/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090605.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 5, 2009, Vol. 13, No. 154 Headlines 1600 PACIFIC: Files for Chapter 11 Bankruptcy Protection 2 G&Y LLC: Voluntary Chapter 11 Case Summary AGY HOLDING: Moody's Downgrades Corporate Family Rating to 'B3' AIR CANADA: Liquidity Concerns Prompt S&P to Junk Ratings ALEXANDER KOJO: Case Summary & 13 Largest Unsecured Creditors AMERICAN ACHIEVEMENT: Moody's Lifts Corp. Family Rating to 'Caa1' ANDREW JAHELKA: Voluntary Chapter 11 Case Summary ASARCO LLC: Americas Mining Can Appeal Using SCC Shares as Bond ASBURY AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating AUTONATION INC: GM Ch 11 Filing Won't Affect Moody's Rating AXS-ONE INC: Inks Amendment to Promissory Notes and Rights Deal BANK OF AMERICA: Names New Chief Risk Officer Amid Merrill Probe BELLE TERRE GOLF: Case Summary & 20 Largest Unsecured Creditors CAPITAL GROWTH: Valuation Matters Cues Yearend Report Filing Delay CAPITAL GROWTH: Receives Covenant Violation from ACF CGS CARAUSTAR INDUSTRIES: 1st Day Motions Okayed, Stocks Delisted CHENIERE ENERGY: Don A. Turkleson Resigns as Senior Vice President CHRYSLER LLC: Executives, Dealers Go Head to Head Before Senate CHRYSLER LLC: Creditors Object to Daimler-PBGC Term Sheet CHRYSLER LLC: Offers Five-Year, No Interest Loans Through GMAC CHRYSLER LLC: Vehicle Owners to Retain Rights to Compensation CITGO PETROLEUM: Fitch Affirms Issuer Default Rating at 'BB-' CITY OF MENASHA: Moody's Cuts Rating on $29 Million Bonds to Ba2 CLOVERLEAK ENTERPRISES: Case Summary & 18 Largest Unsec. Creditors CONCORDIA EARLY LEARNING: Voluntary Chapter 11 Case Summary CONSTAR INT'L: Compensation Committee Okays Annual Incentive Plan CONTECH LLC: Loses Major Client, Feels Pinch of GM Bankruptcy CONTINENTAL ALLOYS: Liquidity Pressure Cues Moody's Junk Rating DALLAS TIGERMARK: Involuntary Chapter 11 Case Summary DAVID DE LA FUENTE: Voluntary Chapter 11 Case Summary DOMTAR CORPORATION: Moody's Assigns 'Ba3' Rating on Senior Notes DOMTAR CORP: S&P Affirms 'BB' Long-Term Corporate Credit Rating DOWLING COLLEGE: Moody's Maintains 'B1' Rating on Two Bonds EDCO PROPERTIES: Case Summary & 6 Largest Unsecured Creditors EL POLLO: Moody's Withdraws 'B1' Rating on Senior Facilities EMPIRE RESORTS: Amends Loan Pact to Extend Maturity to June 30 FANNIE MAE: Regulator Won't Put Firm Into Receivership FEDERAL-MOGUL CORP: S&P Downgrades Corporate Credit Rating to 'B+' FLEETWOOD ENTERPRISES: Sells Motor Home Business to AIP for $53MM FORT WAYNE: Case Summary & 20 Largest Unsecured Creditors FREDDIE MAC: Regulator Won't Put Firm Into Receivership GENARO MENDOZA: Case Summary & 16 Largest Unsecured Creditors GENERAL MOTORS: U.S. Trustee Names 15-Member Creditors' Committee GENERAL MOTORS: Executives, Dealers Go Head to Head Before Senate GENERAL MOTORS: G. Douglas Jones Seeks Representation for Dealers GENERAL MOTORS: Retirees Ask Court for Official Retiree Committee GENERAL MOTORS: Consumer Victims Want Official Tort Committee GMAC LLC: Offers Five-Year, No Interest Loans to Chrysler Clients GRAPHIC PACKAGING: Fitch Assigns 'B/RR4' Rating on $245 Mil. Notes GRISWOLD BUILDING: Case Summary & 20 Largest Unsecured Creditors GROUP 1 AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating HAIGHTS CROSS: Forbearance Period With Loan Lender Expires Today HAYES LEMMERZ: Amends Annual Report to Provide Additional Info HENDRICKS COS: Court Okays Sale of Dothan Branch to Manager HERITAGE WORLDWIDE: French Unit Files Petition for Reorganization HOLLY CORP: S&P Assigns 'BB' Corporate Credit Rating INTCOMEX INC: Limited Liquidity Prompts S&P to Junk Corp. Rating J J LEE MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors JEANNE RIZZOTTO: Files for Chapter 11 Bankruptcy Protection JETBLUE AIRWAYS: S&P Assigns 'CCC' Rating on $75MM Debentures JOSE MORENO: Case Summary & 20 Largest Unsecured Creditors KEVIN L. DAHLGREN: Case Summary & 13 Largest Unsecured Creditors LEAR CORPORATION: Moody's Cuts Corporate Family Rating to 'Ca' LEHMAN BROTHERS: Libra & SocGen Object to Proposed Assumption LEHMAN BROTHERS: LBSF Sues BNY Corporate Trustee LEHMAN BROTHERS: Alvarez & Marsal Gets $42.6MM for 3 Months' Work LEHMAN BROTHERS: Taps Jones Day to Probe Barclays & AIG CDS Deals LEONARD O WALLACE: Meeting of Creditors Scheduled for June 10 LYONDELL CHEMICAL: Solutia Dispute Millenium's Claims LYONDELL CHEMICAL: Marathon Petroleum Agrees to Dismiss Appeal MARINER ENERGY: Moody's Assigns 'B3' Rating on $250 Mil. Notes MASONITE INTERNATIONAL: Set to Emerge From Bankruptcy Very Soon MASTEC INC: $100MM Sr. Notes Offering Won't Affect Moody's Ratings MID AMERICA: Case Summary & Eight Largest Unsecured Creditors MIDWAY GAMES: Compensation Committee Okays Bonus Plan for Spiess MOMENTIVE PERFORMANCE: S&P Retains 'CC' Corporate Credit Rating MORRIS PUBLISHING: Has Until June 12 to Pay $9.7MM Notes Interest NANOGEN INC: Section 341(a) Meeting Slated for June 18 in Delaware NORTHFIELD LABORATORIES: Gets Delisting Notice from NASDAQ NUKOTE INT'L: Case Summary & 20 Largest Unsecured Creditors ORION POWER: Moody's Affirms Ba3 Sr. Unsecured Ratings OCWEN FINANCIAL: Fitch Affirms Issuer Default Rating at 'B+' OWENS CORNING: Moody's Assigns 'Ba1' Rating on Note Offerings PACIFIC ETHANOL: Meeting of Creditors Set for June 24 in Delaware PARC AT CREEKSTONE: Voluntary Chapter 11 Case Summary PARK MEADOWS VILLAGE: Voluntary Chapter 11 Case Summary PARTICLE DRILLING: Files Chapter 11 in Houston; Ceases Operations PENSKE AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating PETRORIG I: Meeting of Creditors Scheduled for June 15 in New York PHOENIX COYOTES: NHL Disputes Jim Balsillie's $212.5 Million Bid PROSPECT HOMES: Files for Chapter 11 Bankruptcy Protection PSYSTER CORP: Carr & Ferrell Holds Much of Firm's Debt QUEBECOR WORLD: S&P Assigns 'B+' Long-Term Corporate Credit Rating REALTY AMERICA: U.S. Trustee Sets Meeting of Creditors for June 23 RH DONNELLEY: Plan Proposes to Reduce Debt by $6.4 Billion RH DONNELLEY: Has Until August 11 to File Schedules & Statements RIDGEWALK HOLDINGS: Case Summary & 2 Largest Unsecured Creditors RIVER WOODS: Section 341(a) Meeting Scheduled for June 19 in Idaho RRI ENERGY: Moody's Downgrades Corporate Family Ratings to 'B1' SAN MICHAEL PIZZA: Case Summary & 9 Largest Unsecured Creditors SANDERSON INDUSTRIES: Section 341(a) Meeting Slated for June 18 SHIV REAL ESTATE: Case Summary & 4 Largest Unsecured Creditors SIX FLAGS: Grace Period Won't Affect Moody's 'Ca' Rating SONIC AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating STEEL DYNAMICS: S&P Affirms 'BB+' Corporate Credit Rating STRAUMUR-BURDARAS: Voluntary Chapter 15 Case Summary SYMMETRICAL STAIR: Case Summary & 15 Largest Unsecured Creditors SYMONS FROZEN: Case Summary & 20 Largest Unsecured Creditors TERRY COFFMAN: Lenders Take Over Italian Seafood Restaurant TESORO CORPORATION: Fitch Assigns 'BB+' Rating on $300 Mil. Notes THERAPEDIC SLEEP: Files for Chapter 11 Bankruptcy Protection THERAPEDIC SLEEP: Case Summary & 20 Largest Unsecured Creditors TRIAXX FUNDING: Moody's Does Not Take Rating Actions on Bonds U.S. BEVERAGE: Voluntary Chapter 11 Case Summary VISTEON CORP: Can Honor Up to $92.1MM in Customer Obligations VISTEON CORP: Gets Interim OK to Continue Funding Foreign Units VISTEON CORP: Can Pay Shippers, Warehousemen & Lienholders $21.3MM VISTEON CORP: Gets Interim Okay to Pay $2.2MM to Foreign Vendors WESTERN REFINING: S&P Affirms 'B+' Corporate Credit Rating YELLOWSTONE CLUB: Court Confirms Plan, to Emerge Later this Month * BOOK REVIEW: Taking America - How We Got from the First Hostile Takeover to Megamergers, Corporate Raiding and Scandal ********* 1600 PACIFIC: Files for Chapter 11 Bankruptcy Protection -------------------------------------------------------- Steve Brown at The Dallas Morning News reports that 1600 Pacific Building LP has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Texas. Court documents say that 1600 Pacific listed between $1 million and $10 million in liabilities, and creditors that include First National Bank of Edinburg and the Internal Revenue Service. Dallas Morning News relates that 1600 Pacific has been trying to convert its 32-storey downtown Dallas office tower into 590 apartments for more than a year. According to Dallas Morning News, the project is awaiting financial support from the city of Dallas. The report notes the project would need more than $100 million. The partnership hopes to complete its subsidy agreements with the city of Dallas "in very short order" and then effectively pull the project out of bankruptcy, the report says, citing developer Curtis Lockey. 1600 Pacific Building, L.P., is a development partnership in LaJolla, California. 2 G&Y LLC: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: 2 G&Y, LLC 5995 E. Grant Road, #200 Tucson, AZ 85712 Bankruptcy Case No.: 09-12188 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court District of Arizona (Tucson) Debtor's Counsel: Michael W. Baldwin, Esq. P.O. Box 35487 Tucson, AZ 85740-5487 Tel: (520) 792-3600 Fax: (520) 792-8616 Email: michael.baldwin@azbar.org 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 David Cutler, CPA. AGY HOLDING: Moody's Downgrades Corporate Family Rating to 'B3' --------------------------------------------------------------- Moody's Investors Service lowered AGY Holding Corporation's Corporate Family Rating to B3 from B2, reflecting expectations for continued weakness and depressed sales volumes in many of its major end-markets. The outlook is negative. Ratings lowered: AGY Holding Corp. * Corporate Family Rating -- B3 from B2 * Probability of Default Rating -- B3 from B2 * $172mm 11% Gtd sr sec 2nd lien notes due 2014 -- B3 (LGD4, 58%) from B2 (LGD4, 58 %) The downgrade to AGY's CFR reflects the slow down in its end markets, expectations for depressed sales volumes over the next year and the lack of visibility concerning a recovery in product demand. In the first quarter of 2009, all of AGY's end markets, except defense, experienced significant softness in demand. AGY completed work in the first quarter for a large defense contract (MRAP vehicle armor) and lower sales volumes for this end market are expected until contracts are awarded for the MATV (a lighter weight vehicle for use by the US military in Afghanistan), which may occur in the second half of 2009. Other major end markets experiencing slow demand, including aerospace, electronics, construction and industrial, are negatively impacted by cancelled new commercial jet orders, fewer airplane refurbishments, lower construction and industrial activity and the drop in consumer spending. AGY currently has adequate liquidity, which is supported by approximately $2.6 million of cash and $18.35 million available under the $40 million revolving credit facility as of March 31, 2009. In addition, the company has precious metal inventory that should be readily marketable in the event the company needs additional liquidity. AGY pays approximately $19 million in annual interest expense on its notes ($9.6 million is due on the notes semi-annually in May and November). AGY is expected to conserve cash during this difficult economic period in order to preserve its liquidity. Moody's most recent announcement concerning the ratings for AGY was on October 11, 2006, when Moody's assigned a B2 rating to AGY's senior secured notes due 2014. The notes were used to refinance existing bank debt that partially financed the acquisition of AGY by the current owners. AGY Holding Corp., headquartered in Aiken, South Carolina, is a manufacturer of advanced glass fibers used as reinforcing materials in applications ranging from aircraft laminates, ballistic armor, roofing membranes, insect screens, architectural fabrics, and specialty electronics. AGY generated revenues of $218 million for the LTM ended March 31, 2009. AIR CANADA: Liquidity Concerns Prompt S&P to Junk Ratings --------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term corporate credit rating on Air Canada to 'CCC+' from 'B-'. The outlook is negative. "The downgrade reflects our assessment that the company's liquidity to support its operations in the near term remains dependent on positive developments in a number of financing and operating initiatives, the outcomes of which remain uncertain," said Standard & Poor's credit analyst Greg Pau. S&P expects that Air Canada will need to find additional non- operating cash resources in the coming months to maintain cash balances sufficient to satisfy the minimum required to avoid additional deposits, as specified in the agreement with its credit card processor. S&P notes from Air Canada's disclosure that it expects to make pension funding payments totaling C$570 million in 2009, although the amount could be lower if the company is able to obtain the relief it is seeking. "In addition, the downgrade reflects our view that Air Canada's financial risk profile continued to weaken in the first quarter, reflecting continued soft market conditions for airlines," Mr. Pau added. S&P notes some recent successful efforts in relieving the company's liquidity situation, including Air Canada's May 25, 2009, announcement of an agreement with a principal credit card processor to lower the required unrestricted maintenance cash level to C$800 million, the completion of a sales-and-leaseback transaction on a B777 aircraft, and other financial arrangements since the beginning of 2009. However, Air Canada's cash balance remained flat at C$1.087 billion as of March 31, and in S&P's view the company's successes by themselves might not be sufficient to alleviate its near-term liquidity challenges. The pension funding payments totaling C$570 million in 2009 (as indicated in the company's first-quarter 2009 Management's Discussion And Analysis) are well in excess of S&P's forecast of the company's 2009 operating cash flow and, if payable, could reduce its cash balance close to the covenanted minimum cash level. Air Canada disclosed that it is currently seeking a funding moratorium from staff and plan members and that the government has proposed measures to provide relief from pension funding requirements of affected companies. In S&P's view, the call on liquidity will be reduced if Air Canada is able to obtain such relief, although at this point whether the relief will materialize and the timing and amount of the relief remain uncertain. The rating action also reflects S&P's assessment of Air Canada's financial risk profile including a reported weakening in first- quarter 2009 because of unfavorable operating conditions in the quarter, which include weakened passenger demand, particularly in the higher-yield business-class and long-haul segments, competitive pricing, and higher interest expenses due to a weakened Canadian dollar. The negative outlook reflects S&P's assessment of the significant challenges S&P believes Air Canada faces in the coming months. It also reflects S&P's assessment that the company's financial flexibility is constrained by what S&P see as a highly leveraged capital structure. Standard & Poor's could lower the rating if there is evidence that Air Canada is unlikely to maintain a cash balance sufficient to satisfy the minimum cash requirement in its financial covenants or if the company indicates its intention to seek bankruptcy protection. S&P currently believe that a revision of the outlook to stable is unlikely in 2009, barring an external equity injection to address the highly leveraged capital structure. Such a revision could occur later assuming the company becomes successful in its effort to shore up liquidity and if it demonstrates its ability to improve its financial measures. ALEXANDER KOJO: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Alexander Kojo Amuah 8410 Chervil Road Lanham, MD 20706 Bankruptcy Case No.: 09-20050 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Debtor's Counsel: Jonathan C. Silverman, Esq. 5437 Connecticut Ave., #807 Washington, DC 20015 Tel: (202) 390-1423 Email: jonathan.c.silverman@gmail.com Total Assets: $2,587,900 Total Debts: $2,757,270 A full-text copy of Mr. Amuah's petition, including a list of his 13 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mdb09-20050.pdf The petition was signed by Mr. Amuah. AMERICAN ACHIEVEMENT: Moody's Lifts Corp. Family Rating to 'Caa1' ----------------------------------------------------------------- Moody's Investors Service upgraded American Achievement Group Holding Corp.'s corporate family rating to Caa1 from Caa2 and its probability of default rating to Caa2 from Caa3. The upgrade is due largely to debt reduction and improved liquidity as a result of the company's amended Credit Agreement which provides, most importantly, an extension of the company's revolving credit facility (albeit at a smaller amount of $25 million) until March 2011 and more flexibility under its financial covenants. In addition, Moody's upgraded the AAC Group Holdings senior discount notes to Caa2 from Caa3 and American Achievement Corporation's senior subordinated notes to B2 from B3 also based on the Loss Given Default methodology and changes to the capital structure following the repayment of $28 million of the company's term loan. The rating outlook is stable. The ratings were upgraded: American Achievement Group Holding Corp. -- Corporate Family Rating to Caa1 from Caa2 -- Probability-of-default rating to Caa2 from Caa3 -- $109 million (current value) Senior PIK notes due 2012 to Caa3 (LGD-5, 79%) from Ca AAC Group Holding Corp. -- $132 million (current value) Senior discount notes due 2012 to Caa2 (LGD-4, 51%) from Caa3 (LGD-3, 49%) American Achievement Corporation -- $150 million senior subordinated notes due 2012 to B2 (LGD-2, 19%) from B3 (LGD-2, 20%) The ratings were affirmed. American Achievement Corporation -- $25 million senior secured revolving credit facility due 2011 at B1 (LGD-1, 2%, adjusted) -- $47 million senior secured term loan due 2011 at B1 (LGD-1, 2%, adjusted) The rating outlook is stable. AAC's Caa1 corporate family rating reflects the company's still very high leverage, weak coverage of total interest expense (including non-cash holding company interest expense), small scale, narrow product focus on yearbooks and class rings, and some regional concentration in the Southern U.S. Moreover, the current economic environment constrains the company's already limited growth prospects. In Moody's view, there is ongoing potential for a distressed exchange as evidenced by the amendment to the credit agreement permitting distributions to the company's holding companies for interest expense and debt repayment. Notwithstanding these risks, the rating is supported by AAC's substantial market shares in each of its niche product segments, its high customer retention rates, good operating margins, and its highly efficient manufacturing footprint. The rating is further supported by AAC's large network of exclusive independent sales representatives and its ability to meet the high requirements of its customers under narrow production and delivery timeframes that serves as a competitive advantage. Moody's also note operational improvements following some plant rationalization and capital investment in new presses. Headquartered in Austin, Texas, American Achievement Corporation is a leading provider of school-related affinity products and services. The company holds strong market shares in each of its product segments -- yearbooks, class rings, and graduation products. Revenues for the last 12 months ended February 2009 were $306 million. Moody's last rating action was on March 13, 2009, when Moody's lowered American Achievement's ratings following its distressed exchange. ANDREW JAHELKA: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Andrew Alvin Jahelka 715 Walnut Dr #407 Darien, IL 60561 Bankruptcy Case No.: 09-20289 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Debtor's Counsel: Colleen E. McManus, Esq. Much Shelist 191 N. Wacker Drive, Suite 1800 Chicago, IL 60606 Tel: (312) 521-2000 Email: cmcmanus@muchshelist.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. ASARCO LLC: Americas Mining Can Appeal Using SCC Shares as Bond --------------------------------------------------------------- Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, in a news release said that U.S. Judge Andrew S. Hanen of the Fifth Circuit District Court in Brownsville, Texas granted on June 2, 2009, Grupo Mexico the right to post an alternative financial guarantee to secure its Motion for Stay. In its opinion, the Court said it would allow AMC to place in escrow shares of Southern Copper Corporation stock rather than a cash bond, as was requested by ASARCO, to secure the enforcement of any judgment at appeal. The appeal is expected to take at least a year. In rendering its opinion, the Court noted that requiring AMC to post a full cash bond would "impose an undue financial burden and that ASARCO's need for security can be satisfied by alternate means." It further noted that ". . . if this Court were to require AMC to post a full bond, ASARCO's creditors would be denied the benefit of competition among three, rather than two, plans for creditor support." This assertion underscores the Court's belief in the feasibility of AMC's plan of reorganization since it authorizes AMC to put shares in escrow rather than pay a full cash bond, which would potentially impair AMC's ability to fund its reorganization plan. While AMC disagrees with the Court's original judgment and it is confident that the judgment will be overturned on appeal, it is pleased that the Court took steps to benefit the creditors by allowing it to utilize a share escrow rather than cash. As reported by the Troubled Company Reporter on May 22, 2009, Americas Mining Corporation asked the U.S. District Court for the Southern District of Texas to stay the execution of Judge Andrew Hanen's final judgment on the transfer dispute with ASARCO LLC of certain stock of Southern Peru Copper Company, now known as Southern Copper Corporation, to AMC, pending the Parent's appeal under Rule 62 of the Federal Rules of Civil Procedure. AMC sought a stay of the Final Judgment from June 5, 2009, through the conclusion of its appeal. The Court previously granted a stay of the Final Judgment through June 5. AMC urged the Court to allow it to obtain a stay pending appeal without the need for a full supersedeas bond covering the monetary portion of the judgment because the value of the SCC Shares far exceeds any possible shortfall in the ASARCO LLC bankruptcy proceedings based on ASARCO's own disclosure statement. Because a return of the SCC Shares would result in payment of creditors in full and because any excess recovery should be returned to AMC as ASARCO's 100% equity holder, AMC should not be required to incur the substantial costs of securing a portion of the judgment that should only flow back to itself, asserts Brian Antweil, Esq., at Haynes & Boone, LLP, in Houston, Texas. AMC's request for a stay of the portion of the judgment ordering the return of the SCC Shares must be evaluated under the four- pronged test governing relief under Civil Rule 62(c), Mr. Antweil contends. He says that AMC can show that: (1) AMC has presented a "substantial case on the merits" relating to "serious legal questions," as the Court acknowledged in its liability opinion; (2) AMC would suffer irreparable harm if the stay were not granted, because the SCC Shares would be transferred to ASARCO LLC's bankruptcy estate and ASARCO would be free to sell, transfer, or encumber or the shares; (3) Granting the stay would not substantially harm ASARCO and its creditors because during the pendency of the appeal, AMC agree not to sell, transfer, or encumber the shares and to extend the voting restrictions contained in the agreed order implementing the temporary stay of execution; and (4) Granting the stay would serve and not harm the public interest, because the public interest favors having legal matters decided on the merits, particularly in the present case where there exists numerous issues of first impression or upon which courts had not clearly spoken. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06- 20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for $2.6 billion. By October 2008, ASARCO LLC informed the Court that Sterlite refused to close the proposed sale and thus, the Original Plan could not be confirmed. The parties has since renewed their purchase and sale agreement and ASARCO LLC has obtained Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for $1.1 billion in cash and a $600 million note. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted its own plan which allows it to keep its equity interest in ASARCO LLC by offering full payment to ASARCO's creditors. AMC offered provide up to $2.7 billion in cash and a $440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASBURY AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating -------------------------------------------------------------- Moody's Investors Service said that the June 1, 2009 bankruptcy filing by General Motors has no immediate impact on the ratings and outlooks for the auto retailers rated by Moody's. These are the rated Auto Retailers: -- Asbury Automotive Group Inc. -- AutoNation, Inc. -- Group 1 Automotive, Inc. -- Penske Automotive Group, Inc. -- Sonic Automotive Group, Inc. The last rating action for Asbury Automotive Group, Inc., was the March 25, 2009 downgrade of the Corporate Family and Probability of Default ratings to B2 from B1 and the assignment of a negative outlook. The last rating action for AutoNation, Inc., was the December 5, 2008 affirmation of the Ba1 Corporate Family and Probability of Default ratings, and a change in the outlook to negative from stable. The last rating action for Group 1 Automotive, Inc., was the March 20, 2009 downgrade of the Corporate Family and Probability of Default ratings to B1 from Ba3 and assignment of a negative outlook. The last rating action for Penske Automotive Group was on March 25, 2009, when the company's Corporate Family Rating was downgraded to B2 from B1. The last rating action for Sonic Automotive Holdings, Inc., was the May 21, 2009 downgrade of the Corporate Family rating to Caa1 from B2, the upgrade of the Probability of Default rating to Caa1 from Caa3, and assignment of a negative outlook. AUTONATION INC: GM Ch 11 Filing Won't Affect Moody's Rating ----------------------------------------------------------- Moody's Investors Service said that the June 1, 2009 bankruptcy filing by General Motors has no immediate impact on the ratings and outlooks for the auto retailers rated by Moody's. These are the rated Auto Retailers: -- Asbury Automotive Group Inc. -- AutoNation, Inc. -- Group 1 Automotive, Inc. -- Penske Automotive Group, Inc. -- Sonic Automotive Group, Inc. The last rating action for Asbury Automotive Group, Inc., was the March 25, 2009 downgrade of the Corporate Family and Probability of Default ratings to B2 from B1 and the assignment of a negative outlook. The last rating action for AutoNation, Inc., was the December 5, 2008 affirmation of the Ba1 Corporate Family and Probability of Default ratings, and a change in the outlook to negative from stable. The last rating action for Group 1 Automotive, Inc., was the March 20, 2009 downgrade of the Corporate Family and Probability of Default ratings to B1 from Ba3 and assignment of a negative outlook. The last rating action for Penske Automotive Group was on March 25, 2009, when the company's Corporate Family Rating was downgraded to B2 from B1. The last rating action for Sonic Automotive Holdings, Inc., was the May 21, 2009, downgrade of the Corporate Family rating to Caa1 from B2, the upgrade of the Probability of Default rating to Caa1 from Caa3, and assignment of a negative outlook. AXS-ONE INC: Inks Amendment to Promissory Notes and Rights Deal --------------------------------------------------------------- AXS-One Inc. entered into an omnibus amendment to certain promissory notes and investor rights agreements with certain other investors. The Omnibus Amendment serves to: (i) extend the maturity date of each of the Company's Series A 6% Secured Convertible Promissory Notes, Series B 6% Secured Convertible Promissory Notes, Series C 6% Secured Convertible Promissory Notes, Series D 6% Secured Convertible Promissory Notes, and Series E 6% Secured Convertible Promissory Notes from May 29, 2009, to July 31, 2009; and (ii) amend the existing registration rights provided to the purchasers of the Subordinated Notes to extend the required filing date for a registration statement to register the shares underlying the Subordinated Notes and the warrants issued in connection with it, from May 29, 2009, to July 31, 2009. A full-text copy of the Omnibus Amendment to Certain Promissory Notes and Investor Rights Agreements among AXS-One Inc. and certain investors is available for free at: http://ResearchArchives.com/t/s?3d8a Headquartered in Rutherford, New Jersey, AXS-One (OTC BB: AXSO) -- http://www.axsone.com/-- provides Records Compliance Management software solutions. The AXS-One Compliance Platform enables organizations to implement secure, scalable and enforceable policies that address records management for corporate governance, legal discovery and industry regulations such as SEC17a-4, NASD 3010, Sarbanes-Oxley, HIPAA, The Patriot Act and Gramm-Leach Bliley. AXS-One has offices worldwide including in the United States, Australia, Singapore, United Kingdom and South Africa. AXS-One Inc.'s balance sheet at September 30, 2008, showed total assets of $4.8 million, total liabilities of $18.2 million and shareholders' deficit of $13.4 million. BANK OF AMERICA: Names New Chief Risk Officer Amid Merrill Probe ---------------------------------------------------------------- Bank of America CEO and President Kenneth D. Lewis has named Gregory L. Curl as Chief Risk Officer for the Company, responsible for working with the Company's lines of business to identify and navigate credit, market, and operational risks. Mr. Curl has had several roles in corporate development since 1997 and most recently has been Global Corporate Strategic Development and Planning executive. He will continue to be a member of the Management Committee. Mr. Lewis said that Mr. Curl will bring a valuable perspective to risk management based on his years of analyzing companies and markets for corporate development. "Greg has that natural ability to look at things, see both the upside and the potential pitfalls and then navigate the right course," Mr. Lewis said. Mr. Curl started his career in 1974 in St. Louis with Boatmen's Bancshares as a commercial loan officer. From 1976 to 1978, he served as a special assistant to U.S. Senator John C. Danforth. He returned to the bank in 1978 and continued to serve in many capacities, including Vice Chairman and Chief Operating Officer of Boatmen's. Since 1996 he has served in several capacities at Bank of America including Vice Chairman of Corporate Development and Global Corporate Planning and Strategy executive since 2001. Mr. Curl received a bachelor's degree in political science from Southwest Missouri State University and a master's degree in government from the University of Virginia. He was named a Woodrow Wilson Fellow in 1970 and was a Philip Dupont Scholar and a McIntire Fellow at the University of Virginia. He served as a naval officer in the Mediterranean and the Middle East from 1970 to 1974. Mr. Curl is a director of the Jefferson Scholars Foundation, University of Virginia, The Enstar Group, Inc., Grupo Financiero Santander Serfin, and China Construction Bank. Mr. Curl will succeed Amy Woods Brinkley as Chief Risk Officer effective June 30 following a transition period. Ms. Brinkley will remain with the Company until her retirement this year. Thereafter, she will voluntarily serve on BofA's charitable board continuing her long-standing commitment to the communities served by the bank. Prior to her current role, Ms. Brinkley served as president of Consumer Products, a business group then composed of Card Services, Consumer Finance, the Consumer Real Estate, Community Development and Consumer e-Commerce, and Insurance. She has also previously served as the Company's principal marketing executive. Ms. Brinkley joined BofA in 1978 as a management trainee in the Commercial Credit Department. She became a corporate banking officer in the Asia Pacific area of the International Division and then a commercial banker in Greensboro, N.C. She established a Consumer Credit Policy function in 1987 to oversee the credit issues of the company's consumer portfolio, including credit card, residential mortgages and direct and indirect consumer loans. Ms. Brinkley was promoted to executive vice president and senior Consumer Credit Policy executive in 1990. Dan Fitzpatrick and Michael R. Crittenden at The Wall Street Journal relate that Ms. Brinkley, along with director Robert Tillman, is leaving BofA as Mr. Lewis prepares to testify before U.S. lawmakers on the circumstances surrounding the recent acquisition of securities firm Merrill Lynch & Co. According to WSJ, Reps. Edolphus Towns and Dennis Kucinich asked Mr. Lewis to appear before the House Committee on Oversight and Government Reform to address: -- when BofA became aware of deteriorating conditions at Merrill Lynch, -- what role the federal government played in the decision to complete the deal, and -- what BofA has done with its federal financial assistance. Investigators are seeking possible discrepancies between Mr. Lewis's public statements, his testimony to New York Attorney General Andrew Cuomo, and what he told BofA's board, WSJ states, citing people familiar with the matter. About Bank of America Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The Company serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers support to more than 4 million small business owners. The company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. The bank needed the government's financial help in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management. Merrill Lynch's operations are organized into two business segments: Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BELLE TERRE GOLF: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Belle Terre Golf, LLC 111 Fairway Dr. La Place, LA 70068 Bankruptcy Case No.: 09-11655 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Eastern District of Louisiana (New Orleans) Judge: Elizabeth W. Magner Debtor's Counsel: Louis Middleton Phillips, Esq. Gordon, Arata, et al, L.L.P. 301 Main Street, Suite 1600 Baton Rouge, LA 70801-1916 Tel: (225) 381-9643 Fax: (225) 336-9763 Email: lphillips@gordonarata.