/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090805.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, August 5, 2009, Vol. 13, No. 215 Headlines 2008 ASSET HOLDING: Court Establishes September 2 Claims Bar Date 750 GARLAND: Puts The Flat Apartment Up for Sale ACCREDITED HOME: Gets Nod to Sell Certain Loans to NPA I AFFINIA GROUP: Moody's Assigns 'B1' Rating on $225 Mil. Notes AMERICAN AXLE: Files Amendment to 2 Employee Plan Annual Reports AMERICAN AXLE: JPMorgan-Led Lenders Extend Waiver Until Aug. 20 AMERICAN CASINO: Moody's Assigns Corporate Family Rating at 'B3' AMERICAN CASINO: S&P Assigns Corporate Credit Rating at 'B' AMERICAN PACIFIC: Liberis Replaces Chesser as Counsel AMERICAN PACIFIC: Hearing on Ch. 7 Conversion Delayed to Aug. 28 ANCHOR BLUE: Court Approves Severance Program ARCLIN US: U.S. Trustee Sets Meeting of Creditors for August 26 ARCLIN US: Wants 60-Day Extension for Schedules and Statements ASARCO LLC: Harbinger Wants Own Plan to Be Set Aside ASARCO LLC: Asbestos Committee Finds Inconsistency in Plan ASARCO LLC: Court Approves Hayden Site Settlement BABCOCK QUARTER: Wants to Sell Motor Home to Reduce Sterling Debt BAMBOO ABBOTT: Court Extends Schedules Filing Until August 24 BAMBOO ABBOTT: Gets Interim OK to Use Wells Fargo Cash Collateral BEARINGPOINT INC: Court Approves Key Employee Incentive Plan BEARINGPOINT INC: In Talks to Divest Latin America, Asia-Pac Units BERNARD MADOFF: Some Victims Oppose Trustee's $14MM Fees BERNARD MADOFF: Ruth Required to Report Expenses to Picard BERTRAND CHAFFEE: Emerges From Chapter 11 Bankruptcy Protection BIRMINGHAM-SOUTHERN COLLEGE: Moody's Affirms 'Ba1' Rating on Debt CENTENNIAL COMMUNICATIONS: $949MM Stockholders Deficit at May 31 CHEMTURA CORP: Committee's Motion to Pursue Causes of Action CHEMTURA CORP: Exclusive Plan Period Extended to Nov. 13 CHEMTURA CORP: Inks Settlement With J. Fina & AIG CITIZENS REPUBLIC: Moody's Junks Subordinated Debt Rating COLONIAL BANCGROUP: Shareholders to Vote on Shares Hike on Sept. 2 COLONIAL BANCGROUP: Hit by TARP Search Warrant COMMERCECONNECT MEDIA: Commences Prepackaged Chapter 11 Bankruptcy CONEXANT SYSTEMS: Swings to $2.72MM Income in Qrtr Ended July 2 COOPER-STANDARD: Chapter 11 Case Summary & Creditors' List COYOTES HOCKEY: Court Moves Local Auction to September 10 CYGNUS BUSINESS: Files for Ch 11 After Lenders Agree to Debt Swap EASTMAN KODAK: S&P Assigns 'CCC+' Senior Unsecured Rating ENERGY FUTURE: Moody's Junks Corporate Family Rating From 'B3' EVERETT MARITIME: U.S. Trustee Appoints 5-Member Creditors' Panel FAIRPOINT COMMUNICATIONS: S&P Reassigns CC Corporate Credit Rating FEDERAL-MOGUL: Allowed by Michigan State to Keep Tax Break FEDERAL-MOGUL: Court Moves Sept. 22 Hearing Due to G-20 Meet FEDERAL-MOGUL: Releases Second Quarter 2009 Results FEDERAL-MOGUL: Tennessee Plan Spill Causes Evacuation, Sickness FONTAINEBLEAU: BofA, et al., Want CCCS to Produce Documents FONTAINEBLEAU: Term Lenders, Arelius Oppose Moelis Engagement FONTAINEBLEAU: Term Lenders Oppose Terms of Citadel Engagement GENERAL MOTORS: Panel Says $1.5BB JPMorgan Loans Are Unsecured GENERAL MOTORS: Can Reject 33 Dealers Who Refused Wind-Down Deals GENERAL MOTORS: Opel Tops GM's Agenda in First Board Meeting GENERAL MOTORS: Appoints Members to Executive Management Committee GENERAL MOTORS: Appointments at Shanghai-Based Operations GENERAL MOTORS: Discloses Five Newest Members to Board GENERAL MOTORS: Has Plan to Return to Car Leasing Business GENERAL MOTORS: Publicis Groupe, Omnium Have Little Exposure GMAC FINANCIAL: Posts $3.9BB Net Loss in Second Quarter 2009 GPS INDUSTRIES: Files for Chapter 11 Bankruptcy Protection GRAPHICS PROPERTIES: Plan Filing Period Extended to September 14 HAYES LEMMERZ: Panel Obtains TRO on Brazil Unit Restructuring HAYES LEMMERZ: Retiree Committee Can Employ Stahl Cowen as Counsel HAYES LEMMERZ: Retiree Panel Can Employ DSI as Financial Advisors HAYES LEMMERZ: Retirees Tap Schnader as Delaware Co-Counsel ICON REALTY: Can Hire Backenroth Frankel as Counsel INSIGNIA VESSEL: Moody's Cuts Corporate Family Rating to 'B3' INTERTAPE POLYMER: Posts $1.2 Million Net Loss for Q2 2009 JEFFERSON COUNTY: Alabama Lawmakers Discuss Occupational Tax KEANE INTERNATIONAL: S&P Gives Stable Outlook; Affirms 'B' Rating L-3 COMMUNICATIONS: Fitch Affirms Issuer Default Rating at 'BB+' LAKE CUMBERLAND: Section 341(a) Meeting Scheduled for August 26 LANDSOURCE COMMUNITIES: Emerges From Ch. 11 as Newhall Land LEHMAN BROTHERS: Federal Home Loan Sues to Recover $41.5 Million LEHMAN BROTHERS: First Bank Wants to Investigate LBHI & LBSF LEHMAN BROTHERS: Hires CB Richard as Real Estate Broker LEHMAN BROTHERS: Intends to Investigate Consolidated Container LEHMAN BROTHERS: Presents Settlement With Orange Beach Member LEHMAN BROTHERS: Protocol for Resolving Derivative Contract Claims LEVEL 3: Posts $134 Million Net Loss for Second Quarter 2009 LOOP 76: U.S. Trustee Sets Meeting of Creditors for August 25 METALDYNE CORP: Receives Bids for "Substantially All Assets" METALDYNE CORP: Court Okays Break-Up Fee for Substitute Bidder METROMEDIA INT'L: Creditors Want Plan Exclusivity Terminated METROMEDIA INT'L: Can Employ Greenberg Traurig as Counsel METROMEDIA INT'L: Can Employ Potter Anderson as Special Counsel METROMEDIA INT'L: Panel Can Employ Baker & McKenzie as Counsel MICHAEL VICK: Attorney's Fees Contested in Bankruptcy Case MIDWAY GAMES: Dewey & Leboeuf Says Work for Directors Allowed MODINE MANUFACTURING: Posts $14.5MM Net Loss for June 30 Quarter MONUMENT REALTY: No Bid Received for Watergate Hotel MOORE-HANDLEY: Section 341(a) Meeting Scheduled for August 25 MOUNT HOLLY: Hearing on MHU's Case Dismissal Plea Set for Aug. 11 MPG JUPITER: Wants to Hire Buddy Ford as Attorney MPG PARKLAND: Files Chapter 11 to Thwart Foreclosure NATIONAL GOLD: Court Denies Case Conversion to Chapter 7 NCB FSB: Fitch Affirms Primary Servicer Rating at 'CPS2+' NOBLE INT'L: Nissan to Buy Assets in Private Sale NOVA HOLDING: Proposes Sept. 11 Deadline for All Assets ONEBEACON INSURANCE: Moody's Assigns 'Ba1' Preferred Stock Rating OVERSEAS SHIPHOLDING: Moody's Cuts Corp. Family Rating to 'Ba2' PENNY & KENNY: Voluntary Chapter 11 Case Summary PITTSBURGH IRISH: Planning to Sell Assets for $1.2 Million PROTOSTAR LTD: Can Hire Kurtzman Carson as Claims & Noticing Agent PUENTES FAMILY LIMITED: Voluntary Chapter 11 Case Summary RALLYE HOMES: Case Summary & 20 Largest Unsecured Creditors REDDY ICE: Board OKs New Pay Scheme for Non-Employee Directors REDDY ICE: June 30 Balance Sheet Upside Down by $224 Million REGAL ENTERTAINMENT: Posts $40.4 Million Net Income in Q2 2009 REVLON INC: Posts $200,000 Net Income for Second Quarter 2009 ROLLLING HILLS: Case Summary & 2 Largest Unsecured Creditors SALLY BEAUTY: June 30 Balance Sheet Upside-Down by $650.6 Million SALLY BEAUTY: L'Oreal USA Amends Breach of Contract Suit SANTA FE HOLDING: Gets Court Nod to Borrow $1.2MM from DBMC SANTE FE HOLDING: Selects Heller Draper as Counsel SANTE FE HOLDING: Names Dodson Parker as Corp. and Local Counsel SEA CHANGE GROUP: Case Summary & 3 Largest Unsecured Creditors SECURITY BANK: Files for Chapter 7 After Banks Seized SEMGROUP LP: Canada Crude's Amended Chapter 15 Database SEMGROUP LP: Court OKs Settlement With Catsimatidis SEMGROUP LP: Five Units File Chapter 15, Have CCAA Plans SEMGROUP LP: Producers' Committee Object to Plan STATION CASINOS: Has Agreement for FCP Use of Cash Collateral STATION CASINOS: Proposes to Honor Prepetition Insurance Dues STATION CASINOS: Sec. 341 Meeting of Creditors on August 31 STUART EDWARDS: Court Orders Conversion of Case to Chapter 7 STUDIO THEATRE: Court Orders Conversion of Case to Chapter 7 TROPICANA ENT: OpCo Entities Oppose LandCo Trademark Suit TROPICANA ENT: Adamar of NJ Wants Plan Deadline Moved to Dec. 25 TROPICANA ENT: Adamar Asks 90-Day Extension for Lease Decisions TROPICANA ENT: Sr. Sub. Noteholders Want Professionals' Fees Paid TVI CORP: Plan Filing Period Extended to August 31 UNISYS CORPORATION: Moody's Confirms Corp. Family Rating at 'B3' UNISYS CORPORATION: Fitch Downgrades Issuer Default Rating to 'RD' UNISYS CORP: S&P Downgrades Corporate Credit Rating to 'SD' US ORE CORP: Case Summary & 20 Largest Unsecured Creditors VALASSIS COMMUNICATIONS: S&P Gives Stable Outlook; Keeps B Rating VISTEON CORP: Amended Application Hikes FTI Fees VISTEON CORP: Committee Wants to Retain Chanin Capital as Banker VISTEON CORP: Hires Ernst & Young for Risk Management Services VISTEON CORP: To Sell Equipment at Durant, Mississippi Facility WASHINGTON MUTUAL: Amends By-Laws to Reflect Management Changes WASHINGTON MUTUAL: FTI Consulting Charges $754,970 for Feb. to May WASHINGTON MUTUAL: Shareholders Aim to Recoup Losses WESTSIDE DEVELOPMENT: Section 341(a) Meeting Slated for August 31 WITHERS STEEL: Case Summary & 20 Largest Unsecured Creditors WOLVERINE TUBE: Amends SEC Disclosures to Correct Typo Errors YOUNG OPERATING: Case Summary & 20 Largest Unsecured Creditors * Bankruptcy Exit Plans Filed in Seven Large Cases Last Week * High-Yield Distressed-Debt Trading Falls Lowest in 11 Months * Upcoming Meetings, Conferences and Seminars ********* 2008 ASSET HOLDING: Court Establishes September 2 Claims Bar Date ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has set deadlines for creditors and parties-in-interest to file proofs of claim against 2008 Asset Holding Corp. (f/k/a GSC Capital Corp.). Holders of general unsecured claims arising pre-bankruptcy must file proofs of claim by September 2, 2009. The governmental units must file proofs of claim by December 28, 2009. As reported by the Troubled Company Reporter on July 7, 2009, citing Bill Rochelle at Bloomberg News, 2008 Asset Holding intends to file a Chapter 11 liquidating plan it hopes will be supported by the noteholders. The Debtor owes $97.9 million on 7.25% senior convertible notes. GSC Capital Corp., a real estate investment trust, was formed to invest in mortgage-backed securities, residential mortgages, mortgage loans, and a variety of real estate-related derivatives. Some of the assets are worthless and will be abandoned, Bloomberg said, citing a court filing. 2008 Asset Holding, together with two subsidiaries, filed for Chapter 11 on June 30, 2009 (Bankr. S.D.N.Y. Case No. 09-14264). Shannon Lowry Nagle, Esq., at O'Melveny & Myers, LLP, in New York, serves as counsel. The petition says assets range from $1,000,001 to $10,000,000 while debts are between $100,000,001 and $500,000,000. 750 GARLAND: Puts The Flat Apartment Up for Sale ------------------------------------------------ 750 Garland LLC is auctioning off The Flat, its apartment building in City West, California, Adrian Glick Kudler at la.curbed.com reports. According to the report, broker Rotimi Ayenbeku said that China Trust Bank, whom 750 Garland owes $23 million in construction loan, is asking $24 million for the former Holiday Inn building. Mr. Ayenbeku said that he and his partner received three offers -- most around $20 million -- and are still accepting more, la.curbed.com relates. la.curbed.com states that leasing continues at The Flat and Westside Rentals has two listings at the property. Headquartered in Los Angeles, California, 750 Garland LLC is a limited liability company which owns The Fiat, a 206-unit, six- story apartment building. The Company filed for Chapter 11 on April 22, 2009 (Bankr. C.D. Calif. Case No. 09-19104). Helen R. Frazer, Esq., at Atkinson Andelson Loya Ruud & Romo, represents the Debtor in its restructuring efforts. The Debtor listed total assets of $30,015,000 and total debts of $27,342,806. ACCREDITED HOME: Gets Nod to Sell Certain Loans to NPA I -------------------------------------------------------- Accredited Home Lenders Holding Co. obtained permission from Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware to sell certain loans free and clear of liens, claims and other interests. According to Carla Main at Bloomberg News, the sale is to be completed under the terms of an asset purchase agreement between the debtor and NPA I LLC. If they fail to close on the agreement, a second buyer, Lendsure, which was the second bidder at the bankruptcy auction, will step in and become the purchaser. Accredited Home Lenders Holding Co. -- http://www.accredhome.com/ -- is a mortgage banker servicing U.S. markets for conforming and non-prime residential mortgage loans operating throughout the U.S. and in Canada. Founded in 1990, the company is headquartered in San Diego. The Company was acquired by Lone Star Funds for $300 million in October 2007. Lone Star also owns Bruno's Supermarkets LLC and Bi-Lo LLC, two grocery retailers in Chapter 11. Accredited Home and its affiliates filed for Chapter 11 on May 1, 2009 (Bankr. D. Del. Lead Case No. 09-11516). The Debtors selected Hunton & Williams LLP as Chapter 11 counsel, and Pachulski Stang Ziehl & Jones LLP as co-counsel. Accredited Home also tapped Luce, Forward, Hamilton & Scripps LLP and Quinn Emanuel Urquhart Oliver & Hedges LLP for various litigation. APS Services LLC has been tapped to provide management services, including a CRO for the Debtors. Kurtzman Carson Consultants is the Debtors' claims agent. The official committee of unsecured credtiors tapped Arent Fox as counsel, Elliott Greenleaf as Delaware and conflicts counsel, and Weiser LLP as financial advisor. According to its bankruptcy petition, Accredited Home's assets range from $10 million to $50 million and its debts from $100 million to $500 million. AFFINIA GROUP: Moody's Assigns 'B1' Rating on $225 Mil. Notes ------------------------------------------------------------- Moody's Investors Service has assigned a (P)B1 prospective rating to Affinia Group Inc.'s proposed $225 million of senior secured notes. In a related action Moody's affirmed Affinia's Corporate Family Rating and Probability of Default Rating at B2, the Ba2 rating on the existing bank credit facilities, the B3 rating on the subordinated notes, and the SGL-3 Speculative Grade Rating. The rating outlook remains negative. The proposed senior secured notes, combined with funds from other sources will be used to refinance Affinia's existing senior secured bank credit facilities. The affirmation of Affinia's B2 Corporate Family Rating reflects the relative stability of the company's automotive aftermarkets business, which has supported the company's ability to maintain credit metrics consistent with the assigned rating. The automotive aftermarket parts sector benefits from a growing number of registered vehicles. In addition, Affinia's product offerings are largely consumables such as filtration and brake products with demand generally correlated more with normal maintenance and wear requirements rather than overall economic conditions. The company's products also benefit from leading market positions. The negative outlook continues to reflect the softer demand environment for aftermarket auto parts as consumer spending patterns shift toward savings resulting in some postponed car maintenance and lower passenger miles driven. As a result, company's top line and credit metrics are expected to continue to be pressured through 2009 despite recent restructuring actions, and lower cost sourcing. The Speculative Grade Liquidity Rating of SGL-3 reflects the company's current adequate level of liquidity. At March 31, 2009, the company maintained $39 million of unrestricted cash and cash equivalents. The $125 million revolver was undrawn, with $22 million utilized for LC issuance. However, revolver availability is severely limited by the bank credit facility's net leverage covenant. The company had no outstandings under its $100 million receivable securitization facility which matures in November 2009. The next major debt maturity is the company's $287 million term loan in November 2011. Alternate forms of liquidity are limited as the bank credit facilities are secured by substantially all of the company's assets. Affinia's ability to generate free cash flow over the next 12 months may be pressured by soft economic conditions which may pressure consumer aftermarket spending patterns. The successful completion of Affinia's capital structure refinancing is expected to favorably impact the company's liquidity profile. Rating Assigned: * (P)B1 (LGD3, 37%) for the proposed $225 million privately placed senior secured notes Ratings affirmed: * B2, Corporate Family Rating * B2, Probability of Default * First lien bank debt, Ba2 (LGD2, 19%) * B3 (LGD5, 70%) on the Subordinated Notes * Speculative Grade Liquidity Rating, SGL-3 * Senior Unsecured Issuer Rating, B3 The last rating action for Affinia was on December 2, 2008. When the Corporate Family Rating was affirmed at B2 and the outlook was changed to negative. Affinia Group Inc., headquartered in Ann Arbor, MI, is a designer, manufacturer and distributor of aftermarket components for passenger cars, sport utility vehicles, light, medium and heavy trucks and off-highway vehicles. The company's product range addresses filtration, brake and chassis markets in North and South America, Europe, and Asia. In 2008, the company reported revenues of approximately $2.2 billion. AMERICAN AXLE: Files Amendment to 2 Employee Plan Annual Reports ---------------------------------------------------------------- American Axle & Manufacturing Holdings, Inc., filed amendments on Form 11-K/A to the Annual Report for the year ended December 31, 2008, for: 1. the American Axle & Manufacturing, Inc. Personal Savings Plan for Hourly-Rate Associates See http://ResearchArchives.com/t/s?40a6 2. the American Axle & Manufacturing, Inc. Salaried Savings Plan See http://ResearchArchives.com/t/s?40a7 The Personal Savings Plan for Hourly-Rate Associates reported $147,938,684 in Net Assets Available for Benefits at December 31, 2008. The Salaried Savings Plan reported $98,295,417 in Net Assets Available for Benefits at December 31, 2008. Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Michigan, New York, Ohio and Indiana), the Company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom. * * * As reported by the Troubled Company Reporter on August 3, 2009, American Axle may have to file for Chapter 11 bankruptcy protection if it fails to reach a new accord with lenders, Detroit Free Press said, citing analysts. As reported by the TCR on July 14, 2009, Reuters, citing people familiar with the matter, said American Axle is working with law firm Shearman & Sterling as it considers restructuring options, including filing for bankruptcy. American Axle said that its long-term relationship with Shearman & Sterling, which has included work on securities law and litigation, was broadened to include advice on restructuring. As reported by the TCR on June 11, 2009, Fitch Ratings said its 'CCC' issuer default ratings on American Axle & remain on Watch Negative. According to the TCR on May 14, 2009, Moody's Investors Service lowered American Axle's Probability of Default Rating to Caa3 from Caa1, and its Corporate Family Rating to Ca from Caa1. In a related action Moody's also lowered the rating on the Company's secured bank credit facilities to Caa2 from B2, lowered the rating on the unsecured guaranteed notes to Ca from Caa2, and lowered the rating on the unsecured convertible notes to Ca from Caa2. The Speculative Grade Liquidity Rating was affirmed at SGL-4. The outlook is negative. Deloitte & Touche LLP, American Axle's auditor, has raised substantial doubt about the ability of the Company to continue as a going concern. Deloitte noted the significant downturn in the domestic automotive industry which has an adverse impact on American Axle's two largest customers. American Axle had assets of $2.073 billion against debts of $2.525 billion as of March 31, 2009. AMERICAN AXLE: JPMorgan-Led Lenders Extend Waiver Until Aug. 20 --------------------------------------------------------------- American Axle & Manufacturing Holdings, Inc., and American Axle & Manufacturing, Inc., entered into an extension of the Waiver and Amendment, dated as of June 29, 2009, to the Credit Agreement dated as of January 9, 2004, as amended, with JPMorgan Chase Bank, N.A., as Administrative Agent for the lenders party thereto, and J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Bookrunners. The Waiver Extension, among other things, extends the original waiver period termination date of July 30, 2009, to August 20, 2009. The Waiver Extension continues to require AAM to maintain a daily minimum liquidity of $100 million and can be terminated under certain circumstances, including AAM's inability to meet the minimum liquidity test for four consecutive business days or the payment of interest during the extension period on AAM's and Holdings' outstanding notes. Except for the foregoing, the Waiver and Amendment remains in full force and effect. AAM continues to have active discussions with its lenders regarding further modifications to the Revolving Credit Facility. The extension of the waiver period is a positive step in this process and provides additional time for these discussions. Members of the lending syndicate are: * Bank of America, N.A. * Bank of China, Los Angeles Branch * Bank of China, New York Branch * The Bank of New York Mellon * BNP Paribas * Comerica Bank * HSBC Bank USA, National Association * KeyBank National Association * Wachovia Bank, N.A. A full-text copy of the Waiver Extension is available at no charge at http://ResearchArchives.com/t/s?40a5 As reported by the Troubled Company Reporter on August 3, 2009, American Axle may have to file for Chapter 11 bankruptcy protection if it fails to reach a new accord with lenders, Detroit Free Press said, citing analysts. As reported by the TCR on July 14, 2009, Reuters, citing people familiar with the matter, said American Axle is working with law firm Shearman & Sterling as it considers restructuring options, including filing for bankruptcy. American Axle said that its long-term relationship with Shearman & Sterling, which has included work on securities law and litigation, was broadened to include advice on restructuring. American Axle spokesperson Chris Son said the Company continues to have talks with lenders about further modifications to a $470 million revolving credit line, Detroit Free Press said. Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Michigan, New York, Ohio and Indiana), the Company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom. * * * As reported by the Troubled Company Reporter on June 11, 2009, Fitch Ratings said its 'CCC' issuer default ratings on American Axle & remain on Watch Negative. According to the TCR on May 14, 2009, Moody's Investors Service lowered American Axle's Probability of Default Rating to Caa3 from Caa1, and its Corporate Family Rating to Ca from Caa1. In a related action Moody's also lowered the rating on the Company's secured bank credit facilities to Caa2 from B2, lowered the rating on the unsecured guaranteed notes to Ca from Caa2, and lowered the rating on the unsecured convertible notes to Ca from Caa2. The Speculative Grade Liquidity Rating was affirmed at SGL-4. The outlook is negative. Deloitte & Touche LLP, American Axle's auditor, has raised substantial doubt about the ability of the Company to continue as a going concern. Deloitte noted the significant downturn in the domestic automotive industry which has an adverse impact on American Axle's two largest customers. American Axle had assets of $2.073 billion against debts of $2.525 billion as of March 31, 2009. AMERICAN CASINO: Moody's Assigns Corporate Family Rating at 'B3' ---------------------------------------------------------------- Moody's assigned a B3 Corporate Family Rating and Probability of Default Rating to American Casino & Entertainment Properties, LLC. Moody's also assigned a B3 rating to the company's proposed $375 million senior secured notes due 2014 and a Speculative Grade Liquidity rating of SGL-2. Proceeds from the new notes will be used to repay the company's existing term loan. All ratings are subject to the receipt and review of final documentation. The rating outlook is stable. The B3 Corporate Family Rating reflects ACEP's small scale in terms of revenue, concentration in the Las Vegas market, and the expectation of continued weak gaming demand, particularly in Las Vegas, that could challenge ACEP's ability to reduce its high leverage in the near-term. Positive ratings consideration includes the company's good liquidity represented by pro-forma cash balances of approximately $100 million and Moody's expectation that the company can generate positive free cash flow. Additionally, the indenture is expected to significantly limit the company's ability to make restricted payments and to incur additional debt. The stable outlook considers that ACEP will be able to maintain debt/EBITDA below 5.5 times and given restrictions in the indenture, the company can maintain strong cash balances. First time ratings assigned: * Corporate Family Rating at B3 * Probability of Default Rating at B3 * $375 million senior secured notes due 2014 at B3 (LGD 4, 50%) * Speculative Grade Liquidity rating at SGL-2 American Casino & Entertainment Properties LLC owns and operates three gaming properties in Las Vegas, NV (Stratosphere Casino Hotel and Tower, Arizona Charlie's Decatur and Arizona Charlie's Boulder) and one property in Laughlin, NV (Aquarius Casino Resort). The company generates annual net revenue of approximately $400 million. AMERICAN CASINO: S&P Assigns Corporate Credit Rating at 'B' ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Las Vegas-based American Casino & Entertainment Properties LLC. The rating outlook is stable. At the same time, S&P assigned ACEP's proposed $375 million senior secured notes an issue-level rating of 'B+' (one notch higher than the 'B' corporate credit rating) with a recovery rating of '2', indicating S&P's expectation of substantial (70% to 90%) recovery for noteholders in the event of a payment default. The company intends to use the proceeds from the notes offering to repay all outstanding amounts under its Goldman term loans. The notes will be issued in a private transaction under Rule 144A of the U.S. Securities Act of 1933 and will have registration rights. "The 'B' corporate credit rating reflects the disadvantaged location on the Las Vegas Strip of its largest cash flow generating property, reliance on only two markets that are geographically close together, and S&P's expectation that challenging operating conditions in the Las Vegas market will continue over the next several quarters," said Standard & Poor's credit analyst Melissa Long. "ACEP does benefit from some diversity of cash flow, with four properties." The company owns and operates four casinos in Nevada: three in Las Vegas (the Stratosphere, Arizona Charlie's Decatur, and Arizona Charlie's Boulder) and one in Laughlin (the Aquarius Casino Resorts). The Stratosphere is located on the northern end of the Las Vegas Strip. Despite its visible landmark given the dramatic height of its tower, its disadvantaged Strip location has created challenges because of the lack of foot traffic on this portion of the Strip. As a result, it is marketed as a value-oriented property. S&P expects the disadvantageous location to continue to pressure performance at this property, especially since a significant amount of room capacity will come online in the Las Vegas market later on in 2009 when MGM's CityCenter opens. While the new CityCenter rooms will target high-end visitors, S&P expects that the facility's opening will place more pressure on already low room rates throughout the market and will likely pull traffic toward the center of the Las Vegas strip. ACEP's Arizona Charlie's Decatur and Arizona Charlie's Boulder casinos are located off of the Las Vegas Strip and target individuals who live and work in Las Vegas. Although S&P has a favorable long-term view of the Las Vegas locals market given strong demographics and local zoning regulations that create high barriers to entry, operating conditions in the locals market have been quite weak because of high unemployment and a very weak Las Vegas real estate market. S&P expects these difficult operating conditions to continue through at least the rest of 2009, and S&P does not expect to see a rebound in performance in 2010. In the first six months of 2009, ACEP's net revenues decreased approximately 16% and EBITDA fell 24%. S&P anticipates that the second half of 2009 will be similar to the first half of 2009 and, as a result, S&P expects net revenues to fall in the mid-teens area and EBITDA to fall in the mid-20% area for the full year. Under these performance assumptions, S&P expects leverage will end 2009 at around 6x, and EBITDA coverage of interest to be in the mid-1x area. AMERICAN PACIFIC: Liberis Replaces Chesser as Counsel ----------------------------------------------------- American Pacific International, Ltd., asks the U.S. Bankruptcy Court for the Northern District of Florida for authority to employ Liberis & Associates, P.A., as counsel. Liberis will advise the Debtor regarding its rights and represent its interests before the Court. Services to be provided by Liberis include negotiations with creditors, amendment of the schedules and statement of affairs, preparation of the plan and disclosure statement, and the representation of the Debtor in any adversary pleadings, motions or other matters brought before the Court. Liberis replaces Chesser & Barr, P.A., the Debtor's prior counsel. Liberis' hourly rates are: Charles S. Liberis, Esq. $350 Bruce C. Fehr, Esq. $250 Paralegals $85 Bruce C. Fehr, Esq., an associate at Liberis, assures the Court that he does not represent or holds an interest to the Debtor and its estate in connection with the matters on which his firm is to be employed. Mr. Fehr can be reached at: Bruce C. Fehr, Esq. Liberis & Associates, P.A. West Intendencia Street Pensacola, Florida 32502 Tel: (850) 438-9647 Crestview, Florida-based American Pacific International, Ltd., dba Shoal River Country Club and Adara Golf Club, operates a golf course and pro shop. The Company filed for Chapter 11 protection on October 10, 2008 (Bankr. N.D. Fla. Case No. 08-31566). In its bankruptcy petition, the Debtor listed assets of $12,435,231 and debts of $6,025,130. AMERICAN PACIFIC: Hearing on Ch. 7 Conversion Delayed to Aug. 28 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Florida has postponed the hearing on the motion of First National Bank &Trust to dismiss or convert the Chapter 11 case of American Pacific International, Ltd. to August 28, 2009, at 9:30 a.m. to give Liberis & Associates, P.A., the Debtor's proposed new counsel, time to review the file and fully prepare for the hearing. As reported in the TCR on July 3, 2009, secured creditor First National, in its request for conversion or dismissal, said that the golf course, pro shop and affiliated businesses closed soon after the commencement of the Debtor's bankruptcy case and that since the petition date, the Debtor has performed "virtually" no maintenance of its assets. First National added that the Debtor's estate is sustaining continual losses, and its only source of income is $1,000 in monthly payments from a homeowners association. About American Pacific Crestview, Florida-based American Pacific International, Ltd., dba Shoal River Country Club and Adara Golf Club, operates a golf course and pro shop. The Company filed for Chapter 11 protection on October 10, 2008 (Bankr. N.D. Fla. Case No. 08-31566). Bruce C. Fehr, Esq., at Liberis & Associates, P.A. represents the Debtor as counsel. In its bankruptcy petition, the Debtor listed assets of $12,435,231 and debts of $6,025,130. ANCHOR BLUE: Court Approves Severance Program --------------------------------------------- Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the severance program proposed by Anchor Blue Retail Group, Inc. As reported by the Troubled Company Reporter on July 14, 2009, the Debtors sought permission to implement a severance program for certain non-insider employees as the Debtors proceed with their planned asset sales and store closings. Pursuant the program, a group of 14 employees would be eligible to receive either 5% -- for Levi's & Dockers Outlet by MOST employees -- or two weeks of base pay -- for Anchor Blue employees -- for each month that the employee remains employed beyond the effective date of a Transition Services Agreement. The effective date was expected to occur July 13, 2009. The Debtors said the transition period will last a maximum of three months, which would result in a maximum expected exposure of roughly $120,000. Prepetition, the Debtors adopted offered terminated employees with severance. That prepetition severance program was applicable to all management and non-management employees. As reported by the TCR on July 6, 2009, the Court approved the sale of 73 of the 74 Anchor Blue Retail Group, Inc., et al.'s Levi's & Dockers Outlet by MOST stores, free and clear of all liens and encumbrances to Levi's Only Stores, Inc., the successful bidder at the auction. Levi's Only, an affiliate of Levi Strauss & Co., made a bid of $72 million. Anchor Blue has a separate deal to sell some 127 Anchor Blue stores to current management and Ableco Finance LLC, the agent for the term loan lenders. Ableco will pay for the stores largely in exchange for secured debt, including debt provided for the Chapter 11 case. The auction date for this sale is set for July 27 to be followed by a sale approval hearing on July 30. Sixty-four stores will be closed in going-out-of-business sales. Gordon Brothers Retail Partners LLC has the stalking horse bid for the GOB sales. Under the Debtors' agreement with its stalking horse bidder for the liquidation sales, the Debtors were to receive 114% of the "aggregate Cost Value of the Merchandise" sold at the GOB sales, but only if the aggregate Cost Value is between $6.5 million and $7.5 million. If the aggregate Cost Value is outside of that range (either higher or lower), Anchor Blue's guaranteed percentage is lower. The TCR said July 3 that Judge Peter Walsh approved $800,000 in bonuses for executives at Anchor Blue despite objections from a U.S. trustee, who claimed the bonus plan was really a retention plan in disguise that improperly compensated the company's executives regardless of performance. About Anchor Blue Retail Group Anchor Blue Retail Group is the holding company for two subsidiaries -- Anchor Blue Division and Levi's(R) & Dockers(R) Outlet by MOST Division. Anchor Blue is a specialty retailer of casual apparel and accessories for the teenage and young adult markets. Founded in 1972, the Company has 177 stores in 12 states. Anchor Blue offers a great assortment of well-priced fashion basics with West Coast style in a fun environment. MOST is an outlet store retailer that holds the exclusive U.S. license for Levi's(R) Outlet & Dockers(R) Outlet Stores. Known for its denim apparel and reasonable prices, MOST operates 74 stores across the U.S. Anchor Blue Retail Group Inc. and four of its affiliates filed for Chapter 11 protection on May 27, 2009 (Bankr. D. Del. Lead Case No. 09-11770). Chun I. Jang, Esq., and Jason M. Madron, Esq., at Richards Layton & Finger P.A., represent the Debtors' in their restructuring efforts. In its petition, Anchor Blue listed assets and debts between $100 million to $500 million. ARCLIN US: U.S. Trustee Sets Meeting of Creditors for August 26 --------------------------------------------------------------- Roberta DeAngelis, Acting The U.S. Trustee for Region 3 will convene a meeting of creditors in Arclin US Holdings Inc. and other U.S. based units' Chapter 11 cases on August 26, 2009, at 11:00 a.m. The meeting will be held at J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, 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. Based in Mississauga, Ontario, Arclin is a privately held provider of bonding and surfacing solutions for the building and construction, engineered materials and natural resource markets. Arclin provides bonding solutions for a number of applications including wood based panels, engineered wood, non-wovens and paper impregnation. As of June 30, 2009, the Debtors had assets of roughly $277.2 million and liabilities of roughly $312.0 million on a consolidated basis. As part of an agreement with lenders, Arclin commenced restructuring proceedings in Canada and the United States. Arclin's U.S. companies -- Arclin US Holdnigs, Inc.; Marmorandum LLC; Arclin Chemicals Holding Inc.; Arclin Industries U.S.A., Inc; Arclin Fort Smith Inc., Arclin U.S.A. Inc.; and Arclin Surfaces Inc. -- filed voluntary petitions for Chapter 11 on July 27, 2009 (Bankr. D. Del. Lead Case No. 09-12628). Frederick Brian Rosner, Esq., at Messana Rosner & Stern, LLP, serves as counsel for the Debtors. Dechert LLP is co-counsel while Alvarez & Marsal securities LLC is the investment banker. Kurtzman Carson Consultants LLC serves as claims and noticing agent. The petition says that Arclin US's assets and debts are between $100,000,001 and $500,000,000. Arclin's Canadian companies also made a filing with the Ontario Superior Court of Justice and have obtained an Initial Order authorizing Arclin to reorganize under the Companies' Creditors Arrangement Act. Ernst & Young serves as CCAA monitor. Arclin's subsidiaries in Mexico are not included in the filings. The Mexican affiliates -- Arclin Mexican Holdings S.A. de C.V., Arclin Mexico S.A. de C.V., and Arclin Operadora S.A. de C.V. -- are not subject to any insolvency proceedings. ARCLIN US: Wants 60-Day Extension for Schedules and Statements -------------------------------------------------------------- Arclin US Holdings Inc. and other U.S. based units ask the U.S. Bankruptcy Court for the District of Delaware to extend for an additional 60 days the time to file their (i) schedules of assets and liabilities; (ii) schedules of executory contracts and unexpired leases; and (iii) statements of financial affairs. Arclin's U.S. companies -- Arclin US Holdnigs, Inc.; Marmorandum LLC; Arclin Chemicals Holding Inc.; Arclin Industries U.S.A., Inc; Arclin Fort Smith Inc., Arclin U.S.A. Inc.; and Arclin Surfaces Inc. -- filed voluntary petitions for Chapter 11 on July 27, 2009 (Bankr. D. Del. Lead Case No. 09-12628). Frederick Brian Rosner, Esq., at Messana Rosner & Stern, LLP, serves as counsel for the Debtors. Dechert LLP is co-counsel while Alvarez & Marsal securities LLC is the investment banker. Kurtzman Carson Consultants LLC serves as claims and noticing agent. The petition says that Arclin US's assets and debts are between $100,000,001 and $500,000,000. Arclin's Canadian companies also made a filing with the Ontario Superior Court of Justice and have obtained an Initial Order authorizing Arclin to reorganize under the Companies' Creditors Arrangement Act. Ernst & Young serves as CCAA monitor. Arclin's subsidiaries in Mexico are not included in the filings. The Mexican affiliates -- Arclin Mexican Holdings S.A. de C.V., Arclin Mexico S.A. de C.V., and Arclin Operadora S.A. de C.V. -- are not subject to any insolvency proceedings. ASARCO LLC: Harbinger Wants Own Plan to Be Set Aside ---------------------------------------------------- Harbinger Capital Partners Master Fund I Ltd. asks the U.S. Bankruptcy Court for the Southern District of Texas to abate confirmation of its proposed Chapter 11 plan for ASARCO LLC ASARCO LLC has sent to creditors three competing Chapter 11 plans for voting -- plans sponsored by investors led by Harbinger Capital Partners Master Fund I Ltd., another by parent Grupo Mexico SAB, through ASARCO Inc. and a third by ASARCO LLC. The Bankruptcy Court is scheduled to begin confirmation hearings for the competing plans on August 10. Harbinger says that while it is not withdrawing its Plan, it wants the Court to suspend confirmation of its own plan in order to conserve estate resources. Harbinger said that since it filed its plan, the Debtors and Grupo Mexico have made substantial modifications to the terms of their proposed plans. These plans, according to Harbinger, have substantially improved the proposed treatment and recovery for unsecured creditors. Harbinger added that interim results from AlixPartners, the balloting agent, reveal that no impaired class have voted to accept its proposed Chapter 11 plan. Several parties have also conveyed objections to the Harbinger plan. Harbinger said that it will seek confirmation of its own plan in the event neither the ASARCO LLC nor the Parent plan is confirmed by the Court. In that scenario, it intends to present for confirmation its own plan 20 days after the confirmation of the confirmation hearings scheduled to begin August 10. Competing Plans ASARCO LLC's plan is built upon an agreement to sell assets to Vedanta unit Sterlite Industries Inc. Sterlite has agreed to provide a $770 million promissory note, pay $1.1 billion in cash and assume certain liabilities as part of its consideration in exchange for ASARCO's assets. Grupo Mexico, through ASARCO Inc. and Americas Mining Corp., is offering to purchase ASARCO LLC, and exchange offer creditors 100% 100% of the value of the claims: 97% in the form of payments in cash and equivalents, consisting of $3.152 billion, as well as the remaining 3% from amounts recovered from various litigation proceedings, including against Sterlite. Grupo Mexico recently beefed up its plan to provide recovery options for creditors. Harbinger's plan proposes to purchase ASARCO's assets for $500 million and the assumption of certain liabilities. In a letter included in the solicitation documents, Harbinger and co-sponsor Citigroup Global told urged creditors to vote for the Company's plan, and not to vote on parent Grupo Mexico SAB's proposed plan. According to Harbinger, the Debtors' Plan provides for maximum recoveries to, and expeditious and equitable treatment of, all holders of claims, including holders of bond claims. Harbinger and Citigroup, which own two-thirds of Asarco's bonds and debentures, say that the Parent Plan may be non-confirmable as it deprives creditors of the right to collect US$500 million in post-bankruptcy interest. The bondholders say they proposed their own plan just in case Asarco's plan couldn't be confirmed "for some unforeseeable reason." Copies of the disclosure statement explaining the three plans, as divided into five parts, are available for free at: http://bankrupt.com/misc/ASARCO_Joint_DS_070609_01.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_02.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_03.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_04.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_05.pdf About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for US$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 US$1.1 billion in cash and a US$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 US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Asbestos Committee Finds Inconsistency in Plan ---------------------------------------------------------- The Official Committee of Asbestos Claimants in Asarco LLC's case relates that it supports confirmation of the Chapter 11 Plan filed by the Debtors and their Parent, Asarco Incorporated and Americas Mining Corporation. The Asbestos Committee, however, note that upon review of the Plans, it discovered a potential inconsistency in the Debtors' Plan that could adversely affect the "Put Option" to be entered into between the Asbestos Trust and Sterlite (USA) Inc. Jacob L. Newton, Esq., at Stutzman, Bromberg, Esserman & Plifka, in Dallas, Texas, notes that the Debtors' Plan provides that the Debtors, before the Plan Effective Date, and the South Copper Company Litigation Trustee, after the Plan Effective Date, "may at any time cause the SCC Litigation Trust Interests to be non- transferable to achieve desired treatment under tax or securities laws," or if the Debtors and SCC Litigation Trustee determine that non-transferability "to be in the best interests of the SCC Litigation Trust." The Asbestos Committee does not believe any party intends for that provision to affect or have any adverse impact on the Put Option to be entered into between the Asbestos Trust and Sterlite; however, that language needs to be clarified, Mr. Newton asserts. He notes that given the ongoing time constraints imposed by the plan confirmation deposition schedule and other related plan meetings, the Asbestos Committee counsel and the Debtors' counsel have not had time to address the issue. The Asbestos Committee says it wants to ensure that its concern is adequately addressed. 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 US$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 US$1.1 billion in cash and a US$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 US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Court Approves Hayden Site Settlement ------------------------------------------------- ASARCO LLC obtained approval from the Bankruptcy Court of a compromise and settlement with the United States of America, on behalf of the United States Environmental Protection Agency, regarding the Hayden Plant Site, pursuant to Section 363(b)(1) of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure. The Site consists of the ASARCO Hayden Smelter and associated facilities in Hayden, Arizona. The EPA, pursuant to its authority under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act conducted various investigations at the Site, including a preliminary assessment, a removal assessment, collection and testing of residential soil samples, and a remedial investigation and human health risk assessment, to address the release of hazardous substances at the Site. The United States has alleged that ASARCO LLC, formerly known as ASARCO Incorporated, is a potentially responsible party with respect to the Hayden Site; and that the EPA has incurred past response costs under CERCLA in connection with the Site for which ASARCO allegedly is liable. After the Debtors' filing for bankruptcy protection, the United States filed Claim No. 10746, setting forth claims under Section 107 of the CERCLA for various past and future response costs in connection with the Site. ASARCO has disputed the assertions set forth in the Claim. The Debtors, subsequently, entered into different previous settlements with the United States, and the Arizona Department of Environmental Quality, relates Tony M. Davis, Esq., at Baker Botts L.L.P., in Houston, Texas. To settle, compromise and resolve their disputes without the necessity of an estimation hearing, the United States and ASARCO entered into a settlement agreement, which resolves the claims by the United States against ASARCO with respect to EPA's costs relating to or in connection with the Site, incurred on or before May 27, 2008. The salient terms of the Settlement Agreement are: (a) The United States, on behalf of the EPA, will have an allowed general unsecured claim for $3,000,000 with respect to the Hayden Site; (b) With respect to response costs at the Site incurred by EPA on or before May 27, 2008, and except as specifically provided in previous settlements, the United States convenants not to sue or assert any civil claims or causes of action against ASARCO pursuant to Sections 107(a) or 113 of the CERCLA, or any liabilities or obligations asserted in the Claim; (c) ASARCO covenants not to sue and agrees not to assert any claims or causes of action against the United States with respect to the response costs at the Site incurred by EPA on or before May 27, 2008; and (d) ASARCO is entitled to protection from contribution actions or claims as provided by Section 113(f)(2) of CERCLA for matters addressed in the Settlement Agreement, including response costs at the Site incurred by EPA on or before May 27, 2008. 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 US$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 US$1.1 billion in cash and a US$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 US$2.7 billion in cash and a US$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) BABCOCK QUARTER: Wants to Sell Motor Home to Reduce Sterling Debt ----------------------------------------------------------------- Babcock Quarter Horses, Inc., asks the U.S. Bankruptcy Court for the Eastern District of Texas for authority to sell a recreational vehicle in a private sale, free of liens. Pursuant to Sterling Bank's marketing and sales efforts it had obtained a prospective buyer for the 2004 Royale Prevost Motor Home, is a recreational vehicle. An antique car dealer proposed to buy the motor home for 355,000. The Debtor owed Sterling Bank $588,283 at February 10, 2009, pursuant to a promissory note in the original sum of $662,379. As security for the promissory note, the Debtor also signed a commercial security agreement granting Sterling Bank a purchase money security interest in the motor home. The Debtor relates that the sale will maximize the purchase price and reduce the Debtor's obligation to Sterling Bank for the benefit of all creditors. About Babcock Quarter Horses Gainesville, Texas-based Babcock Quarter Horses, Inc., operates a ranch. The Company filed for Chapter 11 on July 13, 2009 (Bank. E. D. Tex. Case No. 09-42232). Bill F. Payne, Esq., represents the Debtor in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. BAMBOO ABBOTT: Court Extends Schedules Filing Until August 24 ------------------------------------------------------------- The Hon. Michael Kaplan of the U.S. Bankruptcy Court for the District of New Jersey extended until August 24, 2009, Bamboo Abbott, Inc.'s time to file its schedules of assets and liabilities and statement of financial affairs. Edison, New Jersey, Bamboo Abbott, Inc., dba Prestige Window Fashions, filed for Chapter 11 on July 19, 2009 (Bankr. D. N.J. Case No. 09-28689). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard represents the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. BAMBOO ABBOTT: Gets Interim OK to Use Wells Fargo Cash Collateral ----------------------------------------------------------------- The Hon. Michael Kaplan of the U.S. Bankruptcy Court for the District of New Jersey authorized, on an interim basis, Bamboo Abbott, Inc., to use the cash collateral of Wells Fargo Bank N.A. A final hearing is set for 1:00 p.m. on August 12, 2009, in the Courtroom of Judge Kaplan, U.S.B.J., U.S. Bankruptcy Court, 402 E. State Street, Trenton, New Jersey. Objections, if any are due 5:00 p.m. on August 10, 2009. The Debtor said that Wells Fargo asserted a claim of $8,278,258 as of the petition date. Wells Fargo, added the Debtor, is adequately protected by a replacement lien on substantially all the assets of the Debtor and a substantial equity cushion of $14 million. The Debtor is authorized to use the cash collateral in accordance with the Cash Collateral Budget, and subject to the 10% variance set up to the aggregate amount of $3,600,000 through and including August 12, 2009. The Debtor related that the use the cash collateral of Wells Fargo will meet its ordinary cash needs. The Debtor added that it does not have sufficient unencumbered cash or other assets with which to continue to operate its business in Chapter 11. About Bamboo Abbott, Inc. Edison, New Jersey, Bamboo Abbott, Inc., dba Prestige Window Fashions, filed for Chapter 11 on July 19, 2009 (Bankr. D. N.J. Case No. 09-28689). Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard represents the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. BEARINGPOINT INC: Court Approves Key Employee Incentive Plan ------------------------------------------------------------ The United States Bankruptcy Court for the Southern District of New York on July 24, 2009, authorized BearingPoint, Inc., to implement -- and the Board of Directors of the Company approved -- a Key Employee Incentive Plan. The Plan is intended, among other things, to retain and incentivize certain of the Company's key employees to (i) preserve the value of the Company's key assets to the benefit of the Company's clients, employees and creditors and (ii) complete specific objectives regarding the transfer or monetization of the assets. Pursuant to the Plan, Ed Harbach, the Company's Chief Executive Officer, will be entitled to receive up to $900,000 as a sales incentive payment. Based on the closings of the sales of the Company's Public Services, Commercial Services and Japan businesses, Mr. Harbach is entitled to receive $720,000 and, upon the completion of the sale of the Company's Europe, Middle East and Africa business, Mr. Harbach will be entitled to receive an additional $180,000. Pursuant to the terms of the Plan, Mr. Harbach was paid approximately $639,000 on July 28, 2009. On a percentage basis, payments to Mr. Harbach of the sales incentive payment amounts made under the Plan (out of a total of $900,000) may not exceed the percentage of the total secured obligation, as of February 18, 2009, that the Company has distributed to its secured creditors. Additional sales incentive payments will be made to Mr. Harbach when additional amounts are distributed to the secured creditors, and, assuming such additional amounts are distributed, upon the completion of the sale of the Company's Europe, Middle East and Africa business. Mr. Harbach may also be eligible to participate in certain wind-down incentive payments available for distribution under the Plan. About BearingPoint BearingPoint, Inc. -- http://www.BearingPoint.com/-- was one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. Based in McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP - - has approximately 15,000 employees focusing on the Public Services, Commercial Services and Financial Services industries. The Company's service offerings are designed to help clients generate revenue, increase cost-effectiveness, manage regulatory compliance, integrate information and transition to "next- generation" technology. BearingPoint, Inc., fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 protection on February 18, 2009 (Bankr. S.D.N.Y., Case No. 09-10691). Alfredo R. Perez, Esq., at Weil Gotshal & Manges LLP, in Houston; Marcia J. Goldstein, Esq., Ronit J. Berkovich, Esq., and Jose R. Alcantar, Esq., at Weil Gotshal & Manges LLP, in New York, represent the Debtors as restructuring counsel. AlixPartners, LLP, is the Debtors' restructuring advisors. Greenhill & Co., LLC, is the Debtor's financial advisor & investment banker. Jeffrey S. Sabin, Esq., at Bingham McCutchen LLP represents the Creditors' Committee as counsel. BearingPoint disclosed total assets of $1,762,689,000, and debts of $2,231,839,000 as of September 30, 2008. BEARINGPOINT INC: In Talks to Divest Latin America, Asia-Pac Units ------------------------------------------------------------------ BearingPoint Inc. reports it is in negotiations with other interested parties and local management to sell its Latin America practices and various Asia Pacific practices -- other than BearingPoint Brazil, BearingPoint Japan and BearingPoint China GDC -- and is in the process of selling certain remaining assets that were not or will not be sold pursuant to other transactions. There can be no assurance that any of these transactions will be completed. BearingPoint is pursuing the sale of all or substantially all of its businesses and assets to a number of parties. BearingPoint expects that the sale transactions will result in modification of the plan of reorganization filed with the Bankruptcy Court on February 18, 2009. If BearingPoint is successful in selling all or substantially all of its assets, in the liquidation of BearingPoint's business and BearingPoint ceasing to operate as a going concern. On March 23, 2009, BearingPoint and certain of its subsidiaries entered into an Asset Purchase Agreement to sell a significant portion of their assets related to BearingPoint's North American Public Services business to Deloitte LLP. On April 17, the Bankruptcy Court approved this sale. The closing of this transaction occurred on May 8. In connection with the closing, BearingPoint received net proceeds of roughly $329.3 million. On April 2, BearingPoint International Bermuda Holdings Limited, BearingPoint's indirect subsidiary, entered into a Share Sale Agreement with PwC Advisory Co., Ltd., the Japanese member firm of the PricewaterhouseCoopers global network of firms, for the sale of BearingPoint's consulting business in Japan to PwC Japan for roughly $45 million. In addition, PwC Japan assumed the intercompany debt owed by certain non-debtor subsidiaries of BearingPoint to BearingPoint Co., Ltd. (Chiyoda-ku). The closing of the PwC Japan Transaction occurred on May 11. On April 17, BearingPoint and certain of its subsidiaries entered into an Asset Purchase Agreement with PricewaterhouseCoopers LLP pursuant to which BearingPoint agreed to sell a substantial portion of its assets related to its North American Commercial Services business unit, including Financial Services, to PwC and PwC agreed to assume certain liabilities associated with the assets. In addition, affiliates of PwC also entered into definitive agreements to purchase the equity interests of BearingPoint Information Technologies (Shanghai) Limited, a subsidiary of BearingPoint that operates a global development center in China, and certain assets of a separate global development center in India. On April 27, the Bankruptcy Court approved bidding procedures in connection with an auction of all or substantially all of the assets of the CS Business and BearingPoint China GDC. The Auction was held on May 27 and concluded on May 28. At a hearing May 28, the Bankruptcy Court approved PwC as the winning bidder at the Auction. The aggregate purchase price for the PwC Commercial Services Transaction was $44 million (subject to certain contractual adjustments). The closing of the PwC U.S. Transaction occurred on June 15, and, as a result, PwC acquired the CS Business. The purchase price for the PwC U.S. Transaction was $39 million. BearingPoint anticipates that the PwC China Transaction and the PwC India Transaction will close within the next several months; however, there can be no assurance that the transactions will be completed. On July 9, BearingPoint and certain of its subsidiaries entered into a Stock Purchase Agreement with CSC Brazil Holdings LLC and Computer Sciences Corporation for the sale of BearingPoint's consulting business in Brazil. Pursuant to the Brazil Stock Purchase Agreement, CSC agreed to purchase BearingPoint, S.A., a wholly owned subsidiary of BearingPoint, through the purchase of all issued and outstanding shares of common stock of BearingPoint Brazil, for a purchase price of US$7.9 million. The Bankruptcy Court approved the Brazil Transaction on July 23. The consummation of the Brazil Transaction is expected to occur on or prior to August 7 and is subject to customary closing conditions. There can be no assurance that the Brazil Transaction will be completed. On April 20, BearingPoint's Board of Directors authorized BearingPoint to enter into a non-binding term sheet for the sale of its Europe, Middle East and Africa business to local management. On July 17, BearingPoint, BE Holdings I CV, a subsidiary of BearingPoint, certain other affiliates of BearingPoint and BE Partners B.V., a newly formed company established by a significant majority of the managing directors of BearingPoint's EMEA practice for the purpose of acquiring the EMEA practice from BearingPoint, entered into an Agreement for the Sale and Purchase of the Share Capital of BearingPoint Europe Holdings B.V., BearingPoint's European holding company. Under the terms of the EMEA Share Sale Agreement, the Purchaser will acquire all of BearingPoint's EMEA practice for an aggregate purchase price of roughly US$69 million in total consideration. The EMEA practice will continue to operate under the BearingPoint name following the completion of the EMEA Share Sale Agreement. The parties have agreed to work towards a completion date of August 31 for the EMEA Transaction. The EMEA Transaction is subject to (i) the approval of the Bankruptcy Court, (ii) the formation of a trust to which certain intellectual property rights will be transferred for the benefit of the Purchaser and (iii) BearingPoint being released from certain outstanding letters of credit issued in respect of the EMEA practice. There can be no assurance that the EMEA Transaction will be approved by the Bankruptcy Court or that the EMEA Transaction will be completed. About BearingPoint BearingPoint, Inc. -- http://www.BearingPoint.com/-- was one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. Based in McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP - - has approximately 15,000 employees focusing on the Public Services, Commercial Services and Financial Services industries. The Company's service offerings are designed to help clients generate revenue, increase cost-effectiveness, manage regulatory compliance, integrate information and transition to "next- generation" technology. BearingPoint, Inc., fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 protection on February 18, 2009 (Bankr. S.D.N.Y., Case No. 09-10691). Alfredo R. Perez, Esq., at Weil Gotshal & Manges LLP, in Houston; Marcia J. Goldstein, Esq., Ronit J. Berkovich, Esq., and Jose R. Alcantar, Esq., at Weil Gotshal & Manges LLP, in New York, represent the Debtors as restructuring counsel. AlixPartners, LLP, is the Debtors' restructuring advisors. Greenhill & Co., LLC, is the Debtor's financial advisor & investment banker. Jeffrey S. Sabin, Esq., at Bingham McCutchen LLP represents the Creditors' Committee as counsel. BearingPoint disclosed total assets of $1,762,689,000, and debts of $2,231,839,000 as of September 30, 2008. BERNARD MADOFF: Some Victims Oppose Trustee's $14MM Fees -------------------------------------------------------- According to Carla Main at Bloomberg News, a group of victims of Bernard Madoff's fraud objects to the request of the law firm of Irving H. Picard for more than $14 million in fees for its first four months of work. Baker & Hostetler LLP, where trustee Irving Picard is a partner, has asked the Court for $14.7 million in fees and $274,203 in expenses for work done from December 15, 2008, to April 30, 2009. The objectors say the fees are excessive. Mr. Picard's fee application is, simply put, "scandalous on several levels," said the Joseph N. Muschel Memorial Foundation, which lost all of its money in Mr. Madoff's fraud, according to the Bloomberg report. The Trustee is in the process of marshalling BLMIS's assets, and the liquidation of BLMIS' assets is well underway. As of July 17, Mr. Picard said he has recovered more than $1 billion in assets. Mr. Picard has also commenced a number of lawsuits against former investors to avoid and recover transfers made by Madoff to investors during the past six years. The Securities Investor Protection Corporation has paid each victim of Mr. Madoff up to $500,000 each. Any remaining claims will be paid from the assets recovered by Mr. Picard. