/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/091023.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, October 23, 2009, Vol. 13, No. 293 Headlines ACCURIDE CORP: U.S. Trustee Forms 5-Member Creditors' Committee ACCURIDE CORP: Selects Deloitte as Tax Services Provider ACCREDITED HOME: Wants Excl. Plan Filing Extended Until Oct. 30 ADAMS DAIRY: Wants to Hire Berman DeLeve as Attorney AGRIPROCESSORS INC: Feldman Testifies in Rubashkin's Fraud Trial ALEKSANDR VILCHITSA: Voluntary Chapter 11 Case Summary AIR INDUSTRIES: Files Form 15 to Suspend SEC Reporting Obligations AIRBORNE HEALTH: Moody's Withdraws 'Ca' Corporate Family Rating ALIXPARTNERS LLP: S&P Raises Corporate Credit Rating to 'BB' AMERICAN INT'L: Pay Czar to Cut Compensation at Bailed-Out Firms ANDERLEE INC: Case Summary & 8 Largest Unsecured Creditors ASSET RESOLUTION: Files Schedules of Assets & Liabilities ASARCO LLC: Halcyon Seeks Allowances of Subs. Contribution claims ASARCO LLC: Judge Hanen to Hold Hearing on Parent & Union Dispute ASARCO LLC: Opposes Renewed Request for Stay on SCC Reimbursements ATLAS TRAFFIC: Case Summary & 20 Largest Unsecured Creditors BANK OF AMERICA: Pay Czar to Half Average Pay for Select Employees BERNIE KOSAR: Rejoins Cleveland Browns as Consultant BRIGHAM EXPLORATION: S&P Raises Corporate Credit Rating to 'B-' BSC DEV'T: New Buffalo Statler Stops Payment on Good Faith Check BUILDING MATERIALS: Begins Soliciting Votes on Plan CABI DOWNTOWN: Condo Buyers File Suit over Contract Deposits CALIFORNIA COASTAL: Misses $760,000 Interest Payments Due Oct. 14 CANWEST GLOBAL: Canadian Court Sets Nov. 19 Claims Bar Date CANWEST GLOBAL: Sees Plan Implementation by Mid-April CANWEST GLOBAL: Recapitalization Milestone Extended CANWEST GLOBAL: U.S. Court's Preliminary Injunction Order CATHOLIC CHURCH: 8 Claimants Seek Lift Stay to Pursue Alaska Trial CATHOLIC CHURCH: Committee Commences Avoidance Action vs. CTNA CATHOLIC CHURCH: Fairbanks Committee Sues CBNA & Parishes CATHOLIC CHURCH: Catholics Support Wilmington Bankruptcy Filing CATHOLIC CHURCH: Wilmington's First-Day Motions Approved CATHOLIC CHURCH: Wilmington Plans to Have Abuse Mediations CHEMTURA CORP: Notifies Ex-Witco Employees of Bar Date CHEMTURA CORP: Various Parties Object to Professional Fees CIT GROUP: Bond Exchange May 'Burn' Investors, Analyst Says CITIGROUP INC: Registers 3 Securities with NYSE Arca CITIGROUP INC: Pay Czar to Reduce Compensation at Bailed Out Firms CITIZEN REPUBLIC: Posts Third Quarter 2009 Results CLARENS JUNIOR GELIN: Case Summary & 16 Largest Unsec. Creditors CMR MORTGAGE: Files Disclosure Statement to Chapter 11 Plan COCKROFT DAIRY: Files for Chapter 11 Bankruptcy Protection COMMUNITY AZTEC LIMOUSINE: Voluntary Chapter 11 Case Summary COOPER-STANDARD: Committee Proposes Protocol for Access to Info COOPER-STANDARD: Proposes Dec. 4 General Claims Bar Date COOPER-STANDARD: Warren H. Smith Appointed as Fee Auditor COYOTES HOCKEY: NHL Awaits Guidance From Court on Revision of Bid DAEWOO LOGISTICS: Wins Chapter 15 Relief in United States DANIEL RAY MOXLEY: Case Summary & 20 Largest Unsecured Creditors DDJ DISPOSAL #1: Case Summary & 5 Largest Unsecured Creditors DOCTORS COMMUNITY: Arent Settles With Builders Over Defense Fees DOMARK INT'L: Posts $275,830 Net Loss in Quarter Ended Aug. 31 EASTMAN KODAK: Closes Tender Offer; 98% of Notes Validly Tendered EDDIE BAUER: Google Seeks Bilked Funds From Eddie Bauer Sale EDSCHA NORTH AMERICA: Halting Production EDUCATION MANAGEMENT: Moody's Affirms 'B1' Corporate Family Rating EMISPHERE TECHNOLOGIES: Restates Reports to Reflect MHR Warrants EMISPHERE TECHNOLOGIES: Mulls Options on $1.03MM Goldberg Judgment EPIX PHARMACEUTICALS: Joseph Finn Assignee for Creditor's Benefit FAIRPOINT COMMUNICATIONS: May Ask for Union Concessions FATBURGER RESTAURANTS: Closing Eight Restaurants FONTAINEBLEAU LV: Has Lenders' Consent to $583,000 Cash Collateral FORD MOTOR: Plans to Make SUV in Kentucky to Export to Europe FRASER PAPERS: CCAA Stay Extended Through December 4 FRED LEIGHTON: Merrill Cries Foul Over Professional Fees GALLERIA USA: Todd Neilson Appointed as Chapter 11 Trustee GATEWAY ETHANOL: Has Until Nov. 29 to File Plan of Reorganization GATEWAY ETHANOL: DIP Facility Now Requires Asset Sale by Oct. 31 GMAC INC: Pay Czar Cuts Compensation at Bailed-Out Firms GRANDVIEW WATER: Case Summary & 20 Largest Unsecured Creditors GREEKTOWN HOLDINGS: Luna/Plainfield Files Motion to Withdraw Plan HOLLY CORP: Moody's Assigns 'B1' Rating on $100 Mil. Notes HOLLY CORP: S&P Affirms Corporate Credit Rating at 'BB' IGOURMET.COM: Sales Drop, Failure to Secure Credit Cause Ch 11 INFOLOGIX INC: Forbearance Pact Extended to November 12 IPCS INC: Signs Deal to be Merged with Sprint Nextel Unit IPCS INC: Shuman Probes Board for Breach of Fiduciary Duty IRVINE SENSORS: Issues 5-Year Warrant to Investment Banker JABIL CIRCUIT: Moody's Affirms Corporate Family Rating at 'Ba1' JOSE LEON: Voluntary Chapter 11 Case Summary LAKE AT LAS VEGAS: DIP Facility Extended to December 31 LAS VEGAS SANDS: Seeks Funding to Revive Macau Casino Expansion LEHMAN BROTHERS: Ex-Bankers Assert $100 Mil. Claims in Lost Pay LEHMAN BROTHERS: Goldman Sachs, CBI Buy Claims LEHMAN BROTHERS: HKMA Updates on Minibond Cases LEHMAN BROTHERS: MAS Welcomes Deal on Minibond Notes LINENS 'N THINGS: Noteholders Clash with Gardere Over Budget LYONDELL CHEMICAL: Air Products Amends 503(b)(9) Claims M.J. MILLER INC: Voluntary Chapter 11 Case Summary MELODY HOWARTH: Case Summary & 8 Largest Unsecured Creditors MERIDIAN RESOURCE: Fortis Forbearance Extended to November 15 MERISANT WORLDWIDE: Seeks Dec. 19 Extension of Plan Exclusivity MERRILL LYNCH: Documents Raise Skepticism on BofA Execs. MGM MIRAGE: Says Kerkorian Moove an Effort to Boost Stock Value MORRIS PUBLISHING: Restates $136.5MM Loan; Tranche Buys Bank Debt NAVISTAR INT'L: Unveils $1.5 Billion Debt Offerings NAVISTAR INT'L: Has Deal With SEC Over Restatement of Financials NAVISTAR INT'L: Sees FY2009 Net Income at Lower End of Guidance NAVISTAR INT'L: Moody's Assigns 'B1' Corporate Family Rating NAVISTAR INT'L: S&P Assigns 'BB-' Rating on $1 Bil. Bonds NTK HOLDINGS: Files Prepackaged Plans of Reorganization OPUS WEST: Gets Nod to Reject Phoenix HQ Office Lease OPUS WEST: Proposes to Reject Phoenix Equipment Lease OPUS WEST: Proposes to Reject Sacramento Office Lease P & M INDUSTRIES INC: Case Summary & 20 Largest Unsec. Creditors PCS EDVENTURES: Receives "Wells Notice" From Sec Staff PHILADELPHIA NEWSPAPERS: Bruce Toll Sweetens Bid by $20 Million PILGRIM'S PRIDE: Shareholders to Vote on JBS-Backed Plan PTC ALLIANCE: Bankruptcy to Cost Hannibal $45,000 QUANTUM GROUP: Receives Delisting Notice From Amex READER'S DIGEST: Interactive Division Head to Resign READER'S DIGEST: Trustee Wants More Info on Funds REAL MEX: Michael Linn Gives Board Seat to Anthony Polazzi REBECCA ENGLE: Tries to Fight Securities Fraud Lawsuit RED RIVER ENERGY: Dist. Ct. Won't Review Shareholder Duty Decision R.H. DONNELLEY: Further Tweaks Plan & Disclosure Statement R.H. DONNELLEY: Says Committee Trading May Affect Playing Field R.H. DONNELLEY: Set to Solicit Votes on Chapter 11 Plan RIVERVIEW VENTURES: Voluntary Chapter 11 Case Summary ROBERT GRIMSLEY: Voluntary Chapter 11 Case Summary ROCKWELL DIAMONDS: Posts C$6.6MM Loss in 6 Months Ended Aug. 31 RURAL/METRO OPERATING: Moody's Puts 'Ba3' Rating on $40 Mil. Loan SASY HOLDINGS LLC: Voluntary Chapter 11 Case Summary SEMGROUP LP: Facing Objections to Plan at Oct. 26 Hearing SEMGROUP LP: Gets Court Nod to Use Cash Collateral Until Dec. 18 SEMGROUP LP: Nov. 30 Extension of DIP Loan Okayed on Final Basis SEMGROUP LP: Proposes Settlement Pact With J. Aron SIX FLAGS: Citigroup Discloses 6.4% Equity Stake SIX FLAGS: Court OKs Houlihan Lokey as Advisor SIX FLAGS: Gets Court Nod to Settle New Orleans Issues SOUTH COLLINS: Case Summary & 11 Largest Unsecured Creditors SPRINT NEXTEL: Signs Deal to Acquire iPCS Inc. for $831-Mil. STEVEN LEROY AYRES: Case Summary & 20 Largest Unsecured Creditors SQUIRES MOTEL: Court Dismisses "New Debtor Syndrome" Case STANT PARENT: Holdings Files Amended Schedules of Assets & Debts STANT PARENT: Milestone Deadline under DIP Facility on Oct. 24 STANT PARENT: Court OKs Sale of All Assets to Vapor Acquisition STARTRANS INC: Files Schedules of Assets and Liabilities STARTRANS INC: Pushes to Sell Non-cash Assets for $24 Million STARTRANS INC: Wants to Hire McCarth Law as Counsel STRATEGIC RESOURCE: Provides Default Statuts Report SUNRISE SENIOR: Annual Stockholders' Meeting on November 18 TAVERN ON THE GREEN: NY City Claims Ownership of Name TETON ENERGY: JPMorgan-Led Lenders Extend Forbearance to Nov. 6 TIGER PACIFIC: Completes Forbearance and Loan Transaction TIMOTHY CORCORAN: Case Summary & 19 Largest Unsecured Creditors TISHMAN SPEYER: Moves Closer to Default After Losing Court Ruling TOUSA INC: Banks Seek Stay of Fraudulent Transfer Judgment TRICOM SA: Set to Exit Chapter 11 After Plan Gets OK TROY ELEVATOR: Propose Bradshaw Fowler sa General Counsel TXCO RESOURCES: Creditors Agree to Two More Weeks Exclusivity UAL CORP: Enters into Funding Agreement with SkyWest UAL CORP: Provides Financial Projections for 4th Quarter UAL CORP: Reports September 2009 Traffic Results UAL CORP: United MEC Selects Wendy Morse as Chairman UNIVERSAL ENERGY: Converts Remaining Debt Into Common Shares US DEVELOPMENT: Names Polsinelli Shughart as Counsel WESTERN LIBERTY: Receives Delisting Notice From NYSE Amex WHITEHALL JEWELERS: Proposes Plan Exclusivity Until Dec. 23 WILLIAM WISE: Case Summary & 14 Largest Unsecured Creditors * 264 Companies Remain Vulnerable to Default, S&P Says * Speculative-Grade Spread Tightens Marginally to 706 Bps * U.S. Default Rate Expected to Drop to 6.9% in Sept. 2010 * Chemicals Industry Showing Resilience to Economic Challenges * Geithner Says Core TARP Programs Ending * Senate Panel Considers Bill to Ease Bankruptcy Requirements * BOOK REVIEW: Calling a Halt to Mindless Change - A Plea for Commonsense Management ********* ACCURIDE CORP: U.S. Trustee Forms 5-Member Creditors' Committee --------------------------------------------------------------- Roberta A. DeAngelis, the United States Trustee for Region 3, appointed five creditors to serve on the Official Committee of Unsecured Creditors of Accuride Corporation and its debtor- affiliates. The members of the Committee: 1) The Bank of New York Mellon Trust Company, N.A. Attn: Dennis Roemlein 601 Travis Street, 16 Floor Houston, TX 77002 Tel: (713) 483-6531 Fax: (713) 483-6979 2) Ryerson Attn: James Doseck 440 Peachtree Industrial Blvd. Norcross, GA 30071 Tel: (678) 291-4162 Fax: (678) 291-4163 3) Dawlen Corporation Attn: Faith Small 2029 Micor Drive PO Box 884 Jackson, MI 49204 Tel: (517) 787-2200 Fax: (517) 768-1766 4) B&D Thread Rolling, Inc. Attn: Scott Sanderson 25000 Brest Rd. Taylor, MI 48180 Tel: (734) 728-7070 Fax: (734) 946-0776 5) Church Electric Attn: Thomas H. Church, Jr. 7605 Old French Rd. Erie, PA 16509, Tel: (814) 868-1858 Fax: (814) 866-6387 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also Attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Accuride Corporation (OTCBB: AURD) -- http://www.accuridecorp.com/ -- is one of the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. Accuride's products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components. Accuride's products are marketed under its brand names, which include Accuride, Gunite, Imperial, Bostrom, Fabco, Brillion, and Highway Original. Accuride agreed to a balance sheet restructuring with the ad hoc committee of holders of its 8-1/2% senior subordinated notes and the steering committee of senior lenders under its credit agreement. To complete the proposed restructuring, Accuride's U.S. entities on October 8 filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code to seek approval of the prepackaged plan of reorganization (Bankr. D. Del. Case No. 09-13449). The Debtors have selected Latham & Watkins LLP as counsel; Young Conaway Stargatt & Taylor, LLP as co-counsel; Goodmans LLP as Canadian Counsel; MorrisAnderson as financial advisor; and The Garden City Group Inc. as claims agent. Accuride's petition listed assets of $682 million against debt totaling $847 million. Liabilities include a $304 million term loan and a $100 million revolving credit, plus the $275 million in subordinated notes. ACCURIDE CORP: Selects Deloitte as Tax Services Provider -------------------------------------------------------- Accuride Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Deloitte Tax LLP as their tax services provider. The firm has agreed to provide various bankruptcy tax and other ordinary course tax services. The firm's standard hourly rates: Partner/Principal/Director $680 Senior Manager $550 Manager $460 Senior $360 Other Professional Personnel $300 The Debtors assure the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Accuride Corporation (OTCBB: AURD) -- http://www.accuridecorp.com/ -- is one of the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. Accuride's products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components. Accuride's products are marketed under its brand names, which include Accuride, Gunite, Imperial, Bostrom, Fabco, Brillion, and Highway Original. Accuride agreed to a balance sheet restructuring with the ad hoc committee of holders of its 8-1/2% senior subordinated notes and the steering committee of senior lenders under its credit agreement. To complete the proposed restructuring, Accuride's U.S. entities on October 8 filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code to seek approval of the prepackaged plan of reorganization (Bankr. D. Del. Case No. 09-13449). The Debtors have selected Latham & Watkins LLP as counsel; Young Conaway Stargatt & Taylor, LLP as co-counsel; Goodmans LLP as Canadian Counsel; MorrisAnderson as financial advisor; and The Garden City Group Inc. as claims agent. Accuride's petition listed assets of $682 million against debt totaling $847 million. Liabilities include a $304 million term loan and a $100 million revolving credit, plus the $275 million in subordinated notes. ACCREDITED HOME: Wants Excl. Plan Filing Extended Until Oct. 30 --------------------------------------------------------------- Accredited Home Lenders Holding Co. and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the period during which the Debtors have the exclusive right to (i) file a plan of reorganization through Oct. 30, 2009, and (ii) solicit acceptances of the plan through Dec. 31, 2009. This was the second request by Accredited Home for an extension. The Court is set to consider the Debtor's motion on Oct. 30, 2009, at 10:30 a.m., prevailing Eastern Time. Objections, if any are due on Oct. 23, 2009 at 4:00 p.m., prevailng Eastern Time. The Debtors relate that they have commenced negotiations on a plan of reorganization with the Committee, and have had several meetings with the Committee and its professionals. The Debtors have been evaluating and drafting a liquidating plan and disclosure statement, and attendant documents as a liquidation analysis. The Debtors hope to be able to confirm a consensual plan, and intend to cooperate with the Committee to carve at a plan that will preserve the rights of all parties while allowing the remaining assets of the Debtors estates to be liquidated and distributed to creditors. 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). Gregory G. Hesse, Esq., Lynnette R. Warman, Esq., and Jesse T. Moore, Esq., at Hunton & William LLP, represent the Debtors as counsel. Laura Davis Jones, Esq., James E. O'Neill, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as Delaware counsel. Kurtzman Carson Consultants is the Debtors' claims agent. Andrew I Silfen, Esq., Schuyler G. Carroll, Esq., Robert M. Hirsch, Esq., at Arent Fox LLP in New York, and Jeffrey N. Rothleder, Esq., at Arent Fox LLP in Washington, DC, represent the official committee of unsecured creditors as co-counsel. Neil R. Lapinski, Esq., and Shelley A. Kinsella, Esq., at Elliott Greenleaf, represent the Committee as Delaware and conflicts counsel. 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. ADAMS DAIRY: Wants to Hire Berman DeLeve as Attorney ---------------------------------------------------- Adams Dairy Development LLC asks the U.S. Bankruptcy Court for the Western District of Missouri for permission to employ Berman, DeLeve, Kuchan & Chapman LC as its attorney. The firm has agreed to: a) advise the Debtor with respect to its rights and obligations as Debtor and Debtor-in-Possession and regarding compliance with the Bankruptcy Code; b) prepare and file any and all petitions, schedules, statement of affairs, motions, applications, plan of reorganization and any and all other pleadings and documents which may be required in this proceeding; c) represent the Debtor at the meeting of creditors, confirmation, and related hearings and any continued or adjourned hearings thereof; d) solicit consents to the Debtor's proposed plan of reorganization; disclosures and communications with creditors relating thereto; and securing confirmation of said plan; e) represent the Debtor with respect to any matters that may arise in connection with the Debtor's reorganization proceeding and the conduct and operation of the Debtor's business; and f) examine claims of creditors in order to determine their validity, priority, and amount; giving advice and counsel to the applicants in connection with legal problems, including securing Debtor-in-Possession financing, the use of cash collateral, the sale of property of the estate, the assumption and rejection of unexpired leases and executory contracts, and the protection of the Debtor's interests with respect to any contested or adversary matters. Ronald S. Weiss, Esq., attorney at the firm, charges $250 per hour for this engagement. The firm's other attorneys bill between $125 and $200 per hour, and paralegals bill between $60 and $75 per hour. The Debtor assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Grain Valley, Missouri, Adams Dairy Development, L.L.C., filed for Chapter 11 protection on Oct. 1, 2009 (Bankr. W.D. Miss Case No. 09-44821). In its petition, the Debtor listed both assets and debts between $10 million and $50 million. AGRIPROCESSORS INC: Feldman Testifies in Rubashkin's Fraud Trial ---------------------------------------------------------------- Former Agriprocessors Inc. manager Sholom Rubashkin said after an immigration raid in May 2008 that he intentionally diverted money meant to pay off a bank loan back into the plant's operating budget, The Associated Press reports, citing Bernard Feldman, who replaced Mr. Rubashkin. According to The AP, Mr. Feldman testified in the fraud trial on Wednesday. Mr. Rubashkin faces 91 financial fraud charges, including bank fraud, mail and wire fraud and money laundering. He has pleaded not guilty, according to The Associated Press. The report says that prosecutors claim that Agriprocessors intentionally defrauded First Bank on a revolving $35 million loan by faking invoices from meat dealers. Headquartered in Postville, Iowa, Agriprocessors Inc. -- http://www.agriprocessor.com/-- operated a kosher meat and poultry packing processors located at 220 North West Street. The Company maintains an executive office with 50 employees at 5600 First Avenue in Brooklyn, New York. The Company filed for Chapter 11 protection on November 4, 2008 (Bankr. E.D.N.Y. Case No. 08-47472). The case, according to McClatchy-Tribune, has been transferred to Iowa. Kevin J. Nash, Esq., at Finkel Goldstein Rosenbloom & Nash, represents the Company in its restructuring effort. In its petition, the Company listed assets of $100 million to $500 million and debts of $50 million to $100 million. ALEKSANDR VILCHITSA: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Joint Debtors: Aleksandr Vilchitsa dba Gutters Plus dba Quality Custom Builders dba AV Contracting Alla A. Vilchitsa 5100 Auburn Folsom Rd Granite Bay, CA 95746 Bankruptcy Case No.: 09-42658 Chapter 11 Petition Date: October 19, 2009 Court: United States Bankruptcy Court Eastern District of California (Sacramento) Judge: Christopher M. Klein Debtors' Counsel: Ravi Sakthivel, Esq. 4568 Feather River Dr #A Stockton, CA 95219 Tel: (209) 476-1010 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtors did not file a list of their 20 largest unsecured creditors when they filed their petition. The petition was signed by the Joint Debtors. AIR INDUSTRIES: Files Form 15 to Suspend SEC Reporting Obligations ------------------------------------------------------------------ Air Industries Group, Inc., on October 21 said it has completed and filed with the United States Securities and Exchange Commission its Annual Report on Form 10-KA for the Fiscal Year Ended December 2007, and its Annual Report on Form 10-K for the fiscal year ended December 2008, together with its Quarterly Reports for the three-month periods ending March and June 2009. In addition the Company has voluntarily filed a Form 15 with the SEC to suspend the Company's reporting obligations. Upon the filing of the Form 15, the Company's obligation to file periodic and current reports with the SEC, including Forms 10-K, 10-Q and 8-K, will be immediately suspended. The Company expects the registration of its common stock will be terminated within 90 days. As a result of deregistration, the Company's securities will not be eligible for trading on any national exchange or the OTC Bulletin Board; however, the Company's securities may remain eligible for quotation on the Pink Sheets, as they are now. Mr. Michael Taglich, Chairman of the Board of Air Industries Group, Inc., commented: "The past twelve months have been very eventful for the Company and much has been accomplished to return Air Industries to the consistently cash flow positive, customer centric enterprise that it is [Wednes]day, starting with a critical $6 million subordinated debt and equity financing late last year. The $6 million allowed the Company the flexibility to restore a financially overstretched supply chain. With adequate working capital, our management was allowed to do what it does best, focus on making critical, difficult-to-make aircraft parts. I would like to thank our President, Peter Rettaliata, our divisional Presidents, Dario Peragallo and Gary Settoducato, and our other hardworking officers and employees, heroes of which there are many; they dialed it up together as a team and made it happen. "In October 2008, our subsidiary Sigma Metals, Inc., reduced its operations and sold certain intangible and some minor tangible assets to the former owners of Sigma. The other assets of Sigma, principally inventory and accounts receivable, were and continue to be sold with the proceeds reducing Sigma's debt. "After completion of the $6 million subordinated debt financing management at Air Industries Group, Inc., was able to focus on other goals for the balance of 2008 and 2009. These goals included: 1. Improving Air Industries Machining, Corp.'s relationships with its customers, 2. Improving our relationships with our many vendors, and with its customers, 3. Reducing our overhead costs, 4. Renegotiating our Loan covenants to eliminate existing defaults with our Senior and Subordinated Lenders, and 5. Continuing the growth of our core business at our Air Industries Machining, Corp. subsidiary and accelerating the growth of our Welding Metallurgy, Inc. subsidiary. "All of these initiatives have a singular goal -- returning the Company to profitability. "We are very pleased that Air Industries Group, Inc. has enjoyed sales increases at both operating subsidiaries and has had positive cash flow in each month of our current fiscal year. "I am pleased to report that we have made significant progress. Our relationships with our major customers have improved as we have been able to deliver products to them in a more timely manner. Similarly our improved financial condition has enabled us to restore our vendor relationships to more normal terms. We have embarked on a significant firm-wide cost reduction program and have been able to accomplish a high percentage of our planned savings. We have completed the renegotiation of our loan agreements and believe that our relationship with our lenders is much improved from what it was one year ago. We have also made significant investments in machinery and equipment for our manufacturing facility to improve efficiency and reduce costs." Mr. Taglich continued: "The Board of Directors has decided to file a Form 15 with the SEC to suspend our obligation to file periodic and current reports. We have done this to reduce the demands on our financial reporting staff enabling them to focus their energy entirely on improving our internal operations, and to reduce the legal and accounting fees associated with external reporting obligations. "I am also pleased to announce that Air Industries Group, Inc. will be scheduling an annual meeting of stockholders for late January or early February of 2010. While we will not be filing a proxy statement with the SEC, we will be sending information that is substantially equivalent to a proxy statement to shareholders prior to the meeting." About Air Industries Air Industries Group, Inc. (PINKSHEETS: AIRI) is an integrated manufacturer of precision components for the aerospace and defense industry. The Company designs and manufactures structural parts and assemblies that focus on flight safety, including landing gear, arresting gear, engine mounts and flight controls. Air Industries Group, through its Welding Metallurgy subsidiary, also provides sheet metal fabrication, such as oil tanks and aircraft engine inlet ducts, tube bending, and welding services, as well as distributing specialty metals that are a critical component in the aerospace supply chain. AIRBORNE HEALTH: Moody's Withdraws 'Ca' Corporate Family Rating --------------------------------------------------------------- Moody's Investors Service withdrew the debt ratings of Airborne Health, Inc., in light of the acquisition of the assets of Airborne by a new entity formed by GF Capital Private Equity Fund, LP, a New York City based private equity firm. Details of the transaction were not disclosed. The ratings were withdrawn because the rated entity's assets have been sold and the entity is being wound down. Moody's withdrew these ratings: * Corporate Family Rating of Ca; * Probability of Default Rating of D; * $20 million first lien secured revolving credit facility due 2012, rated Ca (LGD 4, 64%); and * $135 million first lien secured term loan due 2012, rated Ca (LGD 4, 64%). On February 9, 2009, Airborne's corporate family rating was downgraded to Ca, following covenant violations and Airborne's failure to pay a principal installment. Airborne Health, Inc, headquartered in Bonita Springs, Florida, markets the "Airborne" effervescent health formula that is designed to support the immune system. The company's products are distributed nationwide through about 70,000 supermarkets, drugstores, discounters, club stores, and other retail locations. ALIXPARTNERS LLP: S&P Raises Corporate Credit Rating to 'BB' ------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit and issue-level ratings on Southfield, Michigan-based AlixPartners LLP by one notch. The corporate credit rating was raised to 'BB' from 'BB-'. These ratings were removed from CreditWatch, where they were placed with positive implications s1, 2009. The rating outlook is stable. AlixPartners had total debt outstanding of $371 million as of June 30, 2009. "The ratings upgrade is based on AlixPartners' solid operating performance and improving financial measures," said Standard & Poor's credit analyst Andy Liu. The 'BB' rating reflects the company's size relative to peers, the competitive market for consulting services, and some business cycle exposure, especially as the company gains scale. AlixPartners' somewhat flexible cost structure, strong margins, and good discretionary cash flow partially offset these factors. AlixPartners' main practice areas are financial advisory, enterprise improvement, information management services, and turnaround and restructuring. The company's expert-driven model, with a 1-to-5 ratio of managing directors to staff, has enabled the company to enjoy higher-than-average billing rates and to achieve very high average consultant utilization. For the quarter ended June 30, 2009, AlixPartners' revenues and EBITDA increased 20% over the prior-year period. The performance at the firm's information management services and turnaround and restructuring practices were particularly strong. This partially contributed to the significant improvement in credit measures. For the 12 months ended June 30, 2009, lease-adjusted EBITDA coverage of interest and lease-adjusted total debt to EBITDA were 6.1x and 3.0x, respectively. The corresponding ratios at the end of 2006 were 2.7x and 4.5x, respectively. AlixPartners typically generates healthy discretionary cash flow. Depending on the timing of bonus payments to staff and managing directors, the level of discretionary cash flow can vary. Working capital and capital expenditure needs of the firm are modest and should not impede discretionary cash flow generation. For the 12 months ended June 30, 2009, the company's EBITDA margin was 20.6%, broadly in line with 20.4% at the end of 2008. AMERICAN INT'L: Pay Czar to Cut Compensation at Bailed-Out Firms ---------------------------------------------------------------- Kenneth Feinberg, the Treasury Department's special master for compensation, will cut in half the average compensation for 175 employees at firms receiving large sums of government aid, Deborah Solomon and Dan Fitzpatrick at The Wall Street Journal relates, citing people familiar with the matter. The firms under Mr. Feinberg's authority are American International Group, Bank of America, Citigroup Inc., General Motors Co., GMAC Inc., Chrysler Group LLC, and Chrysler Financial. According to The Journal, the sources said that majority of salaries will come in under $500,000. The Journal says that the biggest cut will be to salaries, which will drop by 90% on average. The Journal relates that Bank of America CEO Ken Lewis won't receive any salary for 2009, sources say that Citigroup Inc. is telling employees that the net impact of Mr. Feinberg's rulings will be minimal because the cut salary will be shifted from cash to longer-term stock grants. The Journal says that some of the toughest pay restrictions will come at American International Group Inc.'s financial-products unit of American International Group Inc. According to The Journal, people familiar with the matter said that no employee within that unit will get compensation of more than $200,000. The Journal reports that Mr. Feinberg will also demand a host of corporate governance changes at those firms, including: -- splitting the chairman and CEO positions, -- requiring boards of directors to create "risk" committees, and -- eliminate staggered board elections. Based in New York, American International Group, Inc., is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. In September 2008, AIG experienced a liquidity crunch when its credit ratings were downgraded below "AA" levels by Standard & Poor's, Moody's Investors Service and Fitch Ratings. On September 16, 2008, the Federal Reserve Bank created an $85 billion credit facility to enable AIG to meet increased collateral obligations consequent to the ratings downgrade, in exchange for the issuance of a stock warrant to the Fed for 79.9% of the equity of AIG. The credit facility was eventually increased to as much as $182.5 billion. AIG has sold a number of its subsidiaries and other assets to pay down loans received, and continues to seek buyers of its assets. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the U.S. Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. ANDERLEE INC: Case Summary & 8 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Anderlee, Inc. 333 Broadway, Suite 401 Saratoga Springs, NY 12866 Bankruptcy Case No.: 09-13925 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Northern District of New York (Albany) Judge: Chief Judge Robert E. Littlefield Jr. Debtor's Counsel: Richard H. Weiskopf, Esq. O'Connell & Aronowitz 54 State Street, 9th Floor Albany, NY 12207 Tel: (518) 462-5601 Fax: (518) 462-2670 Email: rweiskopf@oalaw.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $243,295, and total debts of $1,268,082. A full-text copy of the Debtor's petition, including a list of its 8 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nynb09-13925.pdf The petition was signed by Sara Lee Stefanishin, president of the Company. ASSET RESOLUTION: Files Schedules of Assets & Liabilities --------------------------------------------------------- Asset Resolution LLC delivered to the U.S. Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $10,641,166 B. Personal Property $412,856,836 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Non-priority Claims $22,642,531 ------------ ----------- TOTAL $423,498,002 $22,642,531 Headquartered in New York, Asset Resolution LLC filed for Chapter 11 protection on Oct. 14, 2009 (Bankr. D. Del. Case No. 09-16142). When it filed for protection from its creditors, it listed assets between $100 million and $500 million, and debts between $10 million and $50 million. ASARCO LLC: Halcyon Seeks Allowances of Subs. Contribution claims ----------------------------------------------------------------- Halcyon Master Fund L.P. and DK Acquisition Partners, L.P., ask the Court: (a) pursuant to Section 503(b)(4) of the Bankruptcy Code, to grant them an allowed administrative expense claim in the Debtors' Chapter 11 cases in an amount no greater than $500,000, as reasonable compensation for professional services rendered by their attorneys with respect to their bid to purchase certain interests in the SCC Litigation Trust; (b) pursuant to Section 503(b)(3)(D), to grant them an allowed direct administrative expense claim for $1.875 million; and (c) to authorize and direct the Debtors to pay the Substantial Contribution Claims in full within 10 business days after the claims are allowed. Darrell L. Barger, Esq., at Hartline, Dacus, Barger, Dreyer & Kern, L.L.P., in Corpus Christi, Texas, relates that Halcyon and DK Acquisition participated in the Debtors' process for soliciting offers from third parties to act as a "stalking horse" bidder for some or all of the SCC Litigation Trust Interests from the judgment against Americas Mining Corporation in the litigation relating to shares of Southern Peru Copper Company, now known as Southern Copper Corporation. He avers that Halcyon and DK spent significant time, money and other resources, both internally and through outside counsel, valuing the SCC Litigation Trust Interests and formulating an offer to act as stalking horse bidder. To protect that investment of resources, the Halcyon and DK conditioned their offer on two criteria common to these types of offers: (1) They obtained promises from the Debtors and otherwise made clear that their offer was to be kept strictly confidential unless and until it was accepted by the Debtors as a stalking horse bid for the SCC Litigation Trust Interests; and (2) They conditioned use of their offer as a stalking horse bid on the Debtors agreeing to, and obtaining Court approval for, standard "stalking horse protections," including a break-up fee and expense reimbursement, that would adequately compensate Halcyon and DK should the Debtors use their offer to generate value for the Debtors' bankruptcy estates by spurring a third party to pay a higher amount for the SCC Litigation Trust Interests than that offered by Halcyon and DK. Notwithstanding the confidentiality provisions, upon obtaining Halcyon and DK's offer, Mr. Barger asserts that the Debtors publicly disclosed that offer, thereby setting the baseline for and spurring other parties to bid on the SCC Litigation Trust Interests and effectively using the offer as a stalking horse bid to provide a substantial contribution to the estates. As both the Court and the Debtors have expressly stated, the value the Debtors' estates and creditors will receive as a result of Halcyon and DK's offer and the bidding it prompted is significant, and likely enough to satisfy all creditors in full, Mr. Barger contends. He also notes that in the Court's report recommending the Parent's Plan, Judge Schmidt stated that "the [i]nitiation of the auction process [for the SCC Litigation Trust Interests] brought tangible benefits to the Debtor's estate and was perhaps the final impetus needed to encourage the Parent to file its plan which pays creditors in full." As Halcyon and DK's offer was the only timely submitted binding offer that provided a fixed price for the SCC Litigation Trust Interests, the benefits are directly attributable to Halcyon and DK's offer and the resources they dedicated to formulating and submitting that offer, Mr. Barger insists. Accordingly, Halcyon and DK contend that the Court should allow their Substantial Contribution Claims to compensate them for their actual, necessary expenses and reasonable professional fees incurred in preparing and submitting their offer, and for making a substantial contribution to the Chapter 11 cases. 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. 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). 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: Judge Hanen to Hold Hearing on Parent & Union Dispute ----------------------------------------------------------------- The final battle for the ownership of ASARCO LLC has begun before Judge Andrew S. Hanen of the U.S. District Court for the Southern District of Texas. Judge Hanen commenced a hearing October 19, 2009, to consider final arguments from key parties-in-interest as to whose plan of reorganization should be approved for ASARCO LLC, Southern Peru Holdings, LLC, AR Sacaton, LLC, and ASARCO Master, Inc. At the October 19 hearing, Judge Hanen indicated that he would consider a broad array of issues before ruling on the Competing Plans, including environmental and labor issues with ASARCO's workers and Grupo Mexico SAB de C.V.'s previous performance as ASARCO's owner, according to The Wall Street Journal. Judge Hanen has also urged Grupo Mexico to come up with a labor agreement with ASARCO's union. "That does not mean you will sit down with the union, singing Kumbaya . . . But maybe since July, no one has really sat down and really crunched these things down," Judge Hanen is quoted by Reuters as saying. On behalf of Grupo Mexico, Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Los Angeles, California, asked the District Court during opening statements to confirm the Bankruptcy Court's recommendation, and reject Sterlite (USA), Inc.'s amended bid for ASARCO, WSJ reports. He also insisted that the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL-CIO's opinions should not be considered because the Union is not a creditor of the bankruptcy estates. Judge Hanen, however, has allowed Sterlite to argue its amended bid, and has maintained that Union's objections will be considered, WSJ's Joel Millman says. As previously reported, Judge Hanen commenced on October 19 the hearings to consider the objections of several key parties of the Debtors' bankruptcy cases against Bankruptcy Court Judge Richard S. Schmidt's report and recommendation for the District Court (i) not to consider the Post-Recommendation Plan of Reorganization filed by the Debtors on September 10, 2009, or (ii) in the alternative, if the District Court considers the Post- Recommendation Plan, to confirm the Plan proposed by Asarco Incorporated and Americas Mining Corporation. The objecting parties include ASARCO LLC and its Subsidiary Debtors; Sterlite (USA), Inc., and Sterlite Industries (India) Ltd.; the state of Arizona; and the Union. In answer to the objections, the Parent filed responses insisting that Judge Hanen should confirm the Parent's Plan, as recommended by Judge Schmidt. The Parent also filed a surreply to the Bankruptcy Court's order to show cause why the Debtors' Post- Confirmation Plan should be considered, insisting that Sterlite's assertion that it is releasing the Parent from over $8 billion of liability is "nothing but smoke and mirrors." Judge Hanen has said that anyone who wishes to be heard with respect to the confirmation of the Competing Plans must be in present in court because the District Court will not allow telephonic participation. He is expected to issue the final judgment on which Chapter 11 Plan is feasible and best for the reorganization of the Debtors' bankruptcy estates by November 2009. In a separate order, Judge Hanen directed each of the Union and the Parent to have these individuals appear at his courtroom: (1) the person most familiar with the negotiations between AMC and the Union that have taken place in the last 12 months; and (2) the person or persons with the authority to negotiate a binding labor agreement. As widely reported, Judge Schmidt has recommended the confirmation of the Parent Plan, saying that it achieves good objective consequences because it provides a cash recovery in full satisfaction of creditor's claims, the greatest immediate recovery to various constituencies, and certainty of funding. The Parent's Plan, valued at $3.6 billion, complies with all of the requirements of the Bankruptcy Code and should be confirmed, Judge Schmidt opined in a 137-page report and recommendation dated August 31, 2009. Grupo Mexico could still Get ASARCO The Parent's ultimate parent, Grupo Mexico SAB de C.V., could still take control of ASARCO regardless of the threats from company workers that they will strike if the Mexican miner regains control of ASARCO, Reuters quoted analysts as saying. Mica Rosenberg of Reuters related analysts infer that the Union's threat will probably not sway Judge Hanen's upcoming November decision as to which will take control of ASARCO, Grupo Mexico or Sterlite. The Union has backed the Debtors' Plan, and has said that it would go on strike if it cannot reach a labor agreement with Grupo Mexico. "We have said all along if we don't have an agreement and Grupo was to be the successful bid, we will not work without an agreement. We will strike," Manuel Armenta from the United Steel Workers Union told Reuters. The Union worries that if Grupo Mexico wins, it will bring its fraught labor relations in Mexico to Arizona. "We know exactly what they have done to the workers in Mexico," Mr. Armenta added. Many of ASARCO's creditors, including the U.S. government and the state of Arizona, support the Debtors' Sterlite-backed Plan, and file separate objections against the Parent's Plan. "If this opposition was having an important effect we would have seen it in the judgment of Richard Schmidt . . . We think that Grupo Mexico has a big chance of winning," Reuters quoted Rodrigo Heredia as saying. Mr. Heredia is an analyst at the Mexican brokerage firm Ixe. 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. 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). 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: Opposes Renewed Request for Stay on SCC Reimbursements ------------------------------------------------------------------ Americas Mining Corporation and Asarco Incorporated have renewed their request to stay, pending appeal, the order entered on April 15, 2009, by the U.S. District Court for the Southern District of Texas, Brownsville Division, approving the expense reimbursement in connection with the auction and proposed sale in favor of ASARCO LLC, in the litigation against AMC relating to shares of Southern Peru Copper Company, now known as Southern Copper Corporation. On September 17, 2009, the District Court ruled "that all appellate briefing is stayed pending entry of a Final Confirmation Order" in the Debtors' bankruptcy cases. The Parent now requests that the stay of the Reimbursement Order be extended through the pendency of its appeal of the Reimbursement Order -- as originally contemplated in the Original Stay Motion. In the alternative, the Parent seeks that the stay be extended pending entry of a Final Confirmation Order. Charles A. Beckham, Jr., Esq., at Haynes and Boone, LLP, in Houston, Texas, relates that since the Original Stay Motion was approved, Judge Schmidt has entered reports all recommending that the District Court enter a Final Confirmation Order confirming the Parent's Plan. For the same reasons that the Bankruptcy Court entered the initial Stay Order and the renewed Stay Order, a further stay of the Reimbursement Order is warranted, Mr. Beckham contends. "Such a stay would be consistent with the District Court's order staying all appellate briefing pending entry of a Final Confirmation Order," he points out. ASARCO Objects to 2nd Renewed Stay Request ASARCO LLC filed a response to the second renewed Motion for Stay Pending Appeal filed by Asarco Incorporated and Americas Mining Corporation, seeking to stay ASARCO's payment of fees pursuant to the Court Order approving the expense reimbursement in connection with the auction and proposed sale of the SCC Judgment. ASARCO says it strongly disagrees with the Parent's contention that since the Bankruptcy Court has entered a Report and Recommendation recommending confirmation of the Parent's proposed plan of reorganization, "there is no reason to begin paying third party bidders for the SCC Judgment if the Parent's Plan is confirmed." ASARCO instead says it agrees with the Bankruptcy Court's observation that "[i]nitiation of the auction process brought tangible benefit to the Debtor's estate and was perhaps the final impetus needed to encourage the Parent to file its plan which pays creditors in full." Following the expiration of the stay of the Reimbursement Order, ASARCO is now technically allowed to reimburse bidders for eligible due diligence expenses and work fees in accordance with the Reimbursement Order. Nevertheless, in an abundance of caution and in light of the Parent's pending Motion to Stay and the prior Court orders staying the Reimbursement Order, ASARCO asks Judge Schmidt for a formal ruling denying the Parent's Motion to Stay prior to making any payments to the bidders under the Reimbursement Agreements. In the alternative, ASARCO asks the Court to set an expedited hearing to consider the Motion to Stay and ASARCO's response to it. 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. 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). 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) ATLAS TRAFFIC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Atlas Traffic Management Systems, LLC 2801 SW 46TH AVENUE Fort Lauderdale, FL 33314 Bankruptcy Case No.: 09-32677 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: Robert A. Schatzman, Esq. 1221 Brickell Ave #1600 Miami, FL 33131 Tel: (305) 416-6880 Fax: (305) 416-6887 Email: robert.schatzman@gray-robinson.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/flsb09-32677.pdf The petition was signed by Benjamin G. Mayer, authorized representative of the Company. BANK OF AMERICA: Pay Czar to Half Average Pay for Select Employees ------------------------------------------------------------------ Kenneth Feinberg, the Treasury Department's special master for compensation, will cut in half the average compensation for 175 employees at firms receiving large sums of government aid, Deborah Solomon and Dan Fitzpatrick at The Wall Street Journal relates, citing people familiar with the matter. The firms under Mr. Feinberg's authority are American International Group, Bank of America, Citigroup Inc., General Motors Co., GMAC Inc., Chrysler Group LLC, and Chrysler Financial. According to The Journal, the sources said that majority of salaries will come in under $500,000. The Journal says that the biggest cut will be to salaries, which will drop by 90% on average. The Journal relates that Bank of America CEO Ken Lewis won't receive any salary for 2009, sources say that Citigroup Inc. is telling employees that the net impact of Mr. Feinberg's rulings will be minimal because the cut salary will be shifted from cash to longer-term stock grants. The Journal says that some of the toughest pay restrictions will come at American International Group Inc.'s financial-products unit of American International Group Inc. According to The Journal, people familiar with the matter said that no employee within that unit will get compensation of more than $200,000. The Journal reports that Mr. Feinberg will also demand a host of corporate governance changes at those firms, including: -- splitting the chairman and CEO positions, -- requiring boards of directors to create "risk" committees, and -- eliminate staggered board elections. Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The Company serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers support to more than 4 million small business owners. The Company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. BofA sought government backing in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. * * * BofA has received US$45 billion in government bailout money since the economic collapse in 2008. As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. Bank of America reported a third-quarter 2009 net loss of $1.0 billion. After deducting preferred dividends of $1.2 billion, including $893 million related to dividends paid to the U.S. government, the diluted loss per share was $0.26. BERNIE KOSAR: Rejoins Cleveland Browns as Consultant ---------------------------------------------------- Aaron Kuriloff at Bloomberg News reports that Bernie Kosar has rejoined the National Football League team Cleveland Browns as a consultant a week after U.S. Bankruptcy Judge Raymond B. Ray in Fort Lauderdale appointed a trustee to take over his bankruptcy case. Bernard J. Kosar, Jr., is a former Cleveland Browns and University of Miami quarterback. He lives in the Fort Lauderdale suburb of Weston. Mr. Kosar filed for Chapter 11 on June 19, 2009 (Bankr. S.D. Fla. Case No. 09-22371). Julianne R. Frank, Esq., represents Mr. Kosar. Mr. Kosar listed assets listed $9.2 million in assets and $18.9 million in debt. BRIGHAM EXPLORATION: S&P Raises Corporate Credit Rating to 'B-' --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on oil and gas exploration and production company Brigham Exploration Co. to 'B-' from 'CCC+'. The outlook is stable. At the same time, S&P raised the issue-level rating on Brigham's $160 million 9.625% senior notes due 2014 to 'CCC+' from 'CCC'. The recovery rating on these notes remains at '5', indicating expectations of modest (10% to 30%) recovery. "The rating actions follow Brigham's announcement of an equity offering, which should improve liquidity," said Standard & Poor's credit analyst Patrick Y. Lee. With the equity offering, Brigham seeks to raise $137 million in net proceeds, which the company ultimately plans to use to accelerate its drilling program in the Williston Basin. Pending use of the proceeds, Brigham will use a portion to pay down its senior revolving credit facility. As of September 30, 2009, $110 million was outstanding under this revolver. The remainder of the proceeds will be added to Brigham's cash balance and will help fund capital expenditures in the near future, well into 2010. In conjunction with the equity announcement, the company stated that it expects to spend $175.8 million on exploration and development in 2010, which would likely outstrip expected cash flow and pro forma outstanding cash. Consequently, Brigham will draw down on its revolver as needed to fund the additional capital expenditures necessary for accelerated development of its Williston Basin acreage. Nevertheless, S&P expects pro forma the equity offering and debt paydown that the company will have sufficient funds in the next 12 months to support its proposed capital expenditures and debt payments as they come due. The ratings on Austin-based Brigham reflect its small reserve base, high debt leverage, tight liquidity, and weak interest coverage. The ratings also reflect its improved liquidity as a result of the equity offering and growth prospects in the Williston Basin. The stable outlook is based on S&P's expectations that Brigham will have sufficient liquidity over the next year to fund capital expenditures and to repay debt. S&P could take a positive rating action if the company improves its business profile in terms of scale and scope, is able to maintain adequate liquidity levels, and improves cash flow to support capital expenditures and debt payments for an extended period of time. S&P could lower the rating if Brigham's liquidity deteriorates from current levels through a substantial borrowing base reduction, a considerable increase in capital spending, or lower commodity prices causing a drop in expected cash flow. BSC DEV'T: New Buffalo Statler Stops Payment on Good Faith Check ---------------------------------------------------------------- James Fink at Business First of Buffalo reports that New Buffalo Statler Redevelopment LLC, the local group which in August submitted the highest bid for Statler Towers, has stopped payment on a $261,000 good faith check. Business First relates that the check has been returned. According to Business First, the payment was promised on September 29 by New Buffalo Statler's lawyers. Business First states that the deal was scheduled to close on August 28 and the closing date has twice been postponed, now until November 30. New Buffalo Statler Redevelopment, which bid $1.3 million for Statler Towers, has already made more than $300,000 in advance payments towards the closing, and has been paying the building's weekly operating costs since early September, the report says. Business First states that U.S. Bankruptcy Court Judge Carl Bucki agreed to hold a closed-door status conference on Tuesday, but said that the outcome of the private meeting will be discussed in open court following the conference. Business First relates that court-appointed trustee Morris Horowitz thinks that New Buffalo Statler will be able to meet the November 30 closing date. Contract Specialists International, Inc., Firstsource Manufacturing, Inc., and Parklane Catering LLC filed a Chapter 11 bankruptcy petition for BSC Development BUF LLC, aka BSC Tower, LLC, on April 13, 2009 (Bankr. W.D. N.Y. Case No. 09-11550). BUILDING MATERIALS: Begins Soliciting Votes on Plan --------------------------------------------------- Building Materials Holding Corporation has received approval from the U.S. Bankruptcy Court in Delaware of the disclosure statement explaining its proposed Chapter 11 plan of reorganization. It also received approval to begin soliciting approvals of the Plan from the requisite creditor groups. With these developments, BMHC remains on track to complete its financial restructuring and emerge from Chapter 11 by the end of 2009. The deadline for ballots to be received by the voting agent is November 25, 2009. A court hearing to confirm the Plan is scheduled to be held December 10, 2009. "We are pleased that BMHC has reached another important milestone in executing our balance sheet restructuring and putting our Company in a financially stronger position for the future," said Robert E. Mellor, Chairman and Chief Executive Officer. "Our Plan has the support of our secured lender group; we have obtained a commitment for $103.5 million in exit financing; and, with today's court ruling, we can now move forward to complete the restructuring process. With far less debt and a healthier capital structure, BMHC will enjoy new opportunities ahead, while remaining as committed as always to our customers and partners." As previously announced, on June 16, 2009, BMHC and all of its subsidiaries voluntarily initiated reorganization cases in Delaware under Chapter 11 of the U.S. Bankruptcy Code. Pursuant to the bankruptcy plan, BMHC's existing common shares held by shareholders will be extinguished and these shareholders will not receive any distributions. The Chapter 11 Plan The Plan, twice amended, provides for BMHC's secured lenders to convert debt into equity, becoming majority owners of the Company upon emergence. BMHC has secured a commitment for $83.5 million of exit financing that will be available to the Company upon its emergence from Chapter 11 to help meet its operating needs and grow its business. The agreement includes an option to expand the facility by up to $20 million, for a total of $103.5 million, subject to certain conditions. The facility will be provided by a group of lenders led by Wells Fargo. BMHC expects to emerge from Chapter 11 before the end of the year. BMHC notes that in a hypothetical Chapter 7 liquidation unsecured creditors won't receive any distributions. However, if they vote for the Second Amended Plan, they will receive their pro rata share from the $5 million allocated for the unsecured cash fund and the proceeds from the sale of insurance policies. They are expected to recover 13.1% of their claims under this scenario. Any unsecured creditor class that rejects the Plan won't receive distributions. BMHC's existing common shares held by shareholders will be extinguished and these shareholders will not receive any distributions. Under the Second Amended Plan, the Debtors are projected to emerge from Chapter 11 with approximately $131 million of net debt, which will be reduced to $62 million by December 12. Copies of the Second Amended Plan and Disclosure Statement are available free of charge at: http://bankrupt.com/misc/BMHC_Amended_DS.pdf http://bankrupt.com/misc/BMHC_AmendedPlan.pdf About Building Materials Building Materials Holding Corporation -- http://www.bmhc.com/-- is one of the largest providers of building materials and residential construction services in the United States. BMHC serves the homebuilding industry through two recognized brands: as BMC West, it distributes building materials and manufacture building components for professional builders and contractors in the western and southern states; as SelectBuild, it provides construction services to high-volume production homebuilders in key markets across the country. BMHC and 11 affiliates filed for bankruptcy on June 16, 2009 (Bankr. D. Del. Lead Case No. 09-12074). Judge Kevin J. Carey handles the case. Michael A. Rosenthal, Esq., and Matthew K. Kelsey, Esq., at Gibson, Dunn & Crutcher LLP; and Sean M. Beach, Esq., at Young Conaway Stargatt & Taylor, LLP, serve as bankruptcy counsel. Paul Croci, at Peter J. Solomon Company, serves as financial advisor. Joseph Spano at Alvarez & Marsal North America, LLC, serves as restructuring advisor. The Debtors' tax consultant is KPMG LLP; tax advisor is PricewaterhouseCoopers LLP; and claims and notice agent is The Garden City Group, Inc. As of March 31, 2009, the Debtors had total assets of $480,148,000 and total debts of $481,314,000. CABI DOWNTOWN: Condo Buyers File Suit over Contract Deposits ------------------------------------------------------------ Cabi Downtown LLC was sued by 67 individuals who signed contracts to buy units and made deposits into escrow before the bankruptcy filing, Bill Rochelle at Bloomberg News reported. According to the report, the buyers, who all refused to complete the purchases, contend that Cabi was in default, entitling them to the return of their deposits. Even if they should have completed the purchases, the lawsuit seeks a declaration that the purchasers are entitled to a return of some of the deposits under the contracts and Florida law. Aventura, Florida-based Cabi Downtown, LLC, operates a real estate Business and owns the 49-story Everglades on the Bay condominium in Miami. The condominium project has 849 units in two towers, with 60,000 square feet of retail space. The Company is owed by GICSA, which says it is the largest and most profitable real estate developer in Mexico. The Company filed for Chapter 11 on Aug. 18, 2009 (Bankr. S.D. Fla. Case No. 09-27168). Mindy A. Mora, Esq., represents the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts both ranging from $100,000,001 to $500,000,000. CALIFORNIA COASTAL: Misses $760,000 Interest Payments Due Oct. 14 ----------------------------------------------------------------- California Coastal Communities, Inc., on October 14, 2009, declined to make a $266,460 interest payment that was due under its Senior Secured Revolving Credit Agreement dated as of September 15, 2006, and a $492,558 interest payment that was due under its Senior Secured Term Loan Agreement dated as of September 15, 2006. As of October 14, 2009, roughly $81.9 million of principal and accrued and unpaid interest was outstanding under the Revolving Loan Agreement, and roughly $100.3 million of principal and accrued and unpaid interest was outstanding under the Term Loan Agreement. As a result of not having made the interest payments under the Revolving Loan Agreement and the Term Loan Agreement, a triggering event has occurred which could give rise to the immediate acceleration of the payment of all outstanding principal and accrued interest under the Loan Agreements. The non-payment of interest also constitutes termination events with regard to the previously announced forbearance agreements that California Coastal entered into with its lenders with respect to the non- payment of $1.7 million in principal under the Revolving Loan Agreement that was due on September 30, 2009. California Coastal is continuing to negotiate with its lenders in an effort to obtain a consensual restructuring of its obligations under the Loan Agreements to provide full repayments on amortization schedules that would coincide with the receipt of revenues from anticipated future home sales. In the event that these negotiations are not successful, California Coastal believes that any efforts to attempt to enforce the payment obligations or otherwise accelerate the indebtedness under either of the Loan Agreements would be automatically stayed under Chapter 11 of Title 11 of the United States Bankruptcy Code in the event that California Coastal elects to file for protection under such laws. As reported by the Troubled Company Reporter, California Coastal on October 1, 2009, entered into: (i) a Senior Secured Revolving Loan Forbearance Agreement with KeyBank National Association as a lender and as syndication agent under that certain Senior Secured Revolving Credit Agreement dated as of September 15, 2006 as amended from time to time; and (ii) a Senior Secured Term Loan Forbearance Agreement with KeyBank as a lender and as syndication agent under that certain Senior Secured Term Loan Agreement dated as of September 15, 2006 as amended from time to time. KeyBank has advised the Company that it has received the consent of various other lenders, who together with KeyBank hold over 66.66% of the principal amount outstanding under each of the Loan Agreements, to enter into the forbearance contained in the Forbearance Agreements. The Forbearance Agreements terminate on November 1, 2009 or upon such earlier date as any further defaults may occur. About California Coastal California Coastal Communities, Inc. is a residential land development and homebuilding company with properties owned or controlled primarily in Orange County, California, and also in two other Southern California counties (Los Angeles and Riverside). The Company's principal activities include obtaining zoning and other entitlements for land that it owns; improving the land for residential development, and designing, constructing and selling single-family homes in Southern California. The Company's primary asset is a 356-home luxury coastal community known as Brightwater. The Company's homebuilding operations include projects in the Huntington Beach, the Inland Empire (Beaumont), and Lancaster areas of Southern California. During the year ended December 31, 2008, the Company delivered 55 homes. Its homebuilding subsidiary, Hearthside Homes, Inc., has delivered over 2,100 homes to families throughout Southern California. As of June 30, 2009, California Coastal had $290.6 million in total assets, including $10.0 million in cash and cash equivalents, against $231.2 million in total liabilities. CANWEST GLOBAL: Canadian Court Sets Nov. 19 Claims Bar Date ----------------------------------------------------------- Canwest Global Communications Corp. and the other applicants and partnerships -- the CMI Entities -- sought and obtained from the Ontario Superior Court of Justice an order: (a) establishing 5:00 p.m. (Toronto Time), November 19, 2009, as the deadline for all creditors of the Applicants to file proof or proofs claims; and (b) approving a claims procedure for the determination of affected creditors' voting and distribution rights under a plan of arrangement or compromise to be proposed by the Applicants and the partnerships. In order to hold a meeting of creditors to approve a plan of arrangement within the timeframe contemplated in a Term Sheet, and to establish the procedure for identifying and valuing creditor claims for voting and distribution purposes at a meeting, the Applicants say it is necessary to implement a claims process and bar procedure. The Honorable Madam Justice Sarah E. Pepall, ordered that any Claims denominated in a foreign currency will be converted to Canadian dollars for purposes of any Plan on the basis of the average Bank of Canada United States/Canadian dollar noon exchange rate in effect over the 10-day period preceding the filing of a Plan. The Honorable Ed Saunders, the Honorable Jack Ground, the Honorable Coulter Osborne, and other Persons as may be appointed by the Court from time to time on application of the CMI Entities, or other Persons designated by the CMI Entities and consented to by the FTI Consulting Monitor, Inc., the Court- appointed Monitor, are appointed as Claims Officers for the claims procedure. Subject to the discretion of the Court, a Claims Officer will determine the validity and amount of disputed Claims in accordance with the Claims Procedure Order and to the extent necessary may determine whether any Claim or part thereof constitutes an Excluded Claim. A Claims Officer will determine all procedural matters which may arise in respect of his or her determination of these matters, including the manner in which any evidence may be adduced. A Claims Officer will have the discretion to determine by whom and to what extent the costs of any hearing before a Claims Officer will be paid. FTI Consulting Canada Inc., the court-appointed CCAA monitor, will assist the CMI Entities in connection with the administration of the claims procedure provided, including the determination of Claims of Creditors and the referral of a particular Claim to a Claims Officer, as requested by the CMI Entities from time to time, and is directed and empowered to take other actions and fulfill other roles as are contemplated by the Claims Procedure Order. The Monitor will file a report with the Court by October 31, 2009, detailing the nature and quantum of the Canwest Intercompany Claims. The Claims Procedure contemplates the identification and final determination of all "Claims", which include: (a) claims of any person against one or more of the CMI Entities, whether or not asserted, in connection with any indebtedness, liability or obligation of one or more CMI Entities on October 6, 2009, including on account of Wages and Benefits, which indebtedness, liability or obligation is based in whole or in part on facts which existed prior to the Filing Date; (b) claims of any person against one or more of the CMI Entities, whether or not asserted, in connection with any indebtedness, liability or obligation owed by one or more of the CMI Entities to the person arising out of the restructuring, repudiation, termination or breach on or after the Filing Date of any contract, lease or other agreement, whether written or oral, and whether the restructuring, repudiation, termination or breach took place or takes place before or after the date on which the Canadian Court grants the Claims Procedure Order; and (c) any claim against the Directors or Officers that relate to a Pre-Filing Claim or a Restructuring Period Claim for which the Directors or Officers are by law liable to pay in their capacity as Directors or Officers or in any other capacity. For greater certainty, it is contemplated that these claims will not be compromised by the CMI Entities as part of the Plan and, therefore, will not be entitled to vote in respect of the Plan: (a) claims secured by any of the charges, as defined in the Initial Order, (b) any claim against a Director that cannot be compromised due to the provisions