. Campbell & Levine, LLC 1700 Grant Building Pittsburgh, PA 15219, Telephone (412) 261-0310 Fax (412) 261-5066 E-mail: pjc@camlev.com Railpower Technologies Corp. (TSX: P) -- http://www.railpower.com/ -- is engaged in the development, construction, marketing and sales of high performance, clean locomotives and power plants for the transportation and related industries. Railpower has designed and is marketing a range of locomotives for the North American low and medium horsepower locomotive market. It has also designed and is marketing hybrid power plants for rubber tyred gantry cranes (Eco-Cranes(R)). Its technologies have broader potential and applications in other markets and industries. Railpower Technologies Corp. and its U.S. subsidiary, Railpower Hybrid Technologies Corp., have obtained court protection under the Companies' Creditors Arrangement Act in Canada pursuant to the initial order granted by the Quebec Superior Court (No. 500-11- 035434-097). Lawyers at McCarthy Tetrault LLP represent Railpower in the CCAA proceedings, and Martin P. Rosenthal at Ernst & Young, Inc., serves as the Canadian Monitor. Mr. Rosenthal filed a Chapter 15 petition (Bankr. W.D. Pa. Case No. 09-10198) to protect Railpower Hybrid Technologies Corp.'s assets from U.S. creditors on February 5, 2009, and ask the U.S. Court to recognize the CCAA proceeding as the foreign main proceeding. REDCORP VENTURES: Announces Reduction in Corporate Management ------------------------------------------------------------- Redcorp Ventures Ltd. reported that pursuant to its filing together with Redfern Resources Ltd. under the Companies' Creditors Arrangement Act on March 4, 2009, its Chairman of the Board, Mr. Ken Lowe, who was also a director of The Company has resigned and its Chief Financial Officer, Mr. Mike Bardell, has left the employ of the Company. Since the Initial Order the Petitioners have worked closely with the Monitor and have, among other things, held regular conference calls between the Petitioners, the Committee of Secured Note Holders and the Monitor, developed and commenced implementation of a plan for putting the Tulsequah Project on a "care and maintenance" basis, initiated proceedings in the United States Bankruptcy Court for recognition of the Initial Order, arranged for a central storage facility to be rented, consolidated its equipment in that facility and developed a plan for the care of the site to minimize environmental issues. Implementation of that plan is subject to the Company's forthcoming application to the Court for additional relief, currently set for May 27, 2009, failing which it is anticipated that a receiver will be appointed at the request of the Committee of Secured Note Holders. Redcorp Ventures Ltd. (CA:RDV) -- http://www.redcorp-ventures.com and http://www.redfern.bc.ca-- is a Vancouver, British Columbia- based mineral exploration and development company with active projects in British Columbia, Canada and Portugal. Redcorp and Redfern sought and were granted protection under the Companies' Creditors Arrangement Act by order of the Supreme Court of British Columbia on March 4, 2009. KPMG Inc. was appointed Monitor. S&K FAMOUS: Will Shut Down 105 Stores; GOB Sales Has Started ------------------------------------------------------------ Austin Business Journal reports that S&K Famous Brands Inc. will close its 105 stores. According to Business Journal, S&K Famous filed for Chapter 11 bankruptcy hoping to reorganize its business, but then moved to liquidate. As reported by the Troubled Company Reporter on May 25, 2009, S&K Famous started a going-out-of-business sale last week. S&K Famous chief restructuring officer Jonathan Tibus said, "In spite of our best efforts, the current economic climate left us with no choice but to close down the business." Headquartered in Glen Allen, Virginia, S & K Famous Brands, Inc. - - http://www.skmenswear.com/-- sells men's swimwear. The Debtor filed for Chapter 11 protection on February 9, 2009 (Bank. E.D. Va. Case No. 09-30805). Lynn L. Tavenner, Esq., Paula S. Beran, Esq., at Tavenner & Beran, PLC and McGuireWoods LLP represent the Debtor in its restructuring efforts. Its financial advisor is Alvarez & Marsal North America LLC. The Debtor's DIP Lender is Wells Fargo Retail Finance LLC as administrative and collateral agent. The Debtor listed total assets of $41,440,100 and total debts of $35,499,00. S-TRAN HOLDINGS: Plan Filing Period Extended to June 1 ------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware has extended S-Tran Holdings, Inc., et al's exclusive periods to propose a plan and solicit acceptances of that plan to June 1, 2009, and August 3, 2009, respectively. A hearing to consider confirmation of the First Amended Plan of Liquidation is presently scheduled for July 16, 2009. The deadline for the service of solicitation packages is June 1, 2009. On April 11, 2008, the Court approved the disclosure statement explaining the Debtors' First Amended Plan of Liquidation and fixed the voting procedures associated with approval of the Plan. Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc., provides common carrier services and specialized in less-than- truckload shipments and also supplies overnight and second day service to shippers in 11 states in the Southeast and Midwestern United States. The company and its debtor-affiliates filed for Chapter 11 relief on May 13, 2005 (Bankr. D. Del. Case No. 05-11391). Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Michael Seidl, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang Ziehl Young & Jones LLP represent the Debtors as counsel. Christopher A. Ward, Esq., at Polsinelli Shalton Flanigan Suelthaus, Mary E. Augustine, Esq., at Ciardi, Ciardi & Astin, P.C., and Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $22,508,000 and total debts of $30,891,000. SCHIMMEL'S RESTAURANT: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Schimmel's Restaurant, LLC 2615 North State Street Jackson, MS 39216 Bankruptcy Case No.: 09-01759 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Southern District of Mississippi (Jackson Divisional Office) Judge: Neil P. Olack Debtor's Counsel: Samuel L. Begley, Esq. P.O. Box 287 Jackson, MS 39205 Tel: (601) 969-5545 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. SHANE SENTER: Files for Chapter 7 Liquidation --------------------------------------------- Michael Hinman at Airlock Alpha reports that Shane Senter, doing business as New Hampshire Travel Agency, has filed for Chapter 7 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Hampshire. According to Airlock Alpha, Mr. Senter has listed up to $10,000 in assets and $1 million to $10 million in liabilities. Airlock Alpha relates that Deborah Notinger, Esq., at Donchess Notinger & Tamposi of Nashua, N.H., assists the Debtor in his restructuring efforts. Airlock Alpha relates that Mr. Senter was indicted in April 2009 on two counts of theft and four counts of unfair or deceptive business practices from his failed JumpCon convention. Airlock Alpha notes that it is unclear why Mr. Senter filed under his travel agency, rather than JumpCon LLC, the business entity he conducted the convention planning under. No entity for "New Hampshire Travel Agency" could be found in state corporate records in New Hampshire, Airlock Alpha states. The report says that state records list JumpCon to not be "in good standing." Other than the prepaid ticket holders for JumpCon, Mr. Senter also owes some $542,125 to a number of celebrity guests that he had to cancel, Airlock Alpha states. Airlock Alpha reports that a meeting with creditors is set for June 11. SHERIDAN GROUP: S&P Cuts Corporate Credit Rating to 'B' From 'B+' ----------------------------------------------------------------- Standard & Poor's Ratings Service lowered its corporate credit and senior secured debt ratings on Hunt Valley, Maryland-based The Sheridan Group Inc., to 'B' from 'B+'. At the same time, S&P placed the ratings on CreditWatch with negative implications. The ratings downgrade reflects S&P's updated view that operating performance in 2009 will be worse than S&P previously expected. While S&P believes management has made strides in managing expenses, S&P is concerned that a weak operating environment will continue to pressure earnings. "Our ratings now assume that EBITDA in 2009 will fall in the midteens percent area, resulting in leverage of around 5x, which is weak for the previous rating given our current view of the company's business profile," said Standard & Poor's credit analyst Ariel Silverberg. "Our expectation for 2009 performance stems from our assumption that Sheridan will continue to experience volume declines across all of its segments, including books and journals, resulting in a midteens percent revenue decline in 2009," she continued. As of March 31, 2009, adjusted debt to EBITDA was 4.3x, and EBITDA coverage of interest was 2.1x. The CreditWatch listing reflects the uncertain status around Sheridan's revolving credit facility. Standard & Poor's had previously expected lenders to renew or significantly extend it before its May 15, 2009, maturity date. Current lenders extended the facility maturity date to June 25, 2009, while the company continues to negotiate a longer-term solution with its banks. In resolving S&P's CreditWatch listing, S&P will monitor management's progression with respect to negotiating a new revolving facility, and assess the new terms of the facility. SILICON GRAPHICS: Files Docs With SEC to Deregister Unsold Shares ----------------------------------------------------------------- Silicon Graphics Inc. filed documents with the Securities and Exchange Commission to deregister certain shares of the Company's common stock. Silicon Graphics filed three Form S-8 POS and a Form POS AM with the SEC on May 14, six days after it closed on the sale of substantially all of its assets -- excluding certain intellectual property assets -- to Rackable Systems, Inc. for $42.5 million in cash, plus the assumption of certain liabilities associated with the acquired assets. Silicon Graphics filed Post-Effective Amendment No. 1 to various registration statements to: -- deregister all unsold shares of the Company's common stock pursuant to a Registration Statement declared effective by the SEC on February 14, 2008; -- deregister all shares of Company Common Stock, par value $0.01 per share, issuable pursuant to the April 17, 2007 Restricted Stock Unit Award that remain unissued. The relevant Registration Statement became effective on April 17, 2007; -- deregister all shares of Common Stock, par value $0.01 per share, issuable by the Company pursuant to the Silicon Graphics, Inc., Management Incentive Plan that remain unissued. The relevant Registration Statement became effective on January 26, 2007; and -- deregister all shares of Common Stock, par value $0.01 per share, issuable by the Company pursuant to the Company's Management and Incentive Plan and 2007 Employee Stock Purchase Plan that remain unissued. The relevant Registration Statement became effective on February 2, 2008. Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on September 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed AlixPartners LLC as restructuring advisor; Houlihan Lokey Howard & Zukin Capital, Inc., as financial advisor; and Donlin, Recano & Company, Inc., as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed $390,462,000 in total assets and $526,548,000 in total debts as of 2008. SL GREEN: Fitch Assigns Issuer Default Rating at 'BB+' ------------------------------------------------------ Fitch Ratings has assigned Issuer Default Ratings and outstanding debt ratings to SL Green Realty Corp. and its subsidiary, SL Green Operating Partnership, L.P.: SL Green Realty Corp. -- IDR 'BB+'. -- Perpetual preferred stock 'BB-'. SL Green Operating Partnership, L.P. -- IDR 'BB+'; -- Revolving credit facility 'BB+'; -- Senior unsecured notes 'BB+'; Fitch has affirmed the ratings of Reckson Operating Partnership, L.P.: Reckson Operating Partnership, L.P. -- IDR affirmed at 'BB+' -- Senior unsecured notes affirmed at 'BB+'. Fitch has revised the Rating Outlook to Negative from Stable. The ratings reflect Fitch's view that the consistent performance of SLG's portfolio as evidenced by a 94.8% occupancy as of March 31, 2009, same-store NOI growth during the quarter ended March 31, 2009 of 2.5%, and unencumbered asset coverage of unsecured debt, which at 1.4 times (x) as of March 31, 2009, based on Fitch's calculation, provides modest protection to unsecured bondholders. The ratings are further supported by SLG's leverage and coverage ratios. SLG's debt-to-recurring EBITDA ratio was 8.3x as of March 31, 2009 compared to 8.5x at Dec. 31, 2008 and 9.6x at Dec. 31, 2007, and SLG has a solid fixed-charge coverage ratio (defined as recurring EBITDA less capital expenditures and straight-line rents, divided by interest expense, capitalized interest, and distributions on preferred stock) of 1.9x for the 12 months ended March 31, 2009, up from 1.7x in 2008. While SLG has drawn approximately $1.4 billion of its $1.5 billion line of credit, Fitch estimates that the company has over $700 million of cash, pro forma for net proceeds of approximately $387 million from its recent common equity offering. Fitch notes that SLG's liquidity surplus of over $400 million, supported by a sizeable cash balance, a manageable debt maturity schedule, and SLG's most recent actions to reduce its common dividend and issue equity to delever the balance sheet provide SLG with adequate liquidity and limit refinance risk over the next two years. The ratings also point to the strength of SLG's management team. In addition, the company's ratios under its unsecured credit facilities' financial covenants do not hinder the company's financial flexibility. Offsetting these credit positives, Fitch notes that while same property NOI growth was positive for the quarter ended March 31, 2009, it has declined from 4.2% and 12.2% as of fourth quarter 2008 (4Q'08) and 1Q'08, respectively, while occupancy for the Manhattan portfolio has remained relatively stable at 96.2% in 1Q'09, compared to 96.7% and 96.3% as of 4Q'08, and 1Q'08, respectively. Fitch anticipates further deterioration in operating performance, as challenging New York City office property fundamentals are likely to persist for several years. Fitch remains concerned that SLG's usage of secured debt limits financial flexibility and protection for unsecured creditors. Fitch calculates that SLG's unencumbered assets - based on undepreciated book values, to unsecured debt coverage has been below 1.5x since 2007. The ratings also acknowledge the volatile Manhattan office market, where the bulk of SLG's assets exist, the impact of the constrained credit markets and SLG's exposure to financial services tenants, which account for 41% of SLG's combined base rental revenues, all of which expose SLG's portfolio to increased market risk and refinance risk, respectively. Consistent with Fitch's criteria, 'Parent and Subsidiary Rating Linkage' dated June 19, 2008 and available on 'www.fitchratings.com', the Reckson IDR ranks pari passu with that of SLG due to strong legal, operational and strategic ties between SLG and Reckson and a stronger Reckson standalone credit profile relative to that of standalone SLG. The two notch differential between SLG's IDR and its preferred stock is consistent with Fitch's criteria for corporate entities with an IDR of 'BB+' and further reflects the fact that SLG's preferred stock does not contain covenant protections comparable to those within debt agreements governing SLG's senior unsecured debt obligations. In addition, based on Fitch's criteria report, 'Equity Credit for Hybrids & Other Capital Securities', SLG's preferred stock is 75% equity-like and 25% debt-like since SLG's preferred stock is perpetual and has no covenants, but has a cumulative deferral option. Debt plus 25% of preferred stock-to-recurring EBITDA was 8.4x as of March 31, 2009, compared with 8.6x as of Dec. 31, 2008. The Negative Outlook centers on the weakening office property fundamentals in Manhattan, the geographic concentration of SLG's portfolio of office properties in only New York City, Connecticut and Westchester, New York, SLG's modest pool of unencumbered assets relative to its unsecured debt, and the increased potential for refinance risk due to SLG's sizeable mortgages on single assets. Fitch's existing ratings and Outlook for SLG could come under pressure if (i) Fitch-defined fixed charge coverage were to fall to 1.5x or lower for several consecutive quarters, (ii) if SLG were to have a liquidity shortfall, (iii) if total debt to annualized recurring EBITDA were to increase above 10.0x and (iv) if SLG's unencumbered asset to unsecured debt coverage ratio were to fall below 1.1x. Conversely, the current ratings or Outlook may improve if (i) Fitch-defined fixed charge coverage were to remain above to 2.5x for several consecutive quarters, (ii) if SLG were to sustain a liquidity surplus of at least $100 million, (iii) if total debt to annualized recurring EBITDA were to sustain below 8.5x and (iv) if SLG's unencumbered asset to unsecured debt coverage ratio were to sustain above 1.75x. SLG is a self-administered and self-managed real estate investment trust that predominantly acquires, owns, repositions and manages Manhattan and suburban office properties. As of March 31, 2009, the company owned 29 New York City office properties totaling approximately 23,211,200 square feet, and 32 suburban assets totaling 6,986,500 sf. SLG also held investment interests in, eight retail properties, three development properties, and two land interests. SLG had $11.1 billion in total book assets and $3.7 billion in total shareholders' equity as of March 31, 2009. SNOQUALMIE ENTERTAINMENT: S&P Junks Issuer Credit Rating From 'B' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issuer credit and senior unsecured debt ratings for the Seattle, Washington area- based Snoqualmie Entertainment Authority to 'CCC' from 'B'. The ratings were removed from CreditWatch, where they were placed with negative implications on April 2, 2009. The rating outlook is negative. The Snoqualmie Entertainment Authority is an unincorporated instrumentality of the Snoqualmie Indian Tribe, which was created to develop and operate the Snoqualmie Casino. "The ratings downgrade reflects significantly weaker-than-expected operating performance in the first five months of operations (the Snoqualmie Casino opened Nov. 6, 2008) and S&P's concern that the property may have difficulty ramping up quickly enough to a level of EBITDA generation that is sufficient to cover all fixed charges," said Standard & Poor's credit analyst Melissa Long. In addition, the Authority's capital structure includes a furniture, fixtures, and equipment facility that contains financial maintenance covenants that will be measured beginning in the June 2009 quarter. S&P does not believe the Authority will be able to meet those covenants in the June 2009 quarter and will need to negotiate a waiver and amendment with FF&E lenders. The 'CCC' issuer credit rating reflects S&P's near-term liquidity concerns (as further described in the Liquidity section of this report), high debt levels, a narrow business focus (with only one casino operating in a single market), and significantly weaker- than-expected initial operating results. The Authority does not publicly disclose its financial information. However, operating performance since the opening five months ago has been meaningfully below initial expectations. Severe weather conditions in the Pacific Northwest and much greater-than-anticipated operating costs negatively affected the facility's initial performance. The current weakened state of the economy and the resulting pullback in consumer discretionary spending also had an effect. S&P expects the current weak economic climate to continue through at least the next few quarters. As a newly opened property, the Snoqualmie Casino needs to ramp up quickly in order for the Authority to meet its fixed obligations. SOURCE INTERLINK: Shareholders Want Plan Hearing Delayed 45 Days ---------------------------------------------------------------- According to Bloomberg's Bill Rochelle, a group of shareholders of Source Interlink Cos. has asked the U.S. Bankruptcy Court for the District of Delaware to delay the May 28 confirmation hearing for 45 days. If the present schedule stands, the prepackaged reorganization plan will have been confirmed in one month and one day. The stockholders argue that the Company's value should be tested in the market before the plan is approved and their stock is wiped out. On April 28, 2009, the Company reached a restructuring agreement to take the Company private and eliminate nearly $1 billion of its existing debt. To