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on December 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Mr. Madoff's fraud were allegedly at least US$50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors. BERNARD MADOFF: Ruth Required to Report Expenses to Picard ---------------------------------------------------------- According to Carla Main at Bloomberg News, Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York has entered an order freezing the assets of Bernard Madoff's wife, Ruth, and requiring Ms. Madoff to provide monthly reports on expenses to the trustee, Irving H. Picard. Ruth can't spend more than $100 on herself without informing Mr. Picard. The order applies to a $2.5 million settlement the U.S. government will give Ruth as part of a deal in her husband's criminal case. Ms. Madoff has also obtained approval to disburse money for "reasonable" legal fees. Mr. Picard sued Ruth Madoff on July 29, seeking the return of $44.8 million allegedly transferred to her from Bernard Madoff's firm over a six-year period. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on December 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Mr. Madoff's fraud were allegedly at least US$50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors. BERTRAND CHAFFEE: Emerges From Chapter 11 Bankruptcy Protection --------------------------------------------------------------- Business First of Buffalo reports that Bertrand Chaffee Hospital has emerged from Chapter 11 bankruptcy protection. Bertrand Chaffee said it earlier obtained approval from the Bankruptcy Court of its reorganization plan. The New York State Health Department grant funds helped Bertrand Chaffee settle its long-term debt and upgrade equipment for its surgery suite, according to Business First. Headquartered in Springville, New York, The Bertrand Chaffee Hospital and its debtor-affiliate, Jennie B. Richmond Chaffee, Nursing Home Company, operates hospital facilities and serves a rural population of 55,000 people in approximately 525 square miles in a three county area of Erie, Wyoming and Cattaraugus counties. The Debtors filed for Chapter 11 protection on February 7, 2007 (Bankr. W.D. NY Case No. 07-00470). Gary M. Graber, Esq., and Julis S. Kreher, Esq., at Hodgson Russ LLP, represent the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtors' bankruptcy proceedings. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BIRMINGHAM-SOUTHERN COLLEGE: Moody's Affirms 'Ba1' Rating on Debt ----------------------------------------------------------------- Moody's Investors Service has affirmed its Ba1 rating on Birmingham-Southern College's debt issued through the Private Education Building Authority of the City of Birmingham. The rating outlook is stable. The rating applies to the College's Series 1996, 1997 and 2002 Revenue Bonds. Legal Security: Security on the bonds is provided by a pledge on the College's gross tuition revenues. There is an additional bonds test requiring that recent pledged tuition revenue be at least 300% of prospective Maximum Annual Debt Service. Interest Rate Derivatives: The College has entered into one interest swap with Regions Bank (Bank Deposit Rating of Baa1/P-2) with a current notional amount of $11.01 million as hedge associated with its Series 2007 letter of credit backed bonds. The College pays 3.88% and receives SIFMA Municipal Swap Index rate. As of June 30, 2009, the swap's market value was a liability to the College of $769,614. In addition to standard termination events, the College could trigger a termination event for the hedge through an event of default contained in any agreements related to borrowed money. Challenges * Record of deep structural operating deficits with Moody's calculation of operating performance at negative 11% in fiscal year 2008 (improved from negative 33% in fiscal year 2007.) Endowment draws in the 8% range for FY 2008 and 2009 have been well beyond the traditional 5% range. If recent trends in student revenue growth continue, the College plans to reduce the endowment spending rate to 5.75% of a trailing average beginning in FY 2010. While Alabama has enacted a version of the Uniform Prudent Management of Institutional Funds Act, it did not adopt a 7% ceiling on prudent endowment spending some other states have adopted. Despite the history of operating deficits, Moody's note an improving trend in operating performance with operating cash flow in FY 2008 aided by unrestricted gifts and growth in student charges able to cover actual debt service by 1.2 times even with Moody's approach of limiting endowment spending to 5% of a trailing three year average of total cash and investments. * Deep decline in expendable financial resources through extraordinary endowment draws and recent investment losses. Expendable financial resources were $27.4 million at the end of FY 2008, while total financial resources were $104 million. Based on Moody's estimated 23% decline in total financial resources fully impacting expendable financial resources, the College's estimated expendable financial resources declined 88% to $3.4 million in FY 2009. The projected 23% reduction is based on the preliminary endowment return of negative 14.7% for the fiscal year (while negative is less of loss than many peers) coupled with an 8% endowment spending rate for the year. The reduced expendable financial resources cushion debt by 0.06 times and operating expenses by 0.06 times, well below Moody's guidance for Baa-rated private colleges of 0.7 and 0.5 times, respectively, in Moody's "U.S. Colleges and Universities Rating Roadmap. "We remain concerned that College's liquidity profile has become increasingly sensitive to investment returns, with extraordinarily little cushion to absorb additional losses and retain operating flexibility. * Strongly competitive student market with increasing pressure from public universities in Alabama as well as wealthier private universities in the region. * Limited evidence of recent financial market access with existing banking relationships concentrated with Regions Bank (Bank Deposit Rating of Baa1/P-2.) The College's debt structure which includes roughly $14 million in various bank borrowings with Regions are subject to potential acceleration. Strengths * Recent trend of remarkably strong growth in student charges for the liberal arts college with net tuition per student in FY 2009 (based on preliminary, unaudited results) of $13,885 up 27% for FY 2009, following 10% growth in the prior fiscal year. On an overall basis when combined with enrollment growth (fall 2008 full-time equivalent enrollment of 1,429 in fall 2008 up 16% from fall 2006) net tuition revenue grew a remarkable 62% over two years to $19.8 million in FY 2009 compared to just $12.2 million in FY 2007. Moody's attribute the growth to the new management team's commitment to capitalize on the College's reputation through data-driven enrollment management practices, investments in core student recruitment efforts including a new welcome center and a switch to Division III intercollegiate athletics, which eliminates the athletic scholarships that depressed net tuition. While the net tuition per student remains relatively low on an absolute level, the pace of growth has been uncommonly dramatic and Moody's believe reflects the adoption of certain best practices. If the ability to maintain recent gains and generate additional student charges through enrollment growth and pricing power proves sustainable, the additional revenue should support relative credit quality improvement over time. * History of substantial donor support with average gift revenue of $11.5 million per year over last three fiscal years with. Through May 31, 2009, the College had received cash payments of $24 million as part f its Destiny Delivered comprehensive campaign, with unrestricted or current use operating support coming in above budget in FY 2009 at $5.4 million. * Student market position as small liberal arts college (1,429 full-time equivalent students in fall 2008) within Methodist tradition. Reputation aided by small class sizes and success of graduates in entering professional programs. For the entering freshman class of fall 2008, the College accepted 69% of applicants and yielded 31% of those admitted. Management reports demand for this fall should support the budgeted goal of 400 entering freshmen. While application volume is up 21% for this fall from the prior fall, some of the growth has come through an online channel with expectations of weaker yield on admitted students. Geographic diversity has been improving with approximately 41% of the fall 2009 expected entering class to come from out of state. Recent Developments: Following the downgrade of Region's Bank on May 18, Birmingham- Southern's $11 million of Series 2007 Housing Revenue Bonds were tendered and are currently bank bonds. The College has a letter of intent with Regions for a tax-exempt bank qualified refinancing of the principal amount as well as alterations to the existing interest rate swap. Under certain scenarios, the variable rate financing as proposed will be subject to unscheduled and accelerated repayment by the College. The proposed structure incorporates two financial covenants: a Debt Service Coverage Ratio for the project and Total Endowment Balance of not less than $45 million for the first two year and $50 million thereafter. The Debt Service Coverage test is a feature of the current reimbursement agreement with a 1.1 times requirement tested annually. Management reports FY 2009 coverage was 1.92 times. Outlook Our stable outlook at the Ba1 level reflects expectations of the College's ability to sustain student revenue growth, solid donor support, refinance the Series 2007 bonds, ability to cover debt service from operating cash flow and limited additional borrowing plans. What Could Change the Rating - UP The rating could move up if the College's plan to increase net tuition revenue yields sustained results coupled with positive operating cash flow and some recovery of financial resource levels while limiting additional debt. What Could Change the Rating - DOWN Inability to meet enrollment growth and tuition revenue targets; material decline in financial resources; acceleration of variable rate debt or inability to renew credit facilities. The presence of the bank borrowings subject to accelerated repayment could accelerate downward pressure. Key Indicators (Fall 2008 enrollment and Fiscal Year 2008 financial data): * Figures in parentheses represent a 23% modeled loss in total financial resources fully impacting expendable financial resources as an estimate of the impact of a 15% negative return in the pooled endowment and 8% endowment draw during FY 2009 * Full-time equivalent enrollment: 1,429 students * Freshman applicants accepted: 69% * Accepted students enrolled: 31% * Net tuition per student: $10,888 * Total pro forma direct debt: $53.7 million * Total financial resources: $104 million ($80.2 million) * Expendable financial resources: $27.4 million ($3.4 million) * Expendable resources to direct debt: 0.51 times (0.06 times) * Expendable resources to operations: 0.50 times (0.06 times) * Total financial resources per student: $72,904 * Annual operating margin: -10.6% * Average operating margin: -22.0% Rated Debt: * Private Educational Building Authority of the City of Birmingham Series 1996, 1997 and 2002: Baa3 * Series 2007 Housing Revenue Bonds: Baa1/VMIG 2 (based on letter of credit with Regions Bank) The last rating action was on February 27, 2007, when the rating of Birmingham-Southern's debt was downgraded to Ba1 with a stable outlook from Baa3 with a negative outlook. CENTENNIAL COMMUNICATIONS: $949MM Stockholders Deficit at May 31 ---------------------------------------------------------------- Centennial Communications Corp. reported $1.45 billion in total assets; and $195.2 million in total current liabilities, $2.02 billion in long-term debt, $155.5 million in deferred income taxes, $31.9 million in other liabilities, $1.44 million in minority interest in subsidiaries; resulting in $949.8 million in stockholders' deficit at May 31, 2009. Centennial reported net income of $37.1 million, or $0.33 per diluted share, for the fiscal fourth quarter of 2009 as compared to net income of $12.9 million, or $0.10 per diluted share, in the fiscal fourth quarter of 2008. Consolidated adjusted operating income was $126.2 million for the fiscal fourth quarter, as compared to $105.6 million for the adjusted prior-year quarter. Fiscal fourth quarter AOI benefited from $7.8 million of prior period items largely related to Universal Service Fund support and an intercarrier compensation settlement. For comparison, certain of the Company's fiscal 2008 financial results have been adjusted to reflect the discontinuation of its loaned phones program in Puerto Rico as of June 1, 2008. Centennial reported fiscal fourth-quarter consolidated revenue of $261.8 million, which included $144.2 million from U.S. wireless and $117.5 million from Puerto Rico operations. Consolidated revenue grew 1% versus the fiscal fourth quarter of 2008. The Company ended the quarter with 1,078,200 total wireless subscribers, which compares to 1,092,600 for the year-ago quarter and 1,094,900 for the previous quarter ended February 28, 2009. The Company reported 694,900 total access lines and equivalents at the end of the fiscal fourth quarter, which compares to 582,200 for the year-ago quarter. For the full year, the Company reported net income of $67.3 million, or $0.60 per diluted share, as compared to net income of $25.1 million, or $0.22 per diluted share, for fiscal year 2008. Centennial reported full-year 2009 consolidated revenue of $1.1 billion, which included $583.4 million from U.S. wireless and $468.2 million from Puerto Rico operations. The Company's fiscal 2009 consolidated AOI was $425.8 million, an increase of 10 percent versus the adjusted 2008 fiscal year. The Company ended fiscal 2009 with net debt of $1.8 billion, a decrease of $101.8 million from the end of fiscal 2008. On November 7, 2008, the Company entered into an Agreement and Plan of Merger with AT&T Inc. providing for the acquisition of Centennial by AT&T. Under the terms of the AT&T Transaction, the Company's stockholders will receive $8.50 per share in cash. The AT&T Transaction was approved by Centennial stockholders in February 2009. Completion of the AT&T Transaction is not subject to a financing condition but remains subject to (i) approval by the Federal Communications Commission and (ii) other customary conditions. The applicable waiting period under the Hart-Scott- Rodino Antitrust Improvements Act of 1976, as amended, has expired; however, the parties are still discussing the transaction with the Department of Justice. The parties anticipate that the AT&T Transaction will be completed during the third quarter of calendar year 2009, assuming timely satisfaction or waiver of all remaining closing conditions. A full-text copy of the Company's report on Form 10-K is available at no charge at http://ResearchArchives.com/t/s?40a8 About Centennial Based in Wall, New Jersey, Centennial Communications (NASDAQ: CYCL) -- http://www.centennialwireless.com/and http://www.centennialpr.com/-- provides regional wireless and integrated communications services in the United States and Puerto Rico with roughly 1.1 million wireless subscribers and 694,900 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe is a significant shareholder of Centennial. CHEMTURA CORP: Committee's Motion to Pursue Causes of Action ------------------------------------------------------------ At the behest of the Official Committee of Unsecured Creditors, the U.S. Bankruptcy Court for the Southern District of New York granted the Committee derivative standing to pursue preference claims and certain causes of action on behalf of the Chemtura Corporation and its debtor affiliates. At the start of their Chapter 11 cases, the Debtors waived any ability to investigate, assert or prosecute any claims in respect of their Prepetition Credit Facility. Since then, however, the Debtors have consented to the Creditors Committee's standing to pursue preference claims on behalf of their estates. Accordingly, the Creditors Committee commenced on July 29, 2009, an adversary proceeding against Citibank N.A., as administrative agent of the Debtors' Prepetition Credit Facility. The Committee, as a representative of the Debtors' estates, seeks to avoid various preferential transfers made during the 90-day period before the Petition Date, and seeks declarations from the Court regarding the nature and extent of the collateral securing the Prepetition Credit Facility. Specifically, the Committee seeks to avoid these transfers as preferences under Section 547 of the Bankruptcy Code: -- Inventory Liens. Liens and security interests granted by the Debtors to the Prepetition Agent in all of the Debtors' inventory. -- Receivables SPV Equity Lien. The lien allegedly granted by Chemtura Corp. to the Prepetition Agent in February 2009 in Chemtura Corp.'s ownership interests in non-Debtor Chemtura Receivables LLC -- Cash Transfers. At least $6,000,000 in cash payments made by the Debtors to the Prepetition Agent during the preference period. Daniel H. Golden, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, asserts that avoidance of the Preferential Transfers will benefit the Debtors' estates and their unsecured creditors because (i) it strips the purported liens on the Debtors' inventory and capital stock of Chemtura Receivables, (ii) it unwinds the $86.5 million of rolled-up prepetition debt pursuant to the Final DIP Order, and (iii) it recovers at least $6,000,000 in cash for the benefit of the Debtors and its creditors. The Committee also asks the Court to declare that: (a) the Prepetition Credit Facility constitutes a single undersecured credit facility and not, as the Prepetition Agent contends, two separate credit facilities -- one that is fully secured by stock of Chemtura's first tier domestic and foreign subsidiaries and another that is completely unsecured; (b) the amount of the Prepetition Credit Facility Debt that is entitled to the benefit of collateral is capped at $46.1 million, not $139.2 million as asserted by the Debtors in their request to approve their DIP financing; and (c) the collateral securing the Prepetition Credit Facility Debt must be allocated among the letters of credit and revolver borrowings outstanding as of the date the "Secured Obligation Cap" is measured. Prepetition Capital Structure Mr. Golden reminds the Court that the Debtors are party to an Amended Credit Agreement, dated as of July 1, 2005, among Chemtura, as borrower; Citibank, as the Prepetition Agent; and certain lender parties, whereby Chemtura was granted access to a revolving facility of up to $600 million. As of the Petition Date, about $272 million was outstanding under the Prepetition Credit Facility, consisting of $90 million in letters of credit and about $182 million in revolver borrowings. Following a May 2007 downgrade in the unsecured debt rating by Moody's Investors Services, the Prepetition Agent was granted a security interest in 100% of the capital stock of Chemtura's first-tier domestic subsidiaries and a security interest in 66% of the capital stock of the Debtor's first tier foreign subsidiaries. In addition to the Prepetition Credit Facility, the Debtors also funded debt obligations in the form of unsecured notes and debentures. The Indentures governing the Notes, however, restricted the Debtors' ability to secure obligations or other indebtedness without triggering liens for the benefit of the holders of the Notes -- the Secured Obligation Cap. The most restrictive Note indenture limits permissible secured obligations to 10% of Consolidated Net Tangible Assets. Inventory & SPV Equity Liens, Cash Transfers Mr. Golden relates that the Debtors' financial performance began to deteriorate drastically in 2008. Towards that end, on December 30, 2008, the Debtors granted the Inventory Liens to the Prepetition Agent. In return, the Prepetition Lenders agreed to waive the Debtors' compliance with certain financial covenants and events of default under the Prepetition Credit Agreement from December 30, 2008 through March 30, 2009. Mr. Golden contends that upon information, the Prepetition Lenders sought the grant of the Inventory Liens because the value of the equity collateral had deteriorated significantly in the interim, and was insufficient to satisfy the then-outstanding secured obligations under the Prepetition Credit Facility. By December 2008, the Debtors only had $15 million in potential available liquidity through March 30, 2009, due to some unattained requirements under the Prepetition Credit Facility; and had had restricted access to an existing receivables securitization facility. The Debtors thus obtained new $150 million financing through a new receivables facility dated January 2009, whereby Chemtura, Great Lakes, GLCC Laurel LLC and Biolab Inc. sold receivables to Receivables SPV, which in turn sold fractional ownership interests in the receivables to participating purchasers who were granted a security interest in all of the receivables. An amended Pledge Agreement contemplated that Chemtura grant the Prepetition Agent a security interest in Chemtura's 100% ownership of the Receivables SPV. Mr. Golden adds that the Debtors made two cash transfers to the Prepetition Agent, totaling $6,000,000, that were either unscheduled, optional payments made outside the ordinary course of business or were payments made pursuant to the Amended Pledge Agreement or Waiver. Mr. Golden argues that the transfer of the Inventory Lien, the SPV Equity Lien, and the Cash Payments are avoidable because the Liens will enable the Prepetition Lenders to receive more on account of their claims than they otherwise would receive if the Debtors had filed for Chapter 7 on the Petition Date and the Liens had not been granted and the Cash Transfers had not been made. Mr. Golden adds that the Transfers were also made within 90 days before the Petition Date and while the Debtors were insolvent. About Chemtura Corp Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D.N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Exclusive Plan Period Extended to Nov. 13 -------------------------------------------------------- Judge Robert Gerber has extended Chemtura Corp. and its affiliates' exclusive period to file a Chapter 11 plan through November 13, 2009, and their exclusive period to solicit acceptances of that plan through January 12, 2010. The Court's ruling is without prejudice to the Debtors' ability to seek further extensions of the Exclusive Periods pursuant to Section 1121(d) of the Bankruptcy Code. Before the Judge extended the Exclusive Periods, Karen Smith and certain other diacetyl claimants noted that they do not oppose the extension, but expressed that there may come a time when it will be in the best interests of creditors to lift the exclusivity and permit the filing of competing Chapter 11 plans. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, in New York, contended that the Debtors should not be permitted to use extensions of exclusivity as a means of prolonging their reorganization in order to obtain undue bargaining leverage over creditors. About Chemtura Corp Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D.N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Inks Settlement With J. Fina & AIG ------------------------------------------------- Chemtura Corp. and its affiliates ask the Bankruptcy Court for authority to enter into and consummate settlement agreements with Janet Fina, certain individual defendants and AIU Holdings, Inc., AIG Domestic Claims, Inc., a member company of AIUH, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, a member underwriting company of AIUH related to a shareholder derivative lawsuit filed by Ms. Fina in 2003. Ms. Fina, individually and derivatively, previously alleged that Vincent A. Calarco, Roger L. Headrick, Patricia K. Woolf, Leo I. Higdon, C.A. (Lance) Piccolo, Bruce F. Wesson, and Robert A. Fox breached their fiduciary duties by causing or allowing the Debtors to issue false and misleading financial statements resulting from an alleged illegal, undisclosed price-fixing conspiracy. According to Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York, the Settlement Agreements, which were substantially negotiated before the Debtors' Chapter 11 filing, require the implementation of certain corporate governance measures and otherwise resolve the litigation using insurance proceeds with no cost to the Debtors' estates. Pursuant to their Settlement with Ms. Fina, the Debtors agreed to adopt certain corporate governance measures, which include: a. The implementation of changes to the Board and Senior Management, which include: * an annual election of directors; * an independent director will preside at executive sessions; and * majority of directors are independent. b. With respect to the Audit Committee: * an Audit Committee Chair will be appointed each year; * only independent directors can serve on the Audit Committee; * the chair of the Audit Committee will meet with the Head of the Office of Global Ethics & Compliance outside the presence of the Chief Executive Officer or the Chief Financial Officer; and * the Audit Committee is responsible for the oversight and monitoring of the effectiveness, on an annual basis, of the compliance, internal control and risk assessment functions of Chemtura. c. The implementation by the Debtors of a Records Management Policy that established policy and procedures for records maintenance. d. The establishment and implementation by the Debtors of a a wide-ranging and effective compliance and ethics program. In addition to the Corporate Governance Measures, the Defendants agreed to pay $1,300,000 to Ms. Fina's attorneys, which will be paid entirely from insurance for the Debtors and the Individual Defendants. The Fina Settlement also provides for mutual releases by Ms. Fina, on the one hand, and the Defendants, on the other, for all claims related to the Action. Mr. Cieri relates that the Debtors and the Individual Defendants are named under an insurance policy issued by National Union, which covers the Action and one additional lawsuit, a pending securities class action. Specifically, the AIG policy has a $25,000,000 coverage limit in excess of a self-insured retention of $1,000,000 and is a claims made policy covering the period from September 1, 2002, to September 1, 2003. Aside from the Action, only one other claim was asserted against the Policy during the applicable policy period. The Policy is thus not available for any unrelated claims. Mr. Cieri contends that the Debtors have satisfied the self- insured retention, and AIG has paid $12,310,728 out of the Policy in (i) defense costs for both the securities class action and the Fina Action, and (ii) an anticipated settlement payment for the securities class action. In connection with the Fina Settlement, Mr. Cieri discloses that AIG has agreed to pay the Settlement Amount. About Chemtura Corp Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D.N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CITIZENS REPUBLIC: Moody's Junks Subordinated Debt Rating --------------------------------------------------------- Moody's Investors Service downgraded the ratings of Citizens Republic Bancorp, Inc. (issuer rating to B2/Not-Prime from Baa3/Prime-3, subordinated debt to Caa2 from Ba1) and its subsidiaries, including its lead bank, Citizens Bank, Michigan (bank financial strength to D- from C-, deposits to Ba3/Not-Prime from Baa2/Prime-2), and Citizens Funding Trust I (trust preferred securities to Caa2 from Ba1). Following the downgrade, holding company subordinated debt and trust preferred ratings are under review, direction uncertain. All of Citizens' other ratings remain under review for possible downgrade. Moody's rating action follows the announcement that Citizens commenced an offering to exchange common stock for holding company subordinated debt and trust preferred securities. The downgrade of Citizens' financial strength rating to D- reflects the increase in Moody's loss expectations for Citizens' loan portfolio. In particular, Moody's loss assumptions for Citizens' commercial and industrial and residential mortgage portfolios have increased as a result of the ongoing economic deterioration in Michigan, where Citizens is concentrated. Heightened credit costs in the near to medium term will continue to put pressure on Citizens' profitability and capital metrics. In fact, Moody's expects that Citizens will report additional net operating losses into 2010. As a result, Citizens' capital base may not be sufficient to absorb these costs. Therefore, the review will focus on Citizens' ability to improve its capital position through the exchange offer. Moody's said a confirmation of the bank-level ratings is a possibility if Citizens' exchange offer is successful. If the exchange offer is unsuccessful, it is likely that the bank's ratings would be downgraded further. Regarding the subordinated debt and trust preferred ratings at the holding company, Moody's said the multiple-notch downgrade reflects its view that Citizens' exchange offer constitutes a distressed exchange, since Moody's does not believe that Citizens has other viable alternatives for strengthening its common equity base. The Caa2 ratings on these securities reflect the anticipated loss to those creditors that will participate in the exchange. Moody's noted that it will reassess Citizens' capital structure and the subordinated debt and trust preferred ratings after the exchange is completed. If Moody's believes that Citizens' new capital structure would reduce the risk of loss for the remaining subordinated debt and trust preferred holders, there could be upward rating pressure. On the other hand, if Citizens' exchange offer is unsuccessful, similar to the bank-level ratings, the subordinated debt and trust preferred ratings could be downgraded. The review will also consider the increased risk of a dividend deferral on the trust preferred securities under such a scenario. The range of outcomes of the exchange offer is reflected in the review with direction uncertain on those instruments. Moody's last rating action on Citizens was on June 26, 2009 when Moody's placed the ratings under review for possible downgrade. Downgrades: Issuer: Citizens Bank, Michigan -- Bank Financial Strength Rating, Downgraded to D- from C- -- Issuer Rating, Downgraded to B1 from Baa2 -- OSO Rating, Downgraded to NP from P-2 -- Deposit Rating, Downgraded to NP from P-2 -- OSO Senior Unsecured OSO Rating, Downgraded to B1 from Baa2 -- Senior Unsecured Deposit Rating, Downgraded to Ba3 from Baa2 Issuer: Citizens Funding Trust I -- Preferred Stock Preferred Stock, Downgraded to Caa2 from Ba1 Issuer: Citizens Republic Bancorp, Inc. -- Issuer Rating, Downgraded to B2/NP from Baa3/P-3 -- Subordinate Regular Bond/Debenture, Downgraded to Caa2 from Ba1 Citizens Republic Bancorp, Inc., is headquartered in Flint, Michigan and reported assets of $12.3 billion at June 30, 2009. COLONIAL BANCGROUP: Shareholders to Vote on Shares Hike on Sept. 2 ------------------------------------------------------------------ A Special Meeting of Shareholders of The Colonial BancGroup, Inc. will be held at the Company's offices, 100 Colonial Bank Boulevard, Montgomery, Alabama 36117, on Wednesday, September 2, 2009, at 10:00 a.m. Central Daylight Time, at which holders of shares of its common stock will be asked to consider and vote on proposals to approve: (i) the increase of the number of authorized shares of its common stock from 400,000,000 to 5,000,000,000; (ii) the increase of the number of authorized shares of its preference stock from 1,000,000 to 50,000,000, and (iii) the reduction in the par value of each of BancGroup's common stock, preference stock and preferred stock from $2.50 per share to $0.01 per share. The Board has unanimously approved these proposals and recommends that shareholders vote in favor of these proposals. The Company is under directives from its banking regulators to increase the capital of its subsidiary, Colonial Bank, an Alabama banking corporation, and the Company hopes that it may be able to satisfy these directives, in part, by the sale of common stock. As of the record date, the Company had 202,753,965 shares of common stock outstanding, with an additional 33,247,280 shares of common stock reserved for issuance. A copy of the Proxy Statement filed with the Securities and Exchange Commission is available at: http://researcharchives.com/t/s?40ac About Colonial Bank Colonial BancGroup (NYSE: CNB) -- http://www.colonialbank.com/-- operates 355 branches in Florida, Alabama, Georgia, Nevada and Texas with over $25 billion in assets. According to the Troubled Company Reporter on June 11, 2009, Fitch Ratings has downgraded the ratings of The Colonial BancGroup and its subsidiaries following Colonial Bank, CNB's bank subsidiary, entering into an Order to Cease and Desist with the FDIC and the Alabama State Banking Department on June 9, 2009. Fitch has placed the ratings on Rating Watch Evolving. Fitch downgraded Colonial Bank's Colonial Bank's Long-term IDR to 'B-' from 'B+'; Long-term deposits to 'B/RR3' from 'BB-/RR3'; Subordinated debt to 'CC/RR6' from 'B/RR6'; and Individual to 'E' from 'D/E'. BancGroup posted a net loss of $606 million, or $3.02 per common share, in the quarter compared to a net loss of $168 million, or $0.86 per common share, in the 1st quarter of 2009. As a result of regulatory actions and the current uncertainties associated with Colonial's ability to increase its capital levels to meet regulatory requirements, management has concluded that there is substantial doubt about Colonial's ability to continue as a going concern. As reported by the TCR on August 4, Fitch Ratings has downgraded the ratings of The Colonial BancGroup's Long-term Issuer Default Rating (IDR) to 'C' from 'CCC' and Colonial Bank's long-term IDR to 'C' from 'B-'. The rating action follows the announcement that the pending $300 million investment by Taylor Bean & Whitaker and its consortium of investors has terminated. BancGroup was mandated to raise $300 million in equity from the private sector in order to receive the much needed $550 million of capital through the Treasury's Capital Purchase Program, for which it already received preliminary approval. COLONIAL BANCGROUP: Hit by TARP Search Warrant ---------------------------------------------- The Colonial BancGroup, Inc. (NYSE: CNB - News) confirmed August 4 that federal agents associated with the Special Inspector General for the Troubled Asset Relief Program executed a search warrant at BancGroup's Mortgage Warehouse Lending Division located on East Pine Street in Orlando, Florida. Certain press reports have indicated that two Colonial Bank branch locations were the subject of the search warrant. Those reports are incorrect, BancGroup said. BancGroup is cooperating with the investigation. Colonial Bank continues to conduct business as usual. About Colonial Bank Colonial BancGroup (NYSE: CNB) -- http://www.colonialbank.com/-- operates 355 branches in Florida, Alabama, Georgia, Nevada and Texas with over $25 billion in assets. According to the Troubled Company Reporter on June 11, 2009, Fitch Ratings has downgraded the ratings of The Colonial BancGroup and its subsidiaries following Colonial Bank, CNB's bank subsidiary, entering into an Order to Cease and Desist with the FDIC and the Alabama State Banking Department on June 9, 2009. Fitch has placed the ratings on Rating Watch Evolving. Fitch downgraded Colonial Bank's Colonial Bank's Long-term IDR to 'B-' from 'B+'; Long-term deposits to 'B/RR3' from 'BB-/RR3'; Subordinated debt to 'CC/RR6' from 'B/RR6'; and Individual to 'E' from 'D/E'. BancGroup posted a net loss of $606 million, or $3.02 per common share, in the quarter compared to a net loss of $168 million, or $0.86 per common share, in the 1st quarter of 2009. As a result of regulatory actions and the current uncertainties associated with Colonial's ability to increase its capital levels to meet regulatory requirements, management has concluded that there is substantial doubt about Colonial's ability to continue as a going concern. As reported by the TCR on August 4, Fitch Ratings has downgraded the ratings of The Colonial BancGroup's Long-term Issuer Default Rating (IDR) to 'C' from 'CCC' and Colonial Bank's long-term IDR to 'C' from 'B-'. The rating action follows the announcement that the pending $300 million investment by Taylor Bean & Whitaker and its consortium of investors has terminated. BancGroup was mandated to raise $300 million in equity from the private sector in order to receive the much needed $550 million of capital through the Treasury's Capital Purchase Program, for which it already received preliminary approval. COMMERCECONNECT MEDIA: Commences Prepackaged Chapter 11 Bankruptcy ------------------------------------------------------------------ CommerceConnect Media Holdings, Inc., and affiliates Cygnus Business Media, Inc., Cygnus New Business Launches, Inc., and Cygnus Interactive New Business Launches, Inc., filed separate voluntary chapter 11 bankruptcy petitions in the U.S. Bankruptcy Court for the District of Delaware. The Debtors filed a prepackaged plan of reorganization together with their bankruptcy petitions. According to NetDockets, the disclosure statement accompanying the Plan discloses that CommerceConnect began attempting to market itself for sale roughly three years ago but failed at that time to receive a credible bid. CommerceConnect underwent a management change and attempted to re-market itself roughly 12 months later. However, the leading bid received at that time was insufficient to satisfy the companies' first and second lien debt. According to NetDockets, the Debtors then attempted to negotiate an out-of-court restructuring to convert a large portion of its existing first lien debt and all of the existing second lien debt to equity. That plan was supported by all of the holders of the second lien debt and all but one of the holders of the first lien debt. The dissenting first lien lender was Genesis CLO 2007-2, Ltd., managed by Levine Leichtman, and owed $6.4 million of the $173 million in first lien obligations. The agreements governing the first lien debt required unanimous consent for an out-of-court restructuring forcing the Debtors to file for bankruptcy to implement its prepackaged plan. CommerceConnect Media is a business-to-business publisher and communications company. CommerceConnect's brands include Qualified Remodeler, Firehouse, Equipment Today, Kitchen and Bath Design News, and the CPA Technology Advisor. In total, CommerceConnect publishes 42 trade publications in 13 markets, with total circulation of more than 3 million. CommerceConnect also operates 38 Web sites which generated more than 180 million page views in 2008. CommerceConnect also produces more than 30 trade shows and events each year. The case is In re CommerceConnect Media Holdings Inc., 09- 12765, U.S. Bankruptcy Court, District of Delaware (Wilmington). CONEXANT SYSTEMS: Swings to $2.72MM Income in Qrtr Ended July 2 --------------------------------------------------------------- Conexant Systems, Inc., swung to a net income of $2.72 million for the third quarter ended July 2, 2009, from a net loss of $149.8 million for the three months ended June 27, 2008. Conexant narrowed its net loss to $28.7 million for the nine months ended July 2, 2009, from a net loss of $301.0 million for the nine months ended June 27, 2008. At July 3, 2009, the Company had $399.9 million in total assets and $561.9 million in total liabilities, resulting in $161.9 million in shareholders' deficit. As of April 3, 2009, the Company's balance sheet showed total assets of $392.2 million and total liabilities of $557.9 million, resulting in total shareholders' deficit of $164.9 million. Conexant said financial results for the third quarter of fiscal 2009 exceeded guidance provided at the beginning of the quarter. The company also said it expects to complete the transaction to sell its Broadband Access business in the current fiscal quarter. Conexant presented financial results based on Generally Accepted Accounting Principles as well as select non-GAAP financial measures intended to reflect its core results of operations. On April 22, 2009, Conexant announced the planned sale of its Broadband Access product lines to Ikanos Communications, Inc. (NASDAQ: IKAN) for $54 million. The Company expects to close the transaction in the current quarter. Including results from discontinued operations related to the Broadband Access business, Conexant's revenues for the third quarter of fiscal 2009 were $84.6 million, slightly above the top end of the guidance range provided in April. The Company ended the quarter with $123.4 million in cash and cash equivalents, a sequential increase of $13.1 million due to improvements in working-capital management, the receipt of an escrow payment, the release of restricted cash, and the sale of equity investments. Excluding results from discontinued operations related to the company's Broadband Access business, Conexant expects revenues for the fourth quarter of fiscal 2009 to be approximately $54 million. The Company anticipates that its imaging and audio product lines will grow about 20% sequentially and account for more than 60% of total revenues in the fourth quarter. Core gross margins for the fourth quarter are expected to be about 60% of revenues. The company expects core operating expenses to be approximately $27 million, assuming the Broadband Access transaction closes on schedule. As a result, the company anticipates that fourth fiscal quarter core operating income will be approximately $6 million, with core net income of $0.01 to $0.02 per share. Headquartered in Newport Beach, California, Conexant Systems, Inc. (NASDAQ: CNXT) -- http://www.conexant.com/-- has a comprehensive portfolio of innovative semiconductor solutions which includes products for Internet connectivity, digital imaging, and media processing applications. Outside the United States, the company has subsidiaries in Northern Ireland, China, Barbados, Korea, Mauritius, Hong Kong, France, Germany, the United Kingdom, Iceland, India, Israel, Japan, Netherlands, Singapore, and Israel. COOPER-STANDARD: Chapter 11 Case Summary & Creditors' List ---------------------------------------------------------- Debtor: Cooper-Standard Holdings Inc. f/k/a CSA Acquisition Corp. 39550 Orchard Hill Place Drive Novi, Michigan 48375 Bankruptcy Case No.: 09-12743 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Sterling Investments Company 09-12750 Cooper-Standard Automotive Inc. 09-12744 NISCO Holding Company 09-12751 Cooper-Standard Automotive FHS Inc. 09-12745 Cooper-Standard Automotive NC L.L.C. 09-12752 Cooper-Standard Automotive Fluid Systems Mexico Ho 09-12746 CS Automotive LLC 09-12753 StanTech, Inc. 09-12747 CSA Services Inc. 09-12754 Westborn Service Center, Inc. 09-12748 Cooper-Standard Automotive OH, LLC 09-12755 North American Rubber, Incorporated 09-12749 Chapter 11 Petition Date: August 4, 2009 Bankruptcy Court: U.S. Bankruptcy Court for the District of Delaware Bankruptcy Judge: Honorable Peter J. Walsh Debtors' Counsel: Gary L. Kaplan, Esq. Richard Slivinski, Esq. Peter B. Siroka, Esq. Fried, Frank, Harris, Shriver & Jacobson LLP One New York Plaza New York, NY 10004 Tel: (212) 859-8000 Fax: (212) 859-4000 Debtors' Co-Counsel: Mark D. Collins, Esq. Michael J. Merchant, Esq. Chun I. Jang, Esq. Richards, Layton & Finger PA One Rodney Square 902 N. King Street Wilmington, DE 19801 Tel: (302) 651-7700 Fax: (302) 651-7701 Debtors' Financial Advisor: Alvarez & Marsal 600 Lexington Avenue New York, NY 10022 Debtors' Investment Banker: Lazard Freres & Co. 30 Rockfeler Place New York, NY 10020 Debtors' Claims Agent: Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90245 Tel: (866) 381-9100 U.S. Trustee: Roberta A. DeAngelis Acting United States Trustee for Region 3 844 King Street, Room 2207 Lockbox #35 Wilmington, DE 19899-0035 The Debtors' financial condition as of March 31, 2009: Total Assets: $1,733,017,000 Total Debts: $1,785,039,000 List 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wilmington Trust Company 8.375% Sr. Sub. $313,350,000 as Indenture Trustee notes due Dec. Rodney Square North 15, 2014 100 N. Market St. Wilmington, DE 19890 Tel: (302) 636-5410 Fax: (302) 636-4145 Wilmington Trust Company 7.000% Sr. Notes $313,350,000 as Indenture Trustee due Dec. 15, 2012 Rodney Square North 100 N. Market St. Wilmington, DE 19890 Tel: (302) 636-5410 Fax: (302) 636-4145 State of Ohio Environmental consent $2,700,000 Protection Agency 1800 WaterMark Drive Columbus, Ohio 43266-0149 Tel: (614) 644-3020 Fax: (614) 644-2329 Robert Bosch LC trade vendor $713,782 38000 Hils Tech Drive Farmington Hills, MI 48331 Tel: (248) 876-1000 Fax: (876) 876-1116 Gil-Mar Manufacturing trade vendor $477,815 Summit Metals Services Inc. trade vendor $449,326 EMS-Chemie Na Inc. trade vendor $448,778 Evonik Degussa Corporation trade vendor $437,456 TMS Corporation trade vendor $395,668 Premier Too & Die Cast Corp. trade vendor $375,451 Kongsberg trade vendor $306,805 TI Group Automotive Systems trade vendor $259,315 Vitrica SA de CV trade vendor $259,312 Calvary Automation Systems trade vendor $248,191 Signature Aluminum Inc. trade vendor $247,428 Precix trade vendor $211,226 H&L Too Co. Inc trade vendor $202,485 Thunder Tooling & Mfg. Ltd. trade vendor $201,791 Vacuum Instrument Corporation trade vendor $192,780 USI Inc. trade vendor $183,096 GHSP trade vendor $183,101 Tubos Samaue De Mexico trade vendor $182,220 Papp Plastics trade vendor $179,316 Gonzalez Group LLC trade vendor $178,209 Titeflex Corporation trade vendor $176,633 Hi-Vo Products trade vendor $173,481 Apollo Metals trade vendor $166,390 Pension Benefit Guaranty Corp. trade vendor unknown Cooper Tire & Rubber trade vendor unknown Michigan Department of Gayford unknown Environmental Quality groundwater contamination remediation List of Equity Security Holders: Equity Holders Shares -------------- ---------- The Goldman Sachs Group Inc. 1,715,000 The Cypress Group LLC 1,715,000 James S. McElya 20,000 S.A. Johnson 5,000 Larry J. Beard 5,000 Allen J. Campbell 3,150 Edward A. Hasler 2,700 Kenneth L. Way 2,500 Leo F. Mullin 1,000 COYOTES HOCKEY: Court Moves Local Auction to September 10 --------------------------------------------------------- The Hon. Redfield T. Baum of the U.S. Bankruptcy Court for the District of Arizona, at the behest of the National Hockey League, has pushed back the August 5 local auction of Phoenix Coyotes to September 10. Judge Baum previously approved an accelerated schedule for an auction sale for the assets. In that schedule, bids that would keep the team in Glendale, Arizona were initially due August 5. Absent satisfactory bids, an auction that would accept relocation bids will be held September 10. According to The AP, Judge Baum postponed the August auction so that local bidders would have more time to finalize their offers, and he brushed aside arguments over the merits of Jerry Reinsdorf's offer. Judge Baum is considering combining the bids in one auction, The AP states. The AP relates that NHL deputy commissioner Bill Daly was worried that Mr. Reinsdorf may be wavering in his bid for Phoenix Coyotes, after Judge Baum postponed the auction. Mr. Reinsdorf's bid has been repeatedly challenged by Phoenix Coyotes owner Jerry Moyes and Canadian billionaire Jim Balsillie. The report quoted Mr. Daly as saying, "I think from time to time, (Reinsdorf has) become very frustrated with the process. He feels like he's being fought at every turn, and he's already invested a lot of money in this. At some point, we're concerned that he may just reach a decision that it's not worth all the time and money and effort when he's getting resisted as strongly as he is by Mr. Moyes and Mr. Balsillie." The AP notes that Mr. Reinsdorf's frustration apparently grew when Mr. Moyes' attorneys revealed details of his talks with the city of Glendale on a possible new lease for Jobing.com Arena. Court documents say that Mr. Reinsdorf has asked for a special taxing district to be created near the arena that would pay the new owners as much as $23 million in 2010. The AP says that Glendale would have to pay Mr. Reinsdorf about $15 million for each year of losses or allow the team to be sold and moved without penalty, if Phoenix Coyotes were still losing money after five years. Glendale attorneys said in court documents that the city was "very close to a definitive agreement" that would include "strong economic essentials." According to court documents, Glendale's lawyers said, "The Reinsdorf group is rightfully upset because the terms with Glendale concern economic issues which it is seeking to resolve in making its bid. If the bidders walk away from this Glendale sale process, the damage caused by the disclosure will be staggering for Glendale. Our challenge, frankly, is having a bidder with us" on September 10. Glendale-Goldwater Legal Fight Phoenix Business Journal relates that the Goldwater Institute watchdog group, on behalf of eight Glendale taxpayers, has filed an objection in U.S. Bankruptcy Court, claiming that Glendale officials may have offered unconstitutional taxpayer subsidies to a Phoenix Coyotes bidder. According to the TCR on August 4, 2009, Maricopa County Superior Court Judge Edward Burke ruled that most of the documents dealing with negotiations by the city of Glendale, Arizona, with the Phoenix Coyotes may remain sealed under a state law that allows nondisclosure in cases of legal negotiations. About 34 of the 322 pages of the documents will have to be released as part of a lawsuit filed by the Goldwater. Goldwater was seeking to get a look at Glendale's negotiations with Mr. Reinsdorf regarding his bid for Phoenix Coyotes. Goldwater Institute wanted to see what Glendale had been talking to Mr. Reinsdorf about including any possible incentives, subsidies or lease changes. Glendale refused a public records request by Goldwater Institute, which then sued the city in June 2009, asking the court to make Glendale turn over the records. Glendale said that Goldwater Institute's request didn't fit into the state's public records law. Phoenix Coyotes owner Mr. Moyes' lawyers also asked the U.S. Bankruptcy Court for the District of Arizona to require more information on Mr. Reinsdorf's $148 million bid for the team. Mr. Moyes was also seeking information from Mr. Reinsdorf's business partners and the NHL regarding the bid. Business Journal relates that Goldwater asked the bankruptcy court judge to consider the unconstitutionality of any arrangement that provides taxpayer-funded concessions in accepting a bid. "Goldwater Institute attorneys have been unable to verify that any unconstitutional offers have been made by Glendale officials, since public records requested more than four weeks ago from Glendale still have not been provided. This is in spite of two court rulings instructing Glendale to turn over records related to negotiations between the city and prospective buyers of the team, with limited exceptions," the institute said in a statement. About Coyotes Hockey Dewey Ranch Hockey LLC, Arena Management Group, LLC, Coyotes Holdings, LLC, and Coyotes Hockey, LLC -- owners and affiliates of the Phoenix Coyotes National Hockey League team -- filed for Chapter 11 protection (Bankr. D. Ariz. Case No. 09-09488) on May 5, 2009. The Debtors are represented by Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey, LLP, in Phoenix, and estimate their assets and liabilities are between $100 million and $500 million. Jim Balsillie, Research in Motion Ltd.'s co-chief executive officer, offered to buy the Phoenix Coyotes for $212 million and move the NHL team to Hamilton, Ontario, and the League balked at the relocation proposal. Mr. Balsillie was unsuccessful in 2007 when he attempted to buy and relocate the Nashville Predators, and lost a similar bid in 2006 to buy and relocate the Pittsburgh Penguins. CYGNUS BUSINESS: Files for Ch 11 After Lenders Agree to Debt Swap ----------------------------------------------------------------- Cygnus Business Media has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. Matt Kinsman at FolioMag.com reports that Cygnus Business had reached an agreement with 23 of its 24 lenders on a pre-packaged restructuring. FolioMag.com says that because an out-of-court settlement required a unanimous decision, the Company had to file for bankruptcy. FolioMag.com relates that Cygnus' secured debt will be reduced from $180 million to $60 million through a secured debt-equity exchange. GE Commercial, according to FolioMag.com, will own the majority of Cygnus. FolioMag.com states that Cygnus said that it expects to emerge from Chapter 11 within 45 days. The report quoted Cygnus spokesperson Kathy Scott as saying, "All vendors and creditors will be paid 100 cents on the dollar. We plan to be out in 45 days. All employees are getting paid and benefits remain in place. In 45 days we will emerge with a better debt structure." Headquartered in Fort Atkinson, Wisconsin, Cygnus Business Media is a diversified business-to-business media company. EASTMAN KODAK: S&P Assigns 'CCC+' Senior Unsecured Rating --------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its preliminary 'CCC+' senior unsecured and preliminary 'CCC' subordinated debt ratings to Eastman Kodak Co.'s Rule 415 shelf registration. These ratings are preliminary and are subject to the terms of the securities that the company ultimately issues, the use of the proceeds, and its overall credit opinion of Kodak at the time of issuance. The corporate credit rating on Rochester, New York-based Eastman Kodak is 'B-' and the rating outlook is negative. The 'B-' rating reflects its concern about the company's earnings and cash flow prospects and its high lease- and pension-adjusted leverage. These concerns are based on: * The ongoing and rapid deterioration of the company's traditional consumer imaging business, * The unproven long-term profit potential of its consumer digital imaging businesses, * The longer-term potential for a decline in its entertainment imaging businesses, * Significant discretionary cash flow deficits, * Vulnerability to economic pressures, and * Its leveraged financial profile. Ratings List Eastman Kodak Co. Corporate Credit Rating B-/Negative/-- New Ratings Rule 415 shelf reg Senior Unsecured CCC+ (prelim) Subordinated CCC (prelim) ENERGY FUTURE: Moody's Junks Corporate Family Rating From 'B3' -------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Energy Future Holdings Corp. and its unregulated subsidiary, Texas Competitive Energy Holdings including EFH's Corporate Family Rating and Probability of Default Rating to Caa1 from B3. EFH's speculative grade liquidity rating of SGL-3 is affirmed. The rating outlooks for EFH and TCEH remain negative. The downgrade and negative outlook reflect Moody's concerns regarding the long-term sustainability of EFH's business model. These concerns primarily reflect the approximately $44 billion of debt and roughly $20 billion of other gross liabilities currently on the balance sheet versus negative book equity of $3.2 billion. The rating action also reflects Moody's view that the capital structure is untenable and will likely prompt the company to pursue some form of restructuring activity. These actions are likely to address the company's liquidity profile and its substantial maturities upcoming in 2014. Moody's is likely to view any such action as a "distressed exchange" event and will score such event as a default, albeit one that is immediately cured. EFH's longer-term fundamentals remain weak. Fundamental concerns include: the magnitude of its debt ($44 billion); significant looming maturities in 2014 (approximately $23 billion); the prospective liquidity profile and continued availability under the revolver; the current and longer-term prospects for the financial and credit markets (due to the sizeable hedging program, which will need to be addressed in 2013); a noticeable acceleration of environmentally-sensitive legislative initiatives (including carbon and mercury) which threatens coal-fired margins and the risk of incremental market intervention in Texas. Moody's views EFH's capitalization as relatively complex, which includes numerous, often inter-related, incurrence tests and other covenants. In addition, EFH's financial profile is considered weak, where the ratio of cash flow from operations to debt was roughly 2.5% for the latest twelve months ended March 2009 and for the year ended 2008. Moody's estimates that even under fairly optimistic assumptions, cash flow to debt is expected to be less than 5% for the next several years which Moody's believe is more in line with a Caa CFR. EFH's SGL-3 rating implies adequate liquidity over the next twelve months. In Moody's opinion, liquidity is benefited by a current large cash balance, meaningful availability under its existing TCEH credit facilities, no material near-term maturities until 2014 and a modest capital expenditure plan. Moody's observes that EFH recently announced that it would pay lenders a consent fee to modify several components to its TCEH secured revolving credit and term loan B facilities. Moody's believes the proposed amendments would marginally improve EFH's overall financial flexibility. "We believe the proposed credit facility amendments will provide EFH with an increased level of financial flexibility to better position the organization to attempt some form of maturity extensions, debt exchange or other restructuring activities" stated Jim Hempstead, senior vice president at Moody's. "We continue to incorporate a view that any such action, given the company's fundamentals, will most likely be viewed as a distressed exchange" added Hempstead. Moody's also downgraded EFH's $4.5 billion of senior unsecured (guaranteed) notes to Caa2 from Caa1 and $2.5 billion of senior unsecured (TXU legacy, pre-LBO debt securities) to Caa3 from Caa2, which includes the $1.0 billion 5.55% senior unsecured notes due 2014. In addition, the ratings for EFH's principal subsidiary's, Texas Competitive Electric Holdings (TCEH), $24 billion of senior secured term loan facilities were downgraded to B2 from B1, the $6.5 billion of senior unsecured notes were downgraded to Caa2 from Caa1 and the TCEH legacy senior unsecured notes were downgraded to Caa3 from Caa2. EFH's rate-regulated electric transmission and distribution (T&D) utility, Oncor Electric Delivery Company's (Oncor), Baa1 senior secured ratings are affirmed. The rating outlook for Oncor remains stable. Moody's last rating action for EFH occurred on March 31, 2009, when EFH's CFR was downgraded to B3 from B2. EFH'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 EFH versus others within its industry or sector, ii) the capital structure and financial risk of EFH, iii) the projected performance of EFH over the near to intermediate term, and iv) EFH's history of achieving consistent operating performance and meeting financial plan goals. These attributes were compared against other issuers both within and outside of EFH's core peer group and EFH's ratings are believed to be comparable to ratings assigned to other issuers of similar credit risk. The ratings for EFH, TCEH and EFCH's individual securities were determined using Moody's Loss Given Default methodology. Based on EFH's Caa1 CFR and PDR, and based strictly on the priority of claims within those entities, the LGD model would suggest a rating of Caa3 for EFH's senior unsecured (guaranteed) debt. The Caa2 rating assigned reflects the fact that the holders of these securities also benefit from an upstream guarantee from Oncor's intermediate subsidiary holding company. EFH is a large merchant generation company and retail electric provider operating in Texas. EFH is headquartered in Dallas, Texas. Downgrades: Issuer: Brazos River Authority, TX -- Revenue Bonds, Downgraded to Caa3 from Caa2 -- Senior Unsecured Revenue Bonds, Downgraded to Caa3 from Caa2 Issuer: Energy Future Holdings Corp. -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Corporate Family Rating, Downgraded to Caa1 from B3 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2, LGD5, 83% from Caa1, LGD5, 78% Issuer: Sabine River Authority, TX -- Senior Unsecured Revenue Bonds, Downgraded to Caa3 from Caa2 Issuer: TXU Corp. (Old) -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3 from Caa2 Issuer: TXU US Holdings Company -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 from Caa1 Issuer: Texas Competitive Electric Holdings Co LLC -- Senior Secured Bank Credit Facility, Downgraded to a range of B2, LGD2, 28% from a range of B1, LGD2, 27% -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2, LGD5, 72% from Caa1, LGD5, 71% -- Senior Unsecured Sec. Lease Oblig. Bond, Downgraded to Caa3, LGD5, 86% from Caa2, LGD5, 83% Issuer: Trinity River Authority, TX -- Senior Unsecured Revenue Bonds, Downgraded to Caa3 from Caa2 Upgrades: Issuer: TXU Corp. (Old) -- Senior Unsecured Regular Bond/Debenture, Upgraded to LGD6, 92% from LGD6, 96% Issuer: TXU US Holdings Company -- Senior Unsecured Regular Bond/Debenture, Upgraded to LGD5, 72% from LGD6, 91% EVERETT MARITIME: U.S. Trustee Appoints 5-Member Creditors' Panel ----------------------------------------------------------------- The U.S. Trustee for the Northern District of Illinois appointed five parties to the Official Committee of Unsecured Creditors in the bankruptcy cases of Everett Maritime, LLC. The Committee members are: -- GGLO, LLC -- Hoffman Construction Co. -- Methodologie -- Kosnick Engineering -- Landau Associates NetDockets relates that, in light of a pending motion to transfer the case to the Western District of Washington bankruptcy court, every member of the Committee appears to be located in Washington. Three of the creditors have addresses in Seattle and one each have addresses in Everett and Edmonds, Washington, NetDockets say. As reported by the Troubled Company Reporter on July 31, 2009, citing NetDockets, the Port of Everett has asked the Court to transfer venue of the case to the Western District of Washington for the convenience of parties-in-interest and in the interests of justice. The Port of Everett acknowledges that venue is likely proper in the Northern District of Illinois, but asserts that venue would also be proper in the Western District of Washington. According to NetDockets, the Port of Everett argues that Everett Maritime is a Washington limited liability company and that its principal assets are located in Washington. Port of Everett notes the Debtor's owners and managers "appear" to be located in Chicago, which would cause Everett Maritime's "principal place of business" to be located in Chicago under Seventh Circuit precedent. Port of Everett, according to NetDockets, also asserts that "the clear majority of unsecured creditors -- whether viewed in terms of number of creditors or claim amounts -- are located" in Washington, the "essence of this case" is an option agreement between the Port and the debtor, all of the witnesses related to that agreement reside in Washington, and the cases would be more economically administered in Washington. Everett Maritime LLC is the developer of the Port Gardner Wharf real estate development project in Everett, Washington. Everett Maritime filed for Chapter 11 on May 20, 2009 (Bankr. N.D. Ill. Case No. 09-18224). David K. Welch, Esq., at Crane Heyman Simon Welch & Clar, represents the Debtor as counsel. The Debtor disclosed $76,517,033 in total assets and $22,155,482 in total debts. FAIRPOINT COMMUNICATIONS: S&P Reassigns CC Corporate Credit Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services said it reassigned a 'CC' corporate credit rating, with a negative outlook to Charlotte, North Carolina-based incumbent local exchange carrier FairPoint Communications Inc., from the previous 'SD'. S&P also raised the rating to 'C' from 'D' on the approximate $90 million of aggregate principal amount remaining on the company's unsecured notes that did not participate in its exchange offer. The recovery rating on the notes is '6', representing negligible (0%-10%) recovery prospects in the event of a payment default. S&P also removed the 'CC' secured bank loan rating from CreditWatch, where it had been placed with negative implications on June 25, 2009, following the company's announced note exchange. The loan has a '3' recovery rating, representing meaningful (50%- 80%) recovery prospects in the event of a payment default. "We reassigned a corporate credit rating of 'CC', given the very limited liquidity being experienced by the company since the cutover from the Verizon systems due to operational issues," said Standard & Poor's credit analyst Catherine Cosentino, "the uncertain prospects for near-term payment of interest and loan amortization, and uncertain ability to meet existing covenants in the credit facility over the coming quarters." The company's distressed exchange did not materially change its credit profile. The new notes provide the company the option to pay interest due on October 1, 2009, via a noncash accrual, but beyond that they require cash payment of interest. FEDERAL-MOGUL: Allowed by Michigan State to Keep Tax Break ---------------------------------------------------------- Federal-Mogul Corporation has won approval to keep 100% tax break despite the drop in the number of its work force in its Greenville, Michigan plant, Julia Bauer of The Grand Rapids Press reports. The report notes that the plant's headcount will drop from 220 to 150 through 2010. Ms. Bauer says the Michigan Economic Growth Authority has approved a two-year exception to the standard, which was set in 2004, due to the downturn in auto sales. As widely reported, two of Michigan's big three -- General Motors and Chrysler -- are currently under Chapter 11 bankruptcy protection. Federal-Mogul could seek another one-year extension to stay at 150 employees. Michigan's state representative Mike Huckleberry, D-Greenville, has asked that any extension should include public notification, "so there is no mistaking that the entire community looks forward to, and needs, restored employment levels at Federal-Mogul's Greenville plant," Grand Rapids Press reports. According to Ms. Bauer, Federal-Mogul's $60 million tax break was approved five years ago, and covered five Michigan locations -- Southfield, Ann Arbor/Plymouth, Greenville, Sparta and St. Johns. The plant at St. Johns was shut down a couple of years ago. About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the Company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on November 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on February 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, 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 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," S&P said. FEDERAL-MOGUL: Court Moves Sept. 22 Hearing Due to G-20 Meet ------------------------------------------------------------ Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware moved to September 29, 2009, the omnibus hearings she previously set for September 22 in the Debtors' bankruptcy cases. Judge Fitzgerald noted that the G-20 Summit will be held in Pittsburgh, Pennsylvania, on September 24 through 25, 2009, and travel into and out of Pittsburgh will be restricted for several days before and after the Summit. According to G-20's Web site, the Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 to bring together systemically important industrialized and developing economies to discuss key issues in the global economy. Among the members of the G-20 are finance ministers and central bank governors of the United States of America, United Kingdom, Japan, Saudi Arabia, Australia and Canada. About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the Company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on November 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on February 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, 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 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," S&P said. FEDERAL-MOGUL: Releases Second Quarter 2009 Results --------------------------------------------------- Federal-Mogul Corporation reported positive net income and cash flow on improved sales versus the first quarter 2009, as the company's restructuring and cost reduction initiatives brought improved profits to the bottom line, countering the impact of the global market downturn. Financial Summary (in millions) 2009 2008 -------------------- -------------------- Q1 Q2 YTD Q1 Q2 YTD ---- ---- ---- ---- ---- ---- Net sales $1,304 $1,238 $2,542 $1,995 $1,859 $3,854 Gross margin 198 158 356 396 266 662 pct. of sales 15.2% 12.8% 14.0% 19.8% 14.3% 17.2% Selling, general (170) (184) (354) (212) (209) (421) & admin. expenses Net income (loss) 3 (101) (98) 90 (32) 58 attributable to Federal-Mogul Operational EBITDA 129 70 199 258 207 465 pct. of sales 9.9% 5.7% 7.8% 12.9% 11.1% 12.1% Cash flow $7 ($196) ($189) $70 ($162) ($92) "We are pleased to report a profitable quarter, including stronger gross margin, reduced selling, general and administrative expenses, positive net income, higher operational EBITDA and significantly improved cash flow in Q2 2009 versus Q1 2009. We have implemented numerous measures to reduce costs and more closely align our global structure and capacity with current market requirements," said Jose Maria Alapont, Federal-Mogul President and CEO. "These Q2 2009 results highlight our substantial progress versus Q1 2009, as we strengthen the company to operate more efficiently in the current market environment, while preparing to capitalize on an eventual rebound in vehicle production. The company's performance during the quarter demonstrates the effectiveness of Federal-Mogul's variable cost company strategy to generate sustainable global profitable growth," he said. Federal-Mogul reported $1.3 billion in sales during Q2 2009, a $66 million increase over Q1 2009, yet the global automotive markets remained challenging in all but a few growth countries. The company's improved sales along with global restructuring measures and strict cost controls resulted in a gross margin of $198 million or 15.2 percent of sales in Q2 2009, which is up $40 million and 2.4 percentage points. Net income in Q2 2009 was $3 million versus a net loss of $(101) million during Q1 2009. The stronger net income is attributable to operational improvements across all business activities. Operational EBITDA for Q2 2009 was $129 million or 9.9 percent, an increase of $59 million over Q1 2009, when the company reported operational EBITDA of $70 million or 5.7 percent. Federal-Mogul generated positive cash flow of $7 million in Q2 2009 compared with negative cash flow of $(196) million in Q1 2009, representing a $203 million improvement in cash flow performance during the quarter. This strong improvement was due to enhanced profitability and improved working capital management. The company maintained its strong cash position of about $700 million with an unused revolver of over $500 million, providing more than $1.2 billion of liquidity. On a year-over-year basis, Federal-Mogul reported Q2 2009 sales of $1.3 billion versus $2.0 billion in Q2 2008, which was the last full quarterly reporting period before the global automotive market downturn began, and when the company reported its all-time quarterly sales record. Federal-Mogul's total revenue declined 29 percent in Q2 2009 on a constant dollar basis or 35 percent including currency exchange versus Q2 2008. Gross margin was $198 million or 15.2 percent in Q2 2009 versus $396 million or 19.8 percent in the same period of 2008. Sales, general and administrative (SG&A) expenses were improved by 20 percent to $170 million during Q2 2009, versus $212 million during the same period one year ago. Net income was $3 million in Q2 2009 versus $90 million in Q2 2008. Federal-Mogul's operational EBITDA for Q2 2009 was $129 million, compared to $258 million, reported a year ago. The company reported positive cash flow of $7 million for Q2 2009 versus $70 million during Q2 2008. For the six-month period ending June 30, 2009, Federal-Mogul reported sales of $2.5 billion, compared to $3.9 billion for the same period in 2008. Gross margin was $356 million in the first half of 2009, versus $662 million for the same period in 2008. SG&A costs were improved by $67 million, to $354 million in the first six months of this year from $421 million in the first half of 2008. The company reported a net loss of $(98) million for the first half of 2009, compared to $58 million of net income for the first two quarters of 2008. Operational EBITDA was $199 million, or 7.8 percent of sales for the first six months of 2009, compared to $465 million or 12.1 percent of sales during the first half of 2008. The company recorded negative cash flow of $(189) million for the six months ending June 30, compared to negative $(92) million in the first half of 2008. The company in the second quarter continued to adjust its global headcount in order to realign its manufacturing capacity to market requirements. As a result of the company's global restructuring plan, Federal-Mogul has reduced its headcount by nearly 11,000 employees, or 22 percent from one year ago. Federal-Mogul during the three months ending June 30, 2009, continued to achieve new business bookings with a high percentage of conquest contracts, evidence of continued demand for Federal- Mogul's leading technology and innovation to increase fuel economy, reduce emissions and improve vehicle safety. "Federal-Mogul's results demonstrate that our sustainable global profitable growth strategy has been effective in establishing a solid foundation which helps the company withstand extremely difficult market conditions," Mr. Alapont said. "We continue to focus on strengthening as well as diversifying our customer base to grow our revenue stream with new technologies, innovations and strong brands that bring value to our customers, especially given the increasingly challenging regulatory requirements for fuel economy, alternative fuels, reduced emissions and improved safety. We are working efficiently in order to continue to improve our global performance," he concluded. A full-text-copy of Federal-Mogul Corp.'s Second Quarter 2009 Results filed on Form 10-Q is available at no charge at: http://researcharchives.com/t/s?40a3 Reorganized Federal-Mogul Corp. Balance Sheet (In millions) June 30 Dec. 31 2009 2008 ------- ------- Assets Current Assets: Cash and equivalents $687.3 $888.2 Accounts receivable 1,057.9 938.7 Inventories 876.1 893.7 Prepaid expenses and other current assets 250.9 267.4 -------- -------- Total current assets 2,872.2 2,988.0 Property, plant and equipment 1,895.1 1,910.6 Goodwill & indefinite-lived intangible assets 1,406.5 1430.4 Definite-lived intangible assets, net 539.5 563.9 Other non-current assets 317.5 342.7 -------- -------- Total Assets $7,030.8 $7,235.6 ======== ======== Liabilities and Shareholders' Equity Short-term debt & current portion of long-term debt $99.7 $101.7 Accounts payable 486.7 622.5 Accrued liabilities 489.3 483.1 Current portion of postemployment benefit liability 61.1 61.0 Other current liabilities 192.7 173.8 -------- -------- Total current liabilities 1,329.5 1,442.1 Long-term debt 2,762.5 2,768.0 Post-employment benefits 1,256.4 1,240.1 Long-term portion of deferred income taxes 537.6 553.4 Other accrued liabilities 163.2 235.9 Shareholders' equity: Preferred stock -- -- Common stock 1.0 1.0 Additional paid-in capital 2,122.7 2,122.7 Accumulated deficit (566.0) (467.9) Accumulated other comprehensive loss (616.4) (688.0) Treasury stock, at cost (16.7) (16.7) -------- -------- Total Shareholders' Equity 924.6 951.1 -------- -------- Noncontrolling interests 57.0 45.0 -------- -------- Total Liabilities and Shareholders' Equity $7,030.8 $7,235.6 ======== ======== Reorganized Federal-Mogul Corp. Statement of Operations (In millions) Three Months Ended June 30 ------------------ 2009 2008 ------ ------ Net sales $1,304.4 $1,995.2 Cost of products sold (1,106.6) (1,599.6) -------- -------- Gross margin 197.8 395.6 Selling, general & admin. expenses (170.3) (212.4) Interest expense, net (33.8) (42.4) Amortization expense (12.2) (19.2) Chapter 11 & U.K. Administration expenses (1.6) (3.2) Equity earnings of unconsolidated affiliates 3.4 7.8 Restructuring expense, net (1.4) (1.0) Other income, net 15.1 (0.9) -------- -------- Income before Income Taxes (3.0) 124.3 Income Tax Expense 9.7 (33.8) -------- -------- Net Income $6.7 $90.5 Less net income attributable to Noncontrolling interests (3.7) (0.9) -------- -------- Net income attributable to Federal Mogul $3.0 $89.6 ======== ======== Reorganized Federal-Mogul Corp. Statement of Cash Flows (In millions) Six Months Ended June 30 ---------------- 2009 2008 Cash Provided From (Used By) ------ ------ Operating Activities: Net loss attributable to FMC ($94.1) $59.7 Adjustments to reconcile net (loss) income to net cash: Depreciation and amortization 158.2 171.1 Cash received from 524(g) Trust -- 225.0 Change in postemployment benefits 27.9 4.1 Gain on sale of debt investment (7.9) -- Change in deferred taxes (3.6) 3.9 Changes in operating assets & liabilities: Accounts receivable (105.3) (249.8) Inventories 28.8 55.0 Accounts payable (138.0) (49.1) Other assets & liabilities 15.0 37.7 -------- -------- Net Cash Provided From Operating Activities (119.0) 257.6 Cash Provided From (Used By) Investing Activities: Expenditures for property, plant & equipment (88.7) (148.0) Net settlement from sale of debt investment 7.9 -- Net proceeds from the sale of property 0.3 10.9 Payments to acquire business -- (4.7) -------- -------- Net Cash Used by Investing Activities (80.5) (141.8) Cash Provided From (Used By) Financing Activities: Proceeds from borrowings on exit facility -- 2,082.0 Repayment of Tranche A, Revolver & PIK Notes -- (1,790.8) Principal payments on long-term debt (14.8) (14.8) (Decrease) increase in short-term debt (3.2) 2.4 (Decrease) increase in other long-term debt (1.7) 6.9 Net (payments) proceeds from factoring arrangements (3.9) 6.3 Debt issuance fees -- (0.4) -------- -------- Net Cash (Used By) Investing Activities (23.6) 291.6 Effect of foreign currency exchange 22.2 11.1 rate fluctuations on cash (Decrease) increase in Cash and Equivalents (200.9) 418.5 Cash and equivalents at beginning of period 888.2 425.4 -------- -------- Cash and equivalents at end of period $687.3 $843.9 ======== ======== About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the Company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on November 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on February 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, 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 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," S&P said. FEDERAL-MOGUL: Tennessee Plan Spill Causes Evacuation, Sickness --------------------------------------------------------------- A chemical spill at a plant owned by Federal-Mogul Corporation in Grizzly Lane, in Smithville, Tennessee, prompted evacuations on the night of August 2, 2009, News-Channel Five reports. Just before 6:00 p.m. that night, an unknown gas was inadvertently released while workers were changing a pump, the report says citing the Tennessee Emergency Management Agency as its source. Employees at the company were evacuated and kept out around 50 feet from the building when they started getting sick and passing out due to inhalation of the fumes, News-Channel further reports. About Federal-Mogul Corporation Federal-Mogul Corporation -- http://www.federal-mogul.com/-- (OTCBB: FDMLQ) is a global supplier, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy-duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Founded in Detroit in 1899, the Company is headquartered in Southfield, Michigan, and employs 45,000 people in 35 countries. Aside from the U.S., Federal-Mogul also has operations in other locations which includes, among others, Mexico, Malaysia, Australia, China, India, Japan, Korea, and Thailand. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl & Jones, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan. They submitted a Disclosure Statement explaining that plan on April 21, 2003. They submitted several amendments and on June 6, 2004, the Bankruptcy Court approved the Third Amended Disclosure Statement for their Third Amended Plan. On July 28, 2004, the District Court approved the Disclosure Statement. The estimation hearing began on June 14, 2005. The Debtors submitted a Fourth Amended Plan and Disclosure Statement on November 21, 2006, and the Bankruptcy Court approved that Disclosure Statement on February 6, 2007. The Fourth Amended Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, 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 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," S&P said. FONTAINEBLEAU: BofA, et al., Want CCCS to Produce Documents ----------------------------------------------------------- Fontainebleau Las Vegas, LLC, one of the three Debtors in the Chapter 11 cases, sued a group of banks led by Bank of America, N.A., as administrative agent, on June 9, 2009, for alleged breach under their financing commitment to fund the Debtor's multi-billion-dollar casino-resort development in Las Vegas, Nevada. The Debtor complained that BofA, along with Merrill Lynch Capital Corporation, JPMorgan Chase Bank, N.A., Barclays Bank PLC, Deutsche Bank Trust Company Americas, The Royal Bank of Scotland PLC, Sumitomo Mitsui Banking Corporation New York, Bank of Scotland, HSH Nordbank AG, New York Branch, and MB Financial Bank, N.A., have "unjustifiably" failed and refused to provide the $770,000,000 in revolver financing under certain credit agreements aggregating $1.85 billion for the casino-resort development. The Banks, in response, insist that the Debtor breached the Credit Agreement and defaulted on numerous covenants, terms and conditions of the Credit and Disbursement Agreements, compliance with which was a condition precedent to its right and ability to borrow funds under the Credit Agreement. Deposition on CCCS Int'l In connection with the lawsuit, Barclays Bank, PLC, Deutsche Bank Trust Company Americas, JP Morgan Chase Bank, NA, and Royal Bank of Scotland PLC, served a deposition notice and request for production of documents from CCCS International, among other parties. CCS International asks the Court enter a protective order preventing the Banks from taking the deposition of a CCCS representative and from requiring CCCS to produce documents. CCCS also asks the Court to quash or modify the subpoena issued by the Banks pursuant to Rule 45(c) of the Federal Rules of Bankruptcy Procedure. CCCS maintains that the subpoena requires disclosure of privileged or protected matters and is subjecting CCCS to significant undue burden. CCCS, which performs various construction management services for the Debtor related to the Project, asserts that in addition to the lack of sufficient notice, it cannot participate in the deposition because of a substantial concern that it will be pursued for violating an alleged confidentiality agreement. Defendants Barclays Bank, et al., assert that the mere filing of the Motion for Protective Order had the effect of staying their good faith efforts to obtain discovery from CCCS International in advance of a hearing on the lawsuit. The Official Committee of Unsecured Creditors has informed the Bankruptcy Court that it desires to attend and have the right to ask questions at the deposition of CCCS and to receive copies of all documents produced in the issue. The Committee says it is not seeking to reargue its motion to generally intervene in the Adversary Proceeding. Rather, it is seeking to participate, on a limited basis, with respect to the matters raised in the CCCS Action. These issues point to potential causes of action under Section 548 of the Bankruptcy Code and otherwise, which would directly benefit the constituency which the Committee represents, it notes. The Committee's counsel informed counsel to the Revolver Banks of the Committee's intention to attend the deposition and fully participate in the discovery, and was told that the Revolver Banks would not permit the involvement in the discovery by the Committee. Accordingly, as part of the Court's consideration of the issues raised by the application of CCCS, the Committee asks the Court to issue a directive to the parties in the Action that the Committee can fully participate any discovery to be obtained from CCCS. Robert Barone Files Declaration Robert W. Barone, senior vice president and principal of Inspection and Valuation International, Inc., disclose that in May 2007, IVI was retained by Bank of America, on behalf of a group of lenders, to serve as a construction consultant to oversee the construction of the Project. Mr. Barone was designated to be the Principal for the engagement. Mr. Barone says that based on his experience generally and with the Project specifically, he believes that it is highly likely that Turnberry West Construction or the Debtor possess records that would enable one to determine the timeframe in which each of the claims and pending change orders in the Project as reflected in Turnberry's Anticipated Cost Report for April 2009 were brought to the attention of Turnberry or the Debtor. A copy of Mr. Barone's declaration is available for free at http://bankrupt.com/misc/FB_BaroneDec.pdf About Fontainebleau Las Vegas Fontainebleau Las Vegas Holdings, LLC -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. An official committee of unsecured creditors has been appointed in the Chapter 11 cases. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FONTAINEBLEAU: Term Lenders, Arelius Oppose Moelis Engagement ------------------------------------------------------------- The Term Lender Steering Group in Fontainebleau Las Vegas Holdings LLC's cases has filed an objection to the Debtors' employment of Moelis & Company LLC as financial advisor and investment banker, noting that it performs services identical to Citadel Derivatives Group LLC. Aurelius Capital Management, LP supports the objection raised by the Term Lenders. Aurelius reiterated that the Debtors have failed to establish a valid business justification for engaging one, let alone two, financial advisory firms to provide what appear to be duplicative services and imposing an unwarranted administrative burden on the estates, with no corresponding benefit. Indeed, Aurelius says, the description of services provided for in both engagement letters is identical. According to Aurelius, it is not clear that a financial advisor is even required at this stage of the Cases, as there is a pending mediation that will determine the need and scope of a financial advisor. The estate should wait until that process has been completed to obligate itself to an additional significant fee burden, Aurelius relates. The Debtors have obtained interim approval to hire Moelis & Company LLC. Moelis will assist the Debtors in the restructure of outstanding debt obligations, raising additional capital and consummating a sale transaction, in a short timeframe, to help the Debtors reorganize and emergence from Chapter 11. Specifically, Moelis is expected to: (a) undertake, in consultation with members of management of the Debtors, a comprehensive business and financial analysis of the Debtors; (b) review and analyze the Debtors' assets and their operating and financial strategies; (c) review and analyze the business plans and financial projections prepared by the Debtors, including testing assumptions and comparing those assumptions to historical and industry trends of the Debtors; (d) evaluate the Debtors' debt capacity and assist in the determination of an appropriate capital structure for the Debtors; (e) identify, initiate, review, negotiate, and evaluate any restructuring transaction, sale transaction or capital transaction, or any combination, and develop and evaluate alternative proposals for a restructuring transaction, sale transaction or capital transaction, or their combination; (f) solicit and evaluate indications of interest and proposals regarding any Restructuring Transaction, Sale Transaction or Capital Transaction from current or potential lenders, equity investors, acquirors or strategic partners; (g) assist the Debtors in developing strategies to effectuate any Restructuring Transaction, Sale Transaction or Capital Transaction, including financing alternatives; (h) advise and assist the Debtors in the course of their negotiation of any Restructuring Transaction, Sale Transaction or Capital Transaction and participate in those negotiations, as requested; (i) determine and evaluate the risks and benefits of considering, initiating and consummating any Restructuring Transaction, Sale Transaction or Capital Transaction; (j) determine values or ranges of values for the Debtors and any securities that the Debtors offer or propose to offer in connection with a Capital Transaction; (k) in coordination with the Debtors, prepare and implement a marketing plan and prepare one or more memoranda, called selling memos, which describe assets, properties or businesses to be sold in any Sale Transaction; (l) working with the Debtors' management in preparing one or more memoranda, called information memeo, describing the Debtors and their businesses for use in any potential Capital Transaction; (m) contact potential acquirors or investors that Moelis and the Debtors have agreed may be appropriate, and in rendering the services, Moelis may meet with representatives of those acquirors or investors and provide the representatives with the selling memo or information memo and additional information about the Debtors' assets, properties or businesses as may be appropriate and acceptable to the Debtors, subject to customary business confidentiality agreements in form and substance approved by the Debtors; (n) assist the Debtors in the development, preparation and distribution of selected information, documents and other materials to create interest in and to consummate any Restructuring Transaction, Sale Transaction or Capital Transaction; (o) assist the Debtors in valuing their assets or business, provided that any real estate or fixed asset appraisals will be undertaken by outside appraisers, separately retained and compensated by the Debtors; (p) be available at the Debtors' request to meet with Debtors' management, board of directors or board of managers, creditor groups, equity holders, any official committees appointed in these Chapter 11 cases, or other parties, to discuss any Restructuring Transaction, Sale Transaction or Capital Transaction; (q) if requested by the Debtors, participate in hearings before the Bankruptcy Court and provide relevant testimony; and (r) provide other financial advisory and investment banking services as may be agreed upon by Moelis and the Debtors. The Debtors has said it is in the best interests of their estates to retain both Moelis and CDRG as financial advisors and investment bankers, and have determined that each possess complementary, but distinct, expertise necessary to assist them in effectuating a Restructuring Transaction, Capital Transaction or Sales Transaction. The Debtors propose to pay Moelis based on this fee structure: (A) Monthly Fee of $150,000 whether or not a Restructuring Transaction, Sale Transaction or Capital Transaction has taken place or will take place, from the Petition Date until the end of the term of the Engagement Letter. All Monthly Fees paid by the Debtors to Moelis will be credited against any Restructuring Fee, Capital Transaction Fee or Sale Transaction Fee payable under the Engagement Letter, provided, however, that credit will not apply to the extent that, and in the amount that, any Restructuring Fee, Capital Transaction Fee or Sale Transaction Fee is not entirely approved by the Bankruptcy Court. (B) Restructuring Fee of $9,000,000 in cash, if a Restructuring Transaction is consummated, to be paid immediately upon any closing of a Restructuring Transaction. A separate Restructuring Fee will be payable in respect of each Restructuring Transaction in the event more than one Restructuring Transaction will occur. (C) Capital Transaction Fee, in cash, equal to: (1) 0.60% of the aggregate amount of new debt raised in a Capital Transaction in the form of secured, first lien, non-convertible debt, (2) 1.05% of the aggregate amount of new debt raised in a Capital Transaction in the form of senior unsecured, non- convertible debt, (3) 1.35% of the aggregate amount of new debt raised in a Capital Transaction in the form of subordinated and/or junior lien, non-convertible debt, (4) 1.50% of the aggregate amount of new debt raised in a Capital Transaction in the form of convertible debt, (5) 2.25% of the aggregate amount or face value of new capital raised in a Capital Transaction in the form of non-convertible preferred equity, including preferred equity in the form of stock or partnership, membership or limited liability company interests, equity-linked securities, options, warrants or other rights to acquire preferred equity interests in the Debtors, and (6) 2.40% of the aggregate amount or face value of new capital raised in a Capital Transaction in the form of common equity, including common equity in the form of stock or partnership, membership or limited liability company interests, equity-linked securities, options, warrants or other rights to acquire common equity interests in the Debtors, or in the form of convertible preferred equity, including convertible preferred equity in the form of stock or partnership, membership or limited liability company interests; Each percentage, however, will be reduced: (a) with respect to clauses (5) or (6), by 50% with respect solely to new preferred equity or common equity raised in a Capital Transaction from: * any person or entity that is an existing investor or holder of debt of the Debtors, other than from Jeffrey Soffer or any entity that Jeffrey Soffer controls, or * indemnified persons specified in the Engagement Letter, or (b) to 0% with respect solely to new debt or new capital raised in a Capital Transaction from Jeffrey Soffer or any entity that Jeffrey Soffer controls. The Capital Transaction Fee will be paid in cash immediately upon any closing of a Capital Transaction. A separate Capital Transaction Fee will be payable in respect of each Capital Transaction in the event that more than one Capital Transaction will occur. (D) Sale Transaction Fee, in cash and in an amount equal to 0.75% of the Transaction Value. In the event, however, that the Sale Transaction consists of (i) a liquidation in a bankruptcy case under chapter 7, or (ii) a credit bid by any secured lender where the credit bid consists solely of secured debt, the cash fee will be an amount equal to 0.60% of the Transaction Value, provided, further, that, any Sale Transaction Fee will not exceed $9,000,000. The Sale Transaction Fee will be paid in cash immediately upon any closing of a Sale Transaction. A separate Sale Transaction Fee will be payable in respect of each Sale Transaction if more than one Sale Transaction occurs. The maximum fees payable by the Debtors to Moelis under the Engagement Letter, whether in respect of the Monthly Fee, the Restructuring Fee, the Sale Transaction Fee or the Capital Transaction Fee, or any of this combination, after giving effect to any crediting, will not exceed $15,000,000 in the aggregate. About Fontainebleau Las Vegas Fontainebleau Las Vegas Holdings, LLC -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. An official committee of unsecured creditors has been appointed in the Chapter 11 cases. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FONTAINEBLEAU: Term Lenders Oppose Terms of Citadel Engagement -------------------------------------------------------------- Aurelius Capital Management, LP, and the Term Lender Steering Group have conveyed objection to Fontainebleau Las Vegas Holdings LLC's application to employ Citadel Derivatives Group LLC as financial advisor and investment banker. Aurelius argues that any restructuring, transaction, "success" or similar fee paid to Citadel and Moelis & Company LLC must be subject to a reasonableness review at the conclusion of the Cases, under the standards set forth in Section 330 of the Bankruptcy Code. Aurelius says that pre-approval of any fee under Section 328 is not justified in cases like the Debtors', where the course of the Debtors' restructuring is uncertain; pre-approval could result in a financial advisor earning a sizable "success" fee based upon a successful result that had nothing to do with the services provided by that advisor. The Debtors have sought the Court's permission to hire Citadel to, among others things (a) undertake a comprehensive business and financial analysis of the Debtors; (b) review and analyze the business plans and financial projections prepared by the Debtors, including testing assumptions and comparing those assumptions to historical and industry trends of the Debtors; (c) identify, initiate, review, negotiate, and evaluate any restructuring transaction, sale transaction or capital transaction, or any combination, and develop and evaluate alternative proposals for a restructuring transaction, sale transaction or capital transaction, or their combination; (d) solicit and evaluate indications of interest and proposals regarding any Restructuring Transaction, Sale Transaction or Capital Transaction from current or potential lenders, equity investors, acquirors or strategic partners; (e) advise and assist the Debtors in the course of their negotiation of any Restructuring Transaction, Sale Transaction or Capital Transaction and participate in those negotiations, as requested; (f) contact potential acquirors or investors that Citadel and the Debtors have agreed may be appropriate, and in rendering the services, Moelis may meet with representatives of those acquirors or investors and provide the representatives with the selling memo or information memo and additional information about the Debtors' assets, properties or businesses as may be appropriate and acceptable to the Debtors, subject to customary business confidentiality agreements in form and substance approved by the Debtors; (g) provide other financial advisory and investment banking services as may be agreed upon by Moelis and the Debtors. For the contemplated services, the Debtors will pay Citadel: (A) A monthly fee of $25,000 (B) Restructuring fee of $6,000,000 in cash if a restructuring transaction is consummated, to be paid immediately upon any closing of a restructuring transaction. A separate Restructuring Fee will be payable in respect of each Restructuring Transaction in the event more than one Restructuring Transaction occurs. (C) If a capital transaction is consummated, a Capital Transaction Fee will be paid in cash equal to: (1) 0.40% of the aggregate amount of new debt raised in a Capital Transaction in the form of secured, first lien, non-convertible debt, (2) 0.70% of the aggregate amount of new debt raised in a Capital Transaction in the form of senior unsecured, non-convertible debt, (3) 0.90% of the aggregate amount of new debt raised in a Capital Transaction in the form of subordinated and/or junior lien, non-convertible debt, (4) 1.00% of the aggregate amount of new debt raised in a Capital Transaction in the form of convertible debt, (5) 1.50% of the aggregate amount or face value of new capital raised in a Capital Transaction in the form of non-convertible preferred equity, including preferred equity in the form of stock or partnership, membership or limited liability company interests, equity-linked securities, options, warrants or other rights to acquire preferred equity interests in the Debtors, and (6) 1.60% of the aggregate amount or face value of new capital raised in a Capital Transaction in the form of common equity, including common equity in the form of stock or partnership, membership or limited liability company interests, equity-linked securities, options, warrants or other rights to acquire common equity interests in the Debtors, or in the form of convertible preferred equity, including convertible preferred equity in the form of stock or partnership, membership or limited liability company interests; Each percentage, however, will be reduced: (a) with respect to clauses (5) or (6), by 50% with respect solely to new preferred equity or common equity raised in a Capital Transaction from: * any person or entity that is an existing investor or holder of debt of the Debtors, other than from Jeffrey Soffer or any entity that Jeffrey Soffer controls, or * any indemnified persons, pursuant to the Engagement Letter, or (b) to 0% with respect solely to new debt or new capital raised in a Capital Transaction from Jeffrey Soffer or any entity that Jeffrey Soffer controls. The Capital Transaction Fee will be paid in cash immediately upon any closing of a Capital Transaction. A separate Capital Transaction Fee will be payable in respect of each Capital Transaction in the event that more than one Capital Transaction will occur. (D) Sale Transaction Fee, in cash and in an amount equal to 0.75% of the transaction value if a sale transaction is consummated. In the event, however, that the Sale Transaction consists of (i) a liquidation in a bankruptcy case under chapter 7, or (ii) a credit bid by any secured lender where the credit bid consists solely of secured debt, the cash fee will be an amount equal to 0.40% of the Transaction Value, provided, further, that, any Sale Transaction Fee will not exceed $6,000,000. The Sale Transaction Fee will be paid in cash immediately upon any closing of a Sale Transaction. A separate Sale Transaction Fee will be payable in respect of each Sale Transaction if more than one Sale Transaction occurs. Payment by the Debtors under the Engagement Letter, for Monthly Fees, Restructuring Fees, Sale Transaction Fees or Capital Transaction Fees, or any of this combination, after giving effect to any crediting, will not exceed $10,000,000 in the aggregate, notwithstanding anything to the contrary in the Engagement Letter. About Fontainebleau Las Vegas Fontainebleau Las Vegas Holdings, LLC -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. An official committee of unsecured creditors has been appointed in the Chapter 11 cases. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Panel Says $1.5BB JPMorgan Loans Are Unsecured -------------------------------------------------------------- The official committee of unsecured creditors in General Motors Corp.'s bankruptcy cases has commenced an adversary proceeding against JPMorgan Chase & Co. and other parties who gave the Debtors access to a $1.5 billion term-loan prepetition. The Creditors Committee, in its complaint filed before the Bankruptcy Court, to enter a judgment that loans made by JPMorgan, et al., were unsecured. Under the term-loan agreement, the Debtors agreed that the loan, of which in excess of $1.4 billion is outstanding, would be backed by a first-priority lien on certain assets of GM. However, according to the Committee, after inspection, it has discovered that the pertinent U.C.C. filings demonstrate that the lien was not perfected as of the petition date. The Committee explained that a UCC-1 financing statement was filed on November 30, 2006, but this was terminated by a UCC-3 financing statement amendment filed on Oct. 30, 2008. A judgment in favor of the Committee would impact recovery by the term-lenders. If their liens are avoided, the term loan lenders would be treated like other unsecured creditors. The Debtors have obtained debtor-in-possession financing of $33 billion from the U.S. Department of Treasury and the Export Development Canada to pay prepetition claims and fund the Chapter 11 cases. A portion of the DIP Loans would be used to pay in full all claims under the Term Loan Agreement. However, the Committee points out, it was generally assumed that all claims under the Term Loan Agreement were fully-secured, first-priority claims. A copy of the Complaint is available at: http://bankrupt.com/misc/GM_CreditorsVsJPM.pdf 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Can Reject 33 Dealers Who Refused Wind-Down Deals ----------------------------------------------------------------- According to Carla Main at Bloomberg News, General Motors Corp., now know as Motors Liquidation Inc., obtained approval from the Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York to reject contracts with 33 dealerships that didn't accept wind-down agreements from As reported by the Troubled Company Reporter on July 8, 2009, GM sought authority from the Bankruptcy Court to terminate, effective July 10, sales and service dealership agreements with 38 entities. Bloomberg relates the ruling didn't apply to two dealers, Everett Chevrolet in Everett, Washington, and Forrest Chevrolet-Cadillac in Cleburne, Texas. Judge Gerber said Detroit-based GM must provide those dealers with more information on why they were rejected. Three dealers reached settlements with GM prior to the hearing. Few Dealers Did Not Accept Participation or Wind-Down Pacts On July 5, 2009, the Bankruptcy Court approved the sale of substantially all of the Debtors' assets to NGMCO, Inc., an entity sponsored by the United States Department of the Treasury. As determined by the Court in the Sale Order, the 363 Transaction was the best, indeed, the only, viable means to save and carry forward GM's business in a new enterprise that will maximize and realize the going concern value of GM's assets. Harvey R. Miller, Esq., at Weil, Gotshal & Manges LLP, said that as part of the transaction, a rationalization of GM's extensive dealer network was essential in order for New GM to be a viable company capable of surviving ever increasing foreign competition and cyclical economic downturns. While the rationalization of the Dealer Network included a reduction in the number of Dealerships, the 363 Transaction allowed for the substantial majority of GM's dealers to continue operations in New GM on a long-term basis. These Dealers were offered a Participation Agreement, which provided for their Dealership Franchise Agreement to be assumed and assigned to New GM, subject to certain modifications. Over 99% of the Dealers that were offered Participation Agreements signed and returned such agreements. Under the 363 Transaction, the Debtors will be assuming and assigning the Participation Agreements to New GM. With respect to the remaining dealers that were not offered Participation Agreements and will not be retained as part of the New GM dealer network on a long-term basis, GM did not seek to abruptly reject and terminate their Dealership Franchise Agreements. Rather, GM offered the Wind-Down Dealers the opportunity to accept "wind-down" agreements that will allow them to stay in business until October 2010 so that they can -- in an orderly fashion -- sell down their inventories and continue to provide warranty and other services to their customers with the continued support of New GM. Over 98% of the Wind-Down Dealers accepted and executed the Wind-Down Agreements. Despite these efforts, 38 Dealers, who represent less than 2% of the Dealers offered a Participation or Wind-Down Agreement, elected not to accept GM's offer. Accordingly, the Debtors sought to reject their contracts. The Debtors explained that after the closing of the 363 Transaction, the Debtors will no longer manufacture GM vehicles, nor will they retain any rights to the GM vehicle brands that were sold to the Purchaser under the MPA. 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Opel Tops GM's Agenda in First Board Meeting ------------------------------------------------------------ General Motors Co.'s 13-member board was scheduled to review bids for the Opel brand as part of its first meeting beginning August 3, Bloomberg News reported, citing people familiar with the planning said. According to Carla Main at Bloomberg, the two-day gathering in Detroit, where Ed Whitacre makes his boardroom debut as chairman, includes a discussion of asset sales, committee assignments and company goal. Directors also will receive a product overview at GM's technical center and test-drive vehicles, the people said. General Motors' Opel unit may be forced into bankruptcy if the automaker and the German government fail to agree on a buyer, Bloomberg earlier reported, citing three people close to the trust that controls the division. The German government has preferred Magna International Inc. as a buyer for Opel as the automotive supplier has promised to keep jobs. The trust's five-member board, however, prefers RHJ International SA as the buyer or pushing Opel into insolvency, Bloomberg said. GM negotiators are also fighting Magna's bid because they're concerned about losing control of some patents, Bloomberg said, citing one of the people. The German government is providing EUR1.5 billion (US$2.1 billion) in short-term loans to Opel for the sale. A spokesman to Germany Chancellor Angela Merkel has earlier warned that no deal is possible without the German government's approval. The trust was set up as an interim owner of Opel. It oversees talks with the suitors approves any business decisions by Opel, including which bidder will win. A final decision on the sale is made by General Motors, which is now controlled by the U.S. Treasury. According to Bloomberg, GM's board will review bids for Opel during a meeting starting Aug. 3, people familiar with the planning have said. The trust will gather to discuss the bids the following week, said two of the people. Approval is also required by the U.S. Treasury, people familiar with the process have said. Brussels-based RHJ is bidding for a 51% stake in Opel and is asking for EUR700 million less than Magna in government aid to secure Opel's future, while Magna, which is bidding for Opel with Moscow-based OAO Sberbank, would provide EUR350 million of cash directly under an improved cash offer for the unit, Bloomberg notes. 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Appoints Members to Executive Management Committee ------------------------------------------------------------------ General Motors Company announced the formation of the executive committee that will lead the new GM, as well as a number of leadership appointments and retirements. New Executive Committee On July 10, Fritz Henderson, GM president and CEO, announced that GM would speed day-to-day decision making by replacing two senior leadership forums, the Automotive Strategy Board and Automotive Product Board, with a single, smaller executive committee. Led by Mr. Henderson, the executive committee membership will include: * Bob Lutz, vice chairman, marketing and communications; * Tom Stephens, vice chairman, global product development; * Nick Reilly, executive vice president, GM International Operations; * Ray Young, executive vice president, chief financial officer; * Tim Lee, group vice president, global manufacturing and labor relations; * John Smith, group vice president, corporate planning and alliances, and secretary of the executive committee; * Mark LaNeve, vice president, U.S. sales; * Bob Socia, vice president, global purchasing and supply chain. Leadership Appointments and Retirements Tim Lee, currently GM North America vice president, manufacturing, will become a group vice president, responsible for global manufacturing and labor relations. Prior to his current assignment, Lee, 58, was GM Europe vice president of manufacturing. He has also served as executive director of manufacturing engineering, as plant manager at several U.S. facilities, and in several leadership positions at Isuzu Motors in Japan. Gary Cowger, group vice president, global manufacturing and labor relations, will retire at the end of the year. Until then, at Henderson's request, Mr. Cowger will assume responsibility for the integration of Delphi facilities being acquired by GM and for the preparation and launch of a new battery assembly facility, details of which will be announced in the near future. Mr. Cowger, 62, joined GM as a co-op student at the Kansas City, Kansas plant, and served in various manufacturing and leadership roles in the U.S., Mexico and Europe, including chairman and managing director of Adam Opel AG and president and managing director of GM de Mexico. Prior to his current assignment, Mr. Cowger was president of GM North America. Terry Kline, currently process information officer, product development, will be named vice president, information systems and services, and chief information officer. Mr. Kline, 47, joined GM in 2001 from New Venture Gear, where he was vice president and chief information officer. He has also served as executive director, global product development for information systems and services, and as interim chief information officer for GM Asia Pacific. Ralph Szygenda, group vice president and chief information officer, will be retiring effective October 1. Mr. Szygenda, 60, joined GM in 1996 as vice president and chief information officer from Bell Atlantic, where he was vice president and chief information officer. Prior to that, Mr. Szygenda held a number of positions at Texas Instruments, including vice president for information systems and services and chief information officer. He also served as vice president and general manager of TI's Enterprise Systems Business Unit. Troy Clarke, group vice president and president, GM North America, will retire effective October 1. Mr. Clarke, 54, joined GM in 1973 as a co-op student at Pontiac Motor Division, and has served in a number of leadership positions at GM, including group vice president and president of GM Asia Pacific, group vice president of manufacturing and labor relations, and president and managing director of GM de Mexico. Mr. Henderson will assume responsibilities for GM's North American operations. Maureen Kempston Darkes, group vice president, GM Latin America, Africa and Middle-East, will retire at the end of this year. Kempston Darkes, 60, previously served as president and general manager of GM Canada. She also held a number of legal and finance positions in both the U.S. and Canada, including general counsel and secretary, and vice president for corporate affairs, both for GM Canada. Oversight of the countries in GM's LAAM region will move to the GM International Operations, based in Shanghai. Michael Grimaldi, GM Vice President and CEO GM Daewoo, will retire effective October 1. Mr. Grimaldi, 57, previously served as president and general manager of GM Canada, general manager, Field Sales, Service and Parts - North America VSSM and Vehicle Line Executive for Full Size Trucks. He also held a number of finance and planning positions. A replacement for Mr. Grimaldi will be announced by International Operations. Sales and Marketing Appointments In the GM Sales and Marketing organizations, the following appointments have been announced: As previously confirmed, Mark LaNeve, has been named vice president, U.S. sales, reporting to Henderson. Brent Dewar, 54, currently GME vice president, sales, marketing, and aftersales, will become vice president, global Chevrolet brand. He will be responsible for the Chevrolet brand in North America and Chevrolet brand coordination on a global basis. * Susan Docherty, 46, currently North America vice president, Buick-GMC channel, will be named general manager, Buick-GMC brands; * Bryan Nesbitt, 40, currently North America vice president, design, will become general manager, Cadillac brand; * Jay Spenchian, 50, currently executive director, marketing strategy support group, will continue in his role; * Dewar, Docherty, Nesbitt, and Spenchian will report to Lutz, effective August 1; * Jim Bunnell, 54, currently executive director, sales support group, will be named general manager, sales operations; * Steve Hill, 49, currently general sales manager, premium channel, will be named general manager, retail sales support; * Kurt McNeil, 45, currently general sales manager, Chevrolet sales, will continue in this role; * Ed Peper, 47, currently GM North America vice president, Chevrolet channel, will be named general sales manager, Cadillac sales; * Brian Sweeney, 42, currently general sales manager, Buick-GMC sales, will continue in his role; * Bunnell, Hill, McNeil, Peper, and Sweeney will report to LaNeve, effective August 1; * Jonathan Browning, 50, currently GM Vice President, Global Sales, Service and Marketing, has elected to leave the company on October 1 to pursue other interests. He will not be replaced and his staff will be merged into the North America and GMIO operations; "With these announcements, most of the new GM leadership team is in place," Mr. Henderson said. "We expect to have the final round of announcements next week. "I'd like to congratulate the leaders who are assuming new positions, and personally thank Jonathan Browning, Troy Clarke, Gary Cowger, Michael Grimaldi, Maureen Kempston Darkes and Ralph Szygenda for their leadership during an extraordinary period for GM. Their years of dedicated work have helped create the foundation for a new GM, and we wish them the best as they move into the next chapters of their lives." 