of subsection 5.1(2) of the CCAA, and (c) that portion of a Claim arising from a cause of action for which the applicable CMI Entities are fully insured. Claims Procedure For CMI Noteholders The CMI Entities will not be required to send to a CMI Noteholder a CMI General Notice of Claim and neither the CMI Noteholders nor the CMI Noteholder Trustee will be required to file a CMI Proof of Claim in respect of Claims pertaining to the CMI Notes. Within 15 Calendar Days of the Filing Date, the CMI Entities will send to the CMI Noteholder Trustee a notice stating the accrued amounts owing directly by each of the CMI Entities under the CMI Noteholder Trust Indenture and the guarantees executed by the CMI Entities in respect of the CMI Notes up to the Filing Date. The CMI Noteholder Trustee will confirm whether the amounts are accurate to the Monitor within 15 Calendar Days of receipt of the CMI Entities' notice. If the amounts are confirmed by the CMI Noteholder Trustee, or in the absence of any response by the CMI Noteholder Trustee within 15 Calendar Days of receipt of the CMI Entities' notice, the amounts will be deemed to be the accrued amounts owing directly by each of the CMI Entities under the CMI Noteholder Trust Indenture and the guarantees executed by the CMI Entities in respect of the CMI Notes for the purposes of voting and for purposes of distributions under the Plan, unless the amounts of the Claims are otherwise agreed to in writing by the applicable CMI Entities, the Ad Hoc Committee, and the CMI Noteholder Trustee, in which case the agreement will govern. If the CMI Noteholder Trustee indicates that it cannot confirm the accrued amounts owing directly by each of the CMI Entities under the CMI Noteholder Trust Indenture and the guarantees executed by the CMI Entities in respect of the CMI Notes, the amounts will be determined by the Court for the purposes of voting and distributions under the Plan, unless the amount of the Claims are otherwise agreed to in writing by the applicable CMI Entities, the Ad Hoc Committee and the CMI Noteholder Trustee, in which case the agreement will govern. Claims Procedure for CMI Known Creditors To expedite the Claims Procedure so as to ensure compliance with the Key Dates and time frames contemplated in the Support Agreement between the CMI Entities holders of 8% Senior Subordinated Notes, the CMI Entities will send a Notice of Claim form to each of the known creditors of the CMI Entities setting out the quantum of the CMI Known Creditor's claim as determined by the books and records of the CMI Entities. (a) Calling of Claims The CMI Entities will be required to deliver a CMI General Notice of Claim, a CMI Instruction Letter and a blank CMI Notice of Dispute of Claim, to each of the CMI Known Creditors -- other than current employees of the CMI Entities as of the Filing Date -- by ordinary mail to the last recorded address as set out in the books and records of the CMI Entities, by no later than 11:59 p.m., on October 22, 2009. The CMI General Notice of Claims will set out the CMI Known Creditor's claim for voting purposes and distribution purposes as valued by the CMI Entities on consultation with the CMI chief restructuring advisor, Harold (Hap) Stephen, as applicable, based on the books and records of the CMI Entities. The CMI Instruction Letter will explain the Claims Procedure and will provide general instructions for completing the CMI Notice of Dispute of Claims form. The CMI Instruction Letter will also direct CMI Known Creditors as to where to send notices. The Claims Procedure contemplates a separate claims package being delivered to the CMI Employees. Given that it is the CMI Entities' intention to pay wages and benefits in the ordinary course during the CCAA proceeding, and given that the Initial Order allows the CMI Entities to do so, it is unlikely that any of the CMI Employees will have a claim for wages and benefits and therefore the value of most of the CMI Employees' Claims will be zero. However, to give the CMI Employees comfort in light of the CCAA proceedings, and to ensure that the CMI Employees have the ability to dispute any valuation that is done by the CMI Entities in respect of their claims or to add a Claim that is not identified by the CMI Entities, the CMI Entities will deliver a claims package to all CMI Employees, by ordinary mail to the last recorded address as set out in the books and records of the CMI Entities, by no later than October 22, 2009. In terms of calling for intercompany claims, the Claims Procedure requires the CMI Entities to provide a CMI Claims Package to any of the CMI Entities that have one or more claims against any of the other CMI Entities with respect to each CMI Intercompany Claim that appears on the books and records of the CMI Entities, by no later than October 22, 2009. (b) Adjudication of Claims In the event that a CMI Known Creditor disputes the amount set out on the CMI General Notice of Claim or a CMI Employee disputes the amount set out in his or her CMI Employee Notice of Claim or believes that he has a Claim other than in respect of Wages and Benefits, the Claims Procedure requires the CMI Known Creditor or the CMI Employee to deliver a CMI Notice of Dispute of Claim which must be received by the CMI Entities by no later than November 19, 2009. (c) Resolution of Disputed Claims The Claims Procedure provides that in the event that a CMI Entity, with the assistance of the Monitor and on consultation with the CMI CRA, is unable to resolve a dispute in respect of a CMI Known Creditor Claim for voting purposes or for distribution purposes, the CMI Entity may refer the dispute to the Court or a Claims Officer for adjudication. In the event that a CMI Known Creditor Claim cannot be resolved by the CMI Entities and the dispute is therefore referred to the Court or a Claims Officer for adjudication, the Claims Procedure provides that the Court or a Claims Officer is to resolve all disputes and is required to notify the CMI Entity and the CMI Known Creditor and the Monitor by no later than two days prior to the date of the meeting of creditors called for the purpose of considering and voting in respect of the Plan, of the determination of the value of the CMI Known Creditor Claim for voting purposes and for distribution purposes. However, if the Court or a Claims Officer has not finally determined the value of a CMI Known Creditor Voting Claim by the date of the Meeting, the relevant CMI Entity will be required to either: (a) accept the CMI Known Creditor's determination of the value of the CMI Known Creditor Voting Claim and conduct the vote of the Creditors on that basis subject to a final determination of the CMI Known Creditor's Voting Claim and in that case the Monitor will record separately the value of the CMI Known Creditor's Voting Claim and whether the CMI Known Creditor voted in favor of or against the Plan; (b) adjourn the Meeting until a final determination of the CMI Known Creditor Voting Claim is made; or (c) deal with the matter as the Court may otherwise direct or as the relevant CMI Entity, the Monitor and the CMI Known Creditor may otherwise agree. A CMI Known Creditor or a CMI Entity may, within seven days of notification of the Claims Officer's determination of the value of a CMI Known Creditor Voting Claim or CMI Known Creditor Distribution Claim, appeal the determination to the Court, and the appeal will be initially returnable within 10 days of the filing of the notice of appeal. Claims Procedure for CMI Unknown Creditors In addition to creditors who can be identified based on the information contained in the books and records of the CMI Entities, there may be other creditors who are, at present, unknown to the CMI Entities but who may have valid Claims against one or more of the CMI Entities or Directors and Officers and therefore ought to be entitled to vote at the Meeting and receive distributions from any Plan. Accordingly, the Claims Procedure includes a process for identifying Claims from unknown creditors of the CMI Entities or the Directors and Officers. The process, which involves placing notices in several major English and French newspapers in North America, is designed to alert any CMI Unknown Creditors of the Claims Procedure Order and put them on notice of the fact that certain claims against the CMI Entities or the Directors and Officers are being called for in the CCAA proceedings. The Monitor will also post the CMI Notice to Creditors and a Proof of Claim Form on the Monitor's Web site at: http://cfcanada.fticonsulting.comlcmi (a) Notice to Creditors The Claims Procedure will require the CMI Entities or the Monitor to place a notice to creditors, in The Globe and Mail (National Edition), the National Post, La Presse and The Wall Street Journal. All CMI Unknown Creditors who believe they have a claim against the CMI Entities will be required to return a completed Proof of Claim form to the CMI Entities by the Claims Bar Date. If a Proof of Claim Form is not received by the Claims Bar Date, the CMI Unknown Creditor will not be entitled to attend or vote at the Meeting and will not be entitled to receive any distribution from any Plan and its Claim will be forever extinguished and barred without any further act or notification by the CMI Entities. (b) Adjudication of Claims The CMI Entities, with the assistance of the Monitor and on consultation with the CMI CRA, will be required to review all of the CMI Proof of Claims that are received from CMI Unknown Creditors on or before the Claims Bar Date and will accept, revise or reject the amount of each Claim for voting or distribution purposes. The CMI Entities will be required to notify each CMI Unknown Creditor who has delivered a Proof of Claim by no later than 11:59 p.m., on November 30, 2009, as to whether the amount of the CMI Unknown Creditor's Claim has been accepted, revised or rejected for voting purposes. Any CMI Unknown Creditor who intends to dispute a Notice of Revision or Disallowance will be required under the Claims Procedure to deliver a CMI Notice of Dispute of Revision or Disallowance by no later than 5:00 p.m., on December 10, 2009. (c) Resolution of Disputed Claims In the event that a CMI Entity, with the assistance of the Monitor and on consultation with the CMI CRA, is unable to resolve a dispute in respect of a CMI Unknown Creditor Voting Claim, the applicable CMI Entity may refer the dispute to the Court or to a Claims Officer for adjudication. If a CMI Unknown Creditor Voting Claim cannot be resolved by the CMI Entities and the dispute is therefore referred to the Court or a Claims Officer for adjudication, the Claims Procedure provides that the Court or the Claims Officer, as the case may be, is to resolve the dispute and, in any event, will, by no later than 2 days prior to the Meeting, notify the CMI Entity and the CMI Unknown Creditor and the Monitor of the determination of the value of the CMI Unknown Creditor Claim for voting purposes and for distribution purposes. However, if the Court or a Claims Officer has not finally determined the value of a CMI Unknown Creditor Voting Claim by the date of the Meeting, the applicable CMI Entity will be required to either: (a) accept the CMI Unknown Creditor's determination of the value of the CMI Unknown Creditor Voting Claim and conduct the vote of the Creditors on that basis subject to a final determination of the CMI Unknown Creditor's Voting Claim and in that case the Monitor will record separately the value of the CMI Unknown Creditor's Voting Claim and whether the CMI Known Creditor voted in favor of or against the Plan; (b) adjourn the Meeting until a final determination of the CMI Unknown Creditor Voting Claim is made; or (c) deal with the matter as the Court may otherwise direct or as the relevant CMI Entity, the Monitor and the CMI Unknown Creditor may otherwise agree. The Claims Procedure will permit a CMI Unknown Creditor or a CMI Entity, within seven days of notification of the Claims Officer's determination of the value of a CMI Unknown Creditor Voting Claim or a CMI Unknown Creditor Distribution Claim, appeal the determination to the Court, and the appeal will be initially returnable within 10 days of the filing of the notice of appeal. Other Key Provisions Other key provisions in the Claims Procedure Order include, among others,: (a) in respect of any Claim that exceeds $15 million, the CMI Entities must consult with the CMI CRA prior to: accepting, admitting, settling, resolving, valuing, revising or rejecting the Claim; referring the determination of the Claim to a Claims Officer or the Court; appealing any determination of the Claim by a Claims Officer; or adjourning any Meeting on account of a dispute with respect to the Claim; and (e) the CMI Entities may set-off against payments or other distributions to be made pursuant to the Plan to any Creditor or any claims of any nature whatsoever that any of the CMI Entities may have against the Creditor, however, neither the failure to do so nor the allowance of any Claim will constitute a waiver or release by the CMI Entities of any claim that the CMI Entities may have against the Creditor. Any notice or communication required to be provided or delivered by a Creditor to the Monitor or the CMI Entities under the Claims Procedure Order will be in writing in substantially the form, if any, provided for in the Claims Procedure Order and will be sufficiently given only if delivered by prepaid registered mail, courier, personal delivery, facsimile transmission or e-mail addressed to: FTI Consulting Canada Inc., Court-appointed Monitor of Canwest Global Communications Corp. et al Claims Process Suite 2733, TD Canada Trust Tower 161 Bay Street Toronto ON M5J 2S1 Attention: Anna-Liisa Sisask Telephone: 1-888-318-4018 Fax: 416-572-4068 Email: anna.sisask@fticonsulting.com Any notice or communication delivered by a Creditor will be deemed to be received upon actual receipt by the Monitor during normal business hours on a Business Day or if delivered outside of normal business hours, the next Business Day. A full-text copy of the Claims Procedures Order, with accompanying exhibits, is available for free at: http://bankrupt.com/misc/CanWest_ClaimsProcedureOrd.pdf About Canwest Global Canwest Global Communications Corp. (TSX: CGS and CGS.A) -- http://www.canwest.com/-- an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. On October 6, 2009, Canwest Global, Canwest Media Inc., Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World), The National Post Company and certain subsidiaries voluntarily entered into, and successfully obtained an Order from the Ontario Superior Court of Justice (Commercial Division) commencing proceedings under the Companies' Creditors Arrangement Act. The CMI Entities' commencement of these proceedings was undertaken in furtherance of a proposed recapitalization transaction that is supported by over 70% of holders of the 8% senior subordinated notes issued by CMI. On the same day, FTI Consulting Canada Inc., the Court-appointed Monitor in the CCAA proceedings, sought protection in the United States Bankruptcy Court under Chapter 15 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 09-15994) for certain of the entities involved in Canwest's television business that filed for protection under the CCAA, including Canwest, Canwest Media Inc. and Canwest Global Broadcasting Inc./Radiodiffusion Canwest Global Inc. Judge Stuart M. Bernstein presides over the Chapter 15 cases. Evan D. Flaschen, Esq., at Bracewell & Giuliani LLP, in Hartford, Connecticut, serves as Chapter 15 Petitioner's counsel. The Chapter 15 Debtors disclosed estimated assets of $500 million to $1 billion and estimated debts of $50 million to $100 million. In a regulatory filing with the U.S. Securities and Exchange Commission, Canwest Media disclosed C$4,847,020,000 in total assets and C$5,826,522,000 in total liabilities at May 31, 2009. Bankruptcy Creditors' Service, Inc., publishes Canwest Bankruptcy News. The newsletter tracks the CCAA proceedings and Chapter 15 proceedings undertaken by Canwest Global Communications Corp. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). CANWEST GLOBAL: Sees Plan Implementation by Mid-April ----------------------------------------------------- In a statement dated October 13, 2009, the Honorable Madam Justice Sarah E. Pepall disclosed her reasons for the approval of Canwest Global Communications Corp.'s applicants' request for relief under the Companies' Creditors Arrangement Act. Madam Justice Pepall said that the applicants qualify as debtor companies under the CCAA. Their chief place of business is in Ontario; the applicants are affiliated debtor companies with total claims against them exceeding $5 million; the CMI Entities are in default of their obligations; CMI does not have the necessary liquidity to make an interest payment in the amount of US$30.4 million that was due on September 15, 2009, and none of the other CMI Entities who are all guarantors are able to make a payment either, said the Judge. The assets of the CMI Entities are insufficient to discharge all of the liabilities. The CMI Entities are unable to satisfy their debts as they come due and they are insolvent. They are insolvent both under the Bankruptcy and Insolvency Act definition and under the more expansive definition of insolvency used in Re Stelco, she said. According to Madam Justice Pepall, absent these CCAA proceedings, the applicants would lack liquidity and would be unable to continue as going concerns. Under Section 11 of the CCAA, the Canadian Court has broad jurisdiction to grant a stay of proceedings and to give a debtor company a chance to develop a plan of compromise or arrangement. Madam Justice Pepall averred that given the facts outlined, a stay is necessary to create stability and to allow the CMI Entities to pursue their restructuring. In addition, the applicants seek to extend the stay of proceedings and other relief to the partnerships: 1. Canwest Television Limited Partnership 2. Fox Sports World Canada Partnership 3. The National Post Company/La Publication National Post The partnerships are intertwined with the applicants' ongoing operations, she said. They own the National Post daily newspaper and Canadian free-to-air television assets and certain of its specialty television channels and some other television assets. Madam Justice Pepall pointed out that these businesses constitute a significant portion of the overall enterprise value of the CMI Entities. The partnerships are also guarantors of the 8% senior subordinated notes. While the CCAA definition of a company does not include a partnership or limited partnership, courts have repeatedly exercised their inherent jurisdiction to extend the scope of CCAA proceedings to encompass them. In this case, Madam Justice Pepall said, the partnerships carry on operations that are integral and closely interrelated to the business of the applicants. The operations and obligations of the partnerships are so intertwined with those of the applicants that irreparable harm would ensue if the requested stay were not granted. Accordingly, the Judge ruled, it is just and convenient to grant he relief requested with respect to the partnerships. With regards the DIP charge, the Canadian Court must determine that the amount of the DIP is appropriate and required having regard to the debtors' cash-flow statement. The DIP charge is for up to $100 million. Prior to entering into a senior secured revolving asset-based loan facility in the maximum amount of $75 million with CIT Business Credit Canada Inc., the CMI Entities sought proposals from other third party lenders for a credit facility that would convert to a DIP facility should the CMI Entities be required to file for protection under the CCAA. According to Madam Justice Pepall, the CIT facility was the best proposal submitted. It is contemplated that implementation of the plan will occur no later than April 15, 2010. The total amount of cash on hand is expected to be down to approximately $10 million by late December 2009, based on the cash flow forecast. The applicants have stated that this is an insufficient cushion for an enterprise with a magnitude similar to theirs. The cash-flow statements project the need for the liquidity provided by the DIP facility for the recapitalization transaction to be finalized, she said. The facility is to accommodate additional liquidity requirements during the CCAA proceedings. It will enable the CMI Entities to operate as going concerns while pursuing the implementation and completion of a viable plan and will provide creditors with assurances of same. Madam Justice Pepall also noted that the proposed facility is simply a conversion of the pre-existing CIT facility and it is expected that there would be no material prejudice to any of the creditors of the CMI Entities that arises from the granting of the DIP charge. With these facts, Madam Justice Pepall was persuaded that the amount is appropriate and required. FTI Consulting Canada Inc., the court-appointed CCAA monitor, had informed the Court that a $20 million D&O charge was estimated taking into consideration the existing Directors and Officers insurance and the potential liabilities which may attach including certain employee related and tax related obligations. The amount was negotiated with the DIP lender and the Ad Hoc Committee. The order proposed speaks of indemnification relating to the failure of any of the CMI Entities, after the date of the order, to make certain payments. It also excludes gross negligence and willful misconduct. The D&O insurance provides for $30 million in coverage and $10 million in excess coverage for a total of $40 million. It will expire in a matter of weeks and Canwest Global has been unable to obtain additional or replacement coverage. Madam Justice Pepall was also advised that the D&O insurance also extends to others in the Canwest enterprise and not just to the CMI Entities. The directors have indicated that they cannot continue in the restructuring effort unless the order includes the requested directors' charge. Retaining the current directors and officers of the Applicants would avoid destabilization and would assist in the restructuring, Madam Justice Pepall held. The proposed charge would enable the Applicants to keep the experienced board of directors supported by experienced senior management. The Monitor believes that the charge is required and is reasonable in the circumstances and also observes that it will not cover all of the directors' and officers' liabilities in the worst case scenario. In all of these circumstances, Madam Justice Pepall granted the request. About Canwest Global Canwest Global Communications Corp. (TSX: CGS and CGS.A) -- http://www.canwest.com/-- an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. On October 6, 2009, Canwest Global, Canwest Media Inc., Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World), The National Post Company and certain subsidiaries voluntarily entered into, and successfully obtained an Order from the Ontario Superior Court of Justice (Commercial Division) commencing proceedings under the Companies' Creditors Arrangement Act. The CMI Entities' commencement of these proceedings was undertaken in furtherance of a proposed recapitalization transaction that is supported by over 70% of holders of the 8% senior subordinated notes issued by CMI. On the same day, FTI Consulting Canada Inc., the Court-appointed Monitor in the CCAA proceedings, sought protection in the United States Bankruptcy Court under Chapter 15 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 09-15994) for certain of the entities involved in Canwest's television business that filed for protection under the CCAA, including Canwest, Canwest Media Inc. and Canwest Global Broadcasting Inc./Radiodiffusion Canwest Global Inc. Judge Stuart M. Bernstein presides over the Chapter 15 cases. Evan D. Flaschen, Esq., at Bracewell & Giuliani LLP, in Hartford, Connecticut, serves as Chapter 15 Petitioner's counsel. The Chapter 15 Debtors disclosed estimated assets of $500 million to $1 billion and estimated debts of $50 million to $100 million. In a regulatory filing with the U.S. Securities and Exchange Commission, Canwest Media disclosed C$4,847,020,000 in total assets and C$5,826,522,000 in total liabilities at May 31, 2009. Bankruptcy Creditors' Service, Inc., publishes Canwest Bankruptcy News. The newsletter tracks the CCAA proceedings and Chapter 15 proceedings undertaken by Canwest Global Communications Corp. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). CANWEST GLOBAL: Recapitalization Milestone Extended --------------------------------------------------- Canwest Global Communications Corp announced that its subsidiary, Canwest Media Inc, has agreed with the members of the ad hoc committee of 8% senior subordinated noteholders of CMI pursuant to the terms of their Support Agreement to extend to October 22, 2009, the date by which CMI must enter into a definitive agreement with Canwest Limited Partnership in respect of the transfer of the business operated by the National Post. About Canwest Global Canwest Global Communications Corp. (TSX: CGS and CGS.A) -- http://www.canwest.com/-- an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. On October 6, 2009, Canwest Global, Canwest Media Inc., Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World), The National Post Company and certain subsidiaries voluntarily entered into, and successfully obtained an Order from the Ontario Superior Court of Justice (Commercial Division) commencing proceedings under the Companies' Creditors Arrangement Act. The CMI Entities' commencement of these proceedings was undertaken in furtherance of a proposed recapitalization transaction that is supported by over 70% of holders of the 8% senior subordinated notes issued by CMI. On the same day, FTI Consulting Canada Inc., the Court-appointed Monitor in the CCAA proceedings, sought protection in the United States Bankruptcy Court under Chapter 15 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 09-15994) for certain of the entities involved in Canwest's television business that filed for protection under the CCAA, including Canwest, Canwest Media Inc. and Canwest Global Broadcasting Inc./Radiodiffusion Canwest Global Inc. Judge Stuart M. Bernstein presides over the Chapter 15 cases. Evan D. Flaschen, Esq., at Bracewell & Giuliani LLP, in Hartford, Connecticut, serves as Chapter 15 Petitioner's counsel. The Chapter 15 Debtors disclosed estimated assets of $500 million to $1 billion and estimated debts of $50 million to $100 million. In a regulatory filing with the U.S. Securities and Exchange Commission, Canwest Media disclosed C$4,847,020,000 in total assets and C$5,826,522,000 in total liabilities at May 31, 2009. Bankruptcy Creditors' Service, Inc., publishes Canwest Bankruptcy News. The newsletter tracks the CCAA proceedings and Chapter 15 proceedings undertaken by Canwest Global Communications Corp. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). CANWEST GLOBAL: U.S. Court's Preliminary Injunction Order --------------------------------------------------------- Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York granted CanWest Global Communications Inc. and its affiliates a preliminary injunction to protect it from creditor actions or lawsuits in the U.S. as it reorganizes in its main bankruptcy in Toronto, Canada. "Brief me on whether under Chapter 15, the court can enter an injunction in favor of non-debtors in a foreign proceeding," Judge Bernstein said, granting the injunction while questioning whether it protected units that aren't in bankruptcy, says Bloomberg News. The Canadian court issued an injunction that would also shield non-bankrupt units, and the U.S. court may be able to "grant comity" to Canadian law, said Judge Bernstein, notes Bloomberg. Chapter 15 of the U.S. Bankruptcy Code protects companies from lawsuits and U.S. creditors as a company reorganizes in a foreign court. Judge Bernstein's order dated October 15, 2009, stated that any individual, firm, corporation, or any other entity, and all those acting for or on their behalf, are hereby enjoined and prohibited from taking these actions in the United States and its territories: (a) Taking any action to obtain possession of property of the estates of Canwest Global Communications Corp. and its debtor-affiliates or of property from the estate or to exercise control over the Debtors, their estates, or their businesses, pending further order of the U.S. Court; and (b) Discontinuing, altering, failing to honor, interfering with, repudiating, ceasing to perform, or terminating any oral or written agreement, contract, license, or permit with a Chapter 15 Entity or statutory or regulatory mandate for the supply of goods or services, including all programming supply, computer software, communication and other data services, centralized banking services, payroll services, insurance, transportation services, utility or other services to the Debtors' businesses or a Chapter 15 Entity, on the basis of, or as a result of, the filing of the Chapter 15 cases, the Canadian Proceedings or any amounts outstanding as of the filing of the Chapter 15 cases, and the Chapter 15 Entities will be entitled to the continued use of their current premises, telephone numbers, facsimile numbers, internet addresses and domain names; provided, in each case, that the contractual prices or charges for all the goods or services received after the date of the Initial CCAA Order are paid by the Chapter 15 Entities in accordance with normal payment practices of the Chapter 15 Entities or other practices as may be agreed upon by the supplier or service provider, the relevant Chapter 15 Entity and the Monitor, or as may be ordered by the Court. Pursuant to Rule 7065 of the Federal Rules Bankruptcy Procedure, the security provisions of Rule 65(c) of the Federal Rules are waived, the U.S. Court held. FTI Consulting Canada Inc., in connection with its appointment as the Debtors' monitor and foreign representative, and the Debtors, are entitled to the full protections and rights available pursuant to Section 1519(a) of the Bankruptcy Code. Moreover, the U.S. Court ruled that the stay of actions and proceedings against the Chapter 15 Entities will exist until the hearing on the Foreign Representative's request for recognition, currently scheduled for November 3, 2009, unless otherwise ordered by the U.S. Court. About Canwest Global Canwest Global Communications Corp. (TSX: CGS and CGS.A) -- http://www.canwest.com/-- an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. On October 6, 2009, Canwest Global, Canwest Media Inc., Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World), The National Post Company and certain subsidiaries voluntarily entered into, and successfully obtained an Order from the Ontario Superior Court of Justice (Commercial Division) commencing proceedings under the Companies' Creditors Arrangement Act. The CMI Entities' commencement of these proceedings was undertaken in furtherance of a proposed recapitalization transaction that is supported by over 70% of holders of the 8% senior subordinated notes issued by CMI. On the same day, FTI Consulting Canada Inc., the Court-appointed Monitor in the CCAA proceedings, sought protection in the United States Bankruptcy Court under Chapter 15 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 09-15994) for certain of the entities involved in Canwest's television business that filed for protection under the CCAA, including Canwest, Canwest Media Inc. and Canwest Global Broadcasting Inc./Radiodiffusion Canwest Global Inc. Judge Stuart M. Bernstein presides over the Chapter 15 cases. Evan D. Flaschen, Esq., at Bracewell & Giuliani LLP, in Hartford, Connecticut, serves as Chapter 15 Petitioner's counsel. The Chapter 15 Debtors disclosed estimated assets of $500 million to $1 billion and estimated debts of $50 million to $100 million. In a regulatory filing with the U.S. Securities and Exchange Commission, Canwest Media disclosed C$4,847,020,000 in total assets and C$5,826,522,000 in total liabilities at May 31, 2009. Bankruptcy Creditors' Service, Inc., publishes Canwest Bankruptcy News. The newsletter tracks the CCAA proceedings and Chapter 15 proceedings undertaken by Canwest Global Communications Corp. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: 8 Claimants Seek Lift Stay to Pursue Alaska Trial ------------------------------------------------------------------ Eight creditors, who filed claims of sexual abuse in the bankruptcy case of the Catholic Bishop of Northern Alaska, ask the U.S. Bankruptcy Court for the District of Alaska for relief from automatic stay pursuant to Section 362(d) of the Bankruptcy Code to allow their pending actions in the Superior Court for the State of Alaska to proceed to trial and judgment. In another request, the Creditors sought and obtained the Court's authority to file under seal Exhibits B-1 to B-8 to their request, which exhibits contain confidential information. John C. Manly, Esq., at Manly, McGuire & Stewart, in Newport Beach, California, relates that based on prepetition and postpetition settlement conferences and multiple mediation sessions, he believes that two fundamental impediments to the Debtor's reorganization can be resolved by granting relief from the automatic stay to allow the Creditors' state court cases to proceed to trial: (i) across the board disagreement about the value of the sex abuse cases, and (ii) disagreement over whether the Creditors suffered "personal injuries" or "bodily injury" during the policy periods of Catholic Mutual Group's or Travelers Casualty and Surety Company's umbrella liability insurance policies. CBNA's amended plan or reorganization attempts to break the impasses, to the detriment of timely compensation to survivors, by deferring their resolution to a post-confirmation litigation process, Mr. Manly asserts. The Creditors, however, assert that today, as opposed to unspecified months and years ahead, is the time to overcome the impediments, and resolve the Chapter 11 case. As indicated in the Debtor's First Amended Plan, CBNA has been interested for some time in assigning its rights under its various insurance policies directly or indirectly to the survivors of childhood sexual abuse, Mr. Manly relates. However, he tells the Court that he is considering a variation of the Debtor's insurance proposal colloquially known as a "Great Divide Agreement" based on the Alaska Supreme Court case, Great Divide Insurance Co. v. Carpenter, 79 P.3d 599 (2003). The Great Divide decision confirmed the enforceability of an agreement between the insured and an injured party in circumstances involving a carrier's material breach of the carrier's contractual obligations to the insured, like an unreasonable failure to settle within policy limits, and the consequent relief from the insured's corresponding covenant to cooperate with the carrier in the defense of the claim, Mr. Manly explains. Freed of the consequences of breaching the cooperation covenant, an insured defendant is free to confess to judgment in exchange for a covenant to restrict execution against the insured's assets and assigns the insured's rights against the carrier. The carrier is not bound by the exact amount of the confession of judgment but it is limited to a defense that the amount of the confession is not reasonable. Mr. Manly recommends a reorganization plan that includes a Great Divide Agreement for all abuse claimants provided that the Creditors obtain sum assurance that their settlement positions are reasonable and, conversely, that CBNA's carriers are unreasonably refusing to settle the claims. If a jury verdict determines that the Creditors are reasonable in their demands, either the insurance carriers will come to the settlement table at reasonable amounts or the Creditors will support the concept of a Great Divide Agreement for incorporation into a plan, he asserts. If a jury verdict demonstrates, however, that the Creditors are unreasonable in their demands, the Creditors will be compelled to re-evaluate their demands, obviously enhancing the prospects of a global settlement, he adds. Cause exists to grant to the Creditors relief from stay because the parties and the trial court have recognized that permitting a sampling of test cases to proceed to trial will result in judgments and settlements that may be used as benchmarks in the valuation of other cases, Mr. Manly contends. He points out that permitting the Creditors' cases to go to trial will lead to a speedier conclusion of the bankruptcy process and sooner payment to grievously injured creditors. The Official Committee of Unsecured Creditors joins in and supports the request. James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California, contends that the eight Creditors, who will receive no advantage over other survivors by virtue of having their claims valued, are subjecting themselves to an enormous emotional and physical toll by going through the inevitable depositions, medical examinations and public trials for the benefit of all survivors. He adds that the Creditors Committee salutes the Creditors' courage in "the face of the dogged denials of the Debtor and its insurance carriers." CBNA Objects Kasey C. Nye, Esq., at Quarles & Brady LLP, in Tucson, Arizona, reminds Judge MacDonald that tort claimants' sexual abuse claims are at the heart of the Diocese's reorganization case. She notes that CBNA filed for bankruptcy in order to pay just compensation to victims of sexual abuse, and to provide that compensation through a plan of reorganization that will also restructure CBNA's financial affairs to preserve and develop its ministries and missions. The request should be denied because it seeks, in essence, to ignore the Chapter 11 process and pointlessly seeks to liquidate the Creditors' claims in a costly jury trial, Mr. Nye argues. He contends that the request fails to disclose that none of CBNA's insurers are providing a defense, even under a reservation of rights, for the Creditors' claims. As a result, he asserts, the bankruptcy estate, which the request candidly admits is extremely limited, will bear the expense of the unnecessary litigation alone. Contrary to the allegations in the request, granting stay relief and permitting jury trials will hurt rather than help CBNA's ability to marshal insurance assets to benefit Tort Claimants under a "Great Divide Agreement" that assigns CBNA's claims against breaching insurers, Mr. Nye asserts, among other things. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA -- http://www.cbna.info/-- filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on January 15, 2009. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Committee Commences Avoidance Action vs. CTNA -------------------------------------------------------------- The Official Committee of Unsecured Creditors for the Catholic Bishop of Northern Alaska commenced an adversary proceeding against the Catholic Trust of Northern Alaska, certain schools and numerous parishes under the Diocese of Fairbanks. The U.S. Bankruptcy Court for the District of Alaska has previously allowed the Creditors Committee to sue CTNA, but not the Holy See. James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California, relates that the Creditors Committee commenced the adversary proceeding to remedy a number of harms that CBNA, its officers, directors, employees, and related entities have all perpetuated at the expense of the men and women, who have claims against the Diocese for childhood sexual and physical abuse. He says that in the period leading up to the Debtor's filing for chapter 11 on March 1, 2008, CBNA attempted to hide its assets from the Survivors, whose claims CBNA long knew constituted the vast bulk of its liabilities. "The Diocese, its Bishop, and its Director of Finance took a lesson from bankruptcy cases of other dioceses to divest, shield, and lessen the availability of resources for these Survivors," Mr. Stang alleges. He tells the Court that they did this by amending the Debtor's Articles of Incorporation on April 4, 2007, which is less than one year prior to the commencement of the bankruptcy case, to assert that CBNA -- the owner of all of the property located at each parish in the Diocese -- only held that property for the benefit of the parishes, missions, schools and other "public juridic persons". Mr. Stang also points out that certain settlors created a trust -- Catholic Trust of Northern Alaska -- for the benefit of the defendants into which CBNA funneled $3 million from its own accounts. Hence, he says, the Creditors Committee brings the complaint seeking to (i) avoid CBNA's transfer of substantial cash to CTNA pursuant to Sections 544 and 548 of the Bankruptcy Code, and Section 34-40-010 of the Alaska Statutes, and (ii) recover the transfers, or the value thereof under Section 550 of the Bankruptcy Code. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA -- http://www.cbna.info/-- filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on January 15, 2009. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Fairbanks Committee Sues CBNA & Parishes --------------------------------------------------------- The Official Committee of Unsecured Creditors of the Catholic Bishop of Northern Alaska commenced another adversary proceeding against CBNA, Monroe Foundation and CBNA's parishes regarding ownership of real and personal property, and substantive consolidation of the defendants. Aside from alleging that CBNA attempted to hide its assets from its creditors-survivors, James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California, alleges that the Diocese of Fairbanks, its bishop, and its director of finance caused the filing of "notices of beneficial ownership" to further the charade that Diocese-owned real property belongs to its Parishes. He adds that the Diocese has and continued to transfer its funds to its Parishes through the Catholic Trust of Northern Alaska. "Underlying all of these attempts to divest, shield, and lessen assets is a great sham. The Diocese maintains that its parishes are legal entities separate from the Diocese and not unincorporated divisions of the Diocese," Mr. Stang says. "This contention is contradicted by the 2,000-year history of the Catholic Church, and the Diocese's own history, practices and procedures," he continues. The Creditors Committee, hence, brings the complaint seeking declaratory relief concerning the ownership of real property and personal property within the Diocese, and seeking declaratory relief to substantively consolidate the Diocese and the Parishes. On March 2, 2008, the Diocese filed its statement of financial affairs, on which it sets forth at Line 14 its designation of "property held for another person." In April 2008, the Diocese filed, among other things, an Amended Schedule B for its Schedules of Assets and Liabilities, which sets forth certain personal property, which the Diocese contends, is restricted and that the Diocese allegedly cannot use for general purposes. The Creditors Committee alleges that the real property identified in Line 14 as belonging to Parishes and the real property where all of the Parishes are located is, in fact, owned by the Diocese. The Creditors Committee also alleges that all of the personal property that the Parishes claim to own and that is located at or on the Disputed Real Property is, in fact, owned by the Diocese. The Disputed Personal Property includes appurtenances to the Disputed Real Property, furniture, books, relics, artwork, vestments, cash, bank accounts, investments, trusts, estates, endowment funds and custodial funds. Specifically, the Creditors Committee alleges that the Disputed Personal Property includes these personal properties, some of which is listed on Line 14, Schedule B and Amended Schedule B, and the Diocese's Web site: (a) The Endowment established in 1980 and various pooled investments of funds relating to the Endowment; (b) The Diocese's Operating Account 7466, held at First National Bank of Alaska; (c) Catholic School o Fairbanks' Operating Account 7557, held at First National Bank of Alaska; (d) All amounts listed on the Diocese's Amended Schedule B that are unspecified but that the Diocese contends are allegedly "temporarily restricted by donors"; (e) Current Fund Investments; (f) Renewal and Replacement Fund Investments; (g) Accumulated retained earnings from Endowment trust funds held in a pooled investment portfolio; (h) Alleged custodial funds that the Diocese contends, in Line 14 that it is holding for: * Diocesan Rice Bowl Reserve; * Third World Store; * Campaign for Human Development; * Bishop Kettler Funds * Lay Spirituality Religious Association; and * Aid to Latin America; (i) Diocesan Priest Retirement Trust, principal and retained income located in various pooled investments; (j) Monroe Foundation Endowment, principal and retained income located in various pooled investments; and (k) 102 relics located at Immaculate Conception Parish. The Creditors Committee further alleges that: -- the Parishes are unincorporated divisions and instrumentalities of the Diocese, with no separate existence apart from the Diocese; -- the Diocese's affairs are so entangled with those of each of the Parishes that substantive consolidation of the Diocese and each of the Parishes will benefit the Creditors Committee and all of the Diocese's creditors; and -- no harm will come to the Diocese or the Parishes should the Court enter an order of substantive consolidation because the entities are already so entirely entangled. Mr. Stang points out that substantive consolidation will allow a truly equitable distribution of assets among the Diocese's creditors by treating the Diocese and the Parishes as a single entity. Hence, the Creditors Committee asks the Court for an order determining that the Parishes have no separate existence apart from the Diocese or, in the alternative, ordering substantive consolidation, of the Diocese's bankruptcy estate with the Parishes. The Creditors Committee also seeks judgment declaring that the Disputed Real Property and the Disputed Personal Property are property of the estate under Section 541(a)(1) of the Bankruptcy Code as of March 1, 2008. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA -- http://www.cbna.info/-- filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on January 15, 2009. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Catholics Support Wilmington Bankruptcy Filing --------------------------------------------------------------- Catholics in Wilmington, Del., have agreed with Bishop W. Frances Malooly's decision to put the diocese in Chapter 11 protection. The Diocese of Wilmington covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. It is the seventh U.S. diocese to file for bankruptcy since allegations erupting seven years ago against Catholic clergy in Boston. The Diocese filed for Chapter 11 on Oct. 18, 2009 (Bankr. D. Del. Case No. 09-13560). Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Diocese. The Ramaekers Group, LLC is the financial advisor. The petition says assets range $50,000,001 to $100,000,000 while debts are between $100,000,001 to $500,000,000. The Delaware diocese is the seventh Roman Catholic diocese to file for Chapter 11 protection to deal with lawsuits for sexual abuse. Previous filings were by the dioceses in Spokane, Washington; Portland, Oregon; Tucson, Arizona; Davenport, Iowa, Fairbanks, Alaska; and San Diego, California. CATHOLIC CHURCH: Wilmington's First-Day Motions Approved -------------------------------------------------------- Law360 reports that the Catholic Diocese of Wilmington Inc. has won court approval to access its cash management system, pay employee wages and appoint a claims agent. The Diocese of Wilmington covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. It is the seventh U.S. diocese to file for bankruptcy since allegations erupting seven years ago against Catholic clergy in Boston. The Diocese filed for Chapter 11 on Oct. 18, 2009 (Bankr. D. Del. Case No. 09-13560). Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Diocese. The Ramaekers Group, LLC is the financial advisor. The petition says assets range $50,000,001 to $100,000,000 while debts are between $100,000,001 to $500,000,000. The Delaware diocese is the seventh Roman Catholic diocese to file for Chapter 11 protection to deal with lawsuits for sexual abuse. Previous filings were by the dioceses in Spokane, Washington; Portland, Oregon; Tucson, Arizona; Davenport, Iowa, Fairbanks, Alaska; and San Diego, California. CATHOLIC CHURCH: Wilmington Plans to Have Abuse Mediations ---------------------------------------------------------- The Catholic Diocese of Wilmington Inc. told the Bankruptcy Court at a hearing October 21 that it plans on setting up a mediation process to resolve sexual abuse claims, Bill Rochelle at Bloomberg reported. A lawyer for a sexual abuse victim has already filed a motion with Bankruptcy Court asking for relief from stay to allow a November 16 state court trial against the Diocese to continue. The proposal is scheduled for hearing November 2. The claimant contends the Diocese won't be hurt if there is a trial. It says the diocese is being defended by an insurance company. As reported by the TCR on October 22, the Diocese's filing for Chapter 11 on October 18 automatically staying the sexual abuse lawsuits against it. Because the automatic stay doesn't apply to non-debtor defendants, the Diocese has asked the Bankruptcy Court to enter an order freezing state court suits against other defendants such as parishes, the diocese's vicar general, a former bishop and a priest accused of abuse. About the Diocese of Wilmington The Diocese of Wilmington covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. The Delaware diocese is the seventh Roman Catholic diocese to file for Chapter 11 protection to deal with lawsuits for sexual abuse. Previous filings were by the dioceses in Spokane, Washington; Portland, Oregon; Tucson, Arizona; Davenport, Iowa, Fairbanks, Alaska; and San Diego, California. The bankruptcy filing automatically stayed eight consecutive abuse trials scheduled in Delaware scheduled to begin October 19. There are 131 cases filed against the Diocese, with 30 scheduled for trial. The Diocese filed for Chapter 11 on Oct. 18, 2009 (Bankr. D. Del. Case No. 09-13560). Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Diocese. The Ramaekers Group, LLC is the financial advisor. The petition says assets range $50,000,001 to $100,000,000 while debts are between $100,000,001 to $500,000,000. CHEMTURA CORP: Notifies Ex-Witco Employees of Bar Date ------------------------------------------------------ Chemtura Corporation, through its counsel, Kirkland & Ellis LLP, has sent notices of the October 30, 2009 civil suit deadline to former employees of Witco Chemical plant, an asset bought by Chemtura in 1996, Warren County News reports. After the Plant shut down, Chemtura was charged by the New Jersey Department of Environmental Protection to clean the area. Currently, the cleaning process in only 80% done. According to the report, residents are worried that Chemtura will shed the Plant as part of its reorganization efforts. 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: Various Parties Object to Professional Fees ---------------------------------------------------------- Thirteen professionals, in separate filings, submitted to the Court applications for the allowance of fees for professional services rendered and reimbursement of the incurrence of reasonable expenses: Professional Period Fees Expenses ------------ --------- ---------- -------- Kirkland & Ellis LLP March 18 to $5,132,958 $167,487 June 30, 2009 Akin Gump Strauss Hauer March 29 to 2,474,449 69,639 & Feld LLP June 30, 2009 Deloitte Tax LLP March 18 to 1,396,457 32,731 June 30, 2009 KPMG LLP March 18 to 1,107,935 0 June 30, 2009 Lazard Freres & Co. LLC March 18 to 862,903 31,797 June 30, 2009 Duane Morris LLP April 13 to 392,085 13,450 June 30, 2009 FTI Consulting, Inc. May 5 to 163,474 126 June 30, 2009 DLA Piper LLP (US) March 18 to 252,708 14,244 June 30, 2009 O'Melveny & Myers LLP March 18 to 201,229 379 June 30, 2009 Allen & Overy LLP March 18 to 393,876 6,274 June 30, 2009 Genetelli Consulting March 18 to 593,752 10,165 Group June 30, 2009 Katten Muchin Rosenman March 18 to 664,646 60,991 LLP June 30, 2009 Ogilvy Renault LLP March 18 to 497,695 39,641 June 30, 2009 The fees sought by the 13 professionals aggregate approximately $14 million, while the expenses aggregate approximately $440,000. Chemtura Corp. Chief Executive Officer Craig Rogerson disclosed, in an interview with ICIS, that legal fees and interest payments have cost the Debtors 18% of their $ Several parties filed responses and objections to the Chapter 11 professionals' first interim fee applications. The Parties point out that the pending fee applications total approximately $14.8 million in fees and expenses and the cost of administering the Debtors' cases for the first interim period is well over $4 million per month or $140,000 per day and that by any standard, the professional fees are "breathtaking". A. Company Stock Fund The Chemtura Corporation Employee Savings Plan, with respect to the Company Stock Fund, provides that a fee auditor or a fee committee should be appointed to ensure the cost-effective administration of the Debtors' Chapter 11 cases. The Company Stock Fund asserts that any approval by the Court of the Fee Applications should be subject to the ability of any subsequently appointed fee auditor or fee committee to review the first interim fee applications and to submit any findings, recommendations, or objections to the Court for further action. B. DIP Lenders' Agent Citibank, N.A., as administrative agent for the lender parties to the Senior Secured Superpriority DIP Credit Agreement, reminds the Court that the Final DIP Order sets a limit on the fees and expenses that may be incurred by the Official Committee of Unsecured Creditors in its efforts to investigate the Debtors' prepetition secured indebtedness at $200,000. Citibank points out that the professionals the Committee retained, namely Akin Gump Strauss Hauer & Feld LLP and FTI Consulting, Inc., are collectively seeking fees in excess of $1,000,000 for work related to the investigation of the Debtors' prepetition secured indebtedness out of the firms' $2,707,739 requested fees. For these reasons, Citibank the Court to limit the payment of any Avoidance Action Fees to Akin Gump and FTI to $200,000 unless they certify that the fees sought are not for Avoidance Action Fees. C. U.S. Trustee The United States Trustee asks the Court to reduce any compensation awarded to the bankruptcy professionals by a percentage to be determined by the Court pending the final resolution of the Debtors' Chapter 11 cases. The U.S. Trustee points out the fee application submitted by Kirkland & Ellis LLP sought $5,132,958 in fees and reimbursement of out-of-pocket expenses aggregating $167,487. The U.S. Trustee specifically notes that (1) Kirkland sought fees, aggregating $151,840, for services performed by four associates whose year of admission to practice is 2010; and (2) Kirkland sought $13,920 for the services of Jonathan Kidwell, Esq., for whom no year of admission is listed. The hourly rates for each of the four associates who are to be admitted to the bar in 2010 are listed as $365 per hour, and the rate for Mr. Kidwell is listed as $320 per hour. Kirkland needs to explain whether Mr. Kidwell and the 2010 Associates were actually attorneys licensed to practice in any jurisdiction during the relevant compensation period, the U.S. Trustee asserts. If Mr. Kidwell and the 2010 Associates are law school graduates who have not yet been admitted to practice law in any jurisdiction during the Fee Period, then their compensation rates should be reduced to be consistent with those of the firm's non- attorney employees, the U.S. Trustee contends. Akin Gump Responds, FTI Joins Daniel H. Golden, Esq., at Akin Gump, in New York, argues that the DIP Agent failed to grasp the plain language of the Final DIP Order, which actually permits the current payment of Avoidance Action Fees in excess of $200,000. He elaborates that a certain paragraph in the Final DIP Order "just makes such excess amounts subordinate to the Superpriority Claim, the Carve-Out and the Adequate Protection Obligations -- like every other administrative expense incurred and paid by the Debtors during the pendency of these chapter 11 cases." To the extent the Court determines that the Avoidance Action Fees are reasonable, based on paragraph 28(a) of the Final DIP Order, the fees should be allowed and paid as administrative expenses under Section 331 of the Bankruptcy Code, Mr. Golden asserts. He further adds that pursuant to the same plain language, the Avoidance Action Fees in excess of $200,000 would be subject to disgorgement in the event that the Superpriority Claim, the Carve-Out or the Adequate Protection Obligations were not paid in full as a result of the conversion of the Chapter 11 cases to Chapter 7 and a determination that the Debtors' estates were administratively insolvent. With regard to the U.S. Trustee's objection, Mr. Golden contends that representation of official committees is labor intensive and requires the attention of a multitude of attorneys of varying experiences from different practice sections. He maintains that Akin Gump has carefully reviewed the time entries for those present at intra-office meetings and believes the level of staffing was appropriate for the tasks involved and that Akin Gump would not have been able to competently handle the particular meetings or adequately analyze the issues at hand with only one lawyer. Mr. Golden informs the Court that Akin Gump's expenses are available for inspection and is supported by documentation substantiating each expense. Furthermore, with regard to the Company Stock Fund, Mr. Golden relates that the Committee opposes the appointment of a fee auditor, but does not oppose the formation of a fee committee. "As a fiduciary for unsecured creditors, the Committee has an obligation to review all fees and expenses incurred by professionals retained by the estates to ensure that the services being rendered are appropriate and non-duplicative," Mr. Golden explains. He adds that "any fee auditor appointed would incur substantial administrative expenses that would be borne by the Debtors' estates." FTI Consulting joins in the Akin Gump's response. FTI notes that its fees in connection with the investigation and prosecution of claims related to Prepetition Secured Indebtedness totaled only $26,659 and not $76,552. Kirkland & Ellis Responds After reviewing the U.S. Trustee's questions, Kirkland & Ellis believes that the requested reduction is not warranted. The firm informs the Court that it is in the process of providing the U.S. Trustee with specific information, which will address the U.S. Trustee's concerns. Kirkland says it is hopeful of a consensual resolution of the objection before the hearing on its fee application. With regard to Company Stock Fund's response, Kirkland argues that there is no need for the Court to appoint a fee auditor or fee committee because the parties are still in discussions and the professionals seek only interim fee approval, which would be subject to further review. Ogilvy Renault Supplements Filing Ogilvy Renault LLP, the Debtors' special counsel, submitted a description of its services with further elaboration along with a revised summary of hours. Accordingly, Ogilvy Renault pleads that its fee application not be reduced by $10,000. In addition, Ogilvy Renault enclosed a detailed itemization of expenses together with underlying documentation. J. Jacks Reacts Jon Eric Jacks, an equity holder of 800,000 shares of Chemtura common stock, complains that Kirkland & Ellis "no longer represents [the Debtors] as they should but rather K&E represents K&E." Mr. Jacks says that K&E along the way forgot that it owes a fiduciary duty to all stakeholders and not just 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) CIT GROUP: Bond Exchange May 'Burn' Investors, Analyst Says ----------------------------------------------------------- CIT Group Inc.'s revised debt exchange offer may "burn" participating bondholders because the 101-year-old commercial lender tweaked a provision in the terms, Covenant Review LLC said, according to a report by Bloomberg's Bryan Keogh. A change to the credit agreement eliminating a $3 billion cap on future senior secured loans may have "cascading effects," allowing CIT to issue new unsecured debt in exchange for notes held by investors who don't participate or to repay them before maturity, Covenant Review analyst Chris Chaice wrote in a report, according to Bloomberg News. "They made the covenants worse in a material way so people could get potentially burned," Mr. Chaice, based in New York, said in a telephone interview with Bloomberg. "If you held out, you could get a better deal." CIT Group, on July 29, 2009, entered into a credit agreement, with Barclays Bank PLC, as administrative agent and collateral agent, and the lenders party thereto, for loans of up to $3 billion. In connection with the credit agreement, CIT Group was required to adopt a restructuring plan acceptable by lenders starting October 1, 2009. CIT Group on October 1 announced that it has commenced a restructuring of its capital structure that has been approved by the Company's Board of Directors and by the Steering Committee of CIT's bondholders. The announcement is an important step in a comprehensive restructuring plan to enhance CIT's capital levels, improve its liquidity and return the Company to profitability. Under the plan, CIT Group Inc. and CIT Group Funding Company of Delaware LLC (Delaware Funding) are launching exchange offers for certain unsecured notes. Under CIT's restructuring plan, holders of $1,000 of old notes maturing in 2009 will receive $900 in New Notes and 0.40749 shares of new preferred stock; in 2010 will receive $850 in new notes and 1.22248 shares of new preferred stock; in 2011 and 2012 will receive $800 in new notes and 2.03746 shares of new preferred stock; in 2013 through 2017 and in 2036 will receive $700 in new notes and 3.25993 shares of new preferred stock; in 2018 will receive 4.07492 in shares of new preferred stock; and in 2067 will receive 2.03746 shares of new preferred stock. The Offers will expire at 11:59 p.m., (prevailing Eastern Time), on October 29, 2009. The Company said that if it does not achieve the objectives of the exchange offers, it may decide to initiate a voluntary filing under Chapter 11 of the U.S. Bankruptcy Code. Therefore, the Company is concurrently soliciting bondholders and other holders of CIT debt to approve a prepackaged plan of reorganization. The Company has been informed by advisors to the Steering Committee that, subject to review of the offering memorandum, approximately $10 billion of outstanding unsecured indebtedness have already indicated their intention to participate in the exchange offer or vote for the prepackaged plan of reorganization. CIT Group Inc. on October 16 amended its restructuring plan to further build bondholder support. The amended terms of the restructuring plan include, among others: * A comprehensive cash sweep mechanism to accelerate the repayment of the new notes; * The shortening of maturities by six months for all new notes and junior credit facilities; * An increased amount of equity offered to subordinated debt holders reflecting agreements with holders of the majority of its senior and subordinated debt; * The inclusion of the notes maturing after 2018 that had previously not been solicited as part of the exchange offer or plan of reorganization; * An increase in the coupon on Series B Notes, to 9% from 7%, being issued by CIT Delaware Funding; and * Provided preferred stock holders contingent value rights in the plan of reorganization, and modified the allocation of common stock in the recapitalization after the exchange offers, as part of an agreement with the United States Department of Treasury. Carl Icahn sent a letter to CIT Group's board of directors on October 19, complaining that CIT is "shamelessly offering" large unsecured bondholders the opportunity to purchase $6 billion in secured loans in the company at well below fair market value -- at the expense of thousands of smaller bondholders who will not be given the same opportunity. As an alternative, Mr. Icahn has offered to underwrite a $6 billion loan which would save the company as much as $150 million in fees to prospective lenders under the company's proposed financing. More importantly, Icahn's offer would not force bondholders to vote for the current plan which Icahn claims would entrench current board members and give them releases for a range of past acts. About CIT Group Inc. CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. As of June 30, 2009, CIT Group had total assets of $71,019,200,000 against total debts of $64,901,200,000. CITIGROUP INC: Registers 3 Securities with NYSE Arca ---------------------------------------------------- Citigroup Inc. filed with the Securities and Exchange Commission three Form 8-A12Bs to register these securities with the NYSE Arca pursuant to Section 12(b) of the Securities Exchange Act of 1934: -- Equity LinKed Securities (ELKS(R)) Based Upon the Common Stock of Schlumberger Limited Due 2010; -- Buffer Notes Based Upon the Dow Jones Industrial AverageSM Due 2011 -- Equity LinKed Securities (ELKS(R)) Based Upon the Common Stock of Wells Fargo & Company Due 2010 About Citigroup Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. At June 30, 2009, Citigroup had total assets of $1.84 trillion and total liabilities of $1.69 trillion. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. The U.S. Treasury and the Federal Deposit Insurance Corporation agreed to provide protection against the possibility of unusually large losses on an asset pool of roughly $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup, the third-biggest U.S. bank, received $52 billion in bailout aid. Other bailed-out banks, including Bank of America Corp., Wells Fargo & Co., have pledged to repay TARP money. JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, repaid TARP funds in June. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CITIGROUP INC: Pay Czar to Reduce Compensation at Bailed Out Firms ------------------------------------------------------------------ Kenneth Feinberg, the Treasury Department's special master for compensation, will cut in half the average compensation for 175 employees at firms receiving large sums of government aid, Deborah Solomon and Dan Fitzpatrick at The Wall Street Journal relates, citing people familiar with the matter. The firms under Mr. Feinberg's authority are American International Group, Bank of America, Citigroup Inc., General Motors Co., GMAC Inc., Chrysler Group LLC, and Chrysler Financial. According to The Journal, the sources said that majority of salaries will come in under $500,000. The Journal says that the biggest cut will be to salaries, which will drop by 90% on average. The Journal relates that Bank of America CEO Ken Lewis won't receive any salary for 2009, sources say that Citigroup Inc. is telling employees that the net impact of Mr. Feinberg's rulings will be minimal because the cut salary will be shifted from cash to longer-term stock grants. The Journal says that some of the toughest pay restrictions will come at American International Group Inc.'s financial-products unit of American International Group Inc. According to The Journal, people familiar with the matter said that no employee within that unit will get compensation of more than $200,000. The Journal reports that Mr. Feinberg will also demand a host of corporate governance changes at those firms, including: -- splitting the chairman and CEO positions, -- requiring boards of directors to create "risk" committees, and -- eliminate staggered board elections. About Citigroup Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. At June 30, 2009, Citigroup had total assets of $1.84 trillion and total liabilities of $1.69 trillion. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. The U.S. Treasury and the Federal Deposit Insurance Corporation agreed to provide protection against the possibility of unusually large losses on an asset pool of roughly $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup, the third-biggest U.S. bank, received $52 billion in bailout aid. Other bailed-out banks, including Bank of America Corp., Wells Fargo & Co., have pledged to repay TARP money. JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, repaid TARP funds in June. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CITIZEN REPUBLIC: Posts Third Quarter 2009 Results -------------------------------------------------- Citizens Republic Bancorp, Inc., posted net loss of $56.9 million for the three months ended September 30, 2009, compared with a net loss of $347.4 million for the second quarter of 2009 and a net loss of $7.2 million for the third quarter of 2008. On September 30, 2009, Citizens completed its exchange offers to issue common stock in exchange for some of its outstanding debt, which generated approximately $198.0 million of Tier 1 common equity for Citizens. The second quarter of 2009 included a non- cash goodwill impairment charge of $266.5 million (which had no impact on regulatory capital ratios or Citizens' overall liquidity). After incorporating the $5.2 million dividend paid to the preferred shareholder, Citizens reported a net loss attributable to common shareholders of $62.1 million for the three months ended September 30, 2009. Diluted net loss per share was $0.48, compared with $2.81 for the second quarter of 2009 and $0.20 for the third quarter of 2008. Annualized returns on average assets and average equity during the third quarter of 2009 were (1.86)% and (18.40)%, respectively, compared with (10.91)% and (89.50)% for the second quarter of 2009 and (0.22)% and (1.84)% for the third quarter of 2008. "We are encouraged with our core operating results this quarter: net interest margin improved, pre-tax pre-provision core earnings increased, and core deposits rose for the third straight quarter," said Cathleen H. Nash, president and chief executive officer. "As we continue to work through the economic challenges in our footprint, we are pleased by the considerable progress we made this quarter to further strengthen our balance sheet. We bolstered our loan loss reserve to 4.13% of total loans at September 30, 2009. In our recent exchange offers, holders of over 75% of the subject debt securities exchanged their securities for common shares. As a result of the completion of the recent exchange offers, our capital ratios improved during the quarter and continue to be well above the 'well-capitalized' regulatory requirements. We are very focused on maintaining strong liquidity and capital levels as we manage through this recession," added Ms. Nash. Key Highlights in the Quarter: -- Net interest margin for the third quarter of 2009 was 2.97% compared with 2.73% for the second quarter of 2009. The increase in net interest margin over the second quarter of 2009 was primarily the result of expanding loan spreads, declining deposit costs, and a decrease in higher-cost brokered time deposit balances. -- The pre-tax pre-provision core operating earnings for the third quarter of 2009 totaled $30.5 million, an increase of $9.1 million or 42.4% over the second quarter of 2009. The increase was primarily the result of a $5.3 million improvement in net interest income. -- Core deposits at September 30, 2009 increased $234.3 million or 4.8% over June 30, 2009, to $5.1 billion and increased $544.7 million or 12.0% over September 30, 2008. -- Citizens continues to hold short-term (liquid) assets at September 30,2009 of $533.5 million, a decrease of $27.2 million or 4.8% from June 30, 2009, and an increase of $531.0 million over September 30, 2008. -- Total nonperforming assets at September 30, 2009, were essentially unchanged from June 30, 2009, at $608.0 million. -- The allowance for loan losses at September 30, 2009, increased to $339.7 million or 4.13% of portfolio loans, compared with $333.4 million or 3.96% at June 30, 2009. The provision for loan losses for the third quarter of 2009 was $77.8 million, compared with $100.0 million for the second quarter of 2009. The decrease in the provision for loan losses was primarily due to more stable nonperforming loan levels. Net charge-offs for the third quarter of 2009 totaled $71.5 million, compared with $49.2 million for the second quarter of 2009. -- On September 16, 2009, Citizens' shareholders voted to approve the proposal to amend the company's Amended and Restated Articles of Incorporation to increase the number of authorized shares of common stock from 150 million to 1.05 billion shares. -- On September 30, 2009, Citizens completed the settlement of its exchange offers to issue common stock in exchange for its outstanding 5.75% Subordinated Notes due 2013 (the "Subordinated Notes") and outstanding 7.50% Enhanced Trust Preferred Securities (the "Trust Preferred Securities") of Citizens Funding Trust I (the "Exchange Offers"). In the aggregate, approximately 268.2 million shares were issued in exchange for approximately $107.8 million principal amount of its Subordinated Notes and approximately $101.3 million aggregate liquidation amount of the Trust Preferred Securities. The Exchange Offers generated approximately $198.0 million of Tier 1 common equity and a non-cash net loss on the early extinguishment of debt totaling $15.9 million. -- Citizens' regulatory capital ratios increased during the third quarter of 2009 due to the Exchange Offers and continue to exceed the "well-capitalized" designation. As of September 30, 2009, Citizens' estimated capital ratios were: -- Tier 1 capital - 12.77% -- Total capital - 14.17% -- Tier 1 leverage - 9.62% -- Tier 1 common equity - 8.89% -- Tangible common equity to tangible assets - 6.74% -- Tangible equity to tangible assets - 9.02% Balance Sheet Total assets at September 30, 2009 were $12.1 billion, a decrease of $216.6 million or 1.8% from June 30, 2009 and a decrease of $1.0 billion or 8.0% from September 30, 2008. The declines were primarily due to reductions in total portfolio loans and the second quarter of 2009 goodwill impairment, partially offset by higher money market investments. Money market investments at September 30, 2009, totaled $533.5 million, a decrease of $27.2 million or 4.8% from June 30, 2009, and an increase of $531.0 million over September 30, 2008. The decrease from June 30, 2009, was primarily the result of using portfolio cash flow to reduce short-term borrowings. The increase over September 30, 2008, was primarily the result of holding excess short-term funds with the Federal Reserve as a result of continued deposit growth, coupled with a lack of demand for loans from credit-worthy clients. Investment securities at September 30, 2009, totaled $2.4 billion, essentially unchanged from June 30, 2009, and an increase of $213.9 million or 9.9% over September 30, 2008. The increase over September 30, 2008, was primarily the result of investing the proceeds from the fourth quarter of 2008 participation in the TARP Capital Purchase Program into securities that can be pledged as collateral for funding of future loans, partially offset by the effects of using portfolio cash flow to reduce short-term and long-term borrowings. Citizens did not have any other-than- temporary impairment charges during the third quarter of 2009. The following table displays the total commercial loan portfolio by segment at quarter end for each of the last five quarters. The following definitions are provided to clarify the types of loans included in each of the commercial real estate segments identified in the table. Land hold loans are secured by undeveloped land which has been acquired for future development. Land development loans are secured by land undergoing infrastructure improvements to create finished marketable lots for commercial or residential construction. Construction loans are secured by commercial, retail and residential real estate in the construction phase with the intent to be sold or become an income producing property. Income producing loans are secured by non-owner occupied real estate leased to one or more tenants. Owner occupied loans are secured by real estate occupied by the owner for ongoing operations. Commercial Loan Portfolio (in millions) Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 2009 2009 2009 2008 2008 -------- -------- -------- -------- -------- Land Hold $52.0 $54.9 $54.2 $45.0 $48.3 Land Development 129.7 123.1 121.2 132.7 125.0 Construction 214.8 230.4 257.7 263.5 364.2 Income Producing 1,509.7 1,534.5 1,558.2 1,556.2 1,533.2 Owner-Occupied 992.4 979.5 953.0 967.3 999.6 -------- -------- -------- -------- -------- Total Commercial Real Estate 2,898.6 2,922.4 2,944.3 2,964.7 3,070.3 Commercial and Industrial 2,099.8 2,198.3 2,394.4 2,602.4 2,703.7 -------- -------- -------- -------- -------- Total Commercial Loans $4,998.4 $5,120.7 $5,338.7 $5,567.1 $5,774.0 ======== ======== ======== ======== ======== The decreases in total commercial loans were primarily the result of a decline in customer demand from credit-worthy clients, normal paydowns as a result of client activity, and charge-offs. Residential mortgage loans at September 30, 2009 totaled $1.1 billion, a decrease of $60.1 million or 5.3% from June 30, 2009, and a decrease of $194.8 million or 15.2% from September 30, 2008. The declines were primarily the result of normal paydowns as a result of client activity and new business not being retained in the portfolio due to Citizens' strategy of selling more than 90% of new mortgage originations into the secondary market. Direct consumer loans, which are primarily home equity loans, were $1.3 billion at September 30, 2009, a decrease of $43.2 million or 3.2% from June 30, 2009, and a decrease of $173.1 million or 11.7% from September 30, 2008. The decreases were due to weaker consumer demand. Indirect consumer loans, which are primarily marine and recreational vehicle loans, totaled $825.3 million at September 30, 2009, essentially unchanged from June 30, 2009, and September 30, 2008. Loans held for sale at September 30, 2009, were $61.4 million, a decrease of $16.7 million or 21.4% from June 30, 2009, and a decrease of $45.1 million or 42.3% from September 30, 2008. The decreases were primarily the result of a decline in commercial loans held for sale due to customer paydowns, writedowns to reflect market-value declines for the underlying collateral, and transfers to ORE. Goodwill at September 30, 2009, was $330.7 million, unchanged from June 30, 2009, and a decrease of $266.5 million from September 30, 2008. The decrease was due to a non-cash and non-tax-deductible goodwill impairment charge recorded in the second quarter of 2009. Citizens performed an evaluation to determine if events or circumstances indicated additional goodwill impairment at September 30, 2009. As the key inputs and drivers remained consistent with those at June 30, 2009, Citizens concluded that no additional impairment was indicated. There can be no assurance, however, that future testing will not result in additional material impairment charges due to further developments in the banking industry or Citizens' markets. Total deposits at September 30, 2009, were $8.8 billion, a decrease of $121.6 million or 1.4% from June 30, 2009, and a decrease of $214.2 million or 2.4% from September 30, 2008. Core deposits, which exclude all time deposits, totaled $5.1 billion at September 30, 2009, an increase of $234.3 million or 4.8% over June 30, 2009, and an increase of $544.7 million or 12.0% over September 30, 2008. The increases were primarily the result of clients holding higher balances in transaction accounts and recent changes in FDIC coverage thresholds. Time deposits totaled $3.7 billion at September 30, 2009, a decrease of $355.9 million or 8.7% from June 30, 2009, and a decrease of $758.9 million or 17.0% from September 30, 2008. The decreases in time deposits were primarily the result of planned reductions in brokered deposits and a shift in funding mix from customer time deposits to core deposits. Other interest-bearing liabilities, which include federal funds purchased and securities sold under agreements to repurchase, other short-term borrowings, and long-term debt, totaled $1.7 billion at September 30, 2009, a decrease of $265.9 million or 13.3% from June 30, 2009, and a decrease of $740.0 million or 30.0% from September 30, 2008. The decreases were primarily the result of exchanging $209.1 million in long-term debt (approximately $107.8 million principal amount of its Subordinated Notes and approximately $101.3 million aggregate liquidation amount of the Trust Preferred Securities) for Citizens' common stock in the third quarter of 2009 and applying the proceeds from loan prepayments to reduce wholesale funding. Capital Adequacy and Liquidity Shareholders' equity at September 30, 2009, totaled $1.4 billion, an increase of $178.3 million or 14.6% over June 30, 2009 and a decrease of $133.3 million or 8.7% from September 30, 2008. The increase over June 30, 2009, was primarily the result of the issuance of common shares upon consummation of the Exchange Offers in the third quarter of 2009, partially offset by the net loss for the third quarter of 2009. The decrease from September 30, 2008 was primarily the result of the net losses incurred since the third quarter of 2008, partially offset by the capital raised during the fourth quarter of 2008 and the consummation of the Exchange Offers in the third quarter of 2009. On September 30, 2009, Citizens completed the Exchange Offers, exchanging approximately 268.2 million shares of Citizens' common stock for an aggregate of $209.1 million in long-term debt (or approximately 76% of the outstanding securities that were subject to the Exchange Offers). The consummation of the Exchange Offers strengthened Citizens' capital base by raising approximately $198.0 million of Tier 1 common equity and also reduced the interest expense associated with the Subordinated Notes and the Trust Preferred Securities by approximately $13.8 million annually. The Exchange Offers generated a non-cash net loss on the early extinguishment of debt totaling $15.9 million, which represents the difference between the fair value of Citizens' common stock issued (as of the expiration date of the Exchange Offers) and the carrying amount of the retired debt. Citizens continues to maintain a strong capital position, and its regulatory capital ratios are above "well-capitalized" standards, as evidenced by the following key capital ratios. Regulatory Minimum for Excess Capital "Well- over Minimum Capitalized" 9/30/09 6/30/09 3/31/09 (in millions) ----------- ------- ------- ------- ----------- Tier 1 capital ratio* 6.00% 12.77% 11.81% 12.16% $601.0 Total capital ratio* 10.00% 14.17% 13.91% 14.21% $370.2 Tier 1 leverage ratio* 5.00% 9.62% 8.68% 9.32% $544.5 Tier 1 common ratio* 8.89% 6.95% 7.52% Tangible common equity to tangible assets 6.74% 5.14% 5.58% Tangible equity to tangible assets 9.02% 7.39% 7.74% * September 30, 2009 is an estimate ------------------------------------ Like many financial institutions across the United States, Citizens has been impacted by deteriorating economic conditions. Recent events such as bankruptcy filings by significant automotive manufacturers and suppliers, as well as announced automotive plant and dealer closings, affect the national economy in general and the Michigan economy in particular. As a result, to withstand the effects of increased economic stress and uncertainty over the coming months and years, as described in its recent SEC filings, Citizens continues to evaluate a number of alternatives to raise additional Tier 1 common equity to maintain and strengthen its balance sheet. Citizens maintains a strong liquidity position due to its on- balance sheet liquidity sources and very stable funding base comprised of approximately 73% deposits, 14% long-term debt, 12% equity, and 1% short-term liabilities. Citizens also has access to high levels of untapped liquidity through collateral-based borrowing capacity provided by portions of both the loan and investment securities portfolios. Additionally, money market investments and securities available-for-sale could be sold for cash to provide liquidity, if necessary. Net Interest Margin and Net Interest Income Net interest margin was 2.97% for the third quarter of 2009 compared with 2.73% for the second quarter of 2009 and 3.09% for the third quarter of 2008. The increase in net interest margin over the second quarter of 2009 was primarily the result of expanding loan spreads, declining deposit costs, and a decrease in higher-cost brokered time deposit balances. The decrease in net interest margin from the third quarter of 2008 was primarily the result of deposit price competition, the movement of loans to nonperforming status, and an increase in short-term investments to provide additional on-balance sheet liquidity, partially offset by expanding commercial and consumer loan spreads and retail time deposits repricing to a lower rate. For the nine months ended September 30, 2009, net interest margin declined to 2.81% compared with 3.11% for the same period of 2008 as a result of the aforementioned factors. Net interest income was $80.9 million for the third quarter of 2009, an increase of $5.3 million or 7.0% over the second quarter of 2009, and a decrease of $6.4 million or 7.4% from the third quarter of 2008. The increase over the second quarter of 2009 was due to the increase in net interest margin, partially offset by a $345.6 million decrease in average earning assets. The decrease in average earning assets was primarily the result of a decrease in loan portfolio balances due to lower demand in the current Midwest economic environment, and a decrease in investment securities balances due to maturing balances not being fully reinvested. The decrease in net interest income compared with the third quarter of 2008 was due to the lower net interest margin and a $492.3 million decrease in average earning assets. The decrease in average earning assets was the result of a decrease in loan portfolio balances due to lower demand in the current Midwest economic environment, partially offset by an increase in investment securities and money market investments. For the nine months ended September 30, 2009, net interest income declined to $233.4 million compared with $263.2 million for the same period of 2008 as a result of the lower net interest margin and a $213.3 million decrease in average earning assets due to the aforementioned factors. Credit Quality The quality of Citizens' loan portfolio is impacted by numerous factors, including the economic environment in the markets in which Citizens operates. Citizens carefully monitors its loans in an effort to identify and mitigate any potential credit quality issues and losses in a proactive manner. Citizens performs quarterly reviews of the non-watch commercial credit portfolio focusing on industry segments and asset classes that have or may be expected to experience stress due to economic conditions. This process seeks to validate each such credit's risk rating, underwriting structure and exposure management under current and stressed economic scenarios while strengthening these relationships and improving communication with these clients. The following tables represent four qualitative aspects of the loan portfolio that illustrate the overall level of quality and risk inherent in the loan portfolio. -- Table 1 -- Delinquency Rates by Loan Portfolio -- This table illustrates the loans where the contractual payment is 30 to 89 days past due and interest is still accruing. While these loans are actively worked to bring them current, past due loan trends may be a leading indicator of potential future nonperforming loans and charge-offs. -- Table 2 -- Commercial Watchlist -- This table illustrates the commercial loans that, while still accruing interest, we believe may be at risk due to general economic conditions or changes in a borrower's financial status and therefore require increased oversight. Watchlist loans that are in nonperforming status are included in Table 3 below. -- Table 3 -- Nonperforming Assets -- This table illustrates the loans that are in nonaccrual status, loans past due 90 days or more on which interest is still accruing, restructured loans, nonperforming loans that are held for sale, and other repossessed assets acquired. The commercial loans included in this table are reviewed as part of the watchlist process in addition to the loans displayed in Table 2. -- Table 4 -- Net Charge-Offs -- This table illustrates the portion of loans that have been charged-off during each quarter. Table 1 -- Delinquency Rates By Loan Portfolio 30 to 89 days Past Due Sep 30, 2009 Jun 30, 2009 Mar 31, 2009 ------------ ------------ ------------ (dollars in % of % of % of millions) $ Portfolio $ Portfolio $ Portfolio - ---------- - --------- - --------- Land Hold $1.4 2.61% $3.5 6.38% $3.7 6.83% Land Development 12.0 9.29 1.3 1.06 11.1 9.16 Construction 12.1 5.64 1.7 0.74 16.7 6.48 Income Producing 44.9 2.97 50.0 3.26 64.2 4.12 Owner-Occupied 24.4 2.46 15.6 1.59 37.4 3.92 ---- ---- ---- ---- ---- ---- Total Commercial Real Estate 94.8 3.27 72.1 2.47 133.1 4.52 Commercial and Industrial 20.2 0.96 34.0 1.55 47.1 1.97 ---- ---- ---- ---- ---- ---- Total Commercial Loans 115.0 2.30 106.1 2.07 180.2 3.38 Residential Mortgage 30.3 2.80 27.7 2.42 25.9 2.14 Direct Consumer 24.5 1.87 23.3 1.72 20.4 1.45 Indirect Consumer 16.3 1.98 14.6 1.81 14.7 1.83 ---- ---- ---- ---- ---- ---- Total Consumer Loans 71.1 2.21 65.6 1.98 61.0 1.79 Total Delinquent Loans $186.1 2.26% $171.7 2.04% $241.2 2.76% ====== ====== ====== Dec 31, 2008 Sep 30, 2008 ------------ ------------ $ % of $ % of Portfolio Portfolio -- ---------- -- --------- Land Hold $3.9 8.67% $7.3 15.11 % Land Development 5.2 3.92 10.3 8.24 Construction 27.3 10.36 26.1 7.17 Income Producing 76.7 4.93 50.1 3.27 Owner-Occupied 37.5 3.88 21.3 2.13 ---- ---- ---- ---- Total Commercial Real Estate 150.6 5.08 115.1 3.75 Commercial and Industrial 56.5 2.17 29.1 1.08 ---- ---- ---- ---- Total Commercial Loans 207.1 3.72 144.2 2.50 Residential Mortgage 39.5 3.13 37.7 2.95 Direct Consumer 25.5 1.76 19.5 1.32 Indirect Consumer 18.5 2.25 13.6 1.61 ---- ---- ---- ---- Total Consumer Loans 83.5 2.36 70.8 1.96 Total Delinquent Loans $290.6 3.19% $215.0 2.29 % ====== ====== The increase in total delinquencies over June 30, 2009, was primarily the result of longer than anticipated renewal efforts on several large commercial real estate loans totaling $10.2 million (which have since been renewed in the fourth quarter), partially offset by a decrease in commercial and industrial delinquent loans. The decrease from September 30, 2008, was primarily due to enhanced administrative renewal efforts. However, the weak economy in the Midwest and particularly in Michigan, continues to significantly impact Citizens' commercial real estate portfolio. As part of its overall credit underwriting and review process and loss mitigation strategy, Citizens carefully monitors commercial and commercial real estate credits that are current in terms of principal and interest payments but may deteriorate in quality as economic conditions decline. Commercial relationship officers monitor their clients' financial condition and initiate changes in loan ratings based on their findings. Loans that have migrated within the loan rating system to a level that requires increased oversight are considered watchlist loans (generally consistent with the regulatory definition of special mention, substandard, and doubtful loans) and include loans that are accruing (see Table 2) or nonperforming (see Table 3). Citizens utilizes the watchlist process as a proactive credit risk management practice to help mitigate the migration of commercial loans to nonperforming status and potential loss. Once a loan is placed on the watchlist, it is reviewed quarterly by the chief credit officer, senior credit officers, senior market managers, and commercial relationship officers to assess cash flows, collateral valuations, guarantor liquidity, and other pertinent trends. During these meetings, action plans are implemented or reviewed to address emerging problem loans or to remove loans from the portfolio. Additionally, loans viewed as substandard or doubtful are transferred to Citizens' special loans or small business workout groups and are subjected to an even higher level of monitoring and workout activity. Table 2 -- Commercial Watchlist Accruing loans only Sep 30, 2009 Jun 30, 2009 Mar 31, 2009 ------------ ------------ ------------ (dollars in millions) $ % of $ % of $ % of Portfolio Portfolio Portfolio -- --------- -- --------- -- --------- Land Hold $29.0 55.76% $18.1 32.97% $15.7 28.97% Land Development 93.6 72.12 83.6 67.91 62.4 51.49 Construction 90.4 42.10 90.3 39.19 86.6 33.60 Income Producing 519.6 34.42 458.9 29.91 421.9 27.08 Owner-Occupied 277.3 27.94 274.4 28.01 224.2 23.53 ----- ----- ----- ----- ----- ----- Total Commercial Real Estate 1,009.9 34.84 925.3 31.66 810.8 27.54 Commercial and Industrial 510.3 24.30 532.9 24.24 479.7 20.03 ----- ----- ----- ----- ----- ----- Total Watchlist Loans $1,520.2 30.41% $1,458.2 28.48% $1,290.5 24.17% ======== ======== ======== Dec 31, 2008 Sep 30, 2008 ------------ ------------ % of % of $ Portfolio $ Portfolio -- --------- -- --------- Land Hold $18.5 41.11% $20.7 42.86 % Land Development 49.3 37.15 51.8 41.44 Construction 74.8 28.39 104.8 28.78 Income Producing 401.0 25.77 290.3 18.93 Owner-Occupied 178.4 18.44 167.0 16.71 ----- ----- ----- ----- Total Commercial Real Estate 722.0 24.35 634.6 20.67 Commercial and Industrial 436.8 16.78 431.2 15.95 ----- ----- ----- ----- Total Watchlist Loans $1,158.8 20.82% $1,065.8 18.46 % ======== ======== The increases in accruing watchlist loans over June 30, 2009, and September 30, 2008, were primarily the result of the aforementioned non-watch commercial credit reviews as signs of economic or business related stress indicate more credit oversight and review is warranted. Additionally, the increases were also impacted by continuing commercial real estate deterioration in Michigan and, as a way to help mitigate future losses, additional proactive downgrades as Citizens closely monitors borrowers' repayment capacity in this environment. Table 3 -- Nonperforming Assets Sep 30, 2009 Jun 30, 2009 Mar 31, 2009 ---------------- -------------- ------------- (dollars in % of % of % of millions) $ Portfolio $ Portfolio $ Portfolio -- --------- -- --------- -- --------- Land Hold $13.3 25.56% $13.1 23.86% $12.0 22.14% Land Development 13.7 10.52 15.1 12.27 14.6 12.05 Construction 33.7 15.70 36.0 15.63 26.5 10.28 Income Producing 126.7 8.39 139.4 9.08 116.3 7.46 Owner-Occupied 70.2 7.07 72.0 7.35 66.5 6.98 ---- ---- ---- ---- ---- ---- Total Commercial Real Estate 257.6 8.89 275.6 9.43 235.9 8.01 Commercial and Industrial 111.5 5.31 91.8 4.18 83.7 3.50 ----- ---- ---- ---- ---- ---- Total Nonaccruing Commercial Loans 369.1 7.38 367.4 7.17 319.6 5.99 Residential Mortgage 106.5 9.82 103.3 9.02 84.6 7.00 Direct Consumer 20.4 1.56 20.3 1.50 21.0 1.49 Indirect Consumer 2.6 0.31 1.4 0.17 2.0 0.25 --- ---- --- ---- --- ---- Total Non- accruing Consumer Loans 129.5 4.03 125.0 3.78 107.6 3.15 Total Non- accruing Loans 498.6 6.07 492.4 5.84 427.2 4.88 Loans 90+ days still accruing 0.6 0.01 0.8 0.01 1.0 0.01 Restructured loans 2.3 0.03 2.5 0.03 0.4 - --- ---- --- ---- --- -- Total Non- performing Portfolio Loans 501.5 6.10% 495.7 5.88% 428.6 4.90% Nonperforming Held for Sale 44.5 54.3 64.6 Other Repossessed Assets Acquired 62.0 54.7 57.4 ---- ---- ---- Total Non- performing Assets $608.0 $604.7 $550.6 ====== ====== ====== Dec 31, 2008 Sep 30, 2008 ------------ ------------ % of % of $ Portfolio $ Portfolio -- --------- -- --------- Land Hold $10.4 23.11% $11.0 22.77 % Land Development 23.4 17.63 20.6 16.48 Construction 18.3 6.94 25.7 7.06 Income Producing 78.6 5.05 57.6 3.76 Owner-Occupied 31.8 3.29 17.7 1.77 ---- ---- ---- ---- Total Commercial Real Estate 162.5 5.48 132.6 4.32 Commercial and Industrial 64.6 2.48 38.2 1.41 ---- ---- ---- ---- Total Nonaccruing Commercial Loans 227.1 4.08 170.8 2.96 Residential Mortgage 59.5 4.71 40.2 3.14 Direct Consumer 15.1 1.04 16.3 1.10 Indirect Consumer 2.6 0.32 2.1 0.25 --- ---- --- ---- Total Nonaccruing Consumer Loans 77.2 2.18 58.6 1.63 Total Nonaccruing Loans 304.3 3.34 229.4 2.45 Loans 90+ days still accruing 1.5 0.02 1.6 0.02 Restructured loans 0.2 - 0.3 - --- - --- Total Nonperforming Portfolio Loans 306.0 3.36% 231.3 2.47% Nonperforming Held for Sale 75.2 86.6 Other Repossessed Assets Acquired 58.0 46.5 ---- ---- Total Nonperforming Assets $439.2 $364.4 ====== ====== The increase in nonperforming assets over September 30, 2008, was primarily the result of continued deterioration in the real estate secured portfolios (particularly commercial) and general economic deterioration in the Midwest. Nonperforming assets at September 30, 2009, represented 7.34% of total loans plus other repossessed assets acquired compared with 7.13% at June 30, 2009, and 3.87% at September 30, 2008. Nonperforming commercial loan inflows were $94.2 million in the third quarter of 2009 compared with $133.3 million in the second quarter of 2009 and $102.6 million in the third quarter of 2008. Nonperforming commercial loan outflows were $93.0 million in the third quarter of 2009 compared with $85.9 million in the second quarter of 2009 and $38.5 million in the third quarter of 2008. The third quarter of 2009 outflows included $7.3 million in loans that returned to accruing status, $29.6 million in loan payoffs and paydowns, $49.2 million in charged-off loans, and $6.9 million transferred to other repossessed assets acquired. Table 4 -- Net Charge-Offs Three Months Ended ------------------ Sep 30, 2009 Jun 30, 2009 Mar 31, 2009 ------------ ------------ ------------ % of % of % of $ Portfolio $ Portfolio $ Portfolio -- --------- -- --------- -- --------- Land Hold $0.5 4.02% $0.6 4.37% $--- ---% Land Development 1.4 4.19 2.4 7.80 6.3 20.79 Construction 0.9 1.63 5.8 10.07 2.0 3.10 Income Producing 24.5 6.50 12.6 3.28 7.8 2.00 Owner-Occupied 4.6 1.85 7.9 3.23 2.4 1.01 --- ---- --- ---- --- ---- Total Commercial Real Estate 31.9 4.40 29.3 4.01 18.5 2.51 Commercial and Industrial 20.1 3.84 6.8 1.24 8.0 1.34 ---- ---- --- ---- --- ---- Total Commercial Loans 52.0 4.16 36.1 2.82 26.5 1.99 Residential Mortgage 10.0 3.67 2.2 0.77 0.8 0.26 Direct Consumer 6.3 1.92 6.5 1.92 4.4 1.25 Indirect Consumer 3.2 1.56 4.4 2.18 5.0 2.49 --- ---- --- ---- --- ---- Total Consumer Loans 19.5 2.42 13.1 1.59 10.2 1.19 Total Net Charge- offs $71.5 3.41% $49.2 2.30% $36.7 1.67% ===== ===== ===== ** Represents an annualized rate. ----------------------------------- Three Months Ended ------------------ Dec 31, 2008 Sep 30, 2008 ------------ ------------ % of % of $ Portfolio** $ Portfolio** -- ------------ -- ----------- Land Hold $4.6 40.89% $1.7 14.08 % Land Development 5.8 17.48 6.9 22.08 Construction 10.7 16.24 0.5 0.55 Income Producing 21.7 5.58 4.4 1.15 Owner-Occupied 3.1 1.28 1.3 0.52 --- ---- --- ---- Total Commercial Real Estate 45.9 6.19 14.8 1.93 Commercial and Industrial 21.9 3.37 0.4 0.06 ---- ---- --- ---- Total Commercial Loans 67.8 4.87 15.2 1.05 Residential Mortgage 1.6 0.51 0.5 0.16 Direct Consumer 5.9 1.63 3.3 0.89 Indirect Consumer 5.7 2.78 3.4 1.61 --- ---- --- ---- Total Consumer Loans 13.2 1.49 7.2 0.80 Total Net Charge- offs $81.0 3.48% $22.4 0.94 % ===== ===== ** Represents an annualized rate. ----------------------------------- The increase in net charge-offs over the second quarter of 2009 was primarily the result of charging off four large commercial real estate loans totaling $17.6 million and four large commercial and industrial loans totaling $16.2 million (one of which was related to real estate construction projects). Additionally, the increase in residential mortgage net charge-offs over the second quarter of 2009 was primarily due to charging off one loan totaling $2.1 million and an increase in the migration of nonperforming loans through the disposition process, which was expected. The increase over the third quarter of 2008 was primarily the result of continued deterioration in the real estate secured portfolios (particularly commercial) and general economic deterioration in the Midwest. The allowance for loan losses was $339.7 million or 4.13% of portfolio loans at September 30, 2009, compared with $333.4 million or 3.96% at June 30, 2009, and $217.7 million or 2.32% at September 30, 2008. The increases were primarily the result of continued deterioration in commercial real estate loans and an increase in the loss migration rates and extended duration of residential mortgage and consumer loans. Based on current conditions and expectations, Citizens believes that the allowance for loan losses is adequate to address the estimated loan losses inherent in the existing loan portfolio at September 30, 2009. After determining what Citizens believes is an adequate allowance for loan losses based on the risk in the portfolio, the provision for loan losses is calculated as a result of the net effect of the quarterly change in the allowance for loan losses and the quarterly net charge-offs. The provision for loan losses was $77.8 million in the third quarter of 2009, compared with $100.0 million in the second quarter of 2009 and $58.4 million in the third quarter of 2008. The decrease from the second quarter of 2009 was primarily due to more stable nonperforming loan levels in the third quarter. The increase over the third quarter of 2008 was primarily the result of higher net charge-offs and overall migration of loans to nonperforming status. This migration, and evaluation of the underlying collateral supporting these loans, caused an increase in the allowance for loan losses due to the higher likelihood that portions of these loans may eventually be charged-off. Noninterest Income Noninterest income for the third quarter of 2009 was $11.8 million, a decrease of $9.1 million or 43.5% from the second quarter of 2009 and a decrease of $16.2 million or 57.7% from the third quarter of 2008. Noninterest income for the first nine months of 2009 totaled $52.0 million, a decrease of $33.9 million or 39.5% from the same period of 2008. The decrease in noninterest income from the second quarter of 2009 was primarily the result of the aforementioned net loss on the extinguishment of debt in connection with the Exchange Offers ($15.9 million), partially offset by lower losses on loans held for sale ($3.5 million), higher other income ($2.5 million), and higher service charges on deposit accounts ($0.7 million). The decrease in losses on loans held for sale was primarily the result of lower writedowns to reflect market-value declines for the underlying collateral. The increase in other income was primarily the result of receiving the proceeds for an insurance claim on a previous branch office, exiting the holding company's 2006 capital investment in a limited partnership, and a higher rate on bank owned life insurance. The increase in service charges on deposit accounts was primarily the result of higher customer transaction volume. The decrease in noninterest income from the third quarter of 2008 was primarily due to the aforementioned net loss on the extinguishment of debt ($15.9 million) and, to a lesser extent, lower service charges on deposit accounts ($0.7 million) and trust fees ($0.6 million). The decrease in service charges on deposit accounts was primarily the result of a decline in customer transaction volume. The decline in trust fees was primarily the result of negative market conditions. The decrease in noninterest income from the first nine months of 2008 was primarily due to the aforementioned net loss on debt extinguishment ($15.9 million), as well as higher net losses on loans held for sale ($7.9 million), lower other income ($3.7 million), lower trust fees ($3.1 million), and lower service charges on deposit accounts ($3.1 million) due to the aforementioned factors. Noninterest Expense Noninterest expense for the third quarter of 2009 was $83.6 million, a decrease of $271.8 million from the second quarter of 2009 and an increase of $9.3 million over the third quarter of 2008. The second quarter of 2009 included a non-cash non tax deductible goodwill impairment charge of $266.5 million. Noninterest expense for the first nine months of 2009 totaled $519.8 million, an increase of $107.7 million over the same period of 2008. The decrease in noninterest expense from the second quarter of 2009 was primarily the result of the aforementioned goodwill impairment charge ($266.5 million), as well as lower other expense ($8.4 million), partially offset by higher salaries and employee benefits ($2.5 million) and other real estate (ORE) expenses ($1.2 million). The decrease in other expense was primarily the result of a $5.6 million FDIC insurance premium incurred in the second quarter of 2009 as a result of an industry-wide special assessment. The increase in salaries and employee benefits was primarily the result of higher severance expense and benefits related to those agreements. The increase in ORE expenses was primarily the result of higher carrying costs related to holding the ORE properties and mark-to-market charges related to additional declines in market value on ORE assets. The increase in noninterest expense over the third quarter of 2008 was primarily the result of higher other loan expenses ($3.7 million), ORE expenses ($3.7 million) and other expense ($3.1 million), partially offset by lower salaries and employee benefits ($1.3 million), as well as a net decline in all other noninterest expense categories. The increase in other loan expense was primarily the result of higher foreclosure expenses associated with repossessing collateral underlying commercial and residential real estate loans. The increase in ORE expenses was primarily the result of the aforementioned factors. The increase in other expense was primarily the result of an increase in FDIC insurance premiums due to an industry-wide rate increase. The decrease in salaries and employee benefits was primarily due to lower staffing levels and suspending employer contributions to the 401(k) plan in 2009. The net decline in all other noninterest expense categories was primarily the result of various expense management initiatives implemented throughout the company. Salary costs included severance expense of $1.5 million for the third quarter of 2009, compared with less than $0.1 million for the second quarter of 2009, and $2.0 million for the third quarter of 2008. Citizens had 2,173 full-time equivalent employees at September 30, 2009, compared with 2,157 at June 30, 2009, and 2,261 at September 30, 2008. The increase in noninterest expense over the first nine months of 2008 was primarily the result of a higher goodwill impairment charge ($88.4 million), as well as higher other expense ($15.9 million), other loan expense ($11.3 million), and ORE expense ($8.9 million), partially offset by lower salaries and employee benefits ($12.7 million), and a net decline in all other noninterest expense categories due to the aforementioned factors. Income Tax Benefit The income tax benefit for the third quarter of 2009 was $11.7 million, compared with $11.4 million for the second quarter of 2009 and $10.2 million for the third quarter of 2008. For the first nine months of 2009, the income tax benefit totaled $26.6 million, a decrease of $2.0 million from the same period of 2008. The variances were primarily due to the effect of higher pre-tax losses and current period adjustments to other comprehensive income. Reconciliation of Pre-Tax Pre-Provision Core Operating Earnings Citizens presents pre-tax pre-provision core operating earnings in this release for purposes of additional analysis of our operating results. Pre-tax pre-provision core operating earnings, as defined by management, represents net income (loss) excluding income tax provision (benefit), the provision for loan losses, and any impairment charges or special assessments (including goodwill, credit writedowns, fair-value adjustments, and FDIC special assessments). The following table reconciles consolidated net loss, which is presented in accordance with US generally accepted accounting principles ("GAAP"), to pre-tax pre-provision core operating earnings. GAAP is the principal and most useful measure of earnings and provides comparability of earnings with other companies. However, Citizens believes presenting pre-tax pre- provision core operating earnings provides investors with the ability to better understand Citizens' underlying operating trends separate from the direct effects of the impairment charges, net loss on debt extinguishment, credit issues, fair value adjustments, challenges inherent in the real estate downturn and other economic cycle issues and displays a consistent core operating earnings trend before the impact of these challenges. The credit quality section of this earnings release already isolates all of the challenges and issues related to the credit quality of Citizens' loan portfolio and its impact on Citizens' earnings as reflected in the provision for loan losses. Pre-Tax Pre-Provision Core Operating Earnings Three Months Ended Sep 30 Jun 30 Mar 31 Dec 31 Sep 30 (in thousands) 2009 2009 2009 2008 2008 --------------- ------ ------ ------ ------ ------ Net Loss $(56,923) $(347,413) $(45,149) $(195,369) $(7,176) Income tax provision (benefit) (11,747) (11,415) (3,467) 99,634 (10,192) Provision for loan losses 77,783 99,962 64,017 118,565 58,390 Goodwill impairment --- 266,474 --- --- --- Net loss on debt extinguishment 15,929 --- --- --- --- FDIC special assessment --- 5,565 --- --- --- Fair-value writedown on loans held for sale 859 4,350 6,152 5,865 1,261 Fair-value writedown on ORE 3,934 3,306 7,985 602 675 Fair-value (write-up)/ writedown on bank owned life insurance (360) --- 235 2,896 551 Loss on auction rate securities repurchase --- --- --- 2,406 --- Mark-to-market on swaps 1,018 583 (2,444) 2,414 (2,894) Captive insurance impairment charge --- --- --- 1,053 --- --- --- --- ----- --- Pre-Tax Pre-Provision Core Operating Earnings $30,493 $21,412 $27,329 $38,066 $40,615 ======= ======= ======= ======= ======= Use of Non-GAAP Financial Measures In addition to results presented in accordance with GAAP, this release includes non-GAAP financial measures such as those included in the "Key Highlights in the Quarter" section, the "Reconciliation of Pre-Tax Pre-Provision Core Operating Earnings" section, the "Non-GAAP Performance Ratios" table, and the "Non- GAAP Common Equity Ratios" table. Citizens believes these non- GAAP financial measures provide information useful to investors in understanding the underlying operational performance of the company, its business, and performance trends and facilitates comparisons with the performance of others in the banking industry. Specifically, Citizens believes the exclusion of restructuring and merger-related expenses, intangible asset amortization, and the goodwill impairment to create "core operating earnings" as well as the exclusion of related goodwill and other intangible assets, net of applicable deferred tax amounts, to create "average tangible assets" and "average tangible equity" facilitates the comparison of results for ongoing business operations. Citizens' management internally assesses the company's performance based, in part, on these non-GAAP financial measures. The tangible common equity ratio and Tier 1 common equity ratio have become a focus of some investors and management believes that these ratios may assist investors in analyzing our capital position absent the effects of intangible assets and preferred stock. Because tangible common equity and Tier 1 common equity are not formally defined by GAAP or codified in the federal banking regulations, these measures are considered to be non-GAAP financial measures. Because analysts and banking regulators may assess our capital adequacy using tangible common equity and Tier 1 common equity, the Company believes that it is useful to provide investors the ability to assess our capital adequacy on these same bases. In accordance with industry standards, certain designated net interest income amounts are presented on a taxable equivalent basis, including the calculation of net interest margin and the efficiency ratio displayed in the "Selected Quarterly Information" and "Financial Summary and Comparison" tables. Citizens believes the presentation of net interest margin on a taxable equivalent basis allows comparability of net interest margin with our industry peers by eliminating the effect of the differences in portfolios attributable to the proportion represented by both taxable and tax-exempt investments. Although Citizens believes the above non-GAAP financial measures enhance investors' understanding of its business and performance, these non-GAAP measures should not be considered a substitute for GAAP basis financial measures. Other News Citizens Receives Nasdaq Notice of Minimum Bid Price Non-Compliance On September 25, 2009, Citizens received a notice from The Nasdaq Stock Market stating that the minimum bid price for Citizens' common stock was below $1.00 per share for 30 consecutive business days and that Citizens was therefore not in compliance with Nasdaq Marketplace Rule 5450(a)(1). To regain compliance, the closing bid price of Citizens' common stock must meet or exceed $1.00 per share for at least ten consecutive business days. Citizens has until March 22, 2010, to regain compliance with the minimum closing bid price requirement and is considering available options to regain compliance. The notification letter has no effect at this time on the listing of Citizens' common stock on The Nasdaq Global Select Market. Citizens Names Treasurer and Principal Accounting Officer On October 8, 2009, Citizens announced that Brian D. J. Boike was named senior vice president and treasurer and Joseph C. Czopek was named senior vice president and principal accounting officer. Boike will have responsibility for all treasury activities, including management of the company's balance sheet, capital, funding and liquidity. In addition to his responsibilities as corporate controller, Czopek will lead the daily activities of SEC reporting and SOX compliance for the company. About Citizens Republic Citizens Republic Bancorp, Inc. -- http://www.citizensbanking.com/ -- is a diversified financial services company providing a wide range of commercial, consumer, mortgage banking, trust and financial planning services to a broad client base. Citizens serves communities in Michigan, Ohio, Wisconsin, and Indiana as Citizens Bank and in Iowa as F&M Bank, with 232 offices and 267 ATMs. Citizens Republic Bancorp is the largest bank holding company headquartered in Michigan with roots dating back to 1871 and is the 44(th) largest bank holding company headquartered in the United States. As reported by the TCR on Oct. 5, 2009, Moody's Investors Service has confirmed the B2 long-term issuer rating of Citizens Republic Bancorp, Inc., and the long-term ratings of its lead bank, Citizens Bank, Michigan (bank financial strength of D-, deposits of Ba3, issuer and other senior obligations of B1). At the same time, Moody's upgraded Citizens' subordinated debt rating to B3 from Caa2, but continued the review with direction uncertain on the Caa2 trust preferred securities rating of Citizens Funding Trust I. The outlook on Citizens and its lead bank is negative. CLARENS JUNIOR GELIN: Case Summary & 16 Largest Unsec. Creditors ---------------------------------------------------------------- Joint Debtors: Clarens Junior Gelin aka Clarens Junior Gelin Marie Denise Destin 4398 Chastain Dr. Melbourne, FL 32940 Bankruptcy Case No.: 09-15881 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Debtors' Counsel: Bryan K. Mickler, Esq. 5452 Arlington Expressway Jacksonville, FL 32211 Tel: (904) 725-0822 Email: court@planlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $1,007,757, and total debts of $1,263,565. A full-text copy of the Debtors' petition, including a list of their 16 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flmb09-15881.pdf The petition was signed by the Joint Debtors. CMR MORTGAGE: Files Disclosure Statement to Chapter 11 Plan ----------------------------------------------------------- CMR Mortgage Fund II, LLC, and CMR Mortgage Fund III, LLC, filed with the U.S. Bankruptcy Court for the Northern District of California a disclosure statement with respect to their Joint Chapter 11 Plan of Reorganization. The Plan provides that substantially all secured and unsecured creditors will be paid in full over a maximum seven-year term, members of the Debtors will retain their membership interests or voluntarily exchange the interests for debt as provided for in the Plan, and the Debtors will eventually begin to return capital to members of the Debtors. Distributions under the Plan will be funded by sales or Joint Ventures of real property, loans secured by real property and payoffs by borrowers. There are only two secured claims against assets held by CMR Fund II, which claims will be paid from the proceeds of the sale or refinance of the underlying assets or satisfied by forfeiture of the assets. There are no secured claims against assets held by CMR Fund III. The Debtors intend to obtain DIP Financing in order to fund business operations, however, the DIP Financing will not be used to make distributions under the Plan. The Plan further provides that the Debtors will restructure their members' equity interests and reduce the number of members of each Debtor to less than 300 in order to enable the Debtors to terminate the requirement to register their securities with Section 12(g)(4) of the Securities and Exchange Act of 1934 and to file reports as a public company. In order to accomplish the restructuring, the Debtors will offer some or all members the option of exchanging their membership interest for unsecured debt. Imperial Capital Bank will retain its lien against the Sand City Property. CMR Fund II intends to sell or refinance the Sand City Property and pay Imperial Capital Bank's Allowed Secured Claim in full. Imperial Capital Bank holds a first priority lien against the Sand City Property. In addition to the lien which was foreclosed upon, CMR Fund II holds a second position lien against the Sand City Property in the amount of $10,000,000. A third position lien against the Sand City Property in the amount of $10,000,000 is jointly held by CMR Fund I (97%) and CMR Fund III (3%). The Plan also proposes that CMR Income Fund, LLC, a California limited liability company, and Wells Fargo Foothill, Inc. will retain their jointly-held lien against Fund II's lien against the Wheatland Property and its membership interests in Wheatland Holdings. CMR Fund II intends to sell or refinance the Wheatland Property and pay the Allowed Class 2A Claim in full. Income Fund and Wells Fargo Foothill, Inc. hold a lien in the amount of $23,333,777 against CMR Fund II's lien against the Wheatland Property and its membership interest in Wheatland Holdings. The Court has not set a date to consider approval of the adequacy of the information in the Disclosure Statement. A full-text copy of the Debtor's Disclosure Statement is available for free at: http://bankrupt.com/misc/CMRMortgage_DS.pdf A full-text copy of the Debtor's Joint Plan of Reorganization is available for free at: http://bankrupt.com/misc/CMRMortgage_JointPlan.pdf San Francisco, California-based CMR Mortgage Fund II, LLC, is a limited liability company organized for the purpose of making or investing in business loans secured by deeds of trust or mortgages on real properties located primarily in California. The Company previously funded lending activities through loan pay downs or pay offs, as well as by selling its membership interests, and by selling all or a portion of interests in the loans to individual investors. The Company commenced operations in February 2004. The Company ceased accepting new members in the third quarter of 2006. The Company and CMR Mortgage Fund III, LLC, filed for Chapter 11 protection on March 31, 2009 (Bankr. N. D. Calif. Case No. 09- 30788 and 09-30802). Robert G. Harris, Esq., at the Law Offices of Binder and Malter, represents the Debtor as counsel. The Debtor listed between $10 million and $50 million each in assets and debts. COCKROFT DAIRY: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Cockroft Dairy Farm of Kersey has filed for Chapter 11 bankruptcy protection, listing $1 million to $10 million in assets against $1 million to $10 million in debts owed to more than 60 creditors, including the Greeley bank being liquidated by the Federal Deposit Insurance Corp. Miles Moffeit at The Denver Post relates that Cockroft Dairy is among the hundreds of agricultural companies that depended on the failed New Frontier Bank for financing. Cockroft Dairy Farm of Kersey is a Colorado dairy. COMMUNITY AZTEC LIMOUSINE: Voluntary Chapter 11 Case Summary ------------------------------------------------------------ Debtor: Community Aztec Limousine Service, Inc. 5617 Fern Valley Rd Louisville, KY 40228 Bankruptcy Case No.: 09-35400 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Western District of Kentucky (Louisville) Debtor's Counsel: G. Denise Brown, Esq. 327 Guthrie Street Louisville, Ky 40202 Tel: (502) 587-0331 Fax: (502) 587-0333 Email: denisebrown@4realdirection.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 Frederick L. Moore, president of the Company. COOPER-STANDARD: Committee Proposes Protocol for Access to Info --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Cooper-Standard Holdings Inc. seeks court approval to implement a set of protocols governing the sharing of information to unsecured creditors of Cooper-Standard Holdings Inc. and its affiliated debtors. Edwards, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, says the protocols would allow the Creditors Committee to provide unsecured creditors access to information pursuant to Section 1102 of the Bankruptcy Code, while protecting the Debtors' confidential, privileged and proprietary information. Under the proposed protocols, the Creditors Committee is not authorized to share non-public information disclosed to the panel by the Debtors. The Creditors Committee is also not allowed to disclose information it generated for the use of the panel as well as communications among members of the Creditors Committee. The proposed protocols also require the Creditors Committee to create and maintain an Internet-accessed Web site where the unsecured creditors can access the information, and to retain Epiq Bankruptcy Solutions to maintain the web site. A copy of the document detailing the Creditors Committee's proposed protocols is available without charge at: http://bankrupt.com/misc/CooperProtocolCommittee.pdf The Court will hold a hearing on October 27, 2009, to consider approval of the Debtors' request. Creditors and other concerned parties have until October 20, 2009, to file their objections. About Cooper-Standard Cooper-Standard Automotive Inc. -- http://www.cooperstandard.com/ -- headquartered in Novi, Michigan, is a leading global automotive supplier specializing in the manufacture and marketing of systems and components for the automotive industry. Products include body sealing systems, fluid handling systems and NVH control systems. The Company is one of the leading suppliers of chassis products in North America, with about 14% of market share. The Company's main custoemrs include Ford Motor Company, General Motors, Chrysler, Audi, Volkswagen, BMW, Fiat and Honda, among other automakers. Cooper-Standard Automotive employs approximately 16,000 people globally with more than 70 facilities throughout the world. Cooper-Standard is a privately held portfolio company of The Cypress Group and Goldman Sachs Capital Partners Funds. Cooper-Standard Holdings Inc., together with affiliates, filed for Chapter 11 on August 4, 2009 (Bankr. D. Del. Case No. 09-12743). Attorneys at Fried, Frank, Harris, Shriver & Jacobson LLP and Richards, Layton & Finger, P.A., will serve as bankruptcy counsel to the Debtors. Lazard Freres & Co. is serving as investment banker while Alvarez & Marsal is financial advisor. Kurtzman Carson Consultants LLC is notice, claims and solicitation agent. In its bankruptcy petition, the Company said that assets on a consolidated basis total $1,733,017,000 while debts total $1,785,039,000 as of March 31, 2009. The Company's Canadian subsidiary, Cooper-Standard Automotive Canada Limited, also sought relief under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Ontario, Canada. Bankruptcy Creditors' Service, Inc., publishes Cooper-Standard Bankruptcy News. The newsletter tracks the Chapter 11 and CCAA proceedings undertaken by Cooper-Standard Holdings Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) COOPER-STANDARD: Proposes Dec. 4 General Claims Bar Date -------------------------------------------------------- Cooper-Standard Holdings Inc. and its affiliated debtors ask the U.S. Bankruptcy Court for the District of Delaware to set: (1) December 4, 2009, as the deadline for filing proofs of claim by creditors holding pre-bankruptcy claims; and (2) February 1, 2010, as the deadline for government units to file their proofs of claim. For claims that stem from the rejection of their executory contracts and leases, the Debtors propose that the deadline for filing their proofs of claim be the later of December 4, 2009, or 30 days after court approval of the rejection. The Debtors also ask the Court to allow claimants affected by any amendment to their schedules of assets and liabilities to file their proofs of claim until the later of December 4, 2009, or 20 days after receiving a notice of the amendment. Creditors holding claims not listed in the Debtor's schedules or are listed as disputed, contingent and unliquidated, and those holding claims arising under section 503(b)(9) of the Bankruptcy Code, are required to file proofs of claim. Any creditor that holds a claim that is improperly classified in the schedules, listed in an incorrect amount or against the wrong Debtor, and that desires to have its claim allowed in a classification or amount other than that identified in the schedules is also required to file a proof of claim. The Debtors propose that Deutsche Bank Trust Company Americas, the administrative agent under the December 23, 2004 Credit Guaranty Agreement, be authorized to file one master proof of claim on behalf of all the lenders under the agreement. Meanwhile, these creditors are not required to file proofs of claim: (1) any entity that has properly filed a proof of claim; (2) any holder of a claim which is not listed as disputed, contingent and unliquidated in the schedules, and that agrees with the nature, classification and amount of its claim as identified in the Schedules; (3) any entity whose claim against a Debtor had been allowed by or paid pursuant to a court order; (4) any Debtor that holds a claim against another Debtor; (5) non-debtor subsidiaries of any Debtor; (6) any holder of a claim allowable under Sections 503(b) and 507(a) of the Bankruptcy Code as an expense of administration, except for holders of "503(b)(9) claims"; (7) any entity that holds a claim against the Debtors' non- debtor affiliates; and (8) any holder of a claim that is limited exclusively to the repayment of principal, interest or other fees and charges that stemmed from any bond, note or debenture issued by the Debtors under the indenture executed in connection with the 7% Senior Notes due 2012, or the indenture executed in connection with the 8 3/8% Senior Subordinated Notes due 2014; provided that this exclusion (i) does not apply to the indenture trustees, and (ii) any former or current holder of a note claim wishing to assert a claim. Claimants may submit their proofs of claim in person or by courier service, hand delivery or mail. Proofs of claim submitted by facsimile or e-mail will be deemed not properly filed. The Debtors propose that any entity holding an interest in any of the Debtors, which is based exclusively on the ownership of common or preferred stock in a corporation, a membership interest in a limited liability partnership, or warrants and rights to purchase, sell and subscribe to the security or interest need not file a proof of interest on or before the General Bar Date. Holders of interest that wish to assert claims stemming from the ownership or purchase of an interest including claims arising out of or relating to the sale, issuance or distribution of the interest, must file their proofs of claim. Any creditor that fails to timely file a claim will be barred from asserting its claim, will not be permitted to vote for or against the plan, and will not receive any distribution under the Debtors' Chapter 11 plan. The Debtors intend to mail a notice of the Bar Dates to all creditors and have it published in the Wall Street Journal, USA Today, Detroit Free Press and other local newspapers 20 days before December 4, 2009. The Court will hold a hearing on October 27, 2009, to consider approval of the Debtors' request. Creditors and other concerned parties have until October 20, 2009, to file their objections. About Cooper-Standard Cooper-Standard Automotive Inc. -- http://www.cooperstandard.com/ -- headquartered in Novi, Michigan, is a leading global automotive supplier specializing in the manufacture and marketing of systems and components for the automotive industry. Products include body sealing systems, fluid handling systems and NVH control systems. The Company is one of the leading suppliers of chassis products in North America, with about 14% of market share. The Company's main custoemrs include Ford Motor Company, General Motors, Chrysler, Audi, Volkswagen, BMW, Fiat and Honda, among other automakers. Cooper-Standard Automotive employs approximately 16,000 people globally with more than 70 facilities throughout the world. Cooper-Standard is a privately held portfolio company of The Cypress Group and Goldman Sachs Capital Partners Funds. Cooper-Standard Holdings Inc., together with affiliates, filed for Chapter 11 on August 4, 2009 (Bankr. D. Del. Case No. 09-12743). Attorneys at Fried, Frank, Harris, Shriver & Jacobson LLP and Richards, Layton & Finger, P.A., will serve as bankruptcy counsel to the Debtors. Lazard Freres & Co. is serving as investment banker while Alvarez & Marsal is financial advisor. Kurtzman Carson Consultants LLC is notice, claims and solicitation agent. In its bankruptcy petition, the Company said that assets on a consolidated basis total $1,733,017,000 while debts total $1,785,039,000 as of March 31, 2009. The Company's Canadian subsidiary, Cooper-Standard Automotive Canada Limited, also sought relief under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Ontario, Canada. Bankruptcy Creditors' Service, Inc., publishes Cooper-Standard Bankruptcy News. The newsletter tracks the Chapter 11 and CCAA proceedings undertaken by Cooper-Standard Holdings Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) COOPER-STANDARD: Warren H. Smith Appointed as Fee Auditor --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware appointed Warren H. Smith & Associates P.C. as fee auditor effective October 6, 2009. Warren will serve as the Court's special consultant in reviewing and analyzing the fees of and expenses incurred by professionals retained in the Chapter 11 cases of Cooper-Standard Holdings Inc. and its affiliated debtors. Pursuant to the Court's order dated October 16, 2009, Warren is tasked to review all quarterly interim fee and final fee applications filed by the professionals. The firm is also authorized to review any filed documents in the Debtors' cases and communicate with the professionals if it has any questions about the quarterly interim fee applications by providing an initial report. Warren is required to provide an initial report to the professionals within 30 days after the latter of (i) the due date of a quarterly interim fee application or (ii) service upon Warren of that application. Any professional that has received an initial report may respond to the questions, issues or disputes raised in the report within 10 days after the date of that report. Warren's fees and expenses will be subject to application and review, and will be paid from the Debtors' estates as an administrative expense. The total fees paid to Warren will be charged at the ordinary hourly rate of the firm. In connection with the appointment, these procedures were also established for the review, allowance and payment of fees and expenses of the applications: (1) Warren is required to file a final report on each quarterly interim fee application within the latter of 30 days after it provides an initial report to the professionals or 20 days after receiving response to the initial report. (2) Warren is required to provide the final report to the professionals and other concerned parties. (3) Within 15 days after the date of the final report, the concerned applicant may file in Court a response to the report. Hearings to consider requests for approval of all quarterly interim fee applications for a particular period will be scheduled by the Court in consultation with the Debtors' counsel, after Warren either has filed final reports or has expressly stated that the hearing can go forward even without all the final reports being filed. (4) Should the professional fail to meet the deadlines for the review of a quarterly interim fee application, and, in the sole discretion of Warren, the professional's failure to meet these deadlines does not allow sufficient time for the review process to be completed, the quarterly interim fee application will be heard at a subsequent hearing date. (5) Warren should be available for deposition and cross- examination by the Debtors, the Creditors Committee, the United States Trustee and other concerned parties. The Court clarified that the October 16 order does not affect the provisions of its prior order approving the procedures governing interim compensation of professionals, except that the professionals are required to also provide a copy of their monthly fee and quarterly interim fee applications to Warren. The October 16 order does not apply to fees earned by professionals that represent a percentage of a specified transaction, and to ordinary course professionals employed by the Debtors, the Court also clarified. About Cooper-Standard Cooper-Standard Automotive Inc. -- http://www.cooperstandard.com/ -- headquartered in Novi, Michigan, is a leading global automotive supplier specializing in the manufacture and marketing of systems and components for the automotive industry. Products include body sealing systems, fluid handling systems and NVH control systems. The Company is one of the leading suppliers of chassis products in North America, with about 14% of market share. The Company's main custoemrs include Ford Motor Company, General Motors, Chrysler, Audi, Volkswagen, BMW, Fiat and Honda, among other automakers. Cooper-Standard Automotive employs approximately 16,000 people globally with more than 70 facilities throughout the world. Cooper-Standard is a privately held portfolio company of The Cypress Group and Goldman Sachs Capital Partners Funds. Cooper-Standard Holdings Inc., together with affiliates, filed for Chapter 11 on August 4, 2009 (Bankr. D. Del. Case No. 09-12743). Attorneys at Fried, Frank, Harris, Shriver & Jacobson LLP and Richards, Layton & Finger, P.A., will serve as bankruptcy counsel to the Debtors. Lazard Freres & Co. is serving as investment banker while Alvarez & Marsal is financial advisor. Kurtzman Carson Consultants LLC is notice, claims and solicitation agent. In its bankruptcy petition, the Company said that assets on a consolidated basis total $1,733,017,000 while debts total $1,785,039,000 as of March 31, 2009. The Company's Canadian subsidiary, Cooper-Standard Automotive Canada Limited, also sought relief under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Ontario, Canada. Bankruptcy Creditors' Service, Inc., publishes Cooper-Standard Bankruptcy News. The newsletter tracks the Chapter 11 and CCAA proceedings undertaken by Cooper-Standard Holdings Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) COYOTES HOCKEY: NHL Awaits Guidance From Court on Revision of Bid ----------------------------------------------------------------- Mike Sunnucks at Phoenix Business Journal reports that U.S. Bankruptcy Court Judge Redfield Baum is waiting the National Hockey League's revised $148 million bid for Phoenix Coyotes, but the league is waiting on guidance from Judge Baum on how exactly to revise its bid. As reported by the TCR on October 1, 2009, Bankruptcy Judge Redfield Baum rejected competing bids by the Hockey League and BlackBerry billionaire Jim Balsillie for the Phoenix Coyotes. Mr. Balsillie failed to convince Judge Baum that the NHL's rights could be protected if he bought the team. The NHL had argued it has the right to admit only owners who meet its requirements and to control where teams play their home games. The NHL bid -- which is $100 million lower than Balsillie's -- was also rejected because it doesn't treat creditors equally. The NHL has chosen which creditors will be repaid if it's successful in its bid, leaving out current Coyotes owner Jerry Moyes and former coach Wayne Gretzky. Judge Baum said he can't accept an offer that pays virtually all creditors "except the two a buyer views as its opponents." The ruling, however, allows the NHL to modify its bid to address the concerns. The Bankruptcy Court is scheduled to convene a hearing on October 26 to consider a revised offer by the NHL. 