facilitate the restructuring, the Company filed lender-approved pre-packaged Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Plan proposes to pay holders of term loan claims 66.4% of their allowed claims. General unsecured claimants will get 100% of the amount they're owed. Holders of Senior Notes and equity securities won't get a dime. A full-text copy of Source Interlink's plan summary is available at no charge at: http://bankrupt.com/misc/SourceInterlinkPlanSummary.PDF Bonita Springs, Florida-based Source Interlink Companies, Inc., -- http://www.sourceinterlink.com/-- is a U.S. distributor of home entertainment products and services and one of the largest publishers of magazines and online content for enthusiast audiences. Source Interlink Media, LLC publishes more than 75 magazines and 90 related Web sites. Source Interlink Distribution services tens of thousands of retail store locations throughout North America distributing DVDs, music CDs, magazines, video games, books, and related items. In addition to distributing more than 6,000 distinct magazine titles annually, the Company maintains the largest in-stock catalog of CDs and DVDs in the US -- a combined total of more than 260,000 titles. Supply chain relationships include consumer goods advertisers, subscribers, movie studios, record labels, magazine, book, and newspaper publishers, confectionary companies and manufacturers of general merchandise. Source Interlink Companies, Inc. and 17 affiliates filed for bankruptcy on April 27, 2009 (Bankr. D. Del. Case No. 09-11424). Judge Kevin Gross presides over the case. David Eaton, Esq., and David Agay, Esq., at Kirkland & Ellis LLP; and Laura Davis Jones, Esq., Mark M. Billion, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl Young Jones in Wilmington, Delaware, serve as bankruptcy counsel. Meolis & Company LLC serves as the Debtors' financial advisors, while Kurtzman Carson Consultants LLC is the Debtors' claims and notice agent. As of April 24, 2009, the Debtors had $2,436,005,000 in total assets and $1,995,504,000 in total debts. SOURCECORP INC: S&P Gives Stable Outlook; Affirms 'B' Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said that it revised its outlook on SOURCECORP Inc. to stable from negative. The 'B' corporate credit rating is affirmed. "The outlook revision reflects a fairly stable revenue profile despite challenging market conditions, consistent profitability, and adequate liquidity. S&P's ratings on SOURCECORP reflect its leveraged financial profile, a niche position in the large, fragmented, business process outsourcing market, and relatively modest annual earnings and cash flow," said Standard & Poor's credit analyst Martha Toll-Reed. These factors are partly offset by a material level of recurring revenues, significant barriers to entry and customer switching costs, and a diverse customer base. SOURCECORP had fiscal 2008 revenues of $356 million, down 4.5% from the prior year. The company provides solutions that enable its customers to automate high-volume, document-intensive workflow processes through services that include: document scanning/digitization, Web-based electronic document hosting and retrieval, and customer statement processing. In addition, the company offers specialized services that include class action claims administration services, and professional economic research and litigation services. SOURCECORP focuses its operations primarily in the financial services, healthcare, legal, and government markets. The majority of its BPO solutions -- about 60% of revenues -- are contractual and recurring in nature, with significant customer switching costs, providing some revenue stability and predictability. Although the company's operations are based in the U.S., it uses international partner relationships to provide flexible, cost- effective service solutions. SOURCECORP's focus on building expertise within a limited number of industry verticals helps the company achieve competitive differentiation and greater operational scale. SOURCECORP experienced a significant decline in its mortgage industry customer base over the past two years, but preserved EBITDA through growth in other industry verticals and cost reductions. S&P believes revenue and EBITDA growth will continue to be constrained in the near term by the decline in the company's remaining mortgage processing base, as well as difficult economic conditions. Nevertheless, S&P expects EBITDA margins (adjusted for non-recurring expenses) will at about 20% based on SOURCECORP's track record of expense management and consistent profitability. SOUTH SOUND: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: South Sound Property Development, L.L.C. 673 Woodland Square Loop SE, Ste 310 Lacey, WA 98503 Bankruptcy Case No.: 09-43633 Type of Business: The Debtor is engaged in the real estate business. Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Western District of Washington (Tacoma) Debtor's Counsel: Benjamin J. Riley, Esq. Brian L Budsberg PLLC 1801 West Bay Drive Ste 301 Olympia, WA 98507 Tel:(360) 584-9093 Email: ben@budsberg.com Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Architectural Glass Joint $95,667 5703 16th Ave. S.E. Ste B Lacey, WA 98503 S&H Electric Subcontract $51,684 855 Trosper Rd. Bldg. 108 Box 365 Olympia, WA 98512 Black Hills Excavation Subcontract $29,763 7216 187th Ave. SW Yelm, WA 98597 Olympia Sheet Metal Inc. Subcontract $27,227 North Pacific Drywall Subcontract $24,805 Kell-Chuck Glass $16,618 Sherwood Woodworks, Inc. Subcontract $14,375 Auburn Mechanical Work performed $13,966 Coastal Steel, Inc. Subcontract $10,775 Systems Solution Subcontract $10,083 Exterior Metals Subcontract $9,930 Ryan Swanson Cleveland Subcontract $7,741 South Central Concrete $6,998 Madsen Roofing Subcontract $6,695 Owens Davies et al $5,833 Lakeridge Paving Company Subcontract $5,120 Todd Robinson Painting Subcontract $4,503 Puget Sound Energy $4,379 Accoustics Northwest Inc. Labor for building $4,438 Johnson Brothers Subcontract $3,569 The petition was signed by Michael Weinand, managing member. SOUTHERN AUTOMOTIVE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Southern Automotive Marketing, Inc. 645 Auto Center Drive San Bernardino, CA 92408 Bankruptcy Case No.: 09-20734 Chapter 11 Petition Date: May 20, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Sheri Bluebond Debtor's Counsel: Michael S. Kogan, Esq. Ervin Cohen & Jessup LLP 9401 Wilshire Blvd 9th Fl Beverly Hills, CA 90212-2974 Tel: (310) 273-6333 Fax: (310) 859-2325 Email: mkogan@ecjlaw.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 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-20734.pdf The petition was signed by Michael Graeber, president of the Company. STANLEY MEADOWS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Stanley Meadows Inc. 326 Hawksbill Road Stanley, VA 22851 Bankruptcy Case No.: 09-50797 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Western District of Virginia (Harrisonburg) Judge: Chief Judge Ross W. Krumm Debtor's Counsel: Garren Robert Laymon, Esq. Magee Foster Goldsteing & Sayers PC P. O. Box 404 Roanoke, VA 24003 Tel: (540) 343-9800 Email: glaymon@mfgs.com Andrew S. Goldstein, Esq. Magee Foster Goldsteing & Sayers PC P. O. Box 404 Roanoke, VA 24003 Tel: (540) 343-9800 Fax: (540) 343-9898 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 Vivek Prabhakar, president of the Company. TEREX CORP: S&P Downgrades Corporate Credit Rating to 'BB-' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Terex Corp., a manufacturer of equipment for the construction, infrastructure and mining industries, to 'BB-' from 'BB'. The outlook is negative. "The rating action reflects continued weak end-market conditions which appear likely to result in credit measures deteriorating beyond our range of expectations," said Standard & Poor's credit analyst Dan Picciotto. The company is exposed to the highly cyclical construction sector which has seen significant demand declines because of the global economic downturn. Terex's sales were down 45% in the first quarter with the most pronounced decline in its aerial work platform segment, which experienced a 66% decline. Markets remain weak and credit measures are likely to worsen meaningfully. Still, Terex benefits from good cash balances and its cash flow generation should benefit from working capital reductions this year. Nevertheless, if market conditions remain poor, the benefits of working capital reduction will subside and cash flow generation in future years could become constrained. The ratings on Westport, Conn.-based Terex reflect the company's participation in the highly cyclical and competitive construction equipment industry and its aggressive financial profile. These factors are mitigated by the company's satisfactory business position as a major provider of construction equipment and by its good geographic and product diversity. Terex manufactures a broad range of equipment for the construction, infrastructure, and mining industries. Its business strengths include well-known brands, low-cost products, and good aftermarket parts sales. It has geographic diversity, with more than half of its sales coming from outside the U.S. Through a number of acquisitions, Terex has grown to become a sizable global construction equipment company. Terex has funded acquisitions with a combination of debt and equity to temper leverage. Standard & Poor's Ratings Services considers Terex's financial risk profile aggressive. S&P expects the company to remain acquisitive. At March 31, 2009, total debt to EBITDA (adjusted for estimated postretirement obligations and operating leases) was about 2.6x and funds from operations to total debt was about 24%. However, credit measures appear likely to deteriorate meaningfully this year. In addition, Terex has stated it expects to close its acquisition of the port equipment businesses of Fantuzzi Industries, which could add approximately $230 million in debt. At the current rating, S&P expects Terex to maintain FFO to total debt of 15%-20%, although metrics are likely to be volatile. S&P would expect any large acquisition to include an equity component, at the current rating. S&P could lower the ratings if headroom under covenants is limited and the company is delayed in obtaining adequate relief. In addition, if Terex's operating performance continues to deteriorate or if credit measures did not appear likely to rebound in 2010, S&P could lower the ratings. If, for instance, FFO were likely to become negative and there were not significant excess cash balances, S&P could lower the ratings. TJ'S TREES & MORE: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: TJ's Trees & More, LLP PO Box 822933 NRH, TX 76182-933 Bankruptcy Case No.: 09-42953 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Northern District of Texas (Ft. Worth) Debtor's Counsel: Richard G. Grant, Esq. 7018 Primrose Lane Colleyville, TX 76034 Tel: (214) 210-2929 Fax: (214) 224-0198 Email: rgrant@robertsandgrant.com Estimated Assets: $100,001 to $1,000,000 Estimated Debts: $1,000,001 to $100,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by T.J. Stankiewicz, president of the Company. TRONOX INC: Asks Court to Set August 12 as Claims Bar Date ---------------------------------------------------------- Tronox Inc. and its affiliates anticipate that thousands of parties-in-interest potentially may file claims in their Chapter 11 Cases. As listed in their statements of financial affairs and schedules of assets and liabilities, filed March 30, 2009, with the U.S. Bankruptcy Court for the Southern District of New York, the Debtors have assets and liabilities in excess of $1 billion, and thousands of known creditors with claims arising from the Debtors' operating businesses. Moreover, the Debtors are also burdened by a variety of environmental, tort, pension, workers' compensation and other post-employment liabilities arising from discontinued chemical, refining, coal, nuclear, offshore contract drilling, and other businesses that were formerly conducted by Kerr-McGee Corporation as a result of the Debtors' spin off from Kerr-McGee in 2006. Thus, the Debtors anticipate that thousands of parties-in- interest potentially may file claims against them related to the Legacy Businesses, in addition to the creditors and parties in interest with claims arising from their operating businesses. In this regard, the Debtors ask the Court to set August 12, 2009, at 8:00 p.m. (Eastern Time) as the deadline by which proofs of claim must be filed by persons or entities, including governmental units, holding claims against the Debtors arising from prepetition obligations of the Debtors. The Debtors also ask the Court to approve the proposed Proof of Claim Form, the proposed Bar Date Notice, and the proposed publication notice. The Debtors further seek the Court's authority to establish supplemental bar dates as needed in certain circumstances upon written consent of the Official Committee of Unsecured Creditors. The Debtors anticipate that Supplemental Bar Dates in these instances: (a) In the event the Debtors amend their Schedules, the Debtors ask the Court to establish the later of the Bar Date, or 30 days from the date on which they notify affected creditors of the amendment to the Schedules as the deadline by which the creditors may file a Proof of Claim. (b) The Debtors anticipate rejecting various executory contracts and unexpired leases pursuant to Section 365(a) of the Bankruptcy Code during the Chapter 11 cases. The Debtors ask the Court to establish the later of (a) the Bar Date, (b) the date provided in the order authorizing the rejection, or notice of rejection, of the contract or lease, or (c) if no date is provided, then 30 days after the date the order is entered or notice is provided, as the deadline by which counterparties may file a Proof of Claim asserting damages arising from the rejection of the contract or lease. (c) The Debtors anticipate that it may be appropriate to supplement the initial mailing of the Bar Date Package in certain instances, including when (a) other creditors become known to the Debtors after the initial mailing, (b) notices are returned by post office with forwarding addresses, and (c) certain parties acting on behalf of other parties-in-interest provide appropriate names and addresses of those other parties-in-interest for direct mailing by the Debtors. To the extent that the Debtors determines that a re-mailing is appropriate under the circumstances, but the re-mailing cannot be accomplished in time to provide at least 30 days' notice of the Bar Date to the impacted creditors, then the Debtors proposes that the Court establish a deadline which provides the impacted creditors with at least 30 days' notice to file a Proof of Claim. Parties Excluded from the Bar Dates As a matter of law, parties should not be required to file a Proof of Claim on account of certain categories of Claims that they may hold against the Debtors. Specifically, the Bar Dates should not apply to: (a) Any Claim for which a Proof of Claim has previously been filed against the Debtors with the Clerk of the Court in a form substantially similar to Official Bankruptcy Form No. 10; (b) Any Claim that is listed on the Debtors' Schedules; provided that (i) the Claim is not scheduled as "disputed," "contingent" or "unliquidated;" (ii) the Claimant does not disagree with the amount, nature and priority of the Claim as set forth in the Schedules; and (iii) the Claimant does not dispute that the Claim is an obligation of the specific Debtors as set forth in the Schedules; (c) Any Claim that has been allowed pursuant to an order of the Court; (d) Any Claim against a Debtor that has been paid in full by any of the Debtors or any other party; (e) Any Claim that is subject to specific deadlines, aside from those established pursuant to the Bar Date Motion, fixed by the Court; (f) Any Claim held by a Debtor in the Chapter 11 cases; (g) Any Claim of a current Debtors employee for Wages and Benefits; (h) Any Claim that is limited exclusively to the repayment of principal, interest and other applicable fees and charges owed under any bond or note issued by the Debtors pursuant to an indenture; provided that (i) an indenture trustee under a Debt Instrument must file one proof of claim, on or before the Bar Date, with respect to all of the amounts owed under each of the Debt Instruments and (ii) any holder of a Debt Claim wishing to assert a claim, other than a Debt Claim, arising out of or relating to a Debt Instrument must file a Proof of Claim on or before the Bar Date; (i) Any Claimant whose Claim is based on an interest in an equity security of the Debtors; provided, however, that any Claimant who wishes to assert a Claim against the Debtors based on Claims for damages or rescission based on the purchase or sale of an equity security, must file a Proof of Claim on or before the Bar Date; and (j) Any Claim allowable under Sections 503(b) and 507(a)(1) of the Bankruptcy Code as administrative expenses of the Debtors' Chapter 11 cases, with the exception of Claims allowable under Section 503(b)(9), which are subject to Bar Date. The Debtors ask the Court to approve a Proof of Claim form based on Official Form 10, a full-text copy of which is available for free at http://bankrupt.com/misc/Tronox_ProofOfClaimForm.pdf With the assistance of their notice and claims agent, Kurtzman Carson Consultants LLC, the Debtors propose to provide a "personalized" Proof of Claim to each of the creditors listed on their Schedules. Each Proof of Claim will include information reflected in the Schedules as to the appropriate creditor's name, the amount of the Claim against the applicable Debtor, the type of Claim held by the creditor and whether the Claim is disputed, contingent or unliquidated. The personalized Proof of Claim Form will facilitate the Chapter 11 cases by reducing delay, confusion and expense, and will make possible the matching of scheduled and filed Claims while providing scheduled creditors with an opportunity to correct any erroneous information, Colin M. Adams, Esq., at Kirkland & Ellis LLP, in New York, tells the Court. Requirements for Filing Proofs of Claim With respect to preparing and filing of Proofs of Claim, the Debtors propose that each Proof of Claim must: -- be signed by the creditor or, if the creditor is not an individual, by an authorized agent of the creditor; -- be written in English; -- include a Claim amount denominated in United States dollars; -- state a Claim against only one Debtor; and -- clearly indicate the Debtor against which the creditor is asserting a Claim. Each Proof of Claim must also include supporting documentation. If the documentation is voluminous, the Proof of Claim may include a summary or an explanation as to why the documentation is not available; provided that any creditor that received the written consent will be required to transmit the writings to the Debtors' counsel upon request no later than 10 days from the date of the request. All Proofs of Claim must be actually received by no later than August 12, 2009 at 8:00 p.m. (Eastern Time) at: Tronox Claims Processing Center c/o Kurtzman Carson Consultants LLC 2335 Alaska Ave. El Segundo, California 90245 Proofs of Claim may be delivered only by first class U.S. mail, postage prepaid, in person, by courier service, or by overnight delivery. KCC will not accept a Proof of Claim sent by facsimile or e-mail. A creditor who wishes to receive acknowledgment of receipt of its Proof of Claim Form must submit a copy of the Proof of Claim Form and a self-addressed, stamped envelope to KCC along with the original Proof of Claim Form. Mailing of Bar Date Notices The Debtors, with the assistance of KCC, proposes to provide actual notice of the Bar Date to their known creditors. Specifically, the Debtors intend to mail by first class U.S. mail, postage prepaid, of these materials no later than five business days after the date of entry of the Bar Date Order (a) written notice of the Bar Date; and (b) the Proof of Claim Form to their known creditors. The Bar Date Notice contains information that will notify parties of the Bar Date and inform them as to whether they must file a Proof of Claim, the procedure for filing a Proof of Claim, and the consequences of not timely filing a Proof of Claim. KCC will serve the Bar Date Package on these parties: (a) The U.S. Trustee; (b) Counsel to the agent for the Debtors' prepetition and postpetition secured lenders; (c) Counsel to the Creditors' Committee; (d) Counsel to the Official Committee of Equity Security Holders; (e) All persons or entities that have requested notice of the proceedings in the Chapter 11 cases; (f) All persons or entities that have filed Claims against the Debtors as of the date of entry of the Bar Date Order; (g) All creditors and other known holders of