/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/091030.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 30, 2009, Vol. 13, No. 300 Headlines ABDUL HALIM SHEIKH: Case Summary & 19 Largest Unsecured Creditors ABITIBIBOWATER INC: May Reject Augusta Newsprint Venture ALTA NEBRASKA: Will Sell Off Unfinished Ethanol Plant AIRTRAN HOLDINGS: Discloses Obligations for Remainder of 2009 AMERICAN CONSOLIDATED: Breaches Covenants Under US$133.7MM Loan AMERICAN INT'L: Pay Czar Raises Base Pay AMERICAN INT'L: Recoups Some of Money Used on Souring Trades AMERICAN TIRE: S&P Affirms Corporate Credit Rating at 'B' A.P. PHARMA: To Transfer to Nasdaq Capital Market APPALACHIAN OIL: Court to Consider Disclosure Statement on Nov. 10 ASSOCIATED MATERIALS: S&P Assigns 'CCC' Rating on $200 Mil. Notes BARRIER'S INC: Moving Ahead With Liquidation Sale on Monday BARZEL INDUSTRIES: Panel Taps FTI Consulting as Financial Advisor BEAR CROSSING: Section 341(a) Meeting Slated for November 25 BEAR CROSSING: Taps Kutner Miller as Attorney BERNARD MADOFF: Claim Payments Exceed Prior Brokers' Total BERRY PLASTICS: Moody's Gives Stable Outlook, Assigns 'B1' Rating BERRY PLASTICS: S&P Assigns 'B' Rating on $325 Mil. Senior Notes BSC DEV'T: New Buffalo Statler Makes $261,000 Payment for Towers BUILDERS FIRSTSOURCE: Posts $15.2MM Net Loss in 2009 Third Quarter BUILDERS FIRSTSOURCE: S&P Assigns 'CCC' Rating on $145 Mil. Notes CANARGO ENERGY: Files Prepack Chapter 11 in Manhattan CAPITAL CORP: TRUPS Claimants Deadline to Vote on Plan Dec. 9 CAPMARK FINANCE: Mortgage Servicer Ratings Still on Watch Evolving CAPMARK FINANCIAL: Proposes to Protect NOL Carryforwards CARABEL EXPORT: Court to Consider Plan Outline on November 2 CDS DEVELOPMENT: Case Summary & 4 Largest Unsecured Creditors CENTAUR LLC: S&P Downgrades Corporate Credit Rating to 'D' CENTAUR PA: Files Chapter 11 in Delaware CHAI INVESTMENT: Wants to Hire Engelman Berger as Legal Counsel CHRYSLER FINANCIAL: Pay Czar Raises Base Pay CHRYSLER LLC: Court OKs Jones Day's $21.3MM Fee for 4 Months Work CIT GROUP: Bonds Show Bankruptcy Inevitable as Swap Expires CITIGROUP INC: Pay Czar Raises Base Pay CITY OF PRICHARD: Files Chapter 9 Petition CLASSICSTAR LLC: Founders Plead Guilty to Fraud Conspiracy CLEARWATER GROUP: Files for Chapter 7 Liquidation COBRA ELECTRONICS: Lenders Waive Financial Covenant Violations COLOR-CROWN: Case Summary & 20 Largest Unsecured Creditors COLT DEFENSE: S&P Assigns 'B+' Rating on $225 Mil. Senior Notes DAMON'S INTERNATIONAL: Files for Chapter 11 Bankruptcy Protection DANIEL FARKAS: Case Summary & 13 Largest Unsecured Creditors DAVID LAPIN: Case Summary & 20 Largest Unsecured Creditors DAYTON SUPERIOR: S&P Withdraws 'D' Corporate Credit Rating DELPHI CORP: WTC Withdraws Appeal on UAW Special Attrition Plans DOLLAR THRIFTY: Prices Offering of 5,750,000 Common at $19.25 DONNA ZYNEL: Case Summary & 26 Largest Unsecured Creditors E*TRADE FIN'L: Net Loss Widens to $832MM for Sept. 30 Quarter EASTMAN CHEMICAL: Moody's Assigns Ratings on $250 Mil. Notes EMILIA DONIS DONSON: Voluntary Chapter 11 Case Summary ERICKSON RETIREMENT: Wants Injunction Against Utility Companies ERICKSON RETIREMENT: Wants to Assume S. Miller Employment Pact EVANS INDUSTRIES: Adams & Reese Subpoena Quashed in Conflict Suit EXTENDED STAY: 66 Affiliates' Schedules of Asses & Debts EXTENDED STAY: 66 Affiliates' Statements of Financial Affairs EXTENDED STAY: Lichtenstein Appeals Decision on Line Trust Dispute FAIRPOINT COMMS: Has Interim Approval to Borrow $20 Million FLETCHER-TERRY COMPANY: Case Summary & 20 Largest Unsec. Creditors FOOTHILLS OF FERNLEY: Hires Belding Harris as Attorney FOOTHILLS OF FERNLEY: Section 341(a) Meeting Set for November 23 FOREST CITY: S&P Puts 'B-' Rating on $200 Mil. Convertible Notes FORUM HEALTH: Court to OK Interim CEO Hiring If Filings Complete GENCORP INC: Moody's Give Positive Outlook, Affirms 'B3' Rating GENERAL MOTORS: AP Services Reports on Fees for June-August GENERAL MOTORS: Jenner & Block to Provide Services to New GM GENERAL MOTORS: Nine Directors Report Ownership of MLCO Securities GEORGES MARCIANO: GUESS? Founder Sent to Chapter 11 by Ex-Staff GGNSC HOLDINGS: Moody's Affirms Corporate Family Rating at 'B2' GIGABEAM CORP: Sold to Lenders on $6.1 Million Credit Bid GK ELEVEN: Section 341(a) Meeting Slated for November 30 GK ELEVEN: Selects Russack Associates as Counsel GMAC INC: Pay Czar Raises Regular Salaries GREATER SOUTHEAST: D.C. Cir. Leaves Fee Settlement Undisturbed HAWKVIEW ESTATES LLC: Voluntary Chapter 11 Case Summary HEARTHSIDE HOMES INC: Case Summary & 25 Largest Unsec. Creditors HELLER EHRMAN: To Seek Approval of Disc. Statement on Nov. 9 HHI CHANDLER LLC: Case Summary & 25 Largest Unsecured Creditors HHI CHINO II LLC: Case Summary & 25 Largest Unsecured Creditors INDIAN SADDLE LCC: Case Summary & 5 Largest Unsecured Creditors INTEGRATED TECH: Creditor's Consequential Damage Claim Allowed INTERMET CORP: Role of Lender Liquidating Trustee Clarified INTERMET CORP: Sells Palmyra & Monroe City Plants INTERPUBLIC GROUP: Fitch Comments on Third Quarter Earnings JETBLUE AIRWAYS: Reports $15 Million Net Income in Q3 2009 JOHN MCCLELLAND: Appraisers Have No Liability to Debtor JOHNSON BROADCASTING: TV Stations Up for Auction on December 7 KAINOS PARTNERS: Can Access DIP Financing Until November 30 KRONOS INTERNATIONAL: Moody's Raises Corp. Family Rating to 'Caa1' LAMBERT PROPERTIES: Voluntary Chapter 11 Case Summary LARRY HORTON: Case Summary & 20 Largest Unsecured Creditors LESLIE'S POOLMART: Moody's Affirms Corporate Family Rating at 'B3' LILLIAN VERNON: Lift Stay Requested in RDA Case to Continue Suit MAGNA ENT: Lone Star Park Sold to Global Gaming MAGNA ENT: Wants to Cut Ties With Laurel Park & Pimlico Ex-Owners MAINSTREAM DEV'T: Files for Chapter 11 Bankruptcy Protection MAINSTREAM DEVELOPMENT: Voluntary Chapter 11 Case Summary MAMMOTH CORONA: Section 341(a) Meeting Slated for November 20 MANUFACTURING WHITSELL: Case Summary & 20 Largest Unsec. Creditors MASHANTUCKET PEQUOT: Has Forbearance from Lenders Until Jan. 20 MIDWEST BANC HOLDINGS: Lender Agrees to Forbear Until March 31 MINCO GOLD: NYSE Extends Listing Until February 8, 2010 MCG CAPITAL: Fitch Assigns 'BB+' Rating on $34.3 Mil. Notes MOUNTAIN RUN: Voluntary Chapter 11 Case Summary MOVIE GALLERY: Late on Rents, May Shut 200 More Stores NETFLIX INC: Moody's Assigns 'Ba2' Corporate Family Rating NETFLIX INC: S&P Assigns 'BB-' Rating, One Ding Lower Than Fitch's NEW CEDAR: Voluntary Chapter 11 Case Summary NEW CENTURY: Insurers Found Liable in Blast Fax Spat NEW RIVER BOAT: No Sanctions Imposed on Auctioneer NORTEL CORP: Auction for GSM/GSM-R Postponed to Nov. 20 NORTEL CORP: CCAA Stay Extended Until December 18 NORTEL CORP: $10-Mil. Sale of Packet Core Approved by Courts ORYX TECHNOLOGY: To Liquidate Assets Out of Court PACIFIC ENERGY: Cook Inlet Sale Hits Speed Bumps PAMELA KAY ROBERTSON: Voluntary Chapter 11 Case Summary PARLUX FRAGRANCES: In Talks with Bank to Extend Forbearance PC GROUP: Receives Delisting Notice From NASDAQ PEACH HOLDINGS: Moody's Keeps 'C' Rating; Outlook Now Stable PFAU, PFAU: $23-Mil. Loan Extended; Joint Venture in the Works PHH CORP: Targets Realogy for Mortgages, to Renew Merrill Pact PHOENIX BUSINESS TRUST: Case Summary & 3 Largest Unsec. Creditors PHOENIX ENTERPRISES: Voluntary Chapter 11 Case Summary PREMIER STORAGE CONDOS: Voluntary Chapter 11 Case Summary PRESTIGE REALTY: Case Summary & 9 Largest Unsecured Creditors RAINIER PACIFIC: Receives Non-Compliance Notice From Nasdaq RANCHER ENERGY: Files for Chapter 11 Reorganization READER'S DIGEST: Gets Nod to Assumption of 29 Executory Contracts READER'S DIGEST: LV Estate Wants Lift Stay to Commence Suit READER'S DIGEST: Targets December Confirmation Hearings READER'S DIGEST: U.S. Trustee Opposes Waiver of Sec. 345 Rules RECTICEL NORTH AMERICA: Files for Bankruptcy R.H. DONNELLEY: Brower Piven Leads Class Suit for Shareholders R.H. DONNELLEY: Izard Nobel LLP Files Class Action Lawsuit RICHARD BULAN: Voluntary Chapter 11 Case Summary RIDER AUTO: May Sell Some Assets to Sutliff Motors RIVERHEAD PARK: Landowner Stops Foreclosure with Chapter 11 RIVERHEAD PARK: Case Summary & 2 Largest Unsecured Creditors RITCHIES AUCTIONEERS: Forced Into Bankruptcy ROBERT MACKLIN: Case Summary & 7 Largest Unsecured Creditors RURAL/METRO CORP: Refinancing Cues S&P to Update CreditWatch SALTON INC: S&P Assigns Corporate Credit Rating at 'B' SCOTT CONSTRUCTION: Equipment Auctioned Off After Foreclosure SEQUENOM INC: Settles Ibis Biosciences Patent Suit; to Get $1-Mil. SILVER FALLS BANK: FDIC Orders Online Auction of FF&E SILVER STATE: Student Loan Xpress to Forgive $112.8MM in Loans SIMMONS CO: Tempur to Dismiss Patent Infringement Litigation SOUTH MARSH: Section 341(a) Meeting Slated for November 19 SPANSION INC: Files Reorganization Plan & Disclosure Statement SPANSION INC: G. Delfassy Resigns as Member of Board SPANSION INC: Insists Samsung Claims Not Arising Postpetition SPANSION INC: Foundry Pact Should Be Scrapped Despite Objections SPANSION INC: Says Japan Unit Not Selling Chip Line STAGE COACH VENTURE: Case Summary & 2 Largest Unsec. Creditors STANDARD MOTOR: Reports $3.1 Million Net Income in Q3 2009 STATION CASINOS: Boyd Gaming "Serious" About Buying Assets STATION CASINOS: Wants Plan Exclusivity Until March 25 STERLING MINING: Bankruptcy Court Resolved Lease Dispute SYMBION INC: Moody's Affirms Corporate Family Rating at 'B2' TARRAGON CORPORATION: Bermuda Unit Can Use BofA's Cash Collateral TARRAGON CORPORATION: Court Extends Solicitation Period to Nov. 5 THORNBURG MORTGAGE: Court Directs Chapter 11 Trustee Appointment TOWNSEND CONSTRUCTION: Owner's Felony Pretrial Set for Nov. 23 TOYS "R" US: Will Launch FAO Schwarz Boutiques in Stores TRIAD ENERGY: Magnum Hunter to Buy Appalachian Assets for $81MM TROPICANA ENT: Fee Auditors OK $9.8MM in Fees for Nov.-Jan. TROPICANA ENT: NJ Debtors Want to Expand Cooper's Services TROPICANA ENT: LandCO Debtors Q3 Post-Confirmation Report TRUMP ENTERTAINMENT: Court Revives Richard Fields Lawsuit UNBRIDLED ENERGY: Signs Forbearance Pact, Seeks to Sell Leases VIRGIL KEITH ROBERTSON: Voluntary Chapter 11 Case Summary VISHAY INTERTECHNOLOGY: Moody's 'B1' Rating Unaffected by Spin-Off VISHAY INTERTECHNOLOGY: Spin-Off Won't Affect S&P's 'BB' Rating VISTA HOMES INC: Case Summary & 20 Largest Unsecured Creditors VISTEON CORP: Incurs $38 Million Net Loss in Third Quarter VITAMIN SHOPPE: Moody's Raises Corporate Family Rating to 'B2' VITAMIN SHOPPE: S&P Raises Corporate Credit Rating to 'B+' WESTERN ISLES INSURANCE: A.M. Best Downgrades FSR to 'C++' WILLIAM WRIGHT: Case Summary & 16 Largest Unsecured Creditors WISH I LLC: Case Summary & 6 Largest Unsecured Creditors WOODBURY COUNTRY: Shuts Down After Filing for Chapter 7 Bankruptcy W.R. GRACE: Closing Arguments on Plan Confirmation January 6 W.R. GRACE: Reports $44.4 Mil. Net Income for Third Quarter W.R. GRACE: Settles New Jersey Environmental Claim * Bill Seeks to Shift Rescue Costs to Big Banks * House Panel Advances Credit Rating Bill * Small and Midmarket Businesses Brace for Looming Fallout of CIT * Five New Associates Join Cohen & Grigsby's Pittsburgh Office * BOOK REVIEW: Inside Investment Banking, Second Edition ********* ABDUL HALIM SHEIKH: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Abdul Halim Sheikh aka A.H. Sheikh aka Abdul H. Sheikh aka A. Halim Sheikh aka Halim A. Sheikh aka Abdul Sheikh aka Halim Sheikh 2733 Via Miguel Palos Verdes Estates, CA 90274 Case No.: 09-39652 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Alan M. Ahart Debtor's Counsel: Paul R. Shankman, Esq. 21515 Hawthorne Blvd., Ste. 1150 Torrance, CA 90503 Tel: (310) 316-0500 Email: pshankman@jhindslaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Mr. Sheikh. Debtor's List of 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ American Express Unpaid Debt $17,222 American Express Unpaid Debt $4,423 American Express Unpaid Debt $1,274 Capital One Unpaid Debt $197 Chase Unpaid Debt $2,490 Chase (WAMU) 2733 Via Miguel $2,400,000 Palos Verdes (1,800,000 Estates, CA 90274 secured) Chase (WAMU) 2733 Via Miguel $105,000 Palos Verdes (1,800,000 Estates, CA 90274 secured) (2,400,000 Senior lien) Chevron Unpaid Debt $213 Discover Card Unpaid Debt $7,851 HSBC Unpaid Debt $5,800 J.H. World Express, Inc. Unpaid Debt $40,559 c/o Ethan & Associates Jaynes Corporation of Unpaid Debt $859,170 California c/o Marks, Golia & Finch, LLP 8620 Spectrum Center Blvd #900 San Diego, CA 92123 Juniper Unpaid Debt $430 Kohl's Unpaid Debt $139 PentaGroup Financial LLC Unpaid Debt $116 Sam's Club Unpaid Debt $103 Superior Electrical Complaint for $34,237 Advertising, Inc. Damages: (1) Breach c/o Lindberg & Drill LLP of Contract; (2) Common Counts; (3) Unjust Enrichment; (4) Foreclosure On Mechanic's Lien Valero Unpaid Debt $830 Wells Fargo Unpaid Debt $732 ABITIBIBOWATER INC: May Reject Augusta Newsprint Venture -------------------------------------------------------- AbitibiBowater Inc. was authorized to reject an agreement under which it could have been forced to buy out its partner in a joint venture called Augusta Newsprint Co. The Woodbridge Company Limited, Woodbridge International Holdings Limited and Woodbridge International Holdings SA, had opposed the proposal to reject the call agreement. In 2001, the Debtors entered into a partnership arrangement with the Woodbridge Entities to operate a newsprint mill in Augusta, Georgia. The Partnership was created on September 6, 2001, when the Woodbridge Partner acquired a 50% interest in a partnership from Thomson Newsprint Inc., which is a public company whose largest shareholder is TWCL. Woodbridge counsel David P. Primack, Esq., at Drinker Biddle & Reath LLP, in Wilmington, Delaware, relates that the Partnership Arrangement is made up of two integral parts, which include the Partnership Agreement and the Call Agreement. Mr. Primack insists that the Partnership Arrangement would not exist without the terms of Call Agreement. The terms of the Call Agreement and the Partnership Agreement "were considered to be -- and, indeed, were treated as -- the complete set of terms of the Partnership Arrangement [hence] . . . the Debtors should not be able to cherry pick through the whole and decide to reject some terms while retaining the benefit of others," he argues. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 23 pulp and paper facilities and 29 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of Sept. 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes AbitibiBowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ALTA NEBRASKA: Will Sell Off Unfinished Ethanol Plant ----------------------------------------------------- Art Hovey at the Lincoln Journal Star reports that Altra Nebraska, LLC, will sell off, piece by piece, a partially finished, $220 million ethanol plant, after attempts to sell the plant intact failed to attract buyers by an October 13 deadline. According to Journal Star, officials at Maas Companies of Rochester, Minnesota, will preside over the auction. Healdsburg, California-based Altra Nebraska, LLC, filed for Chapter 11 on August 13, 2009 (Bankr. D. Nebr. Case No. 09-42348). Robert J. Bothe, Esq., and Robert P. Diederich, Esq., at McGrath, North, Mullin & Kratz, PC, represent the Debtor in its restructuring effort. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $50,000,001 to $100,000,000 in debts. AIRTRAN HOLDINGS: Discloses Obligations for Remainder of 2009 ------------------------------------------------------------- AirTran Holdings, Inc., disclosed in a regulatory filing that during the remainder of 2009, it will need cash for capital expenditures and debt and capital lease obligations: $1.5 million for expenditures for acquisition of property and equipment, other than aircraft and aircraft parts, $6.8 million in scheduled payments related to aircraft purchase commitments, $140 million in payments of current maturities of existing debt and capital lease obligations, including payment of $125 million previously borrowed under the Company's revolving line of credit facility and repaid as of October 19, 2009. AirTran believes it has options available to meet its debt repayment, capital expenditure and operating commitments, which may include internally generated funds, and various financing or leasing options, including the sale, lease, or sublease of its aircraft or other assets. During October 2009, AirTran completed two concurrent public offerings. The net proceeds from the October 2009 offerings of common stock and senior unsecured convertible notes, which aggregated $166.3 million, are being used for general corporate purposes including improving its overall liquidity. AirTran also has a $125 million revolving line of credit facility, under which $125 million and none was outstanding as of September 30, 2009 and October 19, 2009, respectively. However, its future financing options may be limited because its owned aircraft are pledged to the lenders that provided financing to acquire such aircraft, and AirTran has pledged a significant portion of its owned assets other than aircraft and engines to collateralize its obligations under its credit facility. The counterparty to the Credit Facility has agreed to release its lien on certain specified assets securing that facility in the event AirTran seeks to re- pledge those assets to secure a new financing so long as the collateral value of the assets pledged under the Credit Facility are at least equal to the amount then-available under the Credit Facility. AirTran believes its existing liquidity and forecasted 2009 cash flows will be sufficient to fund its operations and other financial obligations for the remainder of 2009. While it believes its 2009 forecast is reasonable, a combination of one or more material and significant adverse events, most of which are outside of its direct control, could, depending on the severity and duration thereof, have significant unfavorable impacts on its future cash flows. During the three months ended September 30, 2009, AirTran reported net income of $10.4 million. Due to the substantial reduction in the average cost of jet fuel per gallon and the actions the Company has undertaken, its operating results for the quarter were substantially improved compared to the third quarter of 2008. During the three months ended September 30, 2008, AirTran reported a net loss of $94.6 million. For the nine months ended September 30, 2009, AirTran reported net income of $117.6 million compared to a net loss of $144.7 million for the nine months ended September 30, 2008. As of September 30, 2009, AirTran had $2.157 billion in total assets against total current liabilities of $774.9 million, long- term capital lease obligations of $15.08 million, long-term debt of $818.2 million, other liabilities of $113.8 million, deferred income taxes of $7.992 million, and derivative financial instruments of $12.054 million. As of September 30, 2009, AirTran also had accumulated deficit of $100.48 million and total stockholders' equity of $414.81 million. AirTran's balance sheet showed strained liquidity with $634.08 million in total current assets against $774.90 million in total current liabilities. As of September 30, 2009, AirTran had aggregate unrestricted cash, cash equivalents, and short-term investments of $408.2 million, and AirTran also had $55.2 million of restricted cash. A full-text copy of AirTran's quarterly report is available at no charge at http://ResearchArchives.com/t/s?47d2 About AirTran Holdings Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is the parent company of AirTran Airways, which has been ranked the number one low-cost carrier in the Airline Quality Rating study for the past two years. AirTran is the only major airline with Wi-Fi on every flight and offers coast-to-coast service on North America's newest all-Boeing fleet. Its low-cost, high-quality product also includes assigned seating, Business Class and complimentary XM Satellite Radio on every flight. * * * As reported by the Troubled Company Reporter on October 7, 2009, Moody's Investors Service affirmed the Caa2 corporate family and probability of default ratings of AirTran Holdings Corp., Inc., the Ca rating on AirTran's $96 million senior unsecured convertible notes due in 2023 and also the SGL-4 Speculative Grade Liquidity Rating. Moody's also changed the ratings outlook to stable from negative. The TCR said on July 10, 2009, Standard & Poor's Ratings Services affirmed the airline's corporate credit rating at CCC+/Stable/--. AMERICAN CONSOLIDATED: Breaches Covenants Under US$133.7MM Loan --------------------------------------------------------------- Macquarie Media Group said Thursday its U.S. subsidiary American Consolidated Media LLC has breached loan covenants under its US$133.7 million business level bank facility. "Discussions are ongoing between ACM and its lenders in relation to requested forbearance and waivers of ACM's covenant non- compliance, ACM's request for the necessary amendments to the existing covenants and for an extension to the maturity date of the ACM Facility," the company said in a statement. "ACM has received an initial draft of a forbearance term sheet from the ACM facility agent." "There can be no assurance that any forbearance, amendment or extension will be provided, or that the requested waivers will be provided," it said. About Macquarie Media Based in Sydney, Australia, Macquarie Media Group (ASX:MMG) -- http://www.macquarie.com.au/au/mmg/-- invests in a range of media assets. MMG comprises of Macquarie Media Trust (MMT), Macquarie Media Holdings Limited (MMHL) and Macquarie Media International Limited (MMIL). The Company operates in two service types: Free to air commercial radio and television broadcasting (Free to air broadcasting), which comprises the commercial radio and television broadcast licenses held throughout regional Australia, and which operates solely within the MMHL group and Community Newspapers, which are located in the United States, and operates within the MMIL group. MMG operates mainly in Australia and United States. AMERICAN INT'L: Pay Czar Raises Base Pay ---------------------------------------- David Enrich and Deborah Solomon at The Wall Street Journal report that the U.S. Treasury Department pay czar Kenneth Feinberg substantially increased regular salaries, after disclosing last week sharp cuts in total compensation at the finance and auto companies under his control. Mr. Feinberg oversees these firms that accepted bailout packages: -- American International Group Inc., -- Citigroup Inc., -- Bank of America Corp., -- General Motors Corp., -- GMAC Financial Services, -- Chrysler Group, and -- Chrysler Financial. According to The Journal, Mr. Feinberg decided last week that 136 employees and executives working at the seven companies will earn much less this year than in 2008, even after accounting for the rise in regular salaries. The Journal states that Mr. Feinberg then increased base salaries at companies when the banks complained. Mr. Feinberg, says The Journal, adjusted base salaries for the bulk of those employees, in some cases boosting them by hundreds of thousands of dollars. The Journal notes that on average, base salaries climbed to $437,896 per year as a result of Mr. Feinberg's review, compared with $383,409 previously, a 14% increase. The Journal states that of the 136 employees, about 89 saw their base salaries increase. 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 from the U.S. government, and continues to seek buyers of its assets. AMERICAN INT'L: Recoups Some of Money Used on Souring Trades ------------------------------------------------------------ Liam Pleven at The Wall Street Journal report that American International Group Inc. has recoup some of the money it shelled out to Wall Street banks in 2008 on souring trades, due to a turnaround in the securities that helped level the Company. According to The Journal, people familiar with the matter said that billions of dollars have flowed from banks into AIG coffers in recent months. The Journal notes that for the second quarter, the figure may have topped $3 billion. Citing people familiar with the matter, the report states that Goldman Sachs Group Inc. has sent back at least $1 billion. The Journal relates that the cash that AIG is getting back from Wall Street is tied to credit-default swaps, which act as insurance policies on securities backed by assets like mortgages and pay off in case of default. The Journal notes that it isn't clear exactly how much collateral has flowed back to AIG, or how much still is outstanding, but the Company's filings with the U.S. Securities and Exchange Commission says that the amount of collateral that the Company's trading partners held decreased by more than $3 billion between the end of the first and second quarters. According to The Journal, credit markets continued to rally in the third quarter, suggesting AIG got more collateral back. 