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. DAEWOO LOGISTICS: Wins Chapter 15 Relief in United States --------------------------------------------------------- Daewoo Logistics Corp was given permanent protection from creditors' actions in the U.S. when the U.S. Bankruptcy Judge Burton Lifland concluded that the insolvency process in South Korea is the "foreign main proceeding." According to Tiffany Kary at Bloomberg News, a preliminary injunction granted Sept. 24 had given the Company a temporary legal shield until the Company made its final request October 22, showing that a reorganization in Seoul court is a "main proceeding." Under Chapter 15 of the U.S. Bankruptcy Code, companies win stays against legal proceedings and can organize U.S. creditors in support of a main proceeding in another country. Established in June 1999, Daewoo Logistics Corp. -- http://www.dwlogistics.co.kr/-- is a mid-sized South Korean shipping and logistics company. The company was spun off from the bankrupt Daewoo conglomerate and bought by former Daewoo executives in 1999. On July 3, 2009, Daewoo Logistics filed for court receivership before the Seoul District Court after struggling to pay back maturing debts. The filing came after the Company's rescue talks with steelmaker Posco fell through. Daewoo Logistics filed a Chapter 15 petition on September 15 (Bankr. S.D.N.Y. Case No. 09-15558). It listed as much as US$500 million in debt and assets. Jeremy O. Harwood, Esq., at Blank Rome, LLP, represents Daewoo in the Chapter 15 case. DANIEL RAY MOXLEY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Joint Debtors: Daniel Ray Moxley Deborah Oland Moxley 5475 Raven Rock Park Road Sabillasville, MD 21780 Bankruptcy Case No.: 09-30134 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtors' Counsel: Stephen K. Carper, Esq. Clapp and Carper LLC. One West Church Street, 2nd Floor Frederick, MD 21701 Tel: (301) 694-9700 Fax: (301) 694-5057 Email: stephen.carper@verizon.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including a list of their 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mdb09-30134.pdf The petition was signed by the Joint Debtors. DDJ DISPOSAL #1: Case Summary & 5 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: DDJ Disposal #1, LLC 1390 70 Rd Scandia, KS 66966 Bankruptcy Case No.: 09-46604 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: St. Clair Newbern III, Esq. Law Offices of St.Clair Newbern III, P.C 1701 River Run, Suite 1000 Fort Worth, TX 76107 Tel: (817) 870-2647 Email: filing@newbernlawoffice.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $1,800,840, and total debts of $1,453,442. A full-text copy of the Debtor's petition, including a list of its 5 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/txnb09-46604.pdf The petition was signed by Delton Robison, president of the Company. DOCTORS COMMUNITY: Arent Settles With Builders Over Defense Fees ---------------------------------------------------------------- Law360 reports that Arent Fox LLP has reached a settlement with Gietz Master Builders ACC and Superior Home Services Inc. in a breach of contract suit over more than $76,000 in unpaid legal expenses stemming from the firm's defense efforts in a fraudulent conveyance action initiated in the bankruptcy case of Doctors Community Healthcare Corp. Doctors Community Healthcare Corporation was a privately held, investor-owned healthcare management company with hospitals across the United States. Doctors Community and five subsidiaries on November 20, 2002, filed for Chapter 11 bankruptcy protection (Bankr. D.C. Case No. 02-2249). The Company stated that the bankruptcy filing was due to the bankruptcy of National Century Financial Enterprises and affiliates, which resulted in NCFE halting payments to health care providers, including Doctors Community. DOMARK INT'L: Posts $275,830 Net Loss in Quarter Ended Aug. 31 -------------------------------------------------------------- DoMark International, Inc., reported a net loss of $257,830 on revenue of $987,525 for the fiscal first quarter ended August 31, 2009, compared with a net loss of $959,368 on revenue of $452,336 in the comparable period last year. At August 31, 2009, the Company's consolidated balance sheet showed $1,723,603 in total assets, $1,020,394 in total liabilities, and $703,209 in total stockholders' equity. A full-text copy of the Company's consolidated financial statements as of and for the three months ended August 31, 2009, is available for free at http://researcharchives.com/t/s?4739 For the year ended May 31, 2009, the Company reported a net loss of $13,416,046 on revenue of $6,617,175, compared with a net loss of $1,419,170 on revenue of $15,750 for the year ended May 31, 2008. At May 31, 2009, the Company's consolidated balance sheet showed $5,887,668 in total assets, $1,411,629 in total liabilities, and $4,476,039 in total stockholders' equity. A full-text copy of the Company's consolidated financial statements as of and for the year ended May 31, 2009, is available for free at http://researcharchives.com/t/s?473a Going Concern Doubt Larry O'Donnell, CPA, P.C., expressed substantial doubt about DoMark International, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements as of and for the years ended May 31, 2009 and 2008. The auditor reported that the Company has operating and liquidity concerns, and has incurred an accumulated deficit of approximately $13,416,046 through the period ended May 31, 2009. About Domark International Based in Lake Mary, Florida, DoMark International, Inc., was incorporated under the laws of the State of Nevada on March 30, 2006. The Company was formed to engage in the acquisition and refinishing of aged furniture using exotic materials and then reselling it through interior decorators, high-end consignment shops and online sales. The Company abandoned its original business of exotic furniture sales in May of 2008 and pursued the acquisition of entities to best bring value to the company and its shareholders. EASTMAN KODAK: Closes Tender Offer; 98% of Notes Validly Tendered ----------------------------------------------------------------- Eastman Kodak Company said Tuesday that the tender offer to purchase for cash up to $575 million aggregate principal amount of its outstanding 3.375% Convertible Senior Notes due 2033 expired at 5:00 p.m. New York City time on October 19, 2009. The aggregate principal amount of 2033 Notes validly tendered and not withdrawn, was roughly $563.5 million, which represented roughly 98% of the outstanding aggregate principal amount of the 2033 Notes. Kodak has accepted for purchase all of the Tendered Notes. Payment of the Tendered Notes will be made promptly. Holders of the Tendered Notes will receive $1,000 for each $1,000 principal amount for each note plus any accrued and unpaid interest up to but not including the date of purchase. Pursuant to the indenture for the 2033 Notes, holders of 2033 Notes can require Kodak to purchase the notes on October 15, 2010, and at certain dates thereafter, subject to terms and conditions contained in the indenture. In addition, Kodak has the right to call the outstanding 2033 Notes on or after October 15, 2010. Kodak had placed $575 million in a restricted account solely for the purpose of purchasing the 2033 Notes. The remaining balance in this account after purchasing Tendered Notes, and available for the settlement of the remaining outstanding 2033 Notes, will be roughly $11.5 million. Pursuant to the terms of the Offer, Notes not tendered, or tendered and validly withdrawn, in the Offer will remain outstanding, and the terms and conditions governing the Notes, including the covenants and other provisions contained in the indenture governing the Notes, will remain unchanged. Kodak funded the purchase of the 2033 Notes with the proceeds of its completed sale of senior secured notes and a private placement of its convertible notes. As reported by the Troubled Company Reporter, Eastman Kodak in September 2009 completed its issuance to Kohlberg Kravis Roberts & Co. L.P.-managed investment vehicles of $300 million in aggregate principal amount of 10.50% Senior Secured Notes due 2017 and warrants to purchase 40 million shares of Kodak common stock. The KKR transaction, along with a separate private placement transaction of $400 million aggregate principal amount of Convertible Senior Notes due 2017, which closed on September 23, was part of an overall $700 million financing transaction designed to reinforce Kodak's strategic direction and strengthen the company's financial position. Under the terms of the agreement, and subject to certain exceptions, the KKR group is required to hold the warrants and shares issuable upon exercise of the warrants for a minimum of two years. So long as the KKR group holds warrants to purchase at least 50% of the number of shares of Kodak common stock issuable upon exercise of warrants purchased in the transaction (or at least 50% of the shares issued upon exercise thereof), KKR will have the right to nominate up to two members of Kodak's Board of Directors. If that warrant amount falls below 50%, but is at least 25%, KKR will have the right to nominate one member of Kodak's Board of Directors. If that warrant amount falls below 25%, the KKR group will no longer have the right to nominate any directors. The net proceeds of the KKR transaction, along with the net proceeds of the separate convertible senior note offering, are being used in part by Kodak to repurchase the company's existing 3.375% Convertible Senior Notes due 2033, a move that will bolster the company's balance sheet and free up capital for core investments. Excess proceeds will be used for general corporate purposes. About Eastman Kodak Headquartered in Rochester, New York, Eastman Kodak Company -- http://www.kodak.com/-- provides imaging technology products and services to the photographic and graphic communications markets. Kodak'S balance sheet at June 30, 2009, showed total assets of $7,106,000,000 and total liabilities of $7,215,000,000, resulting in shareholders' deficit attributable to Kodak of $112,000,000. The Troubled Company Reporter on September 22, 2009, said Fitch Ratings affirmed Kodak's Issuer Default Rating at 'B-'; Senior secured revolving credit facility at 'BB-/RR1'; and Senior unsecured debt at 'B-/RR4'. On Sept. 18, 2009, Standard & Poor's Ratings Services revised its recovery rating on Eastman Kodak's senior unsecured debt to '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default, from '5'. S&P lowered the issue- level rating to 'CCC' (two notches lower than the 'B-' corporate credit rating on the company) from 'CCC+', in accordance with S&P's notching criteria for a '6' recovery rating. EDDIE BAUER: Google Seeks Bilked Funds From Eddie Bauer Sale ------------------------------------------------------------ Law360 reports that Google Affiliate Network Inc. has requested that the cure order in the sale of Eddie Bauer Holdings Inc. be amended to compensate the Google Inc. subsidiary for its affiliate services provided to the retailer under a performance marketing agreement. Established in 1920 in Seattle, Washington, Eddie Bauer is a specialty retailer that sells outerwear, apparel and accessories for the active outdoor lifestyle. The Eddie Bauer brand is a nationally recognized brand that stands for high quality, innovation, style and customer service. Eddie Bauer products are available at 371 stores throughout the United States and Canada, through catalog sales and online at http://www.eddiebauer.com/ Eddie Bauer participates in a joint venture in Japan and has licensing agreements across a variety of product categories. Eddie Bauer, Inc., was a subsidiary of Spiegel, Inc. Eddie Bauer Inc. emerged from Spiegel's 2003 Chapter 11 case as a separate, reorganized entity under the control and ownership of Eddie Bauer Holdings, Inc. Eddie Bauer Holdings, Inc., and eight affiliates filed for bankruptcy on June 17, 2009 (Bankr. D. Del. Lead Case No. 09-12099). Judge Mary F. Walrath presides over the case. David S. Heller, Esq., Josef S. Athanas, Esq., and Heather L. Fowler, Esq., at Latham & Watkins LLP, serve as the Debtors' general counsel. Kara Hammond Coyle, Esq., and Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor LLP, serve as local counsel. The Debtors' restructuring advisors are Alvarez and Marsal North America LLC. Their financial advisors are Peter J. Solomon Company. Kurtzman Carson Consultants LLC acts as claims and notice agent. As of April 4, 2009, Eddie Bauer had $525,224,000 in total assets and $448,907,000 in total liabilities. Eddie Bauer Canada, Inc., and Eddie Bauer Customer Services filed for protection from their creditors in Canada on June 17, 2009, the same day the U.S. Debtors filed for protection from their creditors. The Canadian Debtors have obtained an initial order of the Canadian Court staying the proceedings against the Canadian Debtors and their property in Canada. RSM Richter Inc. was appointed as monitor in the Canadian proceedings. On August 4, 2009, Golden Gate Capital closed a deal to acquire Eddie Bauer Holdings for $286 million. Golden Gate will maintain the substantial majority of Eddie Bauer's stores and employees in a newly formed going concern company. Golden Gate beat an affiliate of CCMP Capital Advisors, LLC, at the auction. The CCMP unit's $202 million cash offer served as stalking horse bid. Golden Gate Capital -- http://www.goldengatecap.com/-- is a San Francisco-based private equity investment firm with roughly $9 billion of assets under management. EDSCHA NORTH AMERICA: Halting Production ---------------------------------------- Edscha North America Inc. is halting production as are affiliates in Canada and Mexico, Bill Rochelle at Bloomberg News reported. The cessation of production stems from the insolvency filing in February by the German parent Edscha AG. Germany-based Edscha AG manufactures door hinges, convertible roofs and driver controls for major carmakers. It was previously owned by buyout firm Carlyle Group. Edscha AG, the German auto parts company and parent of Edscha North America, filed for insolvency for its European operations on Feb. 2, 2009. At the time, it cited "massive declining trends" in the auto industry and difficulty in obtaining financing. The debts incurred by the company's leveraged buyout through Carlyle in late 2002 "was not responsible" for the insolvency filing, but the massive slump in car sales. The insolvency of Edscha followed a 50% drop in some of the company's businesses during the fourth quarter of 2008. Edscha North America Inc., has filed for Chapter 11 reorganization (Bankr. N.D. Ill. Case No. 09-39055), eight months after its German parent filed for insolvency. The company listed assets of $6.44 million and liabilities of $672.4 million in its voluntary Chapter 11 petition. EDUCATION MANAGEMENT: Moody's Affirms 'B1' Corporate Family Rating ------------------------------------------------------------------ Moody's Investors Service affirmed the B1 Corporate Family Rating of Education Management LLC and changed the outlook to positive. The rating action follows the company's recent Initial Public Offering and application of the proceeds to retire about $316 million of its 10.25% subordinated notes. Moody's also affirmed the company's SGL-1 speculative grade liquidity rating. The company had previously been upgraded to B1 from B2 in July 2009, following continued reduction in financial leverage and ongoing strength in demand for higher education. "The IPO and the application of the proceeds to retire debt solidify Education Management's positioning within the B1 rating category," said Moody's analyst Costas Chrysostomou. "The positive outlook anticipates that continued strong operating performance, accompanied by further reductions in financial leverage could result in an upgrade." The ratings are supported by stronger credit metrics, the recent strength in enrollment trends, the predictability in revenues associated with multi-year degree programs, and expectations of very good liquidity. The change in outlook also reflects Moody's expectation that credit metrics are improving as the company benefits from an environment where higher unemployment increases the need for retraining and educational certifications/degrees for high school graduates. Despite the reduction in leverage and interest expense through the recent retirement of the bulk of the company's subordinated notes, the rating remains constrained by leverage in line with the B1 rating category and relatively low free cash flow generation net of significant growth-oriented capital expenditures. The rating also reflects funding pressures in the private student loan market and the fact that a very large portion of the company's revenues and enrollments are predicated on students' ability to borrow. Moody's also expects bad debt expense to continue to increase as the company began to invest in loans to select students starting in August 2008. Although the government has stepped in to support and enhance Title IV funding programs for student loans, details of how direct lending would operate in practice would provide further confirmation of the positive fundamentals for US for- profit higher education. Moody's affirmed these ratings: * Corporate Family Rating of B1; * Probability of Default Rating of B1; * $443 million senior secured revolver due 2012, rated B1 (LGD3, 43%); * $1,127 million (originally $1,185 million) senior secured term loan C due 2013, rated B1 (LGD3, 43%); * $375 million 8.75% senior unsecured notes due 2014, rated B2 (LGD 5, 75%); * $69 million (originally $385 million) 10.25% senior subordinated notes due 2016, rated B3 (LGD 6, 96%); and * Speculative grade liquidity rating of SGL-1. The outlook for the ratings was changed to positive from stable. The last rating action on Education Management was taken on July 24, 2009, when the corporate family rating was upgraded to B1 from B2. Education Management LLC, based in Pittsburgh, Pennsylvania, is one of the largest providers of private post-secondary education in North America, based on student enrollment and revenue. Education Management had revenues of approximately $2.0 billion for its fiscal year 2009. EMISPHERE TECHNOLOGIES: Restates Reports to Reflect MHR Warrants ---------------------------------------------------------------- Management of Emisphere Technologies, Inc., on October 15, 2009, after consulting with the Audit Committee of the Board of Directors, concluded that the Company's previously issued financial statements included in its quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2009 and June 30, 2009 should no longer be relied upon due to errors in the application of accounting guidance regarding the determination of whether a financial instrument is indexed to its own stock. As the result of this misapplication, the financial statements did not reflect the fair value of 600,000 warrants as a derivative liability and the bifurcation of the conversion feature embedded in the Company's 11% senior secured convertible notes in favor of MHR Institutional Partners IIA due September 26, 2012, as a derivative liability, and therefore, should not be continued to be relied upon. The Company's Audit Committee has discussed the matters with its independent registered public accounting firm. For the three months ended March 31, 2009, the Company understated the change in the fair value of the warrant liability by $58 thousand and understated net loss by $324 thousand, or $0.01 per basic and diluted share, which understatement included the effects of the accretion of debt discount associated with the embedded derivative associated with the MHR Convertible Note in the amount of $382 thousand. For the three months ended June 30, 2009, the Company understated the change in the fair value of the warrant liability by $71 thousand and understated net loss by $483 thousand, or $0.02 per basic and diluted share, which understatement included the effects of the accretion of debt discount associated with the embedded derivative associated with the MHR Convertible Note in the amount of $412 thousand. For the six months ended June 30, 2009, the Company understated the change in the fair value of the warrant liability by $13 thousand and understated net loss by $807 thousand, or $0.03 per basic and diluted share, which understatement included the effects of the accretion of debt discount associated with the embedded derivative associated with the MHR Convertible Note in the amount of $794 thousand. This reclassification and related charges to earnings have no impact on the Company's cash position, its cash flows or its future cash requirements. On October 21, the Company filed with the Securities and Exchange Commission: -- a Form 10-Q/A to amend the Company's unaudited financial statements for the three and six months ended June 30, 2009. See http://ResearchArchives.com/t/s?4749 -- a Form 10-Q/A to amend the Company's unaudited financial statements for the quarter ended March 31, 2009. See http://ResearchArchives.com/t/s?474a As reported by the Troubled Company Reporter on August 18, the Company anticipates that it will continue to generate significant losses from operations for the foreseeable future, and that its business will require substantial additional investment that it has not yet secured. The Company anticipates that its existing cash resources will enable it to continue operations only through approximately August 2009. The TCR said August 24 that Emisphere completed a sale of 5,714,286 shares of its common stock and warrants to purchase up to 2,685,714 additional shares of common stock in a registered direct offering with two institutional investors -- BAM Opportunity Fund LP and MOG Capital, LLC -- resulting in gross proceeds of $4 million. About Emisphere Technologies Based in Cedar Knolls, New Jersey, Emisphere Technologies, Inc. (OTC BB: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company that focuses on delivery of therapeutic molecules or nutritional supplements using its Eligen(R) Technology. On March 16, 2009, PricewaterhouseCoopers LLP in New York City expressed substantial doubt about its ability to continue as a going concern after auditing the Company's financial results for the fiscal years ended Dec. 31, 2008, and 2007. The auditor noted that the Company experienced recurring operating losses, has limited capital resources and has significant future commitments. EMISPHERE TECHNOLOGIES: Mulls Options on $1.03MM Goldberg Judgment ------------------------------------------------------------------ The former Chief Executive Officer of Emisphere Technologies, Inc., Dr. Michael Goldberg, brought an arbitration asserting that his termination was without cause following a change-in-control. During the arbitration, Dr. Goldberg sought a total damage amount of at least $9,223,646 plus interest. On September 13, 2009, the arbitrator issued an interim award in favor of Dr. Goldberg for a total amount of $1,030,891, plus interest, which includes his claims for severance and certain other items, but denied his claims relating to a change-in-control benefit, options, bonuses and certain other claims. The arbitrator has not yet determined the amount, if any, of Dr. Goldberg's attorney's fees that he is entitled to receive from the Company. The Company is evaluating its options with respect to the interim awards. If the awards are upheld and confirmed in court, the Company will be required to pay the final amount due to Dr. Goldberg. As reported by the Troubled Company Reporter on August 18, the Company anticipates that it will continue to generate significant losses from operations for the foreseeable future, and that its business will require substantial additional investment that it has not yet secured. The Company anticipates that its existing cash resources will enable it to continue operations only through approximately August 2009. The TCR said August 24 that Emisphere completed a sale of 5,714,286 shares of its common stock and warrants to purchase up to 2,685,714 additional shares of common stock in a registered direct offering with two institutional investors -- BAM Opportunity Fund LP and MOG Capital, LLC -- resulting in gross proceeds of $4 million. About Emisphere Technologies Based in Cedar Knolls, New Jersey, Emisphere Technologies, Inc. (OTC BB: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company that focuses on delivery of therapeutic molecules or nutritional supplements using its Eligen(R) Technology. On March 16, 2009, PricewaterhouseCoopers LLP in New York City expressed substantial doubt about its ability to continue as a going concern after auditing the Company's financial results for the fiscal years ended Dec. 31, 2008, and 2007. The auditor noted that the Company experienced recurring operating losses, has limited capital resources and has significant future commitments. EPIX PHARMACEUTICALS: Joseph Finn Assignee for Creditor's Benefit ----------------------------------------------------------------- The previously disclosed auction of assets of EPIX Pharmaceuticals, Inc., was conducted on October 21, 2009. As of today, claims filed against the estate far exceed the assets available for distribution to creditors. The Assignee will continue to liquidate assets and review the claims filed against the estate, but at this juncture, it does not appear that creditors will be paid in full or that there will be any assets available for distribution to shareholders of EPIX Pharmaceuticals. On July 20, 2009, EPIX Pharmaceuticals, Inc., entered into an Assignment for the Benefit of Creditors in accordance with Massachusetts law. The purpose of the Assignment is to conclude the company's operations and provide for an orderly liquidation of its assets. The Assignment is a common law business liquidation mechanism under Massachusetts law that is an alternative to a formal bankruptcy proceeding. Under the terms of the Assignment, the Company transferred all of its assets to an assignee for orderly liquidation and distribution of the proceeds to the Company's creditors. The designated assignee for the company is Joseph F. Finn, Jr., at Finn, Warnke & Gayton, 167 Worcester Street, Suite 201, Wellesley Hills, MA 02481. About Joseph F. Finn, Jr., C.P.A. Joseph F. Finn, Jr., C.P.A., is the founding partner of the firm Finn, Warnke & Gayton, Certified Public Accountants of Wellesley Hills, Massachusetts. He works primarily in the area of management consulting for distressed enterprises, bankruptcy accounting and related matters, such as assignee for the benefit of creditors and liquidation agent for a corporation. He has been involved in a number of loan workouts and bankruptcy cases for thirty-five (35) years. His most recent Assignments for the Benefit of Creditors in the biotech field include Spherics, Inc., ActivBiotics, Inc., and Prospect Therapeutics, Inc. About EPIX Pharmaceuticals EPIX Pharmaceuticals, Inc. (NASDAQ:EPIX), is a biopharmaceutical company focused on discovering and developing novel therapeutics through the use of its proprietary and highly efficient in silico drug discovery platform. The company has a pipeline of internally-discovered drug candidates currently in clinical development to treat diseases of the central nervous system -- see http://www.trialforAD.com/-- and lung conditions. EPIX also has collaborations with leading organizations, including GlaxoSmithKline, Amgen and Cystic Fibrosis Foundation Therapeutics. As reported by the Troubled Company Reporter, EPIX on July 20, 2009, entered into an Assignment for the Benefit of Creditors in accordance with Massachusetts law. Following the Company's unsuccessful efforts to effect a strategic alternative, including a financing, recapitalization, sale or disposition of corporate assets, merger or strategic business combination, the Company's Board of Directors determined it was in the best interests of the enterprise to cease the Company's operations and to provide for an orderly liquidation of its assets by entering into the Assignment. FAIRPOINT COMMUNICATIONS: May Ask for Union Concessions ------------------------------------------------------- Mike Spillane of the International Brotherhood of Electrical workers union said that a meeting will be held with FairPoint Communications in Boston to discuss a possible bankruptcy filing, WCSH6 reports. Mr. Spillane, according to WCSH5, said that he expects Fairpoint to ask for union concessions during that meeting, according to WCSH6. Headquartered in Charlotte, North Carolina, FairPoint Communications, Inc. -- http://www.fairpoint.com/-- owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television, and broadband services. FairPoint is traded on the New York Stock Exchange under the symbol FRP. On Sept. 29, Moody's Investors Service repositioned FairPoint Communications, Inc.'s Probability of Default Rating to Ca/LD from Ca to reflect the limited default that has occurred following non- payment of the principal due on its credit facility on Sept. 30, 2009. The "/LD" suffix will be removed after three business days. FATBURGER RESTAURANTS: Closing Eight Restaurants ------------------------------------------------ Barbara Farfan at About.com reports that Fatburger Restaurants has recently announced the closing of eight restaurants that were collectively losing $1 million. Sherman Oaks, California-based Fatburger Restaurants of California Inc. and Fatburger Restaurants of Nevada Inc. filed for Chapter 11 bankruptcy protection on April 7, 2009 (Bankr. C.D. Calif. 09- 13964 and 09-13965). Portland, Oregon-based Fog Cutter didn't file for bankruptcy. FONTAINEBLEAU LV: Has Lenders' Consent to $583,000 Cash Collateral ------------------------------------------------------------------ Fontainebleau Las Vegas Holdings LLC has obtained its prepetition lenders' nod to use cash collateral totaling $583,000 for the week ending October 25, 2009, Bill Rochelle at Bloomberg News reported. The Debtor has been obtaining consent for cash collateral use one week at a time. The budget for the week ended Oct. 9 was only $133,000. According to the report, the larger cash requirement this week results from the need to pay local taxes, in addition to the usual payroll and costs of keeping the property secure and safe. Fontainebleau says it's also incurring expenses resulting from ongoing talks with Penn National Gaming Inc., a prospective buyer who said it hopes to make the first bid at auction. 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. Attorneys at Genovese Joblove & Battista, P.A., and Fox Rothschild, LLP, represent the Official Committee of Unsecured Creditors. 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) FORD MOTOR: Plans to Make SUV in Kentucky to Export to Europe ------------------------------------------------------------- Ford Motor Co. is moving production of a small sport-utility vehicle from Europe to the U.S. to take advantage of lower labor costs and the weaker dollar, Jeff Green and Keith Naughton at Bloomberg reported, citing three people familiar with the plan. According to the unidentified people, Ford in October 2011 will shift the Kuga model to Louisville, Kentucky, from a factory in Saarlouis, Germany. As many as 80,000 a year will be exported to Europe, one of the people said. The dollar has fallen 18 percent against the euro this year, lowering the cost of U.S.-made goods. "This makes sense because western Europe is not a particularly cheap place to make cars," said Barclays Capital auto analyst Brian Johnson, who estimates Ford's labor costs in the U.S. could be $10 an hour lower than in Germany. Mr. Johnson, based in Chicago, rates Ford "equal weight." "Building a car with European specifications on a U.S. assembly line also shows the benefits of having common vehicle platforms." Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The Company provides financial services through Ford Motor Credit Company. The Company has operations in Japan in the Asia Pacific region. In Europe, the Company maintains a presence in Sweden, and the United Kingdom. The Company also distributes its brands in various Latin-American regions, including Argentina and Brazil. As reported in the Troubled Company Reporter on Sept. 7, 2009, Moody's upgraded the Corporate Family Rating of Ford Motor Company to Caa1 from Caa3, and also raised the company's Speculative Grade Liquidity rating to SGL-3 from SGL-4. The rating outlook was changed to Stable from Negative. Ford's Probability of Default Rating remains at Caa3. In a related action, Moody's placed the Caa1 senior unsecured rating of Ford Motor Credit Company LLC on review for possible upgrade. FRASER PAPERS: CCAA Stay Extended Through December 4 ---------------------------------------------------- Fraser Papers Inc. said the Ontario Superior Court of Justice has granted a further extension of the initial Order under which Fraser Papers, together with its subsidiaries, was granted creditor protection under the Companies' Creditors Arrangement Act (Canada). This extension is through December 4, 2009, and was supported by PricewaterhouseCoopers Inc., the Court appointed Monitor of the Company's CCAA process. Fraser Papers -- http://www.fraserpapers.com/-- is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The Company has operations in New Brunswick, Maine, New Hampshire and Quebec. On June 18, 2009, citing continued operating losses, weak markets for pulp and lumber, impending debt repayments and significant pension funding obligations, the Company and its subsidiaries filed for protection under the Companies Creditors Arrangement Act (Ont. Super. Ct. J. Ct. File No. CV-09-8241-00CL) in Toronto and Chapter 15 (Bankr. D. Del. Case No. 09-12123) of the U.S. Bankruptcy Code. Fraser is represented by Michael Barrack, Esq., Robert I. Thornton, Esq., and D.J. Miller, Esq., at ThorntonGroutFinnigan LLP, in Toronto, and Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Del. With adequate financing to support continuing operations, Fraser says it is developing a restructuring plan to present to its creditors -- hopefully by Oct. 16, 2009 -- with the objective of emerging with a sustainable and profitable specialty papers business. FRED LEIGHTON: Merrill Cries Foul Over Professional Fees -------------------------------------------------------- According to Law360, secured lender Merrill Lynch Mortgage Capital Inc. has protested fees requested by law firms Herrick Feinstein LLP and Phillips Nizer LLP in the bankruptcy of Fred Leighton Holding Inc., contending that the firms have accomplished little over the course of the proceedings apart from allowing an ex-owner to plunder the estate. Fred Leighton Holding, Inc. -- http://www.fredleighton.com/-- is a New York-based jewelry retailer owned by Ralph O. Emerian. Fred Leighton has decked countless red-carpet-dwellers in diamonds, including Sarah Jessica Parker, Nicole Kidman, and Catherine Zeta- Jones. It specializes in vintage jewelry from the 18th and 20th centuries, including antique cushion-cut diamonds and antique and estate brooches. It also produces Fred Leighton signature collection that combines past aura and the present materials and craftmanship. Fred Leighton and its affiliates filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on April 15, 2008 (Bankr. S.D.N.Y., Case No. 08-11363). Joshua Joseph Angel, Esq., and Frederick E. Schmidt, Esq., at Herrick, Feinstein LLP, in New York, represent the Debtors. The Official Committee of Unsecured Creditors has retained Michael Z. Brownstein, Esq., and Rocco A. Cavaliere, Esq., at Blank Rome LLP, as counsel. Fred Leighton listed total assets of $128,551,467 and total liabilities of $134,814,367 in its schedules. GALLERIA USA: Todd Neilson Appointed as Chapter 11 Trustee ---------------------------------------------------------- Peter Anderson, the United State Trustee for Region 16, appointed R. Todd Neilson as Chapter 11 trustee for Galleria USA Inc. Mr. Neilson assured the U.S. Bankruptcy Court for the Southern District of California that he does have an interest materially adverse to the interest of the Debtor's etstate. Galleria (USA) manufactures home accents. It filed for bankruptcy in Santa Ana, California (Case No. 09-20651), following the filing of affiliate Galleria (Hong Kong) Ltd. Galleria (Hong Kong) Ltd. sought bankruptcy Sept. 29 (Bankr. C.D. Calif. Case No. 09-20414). Matthew A Lesnick, Esq., represents the Debtor in its restructuring effort. The petition says that assets and debts are $100,000,001 to $500,000,000. Bank of America filed a winding up petition against a company of the same name and with the same address in Hong Kong in July, Tiffany Kary at Bloomberg notes. GATEWAY ETHANOL: Has Until Nov. 29 to File Plan of Reorganization ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas extended Gateway Ethanol, L.L.C.'s exclusive periods to file a plan of reorganization and solicit acceptances of the plan until Nov. 29, 2009, and Jan. 28, 2010, respectively. Debtor related that the extension of the exclusive periods will provide additional time to resolve pending objections to the asset sale, close the sale, and develop a plan, if necessary. The Debtor added that since its sale of assets to its primary secured lender, Dougherty Funding LLC, has not yet closed, it would be premature to consider developing a plan that would serve the best interests of Debtor, the estate, or creditors. Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol plant that has a capacity of 55 million gallons a year, according to Orion Ethanol's Web site. The Company filed for bankruptcy protection on October 5, 2008 (Bankr. D. Ks., Case No. 08-22579). Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E. McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its restructuring efforts. In its schedules, the Debtor listed total assets of $94,545,022, and total debts of $93,353,654. GATEWAY ETHANOL: DIP Facility Now Requires Asset Sale by Oct. 31 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas approved the fifth amendment to the stipulated final order granting Gateway Ethanol, L.L.C., authority to obtain secured postpetition financing from Dougherty Funding LLC. The amendments include a decrease in the maximum principal amount from $7,894,000 to $7,844,000, and postponement to Oct. 31, 2009, of the deadline to close the asset sale. As reported by the Troubled Company Reporter on Nov 19, 2008, pursuant to the DIP Loan terms, the financing terminates if certain milestones are not achieved, including the completion of a sale at a specified date. Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol plant that has a capacity of 55 million gallons a year, according to Orion Ethanol's Web site. The Company filed for bankruptcy protection on October 5, 2008 (Bankr. D. Ks., Case No. 08-22579). Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E. McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its restructuring efforts. In its schedules, the Debtor listed total assets of $94,545,022, and total debts of $93,353,654. GMAC INC: Pay Czar Cuts Compensation at Bailed-Out Firms -------------------------------------------------------- Daniel Fitzpatrick at The Wall Street Journal reports that Kenneth Feinberg, the Treasury Department's special master for compensation, has decided to cut compensation at GMAC Financial Services. The Journal relates that GMAC initially proposed that it compensate top executives with a split of 20% cash and 80% stock, but people familiar with the matter said that Mr. Feinberg pushed cash levels down so the cash-stock percentage mix now stands at about 15-85. According to The Journal, sources said that overall compensation for GMAC's top 25 would decline by 50% as a result of Mr. Feinberg's final ruling, and the top 25 executives at GMAC, with the exception of a few executives, will make no more than $500,000 in base salary. About GMAC Inc. GMAC Inc. -- http://media.gmacfs.com/-- is a bank holding company with 15 million customers worldwide. As a global, independent financial services institution, GMAC's diversified business operations include automotive finance, mortgage operations, insurance, commercial finance and online banking. As of June 30, 2009, the company had approximately $181 billion in assets. GMAC Inc. was founded in 1919 as a wholly owned subsidiary of General Motors Corporation. On November 30, 2006, General Motors Corporation sold a 51% interest in GMAC to FIM Holdings LLC, an investment consortium led by Cerberus FIM Investors, LLC, the sole managing member. On December 24, 2008, the Board of Governors of the Federal Reserve System approved its application to become a bank holding company under the Bank Holding Company Act of 1956, as amended. In connection with this approval, GM and FIM Holdings were required to significantly reduce their voting equity ownership interests in GMAC. GMAC Inc. had total assets of $181,248,000,000 against total debts of $155,202,000 as of June 30, 2009. Ally Bank, a unit of GMAC Financial Services, is an online U.S. bank that provides an array of products, including online savings accounts, money-market savings accounts and a variety of no penalty certificates of deposit. The bank was founded on three core values: talking straight, doing what's right and being obviously better than the competition. Visit online in the U.S. at http://www.AllyBank.com/or in Canada at http://www.ally.ca Ally Bank's total assets were $42.5 billion at the end of the second quarter of 2009. Headquartered in Minneapolis, Minnesota, Residential Capital LLC -- http://www.rescapholdings.com/-- is the home mortgage unit of GMAC Financial Services, which is in turn wholly owned by GMAC LLC. ResCap's balance sheet showed total assets of $21.9 billion, total liabilities of $20.9 billion and stockholders equity of $1.0 billion. * * * GMAC Inc. and Residential Capital LLC carry "CCC/Negative/C" ratings from Standard & Poor's Ratings Services. GMAC 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. GMAC has obtained two bailouts totaling $12.5 billion from the U.S. government during the economic crisis in 2008. GMAC says there is substantial doubt about ResCap's ability to continue as a going concern. GMAC says that should ResCap file for bankruptcy, its $1.0 billion investment related to ResCap's equity position would likely be reduced to zero. In addition, as of June 30, 2009, GMAC had approximately $3.5 billion in secured financing arrangements and secured hedging agreements with ResCap of which approximately $2.9 billion in loans and $32 million related to hedging agreements had been utilized. GRANDVIEW WATER: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Grandview Water Disposal Services LP 1390 70 Rd Scandia, KS 66966 Bankruptcy Case No.: 09-46603 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Northern District of Texas (Ft. Worth) Judge: D. Michael Lynn Debtor's Counsel: St. Clair Newbern III, Esq. Law Offices of St.Clair Newbern III, P.C 1701 River Run, Suite 1000 Fort Worth, TX 76107 Tel: (817) 870-2647 Email: filing@newbernlawoffice.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $7,679,870, and total debts of $3,428,818. 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/txnb09-46603.pdf The petition was signed by Delton Robison, general partner of the Company. GREEKTOWN HOLDINGS: Luna/Plainfield Files Motion to Withdraw Plan ----------------------------------------------------------------- Luna Greektown and Plainfield Asset Management filed a motion with the U.S. Bankruptcy Court to dismiss/withdraw the Chapter 11 plan they previously proposed for Greektown Holdings. BankruptcyData relates that the motion states, "The Luna Plan Proponents have determined that, under the circumstances of this case, the Luna Plan Proponents should not pursue confirmation of the Luna Plan at this time. Accordingly, the Luna Plan Proponents request that the Luna Plan be withdrawn without prejudice in order to limit the cost and expense of all parties going forward in the confirmation process. Finally, the Luna Plan Proponents reserve the right to re-file the Luna Plan or a modified plan in the event that this Court does not confirm the Debtors' plan." Greektown Holdings and Merrill Lynch Capital, as administrative agent of the Debtors' Lenders, have co-proposed a Chapter 11 plan. Greektown had asked the Bankruptcy Court to reject a competing plan filed by Luna Greektown and Plainfield Asset Management and its affiliates. Greektown says the secured lenders would fare better under its own plan. It notes that the competing plan gives pre-petition lenders only $256.5 million, including $60 million in equity, $125 million of unsecured, subordinated debt and $71.5 million in cash. The competing plan "is an unconfirmable attempt by a disappointed bidder to compel acceptance of its inadequate bid and delay the confirmation of the joint plan," Merrill Lynch Capital Corporation and Greektown said in a court filing filing. More details about the competing plans are available at: http://bankrupt.com/misc/GRKTOWN_SolPackageCoverSheet.pdf About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC, and its affiliates -- http://www.greektowncasino.com/-- operates world-class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The Company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. Bankruptcy Creditors' Service, Inc., publishes Greektown Casino Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Greektown Casino and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HOLLY CORP: Moody's Assigns 'B1' Rating on $100 Mil. Notes ---------------------------------------------------------- Moody's Investors Service assigned a B1 (LGD 5, 70%) rating to Holly Corporation's proposed $100 million senior unsecured note add-on offering. Moody's also affirmed its Ba3 Corporate Family Rating, Ba3 Probability of Default Rating, and existing B1 (LGD 5, 70%) senior unsecured note rating in response to Holly's announced pending acquisition of Sinclair Oil Corporation's (unrated) 75,000 barrel per day Tulsa refinery. The Speculative Grade Liquidity Rating of SGL-2 remains unchanged. The outlook was moved up to positive from stable. Holly is also in negotiations to exercise the accordion feature in its bank revolver to upsize the existing $300 million commitment to provide larger working capital back-up funding after the acquisition. Note proceeds will repay bank debt incurred to pay approximately $128.5 million ($54.5 million cash portion; $74 million Holly equity) for the refinery and approximately $45 million for oil and refined product inventories based on market prices at the time. Borrowings for inventory will be refunded by accounts payable build up over the course of the post-acquisition full working capital cycle. Sinclair also entered a 50,000 barrel per day gasoline and diesel offtake agreement to supply its retail marketing system. Holly is not buying Sinclair's large inventory of upgrading equipment that had been purchased for its aborted project to convert the refinery into a unit that could run nearly 100% heavy Canadian bitumen crude. In spite of a negative refining sector outlook, the ratings and positive outlook are supported by Holly's low pro-forma leverage, historically conservative financial policies, adequate expected cash flow during the sector's downturn relative to its low leverage, Holly's reduced capital spending needs, and its greater refining scale and diversification. Holly will run three refineries, two of which are of larger scale, one of which operates in a strongly protected refined product market (Salt Lake City), and one of which operates in a fairly protected market (Navajo). Sinclair's Tulsa refinery and Holly's existing Tulsa plant will be run as one unit, increasing total nameplate capacity by almost 20% to 256,000 bpd. The combined Tulsa units substantially boost the proportion of higher value product and substantially reduce its need for higher cost light sweet crude oil. The ratings also reflect seasoned conservative management with a strong operating and fiscal record and expected continued use of suitable equity funding for acquisitions. Holly is one of the lowest leveraged s independent refiners. While Holly has performed relatively well during this industry down-cycle due to its niche market positions in the Southwest and the Rockies. However, the ratings are restrained by Holly's still modest size, the still substantial inherent risk concentrations of a three refinery portfolio, its limited track record with its existing Tulsa unit and no operating history with the Sinclair unit, and the inherent project completion, cost, and performance risks associated with reconfiguring the two units to run optimally as one. The Sinclair unit was unprofitable during 2008 on a surge in cost of sales relative to product prices. In addition, during a potentially weak winter of 2009-10 refining market and potentially still tepid 2010 refining market, Holly will be funding almost $200 million in expansion capital spending. It believes capital spending will be closer to $100 million for 2011. Lastly, factoring in the leverage of Holly's sponsored master limited partnership Holly Energy Partners (Ba3 CFR), consolidated leverage is significantly higher. Nevertheless, Moody's believe Holly's asset portfolio, conservative financial policy and expected firmer (though not robust) refining markets by 2011warrant the reasonable forward view that a higher rating will be achieved. Moody's would not expect the business to get higher than a Ba2 CFR at the current scale and diversification. The Sinclair unit is only two miles from Holly's 85,000 bpd Tulsa refinery (acquired this year from Sunoco) which faced roughly $280 million in project spending for gas oil upgrading, de- sulfurization, and benzene removal. The existing Tulsa unit generates over 10,000 bpd of low value gas oil. Holly believes the Sinclair unit replaces, at a much lower cost, the need to build gas oil upgrading, and most of the de-sulfurization, capacity at Tulsa. The cash portion of the acquisition, roughly $50 million of new integration, infrastructure, and hydrotreating expansion costs, and $15 million of new benzene removal capacity are substantially less than the existing $280 million Tulsa upgrade plan. The integration of the Sinclair refinery with the existing Tulsa unit gives Holly increased desulphurization capacity and adds a sufficiently large fluid catalytic cracker to upgrade all of Holly's existing Tulsa gas oil stream. After infrastructure additions and the use of third-party pipelines, the Sinclair units will take and upgrade the low value gas oil stream into high value diesel and gasoline fuels and de-sulfurize a larger proportion of Holly's existing total Tulsa product stream. Holly believes the optimal configuration that results in the most economic use of each refinery's distillation, conversion, hydrotreating and other capacities will be achieved by running a total of 125,000 bpd of crude oil. The SGL-2 liquidity rating reflects somewhat under $100 million of cash balances, an undrawn revolver, but a potentially very weak refining market at a time of significant expansion capital funding. Holly will also receive $40 million in cash from the sale of oil storage and pipeline terminals assets to a third party. Moody's also anticipate periodic midstream asset sales from Holly to HEP. The last rating action on Holly was on June 2, 2009 when Moody's assigned a first time Ba3 CFR and a B1 rating to Holly's proposed senior unsecured note offering. Moody's also rates Holly Energy Partners, L.P., a master limited partnership with a Ba3 CFR, B1 senior unsecured note rating, and stable outlook. Sponsored and operated by Holly, HEP owns an integrated system of refined petroleum product pipelines and distribution terminals formerly owned by Holly, located primarily in West Texas, New Mexico, Utah, and Arizona. Holly indirectly holds 41% of HEP's' equity (39% of HEP's limited partnership units and HEP's 2% general partner interest). HEP's outlook is not changed due to its higher leverage and Moody's view that, given its function as an acquirer of completed Holly midstream projects, and the underlying need MLP's have for high levels of fixed coupon capital, HEP will remain more leveraged than Holly. Holly Corporation is headquartered in Dallas, Texas. HOLLY CORP: S&P Affirms Corporate Credit Rating at 'BB' ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit and senior unsecured ratings on Holly Corp. The outlook remains stable. The rating actions follow Holly Corp.'s announcement that it will acquire Sinclair Oil Corp.'s 75,000 barrel per day refinery in Tulsa, Okla., for roughly $129 million, plus costs to acquire related inventory at the close of the transaction. Additionally, Holly has proposed a $100 million add-on to its existing $200 million senior unsecured notes due 2017, which S&P rate 'BB', with a '3' recovery rating, indicating expectations of meaningful (50%-70%) recovery in the event of a payment default. "We expect the transaction to be funded so that Holly maintains above-average financial measures for its rating, such as debt leverage below 3x at current weak margins," said Standard & Poor's credit analyst Paul B. Harvey. The Sinclair acquisition will benefit Holly by allowing it to avoid about $125 million of near-term capital spending for regulatory requirements at the recently acquired Sunoco plant, through the integration of the Sinclair & Sunoco refineries via existing and/or new pipelines. The refineries are located two miles apart, and S&P estimates them to have a combined operating capacity of about 125,000 barrels per day (bpd) when fully integrated. Additionally, the acquisition of the Sinclair refinery adds further asset diversification to Holly's growing asset base, providing a greater cushion to unanticipated downtime at its refineries. Nevertheless, the benefits to credit quality are tempered by still elevated capital spending, both regulatory and growth, over the next 12 to 18 months during a period of weak and uncertain margins. Included is the approximately $100 million of spending during 2010 related to Holly's 75% interest in the UNEV Pipeline. At a time of weak industrywide margins, such spending levels make Holly's liquidity more susceptible to lower-than-expected margins, cost overruns, or extended outages in its refineries. The ratings on Dallas-based Holly Corp. reflect the challenges it faces as a small, independent oil refiner with limited cash flow diversification among three refineries. High near-term spending to meet environmental regulations, benzene and ULSD, as well as construction of the Salt Lake City to Las Vegas pipeline, tempers otherwise above-average near-term financial measures for its rating. The stable outlook reflects expectations that Holly will maintain adequate liquidity and solid financial measures, including debt leverage below 3x. S&P could lower the ratings if Holly experiences significant cost overruns on the UNEV Pipeline, or if debt leverage exceeds 3x without a near-term remedy. Additionally, if liquidity falls below $150 million, S&P could lower the ratings. Given Holly's heavy spending and uncertain industrywide margins, S&P does not expect a ratings upgrade in the near term. IGOURMET.COM: Sales Drop, Failure to Secure Credit Cause Ch 11 -------------------------------------------------------------- igourmet.com has filed for Chapter 11 bankruptcy protection. igourmet.com founder Spencer Chesman said that sales slowed to $10.4 million last year, down from $10.9 million in 2007, The Times Leader relates. Times Leader quoted Mr. Chesman as saying, "We embarked on a very aggressive growth strategy at just the wrong time," and when the economy turned sour and orders dropped, "we couldn't cut costs fast enough." Times Leader, citing Mr. Chesman, states that igourmet.com was also unable to access the credit it needed to operate. According to Times Leader, Mr. Chesman said that igourmet.com has cut its workforce to 15 from 47 in early 2008, but the Company continues to operate normally and expects to emerge from Chapter 11 in a few months. igourmet.com is an Internet specialty foods retailer that started its business in 1997 and moved to West Pittston in 2004. INFOLOGIX INC: Forbearance Pact Extended to November 12 ------------------------------------------------------- Effective as of October 15, 2009, InfoLogix, Inc. and its subsidiaries and Hercules Technology Growth Capital, Inc. entered into a fifth amendment to the Forbearance Agreement dated July 31, 2009, as amended August 14, 2009, August 20, 2009, September 23, 2009 and September 30, 2009, under which the Lender has agreed to forbear from exercising its rights and remedies with respect to certain events of default under the Loan and Security Agreement between the Company and the Lender dated May 1, 2008, as amended. The Lender agreed under the fifth amendment to reduce the amount of unrestricted cash that the Company is required to maintain from $1,500,000 to $750,000. Pursuant to the Loan Agreement, the Company was required to maintain unrestricted cash of not less than $1,500,000. During the period from July 31, 2009 through October 9, 2009, the Company did not maintain the required amount of unrestricted cash, and as a result, an event of default occurred under the Loan Agreement. Under the fifth amendment to the Forbearance Agreement, the Lender also agreed to forbear from exercising its rights and remedies under the Loan Agreement as a result of this event of default for the period and subject to the terms and conditions specified in the Forbearance Agreement. The fifth amendment to the Forbearance Agreement extends the forbearance period until the earlier of (i) November 12, 2009 and (ii) the occurrence of a termination event under the Forbearance Agreement, which includes, among other things, the occurrence of another event of default under the Loan Agreement, subject to specified exceptions. About InfoLogix, Inc. InfoLogix Inc. (NASDAQ: IFLG) -- http://www.infologix.com/-- provides enterprise mobility solutions for the healthcare and commercial industries. InfoLogix uses the industry's most advanced technologies to increase the efficiency, accuracy, and transparency of complex business and clinical processes. With 19 issued patents, InfoLogix provides mobile managed solutions, on- demand software applications, mobile infrastructure products, and strategic consulting services to over 2,000 clients in North America including Kraft Foods, Merck and Company, General Electric, Kaiser Permanente, MultiCare Health System and Stanford School of Medicine. The Company has $45.06 million in assets against debts of $46.35 million as of June 30, 2009. IPCS INC: Signs Deal to be Merged with Sprint Nextel Unit --------------------------------------------------------- iPCS, Inc., and Ireland Acquisition Corporation, with its parent, Sprint Nextel Corporation, on October 18, 2009, entered into an Agreement and Plan of Merger pursuant to which, among other things, Ireland Acquisition will commence a tender offer to acquire all of iPCS's outstanding shares of common stock, par value $0.01 per share, at a price of $24.00 per share in cash, subject to required withholding taxes and without interest. The Merger Agreement also provides that following the consummation of the Offer, the Purchaser will be merged with and into the Company with the Company surviving the merger as a wholly owned subsidiary of Parent. At the effective time of the Merger, all remaining outstanding Shares not tendered in the Offer, will be converted into a cash amount of $24.00 per share on the terms and conditions set forth in the Merger Agreement. Sprint Nextel's unit will acquire iPCS for $831 million, including $405 million of iPCS' net debt. The Merger Agreement provides that IAC will commence, and Sprint Nextel will cause IAC to commence, the Offer no later than October 28, 2009. Upon the consummation of the Offer, each Share accepted by IAC in accordance with the terms of the Offer will be exchanged for the right to receive the Offer Price. The Purchaser's obligation to accept for payment and pay for all Shares validly tendered pursuant to the Offer is subject to (i) the condition that the number of Shares validly tendered and not withdrawn represents at least a majority of the total number of Shares outstanding on a fully diluted basis and (ii) the satisfaction or waiver of other customary closing conditions as set forth in the Merger Agreement, including the receipt of necessary regulatory approvals (including the expiration or termination of the Hart-Scott-Rodino waiting period). The initial expiration date of the Offer will be 20 business days following the commencement of the Offer. If all of the conditions to the consummation of the Offer are not satisfied or waived upon the scheduled expiration date of the Offer, the Purchaser may, and, if requested by the Company, the Purchaser will, extend the Offer; however the Purchaser will not be obligated to extend the Offer beyond January 31, 2010, unless, as of such date, all of the conditions to the consummation of the Offer are satisfied or waived other than any condition relating to the receipt of certain regulatory approvals, in which case, the Outside Date will be March 15, 2010. iPCS has granted IAC an irrevocable option, which IAC, subject to certain conditions, may exercise up to five business days after the consummation of the Offer, to purchase such number of newly issued Shares at the Offer Price such that, when added to the Shares already owned by Sprint Nextel and IAC and their affiliates at the time of such exercise, constitutes one Share more than 90% of the total number of Shares outstanding on a fully diluted basis. If IAC acquires more than 90% of the outstanding Shares, in the Offer or through exercise of the Top-Up Option, it will complete the Merger through the "short form" procedures available under Delaware law, which would not require the Company to hold a meeting of its stockholders to vote on the adoption of the Merger Agreement. Upon the consummation of the Offer, (i) each outstanding stock option under the Company's equity incentive plans, whether vested or unvested, will be canceled, and in exchange each holder thereof will receive at the effective time of the Merger an amount in cash equal to the excess (if any) of the Offer Price over the exercise price per Share, multiplied by the number of Shares subject to such stock option and (ii) each share of restricted stock under the Company's equity incentive plans that is outstanding shall become fully vested. In addition, effective upon the consummation of the Offer, the Purchaser will be entitled to designate a number of directors, rounded up to the next whole number, on the Company's board of directors equal to the product of (i) the total number of directors on the Company's board of directors and (ii) the percentage that the number of Shares beneficially owned by Parent or the Purchaser bears to the number of Shares then outstanding; however, Parent, the Purchaser and the Company shall use their reasonable best efforts to ensure that after the consummation of the Offer, at least two independent directors currently serving on the Company's board of directors shall continue to be on the Company's board of directors until the effective time of the Merger. The Merger Agreement contains customary representations and warranties by the Company, the Purchaser and Parent. The Merger Agreement also contains customary covenants and agreements, including with respect to the operation of the business of the Company and its subsidiaries between the signing of the Merger Agreement and the closing of the Merger, restrictions on the solicitation of alternative acquisition proposals by the Company, governmental filings and approvals, and other matters. The Company is permitted to enter into discussions with a third party that makes an unsolicited proposal with respect to an alternative transaction so long as certain terms and conditions are met, including that the Company's board of directors makes a determination that such proposal is reasonably likely to lead to a proposal for a transaction that is more favorable to the Company's stockholders than the Offer and the Merger. The Merger Agreement provides certain termination rights for the Company, the Purchaser and Parent, including in the event that the Offer shall not be consummated by the Outside Date. In connection with the termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee equal to $12,500,000. As inducement Sprint Nextel to enter into the Merger Agreement, certain officers, directors and principal stockholders of the Company have agreed to tender their shares of the Company in connection with the Offer and to vote in favor of the Merger pursuant to a Stockholders Agreement, dated October 18, 2009, entered into with Parent. In addition, such Tendering Stockholders have agreed, subject to certain exceptions, to refrain from disposing of their shares of the Company and soliciting alternative acquisition proposals to the Offer and the Merger. In connection with the Merger Agreement, Parent, WirelessCo L.P., Sprint Spectrum L.P., SprintCom, Inc., Sprint Communications Company, L.P., Nextel Communications, Inc., PhillieCo L.P. and APC PCS LLC also entered into a Settlement Agreement and Mutual Release, dated October 18, 2009. Under the terms of the Settlement Agreement, the Sprint Parties and the iPCS Parties have agreed to stay all pending litigation between them, subject to certain conditions, and not to sue each other during the pendency of the transactions contemplated by the Merger Agreement, subject to certain exceptions. The stays of litigation and covenants not to sue will terminate if the Merger Agreement is terminated or if the Offer is not closed within the time period allowed by the Merger Agreement and the party seeking to terminate the Merger Agreement is unable to do so due to a court order or injunction that prevents termination. In addition, under the terms of the Settlement Agreement, effective upon the closing of the Merger, the Sprint Parties and the iPCS Parties will release each other from all claims, except those arising under or relating to a breach of the Merger Agreement or the Settlement Agreement, and will jointly file all such documents that are necessary to effect the dismissal with prejudice of all court orders and pending lawsuits between the Sprint Parties and the iPCS Parties. About iPCS Inc. iPCS Inc. is a holding company that operates as a PCS Affiliate of Parent through three wholly owned subsidiaries, iPCS Wireless, Inc., Horizon Personal Communications, Inc. and Bright Personal Communications Services, LLC, each having its own affiliation agreements with Parent. Pursuant to these affiliation agreements with Parent, the Company offers digital wireless personal communications services using Parent's spectrum under the Sprint brand name on a wireless network built and operated to Parent's specifications at the Company's expense. The Company owns and is responsible for operating, managing and maintaining its wireless network. iPCS has assets totaling $553,866,000 against debts aggregating $588,308,000 as of June 30, 2009. In October 2009, Standard & Poor's Ratings Services placed iPCS Inc., including its 'B' corporate credit rating, on CreditWatch with positive implications following an agreement to be merged with Sprint Nextel (BB/Negative/--). Moody's Investors Service affirmed iPCS, Inc.'s B3 corporate family and probability of default ratings, B1 rating of the Company's 1st lien notes and the Caa1 rating of 2nd lien notes. About Sprint Nextel Corporation Sprint Nextel Corporation is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses and government subscribers. Sprint Nextel is the third largest wireless communications company in the United States based on the number of wireless subscribers. Sprint Nextel is also one of the largest providers of wireline long distance services and one of the largest carriers of Internet traffic in the nation. Following the October 2009 announcement to acquire iPCS, Moody's Investors Service affirmed Sprint Nextel Corp.'s Ba1 corporate family rating and negative outlook and placed iPCS, Inc.'s ratings under review for possible upgrade in connection with Sprint's announced plans to acquire iPCS for approximately $831 million, including assumption of $405 million net debt. Standard & Poor's Ratings Services said that its rating on Overland Park, Kansas-based wireless carrier SprintNextel Corp. (BB/Negative/--) is not affected by the company's definitive agreement to acquire iPCS Inc. IPCS INC: Shuman Probes Board for Breach of Fiduciary Duty ---------------------------------------------------------- The Shuman Law Firm announced that an investigation of the Board of Directors of iPCS, Inc. (Nasdaq:IPCS) has been commenced by multiple law firms. The investigations indicate possible breaches of fiduciary in connection with iPCS's attempt to sell the Company to Sprint- Nextel Corp. Under the terms of the agreement, iPCS shareholders will receive $24 in cash for each share of iPCS common stock they own. The investigation concerns "whether the consideration to be paid to shareholders is grossly unfair, inadequate, and substantially below the fair or inherent value of the Company and whether the directors and special committee members may have breached their fiduciary duties by not acting in the shareholders' best interests in connection with the sale process." The Shuman Law Firm represents investors throughout the nation, concentrating its practice in securities class actions and shareholder derivative actions. About iPCS Inc. iPCS Inc. is a holding company that operates as a PCS Affiliate of Parent through three wholly owned subsidiaries, iPCS Wireless, Inc., Horizon Personal Communications, Inc. and Bright Personal Communications Services, LLC, each having its own affiliation agreements with Parent. Pursuant to these affiliation agreements with Parent, the Company offers digital wireless personal communications services using Parent's spectrum under the Sprint brand name on a wireless network built and operated to Parent's specifications at the Company's expense. The Company owns and is responsible for operating, managing and maintaining its wireless network. iPCS has assets totaling $553,866,000 against debts aggregating $588,308,000 as of June 30, 2009. In October 2009, Standard & Poor's Ratings Services placed iPCS Inc., including its 'B' corporate credit rating, on CreditWatch with positive implications following an agreement to be merged with Sprint Nextel (BB/Negative/--). Moody's Investors Service affirmed iPCS, Inc.'s B3 corporate family and probability of default ratings, B1 rating of the Company's 1st lien notes and the Caa1 rating of 2nd lien notes. About Sprint Nextel Corporation Sprint Nextel Corporation is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses and government subscribers. Sprint Nextel is the third largest wireless communications company in the United States based on the number of wireless subscribers. Sprint Nextel is also one of the largest providers of wireline long distance services and one of the largest carriers of Internet traffic in the nation. Following the October 2009 announcement to acquire iPCS, Moody's Investors Service affirmed Sprint Nextel Corp.'s Ba1 corporate family rating and negative outlook and placed iPCS, Inc.'s ratings under review for possible upgrade in connection with Sprint's announced plans to acquire iPCS for approximately $831 million, including assumption of $405 million net debt. Standard & Poor's Ratings Services said that its rating on Overland Park, Kansas-based wireless carrier SprintNextel Corp. (BB/Negative/--) is not affected by the company's definitive agreement to acquire iPCS Inc. IRVINE SENSORS: Issues 5-Year Warrant to Investment Banker ---------------------------------------------------------- Irvine Sensors Corporation reports that on October 14, 2009, it issued a five-year warrant to purchase 350,000 shares of common stock at an exercise price of $0.44 per share to an accredited investor, a financial advisory and investment banking firm that the Company engaged to assist it to raise additional capital and to provide financial advisory services. The Company also issued 300,000 shares of common stock to an accredited institutional investor upon such investor's conversion on September 28, 2009 of $120,000 of the stated value of the Series A-1 10% Cumulative Convertible Preferred Stock of the Company. As a result of the issuance on October 14, 2009, the Company has issued more than 5% of its outstanding shares of common stock in unregistered transactions in the aggregate. The Warrant may be exercised in cash or pursuant to a net exercise provision if the Company does not register the shares of common stock issuable upon exercise of the Warrant on or prior to April 14, 2010. The exercise price of the Warrant is subject to adjustment for stock splits, stock dividends, recapitalizations and the like. The Warrant also is subject to a blocker that would prevent the holder's common stock ownership at any given time from exceeding 4.99% of the Company's outstanding common stock (which percentage may increase but never above 9.99%). The sales have been determined to be exempt from registration under the Securities Act of 1933 in reliance on Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder, as transactions by an issuer not involving a public offering, in which the investors are accredited and have acquired the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof. About Irvine Sensors Headquartered in Costa Mesa, California, Irvine Sensors Corporation (NASDAQ: IRSN) -- http://www.irvine-sensors.com/-- is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies and sale of higher level systems incorporating such products and research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low-power analog and mixed-signal integrated circuits for diverse systems applications. As of June 28, 2009, Irvine Sensors had total assets of $6,627,800 and total liabilities of $11,999,000, resulting to stockholders' deficit of $5,371,200. Optex Systems, Inc., a Texas corporation and a wholly owned subsidiary of Irvine Sensors, on September 21, 2009, filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court in California. * * * Grant Thornton LLP in Irvine, California, in a letter dated January 9, 2009, pointed out that the Company incurred net losses of $21.6 million, $22.1 million, and $8.4 million for the years ended September 28, 2008, September 30, 2007, and October 1, 2006, respectively, and the Company has a working capital deficit of $16.1 million at September 28, 2008. "These factors, among others, raise substantial doubt about the company's ability to continue as a going concern." JABIL CIRCUIT: Moody's Affirms Corporate Family Rating at 'Ba1' --------------------------------------------------------------- Moody's Investors Service affirmed Jabil Circuit, Inc.'s Ba1 corporate family, probability of default and senior unsecured notes ratings, SGL-1 liquidity rating and changed the outlook to stable from negative. The outlook revision to stable reflects Jabil's recent improvement in operating performance, enhanced year-over-year cash flow generation and share gains as a result of good execution on customer penetration, cost reductions and working capital management, as well as an improved demand environment, which Moody's expect to continue. Operating margin (Moody's adjusted) increased sequentially to 1.8% from a trough of 0.5% in the May quarter due to cost savings from restructuring initiatives and ramp of higher margin mandates with new and existing customers. During the recent downturn and early recovery phase, Jabil benefited from OEM supply chain consolidation as some customers transitioned several programs from financially weaker EMS players to Jabil. Additionally, the company has demonstrated strong performance relative to its rated EMS peer group due to offsetting strength from new mandates in consumer electronics (fueled by rapid adoption of mobile smart phones) and industrial/ instrumentation/medical segments, which helped to mute weakness in Jabil's traditional EMS segments. The stable rating outlook also anticipates that operating margin and cash flow expansion will be aided by Jabil's planned divestiture of its automotive business in Western Europe. Moreover, the outlook reflects Moody's expectation that Jabil will continue to trim reported debt levels and the credit profile will benefit from the continued ramp of vertical, higher margin programs, completion of the restructuring plan and solid free cash flow generation. The Ba1 corporate family rating is supported by Jabil's status as a preferred Tier 1 EMS provider, with expanding core competencies and increasing customer penetration across a broad mix of complex products. The rating also reflects a strong liquidity position (rated SGL-1) bolstered by $876 million in cash (as of August 2009), full access to its $800 million revolver and improved working capital management. The rating is constrained by the company's weak historical FCF compared to its EMS peers, past volatility in operating performance, low ROA and temporary spikes in Moody's adjusted leverage due to Jabil's use of A/R securitizations to boost cash flow. In addition, the Ba1 rating reflects Jabil's smaller scale relative to larger and diversified EMS players, limited demand visibility, significant customer concentration and the high fixed costs associated with its vertical operations. It also considers Moody's expectation of some near-term margin pressure in Jabil's computing/storage, networking and telecom segments as global demand recovers slowly and remains weak relative to historical levels. Finally, the Ba1 rating captures the company's increasing exposure to the consumer segment and heightened competition from Asian outsourcers, as well as Moody's concern that Jabil may pursue debt-funded acquisitions that would allow it to increase scale and compete more effectively with larger vertically-integrated EMS rivals. These ratings were affirmed: * Corporate Family Rating - Ba1 * Probability of Default Rating - Ba1 * $5.1 Million (originally $300 Million) Senior Unsecured Notes due July 2010 -- Ba1 (LGD-4, 51%) * $312 Million Senior Unsecured Notes due July 2016 - Ba1 (LGD-4, 51%) * $400 Million Senior Unsecured Global Notes due March 2018 - Ba1 (LGD-4, 51%) * Speculative Grade Liquidity Rating - SGL-1 The last rating action was on July 28, 2009, when Moody's affirmed Jabil's Ba1 CFR and negative outlook, and assigned a Ba1 rating to the new senior notes due 2016. Headquartered in St. Petersburg, Florida, Jabil Circuit, Inc., is an electronic product solutions company providing comprehensive electronics design, manufacturing and product management services to global electronics and technology companies in the networking, telecommunications, computing and storage, peripherals, consumer products, automotive and instrumentation and medical industries. Revenues for the fiscal year ended August 31, 2009, were $11.7 billion. JOSE LEON: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Jose E. Leon dba The Jose E. Leon Revocable Trust dba The Jose E. Leon Declaration of Trust dba Jose E. Leon, Trustee of the Jose E. Leon 11605 Meridian Market View, Suite 124 #307 Falcon, CO 80831 Bankruptcy Case No.: 09-32205 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court District of Colorado (Denver) Judge: A. Bruce Campbell Debtor's Counsel: Lee M. Kutner, Esq. 303 E. 17th Ave., Ste. 500 Denver, CO 80203 Tel: (303) 832-2400 Email: lmk@kutnerlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Michael J. Miller, president of the Company. LAKE AT LAS VEGAS: DIP Facility Extended to December 31 ------------------------------------------------------- The Hon. Linda B. Riegle of U.S. Bankruptcy Court for the District of Nevada granted Lake at Las Vegas Joint Venture, LLC, et al., authorization to enter into a seventh amendment to their DIP Credit Agreement with Credit Suisse, Cayman Islands Branch, as administrative agent and collateral agent for the lenders. Pursuant to the amendments, the maturity and milestone dates under the Primary DIP Facility with Credit Suisse, Cayman Islands Branch will be extended from Aug. 7, 2009, to Dec. 31, 2009. The purpose of the amendment to the Primary DIP Facility is to provide a sufficient opportunity for the Debtors to obtain approval of the disclosure statement, solicit acceptances to their plan of reorganization, obtain confirmation of their plan of reorganization, and effectuate their plan of reorganization. Transcontental Corp. and Transcontinental Properties, Inc.'s limited objection to the motion were overruled. Full-text copies of the amendments to the DIP Documents is available for free at: http://bankrupt.com/misc/LakeatLasVegas_seventhamendmentDIP.pdf Headquartered in Henderson, Nevada, Lake at Las Vegas Joint Venture, LLC and 14 of its debtor-affiliates -- http://www.lakelasvegas.com/-- are owners and developers of 3,592-acre residential and resort destination Lake Las Vegas Resort in Las Vegas, Nevada. Centered around a 320-acre man-made lake, Lake Las Vegas contains more than 9,000 residential units, and also includes two luxury resort hotels (a Loews and a Ritz- Carlton), a casino, a specialty retail village shopping area, marinas, three signature golf courses and related clubhouses, and other real property. The Debtors filed separate petitions for Chapter 11 relief on July 17, 2008 (Bankr. D. Nev. Lead Case No. 08-17814). When Lake at Las Vegas Joint Venture, LLC filed for protection from its creditors, it listed assets of $100 million to $500 million, and debts of $500 million to $1.0 billion. Courtney E. Pozmantier, Esq., Martin R. Barash, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, Jason D. Smith, Esq., at Santoro, Driggs, Walch, Kearney, Holley & Thompson, Jeanette E. McPherson, Esq., Lenard E. Schwartzer, Esq., at Schwartzer & McPherson Law Firm, represent the Debtors as counsel. Kaaran E. Thomas, Esq., and Ryan J. Works, Esq., at McDonald Carano Wilson LLP, represent the official committee of unsecured creditors as counsel. LAS VEGAS SANDS: Seeks Funding to Revive Macau Casino Expansion --------------------------------------------------------------- Las Vegas Sands Corp. is seeking as much as $2 billion to restart mothballed projects in Macau, Beth Jinks at Bloomberg reported, citing Chief Operating Officer Michael Leven. Las Vegas Sands aims to get commitments for project financing from lenders by the end of the month to resume work on lots 5 and 6 of its 21,000-room hotel and casino complex on Macau's Cotai Strip, Mr. Leven said in an interview with Bloomberg in New York. Las Vegas Sands, according to the report, is willing to contribute additional equity in the project, on top of the $1.6 billion it has already spent on the four hotels, Mr. Leven said, declining to give an amount. He estimated the total cost at about $3.6 billion and said it could be finished by June 2011. Sheldon Adelson, the Company's chief executive officer, stopped construction on the two-thirds-built structures last year as credit markets froze, revenue growth slowed and the risk of loan defaults swelled. According to Bloomberg, separate from the construction financing, Las Vegas Sands plans to sell a stake in its Macau business in an initial public offering on the Hong Kong Stock Exchange. Wynn Macau Ltd., controlled by billionaire Steve Wynn, raised about $1.6 billion selling a stake in its Macau unit this month in Hong Kong. In September, Las Vegas Sands said it has closed and funded its previously announced $600 million pre-IPO financing transaction. The Company said it has the flexibility to utilize the net proceeds from the issuance of the bonds for general corporate purposes. About Las Vegas Sands Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. The casino company is controlled by billionaire Sheldon Adelson. As reported by the TCR on Aug. 4, 2009, Moody's Investors Service has placed Las Vegas Sands, Corp.'s ratings, including its B3 Corporate Family Rating, on review for possible downgrade. The review for possible downgrade reflects LVSC's weak fiscal 2009 second quarter operating results and Moody's heightened concern regarding the company's ability to maintain an adequate liquidity profile, reduce leverage, and remain in compliance with its financial covenants. LEHMAN BROTHERS: Ex-Bankers Assert $100 Mil. Claims in Lost Pay --------------------------------------------------------------- Nine Europe-based former bankers of Lehman Brothers Holdings, Inc., filed claims totaling more than $100 million in lost deferred compensation. The claims were filed in LBHI's Chapter 11 cases, according to Wall Street Journal. The former bankers and their claims, covering up to five years prior to Lehman Brothers' collapse, are: * Riccardo Banchetti - $26.04 million * Georges Assi - $18.6 million * Christian Meissner - $17.3 million * Giancarlo Saronne - $12.88 million * Adrian Mee - $11.2 million * Harsh Shah - $10.95 million * Makram Azar - $5.45 million * Fabrizio Cesario - $3 million * Calvert 'Gunner' Burkhart - $1 million 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. Lehman Brothers 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. 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 U.S. 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 (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of 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, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. 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. 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. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Goldman Sachs, CBI Buy Claims ---------------------------------------------- The Office of the Clerk of the Bankruptcy Court received more than 30 notices of transfer of claims in Lehman Brothers Holdings Inc.'s Chapter 11 cases from September 28 to October 13, 2009: Claim Claim Transferors Transferees Number Amount ----------- ----------- ------ ---------- Sunrise Partners C.V.I G.V.F. (Lux) 21369 $16,226,337 Limited Partnership Master S.a.r.l. TPG-Axon Partners Goldman Sachs 17602 $7,552,687 (Offshore), Ltd. Lending Partners 17603 $7,552,687 29889 $46,360,344 17599 $45,745,423 TPG-Axon Partners LP Goldman Sachs 17604 $821,074 Lending Partners 17600 $23,820,228 30099 $24,120,008 17601 $821,074 21484 $821,074 Credit Bias Hub Fund Goldman Sachs 23518 $4,487,124 Limited Lending Partners 23517 $4,487,124 Select Credit Hub Goldman Sachs 16745 $4,757,960 Fund Ltd. Lending Partners 16744 $4,757,960 Enhanced Credit Bias Goldman Sachs 23519 $2,823,186 Hub Fund Ltd. 23520 $2,823,186 Finance Ltd. Goldman Sachs 23516 $31,421,626 Lending Partners 23559 $31,421,626 Global Ltd. Goldman Sachs 16743 $3,233,883 Lending Partners 16742 $3,233,883 Relative Value Credit Goldman Sachs 16739 $21,085,641 Strategies Hub Fund Lending Partners 16738 $21,085,641 Relative Value/Macro Goldman Sachs 16741 $6,190,577 Hub Fund Ltd. Lending Partners 16740 $6,190,577 Chesapeake Energy Corp. Deutsche Bank AG 18966 $251,148,160 London Branch 18969 $251,148,160 Southern Community SPCP Group L.L.C. 22746 $325,000 Financial Corporation 22367 $325,000 Southern Community SPCP Group L.L.C. 25562 $875,000 Bank and Trust 22282 $875,000 Aristeia International Aristeia Master LP 100007 $2,586,113 Limited 10008 $2,586,113 National Power Corp. Power Sector Assets 9835 $3,461,590 & Liabilities Management Corp. Quinlan Private C.V.I G.V.F. (Lux) 12558 $21,569,535 European Strategic Master S.a.r.l. Property Fund Deutsche Pfandbriefbank C.V.I G.V.F. (Lux) 17543 $8,976,875 Master S.a.r.l. 8721 $47,153,961 DEPFA BANK plc C.V.I G.V.F. (Lux) 6943 $141,857,903 Master S.a.r.l. JMG Triton Offshore C.V.I G.V.F. (Lux) 9785 $5,225,952 Fund Limited Master S.a.r.l. 9788 $5,225,952 JMG Capital Partners C.V.I G.V.F. (Lux) 9787 $3,984,952 Master S.a.r.l. 9786 $3,984,952 Asian SBC Hedge Fund Hain Capital Group 8669 N/A Asian Special Finance Hain Capital Group 8666 $1,298,689 Hedge Fund Asian Multi Finance Hain Capital Group 8667 $543,446 Hedge Fund Asian CRC Hedge Fund Hain Capital Group 8670 $1,007,064 Access Asia Investment Hain Capital Group 8671 $935,221 Holdings (BVI) Ltd. Axis-ACM Inc. Hain Capital Group 8668 $210,261 Global Credit Hedge Hain Capital Group 8665 $370,166 Fund 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. Lehman Brothers 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. 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 U.S. 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 (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of 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, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. 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. 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. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: HKMA Updates on Minibond Cases ----------------------------------------------- The Hong Kong Monetary Authority (HKMA) announced that there are currently 520 Lehman- Brothers-related non-minibond cases under disciplinary consideration. These are cases which have gone through detailed investigation by the HKMA. Since 17 October 2008 the HKMA has referred a total of 334 Lehman-Brothers-related non-minibond cases to the Securities and Futures Commission (SFC) for further action. These cases have been reviewed by the HKMA, which has determined that there are sufficient grounds for referring them to the SFC to facilitate its investigations into banks. The HKMA has, up to 30 September 2009, received 21,712 complaints concerning Lehman-Brothers-related products, of which 7,779 relate to non-minibond products. Of the Lehman-Brothers- related non- minibond complaints, 7,689 cases have gone through the preliminary assessment process and, as a result, the HKMA is currently investigating 3,051 cases and seeking further information on 2,340 cases. A total of 1,778 Lehman-Brothers- related non-minibond complaints have been closed as there was no sufficient prima facie evidence found after the preliminary assessment process or no sufficient grounds and evidence found after detailed investigations. Of the minibond complaints, 13,009 cases are eligible for the Lehman-Brothers Minibonds Repurchase Scheme or the voluntary offer made by the distributing banks to customers with whom they had reached settlements before the Scheme was introduced. Eight hundred and seventy-two minibond complaints involving customers who are not eligible for, or have indicated that they do not accept, the repurchase offer under the Scheme or whose cases require clarification from the banks will continue to be handled by the HKMA if the complaints cannot be resolved by the enhanced complaint handling system introduced by the distributing banks as agreed by the regulators. Since 7 August 2009, 16 minibond distributing banks have begun the issue of repurchase offer letters to eligible customers (about 25,000 customers) under the Scheme. Up to 30 September 2009, 23,130 customers have responded to the repurchase offers, of whom 22,909 customers or 99.0% have accepted the offers. About 80% of these customers have already received payment from the banks concerned while the remaining payments will be settled soon (in any case no later than 30 days after having received the duly completed acceptance forms from these customers). "The repurchase offer is open for 60 days from the date of the offer letter. Depending on the date of individual offer letters, the offer period will start to expire from 6 October 2009. Nevertheless, eligible customers should consider carefully the terms of the offer and his or her personal circumstances before deciding whether to accept the offer from the distributing banks," added the HKMA spokesperson. 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. Lehman Brothers 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. 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 U.S. 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 (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of 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, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. 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. 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. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: MAS Welcomes Deal on Minibond Notes ---------------------------------------------------- The Monetary Authority of Singapore (MAS) welcomes the announcement by the three partners of PricewaterhouseCoopers LLP appointed as receivers for the Minibond notes, and HSBC Institutional Trust Services (Singapore) Limited, the trustee for the notes, that they have reached a settlement agreement with Lehman Brothers Special Financing Inc., the swap counterparty for the notes. This is an important development which resolves the legal complexities that had prevented the earlier unwinding of the notes and gives noteholders greater certainty that they will be able to receive the remaining value of their notes. The obligations of the trustee and the receivers in this situation are to act in the interest of noteholders. The trustee and receivers have kept MAS informed during the settlement negotiations. MAS understands that they have considered the matter thoroughly and are both satisfied that the settlement and liquidation of the underlying collateral are in the best interest of noteholders. The settlement with LBSF does not affect any claims investors are making against the financial institutions from which they bought the notes. Investors who accepted partial settlement offers as part of the dispute resolution process by the FI or the Financial Industry Disputes Resolution Centre would have retained a portion of the notes, and will get to keep the residual value arising from those notes. Investors who accepted full settlement offers would have received 100% of their principal investment amount. These investors will not receive any residual value as they would have transferred the notes to the FI. 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. Lehman Brothers 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. 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 U.S. 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 (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of 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, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. 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. 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. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LINENS 'N THINGS: Noteholders Clash with Gardere Over Budget ------------------------------------------------------------ Law360 reports that in a festering fee dispute between Linens 'N Things' noteholders and the debtor's special counsel Gardere Wynne Sewell LLP, the noteholders have opposed the firm's continuing demands for document production in connection with attempts to tighten the debtor's wind-down budget and restrict payments to the firm. Headquartered in Clifton, New Jersey, Linens 'n Things, Inc. -- http://www.lnt.com/-- was the second largest specialty retailer of home textiles, housewares and home accessories in North America. As of Sept. 30, 2008, Linens 'n Things operated 411 stores in 47 states and seven provinces across the United States and Canada. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed Chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., are Linens 'n Things' bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. LYONDELL CHEMICAL: Air Products Amends 503(b)(9) Claims ------------------------------------------------------- In an amended request, Air Products and Chemicals, Inc., and Air Products LLC relate that 20 days before the Petition Date, it delivered products, including gaseous and liquid hydrogen, nitrogen and oxygen to certain Debtors in these amounts: Debtor Amount ------ ------ Houston Refining L.P $5,332,190 Lyondell Chemical Company 501,538 Equistar Chemicals, L.P. 318,580 Millennium Specialty Chemicals, Inc. 108,910 Equistar Chemicals, L.P. 68,260 Millennium Chemicals Inc. 49,069 Basell USA Inc. 18,169 Houston Refining L.P. 3,463 Air Products says that the products delivered to the Debtors within the 20 days before the Petition Date were sold in the ordinary course of business pursuant to Section 503(b)(9) of the Bankruptcy Code. Air Products add that the Products provided to the Debtors were goods within the meaning of the Uniform Commercial Code Article 2. Accordingly, Air Products ask the Court to allow their administrative expenses aggregating $6,400,224 against the Debtors pursuant to Section 503(b)(9). About Lyondell Chemical LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. On January 6, 2009, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D.N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc. filed for Chapter 11. In May 2009, one of the cases was dismissed -- Case No. 09-10068 -- because it is duplicative of Case No. 09- 10040 relating to Debtor Glidden Latin America Holdings. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately US$8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a US$6.5 billion term loan, which comprises a US$3.25 billion in new loans and a US$3.25 billion roll-up of existing loans; and a US$1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24, 2009, in order to seek protection against claims by certain financial and U.S. trade creditors. On May 8, 2009, LyondellBasell Industries added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) M.J. MILLER INC: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: M.J. Miller, Inc. PO Box 772503 Steamboat Springs, CO 80477 Bankruptcy Case No.: 09-32194 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court District of Colorado (Denver) Judge: Elizabeth E. Brown Debtor's Counsel: David M. Miller, Esq. 303 E. 17th Ave., Ste. 500 Denver, CO 80203 Tel: (303) 832-2400 Email: dmm@kutnerlaw.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 Michael J. Miller, president of the Company. MELODY HOWARTH: Case Summary & 8 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Melody Howarth 4455 Commonwealth Ave La Canada, CA 91011 Bankruptcy Case No.: 09-38778 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Thomas B. Donovan Debtor's Counsel: Richard Gibson, Esq. 21800 Oxnard, St #310 Woodland Hills, CA 91367 Tel: (818) 716-7950 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of Ms. Howarth's petition, including a list of her 8 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-38778.pdf The petition was signed by Ms. Howarth. MERIDIAN RESOURCE: Fortis Forbearance Extended to November 15 ------------------------------------------------------------- The Meridian Resource Corporation and certain of its subsidiaries on October 20, 2009, entered into a Third Amendment to Forbearance and Amendment Agreement, which extends to November 15 the date by which the Fortis Forbearance Agreement will terminate if, by that date, Meridian has not entered into a Transaction Agreement. Meridian entered into the First Amendment to Forbearance and Amendment Agreement, dated September 30, 2009, and the Second Amendment to Forbearance and Amendment Agreement, dated October 2, 2009, each of which amend the Forbearance and Amendment Agreement with Fortis Capital Corp., as administrative agent, and the other lenders and agents party to the Company's Amended and Restated Credit Agreement, dated as of December 23, 2004, as amended. The First Forbearance Amendment extended from September 30 to October 2, 2009, and the Second Forbearance Amendment further extended to October 7, the date by which the Fortis Forbearance Agreement will terminate if, by such date, Meridian has not entered into a Transaction Agreement. Subsequently, Meridian's Lenders agreed to extend the date of termination to October 14, and on that date agreed to further extend such date of termination to October 16. Subsequently, the Lenders agreed to further extend the date of termination to October 20. Under the Third Forbearance Amendment, Meridian will also be required to pay to the Lenders on November 15 an amendment fee of 0.25% of the aggregate outstanding borrowings under the Amended and Restated Credit Agreement. The Fortis Forbearance Agreement will terminate if, by such date, Meridian has not entered into (a) a merger agreement pursuant to which Meridian will merge with or into or be acquired by or transfer all or substantially all of our assets to another person; (b) a capital infusion agreement pursuant to which one or more persons will contribute subordinated debt or equity capital to Meridian in an amount sufficient to enable Meridian to pay to the Lenders an amount equal to 100% of Meridian's borrowing base deficiency; or (c) a purchase and sale agreement pursuant to which Meridian agrees to sell one or more oil and gas properties for net proceeds sufficient to enable Meridian to pay to the Lenders an amount equal to 100% of Meridian's borrowing base deficiency, plus any incremental borrowing base deficiency resulting from such sales. Concurrently with the execution of the Fortis Forbearance Agreement, Meridian entered into (a) a Forbearance Agreement with Fortis Capital Corp. and Fortis Energy Marketing & Trading GP, (b) a Forbearance and Amendment Agreement with The CIT Group/Equipment Financing, Inc., and (c) a Forbearance and Amendment Agreement with Orion Drilling Company, LLC. The termination of the forbearance period under the Fortis Forbearance Agreement will also result in the termination of the forbearance periods under each of the Hedge Forbearance Agreement, the CIT Forbearance Agreement and the Orion Forbearance Agreement. Meridian cannot give any assurance that, by the November 15 expiration of the forbearance periods, it will be able to enter into a Transaction Agreement or that it will otherwise be able to satisfy its obligations under the agreements to which the forbearance agreements relate, nor can it give any assurance that the Lenders will grant any further extensions under the Fortis Forbearance Agreement. A full-text copy of the THIRD AMENDMENT TO FORBEARANCE AND AMENDMENT AGREEMENT is available at no charge at http://ResearchArchives.com/t/s?4747 Members of the lending syndicate are: * FORTIS CAPITAL CORP., as Administrative Agent, Co-Lead Arranger, Bookrunner, Issuing Lender, and a Lender; * THE BANK OF NOVA SCOTIA, as Co-Lead Arranger, Syndication Agent, and a Lender; * COMERICA BANK, as a Lender; * U.S. BANK NATIONAL ASSOCIATION, as a Lender; and * ALLIED IRISH BANKS plc, as a Lender About Meridian Resource The Meridian Resource Corporation, incorporated in 1990, is an independent oil and natural gas company. The Company explores for, acquires and develops oil and natural gas properties. As of December 31, 2008, it had proved reserves of 80 billion cubic feet (Bcfe). Sixty-three percent of its proved reserves were natural gas and approximately 64% were classified as proved developed. It owns interests in 19 fields and 100 producing wells, and operated approximately 96% of its total production during the year ended December 31, 2008. The Company's wholly owned subsidiary, TMR Drilling Corporation (TMRD), owns a rig which is used primarily to drill wells operated by the Company. At June 30, 2009, the Company's balance sheet showed total assets of $207.77 million, total liabilities of $152.61 million and stockholders' equity of $55.16 million. MERISANT WORLDWIDE: Seeks Dec. 19 Extension of Plan Exclusivity --------------------------------------------------------------- Merisant Worldwide Inc. has a Chapter 11 plan, but as a precaution, is seeking a December 19 extension of its exclusive period to propose a Chapter 11 plan, Bloomberg's Bill Rochelle reported. The disclosure statement explaining Merisant's plan is up for approval at a hearing today. Merisant will begin soliciting votes on, then seek approval of, the Plan following approval of the Disclosure Statement. Pursuant to a backstop commitment and stock purchase agreement, Newport has agreed to provide at least $10 million which will be available to pay down secured bank debt when its reorganization plan is effective. Under the plan, Newport Global Advisors will purchase $7.5 million in convertible preferred stock and backstop $2.5 million out of a $5 million in a rights offering. The Plan accomplishes a deleveraging of the Debtors' capital structure by removing approximately $400 million in indebtedness, including approximately $45 million of secured indebtedness, from the Debtors' balance sheet. Under the Plan, holders of bank claims aggregating $205 million will recover 100% of their claims in the form of new notes, cash and majority of the preferred stock. Holders of unsecured claims aggregating $235.3 million against Merisant Company will recover 5.5% in the form of new common stock of Reorganized Merisant and may participate in the rights offering. Holders of unsecured trade claims will receive payment of 60% of the claim in cash. Holders of unsecured claims aggregating $137.1 million against Merisant Worldwide will receive distributions in the form of "contingent value rights" if they vote in favor of the Plan. Merisant's Chapter 11 plan is supported by the Official Committee of Unsecured Cerditors and Wayzata Investment Partners, which controls two-thirds aggregate principal amount of loans outstanding under Merisant Company's amended and restated credit facility as well as a majority of the aggregate principal amount of Merisant Company's 9.5% Senior Subordinated Notes due 2013. Merisant anticipates that it will be able to obtain Bankruptcy Court confirmation of the Plan and emerge from bankruptcy as early as January 1, 2010. An ad hoc committee of the Company's lenders and Nomura Corporate Research & Asset Management Inc., the holder of 11% of the 9.5% senior subordinated notes, have already conveyed objections to the Plan. About Merisant Worldwide Headquartered in Chicago, Illinois, Merisant Worldwide Inc. -- http://www.merisant.com/-- sells low-calorie tabletop sweetener. The Debtor's brands are Equal(R) and Canderel(R). The Debtor has principal regional offices in Mexico City, Mexico; Neuchatel, Switzerland; Paris, France; and Singapore. In addition, the Debtor owns and operates manufacturing facilities in Manteno, Illinois, and Zarate, Argentina, and own processing lines that are operated exclusively for the Debtor at plants located in Bergisch and Stendal, Germany and Bangkrason, Thailand. As of March 28, 2008, the Debtor has 20 active direct and indirect subsidiaries, including five subsidiaries in the United States, six subsidiaries in Europe, five subsidiaries in Mexico, Central America and South America, and three subsidiaries in the Asia Pacific region, including Australia and India. Furthermore, the Debtor's Swiss subsidiary holds a 50% interest in a joint venture in the Philippines. Merisant Worldwide holds 100% interest in Merisant Company. Merisant Worldwide and five of its units filed for Chapter 11 protection on January 9, 2009 (Bankr. D. Del. Lead Case No. 09-10059). Sidley Austin LLP represents the Debtors in their restructuring efforts. Young, Conaway, Stargatt & Taylor LLP represents the Debtors' as co-counsel. Blackstone Advisory Services LLP is the Debtors' financial advisor. Epiq Bankruptcy Solutions, LLC, is the Debtors' Claims and Noticing Agent. Winston & Strawn LLP represents the official committee of unsecured creditors as counsel. Ashby & Geddes, P.A., is the Committee's Delaware counsel. The Debtors had US$331,077,041 in total assets and US$560,742,486 in total debts as of November 30, 2008. MERRILL LYNCH: Documents Raise Skepticism on BofA Execs. -------------------------------------------------------- ABI reports that congressional investigators think that internal documents turned over by Bank of America last Friday show that its executives were alarmed by mounting losses at Merrill Lynch well before shareholders voted to approve the merger. Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The Company serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers support to more than 4 million small business owners. The Company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. BofA sought government backing in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. * * * BofA has received US$45 billion in government bailout money since the economic collapse in 2008. As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. Bank of America reported a third-quarter 2009 net loss of $1.0 billion. After deducting preferred dividends of $1.2 billion, including $893 million related to dividends paid to the U.S. government, the diluted loss per share was $0.26. MGM MIRAGE: Says Kerkorian Moove an Effort to Boost Stock Value --------------------------------------------------------------- To recall, Kirk Kerkorian's Tracinda Corporation announced October 20 that it is exploring the possibility of strategic partnerships or other alternatives with respect to its investment in MGM MIRAGE (NYSE: MGM). Tracinda stated it would not engage in any such transaction until after CityCenter, the 67-acre city within a city on the Las Vegas Strip which is 50% owned by MGM MIRAGE, has successfully opened on December 16, 2009. Tracinda believes there is substantial unrecognized value in MGM MIRAGE and CityCenter that is not reflected in the market value of MGM MIRAGE's stock. Tracinda may decide not to pursue strategic partnerships or other alternatives, and may not ultimately enter into any such transactions. MGM Mirage Chief Executive Officer James Murren, in response to the announcement, said Mr. Kerkorian's move is an effort to boost the stock's value as business improves in Las Vegas, Bloomberg News reported. "He feels there's a dislocation in value, and he's going to shake the trees down and figure out how" to increase the stock price, Mr. Murren said in an interview with Bloomberg in New York. "He's not going to come in and try to break the company up, that's not his mindset." About MGM MIRAGE Headquartered in Las Vegas, Nevada, MGM MIRAGE (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. At June 30, 2009, the Company had $22.4 billion in total assets, including $1.07 billion in total current assets; $1.23 billion in total current liabilities, $3.58 billion in deferred income taxes, $12.3 billion in long-term debt, $186.7 million in other long-term obligations; and $5.04 billion in stockholders' equity. * * * As reported by the Troubled Company Reporter on September 22, 2009, Moody's Investors Service affirmed MGM MIRAGE's Caa2 Corporate Family Rating and Caa3 Probability of Default Rating. Moody's also assigned a Caa2 rating to the company's new $475 million 11.375% senior unsecured notes due 2018. Moody's also affirmed MGM's SGL-4 Speculative Grade Liquidity rating. The rating outlook is negative. As reported by the TCR on September 24, 2009, Fitch Ratings has assigned a 'CCC/RR4' rating to MGM MIRAGE's $475 million 11.375% unsecured notes due 2018. The notes were priced at a 97.396% discount to yield 11.875%. The net proceeds will be used to reduce credit facility borrowings, and also for general corporate purposes. The offering attempts to chip away at the company's most significant credit hurdle: the maturity of its $5.8 billion credit facility in 2011, which had $4.1 billion outstanding as of June 30, 2009. MORRIS PUBLISHING: Restates $136.5MM Loan; Tranche Buys Bank Debt ----------------------------------------------------------------- Morris Publishing Group, LLC, as borrower, entered into an amended and restated credit agreement on October 15, 2009, to amend and restate its $136,500,000 senior secured credit agreement dated December 14, 2005. The amendment immediately followed the acquisition by Tranche Holdings, LLC, an affiliate of ACON Investments LLC, of all outstanding loans under the Original Credit Agreement. The Amended Credit Agreement converts all existing loans under the Original Credit Agreement into the following three tranches of term loans: $19,700,000 in Tranche A Term Loans, $6,800,000 in Tranche B Term Loans, and $110,000,000 in Tranche C Term Loans. All $6,800,000 of the Tranche B Term Loans and all $110,000,000 of the Tranche C Term Loans were acquired by two of Morris Publishing's affiliates, MPG Revolver Holdings, LLC, and Morris Communications Company, LLC. The parties to the Amended Credit Agreement are Morris Publishing, as borrower, all of its subsidiaries as subsidiary guarantors, Morris Communications, and its wholly owned domestic subsidiaries as affiliate guarantors, Tranche Manager, LLC as the new Administrative Agent, and Tranche Holdings, MPG Revolver, and Morris Communications as lenders. Tranche Manager, LLC, an affiliate of Tranche Holdings, replaced JPMorgan Chase Bank, N.A., as Administrative Agent. The lenders party to the Original Credit Agreement were JPMorgan Chase Bank, N.A., The Bank of New York, SunTrust Bank, Wachovia Bank, N.A., Bank of America, N.A., General Electric Capital Corporation, Allied Irish Banks, P.L.C., RBS Citizens, N.A., Comerica Bank, US Bank, National Association, First Tennessee Bank, National Association, Webster Bank, National Association, Keybank National Association, Sumitomo Mitsui Banking Corporation, and Mizuho Corporate Bank, Ltd. Under the Amended Credit Agreement, the Tranche A Term Loans bears cash interest at the rate of 15% per annum. The 5% interest rate on the Tranche B Term Loans and the 15% interest rate on the Tranche C Term Loans are required to be paid-in-kind (PIK) as an addition to the principal amount rather than cash. All tranches of loans under the Amended Credit Agreement mature in two years, with two six-month extension options during which extensions the interest rate on the Tranche A Term Loans would increase to 17.5% and 20%, respectively. However, after the consummation of a successful subordinated debt restructuring transaction as described below, the Tranche A Term Loans will mature earlier on the deadline for the required refinancing of the Tranche A Term Loans (150 days after the consummation of the subordinated debt restructuring transaction). All principal payments on the senior debt will be applied first to the Tranche A Term Loans until paid in full. Quarterly principal payments are required from Morris Publishing's cash flow to reduce the Tranche A Term Loans. All three tranches of senior debt remain senior to the $278,478,000 outstanding principal amount of Morris Publishing's existing 7% Senior Subordinated Notes Due 2013; however, MPG Revolver and Morris Communications have deposited all $110,000,000 of Tranche C Term Loans into an escrow account for eventual cancellation upon successful consummation of a proposed restructuring transaction supported by holders of over seventy-five percent of the Existing Notes. Morris Publishing entered into a binding restructuring term sheet on September 23, 2009 with an ad hoc committee of holders of more than 75% of the Existing Notes, subject to the final negotiation and execution of the definitive legal documentation and other closing conditions for the transactions contemplated thereby, including the execution of a "Plan Support Agreement" on reasonable and customary terms. The Term Sheet provides, among other things, for the restructuring of the Existing Notes through an out-of-court exchange offer (if holders of at least 99% of the Existing Notes participate) or a Chapter 11 filing and a plan of reorganization confirmed under the United States Bankruptcy Code, as amended. If the Restructuring is approved, the holders of the Existing Notes would exchange the Existing Notes (including accrued interest) for $100,000,000 in principal amount of new notes immediately upon the effective date of either (i) an out-of- court exchange offer, or (ii) a confirmed plan of reorganization. The New Notes will mature 4-1/2 years from the Effective Date. The indenture for the New Notes will require that Morris Publishing continue to file annual, quarterly and current reports with the Securities and Exchange Commission. The execution of the Amended Credit Agreement is part of the "Senior Refinancing Transaction" contemplated by the Term Sheet, which was a condition precedent to the Restructuring. The members of the ad hoc committee provided approvals for the consummation of the Senior Refinancing Transaction under the indenture dated as of August 7, 2003, for the Existing Notes between the issuers, the subsidiary guarantors and Wilmington Trust, FSB (as successor trustee), as Indenture Trustee, the Term Sheet and the Forbearance Agreement. Upon the exchange of the Existing Notes, the Morris Publishing affiliates have agreed to cancel the Tranche C Term Loans in repayment of approximately $25,000,000 of intercompany indebtedness to Morris Publishing and as a contribution to capital of approximately $85,000,000. The loans under the Amended Credit Agreement continue to be guaranteed by all subsidiaries of Morris Publishing, as well as Morris Communications and all of its wholly-owned, domestic subsidiaries, and secured by substantially all of the assets of such guarantors and Morris Publishing. In the case of the security interests granted by Morris Communications and its subsidiaries, the lenders are generally not permitted to exercise collateral foreclosure remedies prior to May 15, 2010 so long as all interest on the Tranche A Term Loans has been paid and certain bankruptcy events have not occurred. In connection with the Senior Refinancing Transaction, the equity of MCC Outdoor, LLC (a former subsidiary of Morris Communications engaged in the outdoor advertising business) was transferred to FMO Holdings, LLC, and MCC Outdoor, LLC was released from its guaranty, and its equity and assets no longer serve as security for the obligations under the Amended Credit Agreement. An affiliate of Tranche Holdings (Magic Media, Inc.) is the controlling member of FMO Holdings, LLC, and a subsidiary of Morris Communications has a significant equity interest in FMO Holdings, LLC. Other than the relationships relating to FMO Holdings, LLC and with respect to the Amended Credit Agreement, Morris Publishing and its affiliates have no material relationship with Tranche Holdings. The Amended Credit Agreement contains various representations, warranties and covenants generally consistent with the Original Credit Agreement, but with certain additional limitations applicable prior to the repayment in full of the Tranche A Term Loans. Financial covenants in the Amended Credit Agreement require Morris Publishing to meet certain financial tests on an on-going basis, including minimum interest coverage ratio, minimum fixed charge coverage ratio, and maximum cash flow ratios, based upon the combined consolidated financial results of Morris Publishing and Morris Communications. However, until May 15, 2010, the financial covenants will be calculated as if the Restructuring had been completed. An event of default will occur under the Amended Credit Agreement if the Restructuring has not been completed by May 15, 2010. Other new events of default include the Tranche A Term Loans lender's determination that there has been a diminution of value in the collateral, or that Morris Publishing is not making adequate progress to consummate the Restructuring. Unless refinanced prior to the Restructuring, the Tranche B Term Loans remaining after the Restructuring will rank pari passu with the New Notes and shall cease to be secured by the liens securing the Amended Credit Agreement, and shall share in the same collateral securing the New Notes on a second priority basis. On or prior to 150 days from the date of the Restructuring, Morris Publishing must refinance all of the remaining Tranche A and Tranche B Term Loans (currently totaling $26,500,000) with an unaffiliated commercial bank at an annual interest rate no greater than LIBOR plus 970 basis points (assuming the definitive documents relating to Restructuring require such a refinancing as contemplated by the Term Sheet). The refinanced debt, including the refinanced debt attributable to the refinancing of the Tranche B Term Loans, will be senior to the New Notes and will be secured by a first lien in substantially all of Morris Publishing's assets. In the event of any prepayment of the Tranche A Term Loans prior to the second anniversary of the closing date of October 15, 2009, a prepayment fee shall become due: (1) during the first year of the loan, a fee equal to 7.5% of such prepayment amount less the aggregate amount of interest paid in cash on such amount during the period between the Closing Date and the date of such payment, and (2) during the second year of the loan, a fee equal to (a) the amount of interest which would have accrued in respect of such prepayment amount as if such amount had remained outstanding at all times during the second year of the loan less (b) the aggregate amount of interest paid in cash on such principal prepayment amount during the period between the first anniversary of the Closing Date and the date of such prepayment. With respect to the Prepayment Fee, the obligation of Morris Publishing is limited to an aggregate amount of not more than $300,000, with any excess Prepayment Fee obligations being liabilities of Morris Communications. A full-text copy of the Amended Credit Agreement is available at no charge at http://ResearchArchives.com/t/s?4746 Notices to Tranche must be sent to: ACON Investments, LLC 1133 Connecticut Avenue, NW Washington, DC 20036 Attn: Barry Johnson Tel: (202) 454-1100 E-mail: bjohnson@aconinvestments.com with copy to: ACON Investments, LLC 1133 Connecticut Avenue, NW Washington, DC 20036 Attn: Daniel Prawda Tel: (202) 454-1100 E-mail: dprawda@aconinvestments.com Notices to RSA FMO Holdings, LLC, must be sent to: RSA FMO Holdings, LLC 201 South Union Street Montgomery, Alabama 36130 Attn: M. Hunter Harrell Tel: (334) 517-7109 Email: hunter.harrell@rsa-al.gov with copy to: Haskell Slaughter Young & Rediker, LLC 1400 Park Place Tower, 2001 Park Place North Birmingham, Alabama 35203 Tel: (205) 254-1402 Email: glw@hsy.com Term Sheet Amendment On October 15, 2009, Morris Publishing and Morris Publishing Finance Co., as issuers, and all other subsidiaries of Morris Publishing, as subsidiary guarantors entered into an amendment to the Term Sheet with the holders, or investment advisors or managers of more than 75% percent of the outstanding $278,478,000 aggregate principal amount of Existing Notes. Under the amendment, the deadline to execute a Plan Support Agreement was extended until 5:00 p.m. EDT on October 23, 2009, and the requirement to commence the solicitation of the exchange offer was extended until 5:00 p.m. EDT on October 30, 2009. On October 15, 2009, Morris Publishing and Morris Publishing Finance Co., as issuers, and all other subsidiaries of Morris Publishing, as subsidiary guarantors, and the holders, or investment advisors or managers of more than 80% of the outstanding $278,478,000 aggregate principal amount of Existing Notes, entered into Amendment No. 14 to the Forbearance Agreement dated as of February 26, 2009 with respect to the Indenture. Morris Publishing failed to pay the $9,746,730 interest payment due February 1, 2009 and the $9,746,730 interest payment due August 3, 2009 on the Existing Notes. Pursuant to Amendment No. 14, the holders of more than 80% of outstanding principal amount of the Existing Notes agreed not to take any action during the forbearance period as a result of the Payment Defaults to enforce any of the rights and remedies available to the Holders or the Indenture Trustee under the Indenture or the Existing Notes, including any action to accelerate, or join in any request for acceleration of, the Existing Notes. The Holders also agreed to request that the Indenture Trustee not take any such remedial action with respect to the Payment Defaults, including any action to accelerate the Existing Notes during the Forbearance Period. Under Amendment No. 14, the Forbearance Period generally means the period ending at 5:00 p.m. EDT on December 11, 2009, but could be terminated earlier for various reasons set forth in the Forbearance Agreement including if the lenders under the Amended Credit Agreement accelerate the maturity of the obligations under the Amended Credit Agreement, upon the occurrence of any other default under the Indenture, or if Morris Publishing files for bankruptcy protection or breaches its covenants under the Forbearance Agreement. However, the Forbearance Period would terminate earlier at 5:00 p.m. EDT on October 23, 2009 if Morris Publishing has not entered into a Plan Support Agreement with the ad hoc committee of holders of the Existing Notes, or at 5:00 p.m. EDT on October 30, 2009 if Morris Publishing has not launched the exchange offer solicitation process. In the Forbearance Agreement, Morris Publishing agreed that it would not enter into any transaction in connection with a refinancing of its senior secured debt if, as a result, any affiliate of Morris Publishing would become a lender or beneficial owner of the senior secured debt. Amendment No. 14 amends this restriction to permit the acquisition of the senior secured debt by Tranche Holdings and the amendment and acquisition of such senior secured debt by Morris Communications and MPG Revolver under the Senior Refinancing Transaction. About Morris Publishing Morris Publishing Group, LLC -- http://www.morrisrestructures.com/ -- is a privately held media company based in Augusta, Georgia. Morris Publishing currently owns and operates 13 daily newspapers as well as nondaily newspapers, city magazines and free community publications in the Southeast, Midwest, Southwest and Alaska. NAVISTAR INT'L: Unveils $1.5 Billion Debt Offerings --------------------------------------------------- Navistar International Corporation plans to issue, subject to market conditions, $1 billion of senior notes due 2021 and $500 million of senior subordinated convertible notes due 2014. The net proceeds will be used to repay in full amounts outstanding under its $1.1 billion term loan and $400 million synthetic revolver senior unsecured credit facilities, which expire in January 2012, as well as other general corporate purposes. In connection with the convertible notes offering, Navistar will grant the underwriters an over-allotment option to purchase an additional $75 million of convertible notes. Also in connection with the convertible notes offering, Navistar may enter into convertible note hedge transactions with one or more affiliates of the underwriters (the hedge counterparties) and may also enter into warrant transactions with the hedge counterparties. The convertible note hedge transactions would be expected to reduce the potential dilution to Navistar's common stock upon conversion of the notes. However, prior to maturity, the warrant transactions could separately have a dilutive effect on Navistar's earnings per share to the extent that the market value per share of Navistar's common stock exceeds the applicable strike price of the warrants. If the underwriters exercise their overallotment option to purchase additional notes, and if Navistar has entered into the convertible note hedge and warrant transactions, Navistar may sell additional warrants and use a portion of the net proceeds from the sale of the additional notes and from the sale of additional warrants to enter into additional convertible note hedge transactions. In connection with establishing their initial hedge of the convertible note hedge and warrant transactions, the hedge counterparties or their affiliates expect to enter into various derivative transactions with respect to Navistar's common stock concurrently with or shortly after the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of Navistar's common stock or the notes at that time. In addition, the hedge counterparties or their affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to Navistar's common stock or purchasing or selling Navistar's common stock in secondary market transactions following the pricing of the notes and prior to the maturity of the notes (and are likely to do so following conversion of the notes and during any related observation period). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the notes, which could affect Navistar's ability to convert the notes and, to the extent the activity occurs following conversion of the notes and during any related observation period, could affect the number of shares and value of the consideration that Navistar will receive upon conversion of the notes. The senior notes offering is being led by Credit Suisse, and the convertible notes offering is being led by J.P. Morgan. These notes will be offered and sold under the company's shelf registration statement filed with the Securities and Exchange Commission on Oct. 20, 2009, which was effective upon filing. A copy of the prospectus can be obtained for the senior notes by contacting Credit Suisse at Attention: Prospectus Department, One Madison Avenue, New York, NY 10171 (1-800-221-1037) and for the convertible notes by contacting J.P.Morgan at Attention: Prospectus Department, 4 Chase Metrotech Center, CS Level, Brooklyn, NY 11245 (1-718-242-8002). A full-text copy of the preliminary prospectus relating to the proposed issuance of $500,000,000 in __% Senior Subordinated Convertible Notes due 2014 is available at no charge at http://ResearchArchives.com/t/s?4741 A full-text copy of the preliminary prospectus relating to the proposed issuance of $1,000,000,000 in __% Senior Notes Due 2021 is available at no charge at http://ResearchArchives.com/t/s?4743 Also on Tuesday, Navistar filed an automatic shelf registration of securities. In connection with the filing of the registration statement on Form S-3 and in accordance with Article 11 of Regulation S-X, Navistar provided updated pro forma financial information related to the June 2009 acquisition of additional equity interest in Blue Diamond Parts for the nine month period ended July 31, 2009. A full-text copy of the updated pro forma financial information is available at no charge at http://ResearchArchives.com/t/s?4744 About Navistar Navistar International Corporation (NYSE: NAV) -- http://www.Navistar.com/-- is a holding company whose subsidiaries and affiliates subsidiaries produce International(R) brand commercial and military trucks, MaxxForce(R) brand diesel engines, IC Bus(TM) brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse(R) brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service. Another affiliate offers financing services. At July 31, 2009, the Company had $9.38 billion in total assets and $10.66 billion in total liabilities, resulting in $1.35 billion in stockholders' deficit. Navistar reported $9.65 billion in total assets and $11.09 billion in total liabilities as of April 30, 2009, resulting in $1.44 billion in stockholders' deficit. * * * Navistar carries Standard & Poor's Ratings Services' 'BB-' corporate credit ratings and Fitch Ratings' 'BB-' Issuer Default Ratings. NAVISTAR INT'L: Has Deal With SEC Over Restatement of Financials ---------------------------------------------------------------- Navistar International Corporation has reached a tentative settlement of the Securities and Exchange Commission's investigation into the company's December 2007 restatement of its financial results for 2002 through the first three quarters of 2005 that will fully resolve the matters under investigation. The company said the events underlying the restatement have been under investigation by the SEC since 2006 and were the subject of an internal investigation completed by a special committee of the Navistar board of directors in December 2007. "This settlement will enable our company to put this matter behind us and to continue our focus on building and sustaining our positive momentum on behalf of our shareowners," said Daniel C. Ustian, Navistar chairman, president and chief executive officer. Navistar has been providing information to and fully cooperating with the SEC in this investigation and the company and Mr. Ustian have reached an agreement with the investigative staff of the SEC that will fully resolve this matter. Under the agreement, which is subject to the approval of the commission, Navistar will consent to the entry of an administrative settlement regarding its pre-restatement accounting practices in specified areas. The company will not pay any fines or penalties. As part of this administrative settlement with the SEC, Mr. Ustian has agreed to return some of his 2004 bonus, the only year in which a bonus was paid during the period. In addition, it is anticipated that several former Navistar employees will agree to a civil penalty. Steven K. Covey, Navistar senior vice president and general counsel, said Mr. Ustian and the company's board of directors believe the settlement, which requires neither an admission nor a denial of any wrongdoing "is in the best interest of our shareholders and will avoid the expense and distraction of a potential dispute with the SEC." Mr. Covey also noted that the company has invested heavily in systems and personnel to ensure that events that led to the restatement will not occur in the future. About Navistar Navistar International Corporation (NYSE: NAV) -- http://www.Navistar.com/-- is a holding company whose subsidiaries and affiliates subsidiaries produce International(R) brand commercial and military trucks, MaxxForce(R) brand diesel engines, IC Bus(TM) brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse(R) brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service. Another affiliate offers financing services. At July 31, 2009, the Company had $9.38 billion in total assets and $10.66 billion in total liabilities, resulting in $1.35 billion in stockholders' deficit. Navistar reported $9.65 billion in total assets and $11.09 billion in total liabilities as of April 30, 2009, resulting in $1.44 billion in stockholders' deficit. * * * Navistar carries Standard & Poor's Ratings Services' 'BB-' corporate credit ratings and Fitch Ratings' 'BB-' Issuer Default Ratings. NAVISTAR INT'L: Sees FY2009 Net Income at Lower End of Guidance --------------------------------------------------------------- Andrew J. Cederoth, Chief Financial Officer of Navistar International Corporation, says the company's guidance for net income including and excluding a settlement with Ford Motor and related charges for its fiscal year ending October 31, 2009, is expected to be in the mid to low end of the range that was stated on September 10, 2009, during the third quarter analyst call. According to Mr. Cederoth, the softness in the U.S. and Canadian truck and bus markets was also referenced on that third quarter call and that continued softness has resulted in lower manufacturing segment profit compared to the September 10, 2009 guidance that is expected to be offset by better than expected performance in corporate SG&A and other below the line items. Further, the current guidance does not include certain potential asset impairments, such as those that may arise from developments in the Company's Canadian operations or the potential write-off of certain unamortized debt issuance costs from the company's 2007 term loan that will be triggered as a result of the refinancing. As reported by the Troubled Company Reporter on September 11, 2009, based on projections for increased income tax expenses and its forecast for the remainder of the year, Navistar lowered its guidance for net income for its fiscal year ending Oct. 31, 2009, to a revised range of $182 million, or $2.55 per diluted share, to $207 million, or $2.85 per diluted share, excluding the Ford settlement and related charges. Including the impact of the Ford settlement, net of related charges, earnings should be in the range of $4.95 to $5.25 per diluted share. About Navistar Navistar International Corporation (NYSE: NAV) -- http://www.Navistar.com/-- is a holding company whose subsidiaries and affiliates subsidiaries produce International(R) brand commercial and military trucks, MaxxForce(R) brand diesel engines, IC Bus(TM) brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse(R) brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service. Another affiliate offers financing services. At July 31, 2009, the Company had $9.38 billion in total assets and $10.66 billion in total liabilities, resulting in $1.35 billion in stockholders' deficit. Navistar reported $9.65 billion in total assets and $11.09 billion in total liabilities as of April 30, 2009, resulting in $1.44 billion in stockholders' deficit. * * * Navistar carries Standard & Poor's Ratings Services' 'BB-' corporate credit ratings and Fitch Ratings' 'BB-' Issuer Default Ratings. NAVISTAR INT'L: Moody's Assigns 'B1' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service assigned new ratings to Navistar International Corporation. The newly-assigned ratings include: B1 Corporate Family Rating, B1 Probability of Default; and SGL-2 Speculative Grade Liquidity rating. Moody's also assigned a rating of B1, LGD3, 49% to the company's $1 billion of senior unsecured notes, and (P)B1 to its shelf registration of debt securities. The rating outlook is stable. The proceeds from the note offering, along with funds raised from an unrated $500 million convertible subordinated note offering will be used to repay $1.33 billion outstanding under a revolving credit and term loan facility that will be terminated subsequent to the pay-down. Navistar's B1 rating acknowledges the company's highly competitive position in the North American class 6-8 truck market, its ongoing operational initiatives to reduce its vulnerability to this sector, and the manufacturing operation's sound liquidity. These operational initiatives include: expanding its military truck and parts business, broadening its line of engine offerings, and establishing engine-production joint ventures that will facilitate its entry into truck markets outside of North America. However, the rating also reflects Moody's expectation that the company's earnings, cash generation and credit metrics will weaken considerably during 2010 as a result of several factors. First, the North American truck market remains mired in the most severe cyclical downturn in over 45 years with unit shipments of 455,000 in 2006 falling steadily to about 175,000 in 2009. Moody's expect that shipments will increase by only 10% to 13% during 2010 -- with much of this increase occurring during the second-half of the year. However, Moody's expect that this 2010 recovery may be offset by a decline in truck and part shipments associated with sales to the US military. Second, Navistar's engine supply agreement with Ford is about to terminate, thereby eliminating a historically important source of revenues. Finally, the company's 2010 performance will not benefit from the $200 million cash settlement payment that was received from Ford in 2009. For the LTM through July 2009, Navistar's performance reflected: an operating margin of 5.3%; EBITA/interest of 2.3x; and debt/EBITDA of 2.9x based on Moody's standard adjustments. Moody's anticipate that all of these metrics will weaken during 2010, and will be reflective of a B1 rating. The B1 rating also incorporates the uncertainties associated with Navistar's sales to the US military and with market acceptance of Navistar's EGR engine technology. The sale of trucks and parts to the US military are an important component of Navistar's strategy for reducing its vulnerability to the North American commercial truck market. These profitable sales grew from $400 million in 2007 to almost $4 billion in 2008. But, these revenues will decline to about $3 billion in 2009, and could fall further to approximately $2 billion in 2010. The dramatic increase in military sales during 2008 was the result of the US Marine's urgent need for MRAP vehicles in the Middle East. Navistar was able to meet this need at a time when other suppliers were capacity constrained, and the resulting sales helped to offset the revenue and earnings decline associated with the cyclical decline in the commercial truck market. After fulfilling much of the MRAP requirements during 2008, military sales could fall to what Navistar believes is a minimum sustainable run-rate of $2 billion per year in 2010. However, military contracts are subject to cancellation on short notice, demand for the products supplied by Navistar can vary significantly from year-to-year as evidenced by the $1 billion decline during 2009, and Navistar is in the early stages of establishing the expertise needed to most effectively compete for contracts in this area. Moody's believe that Navistar's need to build its expertise in the military contract arena may be evidenced by its loss during mid-2009 of contracts to provide MATV and FMTV trucks to the US armed services. These contracts could have generated revenue of $5 to $7 billion over several years. Most US truck manufacturers other than Navistar are embracing the SCR engine technology to meet 2010 EPA emissions regulations. Navistar is utilizing EGR technology to meet these requirements. The company's extensive testing of EGR indicates that this technology will be EPA-compliant, and that potential customers will accept EGR engines to a degree that enables Navistar to maintain its current market position. Despite the positive nature of Navistar's tests and of initial customer response, the ultimate competitive standing and economics of Navistar's EGR technology versus that of SCR is not likely to be clearly determined until late in 2010. Although Navistar could harvest material and sustainable strategic benefits from its military contracts and EGR technology over the longer-term, these initiatives represent areas of uncertainty and potential business risk over the near term. The stable outlook reflects Moody's expectation that Navistar will maintain its competitive position in the North American class 6-8 truck market, where its share position has been growing and it currently holds about 33% of the market. Moreover, the strategic initiatives the company has been pursuing should, over time, help to reduce the company' vulnerability to the cycles in its core market. The stable outlook is also supported by the company's prudent liquidity strategy. Navistar's liquidity position is good and the principal sources of liquidity are the $751 million in cash it held at July 31, 2009 and an unused $200 million ABL facility maturing in 2012. In addition, the company should continue to generate moderate levels of free cash flow during the coming twelve months, although at a lower pace than the $318 million generated for the LTM through July. These sources should enable the company to comfortably fund all of its cash requirements during the coming twelve months. The liquidity profile is further supported by the lack of financial covenants in the ABL facility and the company's considerable amount of unencumbered assets that are available to be pledged to potential lenders. Navistar's principal liquidity requirement will be the funding of approximately $217 million of maturing debt and capital lease payments. A potential contingent call on Navistar's liquidity could come from its captive finance operation, Navistar Financial Corporation (NFC), which has a $4 billion portfolio of receivables. NFC provides financing for a relatively modest 10% of Navistar's retail sales, and for the majority of Navistar dealer inventory. NFC benefits from a support agreement with Navistar that requires the manufacturer to maintain the finance operation's fixed charge coverage ratio at no less than 1.25x. Navistar had to make a $60 million payment to NFC under this agreement during 2008. Moreover, should NFC have difficulty in renewing any of its borrowing or ABS facilities, Navistar might choose to provide liquidity to the finance operation. However, the quality of NFC's receivable portfolio is performing in line with that of other captive finance companies in the capital goods and heavy equipment sector. Moreover, conditions in the ABS and bank markets indicate that NFC should not encounter any major obstacles in its attempts to renew its various facilities. Nevertheless, NFC's funding strategy could represent an area of liquidity risk for Navistar. The B1 rating could improve during late 2010 if the North American truck market remains on track for a sustained recovery into 2011, and Navistar's operational initiatives to moderate its vulnerability to the truck cycle show evidence of taking hold. Progress in these initiatives would be demonstrated by growing its military business and establishing solid market acceptance of its EGR engines. An improvement in the rating would also be supported if the company's late 2010 operating performance is on track to generate EBITA/interest approximating 2.5x, debt/EBITDA below 4x, EBITA margin exceeding 5%, and a strong liquidity profile as evidenced by a cash position and unused borrowing facilities in excess of $900 million . The rating could come under pressure if key elements of the company's operational initiatives for reducing cyclicality stall, or if the North American truck market does not begin recovering during 2010. Metrics of These levels would contribute to ratings pressure: EBITA/interest below 1.25x and debt/EBITDA above 4.5x. The last rating action on Navistar was a withdrawal of the company's B1 rating on July 17, 2006, due to the lack of filing of financial statements. NAVISTAR INT'L: S&P Assigns 'BB-' Rating on $1 Bil. Bonds --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating and '4' recovery rating to Navistar International Corp.'s proposed issuance of $1 billion in senior unsecured bonds. The '4' recovery rating indicates S&P's expectation that lenders would receive average (30% to 50%) recovery in the event of a payment default. At the same time, S&P assigned its 'B' issue-level rating and '6' recovery rating to Navistar's proposed $500 million convertible subordinated notes. The '6' recovery rating indicates S&P's expectation of negligible (0 to 10%) recovery in the event of a payment default. In addition, S&P assigned its preliminary 'BB-' senior unsecured and preliminary 'B' subordinated debt ratings to Navistar's $3 billion shelf registration filed with the SEC. S&P expects Navistar to use proceeds from the proposed bond and note offerings to repay its $1.5 billion unrated bank credit facility due 2012, which had about $1.33 billion outstanding as of July 31, 2009. The corporate credit ratings on Warrenville, Ill.-based Navistar and subsidiary Navistar Financial Corp. remain 'BB-' and reflect the severe cyclicality of the North American commercial-vehicle industry, which has experienced an extended period of poor demand because of the weak economy and low freight volumes. The ratings also reflect Navistar's high leverage, volatile cash flow generation, and heavy schedule of debt maturing over the next few years, although the proposed financings largely address this issue for the parent company. The corporate credit ratings also reflect S&P's assumption that Navistar will be able to transition to a more diversified debt structure as it refinances large amounts of private bank debt maturing in the next three years: in addition to the current proposed transactions, Navistar must also refinance an unrated $1.4 billion facility maturing at the finance subsidiary in mid- 2010. S&P views the currently proposed transactions as a positive step for liquidity and financial flexibility. Still, S&P's negative outlook on the corporate credit rating reflects in part the execution risk of what S&P consider significant remaining refinancing requirements. Ratings List Navistar International Corp. Corporate Credit Rating BB-/Negative/-- New Ratings Navistar International Corp. Senior Unsecured US$1 bil. sr unsecd bnds ser due 2021 BB- Recovery Rating 4 Subordinated US$500 mil. convertible nts due 2014 B Recovery Rating 6 NTK HOLDINGS: Files Prepackaged Plans of Reorganization ------------------------------------------------------- Nortek, Inc., and its domestic subsidiaries have filed their prepackaged Chapter 11 plan of reorganization. Nortek completed its previously announced solicitation of votes from creditors for the Prepackaged Plans on October 16, 2009. As a result of the Solicitation, 100% of the votes cast by holders of Nortek's 10% Senior Secured Notes due 2013, 100% of the votes cast by holders of Nortek's 8-1/2% Senior Subordinated Notes due 2014, and 100% of the votes cast by holders of Nortek's 9-7/8% Series A and Series B Senior Subordinated Notes due 2011, each voted to accept the Prepackaged Plans. Nortek and its subsidiaries will continue to operate their businesses in the ordinary course throughout the chapter 11 process while they seek confirmation of their prepackaged plans of reorganization. Nortek anticipates that cash on hand and cash from operating activities will be adequate to fund its projected needs during the chapter 11 process, including the payment of operating costs and expenses. At the time the chapter 11 petitions were filed, Nortek, including its subsidiaries, had in excess of $125 million cash on hand and, as previously announced, on October 9, 2009, Nortek received a commitment for a $250 million asset-based revolving credit facility that will be available upon emergence from bankruptcy. As a result, Nortek does not foresee any need for debtor-in-possession financing. Richard L. Bready, Nortek Chairman and Chief Executive Officer, said, "We continue to believe that Nortek has fundamentally sound businesses operating in established markets that are poised for growth as economic conditions improve. The chapter 11 process will enable Nortek to emerge as an even stronger company with substantially less debt. Going forward, we anticipate no disruption in product availability or delivery of products and remain focused on meeting customer needs worldwide." Nortek is requesting that the Bankruptcy Court approve motions to permit it and its subsidiaries to continue paying suppliers and vendors in full, without interruption, in the ordinary course of business. Additionally, Nortek has asked the Court to approve motions that would permit it to continue paying employees' wages and benefits and maintain its cash management systems. Nortek and its subsidiaries also expect to honor all customer programs and product warranties in the ordinary course of business. Nortek expects that the chapter 11 process will take approximately two to three months to complete, but can give no assurance that this time frame will be met. Nortek also stated that no management changes are anticipated and it has no plans to sell any of its subsidiaries. Holders of NTK Holdings' 10-3/4% Senior Discount Notes due 2014 accepted the Prepackaged Plans and, although holders of indebtedness under NTK Holdings' Senior Unsecured Credit Facility did not accept the Prepackaged Plans, NTK Holdings intends to seek confirmation of the Prepackaged Plans. On its effective date, following its confirmation by the Bankruptcy Court, the Prepackaged Plans provide for the following distributions: holders of 10% Notes will receive new Nortek 11% senior secured notes and 5% of the equity in the reorganized Nortek; holders of 8-1/2% Notes and 9-7/8% Notes will receive 93% of the equity in the reorganized Nortek, and holders of 10 3/4% Notes and indebtedness under the NTK Credit Facility will receive 2% of the equity, and warrants to purchase additional equity, of the reorganized Nortek. All other creditors are unimpaired and, if not previously paid, will be paid in full in the ordinary course of business under the Prepackaged Plans. Nortek and NTK Holdings expect that the consummation of the Prepackaged Plans will result in an approximate $1.3 billion reduction of their outstanding indebtedness. About NTK Holdings NTK Holdings Inc., the parent company of Nortek Holdings and Nortek Inc., is a diversified global manufacturer of branded residential and commercial ventilation, HVAC and home technology convenience and security products. NTK Holdings and Nortek offer a broad array of products including range hoods, bath fans, indoor air quality systems, medicine cabinets and central vacuums, heating and air conditioning systems, and home technology offerings, including audio, video, access control, security and other products. As reported by the TCR on Sept. 4, 2009, NTK Holdings, Inc., and Nortek, Inc., entered into a restructuring and lockup agreement with bondholders to effectuate a comprehensive restructuring of the Company's debt under Chapter 11. When concluded, the Agreement will eliminate approximately $1.3 billion in total indebtednes by, among other things, exchanging debt to bondholders for equity in the Company. NTK Holdings Inc., together with affiliates, including Nortek International, Inc. and Nortek Holdings, Inc., filed for Chapter 11 with a prepackaged plan accepted by all impaired creditors on October 21, 2009 (Bankr. D. Del. Case No. 09-13611). The Company has tapped Blackstone Group and Weil, Gotshal & Manges to aid in its restructuring effort. Mark D. Collins, Esq., at Richards Layton & Finger P.A., serves as local counsel. Epiq Bankruptcy Solutions is claims and notice agent. An Ad Hoc Committee of Nortek noteholders is being represented by Andrew N. Rosenberg, Esq., and Brian N. Hermann, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP; and William Derrough, Esq., and Adam Keil, Esq., at Moelis & Company. NTK Holdings and its units have assets of $1,655,200,000, against debts of $2,778,100,000 as of July 4, 2009. OPUS WEST: Gets Nod to Reject Phoenix HQ Office Lease ----------------------------------------------------- Opus West Corp. and its units obtained the Court's authority to reject the unexpired real property lease of their main office in Phoenix, Arizona, effective as of September 30, 2009. Clifton R. Jessup, Jr., Esq., at Greenberg Traurig LLP, in Dallas, Texas, relates that the Debtors will vacate the premises no later than September 30, 2009, and as a result the Lease will no longer benefit the Debtors' estates. Based in Phoenix, Arizona, Opus West Corporation is a full-service real estate development firm that focuses on acquiring, constructing, operating, managing, leasing and/or disposing of real estate development projects primarily located in the western United States. Opus West and its affiliates filed for Chapter 11 on July 6, 2009 (Bankr. N.D. Tex. Case No. 09-34356). Clifton R. Jessup, Jr., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. Franklin Skierski Lovall Hayward, LLP, is co-counsel to the Debtors. Pronske & Patel, P.C., is conflicts counsel. Chatham Financial Corp. is financial advisor. BMC Group is the Company's claims and notice agent. As of May 31, Opus West -- together with its non-debtor affiliates -- had $1,275,334,000 in assets against $1,462,328,000 in debts. In its bankruptcy petition, Opus West said it had assets and debts both ranging from $100 million to $500 million. Opus West joins affiliates that previously filed for bankruptcy. Opus East LLC, a real estate operator from Rockville, Maryland, commenced a Chapter 7 liquidation on July 1 in Delaware. Opus South Corp., a Florida condominium developer based in Atlanta, filed a Chapter 11 petition April 22 in Delaware. Bankruptcy Creditors' Service, Inc., publishes Opus West Bankruptcy News. The newsletter tracks the separate Chapter 11 proceedings of Opus West Corp. and Opus South Corp. and their related debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) OPUS WEST: Proposes to Reject Phoenix Equipment Lease ----------------------------------------------------- Opus West Corp. and its units ask the Court for authority to reject certain unexpired equipment leases, effective as of September 30, 2009. Debtor Opus West Corporation is a party to several unexpired equipment leases, whereby it leases certain copy and facsimile machines. Clifton R. Jessup, Jr., Esq., at Greenberg Traurig LLP, in Dallas, Texas, relates that the Equipment had been located in the Debtors' former headquarters in Phoenix, Arizona. The Debtors have sought and obtained authorization from the Court to reject an unexpired real property lease for their headquarters. The Debtors tell the Court that after they vacated their headquarters office space, they returned the Equipment to the lessors and therefore, the Equipment has provided no benefit to their bankruptcy estates since that date. Mr. Jessup adds that the Equipment Leases have no value to the Debtors' bankruptcy estate, and are not necessary for their future business operations. Against this backdrop, the Debtors believe it is in their best interests to reject the Equipment Leases effective September 30, 2009. About Opus West Corporation Based in Phoenix, Arizona, Opus West Corporation is a full-service real estate development firm that focuses on acquiring, constructing, operating, managing, leasing and/or disposing of real estate development projects primarily located in the western United States. Opus West and its affiliates filed for Chapter 11 on July 6, 2009 (Bankr. N.D. Tex. Case No. 09-34356). Clifton R. Jessup, Jr., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. Franklin Skierski Lovall Hayward, LLP, is co-counsel to the Debtors. Pronske & Patel, P.C., is conflicts counsel. Chatham Financial Corp. is financial advisor. BMC Group is the Company's claims and notice agent. As of May 31, Opus West -- together with its non-debtor affiliates -- had $1,275,334,000 in assets against $1,462,328,000 in debts. In its bankruptcy petition, Opus West said it had assets and debts both ranging from $100 million to $500 million. Opus West joins affiliates that previously filed for bankruptcy. Opus East LLC, a real estate operator from Rockville, Maryland, commenced a Chapter 7 liquidation on July 1 in Delaware. Opus South Corp., a Florida condominium developer based in Atlanta, filed a Chapter 11 petition April 22 in Delaware. Bankruptcy Creditors' Service, Inc., publishes Opus West Bankruptcy News. The newsletter tracks the separate Chapter 11 proceedings of Opus West Corp. and Opus South Corp. and their related debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) OPUS WEST: Proposes to Reject Sacramento Office Lease ----------------------------------------------------- Clifton R. Jessup, Jr., Esq., at Greenberg Traurig LLP, in Dallas, Texas, relates that on May 1, 2007, the predecessor-in- interest to Opus Real Estate CA VII SG, L.P., a Delaware limited partnership, as landlord, and O.W. Construction, as tenant, entered into an Office Lease Agreement concerning certain office space in the building located at 180 Promenade Circle, in Sacramento, California. Before the Petition Date, O.W. Construction believed that it had reached an agreement with the Landlord whereby the Sacramento Office Lease was to be terminated prior to the Petition Date, Mr. Jessup tells the Court. Pursuant to O.W. Construction's understanding of its agreement with the Landlord, O.W. Construction vacated the Sacramento Office Space prior to the Petition Date. Mr. Jessup notes that O.W. Construction has not received any benefit from the Sacramento Office Space or from the Sacramento Office Lease since prior to the Petition Date. Following the Petition Date, however, the Landlord informed O.W. Construction that it did not believe the Sacramento Office Lease had been terminated prior to the Petition Date. By this motion, the Opus West Debtors ask the Court for authority to reject the Office Lease effective as of the Petition Date. About Opus West Corporation Based in Phoenix, Arizona, Opus West Corporation is a full-service real estate development firm that focuses on acquiring, constructing, operating, managing, leasing and/or disposing of real estate development projects primarily located in the western United States. Opus West and its affiliates filed for Chapter 11 on July 6, 2009 (Bankr. N.D. Tex. Case No. 09-34356). Clifton R. Jessup, Jr., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. Franklin Skierski Lovall Hayward, LLP, is co-counsel to the Debtors. Pronske & Patel, P.C., is conflicts counsel. Chatham Financial Corp. is financial advisor. BMC Group is the Company's claims and notice agent. As of May 31, Opus West -- together with its non-debtor affiliates -- had $1,275,334,000 in assets against $1,462,328,000 in debts. In its bankruptcy petition, Opus West said it had assets and debts both ranging from $100 million to $500 million. Opus West joins affiliates that previously filed for bankruptcy. Opus East LLC, a real estate operator from Rockville, Maryland, commenced a Chapter 7 liquidation on July 1 in Delaware. Opus South Corp., a Florida condominium developer based in Atlanta, filed a Chapter 11 petition April 22 in Delaware. Bankruptcy Creditors' Service, Inc., publishes Opus West Bankruptcy News. The newsletter tracks the separate Chapter 11 proceedings of Opus West Corp. and Opus South Corp. and their related debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) P & M INDUSTRIES INC: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: P & M Industries, Inc. P.O. Box 520 Thorofare, NJ 08086 Bankruptcy Case No.: 09-37927 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court District of New Jersey (Camden) Judge: Gloria M. Burns Debtor's Counsel: David A. Kasen, Esq. Kasen & Kasen 1874 East Route 70, Suite 3 Cherry Hill, NJ 08003 Tel: (856) 424-4144 Email: dkasen@kasenlaw.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $964,122, and total debts of $1,547,133. A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/njb09-37927.pdf The petition was signed by John M. Monteith, president of the Company. PCS EDVENTURES: Receives "Wells Notice" From Sec Staff ------------------------------------------------------ PCS Edventures!.Com, Inc. has received a "Wells Notice" from the Salt Lake regional office staff of the U.S. Securities and Exchange Commission, informing PCS of the Staff's intention to recommend to the Commission that the SEC bring a civil injunctive action against PCS alleging that it violated Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1 and 13a-11 thereunder. A Wells Notice does not itself initiate litigation, nor is it a finding of wrongdoing by PCS or any individual. PCS disagrees with the Staff's recommendation and will continue to pursue a potential resolution of this matter before the Staff makes its formal recommendation to the Commission. PCS will vigorously defend any action brought by the SEC, but cannot predict the outcome or timing of this matter. The Wells Notice was issued in connection with a previously disclosed investigation into possible violations of federal securities laws stemming from disclosures made by PCS in its 8-K Current Report dated March 27, 2007 and in a related Press Release that announced a License Agreement with Global Techniques dba PCS Middle East, subsequent sales of PCS stock by certain PCS officers and directors, book and record-keeping procedures and internal controls relating to revenue recognition from the License Agreement, and later disclosures concerning the License Agreement. PCS has been informed that, as a result of the investigation, Wells Notices were also issued to the Chairman of the Board/Chief Executive Officer; the Executive Vice President/Chief Technology Officer; a Director; and a former officer. PCS has cooperated fully in providing information and documentation to the Staff during the SEC's investigation. In connection with the contemplated recommendation, the Staff may seek remedies including, among other things, a permanent injunction against future violations of federal securities laws, civil monetary penalties and, in the case of the individual Wells Notice recipients, disgorgement of PCS stock sale proceeds and a bar against continued service as officers or directors of PCS. Under a process established by the SEC, PCS and each of the other recipients of the Wells Notices have the opportunity to submit any reasons of law, policy or fact why they believe that a civil injunctive action should not be brought before the Staff makes its recommendation to the Commission regarding what action, if any, should be brought. PCS intends to make a Wells Submission and will endeavor to reach a resolution with the Staff before any action is filed, but cannot guarantee that it will be able to do so. There can be no assurance that the SEC will not decide to bring an action against PCS or the officers and directors who have also received Wells Notices. Under its bylaws, PCS is obligated, subject to certain exceptions and conditions, to indemnify and advance expenses to current and former officers and directors in connection with the SEC investigation and any subsequent SEC enforcement actions. The costs incurred by PCS in addressing the SEC investigation and possible enforcement proceedings, including the anticipated costs of indemnification of PCS' officers and directors, will likely have a material adverse effect on PCS' business, financial position, results of operations and cash flows (including its liquidity and its plan of operation as outlined in management's discussion and analysis in PCS' most recent 10-K and 10-Q reports). The investigation and possible enforcement proceedings could result in adverse publicity and divert the efforts and attention of PCS' executive management team from ordinary business operations. PCS' directors and officers insurance carrier has denied coverage of any claims relating to the SEC investigation, including defense costs, based on its contention that PCS did not give it timely notice of the SEC's formal non-public order commencing the investigation or the related issuance of subpoenas by the SEC. PCS disagrees with the carrier's coverage position and is continuing its efforts to require the insurer to satisfy its contractual obligations. There can be no assurance that the insurer will reimburse the legal expenses associated with the SEC investigation or any subsequent enforcement action that may be commenced in the future. The Company has noted it depends to a large extent on the abilities of key management and technical personnel, in particular Anthony A. Maher, its President and Chief Executive Officer, and Robert O. Grover, its Executive Vice President and Chief Technology Officer. "The loss of any key employee or our inability to attract or retain other qualified employees could seriously impair our results of operations and financial condition. This risk is magnified as a result of the receipt by Messrs. Maher and Grover of the SEC's Wells Notice dated October 16, 2009, because the SEC may seek a bar against continued service as PCS officers and directors as one potential remedy in any enforcement action that it may bring against these individuals," the Company has said. About PCS Edventures! Boise, Idaho-based PCS Edventures!.Com, Inc. (OTCBB: PCSV) -- http://www.edventures.com/-- designs, develops and delivers educational learning labs bundled with related technologies and programs to the K-12 market worldwide. The PCS suite of products ranges from hands-on learning labs in technology-rich topics in Science, Technology, Engineering and Math (STEM) to services rich in imagination, innovation, and creativity. PCS programs operate in over 6,000 sites in all 50 United States as well as in 17 countries Internationally. PHILADELPHIA NEWSPAPERS: Bruce Toll Sweetens Bid by $20 Million --------------------------------------------------------------- The group led by Bruce E. Toll, vice chairman of homebuilder Toll Brothers Inc., raised its offer by $20 million to buy Philadelphia Newspapers LLC, Bloomberg News reported. According to the report, The Toll group's offer would now give the secured lenders $86.5 million, including a $20 million note, $37 million cash, and real estate worth $29.5 million. In addition, the lenders would share half of adjusted cash flow over five years. The Toll group, which includes current investors in the Debtors' newspapers, says its offer is now worth $112 million, plus a $17 million letter of credit. In addition to the payment for the banks, the buyers would pay $25 million toward the costs of the Chapter 11 exercise. An auction for Philadelphia Newspapers is currently scheduled to be held Nov. 18, with bids initially due two days before. The Court-approved rules include a provision for credit bids of up to $318.8 million. As reported by the TCR on October 15, Philadelphia Newspapers lost a ruling in bankruptcy court when the judge allowed secured lenders to submit a credit bid. Philadelphia Newspapers opposed a credit bid by lenders owed more than $400 million, saying that it would have a "chilling effect" on competing bidders. A credit bid would easily top the offer by Bruce E. Toll. Mr. Toll has sweetened its bid to win over opposition from the lenders. Mr. Toll, through entity Philly Papers, originally offered to pay over $41,000,000, after payment of approximately $6,000,000 in administrative and priority claims, and assume some debts. The Associated Press quoted Philadelphia Newspapers spokesperson Jay Devine as saying, "This is putting $20 million in debt on the company, which we think is a doable amount. It's a way for us to . . . give (creditors) $20 million more, but not have to do it all at once." The group would be competing against senior lenders -- including the Royal Bank of Scotland Group PLC, CIT Group Inc. and Angelo, Gordon & Co., who have the right to use the $300 million in "IOUs" they already hold from owners to bid and who want to replace current management, including CEO Brian Tierney, The AP notes. The auction, according to The AP, is on November 18. The Debtors have filed a proposed Chapter 11 plan built around the sale of the business to Mr. Toll or to the highest bidder. A hearing to approve the disclosure statement explaining the newspapers' Chapter 11 plan is set for Oct. 28. The Plan is scheduled for a confirmation hearing on Dec. 4. About Philadelphia Newspapers Philadelphia Newspapers -- http://www.philly.com/-- owns and operates numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site, philly.com, and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. Philadelphia Newspapers and its debtor-affiliates filed for Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa. Case No. 09-11204). Proskauer Rose LLP is the Debtors' bankruptcy counsel, while Lawrence G. McMichael, Esq., at Dilworth Paxson LLP is the local counsel. The Debtors' financial advisor is Jefferies & Company Inc. The Garden City Group, Inc., serves as claims and notice agent. Philadelphia Newspapers listed assets and debts of $100 million to $500 million in its bankruptcy petition. PILGRIM'S PRIDE: Shareholders to Vote on JBS-Backed Plan -------------------------------------------------------- Pilgrim's Pride Corporation has received approval from the U.S. Bankruptcy Court for the Northern District of Texas to begin soliciting stockholder acceptance of the amended joint plan of reorganization of the company and six of its subsidiaries that are debtors and debtors in possession in the chapter 11 cases pending before the Court. The Company's creditors will not be voting on the plan of reorganization as they are not considered to be an impaired class and all will be fully repaid upon the company's emergence from bankruptcy. All stockholders of record on October 22, 2009, are entitled to vote to accept the plan of reorganization. Copies of the plan of reorganization and the amended disclosure statement will be mailed shortly. The deadline for ballots to be received by the voting agent is December 1, 2009. A court hearing to confirm the plan of reorganization is scheduled to be held December 8, 2009. Pilgrim's Pride said it anticipates the plan of reorganization to be confirmed by the Bankruptcy Court in time for the Debtors to emerge from bankruptcy before the end of December. Last month, the Debtors filed a joint plan of reorganization and related disclosure statement with the court. Under terms of the joint plan of reorganization, Pilgrim's Pride has entered into an agreement to sell 64% of the new common stock of the reorganized Pilgrim's Pride to JBS U.S.A. for $800 million in cash. Distributions Under Ch. 11 Plan The Plan, as amended, October 19, 2009, will be financed in part by the sale of 64% of the stock to JBS for US$800 million, leaving the remaining 36% of the stock, presumptively worth US$450 million, for existing equity holders. All creditors will be paid fully either in cash or through issuance of new debt. Proceeds from the sale of the new common stock of the reorganized Pilgrim's Pride to JBS will be used to fund cash distributions to allowed claims under the plan. Under the terms of the plan, all creditors of the Debtors holding allowed claims will be paid in full. The Amended Plan also offers to pay priority tax claims with postpetition interest, if applicable. All existing Pilgrim's Pride common stock will be cancelled and existing stockholders will receive the same number of new common stock shares, representing 36% of the reorganized Pilgrim's Pride in aggregate. The plan also calls for an exit facility for senior secured financing in an aggregate principal amount of at least US$1.65 billion. Since the proposed plan of reorganization represents a "100% plan," with creditors being repaid in full, shareholders represent the only impaired class and will be the only group entitled to vote on the plan of reorganization. The Equity Committee supports the Plan, noting that the Plan results in an initial recovery to equity holders valued at upwards of $450 million, with the potential to enjoy further appreciation of their interests in the Reorganized Debtors (or a successor) should their businesses continue to prosper. A copy of the Amended Plan is available for free at: http://bankrupt.com/misc/Pilgrims_AmendedPlan.pdf A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Pilgrims_AmendedDS.pdf About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. Pilgrim's Pride Corp. and six other affiliates filed Chapter 11 petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No. 08-45664). The Debtors' operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process. Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges LLP, as bankruptcy counsel. Lazard Freres & Co., LLC, is the Company's investment bankers and William K. Snyder of CRG Partners Group LLC is chief restructuring officer. Kurtzman Carson Consulting LLC serves as claims and notice agent. Kelly Hart and Brown Rudnick represent the official equity committee. Attorneys at Andrews Kurth LLP represents the official committee of unsecured creditors. As of December 27, 2008, the Company had US$3,215,103,000 in total assets, US$612,682,000 in total current liabilities, US$225,991,000 in total long-term debt and other liabilities, and US$2,253,391,000 in liabilities subject to compromise. Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride Bankruptcy News. The newsletter tracks the Chapter 11 proceeding of Pilgrim's Pride Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) PTC ALLIANCE: Bankruptcy to Cost Hannibal $45,000 ------------------------------------------------- The bankruptcy filings by PTC Alliance Corp. and its affiliates in Hannibal, Missouri, will cost the Hannibal Board of Public Works around $45,000 in unpaid utility bills, Danny Henley at Hannibal Courier-Post reports, citing Don Willis, general manager of the BPW. According to Courier-Post, the BPW has been budgeting more and more to offset anticipated unpaid bills and Mr. Willis said, "It used to be $60,000, then $90,000, but with the rates the way that they are now we would have budgeted $150,000 for just normal things, but now we've put in $200,000 . . . . We're seeing a lot of $200, $300, $400 ones [unpaid bills] because by the time we actually shut somebody off and they decide to move out of town or do whatever they do, they are 60 days into us. By the time somebody gets into you 60 days with a $200 monthly bill, you've got $400 in it easy." PTC Alliance, says Courier-Post, has paid approximately $1.2 million into a utility trust fund. "What they've done is voluntarily set up a deposit fund for all their utilities, which is Internet, phone, and all those other things too. That's for the whole company, not just for Enduro. That deposit fund is supposed to guarantee they will pay their utilities from now on," the report quoted Mr. Willis as saying. Headquartered in Wexford, Pennsylvania, PTC Alliance Corp. makes welded and cold drawn mechanical steel tubing and tubular shapes, chrome-plated bar products and precision components. The Company and its affiliates filed for Chapter 11 protection on October 1, 2009 (Bankr. D. Del. Lead Case No. 09-13395). The Debtors selected Reed Smith LLP as their counsel. PTC Alliance listed, in its petition, assets between $50 million and $100 million, and debts between $100 million and $500 million. QUANTUM GROUP: Receives Delisting Notice From Amex -------------------------------------------------- The Quantum Group, Inc., on October 21 notified the NYSE Amex LLC of its intent to file a Form 25 with the Securities and Exchange Commission on or about November 2, 2009, and voluntarily delist its common stock, Class A warrants and Class B warrants from Amex. The Company anticipates that the delisting will be effective on or about November 12, 2009, 10 days after the date of its filing of the Form 25. Upon delisting from Amex, the Company intends to have its publicly traded securities quoted on the OTC Bulletin Board following clearance by the Financial Industry Regulatory Authority (FINRA) of a Form 211 application filed by a market maker in Company securities. The Company has previously reported its receipt of a deficiency letter from Amex dated March 17, 2009, advising that the Company was not in compliance with Section 1003(a)(iv) of the NYSE Company Guide. Specifically, the Company had sustained losses that were so substantial in relation to its overall operations or its existing financial resources, or its financial condition had become so impaired that it appeared questionable, in the opinion of Amex, whether the Company would be able to continue operations and/or meet its obligations as they matured. The Company submitted a plan of compliance, accepted by Amex on May 28, 2009, outlining its strategy to regain compliance with the continued listing requirements by September 17, 2009. By letter dated October 15, 2009, Amex informed the Company of its determination that the Company was unable to regain compliance with these listing requirements and that it intended to strike the Securities from Amex. In addition, the letter cited the failure of the Company to comply with Section 301 of the Company Guide. Section 301 states that a listed company is not permitted to issue, or to authorize its transfer agent or registrar to issue or register, additional securities of a listed class until it has filed an application for the listing of such additional securities and received notification from the Exchange that the securities have been approved for listing. The letter also informed the Company that it had the right to appeal the staff determination to delist the Securities. After considering the costs to the Company of compliance with the continued listing requirements of Amex and other factors, the Board determined that it was not in the best interests of the Company and its shareholders to appeal the delisting of the Company securities from Amex and approved the voluntary delisting of the securities on October 19, 2009. As reported by the Troubled Company Reporter on September 25, 2009, the Company said that there is substantial doubt about its ability to continue as a going concern. The Company noted that it has negative cash flows from operating activities of $3,800,000 for the nine months ended July 31, 2009, and an accumulated deficit of more than $50,200,000 at July 31, 2009. For the remainder of the year ending October 31, 2009, the Company will need additional cash infusions to meet its operating expenses. The Company related that if it does not obtain additional funding within a short period of time, it may be required to substantially curtail or cease operations altogether. About The Quantum Group, Inc. The Quantum Group, Inc. (AMEX:QGP) is a Healthcare Services Organization, which provides business process solutions to the healthcare industry, which include support services and leading- edge technology. The Company also provides other services and products to healthcare providers in and outside of its network. These services include medical billing and collection, purchasing, technology and insurance products. The operating divisions of the Company are Renaissance Health Systems, Quantum Medical Support Services and Quantum Innovations. As of Oct. 31, 2008, the Company's network included over 2,000 healthcare providers and operated in 29 counties in central and southern Florida. READER'S DIGEST: Interactive Division Head to Resign ---------------------------------------------------- Lara Bashkoff, president of the interactive division of The Reader's Digest Association, Inc., has informed the Company that she is leaving by the end of October 2009, Jason Fell of FolioMag.com reports. "RDA and I came to a mutual agreement, and I'm leaving the company after a transition over the next month," Ms. Bashkoff told FOLIO in a letter. "I'm excited about the accomplishments we've achieved here over the last three years, and the team is poised to continue growing digital business within the realm of a traditional media company," she added. Reader's Digest recently announced a series of changes to its United States business organization, including the interactive division. About The Reader's Digest Association RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 65 branded Web sites generating 22 million unique visitors per month, and sells 40 million books, music and video products across the world each year. Its global headquarters are in Pleasantville, N.Y. Reader's Digest said that as of June 30, 2009, it had total assets of $2.2 billion against total debts of $3.4 billion. Reader's Digest, together with its 47 affiliates, filed for Chapter 11 on August 24 (Bankr. S.D.N.Y. Case No. 09-23529). Kirkland & Ellis LLP has been engaged as general restructuring counsel. Mallet-Prevost, Colt & Mosle LLP has been tapped as conflicts counsel. Ernst & Young LLP is auditor. Miller Buckfire & Co, LLC, is financial advisor. AlixPartners, LLC, is restructuring consultant. Kurtzman Carson Consultants is notice and claims agent. The Official Committee of Unsecured Creditors is tapping BDO Seidman, LLP, as financial advisor, Trenwith Securities, LLP, as investment banker and Otterbourg, Steindler, Houston & Rosen, P.C., as counsel. Bankruptcy Creditors' Service, Inc., publishes Reader's Digest Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Reader's Digest and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) READER'S DIGEST: Trustee Wants More Info on Funds ------------------------------------------------- Law360 reports that U.S. Trustee Diana Adams is demanding that The Reader's Digest Association Inc. provide more information about funds squirreled away in various domestic and foreign bank accounts amid worries about estate money potentially being kept in institutions that are not authorized depositories. The Debtors have sought the Court's permission to continue to utilize certain foreign bank accounts in the ordinary course of the Debtors' business. On August 26, 2009, the Court granted the Debtors' request to continue their existing cash management system on an interim basis. The Debtors' Cash Management System is comprised of 106 bank accounts maintained at various banks throughout the United States, Canada, the United Kingdom, Ireland and the Netherlands. Although not all, a vast majority of the Bank Accounts are located in banks designated as authorized depositories by the Office of the United States Trustee pursuant to the U.S. Trustee's Operating Guidelines and Financial Reporting Requirements. The Debtors' Bank Accounts include a series of accounts held at foreign banks: -- Canadian Operating Accounts, which the Debtors maintain at Bank of Montreal, National Bank of Canada and Royal Bank of Canada. As of October 2, 2009, the accounts collectively hold approximately $370,000; -- ABN AMRO Accounts, which the Debtors maintain 11 accounts with the ABN AMRO Group. As of October 2, 2009, there are only nominal amounts in the ABN AMRO accounts; and -- National Westminster Bank Account, which account the Debtors are actively working to close. Given the substantial economic scale and geographic reach of the Debtors' business operations and the relatively modest amounts in the accounts, the Debtors ask the Court, through a supplement, for authority to continue to utilize the Foreign Bank Accounts in the ordinary course of business. James H.M. Sprayregen P.C., Esq., at Kirkland & Ellis LLP, in New York, asserts that it is critical that the Cash Management System remain intact to ensure seamless customer experiences and continued collection of revenues for the Debtors' bankruptcy estates. He points out that the continued use of the ABN AMRO Accounts is critical as the Debtors' netting program reduces the number of intercompany transactions and foreign exchange transactions required to be entered into by the netting participants, as well as the associated costs for those transactions. About The Reader's Digest Association RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 65 branded Web sites generating 22 million unique visitors per month, and sells 40 million books, music and video products across the world each year. Its global headquarters are in Pleasantville, N.Y. Reader's Digest said that as of June 30, 2009, it had total assets of $2.2 billion against total debts of $3.4 billion. Reader's Digest, together with its 47 affiliates, filed for Chapter 11 on August 24 (Bankr. S.D.N.Y. Case No. 09-23529). Kirkland & Ellis LLP has been engaged as general restructuring counsel. Mallet-Prevost, Colt & Mosle LLP has been tapped as conflicts counsel. Ernst & Young LLP is auditor. Miller Buckfire & Co, LLC, is financial advisor. AlixPartners, LLC, is restructuring consultant. Kurtzman Carson Consultants is notice and claims agent. The Official Committee of Unsecured Creditors is tapping BDO Seidman, LLP, as financial advisor, Trenwith Securities, LLP, as investment banker and Otterbourg, Steindler, Houston & Rosen, P.C., as counsel. Bankruptcy Creditors' Service, Inc., publishes Reader's Digest Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Reader's Digest and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) REAL MEX: Michael Linn Gives Board Seat to Anthony Polazzi ---------------------------------------------------------- Real Mex Restaurants, Inc., reports that effective October 14, 2009, Michael Linn, who represented a certain shareholder, has resigned from the Company's Board of Directors in order to accommodate the appointment of Anthony Polazzi, who represents certain shareholders. Real Mex Restaurants, Inc., owns and operates restaurants, primarily under the names El Torito(R), Acapulco Mexican Restaurant Y Cantina(R) and Chevys Fresh Mex(R). At December 28, 2008, the Company, primarily through its major subsidiaries (El Torito Restaurants, Inc., Chevys Restaurants LLC and Acapulco Restaurants, Inc.), owned and operated 190 restaurants, of which 157 were in California and the remainder in 12 other states. The Company's other major subsidiary, Real Mex Foods, Inc., provides internal production, purchasing and distribution services for the restaurant operations and manufactures specialty products for sales to outside customers. At March 29, 2009, the company's balance sheet showed total assets of $287.3 million, total liabilities of $272.9 million and stockholders' equity of about $14.4 million. The Company's Senior Secured Notes and senior unsecured credit facility each mature in 2010 and the Company will require additional financing to meet this obligation. The Company is currently evaluating its options to raise the necessary funds. No assurance can be given that the Company will be able to refinance any of its indebtedness on commercially reasonable terms or at all. * * * As reported by the Troubled Company Reporter on July 15, 2009, Moody's Investors Service upgraded Real Mex Restaurant's Speculative Grade Liquidity rating to SGL-3 from SGL-4, recognizing its improved liquidity as a result of the recently completed refinancing. Moody's also revised the rating on the company's newly issued $130 million 14% 2nd lien senior secured notes due 2012 to B3 from the initial provisional rating of (P)B3, upon closing of the transaction. Proceeds from the issuance were mainly used to refinance the 10% 2nd lien senior secured notes due April 1, 2010. The Caa2 Corporate Family Rating remains unchanged, while the rating outlook is revised to stable from developing. The TCR said July 8, 2009, Standard & Poor's Ratings Services affirmed the ratings on Real Mex Restaurants, including its 'B-' corporate credit rating. This action comes after the company priced $130 million of the senior secured notes at a 17.98% yield with a 14% coupon and 90% original issue discount. REBECCA ENGLE: Tries to Fight Securities Fraud Lawsuit ------------------------------------------------------ Josh Funk at The Associated Press reports that Rebecca Engle and Brian Schuster said that they shouldn't be prosecuted for securities fraud because the investors who lost more than $20 million acknowledged the risks in writing. Ms. Engle and Mr. Schuster are accused of defrauding more than 130 investors by improperly selling risky investments in interrelated Florida companies. According to The AP, prosecutors claim that the records don't tell the full story. Citing special prosecutor Michael Guinan, The AP states that the defendants' clients may have signed forms saying that they understood the risks of the investments, but many say now they weren't fully informed about the hazards. The lawyers of Ms. Engle and Mr. Schuster argued at Monday's hearing that prosecutors don't have enough evidence to proceed with the fraud cases, The AP relates. Written records made when the money was invested contradict the version of events investors told state officials several years later, and investigators led investors to believe that the defendants acted improperly with a suggestively worded survey they sent out, The AP says, citing Ms. Engle's lawyer, Steve Achelpohl. Rebecca Engle, a former Nebraska City broker, who is accused of improperly selling risky investments in several interrelated Florida companies filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy for the District of Arizona on May 30, 2008. Ms. Engle disclosed assets between $500,000 and $1 million, and estimated debts between $10 million and $50 million. RED RIVER ENERGY: Dist. Ct. Won't Review Shareholder Duty Decision ------------------------------------------------------------------ WestLaw reports that the proposed representatives of a Chapter 7 debtor-corporation failed to demonstrate the existence of grounds for a substantial difference of opinion with respect to either of the questions of controlling law on which they based their motion for leave to appeal an interlocutory bankruptcy court order designating one of them, a Cayman Islands company, as the primary designee, and that company's principal as the individual responsible for signing the debtor's schedules and statement of financial affairs and appearing at the meeting of creditors. Although the movants argued that there were no reported cases in which a court, pursuant to F.R.B.P. 9001(5), had designated a corporate entity to discharge a debtor's duties, or had named a foreign resident in his personal capacity, without notice, to discharge a debtor's duties, none of the cases cited involved facts like those at issue in the instant case. The movants thus failed to show that any court had interpreted the relevant legal principle differently under substantially similar circumstances. They also failed to show that an immediate appeal would materially advance the ultimate termination of the bankruptcy litigation. In re Red River Energy, Inc., --- B.R. ----, 2009 WL 2901192 (S.D. Tex.). The Troubled Company Reporter covered the bankruptcy court's decision concerning the shareholders' duties on August 12, 2009. On September 12, 2008, C & L Services, L.P.; Tommy's Machine Works, Inc.; Rifle Hospitality, L.L.C.; and Jeffrey Davis filed an involuntary Chapter 7 petition (Bankr. S.D. Tex. Case No. 08-36021) against the Red River Energy, Inc. On January 13, 2009, the Bankruptcy Court entered an order for relief. On January 14, 2009, Ben B. Floyd was appointed to serve as the Chapter 7 Trustee for this case. On March 9, 2009, the Trustee filed a pleading entitled "Motion to Designate Crestview Capital Master, LLC and Rubicon Master Fund as the Entities Responsible to Discharge Duties of the Debtor Under Federal Rule of Bankruptcy Procedure 9001(5)". On March 17, 2009, Rubicon and Crestview filed their Objection to the Motion. Court records indicate that nearly $4 million was transferred to insiders within the one-year period prior to the Petition Date, and nearly $13 million was transferred outside the ordinary course of business within the two-year period prior to the Petition Date. R.H. DONNELLEY: Further Tweaks Plan & Disclosure Statement ---------------------------------------------------------- R.H. Donnelley Corporation and its debtor affiliates, on October 19, 2009, submitted with the U.S. Bankruptcy Court for the District of Delaware a further amended Chapter 11 Plan of Reorganization and a Disclosure Statement explaining the further amended Plan. The Debtors first submitted their Chapter 11 Plan and accompanying Disclosure Statement on July 27, 2009. They then submitted amendments on September 18 and October 7, 2009. The October 19 Plan deleted the indemnity provision present in the previous versions. Specifically, the October 19 Plan has this language deleted: "In addition to the matters set forth in Section 10.8.1 and not by way of limitation thereof, as of the Effective Date, the Reorganized Debtors shall, and shall be deemed to, indemnify and hold harmless all persons who are or were officers or directors of any of the Debtors on the Petition Date or thereafter on account of and with respect to any damages, losses or liabilities of any nature whatsoever (including, without limitation, legal fees, costs and expenses) on account of any Claims or other obligations, suits, judgments, damages, debts, rights, remedies, causes of action or liabilities of any nature whatsoever (with the sole exception of Claims based upon willful misconduct or gross negligence of such officers or directors) threatened or asserted by any third party against any such officers or directors and that seek contribution, indemnity, equitable indemnity, or any similar claim, based upon or as the result of the assertion of primary claims against such third party by any representative of the Debtors' Estates.]" Payment of Notes Indenture Trustee Fees The October 19 Plan provides that to the extent the Notes Indenture Trustee Fees are not paid in accordance with the Plan, the applicable Notes Indenture Trustee may assert the applicable Notes Indenture Trustee Charging Lien. The assertion of the Notes Indenture Trustee Charging Lien may potentially result in diluting and delaying distributions to the Noteholders. Committee's Statement The October 19 Disclosure Statement also includes the Official Committee of Unsecured Creditors' statement in response to the Disclosure Statement. Specifically, the October 19 Disclosure Statement includes certain information that the Committee believes is necessary for the holders of claims to make an informed decision whether to accept or reject the Plan. The information is based on the Committee's view that (i) credit markets have improved considerably since May 21, 2009, when the Plan Support Agreements were executed, (ii) the Reorganized Debtors have substantial additional capacity to issue debt securities for the benefit of all Holders of Noteholders Claims, and (iii) since 2004, the Prepetition Lenders have failed to perfect their prepetition liens on the Debtors' registered copyrights. The Debtors disagree with the Committee's opinions and believe that the Plan, which is predicated on (i) the Bank Support Agreements executed by the Debtors and Prepetition Lenders holding well in excess of two-thirds in principal amount and one- half in number of claims under each of the RHDI, DME and DMW Prepetition Credit Facilities and (ii) the Noteholders Support Agreement executed by the Debtors and Noteholders holding in excess of a majority of the aggregate principal amount of the Prepetition Note Debt, provides optimal recoveries for all creditors, including an estimated 100% recovery for trade creditors, while substantially improving the Company's balance sheet and creating the operating and financial flexibility required to maximize the total value of the Company in a challenging industry environment. In addition, the Debtors believe that the Plan satisfies all of the requirements for confirmation under Section 1129 of the Bankruptcy Code and, is more advantageous to the Company than any potential alternatives under Chapter 11 of the Bankruptcy Code, including the potential alternatives that the Committee has identified. Wilmington Trust's Statement on Subordination Provision The October 19 Disclosure Statement added a statement by Wilmington Trust Company, in its capacity as indenture trustee under the Dex Media West Senior Notes Indenture, regarding its belief that certain subordination provisions may under certain circumstances have the effect of prohibiting the Holders of the DMW Senior Subordinated Notes from receiving any recovery until the DMW Senior Notes are paid in full as provided under the DMW Senior Subordinated Notes Indenture. Under the terms of the DMW Senior Subordinated Notes Indenture, Holders of DMW Senior Subordinated Notes have agreed to subordinate their right to payment to, inter alia, the prior payment in full of the DMW Senior Notes. The Debtors believe that, consistent with applicable law, the Plan provides for a valid, enforceable and consensual waiver of any subordination rights by the Holders of DMW Senior Notes in the event the Class of Holders of DMW Senior Notes has accepted the Plan, in which case any subordination rights in favor of the Holders of DMW Senior Notes will not be enforced. Wilmington Trust Company believes that, under the terms of the DMW Senior Notes Indenture, the Debtors may be obligated, pursuant to Section 510(a) of the Bankruptcy Code, to enforce subordination agreements in accordance with applicable non- bankruptcy law, and that acceptance of the Plan by the Class of Holders of DMW Senior Notes Noteholders Claims may not waive those rights under the Plan without the consent of each Holder of DMW Senior Notes or over the objection of a Holder of DMW Senior Notes. The Debtors, however, do not believe that the statement is consistent with prevailing bankruptcy law. In the event that the value of distributions made to Holders of DMW Senior Notes Noteholders Claims under the Plan is less than 100% of the amount of Allowed Claims, Wilmington Trust reserves the right to enforce, subject to the terms of the DMW Senior Subordinated Notes Indenture and applicable bankruptcy law, the subordination provisions in connection with confirmation of the Plan or otherwise oppose confirmation of the Plan. Debtors Address Disclosure Statement Objections The October 19 Disclosure Statement provides resolutions of objections filed by Maricopa County, Arizona, and Sharon K. Jones, the Treasurer of Douglas County, Colorado. The Objecting Parties separately argued that the Disclosure Statement does not specify the treatment to which their claims will be entitled under the Plan. Maricopa County asserts that it holds an Other Secured Claim against one of the Debtors for 2009 personal property taxes amounting to $13,775. Maricopa County further asserts that its claim is secured by first priority liens on certain property of the Debtors. Douglas County asserts that it holds an Other Secured Claim against certain of the Debtors for 2009 personal property taxes amounting to $181,148. Douglas County further asserts that its claim is secured by a statutory lien on certain personal property of the Debtors. The Debtors relate that upon information and belief, the Maricopa County Claim will not become due and payable under applicable non-bankruptcy law until November 1, 2009, and the Douglas County Claim until April 30, 2010. In the October 19 Disclosure Statement, the Debtors say that they have not had the opportunity to assess the merits of the Objecting Parties' Claims and therefore reserve the right to contest their allowance on any applicable grounds. However, assuming that the Claims are ultimately deemed to be "allowed," the Debtors note that the Claims will be treated as an Allowed Other Secured Claim and will be paid in full in cash on, or as soon as reasonably practicable after, the later to occur of (a) the Effective Date of the Plan and (b) the date on which the Claims become an Allowed Other Secured Claim that is due and payable under applicable non-bankruptcy law. A full-text copy of the October 19 Plan is available for free at http://bankrupt.com/misc/RHDOct19Plan.pdf A full-text copy of the October 19 Disclosure Statement is available for free at http://bankrupt.com/misc/RHDOct19DS.pdf A blacklined copy of the October 19 Plan is available for free at http://bankrupt.com/misc/RHDOct19Plan-Blk.pdf A blacklined copy of the October 19 Disclosure Statement is available for free at http://bankrupt.com/misc/RHDOct19DS-Blk.pdf About R.H. Donnelley Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. Dex Media East, LLC, is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. (Qwest) in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) R.H. DONNELLEY: Says Committee Trading May Affect Playing Field --------------------------------------------------------------- R.H. Donnelley Corp. and its units tell the Court that they are reserving their rights regarding the Official Committee of Unsecured Creditors' request to allow its members to trade in the Debtors' securities and bank debt upon the establishment and implementation of "ethical walls". James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, relates that the Debtors have had discussions with the Committee's counsel regarding the nature, scope and timing of the relief sought in the Committee's Request as well as the request's potential impact upon the orderly administration of the Chapter 11 cases. Mr. Conlan relates that the Debtors have made clear that their primary objective is to ensure that the level playing field for the Plan confirmation process is not inadvertently "skewed" as a result of the relief asked by the Committee, while fairly mitigating the risk of loss of a beneficial investment opportunity asserted by the Committee. In particular, the Debtors do not seek to preclude any Committee member from pursuing its legitimate investment strategies or to impose upon the member any incremental risk of loss of a potential investment opportunity to which it has presumably been subject for the last several months, Mr. Conlan tells the Court. However, the Debtors wish to ensure that the relief asked by the Committee is in the best interest of their estates as a whole, Mr. Conlan says. "For example, if, on the one hand, the Committee were merely seeking to permit Committee members to engage in ordinary course transactions through their respective trading desk in full compliance with the information blocking procedures outlined in the [Committee's Request0 in a manner that would not materially impact any such member's role in these cases, then the relief may not significantly impact the Debtors' estates," Mr. Conlan explains. If, on the other hand, after approval of the Committee's Request, any Committee member were, hypothetically, to acquire additional Securities in an attempt to block confirmation of the Plan, it would in the Debtors' view be detrimental to the Debtors' best interests, and the Debtors would expressly reserve all of their rights and remedies notwithstanding the entry of an order granting the Committee's Request, Mr. Conlan further explains. Therefore, in order to provide some assurance that the Plan confirmation process is not drastically altered at the current stage of the proceedings, the Debtors proposed to the Committee that entry of an order will be without prejudice to any rights or remedies that the Debtors may have with respect to Plan voting under applicable law. About R.H. Donnelley Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. Dex Media East, LLC, is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. (Qwest) in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) R.H. DONNELLEY: Set to Solicit Votes on Chapter 11 Plan ------------------------------------------------------- R.H. Donnelley Corp. won approval of the disclosure statement, bringing the Debtor closer to realizing a Chapter 11 reorganization plan that aims to shed $6.4 billion in debt. With the approval of the Disclosure Statement, the Debtors may now begin sending soliciting packages to stakeholders entitled to vote on the Plan. The deadline to submit ballots is on December 17, 2009. The record date for determining creditors and interest holders receiving solicitation packages is October 30. As scheduled, the Court will convene a hearing to consider confirmation of the Plan on January 12. Objections to confirmation of the Plan are due December 17. "The Plan of Reorganization will provide R.H. Donnelley with a more sustainable capital structure and solidify our financial foundation. Today's approval keeps us on track to complete a successful reorganization by the end of January 2010," said David C. Swanson, chairman and CEO of R.H. Donnelley, in an October 22 statement. "While we still must receive creditor and the court's final approval of our Plan before we can emerge from Chapter 11 protection, our 3,700 employees continue to focus their energies and efforts on helping local businesses address their marketing needs in this challenging economic environment." As previously announced, R.H. Donnelley reached an agreement on the terms of the Plan with several creditor groups, including noteholders and bank lenders, prior to filing for Chapter 11 protection on May 28, 2009. The so-called "lock-up" agreements between the Company and its bank lenders and noteholders remain in place. Under the terms of the Plan of Reorganization: * R.H. Donnelley would reduce its total debt by approximately $6.4 billion, including the repayment of $700 million of secured indebtedness * The approximately $6.0 billion of unsecured bond indebtedness would be exchanged for virtually all of the equity in the restructured Company and $300 million of unsecured notes issued by the Company; all existing equity in the Company would be extinguished * Total cash interest expense reduction of approximately $500 million annually * Post-restructuring secured and consolidated debt of approximately $3.1 billion and $3.4 billion, respectively, which represents approximately 2.9x and 3.2x net secured and net consolidated leverage, respectively * Post-restructuring cash balance of approximately $125 million. Prior to the hearing, Sharon K. Jones, the Treasurer of Douglas County, Colorado, filed an objection, saying that the Disclosure Statement, as amended October 19, does not resolve Douglas County's claim. She added that the Plan does not contain the language in the October 19 Disclosure Statement partially addressing Douglas County's claim. A full-text copy of the Plan, as amended October 19, is available for free at: http://bankrupt.com/misc/RHDOct19Plan.pdf A full-text copy of the explanatory Disclosure Statement, as amended October 19, is available for free at: http://bankrupt.com/misc/RHDOct19DS.pdf About R.H. Donnelley Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. Dex Media East, LLC, is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. (Qwest) in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) RIVERVIEW VENTURES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Riverview Ventures, Inc. dba DeSears Appliance & Home Entertainment dba DeSears Appliance & Television 6430 14th St. W. Bradenton, FL 34207 Bankruptcy Case No.: 09-23787 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtor's Counsel: Stephen R. Leslie, Esq. Stichter, Riedel, Blain & Prosser 110 East Madison Street, Suite 200 Tampa, FL 33602-4700 Tel: (813) 229-0144 Email: sleslie.ecf@srbp.