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/laeb09-11655.pdf The petition was signed by Timothy A. Duhe, manager of the Company. CAPITAL GROWTH: Valuation Matters Cues Yearend Report Filing Delay ------------------------------------------------------------------ Capital Growth Systems, Inc., disclosed in a filing with the U.S. Securities and Exchange Commission it has not filed a Form 10-K for the year ended December 31, 2008, at the present time. Capital Growth says the delay in the Form 10-K filing is attributable to its need to get proper accounting treatment for complex issues associated with valuation of the embedded derivative features with respect to certain of the debt instruments it issued in 2007 and 2008. These valuation issues do not impact cash of the Company and are associated with, inter alia, how much of the face amount of the instruments should be accorded to the value of the embedded derivative features. It must be further noted that all of the applicable debt instruments that were issued in 2007 have since been either paid off or converted to common stock. On April 16, 2009, the Company received an OTC Bulletin Board Delinquency Notification stating that it is delinquent with respect to the filing of its Annual Report on Form 10-K for the year ended December 31, 2008. The Notification stated that pursuant to OTCBB Eligibility Rule 6530, unless the delinquent filing has been received and time stamped by the SEC's EDGAR system by 5:30 pm on May 18, 2009, the securities of the registrant would not be eligible for quotation on the OTCBB and would be removed effective May 18, 2009. On May 13, 2009, the Company filed a notice of appeal of the outside date for the delisting qualification with the Financial Industry Regulatory Authority. In the event the Company is unsuccessful in its appeal with FINRA, trading in the Company's Common Stock may be moved to the pink sheets. The Company intends to complete and file its Form 10-K for the year ended December 31, 2008, and its Form 10-Q for the quarter ended March 31, 2009, soon as it is able to do so. In the event that at the time its stock is trading in the pink sheets, it intends to apply for reinstatement of trading on the OTCBB as promptly as reasonably practical. About Capital Growth Systems Based in Chicago, Illinois, Capital Growth Systems Inc. (OTC BB: CGSY) doing business as Global Capacity Group Inc., delivers telecom integration services to systems integrators, telecommunications companies, and enterprise customers worldwide. It provides an integrated supply chain management system that streamlines and accelerates the process of designing, building, and managing customized communications networks. The Company also provides connectivity services for network integrators who bundle telecommunication solutions to enterprise customers; offers global pricing and quotation software and management services for data communications; and assists customers to reduce connectivity costs and attain understanding and control of their deployed communications network. Going Concern Doubt Plante & Moran, PLLC, in Elgin, Illinois, expressed substantial doubt about Capital Growth Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended December 31, 2007. The auditing firm pointed to the company's recurring losses, negative cash flows from operations and net working capital deficiency. Capital Growth Systems, Inc., posted a $6,236,000 net loss for the three months ended September 30, 2008. As of September 30, 2008, the company's balance sheet showed total assets of $34,820,000 and total liabilities of $60,411,000, resulting in total shareholders' deficit of $25,591,000. CAPITAL GROWTH: Receives Covenant Violation from ACF CGS -------------------------------------------------------- Capital Growth Systems, Inc., disclosed in a filing with the U.S. Securities and Exchange Commission that it received from ACF CGS, L.L.C., as agent, formal notification of certain covenant violations that have occurred and continue to exist under a Loan Agreement dated Nov. 19, 2008, among Capital Growth, Global Capacity Group, Inc., Centrepath, Inc., 20/20 Technologies, Inc., 20/20 Technologies I, LLC, Nexvu Technologies, LLC, Capital Growth Acquisition, Inc., Vanco Direct USA, LLC, to be known as Global Capacity Direct, LLC, and Magenta netLogic Limited, with ACF CGS and certain lender parties. Capital Growth and the other borrowers aver that they have timely paid all their debt service obligations under the Loan Agreement. On May 22, 2009, Magenta netLogic, as Agent, notified Capital Growth that these covenant violations have occurred and continue to exist under the Loan Agreement, by virtue of Borrowers' failure to comply with these sections of the Loan Agreement: (i) Fixed Charge Coverage Ratio for the five months ended March 31, 2009; (ii) Leverage Ratio for the five months ended March 31, 2009; (iii) Monthly Recurring Circuit Revenue for the month ended March 31, 2009; and (iv) Monthly Recurring Circuit Margin for the month ended March 31, 2009. ACF CGS, as agent, is not requiring at this time all accrued PIK Interest to be due and payable in cash pursuant to the Loan Agreement. Furthermore, the Company and Agent are in the process of negotiating the terms of a prospective continuation of the credit facility. ACF CGS and the Lenders, however, have not waived and expressly reserve all their rights, powers, and remedies under the Loan Agreement and the related loan documents. Loan Agreement The Loan Agreement provides for a senior secured term loan of $8.5 million, subject to an increase in availability of up to an additional $2 million, upon the approval of the Lenders and the Company. The Borrowers granted to the Agent and Lenders a security interest in substantially all of their assets and a collateral pledge of all of the Company's subsidiaries' Common Stock or limited liability company interests. The Term Loan is evidenced by a Term Note bearing interest at a rate equal to the prime rate of interest, as defined, plus 14% per annum payable monthly, with 5% of that rate to be capitalized, compounded, and added to the unpaid principal amount of the Term Loan. The Loan Agreement contains a number of financial covenants that the Company must maintain, including a minimum debt to EBITDA ratio, a minimum cash balance, a minimum margin from the Company's circuit business, and others. Under the Loan Agreement, the Company is required to provide the Agent with a monthly income statement regarding the Company's circuit business, a monthly statement regarding the collateral securing the Term Loan, and a monthly summary of the balance on its accounts receivable with its largest customer. The Company must also provide to the Agent all federal tax returns filed by the Company as well as all reports filed with the SEC. Under the Term Loan Agreement, the Company and its subsidiaries may not, among other things: (i) merge or consolidate with any other person, or purchase all or substantially all of the assets of any other person, or sell, transfer, lease, abandon, or otherwise dispose of a substantial portion of its assets or any of the collateral pledged to the Agent, or any interest, except that so long as no default has occurred and is continuing, each Borrower may make sales of its inventory in the ordinary course of business; (ii) incur any indebtedness or liens on its assets except for indebtedness and liens incurred as a result of the issuance of the November Debentures, the Amended March Debentures, and the Seller Debenture, and purchase money financing not to exceed an agreed upon limit; (iii) pay any dividends or repurchase any of its stock, or make payments on the November Debentures, the Amended March Debentures, and the Seller Debenture, except as permitted by the Senior Lender Intercreditor Agreement; (iv) make any loans or advances to or extend any credit to any person, except for certain permitted investments and certain intercompany advances to the Company's Magenta netLogic subsidiary, or create any new subsidiary or make loans to, transfer any money or other assets to, or otherwise invest in any subsidiary unless the subsidiary is or becomes a party to the Loan Agreement; (v) make capital expenditures in excess of $1 million in any fiscal year, determined on an aggregate basis; (vi) increase the total compensation paid to certain members of the Company's management by more than 5% per year; (vii) amend or modify the Purchase Agreement, or any of the Company's or any subsidiary's charter documents, or the Debentures; (viii) enter into new capital leases in excess of $500,000 in the aggregate; (ix) settle or compromise its largest customer's receivable; or (x) use the proceeds of the Term Loan other than for the acquisition of Vanco Direct or for working capital purposes. An event of default occurs under the Loan Agreement when, among other things: (i) the Company fails to pay amounts due under the Loan Agreement when due; (ii) the Company breaches any covenant or fails to perform any agreement required under the Loan Agreement; (iii) a breach of any representation or warranty made in the Loan Agreement; (iv) any event of default will occur under the Debentures or any other agreement for borrowed money for an amount in excess of $100,000 or with respect to material real estate leases; (v) the suspension of the operation of any subsidiary's or the Company's present business; (vi) the Company or any subsidiary becomes insolvent, or a proceeding is instituted by or against it alleging that the Company or the subsidiary is insolvent or unable to pay debts as they mature, or a petition under any provision of the Bankruptcy Code, as amended, is filed by or against the Company or any subsidiary; (vii) entry of any judgment in excess of $100,000 against the Company or any subsidiary; (viii) transfer of a substantial part of the property of the Company or any subsidiary or the sale, transfer, or exchange, either directly or indirectly, of a controlling interest of the Company or any subsidiary to a third person; (ix) if there are certain changes in management of the Company or any subsidiary and the change is not approved by the Agent; (x) the occurrence of any act, omission, event, or circumstance which has or could reasonably be expected to have a material adverse effect; (xi) if the Final Closing will have not occurred within 91 days after the funding of the Term Loan; or (xii) the transfer of Licenses necessary to operate in the states of California, Tennessee, and Pennsylvania has not been approved within 90 days from the date of the Term Loan Agreement. November Debentures Pursuant to the November Securities Purchase Agreement, the Company completed a private placement effective as of the closing date of $9,025,000 of securities with a limited number of investors. The November Debentures provide that holders can accelerate the related indebtedness in the event of the occurrence of an Event of Default and failure to cure within the applicable cure period, if any. Events of Default include: (i) the breach by the Company of any of its obligations pursuant to the November Debentures or any of the other transaction documents or any other material agreement to which the Company is a party; (ii) any representation or warranty being untrue or incorrect at the time made in any material respect; (iii) certain insolvency events with respect to the Company or material subsidiaries, or defaults with respect to any mortgage, credit agreement, or other facility which involves an obligation in excess of $150,000; (iv) cessation of listing of the Company's Common Stock for five consecutive trading days; (v) a "change of control" transaction; (vi) mergers or consolidations where shareholders of the Company immediately prior to the transaction hold less than 60% of the aggregate voting power of the Company or successor after the transaction; (vii) sales of substantially all of the assets of the Company to a purchaser of which the shareholders of the Company prior to the transaction own less than 60% of the voting power of the acquiring entity; (viii) a replacement over a three-year period of over half of the members of the Company's board of directors where the replacement directors were not approved by a majority of the current directors or directors that were duly approved by the persons; (ix) failure to meet the public reporting requirements of the Company under Rule 144; (x) failure to timely deliver stock certificates; (xi) loss of eligibility of the Common Stock for trading on its trading market; (xii) the Company will agree to sell all or substantially all of its assets or be party to a Fundamental Transaction or a Change in Control Transaction; and (xiii) the entering against the Company of any monetary judgment for more than $50,000 which remains unvacated, unbonded, or unstayed for a period of 45 days. March Amended and Restated Debentures Pursuant to the Waiver Agreement, the holders of $16 million of original principal amount of the March Debentures agreed to exchange their March Debentures for amended and restated March Debentures maturing March 11, 2015, convertible into Common Stock at $0.24 per share in which the remainder of the interest that would have accrued under their March Debentures, plus the sum of 25% of their original principal amount, plus all liquidated damages accruing with respect to the original registration rights agreement will be added to the principal amount of the Tranche 1 Amended March Debentures. The Senior Lender Intercreditor Agreement contains certain conditions to the cash payment of the quarterly redemption amounts. To the extent the Company fails to satisfy those conditions, the Tranche 1 Amended March Debenture holders at their election can either accept payment of the amount with Common Stock valued at 90% of the volume weighted average price for a designated ten-day period prior to each payment or in the alternative, accrue the unpaid portion with interest until maturity. Many of the remaining terms of the March Debentures were embodied in the Tranche 1 Amended March Debentures, which include the right to convert the principal amount of the debentures to Common Stock, provided that the Add-on Principal amount is not convertible until the Authorized Share Increase, due to the current lack of sufficient authorized Common Stock to guarantee the issuance of the maximum number of shares issuable. With respect to two affiliated holders of March Debentures, who as of Nov. 20, 2008, held in the aggregate approximately $2,459,160 of principal amount of March Debentures, the Company agreed, effective as of the closing, to exchange their March Debentures for new debentures which mirror the Tranche 1 Amended March Debentures except that: i) the Add-on amount for the Tranche 2 Amended March Debentures will be limited to the liquidated damages amount accrued for failure to have the registration statement declared effective on a timely basis plus the legal fees incurred by the holders in negotiation and documentation of the revised transactions; and ii) at the closing, the Company agreed to make a one-time payment of all interest accruing or scheduled to accrue with respect to the corresponding original March Debentures, in satisfaction of all interest accruing on the debentures. As of May 29, 2009, none of the November Debenture holders or the Tranche 1 or Tranche 2 Amended March Debenture holders has declared a default. Furthermore, in the event of a default, the Lenders may block any payments related to the default for up to 180 days, depending upon the nature of the default, repayment, and satisfaction of the Lender debt and other factors. About Capital Growth Systems Based in Chicago, Illinois, Capital Growth Systems Inc. (OTC BB: CGSY) doing business as Global Capacity Group Inc., delivers telecom integration services to systems integrators, telecommunications companies, and enterprise customers worldwide. It provides an integrated supply chain management system that streamlines and accelerates the process of designing, building, and managing customized communications networks. The Company also provides connectivity services for network integrators who bundle telecommunication solutions to enterprise customers; offers global pricing and quotation software and management services for data communications; and assists customers to reduce connectivity costs and attain understanding and control of their deployed communications network. Going Concern Doubt Plante & Moran, PLLC, in Elgin, Illinois, expressed substantial doubt about Capital Growth Systems Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended December 31, 2007. The auditing firm pointed to the Company's recurring losses, negative cash flows from operations and net working capital deficiency. Capital Growth Systems, Inc., posted a $6,236,000 net loss for the three months ended September 30, 2008. As of September 30, 2008, the company's balance sheet showed total assets of $34,820,000 and total liabilities of $60,411,000, resulting in total shareholders' deficit of $25,591,000. CARAUSTAR INDUSTRIES: 1st Day Motions Okayed, Stocks Delisted ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia approved Caraustar Industries, Inc.'s first day motions to, among other things, pay prepetition general unsecured claims in the ordinary course of business, in connection with its voluntary restructuring under Chapter 11. Caraustar reached agreement with holders of approximately 83% of its 7-3/8% Senior Notes maturing June 1, 2009, and 91% of its 7-1/4% Senior Notes maturing May 1, 2010, on the terms of a cooperative financial restructuring that would reduce the company's debt obligations by approximately $135 million. The Court also granted permission for the company to pay prepetition employee wages and salaries, to make contributions to the 401(k) and other employee benefit plans, and to reimburse employees for their pre-petition business expenses. "Having received approval of our first-day motions so quickly sets Caraustar on strong footing as we move towards completing our recapitalization," Caraustar's president and chief executive officer, Michael J. Keough, stated. "This action by the Court will be well received by our employees, customers and suppliers." In addition, the court approved use of the company's existing cash management system and substantially all of its existing bank accounts. The Court also authorized the immediate use of up to $25 million of the $75 million senior secured debtor-in-possession revolving credit facility from General Electric Capital Corporation which will allow the company the support required to fund operations, pay employees' wages and benefits, and purchase goods and services during the restructuring period. "The approval of our DIP financing and the Court's permission to pay pre-petition general unsecured claims in the ordinary course of business means that our trade creditors will continue to be paid, and as a result, we expect to assure continuity of supply to our customers." The company also received a "Staff Determination" notification from Nasdaq that its equity securities will be delisted from The Nasdaq Stock Market. The decision was based upon Nasdaq's Marketplace Rules 5100, 5110(b) and IM-5100-1, and was made after reviewing the company's press release that it had filed for protection under Chapter 11 of the U.S. Bankruptcy Code and other publicly available information. Trading of the company's common stock on the Nasdaq Stock Market will be suspended at the opening of business on June 11, 2009. Nasdaq will file a Form 25-NSE with the U.S. Securities and Exchange Commission, which will remove the securities from listing and registration. The Company does not plan to appeal the Staff Determination. These securities will not be immediately eligible to trade on the OTC Bulletin Board or in the Pink Sheets, but may become eligible if a market maker makes application to register in and quote the securities in accordance with Securities and Exchange Commission Rule 15c2-11, and such application is cleared. The Company and its domestic subsidiaries filed voluntary Chapter 11 petitions along with a pre-negotiated Plan of Reorganization in the United States Bankruptcy Court for the Northern District of Georgia on May 31, 2009. The cases will be jointly administered and the main case has been assigned case number 09-73830. About Caraustar Industries, Inc. Headquartered in Austell, Georgia, Caraustar Industries, Inc. -- http://www.caraustar.com/-- is one of North America's largest integrated manufacturers of 100% recycled paperboard and converted paperboard products. The Debtors serve the four principal recycled boxboard product end-use markets: tubes and cores; folding cartons; gypsum facing paper and specialty paperboard products. The Company and its affiliates filed for Chapter 11 on May 31, 2009 (Bankr. N. D. Ga. Lead Case No. 09-73830). James A. Pardo, Jr., Esq., and Mark M. Maloney, Esq., at King & Spalding represent the Debtors on their restructuring efforts. The Debtors listed $50 million to $100 million in assets and $100 million to $500 million in debts. CHENIERE ENERGY: Don A. Turkleson Resigns as Senior Vice President ------------------------------------------------------------------ Cheniere Energy Inc. disclosed in a filing with the Securities and Exchange Commission that Don A. Turkleson resigned as senior vice president of the Company effective May 29, 2009. Mr. Turkleson will continue to serve as a director of Cheniere Energy Partners GP, LLC, a subsidiary of the Company and the general partner of Cheniere Energy Partners, L.P. Based in Houston, Texas, Cheniere Energy Inc. (AMEX: LNG) -- http://www.cheniere.com/-- is developing a network of three LNG receiving terminals and related natural gas pipelines along the Gulf Coast of the United States. Cheniere is pursuing related business opportunities both upstream and downstream of the terminals. Cheniere is also the founder and holds a 30.0% limited partner interest in a fourth LNG receiving terminal. Cheniere reported a net loss of $67.4 million for the third quarter of 2008 compared with a net loss of $53.5 million during the corresponding period in 2007. For nine months ended September 30, 2008, the Company reported net loss of $249.6 million compared with net loss of $129.1 million for the same period in the previous year. Unrestricted cash and cash equivalents at September 30, 2008, was $128.3 million of which the majority was held by Cheniere. Cheniere estimates remaining cash expenditures for the Creole Trail pipeline to be $11.0 million from October 2008 through completion. At September 30, 2008, the company's balance sheet showed total assets of $3.0 billion and total liabilities of $3.5 billion, resulting in a stockholders' deficit of $527.1 million. CHRYSLER LLC: Executives, Dealers Go Head to Head Before Senate --------------------------------------------------------------- Josh Mitchell at The Wall Street Journal reports that General Motors Corp. and Chrysler LLC top executives defended their planned dealer cuts before the Senate Commerce Committee on Wednesday. WSJ quoted GM CEO Frederick Henderson as saying, "This is our last chance to get it right, to fix permanently those parts of the business that have diverted us from consistently building winning cars and trucks and the consumer experience to match." Chrysler President Jim Press, WSJ relates, said, "There's not enough business for the number of dealers Chrysler has today given that we have less than two-thirds of our former sales volume." According to WSJ, dealers told the Senate Commerce Committee that the closings won't produce the cost savings claimed by GM and Chrysler, and that the move was being made hastily and without regard to state franchise laws that require manufacturers to compensate affected dealers. WSJ quoted Committee chairperson John D. Rockefeller IV as saying, "I honestly don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves with no real plan, with no real notice, with no real help." WSJ states that the Commerce Committee's top Republican, Kay Bailey Hutchison, threatened in May to hold up a war-funding bill due to the dealer closings. The panel would push for hearings on how the funds are being used to help car makers, WSJ says, citing Rep. Jeb Hensarling, a member of the congressional panel that oversees TARP. 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 Object to Daimler-PBGC Term Sheet --------------------------------------------------------- The Timken Company and Superior Industries Industrial, Inc., join and support the objections filed by filed by GETRAG Transmission Manufacturing LLC and GETRAG Getriebe-Und Zahnradfabrik Hermann Hagenmeyer GmbH & Cie KG, the Committee of Chrysler Affected Dealers, and the Official Committee of Unsecured Creditors against Chrysler LLC and its debtor-affiliates' request for authority to enter into a settlement on the terms set forth in the "Daimler PBGC Binding Term Sheet," dated as of April 27, 2009, among Chrysler LLC; Chrysler Holding, LLC; Daimler AG; the DC Contributors; Cerberus investors CG Investment Group, LLC, and CG Investor, LLC; and the Pension Benefit Guaranty Corporation. GETRAG Transmission Manufacturing LLC and GETRAG Getriebe-Und Zahnradfabrik Hermann Hagenmeyer GmbH & Cie KG hold claims against Chrysler LLC valued at more than $500 million. GETRAG's lawyer, Frank W. DiCastri, Esq., at Foley & Lardner LLP, in Detroit, Michigan, contends that through the request, the Debtors are seeking to strip creditors of potentially valuable rights and claims against non-Debtor entities. He argues that the request's proposed release fails to adequately protect the interests of creditors with potentially valuable claims. The Committee of Chrysler Affected Dealers asserts that the request along with others are a series of integrated requests for relief that, by the Debtors' own admissions, are designed and intended to facilitate the transfer of substantially all of the Debtors' assets to New CarCo Acquisition LLC, pursuant to a Master Transaction Agreement, dated as of April 30, 2009, and certain related documents. The Dealer Committee argues that because the requests are in furtherance of an impermissible sub rosa plan of reorganization, they must be denied. The Official Committee of Unsecured Creditors relates that from its review of an initial draft of the Release contemplated in the Term Sheet, the Creditors Committee understands that the Release will provide the Released Parties with a global and far reaching release of all claims held by the parties -- including a release of claims held by the Debtors against Daimler and certain affiliates, and Cerberus and certain affiliates. The Creditors Committee generally believes that the concessions obtained under the Term Sheet are beneficial to the Debtors' unsecured creditors. At the same time, however, the Creditors Committee is aware that to discharge its fiduciary duty to general unsecured creditors, it must sufficiently investigate whether the concessions obtained from the Released Parties warrant the releases granted to the parties. Daimler-PBGC Binding Term Sheet As reported by the Troubled Company Reporter on May 21, 2009, the Daimler PBGC Binding Term Sheet provides, among other things, that: (a) Daimler will forgive all of its outstanding loan of $1.5 billion to the Debtors under the Second Lien Credit Agreement, and Cerberus will forgive all of its outstanding loan of $500 million to the Debtors under the Second Lien Credit Agreement; (b) Daimler will forgive its outstanding $400 million loan to Chrysler Holding's subsidiary; and (c) Daimler will make scheduled cash contributions of $600 million over a two-year period for the benefit of the Chrysler Pension Plans to reduce shortfalls in the funding of the plans, and it will amend the PBGC Guaranty to reduce the amount to $200 million and continue the amended guaranty after the plans are assigned to New Chrysler, or the New CarCo Acquisition LLC, pursuant to the Fiat Transaction. These payments and continuing guaranty will be made in lieu of any other obligation to contribute to the Chrysler Pension Plans. A full-text copy of the summary of the Daimler PBGC Binding Term Sheet is available for free at: http://bankrupt.com/misc/Chrysler_PBGC_BindingTermSheet.pdf About Chrysler Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The Company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Pursuant to the U.S. Government's Automotive Industry Financing Program, the U.S. Department of the Treasury made emergency loans to General Motors Corp., Chrysler Holding LLC, and Chrysler Financial Services Americas LLC. The Treasury purchased senior preferred stock from GMAC LLC. In exchange, Chrysler and GM submitted restructuring plans to the Treasury on February 17, 2009. Upon submission, President Obama's Designee on the Auto Industry determined that the restructuring plans did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans to comply with the requirements set forth under the Automotive Industry Financing Program. The U.S. Government told Chrysler March 31, 2009, it would provide up to $6 billion in financing if (i) Chrysler and Fiat SpA could complete a deal by the end of April -- on top of the $4 billion Chrysler has already received -- and (ii) Chrysler would obtain concessions from constituents to establish a viable out-of-court plan. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case No. 09-50002). U.S. President Barack Obama said that Chrysler had to file for bankruptcy after the automaker's smaller lenders, including hedge funds that he didn't name -- "a small group of speculators" -- refused to make the concessions agreed to by the Company's major debt holders and workers. In connection with the bankruptcy filing, Chrysler 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: Offers Five-Year, No Interest Loans Through GMAC -------------------------------------------------------------- Mike Ramsey at Bloomberg News reports that Chrysler LLC has begun offering five-year, no-interest loans on some models in its first effort to use new lender GMAC LLC for incentives. Citing Chrysler's volume planning vice president Mike Keegan, Bloomberg relates that Chrysler dealers now have access to retail financing through GMAC, as part of the Company's bankruptcy, and 62% have lines of credit to purchase wholesale inventory. According to Bloomberg, the financing was disclosed on June 3 and runs through July 1. It is an alternative to rebates of as much as $6,000 for customers who purchase through certain credit unions and already own a Chrysler vehicle, Bloomberg relates. "When I look at what we have in inventory, we will be fine through the month of June," Bloomberg quoted Chrysler sales chief Steven Landry as saying. Bloomberg, citing Mr. Landry, states that production isn't set to resume until late June. The deal -- "Zero percent financing for 60 months through GMAC Financial Services on select 2009 model vehicles, or up to $4,000 Consumer Cash on 2009 model vehicles. In addition, current Chrysler LLC vehicle owners are eligible for $1000 Owner Loyalty cash on select 2008 and 2009 Chrysler, Jeep and Dodge vehicles. These offers are in addition to the $1000 Credit Union Bonus Cash on select products for qualified credit union members who finance their new vehicle purchase through a participating Credit Union under the Invest in America program. These incentives are valid through July 1, 2009." 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: Vehicle Owners to Retain Rights to Compensation ------------------------------------------------------------- Attorney General Bill McCollum said that drivers who own Chrysler, Dodge, and Jeep vehicles will retain their Lemon Law rights to compensation for defects under a deal between U.S. states and Chrysler LLC's new owners, The Associated Press reports. Under Florida's Lemon Law, manufacturers must repurchase or replace defective cars and trucks that haven't been fixed after a reasonable number of tries. According to The AP, Mr. said that he and other state attorneys general negotiated the national agreement with Fiat Group SpA before the company takes over Chrysler. Mr. McCollum, The AP relates, also asked Chrysler to honor a Florida law that requires automakers to buy back vehicles and parts when they terminate dealer franchises. Mr. McCollum has filed a motion with the bankruptcy court opposing efforts to override the state laws. In a news release dated June 2, 2009, Attorney General Richard Blumenthal said that Fiat, when it officially takes control of Chrysler's assets, has agreed to honor state lemon laws that protect consumers who may have already purchased defective vehicles. Mr. Blumenthal, in coordination with Department of Consumer Protection (DCP) Commissioner Jerry Farrell, Jr., raised objections in bankruptcy court after Fiat refused to affirmatively agree to honor state lemon laws, or assume product liability, for existing vehicles. In a proposed order by the bankruptcy court, Fiat has agreed to honor rights consumers had under the former Chrysler owners to obtain a refund or replacement vehicle pursuant to the lemon law. Meanwhile, Mr. Blumenthal is considering steps to continue the battle to prevent Fiat from escaping product liability for Chrysler vehicles. Fiat is seeking to escape product liability, which would leave countless Chrysler consumers unprotected and unable to fully pursue claims in court related to defective vehicles, including those severely injured because of defective vehicles. Connecticut's lemon law, like those of many other states, provides additional protection, beyond the manufacturer's warranty, to consumers who purchase defective new vehicles that could not be fixed after a certain number of attempts. "We have turned a lemon law fight into legal lemonade -- winning an agreement that requires Fiat to honor Connecticut's lemon law, providing refunds or replacement cars to consumers with defective vehicles," Blumenthal said. "We cautiously celebrate this victory because the battle to protect consumers must continue vigorously in bankruptcy court. My office will consider steps to fight for Fiat to accept product liability for defective vehicles, particularly when defects cause serious injury. To establish trust and confidence with future consumers -- and treat them fairly -- Fiat must accept accountability, as well as assets from Chrysler. I hope that Fiat will acknowledge product liability -- establishing itself as a good corporate citizen." 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) CITGO PETROLEUM: Fitch Affirms Issuer Default Rating at 'BB-' ------------------------------------------------------------- Fitch Ratings has affirmed the current ratings of CITGO Petroleum Corporation but revised the company's Outlook to Negative from Stable. Fitch has affirmed these ratings for CITGO: -- Issuer Default Rating at 'BB-'; -- Senior Secured Credit Facility at 'BBB-'; -- Secured Term Loan at 'BBB-'; -- Fixed-Rate Industrial Revenue Bonds at 'BBB-'. The Rating Outlook is Negative. CITGO's ratings are supported by the size and complexity of CITGO's three refineries, which total 749,000 bpd of crude distillation capacity and can process a high percentage of lower- cost heavy, sour crude; the strength of the collateral underlying CITGO's secured facilities, which includes its two Gulf Coast refineries plus related working capital accounts; and existing covenant protections for secured lenders, which include limits on distributions to the parent funded from asset sales, a debt-to- capitalization covenant, and an interest coverage covenant. Downsides affecting the rating are significant and include: -- Ongoing deferral of capex linked to ultra low sulfur diesel projects at the Corpus Christi, Texas and Lemont, Illinois refineries (these refineries are now expected to be out of compliance with on-road Ultra Low Sulfur Diesel requirements beyond the June 1, 2010 deadline); -- A high debt-to capitalization ratio (54.3% on March 31, 2009, versus a bank covenant limit of 55%); -- Low liquidity (approximately $352 million in liquidity available on March 31, 2009); -- Growing refinancing risk in the medium term; -- The negative impacts of the global downturn on refined product demand and crude oil differentials. Linkage to parent PDV America (a wholly owned subsidiary of Petroleos de Venezuela SA [PDVSA; IDR 'B+'; Outlook Negative by Fitch]), which is controlled by the Bolivarian Republic of Venezuela, also continues to constrain CITGO's current rating. This strong linkage manifests itself through the dividend policy to PDV America; CITGO's contracts to take Venezuelan crude at its refineries; and frequent management appointments at CITGO. The recent use of CITGO's balance sheet to fund a $1 billion parental requirement also highlights the risk of this linkage. For the LTM period ending March 31, 2009, CITGO generated EBITDA of $1.27 billion and free cash flow of negative $1.15 billion, comprised of cash from operations of $358.6 million, capex of $628 million, and dividends to the parent of $880 million. Total debt with equity credit stood at $2.25 billion, making for debt/EBITDA leverage of 1.80 times (x) and adjusted debt/EBITDAR leverage of 2.80x. As previously stated, the company's debt-to- capitalization ratio remains very close to covenant limits of 55%. Fitch anticipates that the company will remain free cash flow negative at least through 2010 due to weaker refining fundamentals, ongoing pressure to make distributions to the parent, and high pending capex requirements. Current liquidity at CITGO is low. On March 31, 2009, cash and equivalents were just $7.7 million, revolver availability was $110 million, and A/R Securitization facility availability was approximately $234 million for total liquidity of $352 million. Near term maturities for CITGO are light at just $9 million, however, they ramp up quickly thereafter with $420 million due in 2010, $206 million due 2011, and $913 million due 2012. CITGO's pension was underfunded by $332.9 million at year-end 2008, approximately double the level of underfunding seen in 2007. Management expects to contribute $4 million to qualified pension plans and $15 million to fund other postretirement benefits in 2009. CITGO's asset retirement obligation was $23 million, approximately unchanged from levels seen in 2007. CITGO is a crude oil refiner in the U.S. with three modern, highly complex crude oil refineries. Following the sale of its stake in the CITGO-Lyondell joint-venture refinery in Houston, CITGO owns approximately 749,000 barrels per day of crude refining capacity. CITGO branded fuels are marketed through approximately 7,000 independently owned outlets. CITGO is owned by PDV America, an indirect, wholly owned subsidiary of PDVSA. CITY OF MENASHA: Moody's Cuts Rating on $29 Million Bonds to Ba2 ---------------------------------------------------------------- Moody's Investors Service has downgraded the outstanding $29 million of the City of Menasha's (WI) long term debt (both general obligation bonds and note anticipation notes) to Ba2 (on review for possible downgrade) from Baa2 (on review for possible downgrade). Concurrently, Moody's has downgraded the outstanding $14 million of Taxable GO Promissory Notes from MIG 2 to SG, and downgraded the outstanding $5.8 million of the city's water and electric revenue debt from A3 (negative outlook) to Baa2 (on review for possible downgrade). All of the above rating actions follow the Menasha Utilities Commission unanimous decision May 27th to recommend closure of the utility's steam plant, thereby signaling a tangible withdrawal of municipal support for the distressed utility, which had become increasing important to the rating given i) project costs that have escalated to over three times the initial projections, thereby over leveraging the city's appropriation pledge, ii)operating history beset with mechanical/technical issues, iii) unpredictable financial performance resulting from material and uneven variances from the original business plan and iv) recent announcements of pricing disputes and regulatory notice of non-compliance of certain environmental standards. The vote to recommend closure was partly based on the recommendation of an independent consultant, along with the almost complete exhaustion of all options and alternatives to make the steam plant operationally viable and be in a position to repay two series of Steam Revenue BANS maturing September 1 2009. Steam Plant Operating History Never Matched Initial Projections In 2004, the city decided to convert a portion of its electric generation plant into an industrial steam production facility to assist neighboring paper mills that expressed an interest in purchasing steam from a central power plant utilizing coal as the primary fuel. The rational for the project was to help maintain the city's economic base by providing a level of stability to large local employers. The ability to purchase this steam from a central plant would significantly reduce operating costs by allowing them to idle their individual natural gas fired boilers and derive efficiencies through economies of scale- something especially important for an industry which has been and continues to be under strong pricing pressures. Original estimates of the borrowing needs to finance the necessary conversion projected that $12.7 million would be sufficient, with a one year completion time. As the project progressed, the actual costs exceeded original estimates, and significant design changes were made during construction. As a result, the total amount borrowed for the project ballooned from the initial $12.7 million, to over $40 million. Most of the bonded expenses are related to capital costs, but a small portion was used to make a penalty payment for disrupted steam delivery, and to replenish the reserve fund which was tapped in 2007. Roughly $24.1 million of the total debt outstanding is in the form steam revenue BANS which is backed by the city's appropriation pledge - a value which exceeds the steam utility's Reserve fund ($1.8 million in fiscal 2008) and city's debt capacity, (roughly $10 million). The utility's revenues are driven principally by steam sales, behind the meter electric sales, and electric sales in the MISO market. Primary expenditures include coal costs, labor costs, and O&M. Delays in getting all customers online, and mechanical issues with components tied to electrical generation caused 2006 to run a $1.33 million operating deficit and a $2.4 million loss including debt service. During fiscal 2007, the utility found steam utilization estimates consistently coming in under expectations. Projected MISO market revenues also fell well short of expectation (at the time, the utility was in the real time market), partially due to persistent issues with Unit 5, which is responsible for behind the meter sales. These issues continued through most of 2007, resulting in significant negative variances. Concurrent with its revenue pressures, problems with moisture content in purchased coal caused declines in BTU yields, elevating the costs of coal and further aggravating the utility's