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Appointments at Shanghai-Based Operations --------------------------------------------------------- General Motors Company on July 23 announced a series of key executive appointments at the new Shanghai-based GM International Operations (GMIO). As part of the announcement, GM also introduced new senior executives at GM Holden in Australia and GM Daewoo Auto & Technology Co. (GM Daewoo) in Korea. GMIO A new leaner organization was created to replace the former General Motors Corporation's regional operating structure. Together with the managing directors of GMIO countries, the following individuals will represent the different functional roles and serve as GMIO vice presidents: * Jim Bovenzi -- Global Purchasing and Supply Chain; * Jim DeLuca -- Quality; * Don Johnson -- Vehicle Sales, Service and Marketing; * Diane Jurgens -- Information Systems and Services; * Nancy Owens -- Human Resources; * Joe Peter -- Chief Financial Officer; * Therese Ryan -- General Counsel, followed by Ken Wong in June 2010; * Dan Sovran -- Alliances and New Business Development; * John Stadwick -- Aftersales; * Eric Stevens -- Manufacturing; * Johan Willems -- Communications; * Steve Clarke -- Vehicle Engineering; * Lowell Paddock -- Program Management and Planning; * Ken Parkinson -- Design. All of the leadership changes are effective by or before September 1. "The appointment of our executive team represents chapter one for GMIO and a demonstration of our commitment to getting the organization up and running quickly," said Nick Reilly, GM executive vice president and president of GMIO. "All of our new leaders are seasoned industry veterans with experience around the globe. "GMIO's management philosophy will be based on GM's corporate strategy to win globally and on GM's culture of product and customer focus, speed, risk-taking and accountability," Mr. Reilly added. "Our success will be determined by developing great products for the customer, leveraging global functions and moving faster than the competition." GM Daewoo At GM Daewoo, Mike Arcamone will take over as president and CEO, replacing Michael Grimaldi, who is retiring, effective October 1. Mr. Arcamone joined GM in 1980. He has held several important positions in manufacturing and global purchasing in North America and Europe. In his current position as vice president of GM Powertrain Europe, he is responsible for 10 manufacturing plants and five engineering locations. GM Holden At GM Holden, Alan Batey will replace Mark Reuss as managing director of GM Holden, effective September 1. A 30-year GM veteran, Mr. Batey has held important roles in sales and marketing and management at GM's Middle East operations, GM's European operations, and GM Daewoo in Korea. He has served as executive director of Sales, Marketing and Aftersales for GM Holden since 2006. Mr. Reuss, who joined GM Holden in 2008, will return to the U.S. to assume a senior leadership role in Global Product Development with GM. Ray Bierzynski, who has served since 2007 as vice president, Engineering, for GM Asia Pacific and executive director, China Engineering will also return to the U.S. to assume a senior role in Global Product Development. Bob Moran, who has served since 2003 as vice president, Manufacturing Operations, for GM Asia Pacific will retire later this year. "GM Holden and GM Daewoo will be in good hands with Alan Batey and Mike Arcamone. Both bring a wealth of experience to their new roles," said Reilly. "They will be in charge of leading two important members of the GM family as both take on even more important global roles." Mr. Reilly added, "Mark Reuss, Ray Bierzynski, Michael Grimaldi and Bob Moran have distinguished themselves in their respective positions at a time of great changes and challenges for the automotive industry and GM itself. We wish Mark and Ray well in their new positions and Michael and Bob all the best in retirement." These managing directors will also play a key role in the GMIO structure: * Jaime Ardilla -- GM Mercosur * Wayne Brannon -- Chevrolet-Europe * Rick Brown -- GM Japan * Jeffrey Cadena -- GM Ecuador * Steve Carlisle -- GM South East Asia Operations * Rajeev Chaba -- GM Egypt * Santiago Chamorro -- GM Columbia * Michael J. Devereux -- GM Middle East * Steve J. Koch -- GM South Africa * Karl Slym -- GM India * Kevin Wale -- GM China * Ronaldo Znidarsis -- GM Venezuela 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Discloses Five Newest Members to Board ------------------------------------------------------ General Motors Company named the five newest members of its board of directors. The GM directors, elected to the GM BOD on July 20, include: * Carol Stephenson, dean of Ivey School of Business at University of Western Ontario, and has been a member of the GM Canada Advisory Board; * Daniel Akerson, managing director, The Carlyle Group; * David Bonderman, co-founding partner, TPG * Robert Krebs, retired chairman and chief executive officer, Burlington Northern Santa Fe; * Patricia Russo, former chief executive officer, Alcatel-Lucent. Led by Chairman of the Board Edward E. Whitacre Jr., former chairman and CEO of AT&T Inc., the 13-member board includes 10 representatives nominated by the United States Treasury, one representative nominated by the governments of Canada and Ontario and one representative nominated by the United Auto Workers Retiree Medical Benefits Trust, and Fritz Henderson, General Motors Company president and chief executive officer serves as the thirteenth member. The retiree benefits trust selected veteran auto industry analyst Stephen Girsky as its board nominee last month. Also serving on the board of directors of General Motors Company are six members of the former General Motors Corporation board: Erroll Davis, Jr., chancellor, University Systems of Georgia; Fritz Henderson, president and CEO, GM Company; Neville Isdell, retired chairman and CEO, The Coca-Cola Company; Kent Kresa, chairman emeritus, Northrop Grumman Corporation; Philip Laskawy, retired chairman and CEO, Ernst & Young LLP; Kathryn Marinello, chairman and CEO, Ceridian Corp. "The members of this new board of directors bring immense experience and diverse perspectives to the table, and that's exactly what GM needs," said Mr. Whitacre. "The collective expertise of the new BOD is vital at this time as GM seeks to redefine itself as the vehicle design and customer care leader of the extremely competitive auto business." Committee participation by the BOD members will be announced at a later date. Additional biographical information on each of the new board members can be found at the end of this release. Also announced is the appointment of Anne T. Larin as the Corporate Secretary for General Motors Company. Since joining GM in 1990, Ms. Larin has served in a variety of roles including lead attorney for SEC reporting and secretary to board audit committee. Prior to joining GM, Ms. Larin was an associate at Munger, Tolles & Olson in Los Angeles and clerked for Judge Cornelia Kennedy on the U.S. Court of Appeals. Ms. Larin earned her J.D. from the University of Michigan Law School. Biographical summaries the newest GM BOD members Daniel F. Akerson, 60, has been managing director and co-head of the U.S. Buyout Fund of The Carlyle Group since 2003. He previously served as chairman and chief executive officer of XO Communications from 1999 to 2003. He served as chairman of Nextel Communications from 1996 to 2001 and chief executive officer from 1996 to 1999. Mr. Akerson is also a member of the board of American Express Company. David Bonderman, 66, is co-founding partner and managing general partner of TPG, a private investment firm founded in 1992. Prior to forming TPG, Mr. Bonderman served as chief operating officer of Robert M. Bass Group and a partner at Arnold & Porter LLP. Mr. Bonderman is also chairman of Ryanair Holdings PLC and a member of the board of CoStar Group, Inc., and Gemalto N.V., among others. Stephen J. Girsky, 47, is president of S. J. Girsky & Co., an independent advisory firm based in New York. Most recently, he was president of Centerbridge Industrial Partners, LLC, an affiliate of Centerbridge Partners, L.P., a private investment firm. Prior to joining Centerbridge, Mr. Girsky was a special advisor to the CEO and CFO of General Motors Corporation from 2005 to 2006. Mr. Girsky has also been an advisor to the UAW. Mr. Girsky also served as managing director at Morgan Stanley and a senior analyst of the Morgan Stanley automotive and auto parts research team. Mr. Girsky is also a former lead director of the board of Dana Holding Corporation. Robert D. Krebs, 67, is a retired chairman and CEO of Burlington Northern Santa Fe Corporation, where he served as Chairman from 2000 until 2002. He previously served as chairman and CEO of BNSF from 1999 until December 2000 and as chairman, president and CEO from 1997 to May 1999. Mr. Krebs is also a member of the board of UAL Corporation. Patricia F. Russo, 57, is former CEO of Alcatel-Lucent S.A., where she served from 2006 to 2008. Prior to the merger of Alcatel and Lucent in 2006, she served as chairman and CEO of Lucent Technologies, Inc. Prior to rejoining Lucent in 2002, Ms. Russo was president and COO of Eastman Kodak Company. Ms. Russo is also a member of the boards of directors of Alcoa Inc., and Schering- Plough Corporation. Carol Stephenson, 58, has been Dean of the Richard Ivey School of Business at The University of Western Ontario since 2003. She previously spent many years in the Canadian telecom industry, serving as president and CEO of Lucent Technologies Canada from 1999 to 2003. Ms. Stephenson is also a member of the board of directors of Intact Financial Services Corporation (formerly ING Canada) and has been a member of the General Motors of Canada Advisory Board. * * * In a regulatory filing with the Securities and Exchange Commission on July 23, 2009, General Motors Company relates that each member of the New GM board who is not an employee of New GM will be paid, in cash, an annual retainer of $200,000 for service on the board and, if applicable, one or more of these annual retainers: (i) $10,000 for service as chair of any board committee; (ii) $20,000 for service on the audit committee of the board; and (iii) $150,000 for service as the Chairman of the board. In addition, until August 1, 2009, the members of the New GM board may be reimbursed for taxes related to income imputed to them for the use of company cars provided to non-employee directors. 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Has Plan to Return to Car Leasing Business ---------------------------------------------------------- General Motors Co. and GMAC, Inc., plan to return to the auto- leasing market on August 1, 2009, the Wall Street Journal reported, citing people familiar with the matter. GM's spokesperson, Pete Ternes, told the Journal that the automaker has been studying ways to get back into leasing. Details of GM's leasing plans are still being hammered out but the Journal said the automaker is looking at various models across its four-brand lineup as candidates for leasing. 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Publicis Groupe, Omnium Have Little Exposure ------------------------------------------------------------ In June, Publicis Groupe [Euronext Paris: FR0000130577], the world's fourth largest communications group based in Paris, France, disclosed in a public statement that it has a maximum exposure of EUR55,000,000 to the bankruptcy filing of General Motors Corporation. An entity controlled by the U.S. Government ("New GM") has purchased the assets of bankrupt General Motors. Publicis said that since the filing of the bankruptcy, Old GM has signed agreements with some of its agencies and assumed and assigned contracts with other of its agencies to New GM. As a result, it has received payment of the bulk of our fee receivables as of the date of the bankruptcy, and GM has committed to pay its remaining pre-petition fee receivables over the next few months. Taking into account the principle of sequential liability and the commitments it has received from GM, Publicis has re-evaluated its maximum exposure at EUR 9 million, which will be reflected in its second quarter numbers when they are released on July 23, 2009. Plastic Omnium French automotive parts supplier Plastic Omnium says recent revenues are not adversely impacted by financial conditions of General Motors Corporation, Chrysler LLC and Saab Automobile, Forbes notes. Plastic Omnium posted EUR8 million for the period ending June 2009, compared to EUR2.5 million for the same period for 2008, attributing to cost cuts, lower capital expenditure and working capital, Forbes says. However, Plastic Omnium expects revenues for the second half of 2009 to be lower than the first half of 2009 in light of the auto industry slowdown, Forbes discloses. Plastic Omnium further reasons that passenger cars and trucks dropped globally from 25% to 50% in the first half of 2009 due to European customers reducing their capital spending and operating expenses, Forbes adds. 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. 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 counsel. 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 changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GMAC FINANCIAL: Posts $3.9BB Net Loss in Second Quarter 2009 ------------------------------------------------------------ GMAC Financial Services reported a second quarter 2009 after-tax net loss of $3.9 billion, compared to a net loss of $2.5 billion in the second quarter of 2008. Results in the quarter were adversely affected by strategic actions taken by the company which resulted in several charges in the second quarter, including: -- $1.2 billion tax charge related to the incorporation of GMAC; -- $1.6 billion loss on the disposition of international mortgage assets and provision, impairments, and reserves on domestic non-Bank mortgage assets; -- $607 million goodwill impairment of GMAC's U.S. consumer property and casualty insurance business related to a strategic review of the operation; and -- $105 million of additional provision on resort finance assets. Excluding these charges, GMAC's loss in the second quarter of 2009 was approximately $400 million. Also affecting results in the quarter was an increased loss provision at the mortgage operation related to continued credit deterioration and an original issue discount amortization expense related to GMAC's fourth quarter 2008 debt exchange. This was partially offset by improved results in the automotive finance business related to a strengthened used vehicle market in North America. Losses in the quarter related to the mortgage operation are consistent with the analysis completed as part of the Supervisory Capital Assessment Program (S-CAP). Second Quarter Net Income/Loss ($ in millions) Q209 Q208 Net Incorpor- Pre-Tax Pre-Tax Income/ ation Other Income/ Income/ (Loss) Impact Taxes (Loss) (Loss) ------------------------------------ ------- Global Automotive Finance ($727) ($1,051) ($22) $346 ($709) Insurance (515) 1 (40) (476) 193 Mortgage Operations (1,836) 71 137 (2,044) (1,761) Corporate and Other(1) (825) (234) 25 (616) (32) --- --- -- --- -- Consolidated ($3,903) ($1,213) $100 ($2,790) ($2,309) ===== ===== === ===== ===== (1) Includes Commercial Finance, equity investments and other corporate activities "GMAC's results in the quarter were dramatically affected by a series of strategic actions that produced a short-term negative impact to financial performance but are expected to lead to longer-term benefits," said GMAC Chief Executive Officer Alvaro G. de Molina. "This is about gaining funding and operational flexibility, expanding on our strengths, and shedding legacy and non-strategic assets, allowing us to focus on the core automotive and mortgage origination and servicing businesses." GMAC Incorporation In June 2009, GMAC LLC was converted from a partnership into a Delaware corporation and renamed GMAC Inc. The conversion enabled GMAC to create a more flexible capital structure, facilitate implementation of the registration rights provided to GMAC common and certain of the preferred shareholders, and eliminate the requirement of dividend payments to certain equity holders to cover GMAC's tax obligation. The $1.2 billion tax adjustment taken in the second quarter of 2009 restored GMAC's deferred tax assets and liabilities, which were previously written off in 2006 as part of the sale of a controlling interest in the company. Prior to the incorporation, GMAC was economically obligated for its taxes via a dividend payment to its owners related to taxable income from the investment in GMAC. Liquidity and Capital GMAC's consolidated cash and cash equivalents were $18.7 billion as of June 30, 2009, up from $13.3 billion at March 31, 2009. Included in the consolidated cash and cash equivalents balance are $1.2 billion at Residential Capital, LLC (ResCap), $7.2 billion at Ally Bank (formerly GMAC Bank), and $865 million at the insurance business. The change in consolidated cash is primarily related to the investment by the U.S. Department of the Treasury. Ally Bank's total assets were $42.5 billion at quarter-end, which included $11.9 billion of assets at the auto division and $30.6 billion of assets at the mortgage division. This compares to $36.4 billion of assets at March 31, 2009. Deposits increased in the second quarter to $25.4 billion as of June 30, 2009, which included $14.5 billion of retail deposits, $8.7 billion of brokered deposits, and $2.2 billion of other deposits. This compares to $22.5 billion of deposits at March 31, 2009, comprised of $11.0 billion of retail, $9.5 billion of brokered, and $2.0 billion of other deposits. GMAC's total equity at June 30, 2009, was $26.0 billion, up from $22.0 billion at March 31, 2009. In May 2009, GMAC received a $7.5 billion investment from the U.S. Treasury related to both the agreement to provide automotive financing for Chrysler dealers and customers and to the S-CAP results. This investment contributed to strengthening GMAC's capital position. GMAC's preliminary second quarter Tier 1 capital ratio was 13.7%, and the Tier 1 common ratio was 6.1%. During the second quarter, GMAC issued $4.5 billion of guaranteed debt as part of the Federal Deposit Insurance Corporation's (FDIC) Temporary Liquidity Guarantee Program (TLGP). The offering further improved the company's liquidity profile. Global Automotive Finance GMAC's global automotive finance business reported pre-tax income of $346 million, compared to a pre-tax loss of $709 million in the year-ago period. Results were driven primarily by improvement in the U.S. used vehicle market, which resulted in increased proceeds on the sale of off-lease vehicles, favorable provisions on the retail balloon portfolio, and improved loss severity levels. On an after-tax basis, the global automotive finance business reported a net loss of $727 million in the second quarter of 2009, compared to a net loss of $717 million in the year-ago period. The after-tax loss was primarily driven by a tax charge related to the conversion of GMAC to a corporation. Total new vehicle consumer financing originations were $5.6 billion during the second quarter of 2009, down significantly from $12.5 billion in the second quarter of 2008. In comparison to recent quarters, however, origination levels increased in the second quarter of 2009 from extremely low levels in the first quarter of 2009 of $3.4 billion and fourth quarter of 2008 of $2.7 billion. New vehicle originations are lower mainly related to a decrease in U.S. vehicle sales, the significant reduction of leasing and the effects of a weaker economy. GMAC remains committed to providing appropriate levels of credit to support the U.S. auto industry and is now providing financing to Chrysler dealers and consumers. GMAC has financed approximately $320 million of new Chrysler consumer originations through July 20, 2009. GMAC has also extended approximately $1 billion in interim wholesale financing to approximately 1,600 U.S. and Canadian dealers. The formal credit review process of the interim-financed dealers has begun and is expected to be completed by mid-November. GMAC did not experience significant credit losses related to the GM bankruptcy filing. General Motors Company, the new post- bankruptcy entity, holds the equity stake in GMAC and has also assumed the operating agreements between the companies. Credit losses increased in the second quarter of 2009 to 2.24% of managed retail contracts, versus 1.40% in the second quarter of 2008. The increase is due to higher loss frequency in Europe and North America driven by economic weakness, the seasoning of the portfolio and a smaller asset base. Credit losses have declined, however, from the first quarter of 2009 level of 2.41%. Severity of losses has continued to improve from its peak in the fourth quarter of 2008. Delinquencies, defined as contracts more than 30-days past due, also increased to 3.44% in the second quarter of 2009, compared to 2.39% in the second quarter of 2008. Delinquency trends have been negatively affected by higher unemployment and a smaller asset portfolio in North America and Europe. Insurance GMAC's insurance business reported a pre-tax loss of $476 million in the second quarter of 2009, compared to pre-tax income of $193 million in the year-ago period. The results were largely driven by a $607 million pre-tax goodwill impairment at the U.S. consumer property and casualty business. The insurance operation also reported lower written premiums resulting from the sale of the U.S. reinsurance business in November 2008 and MEEMIC Insurance Company (MEEMIC) in April 2009 as well as lower volumes in dealership-related products due to weakness in automotive sales. These factors were partially offset by lower losses during the quarter. On an after-tax basis, the insurance business recorded a net loss of $515 million in the second quarter of 2009, compared to net income of $135 million in the second quarter of 2008. The carrying value of the insurance investment portfolio was $4.7 billion at June 30, 2009, compared to $7.1 billion at June 30, 2008, with the decrease being primarily attributable to the sales of the reinsurance business and MEEMIC. The U.S. consumer property and casualty insurance business is under strategic review and GMAC is exploring alternatives for that unit, including a potential sale. Mortgage Operations GMAC's mortgage operations, which include Residential Capital, LLC (ResCap) and the mortgage activities of Ally Bank and ResMor Trust, reported a pre-tax loss of $2.0 billion in the second quarter of 2009, compared to a pre-tax loss of $1.8 billion in the second quarter of 2008. Results reflect losses on international asset dispositions and higher credit related costs due to continued distress in the mortgage market. Operating costs improved from the prior year period. On an after-tax basis, GMAC's mortgage operations reported a net loss of $1.8 billion for the second quarter of 2009, compared to a net loss of $1.9 billion in the year-ago period. For the second consecutive quarter, mortgage loan origination volume in the U.S. market has shown signs of improvement. U.S. mortgage loan production in the second quarter of 2009 was $18.5 billion, compared to $13.2 billion in the first quarter of 2009 and $17.0 billion in the second quarter of 2008. The improvement was driven by higher government production and increased refinancing activity. As part of its effort to streamline its international business and focus primarily on its U.S. lending and servicing businesses, ResCap sold its mortgage operations in Australia and Spain. Corporate and Other GMAC's corporate and other segment reported a pre-tax loss of $616 million in the second quarter of 2009, compared to a pre-tax loss of $32 million in the year-ago period. The main drivers were an additional $105 million pre-tax provision on resort finance assets in the commercial finance business and an increase in interest expense primarily due to a $344 million original issue discount amortization expense related to the fourth quarter 2008 bond exchange. On an after-tax basis, the corporate and other segment reported a net loss of $825 million in the second quarter of 2009, compared to a net loss of $10 million in the prior year period. The higher after-tax loss was driven by a tax adjustment related to the conversion of GMAC to a corporation. Outlook While difficult economic conditions persist, GMAC is encouraged by positive trends such as improving origination levels in both the auto and mortgage segments. Additionally, GM and Chrysler have exited bankruptcy, which should lead to a more stable U.S. auto industry. GMAC has recently launched an initiative to reduce costs and optimize its returns. The initiative targets decreasing expenses by approximately $1 billion on a run-rate basis by 2010. The plan to achieve this target includes streamlining the cost structure commensurate with business expectations, integrating operations, and rationalizing non-core and non-strategic activities. The profit optimization initiative represents a continuing step in GMAC's plan to transform the company and return to profitability. GMAC also continues to execute its five core strategies: -- Transition to and meet all bank holding company requirements -- Strengthen liquidity and capital position by shifting largely to a deposit-funded institution -- Build a world-class organization -- Expand and diversify customer-focused revenue opportunities, with available funding driving originations -- Drive returns by repositioning risk profile and maximizing efficiencies "The second quarter, like many prior quarters, produced a series of transformational actions, including creating a more flexible capital structure by incorporating GMAC, launching Ally Bank, restructuring the ownership of the company, and expanding our base of auto financing customers through the Chrysler agreement," said de Molina. "Our work is not over, but the foundation is being laid." GMAC Financial Services Preliminary Unaudited Second Quarter 2009 Financial Highlights ($ in millions) 2Q 2Q YTD YTD Summary Statement of Income Note 2009 2008 2009 2008 Revenue Consumer $1,270 $1,764 $2,599 $3,585 Commercial 455 611 896 1,259 Loans held-for-sale 148 312 280 672 Operating leases 1,631 2,135 3,356 4,238 Interest and dividends on investment securities 102 166 198 375 Other interest income 33 393 121 667 Total financing revenue and other interest income 3,639 5,381 7,450 10,796 Interest Expense Deposits 110 80 202 174 Short-term borrowings 168 624 358 1,204 Long-term debt 1,754 2,174 3,590 4,523 Other 56 (9) 119 147 Total interest expense 2,088 2,869 4,269 6,048 Depreciation expense on operating lease assets 1,256 1,401 2,409 2,797 Impairment of investment in operating leases 0 716 0 716 Net financing revenue 295 395 772 1,235 Other revenue Servicing fees 399 465 807 936 Servicing asset valuation and hedge activities, net (240) (185) (600) 225 Net loan servicing income 159 280 207 1,161 Insurance premiums and service revenue earned 818 1,123 1,682 2,232 Loss on mortgage and Automotive loans, net (362) (1,099) (66) (1,698) Gain on extinguishment of debt 14 616 657 1,104 Other gain (loss) on investments, net 98 (49) 81 (444) Other income, net of losses 4 49 (108) 134 Total other revenue 731 920 2,453 2,489 Total net revenue 1,026 1,315 3,225 3,724 Provision for loan losses 1,161 771 2,004 1,244 Noninterest expense Compensation and benefits expense 441 591 860 1,204 Insurance losses and loss adjustment expenses 481 714 1,034 1,344 Other operating expenses 1,126 1,548 2,308 2,811 Impairment of goodwill 607 0 607 0 Total noninterest expense 2,655 2,853 4,809 5,359 Loss before income tax expense (2,790) (2,309) (3,588) (2,879) Income tax expense 1,113 173 990 192 Net loss ($3,903) ($2,482) ($4,578) ($3,071) June 30, Dec. 31, June 30, Select Balance Sheet Data 2009 2008 2008 Cash and cash equivalents $18,655 $15,151 $14,325 Loans held-for-sale 11,440 7,919 12,942 Finance receivables and loans, net 1 Consumer 57,983 63,963 76,707 Commercial 32,838 36,110 43,183 Investments in operating leases, net 2 21,597 26,390 32,810 Total assets 181,248 189,476 227,692 Total debt 3 105,175 126,321 173,489 About GMAC 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. GPS INDUSTRIES: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- GPS Industries, Inc., has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Middle District of Florida. Michael Hinman at Tampa Bay Business Journal relates that GPS Industries' debts include: -- a $2.3 million promissory note to the estate of Douglas E. Wood that is due June 2011; -- a $1.8 million patent lien from Optimal IP Holdings LP; -- a $1 million trade debt with Great White Shark Enterprises LLC of Jupiter; and -- an additional $627,000 trade debt with Austin Manufacturing Services of Dallas. GPS Industries reported a $2.8 million net loss in the quarter ended March 31, 2009. GPS Industries said in a filing with the U.S. Securities and Exchange Commission that there was doubt about its ability to continue as a going concern due to its "history of losses, limited financial resources and need for additional working capital to implement the company's business plan." According to Business Journal GPS Industries said that it needed additional funding to repay its debt and to market and distribute its products as well as to pay off existing liabilities. GPS Industries, Inc., is a golf course global positioning system manufacturer in Sarasota, Florida. GRAPHICS PROPERTIES: Plan Filing Period Extended to September 14 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has extended Graphics Properties Holdings, Inc., f/k/a Silicon Graphics, Inc., and certain of its subsidiaries' exclusive period to file a plan until September 14, 2009, and their exclusive period to solicit acceptances thereof until November 13, 2009. Graphics Properties had told the Court that the sale of substantially all of their assets to an affiliate of Rackable Systems, Inc., required their significant time and resources, leaving them little time to negotiate a plan and prepare adequate information. The sale transaction closed on May 8, 2009. Additionally, the Debtors said need additional time to quantify their exposure to administrative, priority, secured, and unsecured claims, as well as to produce financial projections and a liquidation analysis. Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). The Court confirmed the Debtors' Plan of Reorganization on September 19, 2006. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. At December 26, 2008, the Debtors had $390,462,000 in total assets and $526,548,000 in total debts. HAYES LEMMERZ: Panel Obtains TRO on Brazil Unit Restructuring ------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware granted the request for a temporary restraining order by the Official Committee of Unsecured Creditors of Hayes Lemmerz International Inc. The Creditors Committee asked the Court to block a tax restructuring of a non-bankrupt Brazil- based Hayes subsidiary, which the creditors say could impede its ability to collect from the estate, according to Law360. 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. HAYES LEMMERZ: Retiree Committee Can Employ Stahl Cowen as Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware has granted the official committee of retirees of Hayes Lemmerz International, Inc., et al., permission to employ Stahl Cowen Crowley Addis LLC as its counsel, nunc pro tunc to July 10, 2009. SCCA has agreed to: a) counsel the Retiree Committee with respect to the administration of the bankruptcy estate and advise the Retiree Committee members with respect to their fiduciary duties, communications with the retiree constituency and the like; b) investigate the acts, conduct, assets, liabilities and financial condition of the Debtors and the Debtors' non- debtor affiliates, the operation of the Debtor's business, conduct a review all relevant welfare plans, as well as a review and interpretation of other affected parties relating to equitable considerations, and any other matters relevant to the protection of the Retiree committee, the case in general or the formulation of a plan of reorganization or liquidation and c) analyze any proposals made by the Debtors to determine the necessity and/or extent of reduction of retiree benefits proposed and develop counteroffers to such proposals. SCCA's hourly rates are: Partners $310-$490 Associates $225-$335 Legal Assistants/Paralegals $100-$175 Jon D. Cohen, Esq., a equity member at SCCA, assured the Court that the firm represents no interest adverse to the Debtors' estates and that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. 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. HAYES LEMMERZ: Retiree Panel Can Employ DSI as Financial Advisors ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted the official committee of retirees of Hayes Lemmerz International, Inc., et al., permission to employ Development Specialists, Inc. as its financial advisors, nunc pro tunc to July 15, 2009. As financial advisor to the Retiree Committee, DSI will provide these services: a) Independent analysis of the financial condition and relating to the structure of the Debtors, assisting in the review and analysis of any information produced by Debtors and/or third parties relating to the financial condition, business plans and/or future condition of the Debtors; b) Financial advice and/or expert testimony to assist in negotiations and/or litigation with respect to Retiree benefits as well as assistance in requesting and obtaining relevant information from the Debtors; and c) Exploration of different potential outcomes with respect to the Debtors to assist in making strategic decisions, including but not limited to competitive information, industry information, and any governmental assistance that could impact the Debtors. DSI's hourly rates for its professionals are: Senior Consultants $425-$595 Consultants $260-$420 Junior Consultants $120-$255 R. Brian Calvert, a vice president and senior consultant of DSI, assured the Court that the firm does not hold or represent any interest that is adverse to the Debtors, their creditors or the retirees, the U.S. Trustee or any party-in-interest in relation to the matters upon which it is to be retained, and that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. 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. HAYES LEMMERZ: Retirees Tap Schnader as Delaware Co-Counsel ----------------------------------------------------------- The official committee of retirees of Hayes Lemmerz International, Inc., et al., asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Schnader Harrison Segal & Lewis LLP as Delaware co-counsel, nunc pro tunc to July 16, 2009. As Delaware co-counsel to the Retiree Committee, Schnader Harrison will: a) advise the Retiree Committee with respect to its rights, duties, and powers in these cases; b) assist and advise the Retiree Committee in its consultations with the Debtors relative to the administration of these cases; and c) assist the Retiree Committee in its analysis of, and negotiations with, the Debtors or their creditors concerning matters related to, among other things, the terms of a plan or plans of reorganization for the Debtors. Richard Barkasy, Esq., a partner at Schnader Harrison, assures the Court that the firm does not represent any interests adverse to the Debtors' estates and that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Schnader Harrison's current hourly rates are: Partners $340-$520 Associates $185-$240 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. ICON REALTY: Can Hire Backenroth Frankel as Counsel --------------------------------------------------- The Hon. Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York authorized Icon Realty Corp. to employ Backenroth Frankel & Krinsky LLP as its counsel. The firm is expected to: i) provide the Debtor with legal counsel with respect to its powers and duties as a debtor-in possession in the continued operation of its business and management of its property during the Chapter 11 case; ii) prepare on behalf of the Debtor all necessary applications, answers, orders, reports, and other legal documents which may be required in connection with the Chapter 11 case; iii) provide the Debtor with legal services with respect to formulating and negotiating a plan of reorganization with creditors; and iv) perform such other legal services for the Debtor as may be required during the course of the Chapter 11 case. The firm's professionals and their standard hourly rates are: Professional Hourly Rate ------------ ----------- Abraham Backenroth, Esq. $495 Mark Frankel, Esq. $435 Scott Krinsky, Esq. $395 Paralegal $125 The Debtor assured the Court that the firm has no interest adverse to its estate and creditors and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Brooklyn, New York-based Icon Realty Corp. filed for Chapter 11 on July 15, 2009 (Bank. S.D.N.Y. Case No. 09-14485). Mark A. Frankel, Esq., at Backenroth Frankel & Krinsky, LLP, represents the Debtor in its restructuring efforts. In its petition, the Debtor listed total assets of $13,500,000 and total debts of $8,029,663. INSIGNIA VESSEL: Moody's Cuts Corporate Family Rating to 'B3' ------------------------------------------------------------- Moody's Investors Service downgraded Insignia Vessel Acquisition, LLC's Corporate Family rating to B3. Moody's also upgraded the first lien revolver and first lien term loan to Ba3 and confirmed the Caa1 rating of the second lien term loan. Insignia, Regatta Acquisition, LLC, and Nautica Acquisition, LLC, are the joint and several borrowers under the first and second lien facilities that each own one cruise vessel. All three entities are wholly owned subsidiaries of Oceania Cruises, Inc. Oceania is owned by Prestige Cruise Holdings, Inc. which is indirectly owned by affiliates of Apollo Management L.P. This completes the review of Insignia's ratings that commenced on March 25, 2009. The downgrade of Insignia's CFR reflects the severity of the recession's impact on the company's credit metrics, reliance on funding from Sponsors to support its ship building program and liquidity position, and concern about absorption of new ships on order for delivery. A decline in cruise pricing and occupancy is expected to cause Oceania's reported debt to EBITDA and EBITDA to interest in 2009 to deteriorate to materially over the next twelve months. Although modest earnings growth is expected in 2010, full recovery is not likely until 2011. Additionally, credit metrics will remain under pressure through 2012 as pre-marketing expenses for new ships rise and debt increases to fund ship deliveries. The upgrade of the first lien revolver and term loan reflects an increase in subordinated debt at the ultimate parent level -- a portion of which has already been down streamed as equity to Oceania. The remainder will be funded by the Sponsors to support progress payments for ships under construction. Pursuant to Moody's Loss Given Default methodology, the amount of junior debt within the corporate structure relative to senior debt provides greater loss absorption to the first lien debt instruments in an event of default. Oceania's liquidity profile is adequate. Oceania is expected to generate sufficient EBITDA to cover interest and maintenance capital spending. However, the company is reliant upon support from the Sponsors to fund progress payments for ships under construction and to provide an equity cure of a likely near term default of its senior leverage covenant. Alternatively, Oceania could draw on existing cash balances to repay the drawn revolving credit facility. The senior leverage covenant is not operative if the revolver is undrawn. The stable rating outlook reflects Moody's expectation that the Sponsors will continue to support the company's liquidity and ship building program. The stable outlook also considers Moody's view that credit metrics will improve modestly over the next 12-18 months as pricing and occupancy rebound. Ratings downgraded and assessments updated: * Corporate Family rating to B3 from B2 * Probability of Default rating to B3 from B2 Rating confirmed and assessments updated: * Second lien term loan at Caa1, LGD 4, 60% from Caa1, LGD 6, 90% Ratings upgraded and assessments updated: * First Lien revolver to Ba3, LGD 2, 23% from B1, LGD 3, 39% * First lien term loan at Ba3, LGD 2, 23% from B1, LGD 3, 39% Moody's last rating action occurred on March 25, 2009 when Moody's placed Insignia Vessel Acquisition, LLC's ratings on review for possible downgrade. Insignia Vessel Acquisition, LLC, is one of three operating subsidiaries constituting Oceania Cruises, Inc., a small three- ship passenger cruise company. Oceania targets the upper premium segment of the cruise industry with destination-oriented cruises. Oceania was formed in 2002 and began operating in 2003. Apollo Management L.P. owns a large ownership interest in Oceania's ultimate parent, Prestige Cruise Holdings, Inc. PCI also owns and operates Classic Cruise Holdings d/b/a Regent Seven Seas Cruises. INTERTAPE POLYMER: Posts $1.2 Million Net Loss for Q2 2009 ---------------------------------------------------------- Intertape Polymer Group Inc. released results for the three months and six months ended June 30, 2009. Net loss for the second quarter of 2009 was $1.2 million or $0.02 per share, both basic and diluted, compared to net earnings of $4.6 million or $0.08 per share both basic and diluted for the same period last year. Both of the Company's Divisions experienced declines, however, the Engineered Coated Products Division was harder hit as demand in its largest market, the North American residential housing market, continued to be soft. Net loss for the first six months of 2009 totaled $7.8 million ($0.13 per share, basic and diluted) compared to net earnings of $2.8 million ($0.05 per share, basic and diluted) for the same period in 2008. At June 30, 2009, the Company had $557.8 million in total assets and $325.0 million in total liabilities. Second quarter sales were down 23.1% to $151.9 million, compared to sales of $197.5 million in the second quarter of 2008, reflecting a 20.3% decrease in sales for the Tapes & Films Division and a 34.6% reduction for the ECP Division. Sales for the first six months of 2009 were $291.0 million compared to $382.0 million for the same period in 2008, a decrease of 23.8%. The Company generated cash flows from operating activities in the second quarter of 2009 of $8.8 million compared to $2.3 million in the second quarter of 2008. The higher level of cash generation in 2009 was due to lower raw material inventory costs and an increased focus on cash management. For the first six months of 2009, the Company generated cash flows from operating activities of $20.7 million compared to cash usage of $600,000 for the same period of 2008. Over the quarter, the Company reduced its outstanding debt by $3.6 million, for a total debt reduction of $19.1 million over the first six months of 2009. The ABL has one financial covenant, a fixed charge ratio, the target for which is 1.0 to 1.0. The financial covenant becomes effective only when unused availability drops below $25.0 million. While the Company did not meet the ratio as at June 30, 2009, this covenant was not in effect as unused availability was in excess of $25.0 million and measured at $42.4 million. To date in the third quarter of 2009, the Company has maintained availability in excess of $25.0 million. It is the Company's intention to remain above the $25.0 million threshold of unused availability during the remainder of 2009. "While Intertape sales continue to be affected by the global economic situation, various initiatives undertaken by the Company over the last two quarters, including cost reduction measures, opening of new market channels and new product commercializations, have enabled the Company to somewhat mitigate the impact of external factors. The industry challenges we have faced persist and we must continue to deal proactively with this reality," stated Intertape Chairman, Eric E. Baker. "Sales are down due to the weak economy; however, our new products are beginning to attract attention in the market. Our focus continues to be on the things we can control, in particular cash management, which is of utmost importance in this difficult economy," concluded Intertape Executive Director, Melbourne F. Yull. A full-text copy of the Company's Management's Discussion and Analysis filed with the U.S. Securities and Exchange Commission is available at no charge at http://ResearchArchives.com/t/s?40aa About Intertape Polymer Group Intertape Polymer Group Inc. (TSX:ITP) (NYSE:ITP) develops and manufactures specialized polyolefin plastic and paper based packaging products and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Sarasota/Bradenton, Florida, the Company employs approximately 2,100 employees with operations in 17 locations, including 13 manufacturing facilities in North America and one in Europe. * * * As reported by the Troubled Company Reporter on April 6, 2009, Standard & Poor's Ratings Services lowered its ratings, including its corporate credit rating, to 'CCC+' from 'B' on Intertape Polymer Group Inc. and related entities. At the same time, S&P removed the ratings from CreditWatch with negative implications, where S&P placed them on March 23, 2009. The outlook is negative. As of December 31, 2008, the company had about $270 million in adjusted debt (adjusted for capitalized operating leases and tax- adjusted unfunded employee benefit obligations). JEFFERSON COUNTY: Alabama Lawmakers Discuss Occupational Tax ------------------------------------------------------------ According to Carla Main at Bloomberg News, Alabama lawmakers were scheduled to meet August 4 to resume work on a bill to restore Jefferson County's occupational tax. Governor Bob Riley, a Republican, said he will call a special session of the Legislature to vote on a new occupational tax only if lawmakers agree to a bill beforehand, Bloomberg reported. After state lawmakers failed to agree on a new occupational tax in May, Jefferson County put more than 900 employees, or about 30% of its workforce, on unpaid leave, in order to cut costs. As a result, according to County Commission President Bettye Fine Collins, the county's 640,000 residents are enduring long lines and delays in county services as a result of the cuts. Bloomberg relates that the county's occupational tax problems have superseded a sewer debt crisis that began last year when interest rates on $3 billion of sewer debt soared as high as 10% amid Wall Street's credit crunch. Banks, including JPMorgan Chase & Co. and Bank of America Corp., have granted the county forbearance agreements on its sewer debt. About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. It ended its 2006 fiscal year with a $42.6 million general fund balance, according to Standard & Poor's. The Birmingham firm of Bradley Arant Rose & White, represents Jefferson County. Porter, White & Co. in Birmingham is the county's financial adviser. A bankruptcy by Jefferson County stands to be the largest municipal bankruptcy in U.S. history. It could beat the record of $1.7 billion, set by Orange County, California in 1994. As reported by the TCR on July 24, 2009, Moody's Investors Service has affirmed the Caa3 rating and negative outlook on Jefferson County's (Alabama) outstanding $3.2 billion sewer revenue bonds. Moody's underlying Caa3 rating reflects the likelihood of eventual repayment by the county of principal, irrespective of outside enhancement through bond insurance. It does not reflect the claims paying ability of Syncora, which is rated Ca and failed to fulfill its obligation to make a July 1 Bank Bond principal payment KEANE INTERNATIONAL: S&P Gives Stable Outlook; Affirms 'B' Rating ----------------------------------------------------------------- Standard & Poor's Rating Services said it revised its outlook on Boston-based Keane International Inc. to stable from negative. S&P affirmed all ratings on the company, including the 'B' corporate credit rating. Debt outstanding at March 31, 2009, totaled about $589 million. "The outlook revision reflects S&P's view that Keane's operations have stabilized over the past six months," said Standard & Poor's credit analyst Susan Madison, "and that there are no near-term liquidity issues, given the company's sizable cash balance and solid covenant headroom." With annual revenues of about $890 million for the 12 months ended March 31, 2009, Keane is a second-tier provider of IT and business process outsourcing services. L-3 COMMUNICATIONS: Fitch Affirms Issuer Default Rating at 'BB+' ---------------------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Rating for L-3 Communications, along with these: L-3 Communications Holdings, Inc. -- IDR at 'BB+'; -- Contingent convertible at 'BB+'. L-3 Communications Corporation -- IDR at 'BB+'; -- Revolving credit facility at 'BBB-'; -- Term-loan facility at 'BBB-'; -- Senior subordinated debt at 'BB+'. Approximately $4.6 billion of debt outstanding is affected by the action. The Rating Outlook is revised to Positive, which reflects L-3's strong credit metrics for the current rating and Fitch's expectation of continued solid organic sales growth, steady operating margins, and substantial free cash flow. Furthermore, the Outlook considers the company's improved leverage and potential for additional deleveraging depending on how the company handles debt maturities and cash deployment within the next several quarters. Small to medium-sized acquisitions and meaningful cash deployment toward shareholders are also incorporated into Fitch's expectations. The affirmed ratings are supported by L-3's strong credit and operating profile as well as consistent cash flow generation, which support the company's debt servicing requirements. Other positive factors include high levels of defense spending; L-3's diverse portfolio of products and services that are in line with the Department of Defense requirements; and a balanced contract mix, including generation of more than 50% of revenues from the Operations & Maintenance account in the DoD budget. Concerns relate to the potential for larger debt-financed acquisitions, a shareholder-focused cash deployment strategy, some uncertainty regarding core defense spending trends beyond fiscal year 2010, and the longer-term outlook for supplemental DoD budgets related to operations in Iraq and Afghanistan. Fitch could consider an upgrade of L-3's ratings if the credit profile continues strengthening as a result of limiting cash deployment to amounts equal to or less than the amounts generated by the company's annual free cash flow. Significant improvements to the credit profile are possible if L-3 decides not to refinance maturing debt and instead elects to use cash to repay all or a significant portion of the $650 million term loan which is due in March 2010. Historically, the company has directed cash to acquisitions, share repurchases and dividends. In Fitch's view, acquisitions are the main risk to an improving credit profile, but Fitch notes that L-3's acquisition strategy appears to have moderated in the past several years. As of June 26, 2009, L-3 had a liquidity position of approximately $1.9 billion, consisting of $897 million of cash and $964 million of revolving credit facility availability. Fitch estimates cash balances will grow in the second half, in line with L-3's typical cash generation profile. The company's $1 billion revolver expires in March 2010. Fitch expects that L-3 will be able to renew this facility, but the size and term will likely be reduced, which is consistent with the current trends in the bank market. Even with a $650 million term loan due in March 2010, L-3 appears to have ample liquidity for debt reduction, share repurchases, dividends, and modest acquisitions. Debt has been relatively stable at approximately $4.6 billion over the last few years and, with growing profits, leverage has been modestly improving. Leverage, defined as debt-to-EBITDA, was 2.2 times (x) for the 12 months ending June 26, 2009, down slightly from 2.4x for the same period in the prior year. Fitch's calculation of operating EBITDA is not equivalent to the calculation required by the company's credit agreement. L-3's acquisition spending has decreased in the past couple of years. Historically, acquiring businesses and successfully integrating them while improving profitability was a key component of the company's growth strategy. However, L-3 made only four acquisitions worth a total of $207 million in 2007 and four for $256 million in 2008. One transaction was done in early 2009 for approximately $80 million. Fitch expects acquisition spending will continue to be a focus of the company's cash deployment strategy, but small and mid-size targets are likely to be L-3's objective. In Fitch's opinion, the likelihood of a large, debt- funded transaction has decreased, but L-3 retains the financial flexibility to execute a large transaction if one becomes available, and Fitch believes L-3's management remains open to the possibility of a large purchase if the valuation is attractive. Outside of acquisitions, L-3's cash deployment strategy is shareholder focused. The company repurchased $794 million of common shares in 2008 and $301 million in the first half of 2009. The company has stated that it plans to repurchase $450 million in 2009, but Fitch expects this amount could rise depending on debt refinancing decisions and acquisition spending. L-3 has also consistently increased its dividend. The dividend was raised by 50% in 2006, 33% in 2007, 20% in 2008 and in February 2009, it was again raised by 17% which should result in payments of about $165 million annually. Fitch expects that L-3 will continue to make contributions to its pension plans, although at lower levels than the past few years. At the end of 2008, the company's pension plan was $658 million underfunded (or 62% funded). Like other defense contractors, L-3 can factor in certain pension costs as an allowable expense in some government contracts although there can be timing issues for cash flows. Also, like most defense contractors L-3 is exempt from the Pension Protection Act funding requirements until the PPA is harmonized with government cost accounting standards. As a result, its 38% underfunded status is not a significant concern for the rating. Fitch believes that changes in the fiscal year 2010 DoD budget should not have a significant impact on L-3. There will be some program cuts that will negatively impact the company in the future, such as the size of the Joint Cargo Aircraft program. However, increases in some programs for intelligence, surveillance and reconnaissance should positively impact the company. Fitch believes that fiscal year 2010 (FY2010) is probably the peak in core U.S. defense budgets, and there are several risks to monitor in FY2011 and beyond. These include the Obama Administration's first full budget in fiscal year 2011, the Quadrennial Defense Review, and the large projected federal budget deficits in FY2009-FY2011. In addition to spending levels, some other changes proposed by the new administration could have a detrimental impact on L-3 and other defense contractors, including acquisition reform and the 'insourcing' of services previously contracted out by the DoD. The loss of revenues that could result from lower supplemental budgets after an end to the conflicts in Iraq and Afghanistan is also a concern, but the impact would not likely be immediate as Fitch expects that operations would likely wind down over time and some of L-3's products would benefit from the rebuild and equipment resetting that would continue for some time after the conflicts are over. LAKE CUMBERLAND: Section 341(a) Meeting Scheduled for August 26 --------------------------------------------------------------- The U.S. Trustee for Region 8 will convene a meeting of creditors in Lake Cumberland Marine, LLC's Chapter 11 case on August 26, 2009, at 2:30 p.m. The meeting will be held at the US Bankruptcy Court, 300 S Main St. 2nd Floor, London, Kentucky. 