Claims against the Debtors as of the date of entry of the Bar Date Order, including all persons or entities listed in the Schedules as holding Claims against one or more of the Debtors; (h) All parties to the Debtors' executory contracts and unexpired leases as listed on the Schedules; (i) All parties to litigation with the Debtors or, where individual addresses are not available, through their counsel of record; (j) Anadarko Petroleum Corporation, as the successor-in- interest to Kerr-McGee; (k) The Internal Revenue Service; (l) The United States Attorney for the Southern District of New York on behalf of the Environmental Protection Agency, and other agencies and instrumentalities of the Unites States of America; (m) State attorneys general for states in which the Debtors' property is located; and (n) The Debtors' current employees, and former employees, to the extent that contact information for former employees is available in the Debtors' records. A full-text copy of the proposed Bar Date Notice is available for free at http://bankrupt.com/misc/Tronox_BarDateNO.pdf Notice to Tort Plaintiffs The Debtors are presently aware of approximately 120 tort lawsuits pending against them related to the Legacy Businesses inherited from Kerr-McGee. The Debtors do not have personal information for many of the plaintiffs in these lawsuits. Specifically, due to the manner in which certain of these alleged claims are handled by plaintiffs' counsel, the Debtors does not have, and cannot reasonably obtain, the name and address of each individual Tort Claimant. The Debtors intend to mail the Bar Date Notice to individual Tort Claimants where individual contact information is known and, where individual contact information for Tort Claimants is not known, to their counsel of record on their behalf. The Debtors believe that these procedures will reduce the administrative and economic burdens placed on the Debtors and will not adversely affect the rights of the Tort Claimants, because they will receive notice of the Bar Date through their counsel of record in their respective lawsuits. Supplemental Mailings After the initial mailing of the Bar Date Package, the Debtors anticipates it may be appropriate to make supplemental mailings of notices in a number of situations, including in the event that (a) notices are returned by the post office with forwarding addresses, (b) certain parties acting on behalf of other parties in interest that decline to pass along notices to these parties and instead return the names and addresses of these parties-in- interest to the Debtors for direct mailing, and (c) additional creditors that become known as the result of the Bar Date noticing process. The Debtors ask the Court authorize supplemental mailings of the Bar Date Notice in similar circumstances. If the mailings are made at any time up to 30 days in advance of the Bar Date, the Debtors asks that the Court deem the mailings timely and deem the Bar Date applicable to the recipient creditor. Bar Date Publication In the interest of ensuring that as many potential creditors as possible receive notice of the Bar Dates in the Chapter 11 cases, the Debtors intend to give additional notice of the Bar Date by (a) a general publication notice in the national edition of The Wall Street Journal, on one occasion, on or before July 12, 2009; and (b) supplemental site-specific notices in local publications in those areas in which the Debtors believe unknown creditors with Legacy Business Claims are most likely to be located. Based on a review, the Debtors preliminarily has determined that there is a reasonable basis to assume that a majority of the Legacy Claimants presently unknown to the Debtors may live in the areas immediately surrounding 35 sites owned or operated by the Legacy Businesses. These sites include Manville, New Jersey and West Chicago, Illinois. To provide potential Legacy Claimants near these identified sites with information regarding the Bar Date, the Debtors intend to supplement the General Publication Notice with 35 site-specific notices. Each Site-Specific Publication Notice will contain additional information regarding the particular site at issue and will be published adjacent to the General Publication Notice in local and regional newspapers or periodicals within the impacted areas on one occasion on or before July 12, 2009. Pursuant to Bankruptcy Rule 3003(c)(2), any creditor who is required to file a Proof of Claim in accordance with the Bar Date Order on or before the Bar Date or Supplemental Bar Date, as applicable, but fails to do so will be forever barred, estopped and enjoined from asserting the claim against the Debtors. The Debtors will be forever discharged from any liability with respect to the Claim, and that the creditor will not be permitted to vote to accept or reject any plan of reorganization filed in the Chapter 11 cases, participate in any distrib4ution on account of the Claim, or receive further notices regarding the Claim. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The Company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The Company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Court Denies Creditors' Bid to Scrap Equity Panel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York denied a motion by the Official Committee of Unsecured Creditors in Tronox Incorporated's cases to dissolve the Official Committee of Equity Security Holders Committee of Tronox without prejudice to any party-in-interest to file a subsequent motion to dissolve the Equity Committee or to further limit the Equity Committee's role in the Debtors' Chapter 11 cases. The Court ruled that the Equity Committee will not retain, at the expense of the Debtors' estate, any professionals, including investment bankers or financial advisors, other than a single law firm, to represent the panel, unless the Equity Committee can demonstrate that the Creditors' Committee or the Debtors have unreasonably failed to provide the Equity Committee with access to the Creditors' Committee's or the Debtors' financial advisors and their respective non-privileged work-product as set forth in the Court's Order granting the retention of Pillsbury Winthrop Shaw Pittman LLP, or that failure to obtain the assistance of the professionals would unduly prejudice the Equity Committee's rights in the bankruptcy cases. As reported by the Troubled Company Reporter on April 2, 2009, the Creditors Committee asked Judge Allan L. Gropper to dissolve the Equity Committee appointed by the U.S. Trustee on March 13, 2009, on the grounds that the appointment is "an extraordinary remedy" in the Debtors' Chapter 11 cases. Brian S. Hermann, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, said that on January 29, 2009, the Debtors and the Creditors' Committee each sent reply letters to the U.S. Trustee expressing their oppositions to the appointment of an equity committee. Mr. Hermann said that, as indicated in their Letters, the overwhelming market evidence confirm that the Debtors appear to be hopelessly insolvent, which circumstance does not warrant the appointment of an equity committee. Moreover, he argues that the Debtors' unliquidated environmental, tort and other contingent liabilities -- which amounts are unknown -- account for the insolvency determination and became major factors in the Debtors' decision to seek Chapter 11 relief. Mr. Hermann said if the Debtors' cases continue on their present trajectory, estate recoveries will largely depend on the success of: (i) the asset sale necessitated by Tronox's debtor-in- possession credit facility; and (ii) litigation against third parties, including, most prominently, Anadarko Petroleum Corporation, the successor-in-interest to Kerr-McGee, over responsibility for various of the Debtors' significant legacy environmental, tort and retiree liabilities inherited from its former parent company, Kerr-McGee. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The Company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The Company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Court Extends Plan Filing Deadline to Sept. 15 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended the periods within which Tronox Incorporated and its affiliates have the exclusive right to file and solicit acceptances of a bankruptcy plan. The Court ruled that the Debtors' Exclusive Filing Period is extended until September 15, 2009; and the Debtors' Exclusive Solicitation Period is extended until November 15. The Order is without prejudice to the Debtors' ability to seek further extensions of the Exclusive Periods pursuant to Section 1121(d) of the Bankruptcy Code. The Official Equity Security Holders Committee of Tronox Inc. commented that it does not object to the Debtors' request, and even hopes that the Debtors will use any additional time granted by the Court to work toward formulation of a confirmable plan of reorganization that preserves the future profitability of a reorganized Debtors to maximize the potential value of their estates for the benefit of all stakeholders, particularly those most at risk with the Debtors' current forced "fire sale" approach -- the unsecured creditors and equity security holders. The Equity Committee asserts that the exclusivity period should not be continued solely for the purpose of continuing a one-track fire sale approach at the behest of the DIP lenders at the expense and risk of all of the other stakeholders. Debtors Respond The Debtors state that their sale efforts to date evidence their awareness of their fiduciary duty to maximize value for all stakeholders. To maximize value, the Debtors must maintain its businesses as a going concern, and operating liquidity is the cornerstone on which any going concern rests. The Debtors relate that they engaged in an exhaustive search for debtor-in-possession financing to ensure they would have sufficient liquidity to operate during the Chapter 11 Cases. The financing that the Debtors eventually obtained provides them with the liquidity they need to operate their businesses, while imposing certain requirements on the Debtors, including the requirement to commence a sale process. The Debtors contend that their active engagement in the sale process does not mean that they are unreceptive to viable proposals for maximizing value that do not involve a sale, including the possibility of alternate debtor in possession financing. Indeed, the Debtors assert, they are committed to evaluating all strategies for maximizing value and have recently engaged with their key stakeholders regarding the formulation and evaluation of all restructuring alternatives. However, at this juncture, the Debtors are unaware of alternative financing sources that would provide them with the liquidity they require on demonstrably better terms than the DIP Facility. Until an alternate source of financing emerges that can offer the Debtors liquidity on terms that justify replacing the DIP Facility, the Debtors submit that their fiduciary duty to stakeholders requires them to make every effort to comply with the terms of its existing financing. In a separate order, the Court extended the time within which the Debtors must assume or reject certain Unexpired Leases through and including August 10, 2009, without prejudice for the Debtors to request further extensions upon prior written consent of the lessor. The Order is without prejudice to the right of any lessor under any of the Unexpired Leases to request that the Court fix an earlier date by which the Debtors must assume or reject an Unexpired Lease and is also without prejudice to the Debtors' right to oppose the request. A list of Unexpired Leases subject to the Order is available for free at: http://bankrupt.com/misc/Tronox_UnexpiredLeaseORD050609.pdf About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The Company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The Company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Court to Consider DIP Amendments at May 28 Hearing -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing May 28, 2009, at 11:00 a.m. (Eastern Time) to consider approval of the DIP Amendments obtained by Tronox Inc. and its debtor affiliates. The DIP Hearing was originally scheduled for May 18. Tronox and its debtor affiliates, according to Colin M. Adams, Esq., at Kirkland & Ellis LLP, in New York, are presently not in compliance with certain covenants and representations and warranties in the DIP Agreement primarily as a result of two recent developments: (1) insolvency filings of the Debtors' German subsidiaries, Tronox GmbH and Tronox Pigments GmbH, under German law on March 13, 2009; and (2) the Debtors' failure to timely provide the DIP Lenders with audited financial statements for the fiscal year ended December 31, 2008, on account of the Debtors' ongoing analysis and investigation of their environmental and other contingent reserves. As a consequence of the German subsidiaries' insolvency proceedings, the Debtors are not in compliance with Section 5.01(a) of the DIP Agreement, which requires them to cause each of their subsidiaries to do "all things necessary to preserve, renew and keep in full force and effect their legal existence." The Debtors are also not in compliance with Section 5.04(a) of the DIP Agreement, which requires them to deliver their audited financial statements to the DIP Lenders within 100 days of the end of the fiscal year. As of April 30, 2009, the aggregate amount of borrowings outstanding under the DIP Financing was approximately $50 million, Mr. Adams tells the U.S. Bankruptcy Court for the Southern District of New York. To resolve the issues raised by the Debtors' failure to comply with several terms of the DIP Agreement, the Debtors and their advisors entered into good faith, arms'-length negotiations with the DIP Lenders to waive or amend certain terms of the DIP Agreement. On May 4, 2009, the proposed terms of the First Amendment were provided to the DIP Lenders for their consideration. On May 11, the First Amendment was approved by the requisite number of DIP Lenders. A full-text copy of the First Amendment is available for free at http://bankrupt.com/misc/Tronox_FirstWaiverOfAgreement.pdf The First Amendment provides the Debtors with these key benefits: (a) Waiver of Defaults: To allow the Debtors to continue to borrow under the DIP Agreement and to obtain necessary liquidity for the operation of their businesses, the First Amendment permanently waives any Default that may have occurred as a result of any non-compliance with the provisions of the DIP Agreement or related documents related to (a) the investigation of the Debtors' environmental and other contingent reserves, and any related understatement of said reserves in accordance with applicable accounting standards, (b) the failure to timely deliver audited financials and related auditors' opinions, reports and certifications and (c) the insolvency filings of the Debtors' German subsidiaries. (b) Borrowing Requests: To enable the Debtors to make valid borrowing requests prior to the conclusion of their analysis of their environmental and other contingent reserves, the First Amendment modifies certain representations, warranties and covenants in the DIP Agreement, which may be impacted by the outcome of that analysis. (c) Consolidated Financial Results: To conform to applicable accounting principles relating to the accounting of gains and losses for the Debtors' German subsidiaries, the First Amendment modifies the definition of "Consolidated Net Income," which included the net income or loss of Tronox Incorporated's "consolidated Subsidiaries" to exclude the income or loss of the German subsidiaries. (d) Audited Financial Statements: To allow the Debtors additional time to complete their investigation of their environmental and other contingent reserves, the First Amendment extends the time within which the Debtors must provide the DIP Lenders with audited financing statements for fiscal year ended December 31, 2008, until August 8, 2009. (e) Financial Assistance to Foreign Subsidiaries: To enable the Debtors to provide additional financial assistance to their foreign subsidiaries, the First Amendment modifies Section 6.04 of the DIP Agreement, which restricted the aggregate principal amount of loans and advances made by the Debtors to their non-debtor foreign subsidiaries to $5 million, to allow them to make up to $7.5 million in the loans and advances to their foreign subsidiaries plus up to $5 million to their Dutch subsidiary. (f) DACAs: To provide the Debtors with relief occasioned by the Royal Bank of Canada's refusal to enter into a deposit account control agreement, the First Amendment modifies Section 5.07(a) of the Guarantee and Collateral Agreement, which required the Debtors to establish and maintain Deposit Accounts subject to control agreements for the benefit of the Collateral Agent, to permit the Debtors not to enter into a control agreement with the Royal Bank of Canada; provided that the balance in the account at that bank not exceed $250,000 at any time. In addition, the DIP Lenders have agreed not to object to certain of the Debtors' important operational decisions -- including the payment of a certain secured claim held by one of the Debtors' key vendors as part of a settlement agreement and the payment of severance benefits to certain of the Debtors' employees in the event of their termination pursuant to a non-insider severance program. In exchange for these benefits, the Debtors and the DIP Lenders agreed to these requirements: (a) The affirmative covenant set forth in the DIP Agreement regarding the Debtors' sale efforts is modified to require them to execute an asset purchase agreement with respect to the sale of all or substantially all of its operating assets with a "stalking horse" bidder by May 31, 2009. In addition, the Debtors will be required to file a motion with the Court seeking approval of the terms of the "stalking horse" bid and establishing procedures for a public auction immediately after the execution of the asset purchase agreement. (b) The Debtors will be required to hold weekly calls with the DIP Agent and the DIP Lenders regarding the status of the Chapter 11 cases and to provide the DIP Agent's legal and financial advisors with certain information regarding the asset purchase agreements received by the Debtors from potential bidders. (c) The Debtors agree to pay a waiver fee to the DIP Lenders, an arrangement fee to the DIP Agent, and the expenses of the DIP Agent as consideration for the First Amendment and the concessions. The effectiveness of the First Amendment is conditioned specifically on the Debtors (a) paying a waiver fee equal to 0.5% of the outstanding commitment of each DIP Lender who consent to the First Amendment by a certain deadline; (b) paying the DIP Agent an arrangement fee of $400,000 for the arrangement, negotiation and preparation of the First Amendment; and (c) reimbursing the DIP Agent for all expenses incurred in connection with the First Amendment. Accordingly, the Debtors seek authority from Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York to enter into the First Amendment and to pay certain Amendment Fees to the DIP Agent and the DIP Lenders in connection the Amendment. Mr. Adams asserts that the resulting waiver and amendment is essential to maximizing the value of the Debtors' estates. According to Mr. Adams, the First Amendment will enable the Debtors to borrow under the DIP Agreement, which they cannot presently do. Without the ability to borrow, the Debtors, he says, would face a liquidity crisis before the end of May which would significantly impair their ability to operate in the ordinary course. He adds, the First Amendment will eliminate the serious risks posed to the Debtors' estates by the DIP Lenders' rights under the DIP Agreement to exercise remedies against them on account of the defaults. These remedies include the ability to declare the amounts presently outstanding under the DIP Financing due and payable in full, an act which would likely force the Debtors to liquidate, he asserts. DIP Objections (a) The Official Committee of Unsecured Creditors The DIP Lenders seek to take advantage of certain technical defaults under the DIP Agreement to put a stranglehold on the Debtors' cases and foreclose the estates' ongoing pursuit of a value maximizing alternatives to a sale, and seek to further compensate themselves through additional amendment and arranger fees, the Official Committee of Unsecured Creditors complains. The Court should not countenance that blatant opportunism, counsel for the Creditors' Committee, Brian S. Hermann, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, argues. According to Mr. Hermann, much has changed since the Debtors entered into the DIP Agreement in January 2009, noting that the DIP and