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 from the U.S. government, and continues to seek buyers of its assets. AMERICAN TIRE: S&P Affirms Corporate Credit Rating at 'B' --------------------------------------------------------- Standard & Poor's Ratings Services said it has affirmed its 'B' corporate credit rating and other ratings on American Tire Distributors Inc. Sales in the second quarter grew roughly 10% year over year, mostly because of the $75.4 million revenue contribution from the December 2008 Am-Pac Tire Distributors Inc. acquisition and because of higher prices arising from manufacturers' increases throughout 2008. Unit sales, although better than those of the overall market, still fell 5.3% during the quarter. Gross profit rose by $4.1 million. Based on the 12 months ended July 4, 2009, adjusted EBITDA was about $109 million, down 6% from the same period in 2008. EBITDA margin was 5.3%, compared with 5.8% in 2008. S&P expects adjusted debt to EBITDA in 2009 to decline to about 6x as the company generates significant cash flow to reduce debt. "We believe important factors for cash generation include synergies from consolidating the additional distribution centers from the Am-Pac acquisition, improved working capital management, and the sale of Am-Pac-owned retail stores," said Standard & Poor's credit analyst Lawrence Orlowski. For the rating, S&P expects debt to EBITDA of about 6x. The ratings on ATD reflect its highly leveraged capital structure; modest, but stable profit margins; and narrow scope of operations. The privately owned company is controlled by unrated Investcorp S.A. and is the largest wholesale distributor of passenger car and light-truck tires to the $30.2 billion U.S. replacement tire industry. ATD is the only tire distributor with a national presence, competing in the Southeast, Mid-Atlantic, Midwest, West, and Southwest. It operates 82 distribution centers servicing more than 40,000 customers. Most of these customers are independent tire dealers, which make up the largest channel for replacement tire sales. However, because the market is very fragmented, ATD's national market share is only about 7% (excluding its acquisition of unrated Am-Pac). Huntersville, N.C.-based ATD generated more than $2.0 billion in sales for the 12 months ended June 2009. The company's relative size advantage allows it to carry the broadest product line in the industry, deliver items more efficiently than its competitors, and invest in information systems at a lower cost as a percentage of sales than its competitors. The Am-Pac Tire acquisition allowed ATD to strengthen its presence in its existing geographic areas and to expand operations into St. Louis, Mo., and West Texas. ATD has already consolidated most of its distribution centers from the acquisition and has been selling Am-Pac's retail operations. S&P view ATD's liquidity as adequate for near-term needs. Sources of liquidity include a $400 million, asset-based revolving credit facility expiring Dec. 31, 2011, with $239.8 million borrowed and $125.3 million available as of July 4, 2009. Peak borrowing needs typically occur in the first half of the year because of seasonal demand fluctuations. Because of the reduced inventory already achieved in the current year as a result of the Am-Pac acquisition and the ongoing improvement in the operating cost structure, S&P assume the company will generate adjusted free operating cash flow of about $65 million in 2009, compared to $51 million for the first six months of 2009. S&P assume the company will generate $30 million in 2010 because of S&P's view that the benefit of inventory reduction will be lower in that year. Because ATD is a distributor, S&P believes its capital expenditures are minimal, but working capital swings can be a significant use of cash flow seasonally. The stable outlook reflects the likelihood that the company will be able to realize significant cost synergies from its Am-Pac acquisition and improve its working capital management, thereby bringing adjusted debt to EBITDA to about 6x. S&P expects ATD to generate positive free cash flow that would enable it to repay any temporary borrowings associated with small acquisitions. There is minimal leeway in the rating for a large debt-financed acquisition that leads to a permanent increase in debt, especially in light of the need to address debt maturities by the end of 2011. S&P could lower the rating if ATD fails to generate significant free cash flow during 2009 and in 2010, or if it fails to reduce debt to about 6x before the end of 2010. S&P does not expect to raise the ratings in the near future unless ATD engages in significant, permanent debt reduction. A.P. PHARMA: To Transfer to Nasdaq Capital Market ------------------------------------------------- A.P. Pharma disclosed that on October 26, 2009, the Company received notice that the Nasdaq Listing Qualifications Panel has granted the Company's request to transfer the listing of the Company's common stock from The Nasdaq Global Market to The Nasdaq Capital Market, which will take effect with the opening of the market on Wednesday, October 28, 2009. The Company's securities will continue to trade on The Nasdaq Stock Market (Nasdaq) under the symbol "APPA." The Nasdaq Capital Market is a continuous trading market that operates in the same manner as The Nasdaq Global Market and includes the securities of approximately 450 companies. All companies listed on The Nasdaq Capital Market must meet certain financial requirements and adhere to Nasdaq's corporate governance standards. As previously announced, the Company received notice on July 17, 2009, that it no longer satisfied the $10 million stockholders' equity requirement for continued listing on The Nasdaq Global Market. At a subsequent hearing before the Panel, the Company requested the transfer of its listing to The Nasdaq Capital Market pursuant to an exception to satisfy the $2.5 million stockholders' equity requirement for continued listing on that market. Following the completion of the October 22, 2009 financing for approximately $8.1 million, the Company's stockholders' equity currently exceeds $2.5 million. The Company is awaiting acknowledgement by Nasdaq that it meets the $2.5 million stockholders' equity requirement for continued listing on The Nasdaq Capital Market. Separately, as announced on September 21, 2009, the Company received notice from Nasdaq that it did not satisfy the $1.00 minimum bid price requirement, and that the Company has been granted through March 15, 2010 to regain compliance with the minimum bid price requirement. If the Company is not in compliance with the minimum bid price requirement by that date, the Company will be entitled to a second 180-calendar day grace period, through September 13, 2010, to evidence compliance with the minimum bid price requirement so long as the Company satisfies all criteria for initial listing on The Nasdaq Capital Market (except for bid price) as of March 15, 2010. If the Company is not eligible for an additional compliance period or if the Company has not otherwise complied with the minimum bid price requirement, Nasdaq will provide written notice to the Company that its securities are subject to delisting. At such time, the Company could appeal the delisting determination to a Panel and the Company's securities would remain listed pending a subsequent decision by the Panel. About A.P. Pharma A.P. Pharma -- http://www.appharma.com/-- is a specialty pharmaceutical company developing products using its proprietary Biochronomer(TM) polymer-based drug delivery technology. The Company's primary focus is on its lead product candidate, APF530, for the prevention of chemotherapy-induced nausea and vomiting. The New Drug Application for APF530 was submitted to the U.S. Food and Drug Administration (FDA) in May 2009 and accepted for review in July 2009, at which time the FDA set a Prescription Drug User Fee Act date of March 18, 2010. The Company has additional clinical and preclinical stage programs in the area of pain management, all of which utilize its bioerodible injectable and implantable delivery systems. APPALACHIAN OIL: Court to Consider Disclosure Statement on Nov. 10 ------------------------------------------------------------------ The Hon. Marcia Phillips Parsons of the U.S. Bankruptcy Court for the Eastern District of Tennessee is set to consider approval of the disclosure statement explaining Appalachian Oil Co.'s Plan of Liquidation on Nov. 10, 2009, at 9:00 a.m. The hearing will be held in the bankruptcy courtroom, James H. Quillen U.S. Courthouse, 220 West Depot Street, Greeneville, Tennessee. The Court has also fixed Nov. 6, 2009, as the last day for filing and serving written objections to the Disclosure Statement. The Debtors will begin soliciting votes on the Plan following approval of the adequacy of the information in the Disclosure Statement. The Plan is a liquidation plan that calls for the liquidation of APPCO's remaining assets and the distribution of the proceeds derived therefrom in accordance with the Plan. APPCO has three classes of creditors -- administrative claimants, priority claimants and unsecured creditors. According to the Disclosure Statement, the Plan provides that holders of allowed administrative claims -- expected to aggregate in excess of $750,000 -- will be paid 100% of their claims in cash on or before the Effective Date of the Plan or soon thereafter as practicable. Holders of priority claims are expected to be paid in full. The Debtor scheduled total priority claims of $623,554 but now expects the claims to be reduced to $250,000. In accordance with bankruptcy law, the balance of any individual claims for employees in excess of $10,950 or that were earned more than 180 days prior to the petition date will be treated as unsecured claims. The Debtor did not state the estimated recovery by unsecured creditors. The Debtor scheduled total unsecured claims is $7,189,924. A total of 424 claims have been filed in the case amounting to $77,941,196. The Debtor estimates total allowed unsecured claims ranging from $30 to $35 million. This amount may increase or decrease depending on the enforceability of the APPCO corporate guaranties including the amount of the indebtedness due from the principal obligors. The Debtor assures that holders of allowed claims would obtain a greater recovery from this estate through the Plan than if its assets were liquidated under Chapter 7 of the Bankruptcy Code. The Debtor anticipates securing sufficient funds to pay the holders of administrative claims and priority claims in full but these claimants will be treated as Impaired under the Plan. Unsecured Creditors are impaired under the Plan. The funding for the Plan will come from two sources, the committee fund amounting of $675,798 and preference recoveries collected by the Debtor. The largest potential recoveries for the Debtor are: Payments Received Within Creditor 90 Day Preference Period -------- ------------------------ AMOCO/BP $6,383,484 CITGO Petroleum Corp. $4,834,121 Marathon Ashland Petroleum, LLC $3,912,961 Valero Marketing & Supply Co. $1,070,427 Conoco-Phillips $1,721,274 LP Shanks11 $1,301,000 There are also a number of other preference claims that are available to the Debtor which range from $10,000 to $500,000. A full-text copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/APPALACHIANOIL_DSPlanofLiquidation.pdf Bountville, Tennessee-based Appalachian Oil Co. is a fuel distributor and operator of 60 convenience stores. It has 22.5 million-gallon terminal serving customers in six states. Titan Global Holdings purchased Appco in September 2007. Appco operates 55 stores in Northeast Tennessee, Southwest Virginia, and Southeast Kentucky. Appalachian Oil sought Chapter 11 protection before the U.S. Bankruptcy Court for the Eastern District of Tennessee on February 9, 2009 (Case No. 09-50259). Mark S. Dessauer, Esq., at Hunter, Smith & Davis, in Kingsport, Tennessee, represents the Debtor as counsel. In its petition, the Debtor listed assets between $10 million and $50 million and the same range of debt. The Company's creditors with the biggest unsecured claims are BP Plc's Amoco/BP, owed $2.41 million, and fuel distributor Crescent Oil Co., owed $1.6 million. ASSOCIATED MATERIALS: S&P Assigns 'CCC' Rating on $200 Mil. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' issue-level rating and '5' recovery rating to Associated Materials LLC's proposed $200 million senior secured second-lien notes due 2016 based on preliminary terms and conditions. The issue-level rating is one notch below the 'CCC+' corporate credit rating. The recovery rating of '5' indicates S&P's expectation for modest (10%-30%) recovery of principal in the event of payment default. Proceeds from the proposed notes will be used to repay AMI's existing senior subordinated notes and borrowings on its credit facility. At the same time, S&P affirmed the 'CCC+' corporate credit ratings on Cuyahoga Falls, Ohio-based AMH Holdings LLC and its operating subsidiary Associated Materials LLC. Also, S&P affirmed its 'CCC-' issue-level rating (two notches below the corporate credit rating) on AMH's senior discount notes due 2014. The recovery rating remains '6', indicating expectations of negligible (0%-10%) recovery in the event of a payment default. The outlook is negative. AMH is a holding company with no direct operations and depends on cash flow from AMI to meet its debt obligations. Standard & Poor's Ratings Services views AMH and AMI as a consolidated enterprise. The affirmation follows AMH's recently announced proposed refinancing, including the planned issuance of $200 million senior secured second-lien notes due 2016 and repayment of credit facility borrowings and AMI's senior subordinated notes due 2012. "While the refinancing would extend the maturity profile for AMI's debt, S&P's rating takes into account concerns regarding AMH's high level of interest expense and expectations for limited near- term EBITDA improvement given the challenging residential end markets," said Standard & Poor's credit analyst Tobias Crabtree. As a result, S&P expects AMH will need to take further actions to address its highly leveraged capital structure, which could include an additional refinancing or a potential debt exchange of AMH's subordinated notes to reduce its burdensome interest expense. In addition, S&P expects AMH's financial profile to remain highly leveraged, with debt to EBITDA remaining in excess of 8x and funds from operations to debt below 10% over the next several quarters. The negative rating outlook reflects S&P's concerns about the weak operating environment and the impact this will have on AMH's operating performance throughout the next 12 to 18 months. In addition, interest coverage of 1x results in limited financial flexibility should residential end markets fail to recover as in S&P's projections. S&P could lower the ratings if AMH's near-term operating performance becomes weaker than expected, resulting in excess availability under its ABL facility falling to less than $30 million and EBITDA interest coverage remaining below 1x for a sustained period. S&P considers an outlook revision to stable unlikely at this time given S&P's forecast for residential end markets and the company's high cash interest burden. BARRIER'S INC: Moving Ahead With Liquidation Sale on Monday ----------------------------------------------------------- The Wichita Eagle reports that U.S. Bankruptcy Court Judge Dale Somers has approved Barrier's Inc. liquidation sale, which will start on Monday. Barrier's will close after the sale -- which is expected to bring $2.5 million in sales, of which $1,182,972 is projected to be net profit -- ends in January 2010, The Wichita Eagle states. According to The Wichita Eagle, Marsden Brothers Promotions will handle the sale, which Marsden's Katherine Mitchell says will initially offer merchandise 30 to 70 percent off retail prices. Ed Nazar, Barrier's lawyer, said that a lack of a succession plan coupled with a difficult economy and changing market conditions led to the Company's collapse. "We're here today because of the unfortunate and untimely death of Jay Barrier," the report quoted Mr. Nazar as saying. Wichita, Kansas-based Barrier Inc. is the longtime jewelry store at Douglas and Oliver. It filed for Chapter 11 bankruptcy protection on October 23, 2009 (Bankr. D. Kan. Case No. 09-13503). The Company listed in its petition about $1,000,001 to $10,000,000 in assets and $500,001 to $1,000,000 in liabilities. According to the schedules, the Company has assets of $2,815,582, and total debts of $932,788. BARZEL INDUSTRIES: Panel Taps FTI Consulting as Financial Advisor ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Barzel Industries Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ FTI Consulting Inc. as its financial advisor. The firm has agreed to assist with, among other things: a) the assessment and monitoring of Debtors' short-term cash flow, liquidity, pre-petition claim payments and operating results; b) the review of supply chain issues including, but not limited to, critical vendor payments, reclamation claims, 503(b)(9) claims, and set offs; c) the review of the Debtors' corporate structure and the analysis of intercompany transactions; d) the evaluation of employee related-motions and issues including severance plans, bonus programs, employee retention programs, pensions and other post retirement benefits; and e) the review of any tax issues associated with, but not limited to, claims/stock trading, preservation of net operating losses, plans of reorganization, and asset sales. The firm will be paid $75,000 for the period Oct. 2, 2009, to Nov. 15, 2009; $55,000 for the period Nov. 16, 2009, to Dec. 31, 2009, and $25,000 per month beginning Jan. 1, 2010. The Committee assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Barzel Industries Norwood, Massachusetts-based Barzel Industries, Inc., processes and distributes steel. The Company manufactures steel for the construction and industrial manufacturing industries, and produces finished commercial racking products. Barzel recorded assets of $370,145,000 against debts of $375,412,000 as of May 30, 2009. Barzel Industries -- aka Novamerican Steel Inc. and Symmetry Holdings Inc. -- and seven affiliates filed for Chapter 11 on September 15, 2009 (Bankr. D. Del. Case No. 09-13204). Judge Christopher S. Sontchi presides over the cases. J. Kate Stickles, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Wilmington, Delaware, and Karen M. McKinley, Esq., and Norman L. Pernick, Esq., at Cole Scholtz Meisel Forman Leonard, P.A., in Wilmington, Delaware, serve as legal counsel. On the same day, the Company filed applications for relief under the Canadian Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice -- Commercial List. Barzel Industries and substantially all of its U.S. and Canadian subsidiaries have an Asset Purchase Agreement with Chriscott USA Inc. and 4513614 Canada Inc. pursuant to which the Buyer will purchase substantially all of the assets of the Sellers for $65.0 million in cash, subject to certain adjustments, and assume certain liabilities from the Sellers associated with the purchased assets. The deal is subject to approval by both U.S. and Canadian Courts. BEAR CROSSING: Section 341(a) Meeting Slated for November 25 ------------------------------------------------------------ The U.S. Trustee for Region 19 will convene a meeting of creditors of Bear Crossing LLC on Nov. 25, 2009, at 9:00 a.m., U.S. Custom House, 721 19th St., Room 106 in Denver, Colorado. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Jupiter, Florida, Bear Crossing LLC filed for Chapter 11 protection on Oct. 16, 2009 (Bankr. D. Col. Case No. 09-31927). According to the schedules, the Company has assets of $17,148,208, and total debts of $15,119,946. BEAR CROSSING: Taps Kutner Miller as Attorney --------------------------------------------- Bear Crossing LLC asks the U.S. Bankruptcy Court for the District of Colorado for authority to employ Kutner Miller Brinen PC as its attorney to, among other things, provide the Debtor with legal advice with respect to its powers and duties. The firm's attorney and their standard hourly rates: Lee M. Kutner, Esq. $390 David M. Miller, Esq. $290 Jeffrey S. Brinen, Esq. $320 Jenny M.F. Fujii, Esq. $250 Aaron A. Garber, Esq. $270 Heather E. Schell, Esq. $200 Benjamin H. Shloss, Esq. $150 The Debtor assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy. Headquartered in Jupiter, Florida, Bear Crossing LLC filed for Chapter 11 protection on Oct. 16, 2009 (Bankr. D. Col. Case No. 09-31927). According to the schedules, the Company has assets of $17,148,208, and total debts of $15,119,946. BERNARD MADOFF: Claim Payments Exceed Prior Brokers' Total ---------------------------------------------------------- As of noon E.D.T. on Tuesday, October 27, the total amount of Securities Investor Protection Corporation advances committed to customers in the Securities Investor Protection Act liquidation proceeding for Bernard L. Madoff Investment Securities LLC (BLMIS) has topped half a billion dollars ($534.25 million), with a total of 2,861 direct customer claims determined to date, according to BLMIS Trustee Irving H. Picard, Esq., a partner at Baker & Hostetler LLP. In another major milestone, Securities Investor Protection Corporation President Stephen Harbeck announced that the SIPC advances committed in the Madoff proceeding now exceeds the total of all advances made in the 321 prior liquidations handled under SIPA since the act creating the SIPC was passed by Congress in 1970. In a briefing October 27 for reporters, Messrs. Picard and Harbeck said that as of noon on October 27, 2009, SIPC committed advances to Madoff customers now totals $534,250,113.22. In SIPC's previous liquidations of brokerage firms from 1970 up to the time of the Madoff case, a total of $520 million has been advanced to pay customers and for the expenses of those cases. The $534.25 million in committed advances for the allowed customer claims determined so far against BLMIS is a subset of the total allowed claim figure of $4,436,428,689.94. Mr. Picard said, "I am pleased to report that we have made significant headway in recent months in the processing of BLMIS customer claims under what have been very challenging circumstances. With more than $4.43 billion in customer claims already allowed and advances of over half a billion dollars committed by SIPC, the Trustee's office is working tirelessly to ensure that every BLMIS customer with a valid claim is given full consideration and handled as expeditiously as possible. That will continue to be our focus in the coming weeks and months." Mr. Harbeck said, "The fact that one liquidation proceeding has now involved more in advances from SIPC's reserve than all 321 of the liquidations that preceded it is a testament to both the wisdom of those who created this safety net for investors and the resiliency of the safety net itself. Much of the work done by every trustee and his or her counsel is identifying and gathering the assets of the member and distributing them in a fair and equitable way to all customers of the failed brokerage. Mr. Picard, his counsel and consultants have done admirably in a difficult proceeding to deliver on SIPC's mission." The Securities Investor Protection Corporation is the U.S. investor's first line of defense in the event a brokerage firm fails, owing customer cash and securities that are missing from customer accounts. SIPC either acts as trustee or works with an independent court-appointed trustee in a brokerage insolvency case to recover funds. SIPC maintains a special reserve fund authorized by Congress to help investors at failed brokerage firms. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Case No. 08-01789) (Lifland, J.). Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). BERRY PLASTICS: Moody's Gives Stable Outlook, Assigns 'B1' Rating ----------------------------------------------------------------- Moody's Investors Service revised the rating outlook of Berry Plastics Corporation to stable from negative and assigned B1 and Caa1 ratings respectively to the proposed first and second lien debt issuances. Additional instrument ratings are detailed below. Berry, an Apollo Management, L.P., and Graham Partners portfolio company, announced that it intends, subject to certain conditions, to have two newly formed, wholly owned subsidiaries (the "Issuers") issue $325 million of first priority senior secured notes due 2015 and $295 million of second priority senior secured notes due 2014. The proceeds from this offering will be used to acquire directly or indirectly (the "Acquisition") all of the equity of Pliant Corporation ("Pliant"), to repay certain of Pliant's then-outstanding indebtedness, to pay certain fees and expenses related to such transactions and the offering and, to the extent not used for such purposes, for general corporate purposes and for acquisitions. All proceeds of this offering will be deposited, together with any additional amounts necessary to redeem the notes, into a segregated escrow account until the obligations of the Issuers under the notes are assumed by Berry and certain other conditions are satisfied, including that the Acquisition will occur substantially simultaneously with the release. Amounts held in escrow will be pledged for the benefit of the holders of the Notes. In addition, Berry expects to increase the amount of lender commitments in the existing revolving line of credit (not rated by Moody's) by $100 million concurrently with the closing of the Acquisition subject to final negotiations with the lenders thereunder and the satisfaction of certain conditions precedent. The revision of the outlook to stable reflects Berry's success executing in a difficult