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. Somerset, Kentucky-based Lake Cumberland Marine, LLC, operates a motor boat dealership business. The Company filed for Chapter 11 on July 19, 2009 (Bankr. E. D. Ky.Case No. 09-61089). Taft A. McKinstry, Esq., represents the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts both reanging from $10,000,001 to $50,000,000. LANDSOURCE COMMUNITIES: Emerges From Ch. 11 as Newhall Land ----------------------------------------------------------- LandSource Communities Development LLC has emerged from Chapter 11 reorganization as Newhall Land Development LLC. The new company is financially strong with more than $90 million of cash and no debt on its beginning balance sheet. Newhall Land will have the additional resources and financial flexibility necessary to focus on planning and developing the remainder of the existing community of Valencia and the future Newhall Ranch. The Company consists primarily of the Newhall Land and Farming Company in Los Angeles County, the Newhall Orchard, Valencia Water Company, and the TPC Valencia Golf Club. Newhall Land is backed by strong ownership that consists of a group of investment funds led by Anchorage Advisors LLC, Third Avenue Management LLC, funds affiliated with Och-Ziff Capital Management Group, LLC, funds affiliated with Marathon Asset Management, LP, and TPG Credit Management, L.P., along with Lennar Corp. Newhall Land will be managed by Emile Haddad, the CEO of Five Point Communities Management, Inc., a newly formed management company jointly owned by Mr. Haddad and Lennar. Mr. Haddad resigned as Lennar's Chief Investment Officer to assume his new duties at Five Point and will be joined by more than 20 former Lennar executives. Five Point will augment Newhall's existing strong management team, which has more than 150 years of combined real estate and land development experience. "I know that all of the new equity owners of Newhall share our excitement about this investment opportunity," said Michael Winer of Third Avenue Management LLC. "We look forward to partnering with Five Point and Newhall Management as they embark on developing Newhall Ranch." Mr. Haddad said, "Today marks an important day in Newhall Land's future. We are extremely pleased that we were able to complete our reorganization with the full support of our creditors and emerge as a stronger company. Newhall now has an unleveraged balance sheet, sufficient cash to fund operations going forward and is well positioned to navigate this unprecedented market. "Newhall Land is proud of its 100-year tradition of land stewardship and its community of Valencia, a world-class master plan development with more than 20,000 homes built and 60,000 current jobs," Mr. Haddad added. "Tomorrow we will roll up our sleeves and focus full attention on bringing final neighborhoods and 40,000 additional new jobs to Valencia and perfecting Newhall Ranch entitlements. Newhall Ranch, when completed, will be a hallmark for planned communities providing North Los Angeles County with an additional 20,000 homes and almost 20,000 jobs. Together Valencia and Newhall Ranch will have an employment base of approximately 120,000 permanent jobs." About Newhall Land Development LLC Newhall Land Development LLC primary investment is The Newhall Land and Farming Company which owns 15,000 acres of land in the rapidly growing Santa Clarita Valley, approximately 30 miles north of downtown Los Angeles. Newhall owns some of the last remaining large, undeveloped land in the greater Los Angeles area. It also owns 700 acres of commercial land and other property in the Santa Clarita Valley. LandSource Communities Development LLC, which operates in Arizona, California, Florida, New Jersey, Nevada and Texas, is involved in the planning and development of master planned communities and transforming undeveloped land into ready-to-build home sites and commercial properties. With the exception of one development project in Marina del Rey, California, LandSource does not build homes or commercial properties. LandSource and 20 of its affiliates filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the District of Delaware on June 8, 2008 (Lead Case No. 08-11111). The Debtors are represented by Marcia Goldstein, Esq., at Weil Gotshal & Manges in New York, and Mark D. Collins, Esq., at Richards Layton & Finger in Wilmington, Delaware. Lazard Freres & Co. acts as the Debtors' financial advisors, and Kurtzmann Carson Consultants serves as the Debtors' notice and claims agent. According to the TCR on May 22, 2008, LandSource sought help from its lender consortium to restructure $1.24 billion of its debt. LandSource engaged a 100-bank lender group led by Barclays Capital Inc., which syndicates LandSource's debt. LandSource had received a default notice on that debt from the lender group after it was not able to timely meet its payments during mid-April. However, LandSource failed to reach an agreement with its lenders on a plan to modify and restructure its debt, forcing it to seek protection from creditors. Bankruptcy Creditors' Service, Inc., publishes LandSource Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by LandSource Communities Development LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) LEHMAN BROTHERS: Federal Home Loan Sues to Recover $41.5 Million ---------------------------------------------------------------- Federal Home Loan Bank of Pittsburgh sued Lehman Brothers Holdings, Inc., Lehman Brothers Commercial Corporation, Woodlands Commercial Bank and Aurora Bank FSB, to recover over $41.5 million in collateral for derivative transactions. The $41.5 million, which was deposited with Debtor Lehman Brothers Special Financing Inc., serves as collateral for derivative transactions between FHLB and LBSF. Under the deal, LBSF was required to hold the collateral in a segregated account and was prohibited from pledging, hypothecating, or using the collateral. Starting 1997 and continuing through 2008, Lehman Brothers used the money as collateral in a series of derivative transactions and the money was supposed to be segregated from other Lehman funds. "Rather than fulfilling its contractual obligations to FHLB, LBSF kept FHLB's collateral in a non-segregated operating account," FHLB complained in its July 29, 2009 complaint filed in the U.S. Bankruptcy Court for the Southern District of New York. FHLB also alleged that LBSF transferred the collateral to accounts of each of the defendants after FHLB deposited the collateral. FHLB accused LBSF of using the collateral money for general operating expenditures by transferring the collateral to bank accounts belonging to Lehman and its affiliates. "Because the defendants had no right to receive or hold FHLB's collateral and were unjustly enriched by the same, this Court should, among other requested relief, construe a trust against the defendants in favor of FHLB," the complaint said. FHLB, according to The Pittsburg Business Times, lost $23.6 million during the first quarter of 2009, a 141% drop from the comparable three months in 2008. FHLB attributed the decrease to $30.5 million of other-than-temporary impairment credit loss charges taken on its held-to-maturity investment portfolios, as well as the establishment of a $35.3 million reserve related to the LBSF receivable associated with the LBHI bankruptcy, the report said. FHLB provides low-cost funding and opportunities for affordable housing and community development to 327 member financial institutions in Delaware, Pennsylvania and West Virginia. It is one of 12 federal home loan banks. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered 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 were complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). 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. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on September 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' 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. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' 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 $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. 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 have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. 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: First Bank Wants to Investigate LBHI & LBSF ------------------------------------------------------------ First Bank Puerto Rico seeks authority from the Court to investigate Lehman Brothers Holdings Inc. and Lehman Brothers Special Financing Inc. regarding the location of debt securities that First Bank delivered to LBSF. The securities in the sum of $62,518,197 were delivered by First Bank to an account designated by LBSF as collateral for the bank's obligations under their ISDA master agreement. Following the termination of the agreement on September 29, 2008, First Bank demanded LBSF to make payments and return the securities, however, LBSF allegedly refused to confirm that it is holding the securities or they might have been transferred. As part of the investigation, First Bank asks LBSF to produce a set of documents and designate a person to be questioned concerning the location of the securities. The hearing to consider approval of the proposed investigation is scheduled for August 26, 2009. Creditors and other concerned parties have until August 21, 2009, to file their objections. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered 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 were complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). 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. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on September 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' 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. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' 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 $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. 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 have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. 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: Hires CB Richard as Real Estate Broker ------------------------------------------------------- Lehman Brothers Holdings Inc. seeks the Court's authority to employ CB Richard Ellis Inc. as its real estate broker effective July 15, 2009. LBHI tapped the services of CB Richard in connection with its acquisition, whether by lease, sublease, assignment, purchase or otherwise, of approximately 150,000 square feet of leased office space in New York City. As real estate broker, CB Richard is tasked to coordinate field brokerage activities using standardized format and methodology approved by LBHI; manage transaction process; provide periodic status or activity reports; assist LBHI with lease negotiations, among other things. Pursuant to its engagement agreement with LBHI, CB Richard will be paid of its services on a percentage fee basis. Specifically, the firm will be paid an amount calculated by adding the sum of: * 5% of base rent on the first year of the lease or any fraction thereof; * 4% of base rent on the second year or any fraction thereof; * 3.5% of base rent on the third year up to and including the fifth year; and * 2.5% of base rent on the sixth year and thereafter. LBHI and CB Richard agreed that the obligation to pay the firm of those commissions will initially be the responsibility of the landlord in a leasing transaction or another third party. A full-text copy of the engagement agreement is available for free at http://bankrupt.com/misc/LehmanAgreementCBRichard.pdf LBHI also asks the Court to exempt CB Richard from filing interim fee applications and allow it to pay CB Richard for its services pursuant to these procedures: (1) LBHI will request the Court's allowance of CB Richard's commission either as part of a motion requesting approval of an acquisition, or if court approval is not required, by filing a notice after consummation of the acquisition stating the commission to be paid to the firm and serving the notice on all concerned parties; (2) Each notice will state the amount of the commission; a brief explanation of the method by which the amount of the commission was determined; the identity of the party responsible for paying the commission; and where more than one party is responsible for payment of the commission, a breakdown of the amount that each party is responsible for; (3) Parties have 10 days after the filing of the notice to file an objection to the commission and serve the objection on LBHI and CB Richard. It should state the amount of the commission and the reasons for the objection; (4) If no party timely files and serves an objection, LBHI can pay the commission without further notice or authorization from the Court; and (5) If an objection is filed, LBHI is authorized to pay, without further notice or authorization from the Court, the portion of the commission which is not subject to the objection or which LBHI, CB Richard and the objecting party have agreed to be paid. If the objection is not resolved, LBHI or CB Richard may schedule a hearing for the Court to determine the objection. In an affidavit, Mitchell Rudin, president and chief executive of the New York Tri-State Region of CB Richard, assures the Court that his firm does not have an interest materially adverse to LBHI and its estate, and that the firm is a "disinterested person" under section 101(14) of the Bankruptcy Code. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered 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 were complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). 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. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on September 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' 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. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' 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 $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. 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 have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. 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: Intends to Investigate Consolidated Container -------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors seek permission from the Court to investigate Consolidated Container Company LLC in connection with the termination of its swap transactions with Debtor Lehman Brothers Special Financing Inc. Container Company and LBSF entered into the transactions under an ISDA Master Agreement dated April 26, 2007, which were terminated by Consolidated in late 2008 following LBSF's bankruptcy filing. In court papers, the Debtors questioned the amount which Consolidated Company said is payable to LBSF as part of the termination of the transactions. In a letter dated December 23, 2008, Consolidated Company informed LBSF that it is owed about $2.5 million. The Debtors' counsel, Richard Slack, Esq., at Weil Gotshal & Manges LLP, in New York, complains that Consolidated Company's own valuation "did not represent the market value of the terminated transactions but rather the amount that [it] was scheduled to pay to LBSF on or prior to the termination." Mr. Slack further complains that Consolidated Company did not provide details on how it determined the amount as well as the documents requested by LBSF, leaving the Debtors in doubt if Consolidated Company's valuation was proper or not. "As an estate in bankruptcy, LBSF has an obligation to its creditors to make sure that derivative counterparties properly value swap agreements. The information sought from Consolidated is designed to help LBSF meet that duty," Mr. Slack tells the Court. As part of the investigation, the Debtors demand Consolidated Company to produce a set of documents regarding the valuation by August 25, 2009, and designate a person to be questioned under oath on September 11, 2009, at Weil Gotshal's office in New York. Consolidated Company Objects Consolidated Company says it does not object to the approval of the proposed investigation so long as the proposed order complies with Rule 2004(c) of the Bankruptcy Rules and requires the Debtors to proceed in accordance with Rule 9016, to allow the company to invoke the protections of Rule 45 of the Federal Rules of Civil Procedure. "The provisions of the proposed Order purport to compel [Consolidated] to comply on the terms set forth therein. However, because [Consolidated] is not a party to this proceeding, the Debtor is required to comply with Rule 2004(c)," says Martin Bunin, Esq., at Alston & Bird LLP. Rule 2004(c) protects third parties and provides that "the attendance of an entity for examination and for the production of documents...may be compelled as provided in Rule 9016." Rule 9016 in turn incorporates Rule 45 and the attendant protections for third parties contained in Rule 45. The hearing to consider approval of the proposed investigation is scheduled for August 5, 2009. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered 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 were complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). 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. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on September 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' 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. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' 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 $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. 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 have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. 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: Presents Settlement With Orange Beach Member ------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors ask the Court to approve a settlement agreement with Orange Beach Member LLC. The Debtors entered into the agreement to resolve the terms of the mezzanine loan in the sum of $10.3 million that they provided to Orange Beach and its unit, CRIII LLC, to finance the purchase of 20 individual parcels of land and the construction of a residential condominium in Orange Beach, Alabama. Orange Beach and CRIII allegedly failed to pay off the loan. The mezzanine loan remains in default and, LBHI estimates that the land owned by CRIII is worth no more than $21.8 million, which is far less than the $35 million senior loan held by Bank of America to which the mezzanine loan is subordinate. Orange Beach availed of the senior loan to finance the construction in a separate agreement with LaSalle Bank National Association. In contrast with the senior loan, the mezzanine loan is not secured by a general guaranty of payment. Under the settlement agreement, the Debtors and Orange Beach agree that: (1) the land will be sold for $32.5 million upon the terms and conditions of a purchase agreement between CRIII and a third-party purchaser; (2) LBHI will release Orange Beach Member and certain of its affiliates from any further liability under their loan and net profit agreements; and (3) Orange Beach Member will pay $90,000 to LBHI to offset LBHI's consultant and legal fees. A full-text copy of the settlement agreement is available for free at http://bankrupt.com/misc/LehmanSettlementOrange.pdf The hearing to consider approval of the settlement is scheduled for August 26, 2009. Creditors and other concerned parties have until August 21 to file their objections. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered 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 were complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). 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. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on September 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' 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. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' 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 $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. 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 have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. 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: Protocol for Resolving Derivative Contract Claims ------------------------------------------------------------------ Lehman Brothers Holdings Inc. and its affiliated debtors seek authority from Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to implement a set of procedures for prosecuting their claims under pre-bankruptcy derivative contracts with monetary recovery potential. As of September 15, 2008, the Debtors have more than 900,000 derivative contracts, most of which have recovery potential, according to Lori Fife, Esq., at Weil Gotshal & Manges LLP, in New York. Those contracts, she says, are "in the money" to the Debtors, constituting significant assets of their estates. Ms. Fife tells the Court that given the complex nature of the contracts, the enforcement of the Debtors' claims could result in litigation that may cause delay in the administration of their bankruptcy and loss of the current value in those contracts. Accordingly, the Debtors propose to implement alternative dispute resolution procedures to reduce the cost associated with enforcing the Debtors' affirmative claims under the derivative contract with recovery potential, preserving the value available under such contracts, and promoting judicial efficiency in these complex Chapter 11 cases. Dispute Resolution Procedures The Debtors will designate a dispute as to any derivative contract with recovery potential by serving a copy of an order approving the proposed procedures on the counterparty, and a notice containing information about their claim and demand for settlement to be determined through consultation with the Official Committee of Unsecured Creditors. The service on or notice to a counterparty will be deemed adequate if the order or notice is provided to the counterparty, its counsel, legal guardian, estate representative or other representative by hand delivery, first class mail or overnight mail. Each of the Debtors and the counterparty served with the order and notice have to comply with the procedures, unless otherwise provided in a specific order applicable to a particular dispute. The procedures do not require the Debtors and the counterparty to settle any dispute but each party is required to serve and answer in response to the proposed settlement; engage in settlement discussions; participate in any mediation; follow the directions of the mediator;, and follow the procedures. The counterparty receiving the order and notice has 20 days to respond in writing its position with respect to the Debtors' demand. The counterparty may agree to settle the dispute in accordance with the terms in the notice, or decline to settle the dispute and provide a brief explanation for the denial. Upon receipt of the counterparty's statement, the Debtors have 15 days to serve a reply on the counterparty. If the counterparty fails to respond, the Debtors may elect to file an application for sanctions; entry of a judgment for recovery of the amounts sought in the notice; or immediate entry into the mediation stage. Settlement Conferences At anytime after receipt of the order and notice, the Debtors or the counterparty may request an initial telephonic settlement conference to be held within five days after receiving the request. Upon receiving the notice of settlement conference, the recipient will be required to respond within two days by either accepting the proposed date and time in the notice of settlement conference or proposing an alternate date and time that is no later than five days from the date and time stated in that notice. The Debtors will allocate about one hour for the initial settlement conference and that only the Debtors, the counterparty and their representatives will participate. All discussions will be subject to Section 408 of the Federal Rules of Evidence and the confidentiality provisions of the Court's General Order M- 143. Mediation Stage If the Debtors and the counterparty are not able to resolve the dispute, the dispute will be mediated. The parties have to contact the mediator to schedule the initial mediation date. If the mediator is unwilling or unavailable to serve, then the parties will select an alternate mediator as mutually agreed in writing by all parties subject to the dispute. If the agreement is reached within 10 days, the Court will appoint one or more mediators. The mediation proceedings will take place in New York, unless agreed to by the parties and the mediator. The addition or elimination of mediation locations will be within the sole discretion of the Debtors. Any party to a mediation has the option of submitting a brief to the mediator, with service upon the other parties and the Creditors Committee. The mediation briefs must be submitted at least five days before the scheduled mediation proceeding. All parties to a dispute are required to appear in person at the mediation proceeding. The Creditors' Committee may attend and participate in all mediations. Each party must have a business principal in attendance having settlement authority. In addition, the parties' counsel may attend the mediation proceeding. General Mediation Rules Upon the filing of a notice and a hearing by either the Debtors or the counterparty, the Court may sanction the parties for failing to comply with the procedures. If the mediator reports to the Court that a party subject to the procedures is not cooperating, the Court may, on its own motion, schedule a hearing to consider sanctions against that party. Sanctions against the Debtors may include attorneys' fees; fees and costs of the mediator; termination of the procedures as to one or more contracts; and rejection of some or all claims asserted by Debtors. Sanctions against the counterparty, meanwhile, may include attorneys' fees; fees and costs of the mediator; or an award of the dispute up to the amount specified in the Debtor's notice. All proposed deadlines may be modified by the mutual consent of the Debtors and the counterparty or by the Court for cause shown. All parties will be responsible for their counsel fees and other costs of the mediation, provided that the party requesting the mediation will be responsible for the fees and expenses of the mediator. Except to the extent a counterparty affirmatively chooses the mediation stage, participation in the procedures will not waive any right to a jury trial that might otherwise exist. Ms. Fife clarifies that the proposed procedures are not intended to and will not be utilized as a substitute for claims procedures or limit the Debtors' rights to object to claims stemming from the derivative contracts on any basis permitted by the bankruptcy laws. The procedures do not limit a counterparty to assert valid and enforceable setoff rights with respect to a Debtor's claim or any other valid defense to a Debtor's demand, Ms. Fife further says. The Debtors' request drew support from E*TRADE Bank and a group of creditors consisting of Elliott Management Corporation, King Street Capital Management L.P., and Paulson & Co. Inc. Barclays, et al. Object Barclays Bank PLC, EPCO Holdings Inc., Easton Investments and Wellmont Health System, and more than 60 other parties-in- interest object to the Debtors' move to implement the procedures describing the procedures as "overly burdensome" and "one-sided." EPCO Holdings complains that the proposed procedures for mediation are unnecessarily complicated and will not facilitate mediation. "Mediation is meant to be a flexible process where the parties to the mediation working together with the mediator design a process that makes sense for the parties and their particular case. Rather than allowing for flexibility the procedures proposed are one sided and punitive in nature," EPCO says in court papers. Easton complains that the procedures are "procedurally biased in favor of the Debtors" and that it has never agreed to any form of alternative dispute resolution with the Debtors. Barclays Bank complains that the proposed procedures "unjustifiably depart from the sound mediation procedures" prescribed in General Order M-143. Barclays points out, among other things, that while the General Order provides that any motion by a party in interest to assign a matter to mediation "must be filed promptly after filing the initial document in the matter," the Debtors' proposed order, appears to permit the Debtors to designate any dispute concerning a derivative contract for mediation at any time. "The Debtors should not be allowed to initiate mediation at a time when it is likely to cause delay in, or distraction from, a pending adversary proceeding or contested matter," Barclays' counsel, Robinson Lacy, Esq., at Sullivan & Cromwell LLP, in New York, asserts. "They should be required to institute any mediation before the parties have devoted substantial time and expenses to litigating the dispute, as provided in the existing General Order," he adds. Mr. Lacy says the proposed order also provides the Debtors with ultimate control over the initiation and timing of mediation procedures; contains an inconspicuous provision giving a mediator discretion to certify specific legal issues to the court for decision; and imposes deadlines, without the input of the counterparties, that may provide insufficient time for the counterparties to respond to the Debtors' claims. "It may be appropriate to supplement the provisions of the general order to deal with the Debtors' derivative contract disputes, but to broadly supersede the general order is likely to result in procedures that turn out to be unfair and impractical," Mr. Lacy says. The hearing to consider approval of the procedures is scheduled for August 26, 2009. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Through its team of more than 25,000 employees, Lehman Brothers offered 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 were complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. The firm, through predecessor entities, was founded in 1850. Lehman filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). 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. Subsidiary LB 745 LLC, submitted a Chapter 11 petition on September 16 (Case No. 08-13600). Several other affiliates followed thereafter. The Debtors' 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. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the United States District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act in the case captioned Securities Investor Protection Corporation v. Lehman Brothers Inc., Case No. 08-CIV- 8119 (GEL). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI Barclays Bank Plc has agreed, subject to U.S. Court and relevant regulatory approvals, to acquire Lehman Brothers' 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 $2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. These are currently the only UK incorporated companies in administration. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion -- US$38 billion). Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. 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 have suspended its operations with immediate effect, including ceasing to trade on the Hong Kong Securities Exchange and Hong Kong Futures Exchange, until further notice. The Asian units' asset management company, Lehman Brothers Asset Management Limited, will continue to operate on a business as usual basis. A further notice concerning the retail structured products issued by or arranged by any Lehman Brothers group company will be issued as soon as possible, a press statement said. 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) LEVEL 3: Posts $134 Million Net Loss for Second Quarter 2009 ------------------------------------------------------------ Level 3 Communications, Inc., reported consolidated revenue of $942 million for the second quarter 2009, compared to consolidated revenue of $1.09 billion for the second quarter 2008. The net loss for the second quarter 2009 was $134 million, or ($0.08) per share, compared with a net loss of $42 million, or ($0.03) per share for the second quarter 2008, which included a gain of $96 million from the sale of the company's Vyvx advertising distribution business. The net loss for the first quarter 2009 was $132 million, or ($0.08) per share. Consolidated Adjusted EBITDA was $229 million in the second quarter 2009, compared to $251 million in the second quarter 2008. Consolidated Adjusted EBITDA was $250 million in the first quarter 2009. At June 30, 2009, the Company had $9.2 billion in total assets and $8.4 billion in total liabilities. "The economy continued to be challenging in the second quarter for wireline service providers," said James Crowe, CEO of Level 3. "As expected, sequential revenue pressure continued in the second quarter, although at a significantly moderated rate. We did see improvements in sales and churn, however, they were not as much as we expected. We continue to manage our costs aggressively, and for the fifth consecutive quarter, we were able to reduce our operating expenses, and year over year, we improved both our Gross Margin and Adjusted EBITDA Margin percentages. In addition, we completed several liability management transactions, which further strengthened our balance sheet." During the second quarter 2009, Unlevered Cash Flow improved to $146 million, compared to $126 million for the second quarter 2008 and $43 million in the first quarter 2009. Consolidated Free Cash Flow improved to $20 million for the second quarter 2009, compared to $4 million for the second quarter 2008 and negative $82 million for the first quarter 2009. During the second quarter of 2009, the company's wholly owned subsidiary, Level 3 Financing, Inc., closed its $280 million senior secured Tranche B Term Loan. The company also completed a debt exchange agreement with an institutional investor to exchange a combination of $78 million in cash and $200 million of its 7% Convertible Senior Notes due 2015, for $142 million aggregate principal amount of its 6% Convertible Subordinated Notes due 2010 and $140 million aggregate principal amount of its 2.875% Convertible Senior Notes due 2010. In addition, during the second quarter the company repurchased a total of $314 million of debt for $281 million of cash on hand including an early redemption of approximately $13 million of the remaining 11.5% Senior Notes due 2010, at par. As a result, excluding capital leases and commercial mortgages, at the end of the second quarter 2009 the company had approximately $55 million of principal amount of debt due in 2009, $168 million in 2010, $461 million in 2011 and $301 million in 2012. As of June 30, 2009, the company had cash and cash equivalents of approximately $630 million. "We noted last quarter that while we remained cautious, we expected our revenue base to stabilize and that core communications services revenue pressure would moderate, which is what occurred in the second quarter," said Sunit Patel, CFO of Level 3. "Sales and churn did improve, but not as much as we had expected. In particular, a number of our large telecom and enterprise customers continue to manage their costs aggressively and to defer purchases of network capacity. More broadly, we have not yet seen a return to the historical levels of purchases necessary to accommodate underlying, longer term growth in demand." "As a result, we are updating our Consolidated Adjusted EBITDA guidance to $900 million to $950 million and expect to be Free Cash Flow positive for the remainder of 2009 in the aggregate, but approximately Free Cash Flow neutral for the full year 2009. While we expect revenue performance to improve as it did in the second quarter, we still expect to see overall revenue pressure for the second half of the year." As a result of the liability management transactions completed during the quarter, the company expects GAAP interest expense of approximately $600 million and Net Cash Interest Expense of approximately $515 million for the full year 2009. "We remain focused on continuing to execute in the market and providing outstanding service to our customers," said Mr. Crowe. "We believe our combination of metro and intercity facilities and advanced IP and optical services remain a significant differentiator." "While the economic environment remains challenging, our rate of revenue decline was approximately one third of the first quarter and as the economy improves, we expect to return to positive revenue growth." About Level 3 Communications Broomfield, Colorado, Level 3 Communications, Inc. (NASDAQ: LVLT) -- http://www.Level3.com/-- provides fiber-based communications services. Level 3 offers a portfolio of metro and long-haul services, including transport, data, Internet, content delivery and voice. * * * As reported by the Troubled Company Reporter on June 30, 2009, Fitch Ratings has lowered the rating assigned to Level 3 Communications, Inc.'s convertible subordinated notes to 'CC/RR6' from 'CCC-/RR6'. The rating action brings the subordinated note ratings in line with Fitch's revised rating definition and mapping criteria. Approximately $484 million of convertible subordinates notes outstanding as of March 31, 2009, was effected by Fitch's action. As of March 31, 2009, LVLT had approximately $6.4 billion of debt outstanding. On June 25, the TCR said Fitch assigned a 'CCC/RR5' rating to Level 3's $200 million issuance of 7% convertible senior notes due March 2015. The notes will rank pari passu with LVLT's existing senior unsecured indebtedness. LVLT along with its wholly owned subsidiary Level 3 Financing, Inc., have a 'B-' Issuer Default Rating and a Positive Rating Outlook. The proceeds from the note offering along with approximately $78.2 million of cash (plus accrued interest) will be exchanged for a portion of LVLT's outstanding 6% convertible subordinated notes due 2010 and its 2.875% convertible senior notes due 2010 pursuant to an exchange agreement the company has entered into with certain institutional investors. From Fitch's perspective the debt exchange and the open market debt repurchases have a positive effect on LVLT's credit profile and alleviates concerns related to the company's liquidity position seeing that a significant portion of the exchange and repurchases were targeted at outstanding debt scheduled to mature between 2009 and 2010. After the close of the exchange, expected to occur before the end of the second quarter, and considering the open market debt repurchases, LVLT has a total of $241 million of debt maturing during the balance of 2009 and 2010. LOOP 76: U.S. Trustee Sets Meeting of Creditors for August 25 ------------------------------------------------------------- The U.S. Trustee for Region 14 will convene a meeting of creditors in Loop 76, LLC's Chapter 11 case on August 25, 2009, at 9:00 a.m. The meeting will be held at the US Trustee Meeting Room, 230 N. First Avenue, Suite 102, Phoenix, Arizona. 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. Scottsdale, Arizona-based Loop 76, LLC, filed for Chapter 11 on July 20, 2009 (Bankr. D. Ariz. Case No. 09-16799). Arturo A. Thompson, Esq., Mark W. Roth, Esq., and John J. Hebert, Esq., at Polsinelli Shughart P.C. represent the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts boith ranging from $10,000,001 to $50,000,000. METALDYNE CORP: Receives Bids for "Substantially All Assets" ------------------------------------------------------------ Metaldyne Corp. will hold an auction for its businesses, including its powertrain and chassis assets today, July 5. Metaldyne will present to the Bankruptcy Court the results of the auction on July 7. Metaldyne was scheduled to hold an auction for its chassis business on August 3 but asked the Court to reschedule the auction so that it could be held the same time as its powertrain business. The move came after the Company received a bid for "substantially all" of its assets including its power-train business, Carla Main at Bloomberg said, citing court filings. Metaldyne has already selected as Hephaetus Holdings, Inc. as stalking horse bidder for its powertrain operations. HHI, a portfolio company of KPS Capital Partners LP with other automotive holdings, has offered $78 million cash. Metaldyne has selected Revstone Industries LLC as the stalking horse bidder for most of its chassis operations. About Metaldyne Corporation Headquartered in Plymouth, Michigan, Metaldyne Corporation -- http://www.metaldyne.com/-- is a wholly owned subsidiary of Asahi Tec, a Shizuoka, Japan-based chassis and powertrain component supplier in the passenger car/light truck and medium/heavy truck segments. Asahi Tec is listed on the Tokyo Stock Exchange. Metaldyne is a global designer and supplier of metal based components, assemblies and modules for transportation related powertrain and chassis applications including engine, transmission/transfer case, wheel end, and suspension, axle and driveline, and noise and vibration control products to the motor vehicle industry. On January 11, 2007, in connection with a plan of merger, Asahi Tee Corporation in Japan acquired the shares of Metaldyne. On the same date, Asahi Tee contributed those shares to Metaldyne Holdings, and Asahi Tee thereby became the indirect parent of Metaldyne and its other units. RHJ International S.A. of Belgium now holds approximately 60.1% of the outstanding capital stock of Asahi Tec. The Company owns 23 different properties, including 14 domestic manufacturing facilities in six states, and more than 10 manufacturing facilities North America, Europe, South America and Asia. Metaldyne Corporation aka MascoTech, Inc., aka MascoTech Harbor, Inc., Riverside Acquisition Corporation and Metaldyne Subsidiary Inc. and its affiliates filed for Chapter 11 on May 27, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-13412). The filing did not include the company's non-U.S. entities or operations. Richard H. Engman, Esq., at Jones Day represents the Debtors in their restructuring efforts. Judy A. O'Neill, Esq., at Foley & Lardner LLP serves as conflicts counsel; Lazard Freres & Co. LLC and AlixPartners LLP as financial advisors; and BMC Group Inc. as claims agent. For the fiscal year ended March 29, 2009, the company recorded annual revenues of approximately US$1.32 billion. As of March 29, 2009, utilizing book values, the company had assets of approximately US$977 million and liabilities of US$927 million. METALDYNE CORP: Court Okays Break-Up Fee for Substitute Bidder -------------------------------------------------------------- WestLaw reports that a proposed break-up fee for a substitute stalking horse bidder, in an amount that was less than 3% of the proposed purchase price, would be approved. The substitute stalking horse bidder was not an insider, and there had been no allegation or evidence of any self-dealing or manipulation. Furthermore, the evidence showed that the stalking horse bid would provide comfort to the Chapter 11 debtors' employees and customers that debtors were entering the auction with a locked-in bid. In re Metaldyne Corp., --- B.R. ----, 2009 WL 2244602 (Bankr. S.D.N.Y.). The Honorable Martin Glenn issued the decision on July 28, 2009, in connection with Mataldyne's sale of its powertrain assets. About Metaldyne Corporation Headquartered in Plymouth, Michigan, Metaldyne Corporation -- <http://www.metaldyne.com/>http://www.metaldyne.com/-- is a wholly owned subsidiary of Asahi Tec, a Shizuoka, Japan-based chassis and powertrain component supplier in the passenger car/light truck and medium/heavy truck segments. Asahi Tec is listed on the Tokyo Stock Exchange. Metaldyne is a global designer and supplier of metal based components, assemblies and modules for transportation related powertrain and chassis applications including engine, transmission/transfer case, wheel end, and suspension, axle and driveline, and noise and vibration control products to the motor vehicle industry. On January 11, 2007, in connection with a plan of merger, Asahi Tee Corporation in Japan acquired the shares of Metaldyne. On the same date, Asahi Tee contributed those shares to Metaldyne Holdings, and Asahi Tee thereby became the indirect parent of Metaldyne and its other units. RHJ International S.A. of Belgium now holds approximately 60.1% of the outstanding capital stock of Asahi Tec. The Company owns 23 different properties, including 14 domestic manufacturing facilities in six states, and more than 10 manufacturing facilities North America, Europe, South America and Asia. Metaldyne Corporation aka MascoTech, Inc., aka MascoTech Harbor, Inc., Riverside Acquisition Corporation and Metaldyne Subsidiary Inc. and its affiliates filed for Chapter 11 on May 27, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-13412). The filing did not include the company's non-U.S. entities or operations. Richard H. Engman, Esq., at Jones Day represents the Debtors in their restructuring efforts. Judy A. O'Neill, Esq., at Foley & Lardner LLP serves as conflicts counsel; Lazard Freres & Co. LLC and AlixPartners LLP as financial advisors; and BMC Group Inc. as claims agent. For the fiscal year ended March 29, 2009, the company recorded annual revenues of approximately US$1.32 billion. As of March 29, 2009, utilizing book values, the company had assets of approximately US$977 million and liabilities of US$927 million. METROMEDIA INT'L: Creditors Want Plan Exclusivity Terminated ------------------------------------------------------------ The official committee of unsecured creditors in MIG Inc.'s Chapter 11 case has requested the Bankruptcy Court to terminate the Debtor's exclusivity to file a plan due to the "gross mismanagement" of the Debtor's operations. As reported in the TCR on August 3, 2009, the Committee requested the Bankruptcy Court to appoint a Chapter 11 trustee or dismiss the case, citing that the Debtor's Chapter 11 case is being used "for the naked purpose" of obtaining a stay of a $188 million judgment from the Delaware Chancery Court resulting from an appraisal action following MIG's acquisition in 2007. The Committee also contended that MIG had $40 million transferred to the account of a non-bankrupt subsidiary in advance of the Chapter 11 filing. The Committee said that the same facts that support a finding of cause to dismiss the Debtor's case also support a finding of cause to terminate the Debtor's exclusive period to file a plan. The Committee added that MIG has "grossly mismanaged its operations by pursuing expensive and knowingly futile litigation without appropriately setting aside assets to pay the judgment which MIG knew or should have known was inevitable." As reported by the TCR on July 3, Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware allowed MIG Inc. to continue an appeal of a decision in bankruptcy court that issued a US$188.4 million judgment against the Company. MIG was bought in October 2007 by CaucusCom Ventures LP for US$1.80 a share, or about US$170 million, according to data compiled by Bloomberg. A group of preferred shareholders asked Judge William B. Chandler of the Delaware Chancery Court to evaluate the value of their shares at the time of the merger. Judge Chandler ruled that each share was worth US$47.47, or a total of about US$188.4 million. MIG appealed the ruling. But unable to post a bond enabling an appeal, MIG filed for Chapter 11. MIG asked the Bankruptcy Court to permit the appeal and to allow the plaintiff to take a cross appeal, while preventing the plaintiff from collecting a judgment. MIG believes the amount of the judgment is "substantially overstated." MIG also believes that the assets will turn out to be worth much more than the judgment, even though the assets currently are illiquid. About MIG Inc. Based in Charlotte, North Carolina, MIG Inc. (PINK SHEETS: MTRM, MTRMP) -- http://www.metromedia-group.com/-- through its wholly owned subsidiaries, owns interests in several communications businesses in the country of Georgia. The Company's core businesses include Magticom Ltd., a mobile telephony operator located in Tbilisi, Georgia, Telecom Georgia, a long distance telephony operator, and Telenet, which provides Internet access, data communications, voice telephony and international access services. MIG, Inc., fka Metromedia International Group, Inc., filed for Chapter 11 bankruptcy protection on June 18, 2009 (Bankr. D. Del. Case No. 09-12118). Scott D. Cousins, Esq., at Greenberg Traurig LLP assists the Company in its restructuring efforts. Debevoise & Plimpton LLP is the Company's special corporate counsel, while Potter Anderson & Corroon LLP is the Company's special litigation counsel. The official committee of unsecured creditors of MIG, Inc., has retained Baker & McKenzie LLP as its bankruptcy counsel, nunc pro tunc to June 30, 2009. In its petition, the Company said it had $100 million to $500 million in assets and $100 million to $500 million in debts. In its formal schedules, the Company said it had assets of $54,820,681 against debts of $210,183,657. METROMEDIA INT'L: Can Employ Greenberg Traurig as Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted MIG, Inc., permission to employ Greenberg Traurig, LLP, as counsel, effective as of the petition date. Greenberg Traurig will, among other things: a) provide legal advice with respect to the Debtors' powers and duties as a debtor-in-possession in the continued operation of its business and management of its property; b) negotiate, draft, and pursue all documentation necessary in the cases as determined in conjunction with Greenberg Taurig; and c) prepare on behalf the Debtor all applications, motions, answers, orders, reports, and other legal papers necessary to the administration of the Debtors' estate. The hourly rates of Greenberg Traurig's personnel are: Nancy A. Mitchell $850 Joseph P. Davis $700 Scott D. Cousins $685 Maria J. DiConza $675 Sandra G. M. Selzer $475 Alexandra Aquino-Fike $360 Elizabeth C. Thomas $210 Shareholders $335 - $1,050 Of Counsel $350 - $900 Associates $175 - $565 Legal Assistants/Paralegals $65 - $310 Mr. Cousins assured the Court that Greenberg Traurig is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About MIG Inc. Based in Charlotte, North Carolina, MIG Inc. (PINK SHEETS: MTRM, MTRMP) -- http://www.metromedia-group.com/-- through its wholly owned subsidiaries, owns interests in several communications businesses in the country of Georgia. The Company's core businesses include Magticom Ltd., a mobile telephony operator located in Tbilisi, Georgia, Telecom Georgia, a long distance telephony operator, and Telenet, which provides Internet access, data communications, voice telephony and international access services. MIG, Inc., fka Metromedia International Group, Inc., filed for Chapter 11 bankruptcy protection on June 18, 2009 (Bankr. D. Del. Case No. 09-12118). Scott D. Cousins, Esq., at Greenberg Traurig LLP assists the Company in its restructuring efforts. Debevoise & Plimpton LLP is the Company's special corporate counsel, while Potter Anderson & Corroon LLP is the Company's special litigation counsel. The official committee of unsecured creditors of MIG, Inc., has retained Baker & McKenzie LLP as its bankruptcy counsel, nunc pro tunc to June 30, 2009. In its petition, the Company said it had $100 million to $500 million in assets and $100 million to $500 million in debts. In its formal schedules, the Company said it had assets of $54,820,681 against debts of $210,183,657. METROMEDIA INT'L: Can Employ Potter Anderson as Special Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted MIG, Inc. permission to employ Potter Anderson & Corroon, LLP, as special Delaware litigation counsel, effective as of the petition date. As reported in the TCR on July 22, 2009, the Debtor told the Bankruptcy Court that over the past two years, it has defended an appraisal action in the Court of Chancery of the State of Delaware in the matter captioned In re: Appraisal of Metromedia International Group, Inc., Civil Action No. 33151-CC, brought by a certain group of preferred shareholders against the Company. The appraisal action, according to the Debtor, has resulted in substantial litigation costs and a $188 million judgment entered against MIG on June 5, 2009. As special Delaware litigation counsel, Potter Anderson will provide legal advice to MIG with respect to its appeal of the judgment against the Company in the appraisal action, and negotiate, draft, and pursue all documentation necessary as determined in conjunction with the appeal, in coordination with Debevoise & Plimpton, LLP, the Debtor's proposed special corporate counsel, and Greenberg Traurig, LLP, the Debtor's general bankruptcy counsel. Potter Anderson's professionals will charge MIG these hourly rates: Partners $425-$595 Associates $235-$295 Paralegals $70-$200 Arthur L. Dent, Esq., a partner at Potter Anderson, assured the Court that the firm does not hold or represent any interest adverse to MIG or its estate with respect to the appeal or judgment, and that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The Debtor told the Court that as of the petition date, Potter Anderson was owed $17,959 in respect of services provided to MIG. Further, the Debtors said that upon approval of Potter Anderson's retention in this case, Potter Anderson will waive its right to receive any fees incurred on MIG's behalf prior to the petition date. During the 90 days immediately before the petition date, according to the Debtor, it paid Potter Anderson amounts totaling $211,291, none of which constituted a retainer to Potter Anderson. About MIG Inc. Based in Charlotte, North Carolina, MIG Inc. (PINK SHEETS: MTRM, MTRMP) -- http://www.metromedia-group.com/-- through its wholly owned subsidiaries, owns interests in several communications businesses in the country of Georgia. The Company's core businesses include Magticom Ltd., a mobile telephony operator located in Tbilisi, Georgia, Telecom Georgia, a long distance telephony operator, and Telenet, which provides Internet access, data communications, voice telephony and international access services. MIG, Inc., fka Metromedia International Group, Inc., filed for Chapter 11 bankruptcy protection on June 18, 2009 (Bankr. D. Del. Case No. 09-12118). Scott D. Cousins, Esq., at Greenberg Traurig LLP assists the Company in its restructuring efforts. Debevoise & Plimpton LLP is the Company's special corporate counsel, while Potter Anderson & Corroon LLP is the Company's special litigation counsel. The official committee of unsecured creditors of MIG, Inc., has retained Baker & McKenzie LLP as its bankruptcy counsel, nunc pro tunc to June 30, 2009. In its petition, the Company said it had $100 million to $500 million in assets and $100 million to $500 million in debts. In its formal schedules, the Company said it had assets of $54,820,681 against debts of $210,183,657. METROMEDIA INT'L: Panel Can Employ Baker & McKenzie as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has granted the official committee of unsecured creditors of MIG, Inc. permission to employ Baker & McKenzie LLP as its bankruptcy counsel, nunc pro tunc to June 30, 2009. As reported in the TCR on July 22, 2009, as the Committee's counsel, Baker & McKenzie will: a) advise the Committee with respect to its rights, duties and powers in the Debtor's Chapter 11 cases; b) assist and advise the Committee in its consultation with the Debtor relative to the administration of the cases; and c) assist the Committee in analyzing the claims of the Debtor's creditors and in negotiating with holders of claims and equity interests. The current hourly rates of Baker & McKenzie's professionals are: Partners $500-$925 Of Counsel $400-$700 Associates $295-$540 Paraprofessionals $100-$250 Current hourly rates of Baker & McKenzie's professionals who are expected to have primary responsibility for the engagement are: Professional Position Hourly Rate ------------ -------- ----------- Carmen H. Lonstein, Esq. Partner $565 Andrew P.R. McDermott, Esq. Associate $425 Lawrene P. Vonckx, Esq. Associate $335 Mark Young Paralegal $195 Carmen H. Lonstein, Esq., a partner at Bakr & McKenzie, assured the Court that the firm does not hold or represent any interest materially adverse to the Committee, and that the firm is as "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About MIG Inc. Based in Charlotte, North Carolina, MIG Inc. (PINK SHEETS: MTRM, MTRMP) -- http://www.metromedia-group.com/-- through its wholly owned subsidiaries, owns interests in several communications businesses in the country of Georgia. The Company's core businesses include Magticom Ltd., a mobile telephony operator located in Tbilisi, Georgia, Telecom Georgia, a long distance telephony operator, and Telenet, which provides Internet access, data communications, voice telephony and international access services. MIG, Inc., fka Metromedia International Group, Inc., filed for Chapter 11 bankruptcy protection on June 18, 2009 (Bankr. D. Del. Case No. 09-12118). Scott D. Cousins, Esq., at Greenberg Traurig LLP assists the Company in its restructuring efforts. Debevoise & Plimpton LLP is the Company's special corporate counsel, while Potter Anderson & Corroon LLP is the Company's special litigation counsel. The official committee of unsecured creditors of MIG, Inc., has retained Baker & McKenzie LLP as its bankruptcy counsel, nunc pro tunc to June 30, 2009. In its petition, the Company said it had $100 million to $500 million in assets and $100 million to $500 million in debts. In its formal schedules, the Company said it had assets of $54,820,681 against debts of $210,183,657. MICHAEL VICK: Attorney's Fees Contested in Bankruptcy Case ---------------------------------------------------------- American Lawyer reported that Crowell & Moring, which represented Michael Vick in his Chapter 11 case, has sought and allowance and payment of $2.6 million in fees and expenses "for 7,200 hours of work over ten months." Bankruptcy Judge Frank Santoro postponed a decision on the fees due to objections. The Associated Press relates Crowell has agreed to reduced its fees to $1.5 million. According to Carla Main at Bloomberg, Mr. Vick's criminal lawyers from the firm of Shuttleworth, Ruloff, Swain, Haddad & Morecock asked Santoro to take a closer look at the fee requests, noting that some of the bills include charges for items such as air conditioning on a weekend. The U.S. Trustee and several of Vick's creditor's also objected to the fees as excessive, according to American Lawyer. Judge Santoro, AP relates, was astonished that the firm is billing Mr. Vick for 8,000 hours of work over about 10 months. As reported by the TCR on July 29, 2009, Michael Vick has been conditionally reinstated to the National Football League. NFL Commissioner Roger Goodell, Bloomberg relates, said that Mr. Vick is required to obey the court's terms of his conditional release, including a provision banning him from owning a dog. The report says that Mr. Vick must follow a written plan submitted to Mr. Goodell that details his proposed living arrangements, his finances, and his efforts on behalf of the Humane Society of the United States. About Michael Vick Michael Dwayne Vick, born June 26, 1980, in Newport News, Virginia, is a suspended National Football League quarterback under contract with the Atlanta Falcons team. In 2007, a U.S. federal district court convicted him and several co-defendants of criminal conspiracy resulting from felonious dog fighting and sentenced him to serve 23 months in prison. He is being held in the United States Penitentiary at Leavenworth, Kansas. Mr. Vick is also under indictment for two related Virginia state felony charges for his role in the dogfighting ring and related gambling activity. His state trial has been delayed until he is released from federal prison. He faces a maximum 10-year state prison term if convicted on both counts. Mr. Vick filed a Chapter 11 petition on July 7, 2008 (Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent the Debtor in his restructuring efforts. Mr. Vick listed assets of $10 million to $50 million. MIDWAY GAMES: Dewey & Leboeuf Says Work for Directors Allowed ------------------------------------------------------------- Dewey & Leboeuf LLP has filed with the Bankruptcy Court a formal response to the objection of the official committee of unsecured creditors of Midway Games Inc. to its first application for compensation and reimbursement of expenses as special counsel to the independent directors of Midway's Board, which were incurred for the period February 12, 2009, through April 30, 2009 The Committee had questioned time spent by D&L in April 2009, during which it advised the independent directors regarding the Committee's threatened (but not yet commenced) actions. D&L explains that the Court's retention order does not prohibit the payment of fees associated with the defense of potential claims. D&L contends that the Committee would like the Court to believe that its interim application seeks payments "relating to the defense of this litigation." D&L emphasizes that the litigation was not commenced until after period covered by its interim application. Accordingly, D&L says the Committee has no basis in saying that D&L violated the retention order by seeking payments related to the adversary proceeding. As reported in the Troubled Company Reporter on July 27, the Committee urged the U.S. Bankruptcy Court for the District of Delaware to slash roughly $110,000 from the $470,000 from Dewey & LeBoeuf LLP for acting as special counsel to Midway Games Inc.'s embattled board members, claiming the firm is improperly billing the estate for hours spent advising the directors on how to parry accusations they drove the Debtor into the ground, according to Law360. 