credit markets have improved, as have industry conditions, creating an opening for the Debtors to pursue reorganization. Mr. Hermann says it is for these reasons that the Creditors' Committee has focused much of its efforts in recent weeks pursuing a value maximizing reorganization alternative with the Debtors and other key constituents in the cases. However, he says the Creditors' Committee needs more time and approval of the First Amendment, with its accelerated liquidation timeline, all but forecloses pursuit of any alternative. Mr. Hermann argues that the consideration provided to the DIP Lenders under the First Amendment seems wildly disproportionate to any alleged "harm" to the DIP Lenders resulting from the Debtors' technical defaults. Ironically, he points out, in their effort to avoid liquidation in the theoretically possible, but highly unlikely event the DIP Lenders were to accelerate and commence exercising remedies based on the Debtors' technical defaults, the First Amendment all but ensures the Debtors' prompt liquidation. According to Mr. Hermann, the Creditors' Committee is exploring the ability to obtain replacement DIP financing to eliminate the sale requirement contained in the DIP Agreement, and, in so doing, permitting the Debtors more time to pursue a restructuring alternative. The Creditors' Committee believes that improvements in the credit markets, as well as the market for the titanium dioxide, warrant exploration of alternative sources of financing that would not require an imminent sale of the Debtors' businesses. The Creditors' Committee takes no issue with the current sale covenant, with which the Debtors have complied, applying to the Debtors' use of cash collateral. However, the Creditors' Committee does not think it appropriate that the amended sale covenant included in the First Amendment should survive a refinancing of the DIP. If replacement DIP financing is secured in the short term, the existing DIP Financing, as amended by the First Amendment, should not continue to haunt the Debtors' bankruptcy cases, Mr. Hermann asserts. (b) Official Equity Security Holders Committee The Official Equity Security Holders Committee complains that while the Debtors assert that the DIP Amendment Motion is "essential to maximizing the value of the estates," they fail to demonstrate that the significant and material concessions provided for in the First Amendment are reasonable under current market conditions or in any way relate to the covenant defaults at issue. Counsel for the Equity Committee, Karen B. Dine, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in New York, argues that the Debtors posit that they will face a liquidity crisis before the end of May 2009 if the First Amendment is not approved, but nowhere do the Debtors supply the amount of cash needed to remedy the current shortfall and nowhere is there any evidence that the Debtors have investigated whether alternative financing is available that would not impose the new draconian terms embodied in the First Amendment. According to Ms. Dine, there is no discretion in the proposed amendment for the Debtors to determine whether the bids received justify the sale of the business at this point in time or whether accepting the bids is the best manner to maximize the value of these estates for all constituencies. Ms. Dine asserts that the Debtors' agreement to a forced sale on these terms without the Debtors retaining any discretion with respect to the acceptance of bids is not in the best interests of these estates and certainly not consistent with a goal of maximizing estate value for all stakeholders. There is no reason for the Court to permit the Debtors to enter into an agreement that unnecessarily grants exclusive control over the sale process to the DIP Lenders who have no duty to any other party, Ms. Dine argues. According to her, the sale process must remain under the control of the Debtors and their independent judgment to determine the course of action that maximizes the value of the estates for all stakeholders, rather than focusing solely on the return of value to the DIP Lenders who already have the benefit of senior liens and other significant statutory protections not to mention their existing security of liens in the Debtors' substantial assets. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The Company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The Company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Says Kerr-McGee Knew Spun-Off Company Won't Survive --------------------------------------------------------------- Debtors Tronox Incorporated, Tronox Worldwide LLC formerly known as Kerr-McGee Chemical Worldwide LLC, and Tronox LLC formerly known as Kerr-McGee Chemical LLC, tell the U.S. Bankruptcy Court for the Southern District of New York that Kerr-McGee Corporation breached its fiduciary duties to Tronox by failing to act in good faith. They tell the Court that New Kerr-McGee failed to disclose to Tronox, its future bondholders, and its future shareholders all material facts regarding Tronox, including the true nature and scope of the Legacy Liabilities that were being foisted upon Tronox. New Kerr-McGee failed to act in good faith by creating and promoting Tronox when it knew Tronox could never survive as an independent company. According to the Debtors, Anadarko Petroleum Corporation and New Kerr-McGee were unjustly enriched at Tronox's expense. As reported by the Troubled Company Reporter, the Debtors filed an adversary proceeding against Anadarko and Kerr-McGee seeking recovery for the fraudulent transfer of massive actual and contingent environmental, tort, retiree and other liabilities to Tronox in Kerr-McGee's 2006 spin-off of its Chemical subsidiary. The Debtors allege that Kerr-McGee Corporation created massive actual and contingent environmental, tort, retiree, and other liabilities during its more than 70-year history and then dumped them on the Debtors so that Kerr-McGee's senior executives could obtain windfall profits during a wave of lucrative consolidation in the oil and gas industry. In the process, the Debtors further allege: -- Kerr-McGee left Tronox grossly undercapitalized and without sufficient assets to pay the debts; -- misled potential investors regarding the true magnitude of the Legacy Liabilities; -- loaded down Tronox with debt; -- forced Tronox to provide sweeping indemnities to New Kerr McGee and substantially above-market benefits to retirees; -- defrauded creditors; and -- set Tronox on a path to an inevitable bankruptcy. According to the Debtors, Old Kerr-McGee devised a two-step fraudulent scheme to escape its toxic past and attempt to place its valuable oil and gas assets safely beyond the reach of the EPA, tort claimants, and other creditors: (1) Old Kerr-McGee would isolate the Legacy Liabilities by transferring all of its valuable oil and gas assets out of the historical business and into a new "clean" entity. (2) Old Kerr-McGee then would sever the historical business containing the Legacy Liabilities-achieving a "clean break" between its valuable oil and gas assets and the Legacy Liabilities. The Debtors' counsel, David J. Zott, P.C., Esq., at Kirkland & Ellis LLP, in New York, relates that New Kerr-McGee realized that it could never achieve its goal of a clean break from its Legacy Liabilities with an arm's-length buyer. So it elected to spin-off the Chemical Business as Tronox. A Spin-Off, Mr. Zott says, enabled New Kerr-McGee to unilaterally dictate the terms of the deal, avoid third-party due diligence, and eliminate standard representations and warranties regarding its massive Legacy Liabilities. The two-step scheme concluded with the completion of the Spin-Off on March 31, 2006, Mr. Zott says. New Kerr-McGee not only offloaded the massive Legacy Liabilities but also stripped $785 million out of the Chemical Business tax free on the way out the door. Less than 90 days after the spin off, Anadarko offered to acquire New Kerr-McGee for $18 billion on June 22, 2006. The transaction was approved and New Kerr-McGee became a wholly owned subsidiary of Anadarko on August 10, 2006. According to Mr. Zott, the primary architect of the two-step scheme, New Kerr-McGee Chairman and Chief Executive Officer Luke R. Corbett, personally profited by more than $200 million from the Anadarko deal. New Kerr-McGee Senior Vice President and Chief Financial Officer Robert M. Wohleber, who also served as Chairman of the Board of Tronox until the completion of the Spin-Off, pocketed more than $20 million. New Kerr-McGee Senior Vice President and General Counsel Gregory F. Pilcher, another architect of the Spin-Off, walked away with more than $9 million. Other New Kerr-McGee senior executives also enjoyed windfalls, the Debtors say. As a result of the Legacy Liabilities, despite valiant efforts to survive, including significant personnel reductions, efforts to streamline its operations, and reductions in retiree benefits programs, Tronox was left with no choice but to file for bankruptcy protection on January 12, 2009. Mr. Zott asserts that through the two-step fraudulent scheme, New Kerr-McGee transferred valuable assets from Tronox, Tronox Worldwide LLC, Tronox LLC and their affiliates and predecessors, including valuable oil and gas assets and proceeds from Tronox's secured and unsecured loans and the initial public offering of the Class A common stock of Tronox, while simultaneously transferring to and causing the Tronox Entities to assume liabilities and debt, including the Legacy Liabilities and $550 million in secured and unsecured loans. Each of the Transfers and Obligations was made to or for the benefit of New Kerr-McGee. At the time the Transfers and Obligations were undertaken, New Kerr-McGee was the parent of the Tronox Entities. As a result, New Kerr-McGee was in a position to, and in fact did, control and dominate the Tronox Entities. According to Mr. Zott, the Tronox Entities made the Transfers and incurred the Obligations with the actual intent to hinder, delay, or defraud the creditors or future creditors of the Tronox Entities. As a result of the Transfers and Obligations, the Tronox Entities and their creditors have been harmed. The Tronox Entities were insolvent at the time or became insolvent as a result of the Transfers and Obligations, Mr. Zott points out. Tronox has multiple unsecured creditors as to whom the Transfers and Obligations are voidable under applicable law and who hold an unsecured claim allowable under Section 502 of the Bankruptcy Code. Tronox did not receive reasonably equivalent value from Anadarko and New Kerr-McGee in exchange for payments it made or became obligated to make for Anadarko's and New Kerr-McGee's benefit within two years of Tronox's bankruptcy filing, the Debtors complain. Tronox was engaged in a transaction for which its remaining assets were unreasonably small in relation to the transaction. Mr. Zott argues that at the time of the Transfers and Obligations, the Tronox Entities intended to incur debts beyond their ability to pay as they became due. The Debtors allege that Anadarko conspired with New Kerr-McGee to effectuate the fraudulent conveyance of the Transfers and Obligations through the Spin-Off. By agreeing to purchase New Kerr-McGee once it shed the Legacy Liabilities, Anadarko intentionally furthered the conspiracy by providing New Kerr-McGee with monetary incentive to complete the Spin-Off, thereby harming Tronox and its creditors. Anadarko and New Kerr-McGee benefited from the fraudulent conveyance of the Transfers and Obligations or exercised dominion and control over the fraudulently conveyed assets. Anadarko, the Debtors add, knowingly provided substantial assistance to New Kerr-McGee in the fraudulent conveyance of the Transfers and Obligations by agreeing to purchase New Kerr-McGee once it shed the Legacy Liabilities and by providing New Kerr- McGee with monetary incentive to complete the Spin-Off, thereby harming Tronox and its creditors. Accordingly, the Debtors ask the Court to: (a) award them compensatory damages for all damages sustained as a result of New Kerr-McGee and Anadarko's wrongdoing, in an amount to be proved at trial, including interest; (b) award them appropriate restitution to Tronox from New Kerr-McGee and Anadarko for Defendants' unjust enrichment; (c) award them punitive and exemplary damages where the damages are available; (d) award them reasonable costs and expenses incurred in the Action, including attorneys' fees and expert fees; (e) equitably subordinate or equitably disallow any claims asserted by New Kerr-McGee and Anadarko; and (f) disallow any claims asserted by New Kerr-McGee and Anadarko. Anadarko Denies Liability According to Dow Jones Newswires, in response to recent developments, Anadarko said that Tronox's woes were unrelated to Anadarko and Kerr-McGee. It noted that Tronox attributed its deteriorating financial condition to the downturn in the housing and construction markets. "We conduct our business with the utmost integrity, and we are not responsible for Tronox's financial condition," said Anadarko spokesman John Christiansen, according to Dow Jones. Mr. Christiansen said Tronox was solvent and adequately capitalized at the time of its IPO, saying Tronox was able to issue stock at about $14 per share, and also enter into a credit facility and issue unsecured bonds. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The Company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The Company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Govt. Seeks to Join in Suit vs. Anadarko, Kerr-McGee ---------------------------------------------------------------- The United States of America seeks to intervene in the adversary proceeding commenced by Tronox Inc. against Kerr-McGee Corp. and Anadarko Petroleum Corp., which acquired Kerr-McGee for $18.4 billion in August 2006. In its complaint, Tronox asserts claims to recover environmental remediation costs it was given when spun off from Kerr-McGee in March 2006. Tronox and its affiliates, the U.S. government notes, has maintained that they were forced into bankruptcy in large part by crippling environmental liabilities at dozens, if not hundreds, of sites throughout the country. In its Motion to Intervene, the U.S. government points out that the Debtors have been equally adamant that those liabilities "are almost entirely unrelated" to their ongoing operations, and have foreshadowed a fraudulent conveyance action against their former parent, Kerr-McGee Corporation, as well as Anadarko Petroleum Corporation, which acquired Kerr-McGee almost immediately after the Debtors -- along with all of Kerr-McGee's environmental liabilities -- were spun off. The U.S. government says that it has maintained from the start that it has a unique statutory cause of action against Anadarko and Kerr-McGee under the Federal Debt Collection Procedures Act, 28 U.S.C. Section 3301, et seq., to the extent that those parties fraudulently avoided debts to the United States of America. On May 12, 2009, the Debtors filed their adversary complaint -- a compelling account of corporate greed in which Kerr-McGee sought to "jettison [its] toxic legacy" by spinning off Tronox, so that Kerr-McGee could be acquired by Anadarko for $18 billion, paying rich bonuses to its senior management in the process. According to the Complaint, the defendants' "need to evade the Legacy Liabilities was underscored when the U.S. Environmental Protection Agency . . . notified Old Kerr-McGee that it was allegedly responsible for hundreds of millions of dollars in cleanup costs at a former wood treatment plant in Manville, New Jersey. Old Kerr-McGee knew that Manville was just the tip of the iceberg and that it would face similar potential liability at numerous other sites like Manville." Now that the suit against Anadarko and Kerr-McGee is on file, the United States seeks to intervene to protect its interests. As the largest creditor in Tronox' Chapter 11 cases, the U.S. Government is obviously a party-in-interest within the meaning of 11 U.S.C. 1109(b), and so has an "unconditional right to intervene" in this adversary proceeding under the Second Circuit's decision in In re Caldor Corp., 303 F.3d 161 (2d Cir. 2002). Moreover, given that the United States has a unique statutory cause of action to the extent that the defendants fraudulently avoided debts to the United States - which the complaint makes plain was the case - the Government must be permitted to assert those claims under the FDCPA. The U.S. Government and the Debtors have already reached an agreement permitting the United States to file its complaint-in- intervention and defining the Government's role in the litigation of this action in such a way that will enhance the Debtors' efforts to efficiently and effectively litigate this case, while also protecting the Government's interests. The Official Committee of Unsecured Creditors, the Official Committee of Equity Security Holders, and the Debtors' prepetition Agent and DIP Agent likewise consent to the Government's intervention in this case. The bankruptcy judge will hold a June 9 hearing to decide whether the government can become a plaintiff in the suit. Objections to the motion are due June 2. Anadarko Denies Liability According to Dow Jones Newswires, in response to recent developments, Anadarko said that Tronox's woes were unrelated to Anadarko and Kerr-McGee. It noted that Tronox attributed its deteriorating financial condition to the downturn in the housing and construction markets. "We conduct our business with the utmost integrity, and we are not responsible for Tronox's financial condition," said Anadarko spokesman John Christiansen, according to Dow Jones. Mr. Christiansen said Tronox was solvent and adequately capitalized at the time of its IPO, saying Tronox was able to issue stock at about $14 per share, and also enter into a credit facility and issue unsecured bonds. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Seeks to Implement Severance, Incentive Programs ------------------------------------------------------------ Tronox Inc. and its affiliates are seeking authority from the U.S. Bankruptcy Court for the Southern District of New York to implement: -- The Tronox Incorporated 2009 Involuntary Termination Plan, a non-insider severance program; and -- a Key Employee Incentive Plan. The Court will convene a hearing to consider approval of the Motion on June 9, 2009, at 11:00 a.m. (Eastern Time). Objections are due June 2. Non-Insider Severance Program The commencement of the Chapter 11 cases has caused great uncertainty and concern among certain of the Debtors' employees, Colin M. Adams, Esq., at Kirkland & Ellis LLP, in New York, tells the Court. At this juncture, Mr. Adams says, it is unclear how the Chapter 11 cases will conclude and whether the Debtors will have positions for all employees. Employees' concerns have been exacerbated by the fact that the Debtors are presently engaged in a process to sell substantially all their operating assets, some of which have already resulted in reductions in force. In addition, the Debtors presently do not have a uniform severance policy that is consistently applied throughout the organization. According to Mr. Adams, the absence of a coherent severance policy, against the backdrop of the Chapter 11 cases and ongoing efforts to control costs, reinforces the perception of job insecurity among certain of the Debtors' employees. To counter these concerns, maintain a meaningful level of stability, and improve focus and morale among its workforce, the Debtors have developed a Severance Program. Mr. Adams avers that the Debtors have determined that, in its business judgment, the Severance Program is in the best interests of the estates because implementing the program will effectively and appropriately motivate eligible non-insider employees to focus on maximizing value during this critical period, regardless of whether the Chapter 11 cases result in further force reductions among the impacted employees. Recognizing the need for a severance program, certain members of the Debtors' senior management worked to develop an appropriate program. They evaluated the concerns and morale of the Debtors' employees, the best ways to address these concerns and the potential structure, and cost of the program. Based on this analysis, they developed a severance program targeted at the Debtors' 323 eligible, non-unionized, non-insider, and salaried employees. They determined that the Eligible Employees were the employees whose performance was most likely to suffer as a result of the distractions and uncertainties attendant to the Chapter 11 cases. Mr. Adam assures that none of the Eligible Employees is an "insider", as that term is defined in Section 101(31) of the Bankruptcy Code. Nor are any of the 323 Eligible Employees officers, directors or senior executives of Tronox with a control position. The Eligible Employees are, instead, at or below the manager level. In formulating the terms of the Severance Program, the Debtors balanced the need to maintain the morale, focus and loyalty of the Eligible Employees with the financial constraints under which the Debtors now operates as a Chapter 11 debtor. The Severance Program is carefully structured to avoid unnecessary benefits while focusing and aligning the Eligible Employees' goals with those of Tronox. The resulting Severance Program consists of: (a) Eligibility: Benefits will be provided only to those 323 employees of the Debtors (i) who are not directors, officers or senior executives of the Debtors with the ability to exert control over corporate policy or decision making, (ii) who work on a full time basis, (iii) who are not unionized, and (iv) whose employment is terminated involuntarily by the Debtors. Employees who are terminated for cause or a "Discharge" event are not eligible for severance pay under the Severance Program. (b) Severance Pay: An Eligible Employee will receive a one- time lump-sum payment equal to the product of (i) one week of the Eligible Employee's base salary multiplied by (ii) the number of years of continuous service; provided, however, the total payment may not exceed 3 months of the Eligible Employee's annual base salary. (c) Unused Vacation Pay: Terminated Eligible Employees will also receive payment for any unused vacation benefits in accordance with the company's vacation plan. (d) Release: Severance pay is contingent on the terminated Eligible Employee's execution of a general release and waiver of all claims against the Debtors. (e) Severance Mitigation: Any terminated Eligible Employee who (i) is reemployed within 30 days by an entity that purchases assets from the Debtors or (ii) receives severance benefits under any other agreement or program will not be eligible to receive severance pay under the Severance Program. The amount of Severance Pay will be reduced by any legally required payment under the Worker Adjustment and Retraining Notification Act. The Debtors anticipate two types of potential buyers for their business: "strategic" and "financial" buyers. The Debtors project that if their operating assets are acquired by a financial buyer, the Severance Program will cost approximately $1.4 million, which includes Unused Vacation Payments to Eligible Employees of approximately $550,000. If the Debtors' operating assets are acquired by a strategic buyer, the Debtors project that the Severance Program will cost approximately $3.9 million, which includes Unused Vacation Payments to Eligible Employees of approximately $1.6 million. After completing development and cost projections, the Debtors submitted the Severance Program to Alvarez & Marsal North America LLC for review and comment. Thereafter, the Debtors, in consultation with its financial and legal advisors, presented the Severance Program, cost projections, and other related materials to the Compensation Committee of Tronox's Board of Directors, which approved the Severance Program on March 26, 2009. The Debtors also provided a comprehensive information package detailing the terms and likely costs of the Severance Program to key stakeholders, including advisors to the prepetition and postpetition secured lenders, the Official Committee of Unsecured Creditors, the Official Committee of Equity Security Holders, and the U.S. Trustee. These parties have advised the Debtors that they have no objection to the Severance Program. Mr. Adams asserts that if the Debtors are not permitted to implement the Severance Program and make severance payments to involuntarily terminated Eligible Employees, the morale and focus of the Eligible Employees would suffer. He adds that given the Debtors' status as a Chapter 11 debtor engaged in a sale process, there is no guarantee that they could attract new employees of comparable quality and character should existing Eligible Employees leave the company. And, even if otherwise available, a new employee would lack the unique knowledge and historical perspective held by the Eligible Employees, Mr. Adams contends. Key Employee Incentive Plan Before the Petition Date, the Debtors and their advisors engaged in discussions with certain parties regarding potential strategic transactions, including a sale of all or substantially all of the Debtors' assets. In connection with the sale discussions, the Board of Directors of Tronox Incorporated was advised by management and the Debtors' business and financial advisors that a management incentive plan should be explored to properly incentivize employees that would be critical to the sale process. During the week of April 13, 2009, the Debtors provided an initial Key Employee Incentive Plan proposal to counsel for the agent to the Debtors' secured lenders, the Official Committee of Unsecured Creditors, and the Official Committee of Equity Security Holders. The Creditors' Committee provided a revised KEIP proposal to the Debtors. Following discussions and negotiations between the Debtors, their secured lenders and the Creditors' Committee, the Debtors modified certain terms and the structure of the KEIP. The Debtors initially proposed a sale incentive threshold to stakeholders based on its estimate of a probable purchase price from prepetition sale negotiations. After input from its secured lenders, and the Creditors' Committee, the Sale Incentive Threshold was increased above the Debtors' initial proposed threshold. With these modifications, the Creditors' Committee supports the KEIP. The Board voted to adopt the KEIP, as amended. The KEIP covers key employees who (a) are likely to have the most significant impact on Tronox's profitability, and (b) have substantial oversight and control over any sale of the Assets. The Participants, certain of whom are "insider[s]" within the meaning of Section 101(31), are: * Dennis L. Wanlass, Interim Chairman of the Tronox Board and Chief Executive Officer; * Michael J. Foster, Vice President, General Counsel and Secretary; * John D. Romano, Vice President for Sales and Marketing; * Robert C. Gibney, Vice President for Human Resources and Corporate Affairs; and * Non-insider sales and management personnel who, in the discretion of the Debtors' senior management, deliver outstanding performance during the Chapter 11 cases. Under the KEIP, each of the Participants is eligible to receive a specified percentage of cash set aside in an incentive pool. If profitability-based or asset sale-based targets are met, cash is allocated to the Incentive Pool. The Incentive Pool is divided into two tiers. At the first tier, the Incentive Pool is funded if the Debtors meet an initial set of targets. At the second tier, additional cash is allocated to the Incentive Pool if the Debtors meet a second and higher set of targets. The profitability-based portion of the KEIP is structured to incentivize the Participants to meet profitability targets that are based on the Debtors' 2009 EBITDAR projections, which were established in discussions between the Debtors and the Creditors' Committee. Target EBITDAR will be adjusted for certain factors beyond the control of the Participants including currency exchange rates. If one of the Assets is sold, the EBITDAR associated with that asset will be subtracted from Target EBITDAR. The asset sale-based portion of the KEIP is based on the gross proceeds realized from any sale of the Assets. Amounts allocated to the Incentive Pool would increase as the amount of consideration received for the sale of the Assets increases. For purposes of the KEIP, the Assets include only the assets of the Debtors' titanium dioxide pigment business and its electrolytic and other specialty chemicals business. Notably, if no sale of the Assets is completed, or if the amounts received from the sale of the Assets do not exceed the threshold amount, no payments will be made under the asset sale-based portion of the KEIP. The asset sale-based portion of the KEIP provides for incentive payments to the participants whether the Assets are sold in one transaction or as a series of related or unrelated transactions. The Participants will only receive payments under the KEIP, if at all, under one of the components of the KEIP. To the extent the Participants receive any payments under the profitability-based component of the KEIP and the Assets are sold, the payments would be credited against any payments calculated under the asset sale- based component. Likewise, if the Participants receive payments under the asset sale-based component of the KEIP and the Debtors exit Chapter 11 under a plan of reorganization, the payments would credited against any payments calculated under the profitability-based component. In addition to their ordinary course activities overseeing the Debtors' businesses and maintaining key relationships with employees, long-standing customers and suppliers, the Participants must work with potential purchasers to assist in the diligence necessary for purchasers to increase their bids during the sale process. These managers and their skills, knowledge and motivation are essential to achieving Target EBITDAR or the highest or otherwise best possible value for the Businesses through a sale, Colin M. Adams, Esq., at Kirkland & Ellis LLP, in New York, asserts. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The Company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The Company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D. N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TXCO RESOURCES: Receives Nod to Loan $12.5-Mil. on Interim ---------------------------------------------------------- TXCO Resources Inc. reported that the U.S. Bankruptcy Court for the Western District of Texas has granted the Company interim authorization to borrow up to $12.5 million under its proposed $32 million debtor-in-possession (DIP) credit facility. The DIP facility authorization will provide immediate liquidity to the Company to help fund operations during the reorganization, subject to customary conditions. The Bankruptcy Court also approved the Company's other "first-day motions," providing for the continued payment of employee wages and other compensation, reimbursable employee expenses, and medical and other benefits without interruption; the continued payment of royalties in the ordinary course of business; and the continued use of its cash collateral and cash management systems. As announced in its press release on May 18, 2009, the Company and its subsidiaries filed a voluntary petition for reorganization under chapter 11 of the U.S. Bankruptcy Code with the Court. The Company also reported that it was notified by The Nasdaq Stock Market on May 18, 2009, that Nasdaq will suspend trading of the Company's common stock on The Nasdaq Global Select Market, effective at the opening of business on May 28, 2009, in accordance with Nasdaq Listing Rules 5100, 5110(b), and IM 5100-1. The notification also stated that Nasdaq will file a Form 25-NSE with the Securities and Exchange Commission to remove the Company's securities from listing and registration on The Nasdaq Stock Market. The Company does not intend to appeal Nasdaq's decision and anticipates that its common stock will be delisted from The Nasdaq Global Select Market. TXCO is seeking a listing on the OTCBB, which it believes will provide a reasonable trading market for its shares. In the interim, the Company's common stock will be quoted on the Pink Sheets OTC market. About TXCO Resources TXCO Resources is an independent oil and gas enterprise with interests in the Maverick Basin, the onshore Gulf Coast region and the Marfa Basin of Texas, and the Midcontinent region of western Oklahoma. TXCO's business strategy is to acquire undeveloped mineral interests and internally developing a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling. It accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on Nasdaq's Global Select Market under the symbol "TXCO." TXCO Resources Inc. and 10 affiliates filed for Chapter 11 on May 17, 2009 (Bankr. W. D. Tex. Case No. 09-51807). Judge Ronald B. King handles the case. Deborah D. Williamson, Esq., and Lindsey D. Graham, Esq., are the Debtors' general restructuring counsel. Attorneys at Fulbright and Jaworski, L.L.P. are corporate and conflicts counsel. FTI Consulting Inc. is financial advisor, and FTI's Albert S. Conly is chief restructuring officer. Goldman, Sachs & Co. is the financial advisors for asset sales, while Global Hunter Securities, LLC, is the investment banker. Administar Services Group LLC is the Debtors' investment banker. As of March 31, 2009, TXCO has assets of $431,898,000 against debts of $323,833,000. US ENERGY: Proposes Aug. 26 Extension of Plan Solicitation Period ----------------------------------------------------------------- U.S. Energy Systems Inc. and U.S. Energy Overseas Investments LLC ask the U.S. Bankruptcy Court for the Southern District of New York to further extend the exclusive period to solicit acceptances of their joint liquidation plan of reorganization until Aug. 26, 2009. The Debtors need more time to complete the liquidation of their assets and come up with an amended plan. Under this Plan, a Liquidation Trust would be established, and USEY and Overseas would transfer any remaining assets -- including any net proceeds from USEY's sale of 100% of the common stock of USEB and any residual ownership interests in GBGH, LLC -- into the Liquidation Trust for liquidation and the subsequent distribution of net liquidation proceeds to USEY equity holders, according to the Troubled Company Reporter in August 2008. The Debtors' initial solicitation period will expire on Thursday, May 28, 2009. A hearing is set for May 26, 2009, at 10:00 a.m., to consider the Debtors' extension of time. A full-text copy U.S. Energy and U.S. Energy Overseas' Chapter 11 plan is available for free at http://ResearchArchives.com/t/s?3162 Based in Avon, Connecticut, U.S. Energy Systems, Inc., (Pink Sheets: USEY) -- http://www.usenergysystems.com/-- owns green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production. The Company filed for Chapter 11 protection on January 9, 2008 (Bank. S.D. N.Y. Case No. 08-10054). Subsequently, 34 affiliates filed separate Chapter 11 petitions. Peter S. Partee, Esq., at Hunton & Williams LLP, represents the Debtor in its restructuring efforts. Jefferies & Company, Inc., serves as the Company's financial advisor. The Debtor selected Epiq Bankruptcy Solutions LLC as noticing, claims and balloting agent. The Official Committee of Unsecured Creditors has yet to be appointed in these cases by the U.S. Trustee for Region 2. When the Debtors filed for protection from their creditors, they listed total assets of $258,200,000 and total debts of $175,300,000. On January 23, 2009, U.S. Energy Biogas Corp and eight of its subsidiaries filed their respective voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The USEB Debtors' cases are being jointly administered for procedural purposes with the cases of the USEY Debtors. VINE INVESTMENTS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Vine Investments Inc. 801 East Apache Blvd Tempe, AZ 85281 Bankruptcy Case No.: 09-11069 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Allan D. Newdelman, Esq. 80 E. Columbus Ave. Phoenix, AZ 85012 Tel: (602) 264-4550 Fax: (602) 277-0144 Email: anewdelman@qwestoffice.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Joseph Kennedt, president of the Company. W WALT LOWE REVOCABLE: Case Summary & 20 Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: The W. Walt Lowe Revocable Trust of October 29, 1994 as Amended 4601 Covert Avenue Evansville, IN 47714 Bankruptcy Case No.: 09-70820 Debtor-affiliates filing separate Chapter 11 petition: Entity Case No. ------ -------- The D. Lynn Lowe Revocable Trust of October 29 09-70821 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Southern District of Indiana (Evansville) Judge: Basil H. Lorch III Debtor's Counsel: Marilyn Ratliff, Esq. 123 NW 4th St Ste 304 Evansville, IN 47708 Tel: (812) 434-4918 Fax: (812) 424-3526 Email: marilyn.ratliff@gmail.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 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/insb09-70820.pdf The petition was signed by W. Walt Lowe, trustee of the Company. WINSTAR COMMUNICATIONS: Ch. 7 Trustee to Make $240MM Distribution ----------------------------------------------------------------- Christine C. Schubert, as Chapter 7 Trustee for the estate of Winstar Communications, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to authorize an interim distribution of $240,861,808 with respect to the DIP Lenders' claims from the proceeds of her settlement agreement with Lucent Technologies Inc. In the alternative, if there are objections to the Asserted Amount, the Chapter 7 Trustee asks the Court to authorize an interim distribution of the undisputed portion of $240,861,808 of the DIP Lenders' claims and establish a protocol to determine the allowance of the remainder of the DIP Lenders' claims. The Chapter 7 Trustee sought and obtained Bankruptcy Court approval of a settlement agreement she entered into with Lucent, with respect to Lucent's appeal of a December 2005 Bankruptcy Court Order allowing the Chapter 7 Trustee to recover more than $250 million of preferential payments Lucent received within the 90-day period before the Petition Date. Under the parties' settlement, Lucent will (i) dismiss its continued appeal to the U.S. Court of Appeals for the Third Circuit and its right to seek a further appeal to the U.S. Supreme Court; and (ii) immediately pay to the Chapter 7 Trustee $320 million in full and final satisfaction of the Third Circuit's affirmation of the December 2005 Order. Sheldon K. Rannie, Esq., at Fox Rothschild LLP, in Wilmington, Delaware, relates that as a result of the Settlement Agreement, the Chapter 7 Trustee intends to make a distribution to pay certain allowed secured claims asserted against Winstar's Chapter 7 estate. Since certain creditors may object to the amount of the DIP Lenders' claims, the Chapter 7 Trustee avers that she is interested in ensuring that (i) an interim distribution is authorized with respect to the undisputed portion of the DIP Lenders' claims so that interest does not continue to accrue and needlessly diminish any potential recovery by other creditors, and (ii) a process is established by the Court to resolve any dispute promptly, so that the remaining funds from the Settlement Agreement can be appropriately distributed at the earliest possible juncture. Accordingly, Mr. Rennie reminds the Court that pursuant to the Final DIP Order, the DIP Lenders were granted valid, binding, enforceable and perfected liens, subject to a specified carveout, in all existing and after acquired property and assets of the Debtors, and all proceeds, products, rents and profits, senior to the liens of Prepetition Lenders and other creditors. He notes that during the course of the Chapter 7 Trustee's administration of the Debtors' estates, she has sought and obtained Court approval to make these interim distributions to the DIP Lenders of amounts due under the DIP Agreement: Date Distribution ---- ------------ 12/30/2002 $11,959,314 11/28/2003 $31,953,041 12/27/2003 $36,342,034 08/20/2004 $1,554,905 05/24/2004 $3,445,094 Mr. Rennie says that according to the DIP Agent, as of March 26, 2009, taking into account the previous interim distributions, $240,861,808 is due and owing under the DIP Agreement. A table showing the calculation of the Asserted Amount is available for free at http://bankrupt.com/misc/Winstar_DIPClaimsCalculation.pdf Moreover, the Debtors are obligors under a Revolving Credit and Term Loan Agreement entered into with The Bank of New York, as administrative agent and collateral agent, Citicorp North America, Inc., as syndication agent, CIBC World Markets Corp., and Credit Suisse First Boston, as documentation agents and other lenders. The Debtors, other than WCI Capital Corporation, jointly and severally guaranteed all obligations under the Prepetition Credit Agreement. Mr. Rennie says that as of the Petition Date, $1,372,033,000 is outstanding under the Prepetition Credit Agreement, plus interest and fees incurred, as well as $6,021,939 arising from certain hedging transactions. Under the Final DIP Order, the Prepetition Lenders hold the next two places in the line for distribution of the assets of the Chapter 7 estates behind the DIP Lenders. Mr. Rennie stresses that the Chapter 7 Trustee, who was not involved in the negotiation of the DIP Agreement, takes no position on whether the Asserted Amount of the DIP Lenders' claims has been correctly calculated, or whether any objections of the Prepetition Lenders, if made, should be