ability to effectively participate in the MISO market. Such operating pressures required the tapping of its then $1.65 million Reserve Fund to fulfill making the March and September 2007 interest payments on the steam BANS. The Reserve Fund was replenished with a Taxable GO Promissory Note issued in mid 2007. Recognizing the steam utility's weak operating performance, the utility and city took several steps during fiscal 2007 in an effort to reverse the negative trends. Improved 2008 Financial Operations Offset By Pricing Disputes, Regulatory Issues Higher than expected MISO revenues, the benefit of operating under the new coal contract, and somewhat better reliability from Unit 5 allowed for improvement in operating performance during fiscal 2008. An analysis of the utility's monthly cash flows (un- audited) shows operating revenues were up across all categories, with steam sales (72% of operating revenues) up roughly 3% in fiscal 2008, and behind the meter sales up 2%. Most favorably, MISO revenues, which comprises just under 25% of operating revenues, enjoyed a strong 40% increase. While consultant and other professional services were notably higher at the end of fiscal 2008 (driven by utility's use of outside services for addressing it operating issues), the benefits of the new coal supply contract were realized for the entire year, allowing for total operating and administrative expenses to actually decline 1%. This resulted in a $1.5 million improvement in net revenues (before lease expenses) available for debt service to $2.92 million in 2008. Unlike 2007, both the March and September 2008 interest payments were made from the steam utility's own resources without the support of the Reserve Fund. Favorably, the $2.9 million of net revenues also indicated the system would make its 1.2 times rate covenant on original pro-forma estimated debt service on the long term steam revenue bonds, which assumed $22.8 million of principal amortized over 15 years (slightly less that the value that would be required should the two steam revenue BANS be issued). While the 2008 net revenues would not be sufficient to cover all projected debt service obligations, including both revenue and general obligation, which was estimated to be over $4.0 million per year in total, projections indicated improving performance that would allow the system to support all debt service beginning 2016. While the 2008 results were an improvement, that view should be tempered with recognition that the steam is contractually priced below optimal levels, and consumption is running about 15% below projections. Further, while MISO revenues have been a mitigating factor, experience has shown these revenues can be volatile. Further, the favorable 2008 operating results appear to be unsustainable due to more recent developments. In February 2009, the city filed a material event notice disclosing that it was involved with pricing disputes with two of its three steam customers (Whiting and Sonoco). Whiting filed a formal complaint, alleging $90,000 in over charges. Sonoco, by far the largest customer accounting for roughly 90% of consumption, also has announced a notice of claim, alleging $2.2 million in overcharges. The Sonoco matter has not formally been settled. The claim of both customers is that the utility charged steam prices in excess of the contractual fee schedules in order for the utility to achieve its rate covenant. On March 16, 2009, the arbitrator awarded Whiting $100,000 and ordered future pricing to comply with the terms of its contract. There is no outcome to date on the Sonoco matter, but is likely to also result in a one-time payment as well as materially change the evaluation of the 2008 financial performance, and projected net revenues going forward. Further complicating the city and utility's efforts to create a viable plan is a notice of violation from the Wisconsin Department of Natural Resources asserting the utility failed to use the best available clean technology during the conversion process. This action prompted the Sierra Club to file suit, and the US EPA to formally request information on the issue. Cost estimates to reach environmental compliance have been placed between $1-1.5 million. When the conversion was under taken during 2005- 2006, the state had indicated all environmental requirements were satisfied, but the issue was later revisited by the state resulting in the notice of violation. Given the financial condition of the utility, it is not likely it would be able to bear any more debt service to fund required environmental capital outlay. Recommendation To Close Steam Plant Result Of Last Attempts At Viability Falling Short; Future Rating Directions Dependant On Specifics Of Unwinding And Recovery While the steam revenue BANS were ultimately secured by the planned issuance of long term steam revenue bonds which the city had declared its intention covenanted to issue, in addition to the income and revenues of the steam utility, Menasha lent its appropriation pledge in the event net revenues of the utility are not sufficient to pay the principal and interest on the BANS from its annual general tax levy, or other available funds, including surplus funds of the city's combined electric and water utility (subject to Public Service Commission approval and any applicable levy limits). Bond counsel has opined that since the electric and water bond resolutions are closed loop, the surplus funds of the electric and water utility would not be available until all the electric and water revenue bonds are retired. Menasha's general obligation rating was downgraded and placed under review for possible further downgrade April 6th 2009 based on the aforementioned intensifying technical and operational difficulties of the steam utility. Material event notice #4 was filed April 27th, containing an independent consultant's report which assessed the city and utility's options. The report concluded the steam utility should be closed to prevent any additional burden being placed on the city and utility in their efforts to make the plant viable. This recommendation was primarily based on the capital costs already incurred creating an unsupportable annual debt service requirement given the current contractual arrangement with the three existing customers. For the last two years, the city has attempted with no success to renegotiate the steam supply contracts for a higher cost recovery. Concurrent with those efforts, Menasha also conducted outreach with SCA, a large industrial user of steam which had originally expected to become a customer early in the steam plant conversion, but who eventually opted to continue with self-generation. Following the release of the consultant's recommendation, city officials continued to solicit the addition of SCA as a customer, but on May 12, SCA publicly announced it was not considering becoming a municipal steam customer due to the additional capital costs required for hook up, but most importantly, the cost of self steam generation with their natural gas fired boilers is projected to still be very cost efficient for the next several years (a statement echoed by Sonoco -- the largest of the three current customers). Following private discussions with SCA, Menasha officials conceded the closure of the steam plant was very likely. The Utilities Commission voted 5-0 May 27th to recommend closing the plant, targeting a July 3 2009 closure date. The final decision of closure would need city council approval. A June 3 city council meeting is set to hire a work out counsel to identify options for city council consideration. The current rating action on the city's long term general obligation rating and corresponding downgrade of the Taxable GO Promissory Notes to SG from MIG 2 is due to the increasing likelihood of a default on the September 1 2009 maturity of the Steam Revenue BANS. Moody's recognizes Menasha's past commitment to the steam utility's operations and repayment of debt as demonstrated by the honoring of its appropriation pledge in 2007 to replenish the utility's reserve fund as well as continual exploration of all available options including seeking outside counsel to make the utility viable. However, given the disclosure in the material event notices, limited financial flexibility to fulfill its appropriation pledge, and withdrawal of support of the steam plant via the recommendation for closure, the likelihood for default on the Steam Revenue BANS has increased significantly. It is estimated roughly $5 million in closure costs will have to be incurred- covering Sonoco's pricing dispute, final operational costs, and termination expenses. To date, it is unclear what assets will be available for holders of the Steam Revenue BANS, and what additional contributions, if any, the city could, and will make. A number of work-out scenarios are being contemplated, but it is unclear what the exact value to note holders would be. The future direction of the city and utility's ratings is directly dependant on the manner, timing, and recovery value for note holders. The city did recently get approval for $7 million of state trust fund loans, and intends to seek and receive approval for the remaining amount of steam related GO debt coming due on the Taxable GO Promissory Notes, and Note Anticipation Notes (coming due 2011). The downgrade of the combined utility revenue bond rating reflects the overlapping nature of the utility's management and proximity of the electric and water utility to the work out process that is unfolding on the steam utility. The investment grade rating is retained given the regulatory protections inherent in both the electric and water utility's operations, but the rating is placed under review for possible downgrade pending the final outcome of the steam utility proceedings. The last rating action on the city of Menasha was on April 6, 2009. CLOVERLEAK ENTERPRISES: Case Summary & 18 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Cloverleaf Enterprises, Inc. dba Rosecroft Raceway 6336 Rosecroft Drive Fort Washington, MD 20744 Bankruptcy Case No.: 09-20056 Type of Business: The Debtor operates a horse race track. See http://www.rosecroft.com/ Chapter 11 Petition Date: June 3, 2009 Court: District of Maryland (Greenbelt) Debtor's Counsel: Nelson C. Cohen, Esq. ncohen@zuckerman.com Zuckerman Spaeder LLP 1800 M Street, N.W., Suite 1000 Washington, DC 20036 Tel: (202) 778-1800 Fax: (202) 822-8106 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Maryland Jockey Club of memorandum of $1,240,489 Baltimore City understanding 5201 Park Heights Avenue Baltimore, MD 21215 United States Treasury taxes $150,000 Cincinnati, OH 45999-0039 Prince Georges County liquor license $19,910 Government Board of License Commissioners 5012 Rhode Island Avenue Hyattsville, MD 20781 Group Benefit Services $11,758 Amtote International, Inc. contract $11,200 Delmarva Cleaning & $10,301 Maintenance, Inc. Daily Racing Form trade debt $9,686 Otis Elevator Co. $6,987 International Sound $6,660 Corporation UFCW Local 152 Health & $4,292 Welfare News One trade debt $3,395 Ameritel Corporation $3,020 G.S. Proctor & Associates Inc. $3,000 UGI Energy Services, Inc. Gas $2,925 Roberts Communication $2,250 Network Loyal Restroom Service $1,488 Adopt a Highway Maintenance $1,380 Corp. Larcom & Mitchell Co., Inc. $1,298 The petition was signed by Kelley Rogers, president. CONCORDIA EARLY LEARNING: Voluntary Chapter 11 Case Summary ----------------------------------------------------------- Debtor: Concordia Early Learning & Preschool Academy Inc. 5006 Highway 155 North Stockbridge, GA 30281 Bankruptcy Case No.: 09-74338 Chapter 11 Petition Date: June 2, 2009 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Cheryl Braziel, Esq. 6175 Grovecrest Way Austell, GA 30168 Tel: (678) 365-8222 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company says it does not have unsecured creditors who are not insiders when they filed their petition. The petition was signed by Vurnella Ellis-Dickerson, CEO of the Company. CONSTAR INT'L: Compensation Committee Okays Annual Incentive Plan ----------------------------------------------------------------- Walter S. Sobon, executive vice president and chief financial officer of Constar International Inc., disclosed in a regulatory filing with the Securities and Exchange Commission that on May 26, 2009, the Compensation Committee of the Company's Board of Directors adopted and approved the Constar International Inc. Annual Incentive Plan, which replaces the Company's Annual Incentive and Management Stock Purchase Plan. A full-text copy of the AIP is available for free at: http://researcharchives.com/t/s?3d96 If a bonus is awarded under the AIP, it is paid 50% in cash as soon as practicable, and the remaining 50% is deferred for one year at a 5% interest rate, compounded on a daily basis. Plan participants are fully vested in the Deferred Bonus and any interest credited to the Deferred Bonus. The Deferred Bonus -- including the interest credited to such amount -- will be distributed to the participant in cash after a one year period. Additionally, if a bonus is awarded under the AIP the Company will credit each participant's account under the Plan with a matching contribution equal to the Deferred Bonus. The balance of a participant's matching account shall be credited with a 5% interest rate. Provided the participant remains employed by the Company, the Matching Contribution for any given year will vest and be distributed in full three years after the date that such Matching Contribution was credited to a participant's matching account. If a participant voluntarily terminates employment with the Company -- other than for retirement -- or the Company terminates the participant for cause, the participant shall forfeit any unvested Matching Contribution and shall have no rights with respect to such Matching Contribution. If the participant voluntarily terminates due to retirement or the participant is involuntarily terminated by the Company without cause, the participant will become vested in a prorated amount of the Matching Contribution on the basis of the number of fully completed years of service during the vesting period over three. If the participant terminates due to death or disability, the participant will become fully vested in each Matching Contribution made under the AIP. Additionally, provided the participant remains employed by the Company on the date of a change in control, each Matching Contribution will become immediately and fully vested. Upon a change in control, or upon the participant's termination of service with the Company, all of the Participant's vested Matching Contributions and Deferred Bonus shall be distributed. Until distribution, all amounts credited under the AIP shall be subject to the general creditors of the Company. Because payouts under the AIP depend on future corporate performance, the actual amounts the Company will pay under the AIP for fiscal year 2009 or future years are not yet determinable. In a separate regulatory filing, the Company also delivered to the SEC a registration statement that registers under Section 12(g) of the Securities Exchange Act of 1934, as amended, the common stock, $0.01 par value of Constar International Inc. With the Company's emergence from Chapter 11 bankruptcy proceedings, the Company's common stock outstanding prior thereto is cancelled and the Company will issue new shares of Common Stock pursuant to the Second Amended Joint Plan of Reorganization, as Further Modified, Pursuant to Chapter 11 of the United States Bankruptcy Code. The Common Stock will be governed by the Company's Restated Certificate of Incorporation to be filed by the Company with the State of Delaware and its Amended and Restated Bylaws, both of which will become effective upon the Company's emergence from the Bankruptcy Proceedings. A full-text copy of the Company's disclosure is available for free at: http://researcharchives.com/t/s?3d97 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 December 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. The Debtors completed their financial restructuring and successfully emerged from Chapter 11 on May 29, 2009. CONTECH LLC: Loses Major Client, Feels Pinch of GM Bankruptcy ------------------------------------------------------------- Jimmy Settle at The Leaf-Chronicle reports that Gregg Adams, local director of operations for Contech LLC, said that the Company has lost a key customer that represents 55% of its sales in its plant. Citing Mr. Adams, Leaf-Chronicle relates that Contech is stopping production by July 13, as the Company tries to finalize its sale to Revstone. According to Leaf-Chronicle, Contech is also feeling some of the pinch of General Motors Corp.'s Chapter 11 bankruptcy. The report states that GM is reducing production of its trucks and SUVs, for which Contech made rack-and-pinion steering components. Leaf-Chronicle quoted Mr. Adams as saying, "Production is ceasing from (Tuesday) until the week of July 13, but we're not closing our doors. We'll have a minimal work force here until that time. But our plan is to emerge as a strong, stable company, and the goal is to grow it back to full speed after the sale of the company is finalized." Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com/-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The Company also manufactures safety steel forged automotive components and tube fabrications primarily for commercial trucks. The Company and two of its affiliates filed for Chapter 11 protection on January 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09-42392). Richard A. Chesley, Esq., and Kimberly D. Newmarch, Esq., at Paul, Hastings, Janofsky & Walker, LLP, are the Debtors' counsel. Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., serve as local counsel. Kurtzman Carson Consultants LLC is the claims, noticing and balloting agent for the Debtors. In its bankruptcy petition, Contech said its assets and debts are both between $100 million and $500 million. CONTINENTAL ALLOYS: Liquidity Pressure Cues Moody's Junk Rating --------------------------------------------------------------- Moody's Investors Service downgraded Continental Alloys & Services, Inc.'s Corporate Family Rating to Caa2 from B3, its Probability of Default Rating to Caa2 from Caa1 and its senior secured bank credit facilities to Caa2 (LGD4, 51%) from B3 (LGD3, 34%). The rating outlook is negative. The downgrade reflects the increased pressure on Continental's liquidity and earnings. Extremely weak operating results, which began late in the first quarter of 2009 and which Moody's believe will likely continue into 2010, could result in covenant violations as soon as the end of the second quarter of 2009. Continental's earnings are reliant on the demand for completion products and tools, which in turn is highly volatile and cyclical. The dramatic drop in upstream exploration and production spending in North America, where a vast majority of Continental's earnings are derived from, has severely impacted demand for the company's products. In addition to the top-line tumbling, margins have suffered significantly due to a large inventory overhang caused by long lead time items ordered late in the last up-cycle when steel prices were substantially higher. The negative outlook reflects the weak oilfield services sector outlook, which Moody's expect to continue into 2010, and the company's liquidity and covenant issues, which could also continue into 2010. Furthermore, the outlook reflects Continental's substantial inventory overhang. The ratings could face further negative pressure if the company is unsuccessful in obtaining an amendment or waivers for its covenants, or if the sector downturn results in prolonged weak operating performance. The last rating action was on November 6, 2008, when Moody's downgraded Continental's ratings over earnings and liquidity concerns. Continental Alloys & Services, Inc., is a materials supplier to the energy service industry and is headquartered in Spring, Texas. DALLAS TIGERMARK: Involuntary Chapter 11 Case Summary ----------------------------------------------------- Alleged Debtor: Dallas Tigermark, LP 2801 Flower Mound Road Flower Mound, TX 75022 Case Number: 09-41786 Involuntary Petition Date: June 2, 2009 Court: Eastern District of Texas (Sherman) Judge: Brenda T. Rhoades Petitioner's Counsel: Clay M. Taylor, Esq. clay_taylor@khh.com Kelly, Hart & Hallman 201 Main Street, Suite 2500 Ft Worth, TX 76102 Tel: (817) 332-2500 Fax: (817) 878-9280 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Robert Bailey loans $247,664 P.O. Box 10926 Midland, TX 79702-7926 Kevin Butler loans $247,664 P.O. Box 1171 Midland, TX 79702 James Woodcock loans $247,664 2003 Humble Avenue Midland, TX 79705 DAVID DE LA FUENTE: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: David De la Fuente aka David de la Fuente Masriera aka David Masriera de la Fuente 2201 Second Street Eagle Pass, TX 78852 Bankruptcy Case No.: 09-52048 Chapter 11 Petition Date: June 1, 2009 Court: United States Bankruptcy Court Western District of Texas (San Antonio) Judge: Chief Bkptcy Judge Ronald B. King Debtor's Counsel: Albert William Van Cleave, III, Esq. 1520 W. Hildebrand San Antonio, TX 78201 Tel: (210) 341-6588 Total Assets: $4,171,527 Total Debts: $76,121 The Company says it does not have unsecured creditors who are not insiders when they filed their petition. The petition was signed by Mr. De la Fuente. DOMTAR CORPORATION: Moody's Assigns 'Ba3' Rating on Senior Notes ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Domtar Corporation's proposed senior unsecured guaranteed notes offering due 2017 and affirmed the company's existing Ba2 corporate family rating, Baa3 senior secured rating, Ba3 senior unsecured rating and SGL-1 speculative liquidity rating. The rating outlook is stable. The net proceeds from Domtar's proposed notes offering will be used to fund the recently announced cash tender offer for the company's outstanding 7.875% Notes due 2011 not funded with cash on hand and for general corporate purposes. The new notes will be senior unsecured obligations of Domtar and will rank pari passu with all present and future senior unsecured indebtedness of the company and the guarantors. The Ba3 rating on the proposed notes is in line with the rating on the company's existing senior unsecured notes which benefit from unsecured guarantees from each of Domtar's subsidiaries that provide guarantees under the company's secured bank facilities, however, are notched below the Ba2 corporate family rating due to their effective subordination to the secured debt. Domtar's Ba2 corporate family rating reflects the company's significant position as the largest fine paper producer in North America, its favorable cost position within the industry and management's commitment to debt reduction. The company has good committed liquidity arrangements with no near term debt maturities and the proposed note offering will further extend the maturity of the company's debt. Offsetting these strengths are declining demand for fine paper and weakening paper prices that are expected to constrain operating margins and free cash flow generation. Credit challenges also include the company's lack of product and geographic diversification, and the volatile pricing for both fine paper and lumber. The stable rating outlook reflects Moody's expectations that falling demand and weakening prices will be partially offset with lower input costs and other anticipated cost savings. The SGL-1 liquidity rating indicates that Domtar has very good liquidity supported by expectations of modest internally generated cash flow with no significant near-term debt maturities or dividend payments, a substantial committed credit facility, adequate cash balance, and expectations that financial covenant compliance will not be problematic for the next four quarters. The company also has alternative assets such as its wood products business, forestlands, hydro assets, and idled mills that can be sold to augment liquidity. Downgrades: Issuer: Domtar Corporation -- Senior Secured Bank Credit Facility, Downgraded to LGD2, 23% from LGD2, 21% -- Senior Unsecured Regular Bond/Debenture, Downgraded to LGD5, 75% from LGD5, 74% Assignments: Issuer: Domtar Corporation -- Senior Unsecured Regular Bond/Debenture, Assigned a range of 75 - LGD5 to Ba3 -- Senior Unsecured Regular Bond/Debenture, Assigned Ba3 Moody's last rating action was on Domtar was on August 13, 2008, when Moody's upgraded Domtar's corporate family rating to Ba2 from Ba3. Headquartered in Montreal, Quebec, Domtar Corporation is the largest producer of uncoated freesheet paper in North America and the second largest in the world. The company also operates a paper distribution business and produces lumber and other wood products. DOMTAR CORP: S&P Affirms 'BB' Long-Term Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed the ratings, including the 'BB' long-term corporate credit rating, on uncoated free sheet producer Domtar Corp. The outlook is negative. S&P bases the affirmation on Domtar's US$250 million bond offering due 2017, the proceeds of which S&P expects the company to use to replace part of its 7.875% notes outstanding due 2011, and for general corporate purposes. "The ratings on Domtar reflect our view of the company's leading market position in the North American UFS market and good cost profile," said Standard & Poor's credit analyst Jatinder Mall. "The ratings are constrained, however, by what S&P see as a steady decline in demand for UFS; volatile prices for commodity paper, pulp, and lumber products; and a weak lumber business," Mr. Mall added. With about 33% of industry capacity, Domtar is the largest UFS manufacturer in North America. It has 4.2 million short tons of integrated fine paper capacity at 11 pulp and paper mills. The majority of its paper capacity is in the U.S.; Domtar also manufactures and sells coated groundwood paper, pulp, and lumber. The negative outlook reflects Standard & Poor's expectations that weak product demand and lower prices in all of Domtar's business segments will place pressure on its credit metrics in 2009. While S&P expects the leverage ratio for 2009, excluding alternative fuel tax credits, to be above the previously stated target of 4x for a downgrade, this is countered by an increase in cash flows due to alternative fuel tax credits, good liquidity, and anticipated debt reduction. S&P could lower the ratings if the company is unable to reduce debt as stated and market conditions were to worsen leading to significantly lower-than-expected EBITDA generation, and if the leverage ratio were to be above 4x including alternative fuel tax credits. An upgrade is unlikely in the near term and would likely require a combination of Domtar improving its profitability and further deleveraging to about 2.5x. DOWLING COLLEGE: Moody's Maintains 'B1' Rating on Two Bonds ----------------------------------------------------------- Moody's maintains the B1 rating on Dowling College's (NY) Series 1996 and 2002 bonds on watchlist for possible downgrade. The rating applies to $15.7 million of rated debt. The Series 2002 bonds were issued through the Town of Brookhaven Industrial Development Agency, and the Series 1996 bonds were issued through the Suffolk County Industrial Development Agency. In the near term, Moody's intend to closely monitor the College's fall 2009 enrollment levels, the impact of a 12.5% tuition increase on near- term student demand, FY 2009 final operating results, and the levels of unrestricted liquidity, in light of continued dependence on an operating line of credit which matures in October 2009. Legal Security: The Series 1996 and 2002 bonds are general obligations of the College and feature debt service reserve funds. The Series 2002 bonds are further secured by a first leasehold mortgage and security interest in the financed facility, a residence hall on the Shirley (Brookhaven) campus. The College's $38.5 million of Series 2006 bonds (not rated by Moody's) are a general obligation of the College and also have a debt service reserve fund. They are secured by a first mortgage lien and security interest in the College's Oakdale and Shirley campuses and property, excluding the residential facility financed with the Series 2002 bonds. The Series 2006 bonds have a subordinate mortgage lien and security interest in the Series 2002 facility. Per the Series 2006 Sublease between the College and the issuing authority, under certain circumstances (defined as Triggering Events in the Sublease), the College's Gross Revenues, excluding 2002 Facility Revenues pledged to the Series 2002 Trustee to secure the principal amount of the Series 2002 Bonds, would be directed to the Series 2006 trustee. Debt service on the Series 2006 bonds would first be paid from Gross Revenues, before other operating costs of the College. In Moody's opinion, the Series 1996 and 2002 bonds have a weaker legal security than the Series 2006 bonds. Triggering Events include breach of a financial covenant to maintain $4 million of unrestricted liquid funds (excluding debt service reserve funds) tested every 3/31 and 9/30. As of 3/31, Dowling's management reported that it met this financial covenant with $6.7 million of unrestricted liquidity. Debt-Related Rate Derivatives: None Challenges * Very thin liquidity and reliance on $2 million operating line for seasonal cash flow. Management reports $6.7 million of unrestricted liquidity as of March 31, 2009, compared to a sizeable amount of outstanding debt ($66.7 million in FY 2008) and a large expense base ($73.5 million of expenses in FY 2008). The College relies heavily on a $2 million operating line of credit from TD Bank for operating cash flow needs throughout the year. The line of credit expires on October 31, 2008, and the College expects to fully draw on the line by end of June/early July. * Challenging student market position, as evidenced by past enrollment declines and weak freshmen selectivity and matriculation levels. In fall 2008, Dowling enrolled a combined 4,376 full-time equivalent students at its two campuses on the southern shore of Long Island, NY (compared to 4,798 FTE in fall 2005). In fall 2008, Dowling accepted 79% of freshmen applicants and 23% of those accepted chose to enroll, highlighting a significant amount of competition from both other local private and public universities. For fall 2009, Dowling anticipates increasing its sticker price by 12.5%, a relatively high level especially given the current economic climate, although management believes that the College is priced lower than many of its Long Island peers and has additional pricing flexibility. Moody's will monitor the impact of this tuition increase on student demand, the correlated increase in institutional financial aid, and the ultimate impact on net tuition revenue generation. * Pressured operating performance (5.4% operating deficit in FY 2007 and 1.7% deficit, by Moody's calculation, in FY 2008) as the College continues to work through past enrollment declines, including a notable drop off in the size of the fall 2006 entering freshmen class. Operating cash flow is thin and provides weak coverage of annual debt service responsibilities (0.5 times in FY 2007 and 1.1 times in FY 2008). The College's FY 2009 operating performance is pressured and worse than budget, largely a result of investment losses and a significant increase in institutional financial aid over FY 2008 levels. Management projects that the College will have a decline in net assets in FY 2009, possibly in the $1-2 million range. * Heavy reliance on student charges (92% of FY 2008 revenue base). Stable to growing enrollment is essential to the College's credit profile, as even a slight unexpected decline in enrollment levels, due to either deterioration of recruitment or retention, could result in significant operating pressure. Strengths * Although the College's net tuition revenue declined 2.3% in FY 2007 due to overall enrollment declines in fall 2006, net tuition revenue increased 4.3% in FY 2008. Further, net tuition on a per student basis has grown in each of the past five years with $13,867 of net tuition per student in FY 2008. Based on unaudited financial data, Moody's believes that net tuition revenue (net of institutional aid) increased approximately $2.8 million in FY 2009 over FY 2008. * No near-term capital or borrowing plans. Key Indicators (FY 2008 audited financial data and fall 2008 enrollment data unless otherwise noted): * Total Full-Time Equivalent Enrollment: 4,376 FTE students * Total cash and investments (including $4.5 million of debt service reserve funds): $12.7 million * Total cash and investments as of March 31, 2009 (unaudited data, excludes debt service reserve funds): $9.8 million * Direct Debt: $66.7 million * FY 2008 Operating Margin: -1.7% * FY 2008 Operating Cash Flow Margin: 7.6% * FY 2008 Annual Debt Service Coverage: 1.1 times * Reliance on Student Charges: 91.7% Rated Debt: * Series 1996 and 2002: B1 rating The last rating action was on December 22, 2008, when Dowling College's rating was maintained on watchlist for possible downgrade. EDCO PROPERTIES: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Edco Properties, Inc. successor in interest by merger for Callis Crossing, LLC 6510 Stage Road, Suite 1 Memphis, TN 38134 Bankruptcy Case No.: 09-25959 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Ivy Trails, LLC fka Foxtrail, LLC 09-25960 College Station, LLC 09-25961 Creekview, LLC 09-25962 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Western District of Tennessee (Memphis) Judge: George W. Emerson Jr. Debtor's Counsel: Toni Campbell Parker, Esq. P.O. Box 240666 Memphis, TN 38124-0666 Tel: (901) 483-1020 Email: tparker001@bellsouth.net Estimated Assets: $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 6 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/tnwb09-25959.pdf The petition was signed by W. Terry Edwards, president of the Company. EL POLLO: Moody's Withdraws 'B1' Rating on Senior Facilities ------------------------------------------------------------ Moody's Investors Service upgraded El Pollo Loco, Inc.'s Speculative Grade Liquidity rating to SGL-3 from SGL-4, recognizing the benefit on liquidity from the recently completed refinancing. The SGL-3 reflects Moody's expectation of adequate liquidity throughout the next twelve months. Concurrently, Moody's withdrew the rating of the pre-existing senior secured credit facilities at B1 after they were repaid upon the consummation of the refinancing. All the other ratings, including the Caa1 Corporate Family Rating and negative outlook, remain unchanged. The rating action is: Rating upgraded: * Speculative Grade Liquidity rating -- to SGL-3 from SGL-4 Ratings withdrawn: * $25 million senior secured revolving credit facility due 2010 -- B1(LGD2, 19%) * $99 million senior secured term loan due 2011 -- B1 (LGD2,19%) Ratings unchanged: * Corporate Family Rating -- Caa1 * Probability of Default Rating -- Caa1 * $12.5 million 1st lien senior secured revolving credit facility due 2012, B1 (LGD1,1%) * $132.5 million 2nd lien senior secured notes due 2012, B2 (LGD2, 25%) * $125 million ($106.5 million outstanding) senior unsecured notes due 2013, Caa2 (LGD5, 70%) * Outlook: negative The last rating action on El Pollo occurred on May 14, 2009, when Moody's rated the company's $132.5 million new second lien senior secured notes due 2012 at B2 and affirmed CFR at Caa1, among other related actions. El Pollo Loco Inc, headquartered in Irvine, California, is a quick-service restaurant chain specializing in flame-grilled chicken and other Mexican-inspired entrees. The company operates or franchises approximately 417 restaurants primarily around Los Angeles and throughout Southwestern U.S., and generated total revenues of approximately $298 million in the last twelve months ended March 31, 2009. EMPIRE RESORTS: Amends Loan Pact to Extend Maturity to June 30 -------------------------------------------------------------- Empire Resorts, Inc., amended its Loan Agreement dated January 11, 2005, with Bank of Scotland and certain other lenders. The Loan Agreement Amendment, dated as of May 29, 2009, among other things: (i) extends the maturity date of the Loan Agreement from May 29, 2009, to June 30, 2009; and (ii) provides that the Company will pay all reasonable out-of- pocket costs and expenses of Bank of Scotland incurred from time to time in connection with obtaining appraisals or valuations of the collateral. In connection with the Amendment, the Company reduced the outstanding principal loan amount issued pursuant to the Loan Agreement to approximately $6.9 million and has agreed to promptly seek a commitment from a new lender to purchase or refinance the Loan and to provide Bank of Scotland with written evidence of an unconditional and binding commitment by the party on or prior to June 20, 2009, to close that refinancing no later than June 30. A full-text copy of the Amendment No. 5 to the Bank of Scotland Loan Agreement is available for free at: http://ResearchArchives.com/t/s?3d86 About Empire Resorts Based in Monticello, New York, Empire Resorts, Inc. -- http://www.empireresorts.com/-- operates the Monticello Gaming & Raceway and is involved in the development of another gaming resort project in the Catskills. Going Concern Doubt In its 2008 annual report filed in March 2009, the Company said its ability to continue as a going concern is dependent upon its ability to negotiate a renewal or extension of the maturity dates or to arrange financing to repay its credit facility with the Bank of Scotland when it matures on May 29, 2009, and the holders of the Senior Convertible Notes if they demand repayment of the notes on July 31, 2009. The Company said there is no assurance that it will be successful in obtaining a result that will avoid a default on its obligations under its credit facility or the terms of the Senior Convertible Notes. Friedman LLP in New York, the Company's independent registered public accounting firm, included an explanatory paragraph in its report dated March 13, 2009, regarding its concerns about the Company's ability to continue as a going concern. The Company entered into a credit facility with Bank of Scotland on January 11, 2005. The credit facility provides for a $10 million senior secured revolving loan. In addition, the Company issued on July 26, 2004, about $65 million of 5.5% senior convertible notes presently convertible into approximately 5.2 million shares of common stock, subject to adjustment upon the occurrence or non-occurrence of certain events. The notes were issued with a maturity date of July 31, 2014, and the holders have the right to demand that we repurchase the notes at par plus accrued interest on July 31, 2009. Interest is payable semi- annually on January 31 and July 31. As of December 31, 2009, the Company had $49.0 million in total assets and $81.4 million in total liabilities, resulting in $32.3 million in stockholders' deficit. The Company posted $10.6 million in net loss for the year on $67.2 million in net revenues. FANNIE MAE: Regulator Won't Put Firm Into Receivership ------------------------------------------------------ Jessica Holzer at Dow Jones Newswires reports that Federal Housing Finance Agency Director James B. Lockhart, the regulator for Fannie Mae and Freddie Mac, said that he isn't considering putting the companies into receivership. Citing Mr. Lockhart, Dow Jones relates that U.S. officials decided against putting Fannie Mae and Freddie Mac into receivership before seizing the companies last year and putting them into conservatorship. Dow Jones quoted Mr. Lockhart as saying, "At this point, we are not contemplating receivership and I really don't see the advantage of receivership versus conservatorship." Dow Jones states that Mr. Lockhart said, "The best way to conserve assets for Fannie and Freddie is by aggressively modifying loans, refinancing loans and ensuring liquidity in the housing market." According to Dow Jones, Mr. Lockhart said that the companies own or guarantee $5.4 trillion of mortgage loans. The U.S. government, says Dow Jones, has agreed to inject up to $200 billion into Fannie Mae and Freddie Mac to keep them afloat, but it has stopped short of explicitly backing the companies' debt. Mr. Lockhart explained that there was "no reason at this point to make that explicit" because the government backstop had provided "an effective guarantee," Dow Jones relates. Dow Jones states that the regulator will lay out three potential roles for the future of Fannie Mae and Freddie Mac before a House panel. Fannie Mae and Freddie Mac could be reconstituted as liquidity providers of last resort for the secondary market for mortgage- backed securities, or MBS, Dow Jones says, citing Mr. Lockhart. The report states that Fannie Mae and Freddie Mac could be cast as guarantor or catastrophic risk insurer of MBS, or they could direct subsidies to lessen the cost of mortgage credit for certain borrowers. FNC Endorses Fannie Electronic Appraisal Delivery Initiative In response to inquiries from its mortgage lender and appraiser clients, officials of mortgage technology company FNC, Inc., said that it fully supports Fannie Mae's Announcement 09-14, which requires lenders to submit electronic appraisal data when selling loans to Fannie Mae. FNC believes initiatives like this will contribute to better risk assessment and improved transparency in both the primary and secondary mortgage industries. According to Announcement 09-14, Fannie Mae will require lenders selling mortgages to it to electronically submit MISMO XML appraisal data from all real estate appraisals as of March 1, 2010. FNC clients who use Fannie Mae's systems receive appraisal reports submitted in a secure electronic XML format called AI Ready(TM). These lenders' systems can automatically create and deliver the MISMO XML appraisal data to Fannie Mae. "Clients who use FNC's Collateral Management System(TM), Collateral HQ(TM) or AppraisalPort(R) systems to manage their loan origination processes should not be affected when the new rules take effect," said Neil Olson, FNC chief legal officer. For years, FNC has securely processed millions of appraisal reports annually on behalf of its lender clients using the secure AI Ready XML format. Since 1998, when AI Ready was created in conjunction with the Appraisal Institute, it has been the appraisal industry's most widely accepted residential appraisal XML standard. As a founding member and long-term participant in the MISMO standards development workgroups, FNC endorses the move toward data-centric loan file submission and improved transparency at the loan level for all participants in the mortgage market. AI Ready XML tools are licensed and integrated by all major appraisal form software packages, providing the industry with a commercially proven solution that supports Fannie Mae Announcement 09-14. Fannie Sells $1BB in Bills at Lower Interest Rates Reuters relates that Fannie Mae said on Wednesday that it sold about $1 billion in bills at lower interest rates, compared with sales of the same maturities a week ago. According to Reuters, Fannie Mae sold $500 million of three-month bills due September 2 at a stop-out or lowest accepted rate of 0.125% and $500 million of six-month bills due December 2, 2009, at a 0.248% stop-out rate. About Fannie Mae The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) -- commonly known as Fannie Mae, is a shareholder-owned U.S. government-sponsored enterprise. Fannie Mae has a federal charter and operates in America's secondary mortgage market, providing mortgage bankers and other lenders funds to lend to home buyers at low rates. Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. The government established Fannie Mae to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. In 1968, Fannie Mae was re-chartered by the U.S. Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Fannie Mae is the U.S. largest mortgage buyer, according to The New York Times. 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 FEDERAL-MOGUL CORP: S&P Downgrades Corporate Credit Rating to 'B+' ------------------------------------------------------------------ Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Federal-Mogul Corp. to 'B+' from 'BB-'. S&P also lowered the ratings on the company's senior secured debt; the recovery ratings are unchanged. The outlook is negative. The downgrade reflects S&P's view that lower auto production and weak consumer spending will pressure Federal-Mogul's revenues and profitability, making it unlikely that the company will be able to achieve credit measures appropriate for the previous rating. Although Federal-Mogul has a well-diversified geographic footprint and end markets, the depth and duration of the global recession pushed leverage higher than the 5x S&P had expected for the previous rating as of March 31, 2009. S&P does not believe the company will be able to achieve EBITDA in 2009 or 2010 to lower leverage sufficiently to meet S&P's previous target. In fact, leverage reached 6.5x for the 12 months ended March 31, 2009. S&P now expects Federal-Mogul's EBITDA to decline as much as 25% in fiscal 2009, year over year. S&P expects North American auto sales to decline 27% in 2009, to about 9.6 million units, from the already weak levels of 2008. S&P believes auto sales in Europe will fall about 15% this year. Even revenues from the relatively stable aftermarket, which provides about 47% of the company's revenues, were lackluster in the first quarter of this year. The ratings reflect Federal-Mogul's weak business risk profile as a major participant in the highly competitive global auto industry, and its aggressive financial risk profile. The company manufactures powertrain components, sealing products, bearings, brake friction materials, and vehicle safety products for the global automotive market. Its customers are original equipment manufacturers (53%) and aftermarket participants (47%) operating in automotive, heavy-duty, and industrial markets. The customer base is diverse because of its various end markets, and no single customer accounts for more than about 5% of sales. The company maintains a No. 1 or No. 2 market share in most of its markets, reflecting good technological expertise, quality, and deliverability. Federal-Mogul has significant exposure to the North American and European automotive markets; the former provided 46% of revenues for the first quarter of 2009, and the latter provided 40%. In addition, sales in the North American commercial-truck market remain depressed for the third sequential year. Sales dropped following strong volumes in 2006 -- caused by customers purchasing trucks in advance of regulatory changes -- and have remained weak because of the recession. S&P expects North American truck sales to improve in advance of the next round of emission regulation changes that go into effect in 2010, but prospects for a material rebound have dimmed. European commercial-vehicle production volumes have also declined this year because of the weakening economy. Total heavy-duty and industrial truck sales account for about 25% of Federal-Mogul's revenues. Federal-Mogul's financial risk profile is aggressive because of the company's high leverage, although it has adequate liquidity. At the 'B+' rating, S&P expects the company to generate free cash flow and show evidence that it can reduce leverage through improved EBITDA within the next two years. S&P does not expect the company to pursue acquisitions of a material size or make large dividend payouts that could pressure credit ratios within the next two years. An internal growth strategy should enable Federal-Mogul to generate free cash flow for possible debt reduction. In the first quarter of 2009, Federal-Mogul's revenues declined 27%, year over year, excluding the effect of foreign currency translation; sales were lower in every business segment. The company's reported EBITDA was $70 million for the quarter, excluding restructuring expense and non-cash pension expense, compared to $207 million in the first quarter of 2008. These results were below S&P's expectations at the previous rating. The benefits of cost savings, market share gains, and better aftermarket pricing were offset largely by lower sales volumes and unfavorable product mix, mainly in North America. The company's adjusted EBITDA margin for the 12 months ended March 31, 2009, fell to 9.8% compared to 11.8% one year ago. Higher raw material costs that are not entirely recouped from customers created an additional drag on EBITDA. Federal-Mogul has successfully passed some materials costs on to certain OE customers through contractual price escalators. In the aftermarket, the company has implemented price increases to recover commodity costs. Liquidity is adequate for the rating. As of March 31, 2009, Federal-Mogul had $664 million in cash and about $494 million available on its undrawn $540 million revolving credit facility; there were $46 million in letters of credit. Even in 2009 and 2010, S&P expects some free cash flow from operations, after working capital and capital expenditures, to support liquidity because of Federal-Mogul's disciplined cost control and diverse markets. The company had cash flow from operations of $352 million for the 12 months ended March 31, 2009, and free cash flow of $51 million. S&P expects the company to conserve cash during the economic downturn, possibly by deferring previously anticipated acquisitions, deferring increasing joint-venture positions, and curtailing certain capital spending. However, the company will need cash to execute the restructuring plan this year. In response to weakening global sales, Federal-Mogul's ongoing restructuring plan lowered the cost base by $50 million in the first quarter. Working-capital requirements are relatively constant throughout the year and in any given month, with low intramonth and intrayear seasonal swings. Working capital should be neutral, partly reflecting pension expense in excess of funding. The negative outlook on Federal-Mogul reflects S&P's concern that the company's EBITDA levels and cash generation could decline more than S&P expect, increasing leverage and possibly reducing liquidity. S&P could lower the ratings if S&P believed that Federal-Mogul's currently adequate liquidity position would be impaired by a significant reduction in cash generation. For example, S&P could lower the rating if free cash generated after capital spending were to drop below $50 million for any 12-month period in 2009 and 2010. S&P could also lower the rating if the company were to pursue a distressed exchange of its outstanding debt. S&P could revise the outlook to stable if Federal-Mogul's adjusted leverage declines to near 5x or better, liquidity remains sufficient, and free cash is generated in the year ahead because of successful cost-side actions in the face of weak production volumes, or because global economic conditions improve materially. To reach 5x would require annual adjusted EBITDA of $760 million. FLEETWOOD ENTERPRISES: Sells Motor Home Business to AIP for $53MM ----------------------------------------------------------------- Fleetwood Enterprises, Inc., has signed an asset purchase agreement to sell its motor home business to American Industrial Partners Capital Fund IV, L.P. of New York. AIP is a middle market private equity firm which makes control investments in leading North American-based industrial businesses. Last week, the U.S. Bankruptcy Court approved sales procedures for an auction to explore whether any higher or more qualified bids could be obtained. AIP's $53 million bid is subject to reduction for the assumption of certain liabilities not to exceed $18 million, including warranty obligations on Fleetwood motorized products. The price is also subject to an adjustment for the amount of current assets purchased at the time the transaction closes. Under the bidding procedures, any competing bidders must submit qualifying bids by June 18, 2009, and if the company receives qualifying bids, the Court will hold an auction on June 22, 2009. The Court hearing to finalize the sale is tentatively scheduled for June 24, 2009. The offer from AIP includes two motor home manufacturing facilities, two motor home service facilities, and Fleetwood's Gold Shield supply subsidiary, all located in Decatur, Ind. It also includes intellectual property for Fleetwood's existing motor home brands, certain machinery and equipment , but does not include the company's motor home manufacturing facilities in Riverside, Calif. and Paxinos, Pa., or its travel trailer plants, brands, and intellectual property. "We are pleased to have signed an agreement to sell our motor home operation. AIP is a very capable and qualified organization," said Elden L. Smith, Fleetwood's president and chief executive officer. "Since the sale process under Chapter 11 enables other bidders to come forward, we cannot say for certain what the outcome will be. We do expect, however, that the final purchaser will seek to take advantage of the Fleetwood name and legacy, as well as endeavor to preserve as many jobs as possible." Fleetwood is also pursuing buyers for its manufactured housing business. Management believes that it continues to have adequate cash to fund operations until its businesses are sold. Greenhill & Co. is serving as Fleetwood's investment banker. Interested parties should contact the Seller, Greenhill & Co., LLC ("Greenhill"), 300 Park Avenue, 22nd Floor, New York, New York 10022 (Attn: David E. Burns) dburns@greenhill.com; and counsel to the Seller, Gibson, Dunn & Crutcher LLP, 3161 Michelson Drive, Irvine, California 92612 (Attn: Rod Anavim) ranavim@gibsondunn.com. About Fleetwood 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. FORT WAYNE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Fort Wayne Foundry Corporation 4912 Lima Road Fort Wayne, IN 46808 Bankruptcy Case No.: 09-12423 Debtor-affiliate filing Chapter 11 petition: Entity Case No. ------ -------- Cole Pattern and Engineering Co., Inc. 09-12424 Type of Business: The Debtors make aluminum sand castings for transportation and automotive powertrain applications. See http://www.fortwaynefoundry.com/ Chapter 11 Petition Date: June 3, 2009 Court: Northern District of Indiana (Fort Wayne Division) Debtor's Counsel: Thomas P. Yoder, Esq. tpy@barrettlaw.com 215 E. Berry St. P.O. Box 2263 Fort Wayne, IN 46801 Tel: (260) 423-8845 Fax: (260) 423-8920 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Hitachi Automotive Products $3,756,763 Drawer CS 198-281 Atlanta, GA 30384-8281 EPP-Mar Metal Co. $844,242 PO Box 809241 Chicago, IL 60680-9241 Alimar Corp. $337,816 18034 Cherrywood Lane Homewood, IL 60430 Triangle Industrial Sales $243,403 Ward Heat Treating $212,146 AG Trucking $169,358 Ashland Chemcial Company $163,480 EnergyUSA $148,386 US Silica $105,315 Miniature Precision Compo $99,632 American Electric Power $98,192 Mills Supplies Inc. $97,042 Old National Insurance $77,993 Universal Tube $74,819 Robert C. Spoerri $71,736 Kamax G.B. DuPont LP $66,483 Aluminum Recovery Technol $65,811 Fourslides Inc. $62,016 Pyrotek Inc. $54,688 Beck Aluminum Corp. $54,177 The petition was signed by Michael Lombardi, president. FREDDIE MAC: Regulator Won't Put Firm Into Receivership ------------------------------------------------------- Jessica Holzer at Dow Jones Newswires reports that Federal Housing Finance Agency Director James B. Lockhart, the regulator for Fannie Mae and Freddie Mac, said that he isn't considering putting the companies into receivership. Citing Mr. Lockhart, Dow Jones relates that U.S. officials decided against putting Fannie Mae and Freddie Mac into receivership before seizing the companies last year and putting them into conservatorship. Dow Jones quoted Mr. Lockhart as saying, "At this point, we are not contemplating receivership and I really don't see the advantage of receivership versus conservatorship." Dow Jones states that Mr. Lockhart said, "The best way to conserve assets for Fannie and Freddie is by aggressively modifying loans, refinancing loans and ensuring liquidity in the housing market." According to Dow Jones, Mr. Lockhart said that the companies own or guarantee $5.4 trillion of mortgage loans. The U.S. government, says Dow Jones, has agreed to inject up to $200 billion into Fannie Mae and Freddie Mac to keep them afloat, but it has stopped short of explicitly backing the companies' debt. Mr. Lockhart explained that there was "no reason at this point to make that explicit" because the government backstop had provided "an effective guarantee," Dow Jones relates. Dow Jones states that the regulator will lay out three potential roles for the future of Fannie Mae and Freddie Mac before a House panel. Fannie Mae and Freddie Mac could be reconstituted as liquidity providers of last resort for the secondary market for mortgage- backed securities, or MBS, Dow Jones says, citing Mr. Lockhart. The report states that Fannie Mae and Freddie Mac could be cast as guarantor or catastrophic risk insurer of MBS, or they could direct subsidies to lessen the cost of mortgage credit for certain borrowers. About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At December 31, 2008, the Company's balance sheet showed total assets of $850.9 billion and total liabilities of $881.6 billion, resulting in a stockholders' deficit of $30.7 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. Being under Conservatorship, Freddie Mac said it is dependent upon the continued support of Treasury and FHFA to continue operating its business. GENARO MENDOZA: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Genaro Mendoza aka George Mendoza dba Mendoza Investment 620 E. Washington St., Ste. 100 Petaluma, CA 94952 Bankruptcy Case No.: 09-11678 Chapter 11 Petition Date: June 3, 2009 Court: Northern District of California (Santa Rosa) Debtor's Counsel: John H. MacConaghy, Esq. macclaw@macbarlaw.com MacConaghy and Barnier 645 1st St. W #D Sonoma, CA 95476 Tel: (707) 935-3205 Estimated Assets: $100 million to $500 million Estimated Debts: $50 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ City National Bank credit line $821,667 555 South Flower St. 15th Floor Los Angeles, CA 90071 Bank of America credit line $257,489 101 North Tryon St. NC-001-07-06 Touchstone Pool Service trade debt $13,182 990 Butler Avenue Santa Rosa, CA 95407 Memphis Light, Gas & Water utilities $11,249 Pacific Gas & Electric Co. utilities $6,984 Orchid services Inc. trade debt $2,422 AT&T utilities $2,256 Home Depot Supply trade debt $2,106 Golden Gate Disposal services $1,448 Novato Disposal Service utilities $1,263 PHD Carpet Care trade debt $1,208 Dunn-Edwards Corporation trade debt $957 Hegel Supply Co. trade debt $614 Bay Cities Refuse Service utilities $561 Leslie's Pool Supplies trade debt $386 GENERAL MOTORS: U.S. Trustee Names 15-Member Creditors' Committee ----------------------------------------------------------------- Pursuant to Section 1102 of the Bankruptcy Code, Diana G. Adams, the United States Trustee for Region 2, appointed 15 creditors to serve as members of the Official Committee of Unsecured Creditors in General Motors Corporation and its debtor-affiliates' Chapter 11 cases. The Committee members are: (1) Pension Benefit Guaranty Corporation 1200 K Street, NW Washington, DC 20005 Attention: Dana Cann, Senior Financial Analyst Tel: (202) 326-4000 (Ext. 3810) Fax: (202) 842-2643 (2) Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attention: James J. McGinley Tel: (302) 636-6019 Fax: (302) 636-4140 (3) Law Debenture Trust Company of New York 400 Madison Avenue, 4th Floor New York, NY 10017 Attention: Robert Bice, Senior Vice President Tel: (646) 747-1254 Fax: (212) 750-1361 (4) The Industrial Division of Communications Workers of America, AFL-CIO 2701 Dayton Road Dayton, Ohio 45439 Attention: James Clark, President, IUE-CWA Tel: (937) 298-9984 Fax: (937) 298-6338 (5) International Union UAW 8000 East Jefferson Avenue Detroit, Michigan 48214 Attention: Niraj R. Ganatra, Associate General Counsel Tel: (313) 926-5216 Fax: (313) 926-6240 (6) United Steelworkers Five Gateway Center, Room 807 Pittsburgh, Pennsylvania 15222 Attention: David R. Jury, Associate General Counsel Tel: (412) 562-2545 Fax: (412) 562-2429 (7) Interpublic Group 1114 Avenue of the Americas New York, New York 10036 Attention: Nicholas J. Camera, Senior Vice President & General Counsel Tel: (212) 704-1252 Fax: (212) 704-2223 (8) DENSO International America, Inc. 24777 Denso Drive Southfield, Michigan 48033 Attention: Steven M. Zarowny, Assistant General Counsel Tel: (248) 372-8252 Fax: (248) 213-2551 (9) Inteva Products, LLC 1401 Crooks Road Troy, Michigan 48084 Attention: Lance Lis, General Counsel Tel: (248) 655-8900 Fax: (866) 741-1744 (10) Serra Chevrolet of Birmingham, Inc. Post Office Box 59120 Birmingham, Alabama 35259 Attention: Quentin Brown, Vice President/General Counsel Tel: (205) 706-5359 Fax: (205) 212-3901 (11) Paddock Chevrolet 3232 Delaware Avenue Kenmore, New York 14217 Attention: Duane Paddock, Owner Tel: (716) 876-0945 Fax: (716) 876-4016 (12) Saturn of Hempstead, Inc. 265 North Franklin Street Hempstead, New York 11550 Attention: Ernest Louison, General Manager Tel: (877) 242-5361 Fax: (516) 565-2413 (13) Mark Buttita 2429 South Alpine Rd. Rockford, Illinois 61108 Tel: (815) 509-1172 (14) Genoveva Bermudez c/o Cohen & Associates 8710 E. Vista Bonita Drive Scottsdale, Arizona 85255 Attention: Larry E. Cohen, Esq. Tel: (480) 515-4745 (15) Kevin Schoenl 99 Maretta Road Rochester, New York 14624 Tel: (215) 751-2050 Interpublic Group of Companies, Inc., and Denso Corp. are listed as one of General Motors' 50 largest unsecured creditors. ICG holds a $15,998,270 unsecured trade debt while Denso has a $29,229,047 unsecured trade debt. Wilmington Trust Company, a successor indenture trustee, represents bondholders owning $22.8 billion of unsecured debt securities issued by General Motors pursuant to the Senior Indenture, dated December 7, 1995, as amended, and the Senior Indenture, dated November 15, 1990. Serra Chevrolet of Birmingham, Inc., Paddock Chevrolet, and Saturn of Hempstead, Inc., are GM dealerships. UAW represents 61,000 of GM's 91,000 U.S. employees. In 2008, GM and the UAW inked a settlement under which GM was required to contribute $34 billion into a voluntary employees' beneficiary association trust. As of June 1, 2009, the Company's 2005 UAW VEBA-related obligations aggregated approximately $20.56 billion in principal amount. The individuals appointed in the Committee are plaintiffs in prepetition lawsuits filed against GM, Bloomberg News said. The Creditors' Committee, according to Bloomberg, selected Kramer, Levin, Naftalis & Frankel LLP to represent it. GM lawyer Harvey Miller, Esq., at Weil, Gotshal & Manges, LLP, in New York, according to Reuters, was in attendance during the June 3 organizational meeting conducted by the U.S. Trustee. Mr. Miller said challenges by unsecured creditors won't stop the "inevitable conclusion" of GM's bankruptcy case: the sale of the automaker to an entity sponsored by the U.S. Treasury, Bloomberg related. "We don't have a problem with the secured creditors," Mr. Miller told Bloomberg. "It's not a situation where there's a lot of flexibility. It's a very unusual case." Large institutional investors were not seeking to be on the Creditors' Committee, Andrew Rosenberg, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, in New York, told Reuters. Mr. Rosenberg represents Franklin Templeton Investments, Marathon Asset Management, JMG Capital Management, LLC, Eastbourne Capital Management, LLC, and Western Asset Management Company, who, in the aggregate, hold $1.6 billion of unsecured notes. These investors formed an ad hoc committee of GM Noteholders in December 2008. Mr. Rosenberg, as reported by Reuters, said he has not been in contact with any institutional creditors who said they intend to challenge GM's sale. 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. 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. A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsels. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. GENERAL MOTORS: Executives, Dealers Go Head to Head Before Senate ----------------------------------------------------------------- Josh Mitchell at The Wall Street Journal reports that General Motors Corp. and Chrysler LLC top executives defended their planned dealer cuts before the Senate Commerce Committee on Wednesday. WSJ quoted GM CEO Frederick Henderson as saying, "This is our last chance to get it right, to fix permanently those parts of the business that have diverted us from consistently building winning cars and trucks and the consumer experience to match." Chrysler President Jim Press, WSJ relates, said, "There's not enough business for the number of dealers Chrysler has today given that we have less than two-thirds of our former sales volume." According to WSJ, dealers told the Senate Commerce Committee that the closings won't produce the cost savings claimed by GM and Chrysler, and that the move was being made hastily and without regard to state franchise laws that require manufacturers to compensate affected dealers. WSJ quoted Committee chairperson John D. Rockefeller IV as saying, "I honestly don't believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves with no real plan, with no real notice, with no real help." WSJ states that the Commerce Committee's top Republican, Kay Bailey Hutchison, threatened in May to hold up a war-funding bill due to the dealer closings. The panel would push for hearings on how the funds are being used to help car makers, WSJ says, citing Rep. Jeb Hensarling, a member of the congressional panel that oversees TARP. Retirees Ask Court for Official Committee Bankruptcy Law360 reports that the General Motors Retirees Association has asked the U.S. Bankruptcy Court for the Southern District of New York to appoint an official committee to represent the interests of over 122,000 salaried retirees and surviving spouses. According to Bankruptcy Law360, the retirees are allegedly at risk of losing benefits due to GM's bankruptcy. 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. 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. A full-text copy of GM's viability plan presented in February 2009 is available at: http://researcharchives.com/t/s?39a4 General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsels. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. GENERAL MOTORS: G. Douglas Jones Seeks Representation for Dealers ------------------------------------------------------------------ On behalf of terminated and soon-to-be-terminated GM auto dealerships, former U.S. Attorney G. Douglas Jones dispatched a letter to General Motors bankruptcy trustee Diana G. Adams asking that a special committee be established to protect the interests of terminated GM auto dealerships who operate as separate operating entities and have provided hundreds of millions in tax revenues to state and local governments. "The best way to at least create a seat at the table for the affected dealers and the claims they represent in the bankruptcy is the appointment of a Terminated Dealers Committee," Mr. Jones wrote. "The significant interest these dealers have in the orderly bankruptcy process and the interplay of the dealers' rights under both bankruptcy law and applicable state laws is vital. The appointment of such a committee is crucial in these opening days as important decisions concerning the future of General Motors are being reached." GM disclosed last month that they intended to slash auto dealerships by 42% from 2008 to 2010 levels. Dealerships will be reduced by 2,641 locations, from 6,246 to 3,605. The proposal came in reaction to auto dealerships being left out of the restructuring. "Unlike many of the major affected players, including the United States government, United Auto Workers, major suppliers, bond holders and multi-million dollar pension funds, these small town dealerships risk having no voice in the General Motors bankruptcy," Mr. Jones wrote. Mr. Jones added, "It is important to note that these dealerships are wholly-owned and separate operating entities apart from General Motors. In fact, many of these dealerships are operating companies that have successfully been in existence and turning a profit for years. For example, our client, Abercrombie Chevrolet has been in existence for over 52 years and has been a family owned General Motors dealership operating in Hartselle, Alabama. The Abercrombie family, along with owners and families throughout this country, are being severely impacted by the General Motors bankruptcy." Mr. Jones, who served as U.S. Attorney for the Northern District of Alabama from 1997 through 2001, is now a partner with the Haskell Slaughter Young & Rediker, LLC law firm, which filed suit on behalf of Abercrombie Chevrolet against GM and GMAC in February for arbitrarily and capriciously altering dealership financing terms and requirements in an effort to drive dealers out of business. 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. 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. A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsels. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. GENERAL MOTORS: Retirees Ask Court for Official Retiree Committee ----------------------------------------------------------------- The General Motors Retirees Association -- the organization representing the interest of the Debtors' more than 122,000 salaried retirees, their spouses and survivors -- ask the U.S. Bankruptcy Court for the Southern District of New York to direct the appointment of an official committee, pursuant to Section 1114(d) of the Bankruptcy Code, to represent the retirees, their spouses, and survivors in regard to their benefits. The salaried retirees protected by Section 1114 are not the top executives or upper management but encompass the many tens of thousands of former secretaries, engineers, clerks, buyers, quality inspectors, middle managers and other non-hourly employees who in many cases have spent most of their lives building General Motors into the world's leading automotive company, says Neil A. Goteiner, Esq., at Farella Braun & Martell LLP, in San Francisco, California. Mr. Goteiner relates that on the Petition Date, GM announced that it is working with the U.S. Treasury to reduce some retiree benefit obligations by roughly two-thirds. The reduction, according to GM, will impact salaried retiree life insurance, salaried retiree health care, executive non-qualified pension, executive retiree life insurance and non-UAW hourly life insurance and that GM is still working on how to accomplish the plan. "Presented with these facts, GM's more than 122,000 non-union current retirees and surviving spouses need immediate appointment of an official Section 1114 committee to represent them on retiree benefits issues," Mr. Goteiner asserts. Unlike the hourly workers and retirees represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, the salaried retirees represented by GMRA do not have a collective bargaining agreement to protect their benefits, or a separately funded voluntary employee benefit association to pay for those benefits, or an ownership interest offered to them in the restructured GM to provide for those benefits in the future, Mr. Goteiner tells the Court. GM provides salaried retirees who started work before January 1993 medical, prescription drug, life insurance, dental, vision care and other retiree benefits, all as defined in and protected under Section 1114. "Without these GM policies, the retirees would have to qualify for life insurance individually, after disclosing pre-existing medical conditions that could make that insurance unavailable or prohibitively expensive," Mr. Goteiner asserts. Section 1114 authorizes a committee to negotiate on behalf of affected retirees regarding changes to these benefits and otherwise provides substantive requirements the debtor must demonstrate to justify modifications of retiree benefits during the bankruptcy case. GMRA filed a proposed order regarding its request. 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. 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. A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsels. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. GENERAL MOTORS: Consumer Victims Want Official Tort Committee ------------------------------------------------------------- The Ad Hoc Committee of Consumer Victims of General Motors Corporation has more than 300 members who reside throughout the country. Each of the Ad Hoc Consumer Committee members asserts tort claims involving personal injuries against General Motors, which are valued at a total of more than $1.25 billion. By this motion, the Ad Hoc Consumer Committee asks Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York to direct the appointment of an official committee of tort claimants to represent and protect the interests of persons holding personal injury, asbestos, and environmental tort claims against the Debtors. Benjamin P. Deutsch, Esq., at Schnader Harrison Segal & Lewis LLP, in New York, asserts that the formation of an additional committee -- separate and apart from the creditors committee that will be appointed by the United States Trustee -- is essential to the adequate representation of the Tort Claimants, pursuant to Section 1102(a)(2) of the Bankruptcy Code. "The Tort Claimants have mutual interests that are clearly distinct from those of unsecured bondholders, dealers, suppliers and other unsecured creditors," Mr. Deutsch points out. Under GM's proposed sale of substantially all of its assets free and clear of all products liability and other personal injury claims arising from GM's sold vehicles, (i) unsecured bondholders will receive an ownership interest in the new GM company, (ii) suppliers and dealers with assumed contracts will have their prepetition claims satisfied by the new GM, and (iii) the United Automobile Workers Voluntary Employee Beneficiary Association will receive 17.5% of new GM's common stock, a $2.5 billion note, $6.5 billion of preferred stock and additional consideration in exchange for an obligation of $20.56 billion. Meanwhile, the "economically fragile constituency" of the Tort Claimants -- individuals with limited financial resources "whose lives have been devastated by severe injuries suffered as a result of defects in vehicles manufactured by GM" -- will be left alone to attempt to press an objection to the Sale, Mr. Deutsch laments. Furthermore, Tort Claimants will also likely have special concerns regarding: (1) the circumstances under which relief from the automatic stay will be granted to permit the liquidation of Personal Injury claims in the forum where they are pending; (2) the extent that relief from the Stay will be granted to permit the Tort Claimants to recover from insurance proceeds, if available; (3) the extent that insurance is to be required to be maintained by the proposed Asset purchaser; and (4) any special procedures that the Debtors may seek to impose regarding the adjudication of the Personal Injury claims. 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. 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. A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsels. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. GMAC LLC: Offers Five-Year, No Interest Loans to Chrysler Clients ----------------------------------------------------------------- Mike Ramsey at Bloomberg News reports that Chrysler LLC has begun offering five-year, no-interest loans on some models in its first effort to use new lender GMAC LLC for incentives. Citing Chrysler's volume planning vice president Mike Keegan, Bloomberg relates that Chrysler dealers now have access to retail financing through GMAC, as part of the Company's bankruptcy, and 62% have lines of credit to purchase wholesale inventory. According to Bloomberg, the financing was disclosed on June 3 and runs through July 1. It is an alternative to rebates of as much as $6,000 for customers who purchase through certain credit unions and already own a Chrysler vehicle, Bloomberg relates. "When I look at what we have in inventory, we will be fine through the month of June," Bloomberg quoted Chrysler sales chief Steven Landry as saying. Bloomberg, citing Mr. Landry, states that production isn't set to resume until late June. The deal -- "Zero percent financing for 60 months through GMAC Financial Services on select 2009 model vehicles, or up to $4,000 Consumer Cash on 2009 model vehicles. In addition, current Chrysler LLC vehicle owners are eligible for $1000 Owner Loyalty cash on select 2008 and 2009 Chrysler, Jeep and Dodge vehicles. These offers are in addition to the $1000 Credit Union Bonus Cash on select products for qualified credit union members who finance their new vehicle purchase through a participating Credit Union under the Invest in America program. These incentives are valid through July 1, 2009." GMAC Financial Services -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a bank holding company with operations in North America, South America, Europe and Asia- Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of December 31, 2008, the company had $189 billion in assets and serviced 15 million customers around the world. GMAC is the biggest lender to GM's 6,500 dealers nationwide, most of which get the financing they need to operate and buy vehicle inventory from the automaker, CNNMoney.com notes. GMAC Financial Services is wholly owned by GMAC LLC. Cerberus Capital Management LP led a group of investors that bought a 51% stake in GMAC LLC from General Motors Corp. in December 2006 for $14 billion. On December 24, 2008, GMAC Financial Services' application to become a bank holding company under the Bank Holding Company Act of 1956, as amended, was approved by the Board of Governors of the Federal Reserve System. In addition, GMAC Bank received approval from the Utah Department of Financial Institutions to convert to a state bank. * * * As reported in the Troubled Company Reporter on May 5, 2009, Standard & Poor's Ratings Services maintains its CCC/Negative/C rating on GMAC LLC despite the Company's announcement that it entered into an agreement with Chrysler Financial Services Americas LLC to provide future automotive financing products and services to Chrysler dealers and customers. GRAPHIC PACKAGING: Fitch Assigns 'B/RR4' Rating on $245 Mil. Notes ------------------------------------------------------------------ Consistent with the senior unsecured ratings of Graphic Packaging International Inc.'s 8.5% senior unsecured notes due 2011, Fitch has assigned a 'B/RR4' rating to GPK's new $245 million senior unsecured notes issue. The new notes will carry a coupon of 9.5% and will mature in June 2017. After the original issue discount, the proceeds of the offering will be $238.4 million and will be used to pay for the 8.5% senior unsecured notes tendered into its $225 million capped purchase offer set to expire on June 29, 2009. The remaining proceeds will be used to pay for the tender premium and expenses associated with the offering. Like the 8.5% notes, the new 9.5% notes will be guaranteed by Graphic Packaging Holding Company, Graphic Packaging Corporation and certain domestic subsidiaries of GPK. GPK's Rating Outlook is Negative which reflects concerns about the ability of the company in this recessionary environment to maintain shipment levels and retain recently won price increases. Working in the company's favor are signs of declining input costs for fiber, chemicals and energy (albeit in combination recently stabilizing) and a windfall receipt of biofuel tax credit money. The latter amounted to $42.1 million (received in May) which will put GPK in positive free cash flow territory in the second quarter. In combination, the new notes and tender offer will take $225 million out of GPK's nearest debt maturity (2011) and move it to its farthest. GPK's revolver and term loans mature in 2013 and 2014, respectively, and the company was in compliance with all covenants. GPK is the largest producer of coated unbleached kraft paperboard in North America and a leading manufacturer and supplier of folding cartons and multi-pack beverage containers among other paperboard containers for consumer products companies. GRISWOLD BUILDING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Griswold Building, LLC 719 Griswold #280 Detroit, MI 48226 Bankruptcy Case No.: 09-57520 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Griswold Properties, LLC 09-57521 Colossae, LLC 09-57523 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Phillip J. Shefferly Debtor's Counsel: Michael E. Baum, Esq. 40950 Woodward Ave., Suite 100 Bloomfield Hills, MI 48304 Tel: (248) 540-3340 Email: mbaum@schaferandweiner.com Total Assets: $0 Total Debts: $23,764,098 A list of the Company's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/mieb09-57520.pdf The petition was signed by Waad J. Nadhir. GROUP 1 AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating --------------------------------------------------------------- Moody's Investors Service said that the June 1, 2009 bankruptcy filing by General Motors has no immediate impact on the ratings and outlooks for the auto retailers rated by Moody's. These are the rated Auto Retailers: -- Asbury Automotive Group Inc. -- AutoNation, Inc. -- Group 1 Automotive, Inc. -- Penske Automotive Group, Inc. -- Sonic Automotive Group, Inc. The last rating action for Asbury Automotive Group, Inc., was the March 25, 2009 downgrade of the Corporate Family and Probability of Default ratings to B2 from B1 and the assignment of a negative outlook. The last rating action for AutoNation, Inc., was the December 5, 2008 affirmation of the Ba1 Corporate Family and Probability of Default ratings, and a change in the outlook to negative from stable. The last rating action for Group 1 Automotive, Inc., was the March 20, 2009 downgrade of the Corporate Family and Probability of Default ratings to B1 from Ba3 and assignment of a negative outlook. The last rating action for Penske Automotive Group was on March 25, 2009, when the company's Corporate Family Rating was downgraded to B2 from B1. The last rating action for Sonic Automotive Holdings, Inc., was the May 21, 2009 downgrade of the Corporate Family rating to Caa1 from B2, the upgrade of the Probability of Default rating to Caa1 from Caa3, and assignment of a negative outlook. HAIGHTS CROSS: Forbearance Period With Loan Lender Expires Today --------------------------------------------------------------- Haights Cross Communications, Inc., disclosed in a filing with the Securities and Exchange Commission its financial results for the year ended December 31, 2008. At December 31, 2008, the Company's balance sheet showed total assets of $243.3 million and total debts of $381.8 million, resulting in a stockholders' deficit of $186.5 million. Net loss of $38.0 million was recorded for the year ended December 31, 2008, compared to a net income of $63.6 million for the year ended December 31, 2007. The decrease in net income was due to the prior year including a $115.5 million gain on troubled debt restructuring recorded for the recapitalization of its Preferred B on Aug. 10, 2007; the goodwill impairment charge of $31.6 million in 2008; an increase in product development impairment charge of $2.9 million in 2008; offset by gains on the sales of its Oakstone Publishing and Sundance Newbridge Publishing businesses and a decrease in interest expenses in 2008. Liquidity and Capital Resources As of December 31, 2008, the Company had an available cash balance of $47.4 million. During the year ended December 31, 2008, the Company funded $19.0 million in pre-publication costs for new product development, $1.2 million of capital expenditures for property and equipment, and $32.4 million of cash interest payments. The Company has a working capital deficiency of $320.5 million, including long term debt in default classified as current of $381.8 million, as of December 31, 2008. As of December 31, 2008, the Company had total indebtedness outstanding of $381.8 million, including its Term Loan in the principal amount of $108.2 million, Senior Notes in the aggregate principal amount of $140.0 million and Senior Discount Notes in the aggregate accreted amount of $133.6 million. As of May 29, 2009, the Company had not completed its first quarter financial statements required under the Credit Agreement or filed its Quarterly Report on Form 10-Q with the SEC as required under the Indentures, resulting in default under the Credit Agreement and the Indentures. The default under the indentures also resulted in a cross-default under the Credit Agreement. Going Concern Doubt On May 26, 2009, Ernst & Young LLP in New York City raised substantial doubt about the Company's ability to continue as a going concern. The auditors pointed out that the Company has incurred a loss before discontinued operations of $52.6 million for the year ended December 31, 2008; has a stockholders deficit of $186.6 million and a working capital deficiency of $320.5 million as of December 31, 2008. In addition, the Company is in default of its senior secured term loan agreement. The Company entered into a short-term forbearance agreement with the senior secured term loan lender, whereby the lenders have agreed to forbear exercising any rights and remedies under the credit agreement until June 5, 2009, unless there are events of default, other than events covered by the forbearance agreement, or there is an existence of any event of default under either of the indentures of the Company's Senior Notes or Senior Discount Notes. On May 7, 2009, the Company received a notice from the trustees under the indentures for its Senior Notes and Senior Discount Notes that its failure to timely file its SEC reports constitutes a default under each of those indentures. The indentures provide that the Company has 60 days from receipt of notice to cure such default before an event of default occurs under the indentures. The defaults under the senior secured term loan, if not resolved, prevent the Company from paying interest on its Senior Notes and Senior Discount Notes in August 2009 which would be events of default on such indentures and cause additional cross defaults of other obligations. Moreover, the Senior Discount Notes are obligations of Haights Cross Communications. These obligations are not guaranteed by any of its subsidiaries and none of its subsidiaries is under any obligation to make payments to the Company. The ability of subsidiaries to make any payments to the Company is limited by statutory and other contractual restrictions that would depend on the earnings or financial condition of its subsidiaries and various business and contractual considerations. As a result, even if otherwise permitted under the senior secured term loan agreement, the Company may not have the ability to pay interest or any other obligations under its Senior Discount Notes. Its failure to make interest payments would be a default under the applicable indenture. There is uncertainty as to whether the Company will be able to obtain waivers, amendments and modifications to remedy the defaults under the agreements. A full-text copy of the 10K filing is available for free at http://ResearchArchives.com/t/s?3d8c About Haights Cross Communications Founded in 1997 and based in White Plains, New York, Haights Cross Communications -- http://www.haightscross.com/-- is an educational and library publisher of books, audio products, software and online services, serving these markets: K-12 supplemental education, public library and school publishing and audio books. Haights Cross companies include: Triumph Learning (New York, NY), Buckle Down Publishing (Iowa City, IA), Options Publishing (Iowa City, IA), and Recorded Books (Prince Frederick, MD). * * * As reported by the Troubled Company Reporter on April 29, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating and issue-level ratings on Haights Cross Communications Inc. and related entities by one notch. S&P lowered the corporate credit rating to 'CCC-' from 'CCC'. The rating outlook is negative. HAYES LEMMERZ: Amends Annual Report to Provide Additional Info -------------------------------------------------------------- Hayes Lemmerz International, Inc., delivered on June 1, 2009, to the Securities and Exchange Commission Amendment No. 1 on Form 10-K/A to its Annual Report on Form 10-K for the fiscal year ended January 31, 2009, initially filed with the SEC on May 11, 2009. The amendment is being filed solely to provide the information required by Part III of Form 10-K. The information required by Part III of Form 10-K was previously omitted from the Original Filing in reliance on General Instruction G(3) to Form 10-K. In accordance with Rule 12b-15 under the Exchange Act of 1934, as amended, this Form 10-K/A amends and restates in their entirety: -- Item 10. Directors, Executive Officers and Corporate Governance; -- Item 11. Executive Compensation; -- Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters; -- Item 13. Certain Relationships and Related Transactions; and -- Item 14. Principal Accountant Fees and Services. A full-text copy of the Form 10-K/A is available for free at: http://researcharchives.com/t/s?3d98 Originally founded in 1908, Hayes Lemmerz International, Inc. (NasdaqGM: HAYZ) is a worldwide producer of aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers. The Company is also a supplier of automotive powertrain components. The Company has global operations with 23 facilities, including business, sales offices and manufacturing facilities, located in 12 countries around the world. The Company sells products to every major North American, Asian and European manufacturer of passenger cars and light trucks and to commercial highway vehicle customers throughout the world. The Company and certain affiliates filed for bankruptcy on May 11, 2009 (Bankr. D. Del. Case No. 09-11655) after reaching agreements with lenders holding a majority of the Company's secured debt. The Company's principal bankruptcy attorneys are Skadden, Arps, Slate, Meagher & Flom, LLP. Lazard Freres & Co., LLC serves as the Company's financial advisors. AlixPartners, LLP serves as the Company's restructuring advisors. The Garden City Group, Inc., serves as the Debtors' claims and notice agent. As of January 31, 2009, the Debtors had total assets of $1,336,600,000 and total debts of $1,405,200,000. This is the Company's second trip to the bankruptcy court, dubbed a Chapter 22, which was precipitated by an unprecedented slowdown in industry demand and a tightening of credit markets. The company plans to reduce its debt and restructure its balance sheet. Hayes Lemmerz and its direct and indirect domestic subsidiaries and one subsidiary in Mexico first filed for bankruptcy in December 2001 before the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 filings were precipitated by declining market conditions and the Company's excessive debt burdens, according to Mr. Clawson, who also served as chairman and chief executive officer at that time. The Court confirmed the Company's reorganization plan in May 2003, allowing the Company to exit bankruptcy in June 2003. In accordance with the 2003 Plan, approximately $2.1 billion in pre-petition debt and other liabilities were discharged. The Plan provided for holders of prepetition secured claims to receive $478.5 million in cash and 53.1% of the reorganized company common stock. Holders of senior note claims were to receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims were to receive 2% of the New Common Stock. Hayes Lemmerz' prior common stock and securities were cancelled as of June 3, 2003. HENDRICKS COS: Court Okays Sale of Dothan Branch to Manager ----------------------------------------------------------- Jeff Amy at Al.com reports that the Hon. Margaret Mahoney of the U.S. Bankruptcy Court for the Southern District of Alabama has approved the sale of Hendricks Cos.'s Dothan branch to its manager for $200,000. Al.com didn't disclose the name of the manager. Al.com quoted Hendricks' lawyer, Jeffrey Hartley, a saying, "He's [the manager] getting a good deal, but we're selling it as quickly as we possibly can for as much as we can." Al.com relates that Hendricks President Kent Hendricks said that the Company hoped to reach a deal on Tuesday to sell its Troy and Ozark home centers. Citing Mr. Hendricks, the report states that Hendricks, which went bankrupt last month, is liquidating merchandise at its Eufaula home center, leaving only its Mobile operation, called Builder Resource. Hendricks, says the report, already closed its Loxley branch of Builder Resource, which had been its headquarters. Loxley, Alabama-based Hendricks Companies, Inc., filed for Chapter 11 bankruptcy protection on May 21, 2009 (Bankr. S.D. Ala. Case No. 09-12332). Jeffery J. Hartley, Esq., at Helmsing, Leach, Herlon, Newman & Rouse assists the Company in its restructuring efforts. The Company listed $1,000,001 to $10,000,000 in assets and $10,000,001 to $50,000,000 in debts. HERITAGE WORLDWIDE: French Unit Files Petition for Reorganization ----------------------------------------------------------------- Heritage Worldwide, Inc., disclosed in a filing with the U.S. Securities and Exchange Commission that its French subsidiary, Poly Implants Protheses, S.A., filed a voluntary petition for reorganization under French bankruptcy law in the Commerce Tribunal of Toulon. The Company related that Xavier Huertas was appointed by the Bankruptcy Court as receiver on May 4, 2009. PIP will continue to operate and manage its properties and business under the jurisdiction of the Bankruptcy Court and the supervision of the receiver and in accordance with the applicable provisions of French bankruptcy law and orders of the Bankruptcy Court. PIP's plan is to reorganize its business to strengthen its financial position in order to continue operations. As of May 26, 2009, the Company held over 90% of PIP's outstanding capital stock. As of the quarter ended December 31, 2008, PIP's assets accounted for 95% of the Company's consolidated total assets and revenue generated by PIP accounted for 92% of the Company's consolidated revenues. Heritage Worldwide, Inc. (OTC BB: HWWI) manufactures and distributes cosmetic implants including pre-filled breast and other body implants, as well as body support products. HWWI was incorporated in the State of Delaware in 2001 with headquarters and a production facility in the Toulon metropolitan area of southern France, and a distribution facility in Spain. HWWI products are sold directly and indirectly through independent distributors and sales representatives to surgeons and clinics outside the United States. More than 68% of sales are derived from international operations outside France, where main operations are conducted. Going Concern Doubt As reported in the Troubled Company Reporter on October 16, 2008, New York-based Sherb & Co., LLP, raised substantial doubt about the ability of Heritage Worldwide, Inc., to continue as a going concern after it audited the company's financial statements for the year ended June 30, 2008. The auditor pointed to the Company's significant losses and working capital deficit. HOLLY CORP: S&P Assigns 'BB' Corporate Credit Rating ---------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Holly Corp. S&P also assigned a 'BB' senior unsecured rating and '3' recovery rating to Holly's proposed $200 million senior note offering. The outlook is stable. "The ratings on Dallas-based Holly Corp. reflect the challenges it faces as a small, independent oil refiner with limited cash flow diversification among three refineries," Standard & Poor's credit analyst Paul Harvey said. Proceeds from Holly's notes are expected to help fund the announced $65 million acquisition of Sunoco's 85,000 barrel per day Tulsa, Oklahoma refinery, as well as estimated spending of $150 million to upgrade Tulsa to produce ultra-low sulfur diesel. High near-term spending to upgrade the Tulsa refinery and construct the Salt Lake City to Las Vegas (UNEV) pipeline tempers otherwise above-average near-term financial measures. The stable outlook reflects expectations that Holly will maintain adequate liquidity and solid financial measures, such as debt leverage below 3x, while pursuing the Tulsa upgrade and UNEV construction. INTCOMEX INC: Limited Liquidity Prompts S&P to Junk Corp. Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Intcomex Inc. to 'CCC+' from 'B'. "The downgrade reflects limited liquidity and a capital structure that matures and needs to be refinanced over the next 18 months," said Standard & Poor's credit analyst Martha Toll-Reed. J J LEE MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: J J Lee Management Co. Inc. 3067 E Chevy Chase Dr Glendale, CA 91206 Bankruptcy Case No.: 09-23783 Chapter 11 Petition Date: June 2, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: Kennen H. Kim, Esq. 3700 Wilshire Blvd, Ste 993 Los Angeles, CA 90010 Tel: (213) 382-1911 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/cacb09-23783.pdf The petition was signed by Jong Jin Lee, president of the Company. JEANNE RIZZOTTO: Files for Chapter 11 Bankruptcy Protection ----------------------------------------------------------- Linda Halstead-Acharya at Billings Gazette reports that Jeanne Rizzotto has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for District of Montana. Court documents say that Ms. Rizzotto listed $3.2 million in assets and more than $4 million in debts. Billings Gazette relates that Ms.Rizzotto's 40 unsecured creditors include: -- Mrachek Popp and Associates of Red Lodge; -- Hendrickson, Everson, Noenning and Woodward P.C. of Billings; -- Security by Kenco of Billings; -- J.D. Deines of Red Lodge; and -- Robert Trent Jones, owed $655,000. According to Billings Gazette, Ms. Rizzotto's secured creditors include: -- Bank of Red Lodge, owed more than $700,000; -- Avanta Federal Credit Union of Billings; -- Rocky Mountain Contract Service of Billings; and -- Beartooth Bank of Billings, which has a secured claim on more than 500 acres of property in the Red Lodge area, valued at almost $1.7 million. Billings Gazette reports that Ms. Rizzotto included among her assets: -- an office in Red Lodge, -- a house outside Boyd, -- lots in Dot Calm Subdivision, and -- property in Arizona. Billings Gazette states that listed as assets exempted from Ms. Rizzotto's bankruptcy are her two seven-year-old chimpanzees, which are valued at $30. Court documents say that Ms. Rizzotto is involved in nine lawsuits, some of which are filed by her. Billings Gazette relates that HKM Engineering, RV Resort LLC, and Avanta have sued Ms. Rizzotto, seeking collections from her. Ms. Rizzotto, according to Billings Gazette, filed for collections from two former employees, claiming that they owe her $10,000 each for services that were never provided. Ms. Rizzotto also filed a lawsuit against a Billings businessman for allegedly failing to return four four-wheelers and a trailer that he borrowed from her, valued at $13,000, Billings Gazette states. Ms. Rizzotto claims that she is owed a total of $33,000, the report says. Jeanne Rizzotto is a Red Lodge developer. JETBLUE AIRWAYS: S&P Assigns 'CCC' Rating on $75MM Debentures ------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'CCC' rating to Forest Hills, New York-based JetBlue Airways Corp.'s (B-/Negative/NR) proposed $75 million senior convertible debentures due 2039 (series A) and $75 million senior convertible debentures due 2039 (series B). The recovery rating on each issue is '6', indicating expectations of negligible (0%-10%) recovery in the event of a payment default. "Our ratings on JetBlue Airways reflect high debt levels the company has undertaken to finance its previously rapid growth rate; participation in the cyclical, price-competitive, and capital-intensive airline industry; and near-term revenue and earnings pressure due to the U.S. recession," said Standard & Poor's credit analyst Philip Baggaley. "The ratings also incorporate the airline's low operating cost structure," he continued. JetBlue is a midsize, low-cost, low-fare airline that started operating in 1999 from New York's JFK International Airport, which remains its principal hub. Liquidity is adequate for the rating, with $634 million of unrestricted cash and short- term investments as of March 31, 2009, equal to about 19% of trailing-12-months revenues (better than average among U.S. airlines). The new debt issues S&P is rating, as well as a concurrent offering of common stock, should bolster liquidity. JetBlue has debt maturities of $229 million in the remainder of 2009, and $244 million in the 12 months to March 31, 2010. The latter amount, at 7.3% of trailing-12-months revenue, is among the highest of U.S. airlines. The outlook is negative. Standard & Poor's could lower the ratings on JetBlue if the recession causes losses and unrestricted cash to consistently decline below $500 million. S&P could revise the outlook to stable if an eventually improving economy and better-than-expected earnings allow JetBlue restore funds flow to debt to the high-single-digit percent area. Ratings List JetBlue Airways Corp. Corp. credit rating B-/Negative/NR Ratings Assigned Proposed $75M sr convertible debentures (ser A) CCC Recovery rating 6 Proposed $75M sr convertible debentures (series B) CCC Recovery rating 6 JOSE MORENO: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Jose Moreno aka Jose Moreno Berroa 603 Crystal Way Orange Park, FL 32065 Bankruptcy Case No.: 09-04527 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Middle District of Florida (Jacksonville) Debtor's Counsel: Albert H. Mickler, Esq. 5452 Arlington Expressway Jacksonville, FL 32211 Tel: (904) 725-0822 Email: court@planlaw.com Total Assets: $1,378,476 Total Debts: $1,949,089 A full-text copy of Mr. Moreno's petition, including a list of his 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flmb09-04527.pdf The petition was signed by Mr. Moreno. KEVIN L. DAHLGREN: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Kevin L. Dahlgren 9539 Fairway Circle Franklin, WI 53132 Bankruptcy Case No.: 09-27929 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Eastern District of Wisconsin (Milwaukee) Debtor's Counsel: William H. Green, Esq. 3216 South 92nd Street, Ste. 201 Milwaukee, WI 53227 Tel: (414) 543-5369 Email: willbky.green@gmail.com Total Assets: $1,129,100 Total Debts: $1,207,515 A full-text copy of Mr. Dahlgren's petition, including a list of his 13 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/wieb09-27929.pdf The petition was signed by Mr. Dahlgren. LEAR CORPORATION: Moody's Cuts Corporate Family Rating to 'Ca' -------------------------------------------------------------- Moody's Investors Service lowered Lear Corporation's Probability of Default and Corporate Family Ratings to Ca, reflecting Moody's view of the increased risk that some level of debt comprise will be required as part of the company's negotiation to amend its senior secured credit facilities. On June 1, 2009, the company announced that it had chosen not to make the June 1st interest payments of approximately $38 million on its senior notes due in 2013 and in 2016. The company is utilizing the applicable 30-day grace period "while it continues discussions regarding a capital restructuring with its lenders and others". If an agreement among Lear and its debt holders is not achieved within the 30 day grace period, Lear may be forced to file for bankruptcy. In a related action, Moody's lowered the ratings on the senior secured term loan to Ca from Caa1, and on the unsecured notes to C from Caa2. This action concludes the review initiated in December 12, 2008. The outlook is negative. The lowering of Lear's Probability of Default Rating to Ca reflects the increased risk of a potential distressed debt exchange or bankruptcy filing by the company. Lear has been operating under waivers to its senior secured credit facilities since March 2009. The most recent waiver will expire on June 30, 2009. The outcome of these negotiations must address these: the $468 million reduction in the company's revolving credit commitments in March 2010; financial covenant cushions to provide sufficient liquidity to operate through the currently difficult industry environment; and the company's capital structure, given the uncertain timing and degree of an industry recovery over the intermediate term. The negative outlook considers that industry conditions will continue to be negatively affected by lower consumer demand over the intermediate term. In addition, the bankruptcy filing of GM (23% of 2008 sales), and Chrysler (3%) increases the risks of operational disruptions at Lear over the near term as these OEMs further rationalize their operations, which include reducing product lines, plant closures, and other operational improvements. Lear's Speculative Grade Liquidity is rated SGL-4 reflecting the company's weak liquidity profile. As of April 4, 2009, Lear maintained cash and cash equivalents of $1.2 billion. However, Moody's believes that cash balances could be meaningfully reduced by 2010 due to cash requirements for the company's operations, the $468 million maturity of a portion of the revolving credit in March 2010, and any potential debt repayment which might be required as part of negotiating a successful amendment. Lear's Euro 315 million factoring facility has been suspended due to rating downgrades. As of April 4, 2009, there were no factored receivables. Lear has $1.29 billion of revolving credit facilities, composed of an $822 million facility maturing in January 2012 and a $468 million facility maturing in March 2010. Lear has fully borrowed available amounts under these facilities in order to bolster its liquidity position. The bank debt is secured by the capital stock of all the company's domestic subsidiaries and a portion of the first tier foreign subsidiaries, and certain domestic assets subject to the 10% lien limitation within the company's bond indentures. Above these levels, collateral must be shared with the bonds. Ratings Lowered: -- Probability of Default, to Ca from Caa2; -- Corporate Family Rating, to Ca from Caa2; -- Senior Secured Term Loan, to Ca (LGD4, 56%) from Caa1 (LGD3, 42%); -- Senior Unsecured Notes, to C (LGD5, 73%) from Caa2 (LGD4, 58%) Ratings affirmed: -- Speculative Grade Liquidity Rating of SGL-4 The last rating action was on January 7, 2009, when Lear's Corporate Family Rating was lowered to Caa2 and the ratings remained under review for further downgrade. Lear Corporation, headquartered in Southfield, Michigan, is focused on providing complete seat systems, electrical distribution systems and various electronic products to major automotive manufacturers across the world. The company had net sales of $13.6 billion in 2008 and employed approximately 80,000 employees in 36 countries. LEHMAN BROTHERS: Libra & SocGen Object to Proposed Assumption ------------------------------------------------------------- As reported by the Troubled Company Reporter on May 13, 2009, Lehman Brothers Holdings Inc. and its debtor-affiliates sought authority from the U.S. Bankruptcy Court for the Southern District of New York to assume and assign a credit default swap agreement to Deutsche Bank AG, London Branch, and a letter of agreement with the bank. Libra CDO Limited and Societe Generale New York Branch argue that a ruling on the proposed assumption of the swap agreement, the letter of agreement, and the proposed break-up fee should not be granted at this time. Libra and SocGen point out that in connection with the proposed assumption, the Debtors also sought court approval of a letter of agreement with the bank. The letter agreement secures the commitment of Deutsche Bank to assume the swap agreement and prohibits the bank to enter into another transaction while the dispute between Libra CDO and the Debtors over the swap agreement is not yet resolved. The dispute stemmed from Libra's announcement that the swap agreement had been terminated on October 10, 2008, as a result of the Debtors' bankruptcy. The Debtors have filed a lawsuit seeking nullification of the termination while Libra filed a lawsuit seeking court declaration that the termination is valid. Attorney for Libra CDO and SocGen, Brian Trust, Esq., at Mayer Brown LLP, in New York, asserts that the proposed assumption and the request for approval of the letter agreement and the break-up fee are premature. Mr. Trust adds that the proposed arrangement would not encourage further bids before the lawsuits are concluded "further demonstrating that consideration of the proposed break-up fee should be deferred to that time." "Given the terms of the proposed arrangement, there is no legitimate reason why the Debtors or their proposed assignee need to know whether a break-up fee will be approved, or in what amount, at any time before the adversary proceedings are concluded," Mr. Trust asserts, adding that there no reason why the lawsuits have to be concluded in just 90 days from the day the letter agreement was executed. Debtors Defend Proposed Assumption The Debtors ask the Court to overrule the objections of Libra and Societe arguing that the letter agreement and the proposed break- up fee have the support of the general unsecured creditors. "The support by the creditors and the absence of any objections on behalf of genuine creditors demonstrates the propriety of the relief requested," Ralph Miller, Esq., at Weil Gotshal & Manges LLP, in New York asserts, adding that Libra and Societe did not raise their objections as creditors of Debtor Lehman Brothers Special Financing SF but as counterparties in a related adversary proceeding. "These two parties have interests diametrically opposed to the estate and its creditors," Mr. Miller says. According to Mr. Miller, if it is determined that the swap agreement is not terminated, LBSF stands to recover hundreds of millions of dollars and Libra and SocGen would be responsible for paying those funds to the estate. He says LBSF entered into the letter agreement and filed the motion after settlement discussions with Libra and SocGen on the issue failed to reach a settlement. "The position of Libra and SocGen is nothing more than that of a losing bidder, and such losing bidders are routinely precluded from challenging the Debtor's entry into a transaction with another party," Mr. Miller says. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: LBSF Sues BNY Corporate Trustee ------------------------------------------------ Debtor Lehman Brothers Special Financing, Inc., commenced an adversary proceeding against BNY Corporate Trustee Services Limited to prevent certain unenforceable ipso facto clauses from improperly modifying LBSF's right to priority payments under certain swap agreements solely because it filed a Chapter 11 case. BNY entered into a Principal Trust Deed in 2002 with Dante Finance Public Limited Company pursuant to which a multi-issuer secured obligation program was established. Under the program, Dante issued secured Notes to borrow, buy, sell, or enter into other secured obligations, including swaps. BNY serves as Trustee under the program. One of the Issuers of Notes under the Dante program was Saphir Finance Public Limited Company. LBSF is the swap counterparty under the transactions. In December 2008, Saphir sent putative notices to LBSF stating that LBSF's bankruptcy filing constituted an Event of Default under the ISDA Master Agreement and designated December 1, 2008, as the early termination date under the agreement. No distributions under the Transaction Documents have occurred since Saphir sent its notices. If LBSF's right to payment priority is modified as a result of its bankruptcy filing, and its distributions would be subordinate to noteholder distributions, LBSF would receive no payments given that amounts that would be due to Noteholders would exceed available funds. The resulting loss to LBSF's bankruptcy estate and its creditors would be approximately $39 million for the Saphir 2004-11 transaction and approximately $31 million for the Saphir 2006-5 transaction. Accordingly, LBSF asks the U.S. Bankruptcy Court for the Southern District of New York to declare that the provisions modifying its payment priority solely because of its bankruptcy filing are unenforceable ipso facto clauses and that any action to enforce those provisions violates the automatic stay. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Alvarez & Marsal Gets $42.6MM for 3 Months' Work ----------------------------------------------------------------- Alvarez & Marsal North America, LLC, filed with the U.S. Bankruptcy Court for the Southern District of New York its second quarterly compensation report for the period December 1, 2008, to February 28, 2009, in relation to its work in Lehman Brothers Holdings Inc. and its debtor-affiliates' Chapter 11 cases. The report showed that the firm received these amounts for payment of fees and reimbursement of expenses during the period: Compensation Period Professional Fees Expenses -------------------- ----------------- -------- 12/01/08 to 12/31/08 $13,507,262 $681,862 01/01/09 to 01/31/09 14,396,008 486,667 02/01/09 to 02/28/09 14,786,790 640,987 Lehman Brothers Holdings Inc. hired Bryan P. Marsal as its chief restructuring officer, as required under the terms of the $450,000,000 DIP Facility. Lehman Brothers tapped the services of Mr. Marsal and other employees of Alvarez & Marsal North America LLC, in New York, in connection with its restructuring. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Taps Jones Day to Probe Barclays & AIG CDS Deals ----------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors sought and obtained an order from the U.S. Bankruptcy Court for the Southern District of New York authorizing Jones Day to provide them legal assistance in connection with: (i) the examination of the negotiation and conclusion of the the asset purchase agreement dated September 16, 2008, and and other related transactions involving the Debtors and Barclays Capital Inc. that occurred in and after September 2008; and (ii) the examination of issues relating to derivatives trades among Debtor Lehman Brothers Special Financing Inc. and certain other Debtors, on the one hand, and the counterparty to trades, AIG CDS, Inc. and its affiliates, on the other. As reported by the Troubled Company Reporter on March 11, 2009, the U.S. Bankruptcy Court for the Southern District of New York authorized Lehman Brothers Holdings Inc. and its debtor-affiliates to employ Jones Day as their special counsel. As special counsel, Jones Day will: (1) assist Lehman Brothers Holdings, Inc., in relation to any issues arising in the Asia Pacific region, principally in Hong Kong, The Philippines, Taiwan, Japan and Australia, as a result of their bankruptcy cases in the United States; (2) assist and advise LBHI with respect to the insolvency proceedings of Lehman Brothers Australia Holdings Pty Limited in Australia; (3) assist LBHI and its U.S.-based units in asserting claims in the Japanese Civil Rehabilitation proceedings of Lehman Brothers Japan KK, Lehman Brothers Commercial Mortgage KK and Sunrise Finance KK in Japan; (4) advise LBHI in connection with claims that may be asserted against it relating to Lehman Brothers Japan Holdings KK; (5) advise LBHI and its units with respect to distressed debt transactions in Taiwan, China, The Philippines and Thailand, and its acquisition and financing of real estate assets in Taiwan; (6) represent certain Lehman units through various "third parties" in the sale of their Sunrise Project and the changes to their corporate registrations required by the departure of the members of the Boards of their operating companies to Nomura; (7) continue representing LBHI in the lawsuit it filed against John Kontrabecki in the U.S. Bankruptcy Court of the Northern District of California, and in related bankruptcy cases; and (8) represent LBHI and its affiliated debtors in connection with their businesses and operations in India. In exchange for its services, the Debtors will pay Jones Day these hourly rates: Professionals Rates ------------- ----------- Partners $575 - $900 Counsel $525 - $550 Associates $200 - $475 Paralegals $190 - $225 Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for Chapter 11 on September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On September 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on September 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on September 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEONARD O WALLACE: Meeting of Creditors Scheduled for June 10 ------------------------------------------------------------- The U.S. Trustee for Region 18 will convene a meeting of creditors in Leonard O. Wallace's Chapter 11 case on June 10, 2009, at 9:00 a.m. The meeting will be held at 6450 N. Mineral Dr., in Coeur d Alene, Idaho. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Post Falls, Idaho-based Leonard O. Wallace filed for Chapter 11 on May 14, 2009 (Bankr. D. Idaho Case No. 09-20496). Bruce A. Anderson, Esq., represents the Debtor in its restructuring efforts. The Debtor has assets and debts both ranging from $10 million to $50 million. LYONDELL CHEMICAL: Solutia Dispute Millenium's Claims ----------------------------------------------------- Solutia Inc. denies all allegations set forth in Debtor Millennium Petrochemicals Inc.'s complaint. Early this year, Millennium Petrochemicals Inc. commenced an action against Solutia Inc. and Solutia Europe SPRL/BVBA, to recover $1,964,896. Pursuant to an Amended and Restated Vinyl Acetate Monomer Sales Agreement, the Debtor sold to the Solutia Entities vinyl acetate monomer. Under the Agreement, Solutia must pay for the Product within 30 days of each invoice date. Since December 2008, the Debtor sent Solutia nine invoices for payment in connection with sales of the Product totaling $820,869. But Solutia has not paid those amounts. Moreover, the Debtor sent Solutia Europe three invoices totaling $1,144,026, which remains unpaid. Lyondell Chemical Company, on behalf of Millennium, wrote to demand adequate assurance of future performance from the Solutia Entities under the Agreement, however, the Solutia Entities have refused to provide adequate assurance to Millennium. Subsequently, Lyondell informed the Solutia Entities that due to their not providing adequate assurance, the Solutia Entities had repudiated the Agreement as of March 13, 2009. Representing Solutia, Jeffrey J. Zieger, Esq., at Kirkland & Ellis LLP, in New York, explains that under a June 2007 letter of credit, Millennium and Equistar Chemicals, LP agreed to provide $25 million of credit to Solutia. Under the Credit Letter, Equistar did not lift the credit restrictions, but instead, did not require Solutia to pay Equistar until the total amounts outstanding exceeded the current negotiated aggregate credit limit of approximately $45 million, including the original $25 million credit limit and the additional $20 million in assured credit for which Solutia paid. He stresses that Solutia relied on those terms in structuring its business activities and finances. Moreover, the line of credit provided to Solutia under the Credit Letter applies to any products purchased by Solutia from Equistar or Millennium, he notes. He discloses that Solutia's combined obligations to Equistar and Millennium are under the $45 million cap. Millennium, however, has now sued Solutia for the amounts owed under the credit line -- even though they are not due and payable -- because of Millennium's own liquidity concerns, he asserts. Thus, he contends that Millennium's claims are barred, in whole or in part, based on estoppel. In addition, Mr. Zieger stresses that Millennium's claims are barred, in whole or in part, by the doctrine of unclean hands, waiver, and laches. In a separate filing, Solutia Europe SPRL/BVBA also denies all allegations asserted by Millennium. Solutia Europe asserts defenses identical to Solutia arguing that Millennium's claims are barred, in whole or part, by doctrines of estoppel, unclean hands, waiver, and laches. Mr. Zierger further argues that Millennium's claims are barred, in whole or in part, because Solutia Europe is not subject to personal jurisdiction before the Bankruptcy Court. He explains that the Amended and Restated Vinyl Acetate Monomer Sales Agreement was to be performed entirely within Europe. Millennium and the Solutia Entities will follow the schedule approved by Judge Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York in the adversary proceeding commenced by Debtor Equistar Chemicals, LP against Solutia Inc. * July 10, 2009 -- deadline to complete all fact discovery * June 30, 2009 -- deadline for parties to identify their experts * July 31, 2009 -- production of expert reports under Rule 26(a)(2) of the Federal Rules of Civil Procedure * August 21, 2009 -- deadline to file rebuttal expert Reports * September 4, 2009 -- completion of depositions of all parties' experts and rebuttal experts * September 25, 2009 -- deadline to file of all dispositive motions * October 16, 2009 -- deadline to file any opposition papers * October 27, 2009 -- deadline to file reply papers About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. According to the TCR on April 6, S&P said its ratings and outlook on Solutia (B/Watch Neg/--) remain unchanged following Solutia's announcement that it has entered into a definitive agreement to sell its nylon business to an affiliate of SK Capital Partners II L.P., a New York-based private equity firm. The transaction is expected to close in the second quarter of 2009. About Lyondell Chemical LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. In May 2009, one of the cases was dismissed -- Case No. 09-10068 -- because it is duplicative of Case No. 09-10040 relating to Debtor Glidden Latin America Holdings. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately $8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a $6.5 billion term loan (comprising $3.25 billion in new loans and a $3.25 billion roll-up of existing loans) and a $1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24, 2009 in order to seek protection against claims by certain financial and U.S. trade creditors. On May 8, 2009, LyondellBasell Industries added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Marathon Petroleum Agrees to Dismiss Appeal -------------------------------------------------------------- Marathon Petroleum Company LLC and Lyondell Chemical Company and its debtor-affiliates filed with the U.S. District Court for the Southern District of New York on April 30, 2009, a stipulation of voluntary dismissal of appeal pursuant to Rule 8001(c)(2) of the Federal Rules of Bankruptcy Procedure, with each party bearing its own costs. District Court Judge Richard M. Berman approved the stipulation on May 1, 2009. Marathon Petroleum Company LLC previously appealed the order entered by Judge Robert E. Gerber on February 26, 2009, granting preliminary injunction in favor of the Debtors' non-debtor affiliates, and Judge Gerber's bench decision regarding the Injunction Order. Judge Gerber granted the preliminary injunction sought by Lyondell Chemical Company preventing certain creditors from proceeding against its parent company, LyondellBasell Industries AF S.C.A. Judge Gerber enjoined the parties from commencing involuntary insolvency proceedings in foreign countries -- against LBI until April 27, 2009, or for a period of 60 days. About Lyondell Chemical LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. In May 2009, one of the cases was dismissed -- Case No. 09-10068 -- because it is duplicative of Case No. 09-10040 relating to Debtor Glidden Latin America Holdings. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately $8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a $6.5 billion term loan (comprising $3.25 billion in new loans and a $3.25 billion roll-up of existing loans) and a $1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24, 2009 in order to seek protection against claims by certain financial and U.S. trade creditors. On May 8, 2009, LyondellBasell Industries added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MARINER ENERGY: Moody's Assigns 'B3' Rating on $250 Mil. Notes -------------------------------------------------------------- Moody's Investors Service assigned a B3, LGD5 (74%) rating to Mariner Energy, Inc.'s proposed offering of $250 million of senior unsecured notes due 2016. Moody's also affirmed Mariner's B2 Corporate Family Rating and Probability of Default Rating and the B3, LGD5 (74% changed from 71%) rating on the company's existing $600 million of senior unsecured notes. The Speculative Grade Liquidity Rating remains SGL-2 and the outlook is stable. These rating actions are subject to the completion of Mariner's common stock and notes offering. "Mariner's common stock offering provides significant debt reduction that supports the company's B2 rating," commented Pete Speer, Moody's Vice President. "The stock and bond offering proceeds will pay down revolver borrowings in order to maintain Mariner's good liquidity profile." The company announced an offering of 10 million shares of common stock and $250 million of senior unsecured notes. Pro forma for the stock offering, leverage as measured against proved developed reserves will decline from just over $11/boe as of March 31, 2009, to around $9.75. This improvement in leverage metrics has strengthened Mariner's positioning within the B2 rating category and offset some of Moody's concerns regarding the company's high finding and development costs. Pro forma for the stock and debt offerings, Mariner will have approximately $250 million drawn on its revolving credit facility, leaving the company with approximately $550 million of availability. Mariner expects to fund its capital expenditure budget over the remainder of 2009 with operating cash flow and use free cash flow to further reduce revolver borrowings. This substantial increase in revolver availability reduces the company's liquidity risks in future borrowing base redeterminations and was important for maintaining the SGL-2 rating given the currently weak natural gas price environment. The last rating action was on April 24, 2007, when Moody's affirmed Mariner's B2 CFR and assigned a B3 rating to Mariner's offering of senior unsecured notes due 2017. Mariner Energy, Inc., is an independent exploration and production company headquartered in Houston, Texas that operates primarily in the Gulf of Mexico and West Texas MASONITE INTERNATIONAL: Set to Emerge From Bankruptcy Very Soon --------------------------------------------------------------- Masonite International Inc. said in a news release dated June 1, 2009, that the Ontario Superior Court of Justice issued an order recognizing and implementing in Canada the May 29, 2009 confirmation by the U.S. Bankruptcy Court in Wilmington, Delaware of the Company's Plan of Reorganization and approving the Canadian corporate plan of arrangement. Masonite expects to emerge from Chapter 11 of the U.S. Bankruptcy Code and Companies' Creditors Arrangement Act (CCAA) protection in Canada within the next few weeks. The Company previously announced that both Masonite's term lenders and bondholders voted overwhelmingly in support of the Plan and the CBCA Plan, with 100% of the senior secured debt (US$1.4 billion, 161 term lenders) and 99.99% of the bondholders (US$665 million, 101 bondholders) of those voting on the Plan and the CBCA Plan voting to accept them. In a show of further support for the Company's Plan and CBCA Plan, the term lenders chose to convert 99% of their holdings to equity, which means that Masonite will emerge from this process with less than approximately US$11.3 million of long-term debt on its balance sheet. Masonite also reported that it had more than US$163 million in cash-on-hand at the end of the first quarter of 2009 and expects to close on an Asset-Backed, Revolving Line of Credit facility of up to US$150 million shortly after emergence. As previously announced, Masonite's Plan and CBCA Plan will become effective -- and the Company will exit bankruptcy protection -- as soon as all closing conditions to the Plan and the CBCA Plan have been met. "These orders by the Ontario Superior Court of Justice and the U.S. Bankruptcy Court mark the final stages of Masonite's restructuring, and we should expect to emerge from Chapter 11 and CCAA protection in just a few weeks," said Fred Lynch, President and Chief Executive Officer of Masonite. "As a result of this restructuring and the continued focus on our strategy, Masonite will emerge from this process a stronger, more competitive, more capable company. We want to thank our agent, The Bank of Nova Scotia, and our creditors for their strong endorsement of our Plan of Reorganization, which we believe will provide us with the financial flexibility to not only weather this downturn, but to also take advantage of new growth opportunities as the markets rebound. That's good for the Company, our employees, customers and all of our business partners." About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The Company provides these products to its customers in more than 70 countries around the world. The Company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. Masonite International, Inc., and six affiliates filed petitions on March 16, 2009, before the Ontario Superior Court of Justice (Commercial List) under the Companies' Creditors Arrangement Act. The Honorable Justice Campbell presides over the CCAA proceedings. Derrick Tay and Orestes Pasparakis at Ernst & Young, Inc. serve as monitor. Jay A. Carfagnini, Esq., and Brian F. Emprey, Esq., at Goodmans LLP in Toronto, serve as the Applicants' counsel. Masonite Corporation, based in Tampa, Florida, and several U.S. affiliates filed for Chapter 11 bankruptcy protection on the same day (Bankr. D. Del. Case No. 09-10844). Judge Peter J. Walsh handles the cases. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP; and Daniel J. DeFranceschi, Esq., Jason M. Madron, Esq., and Katisha D. Fortune, Esq., at Richards, Layton & Finger, P.A., serve as bankruptcy counsel. The Debtors' Investment Banker and Financial Advisor is Perella Wenberg Partners LLP; the Debtors' Restructuring Advisors is Alvarez & Marsal North American LLC; and the Debtors' Claims Agent is Kurtzman Carson Consultants LLC. As of January 31, 2009, the Debtors had total assets of $1,527,495,443 and total debts of $2,641,590,842. The Debtors filed with the Bankruptcy Court a pre-negotiated reorganization plan together with their petitions. The Plan provides that Masonite's existing senior secured obligations will be converted on a pro rata basis subject to the election of each existing holder of Senior Secured Obligations into: (i) a new first-priority senior secured term loan; (ii) a new second- priority senior secured PIK loan; and (iii) 97.5% of the common equity of the reorganized Masonite. Holders of Masonite's existing senior subordinated notes will be allocated 2.5% of the common equity in the reorganized Masonite plus warrants for 17.5% of the common stock of the reorganized Company, subject to dilution under certain conditions. Holders of Class 5 General Unsecured Claims under the Plan will be unimpaired and is expected to recover 100% under the Plan. Bankruptcy Creditors' Service, Inc., publishes Masonite Bankruptcy News. The newsletter tracks the CCAA proceedings in Canada and parallel chapter 11 proceedings in Delaware undertaken by company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MASTEC INC: $100MM Sr. Notes Offering Won't Affect Moody's Ratings ------------------------------------------------------------------ Moody's Investors Service commented that MasTec, Inc.'s announcement that it plans to offer $100 million of 4.0% convertible senior notes due 2014 does not have an immediate impact on its ratings and outlook (Ba3 corporate family rating; stable outlook). The last rating action was on January 13, 2009, when Moody's affirmed MasTec, Inc.'s Ba3 corporate family rating and the B1 rating on its senior unsecured notes following its acquisition of Wanzek. MasTec, Inc., headquartered in Coral Gables, Florida, is a leading specialty contractor operating mainly in the United States. The company generated revenues of approximately $1.5 billion for the twelve months ended March 31, 2009. MID AMERICA: Case Summary & Eight Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Mid America Agri Products/Horizon, LLC P.O. Box 1655 1900 East State Farm Road North Platte, NE 69103 Bankruptcy Case No.: 09-41543 Chapter 11 Petition Date: June 3, 2009 Court: District of Nebraska (Lincoln Office) Debtor's Counsel: Robert V. Ginn, Esq. rvgbknotice@huschblackwell.com Blackwell Sanders Peper Martin LLP 1620 Dodge Street, Suite 2100 Omaha, NE 68102 Tel: (402) 964-5000 Fax: (402) 964-5050 Estimated Assets: $50 million to $100 million Estimated Debts: $50 million to $100 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cargill trade $950,085 19849 West Highway 30 PO Box 460 Shelton, NE 68876-0460 ONEOK Partners LP utility $314,591 West Fifth Stree Tulsa, OK 74103 Furnas County Treasurer taxes $186,863 PO Box 407 912 R. Street Beaver City, NE 68926 SG Aermicas Securties LLC consulting $132,676 Noble Americs leases unknown CAT Financial Services leases unknown City of Cambridge utilities unknown Kinder Morgan Interstate transporation unknown The petition was signed by Robert F. Lundeen, chief executive officer. MIDWAY GAMES: Compensation Committee Okays Bonus Plan for Spiess ---------------------------------------------------------------- On May 26, 2009, the Compensation Committee of the Board of Directors of Midway Games Inc. approved Midway Games Limited's Sales Bonus Plan for Martin Spiess, Executive Vice President, International, for MGL, a wholly-owned subsidiary of Midway Games with its office in London, England. Under the terms of the Bonus Plan, Mr. Spiess may receive a bonus amount up to EUR23,100 and EUR42,900 in each of May and June 2009. Each Monthly Bonus is payable by MGL within three business days after MGL's final tabulation of gross sales for May and June 2009, respectively. Sixty percent of each Monthly Bonus shall be paid regardless of the gross sales for the applicable month. The remaining forty percent of each Monthly Bonus shall only be paid if gross sales for the applicable month equal or exceed a specified amount. The Monthly Bonus shall be subject to applicable taxes -- including, without limitation, any applicable government deductions such as National Insurance Contributions -- before payment. In a regulatory filing dated June 1, 2009, Matthew V. Booty, the company's president and chief executive officer, said that Mr. Spiess will not be entitled to payment under the Bonus Plan if he: (i) is not actively employed by MGL on the date of payment of the applicable Monthly Bonus; (ii) has given to or received from MGL notice of termination of his employment; (iii) is on garden leave; (iv) has been continuously absent from the office for more than four (4) weeks on sick leave; or (v) is on unpaid leave of more than two weeks with MGL's agreement. About Midway Games Midway Games Inc. (OTC Pink Sheets: MWYGQ), headquartered in Chicago, Illinois, with offices throughout the world, is a leading developer and publisher of interactive entertainment software for major videogame systems and personal computers. More information about Midway and its products can be found at http://www.midway.com/ The Company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. MOMENTIVE PERFORMANCE: S&P Retains 'CC' Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that its 'CC' corporate credit rating on Momentive Performance Materials Inc. remains on CreditWatch with negative implications pending completion of an exchange offer, which S&P deems to be distressed. If the company completes the offer as proposed, S&P will lower the corporate credit rating to 'SD' (selective default). S&P assigned a 'C' issue rating and a recovery rating of '6' to Momentive's proposed offering of $200 million second-lien notes due in 2014. These ratings, which reflect S&P's views of the company's credit quality following the exchange offer, indicate S&P's expectation for negligible (0% to 10%) recovery for the holders of these notes in the event of a payment default. At the same time, S&P lowered the issue ratings on the senior secured debt of Momentive and its subsidiaries to 'CCC-' from 'CCC', and removed the ratings from CreditWatch. In addition, S&P revised the recovery ratings on the senior secured debt to '3' from '1'. These ratings indicate S&P's expectation of meaningful (50% to 70%) recovery for the holders of this debt. In addition, S&P lowered the ratings on Momentive's senior unsecured debt to 'C' from 'CC' and revised the recovery rating to '6' from '4'. The subordinated debt remains at 'C' with a recovery rating of '6'. The senior unsecured debt and subordinated debt remain on CreditWatch with negative implications pending completion of the exchange offer, when S&P expects to lower the issue ratings to 'D'. These rating actions follow S&P's review of the company's business and financial prospects, as well as an updated recovery analysis. For the complete recovery analysis, see S&P's recovery report on Momentive to be published shortly after this report. If the exchange offer is completed as currently planned, S&P expects to raise the corporate credit rating to 'CCC-' from 'SD' and assign a negative outlook. S&P also expects to raise the senior unsecured and subordinated debt ratings back to 'C' from 'D' following the completion of the transaction. Momentive has extremely high leverage. At March 29, 2009, total adjusted debt was close to $4 billion, and total adjusted debt to EBITDA was well into the double digits. S&P adjusts debt to include about $500 million of pay-in-kind seller notes at the parent holding company, about $125 million in unfunded, tax- effected postretirement obligations, and $40 million of capitalized operating leases. S&P expects to lower the corporate credit rating to 'SD' and the senior unsecured and subordinated debt ratings to 'D' upon completion of the exchange offer, which management currently believes will occur on June 9, 2009. If the exchange offer is completed as currently planned, and barring any other major developments, S&P expects shortly thereafter to raise the corporate credit rating to 'CCC-' and assign a negative outlook. S&P anticipates that all the issue ratings will stay at or revert to the levels. MORRIS PUBLISHING: Has Until June 12 to Pay $9.7MM Notes Interest ------------------------------------------------------------------ Morris Publishing Group, LLC, has obtained an extension until 5:00 p.m. New York City time, on June 12, 2009, to make a $9.7 million interest payment on its senior subordinated notes. Holders of more than 80% of the outstanding amount of senior subordinated notes have agreed to extend the forbearance period for the payment due on the notes, which originally was due February 1, 2009. On May 28, 2009, the Company, as borrower, entered into Waiver No. 6 of its Credit Agreement dated December 14, 2005, with Morris Communications Company, LLC, certain lenders parties and JPMorgan Chase Bank, N.A., as administrative agent. Additional parties to the Waiver include the subsidiary guarantors of Morris Publishing, Morris Communications, MPG Newspaper Holding, LLC, the parent of Morris Publishing, Shivers Trading & Operating Company, the parent of MPG Holding, and Morris Communications Holding Company, LLC, the parent of Morris Communications. Lender parties to the Credit Agreement are JPMorgan Chase Bank, N.A., The Bank of New York, SunTrust Bank, Wachovia Bank, N.A., Bank of America, N.A., General Electric Capital Corporation, Allied Irish Banks, P.L.C., RBS Citizens, N.A., Comerica Bank, US Bank, National Association, First Tennessee Bank, National Association, Webster Bank, National Association, Keybank National Association, Sumitomo Mitsui Banking Corporation, and Mizuho Corporate Bank, Ltd. An event of default under the Credit Agreement is if Morris Publishing defaults in the payment of any principal or interest due on any other indebtedness having an aggregate principal amount of $5,000,000 or more. The waiver will terminate earlier if Amendment No. 3 to the Forbearance Agreement is terminated or amended prior to that time or upon other defaults. Waiver No. 6 also waives until June 12, 2009, any event of default that may have occurred consisting solely of the consolidated cash flow ratio of Morris Communications and Morris Publishing exceeding the applicable amount permitted under the Credit Agreement. Morris Publishing's senior bank group also agreed to extend until June 12, 2009, the waiver of the cross default arising from the overdue interest payment on the senior subordinated notes. About Morris Publishing Headquartered in Augusta, Geogia, Morris Publishing Group, LLC -- http://www.morris.com/-- was formed in 2001 and assumed the operations of the newspaper business segment of its parent, Morris Communications Co., LLC, a privately held media company. The company has a concentrated presence in the Southeast, with four signature holdings: The Florida Times-Union (Jacksonville), The Augusta Chronicle, Savannah (Georgia) Morning News and Athens (Georgia) Banner-Herald. Morris Publishing owns and operates 13 daily newspapers as well as nondaily newspapers, city magazines and free community publications in the Southeast, Midwest, Southwest and Alaska. * * * As reported in the Troubled Company Reporter on February 5, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on Augusta, Georgia-based Morris Publishing Group LLC to 'D' from 'CCC'. In addition, the issue-level rating on the company's $300 million senior subordinated notes was lowered to 'D' from 'CC', and the issue-level rating on its senior secured credit facility was lowered to 'CC' from 'CCC+'. NANOGEN INC: Section 341(a) Meeting Slated for June 18 in Delaware ------------------------------------------------------------------ Roberta A. DeAngelis, Acting U.S. Trustee for Region 3, will convene a meeting of creditors in Nanogen, Inc., and its debtor- affiliates' Chapter 11 cases on June 18, 2009, at 10:00 a.m. The meeting will be held at J. Caleb Boggs Federal Building, Room 5209, 844 King Street, in Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in San Diego, California, Nanogen, Inc. is a manufacturer of advanced human diagnostic products. The Company and its affiliates filed for Chapter 11 on May 13, 2009 (Bankr. D. Del. Lead Case No. 09-11696). Karen B. Skomorucha, Esq., Ricardo Palacio, Esq., and William Pierce Bowden, Esq., at Ashby & Geddes, P.A., represent the Debtors in their restructuring efforts. The Debtors have assets and debts both ranging from $10 million to $50 million. NORTHFIELD LABORATORIES: Gets Delisting Notice from NASDAQ ---------------------------------------------------------- Northfield Laboratories Inc. said it has received a letter dated June 2, 2009 from the staff of the Nasdaq Stock Market indicating that the Company's common stock will be delisted from the Nasdaq Global Market as of the opening of trading on June 11, 2009 in accordance with Nasdaq Listing Rules 5100 and 5110(b) and IM-5100-1. Receipt of the Nasdaq letter follows the Company's announcement on June 1, 2009 that it had filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Delaware. The filing was made to facilitate the Company's previously-announced plan to wind down its business operations and carry out an orderly disposition of its assets. In view of the Company's plan to wind down its business, the Company does not expect to appeal the determination of the Nasdaq staff with respect to the delisting of its common stock. Following the effective date of the delisting of its shares on the Nasdaq Global Market, the Company's common stock will not be immediately eligible to trade on the OTC Bulletin Board or in the "Pink Sheets" over-the-counter trading market. The Company's common stock may become eligible if a market maker submits an application to quote the common stock in accordance with Securities and Exchange Commission Rule 15c2-11 and the application is approved. Only a market maker, and not the Company, may file an application with respect to quotation of the Company's common stock. There can be no assurance that the Company's common stock will become eligible for trading on the OTC Bulletin Board or any other over-the-counter trading market, or that an active trading market will develop or continue if the Company's common stock becomes eligible for trading. The lack of an active trading market for the Company's common stock is likely to make it more difficult for stockholders to sell their shares and may result in a material decrease in the market price of the Company's common stock. As a result of the commencement of its Chapter 11 bankruptcy proceeding, the Company expects to suspend future compliance with its ongoing public reporting obligations under Sections 12 and 15 of the Securities Exchange Act of 1934. Suspension of compliance with these reporting obligations may cause the Company's common stock to become ineligible for trading on the OTC Bulletin Board or other over-the-counter trading markets. Headquartered in Evanston, Illinois, Northfield Laboratories Inc. (NASDAQ:NFLD) -- http://www.northfieldlabs.com/-- develops oxygen-carrying red blood cell to patients with low hemoglobin level. Northfield Laboratories Inc. filed for Chapter 11 protection on June 1, 2009 (Bankr. D. Del. Case No. 09-11924). Ian Connor Bifferato, Esq., and Thomas F. Driscoll, III, Esq., at Bifferato LLC, assist the Debtor in its restructuring efforts. In its petition, the Debtor listed estimated assets to range from $10,000,001 to $50,000,000, and estimated debts to range from $1,000,001 to $10,000,000. NUKOTE INT'L: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Nukote International, Inc. 200 Beasley Drive Franklin, TN 37064 Bankruptcy Case No.: 09-06240 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- Nu-Kote Imperial, Ltd. 09-06243 International Communications Materials, Inc. 09-06244 Envirosmart, Inc. 09-06245 Black Creek Holdings Ltd. 09-06246 Type of Business: The Debtors make ink and toner cartridges for laser and ink-jet printers, copiers, and fax machines. See http://www.nukote.com/ Chapter 11 Petition Date: June 3, 2009 Court: Middle District of Tennessee (Nashville) Judge: Keith M Lundin Debtor's Counsel: Barbara Dale Holmes, Esq. bdh@h3gm.com Harwell Howard Hyne Gabbert & Manner, P. 315 Deaderick Street, Suite 1800 Nashville, TN 37238 Tel: (615) 256-0500 Fax: (615) 251-1058 -- and -- Frank J. Wright, Esq. bankruptcy@wgblawfirm.com Wright Ginsberg Brusilow PC 14755 Preston Road, Suite 600 Dallas, TX 75254 Tel: (972) 788-1600 Fax: (972) 239-0138 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Grupo American Industries S. $2,616,094 Av. Washington No. 3701 Edificio 18, Col. Panamericana Chichuahua, Chichuahua Mexico 31200 Tel: 01152 (614) 439 Fax: 01152 (614) 439-36-09 Static Control Components $2,517,888 PO Box 60976 Charlotte, NC 28260-0976 Tel: (800) 488-2426 Innotex Precision Ltd. $2,2000,000 Unit 6, 10F, Blk A, MP Ind. 18 Ka Yip Street Chai Wan, Hong Kong 070 Tel: 01152 (614) 439 Fax: 01152 (614) 439-36-09 Future Graphics LLC $2,155,401 1175 Aviation Place San Fernando, CA 91340 Tel: (800) 394-990 Fax: (818) 838-7028 International Cargo (Jamaica) $891,119 Cargo Bldg., Suite 9 JFK International Airport Jamaica, NY 11430 Tel: (718) 995-5550 Fax: (718) 995-9099 Fed Ex (Palatine) $708,352 PO Box 660481 Dallas, TX 75266-0481 Tel: (412) 809-4939 Fax: (412) 809-8511 Imex America Corp. $603,028 Hewlett-Packard Company $464,582 Mallory Alexander International $390,593 Nippon Carbide $233,091 Tuico Products Corporation $215,877 Sunrise Distribution USA Inc. $210,472 Fay Sharpe LLP $209,937 ABF Freight System Inc. $189,106 West Point Products $182,627 Print-Rite Procurement Service $163,355 Greentec International Inc. $155,468 Paschall Truck Line Inc. $145,398 Jamestown Container $134,383 Express Personnel Services $131,976 The petition was signed by John P. Rochon, chief executive officer and president. ORION POWER: Moody's Affirms Ba3 Sr. Unsecured Ratings ------------------------------------------------------ Moody's Investors Service downgraded the long-term ratings of RRI Energy, including the Corporate Family Rating, to B1 from Ba3 and its Probability of Default Rating to B1 from Ba3. Moody's also downgraded the company's senior secured ratings to B1 from Ba3 and RRI's senior unsecured ratings to B2 from B1. The Reliant Energy Mid-Atlantic Power Hldgs., LLC senior secured pass-through certificates are confirmed at Ba1 and the Orion Power Holdings senior unsecured ratings are confirmed at Ba3. In addition, Moody's upgraded RRI's speculative grade liquidity rating to SGL-1 from SGL-2. These rating actions conclude the review for possible downgrade that was initiated on September 29, 2008. The rating outlook is stable. "RRI's cash flow generation and key financial credit metrics are declining due to reduced production volumes and margins" said Jim Hempstead, Senior Vice President "but the company is expected to also reduce its overall debt outstanding with the proceeds from the recent divestiture of its retail electric provider operations and the maturity of the OPH notes in May 2010." The upgrade of RRI's speculative grade liquidity rating to SGL-1 from SGL-2 reflects to sizeable cash balances, availability under its secured credit facility and ample headroom under its primary financial covenant. Moody's views management's stated intention to redeem the approximately $400 million Orion Power Holdings senior unsecured notes due in May 2010 as a credit positive, in part due to the elimination of debt and in part due to the simplified capital structure. "Managing the cash balances as part of the operating risk profile provides RRI with a reasonable cushion to weather the difficult and uncertain market conditions" added Mr. Hempstead "and with the company's pure focus on merchant generation, Moody's incorporate an expectation that additional announcements regarding a reduction in the targeted debt profile will be viewed positively for the credit." While the economic conditions and low commodity price environment are contributing to lower volumes and margins for this largely un- hedged merchant generator, RRI is well positioned with a B1 CFR which places the company behind NRG (Ba3 CFR), in-line with Mirant (B1 CFR) and ahead of Dynegy and Calpine (B2 CFR's), which seems to make sense given RRI's relatively lower debt load and prospects to improve their financial profile with improving market conditions. RRI's liquidity profile is strong, with approximately $1.4 billion in cash on the balance sheet. A portion of the retail sales proceeds (approximately $250 million) is expected to reduce senior secured debt at the parent. In addition, the Orion Power Holdings senior unsecured debt ($400 million due May 2010) is expected to be redeemed with cash. This action (OPH redemption) will serve to simplify RRI's capital structure to where the majority of the company's debt (secured and unsecured) resides at the parent holding company level, with the exception of the REMA pass-through certificates. RRI's ratings are benefited by the diversity of its approximately 14 GW's merchant fleet, from both a geographic and dispatch perspective, but are somewhat constrained by the operating performance and efficiency of the assets, as evidenced by the low fleet capacity factors. The ratings are further constrained by the company's exposure to steadily increasing environmental regulations, exposure to volatile commodity prices and the potential for carbon dioxide emission regulations. The last rating action on RRI occurred on December 1, 2008, when Moody's downgraded RRI's speculative grade liquidity rating to SGL-2 from SGL-1. On September 29, 2008, the ratings were placed on review for possible downgrade. RRI's ratings were assigned by evaluating factors believed to be relevant to its credit profile, such as i) the business risk and competitive position of RRI versus others within its industry or sector, ii) the capital structure and financial risk of RRI, iii) the projected performance of RRI over the near to intermediate term, and iv) RRI's history of achieving consistent operating performance and meeting financial plan goals. These attributes were compared against other issuers both within and outside of RRI's core peer group and RRI's ratings are believed to be comparable to ratings assigned to other issuers of similar credit risk. Headquartered in Houston, Texas, RRI is an independent power producer that owns a portfolio of approximately 14,000 MW's of electric generating assets. Downgrades: Issuer: Pennsylvania Economic Dev. Fin. Auth. -- Senior Secured Revenue Bonds, Downgraded to B1 from Ba3 Issuer: RRI Energy, Inc. -- Issuer Rating, Downgraded to B1 from Ba3 -- Probability of Default Rating, Downgraded to B1 from Ba3 -- Corporate Family Rating, Downgraded to B1 from Ba3 -- Multiple Seniority Shelf, Downgraded to a range of (P)B3 to (P)B1 from a range of (P)B2 to (P)Ba3 -- Senior Secured Regular Bond/Debenture, Downgraded to B1 from Ba3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to B2 from B1 Upgrades: Issuer: Orion Power Holdings, Inc. -- Senior Unsecured Regular Bond/Debenture, Upgraded to LGD3, 35% from LGD3, 42% Issuer: Pennsylvania Economic Dev. Fin. Auth. -- Senior Secured Revenue Bonds, Upgraded to LGD3, 43% from a range of 49 - LGD3 to 48 - LGD3 Issuer: RRI Energy, Inc. -- Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 -- Senior Secured Regular Bond/Debenture, Upgraded to LGD3, 43% from LGD3, 48% -- Senior Unsecured Regular Bond/Debenture, Upgraded to LGD5, 74% from LGD5, 76% Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC -- Senior Secured Pass-Through, Upgraded to LGD2, 12% from LGD2, 20% Outlook Actions: Issuer: Orion Power Holdings, Inc. -- Outlook, Changed To Stable From Rating Under Review Issuer: RRI Energy, Inc. -- Outlook, Changed To Stable From Rating Under Review Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC -- Outlook, Changed To Stable From Rating Under Review Confirmations: Issuer: Orion Power Holdings, Inc. -- Senior Unsecured Regular Bond/Debenture, Confirmed at Ba3 Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC -- Senior Secured Pass-Through, Confirmed at Ba1 OCWEN FINANCIAL: Fitch Affirms Issuer Default Rating at 'B+' ------------------------------------------------------------ Fitch Rating has affirmed Ocwen Financial Corp's long-term Issuer Default Rating at 'B+' and short-term IDR at 'B', and removed the company's ratings from Negative Watch. The Rating Outlook is Stable. OCN's removal from Rating Watch Negative reflects Fitch's view that access to servicing advance facilities has improved as the company has made sufficient progress toward maintaining advance financing capacity by renewing, increasing, and/or adding facilities. For example, OCN renewed its advance facility, and increased the size from $300 million to $500 million. The rating affirmation and Stable Outlook are supported by OCN's ability to generate a reliable earnings stream and stable operating cash flows