operating and competitive environment and adequate liquidity. The company has cut costs, rationalized capacity and improved operating performance and credit metrics over the last 12 months. Berry has also benefited from repurchasing debt in the open market at prices well below face value. The increase in the revolver will bolster liquidity and provide a cushion against negative variance in operating performance and integration risk. Despite the deterioration in credit metrics and short term drag on operating performance from the Pliant acquisition, Moody's believes the company will maintain credit metrics within the rating category over the intermediate term. Pro-forma for the Pliant acquisition credit metrics will deteriorate including an increase in total adjusted debt to EBITDA to approximately 7.8 times and EBITA to interest expense of below 1.0 time (excluding potential synergies). Despite the deterioration in credit metrics, the acquisition offers significant synergies with Berry's existing flexible plastics segment and may also have a beneficial impact on the competitive environment. While integration costs and the time necessary to achieve synergies will likely drag on operating performance and credit metrics near term, Berry has demonstrated an ability to effectively integrate acquisitions, cut costs and wring out synergies. Longer term, credit metrics are expected to improve as synergies are achieved. However, leverage is anticipated to remain high as free cash flow is not expected to be significant enough to allow a material reduction in debt. Moody's took these rating actions for Berry Plastics Corporation: * Assigned $325 million first priority senior secured floating rate notes due 2015, B1 (LGD 2 29%) * Assigned $295 million second priority senior secured notes 8.875% add on due 2014, Caa1 (LGD 5 75%) * Affirmed $1,200 million senior secured term loan due 2015 B1 (LGD 2 29% from LGD 3 31%) * Affirmed $680 million first priority senior secured floating rate notes due 2015, B1 (LGD 2 29% from LGD 3 31%) * Affirmed $525 million second priority senior secured notes 8.875% due 2014, Caa1 (LGD 5 75% from LGD 4 69%) * Affirmed $225 million second priority senior secured notes due in 2014, Caa1 (LGD 5 75% from LGD 4 69%) * Affirmed $265 million senior subordinated notes due 2016, Caa2 (LGD 6 92% from LGD 6 90%) * Affirmed Corporate Family Rating, B3 * Affirmed Probability of Default Rating, B3; * Affirmed Speculative Grade Liquidity Rating, SGL-3 Moody's took these rating actions for Berry Plastics Group, Inc.: * $500 million senior unsecured term loan due 2014 ($74 million outstanding), Caa2 (LGD 6, 96%) The rating outlook is revised to stable from negative. The ratings are subject to receipt and review of the final documentation. Moody's last rating action on Berry Plastics Corp occurred on April 28, 2009, when Moody's raised the company's PDR to B3 from Ca/LD in accordance with Moody's distressed exchange policy following the company's repurchase of its debt at prices well below face value in the open market. Based in Evansville, Indiana, Berry Plastics Corporation is a supplier of plastic packaging products, serving customers in the food and beverage, healthcare, household chemicals, personal care, home improvement, and other industries. Net sales for the twelve months ended June 27, 2009, totaled approximately $3.4 billion. Headquartered in Schaumburg, Illinois, Pliant Corporation produces polymer-based films and flexible packaging products for food, beverage, personal care, medical, agricultural and industrial applications. Revenue for the twelve months ended June 30, 2009, was approximately $900 million. BERRY PLASTICS: S&P Assigns 'B' Rating on $325 Mil. Senior Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services said that based on preliminary terms and conditions, it assigned its 'B' senior secured debt rating to the proposed offering of $325 million of first-priority senior secured notes due 2015, which Berry Plastics Escrow LLC and Berry Plastics Escrow Corp will jointly issue. The recovery rating is '2', indicating S&P's expectation for substantial (70%- 90%) recovery for the holders of these notes in the event of a payment default. Also based on preliminary terms and conditions, Standard & Poor's assigned a 'CCC' senior secured debt rating to the same issuers' proposed offering of $295 million of second-priority senior secured notes due 2014. The recovery rating is '6', indicating S&P's expectation for negligible (0%-10%) recovery for second-lien noteholders in the event of a payment default. At the same time, Standard & Poor's affirmed its 'B-' corporate credit ratings on Berry and its parent holding company. The outlook remains stable. In addition, based on S&P's updated recovery analysis, S&P lowered the senior secured debt ratings on Berry's existing first-lien debt to 'B' from 'B+' and revised the recovery rating to '2' from '1'. Also, S&P lowered the ratings on the company's existing senior secured second-lien debt to 'CCC' from 'CCC+' and revised the recovery rating to '6' from '5'. All other issue and recovery ratings are unchanged. The proceeds will be in escrow until the Pliant Corp. acquisition closes, at which time Berry Plastics Corp. will become the successor obligor on the notes and will assume the escrow subsidiaries' obligations under the notes. The notes will be issued under Rule 144a with registration rights. The new second- lien notes will constitute an increase to Berry's existing $525 million 8.875% fixed-rate second-priority senior secured notes due 2014. The ratings on Evansville, Ind.-based Berry reflect the risks associated with the company's highly leveraged financial profile and acquisition-driven growth strategy as well as its fair business risk profile. Berry is a leading producer of rigid plastic packaging products for relatively stable dairy, food, beverage, health care, and other consumer product applications. The company also manufactures flexible packaging products that serve in part more cyclical end markets. Berry is acquiring Pliant, which is currently undergoing a reorganization under Chapter 11 of the U.S. Bankruptcy Code, for $620 million in cash (including transaction fees and expenses) and the assumption of $21 million of capital leases The $641 million purchase price represents a 7.8x multiple of Pliant's EBITDA for the 12 months ended Sept. 30, 2009 (5.0x after $45 million of anticipated synergies). Pliant is a leading manufacturer of films and flexible packaging for food, personal care, medical, agricultural, and industrial applications. However, S&P regard its business as highly competitive and likely to continue to have lower margins than most of Berry's businesses. In addition, Pliant historically was unable to pass through changes in plastic resin costs to its customers on a timely basis and ran into difficulty when resin prices spiked sharply in 2008. "We assume Berry's management can address this issue, and S&P believes that the acquisition of Pliant will broaden Berry's product mix but will make Berry slightly more cyclical," noted Standard & Poor's credit analyst Cynthia Werneth. With respect to the financial risk profile, if Berry achieves the synergies it is targeting in the Pliant acquisition, the transaction should reduce leverage slightly. The outlook is stable. Despite the potential for some deleveraging through acquisition synergies and additional cost savings in its base business, S&P believes Berry will likely pursue further debt-financed acquisitions, thus keeping debt leverage high. If, however, adjusted debt to EBITDA were to decline to about 6x and appear unlikely to increase again, with funds from operations to debt of about 10%, S&P could consider raising the rating slightly. A downgrade would most likely result from a large, debt-financed acquisition; an unexpected, substantial erosion of liquidity; or another distressed debt exchange. BSC DEV'T: New Buffalo Statler Makes $261,000 Payment for Towers ---------------------------------------------------------------- Dave McKinley at wgrz.com reports that New Buffalo Statler Redevelopment, which won the auction for Buffalo's Statler Towers, has made a required $261,000 payment to the court-appointed trustee, Morris Horwitz. According to wgrz.com, New Buffalo Statler agreed to make an additional $30,000 payment to the trustee to cover court and legal fees associated with the deal. New Buffalo Statler, says wgrz.com, has until November 30 to pay the $800,000 balance of their $1.3 million bid. 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). BUILDERS FIRSTSOURCE: Posts $15.2MM Net Loss in 2009 Third Quarter ------------------------------------------------------------------ Builders FirstSource, Inc. reported a net loss of $15.2 million for the three months ended September 30, 2009, compared with a net loss of $18.9 million in the comparable period last year. Sales for the quarter ended Sept. 30, 2009, were $188.9 million, a 29.0% decrease from sales of $266.0 million for the three months ended Sept. 30, 2008. The decrease is largely due to an 18.1% decline in housing starts in the Company's markets, coupled with a 12.8% decline in market prices for lumber and lumber sheet goods from the same period a year ago. Gross margin for the quarter was $39.4 million, a $17.0 million decrease from last year. Selling, general and administrative expenses decreased $20.3 million, or 29.2% from last year. As a percentage of sales, selling, general and administrative expenses decreased from 26.2% in 2008 to 26.1% in 2009. Loss from continuing operations was $15.9 million, compared to a loss of $15.6 million in the same quarter last year. For the nine months ended September 30, 2009, the Company reported a net loss of 68.4 million on sales of $523.9 million, compared with a net loss of $80.6 million on sales of $799.1 million in the same period of 2008. Loss from continuing operations was $63.1 million, compared to a loss of $72.4 million in the same nine months last year. At September 30, 2009, the Company's consolidated balance sheets showed $435.3 million in total assets, $398.3 million in total liabilities, and $37.0 million in total stockholders' equity. A full-text copy of the Company's consolidated financial statements for the three and nine months ended September 30, 2009, is available for free at http://researcharchives.com/t/s?47c5 At September 30, 2009, the Company had $92.0 million of usable cash, which the Company believes is sufficient to meet its anticipated needs, including contractual obligations for the next twelve months. Based upon current housing conditions, the Company expects to use $50-$55 million of cash over the next twelve months to fund cash operating losses, capital expenditures, and cash interest expense. As reported in the Troubled Company Reporter on October 26, 2009, the Company unveiled a $205 million common stock rights offering and debt exchange for its outstanding Second Priority Senior Secured Floating Rate Notes due 2012. The Company expects to raise up to $205 million of new equity by way of a rights offering to its stockholders to purchase common stock at a subscription price of $3.50 per share. The Company intends to use $75 million of the proceeds of the rights offering for general corporate purposes and to use any incremental proceeds to repurchase a portion of the Company's 2012 notes. Holders of the 2012 notes will exchange, at par, their 2012 notes for cash, new notes with an interest rate of LIBOR (subject to a 3.0% floor) plus 1000 basis points that will mature in 2016, or a combination of cash and new notes, subject to proration. To the extent that the gross proceeds of the rights offering are less than $205 million, holders of the 2012 notes will convert a portion of the 2012 notes into common stock at an exchange price equal to the subscription price of the rights offering. The transaction will benefit the Company by: -- providing the Company with significant incremental liquidity to fund operations; -- deleveraging the Company's balance sheet; and -- extending the maturity of the Company's remaining indebtedness under the 2012 notes. Cash provided by operating activities was $9.7 million for the nine months ended September 30, 2009, compared to cash used in operating activities of $23.3 million for the nine months ended September 30, 2008. Cash provided by operating activities in the first nine months of 2009 was primarily driven by the receipt of approximately $32 million in income tax refunds during the second quarter of 2009 and by reductions in working capital due to declining sales volume. Cash used in operating activities in 2008 was primarily driven by a higher net loss combined with a