sustained. However, consistent with her fiduciary duty to maximize the value of the Debtors' estates, the Chapter 7 Trustee believes that she should be permitted to make an interim distribution on the DIP Lender claims, he points out. He says that a Chapter 7 Trustee is authorized to make distribution under Section 726 of the Bankruptcy Cod and that although distributions ordinarily occur at the end of a Chapter 7 case, a trustee may make an interim distribution when it is in the best interests of the estate and its creditors to do so. Moreover, the Chapter 7 Trustee suggests these uniform procedures in the event objections to the Motion are received: (1) Any Prepetition Lender or other party-in-interest wishing to object to payment of the Asserted Amount to the DIP Lenders will be required to file its objection within 10 days after entry of an order granting the DIP Claim Interim Distribution Motion, including (i) its calculation as to what the DIP Lenders are due, and (ii) any documentary evidence or legal authorities on which it relies to support its position. (2) The Order on the Interim Distribution Motion will authorize the Chapter 7 Trustee to immediately distribute to the DIP Lenders the lowest calculation of what any objector asserts the DIP Lenders are due by the Objection Deadline based on all objections received by the Objection Deadline. (3) The DIP Lenders will be entitled to file a response to the Objections, setting forth any documentary evidence and Legal authorities upon which they rely to support the Asserted Amount, within 10 days of the Objection Deadline. (4) The Court will then advise whether it wishes to hold a hearing to take evidence or hear arguments from the creditors, and will then render a decision as to the correct amount of the DIP Lenders' claims. (5) If objections are received to the Motion, the Chapter 7 Trustee will not make any distribution on that portion of the DIP Lender claims, which are disputed by any party unless authorized by further Court order. Prepetition Lenders Object to Proposed Procedures Credit Suisse Loan Funding LLC, GSO Capital Partners, L.P. and Solus Alternative Asset Management, L.P., as the Debtors' Prepetition Senior Secured Lenders, oppose the proposed interim distribution procedures. The Objecting Prepetition Lenders hold $694 million or 56% of the principal amount loaned to the Debtors under the Prepetition Credit Agreement. Dennis A. Meloro, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, points out that after the Debtors' estate funds are distributed to satisfy the allowed claims of the DIP Lenders, as well as the allowed claims for fees of the Chapter 7 Trustee and her professionals, the remainder of the estate funds will be dedicated to make a relatively small distribution with respect to the Prepetition Credit Agreement Claim. He asserts that the Proposed Procedures require an objecting party to dispute the Asserted Amount without the bereft of knowing any of the contractual and legal authorities to be cited by the DIP Lenders in support of their Asserted Amount. He adds that the only publicly available information supporting the DIP Lenders' Asserted Amount is a spreadsheet of unknown origin and without explanation. Moreover, the Prepetition Lenders object to the DIP Lenders' entitlement to (i) default interest and (ii) compound interest as part of the Asserted Amount because the default interest and daily compounding interest add $75 million to the DIP Lenders' Claims. "Every dollar of default interest and daily compounded interest that is included in the DIP Lenders' Claim diminishes, dollar for dollar, the recovery of the Prepetition Lenders," Mr. Meloro stresses. The Prepetition Lenders say they tried to seek amicable resolution of their concerns with Halcyon Asset Management, LLC, the Debtors' DIP Lender and holder of substantially all of the DIP Lenders' claims, but Halcyon has not responded. The Prepetition Lenders suggest that the Proposed Procedures incorporate a language stating that right of each objecting party to file reply, within 10 days after the DIP Lenders file their response to the initial objection filed by the objecting party. Absent this language, the Prepetition Lenders ask the Court to deny the Chapter 7 Trustee's request for interim distribution of the DIP Lenders Claims. Subsequently, on behalf of the Chapter 7 Trustee, Seth A. Niederman, Esq., at Fox Rothschild LLP, in Wilmington, Delaware, filed with the Court a revised form of order on the Interim Distribution Motion, a full-text copy of which is available for free at http://bankrupt.com/misc/WinstarProposedDistOrder.pdf Mr. Niederman relates that the Court held a hearing on April 23, 2009 and asked that the parties submit a revised form of order agreeable to all parties. Accordingly, upon review, Judge Kevin Carey approved the Procedures for resolving objections to the DIP Lenders' Asserted Amount. The Court also established these deadlines: May 12, 2009 Date by which the Chapter 7 Trustee will have made an interim distribution to the DIP Lenders of the Undisputed Amount, without prejudice to the right of the DIP Lenders to receive other and further distribution on claims as may be subsequently authorized by the Court. The Chapter 7 Trustee, however, is not entitled to make any distribution in respect of the Disputed Portion until the Court authorizes and directs the Chapter 7 Trustee to do so. May 26, 2009 Deadline to respond to filed objections to the Asserted Amount. June 9, 2009 Deadline to file counterreplies to the Responses. June 18, 2009 Hearing Date on the objections, responses and replies. Prepetition Lenders Find Interests Exorbitant The Prepetition Lenders subsequently filed an objection, insisting that the aggregate amount of default interest and compound interest for $82.4 million represents a 50% bonus on top of the $165,766,236 portion of the DIP Lenders' Asserted Amount that comprises outstanding principal and accrued and unpaid simple interest as of June 30, 2009. If the Asserted Amount is to be paid in full, the Prepetition Lenders note that they would recover $30.2 million, which represents only 2.2% of the Prepetition Credit Agreement Claim. "The magnitude of the $82.4 million of default interest and compound interest sought by the DIP Lenders can only be interpreted as flagrant, unconscionable and unenforceable penalty for default that bears absolutely no monetary relationship to any actual damages possibly suffered by the DIP Lenders as a consequence of a default," Mr. Meloro argues. Mr. Meloro contends that the equities in these Chapter 7 cases weigh heavily in favor of disallowing the award of default interest and compound interest to the DIP Lenders. He notes that the Debtors' estates are irrevocably insolvent as evidenced in their liabilities exceeding their assets by more than $1 billion. He reiterates that every dollar of default interest and daily compounded interest that is included in the DIP Lenders' Claim diminishes, dollar for dollar, the already de minimis recovery of the Prepetition Lenders. Given that outcome, which results from a senior creditor class obtaining an exorbitant premium at the extreme expense of a junior creditor class that is recovering only a tiny fraction of its claim, is patently inequitable, and does not pass scrutiny under the balancing of the equities test that the Court must apply in considering the request for allowance of those sums, Mr. Meloro emphasizes. The Prepetition Lenders thus leave the DIP Lenders to their proof of burden concerning the amount and proper calculation of default interest and compound interest, which they may be properly entitled under the DIP Credit Agreement. On behalf of Halcyon Fund L.P., Carl N. Kunz, III, Esq., at Morris James LLP, in Wilmington, Delaware, tells the Court that the parties are engaged in ongoing discovery, and a deposition of one party-in-interest could not be scheduled and will not be completed until May 27, 2009. He notes that the parties believe that it is best for the deposition to be completed and to permit information from the deposition to be included in any response filed to the Objection. Accordingly, in a Court-approved stipulation, the Chapter 7 Trustee, Halcyon, Credit Suisse, GSO Capital and Solus agree to these new deadlines for filing responses and replies: May 28, 2009 Deadline to file responses. June 11, 2009 Deadline to file replies to responses. The June 18, 2009 hearing on the objections, responses and replies will remain in place. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On January 24, 2002, the Bankruptcy Court converted the Debtors' cases to a Chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' Chapter 7 trustee. The Chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINSTAR COMMUNICATIONS: Ch. 7 Trustee Modifies Herrick's Role ------------------------------------------------------------- Pursuant to Section 328 of the Bankruptcy Code, Christine C. Schubert, as Chapter 7 Trustee for the estate of Winstar Communications, Inc., sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to further modify the retention of Herrick Feinstein LLP as her special litigation counsel. The Chapter 7 Trustee told the Court that she intended to expand the retention of Herrick Feinstein to enable it to assist her in distribution of a $320 million payment under her settlement agreement with Lucent Technologies Inc. The Chapter 7 Trustee and Lucent entered into the Settlement Agreement in which Lucent will pay the Chapter 7 Trustee $320 million in full and final satisfaction of judgment entered by the Bankruptcy Court on December 28, 2005 with respect to preferential payments made to Lucent. Lucent also agreed to dismiss its petition for rehearing and its right to further seek an appeal before the U.S. Supreme Court. The Bankruptcy Court approved the $320 million Settlement on March 25, 2009. The Chapter 7 Trustee said the Settlement Payment will provide a substantial benefit to the Debtors' creditors because the Settlement Payment will provide sufficient funds to pay (i) all Chapter 7 administrative expenses; (ii) the entire balance of the DIP loan; and (iii) a further distribution to other creditors of the estates. By this Modified Retention Order, Herrick Feinstein will render certain services to the Chapter 7 Trustee, including: -- assisting the Chapter 7 Trustee with the distribution of funds emanating from the Settlement Payment; and -- handling any subsequent issues which may arise in connection with the Lucent Settlement Agreement and the settlement payment. The Chapter 7 Trustee will pay Herrick Feinstein out of the Settlement Payment proceeds, on an hourly basis, at its current customary hourly rates and in accordance with the original Retention Application. Stephen M. Rathkopf, Esq., partner at Herrick Feinstein, assures the Court that his firm: (i) does not have any connection with the Chapter 7 Trustee or the Debtors' estates; (ii) does not hold or represent any interest materially adverse to the Chapter 7 Trustee or the Debtors' estates, their creditors, or any other parties-in-interest; (iii) is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code; (iv) is not an insider as the term is defined in Section 101(31) of the Bankruptcy Code; and (v) has no professionals that are related to any judge of the Court, or the United States Trustee for the Region 3 or its employee. The Modified Retention Order will not affect Herrick Feinstein's right to payment of a contingency fee for $19,200,000 pursuant to an order modifying its retention dated March 18, 2003, Judge Carey held. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On January 24, 2002, the Bankruptcy Court converted the Debtors' cases to a Chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' Chapter 7 trustee. The Chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINSTAR COMMUNICATIONS: Kasowitz Represents Prepetition Lenders --------------------------------------------------------------- Pursuant to Rule 2019(a) of the Federal Rules of Bankruptcy Procedure, Richard F. Casher, Esq., at Kasowitz, Benson, Torres & Friedman LLP, tells the U.S. Bankruptcy Court for the District of Delaware that his firm represents certain of Winstar Communications, Inc.'s Prepetition Senior Secured Lenders. They are: * Credit Suisse Loan Funding LLC 11 Madison Avenue New York, New York 10010 Attn: Kenneth Hoffman * Solus Alternative Asset Management LP 430 Park Avenue New York, New York 10022 Attn: Stephen Blauner * GSO Capital Partners 280 Park Avenue New York, New York 10017 Attn: Jason New Each Prepetition Senior Secured Lender is either a holder of loans of the Debtors under the Prepetition Credit Agreement, or is acting on behalf of, or as an investment manager for, certain of its managed funds or accounts that are holders of loans. Mr. Casher maintains that Kasowitz Benson does not own nor previously owned any claim against, or interest in, the Debtors. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On January 24, 2002, the Bankruptcy Court converted the Debtors' cases to a Chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' Chapter 7 trustee. The Chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINSTAR COMMUNICATIONS: Liberty Executes $30MM Individual Bond -------------------------------------------------------------- Liberty Mutual Insurance Company, as surety, on behalf of Christine C. Schubert, the Chapter 7 Trustee for the estate of Winstar Communications, Inc., executed an individual bond for $30,000,000. Liberty Mutual relates that in consideration of the premium charged for the Bond, the parties agree to increase the aggregate limit from $30,000,000 to $65,000,000. However, Liberty Mutual notes that the Bond will be subject to agreements, limitations and conditions. Moreover, Liberty Mutual clarifies that its liability under the Bond, as amended, will not be cumulative. The Bond rider is effective as of March 26, 2009. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On January 24, 2002, the Bankruptcy Court converted the Debtors' cases to a Chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' Chapter 7 trustee. The Chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINSTAR COMMUNICATIONS: Lucent Withdraws Petition for Rehearing --------------------------------------------------------------- Lucent Technologies Inc. filed a petition to rehear certain issues that it alleged the U.S. Court of Appeals for the Third Circuit erred in holding, pursuant to the decision it entered February 3, 2009, with respect to the December 2005 Bankruptcy Court ruling on the alleged preferential payments the Debtors made to Lucent within the 90-day period before the Petition Date. Subsequently, Christine C. Shubert, as Chapter 7 Trustee for the estate of Winstar Communications, Inc., and Lucent entered into a settlement contemplating the payment of $320 million by Lucent to the Chapter 7 Trustee. Under the Settlement Agreement, Lucent also agreed to dismiss its continued appeal to the Third Circuit and its right to seek a further appeal to the United States Supreme Court. Lucent told the Third Circuit that if the Settlement Agreement is approved, it would withdraw its Petition for Rehearing. The U.S. Bankruptcy Court for the District of Delaware approved the Settlement Agreement on March 25, 2009. Accordingly, Lucent formally withdrew its Petition for Rehearing, which has been mooted by the Settlement Agreement, on April 20, 2009. Subsequently, the Third Circuit issued a certified judgment on April 21, 2009 in lieu of a formal mandate. The Certified Judgment contains the judgment entered by Judge Sloviter, Greenberg and Irenas of the Third Circuit on February 3, 2009, which affirmed in part and denied in part, the order of the U.S. District Court for the District Court of Delaware entered on April 26, 2007, affirming the Bankruptcy Court's judgment. Marcia M. Waldron, clerk of the Third Circuit sent a copy of the Certified Judgment to Peter T. Dalleo, clerk of the District Court saying that the Certified Judgment is to be treated at all respects as a mandate. About Winstar Communications Based in New York, Winstar Communications, Inc., provides broadband services to business customers. The company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). As part of their chapter 11 restructuring strategy, the Debtors sold their domestic telecom assets to IDT Winstar Acquisition, Inc. IDT later sold the Winstar Assets to GVC Networks, LLC, resulting in the creation of GVCwinstar, a wholly owned subsidiary of GVC Networks. On January 24, 2002, the Bankruptcy Court converted the Debtors' cases to a Chapter 7 liquidation proceeding . Christine C. Shubert serves as the Debtors' Chapter 7 trustee. The Chapter 7 trustee is represented by Fox Rothschild LLP and Kaye Scholer LLP. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. The Debtors are currently embroiled in a legal battle before the U.S. Court of Appeals for the Third Circuit to recover about $200 million in payments made to Lucent Technologies. The parties also allege breach of contract claims. (Winstar Bankruptcy News, Issue No. 89; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WR GRACE: Court Denies Banks $100MM Interest Claims Under Sec. 502 ------------------------------------------------------------------ Judge Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware ruled that the group of bank lenders, led by their agent, JP Morgan Chase Bank, who extended prepetition loans to W.R. Grace & Co., is not entitled to payment of postpetition interest at default rate. Judge Fitzgerald concluded that the Bank Lenders are not entitled to the postpetition default rate of interest as part of their allowed claims pursuant to Section 502 of the Bankruptcy Code because Debtors have not been established to be solvent and Bank Lenders are unsecured creditors that, pursuant to the proposed plan, will be paid 100% of the principal balance of their claims plus interest thereon at a rate greater than the nondefault rate provided in their contracts. "Thus, as a matter of claims allowance in the current posture of this case, Debtors' objection to the claims with respect to default interest is sustained and default interest is disallowed as part of the allowed claim," the judge said. Judge Fitzgerald, however, acknowledged, "Whether default interest is appropriate to be paid on the Bank Lenders' allowed claims in the context of plan confirmation must await the plan confirmation hearing and the evidence adduced at that time." JPMorgan filed Claim Nos. 9159 and 9168 as unsecured claims against the W.R. Grace and its debtor affiliates and included demands for interest that was due on the date of the filing of the Debtors' bankruptcy. The Debtors objected to the Claims to the extent they seek postpetition default interest. The Debtors premised their objection on Sections 502(b), 105(a), 726 and 1129 of the Bankruptcy Code. Judge Fitzgerald sustained the Debtors' objection to the Claims on the limited Sections 502(b) and 726 grounds but deferred decision regarding Section 1129. Judge Fitzgerald, in a memorandum opinion, found that (i) the Bank Lenders' presumption that the Debtors are solvent is not established; (ii) that issues concerning whether the Debtors' First Amended Joint Plan of Reorganization, filed in 2008 is fair and equitable or is in the best interests of creditors must be reserved for the plan confirmation hearing; and (iii) no evidence presented substantiated a default on the Bank Lenders' claims. Judge Fitzgerald also found insufficient evidence supporting the Bank Lenders' allegations that reporting failures under the loan documents constitute a default of a type that would trigger any default interest provision in the loan documents. Judge Fitzgerald pointed out that: (a) the Bank Lenders did not specify the reporting requirements that were not met and do not deny that during the course of the bankruptcy cases the Debtors have complied with the reporting requirements of the Bankruptcy Code; and (b) the Bank Lenders, which continued to serve as lenders postpetition, have never, in the eight-year bankruptcy case, expressed dissatisfaction with the Debtors' reporting or filed any requests in connection with the reporting requirements until they responded to the Debtors' objection to their Claims. Judge Fitzgerald found that the Bank Lenders are not entitled to the postpetition default rate of interest as part of their allowed claims pursuant to Section 502 because the Debtors have not been established to be solvent and the Bank Lenders are unsecured creditors that, pursuant to the proposed plan, will be paid 100% of the principal balance of their claims plus interest thereon at a rate greater than the non-default rate provided in their contracts. Thus, as a matter of claims allowance in the current posture of the Debtors' bankruptcy