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. MODINE MANUFACTURING: Posts $14.5MM Net Loss for June 30 Quarter ---------------------------------------------------------------- Modine Manufacturing Company reported its financial results for the first quarter of fiscal 2010. Modine booked $14.5 million in net loss for the three months ended June 30, 2009, compared to a net income of $7.78 million for the same period a year ago. As of June 30, 2009, Modine had $879.2 million in total assets and $619.3 million in total liabilities, resulting in $259.9 million in shareholders' equity. As of March 31, 2009, the Company had $852,132,000 in total assets and $608,295,000 in total liabilities. "Given the overall market conditions, we are very pleased with our underlying operational improvements, which enabled us to generate cash flow and provide additional cushion against our adjusted EBITDA loan covenant," said Bradley C. Richardson, Executive Vice President -- Corporate Strategy and Chief Financial Officer. "We believe we have sufficient liquidity to manage our business and remain in compliance with our loan covenants. This is based on the company's available borrowing capacity, the more than $40 million in cumulative cushion built at the end of the first quarter with respect to our adjusted EBITDA covenant, as well as our anticipated fiscal 2010 results and further actions we have at our discretion." Operating cash flows were $8.0 million in the first quarter of fiscal 2010, compared with $15.1 million in the comparable period of fiscal 2009. The decrease in operating cash flows year over year was primarily driven by the larger reported net loss during the period, partially offset by the positive impact of the Company's working capital management initiatives. The Company's net debt (debt less cash on hand) at June 30, 2009, was $228.9 million, compared to $205.7 million at March 31, 2009. The Company's net debt level has risen primarily as a result of the company's decision to invest during the first quarter in previously committed new program launches and the previously announced construction of facilities in support of future growth. Inclusive of this investment, planned capital spending is expected to remain at or below $65 million in fiscal 2010. As of June 30, 2009, the Company had available borrowing capacity of roughly $97 million, subject to its ability to comply with ongoing debt covenants. The global recession continues to have an adverse impact on the company's sales volumes. This trend is expected to continue to adversely affect the company during fiscal 2010. The Company's expectations for fiscal 2010 include: -- Revenues up slightly from the first quarter 2010 run rate resulting from roughly $100 million in incremental sales volume from several new program launches globally; -- Favorable impact of significant cost reductions implemented in late fiscal 2009; -- Annual SG&A run rate of approximately $160 million; and -- Continued strong emphasis on preserving cash and liquidity. "Given the continued global recessionary pressures on our business, we are pleased with the sequential improvement in Modine's performance during the first quarter of fiscal 2010," said Thomas A. Burke, Modine President and Chief Executive Officer. "Although sales declined 42 percent versus a year ago, sales levels have stabilized versus the fourth quarter of fiscal 2009 and we are seeing the benefits of our focus on SG&A cost reduction, as well as the impact from our repositioning actions taken throughout fiscal 2009. During the first quarter, we were able to reduce our total SG&A costs by $20 million, while the gross margin improved for the first time in four quarters, rising 480 basis points from the fourth quarter of fiscal 2009. Adjusted EBITDA of $16.8 million was at its highest level since the second quarter of last year. Although we anticipate the next several quarters will remain challenging, we are encouraged by the performance trends in the business and believe Modine is well positioned for profitable growth as market volumes recover. We remain encouraged with the rate of new order intake, including a significant new truck module order utilizing our advanced OrigamiTM technology. The fundamental growth drivers of the business -- emissions reduction, energy efficiency, and infrastructure investment -- remain intact." "As we move forward in fiscal 2010, we are driving the fundamentals of our Four Point Plan," concluded Mr. Burke. "We are beginning to see the benefits of the aggressive actions we have taken to improve profitability and lower our cost structure and are prepared to undertake further actions should they become necessary. Meanwhile, as the sequential performance improvement in the first quarter indicates, we are building momentum through a more focused product portfolio, significant cost reductions, continued strong emphasis on preserving cash and liquidity, and delivering on our customer commitments." About Modine Modine Manufacturing Company -- http://www.modine.com/-- with fiscal 2009 revenues of $1.4 billion, specializes in thermal management systems and components, bringing heating and cooling technology and solutions to diversified global markets. Modine products are used in light, medium and heavy-duty vehicles, heating, ventilation and air conditioning equipment, off-highway and industrial equipment, refrigeration systems, and fuel cells. The Company employs roughly 7,000 people at 32 facilities worldwide in 15 countries. On February 17, 2009, Modine Manufacturing entered into amendments to its Credit Agreement with JPMorgan Chase Bank, N.A., and Note Purchase Agreement related to its $50,000,000 of 5.68% Senior Notes, Series A due December 7, 2017, and $25,000,000 5.68% Senior Notes, Series B due December 7, 2018; and Note Purchase Agreement related to its $75,000,000 of 4.91% Senior Notes due September 29, 2015. The Company entered into the Amendments to waive certain events of default existing under the Credit Agreement, the 2006 Note Purchase Agreement and the 2005 Note Purchase Agreement at December 31, 2008, and amend other provisions of the Credit Agreement, the 2006 Note Purchase Agreement and the 2005 Note Purchase Agreement. MONUMENT REALTY: No Bid Received for Watergate Hotel ---------------------------------------------------- Lisa Rein at Washington Post reports that Monument Realty's Watergate Hotel was taken back by Deutsche Postbank AG, whose subsidiary PB Capital made a $25 million credit bid for the property in a public auction last month. According to Washington Post, the auction failed to attract any bids. Washington Post states that the 10 bidders who came to the auction each qualified with $1 million certified checks, but weren't willing to offer the $25 million floor set by PB Capital. Monument Realty purchased the Watergate in 2004 with financing from Lehman Brothers. Monument Realty, Washington Post says, defaulted in June 2009 on a $40 million note held by PB Capital. Washington Post relates that Deutsche Postbank, which foreclosed on the debt-ridden owners, will market Watergate to interested buyers. PB Capital's lawyer, David Astrove, said that several have expressed interest in negotiating privately, Washington Post reports. At least two developers said that they planned to make offers on the Watergate Hotel in a private sale, Washington Post states. Monument Realty principal Michael Darby, according to Washington Post, said that he has commitments from new investors to move forward with the Company's plan to restore the property. Washington Post relates that Virginia-based developer Robert Holland said that his team of investors is in talks with Dubai- based luxury hotel chain Jumeirah about operating the Watergate and even attended the auction but didn't participate. Washington Post says that the team wants to negotiate directly with PB Capital. "Whether the bank will work with us, I don't know," the report quoted Mr. Darby as saying. According to the report, Mr. Darby said that Watergate needs more than $100 million in renovations and that it will require any potential developer to invest time and money in assessing any structural problems in order to price construction costs. Development firm Monument Realty -- http://www.monumentrealty.com/ -- was formed in 1998 by Michael Darby. MOORE-HANDLEY: Section 341(a) Meeting Scheduled for August 25 ------------------------------------------------------------- The U.S. Bankruptcy Administrator for the Northern District of Alabama will convene a meeting of creditors in Moore-Handley, Inc.'s Chapter 11 case on August 18, 2009, at 1:30 p.m. The meeting will be held at Robert S. Vance Fed Bldg, 1800 5th Ave No, Room 127, Birmingham, Alabama. 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. Pelham, Alabama-based Moore-Handley, Inc., operates a hardware and building material distributing business. The Company filed for Chapter 11 on July 17, 2009 (Bankr. N. D. Ala. Case No. 09-04198). Christopher L. Hawkins, Esq., and Jennifer Anne Harris, Esq., at Bradley Arant Rose & White represent the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. MOUNT HOLLY: Hearing on MHU's Case Dismissal Plea Set for Aug. 11 ----------------------------------------------------------------- Mike Gorrell at The Salt Lake Tribune reports that a hearing on MHU Holdings, LLC's motion for the dismissal of Mount Holly Partners, LLC's bankruptcy case will be held on August 11. As reported by the Troubled Company Reporter on July 22, 2009, MHU asked the U.S. Bankruptcy Court for the District of Utah to dismiss the bankruptcy case of Mount Holly Partners, claiming that the Debtor lacked the requisite authority for the bankruptcy filing. MHU asserted that disputes arose between members of Ares Funding, LLC, and MHU -- which are one of the Companies that formed Mount Holly Partners -- "from nearly the outset" of the project. MHU acquired a 50% equity interest in exchange for $25 million, according to a memorandum of law. Ares was designated as the managing member of Mount Holly Partners and MHU and CPB were each designated as non-managing members. On August 23, 2007, the parties entered into a supplement to Mount Holly Partners' operating agreement which provided for the creation of a management committee. That management committee, which was comprised of one member appointed by Ares and one member appointed by MHU, was formed to decide "extraordinary matters" which would require the unanimous consent of the members of the management committee. According to The Salt Lake Tribune, MHU claimed that Mount Holly Partners filed for bankruptcy without its consent. The Salt Lake Tribune says that the bankruptcy filing doesn't end plans to turn Elk Meadow into a posh resort with multimillion- dollar homes, private ski runs, and a golf course designed by Jack Nicklaus. "Just the opposite. It's a plan for reorganization to try to keep the resort going . . . and still take care of the creditors," the report quoted Douglas Short, Esq., at Keith Barton & Associates in South Jordan, Mount Holly's attorney, as saying. Mount Holly Partners, LLC, in South Jordan, Utah, filed for Chapter 11 on July 9, 2009 (Bankr. D. Utah Case No. 09-27185). Judge R. Kimball Mosier presides over the case. Douglas R. Short, Esq., at Keith Barton & Associates PC in South Jordan, represents the Debtor. The Debtor listed assets ranging from $100,000,001 to $500,000,000, and debts ranging from $10,000,001 to $50,000,000. MPG JUPITER: Wants to Hire Buddy Ford as Attorney ------------------------------------------------- MPG Jupiter Ltd. asks the U.S. Bankruptcy Court for the Middle District of Florida for permission to employ Buddy D. Ford P.A. as its attorney. The firm will: -- give the Debtor legal advice with respect to its powers and duties as debtor-in-possession in the continued operation of its business and management of its property, if appropriate; -- prepare, on behalf of the applicants, necessary applications, answers, orders, reports, complaints, and other legal papers and appear at hearings thereon; and -- perform all other legal services for the Debtor as debtor- in- possession which may be necessary herein, and it is necessary for the Debtor as debtor-in-possession to employ the attorney for such professional services. The firm charges $300 per hour for this engagement. The Debtor assures the Court that the firm represents no interest adverse to the Debtor or the estate. Safety Harbor, Florida-based MPG Jupiter, Ltd., dba Sea Plum Town Center and MPG Jupiter, Inc., filed for Chapter 11 on July 15, 2009 (Bank. M. D. Fla. Case No. 09-15148). Buddy D. Ford, Esq., represents the Debtors in their restructuring efforts. In their petition, the Debtors listed total assets of $18,374,880 and total debts of $15,533,518. MPG PARKLAND: Files Chapter 11 to Thwart Foreclosure ---------------------------------------------------- MPG Parkland Ltd. filed for Chapter 11 protection from creditors on Aug. 2 in Tampa, Florida. Bank of America Corp., heads the Company's list of 20 largest unsecured creditors, with a $30.7 million claim, of which $2.2 million is secured. Bank of America initiated foreclosure against MPG Parkland's property, a shopping center in Broward County called Parkland Commons, on May 20, Bloomberg said, citing a May 22 report in the South Florida Business Journal. The Chapter 11 filing stays the foreclosure proceedings. MPG Parkland Ltd. is a single-asset real estate company. MPG filed for Chapter 11 on August 2, 2009 (Bankr. M.D. Fla. Case No. 09-16990). Joel S. Treuhaft, Esq., at the Joel S. Treuhaft Law Offices, in Palm Harbor, Florida, represents the Debtor in its restructuring effort. The petition says MPG Parkland has assets of $1 million to $10 million and debts of $10 million to $50 million. A list of the Company's 20 largest unsecured creditors is available at: http://bankrupt.com/misc/flmb09-16990.pdf NATIONAL GOLD: Court Denies Case Conversion to Chapter 7 -------------------------------------------------------- Jane Meinhardt at Tampa Bay Business Journal reports that Michael Williamson of the U.S. Bankruptcy Court for the Middle District of Florida has denied a motion to convert National Gold Exchange, Inc.'s Chapter 11 reorganization case to Chapter 7 liquidation. Business Journal quoted Judge Williamson as saying, "Evidence of misconduct and mismanagement is substantial" and that there are "ample grounds" to convert the case to liquidation, but the Company's case would be fast-tracked through Chapter 11 with a trustee at the helm to displace the debtor-in-possession. As reported by the Troubled Company Reporter on July 29, 2009, Sovereign Bank confiscated National Gold's multimillion-dollar gold coin collection. The gold coins served as collateral on $35 million in loans. A Hillsborough circuit court judge let Sovereign Bank seize the coins amid allegations that Mr. Yaffe had fraudulently overstated the collection's value to the bank. Business Journal relates that Sovereign Bank sent a team unannounced to Tampa on July 10 to complete a physical inventory of National Gold's coins, and later requested authority to take the coins after finding evidence that the collection might not be worth $33.6 million as Mr. Yaffe stated. Judge Williamson denied National Gold's motion seeking turnover of the business' valuables confiscated by Sovereign Bank, allowing the bank to keep the items until the Chapter 11 trustee takes control, Business Journal relates. According to Business Journal, consultants for and officials from Sovereign Bank had testified that National Gold used some of the collateral pledged to the bank for $35 million in loans to secure loans from other entities and co-mingled assets with Gainesville Coins, which is affiliated with the Debtor's owners, Mark Yaffe and Alan Yaffe. The Yaffe family, the report says, is also involved in the ownership of Independent Coin Grading, a company that assigns values to coins and is located at the rear of National Gold's premises. Elizabeth Sousa, a member of Sovereign Bank's precious metals unit, said that it was difficult to separate Gainesville Coins' assets from those of National Gold or to locate $2.7 million in coins that were reported to be at consignment sales, Business Journal reports. Citing Ms. Sousa, the report states that it appeared that National Gold workers were holding some coins the Company listed as consignment sales. Ms. Sousa, Business Journal relates, that said that Sovereign Bank found: -- documents showing that National Gold had lending relationships with other lenders with double collateral pledged to different institutions; -- documents indicating that National Gold planned to operate its coin business under an entity called Eldorado Gold after bankruptcy and that the Company already sold about $5 million in coins to Eldorado; and -- no books when Sovereign Bank conducted a physical inventory of National Gold's coins. Citing National Gold counsel Richard McIntyre, Business Journal states that the Company always paid its bills, including loan payments to Sovereign Bank, and that Mark Yaffe wanted to remain in control of the estate to help liquidate the coins. According to the report, Mr. Yaffe is willing to pledge his equity -- which Mr. McIntyre said amounts to $15 million -- in his $25 million Avila mansion to the estate. Tampa, Florida-based National Gold Exchange, Inc., operates a gold and silver rare coin wholesaler. The Company filed for Chapter 11 bankruptcy protection on July 24, 2009 (Bankr. M.D. Fla. Case No. 09-15972). Richard J. McIntyre, Esq., at McIntyre, Panzarella, Thanasides & Eleff assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $50,000,001 to $100,000,000 in debts. NCB FSB: Fitch Affirms Primary Servicer Rating at 'CPS2+' --------------------------------------------------------- Fitch Ratings affirms the commercial mortgage-backed securities servicer ratings of NCB, FSB: primary servicer rating at 'CPS2+' and master servicer rating at 'CMS2-'. In addition, Fitch affirms National Cooperative Bank's special servicer rating at 'CSS3'. The primary servicer rating is based on NCB, FSB's solid experience as a longstanding CMBS primary servicer and its strong use of technology. The master servicer rating reflects NCB, FSB's proven ability to report and remit to CMBS trustees and to oversee third party servicers. The special servicer rating indicates NCB's ability to specially service commercial real estate loans in CMBS transactions. Each of the ratings reflects the bank's experienced and tenured servicing staff and management team with minimal turnover. The bank also continues to maintain particular expertise in the servicing and special servicing of cooperative housing loans. As of June 30, 2009, NCB, FSB's primary servicing portfolio consisted of 4,199 loans, totaling $5.5 billion. As of the same date, NCB, FSB was named master servicer on 37 securitized transactions, totaling $4.7 billion. In addition, as of June 30, 2009, the bank was named special servicer for 40 transactions totaling $4.3 billion. NOBLE INT'L: Nissan to Buy Assets in Private Sale ------------------------------------------------- Noble International, Inc., seeks permission from the U.S. Bankruptcy Court to sell assets in Warren, Michigan and South Haven, Michigan to Nissan North America, Inc. According to NetDockets, the Debtors said the assets were specifically designed for the manufacture of parts for Nissan and have no value to any party other than Nissan. The Debtors also noted they are in the process of winding down operations and Nissan intends to re-source the parts manufactured by Noble to other suppliers. Noble asserts that a private sale to Nissan is in the best interests of its creditors. NetDocket relates that under the proposed agreement between Noble and Nissan, dated July 20, 2009, Noble would provide Nissan with assistance in managing the process of re-sourcing production of the parts to another supplier. In addition, Noble would also build an inventory bank for Nissan in order to protect Nissan from any parts shortages resulting from the re-sourcing process. Finally, Noble would agree to provide Nissan with a perpetual license of all intellectual property used in the manufacturing of the Nissan parts. In exchange, Nissan would agree to immediately pay any outstanding accounts receivable and to pay $174,000 to Noble for the assets and the inventory bank. The Debtors are in the process of liquidating their estate. As reported by the Troubled Company Reporter, Noble on July 17, 2009, closed the sale to ArcelorMittal Netherlands B.V., a subsidiary of ArcelorMittal S.A., of the Company's European business, consisting of the shares of Noble European Holdings B.V., together with the direct and indirect holdings and assets of Noble BV. As consideration for the Transferred Assets, ArcelorMittal (a) accepted the Transferred Assets subject to roughly EUR78 million in borrowed money, (b) delivered $2.1 million to the Company by wire transfer and (c) permitted the Company to retain $2.0 million received by Noble BV prior to closing for the transfer of its 49% equity interest in Sumisho Noble (Thailand) Co., Ltd. About Noble International Headquartered in Warren, Michigan, Noble International, Ltd. -- http://www.nobleintl.com/home.html/-- provides flat, tubular, shaped and enclosed formed structures to automotive original equipment manufacturers and their suppliers, for use in automobile applications, including doors, fenders, body side panels, pillars, bumpers, door beams, load floors, windshield headers, door tracks, door frames, and glass channels. Noble International and its affiliates filed for Chapter 11 protection on April 15, 2009 (Bankr. E.D. Mich. Case No. 09- 51720). The Debtors proposed Foley & Lardner LLP as their general bankruptcy counsel. Conway Mackenzie, Inc., has been tapped as the Debtors' financial advisors. The official committee of unsecured creditors is represented by Jaffe Raitt Heuer & Weiss, P.C. The Debtors disclosed total assets of $190,763,000 and total debts of $38,691,000, as of January 10, 2009. NOVA HOLDING: Proposes Sept. 11 Deadline for All Assets ------------------------------------------------------- Nova Holding Clinton County, LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware to approve bidding procedures for the sale of all or substantially all of their assets, including the sale of Nova Biofuels Clinton County, LLC's assets to Clinton County Bio Energy, LLC, the stalking horse bidder in respect of Nova Biofuels Clinton's assets, subject to competing bids at an auction. The Debtors also ask the Court to approve the payment of a breakup fee of $36,000 to Clinton in the event another buyer is the successful bidder at the auction. The assets to be sold consist of: (i) Nova Seneca, LLC's ("Seneca") assets; (ii) Nova Biofuels Clinton County, LLC's ("Clinton") assets; and (iii) the proprietary, patented process technology utilized by the Debtors in the production of biodiesel and owned by Nova Biosource Technologies, LLC. Clinton owns and operates the Clinton County, Iowa refinery, while Seneca owns the Seneca, Illinois refinery, the Debtors' flagship refinery. WestLB AG (New York Branch) holds prepetition liens in all of the Seneca assets and postpetion liens on all sale assets. As consideration for the Clinton assets, the Clinton stalking horse bidder has offered to pay cash at closing of $1,200,000 plus (A) pre-paid expenses, and (B) the dollar amount of any sales tax, use tax or similar tax attributable to the sale or transfer of the purchased assets and exclusive of Bio Energy's payment of cure amounts. Bio Energy has also agreed to assume all of Sellers' liabilities arising from and after the closing date under the Clinton executory contracts and unexpired leases, and the cure amounts. The Debtors seek a sale hearing date of September 23, 2009. As proposed, final bids from prospective purchasers are due on September 11, 2009, and if necessary, an auction will take place on September 16, 2009, at the offices of Blank Rome LLP, One Logan Square, Philadelphia, PA 19103 at 12:00 p.m. The sale of the Debtors' assets will be on an "as is, where is" basis. As reported in the TCR on July 27, 2009, on July 17, 2009, the Debtors and WestLB entered into a third stipulation extending certain milestones set forth in the Bankruptcy Court's Final DIP Order dated June 24, 2009, as follows: * July 31, 2009 -- Debtors will have: (i) entered into an agreement with the highest or best offer to acquire the Seneca Plant and the other DIP collateral, (ii) filed a motion to sell, lease, license or otherwise dispose of the the DIP collateral, to the bidders selected through the bid procedures and approved by the Court, and (iii) filed a motion to approve the bid procedures. * August 19, 2009 -- Debtors will have received an order from the Court: (a) approving the bid procedures and (b) establishing an auction of the Seneca Plant and the other DIP collateral, which will be conducted no later than September 10, 2009. As stipulated on July 9, 2009, the Debtors' authority to use the proceeds of the DIP Facility will terminate on the earliest of: (i) either: (x) Oct. 2, 2009, if the Sale Order as defined in the Interim Cash Collateral Order is entered by September 14, 2009, or (y) September 14, 2009, if the Sale Order is not entered by that date; (ii) the date of acceleration of any outstanding portion of the DIP Facility; (iii) the first business day on which the Final DIP Order expires by its terms or is terminated; (iv) conversion of any of the Borrower's or Guarantor's Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code unless otherwise consented to in writing by the DIP Agent and the DIP Lender; (v) dismissal of any Borrower's or Guarantor's Chapter 11 case unless otherwise consented to in writing by the DIP Agent and the DIP Lender; and (vi) the effective date of any Borrower's or Guarantor's plan of reorganization. Based in Seneca, Illinois, Nova Holding Clinton County, LLC, makes industrial organic chemicals and biological products. Nova Holding and certain affiliates filed for Chapter 11 protection on March 30, 2009 (Bankr. D. Del. Lead Case No. 09-11081). Michael B. Schaedle, Esq., Melissa S. Vongtama, Esq., and Josef W. Mintz, Esq., at Blank Rome LLP, in Philadelphia, represent the Debtors as counsel. David W. Carickhoff, Esq., at Blank Rome LLP, is Delaware counsel to the Debtors. The Debtors listed between $10 million and $50 million each in assets and debts. ONEBEACON INSURANCE: Moody's Assigns 'Ba1' Preferred Stock Rating ----------------------------------------------------------------- Moody's Investors Service has affirmed the A2 insurance financial strength ratings of the OneBeacon Insurance Group inter-company pool and Baa2 senior debt ratings of its intermediate parent, OneBeacon U.S. Holdings, Inc. In the same rating action, Moody's has assigned provisional ratings (senior at (P)Baa2) to OneBeacon U.S.'s $1 billion shelf registration. OneBeacon U.S. is an indirect wholly-owned subsidiary of OneBeacon Insurance Group, Ltd., which, in turn, is an indirect 75%-owned subsidiary of White Mountains Insurance Group, Ltd., with the remaining 25% shares publicly owned. Principal and interest on OneBeacon U.S.'s outstanding senior notes are guaranteed by WTM. The outlook for the ratings is stable. Moody's said that its affirmation of OneBeacon's ratings reflects the company's solid market position, strong agency relationships, improving profitability, and balanced mix of specialty, commercial and personal lines business. "We view the continued control and support by White Mountains as a credit positive," said Vice President/Senior Credit Officer Pano Karambelas. Factors countering these credit strengths include exposure to catastrophes, weakened risk-adjusted capitalization following investment losses in 2008, potential adverse development on the run-off casualty business including A&E, regulatory risks reflecting a regional business concentration, and softening property-casualty insurance market conditions. For the first half of 2009, OneBeacon reported meaningfully improved financial results contributing to an 11% increase in GAAP shareholders' equity, a 93% GAAP combined ratio (reflecting light catastrophes and modest favorable reserve development), and a 5% positive total investment return. On a Moody's adjusted financial leverage basis, the company de-levered by approximately 6 points to 37%. The rating agency expects further debt reduction in the near-term which should return financial leverage in line with its rating expectations of 35%. "Notwithstanding OneBeacon's strong 1H09 results, the group's risk-adjusted capitalization remains pressured," Moody's Karambelas added. In particular, gross exposure to catastrophes has remained relatively flat while GAAP shareholders' equity at June 30, 2009, is down 20% from a year ago. That said, the group has implemented an enhanced reinsurance program which includes a 30% homeowners' quota share and a reduced attachment point on its catastrophe excess of loss program. The rating agency said that the additional outwards reinsurance protection serves to maintain net catastrophe exposure at a prudent level in line with ratings expectations. In recent months, the company has continued to de-risk its investment portfolio largely by reducing the size of its equity holdings from approximately 19% of invested assets at year-end 2008 to 13% at June 30, 2009. Going forward, Moody's expects the company will continue to employ enhanced reinsurance protection and maintain a lower-risk investment profile commensurate with current capital levels. Factors that could lead to a ratings upgrade include: 1) sustained improvement in operating results and capitalization, 2) financial leverage consistently below 25%, and 3) earnings coverage above 8x. Factors that could lead to a ratings downgrade include: 1) deterioration in net loss and loss adjustment expense reserves or exhaustion of reinsurance cover provided by National Indemnity Insurance Company (NICO), 2) annual catastrophe losses exceeding 10% of GAAP equity, 3) financial leverage consistently above 35%, or 4) earnings coverage consistently below 6x. These provisional ratings have been assigned with a stable outlook: * OneBeacon U.S. Holdings, Inc. -- provisional senior unsecured debt at (P)Baa2; provisional subordinated debt at (P)Baa3; provisional junior subordinated debt at (P)Baa3; provisional preferred stock at (P)Ba1. * OneBeacon U.S. Holdings Trust I, II, III -- provisional trust preferred securities at (P)Baa3. The last rating action on OneBeacon occurred on August 4, 2006, when Moody's affirmed the ratings of the White Mountains group (including OneBeacon) with a stable outlook. OneBeacon Insurance Group, Ltd. is a Bermuda-domiciled insurance holding company whose property and casualty insurance subsidiaries provide a range of specialty insurance products as well as a variety of commercial and personal insurance products in the U.S. OneBeacon ranks among the 40 largest property & casualty insurers in the U.S. For the first half of 2009, the company reported total net premiums written of $967 million and net income of $168 million. GAAP shareholders' equity was $1.28 billion as of June 30, 2009. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to pay punctually senior policyholder claims and obligations. OVERSEAS SHIPHOLDING: Moody's Cuts Corp. Family Rating to 'Ba2' --------------------------------------------------------------- Moody's Investors Service downgraded its corporate family, probability of default and senior unsecured debt ratings of Overseas Shipholding Group, Inc., each to Ba2 from Ba1. The rating outlook is stable. "The downgrades reflect Moody's belief that ongoing weak fundamentals of global tanker markets combined with the ongoing fleet diversification strategy are likely to prevent the restoration of OSG's earnings and operating cash flows to levels consistent with the Ba1 rating category over the near term," said Moody's Analyst Jonathan Root. OSG has maintained higher financial leverage because of its expansive sector diversification strategy. "This strategy has increased exposure to the international product carrier and U.S. Jones Act markets, each of which typically produces margins and returns on assets that are lower as compared to those generated by OSG's traditional crude vessels trading spot," continued Root. OSG has demonstrated the ability to generate sizeable cash flows from vessel sale and purchase activities. However, it returned a large portion of such proceeds to shareholders, almost $900 million in the 24 month period ended December 2008, rather than apply a larger portion to debt reduction or to fleet expansion. Adjusted debt increased by over $2.0 billion during this same period. Financial policies that have disproportionately prioritized shareholder returns have contributed to the current weakened credit metrics profile. OSG's adjusted Debt to EBITDA and FFO + Interest to Interest approximated 5.0 times and 3.9 times, respectively, at March 31, 2009. These compare to 4.3 times and 4.5 times, respectively at December 31, 2006. Moody's anticipates that metrics are likely to weaken in upcoming quarters as it believes that a sustained, meaningful inflection in freight rates will not occur before overall global economic conditions materially improve. Additionally, earnings and cash flows from vessel operations are also likely to be pressured from 2010 because contributions from the crude fleet will no longer benefit from OSG's hedging strategy using Forward Freight Agreements that has allowed the crude fleet to achieve above market rates in recent periods. The outlook of continuing weak rates is likely to delay any de-levering of the capital structure over the near term, as is still large commitments for capital expenditures and the looming tender for the publicly-held stake in OSG America L.P. The Ba2 rating considers OSG's position as a market leader in the majority of its trades, the employment of the majority of its spot rate vessels in tanker pools, and its good liquidity including the sizeable cash balance. The supportive long-term fundamentals of the marine transportation sectors that OSG serves and the high operating leverage of the crude fleet further support the Ba2 ratings. Pool trading results in OSG's vessels earning relatively higher freight rates throughout the shipping cycle because this increases the number of backhauls each vessel obtains in a given period. The Ba2 rating also recognizes OSG's chartering policy that provides a meaningful level of coverage of its commitments under charters-in from charters-out. Its charter-out book helps support cash flow from operations at levels that reduce the freight rates its spot rate vessels require for it to comfortably service its debt. The stable outlook reflects Moody's expectation that OSG will maintain its leading market position through the extended trough of the current cycle. Capital expenditures for fleet expansion are expected to moderate after 2010, which should relieve pressure on OSG's free cash flow profile. Additionally, the removal of single-hulled crude carriers from the world fleet is also likely, which should help balance supply and demand from 2010, relieving some of the pressure on freight rates. The inability to sustain a stronger metrics profile could adversely affect the ratings. Debt to EBITDA above 4.5 times, FFO + Interest to Interest below 3.5 times or Retained Cash Flow to Net Debt below 15% could indicate that OSG's diversification strategy resulted in a structural shift in the credit profile towards that of lower rated corporate families. Since OSG's good liquidity is an important supportive factor, the ratings could be pressured if the reported cash balance was sustained below $200 million. Further increases in debt, either from share purchases, acquisitions or additional charters-in could also result in a downgrade. Demonstrated improvement in credit metrics would be required before Moody's would consider a positive change to the rating or outlook. For example, Moody's would look for Debt to EBITDA to approach 3.8 times, FFO + Interest to Interest to exceed 4.0 times and Retained Cash Flow to Net Debt to exceed 20%. The adoption of a more conservative capital structure that sustains a lower proportion of debt could help to restore the credit metrics profile and could also lead to an outlook change to positive. Positive Free Cash Flow to Debt, exclusive of sale and purchase activities that is sustained above 5% could also lead to a positive outlook. The last rating action was on December 19, 2008, when Moody's changed the outlook to negative from stable. Downgrades: Issuer: Overseas Shipholding Group, Inc. -- Issuer Rating, Downgraded to Ba2 from Ba1 -- Probability of Default Rating, Downgraded to Ba2 from Ba1 -- Corporate Family Rating, Downgraded to Ba2 from Ba1 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2, LGD4, 60% from Ba1, LGD4, 59% Outlook Actions: Issuer: Overseas Shipholding Group, Inc. -- Outlook, Changed To Stable From Negative Overseas Shipholding Group, Inc., headquartered in New York City, NY, is one of the largest publicly traded tanker companies in the world, engaged primarily in the ocean transportation of crude oil and petroleum products. PENNY & KENNY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Penny & Kenny Shoes, LLC aka P&K aka PLK aka Penny Loves Kenny 1370 Avenue Of The Americas 1934 Olney Avenue, Suite 102 New York, NY 10019 Bankruptcy Case No.: 09-14792 Chapter 11 Petition Date: July 31, 2009 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Burton R. Lifland Debtor's Counsel: Gilbert A. Lazarus, Esq. Lazarus & Lazarus, P.C. 240 Madison Avenue, 8th Floor New York, NY 10016 Tel: (212) 889-7400 Fax: (212) 684-0314 Email: glawlazarus@aol.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Stuart Chalfin, managing member of the Company. PITTSBURGH IRISH: Planning to Sell Assets for $1.2 Million ---------------------------------------------------------- Pittsburgh Irish Pubs, LLC, has received an offer from Alex Development, LLC, to purchase all of the Debtor's real property located at 660 Washington Road in Pittsburgh (identified as parcel identification number 141-F-38 in Allegheny county land records) and fixed assets (including furniture, kitchen equipment, lighting, and electronic systems) for $1,200,000. The Honorable Jeffery A. Deller has scheduled a hearing on August 18, 2009, at 10:00 a.m. to consider the transaction and any higher and better offers the Debtor may receive. Objections or responses to the sale of assets free and clear of liens, claims, interests, and encumbrances as requested by the Debtor must be filed and served by August 11, 2009. Requests for information concerning the sale or the assets should be directed to the Debtor's bankruptcy lawyers: Christopher A. Boyer, Esq. John M. Steiner, Esq. Leech Tishman Fuscaldo & Lampl, LLC 525 William Penn Place, 30th Floor Pittsburgh, PA 15219 Telephone (412) 261-1600 Pittsburgh Irish Pubs, LLC, sought Chapter 11 protection (Bankr. W.D. Pa. Case No. 07-25554) on September 4, 2007. PROTOSTAR LTD: Can Hire Kurtzman Carson as Claims & Noticing Agent ------------------------------------------------------------------ Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorized ProtoStar Ltd. and its debtor-affiliates to employ Kurtzman Carson Consultants LLC as notice, claims and balloting agent. KCC is expected to render noticing, claims, processing, and balloting services. KCC is also be designated as the authorized repository for all proofs of claims filed in the Chapter 11 cases and authorized to direct and maintain official claims registers for each of the ProtoStar entities and to provide the Clerk's Office with a certified duplicate thereof as directed by the Clerk's Office. Michael J. Frisberg, vice president of corporate restructuring services of KCC, tells the Court that KCC received a $30,000 retainer for services and expenses incurred. Mr. Frisberg assures the Court that KCC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About ProtoStar Ltd. Hamilton, HM EX, Bermuda-based ProtoStar Ltd. is a satellite operator formed in 2005 to acquire, modify, launch and operate high-power geostationary communication satellites for direct-to- home satellite television and broadband internet access across the Asia-Pacific region. The Company and its affiliates filed for Chapter 11 on July 29, 2009 (Bankr. D. Del. Lead Case No. 09-12659). The Debtor selected Pachulski Stang Ziehl & Jones LLP as Delaware counsel; Law Firm of Appleby as their Bermuda counsel; UBS Securities LLC as financial advisor & investment banker and Kurtzman Carson Consultants LLC as claims and noticing agent. In their petition, the Debtors listed assets and debts both ranging from $100,000,001 to $500,000,000. As of December 31, 2008, ProtoStar's consolidated financial statements, which include non-debtor affiliates, showed total assets of $463,000,000 against debts of $528,000,000. PUENTES FAMILY LIMITED: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Puentes Family Limited Partnership 6230 Denain Drive Corpus Christi, TX 78414 Bankruptcy Case No.: 09-20485 Chapter 11 Petition Date: August 1, 2009 Court: United States Bankruptcy Court Southern District of Texas (Corpus Christi) Judge: Richard S. Schmidt Debtor's Counsel: Robert D. Repasky, Esq. Attorney at Law PO Box 158 Fulton, TX 78358-0158 Tel: (361) 288-4724 Fax: (866) 527-0886 Email: repaskylaw@repasky.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Jairo Puentes, general partner of the Company. RALLYE HOMES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Rallye Homes, LP 6300 Ridglea place, Suite 411 Fort Worth, TX 76116 Bankruptcy Case No.: 09-44591 Chapter 11 Petition Date: July 31, 2009 Court: United States Bankruptcy Court Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: Eric A. Liepins, Esq. 12770 Coit Rd., Suite 1100 Dallas, TX 75251 Tel: (972) 991-5591 Email: eric@ealpc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/txnb09-44591.pdf The petition was signed by Brian Watts. REDDY ICE: Board OKs New Pay Scheme for Non-Employee Directors -------------------------------------------------------------- The compensation committee of the Board of Directors of Reddy Ice Holdings, Inc., approved on July 28, 2009, a new compensation structure for the Company's non-employee directors. The new compensation structure was based on a compensation study performed by Towers Perrin, a recognized compensation consultant. Under the updated compensation structure, the non-employee directors will each receive $48,000 per annum as compensation for their service, payable quarterly in arrears. Members of the committees of the Board of Directors will generally no longer receive additional compensation for such service, except that: (i) the chairperson of the audit committee will receive an additional fee of $5,000 per year, (ii) the chairpersons of the compensation committee and the corporate governance and nominating committee will receive an additional fee of $2,500 per year and (iii) per- meeting compensation for members of the special committee (investigation) will not be changed. The non-employee directors' equity compensation was also modified by the compensation committee based on Towers Perrin's advice. With the final vesting of all outstanding restricted stock units occurring on August 12, 2009, non-employee directors would no longer have had any form of equity compensation under the prior structure. In accordance with recent changes in the structure of employee equity incentive compensation, restricted stock units will no longer be issued to non-employee directors. Instead, each non-employee director will receive an annual stock grant immediately following the Company's annual meeting of stockholders with a value on the date of grant of $48,000, an amount generally consistent with the target value of annual equity compensation at the time our directors' compensation was last studied. In connection with the adoption of the new compensation structure on July 28, 2009, the grants for 2009 were approved by the compensation committee. About Reddy Ice Based in Dallas, Texas, Reddy Ice Holdings, Inc. (NYSE:FRZ) and its wholly owned subsidiary, Reddy Ice Corporation, manufacture and distribute packaged ice products. The Company is the largest manufacturer of packaged ice products in the United States and serves roughly 82,000 customer locations in 31 states and the District of Columbia. At June 30, 2009, Reddy Ice had $448.3 million in total assets; and $36.4 million in total current liabilities, $390.6 million in long-term obligations, $21.5 million in deferred taxes and other liabilities; resulting in $224 million in stockholders' deficit. * * * According to the Troubled Company Reporter on April 13, 2009, Standard & Poor's Ratings Services said that it lowered its ratings on Dallas, Texas-based Reddy Ice Holdings Inc. and its wholly-owned operating subsidiary, Reddy Ice Corp. S&P lowered the corporate credit rating to 'B' from 'B+', and for analytical purposes, S&P views the companies as one economic entity. The outlook is negative. REDDY ICE: June 30 Balance Sheet Upside Down by $224 Million ------------------------------------------------------------ Reddy Ice Holdings, Inc., at June 30, 2009, had $448.3 million in total assets; and $36.4 million in total current liabilities, $390.6 million in long-term obligations, $21.5 million in deferred taxes and other liabilities; resulting in $224 million in stockholders' deficit. The Company said revenues for the second quarter ended June 30, 2009, were $99.9 million, compared to $102.7 million in the same quarter of 2008. The Company's net income was $8.2 million in the second quarter of 2009, compared to net income of $5.7 million in the same period of 2008. Diluted net income per share was $0.37 in the second quarter of 2009 compared to a diluted net income per share of $0.26 in the second quarter of 2008. Included in the 2009 results are $500,00 of costs related to the ongoing antitrust investigations and related litigation. Included in the 2008 results are $4.6 million of costs related to the antitrust investigations and related litigation, $100,000 in costs related to the termination of the merger agreement between the Company and affiliates of GSO Capital Partners LP on January 31, 2008, and the related stockholder litigation and a gain of $1.0 million related to the settlement of a property insurance claim. Adjusted EBITDA, defined as earnings before interest, taxes, depreciation and amortization, and the effects of certain other items, was $30.1 million in the second quarter of 2009, compared to $29.0 million in the second quarter of 2008. Available Cash for the second quarter of 2009 was $13.2 million compared to $24.3 million in the second quarter of 2008. Revenues in the first six months of 2009 were $142.1 million, compared to $145.7 million in the same period of 2008. The Company's net loss was $3.7 million in the first six months of 2009, compared to net income of $2.3 million in the same period of 2008. Net loss per share was $0.17 in the first six months of 2009, compared to diluted net income of $0.11 in the same period of 2008. Included in the 2009 results are $3.3 million of costs related to the ongoing antitrust investigations and related litigation. Included in the results for the first six months of 2008 were a gain of $17.0 million related to the termination of the merger agreement between the Company and affiliates of GSO Capital, a gain of $1.0 million related to the settlement of a property insurance claim, $5.8 million of costs related to the antitrust investigations and related litigation and $900,000 of costs related to the GSO transaction and the related stockholder litigation. Adjusted EBITDA was $25.0 million in the first six months of 2009 versus $24.8 million in 2008. Available Cash for the first six months of 2009 was negative $1.3 million, compared to positive $15.2 million in the first six months of 2008. "Challenging economic conditions continued to impact sales volumes during the second quarter, although the impacts on the quarter and year-to-date periods remain better than the last quarter of 2008," commented Chairman of the Board, Chief Executive Officer and President Gilbert M. Cassagne. "In addition, we continue to benefit from favorable commodity costs and good cost controls, especially in regards to labor. We are also continuing to execute on opportunities to improve the business that were identified in our strategic planning process." A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?40ab About Reddy Ice Based in Dallas, Texas, Reddy Ice Holdings, Inc. (NYSE:FRZ) and its wholly owned subsidiary, Reddy Ice Corporation, manufacture and distribute packaged ice products. The Company is the largest manufacturer of packaged ice products in the United States and serves roughly 82,000 customer locations in 31 states and the District of Columbia * * * According to the Troubled Company Reporter on April 13, 2009, Standard & Poor's Ratings Services said that it lowered its ratings on Dallas, Texas-based Reddy Ice Holdings Inc. and its wholly-owned operating subsidiary, Reddy Ice Corp. S&P lowered the corporate credit rating to 'B' from 'B+', and for analytical purposes, S&P views the companies as one economic entity. The outlook is negative. REGAL ENTERTAINMENT: Posts $40.4 Million Net Income in Q2 2009 -------------------------------------------------------------- Regal Entertainment Group announced fiscal second quarter 2009 results and declared a cash dividend of $0.18 per common share. Regal Entertainment said total revenues for the second quarter ended July 2, 2009, were $789.2 million compared to total revenues of $675.8 million for the second quarter ended June 26, 2008. Net income was $40.4 million and net income attributable to controlling interest was $40.5 million in the second quarter of 2009. Net income was $24.2 million and net income attributable to controlling interest was $24.3 million for the second quarter of 2008. Diluted earnings per share was $0.26 for the second quarter of 2009 compared to $0.16 during the second quarter of 2008. Adjusted EBITDA was $167.1 million for the second quarter of 2009 and $124.4 million for the second quarter of 2008. As of July 2, 2009, the Company had total assets of $2.64 billion, including cash and cash equivalents of $267.7 million; $1.99 billion in total debt; and $227.9 million in stockholders' deficit. As of April 2, 2009, the Company had $2.56 billion in total assets and $2.81 billion in total liabilities. Regal's Board of Directors declared a cash dividend of $0.18 per Class A and Class B common share, payable on September 18, 2009, to stockholders of record on September 10. The Company intends to pay a regular quarterly dividend for the foreseeable future at the discretion of the Board of Directors depending on available cash, anticipated cash needs, overall financial condition, loan agreement restrictions, future prospects for earnings and cash flows as well as other relevant factors. "I'm pleased to report that Regal achieved both record total revenue and Adjusted EBITDA during the fiscal second quarter," stated Amy Miles, CEO of Regal Entertainment Group. "Our demonstrated ability to convert revenue growth into increased free cash flow allowed us to continue providing meaningful value to our stockholders," continued Ms. Miles. About Regal Entertainment Based in Knoxville, Tennessee, Regal Entertainment Group (NYSE: RGC) -- http://www.REGmovies.com/-- is the largest motion picture exhibitor in the world. The Company's theatre circuit, comprising Regal Cinemas, United Artists Theatres and Edwards Theatres, operates 6,782 screens in 549 locations in 39 states and the District of Columbia. Regal operates theatres in all of the top 33 and 44 of the top 50 U.S. designated market areas. * * * As reported by the Troubled Company Reporter on July 13, 2009, Moody's Investors Service rated Regal Cinemas' new $300 million 10-year senior unsecured notes B1. On July 14, 2009, the TCR said Standard & Poor's Ratings Services revised its recovery rating on Regal Cinemas's debt to '2', indicating S&P's expectation of substantial (70% to 90%) recovery for secured lenders in the event of a payment default, from '3'. In addition, S&P raised the issue-level rating on this debt to 'BB-' (one notch higher than the 'B+' corporate credit rating on the company) from 'B+', in accordance with S&P's notching criteria for a '2' recovery rating. On July 15, 2009, the TCR said Fitch Ratings assigned a 'B+/RR4' rating to Regal Cinemas' $400 million 8.625% senior unsecured notes. The notes are expected to rank senior to Regal Cinemas' existing 9.375% senior subordinated notes and junior to the secured bank facility. In addition, the $400 million in notes are structurally senior to RGC's 6.25% convertible notes. REVLON INC: Posts $200,000 Net Income for Second Quarter 2009 ------------------------------------------------------------- Revlon, Inc., said net sales in the second quarter ended June 30, 2009, were $321.8 million, compared to $366.5 million in the second quarter of 2008, a decrease of 12.2%. Excluding unfavorable foreign currency fluctuations of $16.7 million, net sales decreased by 7.6%. The decline in net sales was driven by lower net sales of Revlon and Almay color cosmetics, and Revlon Beauty Tools, partially offset by higher net sales of Revlon ColorSilk hair color. Operating income in the second quarter of 2009 was $26.6 million, which included $18.3 million of charges related primarily to restructuring actions announced on May 28, 2009, compared to $59.2 million in the same period last year. Adjusted EBITDA in the second quarter of 2009 was $43.0 million, which included $18.3 million of restructuring charges, compared to $81.3 million in the same period last year. Second quarter 2009 operating income and Adjusted EBITDA included pension expense of $5.7 million compared to $1.8 million in the second quarter of 2008. Second quarter 2008 operating income and Adjusted EBITDA included a net gain of $5.9 million and $6.0 million, respectively, related to the sale of a facility in Mexico. Net income in the second quarter of 2009 was $200,000, or nil per diluted share, which included $18.3 million or $0.36 per diluted share of restructuring charges, compared to $19.9 million, or $0.39 per diluted share, in the same period last year. Net income in the second quarter of 2009 was also impacted by higher foreign currency losses of $3.3 million and higher pension expense of $3.9 million, offset by lower taxes of $8.8 million and lower interest expense of $6.7 million. Second quarter 2008 net income included a net gain of $4.9 million related to the sale of a facility in Mexico. Negative free cash flow in the second quarter of 2009 was $3.0 million compared to positive free cash flow of $7.4 million in the same period last year. Second quarter 2008 free cash flow included installment payments of $2.7 million related to the sale of the facility in Mexico. At June 30, 2009, Revlon had $797.4 million in total assets; and $326.4 million in total current liabilities, $1.15 billion in long-term debt, $107.0 million in long-term debt by affiliates, $213.8 million in long-term pension and other post-retirement plan liabilities, $66.6 million in other long-term liabilities; resulting in $1.07 billion in stockholders' deficiency. Six Months Results Net sales in the first six months of 2009 decreased 7.8% to $625.1 million, compared to net sales of $678.2 million in the first six months of 2008. Excluding unfavorable foreign currency fluctuations of $37.0 million, net sales decreased by 2.4%. Operating income was $58.2 million in the first six months of 2009, which included $18.8 million of restructuring charges, compared to $91.2 million in the first six months of 2008. Net income in the first six months of 2009 was $12.9 million, or $0.25 per fully diluted share, which included $18.8 million or $0.36 per diluted share of restructuring charges, compared to $17.4 million or $0.34 per share in the first six months of 2008. Adjusted EBITDA was $92.1 million in the first six months of 2009, which included $18.8 million of restructuring charges, compared to $138.8 million in the same period last year. Free cash flow in the first six months of 2009 was $14.5 million compared to $22.0 million in the same period last year. Operating income, net income and Adjusted EBITDA in the first six months of 2008 included a net gain of $5.7 million, $4.9 million and $5.9 million, respectively, related to the sale of a facility in Mexico. Free cash flow in the first six months of 2008 included installment payments of $2.7 million, also related to the sale of the facility in Mexico. Operating income, net income, Adjusted EBITDA and free cash flow in the first six months of 2008 also included a net gain of $5.9 million related to the sale of a non- core trademark. Organizational Restructuring On May 28, 2009, the Company announced a worldwide organizational restructuring, rightsizing the organization to reflect the more efficient workflows and processes that have been implemented over the last two years. The primary components of the organizational restructuring, which have been fully implemented, involved consolidating certain functions; reducing layers of management to increase accountability and effectiveness; streamlining support functions to reflect the new organizational structure; and further consolidating the Company's office facilities in New Jersey. The organizational restructuring resulted in the elimination of approximately 400 positions worldwide, including approximately 325 current employees and approximately 75 open positions. Annualized cost reductions from this organizational restructuring are expected to be approximately $30 million, of which approximately $15 million will benefit second half 2009 results. Restructuring and related charges are expected to be