less pronounced decrease in working capital, primarily due to a $13.2 million increase in income tax receivables. During the nine months ended September 30, 2009, cash used in investing activities was $274,000 compared to cash used of $4.1 million in the same period of 2008. This decrease was primarily due to a reduction in capital expenditures of $5.6 million. For the nine months ended September 30, 2009, cash used in financing activities was $20.0 million, the result of a $20.0 million pay down on the Company's revolving credit facility. For the nine months ended September 30, 2008, cash provided by financing activities was $61.0 million, primarily due to $60.0 million in borrowings under the Company's revolving credit facility. At September 30, 2009, the Company had total long-term debt, including current maturities, of $299.2 million, compared to $319.2 million at December 31, 2008: Revolving credit facility $20,000,000 $40,000,000 Floating rate notes $275,000,000 $275,000,000 Other 4,194,000 $4,226,000 ------------ ------------ $299,194,000 $319,226,000 About Builders FirstSource Headquartered in Dallas, Texas, Builders FirstSource, Inc. (NasdaqGS: BLDR) -- http://www.bldr.com/-- is a supplier and manufacturer of structural and related building products for residential new construction. The company operates in 9 states, principally in the southern and eastern United States, and has 55 distribution centers and 51 manufacturing facilities, many of which are located on the same premises as its distribution facilities. Manufacturing facilities include plants that manufacture roof and floor trusses, wall panels, stairs, aluminum and vinyl windows, custom millwork and pre-hung doors. Builders FirstSource also distributes windows, interior and exterior doors, dimensional lumber and lumber sheet goods, millwork and other building products. The Company has total assets of $457,192,000 against total liabilities of $405,038,000 as of June 30, 2009. * * * As reported by the Troubled Company Reporter on September 7, 2009, Moody's Investors Service lowered the Probability of Default rating of Builders FirstSource to 'Caa3' from 'Caa1'. In related rating actions Moody's affirmed BLDR's 'Caa1' Corporate Family Rating and downgraded the Sr. Secured Notes due 2012 to 'Caa3' from 'Caa2'. The Speculative Grade Liquidity rating remains SGL- 4. The outlook is negative. The TCR said September 4, 2009, Standard & Poor's Ratings Services placed its ratings, including the 'CCC+' corporate credit rating, on Builders FirstSource on CreditWatch with negative implications. BUILDERS FIRSTSOURCE: S&P Assigns 'CCC' Rating on $145 Mil. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its issue-level and recovery ratings to Dallas-based manufacturer and supplier of residential new construction building products Builders FirstSource Inc.'s proposed $145 million second-lien floating rate notes due 2016 based on preliminary terms and conditions. S&P rate the proposed notes 'CCC' (one notch below S&P's expected 'CCC+' corporate credit rating) with a '5' recovery rating, indicating its expectation for modest (10% to 30%) recovery in the event of a payment default. S&P also lowered its corporate credit rating on BLDR to 'CC' from 'CCC+'. At the same time, S&P lowered the issue-level rating on the company's existing second-lien secured debt to 'C' from 'CCC'. S&P also removed the ratings from CreditWatch with negative implications, where they were placed on Sept. 1, 2009. "The rating actions follow BLDR's announcement that it is offering to exchange up to $145 million of proposed new second-lien floating rate notes due 2016 and up to $130 million in cash for its existing $275 million second-lien floating debt due 2012. The debt and cash exchange would be at par, while the maturity would be extended beyond the original maturity of the existing notes," said Standard & Poor's credit analyst Andy Sookram. To fund the cash portion of the exchange offer, BLDR plans to raise up to $205 million via a rights offering to its stockholders. The offer is subject to several conditions, including stockholders' approval, the exchange of at least 95% of the notes, and court approval of the agreement to settle lawsuits relating to the previous recapitalization plan proposed by its two largest shareholders, JLL Partners Fund V L.P. and Warburg Pincus Private Equity IX L.P. BLDR indicated that about 83% of existing bondholders have indicated their support for the transaction. Upon completion of the contemplated transaction, S&P will lower the corporate credit rating to 'SD' (selective default) and the issue-level rating to 'D'. As soon as possible thereafter, S&P will reassess the corporate credit rating. The outlook is negative, reflecting S&P's expectation that S&P will lower the corporate credit rating on BLDR to 'SD' following the completion of the exchange offer. CANARGO ENERGY: Files Prepack Chapter 11 in Manhattan ----------------------------------------------------- CanArgo Energy Corp. filed a Chapter 11 petition October 28 in New York (Bankr. S.D.N.Y. Case No. 09-16453) along with agreement for turning the stock over to holders of the 12 percent subordinated convertible notes and unsecured creditors. The petition listed assets of $2.6 million against debt totaling $19.8 million. In addition to the $12.3 million in subordinated convertible notes, CanArgo owes $5.3 million to senior secured lenders. CanArgo says it's based on the Island of Guernsey. According to Bill Rochelle at Bloomberg News, the proposed plan calls for giving the senior lenders new secured debt. The subordinated noteholder would have all of the new equity, although they will share the stock pro rata with general unsecured creditors if they accept the plan. The plan calls for a rights offering where the noteholders and unsecured creditors could participate. The noteholders are offering to provide $1.2 million in financing for the Chapter 11 effort. CanArgo Energy Corp. is an independent oil and gas exploration and production company operating primarily in the Republic of Georgia. CanArgo's balance sheet listed assets of $58.1 million and $20.7 million in liabilities in September 2008. CAPITAL CORP: TRUPS Claimants Deadline to Vote on Plan Dec. 9 ------------------------------------------------------------- The Hon. W. Richard Lee of the U.S. Bankruptcy Court for the Eastern District of California approved Capital Corp of the West's solicitation and voting procedures for the TRUPS Claimants. The Court has set Nov. 3, 2009 as the deadline for which the Debtor must mail solicitation packages and other notices to the persons identified by the record date. The ballots for accepting or rejecting the Plan must be received by Dec. 9, 2009. In a separate motion, the Debtor filed its first amended disclosure statement and its Plan of Liquidation. A full-text copy of the first amended disclosure statement accompanying Capital Corp of the West's plan of liquidation is available for free at: http://bankrupt.com/misc/CapitalCorp_FirstAmendedDS.pdf A full-text copy of the first amended Plan of Liquidation is available for free at: http://bankrupt.com/misc/CapitalCorp_AmendedPlanofLiquidation.pdf Incorporated on April 26, 2005, Capital Corp of the West is a bank holding company whose primary asset and source of income is County Bank. County Bank is a community bank with operations located mainly in the San Joaquin Valley of Central California with additional business banking operations in the San Francisco Bay Area. The corporate headquarters of the Company and the Bank's main branch facility are located at 550 West Main Street, Merced, California. County Bank was closed February 6, 2009, by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Westamerica Bank, based in San Rafael, California, to assume all of the deposits of County Bank. As of February 2, 2009, County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion. In addition to assuming all of the failed bank's deposits, including those from brokers, Westamerica Bank agreed to purchase all of County Bank's assets. According to Capital Corp, although County Bank made no "subprime mortgages," it had made substantial loans to developers for acquisition, development and construction of residential homes and condominiums throughout California's Central Valley. Overbuilding and an increase in foreclosures in the market resulted in rapidly declining real property values, and contributed to the rise in nonperforming loans. Capital Corp of the West filed for bankruptcy on May 11, 2009 (Bankr. E.D. Calif. Case No. 09-14298). Judge W. Richard Lee presides over the case. Paul J. Pascuzzi, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi, serves as the Debtor's bankruptcy counsel. Hagop T. Bedoyan, Esq., serves as counsel to the official committee of unsecured creditors. As of June 30, 2009, Capital Corp of the West had $6,684,645 in total assets and $57,734,000 in total liabilities. In its Chapter 11 petition, the Company disclosed $6,789,058 in total assets and $68,096,190 in total debts. CAPMARK FINANCE: Mortgage Servicer Ratings Still on Watch Evolving ------------------------------------------------------------------ Fitch Ratings' commercial mortgage-backed securities (CMBS) servicer ratings for Capmark Finance Inc. (Capmark) remain on Rating Watch Evolving as follows: -- Primary servicer 'CPS2-'; -- Master servicer 'CMS3-'; -- Special servicer 'CSS2-'. The Rating Watch Evolving status takes into account today's downgrade of Capmark Financial Group Inc.'s Issuer Default Rating to 'D' from 'C' by Fitch's Financial Institutions Group in response to Capmark's filing for bankruptcy protection under Chapter 11. A hearing has been scheduled for Oct. 27, 2009 for First Day Motions. On Sept. 2, 2009 Capmark announced that they entered into a put option agreement to sell its servicing and origination operations to Berkadia Commercial Mortgage LLC (Berkadia), a partnership between Berkshire Hathaway Inc. and Leucadia National Corporation. Berkadia has indicated to Fitch that it expects to retain all of Capmark's servicing management and staff. The Rating Watch Evolving status indicates that Fitch may downgrade, upgrade or affirm Capmark's CMBS servicer ratings depending upon whether the Berkadia purchase is completed. Fitch will continue to monitor servicing quality at Capmark and will provide commentary as conditions warrant. Capmark has provided evidence of adequate liquidity to fulfill advancing obligations over the short-term. The company is also maintaining its management and servicing staff. Fitch does not anticipate any ratings action on the CMBS transactions that Capmark services, because disruption to servicing is not anticipated (disruptions due to either the bankruptcy filing or any servicing transfers as a result of the potential sale to Berkadia). A list of Fitch rated transactions follows below. As of June 30, 2009, Capmark's total servicing portfolio was comprised of 35,507 loans with an unpaid principal balance of $270.1 billion, of which 16,712 loans totaling $131.1 billion were CMBS. As of the same date, the company was named special servicer on 8,618 loans in 113 CMBS transactions with an outstanding balance of $47.5 billion. Capmark was actively specially servicing 280 CMBS loans totaling $2.4 billion, and managing 57 CMBS real estate owned properties valued at $342.9 million. Fitch rates commercial mortgage primary, master, and special servicers on a scale of 1 to 5, with 1 being the highest rating. Within each of these rating levels, Fitch further differentiates ratings by plus (+) and minus (-) as well as the flat rating. For more information about Fitch commercial mortgage servicer ratings or rating criteria, refer to the report titled 'U.S. Commercial Mortgage Servicer Rating Criteria' dated June 19, 2009 and available at http://www.fitchratings.com/ CAPMARK FINANCIAL: Proposes to Protect NOL Carryforwards -------------------------------------------------------- Capmark Financial Group Inc. and its units seek the Court's authority to protect and preserve the potential value of their net operating losses and other tax attributes, including tax credits and tax basis in their assets, by establishing, pursuant to Sections 105(a), 362, and 541 of the Bankruptcy Code, certain notice and hearing procedures that must be complied with as a precondition to the effectiveness of transfers of certain beneficial interests in equity securities or claims against the Debtors. The Debtors assert that those transfers, if unmonitored and unrestricted, could severely limit or preclude their ability to use a valuable asset of their estates -- their Tax Attributes. Specifically, the Debtors note, the transfers of