cases, the Debtors' objection to the claims with respect to default interest is sustained and default interest is disallowed as part of the allowed claim, Judge Fitzgerald maintained. As a matter of law, the bankruptcy filing per se is not a permissible basis for invoking the contract default interest rate, Judge Fitzgerald said. Section 365(e) prohibits enforcement of ipso facto clauses in contracts, she noted citing In re IT Group, Inc., Co., 302 B.R. 483, 486 (D. Del. 2003). Judge Fitzgerald held that an unsecured creditor is not entitled to unmatured postpetition interest unless (a) debtor is shown to be solvent after all distributions are made, or (b) the creditor is oversecured. Section 502(b)(2), she said, prohibits the allowance of unmatured interest as part of an allowed unsecured claim. If interest is paid with respect to an unsecured claim at all, it is paid on an allowed claim, not as an allowed claim, she noted. Furthermore, non-payment of postpetition interest is not a default. On the issue of solvency, Judge Fitzgerald held that the Bank Lenders cite no cases and that their research pointed them to no authority that stands for the proposition that a debtor is presumed to concede solvency when a proposed plan provides for retention of interest by, or distribution to, equity. She said the Debtors' solvency or lack thereof has not yet been established at this stage of the Debtors' bankruptcy cases. The issue of solvency, she added, concerns plan confirmation standards and the Debtors are not yet at that stage. Section 726(a)(5) provides that, if a debtor is solvent, interest is to be paid at the legal rate, not at the contract default rate. Section 726(a)(5) is applicable to Chapter 11 cases through Section 1129(a)(7) and provides for payment of interest "at the legal rate" if the creditor has not accepted the plan. Judge Fitzgerald maintains that the issue of solvency has not yet been determined in the Debtors' bankruptcy cases. Whether default interest is appropriate to be paid on the Bank Lenders' allowed claims in the context of plan confirmation must await plan confirmation hearing and the evidence adduced at that time, Judge Fitzgerald held. A full-text copy of Judge Fitzgerald's Memorandum is available for free at http://bankrupt.com/misc/wrgrace_bankclaimopinion.pdf About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on September 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Paul Weiss Represents Bank Debt Holders' Group -------------------------------------------------------- Andrew N. Rosenberg, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, disclosed in an amended statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure that his firm represents bank debt holders of W.R. Grace & Co. in these cases: * Anchorage Advisors, LLC 610 Broadway, 6th Floor New York, NY 10012 * Avenue Capital Group 535 Madison Avenue, 14th Floor New York, NY 10022 * Bass Companies Wells Fargo Tower Suite 3200 201 Main Street Fort Worth Texas 76102 * Catalyst Investment Management Co., LLC 767 Third Avenue, 32nd Floor New York, NY 10017 * Allen & Co. 711 Fifth Avenue New York, NY 10022 * Babson Capital Management, Inc. 680 Fifth Avenue, 26th Floor New York, NY 10019 * Caspian Capital Advisors, LLC 500 Mamaroneck Avenue Harrison, NY 10528 * Cetus Capital LLC 8 Sound Shore Drive, Suite 303 Greenwich, CT 06830 * D.E. Shaw Laminar Portfolios, LLC 120 West 45th Street, 39th Floor New York, NY 10036 * Halcyon Asset Mgmt., LLC 120 West 45th Street, 39th Floor New York, NY 10036 * JP Morgan Chase, N.A. Credit Trading Group 270 Park Avenue, 8th Floor New York, NY 10017 * MSD Capital, L.P. 645 Fifth Avenue, 21st Floor New York, NY 10022 * Onex Debt Opportunity Fund, Ltd. 910 Sylvan Avenue Englewood Cliffs, NJ 07632 * Restoration Capital Management, LLC 909 Third Avenue, 30th Floor New York, NY 10022 * Goldman Sachs & Co. as ex officio member 1 New York Plaza New York, NY 10004 * Intermarket Corp. 660 Madison Avenue, 22nd Floor New York, NY 10065 * Loeb Partners Corporation 61 Broadway, Suite 2400 New York, NY 10006 * Normandy Hill Capital, L.P. 150 East 52nd Street, 10th Floor New York, NY 10022 * P. Schoenfeld Asset Management, LLC 350 Avenue of the Americas, 21st Floor New York, NY 10019 * Royal Bank of Scotland, PLC 600 Steamboat Road Greenwich, CT 06830 The Bank Debt Holders collectively hold about 72.03%, or $360.16 million of the $500 million, in outstanding principal of the loans and advances granted to the Debtors under the prepetition bank credit facilities. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on September 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Seeks Approval of Venable Engagement as Special Counsel ----------------------------------------------------------------- W.R. Grace & Co. and its affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Venable LLP as their special litigation counsel in regard to the lawsuit filed by Global Printing & Design Solutions, Inc., which is currently pending in the Circuit Court for Howard County, Maryland. The Debtors have employed Venable under the Ordinary Course Professional Order pursuant to which payment to each of the OCPs by the Debtors is limited to $50,000 per month and up to a total $1,200,000 per OCP professional during the pendency of the Debtors' Chapter 11 Cases. Because Venable's fees in relation to the Global Printing Litigation, as well as fees for other services the firm provides to the Debtors, have begun to exceed the monthly cap and are expected to do so for some time to come, the Debtors are filing the application so that Venable may be regularly compensated for its services pursuant to Sections 330 and 331 of the Bankruptcy Code. As special litigation counsel, Venable will: (a) advise the Debtors, their counsel, and their board of directors with respect to employment, employee benefit, workers' compensation and corporate and securities matters; (b) act as counsel for the Debtors and any related party in the Global Printing Litigation; and (c) perform other related services as the Debtors may deem necessary or desirable. The Debtors will pay Venable based on these fees: Professional Hourly Rate ------------ ----------- G. Stewart Webb, Jr., Esq. $635 Colleen M. Mallon, Esq. $415 Alexander W. Major, Esq. $285 Mathew R. Swinburne, Esq. $265 Jeffery P. Ayres, Esq. $495 Elizabeth R. Hughes, Esq. $580 Other Partners $415 to $660 Associates $265 to $400 Paralegals $175 to $225 James E. O'Neill, Esq., Pachulski Stang Ziehl & Jones, LLP, in Wilmington, Delaware, says Venable, upon the Court's approval of the application, will no longer be compensated pursuant to the OCP Order for fees and expenses incurred in their Chapter 11 cases going-forward, and will be entitled to seek application for its currently outstanding fees and expenses in excess of the OCP caps and all fees and expenses going forward pursuant to Sections 330 and 331 and other applicable procedures and orders of the Court in these cases. G. Stewart Webb, Jr., Esq., a partner at Venable LLP, in Baltimore, Maryland, assures the Court that his firm is a "disinterested person" within the meaning of Section 101(14), and does not represent or hold any interest adverse to the Debtors or their estates with respect to the matters for which the firm is to be employed, Venable has been the Debtors' long-time advisors with respect to matters involving labor and employment, employee benefits. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on September 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: To Contribute $30.3 Million to Retirement Plans --------------------------------------------------------- W.R. Grace & Co. seek authority from the U.S. Bankruptcy Court for the District of Delaware to contribute $30,375,532 for minimum contributions required by applicable federal law to one or more of the Grace Retirement Plans for the 09-10 funding period from July 15, 2009, to January 15, 2010. The Grace Retirement Plans are underfuded by most accepted measures, discloses Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. As of January 1, 2009, the amount by which the Grace Retirement Plans were funded ranges from ($113 million) to ($375 million), depending on the measure used. Moreover, the total market value of assets as of January 1, 2009, was about $560 million, with a decrease of about $214 million from January 1, 2008, when the market value was $774 million. According to Ms. Davis, the decrease in the asset value during 2008 was caused by the result of asset return of (25.9%) during 2008 and $59.2 million that was paid out of the Grace Retirement Plans during the year, offset by the Debtors' contribution of about $49.0 million. She adds that virtually all of the Debtors' current employees are covered by one of the Grace Retirement Plans. The Grace Salaried Plan alone covers over 1,900 active, salaried employees, of a total U.S. workforce of approximately 3,000 employees, or more than 60% of the Debtors' U.S. workforce. The legally required minimum contributions to the Grace Retirement Plans for the 09-10 Funding Period are: Payment Due Date Contributions Plan Year ------------- ------------- --------- July 15, 2009 $8,164,422 2009 Sept. 15, 2009 4,824,756 2008 Oct. 15, 2009 8,628,679 2009 Jan. 15, 2010 8,757,675 2009 The Debtors' management believes that continuing to make at least the legally required minimum contributions to each of the Grace Retirement Plans is essential to maintaining the morale of the Debtors' workforce and its confidence in management, and thereby the productivity and long-term profitability of the Debtors' businesses. The employees are vital to maintaining and enhancing the value of the Debtors' estates and to the Debtors' successful reorganization, Ms. Davis contends. The Debtors relate that the contributions have been finalized, and are not subject to change as a result of future market performance of the assets of the Grace Retirement Plans or any anticipated changes in applicable law. There are also no anticipated changes in applicable federal law that could affect the amount of the minimum contributions required to be made to the Grace Retirement Plans during the 09-10 Funding Period, according to the Debtors. Ms. Davis asserts that it is necessary to secure Court approval for the payment of legally required minimum contributions for the 09-10 funding period at this time because the first due date with respect to the contributions is July 15,2009 -- less than one month after the June 29, 2009, hearing for the motion. Consistent with the most recent prior funding motions, the 09-10 funding approach does not include the objective of eliminating the requirement of the Grace Retirement Plans to pay variable rate premiums of Pension Benefit Guaranty Corporation. It is estimated that the Grace Retirement Plans will be required to pay some $2.3 million in Pension Benefit Guaranty Corporation variable rate premiums for 2009. To avoid the requirement to pay all the premiums for 2009, the Debtors would be required to contribute approximately $261.5 million to the Grace Retirement Plans by September 15, 2009, in addition to the legally required minimums. Additionally, the Debtors may slightly accelerate the timing of the legally required minimum contributions during the 09-10 funding period to maximize tax benefits. All contributions specified in the motion have been calculated by the actuary of the Grace Retirement Plans, Ms. Davis tells the Court. Written objections to the motion must be filed by June 12, 2009, the Debtors inform parties-in-interest. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on September 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: U.S. Trustee, Creditors Object to Plan Confirmation ------------------------------------------------------------- Several parties lodge objections with the U.S. Bankruptcy Court for the District of Delaware to the confirmation of the First Amended Chapter 11 Plan of Reorganization of W.R. Grace & Co. and its debtor-affiliates. (A) U.S. Trustee Acting U.S. Trustee for Region 3, Roberta A. DeAngelis, complains about certain "overbroad" provisions under the Debtors' First Amended Chapter 11 Plan of Reorganization. Specifically, Ms. DeAngelis complains that the Plan is overbroad with regard to: (a) the Asbestos Personal Injury and Asbestos Property Damage Channeling Injunctions, with respect to the inclusion of certain entities that are not entitled to the injunctions; (b) the general releases, citing that certain beneficiaries of those releases are not permitted to be released from all prepetition conduct under relevant law; and (c) the exculpation clause in the Plan. Ms. DeAngelis asserts that the inclusion in the channeling injunctions of professionals of certain asbestos protected parties, including the Debtors and their non-Debtor affiliates, the Sealed Air Indemnified Parties, and the Fresenius Indemnified Parties, is not appropriate and violates Third Circuit law. The Plan Proponents cannot rely solely on Section 105 of the Bankruptcy Code as support for the approval of the injunction, she argues. Moreover, Ms. DeAngelis asserts that the Debtors need to prove under relevant law why certain entities who did not contribute to the reorganization, including former officers and directors and representatives of Grace's non-debtor affiliates, should be released or exculpated from virtually any postpetition conduct. (B) Creditors' Committee The Official Committee of Unsecured Creditors complains that the First Amended Joint Plan improperly designates as unimpaired claim under Class 9 consisting of general unsecured claims. "This is a significant flaw, premised on the failure of the Plan to expressly provide for the payment of the full amount of postpetition interest to claimants holding claims in Class 9," Michael R. Lastowski, Esq., at Duane Morris LLP, in Wilmington, Delaware, argues. He points out that: (i) the Holders of Bank Claims are not being provided with postpetition interest at the applicable default rate under the Prepetition Credit Facilities, thus leaving their contractual rights altered; and (ii) as to Holders of non-Bank Claims designated as Class 9 Claims, the Plan is ambiguous as to whether it provides for the payment of the full amount of postpetition interest on these "other" Class 9 Claims that have provisions in each of their agreements for the payment of interest, including default interest or some other late payment amount, or that may be entitled to appropriate state statutory rates of interest in excess of the 4.19% interest rate provided in the Plan. As a result of the impairment of Class 9 claims, the Plan violates the absolute priority rule and therefore is not fair and equitable under Section 1129(b)(2)(B) of the Bankruptcy Code, the Committee complains. The Committee further complains that the Debtors further violate Section 1129 in regard to the Plan's "attempt to provide for the dissolution of the Creditors' Committee on the Plan effective date." The Creditors' Committee, accordingly, seeks to strike out that "offending" section of the Plan. The Committee asserts that the Plan cannot be confirmed unless the Plan is amended in the manner described in its objection. (C) Bank Lenders By the First Amended Plan of Reorganization, the Debtors seek to maximize value for their shareholders at the expense of the Debtors' creditors, a group of bank lenders led by JP Morgan Chase, as agent, alleges. The Plan, the Bank Lenders complain, violates the best interest of creditors test under Section 1129(a)(7) of the Bankruptcy Code and the absolute priority rule of Section 1129(b). The Bank Lenders point out that under the Plan, the Debtors' shareholders will get equity that the Debtors themselves value at between $430 million and $821 million while simultaneously depriving the Bank Lenders of more than $91 million of contract default interest, which has accrued at 2% over almost nine years on the Bank Lenders' more than $503 million of claims. The Bank Lender Group includes: * Anchorage Advisors, LLC * Allen & Co. * Avenue Capital Group * Babson Capital Management LLC * Bass Companies * Caspian Capital Advisors, LLC * Catalyst Investment Management Co., LLC * Cetus Capital, LLC * DE Shaw Laminar Portfolios, LLC * Goldman Sachs & Co., as ex-officio member * Halcyon Asset Management LLC * Intermarket Corp. * JP Morgan Chase, N.A. Credit Trading Group * Loeb Partners Corporation * MSD Capital, L.P. * Normandy Hill Capital, L.P. * Onex Debt Opportunity Fund Ltd. * P. Schoenfield Asset Management, LLC * Restoration Capital Management, LLC * Royal Bank of Scotland, PLC The Bank Lenders ask the Court to deny confirmation of the Plan. (D) Insurers More than 15 insurers of asbestos-related liabilities against the Debtors separately object to the confirmation of the Debtors' First Amended Chapter 11 Joint Plan of Reorganization: -- OneBeacon America and Seaton Insurance Company; -- Zurich Insurance Company and Zurich International (Bermuda) Ltd.; -- Allstate Insurance Company, as successor-in-interest to Northbrook Excess and Surplus Insurance Company, formerly Northbrook Insurance Company; -- Federal Insurance company; -- Government Employees Insurance Co. and Republic Insurance Company, n/k/a Starr Indemnity & Liability Company; -- General Insurance Company of America; -- AIU Insurers consisting of: * American Home Assurance Company * AIU Insurance Company * Birminghan Fire Insurance Company * Granite State Insurance Company, * Illinois National Insurance Company, * Insurance Company of the State of Pennsylvania, * Lexington Insurance Company, and * New Hampshire Insurance Company -- Maryland Casualty Company; -- Travelers Casualty and Surety Company; -- Continental Casualty Company and Continental Insurance Company; -- TIG Insurance Company -- Hartford Accident and Indemnity Company, First State Insurance Company, Twin City Fire Insurance Company, and New England Reinsurance Corporation; -- AXA Belgium, as successor to Royal Belge SA; -- London Market Insurance Companies; -- Longacre Master Fund, Ltd. And Longacre Capital Partners (QP), L.P. -- National Union Insurance Company of Pittsburg, P.A.; -- Fireman's Fund Insurance Company, Allianz S.P.A., formerly Riunione Adriatica Di Sicurta, and Allianza SE, formerly Aktiengesellschaft; and -- Arrowood Indemnity Company, formerly Royal Indemnity Company. Morgan Stanley Senior Funding, Inc.; and plaintiffs Aaron C. Edwards, James T. Beam, Edward E. Storey, John M. Thomas, and Sheila Martin, in the asbestos personal injury complaint against Grace, separately object to the Plan in connection with the claims of certain insurers. The Insurers generally complain that: (a) their contract claims for indemnity with respect to asbestos-related tort claims against the Debtors are improperly classified as Class 6 claims; (b) the Plan is "not insurance neutral;" and (c) the Plan abrogates their contractual rights under Asbestos Insurance Reimbursement Agreements entered into with W.R. Grace & Co. Representing OneBeacon and Seaton, David P. Primack, Esq., at Drinker Biddle & Reath LLP, in Wilmington, Delaware, cites Section 1122(a) of the Bankruptcy Code as providing that a plan may place a claim or an interest in a particular class only if that claim or interest is substantially similar to the other claims or interests of that class. OneBeacon's and Seaton's claims are substantially dissimilar to, and broader in scope than, the asbestos-related tort claims that dominate Class 6 under the Plan, Mr. Primack tells the Court. Zurich and Continental Casualty point out that the Plan impairs their contractual rights. Zurich adds that the Plan provides for overpayment of meritorious claims and payment of non-meritorious claims. Specifically, Zurich objects to the Plan to the extent that the Plan would obligate Zurich to pay to the Asbestos PI Trust excess amounts over that actually paid by the Asbestos PI Trust to the holder of an allowed Asbestos PI Claim, and to the extent that the Plan would impair any coverage defenses under the Debtors' insurance contracts with Zurich, including defenses on assignment of rights under those contracts. Raising a similar concern, Allstate Insurance Company cites Section 7.2.2 (d)(iv) of the First Amended Plan as providing that on the Plan effective date, the Asbestos PI Trust will be the successor to all rights of Grace under each Asbestos Insurance Reimbursement Agreement, where the Asbestos PI Trust's payment of an asbestos PI claim under the PI Trust Distribution Procedures will be deemed to constitute settlement and payment of that claim by or on behalf of Grace. Representing Allstate, James S. Yoder, Esq., at White & Williams, LLP, in Wilmington, Delaware, says this provision ostensibly eviscerates all contractual rights Allstate has to ensure that the various prerequisites of payment under its settlement agreement