consistent with the rating level. Fitch believes demand for subprime and special servicing will remain firm with potential upside from third party sources. In addition, the company is well positioned to benefit from programs such as the government's 'Home Affordable Modification Plan,' which is expected to generate incremental revenue for OCN. Additionally, Fitch anticipates that the company will be able, if required by noteholders, to repurchase the $55.5 million of convertible notes on Aug. 1, 2009, with no material impact on liquidity. Furthermore, OCN's current cash position may allow the company to add volume and fund additional MSR purchases if needed. As a low-cost servicer for subprime and high-risk assets, Fitch believes that the company's expertise will remain in demand for the foreseeable future. Maintaining the current rating incorporates OCN's ability to manage growth and expanded revenue opportunities while maintaining current operating margins and cash flow. OWENS CORNING: Moody's Assigns 'Ba1' Rating on Note Offerings ------------------------------------------------------------- Moody's Investors Service has assigned a Ba1 rating to Owens Corning's proposed $250 - $350 million notes offering and affirmed the company's existing debt ratings. The Ba1 ratings reflect the company's strong market position in the building products industry and diversified revenue stream as a result of its market position in roofing, insulation, and composite materials. The ratings also reflect the expectation that the company will have positive free cash flow in 2009 allowing the company to delever slightly in 2009. Moody's also affirmed the company's speculative grade liquidity rating of SGL-2. The ratings outlook remains negative. The debt ratings were assigned: -- $350 million Senior Unsecured Notes, due 2019, rated Ba1 (LGD4, 54%); -- Sr. Unsecured Shelf, rated (P) Ba1; -- $1 billion Revolving Credit Facility, due 2011, affirmed at Ba1; LGD rate changed to LGD4, 54% from LGD4, 55%; -- $600 million Term Loan, due 2011, affirmed at Ba1; LGD rate changed to LGD4, 54% from LGD4, 55%; -- $650 million 6.5% Senior Unsecured Notes, due 2016, affirmed at Ba1; LGD rate changed to LGD4, 54% from LGD4, 55%; -- $550 million 7.0% Senior Unsecured Notes, due 2036, affirmed at Ba1; LGD rate changed to LGD4, 54% from LGD4, 55%; -- Corporate family rating, affirmed at Ba1; -- Probability of default, affirmed at Ba1; -- Speculative grade liquidity rating, affirmed at SGL-2. The new $250 million to $340 million senior unsecured notes are pari passu with the company's other unsecured indebtedness. The new debt will be guaranteed by each of the company's current and future domestic subsidiaries that are borrowers or guarantors under the Credit Agreement. Although the company's financial metrics are currently weak for the rating category, the affirmation of the company's Ba1 corporate family rating reflects the belief that the company's leverage levels, cash flow generation, and liquidity profile should improve over the next twelve months to a level more consistent with the current ratings. The SGL-2 liquidity rating reflects expected good liquidly over the next 12 months and takes into consideration the company's internal liquidity, external liquidity, covenant compliance, as well as alternative liquidity sources. The company's $1 billion revolver is expected to have over $500 million in availability (including letters of credit) during much of 2009. There is room under the company's covenants and the company's debt is largely unencumbered thereby providing for an alternative source of liquidity. The negative ratings outlook reflects the company's revenue and profit declines and weak credit metrics that may pose challenges to a meaningful deleveraging over the intermediate term. The company's composite business and its insulation business have both been performing below expectations. The company's main profit and cash flow driver has been the more resilient roofing business and any weakness in the roofing business would greatly pressure the company's cash generation. While the expectations are for a gradual improvement in the operating environment for the rest of the year, any shortfalls from this expected performance and the inability to generate positive free cash flow in line with Moody's expectations would likely lead to a downgrade of the ratings. The last rating action was on February 26, 2008, when the company's corporate family rating was downgraded to Ba1 from Baa3. Headquartered in Toledo, Ohio, Owens Corning, is a global producer of residential and commercial building materials, glass fiber reinforcements and engineered materials for composite systems. Revenues for the LTM period ended March 31, 2009, were $5.6 billion. PACIFIC ETHANOL: Meeting of Creditors Set for June 24 in Delaware ------------------------------------------------------------------ The U.S. Trustee for Region 3 will convene a meeting of creditors in Pacific Ethanol Holding Co. LLC and its debtor-affiliates' Chapter 11 cases on June 24, 2009, at 10:00 a.m. The meeting will be held at J. Caleb Boggs Federal Building, Room 5209, 844 King Street, in Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Sacramento, California, Pacific Ethanol Holding Co. LLC -- http://www.pacificethanol.net/-- produces and sells ethanol. The Debtors are affiliates of Pacific Ethanol Inc. The Company and its affiliates filed for Chapter 11 on May 17, 2009 (Bankr. D. Del. Lead Case No. 09-11713). Lawrence C. Gottlieb, Esq., and Richard S. Kanowitz, Esq., at Cooley Godward Kronish LLP represent the Debtors in their restructuring effort. The Debtors propose to hire Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP as co-counsel and Epiq Bankruptcy Solutions LLC as claims and noticing agent. The Debtors listed $50 million to $100 million in assets and $100 million to $500 million in debts. PARC AT CREEKSTONE: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: The Parc at Creekstone, LLC Suite 1500, 171 17th Street Atlanta, GA 30363 Bankruptcy Case No.: 09-73878 Chapter 11 Petition Date: June 1, 2009 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: William C. Griffith, Jr., Esq. 3017 Piedmont Rd, NE, Suite 200 Atlanta, GA 30305 Tel: (404) 812-1926 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company says it does not have unsecured creditors who are not insiders when they filed their petition. The petition was signed by Neill Faucett. PARK MEADOWS VILLAGE: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Park Meadows Village Partners, LLC 5000 California Ave #210 Bakersfield, CA 93309 Bankruptcy Case No.: 09-15111 Chapter 11 Petition Date: June 2, 2009 Court: United States Bankruptcy Court Eastern District of California (Fresno) Judge: Whitney Rimel Debtor's Counsel: D. Max Gardner, Esq. 1800 30th St. 4th Fl. Bakersfield, CA 93301-5298 Tel: (661) 327-9661 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Company says it does not have unsecured creditors who are not insiders when they filed their petition. The petition was signed by Max Bacerra. PARTICLE DRILLING: Files Chapter 11 in Houston; Ceases Operations ----------------------------------------------------------------- Particle Drilling Technologies, Inc., filed for Chapter 11 protection on May 30 in the U.S. Bankruptcy Court for the Southern District of Texas. The Company had disclosed that it will terminate 8 employees and initiate an unpaid furlough for its remaining employees. BankruptcyData.com reports that Particle Drilling has filed with the Bankruptcy Court a motion for an interim order seeking approval of an anticipated debtor-in-possession financing with a potential D.I.P. lender. The D.I.P. lender would provide to the Company debtor-in-possession financing composed of a short term loan facility in an aggregate principal amount of $1,575,000. Based in Houston, Particle Drilling Technologies, Inc., filed for Chapter 11 on May 30, 2009 (Bankr. S.D. Tex. Case No. 09-33744). The Company is a deelopment stage oilfield service provider. Edward L. Rothberg, Esq., at Weycer, Kaplan, Pulaski & Zuber, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $2,884,606 and total debts of $1,418,514. PENSKE AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating -------------------------------------------------------------- Moody's Investors Service said that the June 1, 2009 bankruptcy filing by General Motors has no immediate impact on the ratings and outlooks for the auto retailers rated by Moody's. These are the rated Auto Retailers: -- Asbury Automotive Group Inc. -- AutoNation, Inc. -- Group 1 Automotive, Inc. -- Penske Automotive Group, Inc. -- Sonic Automotive Group, Inc. The last rating action for Asbury Automotive Group, Inc., was the March 25, 2009 downgrade of the Corporate Family and Probability of Default ratings to B2 from B1 and the assignment of a negative outlook. The last rating action for AutoNation, Inc., was the December 5, 2008 affirmation of the Ba1 Corporate Family and Probability of Default ratings, and a change in the outlook to negative from stable. The last rating action for Group 1 Automotive, Inc., was the March 20, 2009 downgrade of the Corporate Family and Probability of Default ratings to B1 from Ba3 and assignment of a negative outlook. The last rating action for Penske Automotive Group was on March 25, 2009, when the company's Corporate Family Rating was downgraded to B2 from B1. The last rating action for Sonic Automotive Holdings, Inc., was the May 21, 2009 downgrade of the Corporate Family rating to Caa1 from B2, the upgrade of the Probability of Default rating to Caa1 from Caa3, and assignment of a negative outlook. PETRORIG I: Meeting of Creditors Scheduled for June 15 in New York ------------------------------------------------------------------ The U.S. Trustee for Region 2 will convene a meeting of creditors in PetroRig I Pte. Ltd. and its debtor-affiliates' Chapter 11 cases on June 15, 2009, at 2:30 p.m. The meeting will be held at the Office of the United States Trustee, 80 Broad Street, Fourth Floor, in New York City. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Singapore PetroRig I Pte. Ltd. and its affiliates filed for Chapter 11 on May 17, 2009 (Bankr. S. D. N.Y. Lead Case No. 09-13083). Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP represents the Debtors in their restructuring efforts. The Debtors have assets and debts ranging from $100,000,001 to $500,000,000. PHOENIX COYOTES: NHL Disputes Jim Balsillie's $212.5 Million Bid ---------------------------------------------------------------- National Hockey League Commissioner Gary Bettman has argued that Jim Balsillie's offer for Phoenix Coyotes isn't $212.5 million, Sean Fitz-Gerald at National Post reports. As reported by the Troubled Company Reporter on May 18, 2009, Mr. Balsillie wants to acquire Phoenix Coyotes for more than $212 million, asserting that his offer is conditional on moving the team to southern Ontario. "First of all, it's really not 212, but we don't have to get into that. It's a much lesser number by the time you do all the set- offs and credits," National Post quoted Mr. Bettman as saying. National Post relates that under the asset purchase agreement filed on May 5, 2009, Wayne Gretzky is in line for $8 million in deferred compensation, and an additional payment of $14.5 million. Citing a source, National Post states that the total cost of such payouts could total as much as $50 million. National Post states that Mr. Balsillie's spokesperson, Bill Walker, said, "We stand by it, that the offer is $212.5-million. Obviously, in any offer of this nature, as has been widely reported, there have been certain monies that go to individuals on a management team. And that's included in the total amount, but any purchaser of the Coyotes franchise would have to pay those amounts -- so they're considered part of the cost of buying the team." According to National Post, Mr. Bettman said, "The club [Phoenix Coyotes] was never in jeopardy . . . . And, at the end of the day, this is a club that could have been sold -- could have been handed over to new ownership, could have moved forward -- and there wouldn't have been any issues." National Post, citing Mr. Walker, relates that Phoenix Coyotes owner Jerry Moyes wasn't aware of any other interested buyers. The report quoted Mr. Walker as saying, "He went looking, he hired Citibank to help him look and came up empty. So, I don't know what Mr. Bettman means by that. But, you know, fair enough. If he has a purchaser, Jim Balsillie has said from the day he announced his bid is that all he wants the bankruptcy court to do is conduct a fair and open process. Let there be an auction, and let any bidders come forward." 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. PROSPECT HOMES: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Richmond Times-Dispatch reports that Prospect Homes of Richmond, Inc., has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Eastern District of Virginia. According to court documents, Prospect Homes listed $50,000,001 to $100,000,000 in assets and $50,000,001 to $100,000,000 in debts. Court documents say that Prospect Homes' largest creditor is SunTrust Bank, which is owed $6.1 million, including $3.8 million secured by real estate or equipment. According to Times-Dispatch, nine of Prospect Homes' largest creditors are banks, including local community banks like First Market Bank, Franklin Federal Bank, C&F Bank, Virginia Commonwealth Bank, and Village Bank. Richmond, Virginia-based Prospect Homes of Richmond, Inc. -- http://www.prospecthomes.com/-- is a home builder. PSYSTER CORP: Carr & Ferrell Holds Much of Firm's Debt ------------------------------------------------------ Gregg Keizer at Computerworld reports that Psystar Corp. owes Carr & Ferrell LLC more than $88,000, the bulk of the Company's outstanding debt. Court documents say that Carr & Ferrell, a firm noted for its intellectual property expertise, represented Psystar for almost a year, when Apple sued the Company over its practice of installing Mac OS X on generic Intel-powered computers. Computerworld relates that the money Psystar owes its legal team is 34% of the $259,000 listed as debts to its top 20 creditors. The report says that a $120,000 loan to Psystar made by Rudy Pedraza, Psystar's CEO and co-founder, accounts for a larger percentage of the debt. According to Computerworld, Psystar also owes about $6,800 to the mediation firm Judicial Arbitration and Mediation Services. Computerworld relates that a federal judge ordered in October 2008 that Psystar and Apple enter an Alternative Dispute Resolution, a legal process that can include mediation, to work out their differences. Computerworld notes that the JAMS and Carr & Ferrell debts account for 37% of Psystar's total debt, and 68% of the money owned to outsiders. Computerworld relates that Psystar didn't mention its legal bills in its bankruptcy filing. It instead blamed the "weakened economy" and "the decrease in consumer spending" for its financial problems, and said that it was making less profit per sale because its suppliers, beset with their own money troubles, were unable to provide necessary parts, "[thus] forcing Debtor to pay higher prices for parts in order to fulfill customer orders in a timely manner," according to Computerworld. Psystar must provide the bankruptcy court with documents, including recent tax returns and a current financial statement, by June 5, Computerworld relates. Doral, Florida-based Psystar Corp. makes computers that are capable of running Apple Inc.'s Macintosh operating system. It sells its computer over the Internet. The Company filed for Chapter 11 bankruptcy protection on May 21, 2009 (Bankr. S.D. Fla. Case No. 09-19921). The Company listed up to $50,000 in assets and $100,000 to $500,000 in liabilities. QUEBECOR WORLD: S&P Assigns 'B+' Long-Term Corporate Credit Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B+' long-term corporate credit rating to Montreal, Quebec-based printer Quebecor World Inc. The outlook is negative. At the same time, S&P assigned its 'BB' issue-level rating (two notches above the corporate credit rating on Quebecor World), with a recovery rating of '1', to the company's proposed US$350 million senior secured revolving credit facility due 2012. The '1' recovery rating indicates S&P's expectation of very high (90%- 100%) recovery in the event of default. This credit facility is part of the company's exit financing from bankruptcy protection. In addition, S&P assigned a 'BB-' issue-level rating (one notch above the corporate credit rating), with a '2' recovery rating, to the company's proposed US$325 million senior secured term loan due 2012, which is also part of the company's exit financing. The '2' recovery rating indicates S&P's expectation of substantial (70%- 90%) recovery in the event of default. "The proposed financing will be used to repay Quebecor World's existing debtor-in-possession loan, pay administrative bankruptcy expenses, and cover fees associated with the transaction," said Standard & Poor's credit analyst Lori Harris. The bank loan ratings are based on preliminary terms and conditions and are subject to review once full documentation is received. Furthermore, the ratings are conditional upon the company's successful emergence from bankruptcy protection. In addition, the ratings are not affected by Donnelley (R.R.) & Sons Co.'s (BBB/Negative/A-3) preliminary indication of interest in purchasing Quebecor World's assets, as outlined in Donnelley's May 12 press release. Should Donnelley's indication of interest progress to a legally binding asset purchase agreement, it is likely S&P would place the ratings on Quebecor World on CreditWatch with positive implications, reflecting the stronger ratings on Donnelley. "The ratings on Quebecor World reflect our assessment of the company's vulnerable business risk profile as reflected in its weakness in revenues and earnings, as well as participation in the challenging printing industry, which is characterized by overcapacity, declining volumes, electronic substitution, pricing pressures, and intense competition," Ms. Harris added. Partially offsetting these factors in S&P's opinion are Quebecor World's market position and solid credit protection measures for the ratings. Despite declining revenue and weaker performance than its global peers over the past several years, Quebecor World remains the second-largest North American printer, with leading market positions in most of its major product groups, including magazines, retail inserts, catalogues, books, direct mail, and directories. It is also the largest printer in Latin America. The negative outlook reflects Standard & Poor's ongoing concerns regarding the challenges the company faces given its weak operating performance and difficult industry fundamentals. Downward pressure on the ratings could result from the continued deterioration in Quebecor World's operations or weakness in credit protection measures. The outlook could be revised to stable if the company demonstrates sustainable improvement in operating performance. REALTY AMERICA: U.S. Trustee Sets Meeting of Creditors for June 23 ------------------------------------------------------------------ The U.S. Trustee for Region 6 will convene a meeting of creditors in Realty America Group (Lincoln Mall), LP's Chapter 11 case on June 23, 2009, at 11:00 a.m. The meeting will be held at the Office of the U.S. Trustee, 1100 Commerce St., Room 976, Dallas, Texas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Dallas, Texas-based Realty America Group (Lincoln Mall), LP dba Lincoln Mall filed for Chapter 11 on May 18, 2009 (Bankr. N. D. Tex. Case No. 09-33076). David W. Elmquist, Esq., at Reed & Elmquist, P.C., represents the Debtor in its restructuring efforts. The Debtor has assets and debts both ranging from $10 million to $50 million. RH DONNELLEY: Plan Proposes to Reduce Debt by $6.4 Billion ---------------------------------------------------------- R.H. Donnelley reached an agreement in principle with key creditor constituencies on the terms of a plan of reorganization that proposes to reduce debt by approximately $6.4 billion, eliminate approximately $500 million in annual interest expense and extend the company's bank maturities out to 2014. Throughout the restructuring process, R.H. Donnelley will be conducting "business as usual" and does not anticipate any interruptions in the services it provides to its more than 500,000 valued customers across the U.S. R.H. Donnelley anticipates that more than $300 million of cash on hand, well as projected positive cash flow from operations will be more than sufficient to fund its operations during the restructuring process, and therefore does not plan to seek debtor- in-possession financing during the reorganization of its business. "Our growth-through-acquisition strategy never anticipated the cataclysmic collapse of the U.S. economy and the local advertising market," David C. Swanson, chairman and CEO of R.H. Donnelley. "As a result of these developments, earlier this year we began negotiating with our lenders to restructure our debt and provide the company with a more sustainable capital structure that reflects the current economic realities." Under the terms of the agreement: -- R.H. Donnelley would reduce its total debt by approximately $6.4 billion, including about $700.0 million of secured indebtedness. -- The approximately $6.0 billion of unsecured bond indebtedness would be exchanged for 100% of the equity in the restructured company and $300.0 million of unsecured notes issued by the company; all existing equity in the company would be extinguished. -- Total cash interest expense reduction of approximately $500.0 million annually. -- Post-restructuring secured and consolidated debt of approximately $3.1 billion and $3.4 billion, which represents approximately 3.0x and 3.3x net secured and net consolidated leverage. -- Post-restructuring cash balance of approximately $125.0 million. R.H. Donnelley filed a variety of customary first day motions with the court to enable it to continue business as usual during the restructuring. These motions include requests to continue paying employee wages and benefits as usual and to continue customer programs and guarantees. Serving as lead restructuring advisors for R.H. Donnelley are Lazard Freres & Co. LLC and Sidley Austin LLP. A full-text copy of the Restructuring Plan is available for free at http://ResearchArchives.com/t/s?3d88 About R.H. Donnelley Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp., -- http://www.rhdonnelley.com/-- (NYSE: RHD) publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc., and Local Launch, Inc., are the company's only direct wholly owned subsidiaries. KPMG LLP, the Company's independent auditor, in March 2009, raised substantial doubt on the Company's ability to continue as a going concern. "The Company has significant amounts of maturing debt which it may be unable to satisfy commencing March 31, 2010, significant negative impacts on operating results and cash flows from the overall downturn in the global economy and higher customer attrition, and possible debt covenant violations in 2009 that raise substantial doubt about its ability to continue as a going concern," KPMG said in its March 27 report. R.H. Donnelley reported a net loss of $2.29 billion for the year ended December 31, 2008, on net revenues of $2.61 billion. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. R.H. Donnelley Corp. and 19 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11833 through 09-11852) after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) RH DONNELLEY: Has Until August 11 to File Schedules & Statements ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the deadline within which R.H. Donnelley Corp. and its debtor- affiliates may file their schedules of assets and liabilities and statements of financial affairs to August 11, 2009. As reported by the Troubled Company Reporter on June 1, 2009, the Debtors' proposed counsel, James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, said that the Debtors may not be able to complete the documents within a month after the bankruptcy filing due to the substantial size and complexity of the Debtors' operations. Mr. Conlan said that extending the Schedules Filing Deadline will not prejudice the rights of the Debtors' creditors or other parties-in-interest since no bar date for the filing of proofs of claim has yet been set. He noted that the Debtors do not anticipate asking the Court to set a bar date until after the Schedules and Statements are filed. An extension of the Schedules Filing Deadline will aid the Debtors' efforts to ensure accuracy and completeness of the Schedules and Statements, which promotes efficient administration of the Chapter 11 cases, Mr. Conlan said. Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp., -- http://www.rhdonnelley.com/-- (NYSE: RHD) publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. KPMG LLP, the Company's independent auditor, in March 2009, raised substantial doubt on the Company's ability to continue as a going concern. "The Company has significant amounts of maturing debt which it may be unable to satisfy commencing March 31, 2010, significant negative impacts on operating results and cash flows from the overall downturn in the global economy and higher customer attrition, and possible debt covenant violations in 2009 that raise substantial doubt about its ability to continue as a going concern," KPMG said in its March 27 report. R.H. Donnelley reported a net loss of $2.29 billion for the year ended December 31, 2008, on net revenues of $2.61 billion. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. R.H. Donnelley Corp. and 19 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11833 through 09-11852) after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) RIDGEWALK HOLDINGS: Case Summary & 2 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Ridgewalk Holdings, LLC 171 17th Street, Suite 1500 Atlanta, GA 30363 Bankruptcy Case No.: 09-73918 Chapter 11 Petition Date: June 1, 2009 Court: Northern District of Georgia (Atlanta) Debtor's Counsel: William C. Griffith, Jr., Esq. William C. Griffith, Jr., Attorney at Law 3017 Piedment Ro., NE, Ste. 200 Atlanta, GA 30305 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 ------ --------------- ------------ Harris Consultants trade debt $317,957 3516 Nantucket Drive Marietta, GA 30068 Tel: (770) 977-8701 Plateau Excavation, Inc. trade debt $176,537 375 Lee Industrial Blvd. Austel, GA 30168 Tel: (770) 948-2600 The petition was signed by Rickard K. Taylor, manager. RIVER WOODS: Section 341(a) Meeting Scheduled for June 19 in Idaho ------------------------------------------------------------------ The U.S. Trustee for Region 18 will convene a meeting of creditors in River Woods, LLC's Chapter 11 case on June 19, 2009, at 9:00 a.m. The meeting will be held at Washington Group Central Plaza, 720 Park Blvd., Suite 210, in Boise, Idaho. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Boise, Idaho-based River Woods, LLC, filed for Chapter 11 on May 11, 2009 (Bankr. D. Idaho Case No. 09-01263). Howard R. Foley, Esq., at Foley Freeman PLLC represents the Debtor in its restructuring efforts. The Debtor listed $10,000,001 to $50,000,000 in assets and in debts. RRI ENERGY: Moody's Downgrades Corporate Family Ratings to 'B1' --------------------------------------------------------------- Moody's Investors Service downgraded the long-term ratings of RRI Energy, including the Corporate Family Rating, to B1 from Ba3 and its Probability of Default Rating to B1 from Ba3. Moody's also downgraded the company's senior secured ratings to B1 from Ba3 and RRI's senior unsecured ratings to B2 from B1. The Reliant Energy Mid-Atlantic Power Hldgs., LLC senior secured pass-through certificates are confirmed at Ba1 and the Orion Power Holdings senior unsecured ratings are confirmed at Ba3. In addition, Moody's upgraded RRI's speculative grade liquidity rating to SGL-1 from SGL-2. These rating actions conclude the review for possible downgrade that was initiated on September 29, 2008. The rating outlook is stable. "RRI's cash flow generation and key financial credit metrics are declining due to reduced production volumes and margins" said Jim Hempstead, Senior Vice President "but the company is expected to also reduce its overall debt outstanding with the proceeds from the recent divestiture of its retail electric provider operations and the maturity of the OPH notes in May 2010." The upgrade of RRI's speculative grade liquidity rating to SGL-1 from SGL-2 reflects to sizeable cash balances, availability under its secured credit facility and ample headroom under its primary financial covenant. Moody's views management's stated intention to redeem the approximately $400 million Orion Power Holdings senior unsecured notes due in May 2010 as a credit positive, in part due to the elimination of debt and in part due to the simplified capital structure. "Managing the cash balances as part of the operating risk profile provides RRI with a reasonable cushion to weather the difficult and uncertain market conditions" added Mr. Hempstead "and with the company's pure focus on merchant generation, Moody's incorporate an expectation that additional announcements regarding a reduction in the targeted debt profile will be viewed positively for the credit." While the economic conditions and low commodity price environment are contributing to lower volumes and margins for this largely un- hedged merchant generator, RRI is well positioned with a B1 CFR which places the company behind NRG (Ba3 CFR), in-line with Mirant (B1 CFR) and ahead of Dynegy and Calpine (B2 CFR's), which seems to make sense given RRI's relatively lower debt load and prospects to improve their financial profile with improving market conditions. RRI's liquidity profile is strong, with approximately $1.4 billion in cash on the balance sheet. A portion of the retail sales proceeds (approximately $250 million) is expected to reduce senior secured debt at the parent. In addition, the Orion Power Holdings senior unsecured debt ($400 million due May 2010) is expected to be redeemed with cash. This action (OPH redemption) will serve to simplify RRI's capital structure to where the majority of the company's debt (secured and unsecured) resides at the parent holding company level, with the exception of the REMA pass-through certificates. RRI's ratings are benefited by the diversity of its approximately 14 GW's merchant fleet, from both a geographic and dispatch perspective, but are somewhat constrained by the operating performance and efficiency of the assets, as evidenced by the low fleet capacity factors. The ratings are further constrained by the company's exposure to steadily increasing environmental regulations, exposure to volatile commodity prices and the potential for carbon dioxide emission regulations. The last rating action on RRI occurred on December 1, 2008, when Moody's downgraded RRI's speculative grade liquidity rating to SGL-2 from SGL-1. On September 29, 2008, the ratings were placed on review for possible downgrade. RRI's ratings were assigned by evaluating factors believed to be relevant to its credit profile, such as i) the business risk and competitive position of RRI versus others within its industry or sector, ii) the capital structure and financial risk of RRI, iii) the projected performance of RRI over the near to intermediate term, and iv) RRI's history of achieving consistent operating performance and meeting financial plan goals. These attributes were compared against other issuers both within and outside of RRI's core peer group and RRI's ratings are believed to be comparable to ratings assigned to other issuers of similar credit risk. Headquartered in Houston, Texas, RRI is an independent power producer that owns a portfolio of approximately 14,000 MW's of electric generating assets. Downgrades: Issuer: Pennsylvania Economic Dev. Fin. Auth. -- Senior Secured Revenue Bonds, Downgraded to B1 from Ba3 Issuer: RRI Energy, Inc. -- Issuer Rating, Downgraded to B1 from Ba3 -- Probability of Default Rating, Downgraded to B1 from Ba3 -- Corporate Family Rating, Downgraded to B1 from Ba3 -- Multiple Seniority Shelf, Downgraded to a range of (P)B3 to (P)B1 from a range of (P)B2 to (P)Ba3 -- Senior Secured Regular Bond/Debenture, Downgraded to B1 from Ba3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to B2 from B1 Upgrades: Issuer: Orion Power Holdings, Inc. -- Senior Unsecured Regular Bond/Debenture, Upgraded to LGD3, 35% from LGD3, 42% Issuer: Pennsylvania Economic Dev. Fin. Auth. -- Senior Secured Revenue Bonds, Upgraded to LGD3, 43% from a range of 49 - LGD3 to 48 - LGD3 Issuer: RRI Energy, Inc. -- Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 -- Senior Secured Regular Bond/Debenture, Upgraded to LGD3, 43% from LGD3, 48% -- Senior Unsecured Regular Bond/Debenture, Upgraded to LGD5, 74% from LGD5, 76% Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC -- Senior Secured Pass-Through, Upgraded to LGD2, 12% from LGD2, 20% Outlook Actions: Issuer: Orion Power Holdings, Inc. -- Outlook, Changed To Stable From Rating Under Review Issuer: RRI Energy, Inc. -- Outlook, Changed To Stable From Rating Under Review Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC -- Outlook, Changed To Stable From Rating Under Review Confirmations: Issuer: Orion Power Holdings, Inc. -- Senior Unsecured Regular Bond/Debenture, Confirmed at Ba3 Issuer: Reliant Energy Mid-Atlantic Power Hldgs., LLC -- Senior Secured Pass-Through, Confirmed at Ba1 SAN MICHAEL PIZZA: Case Summary & 9 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: San Michael Pizza Corporation 809 Washington St S. Attleboro, MA 02703 Bankruptcy Case No.: 09-15195 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Frank J. Bailey Debtor's Counsel: Philip Slotnick, Esq. Shocket & Dockser LLP 13 Tech Circle Natick, MA 01760 Tel: (508) 653-0160 Fax: (508) 651-0750 Email: pslotnick@shocketdockser.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 9 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mab09-15195.pdf The petition was signed by Nashaat F. Moawde, president of the Company. SANDERSON INDUSTRIES: Section 341(a) Meeting Slated for June 18 --------------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of creditors in Sanderson Industries, Inc.'s Chapter 11 case on June 18, 2009, at 9:00 a.m. The meeting will be held at the third floor, Room 363 of Richard B. Russell Bldg., at 75 Spring Street, SW, in Atlanta, Georgia. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Atlanta, Georgia-based Sanderson Industries, Inc., filed for Chapter 11 on May 11, 2009 (Bankr. N. D. Ga. Case No. 09-72311). David G. Bisbee, Esq., represents the Debtor in its restructuring efforts. The Debtor listed total assets of $12,895,000 and total debts of $16,513,276. SHIV REAL ESTATE: Case Summary & 4 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Shiv Real Estate LLC 5-7 Lehns Court Easton, PA 18042 Bankruptcy Case No.: 09-21437 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Reading) Debtor's Counsel: Michael J. Mccrystal, Esq. 2355 Old Post Road, Ste 4 Coplay, PA 18037 Tel: (610) 262-7873 Email: mmccrystal@verizon.net Total Assets: $1,431,010 Total Debts: $938,914 A full-text copy of the Debtor's petition, including a list of its 4 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/paeb09-21437.pdf The petition was signed by Kirit S. Patel, president of the Company. SIX FLAGS: Grace Period Won't Affect Moody's 'Ca' Rating -------------------------------------------------------- Moody's Investors Service indicated that Six Flags, Inc.'s announcement that it was taking advantage of the 30-day grace period with respect to the semi-annual interest payment originally due on June 1, 2009, on its 9.625% senior notes maturing in 2014 does not affect the company's Ca Corporate Family Rating, Probability of Default Rating or debt instrument ratings. The last rating action was on March 13, 2009, when Moody's downgraded Six Flags' CFR and PDR each to Ca from Caa2. Six Flags' ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (iii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Six Flags' core industry and believes Six Flags' ratings are comparable to those of other issuers with similar credit risk. Six Flags, headquartered in New York City, is a regional theme park company that operates 20 parks spread across North America. SONIC AUTOMOTIVE: GM Ch 11 Filing Won't Affect Moody's Rating ------------------------------------------------------------- Moody's Investors Service said that the June 1, 2009 bankruptcy filing by General Motors has no immediate impact on the ratings and outlooks for the auto retailers rated by Moody's. These are the rated Auto Retailers: -- Asbury Automotive Group Inc. -- AutoNation, Inc. -- Group 1 Automotive, Inc. -- Penske Automotive Group, Inc. -- Sonic Automotive Group, Inc. The last rating action for Asbury Automotive Group, Inc., was the March 25, 2009 downgrade of the Corporate Family and Probability of Default ratings to B2 from B1 and the assignment of a negative outlook. The last rating action for AutoNation, Inc., was the December 5, 2008 affirmation of the Ba1 Corporate Family and Probability of Default ratings, and a change in the outlook to negative from stable. The last rating action for Group 1 Automotive, Inc., was the March 20, 2009 downgrade of the Corporate Family and Probability of Default ratings to B1 from Ba3 and assignment of a negative outlook. The last rating action for Penske Automotive Group was on March 25, 2009, when the company's Corporate Family Rating was downgraded to B2 from B1. The last rating action for Sonic Automotive Holdings, Inc., was the May 21, 2009 downgrade of the Corporate Family rating to Caa1 from B2, the upgrade of the Probability of Default rating to Caa1 from Caa3, and assignment of a negative outlook. STEEL DYNAMICS: S&P Affirms 'BB+' Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'BB+' long-term corporate credit rating, on Fort Wayne, Indiana-based Steel Dynamics Inc. All ratings are removed from CreditWatch, where they were placed with negative implications on April 24, 2009. The outlook is negative. At the same time, S&P assigned its 'BB+' issue-level rating (the same as the corporate credit rating on the company) and '3' recovery rating, indicating S&P's expectation for meaningful (50%- 70%) recovery in the event of a payment default, to the company's proposed $150 million convertible senior notes due 2014. The proceeds from this offering, along with a planned offering of common equity, will be used to pay down the company's term loan. At March 31, 2009, $552 million was outstanding on the term loan. The affirmation and CreditWatch removal reflects S&P's assessment that the company's fair business profile, characterized by low- cost and flexible operations, and adequate liquidity, position it to benefit from expected gradual improvements in industry conditions during the next several quarters. Given this assessment, S&P expects the company's credit metrics to remain weak in 2009, but return to levels appropriate for its current 'BB+' rating by the end of 2010. Specifically, S&P's current rating incorporates S&P's expectation that total debt to EBITDA will return to below 4x and funds from operations to total debt above 20%, driven by an improvement in EBITDA to around $700 million. However, the negative outlook reflects a degree of uncertainty regarding the timing and sustainability of a recovery that could limit the company's ability to improve and sustain credit metrics consistent with its 'BB+' rating. "The ratings on Steel Dynamics reflect its exposure to highly competitive and cyclical markets, aggressive growth plans that include significant capital expenditures and acquisitions, and until the current downturn, shareholder-friendly initiatives," said Standard & Poor's credit analyst Marie Shmaruk. They also reflect its relatively high debt burden, its modest size relative to competitors, and currently very weak steel markets. The ratings further reflect Steel Dynamics very low cost position, flexible operations, and improved product diversity. STRAUMUR-BURDARAS: Voluntary Chapter 15 Case Summary ---------------------------------------------------- Chapter 15 Petitioner: Hordur Felix Hardarson Chapter 15 Debtor: Straumur-Burdaras Investment Bank hf. Borgartun 25 - IS-105 Reykjavik Iceland Chapter 15 Case No.: 09-13592 Type of Business: The Debtor operates a bank. See http://www.straumur.net/en/ Chapter 15 Petition Date: June 2, 2009 Court: Southern District of New York (Manhattan) Chapter 15 Petitioner's Counsel: Matthew P. Morris, Esq. matthew.morris@lovells.com Lovells LLP 590 Madison Avenue, 8th Floor New York, NY 10022 Tel: (212) 909-0600 Fax: (212) 909-0660 Estimated Assets: More than $1 billion Estimated Debts: More than $1 billion SYMMETRICAL STAIR: Case Summary & 15 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Symmetrical Stair, Inc. 2115 SW 2nd Street Pompano Beach, FL 33069 Bankruptcy Case No.: 09-21066 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: David L. Merrill, Esq. 7777 Glades Rd # 400 Boca Raton, FL 33434 Tel: (561) 477-7800 Email: dlmerrill@sbwlawfirm.