beneficial interests in equity securities could adversely affect their Tax Attributes if: (a) too many 5-percent or greater blocks of equity securities are created, or too many shares are added to or sold from those blocks, such that, together with previous transfers by 5-percent shareholders during the preceding three-year period, an ownership change within the meaning of Section 382 of the International Revenue Code of 1986, as amended, is triggered prior to consummation, and outside the context, of a confirmed Chapter 11 plan; or (b) the beneficial ownership of claims against the Debtors that are currently held by "Qualified Creditors," as defined for U.S. federal income tax purposes, is transferred, prior to consummation of a Chapter 11 plan, and those claims would be converted under a Chapter 11 plan into a 5-percent or greater block of the stock of a reorganized Debtor. The Debtors assert that by establishing procedures for monitoring the ownership, acquisition and disposition of beneficial interests in claims and equity securities, they can preserve their ability to seek substantive relief at the appropriate time if it appears that the use of their Tax Attributes may be jeopardized. Accordingly, the Debtors ask the Court to enter an order (i) establishing procedures and (ii) determining that any transfer of beneficial interests in claims and equity securities in violation of these procedures will be void ab initio: (a) Procedure for Transfers of CFGI Stock (i) Any person or entity that beneficially owns CFGI Stock in an amount sufficient to qualify that person or entity a Substantial Equityholder must file with the Court a notice of that status on or before the later of (A) 20 business days after the effective date of the notice of entry of the Order or (B) 10 business days after becoming a Substantial Equityholder. (ii) At least 15 business days prior to the effective date of any transfer of CFGI Stock that would result in an increase in the amount of CFGI Stock beneficially owned by a person or entity that is or subsequently becomes a Substantial Equityholder or would result in a person or entity becoming a Substantial Equityholder, that person or entity must file with the Court advance written notice of the intended transfer of CFGI Stock. (iii) At least 15 business days prior to the effective date of any transfer of CFGI Stock that would result in a decrease in the amount of CFGI Stock beneficially owned by a person or entity that is a Substantial Equityholder, that person or entity must file with the Court advance written notice of the intended transfer of CFGI Stock. (iv) The Debtors will have 10 business days after receipt of a Notice of Proposed Transfer to file with the Court and serve on the person or entity providing that Notice of Proposed Transfer an objection to any proposed transfer on the grounds that the transfer might adversely affect the Debtors' ability to utilize their Tax Attributes. If the Debtors file an objection, the transaction in the Notice of Proposed Transfer will not be effective unless approved by final and nonappealable order of the Court. If the Debtors do not object within that 10 business day period, the transaction in the Notice of Proposed Transfer may proceed solely as set forth in the Notice of Proposed Transfer. (b) Procedure For Transfers of Claims (i) Any person or entity that beneficially owns a claim against any Debtor and that currently is or becomes a Substantial Claimholder must file with the Court a notice of that status on or before (A) 20 business days after the effective date of the notice of entry of the Order or (B) 10 business days after becoming a Substantial Claimholder. (ii) At least 15 business days prior to the effective date of any transfer of Claims that would result in an increase in the amount of aggregate Claims beneficially owned by a person or entity that is or subsequently becomes a Substantial Claimholder or would result in a person or entity becoming a Substantial Claimholder, that person or entity must file with the Court advance written notice of the intended transfer of Claims, regardless of whether that transfer would be subject to the filing, notice, and hearing requirements of Rule 3001 of the Federal Rules of Bankruptcy Procedure. (iii) At least 15 days prior to the effective date of any transfer of Claims that would result in a decrease in the amount of aggregate Claims beneficially owned by a person or entity that is a Substantial Claimholder or would result in a person or entity ceasing to be a Substantial Claimholder, that person or entity must file with the Court advance written notice regardless of whether that transfer would be subject to filing, notice, and hearing requirements of Rule 3001 of the Federal Rules of Bankruptcy Procedure. (iv) The Debtors will have 10 business days after receipt of a Notice of Proposed Transfer to file with the Court and serve on person or entity providing that Notice of Proposed Transfer an objection to any proposed transfer of Claims on the grounds that the transfer might adversely affect the Debtors ability to utilize their Tax Attributes. If the Debtors file an objection, the transaction will not be effective unless approved by a final and nonappealable order of the Court. Significance of the Debtors' Tax Attributes The Debtors relate that as of December 31, 2008, they had, for U.S. federal income tax purposes, NOLs and capital loss carryforwards of approximately $824 million and tax credits of approximately $203 million. The Debtors project significant additional NOLs for their 2009 taxable year. IRC Sections 39(a), 59(e), 172(b) and 904(c) permit corporations to carry forward Tax Attributes to offset future taxable income an tax liabilities, thereby significantly improving their cash position. Thus, the Debtors maintain that their Tax Attributes are a valuable asset of their estates, and the availability of those Tax Attributes may facilitate their successful reorganization. About Capmark Financial Based in Horsham, Pennsylvania, Capmark Financial Group Inc. -- http://www.capmark.com/-- is a diversified company that provides a broad range of financial services to investors in commercial real estate-related assets. Capmark has three core businesses: lending and mortgage banking, investments and funds management, and servicing. Capmark operates in North America, Europe and Asia. Capmark has 1,000 employees located in 37 offices worldwide. On October 25, 2009, Capmark Financial Group Inc. and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 (Bankr. D. Del. Case No. 09-13684) Capmark's financial advisors are Lazard Fr? res & Co. LLC and Loughlin Meghji + Company. Capmark's bankruptcy counsel is Dewey & LeBoeuf LLP. Richards, Layton & Finger, P.A. serves as local counsel. Beekman Advisors, Inc., is serving as strategic advisor. KPMG LLP is tax and accounting advisor. Epiq Bankruptcy Solutions, LLC is the claims and notice agent. Capmark has total assets of US$20 billion against total debts of US$21 billion as of June 30, 2009. Bankruptcy Creditors' Service, Inc., publishes Capmark Financial Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Capmark Financial Group Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) CARABEL EXPORT: Court to Consider Plan Outline on November 2 ------------------------------------------------------------ Enrique S. Lamoutte Inclan of the U.S. Bankruptcy Court for the District of Puerto Rico will consider the adequacy of the disclosure statement explaining Carabel Export and Import, Inc.'s Chapter 11 Plan on Nov. 2, 2009, at 9:30 a.m. The Debtors will begin soliciting votes on the Plan following approval of the adequacy of the information in the Disclosure Statement. Under the Plan, retained professionals and the U.S. trustee fees will be paid in full. Other holders of administrative expense claims would only recover 45% of their claims and will be paid from the $300,000 carve out established by Continental Tiles Inc. and Westernbank Puerto Rico. Secured lender Westernbank Puerto Rico will receive the proceeds of the sale of Debtor's assets to Continental Tiles, Inc., amounting to $6,500,000, plus any funds arising from Debtor's accounts receivable and Debtor's balance of available cash, for an estimated 35% recovery. The balance of Westernbank's claim for $18,541,094 is dealt with under Class 5 as a General Unsecured Claim. As per the settlement agreement between Debtor and Firstbank Puerto Rico dated August 13, 2009, Debtor agreed to surrender Firstbank's collateral thereto. Any deficiency in Firstbank's claim will be dealt with under Class 5 as a General Unsecured Claim. On or before the Effective Date, Debtor will surrender Popular Auto's collateral thereto. Any deficiency in Popular Auto's Claim will be dealt with under Class 5 as a General Unsecured Claim. Priority tax claims estimated to total $8,863,569 won't be paid. The holders of allowed general unsecured claims against Debtor also won't receive distributions and are deemed to reject the Plan. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/CARABELEXPORT_DS.pdf Based in Caguas, Puerto Rico, Carabel Export and Import Inc., dba ItalCeramica, and its affiliates filed separate Chapter 11 petitions on December 30, 2008 (Bankr. D. P.R. Lead Case No. 08-08956). The Hon. Enrique S. Lamoutte Inclan oversees the case. Charles Alfred Cuprill, Esq., at Charles A Curpill, PSC Law Office, in San Juan, Puerto Rico, represents the Debtors. When it filed for bankruptcy, Carabel disclosed $14,544,289 in total assets, and $26,957,250 in total debts. CDS DEVELOPMENT: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: CDS Development LLC 1 Roger Road Great Barrington, MA 01230 Bankruptcy Case No.: 09-31897 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Massachusetts (Springfield) Judge: Henry J. Boroff Debtor's Counsel: Richard I. Isacoff, Esq. 100 North Street, Suite 405 Pittsfield, MA 01201 Tel: (413) 443-8164 Fax: (413) 443-8171 Email: rii@isacofflaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 According to the schedules, the Company has assets of $1,318,300, and total debts of $582,800. A full-text copy of the Debtor's petition, including a list of its 4 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mab09-31897.pdf The petition was signed by Roger Brownson, president of the Company. CENTAUR LLC: S&P Downgrades Corporate Credit Rating to 'D' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Indiana-based Centaur LLC to 'D'. The ratings downgrade follows the company's failure to make interest payments (due Oct. 27) on its first- and second-lien term loans, as conveyed by management. A payment default has not occurred relative to the legal provision of the credit agreement because there is a five-day grace period in which to make the interest payment. However, S&P considers a default to have occurred, even if a grace period exists, when the nonpayment is a function of the borrower being under financial distress, unless S&P is confident that the payment will be made in full during the grace period. CENTAUR PA: Files Chapter 11 in Delaware ---------------------------------------- Centaur PA Land LP and its affiliate Valley View Downs LP filed Chapter 11 petitions in Delaware. The companies filed for bankruptcy on October 27 (Bankr. D. Del. Case No. 09-13760). Bill Rochelle relates that the Indianapolis, Indiana-based Centaur and Valley View listed assets of $148 million and debt totaling $297 million. Together with non-bankrupt affiliates, the companies have horse racing and gambling facilities in five markets in Indiana and Colorado. They are developing the bankrupt property in Pennsylvania. The Pennsylvania project, located 55 miles from Pittsburgh, is to be called Valley View Downs and Casino. It's proposed to have harness racing 150 days a year and daily simulcasting, along with slot machines. According to the report, a court filing says Chapter 11 appears the best method for making arrangements so lenders will renew a $50 million letter of credit deposited with Pennsylvania gaming regulators. Absent the letter of credit, the companies won't be able to proceed with their application for a gaming license in Pennsylvania. The companies are affiliated with closely held Centaur Inc. Centaur completed a $1 billion financing in November 2007, the Pennsylvania Web site says. No other Centaur affiliates sought bankruptcy protection. A bankruptcy court filing says the Debtors are obligated on a $382 million first-lien debt and a $190 million second-lien facility. CHAI INVESTMENT: Wants to Hire Engelman Berger as Legal Counsel --------------------------------------------------------------- Chai Investment Group LLC asks the U.S. Bankruptcy Court for the