with the Debtors have been been met and that payment is in fact contractually done. Federal cites that under the Plan, Grace's asbestos insurance rights under policies issued by Federal will be transferred to the Asbestos PI Trust, notwithstanding any anti-assignment provision in any asbestos insurance policy. Federal objects to the transfer of asbestos insurance rights under its policies to the Asbestos PI Trust. The Plan and Plan documents are "absolutely silent" with respect to whether the Trust will assume or comply with the Debtors' duties and obligations under the Asbestos Insurance Policies, relate Government Employees Insurance Co. and Republic Insurance Company, who disclose that their policies also contain identical anti-assignment provisions. AXA Belgium contends that the insurance transfer agreement strips its contractual rights when the agreement transfers all of the insured's asbestos insurance rights, but none of its obligations under the policies. The London Market Insurance Companies complain that the Plan attempts to assume and assign its settlement agreement to the Asbestos PI Trust without complying with the requirements for assumption and assignment of an executory contract. General Insurance wants to ensure neutrality as to any coverage litigation that may ensue pertaining to its settlement agreement with Grace. General Insurance also wants to ensure that the Plan is clarified or modified to provide that its contract claims against Grace arising from the settlement agreement are not channeled to the Asbestos Trust or Indirect Asbestos PI Trust Claims. The AIU Insurers complain that the Plan is silent with respect to the terms of the settlement they entered into with Grace. According to the AIU Insurers, Grace is obligated to provide them certain continuing indemnification rights for claims that might be asserted by others against the AIU Insurers in connection with certain disputed claims. The AIU Insurers also complain that the Asbestos PI Claimants' submissions to the Asbestos PI Trust be kept secret, pursuant to the Plan, inconsistent with the terms under their settlement that the AIU Insurers have the right to review all documents relating to billings and payments of covered asbestos related claims. Longacre Master Fund complains that other claims substantially similar to its Claim No. 9553 are being paid in full, whereas under the Plan, Class 6 claims, under which Claim No. 9553 is classified, can recover as against assets funded into the Asbestos PI Trust only, and can obtain no further recovery from the Debtors. National Union Fire Insurance Company of Pittsburgh, P.A., predecessor-in-interest to Longacre's Claim, joins in Longacre's objection. Morgan Stanley Senior Funding, Inc., assignee to the claims filed by Bank of America, N.A., with respect to standby letters of credit drawn by National Union, complains that the Plan fails to provide the appropriate rate of postpetition interest on the claims Morgan Stanley acquired from BofA. Morgan Stanley says the Plan provides for differing treatments within the four subclasses of Class 9, in violation of the requisite equality treatment within the class. Morgan Stanley files a notice of postpetition interest determination pursuant to the approved notice of procedures relating to the payment of postpetition on general unsecured claims against the Debtors. Morgan Stanley and the Plan Proponents later reach a Court- approved stipulation allowing Morgan Stanley's claims, as acquired from BofA, as Class 9 General Unsecured Claims against the Debtors, notwithstanding any provisions to the contrary in the Plan and Disclosure Statement. Neither Morgan Stanley, BofA, nor any other party, will not be required to file a disputed classification declaration with respect to the claim, pursuant to the Disclosure Statement Order, the parties further stipulate. Travelers Casualty and Surety Company, joined by Hartford Accident and Indemnity Company, et al., files under seal its objections to the Plan, and TIG Insurance Company joins in the objections raised by the insurers. Arrowood complains that the Plan fails to satisfy Section 524(g) of the Bankruptcy Code, citing, among others, that the Debtors have not established that their contributions to the trust are fair and equitable, and if non-debtor persons and entities who would be protected by the channeling injunction have derivative liability for the Debtors' asbestos problems. Also, Arrowood points out that the exculpation and release provisions under the Plan are exceptionally broad and materially impair the rights of Arrowood and other insurers. Aside from its complaint that its indemnity claim is inappropriately classified as a Class 6 Claim rather than as a Class 9 Claim, Fireman's Fund also complains that the Plan also seeks to violate Fireman's contractual rights by excluding Fireman's from the process by which Asbestos PI Claims are to be processed and paid. Fireman's asserts a claim pursuant to an Indemnity Agreement arising from a $43-million bond it issued on Grace's behalf in connection with its appeal of a judgment awarded in favor of plaintiffs Aaron C. Edwards, James T. Beam, Edward E. Storey, John M. Thomas, and Sheila Martin. The Asbestos Plaintiffs assert that the treatment of their claims, or claims to be liquidated by supersedeas bonds, in general, is ambiguous under the Plan. The treatment, if not amended, may possibly exclude the claims in the Edwards Judgment, they say. Fireman's Fund and Maryland Casualty separately file disputed classification declarations, pursuant to the order approving the Disclosure Statement to the Debtors' First Amended Chapter 11 Plan of Reorganization, so that they may vote provisionally to accept or reject the Plan. (E) State of Montana The State of Montana contends that its claims are improperly classified as Class 6 Asbestos Personal Injury Claims under the First Amended Plan. Montana filed proofs of claim against the Debtors for contribution and indemnification resulting from Montana's purported failure to warn about asbestos-containing vermiculite produced by the Debtors, allegedly in violation of a governmental duty imposed under Montana law. Francis A. Monaco, Jr., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, on behalf of Montana, argues that Montana's claims are of a different nature -- contribution and indemnification, as opposed to personal injury, wrongful death, or property damage -- and based on different acts -- alleged failure to warn, as opposed to production of asbestos-containing products -- from the types of claims to which a Section 524(g) of the Bankruptcy Code injunction may apply. By attempting to expand the scope of Section 524(g) to apply to Montana's claims, the Plan fails to comply with the requirements of Section 524(g)(2)(B), and accordingly does not comply with the "applicable provisions" of the Bankruptcy Code, as required by Section 1129(a)(1). Montana further objects to the Plan because it disregards the absolute priority rule and prohibition on unfair discrimination by seeking to cram down the Plan on the impaired Class 6 Asbestos PI Claims while, at the same time, leaving classes that are equal or junior in priority unimpaired. The Plan, Mr. Monaco asserts, is also unfair in that it fails to clarify the procedures pursuant to which Class 6 Asbestos PI Claims will be paid, or the percentage that claimholders in that class will receive on their claims. In addition, Mr. Monaco complains that the Plan unfairly discriminates against Montana in particular in two ways: (1) the Plan provides for a distribution to Montana that violates the Montana Constitution; and (2) the Plan attempts to pay Class 6 Asbestos PI Claims on a first-in-first-out mechanic. (F) Libby Claimants Claimants injured by exposure to asbestos from the Debtors' operations in Lincoln County, Montana, complain that the Plan discriminates their Claims. The Libby Claimants note that the Plan purports to pay Asbestos PI Claims on a pro rata basis based on their value in the tort system, yet as to the Libby Claims, the Plan will pay on the basis of a fraction of tort system value. The Libby Claimants assert that the Plan is unconfirmable because it denies them their right to a trial by jury. The Libby Claimants add that the Plan deprives them of the benefit of insurance coverage for which they do not compete with other claims. The Libby Claimants also object to being required to file an objection to confirmation of the Plan at a time when the Plan Proponents have not yet fully disclosed their contentions with respect to confirmation of the Plan and, specifically, in response to the preliminary plan objection by the Libby Claimants. The Libby Claimants seek leave from the Court to file its objection in excess of the 40-page limitation. (G) Anderson Memorial, et al. Several other parties-in-interest object to confirmation of the Debtors' First Amended Plan of Reorganization: * Anderson Memorial Hospital; * The City of Vancouver; * The School District 68 Nanaimo-Ladysmith; * BNSF Railway Company and its predecessors, the Great Northern Railway Company, the Burlington, Northern Railroad Company, and the Burlington Northern & Santa Fe Railway Company; * Garlock Sealing Technologies; * Kaneb Pipe Line Operating Partnership, L.P., and Support Terminal Services, Inc.; * ERISA Plaintiffs, Keri Evans, Timothy Whips and Mark Siamis; * Tyco Healthcare Group, doing business as Covidien; * The Scotts Company LLC; and * Michigan Department of Treasury. Anderson Memorial Hospital, party-in-interest to asbestos property damage claims against W.R. Grace & Co., complains that the Plan is not proposed in good faith as, among others, it fails to afford creditors in the same class with the same treatment, and improperly releases third parties. According to Christopher D. Loizides, Esq., at Loizides, P.A., in Wilmington, Delaware, the Debtors' Plan singles out Anderson for a treatment not afforded to any other asbestos creditor, citing that every other asbestos claim either has been settled and will be paid on the plan effective date, is subject to alternative resolution procedures with lowered proof thresholds, or is permitted to litigate in its chosen forum. He says only Anderson, of all the asbestos claims filed against the Debtors, is required to litigate its claims in order to be entitled to payment, but that Anderson is precluded from doing so in the forum it chose prior to these Chapter 11 cases. The City of Vancouver and the School District 68 Nanaimo-Ladysmith, both holders of asbestos property damage claims, join in Anderson's objections. BNSF Railway Company, a counterparty to a contract under which BNSF transported through its rail network the vermiculite mined by Grace, complains that the Asbestos PI Trust Distribution Procedures are not fair and equitable. Garlock Sealing Technologies, who asserts indirect claims for contribution and indemnity for asbestos personal injury claims against the Debtors, asserts that the Plan should not be confirmed as the TDP fails to provide a procedure for liquidating the Trust's liability for indirect claims. Garlock explains that the Trust, under the TDP, is permitted to settle an indirect claim only after the indirect claimant has paid the Trust's liability to the direct claimant. Kaneb Pipe Line Operating Partnership, L.P., and Support Terminal Services, Inc., relate that the Plan, in order to pay asbestos- related claims, proposes the use of an Asbestos PI Trust and an Asbestos PD Trust that are funded in part by insurance coverage. Kaneb says it objects to the Plan to the extent the Debtors use insurance policies that are not property of the estates. Keri Evans, Timothy Whips and Mark Siamis, plaintiffs in the complaint against certain directors of Grace for violation of the Employee Retirement Income Security Act of 1974, point out that the Plan's language pertaining to release and injunction is ambiguous so that it may be interpreted to release the claims of the ERISA Plaintiffs. Tyco Healthcare Group, doing business as Covidien, complains that the Plan omits reference to a stipulation resolving its Claim No. 12789 against the Debtors in connection with the Blackburn & Union Privileges, a Superfund site in Walpole, Massachusetts. Covidien seeks to include reference to that stipulation in the Plan. The Scotts Company LLC, in a separate objection, complains that the Plan would improperly enjoin claims of nondebtors against other nondebtors who have not made a substantial financial contribution to the Asbestos PI Trust. The Scotts Company further complains that the Plan provides for an asbestos entity injunction that directly benefits non-settling asbestos insurance companies by enjoining claims against them. Scotts asserts that the Plan is not confirmable because it purports to enjoin claims against the nonsettling asbestos insurance companies while failing to channel, treat or otherwise provide for the payment of those enjoined claims. Scotts holds asbestos-related personal injury claims against the Debtors from products it sold containing Grace-mined vermiculite. The Michigan Department of Treasury opposes to the 4.19% interest rate proposed under the Plan for priority tax claims, asserting that interest at the prevailing market rate must be paid on its priority claims. Assistant attorney general and counsel to the Michigan Treasury, Deborah Benedict Waldmeir, declares in a separate filing, that she is an attorney of good standing. Grace Files Supplement to Plan The Debtors amended their proposed directors and officers for reorganized W.R. Grace, a list of which is available for free at: http://bankrupt.com/misc/grace_amnddPlansupp.pdf Amended Plan-Related Case Management Order Judge Judith K. Fitzgerald signed the protective order governing discovery in connection with the confirmation of the Debtors' Chapter 11 Plan of Reorganization. The Protective Order limits the use of certain documents and information that may contain medical, trade, financial, business or litigation information that may be of a confidential or proprietary nature, while ensuring that parties-in-interest can obtain discovery with a minimum of delay and expense. General Insurance Company of America, in a separate filing, joins in the protective order. A full-text copy of the Protective Order is available for free at http://bankrupt.com/misc/grace_protctvOrd.pdf In a separate order, Judge Fitzgerald ruled to strike the cross- motion filed by the Libby Claimants seeking entry of a protective order regarding the confidentiality of certain medical information. The Libby Claimants have filed the cross-motion in response to Arrowood Indemnity Company's motion to strike the report of the Libby Claimants' expert, Dr. Alan C. Whitehouse. Adam G. Landis, Esq., at Landis Rath & Cobb LLP, in Wilmington, Delaware, has disclosed, in a certification filed prior to entry of the order, that the Libby Claimants incorporated changes suggested by Arrowood and the State of Montana. The Court ruling, however, is without prejudice to the Libby Claimants' right to refile their motion. Prior to the entry of the order, the Debtors a proposed order granting in part Arrowood's motion to strike Dr. Whitehouse's report, or alternatively, for the entry of a confidentiality order, or to compel production of documents and databases on which Dr. Whitehouse relies on for his report. The Debtors disclosed that the the Plan Proponents and the Libby Claimants could not agree on a common form of the proposed order reflecting the Court's ruling on the motion during the May 14, 2009 hearing. The Debtors also submitted a proposed form of order on the Court's ruling pertaining to the Libby Claimants' motion to amend the case management order. According to the Debtors, the Libby Claimants agreed on the draft order circulated by the Plan proponents. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. As reported by the Troubled Company Reporter on March 11, 2009, the Bankruptcy Court approved the disclosure statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and its debtor affiliates, the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, and authorized Grace to begin soliciting plan votes. The Court scheduled a two-phase confirmation hearing: -- Hearings on June 22 to 25 to deal with objections by insurance companies; and -- Hearings on September 8 to 11 for objections related to claims from the facility in Libby, Montana. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * Initial Unemployment Insurance Claims Rise Again -------------------------------------------------- The U.S. Department of Labor said May 21 that in the week ending May 16, the advance figure for seasonally adjusted initial claims was 631,000, a decrease of 12,000 from the previous week's revised figure of 643,000. The advance seasonally adjusted insured unemployment rate was 5.0% for the week ending May 9, an increase of 0.1 percentage point from the prior week's unrevised rate of 4.9%. The advance number for seasonally adjusted insured unemployment during the week ending May 9 was 6,662,000, an increase of 75,000 from the preceding week's revised level of 6,587,000. The rise of Americans receiving jobless benefits to over 6,660,000 is a record for the 16th consecutive week, Bloomberg's Bill Rochelle said. Separately, the newly released minutes of a late-April meeting show Federal Reserve officials as seeing possible signs of "stabilization" in the U.S. economy, although they perceive "significant downside risks" to the outlook for the economy and said the global financial system is still "vulnerable to further shocks," Bill Rochelle said. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total holders Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------- ------- ------ ABSOLUTE SOFTWRE ABT CN 107 (7) 24 AFC ENTERPRISES AFCE US 132 (39) (3) AMR CORP AMR US 24,518 (3,108) (3,545) ARBITRON INC ARB US 189 (3) (22) AUTOZONE INC AZO US 5,235 (187) 112 BLOUNT INTL BLT US 499 (43) 175 BOARDWALK REAL E BEI-U CN 2,318 (5) N.A. BOARDWALK REAL E BOWFF US 2,318 (5) N.A. BOEING CO BA US 55,339 (509) (2,160) BOEING CO BAB BB 55,339 (509) (2,160) BOEING CO-CED BA AR 55,339 (509) (2,160) CABLEVISION SYS CVC US 9,551 (5,349) (367) CENTENNIAL COMM CYCL US 1,413 (992) 148 CENVEO INC CVO US 1,501 (221) 163 CHENIERE ENERGY CQP US 1,975 (408) 79 CHENIERE ENERGY LNG US 2,892 (444) 278 CHOICE HOTELS CHH US 333 (146) (10) CLOROX CO CLX US 4,464 (309) (866) DELTEK INC PROJ US 191 (48) 42 DISH NETWORK-A DISH US 7,063 (1,666) (422) DOMINO'S PIZZA DPZ US 473 (1,396) 99 DUN & BRADSTREET DNB US 1,614 (785) (176) EMBARQ CORP EQ US 8,050 (527) (163) ENERGY SAV INCOM SIF-U CN 551 (423) (162) EPICEPT CORP EPCT SS 12 (5) (2) EXELIXIS INC EXEL US 355 (88) 53 EXTENDICARE REAL EXE-U CN 1,833 (51) 98 FORD MOTOR CO F US 207,270 (16,476) 12,631 FORD MOTOR CO F BB 207,270 (16,476) 12,631 GENTEK INC GETI US 425 (21) 88 GLG PARTNERS INC GLG US 345 (382) 101 GLG PARTNERS-UTS GLG/U US 345 (382) 101 HEALTHSOUTH CORP HLS US 1,921 (656) (53) HOLLY ENERGY PAR HEP US 469 0 (6) IMAX CORP IMX CN 226 (98) 19 IMAX CORP IMAX US 226 (98) 19 INTERMUNE INC ITMN US 193 (82) 121 IPCS INC IPCS US 545 (41) 62 JOHN BEAN TECH JBT US 559 (6) 78 KNOLOGY INC KNOL US 635 (52) 25 LINEAR TECH CORP LLTC US 1,491 (288) 995 MEAD JOHNSON-A MJN US 1,707 (897) 380 MEDIACOM COMM-A MCCC US 3,700 (463) (281) MOODY'S CORP MCO US 1,802 (919) (482) NATIONAL CINEMED NCMI US 604 (514) 89 NAVISTAR INTL NAV US 9,623 (1,492) 1,367 NPS PHARM INC NPSP US 200 (225) 87 OCH-ZIFF CAPIT-A OZM US 1,821 (177) N.A. OVERSTOCK.COM OSTK US 136 (4) 33 PALM INC PALM US 656 (84) 30 PDL BIOPHARMA IN PDLI US 219 (422) 79 QWEST COMMUNICAT Q US 19,711 (1,164) (344) REGAL ENTERTAI-A RGC US 2,563 (246) (78) RENAISSANCE LEA RLRN US 52 (3) (11) REVLON INC-A REV US 784 (1,095) 103 SALLY BEAUTY HOL SBH US 1,433 (702) 389 SANDRIDGE ENERGY SD US 2,670 (114) 118 SEMGROUP ENERGY SGLP US 314 (130) (431) SOLARWINDS INC SWI US 91 (40) 23 SONIC CORP SONC US 821 (43) 26 STANDARD PARKING STAN US 231 0 (15) SUCCESSFACTORS I SFSF US 162 (7) 0 SUN COMMUNITIES SUI US 1,197 (68) N.A. SYNTA PHARMACEUT SNTA US 97 (58) 57 TAUBMAN CENTERS TCO US 2,922 (276) N.A. TENNECO INC TEN US 2,742 (304) 272 THERAVANCE THRX US 214 (144) 152 UAL CORP UAUA US 19,100 (2,655) (2,348) UNITED RENTALS URI US 3,976 (56) 266 VENOCO INC VQ US 730 (107) 33 VERIFONE HOLDING PAY IT 840 (38) 308 VERIFONE HOLDING PAY US 840 (38) 308 VERIFONE HOLDING VF2 GR 840 (38) 308 VIRGIN MOBILE-A VM US 323 (281) (141) WALTER INVESTMEN WAC US 12 (44) N.A. WARNER MUSIC GRO WMG US 4,256 (110) (394) WEIGHT WATCHERS WTW US 1,087 (848) (313) WR GRACE & CO GRA US 3,726 (374) 892 ********* 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. 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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. 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