approximately $21 million comprised of $18.3 million of employee-related costs, including severance and other termination benefits, which was recognized in the second quarter of 2009, and approximately $3 million related to the consolidation of the Company's office facilities in New Jersey, which will be recognized in the third quarter of 2009. The Company continues to execute its established business strategy: (i) building and leveraging its strong brands; (ii) improving the execution of its strategies and plans, and providing for continued improvement in its organizational capability through enabling and developing its employees; (iii) continuing to strengthen its international business; (iv) improving its operating profit margins and cash flow; and (v) improving its capital structure. A full-text copy of Revlon's quarterly report is available at no charge at http://ResearchArchives.com/t/s?40a9 About Revlon Revlon Inc. -- http://www.revloninc.com/-- is a worldwide cosmetics, hair color, beauty tools, fragrances, skincare, anti- perspirants/deodorants and beauty care products company. Revlon Inc. conducts its business exclusively through its direct wholly owned operating subsidiary, Revlon Consumer Products Corporation, and its subsidiaries. Revlon is a direct and indirect majority owned subsidiary of MacAndrews & Forbes Holdings Inc., a corporation wholly-owned by Ronald O. Perelman. The Company's brands, which are sold worldwide, include Revlon(R), Almay(R), ColorSilk(R), Mitchum(R), Charlie(R), Gatineau(R), and Ultima II(R). ROLLLING HILLS: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Rollling Hills Camping Resort, Inc. 11 Hunter Rd Taylorsville, KY 40071 Bankruptcy Case No.: 09-33867 Chapter 11 Petition Date: July 31, 2009 Court: United States Bankruptcy Court Western District of Kentucky (Louisville) Judge: David T. Stosberg Debtor's Counsel: Neil Charles Bordy, Esq. Seiller Waterman LLC 2200 Meidinger Tower 462 S 4th Street Louisville, KY 40202 Tel: (502) 584-7400 Email: bordy@derbycitylaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 A full-text copy of the Debtor's petition, including a list of its 2 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/kywb09-33867.pdf The petition was signed by James M. Gulick, vice president of the Company. SALLY BEAUTY: June 30 Balance Sheet Upside-Down by $650.6 Million ----------------------------------------------------------------- Sally Beauty Holdings, Inc., reported that at June 30, 2009, it had $1.46 billion in total assets and $1.69 billion in total debts, including capital leases, resulting in $650.6 million in stockholders' deficit. The Company said consolidated net sales for the fiscal 2009 third quarter were $673.3 million, a decline of 0.5% from the fiscal 2008 third quarter, and include a negative impact from foreign currency exchange of $21.9 million, or 3.2 % of sales. Same store sales in the fiscal 2009 third quarter grew 2.6% from the fiscal 2008 third quarter. Fiscal 2009 third quarter GAAP net earnings were $31.5 million, growth of 7.3% from the fiscal 2008 third quarter. GAAP diluted earnings per share were $0.17 compared to $0.16 in the fiscal 2008 third quarter. Fiscal 2009 third quarter adjusted net earnings, a non-GAAP measure, were $30.0 million, an increase of 22.5% over the fiscal 2008 third quarter. Adjusted earnings per share were $0.16, growth of 23.1% when compared to $0.13 adjusted earnings per share in the fiscal 2008 third quarter. In the fiscal 2009 third quarter capital expenditures were $9.5 million. Total store count at the end of fiscal 2009 third quarter was 3,821, an increase over fiscal 2008 third quarter of 105 stores, or growth of 2.8%. Debt maturities, excluding capital leases, are: FY2009 $864,000 FY2010 $1,364,000 FY2011 $39,640,000 FY2012 $84,520,000 FY2013 $9,390,000 Thereafter $1,560,755,000 ----------------- Total debt $1,696,533,000 Cash and cash equivalents as of June 30, 2009, were $105.9 million. The Company's asset-based loan revolving credit facility began the fiscal 2009 third quarter at zero outstanding borrowings and ended the quarter unchanged. The Company paid down an additional $30 million in long term debt during the quarter. Capital expenditures in the fiscal 2009 third quarter were $9.5 million. The Company expects to end the fiscal year 2009 with capital expenditure in the range of $37 million to $39 million versus previous projections of $35 million to $40 million. Inventories as of June 30, 2009 were $559.6 million, a decrease of $50.7 million from June 30, 2008. On a sequential basis, fiscal 2009 third quarter versus the fiscal 2009 second quarter, inventory increased $20.7 million. "We are pleased with our third quarter performance as we once again delivered solid financial results. Consolidated same store sales grew 2.6% and gross profit, as a percent of sales, expanded 60 basis points for the quarter and year-to-date," stated Gary Winterhalter, President and Chief Executive Officer. "We remain confident in our ability to generate cash and were able to pay down an additional $30 million of long-term debt during the quarter. We believe we are well positioned to execute our long- term strategy of growing the Company both organically and through potential acquisitions while at the same time continue to strengthen our balance sheet." About Sally Beauty Holdings Sally Beauty Holdings, Inc. (NYSE: SBH) -- http://www.sallybeauty.com/-- is an international specialty retailer and distributor of professional beauty supplies. Through the Sally Beauty Supply and Beauty Systems Group businesses, the Company sells and distributes through over 3,800 stores, including roughly 200 franchised units, throughout the United States, the United Kingdom, Belgium, France, Canada, Puerto Rico, Mexico, Ireland, Spain and Germany. Sally Beauty Supply stores offer more than 6,000 products for hair, skin, and nails through professional lines such as Clairol, L'Oreal, Wella and Conair, as well as an extensive selection of proprietary merchandise. Beauty Systems Group stores, branded as CosmoProf or Armstrong McCall stores, along with its outside sales consultants, sell up to 9,800 professionally branded products including Paul Mitchell, Wella, Sebastian, Goldwell, and TIGI which are targeted exclusively for professional and salon use and resale to their customers. SALLY BEAUTY: L'Oreal USA Amends Breach of Contract Suit -------------------------------------------------------- Sally Beauty Holdings, Inc., said L'Oreal USA S/D, Inc., has filed a Second Amended Complaint in connection with a lawsuit in the Superior Court of the State of California in and for the County of San Diego - Central Division against SD Hair, Ltd. and Hair of Nevada, LLC, franchisees of the subsidiary Armstrong McCall division of the Company's BSG business unit, and Armstrong McCall, among others. The original suit alleged, among other things, that SD Hair breached its franchise agreement with Armstrong McCall by selling Matrix branded products to unauthorized buyers. At this stage, there was no direct action against Armstrong McCall. The Second Amended Complaint alleges, among other things, that Armstrong McCall, certain of its employees and others were involved in selling Matrix branded products to unauthorized buyers and that certain of its employees (and others) engaged in improper business transactions for personal benefit during 2005 through 2007. L'Oreal seeks money damages, certain injunctive relief and a declaration that L'Oreal is entitled to terminate the 1981 Matrix Distributor Agreement now in effect between L'Oreal and Armstrong McCall. None of the employees involved in the allegations are executive officers of the Company. Substantially all of the allegations were made known by L'Oreal to the Company prior to the filing of the Second Amended Complaint. L'Oreal also provided the Company with documents allegedly supporting the allegations. As a result of the allegations made by L'Oreal, many of which are incorporated into the Second Amended Complaint, the Audit Committee of the Board of Directors of the Company engaged independent special counsel to investigate whether certain employees engaged in improper business transactions for personal benefit. After extensive review, the Audit Committee and independent special counsel found insufficient evidence to support a conclusion that Company employees entered into improper transactions for personal benefit. The Company intends to file its response to the Second Amended Complaint and to vigorously defend itself in the lawsuit. Armstrong McCall intends to conduct its normal business pending the resolution of the litigation. The Company said Armstrong McCall retains its exclusive rights to distribute Matrix products in its territories. The Company also said L'Oreal professional products will remain available in BSG stores that currently carry the products. Sally Beauty Supply stores, which carry a different selection of L'Oreal products from those carried in BSG or Armstrong McCall stores, are not impacted by these developments. "We currently expect no material impact on our financial statements. Pending resolution of the litigation, we expect to continue to incur legal fees related to the litigation and have planned accordingly," the Company said. Over the last couple of years, Matrix sales as a percent of overall sales have declined at Armstrong McCall. Sales of Matrix through Armstrong McCall were $8.2 million during the quarter ended June 30, 2009, representing approximately 3% of BSG's sales for the third quarter of fiscal 2009. About Sally Beauty Holdings Sally Beauty Holdings, Inc. (NYSE: SBH) -- http://www.sallybeauty.com/-- is an international specialty retailer and distributor of professional beauty supplies. Through the Sally Beauty Supply and Beauty Systems Group businesses, the Company sells and distributes through over 3,800 stores, including roughly 200 franchised units, throughout the United States, the United Kingdom, Belgium, France, Canada, Puerto Rico, Mexico, Ireland, Spain and Germany. Sally Beauty Supply stores offer more than 6,000 products for hair, skin, and nails through professional lines such as Clairol, L'Oreal, Wella and Conair, as well as an extensive selection of proprietary merchandise. Beauty Systems Group stores, branded as CosmoProf or Armstrong McCall stores, along with its outside sales consultants, sell up to 9,800 professionally branded products including Paul Mitchell, Wella, Sebastian, Goldwell, and TIGI which are targeted exclusively for professional and salon use and resale to their customers. At June 30, 2009, Sally Beauty had $1.46 billion in total assets and $1.69 billion in total debts, including capital leases, resulting in $650.6 million in stockholders' deficit. SANTA FE HOLDING: Gets Court Nod to Borrow $1.2MM from DBMC ----------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Tennessee authorized Santa Fe Holding Company Inc. and its debtor-affiliates to access, on an interim basis, $1.2 million out of $4 million in postpetition financing from DBMC Investments L.L.C. The Court also allowed the Debtors to use the lender's cash collateral. The facility will terminate at the lesser of the 130th day after the Debtors' bankruptcy filing or the occurrence of a termination event. The lender will be entitled to a perfected first-priority priming lien and security interest in all existing and future Collateral of the Debtors as well as a super-priority administrative claim. Proceeds of the facility will be used to (i) pay postpetition payroll, payroll and other taxes, inventory suppliers, and overhead; to maintain their assets; (ii) provide financial information; (iii) attempt to reorganize their business; or (iv) take any of the other actions which the Debtors believe are necessary to maximize the value of their assets. The facility contains customary and appropriate events of default. Brentwood, Tennessee-based Santa Fe Holding Company, Inc., and its affiliates filed for Chapter 11 on July 15, 2009 (Bankr. M. D. Tenn. Case No. 09-07856). Tristan Manthey, Esq., and William H. Patrick III, Esq., at Heller Draper Hayden Patrick & Horn LLC represent the Debtors in their restructuring efforts. In their petition, the Debtors listed assets and debts both ranging from $10,000,001 to $50,000,000. SANTE FE HOLDING: Selects Heller Draper as Counsel -------------------------------------------------- Santa Fe Holding Company Inc. and its debtor-affiliates ask the Hon. George Paine of the U.S. Bankruptcy Court for the Middle District of Tennessee for permission to employ Heller, Draper, Hayden, Patrick & Horn, L.L.C., as their counsel. The firm will, among other things: a) advise the Debtors with respect to their rights, powers and duties as debtors and debtors in possession in the continued operation and management of their respective businesses and properties; b) prepare and pursue confirmation of a plan of reorganization and approval of a disclosure statement; c) prepare on behalf of the Debtors all necessary applications, motions, answers, proposed orders, other pleadings, notices, schedules and other documents, and reviewing all financial and other reports to be filed; d) advise the Debtors concerning and preparing responses to applications, motions, pleadings, notices and other documents which may be filed by other parties herein, and e) appear in Court to protect the interests of the Debtors before this Court. The firm's professionals will render services at the applicable rates: Professional Hourly Rate ------------ ----------- William H. Patrick, III, Esq. $450 Douglas S. Draper, Esq. $450 Tristan Manthey, Esq. $370 Designation Hourly Rate ----------- ----------- Attorneys $275-$450 Associates $275-$320 Paralegal $80-$120 The Debtors assure the Court that the firm is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. Brentwood, Tennessee-based Santa Fe Holding Company, Inc., and its affiliates filed for Chapter 11 on July 15, 2009 (Bankr. M. D. Tenn. Case No. 09-07856). Tristan Manthey, Esq., and William H. Patrick III, Esq., at Heller Draper Hayden Patrick & Horn LLC represent the Debtors in their restructuring efforts. In their petition, the Debtors listed assets and debts both ranging from $10,000,001 to $50,000,000. SANTE FE HOLDING: Names Dodson Parker as Corp. and Local Counsel ---------------------------------------------------------------- Santa Fe Holding Company Inc. and its debtor-affiliates ask the Hon. George Paine of the U.S. Bankruptcy Court for the Middle District of Tennessee for permission to employ Dodson, Parker, Behm & Capparella, PC, as their corporate and local counsel. The firm will, among other things: a) facilitate filing pro hac vice admissions for bankruptcy counsel with the Bankruptcy Clerk; b) provide such other routine assistance to or for bankruptcy counsel as may be requested from time to time; c) render such other legal and advisory services as may be reasonably requested by the Debtors in connection with this engagement; d) continue, to the extent required, pre-petition pending legal matters and litigation; and e) advise and represent the Debtors with respect to general corporate legal matters, employment, lease issues, real estate issues, obligations under existing financial documents and instruments, and intellectual property. The firm's hourly billing rates presently range from $150 to $400 for attorneys and $90 for paralegals. The Debtors assure the Court that the firm is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. Brentwood, Tennessee-based Santa Fe Holding Company, Inc., and its affiliates filed for Chapter 11 on July 15, 2009 (Bankr. M. D. Tenn. Case No. 09-07856). Tristan Manthey, Esq., and William H. Patrick III, Esq., at Heller Draper Hayden Patrick & Horn LLC represent the Debtors in their restructuring efforts. In their petition, the Debtors listed assets and debts both ranging from $10,000,001 to $50,000,000. SEA CHANGE GROUP: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Sea Change Group, LLC 350 Jericho Turnpike, Suite 300 Jericho, NY 11753 Bankruptcy Case No.: 09-75723 Chapter 11 Petition Date: July 31, 2009 Court: United States Bankruptcy Court Eastern District of New York (Central Islip) Judge: Alan S. Trust Debtor's Counsel: Kenneth L. Baum, Esq. Cole Schotz Meisel Forman & Leonard 25 Main St Hackensack, NJ 07602-0800 Tel: (201) 525-6327 Fax: (201) 678-6327 Email: kbaum@coleschotz.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 3 largest unsecured creditors is available for free at: http://bankrupt.com/misc/nyeb09-75723.pdf The petition was signed by Geoffrey Donaldson, managing member of the Company. SECURITY BANK: Files for Chapter 7 After Banks Seized ----------------------------------------------------- BankruptcyData.com reports that Security Bank Corp. filed for Chapter 7 protection with the U.S. Bankruptcy Court in the Middle District of Georgia, Case No. 09-52409. According to the Company's Web site, the Georgia Department of Banking & Finance and the Federal Deposit Insurance Corp. (FDIC) announced July 24 that State Bank & Trust Company, led by veteran banker Joe Evans has acquired assets and deposits of the banks owned by Security Bank Corp. The Georgia Department of Banking and Finance closed Security Bank of Bibb County, Security Bank of Jones County, Security Bank of Gwinnett County, Security Bank of Houston County, Security Bank of North Metro and Security Bank of North Fulton, each of which is a wholly-owned commercial banking subsidiary of Security Bank Corporation, according to the report, BankruptcyData.com reports. The Company's principal asset is the capital stock that it owns in the Banks, and, as a result of the closure of the Banks, the Company has minimal remaining tangible assets. The Company, the report says, indicated total assets of more than $2 billion on its most recent annual report filed with the SEC but total assets as of the petition date are indicated as less than $10 million. Jeffrey W. Kelley of Troutman Sanders represents the Company, the report notes. SEMGROUP LP: Canada Crude's Amended Chapter 15 Database ------------------------------------------------------- Foreign Debtors subject to Chapter 15 petitions: Entity Case No. ------ -------- SemCanada Crude Company 09-12637 SemCAMS ULC 09-12638 CEG Energy Options, Inc. 09-12639 A.E. Sharp Limited 09-12641 SemCanada Energy Company 09-12642 CCAA Petition Date: July 22, 2008 Canadian Court: Court of Queen's Bench of Alberta Judicial District of Calgary Canadian Judge: Honorable Madame Justice Romaine Applicants' Solicitors: A. Robert Anderson, Q.C., Esq. Kelly Bourasa, Esq. Blake, Cassels & Graydon LLP 3500, 855 - 2nd Street S.W. Calgary, AB T2P 4J8 Tel No.: (403) 260-9624 Fax No.: (403) 260-9700 CCAA Monitor: Ernst & Young, Inc. Chapter 15 Petitioner: Ernst & Young, Inc. Chapter 15 Petition Date: July 27, 2009 U.S. Bankruptcy Court: United States Bankruptcy Court for the District of Delaware U.S. Bankruptcy Judge: Hon. Brendan Linehan Shannon Petitioner's U.S. Bankruptcy Counsel: Mary Caloway, Esq. Jeffrey Carbino, Esq. Buchanan Ingersoll & Rooney PC 1000 West Street, Ste 1410 Wilmington, Delaware 19801 Tel: 302-552-4209 Fax: 302-552-4295 E-mail: mary.caloway@bipc.com jeffrey.carbino@bipc.com U.S. Trustee: Roberta A. DeAngelis Acting U.S. Trustee for Region 3 844 King Street, Room 2207 Lockbox #35 Wilmington, Delaware 19899-0035 Tel: 302-573-6491 Est. Assets: $100,001 to $500,000 Est. Debts: More than $1 billion About SemGroup L.P. SemGroup, L.P., -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on November 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SEMGROUP LP: Court OKs Settlement With Catsimatidis --------------------------------------------------- The United States Bankruptcy Court for the District of Delaware authorizes SemGroup L.P. to enter into the settlement agreement with Terrence Ronan; SemGroup, G.P., L.L.C., the sole general partner of SemGroup LP; a group led by John Catsimatidis, United Refining Energy Corp.; and United Refining Company, who are members of the management committee of non-debtor SemGroup G.P.; Bank of America, N.A., as agent for the prepetition and postpetition lenders; and the Official Committee of Unsecured Creditors. The Catsimatidis Group is composed of Mr. Catsimatidis, Nelson Happy, Myron L. Turfitt, James C. Hansel, United Refining Energy Corp., and United Refining Company, who are members of the management committee of non-debtor SemGroup G.P., the sole general partner of SemGroup LP. The Settlement, which is a core addition to the Disclosure Statement, will entirely resolve: (i) United Refining's complaint for declaratory judgment and for turnover of property pursuant to Section 542(b) of the Bankruptcy Code against Debtor SemMaterials, L.P.; (ii) the Debtors' complaints, as amended, for breach of contract, declaratory judgment, breach of fiduciary duty, injunctive relief, and violation of the automatic stay against Messrs. Catsimatidis, Matthew Coughlin, III, Bring, Happy, Turfitt, and United Refining Energy Corp.; and Tulsa Energy Acquisitions, LLC; and (iii) the Catsimatidis Group's complaint against Mr. Ronan for declaratory relief and breach of duty of loyalty. Under the Catsimatidis Settlement, Messrs. Catsimatidis, Happy, Hansel, and Bring are deemed to have withdrawn their objection to the Debtors' Disclosure Statement and will support the Debtors' Plan of Reorganization. In addition, Messrs. Catsimatidis, Happy, Hansel, and Bring will resign from the Management Committee effective as of the date of final judicial approval of the settlement. On or before August 28, 2009, United Refining will pay to the Debtors $3,900,000 in full and final satisfaction of all amounts owed by United Refining to the Debtors under a Vulcan Joint Venture. M. Coughlin Settlement Agreement Moreover, at the Debtors' behest, Judge Shannon approves a settlement agreement executed among the Debtors, Terrence Ronan, BofA, the Creditors' Committee, Matthew F. Coughlin, III, and Tulsa Energy Acquisitions, LLC. Mr. Coughlin and Tulsa Energy are the remaining defendants in the Catsimatidis Action. The salient terms of the Coughlin Settlement are: * Mr. Coughlin is deemed to have already withdrawn his previous objections to the Disclosure Statement. Mr. Coughlin and Tulsa Energy will not support objections to the Disclosure Statement or the Second Amended Plan. Mr. Coughlin and Tulsa Energy agree not to further object to the Second Amended Plan or the Disclosure Statement. If asked by the Debtors, Mr. Coughlin and Tulsa Energy will publicly support the Second Amended Plan with Mr. Coughlin doing so on July 20, 2009, on behalf of himself and Tulsa Energy. * The Coughlin Settlement resolves all issues with respect to the Catsimatidis Action and the Oklahoma Action, and the objections filed by the Catsimatidis Group against the Disclosure Statement with respect to Mr. Coughlin and Tulsa Energy. The Catsimatidis Action will be dismissed with prejudice to Mr. Coughlin and Tulsa Energy. Mr. Coughlin further agrees that he will not oppose the dismissal of the Oklahoma Action of SemGroup GP. * Mr. Coughlin and Tulsa Energy will be added to the release and exculpation provisions of the Second Amended Plan. * If the Official Producers' Committee joins in support of the Second Amended Plan, then the Debtors will ask that the OPC exchange releases with Mr. Coughlin and Tulsa Energy * Mr. Coughlin will take no further action as a member of the Management Committee, as asked by the Debtors through Mr. Ronan or his successor chief executive officer, or as ordered by the Court. * Mr. Coughlin executed a written consent of the Management Committee of SemGroup GP, dated July 17, 2009, ratifying the Coughlin Settlement. The Written Consent is intended a ratification of the resolutions of the Management Committee. Mr. Coughlin will tender his resignation immediately as a member of the Management Committee effective as of July 30, 2009. * Parties agree to mutual releases. Parties to the Coughlin Settlement will be each responsible for their own attorneys' fees and expenses. Mr. Coughlin and Tulsa Energy will not assert a claim for substantial contribution under Section 503(b)(3)(D) of the Bankruptcy Code. The Debtors told the Court that the Coughlin Settlement, in conjunction with the Catsimatidis Settlement, establishes that the entire Management Committee of SemGroup G.P. recognizes the Debtors' authority to prosecute their Second Amended Plan. Moreover, the Settlement Agreement will resolve all outstanding issues with respect to the Catsimatidis Action. About SemGroup L.P. SemGroup, L.P., -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on November 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SEMGROUP LP: Five Units File Chapter 15, Have CCAA Plans -------------------------------------------------------- SemCanada Crude Company, SemCAMS ULC, CEG Energy Options, Inc., A.E. Sharp Limited, and SemCanada Energy Company, filed petitions for recognition of their insolvency proceedings pursuant to the Canadian Companies' Creditors Arrangement Act as "foreign main proceedings" under Chapter 15 of the U.S. Bankruptcy Code. The Chapter 15 Petitions were filed in the U.S. Bankruptcy Code for the District of Delaware where the Chapter 11 case of SemGroup LP, SemCanada Crude's parent, is pending. The SemCanada Group and its affiliates in the United States have been engaged in a coordinated cross-border restructuring. The CCAA Applicants and the U.S. Debtors have made substantial progress in restructuring their businesses, and are now pursuing parallel reorganization plans in the United States and Canada. The SemCanada Group has proposed a Plan of Arrangement and Reorganization for each of SemCAMS ULC and SemCanada Crude to enable them to continue as going concerns and to safeguard substantial employment. SemCanada Energy Company, CEG Energy Options, Inc., and A.E. Sharp Limited have substantially liquidated all of their assets and have retained the proceeds of the liquidation. The SemCanada Energy Group has proposed a Consolidated Plan of Distribution pursuant to CCAA and the Bankruptcy and Insolvency Act, the purpose of which is to resolve all outstanding matters in a cost efficient and fair manner, including the claims of all the group's creditors, outside of a more lengthy bankruptcy or litigation. Ernst & Young, Inc., the Applicants' CCAA monitor appointed by the Hon. Madame Justice Romaine in the Court of Queen's Bench of Alberta Judicial District of Calgary, believes that if the CAMS Plan and the Crude Plan are not implemented, the most likely alternative would be a liquidation of those companies' assets under receivership or the BIA. The Monitor believes the CAMS Plan and the Crude Plan would produce a more favorable result for creditors than liquidation. The Monitor also concludes that the settlement and distribution proposed in the Energy Plan would produce a just and reasonable outcome for the SemCanda Energy Group's creditors. In the United States, the U.S. Debtors have submitted a parallel Second Amended Joint Plan of Reorganization dated July 21, 2009. A condition precedent for the implementation of each of the U.S. Plan and Canadian Plans is that the other Plans take effect the same day. To obtain creditor acceptance and the Calgary Court's sanctioning of the Canadian Plans, the SemCanada Group must first obtain authority from the Calgary Court to distribute the Canadian Plans to creditors and call a meeting or meetings to consider and vote on those Plans. The Monitor intends to recommend to the Calgary Court that creditors of the SemCanada Group vote to accept the Canadian Plans at the meeting of creditors currently scheduled for September 10, 2009. Provided the Calgary Court enters an order scheduling the Creditors' Meetings, the Monitor asks the U.S. Court to enter an order recognizing and enforcing the Canadian Meetings Order in the United States in addition to recognizing the Canadian Proceedings as "foreign main proceeding." Cross-border coordination is crucial to the successful emergence of the SemCanada Group and the U.S. Debtors, and the U.S. Court's recognition of the Canadian Proceedings and enforcement of the Canadian Orders in the United States will ensure a fair and efficient process for consideration of and voting on the Canadian Plans and, subsequently, a fair and efficient conclusion to the Canadian Proceedings, the Monitor contends. Furthermore, the Monitor notes, the recognition and enforcement are consistent with the goals of international cooperation and assistance to foreign courts embodied in Chapter 15 of the Bankruptcy Code. The Delaware Bankruptcy Court, at the behest of SemCanada Crude and its affiliates, ordered that the Chapter 15 cases will be jointly administered under Case No. 098-12637. CCAA Plans (1) SemCanada Crude's Plan Under SemCanada Crude's Plan of Arrangement and Reorganization, dated July 24, 2009, ordinary creditors will be entitled to vote their Voting Claims at the Creditors' Meeting with respect of the Plan. Secured Lenders will be entitled to receive payment in full of their Claims and will be deemed to have a Voting Claim in the amount of the Lenders' Total Claim less $1450,000,000. Noteholder Creditors will be deemed to have a Proven Claim as calculated based on proven claims of the Noteholder Creditors against the U.S. Debtors. A full-text copy of SemCanada Crude's Plan is available for free at http://bankrupt.com/misc/SemCanadaCrudePlan.pdf (2) SemCAMS' Plan SemCAMS' Plan of Arrangement and Reorganization, dated July 24, 2009, provides that Ordinary Creditors will be entitled to vote on the Plan during the Creditors' Meeting. Secured Lenders and Noteholder Creditors will be deemed to have a Proven Claim as calculated based on the proven claims of the Secured Lenders and the Noteholder Creditors against the U.S. Debtors. A full-text copy of the SemCAMS Plan is available for free at http://bankrupt.com/misc/SemCAMsPlan.pdf (3) SemCanada Energy Group Plan The Consolidated Plan of Distribution affecting SemCanada Energy Company, A.E. Sharp Ltd., and CEG Energy Options, Inc., dated July 24, 2009, contemplates that Secured Lenders will be entitled to receive payment in full and will be deemed to have a Voting Claim in the amount of the Lenders' Total Claim less $108,000,000. Noteholder Creditors will be entitled to receive distributions from the U.S. Debtors in accordance with the U.S. Plan. Ordinary Creditors will be entitled to vote on the SemCanada Energy Group Plan during the Creditors' Meeting. A full-text copy of the SemCanada Energy Group Plan is available for free at http://bankrupt.com/misc/SemCanEnergyPlan.pdf About SemGroup L.P. SemGroup, L.P., -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on November 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SEMGROUP LP: Producers' Committee Object to Plan ------------------------------------------------ The Official Producers' Committee complains that SemGroup L.P. and its affiliates' Second Amended Joint Plan of Reorganization fails to satisfy the requirements of Section 1129(b) of the Bankruptcy Code. For one, the OPC points out, the Second Amended Plan does not satisfy the requirements for cram-down of Producer Secured Claim classes under Section 1129(b)(2)(A) in that the Plan: -- does not provide the indubitable equivalent of the claims to Producers; -- discriminates unfairly against those classes; -- provides no reserve for payment of the claims if they are ultimately allowed; and -- does not provide for the adequate protection of claims of Producers. The OPC further alleges that the Second Amended Plan embodies an impermissible gift from the Prepetition Lenders to unsecured creditors. Accordingly, the OPC asks the Court to deny confirmation of the Second Amended Plan. About SemGroup L.P. SemGroup, L.P., -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on November 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) STATION CASINOS: Has Agreement for FCP Use of Cash Collateral ------------------------------------------------------------- Debtor Station Casinos, Inc., and its indirect wholly owned subsidiary FCP PropCo, LLC, ask the Court to approve, on an interim basis, an agreement for consensual use of cash collateral for FCP PropCo in accordance with the terms of a stipulation for adequate protection and use of cash collateral entered into by SCI and FCP PropCo, and German American Capital Corporation and JP Morgan Chase Bank, N.A., in their capacity as lenders under Mortgage Loan Agreement and Deutsche Bank AG as swap counterparty to FCP PropCo with respect to an interest rate swap agreement expiring November 2012. FCP PropCo owns certain real property on which SCI operates four hotel and casinos. FCP PropCo and SCI entered into a Master Lease Agreement, as amended, under which SCI leases the real property for the Leased Hotels from FCP PropCo. Prior to the Petition Date, FCP PropCo entered into an Amended and Restated Loan and Security Agreement with the Mortgage Lenders, pursuant to which the Mortgage Lenders made loans and other financial accommodations to PropCo. The Leased Hotels, the Master Lease, the rent due under the Master Lease, the cash collateral, and certain other assets pledged, are pledge to the Mortgage Lenders or to German American Capital, as the Collateral Agent for the Mortgage Lenders, to secure the obligations due under the Mortgage Loan Agreement. Payments made by SCI to FCP PropCo are used to satisfy FCP PropCo's obligations under the Master Loan Agreement and the Swap, and to pay other operating expenses. As of the Petition Date, the principal amount of $1.8 billion, together with accrued and unpaid interest in an amount equal to $1,271,958 was outstanding under the Mortgage Loan Agreement. Under the Cash Collateral Stipulation, SCI will timely pay all amounts due under the Master Lease, as well as perform all of its obligations under the Master Lease. FCP PropCo will be permitted to use Cash Collateral derived from Master Lease payments for payments under the Mortgage Loan Agreement and the associated Swap and the FCP PropCo operating and reorganization expenses in accordance with the budget attached to the Stipulation. Each Mortgage Lender is entitled, pursuant to Sections 361, 362 and 363(e) of the Bankruptcy Code, to adequate protection of its interest in the Collateral on account of FCP PropCo's use of the Collateral and any other diminution in value for any reason whatsoever. Master Lease payments will be made to the account to which payments were made prior to the Petition Date, until FCP PropCo provides notice of a change in bank account information. The payments will be used only for: (a) a catch-up payment of all unpaid prepetition interest and fees payable including fees due under the Mortgage Loan Agreement; (b) monthly payments due, if any, under the Swap, excluding termination damages. (c) the payment of non-default rate interest due under the Mortgage Loan Payable in accordance with the terms of the Mortgage Loan Agreement; (d) all reasonable fees and expenses of the Mortgage Lenders to the extent due under the Mortgage Loan Agreement and Loan Documents, including professional fees of Sidney Austin LLP, Cadwalader Wickersham & Taft LLP, and Lionel Sawyer & Collins LLP, counsel to Mortgage Lenders, and Miller Buckfire & Co., financial advisor to the Mortgage Lenders; (e) Boulder Station ground rent due, paid from funds impounded this purpose; (f) property taxes due on the Lease Hotels paid from funds impounded for this purpose, and insurance premiums due on the Leased Hotels paid from funds impounded for this purpose to the extent required under the Mortgage Loan Agreement; (g) FCP PropCo's reasonable ordinary course expenses of operation consistent with prepetition practice permitted under Mortgage Loan Agreement, including reasonable ordinary course professional fees and expenses; (h) compensation for and reasonable fees and expenses incurred by FCP PropCo's independent directors, including fees and cost of Gibson, Dunn & Crutcher, as attorneys, and FTI Consulting, as advisors, to the independent directors; and (i) FCP PropCo's expenses of reorganization consisting of trustee funds and court costs, if any, and the reasonable professional of Milbank Tweed, Hadley and McCloy and Lewis & Roca, as attorneys, Lazard as financial advisor, and if engaged by FCP PropCo as conflicts counsel, Gibson, Dunn & Crutcher, provided that the compensation for estate professionals will (i) be subject to the Budget and (ii) be subject to payment and allowance pursuant to the Bankruptcy Code. The expenditures will be limited to the amounts set forth in the Budget and will not be made after the earlier of (i) expiration of the 13-week period in the Budget or (ii) a termination event. A full-text copy of the 13-Week Budget is available for free at http://bankrupt.com/misc/sci_fcpbudget.pdf The Mortgage Lenders and FCP PropCo may agree to the application of any additional amounts in the CMBS Bank Account to reduce the principal balance of the Mortgage Loan, and may implement the payment application after notice and a hearing and further approval by the Court. All of the Cash Collateral will be deposited and maintained at all times in the CMBS Bank Account or other CMBS Mortgage Loan Accounts. The parties agree that it is in their mutual best interest that the status quo be maintained with respect to the Leased Hotels and the Master Lease in accordance with the terms of the stipulation. SCI avers that the terms of the stipulation provide a means to maintaining the status quo in the most efficient and least disruptive manner possible. The Court will convene a hearing to consider the approval of the Stipulation on August 5, 2009, at 12:00 p.m. The SCI and FCP PropCo also ask the Court to schedule a final hearing on the Motion on September 2, 2009, at 9:30 a.m., but in no event not later than 30 days after the date of entry of the Interim Order. About Station Casinos Station Casinos, Inc., is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Station Casinos Inc., together with its affiliates, filed for Chapter 11 on July 28, 2009 (Bankr. D. Nev. Case No. 09-52477). Station Casinos has hired Milbank, Tweed, Hadley & McCloy LLP as legal counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck, LLP, as regulatory counsel; and Lewis and Roca LLP as local counsel. The Debtor is also hiring Lazard Freres & Co. LLC as investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent. In its bankruptcy petition, Station Casinos said that it had assets of $5,725,001,325 against debts of $6,482,637,653 as of June 30, 2009. About 4,378,929,997 of its liabilities constitute unsecured or subordinated debt securities. Bankruptcy Creditors' Service, Inc., publishes Station Casinos Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Station Casinos Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) STATION CASINOS: Proposes to Honor Prepetition Insurance Dues ------------------------------------------------------------- In connection with the operation of their businesses, Station Casinos Inc. maintain workers' compensation, directors' and officers' liability, and various other liability, property, and automobile insurance programs through several different insurance carriers, including, but not limited to insurance programs and policies listed at http://bankrupt.com/misc/sciinsurance.pdf The Insurance Programs include coverage for the benefit of the Debtors and Station Casinos, Inc.'s non-debtor subsidiaries. Prepetition, all costs associated with the Insurance Programs were paid by SCI. Majority of the coverages benefit, and cover the risks of, the non-debtor subsidiaries. Thus, the Debtors anticipate that, postpetition, all costs associated with the Insurance Programs, including coverages for the benefit of both the Debtors and SCI's non-debtor subsidiaries, will be paid by Past Enterprises, Inc., which is a wholly owned, non-debtor subsidiary of SCI. The Debtors anticipate that, postpetition, cash flow generated by the non-debtor subsidiaries of SCI will generally be concentrated into an account held by Past Enterprises. The Debtors do not intend to separate or allocate the cost of insurance coverages between SCI and its non-debtor subsidiaries because procuring all insurance coverages for the Station Group together creates certain, material cost savings, and separating the procurement process between the Debtors and the non-debtor subsidiaries would be onerous, expensive and impracticable, Paul S. Aronzon, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los Angeles, California, tells the Court. The Debtors believe that they do not owe any amount under the Insurance Programs as of the Petition Date. The Debtors, by this motion, seek the Court's authority to continue to pay amounts due under the Insurance Programs. The Debtors also seek the Court's authority to procure Insurance Programs for the Station Group on the understanding that SCI's non-debtor subsidiaries will pay all costs associated with those Insurance Programs, including costs paid on behalf of the Debtors, pending entry of the Final Order. The Debtors employ an insurance broker, Cragin & Pike, Inc., to assist with the procurement and negotiation of the terms of the Insurance Programs, other than D&O Programs. Cragin & Pike earns a commission on each policy, which is part of the aggregate premium amount of each policy. The Debtors believe that, as of the Petition Date, no amounts are owed to Cragin & Pike in connection with their brokerage services. Nevertheless, the Debtors seek the Court's authority to pay in the ordinary course of business any amounts owing to Cragin & Pike in connection with their brokerage services that are payable as of the Petition Date and amounts SCI's non-debtor subsidiaries fail to pay. In connection with the Insurance Programs, SCI has entered into financing arrangements with First Funding Corp. and Zurich American Insurance Company to finance a portion of its insurance premiums. These arrangements allowed SCI to pay certain of its insurance premiums in several installments over a period of time, instead of in a single, large annual payment. In connection with the financing arrangement with First Funding Corp., SCI finances approximately $4,253,194 in premiums. In connection with the financing arrangement with Zurich Financial Services, SCI finances approximately $1,720,892 in premiums. Prepetition, all costs associated with the aforementioned financing arrangements were paid by SCI. As of the Petition Date, eight installments of each of the financing arrangements with an aggregate value of approximately $4,212,384 remain unpaid. Postpetition, the Debtors anticipate that all costs and expenses associated with the insurance financing arrangements, including costs paid on behalf of the Debtors, will be paid by SCI's non-debtor subsidiaries. Nevertheless, the Debtors seek the Court's authority to pay in the ordinary course of business any amounts owing in connection with the financing arrangements payable as of the Petition Date and amounts SCI's non-debtor subsidiaries fail to pay. The Debtors also ask the Court to instruct their banks to honor, process and pay, to the extent funds are available in their accounts, any checks or wire transfer requests issued by the Debtors with respect to their Prepetition Insurance Obligations, pending entry of the Final Order. About Station Casinos Station Casinos, Inc., is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Station Casinos Inc., together with its affiliates, filed for Chapter 11 on July 28, 2009 (Bankr. D. Nev. Case No.: 09-52477). Station Casinos has hired Milbank, Tweed, Hadley & McCloy LLP as legal counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck, LLP, as regulatory counsel; and Lewis and Roca LLP as local counsel. The Debtor is also hiring Lazard Freres & Co. LLC as investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent. In its bankruptcy petition, Station Casinos said that it had assets of $5,725,001,325 against debts of $6,482,637,653 as of June 30, 2009. About 4,378,929,997 of its liabilities constitute unsecured or subordinated debt securities. STATION CASINOS: Sec. 341 Meeting of Creditors on August 31 ----------------------------------------------------------- The United States Trustee for Region 17 will convene a meeting of the creditors of Stations Casinos, Inc., and its debtor affiliates on August 31, 2009, at 1:00 p.m., at Room 2110, at C. Clifton Young Federal Building and U.S. Courthouse 300 Booth Street, in Reno, Nevada. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtors' bankruptcy cases. Attendance by the Debtors' creditors at the meeting is welcome, but not required. The Sec. 341(a) meeting offers the creditors a one-time opportunity to examine the Debtors' representative under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. The meeting may be continued or adjourned from time to time by notice at the meeting, without further written notice to the creditors. About Station Casinos Station Casinos, Inc., is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Station Casinos Inc., together with its affiliates, filed for Chapter 11 on July 28, 2009 (Bankr. D. Nev. Case No. 09-52477). Station Casinos has hired Milbank, Tweed, Hadley & McCloy LLP as legal counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck, LLP, as regulatory counsel; and Lewis and Roca LLP as local counsel. The Debtor is also hiring Lazard Freres & Co. LLC as investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent. In its bankruptcy petition, Station Casinos said that it had assets of $5,725,001,325 against debts of $6,482,637,653 as of June 30, 2009. About 4,378,929,997 of its liabilities constitute unsecured or subordinated debt securities. Bankruptcy Creditors' Service, Inc., publishes Station Casinos Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Station Casinos Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) STUART EDWARDS: Court Orders Conversion of Case to Chapter 7 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California ordered on July 28, 2009, the conversion of Stuart D. Edwards' Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code. The Court's decision was made after the Debtor's failure to serve and file his monthly operating reports for the months of March, April, May and June 2009 despite having been required by the Court to do so no later than July 20, 2009. Salinas, California-based Stuart D. Edwards, a.k.a. Stuart Denzil Edwards filed for Chapter 11 protection on June 3, 2008 (Bankr. N.D.Calif. No. 08-52920). Charles B. Greene, Esq., at the Law Offices of Charles B. Greene, represents the Debtor as counsel. The Debtor listed assets between $10 million and $50 million and debts between $1 million and $10 million. STUDIO THEATRE: Court Orders Conversion of Case to Chapter 7 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of New York, in Buffalo, issued on July 22, 2009, an order converting Studio Theatre School's Chapter 11 case to one under Chapter 7 of the Bankruptcy Code. As reported in the Troubled Company Reporter on June 26, 2009, Diana G. Adams, U.S. Trustee for Region 2, said that the Debtor's case should be converted to Chapter 7 of the Bankruptcy Code or, in the alternative, dismissed for "cause". The U.S. Trustee said that the Debtor has failed to file monthly financial reports since the inception of its case and has also failed to pay the quarterly fees due to the United States Trustee for the quarter ended March 31, 2009. The U.S. Trustee added the Debtor has no current business operations to reorganize and has demonstrated an absence of a reasonable likelihood of rehabilitation warranting dismissal or conversion of its case pursuant to section 1112(b)(4)(A) of the Bankruptcy Code. Based in Buffalo, NY, Studio Theatre School is a not-for-profit theater school and production company. It filed for bankruptcy on June 18, 2008 (Bankr. W.D.N.Y., Case No. 08-12680). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtor as counsel. When the Debtor filed for bankruptcy, it listed between $1 million and $50 million each in assets and debts. TROPICANA ENT: OpCo Entities Oppose LandCo Trademark Suit --------------------------------------------------------- Tropicana Las Vegas, Inc., and Hotel Ramada of Nevada LLC have asked the U.S. Bankruptcy Court for the District of Delaware to confirm that a complaint for declaratory relief they initiated with respect to "trademark issues" in the District Court of Clark County, Nevada, is not subject to the automatic stay under Section 362 of the Bankruptcy Code. In the alternative, the Tropicana Las Vegas Plaintiffs ask the Bankruptcy Court to annul the automatic stay as to the Trademark Action, to the extent it applies, as of July 10, 2009. "The declaratory judgment action filed in the Nevada state court on July 20, 2009 [or the Trademark Action] by non-debtors Tropicana Las Vegas, Inc., and Hotel Ramada of Nevada, LLC, blatantly violated the automatic stay," argues Lee E. Kaufman, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, who represents the OpCo Debtors, the group of reorganized Tropicana entities owning casinos and resorts in Atlantic City, New Jersey and Evansville, Indiana. A group of Tropicana entities, known as the LandCo Debtors, which own Tropicana casino property in Las Vegas, have emerged from Chapter 11 via a separate Chapter 11 plan. The Tropicana Las Vegas Plaintiffs' actions are even less tolerable because their Motion to avoid or annul the automatic stay is groundless, Mr. Kaufman asserts. The Tropicana trademarks at issue, he maintains, are registered to an OpCo Debtor in the United States Patent and Trademark Office and are therefore, legally owned and controlled solely by the estates of the OpCo Debtors on a nationwide basis. Tropicana Entertainment LLC is the owner of the federal trademark registrations for the "Tropicana" and "Trop" marks. Tropicana Entertainment obtained the Tropicana Marks through a valid assignment dated September 12, 2007, from Aztar Corporation, which assignment was publicly recorded at the U.S. Patent and Trademake Office. Aztar Corp., in turn, obtained the Tropicana Marks through a valid assignment dated July 5, 1989, from Ramada, Inc., the original registrant, which assignment was also publicly recorded at the USPTO, Mr. Kaufman relates. Tropicana Entertainment says it permitted the use of the Tropicana Marks by certain subsidiaries, including the LandCo Debtors, as intercompany licensees. The Lanham Act specifically permits intracompany use of a registrant's trademark, Mr. Kaufman notes. The Lanham Act also provides that the use by the related company inures to the sole benefit of the registrant. This means that the intracompany licensee acquires no ownership rights or continuing use rights in the mark itself by virtue of the intracompany license, he clarifies. The genesis of the present dispute is not any malfeasance on the OpCo Debtors' part, Mr. Kaufman contends. Instead, he says, it is the apparent failure of Onex Corporation, the largest holder of LandCo debt, now "equity," and now a part owner of the Tropicana Las Vegas Plaintiffs, to review the OpCo and LandCo Credit Facility Agreements or the LandCo Debtors' and OpCo Debtors' schedules of assets and liabilities before purchasing debt of the LandCo Debtors. Had Onex paid attention to these plain statements of who owned what, it would have understood then what the Lift Stay Motion now concedes that the OpCo Debtors own the trademarks in question; that the Tropicana Las Vegas Plaintiffs do not own the trademarks; and that the Las Vegas property needs a license to continue using the OpCo Debtors' trademarks, Mr. Kaufman points out. The Tropicana Las Vegas Plaintiffs' attempt to use the OpCo Debtors' application for a trademark using the "Tropicana" name as a pretext for their violation of the automatic stay is transparent, Mr. Kaufman contends. As the owner of the trademarks at issue, the OpCo Debtors' application was neither unlawful nor surprising, he tells the Bankruptcy Court. Moreover, nothing in the OpCo Debtors' application evidences any attempt to limit the Tropicana Las Vegas Plaintiffs' use of the trademarks. The Lift Stay Motion should be denied and the Trademark Action should be voided ab initio, Mr. Kaufman asserts. In a separate filing, the OpCo Debtors ask the Bankruptcy Court to enforce the automatic stay or in the alternative, enjoin the Trademark Action pursuant to Section 959(a) of the Judiciary and Judicial Procedures Code or Section 105(a) of the Bankruptcy Code. Mr. Kaufman reiterates that the Tropicana Las Vegas Plaintiffs' Lift Stay Motion violated the automatic stay. He argues that the Tropicana Las Vegas Plaintiffs: -- knew the defendants in the Trademark Action are debtors and that their filing, for which they did not seek prior permission from the Bankruptcy Court, was inappropriate; -- knew that by not first seeking and obtaining Bankruptcy Court approval to file their Trademark Action, they would force the OpCo Debtors to immediately begin spending financial and management resources to respond to the complaint in a timely fashion; and -- that their unauthorized filing of the Trademark Action requires the OpCo Debtors to file a responsive pleading in the Nevada Court before the Bankruptcy Court is scheduled to hear the Lift Stay Motion on August 12, 2009, which, in turn, requires the OpCo Debtors to seek emergency relief to enforce the automatic stay. Section 959(a) states that "debtors in possession, may be sued, without leave of the court appointing them, with respect to any of their acts or transactions in carrying on business connection with such property . . . ." The Trademark Action does not fall within Section 959(a)'s exception to the automatic stay, Mr. Kaufman emphasizes. In this light, he points out that the Trademark Action does not arise from the postpetition conduct of the OpCo Debtors, but rather arises from alleged prepetition "promises" made in the January 3, 2007 LandCo Credit Facility. And because the Trademark Action arose prepetition and in any event, does not arise from any tortious or wrongful act of the OpCo Dbetors, the Action does not arise from the OpCo Debtors' tortious conduct in carrying on their business, Mr. Kaufman says. Moreover, the Tropicana Las Vegas Plaintiffs have failed to show any prejudice resulting from the automatic stay and they are highly unlikely to prevail on the merits of the Trademark Action, Mr. Kaufman tells the Bankruptcy Court. In the event the Bankruptcy Court finds that the automatic stay does not apply to the Trademark Action, it should still enjoin the Trademark Action as the Action will impede the OpCo Debtors' successful emergence from Chapter 11 and will not result in prejudice to the Tropicana Las Vegas Plaintiffs, Mr. Kaufman asserts. The OpCo Debtors also seek an award of damages, including actual damages and punitive damages, in an amount to be proven at an evidentiary hearing. The OpCo Debtors have suffered actual, recoverable damages as a result of the Tropicana Las Vegas Plaintiffs' violation of the automatic stay, Mr. Kaufman emphasizes. By filing the Trademark Action, the Tropicana Las Vegas Plaintiffs forced the OpCo Debtors to immediately begin spending financial and management resources to respond to the complaint in a timely fashion, he points out. In another filing, the OpCo Debtors ask the Court to (i) permit the Tropicana Las Vegas Plaintiffs' Lift Stay Motion to be heard on August 5 or 6, 2009; and (ii) establish the objection deadline for the Lift Stay Motion and the OpCo Debtors' Enforcement Motion as August 4, 2009. The OpCo Debtors intend to provide notice of the Enforcement Motion by overnight mail to the notice parties. Trademark Dispute Tropicana LV is owned by newly formed Tropicana Las Vegas Intermediate Holdings, Inc., and ultimately by newly formed Tropicana Hotel and Casino, Inc., the shareholders of which are the former secured lenders to the LandCo Debtors. Newly formed Tropicana LV is the entity that acquired substantially all of the LandCo Debtors' assets pursuant to the LandCo Plan, including the historic Tropicana Las Vegas Resort and Casino. The LandCo Plan was confirmed on May 5, 2009, and became effective July 1, 2009. Hotel Ramada of Nevada is a reorganized Debtor. In the months before the confirmation of the LandCo Plan, the OpCo Debtors took the position that the LandCo Debtors had no rights to the use of the name "Tropicana" in connection with the Las Vegas casino that has been known as the "Tropicana" since its inception in 1957, Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates. Notwithstanding the fact that the LandCo Debtors and their predecessors had never before paid any royalty to use the name they originated on the property they developed, the OpCo Debtors asserted that the acquirer of the Tropicana Las Vegas casino under the LandCo Plan would have to pay an exorbitant royalty or cease using the name after confirmation, Mr. Brady points out. Subsequently, the lenders whose claims were secured by liens on the Tropicana Las Vegas casino -- who had been promised that their collateral included all rights necessary to operate the business of the Tropicana Las Vegas as it was being conducted -- took issue with the OpCo Debtors' assertions and sought to terminate plan exclusivity in order to pursue a plan that would not give away rights to the Tropicana name. A compromise was ultimately struck, with the LandCo and OpCo constituencies agreeing to postpone disputes over the trademark issues until the post-bankruptcy period. A full reservation of rights was added to both the LandCo and OpCo Plans, Mr. Brady notes. After taking possession of the LandCo Assets, the new owners of the Tropicana Las Vegas casino discovered that just two weeks before the LandCo Plan was declared effective, OpCo Debtor Tropicana Entertainment Holdings LLC had filed applications with the United States Patent and Trademark Office to register the logo and trademark "The Trop Las Vegas | Est. 1957" in favor of the OpCo Debtors. The application was an "intent to use" application, requiring the OpCo Debtors to certify that they have a bona fide intent to use the mark in commerce, according to Mr. Brady. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The Company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and its debtor-affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. In April 2009, the Bankruptcy Court approved separate Chapter 11 plans for form two groups: one comprised of Tropicana's assets outside of Las Vegas -- OpCo -- and the other made up solely of the Tropicana Casino & Resort on the Las Vegas Strip -- LandCo. On April 29, 2009, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711). Judge Judith H. Wizmur presides over the cases. Adamar and Manchester Mall or the New Jersey Debtors are both affiliates of Tropicana Entertainment LLC. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. The New Jersey Debtors own and operate one of the largest, and one of the most established, destination casino resorts in Atlantic City, New Jersey, known as Tropicana Casino and Resort - Atlantic City, which ranks third in gaming positions among Atlantic City's 11 casino properties. The New Jersey Debtors initiated the Chapter 11 cases to effectuate a sale of substantially all their assets in accordance with a mandate issued by the New Jersey Casino Control Commission pursuant to the New Jersey Casino Control Act. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Adamar of NJ Wants Plan Deadline Moved to Dec. 25 ---------------------------------------------------------------- Pursuant to Section 1121(d) of the Bankruptcy Code, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., ask the U.S. Bankruptcy Court for the District of New Jersey to extend their exclusive period to file a plan of reorganization through December 25, 2009, and their exclusive period to solicit acceptances of that plan through February 23, 2010. Under Section 1121, a debtor-in-possession has the exclusive right to file a plan of reorganization for the 120-day period after the commencement of a Chapter 11 petition, and to solicit acceptances for that paln for the 180-day period from the date of its bankruptcy petition. The New Jersey Debtors' Exclusive Plan Proposal Period will expire on August 27, 2009, and their Exclusive Solicitation Period will expire on October 26, 2009. During the first three months of their Chapter 11 cases, the New Jersey Debtors have focused primarily on the sale of all or substantially all their assets as a going concern and receiving approval from the Court of bidding procedures, a "stalking horse" credit bid asset purchase agreement, and the assumption and assignment of related executory contracts, unexpired leases and collective bargaining agreements, pursuant to Sections 363, 365 and 1113 of the Bankruptcy Code, Ilana Volkov, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Hackensack, New Jersey, relates. The New Jersey Debtors also spent significant time addressing issues related to the assumption and assignment of the Acquired Contracts and related cure amounts. The Court approved the Asset Sale and the related APA on June 12, 2009. Given the complexity of the New Jersey Debtors' business, which operates in a highly regulated industry, the sale process has proceeded in a manner and pace different than traditional Chapter 11 asset sales, according to Ms. Volkov. Among other things, the APA contemplates designation of the Buyer only after certain approvals are obtained from the New Jersey Casino Control Commission, and the Buyer receives the necessary regulatory approvals and licensing for operating a casino in New Jersey before the sale transaction closing. To that end, a petition was filed with the NJ Commission for a determination as to the organizational structure of the Buyer, and a hearing on that petition took place on July 27, 2009. The New Jersey Debtors reasonably believe the NJ Commission will rule on the petition on or about August 14, 2009. The licensing process could take up to 120 days by statute following the NJ Commission's ruling on the organizational structure of the Buyer, Ms. Volkov relates. Ms. Volkov further asserts that an extension of the NJ Debtors' Exclusivity Periods is warranted for these reasons: (a) The New Jersey Debtors' Chapter 11 cases are sufficiently large and complex and they operate in a heavily regulated industry. Thus, the sheer size and complexity of the New Jersey Debtors make the sale of substantially all their assets exceedingly, intricate, complicated, and time consuming; and (b) Conclusion of the sale process will not occur before the current Exclusivity Periods expire. Because the New Jersey Debtors have focused primarily on the sale process, and not thoroughly on the conclusion of their Chapter 11 cases following the eventual closing, they require additional time to examine all potential exit alternatives. The New Jersey Debtors aver that they have been and continue to pay all their postpetition debts as they become due. The New Jersey Debtors also believe that they have sufficient liquidity under the existing cash collateral arrangement to operate in the ordinary course of business. Ms. Volkov assures the Court that the New Jersey Debtors are not seeking an extension of the Exclusivity Periods to delay creditors. The New Jersey Debtors are aware of the need to involve all parties-in-interest in these cases. The New Jersey Debtors and their professionals consistently have conferred with the United States Trustee and other parties-in-interest on all major substantive and administrative matters in these cases, and will continue to do so going forward, she says. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The Company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and its debtor-affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. On April 29, 2009, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711). Judge Judith H. Wizmur presides over the cases. Adamar and Manchester Mall or the New Jersey Debtors are both affiliates of Tropicana Entertainment LLC. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. The New Jersey Debtors own and operate one of the largest, and one of the most established, destination casino resorts in Atlantic City, New Jersey, known as Tropicana Casino and Resort - Atlantic City, which ranks third in gaming positions among Atlantic City's 11 casino properties. The New Jersey Debtors initiated the Chapter 11 cases to effectuate a sale of substantially all their assets in accordance with a mandate issued by the New Jersey Casino Control Commission pursuant to the New Jersey Casino Control Act. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Adamar Asks 90-Day Extension for Lease Decisions --------------------------------------------------------------- Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., ask the Bankruptcy Court to extend for 90 days the time by which they must assume or reject their unexpired leases of non-residential real property pursuant to Section 365(d)(4) of the Bankruptcy Code. According to Ilana Volkov, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Hackensack, New Jersey, since the Petition Date, the New Jersey Debtors have been conducting their operations from premises subject to certain unexpired non- residential real property leases, which include several parcels of land, a garage, two warehouses, and a parking lot. The New Jersey Debtors' current deadline to assume or reject the Unexpired Leases is August 27, 2009. A list of the 10 Unexpired Leases is available for free at: http://bankrupt.com/misc/TropiA_1stMotnExtUnexpiredLeases.pdf The New Jersey Debtors have not included several billboard leases in which they are lessees because they do not believe these qualify as "non-residential real property leases" under Section 365(d)(4). To the extent the Court deems otherwise, the New Jersey Debtors also seek to extend for 90 days the time within which they must assume or reject the Billboard Leases. Pursuant to Section 365(d)(4)(A), a debtor must determine whether to assume or reject unexpired leases within 120 days after the Petition Date, or within an additional time as the Court fixes or the Leases are automatically deemed rejected. Section 365(d)(4) also provides that the Court may extend the lease decision period prior to the expiration of the 120-day period for 90 days on a debtor's motion for cause. The New Jersey Debtors assert that during the first three months of their Chapter 11 cases, they focused primarily on issues related to the sale of all or substantially all their assets as a going concern and receiving approval from the Court of bidding procedures and the "stalking horse" Asset Purchase Agreement. They also spent significant time addressing issues related to finalization of contracts to be acquired in connection with the Asset Sale. The Court approved the APA and Sale on June 12, 2009. Closing on the APA is anticipated to occur in late 2009. Ms. Volkov asserts that an extension of the New Jersey Debtors' lease decision period should be granted for these reasons: (a) The Unexpired Leases represent important assets of the New Jersey Debtors' estates because they enable the New Jersey Debtors to conduct their operations on the premises covered by the leases; (b) Absent the ability to maintain these leasehold interests pending a decision to assume or reject them the New Jersey Debtors could not continue to run their business operations and generate revenue; (c) The New Jersey Debtors have large and complicated cases. They operate in a heavily regulated industry, employ over 3,400 people, have a large capital and debt structure, and generate significant revenue that exceeds $350,000,000 on an annual basis. If the requested extension is not granted, the New Jersey Debtors will be compelled either to assume, in some instances, large long-term liabilities, or forfeit leases before August 27, 2009, several months in advance of the anticipated Closing. This creates an untenable predicament for the New Jersey Debtors, Ms. Volkov tells the Court. "On the one hand, the New Jersey Debtors will expose themselves to substantial and unnecessary administrative expense claims should they be compelled to assume the Unexpired Leases by August 27, 2009, and the Closing does not occur," Ms. Volkov points out. "On the other hand, the New Jersey Debtors may jeopardize the Closing should the Unexpired Leases, which the Buyer later decides are necessary to operate and preserve the going concern value of its business, be deemed rejected automatically by statute." As required by Section 365(d)(3), the New Jersey Debtors say they remain current on all known and undisputed postpetition obligations under each of the Unexpired Leases. The New Jersey Debtors intend to make all postpetition rent payments through the date the Unexpired Leases are assumed or rejected, as the case may be. Accordingly, the New Jersey Debtors' landlords will not be prejudiced by the requested extension, Ms. Volkov assures the Court. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The Company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and its debtor-affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. On April 29, 2009, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711). Judge Judith H. Wizmur presides over the cases. Adamar and Manchester Mall or the New Jersey Debtors are both affiliates of Tropicana Entertainment LLC. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. The New Jersey Debtors own and operate one of the largest, and one of the most established, destination casino resorts in Atlantic City, New Jersey, known as Tropicana Casino and Resort - Atlantic City, which ranks third in gaming positions among Atlantic City's 11 casino properties. The New Jersey Debtors initiated the Chapter 11 cases to effectuate a sale of substantially all their assets in accordance with a mandate issued by the New Jersey Casino Control Commission pursuant to the New Jersey Casino Control Act. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Sr. Sub. Noteholders Want Professionals' Fees Paid ----------------------------------------------------------------- Pursuant to Sections 503(b)(3)(D) and (b)(4) of the Bankruptcy Code and Rule 2016 of the Federal Rules of Bankruptcy Procedure, the members of the former Ad Hoc Consortium of Senior Subordinated Noteholders seek the allowance of fees for professional services rendered and reimbursement of allowable expenses incurred in connection with its proposal to have a Chapter 11 trustee appointed in Tropicana Entertainment LLC's Chapter 11 cases. The Consortium seek the allowance of an administrative expense claim, aggregating $2,434,474. The professional fees amount to $2,188,995, and expenses incurred total $245,479. The Consortium, in prosecuting the Trustee Motion, provided a textbook substantial contribution in these Chapter 11 cases, David B. Stratton, Esq., in Pepper Hamilton LLP, in Wilmington, Delaware, asserts. The Debtors were essentially forced into Chapter 11 after William J. Yung, III, as chairman, chief executive officer, and sole shareholder of the Debtors, "came close to destroying the Debtors' prospects for continuing as a going concern through his reckless and grossly misguided management decisions," Mr. Stratton notes. Acordingly, the Consortium filed and prosecuted the Trustee Motion because Mr. Yung's continued role in management, his record of failure managing the estates' assets, the punitive actions from state regulators brought on the company entirely due to his management errors and poor judgment, and his refusal to voluntarily resign from the Board exposed the the Debtors' estates and their creditors to further damage and placed the Debtors' reorganization in jeopardy, Mr. Stratton contends. The Consortium maintains that Mr. Yung's history of animosity with his creditor constituents, including the Noteholders, left him ill-suited to handle commercially reasonable restructuring negotiations on the Debtors' behalf. Mr. Stratton points out that the Consortium's efforts were supported by the major creditor constituents, including the Official Committee of Unsecured Creditors and the Steering Committee of Senior Secured Lenders. The Debtors and Mr. Yung opposed the Trustee Motion. The Trustee Motion was ultimately resolved after the first day of trial, through a settlement under which Mr. Yung agreed to resign from the Boards of each of the Debtors and further agreed to grant an irrevocable voting proxy to the new Board with respect to his equity interests in the Debtors. The settlement paved the way for the Debtors to pursue a restructuring free of the "taint" of Mr. Yung and without the threat of further erosion of value or further adverse regulatory action, Mr. Stratton says. Following the settlement, operations stabilized,the Debtors formulated and negotiated Chapter 11 plans with their creditors, and obtained confirmation of those plans in May 2009. They are also on the precipice of getting relicensed in Indiana, which will allow them to regain control of the Casino Aztar Evansville, one of their most lucrative assets, according to Mr. Stratton. Finally, the secured lenders that acquired the Tropicana Atlantic City casino are well on their way to bringing that casino back under the control of the Reorganized Debtors -- an unthinkable occurrence at the commencement of these cases. Against this backdrop, Mr. Stratton asserts that "without the efforts of the Consortium's efforts leading to the Trustee Motion settlement, the Debtors and creditors realizing value under the Chapter 11 plans may never have seen this day." Indeed, in the settlement documents, the Debtors expressly acknowledged that the Consortium made a substantial contribution to their estates through its efforts. Accordingly, the professional fees and expenses of the Consortium incurred in connection with the Trustee Motion should be paid as an allowed administrative expense claim under Section 503(b). About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The Company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and its debtor-affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. On April 29, 2009, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711). Judge Judith H. Wizmur presides over the cases. Adamar and Manchester Mall or the New Jersey Debtors are both affiliates of Tropicana Entertainment LLC. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. The New Jersey Debtors own and operate one of the largest, and one of the most established, destination casino resorts in Atlantic City, New Jersey, known as Tropicana Casino and Resort - Atlantic City, which ranks third in gaming positions among Atlantic City's 11 casino properties. The New Jersey Debtors initiated the Chapter 11 cases to effectuate a sale of substantially all their assets in accordance with a mandate issued by the New Jersey Casino Control Commission pursuant to the New Jersey Casino Control Act. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TVI CORP: Plan Filing Period Extended to August 31 -------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland has extended TVI Corporation, et al.'s exclusive period to file a plan until August 31, 2009, and their exclusive period to solicit acceptances thereof to October 30, 2009. As reported in the TCR on July 21, 2009, the Debtors said that Houlihan Smith & Company still has to commence its valuation of their business. The Debtors added that they will also need time to finalize negotiations with their lender Branch Banking & Trust Co. and the official committee of unsecured creditors and to draft and file the plan and disclosure statement. As reported in the TCR on August 4, 2009, the Debtors have entered into an amendment to their debtor-in-possession credit agreement with Branch Banking and Trust. The amendment extends the milestones to be achieved by the Debtors. The amendment stated that the Debtors would: a) deliver to the Lender a draft disclosure statement and plan of reorganization on or before July 31, 2009; and b) file a disclosure statement and a plan of reorganization with the Bankruptcy Court, which disclosure statement and plan will be acceptable to the Lender in all respects in its sole and absolute discretion, on or before Aug. 14, 2009. About TVI Corporation Headquartered in Glenn Dale, Maryland, TVI Corporation -- http://www.tvicorp.com/-- supplies military and civilian emergency first responder and first receiver products, personal protection products and quick-erect shelter systems. The products include powered air-purifying respirators, respiratory filters and quick-erect shelter systems used for decontamination, hospital surge systems and command and control. The users of these products include military and homeland defense/homeland security customers. The Company and two of its affiliates filed for Chapter 11 protection on April 1, 2009 (Bankr. D. Md. Lead Case No. 09-15677). Christopher William Mahoney, Esq., Jeffrey W. Spear, Esq., and Joel M. Walker, Esq., at Duane Morris LLP, represent the Debtors in their restructuring efforts. Alan M. Grochal, Esq., and Maria Ellena Chavez-Ruark, Esq., at Tydings and Rosenberg, serve as counsel to the official committee of unsecured creditors. When the Debtor filed for protection from its creditors, it listed $10 million to $50 million in assets and $1 million to $10 million in debts. UNISYS CORPORATION: Moody's Confirms Corp. Family Rating at 'B3' ---------------------------------------------------------------- Moody's Investors Service confirmed Unisys Corporation's corporate family rating of B3 and revised the probability of default rating to B3/LD from Ca following the completion of the debt exchange offer this week. Moody's also assigned Ba3 ratings on the new 12.75 % Senior Secured Notes due 2014 and 14.25% Senior Secured Notes due 2015. In addition, Moody's raised the company's Speculative Grade Liquidity Rating to SGL-2 from SGL-3. The rating actions conclude the review for possible downgrade initiated on April 30, 2009. The rating outlook is stable. The B3/LD PDR reflects the limited default which has occurred following completion of the previously announced private debt exchange offer for its senior notes. The PDR will revert back to B3 and the /LD designation will be removed in approximately 3 business days, consistent with Moody's practice for such deemed distressed exchange transactions. The rating actions reflect the company's improved liquidity following its successful refinancing of the $300 million 6.875% Senior Notes due March 2010, of which $235 million was exchanged for new 2014 Secured Notes, leaving a residual balance of a relatively modest $65 million. In addition, as part of the same debt exchange process, approximately $330 million of the $400 million 8% Senior Notes due 2012 have been exchanged for new 2014 and 2015 Secured Notes. No other debt is currently due prior to 2014. Unisys's B3 CFR reflects the company's modest size relative to much larger competitors with greater financial resources and more efficient labor resources (i.e., greater offshore mix), high financial leverage as measured by free cash flow-to-debt, continued restructuring activities to reduce its cost structure to align with declining revenues, and notably recent significant rise in unfunded pension obligations (in excess of $1 billion). The rating is supported by the company's geographic and business diversity, including a solid presence in the U.S. government and public sector, which has helped the company mitigate its exposure to the business downturn within key commercial markets including U.S. financial institutions. The rating is also supported by the company's sizable cash balance of $475 million. The stable outlook reflects not only the company's strengthened liquidity following the debt exchange, but also its improving performance (e.g., the company reported net income of $38 million for the quarter ended June 30, 2009, and cash usage approaching break-even levels) in a challenging economic environment. Moody's expects that Unisys will generate free cash flow during the second half of 2009 as a result of its stable U.S. federal government business and continued realization of the benefits from significant restructuring actions. Although management has stated that no cash contributions are required for its U.S. qualified defined benefit pension plan in 2009 and 2010, the continued existence of a significantly unfunded obligation and/or further deterioration in the value of the company's pension plan assets could strain liquidity and adversely affect ratings in future periods. Ratings confirmed / assessments revised: * Corporate Family Rating of B3; * $300 million 6.875% Senior Unsecured Notes due 2010 ($65 million outstanding) of Caa1 (LGD 5, 72% from LGD 4, 63%) * $400 million 8% Senior Unsecured Notes due 2012 ($68 million outstanding) of Caa1 (LGD 5, 72% from LGD 4, 63%) * $150 million 8.5% Senior Unsecured Notes due 2015 ($16 million outstanding) of Caa1 (LGD 5, 72% from LGD 4, 63%) * $210 million 12.5% Senior Unsecured Notes due 2016 ($150 million outstanding) of Caa1 (LGD 5, 72% from LGD 4, 63%) Ratings changed: * Probability-of-default rating revised to B3/LD from Ca * Speculative Grade Liquidity (SGL) rating upgraded to SGL-2 from SGL-3 Ratings / assessments assigned: * $385 million 12.75% Senior Secured Notes due 2014 of Ba3 (LGD 1, 4%) * $246 million 14.25% Senior Secured Notes due 2015 of Ba3 (LGD 2, 14%) The last rating action was taken on April 30, 2009, when Moody's downgraded Unisys' PDR to Ca from B3 following the announcement that the company had commenced a private offer to exchange its senior unsecured notes. In addition, Moody's placed all ratings (including the B3 corporate family rating) under review for possible downgrade pending the completion of the debt exchange process. Headquartered in Blue Bell, Pennsylvania, Unisys Corporation, with revenues of $4.8 billion for the twelve months ended June 30, 2009, provides I/T services and technology hardware to commercial and governmental clients worldwide. UNISYS CORPORATION: Fitch Downgrades Issuer Default Rating to 'RD' ------------------------------------------------------------------ Fitch Ratings has downgraded Unisys Corporation's Issuer Default Rating to 'RD' from 'C' following the completion of the company's exchange offer on July 28, 2009, which Fitch views as a coercive debt exchange, and therefore a default. Subsequently, Fitch has taken these rating actions: -- IDR to 'B' from 'RD'; -- New first and second lien senior secured notes issued in conjunction with the CDE rated 'BB/RR1' and 'BB-/RR2', respectively; -- Senior unsecured notes to 'B-/RR5' from 'C/RR4'; -- Secured credit facility rating of 'B-/RR1' withdrawn as the facility expired as expected and was not renewed. The Rating Outlook is Negative as Fitch believes Unisys will continue to be subject to revenue pressures, deteriorating credit protection measures and a disadvantaged competitive position due to lower financial flexibility and a significantly smaller offshore presence required to effectively compete in the commercial marketplace. Fitch's actions affect approximately $931 million of total outstanding debt post the CDE. Unisys' ratings reflect: -- Improved, but still weak, pro forma liquidity position due to a significant reduction in near-term debt maturities following the CDE as debt maturities in 2010 decline to approximately $65 million from $300 million and in 2012 to $68 million from $400 million. However, this is partially offset by a $30 million cash payment to the 2010 bondholders participating in the CDE and a 23% increase in pro forma interest expense to $114 million. Fitch estimates Unisys' weighted average coupon rate under the new debt structure is 12%, or 330 basis points greater than the existing rate of 8.6%. -- Significant cost reductions in excess of Fitch's expectations resulting in improving profitability, despite a nearly 16% revenue decline in the first half of 2009. -- Continued negative free cash flow due most recently to ongoing restructuring activities. Excluding cash restructuring payments, the company generated positive free cash flow of $145 million in the latest 12 months (LTM) ended June 30, 2009. Fitch believes continued cash restructuring payments for severance, increasing pension contributions and weak new order trends due in part to challenging global economic conditions will continue to pressure the company's ability to generate meaningfully positive free cash flow in the near-term. Fitch expects free cash flow of $0-$20 million in 2009 compared with usage of nearly $40 million in 2008 due entirely to significant cost reductions and lower capital expenditures as new orders and revenue trends remain weak. -- Increasing legally mandated cash pension contributions to Unisys' worldwide defined benefit (DB) pension plan following negative double-digit investment returns on pension assets in 2008 amid weak financial markets. -- Continued significant revenue from consulting and systems integration services (34% of revenue in LTM ended June 30, 2009), servers (10%), and the financial services industry (29% in 2008), all of which have experienced materially lower demand in the global economic downturn. Fitch expects Unisys' liquidity profile to remain weak, supported primarily by the company's $475 million cash position as of June 30, 2009, given the as expected expiration of its $275 million revolving credit facility on May 31, 2009 and minimal expectations for meaningfully positive free cash flow in 2009 amidst the global economic downturn. Furthermore, Unisys has a $150 million accounts receivable securitization facility expiring in May 2011 with $30 million of availability at March 31, 2009, assuming sufficient eligible receivables. The facility includes a material adverse change clause, change of control provision, cross default ($25 million), minimum fixed-charge coverage ratio and maintenance of certain ratios related to the sold receivables. The facility is subject to termination on Feb. 28, 2010 if the company fails to refinance or extend the maturity date of the 6.875% senior notes due 2010 beyond May 16, 2011. As of year-end 2008, Unisys' DB plans in the United States and internationally were underfunded by $1.2 billion and $178 million, respectively. The company has contributed approximately $78 million annually to its worldwide DB plans since 2006, the vast majority for international plans. Despite a materially underfunded U.S. DB plan, the company is not legally required to contribute to the U.S. plan in 2009 and 2010. However, Unisys expects the required cash contribution, primarily for international plans, to increase to approximately $100 million in 2009 with incremental contributions potentially required for the U.S. plan starting in 2011, the amount of which is primarily contingent upon the financial markets and ultimate return on U.S. pension assets. Approximately $760 million, or nearly 72%, of the total principal value of unsecured notes outstanding were tendered in the CDE. In terms of maturities, approximately 78%, 83%, 89% and 28% of the existing unsecured notes due 2010, 2012, 2015 and 2016, respectively, were tendered in the exchange, resulting in 12% reduction in total debt outstanding. Unisys' debt structure pro forma for the exchange is: -- $65 million of 6.875% senior unsecured notes due 2010, down from $300 million pre-CDE; -- $68 million of 8% senior unsecured notes due 2012, down from $400 million pre-CDE; -- $385 million of new 12.75% first lien senior secured notes due 2014; -- $247 million of new 14.25% second lien senior secured notes due 2015; -- $16 million of 8.5% senior unsecured notes due 2015, down from $150 million pre-CDE; -- $151 million of 12.5% senior unsecured notes due 2016, down from $210 million pre-CDE. The first lien notes and second lien notes are secured by first- priority liens and second-priority liens, respectively, by substantially all of the Unisys' assets, except (i) accounts receivable that are subject to one or more receivables facilities (ii) cash or cash equivalents securing reimbursement obligations under letters of credit or surety bonds (iii) non U.S.-based real estate and (iv) certain other excluded assets. The Recovery Ratings for Unisys reflect Fitch's recovery expectations under a distressed scenario, as well as Fitch's belief that Unisys enterprise value, and hence recovery rates for its creditors, will be maximized in a restructuring (going concern) rather than liquidation scenario. In deriving a distressed enterprise value, Fitch applies a 32% discount to Unisys' LTM adjusted operating EBITDA, equating to a fixed charge ratio of 1 times (x) after the inclusion of $100 million of cash pension expense and $50 million of recurring cash restructuring expense. Fitch applies a 3x distressed EBITDA multiple in deriving the distressed enterprise value. As a result, Fitch assigns a 'RR1' to the first lien and a 'RR2' to the second lien secured notes, reflecting an expected recovery of 90%-100% and 70%-90%, respectively, in the event of default. The senior unsecured notes are assigned a 'RR5', given Fitch's expectations for below average recovery prospects of 10%-30%, given the unsecured notes subordinate ranking in the debt structure. UNISYS CORP: S&P Downgrades Corporate Credit Rating to 'SD' ----------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on Blue Bell, Pennsylvania-based Unisys Corp. to 'SD' (selective default) from 'CC', and removed the ratings from CreditWatch, where they were placed with negative implications on July 6, 2009. S&P also lowered the issue-level ratings on the company's senior unsecured notes due October 2015 and January 2016 to 'D' from 'CC'. In addition, S&P affirmed the 'B' rating on the company's senior unsecured notes due 2010 (approximately $64.9 million outstanding) and due 2012 (approximately $68.0 million outstanding). The rating actions follow the closing of Unisys' June 30, 2009, private offer to bondholders. All of the company's senior unsecured noteholders participated in the exchange to some degree. "The 'SD' rating reflects its view that the exchange of the October 2015 and January 2016 notes transaction was a distressed offer that was tantamount to default," said Standard & Poor's credit analyst Martha Toll-Reed. Based on the outcome of the offer, whereby approximately $760 million of debt was exchanged for an aggregate of approximately $632 million face amount of new first- and second-lien secured debt, S&P expects to raise its corporate credit rating on Unisys to 'B', with a stable outlook, before August 7, 2009. While the exchange reduced the company's March 2010 debt maturity to about $65 million (from $300 million), removing a rating concern on the exchange, it did not materially improve the company's total adjusted debt level. Pro forma debt to EBITDA as of June 30, 2009, remains high at more than 6.5x. S&P expects notching on the senior unsecured ratings to remain unchanged, despite a likely revision in the recovery rating to '4' from '3'. The '4 recovery rating indicates average (30%-50%) recovery in the event of a payment default, reflecting the addition of secured debt in the capital structure. US ORE CORP: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: US Ore, Corp. 2727 De Anza Rd. SD13 Pacific Beach, CA 92109 Bankruptcy Case No.: 09-20736 Chapter 11 Petition Date: July 31, 2009 Court: United States Bankruptcy Court District of Wyoming (Cheyenne) Judge: Peter J. McNiff Debtor's Counsel: Paul Hunter, Esq. 2616 Central Avenue Cheyenne, WY 82001 Tel: (307) 637-0212 Email: attypaulhunter@prodigy.net Total Assets: $104,130 Total Debts: $2,525,974 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/wyb09-20736.pdf The petition was signed by Jack Wasson, president of the Company. VALASSIS COMMUNICATIONS: S&P Gives Stable Outlook; Keeps B Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook for Livonia, Michigan-based media and marketing services company, Valassis Communications Inc., to stable from negative. At the same time, S&P affirmed the 'B' corporate credit rating and all other ratings for Valassis. "The outlook revision to stable from negative reflects Valassis' better-than-expected operating performance in the first half of 2009 and S&P's expectation for continued good performance for the remainder of the year," said Standard & Poor's credit analyst Liz Fairbanks. While revenue in the first half of 2009 performed close to S&P's previous expectations, the company successfully offset the 8% total revenue decline through cost-cutting measures, resulting in EBITDA that was flat with the previous year. S&P's previous negative outlook incorporated the expectation that EBITDA could decline by around 20% for the full year. S&P now believes Valassis could grow EBITDA in 2009 in the mid- to high-single- digit percentage area, since second half year-over-year comparisons get easier. Through the first six months of 2009, Valassis repaid about $109 million of outstanding debt balances. S&P's measure of total debt to EBITDA, adjusted for operating leases and noncash stock compensation, was about 5.5x at June 2009, down from 6.0x at December 2008. S&P expects this measure to be in the low 5x-area at the end of 2009. Throughout the current recession, Valassis' business segments have demonstrated significant volatility. The company experienced a precipitous drop in EBITDA of 51% in the third quarter of last year, resulting primarily from a 33% decline in shared mail EBITDA. Following the drop in EBITDA, management announced several cost-cutting measures, including a $15 million reduction in headcount; a $10 million reduction in other selling, general, and administrative (SG&A) expenses; and $26 million savings related to production costs (primarily paper costs). In addition, the company expected to yield about $6.5 million in cost savings from shutting down underperforming business segments, including its operations in France, which were sold in the third quarter of 2008 for about $3.6 million. Since that time, management expects to save an additional $20 - $25 million through cost-cutting measures in 2009. S&P expects that revenue will decline in the high single digits area in 2009 and that management will offset this decline through the aforementioned cost-cutting actions. On July 23, 2009, a Michigan jury ordered competitor, News America, a subsidiary of News Corp. (BBB+/Stable/--), to pay Valassis $300 million in damages relating to unfair business practices and tortious interference. News America announced that it would appeal the decision. The outcome of the appeal and timing of receipt of proceeds from the ruling are uncertain at this time. Thus, S&P has not factored the receipt of these proceeds into S&P's current ratings, although if such amount (net of taxes) was used to permanently reduce debt, S&P would clearly view this favorably. Valassis is pursuing two additional suits against News America, one in a Michigan federal court and one in a California state court. Valassis' EBITDA margin was about 11% in the first half of 2009, up from about 9% in fiscal year 2008. Pro forma for a full year of its shared mail division (formerly ADVO), the company's EBITDA margin was about 10% in the 12 months ended December 2007, down from 11% in 2006 and 15% in 2005. The shared mail division has historically produced lower margins than the company's legacy businesses. VISTEON CORP: Amended Application Hikes FTI Fees ------------------------------------------------ The Official Committee of Unsecured Creditors in Visteon Corp.'s cases made changes to the terms of FTI Consulting, Inc.'s proposed compensation package. Subject to the Court's approval, FTI will seek payment of fees for services rendered on a fixed monthly basis of $250,000 per month for the first three months, $225,000 for the fourth month, and $200,000 per month thereafter, and a completion fee of $1,500,000. As originally proposed by the Committee, the Debtors will pay FTI a monthly fee of $250,000 for the first three months and $175,000 thereafter and a completion fee of $1,500,000. The Debtors will also reimburse FTI for actual and necessary expense. In addition, the Debtors will pay FTI in accordance with its standard hourly rates for any services related to the investigation of any litigation pertaining to prior transactions between Ford Motor Company and the Debtors. FTI's customary rates are: Professional Rate/Hour ------------ --------- Senior Managing Directors $710-$825 Directors/Managing Directors $520-$685 Consultants/Senior Consultants $255-$480 Paraprofessionals $105-$210 The Creditors Committee proposes to hire FTI Consulting as its restructuring and financial advisor, nunc pro tunc to June 10, 2009. As restructuring and financial advisors to the Committee, FTI will: (a) assist with the assessment and monitoring of the Debtors' short-term cash flow, liquidity, prepetition claim payments and operating results; (b) assist the Committee with information and analyses required pursuant to the Debtors' postpetition financing; (c) assist with the review of supply chain issues, including critical vendor payments, reclamation claims, Section 503(b)(9) claims, and set offs; (d) assist with the review of the Debtors' corporate structure and the analyses of intercompany transactions; (e) assist in the review of any transactions with Ford Motor Company; (f) assist regarding the evaluation of employee-related motions and issues including severance plans, bonus programs, employee retention programs, pension and other post-retirement benefits; (g) assist with the Committee in the review of any tax issues associated with, but not limited to, claims/stock trading, preservation of net operating losses, plans of reorganization, and asset sales; (h) assist in reviewing the Debtors' business plan, including assessment of revenue enhancement and cost saving opportunities, plant level profitability , customer profitability, capital expenditure and liquidity; (i) assist in the review of claims reconciliation process and claims estimation; (j) assist in the review of plan of reorganization and related disclosure statements; (k) attend meetings with the Debtors, potential investors, banks, other secured lenders, the Committee and any other official committees organized in the Debtors' Chapter 11 proceedings, the U.S. Trustee, other parties-in-interest and professionals hired; and (l) render other business consulting or other assistance as the Committee or its counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals. 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 Corporation 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: Committee Wants to Retain Chanin Capital as Banker ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Visteon Corp.'s cases seeks the Bankruptcy Court's authority to retain Chanin Capital Partners as its investment banker nunc pro tunc to June 10, 2009. The Committee notes that Chanin has advised numerous committees, trustees, secured creditors, debtors and other constituencies in a Chapter 11 process and is experienced in analyzing and testifying regarding corporate restructuring issues and measuring the economics of any potential merger and acquisition transactions. As the Committee's investment banker, Chanin will: (a) analyze and evaluate the liquidity position and financial condition of the Debtors; (b) review, analyze and monitor DIP Financing and other financing alternatives; (c) review and analyze the Company's operations and business and financial projections, including, but not limited to, financial condition, business plan, strategy, operating forecast, cash flow projections, and budgets; (d) determine a theoretical range of values for the Debtors on a going concern basis as well as any securities to be issued or distributed in connection with the Chapter 11 cases, including any securities to be distributed under a plan of reorganization; (e) analyze proposed sales of assets of the Debtors, including strategic alternatives available to the Debtors; (f) assist the Committee in any plan of reorganization negotiations; (g) provide testimony, including expert testimony, as necessary, in any proceeding before the Court; and (h) provide the Committee with other appropriate general restructuring advice. The Debtors will pay Chanin $175,000 per month for the first two months, and $150,000 per month thereafter. The Debtors also propose to entitle Chanin to a $1.5 million fee upon the completion of a restructuring transaction fee, plus reimbursement of expenses. Brent C. Williams, a managing director at Chanin Capital Partners, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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 Corporation 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: Hires Ernst & Young for Risk Management Services -------------------------------------------------------------- Visteon Corp. and its affiliates the Bankruptcy Court's authority to employ Ernst & Young LLP as their risk management services provider nunc pro tunc to the Petition Date. The Debtors have selected Ernst & Young because of the firm's extensive track record of working in similar engagements both in and outside of bankruptcy. Ernst & Young will provide certain risk management services as provided in the Project Exhibit for Internal Audit Teaming Services and Project Exhibit for IT SOX Services. Pursuant to the Project Exhibit #1, Ernst & Young will: (a) assist and work in conjunction with the Debtors' internal audit and risk management function with the responsibilities of Visteon's Team; (b) advice and assist the Debtors' management related to its internal control activities to comply with Section 404 of the Sarbanes Oxley Act of 2002; (c) work with the Debtors to develop a mutual understanding of the areas in which the firm can assist the Debtors; (d) work with the Debtors' Team to conduct a risk assessment that will be focused on Visteon's articulated areas of risk and concerns; (e) identify and assess the risks that Ernst & Young and Visteon's Team determine could potentially impair the achievement of certain of Visteon's business objectives; (f) propose an annual Audit Plan for Visteon's consideration; (g) commence performing activities as specified by the Audit Plan; (h) plan, perform, and report on its activities; (i) communicate the results of its work to the Debtors' management and the Audit Committee; (j) meet with designated members of Visteon's management to develop, plan and prepare for the risk management activities to be conducted; (k) assist the Debtors in meetings with the Audit Committee to help obtain approval of activities to be performed; (l) provide written reports that outline the procedures performed, findings resulting from the performance of those procedures, and recommendations for improvements in systems, processes, and procedures, if applicable; (m) assist management, as part of its ongoing compliance with Section 404, in the planning and execution of its testing of internal controls over financial reporting for significant accounts and processes, and to report any findings and recommendations for improvements in the controls Ernst & Young may identify as a result of this assistance; (n) perform testing of monitoring and transaction controls that address the types of errors that could occur in the significant accounts and processes identified by Visteon and assigned to Ernst & Young; (o) assist with the scoping of the project and integration into Visteon's approach, as requested; (p) assist management in prioritizing the findings and recommendations from testing as necessary to enable management to perform its due diligence, and provide management with a report outlining areas for improvement at the business unit and monitoring level; and (q) meet with Visteon's management to discuss the firm's findings resulting from the 404 services. In accordance with Project Exhibit #2, Ernst & Young will: (1) assist IT Risk Management with testing of the IT General Computer Controls related to Information Security; (2) assist with the testing and documentation of IT General Computer Controls; (3) participate in planning and developing the work plans for the areas agreed upon with Visteon management; (4) perform terminations testing to determine if any employees who have been terminated from Visteon still have access to network as well as the Tier 0 applications; (5) perform sensitive access, including password vault and SAP Monitoring, which will be performed around a subset of the financially significant applications determined by Visteon's management; (6) perform control testing around the password vault process and SAP monitoring process; (7) perform segregation of duties testing, based on Visteon's SOD rule book, on critical applications; (8) provide periodic updates to Visteon Project Manager as to the Information Security testing status; (9) provide with a summary of testing results around key controls over the areas of Information Security outlined in "Scope and Approach" section; and (10) work with the IT SOX Project Manager and report regularly on hours incurred. A full-text copy of Ernst & Young's Engagement Letter is available for free at: http://bankrupt.com/misc/Visteon_E&YEngagement.pdf The Debtors will pay for Ernst & Young's services in accordance with the firm's current hourly rates: Partner/Executive $300 Senior Manager $240 Manager $190 Senior $140 Staff $105 CSA/Intern $60 The Debtors will also reimburse the firm for actual and necessary expenses incurred. George Lenyo, a partner of Ernst & Young LLP, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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 Corporation 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: To Sell Equipment at Durant, Mississippi Facility --------------------------------------------------------------- Visteon Corp. and its affiliates notify the Bankruptcy Court that they intend to sell 54 pieces of equipment located at their Durant, Mississippi facility through an auction scheduled on July 29, 2009, to be conducted by GoIndustry-DoveBid. The equipment to be sold include, among others, bridge crane, crane trolley, shop crane, plastic injection molding machine, storage silo, welding table, cone hoppers, chiller, pallet trucks, paint booth filtration units, curve tracer, saw blade welder, supply and storage cabinets, cutting machine, metering system, industrial battery chargers, air compressor, electric lift, and steel shelving, the description of which are available for free at http://bankrupt.com/misc/Visteon_729AssetSale.pdf The identity of the purchaser, as well as the final purchase price, for each sale will be determined at the auction. The Debtors estimate that the aggregate market value of the Assets to be sold is approximately $528,500. 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 Corporation 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) WASHINGTON MUTUAL: Amends By-Laws to Reflect Management Changes --------------------------------------------------------------- In connection the dissolution of certain standing committees of the Board of Directors of Washington Mutual, Inc., and in recognition of the changes that have occurred regarding the Company's operations since the Petition Date, the Company's Board of Directors approved certain amendments to the Company's by-laws to: (i) remove the range provided in Article II of the Bylaws regarding the size of the Board; (ii) remove provisions in Article IV of the Bylaws regarding the Company's Audit Committee, Human Resources Committee, Governance Committee, Finance Committee, Corporate Relations Committee and Corporate Development Committee, as those committees have been dissolved; and (iii) remove provisions in Article V of the Bylaws regarding the Company's General Auditor, as the position is no longer required. The Amendments to the Bylaws are effective as of June 25, 2009, John Maciel, WaMu's chief financial officer said in a disclosure with the U.S. Securities and Exchange Commission. A full-text copy of the Amendments is available can be accessed at the SEC at http://ResearchArchives.com/t/s?3f83 About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho, and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: FTI Consulting Charges $754,970 for Feb. to May ------------------------------------------------------------------ These professionals retained or employed in the Chapter 11 cases of Washington Mutual Inc. submitted to the Bankruptcy Court their interim fee applications for the period ending May 31, 2009: Professional Fees Expenses Fee Period ------------ ---------- -------- ---------- CP Energy Group LLC 39,285 63 02/03/09 to 05/31/09 FTI Consulting, Inc. 754,970 4,509 02/03/09 to 05/31/09 John W. Wolfe P.S. 197,718 242 02/01/09 to 05/31/09 Grant Thornton LLP 72,549 3,000 02/01/09 to 05/31/09 McKee Nelson LLP 337,784 3,914 02/01/09 to 05/31/09 Pepper Hamilton LLP 319,610 20,217 02/01/09 to 05/31/09 Richards, Layton 80,631 4,293 02/01/09 & Finger LLP to 05/31/09 Simpson Thacher 143,966 8,929 01/01/09 & Barlett LLP to 05/31/09 About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho, and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Shareholders Aim to Recoup Losses ---------------------------------------------------- Washington Mutual Inc. shareholders noted in a June 2009 public statement that for the last eight months, they have been hunched over their computers, trying to keep up with voluminous information about the Washington Mutual's forced bankruptcy, when WAMU bank was seized and sold in what shareholders perceive to be a hostile takeover by JPMorgan Chase of the well capitalized WAMU bank. The counterclaim filing in Federal Court in Washington D.C. on May 29, 2009, has shown their diligence is paying off. It appears more clearly now than ever they will recoup their phenomenal losses from the lawsuits filed regarding this case. Shareholders have seen the share price increase dramatically since the seizure of WAMU bank in September of 2008, when it dropped nearly to zero, and anticipate further upward movement due to the excellent attorney teams that are representing WMI. They are quite pleased with their attorney representation in this matter. The 335 page filing in court by Elliott Greenleaf and Quinn Emanual Urquhart Oliver & Hedges, LLP is detailed and comprehensive, bringing up all the points shareholders have been discussing for months. A copy of the court counter claim filing is posted on http://www.wamustory.com The prayer for relief which begins on page 132 has 18 specific counterclaims. They are demanding fair market value for the assets that were seized, restitution in an equal amount to JPM's unjust enrichment and multiple other significant monetary damages. Their demand for payment of patent and trademark infringement alone, are treble damages of $6 Billion. They have demanded a jury trial in this matter. Shareholders have gathered at Web sites such as http://www.wamucoup.com(950 members) http://www.wamuequity.org (796 members) as well as Yahoo and Google financial sites, to share their "due diligence" with each other over the last eight months. Shareholders should register their shares at http://www.wamuequity.orgto give more strength to their fight for an Equity Committee in this case. Shareholders feel an Equity Committee is their best protection. Weil, Gotshal and Manges, under the leadership of Marcia Goldstein, have put together an excellent team of attorneys that read like a "who's who" list of the best and brightest firms in the country. Shareholders will continue to watch everything in this dramatic and complex case. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho, and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WESTSIDE DEVELOPMENT: Section 341(a) Meeting Slated for August 31 ----------------------------------------------------------------- The U.S. Trustee for Region 9 will convene a meeting of creditors in Westside Development Group's Chapter 11 case on August 31, 2009, at 11:00 a.m. The meeting will be held at 211 West Fort Street Building, Room 315 E. (not at the Levin Courthouse), Detroit, Michigan. 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. Birmingham, Michigan-based Westside Development Group LLC aka Sorano Commercial Village operates a real estate business. The Company filed for Chapter 11 on July 21, 2009 (Bankr. E. D. Mich. Case No. 09-62646). Kenneth J. Wrobel Jr., Esq., represents the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. WITHERS STEEL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Withers Steel Supply, Inc. 12011 Sheridan Road Montrose, MI 48457 Bankruptcy Case No.: 09-34149 Chapter 11 Petition Date: August 1, 2009 Court: United States Bankruptcy Court Eastern District of Michigan (Flint) Judge: Daniel S. Opperman.Flint Debtor's Counsel: Jeffrey A. Chimovitz, Esq. 512 W. Court St. Flint, MI 48503 Tel: (810) 238-9615 Email: jeffchim@aol.com Estimated Assets: $0 to $50,000 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/mieb09-34149.pdf The petition was signed by Douglas Withers, president of the Company. WOLVERINE TUBE: Amends SEC Disclosures to Correct Typo Errors ------------------------------------------------------------- Wolverine Tube, Inc., filed Amendment No. 2 to its Annual Report on Form 10-K for the fiscal year ended December 31, 2008, for the sole purpose of correcting a typographical error in the Amendment No. 1 to the Form 10-K filed on July 8, 2009. The "Report of Independent Registered Public Accounting Firm" and Exhibit 23.1 "Consent of Independent Registered Public Accounting Firm" contained an incorrect date of June 10, 2009. The date should have been June 11, 2009. Amendment No. 2 does not amend, update or change any other items or disclosures in the Original Filing and does not reflect events occurring after the Original Filing. No other changes are being made by means of this filing. The Company also filed an amendment to its Form 8-K filed July 27, 2009, for the purpose of exhibiting KPMG's letter to the Securities and Exchange Commission stating whether or not KPMG agrees with such statements and to correct a typographical error regarding the Change in Registrant's Certifying Accountant. In the "Engagement of Crowe Horwath, LLP", the date of the Audit Committee of Wolverine's Board of Directors decision to retain Crowe as Wolverine's independent registered public accounting firm was filed as July XX, 2009, and should read July 20, 2009. About Wolverine Tube Wolverine Tube, Inc., is a global manufacturer and distributor of copper and copper alloy tube, fabricated products, and metal joining products. The Company had total assets of $237.1 million and $261.2 million in total liabilities, resulting $47.7 million in stockholders' deficit at December 31, 2008. As reported by the Troubled Company Reporter on June 29, 2009, Wolverine Tube does not currently have additional borrowing capacity, and future funding requirements with respect to its liquidity requirements could vary materially from the Company's current estimates. "Those matters raise substantial doubt about the Company's ability to continue as a going concern," KPMG, LLP, in Birmingham, Alabama, its independent auditors, said in a report dated June 11, 2009. YOUNG OPERATING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Young Operating Company 154 A. Young Road Knob Lick, KY 42154 Bankruptcy Case No.: 09-11323 Chapter 11 Petition Date: July 31, 2009 Court: United States Bankruptcy Court Western District of Kentucky (Bowling Green) Judge: Joan A. Lloyd Debtor's Counsel: Scott A. Bachert, Esq. 324 E 10th St PO Box 1270 Bowling Green, KY 42102 Tel: (270) 782-3938 Email: bachert@hbd-law.com William Codell, Esq. Harned, Bachert & Denton, LLP 324 E. 10th Street P.O. Box 1270 Bowling Green, KY 42102-1270 Tel: (270) 782-3938 Fax: (270) 781-4737 Email: codell@hbd-law.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/kywb09-11323.pdf The petition was signed by Anthony Young. * Bankruptcy Exit Plans Filed in Seven Large Cases Last Week ------------------------------------------------------------ NetDockets notes that at the end of last week, new or amended proposed plans of reorganization or liquidation were filed in seven large chapter 11 cases: * Bill Heard Enterprises, Inc.: First Amended Joint Consolidated Chapter 11 Plan of Liquidation Proposed by Debtors and the Official Committee of Unsecured Creditors * Cascade Grain Products, LLC: Second Amended Chapter 11 Plan of Reorganization * CDX Gas, Inc.: First Amended Chapter 11 Plan * LandSource Communities Development LLC: Revised Second Amended Joint Chapter 11 Plans of Reorganization, as Modified filed by Barclays Bank PLC * NV Broadcasting, LLC: Chapter 11 Plan of Reorganization * Salton Land Development, LLC: Amended Chapter 11 Plan of Reorganization * VeraSun Energy Corporation: Joint Plan of Liquidation * High-Yield Distressed-Debt Trading Falls Lowest in 11 Months -------------------------------------------------------------- The percentage of high-yield corporate bonds trading at distressed levels plunged to the lowest level since before Lehman Brothers Holdings Inc. collapsed in September, Carla Main at Bloomberg News said. The percentage of junk bonds with yields at least 10 percentage points more than Treasuries of similar maturity fell to 33% at the end of July from 41% in June and 70% in March, according to Merrill Lynch & Co. index data, Bloomberg said. The ratio was 27% at the end of August 2008 and less than 5% a year earlier. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- July 29-Aug. 1, 2009 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Westin Hilton Head Island Resort & Spa, Hilton Head Island, S.C. Contact: http://www.abiworld.org/ Aug. 6-8, 2009 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Conference Hotel Hershey, Hershey, Pa. Contact: http://www.abiworld.org/ Sept. 10-11, 2009 AMERICAN BANKRUPTCY INSTITUTE Complex Financial Restructuring Program Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 2, 2009 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: http://www.abiworld.org/ Oct. 7-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Oct. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Paris Las Vegas, Las Vegas, Nev. Contact: http://www.abiworld.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 21-23, 2010 INSOL International Annual Regional Conference Madinat Jumeirah, Dubai, UAE Contact: 44-0-20-7929-6679 or http://www.insol.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 6-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: July 19, 2009 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Danilo Munnoz, Joseph Medel C. Martirez, Denise Marie Varquez, Philline Reluya, 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 ***