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 15 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flsb09-21066.pdf The petition was signed by Alphonso J. Cheponis, III president of the Company. SYMONS FROZEN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Symons Frozen Foods, Inc. 619 Goodrich Rd Centralia, WA 98531 Bankruptcy Case No.: 09-43978 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Western District of Washington (Tacoma) Judge: Paul B. Snyder 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: $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 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/wawb09-43978.pdf The petition was signed by William James, president of the Company. TERRY COFFMAN: Lenders Take Over Italian Seafood Restaurant ----------------------------------------------------------- Lorraine Mirabella at Baltimore Sun reports that Dominion Financial Services and USIC, Terry L. Coffman II LLC's lenders, have taken ownership of Velleggia's Italian Seafood Restaurant. Baltimore Sun relates that Velleggia's failed to sell at a foreclosure auction on Wednesday and was taken back by the lenders for $1.2 million. Terry Lee Coffman, II, filed for Chapter 11 bankruptcy protection, pro se, on May 12, 2008 (Bankr. D. Md. Case No. 08-16549). The Debtor disclosed total assets and liabilities below $1,000,000. TESORO CORPORATION: Fitch Assigns 'BB+' Rating on $300 Mil. Notes ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' Rating to Tesoro Corporation's issuance of $300 million of 9.75% senior unsecured notes due 2019. The notes will be used for general corporate purposes, including the repayment or refinancing of indebtedness, capital expenditures, and working capital. Fitch currently rates Tesoro's debt: -- Issuer Default Rating 'BB+'; -- Senior Unsecured Notes 'BB+'; -- Secured Bank Facility 'BBB-'. The Rating Outlook is Negative. Tesoro's ratings are supported by the scale and diversification benefits of its portfolio of seven refineries; its solid long-term competitive position on the supply-constrained California market; recent upgrades across Tesoro's system, including the commissioning of a delayed coking unit at its 161,000-bpd Golden Eagle refinery; and reasonable year-to-date benchmark crack spreads for the West Coast. Offsetting factors to the rating include: significant future mandatory capital spending requirements across the company's refinery system; the unknown length and severity of current trough conditions affecting the downstream; Tesoro's exposure to the underperforming California economy; acquisition risk; and the potential impact of future environmental legislation. Following the significant erosion in results seen in 2008, Tesoro's financial performance improved for the latest twelve months period ending March 31, 2009. Tesoro's EBITDA increased to $1.18 billion versus the $914 million seen in 2008. Debt edged downwards from $1.61 billion to $1.55 billion, driven by the repayment of revolver borrowings. Over the same period, Tesoro generated $624 million in free cash flow versus free cash flow of just $11 million in 2008. Debt/EBITDA leverage at March 31, 2009, was 1.30 times (x) (1.56x on a pro forma basis including the planned $300 million issuance). Tesoro's liquidity also remains reasonable. At March 31, 2009, cash and equivalents were $156 million, and approximately $1 billion in capacity was available under Tesoro's $1.81 billion secured revolver. Availability under the secured revolver is defined as the minimum of revolver capacity or the value of the borrowing base, which is subject to periodic redetermination and includes cash (100%), eligible petroleum inventories (85%) and receivables (80%). The borrowing base, which had been as high as $1.86 billion as of the third quarter of 2008, fell to $620 million at year-end but has since rebounded to approximately $1.3 billion, in line with higher crude oil prices. Tesoro has no near-term maturities due, with $450 million in 6.25% notes and $120 million in junior subordinated notes due in 2012. A key covenant feature of approximately $1.4 billion in Tesoro's total debt is the non-investment grade covenant protections, which fall away if the company achieves investment grade status. This feature applies to the $450 million in 2012 notes, $450 million in 2015 notes, and $500 million in 2017 notes, which constitute the bulk of the company's debt. Note that these covenants are not reinstituted if Tesoro subsequently falls below investment grade. Tesoro's Negative Outlook primarily reflects Fitch's concerns about the high levels of planned capital expenditures across the company's refinery system over the next several years in a weaker cash flow generation environment, including nondiscretionary spending such as regulatory requirements, turnarounds, and maintenance. Tesoro owns and operates seven crude oil refineries with a rated crude oil capacity of approximately 664,500 bpd. Five of Tesoro's refineries are on the West Coast, with facilities in California, Alaska, Hawaii, and Washington. Tesoro also has refineries in Salt Lake City, Utah, and Mandan, North Dakota. Tesoro sells refined products wholesale or through its network of branded retail outlets. THERAPEDIC SLEEP: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------ David Perry at Furniture Today reports that Therapedic Sleep Products has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey. Court documents say that Therapedic Sleep listed $1 million to $10 million in assets and $1 million to $10 million in debts. According to court documents, Therapedic Sleep's unsecured creditors include: -- Orloff, Lowenbach, Stifelman & Siegel, owed $686,076 for legal services; -- L&P Financial Services, owed $508,460; -- Central Bedding Components, owed $381,977; -- Capitol Foam, owed $328,529; CIT Group, owed $203,560; -- Hanes Converting, owed $171,967; -- Future Foam, owed $124,483; -- M. Chasen & Son, owed $108,089; -- Jeffco Fibres, owed $88,952; and -- J.B.S. Woodwork Shop, owed $83,423. Therapedic Sleep, according to Furniture Today, said that funds could be available for distribution to unsecured creditors. Therapedic Sleep CEO Stuart Carlitz said that the Eclipse and Eastman House brands that he owns aren't affected by the bankruptcy filing, Furniture Today relates. Therapedic Sleep Products is a Therapedic licensee based in North Brunswick, New Jersey. THERAPEDIC SLEEP: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Therapedic Sleep Products, Inc. 1375 Jersey Avenue North Brunswick, NJ 08902 Bankruptcy Case No.: 09-24351 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court District of New Jersey (Trenton) Debtor's Counsel: Adam D. Wolper, Esq. Email: awolper@trenklawfirm.com Sam Della Fera, Esq. Email: sdellafera@trenklawfirm.com Thomas Michael Walsh, Esq. Email: twalsh@trenklawfirm.com Trenk, DiPasquale, Webster, Della Fera & Sodono P.C. 347 Mt. Pleasant Avenue, Suite 300 West Orange, NJ 07052 Tel: (973) 243-8600 Fax: (973) 243-8677 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/njb09-24351.pdf The petition was signed by Stuart Carlitz, president of the Company. TRIAXX FUNDING: Moody's Does Not Take Rating Actions on Bonds ------------------------------------------------------------- Moody's Investors Service announced that it has determined that the ratings currently assigned to Triaxx Funding High Grade I, Ltd., will not, at this time, be reduced or withdrawn solely as a result of the implementation of an amendment to its indenture dated as of June 3, 2009, as the "Supplemental Indenture". The Supplemental Indenture extends the maturity date of the credit enhancement notes for three months, from June 3, 2009, to September 3, 2009. The maturity date extension in and of itself would not increase the expected loss of the rated notes to cause a ratings downgrade at this time. Triaxx Funding High Grade I, Ltd., is a Structured Investment Vehicle - Lite managed by ICP Asset Management LLC. The last rating action on Triaxx Funding High Grade I occurred on March 2, 2009. On that date, the Class B-1 Mezzanine Floating Rate Notes Due 2047 was downgraded to Ca from B1 on review for downgrade; the Class B-2 Mezzanine Floating Rate Notes Due 2047 was downgraded to C from B2 on review for downgrade; the Class C Mezzanine Floating Rate Deferrable Interest Notes Due 2047 was downgraded to C from Caa2 on review for downgrade; and Class D Mezzanine Floating Rate Deferrable Interest Notes Due 2047 was downgraded to C from Ca. Many transaction documents (to which Moody's is never a party) specify that, in order to amend the documents, the issuer must obtain an opinion from the rating agencies that the proposed amendment would not in and of itself result in the related ratings being downgraded or withdrawn at the time of the amendment. This type of provision is typically referred to in the indenture as a "rating agency confirmation" or "RAC". Moody's is never obligated to provide a RAC, and the decision whether or not to issue a RAC lies entirely within Moody's sole discretion. Before providing a RAC for an amendment, the proposal will be reviewed by a Moody's credit committee which will consider, among other things, the performance of the specific transaction and collateral manager and the specifics of the proposed amendment and the particular structure of the transaction. A RAC is purely an opinion, as of the point in time at which the RAC is provided, that the proposed amendment in isolation does not introduce sufficient additional credit risk so as to negatively impact the related ratings. In other words, it does not consider the impact of other factors on the ratings, such as collateral deterioration. Also, the RAC does not address any other, non-credit related impact that the amendment might have. Moody's further emphasizes that a RAC is not a substitute for noteholder consent or for independent analyses by noteholders of the impact on them of any proposed amendment. Moody's monitors this transaction using a liquidation sensitivity analysis based on the current market value of the portfolio. U.S. BEVERAGE: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: U.S. Beverage, Inc. 844 Lagoon Commercial Blvd Montgomery, AL 36117 Bankruptcy Case No.: 09-31469 Chapter 11 Petition Date: June 3, 2009 Court: United States Bankruptcy Court Middle District of Alabama (Montgomery) Debtor's Counsel: Max A. Moseley, Esq. Johnston Barton Proctor & Rose LLP 569 Brookwood Village, Suite 901 Birmingham, AL 35209 Tel: (205) 458-9400 Fax: (205) 458-9500 Email: mam@jbpp.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Grady D. Kittrell, president of the Company. VISTEON CORP: Can Honor Up to $92.1MM in Customer Obligations ------------------------------------------------------------- Visteon Corporation and its debtor-affiliates maintain and administer certain customer programs, including warranty programs and various programs related to Automotive Components Holdings, LLC, an indirect, wholly owned subsidiary. The Debtors aver that the purpose of the Customer Programs is to generate goodwill, remain competitive, and ensure customer warranty satisfaction. The Debtors' Customer Programs include warranty programs which can generally be classified into two categories: (a) Visteon provides warranties that the components and service parts supplied to Original Equipment Manufacturer customers and integrated into the OEMs' products will be, among other things, free from defects in material and workmanship. In addition to monetary damages, the Debtors' obligations under the OEM Warranties may require them to participate in a recall campaign as a result of actual or threatened regulatory or court actions and to provide financial contributions or to correct the defect by replacing the non-conforming material with conforming material at no cost to the OEM. (b) Visteon also provides standard customer limited warranties to the ultimate purchasers of its products and parts through an OEM. If one of the parts or components supplied by one of the Debtors' vendor fails, or is part of a warranty claim against the Debtors, the Debtors may have recourse against the vendor who supplied that part or component. The Debtors relate that as of May 15, 2009, their accrued balances for estimated OEM Warranty Obligations total $84,100,000 and Aftermarket Warranty Obligations total $2,800,000. The Debtors' Customer Programs also include programs related to ACH LLC like reconciliation of payments received from shared customers. In 2005, the Debtors, ACH, and Ford Motor Company entered into various agreements governing the terms of the transition of facilities and assets from Visteon to ACH and the provision of certain shared services going forward. Pursuant to a Master Services Agreement between the Debtors and ACH dated as of September 30, 2005, the Debtors provide critical services to ACH, including information technology support and accounting services. The Debtors also contracts with certain third-party service providers to provide services to them and ACH pursuant to the Master Services Agreement. Under the terms of the Master Services Agreement, the Debtors deliver monthly invoices to ACH that forecast internal and third-party services provided that month, as well as true up the payments for the prior month's services. As of the Petition Date, the Debtors relate that they owed approximately $5,200,000 in prepetition payments for third- party services provided to ACH, which amount has already been paid. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, proposed attorney for the Debtors, asserts immediate and irreparable harm would result if the Debtors are not permitted to honor prepetition amounts relating to the Customer Programs. "If the Debtors do not continue to provide the incentives that the OEMs have come to rely upon, then there is a serious threat the OEMs will find vendors that will provide such incentives the next time the OEMs award new business," Ms. Jones tells the U.S. Bankruptcy Court for the District of Delaware. Accordingly, the Debtors sought and obtained the Court's authority to maintain and administer their Customer Programs, including obligations related to services provided to ACH under the Master Services Agreement and to honor any prepetition obligations up to a maximum aggregate cap of $92,100,000. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corp. and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Gets Interim OK to Continue Funding Foreign Units --------------------------------------------------------------- Visteon Corporation and its debtor-affiliates' business is an interconnected, global operation comprised of 31 Debtors and more than 100 non-Debtor affiliates located throughout the world. The Debtors have equity interest in each of the Foreign Affiliates, and the Foreign Affiliates' operation extends across each of the Debtors' product lines. According to Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, proposed attorney for the Debtors, any disruption to the Debtors' relationship with these Foreign Affiliates could cause supply interruption, could cause a cascade of local insolvency proceedings, and have a direct negative impact on the Debtors' relationships with their original equipment manufacturer customers, who also operate as a global enterprise. The Debtors project that the Foreign Affiliates' aggregate 2009 EBITDA-R will be approximately $362,000,000, as compared to a negative EBITDA-R of $320,000,000 for Visteon domestically, according to Ms. Jones. Ms. Jones tells the U.S. Bankruptcy Court for the District of Delaware there are three programs central to the Foreign Affiliates' business operations -- the European Cash Pool, the Legal Entity Restructuring Activity Program and the Maquiladora Program. A. European Cash Pool The European Cash Pool involves Visteon Corporation and various Foreign Affiliates making revolving loans to and, in the case of the Foreign Affiliates, borrowing from Visteon Netherlands Holdings B.V., which acts as an internal banker for those transactions among the Foreign Affiliates. The Debtors estimate that funding the European Cash Pool Participants' working capital needs through the European Cash Pool rather than having those entities obtain outside financing saves the European Cash Pool Participants and Visteon Corporation significant transaction costs that would be incurred for establishing individual working capital facilities for each European Cash Pool Participant, as well as approximately $3,000,000 per year. B. Legal Entity Restructuring Activity Program Under the LERA Program, Debtor Visteon Electronics Corporation serves as a counterparty to and manages customer relationships and financial transactions for sale to certain of the Debtors' European customers. Five of the Debtors' European Foreign Affiliates participate in the LERA Program as contract manufacturers. The LERA transactions generally follow this structure: * VEC contracts with a customer for the delivery of finished goods; * A LERA Participant delivers the finished goods to that customer; * The customer pays VEC; * VEC pays the LERA Participant their cost plus 5% contract manufacturing fee; and * VEC retains that portion of the customer payment that is greater than the Manufacturing Fee, if any, as profit. The Debtors estimate the LERA Program to constitute about $10,000,000 to $15,000,000 in tax savings in 2009. VEC's payments to the LERA Participants are typically made one month in arrears. The Debtors told the Court they owe roughly $80,000,000 prepetition payables to the LERA Participants as of the Petition Date. C. The Maquiladora Program Visteon participates in a program similar to LERA with its Foreign Affiliates in Mexico, which is called Maquiladora Program. Under the Maquiladora Program, Debtors Visteon L.A. Holdings Corp. and Visteon A.C. Holdings Corp. own the manufacturing assets held by the Maquiladora Participants, and various of the other Debtors provide raw materials on a duty-free basis to certain of the Debtors' Foreign Affiliates in Mexico, which then assemble or manufacture those finished products that are sold by the Debtors to OEMs and other customers. The Maquiladora Program is a tax-efficient structure for both the Debtors and the Foreign Affiliates in Mexico that creates significant value for the Debtors and is critical to their ongoing Mexican operations. The Debtors estimate that the Maquiladora Program will generate between $3,000,000 and $6,000,000 in tax savings in 2009. In this light, the Debtors sought and obtained the Court's authority, on an interim basis, to: (a) continue to maintain funding to and the guarantee of the European Cash Pool, including EUR100 million revolving credit facility and guarantees or in the alternative, fund the European Cash Pool Participants individually in an amount consistent with the cash flow forecast; and (b) honor prepetition obligations owing on account of the LERA Program and Maquiladora Program for up to $92,000,000. A final hearing on the Motion will be on June 19, 2009 at 1:00 p.m. Objections are due no later than June 12. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corp. and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Can Pay Shippers, Warehousemen & Lienholders $21.3MM ------------------------------------------------------------------ Visteon Corporation and its debtor-affiliates heavily rely on certain professional domestic common carriers, shippers, truckers, freight forwarders, shipping auditing services, logistics management companies, customs brokers, and certain other third- party service providers to ship, transport, move through customs, and deliver goods through distribution networks or the "Shippers," as well as a network of third-party warehouses to store goods while in transit or the "Warehousemen," says Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, proposed attorney for the Debtors. She states that the Debtors' supply system also depends on third party contractors and vendors who manufacture certain tooling, equipment, and products, as well as parts used in the Debtors' product lines. These contractors perform various services for the Debtors, including manufacturing and repair of tooling, dies, molds, and other equipment, and manufacturing component parts necessary for the Debtors' production. However, as a result of the Debtors' bankruptcy filing, the Shippers and Warehousemen may be unwilling to release goods in their possession to which they may be entitled to liens, since this may result in the status of their claims against the Debtors being changed from secured to unsecured, Ms. Jones tells the U.S. Bankruptcy Court for the District of Delaware. In addition, she notes, certain of the third-party contractors and vendors, including Shippers, Warehousemen, and Lienholders may assert tooling, mechanics', and other possessory liens against the Debtors' or the Debtors' customers' property to secure payments. Accordingly, the Debtors sought and obtained the Court's authority, on a final basis, to pay the prepetition claims of their Shippers and Warehousemen $8,800,000, and the prepetition claims of their Lienholders totaling $12,500,000. In order to protect their supply chain, the Debtors will adopt a carefully formulated approach to paying the Lienholders' prepetition claims. The Debtors will pay only the Lienholders' prepetition claims that are necessary to: (a) obtain release of critical or valuable goods, tooling, or equipment that may be subject to mechanics' or statutory liens; (b) maintain a reliable, efficient, and smooth distribution system; and (c) induce critical Lienholders to continue to make timely delivery of the goods, tooling, and equipment. The Debtors will condition payment of the Lienholders' prepetition claims upon the agreement of the Lienholders to continue to supply goods and services postpetition on normal and customary terms, practices, and programs that were most favorable to the Debtors and that were in effect within 120 days before the Petition Date. "If the Shippers, Warehousemen, and Lienholders are unwilling to deliver the Debtors' goods postpetition because of their outstanding prepetition claims, the Debtors' operations would suffer, compromising the value of the Debtors' estates to the detriment of the Debtors' creditors," Ms. Jones asserts. Ms. Jones relates that prior to the Petition Date, the Debtors ordered approximately $10,400,000 of goods and component parts in the ordinary course of business for which delivery will not occur until after the Petition Date. As a result of the commencement of these Chapter 11 cases, Ms. Jones says, the Debtors' suppliers may be concerned that amounts owed for goods ordered prior to the Petition Date but delivered after the Petition Date will be treated as general unsecured claims against the Debtors' estates. In this light, the Debtors sought and obtained the Court's confirmation that goods delivered postpetition are entitled to administrative expense priority. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corp. and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Gets Interim Okay to Pay $2.2MM to Foreign Vendors ---------------------------------------------------------------- Visteon Corporation and its debtor-affiliates sought and obtained the authority of the U.S. Bankruptcy Court for the District of Delaware to pay the prepetition claims of certain vendors, service providers, landlords, regulatory agencies, and governments located outside the United States. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, proposed attorney for the Debtors, told the Court that as a result of the global nature of their operations, the Debtors regularly transact business with suppliers located in China, South Korea, Taiwan, Japan, Portugal, Brazil, Hungary, Germany, France, the Czech Republic, and Mexico. Certain of the Foreign Vendors are sole source suppliers of custom engineered parts who supply goods to the Debtors that cannot be obtained from other sources or cannot be obtained from other sources without significant delays, Ms. Jones said. The Debtors believe there is a significant risk that non-payment of even a single invoice could cause a Foreign Vendor to stop shipping goods to the Debtors on a timely basis or to completely sever its business relationship with the Debtors. Moreover, if Foreign Vendors are not paid, they may take precipitous action against the Debtors based on an erroneous belief that they are not subject to the automatic stay provisions of Section 362(a) of the Bankruptcy Code. "Although the automatic stay applies to protect the Debtors' assets wherever they are located in the world, attempting to enforce the Bankruptcy Code in foreign countries is often a fruitless exercise," Ms. Jones averred. "Moreover, even if it could be enforced, the automatic stay by itself would not protect assets of the Debtors' non-debtor affiliates, which could remain at risk of seizure or setoff," Ms. Jones maintained. In light of this, the Debtors sought and obtained the Court's authority to pay the claims of their Foreign Vendors of up to $2,200,000, on an interim basis. The Debtors condition the payment of the Foreign Vendor Claims on the agreement of the Foreign Vendors to continue supplying goods or services postpetition on normal customary trade terms, practices, and programs that were most favorable to the Debtors and that were in effect within 120 days before the Petition Date. If a Foreign Vendor accepts a payment and later refuses to supply goods to the Debtors on customary trade terms, then the Debtors may declare that any payment be deemed to have been made in payment of then outstanding postpetition obligations owed to that Foreign Vendor. In that event, the Debtors suggest that: (a) the Foreign Vendor repay any payment of a Foreign Claim to the extent that the aggregate amount of those payments exceed postpetition obligations then outstanding, without the right of any setoffs, claims, provision for payment of reclamation, or trust fund claims; or (b) the Debtors will apply that payment against any outstanding administrative claim held by that Foreign Vendor. A final hearing to consider the approval of payment of Foreign Vendor Claims totaling $5,100,000 will be held on June 19, 2009. Objections are due no later than June 12, 2009. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corp. and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) WESTERN REFINING: S&P Affirms 'B+' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Western Refining Inc., including the 'B+' long-term corporate credit rating and 'BB-' rating on the senior secured debt. The outlook remains negative. At the same time, S&P assigned a 'BB-' rating (one notch above the corporate credit rating) to Western's proposed $600 million senior secured notes due 2017. The recovery rating on this debt is '2', indicating expectations of a substantial recovery (70%-90%) in the event of a default. S&P assigned a 'B-' rating (two notches below the corporate credit rating) on Western's proposed $100 million convertible senior notes due 2014. The recovery rating is '6', indicating expectations of negligible (0%-10%) recovery of principal in the event of default. Western will use the proposed debt offerings, as well as a common equity offering of 14 million shares, to refinance outstanding borrowings its $1.4 billion term loan B, about $1.3 billion of which is currently outstanding. By reducing the outstanding term loan debt, Western is seeking to provide itself with greater financial flexibility through lower debt leverage and more favorable financial covenants. Although Western will modestly lower debt levels and gain additional cushion to its financial covenants, the pro forma debt level remains very high, and in Standard & Poor's view, this leaves Western still vulnerable to a prolonged drop in refining margins. Under a stress case scenario where third- and fourth- quarter 2009 operating margins cover only cash operating costs, Western would be near or in violation of its financial covenants. Although Western's trailing-12-month adjusted debt to EBITDA leverage ratio was around 2.8x as of March 31, S&P believes future refining margins will continue to face negative pressure given the combination of growing capacity and weakened global demand. Western's estimated second-quarter operating income, which could fall as low as $5 million from around $120 million, reflect this adverse industry development. "The ratings on El Paso, Texas-based Western Refining Inc. reflect its high debt leverage in an industry beset by extreme operating margin volatility," said Standard & Poor's credit analyst Paul B. Harvey. The company operates in a competitive, volatile, and unpredictable industry, compounded by high fixed-cost requirements for refinery equipment, a high degree of operating leverage, and regulatory compliance. Ratings also reflect its moderate asset diversification, niche Southwestern markets where margins are generally more favorable, and improved operational abilities of its refineries. The negative outlook reflects S&P's concern that Western's high debt levels combined with weak market fundamentals could test its ability to maintain adequate liquidity and compliance with its financial covenants. If debt leverage exceeds 4x or interest coverage falls below 2.5x, S&P could lower ratings. S&P could also lower ratings if Western fails to maintain adequate liquidity, around $150 million or greater. S&P does not expect ratings to stabilize in the near term given the very uncertain outlook for refining margins combined with Western's continued high debt burden. YELLOWSTONE CLUB: Court Confirms Plan, to Emerge Later this Month ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Montana entered an order confirming The Yellowstone Club's Chapter 11 Plan of Reorganization. The Yellowstone Club expects to emerge from Chapter 11 later this month. Under the Plan, CrossHarbor Capital Partners, LLC, a commercial real estate investment, will acquire the equity ownership interests in the reorganized Club. Upon completion of the transaction, CrossHarbor, together with Discovery Land Company LLC, will manage and develop the private, world class ski and golf resort. Additionally, a $15 million fund will be established by CrossHarbor to ensure payment to local trade and other creditors of the Club, and it is anticipated that the allowed claims of all or substantially all general unsecured creditors will be paid in full. "The Court's confirmation of our Plan is a major milestone for the Yellowstone Club and we are very pleased with this outcome," said Edra Blixseth, chief executive officer of the Yellowstone Club. "We believe the Club is poised to emerge with the capital, financial stability and ownership structure needed for a prosperous future. We thank all of our stakeholders who played a critical role in the Club's successful restructuring, particularly CrossHarbor for providing the interim debtor in possession financing and exit financing that ensured our successful reorganization under Chapter 11. We also wish to express our deepest gratitude to the Club's members and employees, who have worked tirelessly over the past eight months to make this plan for reorganization a reality. I am extremely pleased that local trade creditors will be paid and that the Yellowstone Club will continue as a major contributor to the Big Sky community. I also want to express my deepest gratitude to my legal advisors and other subject matter experts who provided their counsel and support throughout this process." About Yellowstone Club Located near Big Sky, Montana, Yellowstone Club -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. The Company was founded in 1999. Yellowstone Mountain Club LLC and its affiliates filed for Chapter 11 on November 10, 2008 (Bankr. D. Montana, Case No. 08- 61570). The Company's owner affiliate Edra D. Blixseth, filed for Chapter 11 on March 27, 2009 (Case No. 09-60452). Connie Sue Martin, Esq., David A. Ernst, Esq., Lawrence R Ream, Esq., Richard G. Birinyi, Esq., Stephen Deatherage, Esq., Thomas L. Hutchinson, Esq., and Troy Greenfield, Esq., at Bullivant Houser Bailey PC; and James A. Patten, Esq., at Patten, Peterman, Bekkedahl & Green PLLC, represent the Debtors as counsel. The Debtors hired FTI Consulting Inc. and Ronald Greenspan as CRO. The official committee of unsecured creditors in the case are represented by J. Thomas Beckett, Esq., and David P. Billings, Esq., at Parsons, Behle and Latimer, as counsel, and James H. Cossitt, Esq., at local counsel. Credit Suisse, the prepetition first lien lender, is represented by Skadden, Arps, Slate, Meagher & Flom. * BOOK REVIEW: Taking America - How We Got from the First Hostile Takeover to Megamergers, Corporate Raiding and Scandal ----------------------------------------------------------------- Author: Jeff Madrick Publisher: BeardBooks Softcover: 310 pages Review by Henry Berry As the subtitle reveals, Taking America connotes the indiscriminate buying up of the nation's assets of large corporations by investment bankers, insider stock traders, arbitrageurs, and the like. This occurred in the mid-1970s, when low stock prices made many large corporations attractive as takeover targets. At the time, they were not ready for what was going to hit them. This was the business era when the term "hostile takeover" came into use. Ivan Boesky, Carl Icahn, and T. Boone Pickens became household names for their inconceivable, bold attempts to buy out corporations. In doing so, they would stand to make hundreds of millions of dollars as the stock of the acquired company rose. But in most cases, such a stock rise would come at the cost of breaking up the newly-acquired company by selling off its most prized and valuable operations and assets or by drastically reducing its work force to save on wage and benefits costs. In many ways, this wave of buyouts and mergers fundamentally changed the way corporations did business; and it changed the way corporations were seen by businesspersons and the public. Corporations came to be seen not mainly as businesses relating to a particular business sector or making a particular product or product line. Such considerations as operations and growth within a particular or closely-related sector, employee security, and long-term strategic planning were swept aside by the single-minded aim of using a corporation's cash and other assets as leverage to takeover vulnerable, and often unsuspecting, corporations for quick, huge profit. Running a corporation became like playing the stock market. Madrick's Taking America was originally published in 1987, just after this wave of takeovers and mergers waned. But it waned not from any restoration of rationality or temperance, but mainly from having succeeded so well. There were scarcely any big companies worth taking over left after the takeover frenzy, as it was described by many. Madrick follows this unprecedented, transformational takeover spree occurring over the decade of the mid 1970s to the mid 1980s mainly by following the activities of the key individuals driving it, and as much as possible getting into their thinking, the scheming, and the strategies. Most of the participants in the takeover movement who are referred to in this book were interviewed by the author. Most of the book's content is based on these interviews. Other recognizable names in the author's long listing of individuals he interviewed are Peter Drucker, Richard Cheney, Robert Rubin, and Felix Rohatyn. Looking back over this period, Madrick sees a takeover movement that lost touch with business's first principles. These principles take into consideration broad economic well-being for employees and the public, not quickly-gained riches for a few. Although Boesky and others were heavily fined or imprisoned for illegal conduct, their view of business and business activity was taken in by the business field. The "dot-com bubble" of the 1990's, when many young entrepreneurs in the field of computer technology tried to create businesses with the hope of soon being taken over by larger companies, is one instance of the legacy of this takeover era. The Enron approach to business is another; as are the business activities, particularly the financial legerdemain, of WestCom, Tyco, and Adelphia, to name a few. In Taking America, Madrick sheds much light on the origins of widespread problems in today's business world. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Ma. Theresa Amor J. Tan Singco, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***