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Donald F. Clarke, president of the Company. ROBERT GRIMSLEY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Joint Debtors: Robert F. Grimsley Frances F. Grimsley 1611 Ranchette Rd. Zephryhills, FL 33543 Bankruptcy Case No.: 09-23717 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Judge: Caryl E. Delano Debtors' Counsel: Alberto F. Gomez Jr., Esq. Morse & Gomez, PA 119 S. Dakota Avenue Tampa, FL 33606 Tel: (813) 301-1000 Email: algomez@morsegomez.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtors did not file a list of their 20 largest unsecured creditors when they filed their petition. The petition was signed by the Joint Debtors. ROCKWELL DIAMONDS: Posts C$6.6MM Loss in 6 Months Ended Aug. 31 --------------------------------------------------------------- Rockwell Diamonds Inc. disclosed last week its financial results for the six months ending August 31, 2009. The Company incurred a net loss of C$6.6 million for the six-month period ending August 31, 2009, compared to a net loss of C$3.1 million for the comparable period in the prior year. The Company said the loss was due to the collapse in the diamond market and precipitous decline in diamond prices that commenced in the fourth quarter of fiscal 2009 due to the ongoing global credit crisis and economic recession, resulting in weakness of diamond prices through the first two quarters of fiscal 2010. According to the Company, there has been an overall improvement in prices of about 15 to 20% from the initial sharp fall of about 50% in the last quarter of fiscal 2009. During the six months ending August 31, 2009, the Company generated revenue of C$9.8 million compared to revenue of C$17.5 million for the comparable period in the prior year. Rough diamond sales were C$9.7 million and C$17.0 million in the six months ended August 31, 2009, and 2008, respectively. Including amortization and depletion charges, cost of sales for the six months ending August 31, 2009, amounted to C$14.6 million, compared with C$17.5 million for the six months ending August 31, 2008. Operating loss was C$4.8 million for the six months ended August 31, 2009, compared with an operating loss of C$7,344 for the six months ended August 31, 2008. Exploration expenses (excluding stock-based compensation) decreased to C$59,916 for the six months ending August 31, 2009, compared to $271,182 for the same period in the prior year. The Company attributed this decrease to lower engineering activities performed and property assessment fees paid on the South African diamond properties. Administrative costs for the six months ending August 31, 2009, decreased to C$1.5 million in comparison to C$1.8 million incurred in for the same period in the prior year. Travel and conference expenses amounted to C$76,782 for the six months ending August 31, 2009, compared to C$319,709 for the same period in the previous year. Legal, accounting and audit expenses for the six months ending August 31, 2009, amounted to C$493,009 compared to C776,895 incurred for the same period in the prior year, even though the Company experienced significant legal costs due to the unsolicited bid by Pala. Stock-based compensation decreased to C$134,066 for the six months ending August 31, 2009, in comparison to C$1,058,101 for the same period in the previous year. Interest expenses increased to C$480,349 for the six months ending August 31, 2009, compared to C$248,831 for the six months ending August 31, 2008, mainly due to the use of the credit facility to maintain working capital. President and CEO John Bristow commented, "Importantly, there has been an improvement in both sentiment and prices in the diamond market. Rockwell is well positioned to benefit from further improvements in diamond prices. The Company has implemented significant improvements to operating and costs structures in all parts of its business, and management believes that these will stand the Company in good stead for the future, providing the foundation on which to proceed with growth and expansion plans." The Company reported a net loss of C$2.5 million on revenue of C$5.9 million for the three month period ending August 31, 2009, compared to a net loss of C$2.2 million on revenue of C$9.9 million for the comparable period in the prior year. Balance Sheet At August 31, 2009, the Company's consolidated balance sheet showed C$107.7 million total assets, C$33.8 million in total liabilities, C$1.6 million in non-controlling interest, and C$72.3 million stockholders' equity. The Company's consolidated balance sheet at August 31, 2009, also showed strained liquidity with C$7.8 million in current assets available to pay C$16.0 million in current liabilities. A full-text copy of the Company's consolidated financial statements as of and for the three and six months ended August 31, 2009, are available for free at: http://researcharchives.com/t/s?4738 Liquidity At August 31, 2009, the Company had cash and equivalents of C$866,770 and bank indebtedness of C$3.1 million, for a net indebtedness of C$2.2 million. The Company also had a working capital deficit of C$8.2 million, as compared to cash and equivalents of C$4 million and bank indebtedness of $3.5 million, for a net indebtedness of C$456,927, and working capital of C$637,171 at February 28, 2009. The Company had no long-term debt at August 31, 2009, other than asset retirement obligations relating to its Klipdam, Holpan, Wouterspan mines and Saxendrift operations, and capital lease obligations relating to mining equipment with three to four year lease agreements. Cash used in operating activities for the six months ended August 31, 2009, was C$642,703, compared with cash provided by operating activities of C$2.2 million for the comparable period in the previous year. Going Concern The Company incurred losses of C$6.6 million during the six months ended August 31, 2009, and continues to incur losses subsequent to the end of the second quarter. The Company says that although it has reduced costs substantially, sales prices of diamonds have also decreased compared to fiscal 2009. The risk that cash and working capital will not be sufficient to fund the continuing losses indicates that a material uncertainty exists which may cast substantial doubt on the ability of the Company to continue as a going concern. The directors believe that the Company will continue as a going concern for the next quarter as well as the fiscal year ending on February 28, 2010. Based in Vancouver, B.C., Rockwell Diamonds Inc. (TSX:RDI; JSE: RDI, OTC BB: RDIAF) -- http://www.rockwelldiamonds.com/-- is engaged in alluvial diamond production with focus on the mining and development of alluvial diamond deposits that yield high value gemstones. The Company is currently active at three alluvial operations: Holpan, Klipdam, and Saxendrift. A fourth operation, Wouterspan, is currently on care and maintenance. RURAL/METRO OPERATING: Moody's Puts 'Ba3' Rating on $40 Mil. Loan ----------------------------------------------------------------- Moody's Investors Service assigned provisional ratings to the proposed senior secured credit facility of Rural/Metro Operating Company, LLC, a wholly-owned subsidiary of Rural/Metro Corporation. Moody's assigned a (P) Ba3 (LGD2, 24%) to the proposed $150 million term loan and $40 million revolver which will include a $25 million sub-limit for letters of credit. Concurrently, Moody's placed the B2 (LGD4, 50%) rating on the 9.875% Senior Subordinated Notes under review for possible downgrade due to the proposed changes in the capital structure. Specifically, the proposed refinancing transaction would result in a significant increase in senior secured debt ahead of the 9.875% Notes and the removal of the 12.75% Senior Discount Notes from the capital structure, which had provided significant first loss cushion to the 9.875% Notes. If the new $190 million credit facility closes as proposed and all of the Senior Discount Notes are tendered for or repaid, Moody's anticipates the 9.875% Sub Notes would be downgraded to Caa1, in accordance with Moody's Loss Given Default Methodology. If the refinancing transactions close as proposed, Moody's would withdraw the ratings on the existing senior secured credit facility and the 12.75% Senior Discount Notes, assuming substantially all the notes are tendered for. LGD point estimates are subject to change and all ratings are subject to review of final documentation. At the same time, Moody's affirmed Rural/Metro's B2 Corporate Family Rating and changed the outlook to positive from stable. The positive outlook reflects reduced refinancing risk as a result of the proposed transaction and the expectation that leverage and interest coverage will show further improvements as Rural/Metro continues to reduce uncompensated care, increase average patient charge and make repayments on the term loan. If the company is not able to complete the refinancing transaction as proposed, the positive outlook could be at risk. Following is a summary of Moody's rating actions. Rural/Metro Operating Company, LLC * Assigned proposed $40 million senior secured revolving credit facility due 2013 (P) Ba3, (LGD2, 24%) * Assigned proposed $150 million senior secured Term Loan due 2014 (P) Ba3, (LGD2, 24%) * Affirmed existing $20 million senior secured revolving credit facility due 2010 at Ba2 (LGD1, 9%) * Affirmed existing $45 million senior secured letter of credit facility due 2011 at Ba2 (LGD1, 9%) * Affirmed existing $56 million senior secured Term Loan B due 2011 at Ba2 (LGD1, 9%) * Placed under review for downgrade 9.875% senior subordinated notes due 2015, B2 (LGD4, 50%) Rural/Metro Corporation * Affirmed 12.75% senior discount notes due 2016 at Caa1 (LGD5, 88%) * Affirmed Corporate Family Rating, B2 * Affirmed Probability of Default Rating, B2 The outlook was changed to positive from stable. The last rating action was on February 12, 2009, when the outlook was changed to stable from negative. Rural Metro provides emergency and non-emergency medical transportation, fire protection, airport fire and rescue and home healthcare services in 22 states and approximately 400 communities within the United States. The services are provided under contract with government entities, hospitals, healthcare facilities and other healthcare organizations. Net revenue for the twelve months ended June 30, 2009, was approximately $499 million. SASY HOLDINGS LLC: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Sasy Holdings, LLC 23020 Wrencrest Drive Calabasas, CA 91302 Bankruptcy Case No.: 09-23821 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Central District of California (San Fernando Valley) Judge: Geraldine Mund Debtor's Counsel: Raymond H. Aver, Esq. Law Offices of Raymond H Aver APC 12424 Wilshire Blvd., Ste. 720 Los Angeles, CA 90025 Tel: (310) 571-3511 Fax: (310) 571-3512 Email: ray@averlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Avraham Shemuelian, manager of the Company. SEMGROUP LP: Facing Objections to Plan at Oct. 26 Hearing --------------------------------------------------------- SemGroup, L.P., and its debtor affiliates will present its Fourth Amended Plan of Reorganization at a confirmation hearing on October 26, 2009. Thirtee additional parties-in-interest, in separate filings, ask the Court to deny confirmation of the Debtors' Fourth Amended Plan. The Commonwealth of Pennsylvania, Department of Revenue asserts that a default provision should be added in the Plan to ensure that the Debtors and their successors will remain current in filing and payment of postpetition and postconfirmation taxes. Kinder Morgan Interstate Gas Transmission, LLC; Kinder Morgan Natural Gas Pipeline Company of America; and Natural Gas Pipeline Company of America; object to the proposed $0 cure amount with respect to 15 contracts of Kinder Morgan Entities to be assumed by the Debtors under the Plan. The Kinder Morgan Entities thus ask the Court to prohibit any assumption of the Contracts until the Kinder Morgan Entities are given a 30-day period to resolve the cure amounts with the Debtors. Fortis Bank SA/NV and Fortis Capital Corp. say that in the event the Court approves the settlement agreement they entered with the Debtors, the Fortis Entities will withdraw their objection and will accept the Plan. If the Court disapproves the Settlement Agreement, the Fortis Entities allege that the Plan (i) discriminates against them by classifying their lender swap obligation claims as Lender Deficiency Claims rather than as General Unsecured Claims, and (ii) deprives Fortis Capital of the right to recover on its claims against SemCanada Energy Company and the Canadian guarantors under the swap contracts. Other parties that have filed objections are Citation Oil & Gas Corp., Crown Energy Company, Coffeyville Resources Refining & Marketing, LLC, Jeffrey and Patti B. Rixleben, XTO Energy, Bominflot Atlantic, L.L.C., Lucky Ace Petroleum LLC, Cardinal Engineering, Inc., Transcanada Pipelines Limited, and Targa Liquids Marketing and Trade and Targa Midstream Services Limited Partnership. Meanwhile, the Debtors filed with the Court on October 14, 2009, an exhibit containing a schedule of contracts to be assumed pursuant to their Fourth Amended Joint Plan of Reorganization. The Schedule of the Contracts to be assumed is available for free at http://bankrupt.com/misc/semgroup_oct14contractslist.pdf Subsequently, the Debtors revised the schedule of contracts to be assumed under the Plan on October 15, 2009. The revised schedule of the Contracts to be assumed is available for free at: http://bankrupt.com/misc/semgroup_oct15contractslist.pdf The Fourth Amended Plan SemGroup filed a fourth amended plan of reorganization to reflect a settlement with the Official Producers Committee. The plan is already supported by the Official Committee of Unsecured Creditors and the secured lenders. A full-text copy of the September 25 Plan is available for free at http://bankrupt.com/misc/semgroup_Sept25Plan.pdf A full-text copy of the September 25 Disclosure Statement is available for free at: http://bankrupt.com/misc/semgroup_Sept25DS.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: Gets Court Nod to Use Cash Collateral Until Dec. 18 ---------------------------------------------------------------- Bankruptcy Judge Brendan Linehan Shannon authorizes SemGroup LP, on a final basis, to continue to use all cash collateral and prepetition collateral, as well as the cash collateral in which the producers assert an interest, securing their prepetition indebtedness, until the DIP Facility Maturity Date on November 30, 2009. Pursuant to the DIP Second Extension Amendment Order, the Debtors will use the Cash Collateral according to an agreed budget for 17 weeks from September 4 to December 18, 2009. A full-text copy of the 17-Week Budget is available for free at: http://bankrupt.com/misc/semgroup_cashcoll17-weekbudget.pdf The Debtors will also provide Bank of America, N.A., as administrative agent for a consortium of lenders, the DIP Lenders and the Prepetition Secured Lenders with any information relating to the White Cliffs Project. 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: Nov. 30 Extension of DIP Loan Okayed on Final Basis ---------------------------------------------------------------- The Bankruptcy Court authorizes, on an final basis, SemGroup LP and its units to amend the DIP Credit Agreement with Bank of America, N.A., as administrative agent for a group of lenders, to, among others, extend until November 30, 2009, the DIP Maturity Date. The relevant terms of the DIP Second Extension Amendment are: Maturity Date: November 30, 2009 Events of Default: The Events of Default will be modified to provide that: (i) it will be an Event of Default and a termination of the right to use Cash Collateral if the Debtors fail to obtain entry of a confirmation order with respect to the Debtors' Third Amended Joint Plan of Reorganization by October 30, 2009; and (ii) will not be an Event of Default if the Chapter 11 case of Eaglwing, L.P., is converted to a Chapter 7 case with prior consent of the BofA. A full-text copy of the DIP Second Extension Amendment is available for free at: http://bankrupt.com/misc/semgroup_DIP2ndExtensionAgreement.pdf Martin A. Sosland, Esq., at Weil, Gotshal & Manges, LLP, in Dallas, Texas, said the extension was necessary given that the DIP facility was scheduled to expire on September 30, 2009. The Debtors lack sufficient unencumbered funds with which to operate their businesses on an ongoing basis without postpetition financing, he asserts. Absent extension of the DIP Credit Agreement, the Debtors will be unable to continue to operate their businesses, thwarting their efforts to successfully reorganize, he stresses. More importantly, the DIP Credit Agreement, as amended, will allow the Debtors to meet all of their administrative obligations going forward through the confirmation and consummation of their Chapter 11 Plan, he maintains. 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: Proposes Settlement Pact With J. Aron -------------------------------------------------- SemCrude, L.P., its parent, SemGroup, L.P., and certain direct and indirect subsidiaries of SemGroup, and the Official Committee of Unsecured Creditors jointly ask the Court to approve a settlement agreement entered between the Debtors and J. Aron & Company, and consented to by the Creditors' Committee and Bank of America, N.A., as administrative agent for a consortium of lenders. As previously reported, the Official Committee of Unsecured Creditors asked the Court to estimate J. Aron's claims at zero because the claims are remote, speculative and recoverable under a Trading Agreement between J. Aron and the Debtors. J. Aron says that without the Settlement, it would have opposed the Creditors' Committee's Motion to Estimate. Thus, to avoid the costs and time associated with expensive, burdensome, and protracted litigation regarding (i) an adversary proceeding initiated by J. Aron against the Debtors, seeking judgment that its tendering of $89,776,874 as net amount constitutes full performance under the Trading Agreement; (ii) the Debtors' Motion to Release $122 million in Escrowed Funds and the Creditors' Committee's Motion to Estimate J. Aron's Claims; and (iii) other disputes, the Debtors and J. Aron engaged in good-faith negotiations ultimately resulting to the Settlement. The salient terms of the Settlement are: (a) upon the occurrence of the Settlement's effective date, the Debtors will have full use of the Tendered Funds pursuant to Section 542 of the Bankruptcy Code; (b) the Debtors, the Reorganized Debtors and the Litigation Trust under the Debtors' Fourth Amended Joint Plan of Reorganization will be deemed to have released, and will be permanently enjoined from any prosecution of causes of action in connection with any commodity trades by J. Aron with the Debtors, the Trading Agreement or any related transactions against J. Aron and its affiliates; (c) BofA and the Prepetition Lenders will be deemed to have released, and will be permanently enjoined from any prosecution or attempted prosecution of causes of action arising from any commodity trades by J. Aron with the Debtors, the Trading Agreement or any related transactions against J. Aron and its affiliates; (d) J. Aron will retain a General Unsecured Claim against SemGroup, L.P., for any breach of warranty, indemnity, and attorneys' fees for which J. Aron would have a Claim against SemGroup under the Trading Agreement. Pursuant to the Plan, the Debtors will not have to reserve more than an amount equal to the distributions made on account of a $10 million Preserved Claim; (e) the Debtors and the Reorganized Debtors will cooperate in any discovery, including preserving relevant documents and making relevant witnesses available with respect to the Tender Adversary, Third Party Producer Litigations and any other litigation by oil and gas producers against J. Aron relating to oil and gas J. Aron purchased from the Debtors. Costs incurred from that discovery are to be borne by the parties according to applicable law; (f) the Settlement will become effective on the date that is the Effective Date of the Plan, provided that the Confirmation Order, among others, approves the Settlement, amends the Plan to incorporate the Settlement, and provides for the Bankruptcy Court to retain jurisdiction over all issues related to the Tender Adversary and the Third Party Producer Litigations; and (g) J. Aron will be deemed to have released, and will be permanently enjoined from any prosecution of all Causes of Action, if any, in connection with the Prepetition Credit Agreement against BofA or the Prepetition Lenders; If the Settlement becomes effective, and J. Aron elects to proceed with a J. Aron Contribution, J. Aron will pay to the Producer Representative cash aggregating $3 million for distribution solely to the Producers named as defendants in the Tender Adversary that do not choose to opt out of the proposed settlement between J. Aron and the Producer Defendants. The J. Aron Contribution will be distributed by the Producer Representative on a pro rata basis only to those Producer Defendants that do not choose to opt out of the J. Aron Producer Settlement. The receipt of any funds from the J. Aron Contribution will constitute a representation that the Participating Producer has not assigned its Claims. In exchange to the J. Aron Contribution, each Participating Producer will release and be permanently enjoined from any prosecution of the J. Aron Released Causes of Action against J. Aron and its affiliates. Thomas F. Driscoll III, Esq., at Bifferato LLC, in Wilmington, Delaware, reminds the Court that litigation of the Tender Adversary, the Third Party Producer Litigation, and the Potential Third Party Producer Litigation would be extremely complex and has already resulted in significant expense, inconvenience, and delay to the Debtors' reorganization prospects. Thus, the Settlement, if approved, will result in a substantial recovery of assets by the Debtors, which benefit will inure to their creditors, including the Producers. Absent the Settlement, the Debtors' ability to obtain full use of the Tendered Funds would remain subject to the delay, uncertainty, and risk inherent in litigation, he insists. He adds that the J. Aron Contribution and concomitant Participating Producer Releases, while not a condition to the Settlement, are important features of the Settlement and will increase the recoveries to the Participating Producers. The Court will consider the Joint Motion to Approve J. Aron Settlement on October 26, 2009. Objections are due October 23. 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) SIX FLAGS: Citigroup Discloses 6.4% Equity Stake ------------------------------------------------ In a Schedule 13G filing with the Securities and Exchange Commission dated October 9, 2009, Douglas Turnbull, assistant secretary of Citigroup Global Markets Holdings Inc. disclosed that Citigroup Inc. beneficially owns 14,673 shares of Six Flags Common Stock, representing 0% based on 97,769,169 shares of Common Stock issued and outstanding as of June 30, 2009. Citigroup is composed of these entities: -- Citigroup Global Markets Inc. -- Citigroup Financial Products Inc. -- Citigroup Global Markets Holdings Inc. -- Citigroup Inc. In the same filing, Mr. Turnbull specified that: * Citigroup Global Markets Inc. doesn't beneficially own any shares of Six Flags Common Stock; * Citigroup beneficially owns 17,611 shares which includes shares held by other reporting persons. About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Court OKs Houlihan Lokey as Advisor ---------------------------------------------- Six Flags Inc. and its units have asked the Court for permission to employ Houlihan Lokey Howard & Zukin Capital, Inc., as their investment banker and financial advisor nunc pro tunc to the Petition Date. The Debtors have proposed to pay Houlihan Lokey on these terms: (a) a Monthly Fee of $200,000, wherein 50% of each Monthly Fee earned and received by Houlihan Lokey following the sixth month will be credited against the Restructuring Transaction Fee; (b) reimbursement of all reasonable out-of-pocket expenses, including (i) reasonable fees of Houlihan Lokey's counsel, and (ii) reasonable disbursements of Houlihan Lokey's documented travel expenses, duplicating charges, computer charges, messenger services and long-distance telephone calls; (c) upon the date of confirmation of a plan of reorganization, a Restructuring Fee equal to $7,500,000. The Creditors' Committee, filed an objection, saying the Court should deny pre-approval of a $7,500,000 Transaction Fee to be paid to Houlihan in the event of confirmation of any reorganization plan regardless of Houlihan's role and regardless of what distributions will be made under that Plan. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, in Wilmington, Delaware, says the Debtors' Plan is unconfirmable. Furthermore, the Creditors' Committee anticipates to sponsor an alternative plan the Creditors' Committee expects to be confirmed, thereby making uncertain Houlihan's role in the confirmed Plan. The Debtors ask the Court to overrule the Creditors Committee's objection to employ Houlihan Lokey, Howard and Zukin Capital, Inc., as Financial Advisors and Investment Bankers, contending that the terms of Houlihan Lokey's proposed employment are reasonable, and the firm's Transaction Fee is well within the market range. In support of the Debtors' application to employ Houlihan Lokey, Daniel J. DeFranceschi, Esq., at Richards, Layton and Finger, P.A., in Wilmington, Delaware, relates that the Debtors' proposed employment of the firm satisfies the requirement of reasonableness standards of Section 330 of the Bankruptcy Code. Moreover, Mr. DeFranceschi says the Debtors and Houlihan Lokey have agreed that the United States Trustee for the District of Delaware may review, pursuant to Section 330, Houlihan Lokey's Transaction Fee of $7,500,000, eliminating the need for the Creditors' Committee to perform the review. Upon consideration of the Debtors' employment application and related pleadings, Judge Sontchi approved the Application and authorized the Debtors to employ Houlihan Lokey as their financial advisor and investment banker effective nunc pro tunc the Petition Date. Judge Sontchi also gave authority to the United States Trustee and the Creditors' Committee to review Houlihan Lokey's Transaction Fee, but not the Monthly Fees in the event these fees are credited against the Transaction Fee, pursuant to the reasonableness Standards of Section 330 of the Bankruptcy Code. Further, Judge Sontchi ruled that the number of hours spent by Houlihan Lokey's personnel during its engagement or during any given monthly period should not be the sole factor in itself as to the reasonableness of the Transaction Fee or the Monthly Fee. About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Gets Court Nod to Settle New Orleans Issues ------------------------------------------------------ Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, Six Flags Inc. and its units obtained approval of a settlement agreement and release among the Debtors, the Industrial Development Board of the City of New Orleans, Louisiana, Inc., and the City of New Orleans. Further, Judge Sontchi directed the City of New Orleans or the Industrial Development Board of the City of New Orleans to pay all outstanding fees and expenses of The Bank of New York Mellon as trustee pursuant to the Indenture of Trust dated August 1, 2002 between the IDB, as issuer and BNYM, as trustee. On August 23, 2002, Debtor SFJ Management Inc., the tenant, and the New Orleans IDB entered into a Lease Agreement with respect to Six Flags New Orleans, which lease was guaranteed by Six Flags. In addition, the Parties entered into various other related agreements, including, but not limited to, the Master Agreement by and among SFJ, Six Flags, the City of New Orleans, the New Orleans IDB, and Jazzland, Inc., dated August 23, 2002, and the Intercreditor, Payment Priority, Lien Priority, Subordination and Non Disturbance Agreement, dated August 23, 2002. In addition to the leased premises, a Debtor owns fee simple title to parcels of undeveloped land located within close proximity of the park. In 2005, Six Flags New Orleans was severely damaged as a result of Hurricane Katrina and thereafter was unable to open for business. As of August 22, 2009, although the Debtors continue to make monthly rental payments as set forth in the Lease Agreement, Six Flags New Orleans has not reopened. The City alleges that the Debtors are liable for certain damages under the Lease Agreement and Related Agreements in connection with SFJ's failure to reopen Six Flags New Orleans and repair damage incurred by the hurricane. On May 12, 2009, the City obtained a Temporary Restraining Order from the Civil District Court for the Parish of Orleans prohibiting Six Flags from removing any exhibits, rides or other assets at the site, as well as requiring SFJ to provide additional security at the former park. On May 22, 2009, the City filed a civil action against SFJ currently pending in the United States District for the Eastern District of Louisiana, Civ. Action No. 09-3631. To resolve all disputes between the parties, Six Flags, SFJ and the City entered into the "Term Sheet Agreement" setting forth the terms of the Settlement. Upon the Court's approval of the Motion and the terms of the Term Sheet, the parties will enter into a final Settlement Agreement, substantially in accordance with the terms of the Term Sheet. The principal provisions of the Settlement are: (1) The Lease Agreement and the Related Agreements will be deemed terminated; (2) SFJ will vacate and deliver the leased premises to the City including improvements, in their current condition, "as is;" (3) Within 35 days of the Court's final approval of the Settlement, Six Flags will make a cash payment to the City in the amount of $3,000,000; (4) The Debtors will transfer to the City fee simple title in and to the Adjacent Parcels subject to Permitted Liens, as defined in the Term Sheet; (5) The City will be entitled to receive 25% of any net insurance proceeds received by the Debtors with respect to its insurance claim for property damage caused by Hurricane Katrina to the extend the Debtors' recovery exceeds $65,000,000; (6) The City will enter a stipulation dismissing, with prejudice, the action pending in the United States District Court for the Eastern District of Louisiana, Civ. Action No. 09-3631, and dissolving the Temporary Restraining Order from the Civil District Court for the Parish of New Orleans; and (7) The Parties will enter into a mutual general release of all claims. The City will not file any proof of claim or otherwise assert any entitlement to relief in these Chapter 11 Cases. The settlement, according to Zachary I. Shapiro, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, allows the Debtors' estate to avoid costly and uncertain litigation by fully resolving the City's potential claims under the Lease Agreement. Absent a settlement, the Debtors would expend considerable time and money to litigate, with no guarantee that the Debtors would prevail, or achieve a better result than available under the Settlement, Mr. Shapiro contends. A full-text copy of the Term Sheet Agreement is available for free at http://bankrupt.com/misc/SixF_IDB_settlementagreement.pdf About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SOUTH COLLINS: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: South Collins Investments, Inc. dba Chevron Mart 5700 S. Collins St. Arlington, TX 76018 Bankruptcy Case No.: 09-46609 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtor's Counsel: Michael P. ODonnell, Esq. 3450 Hulen Street Fort Worth, TX 76107-6142 Tel: (817)732-7590 Fax: (817)732-8903 Email: nfable@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $1,034,441, and total debts of $1,678,604. A full-text copy of the Debtor's petition, including a list of its 11 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/txnb09-46609.pdf The petition was signed by Ned Pacer, president of the Company. SPRINT NEXTEL: Signs Deal to Acquire iPCS Inc. for $831-Mil. ------------------------------------------------------------ iPCS, Inc., and Ireland Acquisition Corporation, with its parent, Sprint Nextel Corporation, on October 18, 2009, entered into an Agreement and Plan of Merger pursuant to which, among other things, Ireland Acquisition will commence a tender offer to acquire all of iPCS's outstanding shares of common stock, par value $0.01 per share, at a price of $24.00 per share in cash, subject to required withholding taxes and without interest. The Merger Agreement also provides that following the consummation of the Offer, the Purchaser will be merged with and into the Company with the Company surviving the merger as a wholly owned subsidiary of Parent. At the effective time of the Merger, all remaining outstanding Shares not tendered in the Offer, will be converted into a cash amount of $24.00 per share on the terms and conditions set forth in the Merger Agreement. Sprint Nextel's unit will acquire iPCS for $831 million, including $405 million of iPCS' net debt. The Merger Agreement provides that IAC will commence, and Sprint Nextel will cause IAC to commence, the Offer no later than October 28, 2009. Upon the consummation of the Offer, each Share accepted by IAC in accordance with the terms of the Offer will be exchanged for the right to receive the Offer Price. The Purchaser's obligation to accept for payment and pay for all Shares validly tendered pursuant to the Offer is subject to (i) the condition that the number of Shares validly tendered and not withdrawn represents at least a majority of the total number of Shares outstanding on a fully diluted basis and (ii) the satisfaction or waiver of other customary closing conditions as set forth in the Merger Agreement, including the receipt of necessary regulatory approvals (including the expiration or termination of the Hart-Scott-Rodino waiting period). The initial expiration date of the Offer will be 20 business days following the commencement of the Offer. If all of the conditions to the consummation of the Offer are not satisfied or waived upon the scheduled expiration date of the Offer, the Purchaser may, and, if requested by the Company, the Purchaser will, extend the Offer; however the Purchaser will not be obligated to extend the Offer beyond January 31, 2010, unless, as of such date, all of the conditions to the consummation of the Offer are satisfied or waived other than any condition relating to the receipt of certain regulatory approvals, in which case, the Outside Date will be March 15, 2010. iPCS has granted IAC an irrevocable option, which IAC, subject to certain conditions, may exercise up to five business days after the consummation of the Offer, to purchase such number of newly issued Shares at the Offer Price such that, when added to the Shares already owned by Sprint Nextel and IAC and their affiliates at the time of such exercise, constitutes one Share more than 90% of the total number of Shares outstanding on a fully diluted basis. If IAC acquires more than 90% of the outstanding Shares, in the Offer or through exercise of the Top-Up Option, it will complete the Merger through the "short form" procedures available under Delaware law, which would not require the Company to hold a meeting of its stockholders to vote on the adoption of the Merger Agreement. Upon the consummation of the Offer, (i) each outstanding stock option under the Company's equity incentive plans, whether vested or unvested, will be canceled, and in exchange each holder thereof will receive at the effective time of the Merger an amount in cash equal to the excess (if any) of the Offer Price over the exercise price per Share, multiplied by the number of Shares subject to such stock option and (ii) each share of restricted stock under the Company's equity incentive plans that is outstanding shall become fully vested. In addition, effective upon the consummation of the Offer, the Purchaser will be entitled to designate a number of directors, rounded up to the next whole number, on the Company's board of directors equal to the product of (i) the total number of directors on the Company's board of directors and (ii) the percentage that the number of Shares beneficially owned by Parent or the Purchaser bears to the number of Shares then outstanding; however, Parent, the Purchaser and the Company shall use their reasonable best efforts to ensure that after the consummation of the Offer, at least two independent directors currently serving on the Company's board of directors shall continue to be on the Company's board of directors until the effective time of the Merger. The Merger Agreement contains customary representations and warranties by the Company, the Purchaser and Parent. The Merger Agreement also contains customary covenants and agreements, including with respect to the operation of the business of the Company and its subsidiaries between the signing of the Merger Agreement and the closing of the Merger, restrictions on the solicitation of alternative acquisition proposals by the Company, governmental filings and approvals, and other matters. The Company is permitted to enter into discussions with a third party that makes an unsolicited proposal with respect to an alternative transaction so long as certain terms and conditions are met, including that the Company's board of directors makes a determination that such proposal is reasonably likely to lead to a proposal for a transaction that is more favorable to the Company's stockholders than the Offer and the Merger. The Merger Agreement provides certain termination rights for the Company, the Purchaser and Parent, including in the event that the Offer shall not be consummated by the Outside Date. In connection with the termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee equal to $12,500,000. As inducement Sprint Nextel to enter into the Merger Agreement, certain officers, directors and principal stockholders of the Company have agreed to tender their shares of the Company in connection with the Offer and to vote in favor of the Merger pursuant to a Stockholders Agreement, dated October 18, 2009, entered into with Parent. In addition, such Tendering Stockholders have agreed, subject to certain exceptions, to refrain from disposing of their shares of the Company and soliciting alternative acquisition proposals to the Offer and the Merger. In connection with the Merger Agreement, Parent, WirelessCo L.P., Sprint Spectrum L.P., SprintCom, Inc., Sprint Communications Company, L.P., Nextel Communications, Inc., PhillieCo L.P. and APC PCS LLC also entered into a Settlement Agreement and Mutual Release, dated October 18, 2009. Under the terms of the Settlement Agreement, the Sprint Parties and the iPCS Parties have agreed to stay all pending litigation between them, subject to certain conditions, and not to sue each other during the pendency of the transactions contemplated by the Merger Agreement, subject to certain exceptions. The stays of litigation and covenants not to sue will terminate if the Merger Agreement is terminated or if the Offer is not closed within the time period allowed by the Merger Agreement and the party seeking to terminate the Merger Agreement is unable to do so due to a court order or injunction that prevents termination. In addition, under the terms of the Settlement Agreement, effective upon the closing of the Merger, the Sprint Parties and the iPCS Parties will release each other from all claims, except those arising under or relating to a breach of the Merger Agreement or the Settlement Agreement, and will jointly file all such documents that are necessary to effect the dismissal with prejudice of all court orders and pending lawsuits between the Sprint Parties and the iPCS Parties. About iPCS Inc. iPCS Inc. is a holding company that operates as a PCS Affiliate of Parent through three wholly owned subsidiaries, iPCS Wireless, Inc., Horizon Personal Communications, Inc. and Bright Personal Communications Services, LLC, each having its own affiliation agreements with Parent. Pursuant to these affiliation agreements with Parent, the Company offers digital wireless personal communications services using Parent's spectrum under the Sprint brand name on a wireless network built and operated to Parent's specifications at the Company's expense. The Company owns and is responsible for operating, managing and maintaining its wireless network. iPCS has assets totaling $553,866,000 against debts aggregating $588,308,000 as of June 30, 2009. In October 2009, Standard & Poor's Ratings Services placed iPCS Inc., including its 'B' corporate credit rating, on CreditWatch with positive implications following an agreement to be merged with Sprint Nextel (BB/Negative/--). Moody's Investors Service affirmed iPCS, Inc.'s B3 corporate family and probability of default ratings, B1 rating of the Company's 1st lien notes and the Caa1 rating of 2nd lien notes. About Sprint Nextel Corporation Sprint Nextel Corporation is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses and government subscribers. Sprint Nextel is the third largest wireless communications company in the United States based on the number of wireless subscribers. Sprint Nextel is also one of the largest providers of wireline long distance services and one of the largest carriers of Internet traffic in the nation. Following the October 2009 announcement to acquire iPCS, Moody's Investors Service affirmed Sprint Nextel Corp.'s Ba1 corporate family rating and negative outlook and placed iPCS, Inc.'s ratings under review for possible upgrade in connection with Sprint's announced plans to acquire iPCS for approximately $831 million, including assumption of $405 million net debt. Standard & Poor's Ratings Services said that its rating on Overland Park, Kansas-based wireless carrier SprintNextel Corp. (BB/Negative/--) is not affected by the company's definitive agreement to acquire iPCS Inc. STEVEN LEROY AYRES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Joint Debtors: Steven Leroy Ayres Janine Ayres 1505 Mendota Drive Boulder City, NV 89005 Bankruptcy Case No.: 09-29651 Chapter 11 Petition Date: October 19, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtors' Counsel: C Andrew Wariner, Esq. 823 Las Vegas Blvd So, Suite 500 Las Vegas, NV 89101 Tel: (702) 953-0404 Fax: (702) 989-5388 Email: awariner@lvbklaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including a list of their 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-29651.pdf The petition was signed by the Joint Debtors. SQUIRES MOTEL: Court Dismisses "New Debtor Syndrome" Case --------------------------------------------------------- WestLaw reports that the bad-faith filing of a Chapter 11 petition by the debtor-limited liability company and the unlikelihood that the debtor would be able to propose a confirmable plan warranted the dismissal of the case. There was no equity in the debtor's properties to protect its mortgagee, who, except for taxing authorities, was the debtor's only true creditor. Moreover, the mortgagee, which would be prejudiced by any delay, had indicated that he would not vote for any plan that did not pay him the full amount of the judgments of foreclosure previously obtained as to the properties in state court, which would preclude plan confirmation, especially if, due to the property taxes priming the mortgages, the mortgagee became the estate's largest unsecured creditor. In re Squires Motel, LLC, --- B.R. ----, 2009 WL 2984171 (Bankr. N.D.N.Y.) (Davis, J.). Southside Storage, LLC, a non-debtor entity related to Squires Motel, LLC, owns approximately 30 properties in the Broome County area, six of which were transferred to Squires Motel, LLC, on the eve of its bankruptcy filing (Bankr. N.D.N.Y. Case No. 09-61416) on May 20, 2009. According to the Debtor's lawyers, Southside transferred the properties to the Debtor to enable "those particular distressed properties to reorganize efficiently and without disturbing the operations of the remaining properties and dragging unrelated creditors needlessly into a bankruptcy proceeding." Judge Davis says that this example of what's been referred to by other courts as the "new debtor syndrome" is a prima facie showing that Squires' petition was filed in bad faith. STANT PARENT: Holdings Files Amended Schedules of Assets & Debts ---------------------------------------------------------------- Stant Holding Corporation, a debtor-affiliate of Stant Parent Corp., filed with the U.S. Bankruptcy Court for the District of Delaware its amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $51,186,099 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $87,325,199 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $12,125,751 ----------- ----------- TOTAL $51,186,099 $99,450,950 Stant Corp. is headquartered in Connersville, Indiana, and has facilities in Pine Bluff, Arkansas, Mexico, China, and the Czech Republic. Founded in 1898, Stant has earned its reputation for quality and innovation in the automotive industry. Stant is recognized as the world's leading supplier of automotive and industrial fuel, oil and radiator caps, fuel vapor control valves and thermostats for both the original equipment markets and the automotive aftermarket. Stant Corp. and five affiliated companies filed for Chapter 11 bankruptcy protection on July 27, 2009 (Bankr. D. Del 09-12647). Sandra G.M. Selzer, Esq., and Scott D. Cousins, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, serve as the Debtors' counsel. In its petition, Stant Corp. listed $50 million to $100 million in debts against $50 million to $100 million in assets. STANT PARENT: Milestone Deadline under DIP Facility on Oct. 24 -------------------------------------------------------------- Stant Parent Corp. and its units have obtained an Oct. 24, 2009 extension of its "milestone deadline" under its DIP financing agreement with lenders. The extension was set forth in a stipulation which extended the deadline for the third time. As reported in the Troubled Company Reporter on Aug. 13, 2009, the Debtors will use the proceeds of any loans and financial accommodations under the DIP financing, the cash collateral for the operations of the Debtors' business. Salient Terms of DIP Financing Borrowers: The Debtors Agent: GMAC Commercial Finance, LLC Lenders: GMAC Commercial Financial, LLC, RBS Citizens, National Assciation, ING Capital LLC, and the HUntington National Bank Commitment: not to exceed $11,000,000 Milestone Deadline: The date which is the earlier of (a) October 30, 2009; (b) closing of the sale of all or substantially all of the Borrowers' assets; (c) the date that is 10 days after the Bankruptcy Court's order approving the a sale of all or substantially all of the Borrowers' assets; and (d) the occurrence of an event of default. The liens and superpriority claims will be subject and subordinate to the carve-out. As adequate protection, the Debtors will grant the lenders security interest in all of their owned and acquired property. Additionally, the lenders will be granted replacement liens. About Stant Parent Stant Corp. is headquartered in Connersville, Indiana, and has facilities in Pine Bluff, Arkansas, Mexico, China, and the Czech Republic. Founded in 1898, Stant has earned its reputation for quality and innovation in the automotive industry. Stant is recognized as the world's leading supplier of automotive and industrial fuel, oil and radiator caps, fuel vapor control valves and thermostats for both the original equipment markets and the automotive aftermarket. Stant Corp. and five affiliated companies filed for Chapter 11 bankruptcy protection on July 27, 2009 (Bankr. D. Del 09-12647). Sandra G.M. Selzer, Esq., and Scott D. Cousins, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, serve as the Debtors' counsel. In its petition, Stant Corp. listed $50 million to $100 million in debts against $50 million to $100 million in assets. STANT PARENT: Court OKs Sale of All Assets to Vapor Acquisition --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Stant Parent Corp. and its debtor-affiliates to: -- sell substantially all of their assets to Vapor Acquisition Corp., free and clear of all liens, claims, encumbrances and interests; and -- assume and assign certain executory contracts and unexpired leases to the purchaser. As reported in the Troubled Company Reporter on Aug. 14, 2009, Vapor Acquisition agreed to buy the Debtors' assets in exchange for the assumption of all amounts under the debtor-in-possession facility, senior prepetition loans, and liabilities. In a document filed with the Court, Roberta A. DeAngelis, U.S. Trustee for Region 3, pointed out, "the stalking-horse bidder is an affiliate of H.I.G. Capital and the majority shareholder of the Debtors" According to the U.S. Trustee, the Debtors has 920,001 shares of common stock. Of this total, 744,907 shares, or 80.97%, are held by H.I.G. Capital or its affiliates -- H.I.G. Stant IV LLC, Stant Partners and Vapour Investors LLC. An affiliate of H.I.G. Capital has obtained a majority participation the proposed DIP facility. At the first day hearing held on July 29, 2009, representative of the Debtors and H.I.G. Capital disclosed the amount of the participation as $6 million out of a proposed $11 million DIP facility, the U.S. Trustee pointed out. "The aggregate consideration for the sale and transfer of the acquired assets will be an estimated $81 million," the U.S. Trustee added. Expenses incurred by the Debtors and the Committee after the closing date and in aid of seeking confirmation of the Plan of Reorganization will be funded through a wind-down fund of no more than $250,000 pursuant to a wind-down budget to be agreed upon by the purchaser, the Debtor's senior prepetition agent, as agent and a DIP lender, the Debtor and the Committee. About Stant Parent Stant Corp. is headquartered in Connersville, Indiana, and has facilities in Pine Bluff, Arkansas, Mexico, China, and the Czech Republic. Founded in 1898, Stant has earned its reputation for quality and innovation in the automotive industry. Stant is recognized as the world's leading supplier of automotive and industrial fuel, oil and radiator caps, fuel vapor control valves and thermostats for both the original equipment markets and the automotive aftermarket. Stant Corp. and five affiliated companies filed for Chapter 11 bankruptcy protection on July 27, 2009 (Bankr. D. Del 09-12647). Sandra G.M. Selzer, Esq., and Scott D. Cousins, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, serve as the Debtors' counsel. In its petition, Stant Corp. listed $50 million to $100 million in debts against $50 million to $100 million in assets. STARTRANS INC: Files Schedules of Assets and Liabilities -------------------------------------------------------- StarTrans Inc. delivered to the U.S. Bankruptcy Court for the South Carolina its schedules of asset and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property B. Personal Property $27,920,880 C. Property Claimed as Exempt D. Creditors Holding $36,783,590 Secured Claims E. Creditors Holding $638,620 Unsecured Priority Claims F. Creditors Holding Unsecured Non-priority Claims $2,108,252 ----------- ----------- TOTAL $27,920,880 $39,530,463 Based in Holly Hill, South Carolina, StarTrans Inc. filed for Chapter 11 protection on Oct. 5, 2009 (Bankr. D. S.C. Case No. 09-07468). In its petition, the Debtor listed both assets and debts between $10 million and $50 million. STARTRANS INC: Pushes to Sell Non-cash Assets for $24 Million ------------------------------------------------------------- StarTrans Inc. asks the U.S. Bankruptcy Court for the District of South Carolina for authority to sell non-cash assets, including the assumption and assignment of certain executory contracts, to Trimac Dry Bulk Group Inc. for $24,995,657. Under the transaction, the Debtors agreed to pay $2,821,955, from the sale proceed, to its secured lender in exchange for the release of all claims by lenders to their collateral. Based in Holly Hill, South Carolina, StarTrans Inc. filed for Chapter 11 protection on Oct. 5, 2009 (Bankr. D. S.C. Case No. 09-07468). In its petition, the Debtor listed both assets and debts between $10 million and $50 million. STARTRANS INC: Wants to Hire McCarth Law as Counsel --------------------------------------------------- StarTrans Inc. asks the U.S. Bankruptcy Court for the District of South Carolina for authority to employ McCarthy Law Firm LLC as its counsel for all bankruptcy related matters. Papers filed with the Court did not show the firm's standard hourly rates. The Debtor assures the Court that the firm does not represent an interest adverse to the Debtor or its estate, and is a "disinterested person" within the meanin of Section 101(14) of the Bankruptcy Code. Based in Holly Hill, South Carolina, StarTrans Inc. filed for Chapter 11 protection on Oct. 5, 2009 (Bankr. D. S.C. Case No. 09-07468). In its petition, the Debtor listed both assets and debts between $10 million and $50 million. STRATEGIC RESOURCE: Provides Default Statuts Report --------------------------------------------------- Strategic Resource Acquisition Corporation is providing this bi- week default status report in accordance with National Policy 12- 203 - Cease Trade Orders for Continuous Disclosure Defaults. In its initial default announcement of December 31, 2008, the Company announced that it will not be filing its audited financial statements for its fiscal year ended September 30, 2008, and its management's discussion and the annual information form before the prescribed deadline of December 29, 2008. Due to Strategic not filing its Annual Required Financials, the Ontario Securities Commission issued a temporary management cease trade order, which imposed restrictions on all trading in and all acquisitions of the securities of the Company by the Chief Executive Officer and the Chief Financial Officer of the Company. Strategic on September 18, 2009, filed their annual financial statements for the year ended September 30, 2008, and the related management discussion and analysis. On September 23, 2009, Strategic filed the 1st Quarter unaudited financial statements and management discussion and analysis for the period ended December 31, 2008, and on September 30, 2009, filed the 2nd Quarter unaudited financial statements and management discussion and analysis for the period ended March 31, 2009, and on October 21, 2009, filed the 3rd Quarter unaudited financial statements and management discussion and analysis for the period ended June 30, 2009. With the aforementioned filings the Company is now up to date with its continuous disclosure obligations as required by National Instrument 51-102 other than the AIF which is under review. About Strategic Resource Strategic Resource Acquisition Corp. (NEX BOARD:SRZ.H) is a Toronto-based mining company focused on zinc projects in Tennessee. Strategic Resources filed for Chapter 11 on Jan. 15, 2009 (Bankr. M.D. Tenn. Case No. 09-00392). B. Gail Reese, Esq., at Wyatt, Tarrant & Combs, LLP, represents the Debtor in its restructuring effort. According to the petition, assets are between $500,000 and $1,000,000 and debts are between $50,000,000 and $100,000,000. SUNRISE SENIOR: Annual Stockholders' Meeting on November 18 ----------------------------------------------------------- The 2009 annual meeting of stockholders of Sunrise Senior Living, Inc., will be held at the Hilton McLean, 7920 Jones Branch Drive, McLean, Virginia on Wednesday, November 18, 2009 at 9:00 a.m., local time, for these purposes: (1) to elect six directors; (2) to ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the Company's fiscal year ending December 31, 2009; and (3) to transact such other business as may properly come before the meeting or any adjournments or postponements of the meeting. The Board's nominees for election as directors are Glyn F. Aeppel, Thomas J. Donohue, David I. Fuente, Stephen D. Harlan, J. Douglas Holladay and William G. Little. The Board of Directors has fixed the close of business on September 25, 2009, as the record date for the determination of stockholders entitled to notice of and to vote at the annual meeting and any adjournments or postponements of the annual meeting. Accordingly, only stockholders of record at the close of business on that date are entitled to notice of and to vote at the annual meeting and any adjournments or postponements of the annual meeting. However, all stockholders are cordially invited to attend the annual meeting. In the event that there are not sufficient votes to constitute a quorum at the time of the annual meeting, the annual meeting may be adjourned or postponed to permit further solicitation of proxies by the Company. Amendment to Credit Facility As reported by the Troubled Company Reporter, on October 19, 2009, Sunrise entered into a Thirteenth Amendment to its Credit Agreement, dated as of December 2, 2005, with lender parties and Bank of America, N.A., as administrative agent and in its capacity as Swingline Lender and letter of credit issuer. The Amendment, among other matters, extends the maturity date of the Credit Agreement from December 2, 2009, to December 2, 2010, and provides that the current aggregate commitments of roughly $92 million (before giving effect to the $6 million principal repayment discussed below) will be permanently reduced by any future principal repayments or cancellations of letters of credit. The Amendment also (i) provides that the principal payments previously due on October 31, 2009 and November 30, 2009 are no longer due; (ii) modifies the minimum liquidity covenant under the Credit Agreement to require that not less than $10 million of unrestricted cash be on hand on the last day of each month (subject to a 15-day cure period) through the Extended Maturity Date; and (iii) modifies a covenant restricting Sunrise's ability to dispose of real estate, improvements or material assets of Sunrise or its subsidiaries, to permit the disposition of certain assets as long as 50% of the net sales proceeds are allocated to the Lenders. The sale of 21 wholly owned assisted living communities to an affiliate of Brookdale Senior Living Inc. was conditioned upon receiving consent to the transaction from the requisite Lenders under the Credit Agreement by October 19, 2009. In connection with the Amendment, the requisite Lenders under the Credit Agreement consented to the sale of the BLC Properties and Sunrise agreed to make the BLC Closing Payment to the Administrative Agent for the benefit of the Lenders on the BLC Closing Date. Sunrise also agreed to deposit on the BLC Closing Date $20 million of the proceeds from the BLC Properties sale into a collateral account held by and pledged to the Administrative Agent for the benefit of the Lenders. The requisite Lenders under the Credit Agreement consented to the use of such BLC Additional Proceeds and the disposition of various properties by the Company for the purpose of settling claims of other creditors of the Company. On the BLC Closing Date, Sunrise shall (a) make a $25 million principal repayment to the Lenders and (b) either cause the return of letters of credit in the aggregate face amount of roughly $3.7 million or make an additional principal repayment of roughly $3.7 million to the Lenders. If the BLC Closing Date has not occurred by June 30, 2010, Sunrise shall, on July 1, 2010, either (a) make a payment equal to the BLC Closing Payment to the Lenders or (b) (i) make a $5 million principal repayment to the Lenders, (ii) pay a $1 million additional extension fee and (iii) either (1) grant mortgage liens junior in lien priority only to existing mortgages in 15 of the BLC Properties plus one additional property to the Administrative Agent, for the ratable benefit of the Lenders, or (2) if the requisite consents from existing mortgagees cannot be obtained for the granting of such mortgage liens, grant the Administrative Agent, for the ratable benefit of the Lenders, a perfected first priority pledge of, and security interest in, 100% of the equity interests in the entities owning such 16 properties. If the BLC Closing Date has not occurred by December 31, 2009, Sunrise shall commence good faith best efforts on January 4, 2010 to obtain the required approvals of the existing mortgagees of such 16 properties to the grant of the junior mortgage liens to the Administrative Agent, for the ratable benefit of the Lenders. On the first business day of each of June 2010, August 2010 and October 2010, Sunrise shall make a $1.5 million principal repayment to the Lenders, provided that Sunrise's balance of unrestricted cash on deposit with the Administrative Agent as of the last day of the immediately preceding month is not less than $30 million. In connection with the execution of the Amendment, Sunrise made a $6 million principal repayment to the Lenders, and agreed to pay the Lenders an amendment fee of $500,000, of which $250,000 was paid upon the execution of the Amendment. The remaining $250,000 will be paid on the earlier to occur of (a) the BLC Closing Date and (b) January 4, 2010. As of October 19, 2009, after the $6 million repayment, Sunrise had outstanding borrowings of roughly $62.9 million under the Credit Agreement and outstanding letters of credit of roughly $23.1 million. From time to time, Sunrise has had customary commercial banking relationships with certain of the Lenders under the Credit Agreement, including other commercial lending and banking arrangements. In addition, Sunrise has engaged and may in the future engage, from time to time, one or more of the Lenders or their affiliates to provide investment banking and other advisory and financial services to Sunrise. A full-text copy of the Credit Agreement Amendment is available at no charge at http://ResearchArchives.com/t/s?4745 Members of the lending consortium are: * BANK OF AMERICA, N.A., As Administrative Agent; as a Lender, L/C Issuer and Swing Line Lender in its own right and as successor by merger to LaSalle Bank National Association; * PNC BANK NATIONAL ASSOCIATION, as a Lender, in its own right and as successor by merger to Farmers & Merchants Bank; * WACHOVIA BANK, NATIONAL ASSOCIATION, as a Lender; * MANUFACTURERS AND TRADERS TRUST COMPANY, as a Lender in its own right and as successor by merger to First Horizon Bank, formerly a division of First Tennessee Bank, N.A.; * CHEVY CHASE BANK, A DIVISION OF CAPITAL ONE, N.A.; and * HSBC BANK USA, N.A., as a Lender Bankruptcy Warning Sunrise Senior Living said it has no borrowing availability under its bank credit facility, and it has significant scheduled debt maturities in 2009 and significant long-term debt that is in default. Sunrise is endeavoring to extend debt maturity dates, re-finance debt and obtain waivers from applicable lenders. It is engaged in discussions with various venture partners and third parties regarding the sale of certain assets with the purpose of increasing liquidity and reducing obligations to enable the Company to continue operations. Sunrise expects that its cash balances and expected cash flow are sufficient to enable it to meet operating obligations through December 2, 2009. If it is not able to achieve these objectives, it will not have sufficient financial resources to meet financial obligations and it could be forced to seek reorganization under the U.S. Bankruptcy Code. As of June 30, 2009, the Company had $1.14 billion in total assets and $1.09 billion in total liabilities. Sunrise had $37.0 million and $29.5 million of unrestricted cash at June 30, 2009 and December 31, 2008, respectively. As of June 30, 2009, Sunrise and its consolidated subsidiaries had debt of $614.5 million, of which $99.1 million of debt is scheduled to mature in 2009, along with $69.2 million of draws on the Bank Credit Facility. Long-term debt that is in default totals $360.4 million, including $190.2 million of debt that is in default as a result of the failure to pay principal and interest to the lenders of Sunrise's German communities, and $170.2 million of debt that is in default as a result of Sunrise's failure to meet certain financial covenants. About Sunrise Senior Living Sunrise Senior Living, Inc., a McLean, Va.-based company -- http://www.sunriseseniorliving.com/-- employs roughly 40,000 people. As of June 30, 2009, Sunrise operated 415 communities in the United States, Canada, Germany and the United Kingdom, with a combined unit capacity of roughly 42,750 units. Sunrise offers a full range of personalized senior living services, including independent living, assisted living, care for individuals with Alzheimer's and other forms of memory loss, as well as nursing and rehabilitative services. Sunrise's senior living services are delivered by staff trained to encourage the independence, preserve the dignity, enable freedom of choice and protect the privacy of residents. TAVERN ON THE GREEN: NY City Claims Ownership of Name ----------------------------------------------------- New York City filed a complaint against Tavern on the Green LP in the Bankruptcy Court, to claim rights of the name to the Debtor's famed restaurant in New York's Central Park. According to Christopher Scinta at Bloomberg News, the city asked for a judgment canceling the federal trademark registration for the name obtained by the operators in 1981, or an order assigning the trademark to the city. Tavern on the Green LP has asked for a temporary restraining order in U.S. Bankruptcy Court that would allow it to delay turnover of the lease of its popular restaurant in Central Park, for 90 days after January 1, 2010. In August, New York awarded the lease for 20 years starting Jan. 1 to restaurateur Dean Poll, who runs the Boathouse Restaurant in Central Park. Tavern on the Green LP is the operator of the 75-year-old restaurant in New York's Central Park. Tavern on the Green, the second-highest grossing restaurant in the U.S. last year, was founded in 1934 by New York Parks Commissioner Robert Moses and the license was bought by restaurateur Warner LeRoy in 1974. The Company filed for Chapter 11 on September 9, 2009 (Bankr. S.D.N.Y. Case No. 09-15450). It listed assets and debts of as much as $50 million each. TETON ENERGY: JPMorgan-Led Lenders Extend Forbearance to Nov. 6 --------------------------------------------------------------- Effective as of October 16, 2009, Teton Energy Corporation entered into a letter agreement with JPMorgan Chase Bank, N.A., as administrative agent, and each of the financial institutions identified therein amending the Third Amendment to the Second Amended and Restated Credit Agreement and Forbearance Agreement which was entered into effective as of August 26, 2009. Under the terms of the Letter Agreement: (a) Section 2.1 of the Letter Agreement was amended by replacing each reference to "October 16, 2009" to "November 6, 2009" so that the amended Section reads as: "2.1 Forbearance. Upon and subject to the terms and conditions hereof, the Administrative Agent and the Lenders agree to forbear from exercising their rights and remedies as a result of the Specified Defaults [the Company's failure to repay the Borrowing Base Deficiency of $8,484,296 on August 25, 2009] under the Loan Documents, including any rights or remedies arising thereunder pursuant to applicable law, to (i) accelerate the outstanding principal balance of the Loans and (ii) commence foreclosure proceedings under the Security Instruments, during the period from the Amendment Effective Date to and including the earlier of (a) the occurrence of any Default or Event of Default other than the Specified Defaults, or (b) 5:00 p.m., November 6, 2009 (Dallas, Texas time) (the "Forbearance Period"). Upon the earlier of the occurrence of any Default or Event of Default other than the Specified Defaults, or November 6, 2009, the Administrative Agent's and the Lenders' agreement herein to forbear from exercising such rights and remedies available to them shall immediately terminate, and the Administrative Agent and the Lenders shall immediately be entitled to exercise any and all rights and remedies available to them, individually or collectively, under the Loan Documents, at law or in equity or otherwise, including, without limitation, the right (without prior notice or opportunity to cure of any kind) to accelerate the Loans, exercise rights of offset over all accounts of the Borrower and its Subsidiaries, commence foreclosure proceedings and/or seek the appointment of a receiver." (b) The Lenders agreed that the Company's financial statements for the quarter ended September 30, 2009, will be due to the Administrative Agent and each Lender no later than November 30, 2009. The Company, from time to time, enters into commodity hedge agreements to mitigate a portion of the potential exposure to adverse market changes in the prices of oil and natural gas, with JPMorgan Chase. There are no other material relationships between the Company or its affiliates and JPMorgan Chase or the lenders, other than in respect to the Third Amendment, as amended. A copy of the Letter Agreement amending Third Amendment to Second Amended and Restated Credit Agreement and Forbearance Agreement is available at no charge at http://ResearchArchives.com/t/s?4748 Members of the lending consortium are: * JPMORGAN CHASE BANK, N.A., as Administrative Agent and a Lender; * ROYAL BANK OF CANADA, as Syndication Agent and a Lender; * GUARANTY BANK AND TRUST COMPANY, as a Lender; * U.S. BANK NATIONAL ASSOCIATION, as a Lender The Troubled Company Reporter said on October 9 the Company intends to continue to work with the holders of the Debentures towards a more permanent solution, however, there can be no assurance that the Company will be successful in doing so, in which case the Company may, among other options, be required to seek protection under the United States Bankruptcy Code. About Teton Energy Teton Energy Corporation -- http://www.teton-energy.com/-- is an independent oil and gas exploration and production company focused on the acquisition, exploration and development of North American properties. The Company's current operations are concentrated in the prolific Rocky Mountain and Mid-continent regions of the U.S. Teton has leasehold interests in the Central Kansas Uplift, eastern Denver-Julesburg Basin in Colorado and the Big Horn Basin in Wyoming. Teton is headquartered in Denver, Colorado. The Company's balance sheet at June 30, 2009, showed total assets of $60.00 million, total liabilities of $50.90 million and stockholders' equity of about $9.10 million. TIGER PACIFIC: Completes Forbearance and Loan Transaction --------------------------------------------------------- Tiger Pacific Mining Corp. says it has completed its forbearance and loan transaction with a director, a related party and a third party. Pursuant to the transaction, (i) the lenders extended the time for repayment of existing indebtedness due to the lenders totalling $592,165.63 until after two months from Tiger Pacific's reinstatement on either the NEX exchange or the TSX Venture Exchange; and (ii) the lenders agreed to lend an additional $3,000 to Tiger Pacific at 10 per cent per annum due on demand after two months from the reinstatement. Tiger Pacific on October 7 announced it has entered into a forbearance and loan agreement with a director, a related party and a third party. Under the terms of the Agreement, (i) the Lenders agreed to extend the time for repayment of existing indebtedness due to the Lenders totaling $592,1656 until after two months from Tiger Pacific's reinstatement on either the NEX Exchange or the TSX Venture Exchange; and (ii) the Lenders agreed to lend an additional $3,000 to Tiger Pacific at 10% per annum due on demand after two months from the Reinstatement. Tiger Pacific will close the transaction as soon as possible following receipt of NEX approval. Tiger Pacific considers any abridging of time requirements necessary and reasonable in the circumstances because the new loans are de minimus in amount and are required immediately to meet its ongoing financial obligations, and the granting of security is a pre-condition to the new loans. In addition, Tiger Pacific has entered into a general security agreement with the Lenders in respect of the above indebtedness and its advisors for unpaid fees. Tiger Pacific is a mining company engaged in the exploration and development of metals and minerals. TIMOTHY CORCORAN: Case Summary & 19 Largest Unsecured Creditors --------------------------------------------------------------- Joint Debtors: Timothy J. Corcoran Lisa A. Corcoran Po Box 3169 Gilbert, AZ 85299 Bankruptcy Case No.: 09-26495 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Debtors' Counsel: Robert M. Cook, Esq. Law Offices of Robert M. Cook PLLC 219 W Second St Yuma, AZ 85364 Tel: (928) 782-7771 Fax: (928) 782-7778 Email: robertmcook@yahoo.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $4,467,255, and total debts of $3,996,901. A full-text copy of the Debtors' petition, including a list of their 19 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/azb09-26495.pdf The petition was signed by the Joint Debtors. TISHMAN SPEYER: Moves Closer to Default After Losing Court Ruling ----------------------------------------------------------------- Tishman Speyer Properties LP and its partners moved closer to defaulting on $3 billion in loans they used to purchase Manhattan's largest apartment complex after a New York court ruled that the owners illegally raised rents on thousands of tenants, according to a report by Oshrat Carmiel and Patricia Hurtado at Bloomberg News. As widely reported, the New York Court of Appeals in Albany ruled October 22 the rent increase on about 4,350 apartments at the Stuyvesant Town-Peter Cooper Village complex violated the law because it was built with city assistance and the owners received tax breaks. "In the lawsuit, nine plaintiff-tenants of Peter Cooper Village and Stuyvesant Town, two adjoining Manhattan apartment complexes comprising 110 buildings and occupying roughly 80 acres between 14th and 23rd Streets along the East River contend that defendants Tishman Speyer Properties, L.P., and PCV ST Owner LP, and Metropolitan Insurance and Annuity Company and Metropolitan Tower Life Insurance Company, the current and former owners of the properties, respectively, were not entitled to take advantage of the luxury decontrol provisions of the Rent Stabilization Law (RSL)1 while simultaneously receiving tax incentive benefits under the City of New York's J-51 program," the court wrote. "We agree." According to Bloomberg, the Albany court ruling upheld a decision by a lower appeals court in Manhattan. That Manhattan court ruled in March that Tishman and the prior owner, MetLife Inc., wrongfully deregulated the apartments by raising the rents because of a sale of the property in 2006. "Bondholders potentially face a billion dollar loss, which would be the largest loss in CMBS history," Steve Kuritz, senior vice president at credit rating company Realpoint LLC, said in an interview with Bloomberg. "It's a huge blow for Tishman and the bondholders here. Obviously that's going to substantially limit the income growth that was the basis for the loan." The court ruling "likely pushes the mortgage one step closer to default," Aaron Bryson, an analyst at Barclays Capital, said in an e-mail to Bloomberg. The property now has a market value of about $1.99 billion and New York-based Tishman and partners including BlackRock Realty LP owe more to bondholders than the complex is worth, Kuritz said in a recent report on the property. The group bought the 80-acre, 11,200-unit developments for $5.4 billion in 2006, near the top of the U.S. property market, with plans to remodel and raise the cost of rent-regulated units to market rates. Soon after, the global credit crisis and the recession hit, constraining the group's ability to raise rents. Expenses to convert units were also higher than anticipated, Standard & Poor's said in a report in October 2008. A copy of the Albany court decision is available at: http://researcharchives.com/t/s?474c Three judges concurred with the decision. Two judges dissented. The case is Roberts v. Tishman Speyer Properties LP, No. 131, New York Court of Appeals (Albany). About Tishman Speyer Tishman Speyer Properties lays claim to two of the most famous slices of the Big Apple -- New York City's Chrysler Building and Rockefeller Center. The property company invests in, develops, and/or operates commercial real estate. Other well known holdings include Berlin's Q 205 project (the first post-reunification development in the city's center) and Chicago's Franklin Center (one of the city's largest office properties). The company owns or has developed more than 115 million sq. ft. in Asia, Europe, South America, and the US since it was founded in 1978. The company also has projects in India, China, and Brazil, and owns some 92,000 residential units around the world. TOUSA INC: Banks Seek Stay of Fraudulent Transfer Judgment ---------------------------------------------------------- The first- and second-lien lenders of Tousa Inc. are asking the Bankruptcy Court for a stay pending appeal from the Oct. 13 ruling that a $500 million loan was a fraudulent transfer as to the Tousa subsidiaries that pledged their assets while receiving minimal benefit from the loan. The lenders have scheduled an Oct. 26 hearing for their request. Citicorp North America NA, the agent for the first-lien lenders, asks Bankruptcy Judge John K. Olson to grant the stay without requiring a bond because there is no risk of default. In the alternative, Citicorp requests, pursuant to Rule 7062, that the Court fix the amount of the supersedeas bond to be posted to effectuate a stay as of right. Although not binding on the Court, the Southern District of Florida's local rules provide that "[a] supersedeas bond staying execution of a money judgment shall be in the amount of 110% of the judgment." S.D. Fla. Local R. 62.1(A). Thus, if the Court requires a bond as a condition to staying the judgment, Citicorp says the Court should grant the instant motion pursuant to Rule 62(d) requiring each lender to post a bond in an amount no greater than 110% of its individual portion of the judgment, with such bond to be posted within 30 days. As reported by the TCR on Oct. 15, 2009, Judge John K. Olson of the U.S. Bankruptcy Court for the Southern District of Florida has held that the loans Citicorp North America, as administrative agent, and certain prepetition lenders extended to TOUSA Inc. and its affiliates barely six months before the Petition Date were fraudulent transfers. TOUSA, Inc. caused certain of its subsidiaries to borrow in July 2007 from certain lenders (i) a $200 million first lien term loan with Citicorp, as administrative agent under the parties' credit agreement, and (ii) a $300 million second lien term loan with Citicorp as administrative agent, as subsequently replaced by Wells Fargo Bank. To secure the Loans, the lenders were granted liens on substantially all of TOUSA's assets. The proceeds of the Loans were used to settle a litigation initiated by Senior Transeastern Lenders against TOUSA and its subsidiary, TOUSA Homes LP, that arose from the default on debt incurred to finance the Transeastern Joint Venture, a business venture that TOUSA undertook in 2005. Certain of TOUSA's affiliates, otherwise referred to as the "Conveying Subsidiaries," which were not defendants in the Transeastern litigation and were not liable to the entities that financed the Transeastern Joint Venture, nonetheless incurred liabilities and granted liens to secure the resolution of TOUSA Inc.'s liabilities as their parent company. In the Adversary Complaint the Official Committee of Unsecured Creditors initiated in July 2008 against Citicorp, Wells Fargo and the Senior Transeastern Lenders, the Committee sought (1) to avoid and recover $500 million in liens granted pursuant to the July 2007 Loan Transaction; (2) to recover $420 million paid in cash to prior lenders to other Debtors whose loans were paid out as part of the same loan transaction in which the challenged liens were granted; and (3) to avoid as preferential the grant of a security interest in a $207 million tax refund which was perfected less than 90 days before the Debtors' petitions were filed. With respect to the first lien lenders, the Court ordered the disgorgement by the first lien lenders of "any and all principal, interest, costs, expenses and other fees or amounts paid to, for the benefit of, or on behalf of, the First . . . Lien Lenders or in respect of the First . . . Lien Lenders' asserted claims or obligations against the Conveying Subsidiaries' estates. According to Citicorp, the payments on the loan obligation subject to the disgorgement order include the paydown amount of $70,884,588, plus other amounts which continue to be calculated, included but not limited to interest payments made pursuant to the First Lien Term Loan. The Court set October 23, 2009 as the deadline to file an accounting of the amounts to be disgorged subject to the disgorgement order. A full-text copy of Judge Olson's 182-page Findings of Fact and Conclusions of Law dated October 13, 2009, is available for free at http://bankrupt.com/misc/TOUSA_JudgeOlsonOct13Findings.pdf About Tousa Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08- 10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta, Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger Singerman, to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008 (Bankr. S.D. Fla. Case No. 08-20746). It listed assets between $1 million and $10 million, and debts between $1 million and $10 million. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets of $1,734,422,756 and total liabilities of $2,300,053,979. Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRICOM SA: Set to Exit Chapter 11 After Plan Gets OK ---------------------------------------------------- Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York on October 21 entered an order confirming the prepackaged reorganization plan of Tricom S.A., Tricom U.S.A. Inc. and other affiliates. The financial plan was approved by 99.95% of creditors that cast their vote. With the ratification of the plan, and after the conclusion of the implementation phase in the Dominican Republic, which includes, among other actions, INDOTEL's (Instituto Dominicano de Las Telecomunicaciones) approval of the Plan, the former creditors will become the new shareholders of the company, changing their debt for shares, and substantially eliminating all non-secured debts, which totaled over US$500 million. "This invaluable vote of confidence in the future of our company, due to our excellent performance over the last four years, is something never seen before in our country," said Mr. Hector Castro Noboa, Tricom's CEO. Mr. Castro Noboa continued, "During the years in which the restructuring process took place, Tricom has invested over US$160 million, and today marks the beginning of a new stage which will allow us to fulfill our long-term investment plans. We will ensure Tricom is at the head of the competitive pack and poised to develop a new technological infrastructure. "We greatly thank our customers, both residential and corporate, as well as the passion and commitment of our employees, for the confidence placed in our company during this process," said Mr. Castro Noboa. A status conference will be held December 17, 2009, at 10:00 a.m. EST., when the Debtors will report on their progress in satisfying the conditions precedent to the occurrence of the effective date of the Plan. Terms of the Plan Upon the effective date of the plan, Credit Suisse and other lenders will receive new secured debt in the aggregate principal amount of $25,529,781. Holders of "Unsecured Financial Claims" will receive their pro rata share of 10 million shares of Holding Company Stock to be issued by Holding Company, a new entity to be formed that will own at a minimum approximately 97% of the equity of Tricom and, directly or indirectly, approximately 97% of the equity of TCN Dominicana, S.A., and Tricom USA. All of the Debtors' secured and general unsecured creditors are expected to recover 100%, and Unsecured Financial Creditors are expected to get between 22% and 27%, under the Plan. A full-text copy of the Plan, as amended October 19, is available for free at: http://bankrupt.com/misc/Tricom_Oct09_Plan.pdf A full-text copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Tricom_Oct09_DS.pdf About Tricom SA Tricom, S.A., was incorporated in the Dominican Republic on January 25, 1988, as a Sociedad Anonima. Tricom is one of the pre-eminent full service communications services providers in the Dominican Republic. Headquartered in Santo Domingo, Tricom offers local, long distance, and mobile telephone services, cable television and broadband data transmission and Internet services, which are provided to more than 729,000 customers. Tricom's wireless network covers about 90% of the Dominican Republic's population. Tricom's local service network is 100% digital. The company also owns interests in undersea fiber-optic cable networks that connect and transmit telecommunications signals between Central America, the Caribbean, the United States and Europe. Tricom USA, Inc., a wholly owned subsidiary of Tricom, was incorporated in Delaware in 1992, and at that time was known as Domtel Communications. A name change was effected in 1997 and Domtel Communications formally became Tricom USA, Inc. Tricom USA originates, transports and terminates international long-distance traffic using switching stations and other telecommunications equipment located in New York and Florida. Tricom S.A. and its U.S. affiliates filed for Chapter 11 protection on February 29, 2008 (Bankr. S.D.N.Y. Case No. 08-10720). The Debtors' legal advisors are Morrison & Foerster LLP and their financial advisors are FTI Consulting, Inc. Kurtzman Carson Consultants serves as claims and notice agent. An ad hoc committee consisting of certain holders of Unsecured Financial Claims is represented by Manatt, Phelps & Phillips LLP, as legal advisors, and Chanin Capital Partners, as financial advisors. . Affiliates of Tricom's largest shareholders are represented by White & Case LLP, as legal advisors, and Broadspan Capital LLC, as financial advisors. When the Debtors' filed for protection from their creditors, they listed total assets of US$327,600,000 and total debts of US$764,600,000. TROY ELEVATOR: Propose Bradshaw Fowler sa General Counsel --------------------------------------------------------- Troy Elevator Inc. asks the U.S. Bankruptcy Court for the Southern District of Iowa for permission to employ Bradshaw, Fowler, Proctor & Fairgrave PC as its general reorganization counsel. The firm has agreed to, among other things: a) advise and assist the debtor with respect to compliance wit the requirements of the United States Trustee; b) advise the Debtor regarding matters of bankruptcy law, including the rights and remedies of the Debtor with regard to its assets and with respect to the claims of creditors; and c) represent the Debtor in any proceedings or hearings in the Bankruptcy Court and in any action other court where the Debtor's right under the Bankruptcy Code may be litigated or affected. Papers filed with the Court did not show the firm's standard hourly rates. The Debtor assures the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Based in Bloomfield, Iowa, Troy Elevator, Inc., filed for Chapter 11 protection on September 30, 2009 (Bankr. S.D. Iowa Case No. 09-04785). In its petition, the Debtor listed assets between $10 million and $50 million, and debt between $1 million and $10 million. TXCO RESOURCES: Creditors Agree to Two More Weeks Exclusivity ------------------------------------------------------------- TXCO Resources Inc. has obtained creditors' support for a November 12 extension of its exclusive period to file a Chapter 11 plan, Bloomberg News' Bill Rochelle reported. TXCO met opposition from the Official Committee of Unsecured Creditors the last time it filed a request for an extension of its plan filing deadline. The Committee, Bloomberg relates, was voicing opposition to a stranglehold the second-lien term loan lenders allegedly held over the case from the looming maturity of the $100 million loan. About TXCO Resources TXCO Resources Inc. is an independent oil and gas enterprise with interests in the Maverick Basin, the onshore Gulf Coast region and the Marfa Basin of Texas, and the Midcontinent region of western Oklahoma. TXCO's business strategy is to acquire undeveloped mineral interests and internally developing a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling. It accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on Nasdaq's Global Select Market under the symbol "TXCO." The Company and its affiliates filed for Chapter 11 protection on May 17, 2009 (Bankr. W.D. Tex. Case No. 09-51807). The Debtors hired Deborah D. Williamson, Esq., and Lindsey D. Graham, Esq., at Cox Smith Matthews Incorporated, as general restructuring counsel; Fulbright and Jaworski, L.L.P., as corporate counsel & conflicts counsel; Albert S. Conly as chief restructuring officer and FTI Consulting Inc. as financial advisor; Goldman, Sachs & Co. as financial advisor for assets sale; Global Hunter Securities, LLC, as financial advisors and investment bankers; and Administar Services Group LLC as claims agent. Gardere Wynne Sewell LLP represents the Committee. As reported in Troubled Company Reporter on July 6, 2009, in their schedules of assets and liabilities, the Debtors have $357,855,952 in total assets and $331,422,792 in total liabilities UAL CORP: Enters into Funding Agreement with SkyWest ---------------------------------------------------- SkyWest, Inc., announced that it has reached an agreement with United Air Lines, Inc., that provides operational funding to United, extends the current code-sharing relationship between SkyWest Airlines, Inc., a wholly-owned subsidiary of SkyWest and creates the opportunity to develop a new relationship with Atlantic Southeast Airlines, Inc., another wholly-owned subsidiary of SkyWest. Under the terms of the various agreements executed between SkyWest Airlines and United, SkyWest Airlines extended to United a secured term loan in the original principal amount of $80 million. The term loan bears interest at a rate of 11%, with a ten-year amortization period. The term loan is secured by certain ground equipment and airport slot rights held by United. SkyWest Airlines also agreed to defer certain amounts otherwise payable to SkyWest Airlines under the existing United Express Agreement. The maximum deferral amount is $49 million and any amounts so deferred accrue a deferral fee of 8%, payable weekly. United's right to defer such payments is scheduled to terminate in ten years. The agreements executed between SkyWest Airlines and United extend SkyWest Airlines' existing rights to operate 40 regional jet aircraft under the United Express Agreement until the end of their current lease terms, which is an average of 8.4 years. ASA will begin operating as a United Express carrier starting in the first quarter of 2010. All of the 13 regional jets are intended to be in operations by May of 2010. SkyWest anticipates that ASA will operate these aircraft under a capacity purchase agreement, for five years, and it is anticipated that they will be compensated in similar fashion to the SkyWest Airlines current agreement. "This transaction is indicative of a productive and cooperative relationship and partnership between United and SkyWest," said Bradford R. Rich, SkyWest's Executive Vice President and CFO. He continued, "This is an opportunity to utilize the strengths of both companies to create value for both of us." SkyWest will answer questions and provide more detail regarding these arrangements during its third quarter conference call, which is scheduled for November 5, 2009. About SkyWest SkyWest Airlines, based in St. George, Utah, and ASA, based in Atlanta, Georgia, are wholly owned subsidiaries of SkyWest, Inc. SkyWest Airlines operates as United Express, Delta Connection and Midwest Connect carriers under contractual agreements with United Airlines, Delta Air Lines and Midwest Airlines. ASA operates as a Delta Connection carrier under a contractual agreement with Delta Air Lines. System-wide, SkyWest, Inc. serves a total of approximately 207 cities in the United States, Canada, Mexico and the Caribbean, with approximately 2,355daily departures. This press release and additional information regarding SkyWest, Inc. can be accessed at http://www.skywest.com/ About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The Company filed for Chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on January 20, 2006. The company emerged from bankruptcy protection on February 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * UAL and United both carry a 'CCC' issuer default rating from Fitch Ratings. UAL carries a 'B-', on 'watch negative', corporate credit rating from Standard & Poor's Ratings Services. UAL CORP: Provides Financial Projections for 4th Quarter -------------------------------------------------------- UAL Corp, the holding company of United Air Lines, Inc., filed with the U.S. Securities and Exchange Commission on October 20, 2009, an investor update related to its financial and operational outlook for the fourth quarter of 2009. Capacity Kathryn A. Mikells, senior vice president and chief financial officer of UAL, discloses that the fourth quarter consolidated available seat miles are estimated to be down 3.2% to 4.2% year- over-year. She says that full year 2010 mainline ASMs are expected to be down 0.5% to 1.5% and consolidted ASMs are estimated to be down 0.5%. Non-Fuel Expense UAL expects mainline non-fuel price, including the impact of cash settled hedges, to be $2.06 per gallon for both the fourth quarter 2009 and the full year 2009. Fuel Expense UAL expects mainline fuel price, including the impact of cash settled hedges, to be $2.20 per gallon for the third quarter and $2.07 per gallon for the full year. Ms. Mikells says that UAL previously posted cash collateral with its fuel hedge counterparties and this collateral will be used to cover hedge losses as contract settle. Non-Operating Income/Expense Ms. Mikells explains that a portion of UAL's total fuel hedge impact is recorded as non-operating expense, with the rest recorded as fuel expense. Based on October 14, 2009, closing forward prices, UAL anticipates to recognize $35 million of cash losses on settled hedge contracts reported in non-operating expenses in the fourth quarter. Excluding hedge impacts, Ms. Mikells relates that non-operating expense is estimated to be $145 million to $155 million for the fourth quarter and $550 million for the full year. Income Taxes Ms. Mikells discloses that because of its net operating loss carry-forwards, UAL expects to pay minimal cash taxes for the future and is not recording incremental tax benefits at this time. UAL also expects an effective tax rate of 0% for the fourth quarter of 2009 and full year 2009. Capital Spending and Scheduled Debt and Capital Lease Payments Ms. Mikells says that of the planned $300 million in capital expenditures for 2009, $70 million will be spent in the fourth quarter. UAL expects scheduled debt and capital lease payments of $215 million for the fourth quarter of 2009. Fuel Hedge Positions and Collateral For the fourth quarter 2009, UAL has hedged 55% of its estimated consolidated fuel consumption at an average price of $75 per barrel. Ms. Mikells discloses that UAL has hedged 43% of estimated consumption at an average price of $63 per barrel, excluding the legal positions put in place in 2008. She adds that for the full year 2010, UAL has hedged 16% of its estimated fuel consumption at an average price of $74 per barrel, including hedge coverage of 43% of estimated first quarter 2010 consumption at an average price of $74 per barrel. UAL's estimated settled hedge impacts at certain crude oil prices, based on the hedge portfolio as of October 14, 2009, are: Cash Settled Crude Oil Price Hedge Impact 4Q09 FY09 --------------- ------------ ---- ---- $100 per Barrel Mainline Fuel Price Excluding Hedge($/gal) $2.64 $1.94 Impact to Fuel Expense($/gal) ($0.29) $0.19 Impact to Non- Operating Expense ($ millions) $13M $228M $90 per Barrel Mainline Fuel Price Excluding Hedge($/gal) $2.40 $1.89 Impact to Fuel Expense ($/gal) ($0.17) $0.21 Impact to Non- Operating Expense ($ millions) $21M $236M $80 per Barrel Mainline Fuel Price Excluding Hedge($/gal) $2.17 $1.83 Impact to Fuel Expense($/gal) ($0.06) $0.24 Impact to Non- Operating Expense ($ millions) $30M $245M $75.18 per Mainline Fuel Barrel Price Excluding Hedge($/gal) $2.05 $1.80 Impact to Fuel Expense($/gal) $0.01 $0.26 Impact to Non- Operating Expense ($ millions) $35M $250M $70 per Barrel Mainline Fuel Price Excluding Hedge ($/gal) $1.93 $1.78 Impact to Fuel Expense($/gal) $0.05 $0.27 Impact to Non- Operating Expense ($ millions) $39M $254M $60 per Barrel Mainline Fuel Price Excluding Hedge ($/gal) $1.69 $1.72 Impact to Fuel Expense($/gal) $0.15 $0.29 Impact to Non- Operating Expense ($ millions) $48M $263M $50 per Barrel Mainline Fuel Price Excluding Hedge($/gal) $1.45 $1.66 Impact to Fuel Expense($/gal) $0.20 $0.30 Impact to Non- Operating Expense ($ millions) $56M $271M A full-text copy of UAL's Investor Update is available for free at http://ResearchArchives.com/t/s?4729 Third Quarter Results As reported by the TCR on October 21, 2009, UAL Corporation (Nasdaq: UAUA) reported results for the third quarter ended Sept. 30, 2009. The Company: * Reported a net loss of $63 million, or $0.43 per basic share, excluding non-cash, net mark-to-market hedge gains and certain accounting charges as outlined in note 6 of the attached statement of consolidated operations, narrowing its net loss by $202 million compared to the third quarter of 2008. The company reported a GAAP net loss of $57 million, or $0.39 per basic share. * Reported a year-over-year decline in consolidated passenger revenue per available seat mile (PRASM) of 14.7%, a 2.5-percentage-point improvement compared to the 17.2% decline in the second quarter of 2009. * Delivered a third consecutive quarter of non-fuel unit cost reduction, with mainline unit cost per available seat mile (CASM) for the quarter down 1.6% year-over-year, excluding fuel and certain accounting charges, despite a reduction in mainline capacity of 8.2% year-over-year. Mainline CASM, including fuel and excluding non-cash, net mark-to-market fuel hedge gains and certain accounting charges, was down 20.3% year-over-year. GAAP mainline unit cost, including these items, was down 24.8%. * Closed the quarter with total cash of $2.8 billion, unrestricted cash of more than $2.5 billion, and restricted cash of $309 million. * Completed financings totaling more than $1.5 billion, including $270 million in the third quarter and nearly $1.3 billion early in the fourth quarter, raising roughly $1 billion in new liquidity. Through these financings, the company also reduced its debt and net capital lease obligations for 2010 by $215 million and for 2011 by $100 million. * As a part of the $1.3 billion in early fourth quarter financings, the company completed a $129 million financing with SkyWest, Inc., one of its regional flying partners. The agreement includes a contract extension on 40 existing aircraft as well as commitments for a small number of additional aircraft. * Ranked No. 2 in on-time arrivals among the major network carriers year-to-date through September, trailing the leader by less than one half of one percentage point. * Continued to improve the quality of its products and services, with customer satisfaction scores significantly improving across the board compared to last year. UAL Corporation and Subsidiary Companies Unaudited Statement of Consolidated Operations Three Months Ended September 30, 2009 (In Millions) Operating revenues: Passenger - United Airlines $3,267 Passenger - Regional Affiliates 844 Cargo 125 Other operating revenues 197 ---------- Total Operating Expenses 4,433 Operating expenses: Aircraft fuel 1,064 Salaries and related costs 954 Regional affiliates 775 Purchased services 279 Aircraft maintenance materials and outside repairs 253 Landing fees and other rent 226 Depreciation and amortization 220 Distribution expenses 145 Aircraft rent 88 Cost of third party sales 59 Other impairments and special items 43 Other operating expenses 239 ---------- Total Operating Expenses 4,345 Earnings from operations 88 Other income (expense): Interest expense (146) Interest income 3 Interest capitalized 3 Miscellaneous, net (10) ---------- (150) Loss before income taxes and equity in earnings of affiliates (62) Income tax expense (benefit) (4) ---------- Loss before equity in earnings of affiliates (58) Equity in earnings of affiliates, net of tax 1 ---------- NET LOSS ($57) ========== UAL Corporation and Subsidiary Companies Statements of Consolidated Cash Flows Three Months Ended September 30, 2009 (In Millions) Cash flows provided (used) by operating activities: $56 Cash flows provided (used) by investing activities: Net sales of short-term investments - Additions to property, equipment and deferred software (60) Decrease in restricted cash (57) Proceeds from asset sale-leaseback 41 Proceeds from litigation on advance deposits - Proceeds from the sale of property and equipment 31 Other, net 2 ---------- (43) ---------- Cash flows provided (used) by investing activities: Repayment of Credit Facility (9) Repayment of other debt (229) Special distribution to common shareholders - Principal payments under capital leases (26) Decrease in capital lease deposits - Increase in deferred financing costs (5) Proceeds from issuance of long-term debt 187 Proceeds from the issuance of common stock 27 Other, net 1 ---------- (54) ---------- Increase (decrease) in cash and cash equivalents during the period (41) Cash and cash equivalents at beginning of the period 2,566 ---------- Cash and cash equivalents at end of the period $2,525 ========== Trading of UAL's common stock rose 8.8% at $7.90 per share in line with UAL's narrower loss for this quarter, according to an October 21, 2009, report by The Wall Street Journal. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The Company filed for Chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on January 20, 2006. The company emerged from bankruptcy protection on February 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * UAL and United both carry a 'CCC' issuer default rating from Fitch Ratings. UAL carries a 'B-', on 'watch negative', corporate credit rating from Standard & Poor's Ratings Services. UAL CORP: Reports September 2009 Traffic Results ------------------------------------------------ United Air Lines, Inc., reported its preliminary consolidated traffic results for September 2009. The company reported a September consolidated passenger load factor of 81.2 percent. Total consolidated revenue passenger miles (RPMs) decreased in September by 1.1 percent on a consolidated capacity decrease of 3.7 percent in available seat miles (ASMs) compared with the same period in 2008. 2009 2008 Percent Sept. Sept. Change ----- ----- ------- Revenue passenger miles ('000) North America 4,484,005 4,772,889 (6.1%) Pacific 1,811,378 1,717,447 5.5% Atlantic 1,606,269 1,667,518 (3.7%) Latin America 191,086 209,723 (8.9%) Total International 3,608,733 3,594,688 0.4% Total Mainline 8,092,737 8,367,577 (3.3%) Regional Affiliates 1,155,076 985,745 17.2% Total Consolidated 9,247,813 9,353,322 (1.1%) Available seat miles ('000) North America 5,445,645 5,918,285 (8.0%) Pacific 2,291,510 2,298,651 (0.3%) Atlantic 1,868,738 1,981,231 (5.7%) Latin America 255,534 306,033 (16.5%) Total International 4,415,782 4,585,915 (3.7%) Total Mainline 9,861,426 10,504,200 (6.1%) Regional Affiliates 1,530,288 1,321,787 15.8% Total Consolidated 11,391,714 11,825,987 (3.7%) Load factor North America 82.3% 80.6% 1.7 pts Pacific 79.0% 74.7% 4.3 pts Atlantic 86.0% 84.2% 1.8 pts Latin America 74.8% 68.5% 6.3 pts Total International 81.7% 78.4% 3.3 pts Total Mainline 82.1% 79.7% 2.4 pts Regional Affiliates 75.5% 74.6% 0.9 pts Total Consolidated 81.2% 79.1% 2.1 pts Revenue passengers boarded ('000) Mainline 4,425 4,852 (8.8%) Regional Affiliates 2,132 1,900 12.2% Total Consolidated 6,557 6,752 (2.9%) Cargo ton miles ('000) Freight 131,174 134,226 (2.3%) Mail 14,672 22,904 (35.9%) Total Mainline 145,846 157,130 (7.2%) About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The Company filed for Chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on January 20, 2006. The Company emerged from bankruptcy protection on February 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * UAL and United both carry a 'CCC' issuer default rating from Fitch Ratings. UAL carries a 'B-'' on 'watch negative', corporate credit rating from Standard & Poor's Ratings Services UAL CORP: United MEC Selects Wendy Morse as Chairman ---------------------------------------------------- Captain Wendy Morse, a 24-year veteran of United Air Lines, Inc., and a long-time representative of the pilots of United Airlines, was elected Chairman of the United Master Executive Council of the Air Line Pilots Association. Captain Garry Kravit, another long-time aviator and ALPA volunteer, was elected Vice Chairman. Captain Joseph Genovese was reelected Secretary/Treasurer. The new slate of officers will begin their two-year term on January 1, 2010. Captain Morse, a 777 Captain based in Chicago, replaces Captain Steve Wallach, who will complete his term as Chairman on December 31. "While there is a change in leadership, there is no change in our collective resolve to bring about industry-leading career security, wages and working conditions," said Captain Morse. "It has been my privilege to have served the United pilot group faithfully for the past 21 months," said Captain Wallach, a 30 year veteran of United. Certain analysts say that the election of Ms. Morse as Chairman of United MEC could mean that the pilots have realized that their confrontational stance against United is not getting anywhere, Businessweek reported on October 14, 2009. Other analysts see it as a sign of discontent among pilots with respect to the past union leadership' initiatives in dealing with United during tough contract negotiations, Businessweek added. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The Company filed for Chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on January 20, 2006. The company emerged from bankruptcy protection on February 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * UAL and United both carry a 'CCC' issuer default rating from Fitch Ratings. UAL carries a 'B-'' on 'watch negative', corporate credit rating from Standard & Poor's Ratings Services UNIVERSAL ENERGY: Converts Remaining Debt Into Common Shares ------------------------------------------------------------ During the Annual Meeting held on August 25, 2009, the stockholders of Universal Energy Corp. approved an amendment to the Company's Articles of Incorporation to increase the number of authorized shares of common stock, par value $0.0001 per share, of the Company to 100,000,000,000 shares. On October 6, 2009, the Company announced that on September 30, the Company automatically converted the outstanding principal balance and interest amount of all of the Company's remaining debt into shares of the Company's common stock at the applicable conversion price on September 30, 2009. Management took this action to ensure the Company's ongoing viability as an operating company and to protect the interests of the Company's stakeholders. As of October 20, 2009, the Company has 91,866,398,784 shares issued and outstanding. On September 1, 2009, Universal Energy was served with a verified complaint captioned Roswell Capital Partners, LLC, as Collateral Agent; BridgePointe Master Fund Ltd. vs. Universal Energy Corp.; Universal Explorations Corp.; UT Holdings, Inc.; Universal Energy Services Corp; and John Does 1-10. The Complaint, which was filed in the United States District Court for the Southern District of New York, relates to the investment made BridgePointe during 2007 in convertible debentures of the Company. The Debentures are secured by certain assets of the Company and its subsidiaries. In the lawsuit, BridgePointe alleges certain events of default by the Company including failure to pay the "Monthly Redemption Amounts" when due during 2009 and the failure to authorize and reserve a sufficient number of shares of common stock as required by the debenture agreements. Under the terms of certain Debenture agreements, the Company is obligated to maintain an adequate number of shares for debt conversions. On February 5, 2009, the Company notified its debt holders that the authorized share limit had been reached and it would begin the process, as defined in the Debenture agreements, to attempt to authorize more shares. The Company was unable to begin this process immediately, as it wished to do, as the financial statements were being reviewed by the Securities and Exchange Commission. The financial information of a company, and the accompanying financial statements, are an integral and required component of a proxy statement. As the review related to potential material misstatements in the financial statements of the company, the Company was unable to file a preliminary proxy statement until the completion of their review. The SEC review which began on December 31, 2008 was completed on March 31, 2009. Subsequent to the completion of the SEC review of the financial statements, the Company filed a preliminary proxy on April 30, 2009 to increase the number of authorized shares. On May 6, 2009, the Company was informed by the SEC that its proxy was being reviewed and filing a definitive proxy until that review was complete would not be allowed. The review was completed on August 25, 2009. Upon completion of the review, the Company filed its definitive proxy on August 26, 2009 and set the meeting day for September 23, 2009. At the stockholder meeting, the number of authorized shares was increased. On September 21, 2009, the Company received a three-week extension of time to respond to the complaint filed by BridgePointe. The response was due October 12. On September 24, 2009, the Company received a conversion notice from BridgePointe in the amount of $40,000 on their unsecured convertible debenture due April 30, 2010. On September 30, 2009, the Company paid the "Monthly Redemption Amounts" due totaling $1,644,692.77 in principal and $144,437.37 in interest, under the senior secured convertible debentures with 14,909,417,833 shares of the Company's common stock. The Company has a balance due to BridgePointe in the amount of $215,962.64 and has reserved a sufficient number of shares to convert this remaining balance upon notification by BridgePointe that they are able to receive additional shares. On September 30, 2009, the Company automatically converted the outstanding principal balance and interest amount of all of the Company's remaining debt into shares of the Company's common stock at the applicable conversion price on September 30, 2009. Management took this action to ensure the Company's ongoing viability as an operating company and to protect the interests of the Company's stakeholders. The Company was to file its response to the BridgePointe complaint prior to October 12, 2009. As of June 30, 2009, the Company had $1,469,374 in total assets; and $4,291,779 in total current liabilities and $6,773 in asset retirement obligation; resulting in $2,829,178 stockholders' deficit. In its audit report dated July 21, 2009, Mark Bailey & Company, Ltd., in Reno, Nevada -- its independent registered certified public accounting firm -- said the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. The Company said its ability to continue as a going concern is heavily dependent upon its ability to obtain additional capital to sustain operations. Currently, the Company has no commitments to obtain additional capital, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all. About Universal Energy Based in Lake Mary, Florida, Universal Energy Corp. -- http://www.universalenergycorp.info/-- is a small independent energy company engaged in the acquisition and development of crude oil and natural gas leases in the United States. The Company pursues oil and gas prospects in partnership with oil and gas companies with exploration, development and production expertise. Its prospect areas currently consist of land in Louisiana and Texas. Its common stock is quoted for trading on the OTC Bulletin Board under the symbol UVSE. US DEVELOPMENT: Names Polsinelli Shughart as Counsel ---------------------------------------------------- U.S. Development Land LLC asks the U.S. Bankruptcy Court for the District of Arizona for permission to employ Polsinelli Shughart PC as its counsel to assist the Debtor formulate and present a Chapter 11 plan and disclosure statement, among other things. The firm charges between $135 and $600 per hour for legal services. The Debotr assures the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Based in Scootsdale, Arizona, U.S. Development Land LLC filed for Chapter 11 protection on Oct. 6, 2009 (Bankr. D. Ariz. Case No. 09-25015). In its petition, the Debtor listed assets between $10 million and $50 million, and debts between $50 million and $100 million. WESTERN LIBERTY: Receives Delisting Notice From NYSE Amex --------------------------------------------------------- Western Liberty Bancorp on October 21 received notice from the staff of the NYSE Amex indicating that the Exchange believes that WLBC no longer complies with the Exchange's continued listing standards due to the recent amendments to WLBC's Amended and Restated Certificate of Incorporation approved at WLBC's stockholder meeting on October 7, 2009, and an insufficient number of public shareholders of WLBC's common stock, as set forth in Section 1003(c) of the Exchange's Company Guide, and that its securities are, therefore, subject to being delisted from the Exchange. WLBC does not agree with the Exchange's belief that it should be delisted and intends to appeal this determination and request a hearing before a committee of the Exchange. WLBC has seven days to file its appeal. There can be no assurance that WLBC's appeal will be successful and WLBC will be permitted to continue to be listed on the exchange. The Exchange will continue listing WLBC's securities until such time as a final determination is made regarding WLBC's appeal. In light of the Exchange's inquiry into WLBC's listing, WLBC has applied to have its common stock and warrants quoted for trading on the NASDAQ Stock Market. Western Liberty Bancorp, formerly Global Consumer Acquisition Corp. -- http://www.globalconsumeracquisition.com/-- is a blank check company. The Company was formed to consummate a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company is in the process of identifying and evaluating targets for an initial transaction. It has not entered into any definitive business combination agreement. During the year ended December 31, 2008, the Company did not generate any operating revenues. WHITEHALL JEWELERS: Proposes Plan Exclusivity Until Dec. 23 ----------------------------------------------------------- BankruptcyData reports that Whitehall Jewelers Holdings filed a motion with the U.S. Bankruptcy Court for an order extending the exclusive period during which only the Debtors may file a Chapter 11 plan and solicit acceptances thereof through and including December 23, 2009, and February 23, 2010, respectively. Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings, Inc. -- http://www.whitehalljewellers.com/-- owns and operates 375 stores jewelry stores in 39 states. Whitehall is owned by hedge funds Prentice Capital Management and Millennium Partners LP, both of New York, and Holtzman Opportunity Fund LP of Wilkes- Barre, Pa. The company operates stores in regional and regional shopping malls under the names Whitehall and Lundstrom. The Debtors' retail stores operate under the names Whitehall (271 locations), Lundstrom (24 locations), Friedman's (56 locations, and Crescent (22 locations). As of June 23, 2008, the Debtors have about 2,852 workers. The company and its affiliate, Whitehall Jewelers Inc., filed for Chapter 11 protection on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261). James E. O'Neill, Esq., Kathleen P. Makowski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, and Scott K. Rutsky, Esq., at Proskauer Rose LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims, noticing and balloting agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Moses & Singer LLP and Bayard, P.A., represent the Committee. WILLIAM WISE: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------- Joint Debtors: WILLIAM J. WISE MARILYN M. WISE 310 W SAN PEDRO AVE GILBERT, AZ 85233 Bankruptcy Case No.: 09-26614 Chapter 11 Petition Date: October 20, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Debtors' Counsel: Robert M. Cook, Esq. Law Offices of Robert M. Cook PLLC 219 W Second St Yuma, AZ 85364 Tel: (928) 782-7771 Fax: (928) 782-7778 Email: robertmcook@yahoo.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $500,001 to $1,000,000 According to the schedules, the Company has assets of $916,490, and total debts of $622,790. A full-text copy of the Debtors' petition, including a list of their 14 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/azb09-26614.pdf The petition was signed by the Joint Debtors. * 264 Companies Remain Vulnerable to Default, S&P Says ------------------------------------------------------ The number of global weakest links remains elevated, though it has decreased recently as many of these companies defaulted, Standard & Poor's said October 22. As of Oct. 13, 2009, there were 264 weakest links, which is down from the record high of 300 in April but still significantly higher than the 181 recorded one year ago, said an article published by Standard & Poor's, titled "Global Bond Markets' Weakest Links And Monthly Default Rates (Premium)." The 264 weakest links have combined rated debt worth $288.96 billion. Weakest links are issuers rated 'B-' and lower with a negative outlook or ratings on CreditWatch negative. "Corporate default rates across regions continue to rise in 2009, already surpassing the number in all of 2008 by a wide margin," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Through Oct. 13, 2009, 231 issuers defaulted, affecting debt worth $552.8 billion. By comparison, 126 defaults were recorded in all of 2008, affecting debt worth $433 billion," said Ms. Vazza. The 12-month-trailing global corporate speculative-grade default rate increased to 9.58% in September 2009 from 9.33% in August and is now more than 12x the 25-year low of 0.79% recorded in November 2007. The U.S. speculative-grade corporate default rate increased to 10.75% in September from 10.32% in August and is more than 10x the level from year-end 2007. The default rate in Europe also increased, to 7.61% in September 2009 from 7.46% in August, while the emerging markets default rate declined modestly to 6.81% from 6.98%. The standard version of this article is part of S&P's standard Global Fixed Income Research content. The premium version contains expanded analysis of the article's most significant points, typically broken out by sector and region. Also in the premium version are in-depth charts and tables, the underlying data of which are available for download. Ratings information can also be found on Standard & Poor's public Web site at http://www.standardandpoors.com/; under Ratings in the left navigation bar, select Find a Rating. Members of the media may request a copy of this report by contacting the media representative provided. Global Fixed Income Research: Diane Vazza, New York (1) 212-438- 2760; diane_vazza@standardandpoors.com Media Contact: Mimi Barker, New York (1) 212-438-5054; mimi_barker@standardandpoors.com * Speculative-Grade Spread Tightens Marginally to 706 Bps --------------------------------------------------------- Standard & Poor's investment-grade and speculative-grade composite spreads tightened marginally October 19 to 228 basis points (bps) and 706 bps, respectively. By rating, the 'AA' spread tightened one basis point to 153 bps, 'A' tightened 2 bps to 192 bps, 'BBB' tightened one basis point to 287 bps, 'BB' remained unchanged at 503 bps, 'B' tightened 3 bps to 681 bps, and 'CCC' remained unchanged at 1,108 bps. By industry, financial institutions and industrials tightened 2 bps each to 383 bps and 371 bps, respectively. Banks, utilities, and telecommunications tightened one basis point each to 313 bps, 220 bps, and 326 bps, respectively. Despite material tightening since their record highs in December 2008, the speculative-grade spread remains range-bound within a default cycle, and the investment-grade spread continues to face pressure from financial institutions and banks. In addition, speculative-grade defaults continue to accelerate, as does the preponderance of credit downgrades. Because of these factors, S&P expects spreads to remain at their elevated levels for some time as investors, the credit markets, and the economy cautiously tread through the current recessionary period. Standard & Poor's, a subsidiary of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research, and data. With approximately 10,000 employees, including wholly owned affiliates, located in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com/ * U.S. Default Rate Expected to Drop to 6.9% in Sept. 2010 ---------------------------------------------------------- Standard & Poor's updates its outlook for the issuer-based U.S. corporate speculative-grade default rate each quarter after analyzing the latest economic realities and expectations. Since S&P's most recent update, the tone in the capital markets has improved measurably, resulting in benefits for even low-rated borrowers, said an article published October 21 by Standard & Poor's Global Fixed Income Research. Accordingly, S&P has downwardly revised our default-rate expectations for the next 12 months. S&P's 12-month-forward baseline projection for the U.S. corporate speculative-grade default rate is now 6.9%. Its pessimistic and optimistic scenarios result in default rates of 9.9% and 5.5%, respectively, according to the article, titled "U.S. Corporate Speculative-Grade Default Rate: A Forecasted Decline To 6.9% In September 2010 Indicates Apprehension More Than Relief (Premium)." "This does not mean that corporate default risks are permanently lower," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. "Instead, we believe these improvements are largely being driven by increased forbearance by lenders in a monetary environment propped up by policy-induced liquidity." Without a revival in top-line earnings and growth, many of the surviving leveraged issuers originated during 2003-2007 could face renewed default risk unless they significantly reduce their debt burdens. "The marked improvement in financial conditions has altered our expectations for corporate default rates within the one-year forecast horizon," said Ms. Vazza. As of September 2009, the U.S. 12-month-trailing corporate speculative-grade default rate was 10.8%. Previously, S&P had stated our expectations for a swathe of defaults to occur in the first half of 2010. But now, S&P expects that many of the defaults might be postponed to later quarters beyond the 12-month forecast horizon. * Chemicals Industry Showing Resilience to Economic Challenges -------------------------------------------------------------- The chemicals industry was particularly hard hit by the economic recession, as reflected in the closure of numerous manufacturing plants, laying off of personnel and bankruptcies of some major players. However, the market for specialty ingredients in home and fabric care formulations remains dynamic, fuelled by the need to minimise risks from bacteria and germs, to reduce the time and effort required for household chores, and to further improve the quality of life while addressing the environmental concerns of consumers. Strategic Analysis of the Home and Fabric Care Specialty Ingredients Markets in Europe, shows that this market generated EUR615.8 million in revenues in 2008 and estimates it to reach EUR706.2 million in 2015. The following segments are covered in this research: specialty surfactants, functional polymers, fabric enhancers, active ingredients and rheology modifiers in home and fabric care as well as hard surface cleaners, car interior and upholstery cleaners, fabric care, furniture, shoe & leather polishes and dishwashing products. "The advent of the 'green' consumer who prefers natural products that are derived from renewable or recycled sources, have an environmentally friendly profile in terms of toxicity and are safe to use is the catalytic driving force," notes Frost & Sullivan Industry Analyst, Dr. Leonidas Dokos. "The growing demand for more efficient and technically novel chemicals to assist in daily home and fabric care tasks has rejuvenated this mature market as producers focus on addressing the evolving demands of consumers." Specialty ingredients with an improved environmental profile are pulling the market and influencing demand. At the same time, there is a market push in the form of European Directives, with regulators increasingly insisting on reduced toxicity and enhanced biodegradation of such products. Increasing consumption in emerging European markets will further assist in the growth of home and fabric care specialty ingredients, while in the developed markets of Western Europe, green products and innovation are crucial. Also important to growth is the fact that companies active in the market are focusing on reducing the average product development time as product life cycles are being shortened. However, sustaining capital and resource investment in research and development in order to maintain healthy pipelines of innovative products, while at the same time controlling the cost, will be the key challenge for suppliers to this market. Moreover, the current economic crisis is eating into consumer products demand, particularly in Europe and the United States, temporarily highlighting consumer price consciousness. "In 2008 the chemicals sector was the only one among the top 15 sectors in the world showing an investment decrease in research and development of 1.3 per cent, while the household goods sector experienced a decrease in research and development investment of 6.1 per cent," explains Dr. Dokos. "When combined with plant shutdowns, recently introduced legislative frameworks that increase costs and the ongoing economic uncertainty, it becomes clear that the suppliers to the home and fabric care industry are facing a challenging environment." Strategic acquisitions, focus on key market segments, promotion of product differentiation and green innovation are critical in overcoming market challenges and addressing evolving market and consumer needs. However, the completion of strategic acquisitions can only be realised by market participants with strong cash flows. "Some of the leading chemicals companies have opted for strategic acquisitions continuing the consolidation trend, while others have focused on strategic alliances," says Dr. Dokos. "However, the key to growth remains innovation and addressing the needs of the 'green' consumer without compromising the technical performance of products." Strategic Analysis of the Home and Fabric Care Specialty Ingredients Markets in Europe is part of the Chemicals & Materials Growth Partnership Services programme, which also includes research in the following markets: U.S. Polymers in Personal Care Market (2008), U.S. Emulsifiers in Personal Care Market (2008), European Markets for Actives Ingredients in Skin Care (2008) and, European Vitamins in Personal Care Markets (2008). All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. About Frost & Sullivan Frost & Sullivan -- http://www.frost.com/-- the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents. * Geithner Says Core TARP Programs Ending ----------------------------------------- According to ABI, the Obama administration will shutter programs at the heart of a $700 billion financial bailout but remains focused on supporting a fledgling economic recovery. * Senate Panel Considers Bill to Ease Bankruptcy Requirements ------------------------------------------------------------- ABI reports that the Senate Judiciary Subcommittee on Administrative Oversight and the Courts held a hearing yesterday on legislation to carve out an exception for people whose medical bills were the main cause of their financial distress. * BOOK REVIEW: Calling a Halt to Mindless Change - A Plea for Commonsense Management ------------------------------------------------------------- Author: John MacDonald Publisher: Beard Books Softcover: 255 pages List Price: $34.95 Review by Henry Berry MacDonald is not against change. He is not a reactionary or an ideologue. Nor is he dogmatic. He does not have ideas he is trying to persuade business leaders to adopt and follow. He does have a sense of urgency, however, in arguing that change for the sake of change because it is in vogue or because a group of much- publicized business "gurus" advocates it is wrong-headed. According to MacDonald, such thoughtless change prompted by external sources is disruptive and usually unproductive for the large majority of American businesses. This is the "mindless change" MacDonald criticizes. But he does more than just criticize it. He introduces principles and advice on how to be aware of change and respond to it continually, substantively, and productively. Such a response should be never- ending. It should be a way of life, the modus operandi for a business concerned about its survival. Appropriate change is necessary for a business to keep up with the market for its products or services, satisfy and thus keep its customers, and provide security for its employees. Just as with individuals or cultures, businesses that don't change inevitably wither and die away. In urging sensible change -- as opposed to change because it is fashionable, for example -- this author goes out of the "box" of typical business guide books. At the front of each chapter are three or four quotes on time in general or its parts of past, present, and future. These quotes are from mostly literary sources, including the Bible, poets, and British essayists. Calling a Halt to Mindless Change, first published in 1998, is still relevant and useful to businesses in their daily operations, their relationships with both customers and employees, their long- term strategies, and their visions. Although organization -- i. e., structure -- does have a part in nurturing a business's grasp of time, such a grasp is not based on organization. Its primary basis is a business's relationship with its employees. While change has always been a part of the business world, this relationship with employees is particularly important where more highly educated and highly skilled people "demand a share in determining or at least influencing their own destiny." Enlightened companies "are already demonstrating that open communications, empowerment, and education and training of their people are decisive factors in their success." MacDonald points to Toyota and Proctor & Gamble as two companies that have been successful over a long period without engaging in the "reengineering" and other trendy "revolutionary changes" called for by the faddish business "gurus." The author cites both Toyota and Proctor & Gamble as examples of companies that are leaders in their industries because they continually change naturally and productively in response to consumer markets, the latest generation of employees, and the normal, ceaseless, ups and downs of both domestic and international economic events. In Calling a Halt to Mindless Change, MacDonald teaches how such companies remain successful without undergoing wrenching periods of change. Author of many books, John MacDonald has an international reputation in the area of business management. ********* 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. Howard C. Tolentino, 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 **