District of Arizona for permission to employ Engelman Berger P.C. as its legal counsel. The firm has agreed to, among other things: a) advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and property; b) represent the Debtor at the U.S. Trustee interview, first meeting of creditors and all Court hearings, adversary proceedings or contested matters that have been or may be filed herein; c) attend meetings and negotiating with representatives of creditors and other parties-in-interest and advising and consulting on the conduct of this bankruptcy case, including all of the legal and administrative requirements of operating in Chapter 11; d) assist the Debtor with the preparation of its Schedules of Assets and Liabilities and Statements of Financial Affairs; and e) advise the Debtor with respect to any contemplated sales of assets and business combinations, formulating and implementing appropriate closing procedures for such transactions, and preparing and prosecuting all motions and pleadings necessary to obtain the Court's authorization for such transactions; The firm will be paid at these hourly rates: Shareholders $350-$425 Associates $250-$285 Paralegals $150 The Debtor assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Based in Socttsdale, Arizona, Chai Investment Group LLC filed for Chapter 11 protection on October 16, 2009 (Bankr. D. Ariz. Case No. 09-26275). In its petition, the Debtor listed both assets and debts between $10 million and $50 million. CHRYSLER FINANCIAL: Pay Czar Raises Base Pay -------------------------------------------- David Enrich and Deborah Solomon at The Wall Street Journal report that the U.S. Treasury Department pay czar Kenneth Feinberg substantially increased regular salaries, after disclosing last week sharp cuts in total compensation at the finance and auto companies under his control. Mr. Feinberg oversees these firms that accepted bailout packages: -- American International Group Inc., -- Citigroup Inc., -- Bank of America Corp., -- General Motors Corp., -- GMAC Financial Services, -- Chrysler Group, and -- Chrysler Financial. According to The Journal, Mr. Feinberg decided last week that 136 employees and executives working at the seven companies will earn much less this year than in 2008, even after accounting for the rise in regular salaries. The Journal states that Mr. Feinberg then increased base salaries at companies when the banks complained. Mr. Feinberg, says The Journal, adjusted base salaries for the bulk of those employees, in some cases boosting them by hundreds of thousands of dollars. The Journal notes that on average, base salaries climbed to $437,896 per year as a result of Mr. Feinberg's review, compared with $383,409 previously, a 14% increase. The Journal states that of the 136 employees, about 89 saw their base salaries increase. Chrysler Financial served as Chrysler LLC's preferred lender until the automaker filed for bankruptcy protection on April 30. It was replaced by GMAC Financial Services as part of the government- backed restructuring of Chrysler. With a loan portfolio of $45 billion, Chrysler Financial continues to offer dealership insurance and financial products to consumers, AP reported. The TCR reported on October 16, 2009, that Standard & Poor's Ratings Services said it affirmed its 'CCC-' long-term counterparty credit rating on Chrysler Financial Services Americas LLC. The ratings are removed from CreditWatch Negative, where they were placed May 1, 2009. The outlook is negative. S&P is also affirming its '3' recovery rating on Chrysler Financial's $6 billion senior-secured, first-lien debt due 2012 and S&P's '6' recovery rating on Chrysler Financial's $2 billion senior-secured, second-lien term loan facility due 2012. As reported by the TCR on July 10, 2009, Fitch Ratings has affirmed and removed from Rating Watch Negative Chrysler Financial Services Americas LLC's Issuer Default Ratings: Long-term IDR at 'CC'; and Short-term IDR at 'C'. At the same time, CFS' senior debt ratings have been revised following changes in Fitch's rating definitions published in March 2009. CHRYSLER LLC: Court OKs Jones Day's $21.3MM Fee for 4 Months Work ----------------------------------------------------------------- Jones Day, lead bankruptcy counsel for Old CarCo LLC, formerly Chrysler LLC, received the Bankruptcy Court's approval to be paid $21.3 million in fees and expenses covering the first four months of the case through Aug. 31, Bill Rochelle at Bloomberg news said. The U.S. government isn't allowing comparatively small amounts of the funding it provides for the liquidation to be used toward payment of Jones Day fees incurred in connection with preserving lenders' collateral. The Jones Day fees were part of $45 million in fees for 10 professional firms previously given tentative approval by the bankruptcy judge. About Chrysler LLC Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Mopar(R) and Global Electric Motors (GEM) brand vehicles and products. With the resources, technology and worldwide distribution network required to compete on a global scale, the alliance builds on Chrysler's culture of innovation -- first established by Walter P. Chrysler in 1925 -- and Fiat's complementary technology -- from a company whose heritage dates back to 1899. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Dodge Ram. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30 sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler has changed its corporate name to Old CarCo following its sale to a Fiat-owned company. As of December 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat has a 20 percent equity interest in Chrysler Group. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CIT GROUP: Bonds Show Bankruptcy Inevitable as Swap Expires ----------------------------------------------------------- Pierre Paulden and Caroline Salas at Bloomberg News report that CIT Group Inc. bond and credit-default swap prices show that investors are betting that CITG will file for bankruptcy after a debt exchange is set to expire October 29. According to the report, since CIT Chief Executive Officer Jeffrey Peek started a $30 billion debt swap Oct. 1, the company's notes due Nov. 3 have dropped 12 cents to 68 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Holders of the $500 million in notes are being offered 90 cents on the dollar in new debt and equity in an out-of-court exchange. They would get 70 cents on the dollar in bonds and new stock in a pre-packaged bankruptcy. "We believe they will file for bankruptcy within the week, provided nothing unexpected occurs," Adam Steer, an analyst with CreditSights Inc. in New York, said in a telephone interview with Bloomberg. The CIT notes due Nov. 3 gained 1 cent to 68 cents on the dollar as of 3:14 p.m. on October 29, Trace data show. The company's $548 million 5.65 percent notes due in 2017 fell 2.5 cents to 64.5 cents on the dollar as of 4:05 p.m. in New York, Trace data show. The cost to protect CIT debt against default for five years has risen 5.4 percentage points to 39.4 percent upfront since Sept. 30, according to CMA DataVision, Bloomberg said. That means it would cost $3.94 million initially and $500,000 annually to protect $10 million of CIT bonds from default for five years. Bloomberg explains the cost of the credit-default swaps implies that traders have priced in an 86.5 percent chance that the company will default within five years, a standard pricing model used by Bloomberg shows. The model assumes investors could recover 40 cents on the dollar in a bankruptcy proceeding. "The credit-default-swap market is telling you default is imminent," Kevin Starke, an analyst at CRT Capital Group LLC in Stamford, Connecticut, said in a telephone interview. "The bond prices are indicating the pre-pack is likely." CIT Restructuring CIT Group, on July 29, 2009, entered into a credit agreement, with Barclays Bank PLC, as administrative agent, and the lenders party thereto, for loans of up to $3 billion. CIT Group was required to adopt a restructuring plan acceptable by lenders starting October 1, 2009. Under the plan, CIT Group Inc. and CIT Group Funding Company of Delaware LLC (Delaware Funding) launched exchange offers for certain unsecured notes. The Offers will expire at 11:59 p.m., (prevailing Eastern Time), 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. The Company is concurrently soliciting bondholders and other holders of CIT debt to approve a prepackaged plan of reorganization. CIT on October 16 amended its restructuring plan to further build bondholder support, by, among others things, shortening maturities by six months for all new notes and junior credit facilities. Carl Icahn sent a letter to CIT Group's board 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. CIT Group modified its amended Offering Memorandum dated as of October 16, 2009 through a supplement dated October 23, 2009. The supplement reflects changes that are expected to build additional bondholder support. The supplement is available at http://researcharchives.com/t/s?477c On October 27, Mr. Icahn sent a letter saying its affiliates have committed to provide a new $4.5 billion term loan to CIT as an alternative to the loan currently being arranged by Bank of America, N.A., which would be on superior terms and would save $100 million in fees. Mr. Icahn separately announced that he is providing downside protection for smaller CIT Group noteholders if they are willing to support him in his opposition to the company's pre-packaged bankruptcy plan. The protection will take the form of a 30 day tender offer at 60% of par value. CIT Group on October 28 announced that it has expanded its current $3 billion senior secured credit facility by an additional $4.5 billion arranged by Bank of America. It said it rejected Mr. Icahn's offer after the latter failed to provide evidence of his ability to fund the commitment. About CIT Group 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: Pay Czar Raises Base Pay --------------------------------------- David Enrich and Deborah Solomon at The Wall Street Journal report that the U.S. Treasury Department pay czar Kenneth Feinberg substantially increased regular salaries, after disclosing last week sharp cuts in total compensation at the finance and auto companies under his control. Mr. Feinberg oversees these firms that accepted bailout packages: -- American International Group Inc., -- Citigroup Inc., -- Bank of America Corp., -- General Motors Corp., -- GMAC Financial Services, -- Chrysler Group, and -- Chrysler Financial. According to The Journal, Mr. Feinberg decided last week that 136 employees and executives working at the seven companies will earn much less this year than in 2008, even after accounting for the rise in regular salaries. The Journal states that Mr. Feinberg then increased base salaries at companies when the banks complained. Mr. Feinberg, says The Journal, adjusted base salaries for the bulk of those employees, in some cases boosting them by hundreds of thousands of dollars. The Journal notes that on average, base salaries climbed to $437,896 per year as a result of Mr. Feinberg's review, compared with $383,409 previously, a 14% increase. The Journal states that of the 136 employees, about 89 saw their base salaries increase. 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. CITY OF PRICHARD: Files Chapter 9 Petition ------------------------------------------ The city of Prichard, Alabama, a suburb of Mobile, filed for municipal reorganization for a second time in eight years. The Chapter 9 petition filed Oct. 27 in Mobile says that assets and debt both exceed $10 million. According to Bloomberg's Bill Rochelle, Prichard says it is having a "substantial under-funded pension obligation." Net revenue in fiscal 2009 was $10.1 million while net operating expenses were $600,000 greater. Prichard has a population of 25,000. CLASSICSTAR LLC: Founders Plead Guilty to Fraud Conspiracy ---------------------------------------------------------- Glenye Cain Oakford at Daily Racing Form reports that ClassicStar LLC co-founders David and Spencer Plummer have pleaded guilty to conspiracy to commit tax fraud through a complex mare-lease program. The Justice Department and the Internal Revenue Service said in a joint statement that David Plummer, his son Spencer, and Terry Green -- a certified public accountant who assisted the Plummers with the mare-lease program -- pleaded guilty on Monday at a federal court hearing in Oregon. ClassicStar, says Daily Racing Form, advertised its mare-lease program as a tax shelter for the wealthy, but the Justice Department called the program "a fraudulent tax product" through which investors reported fraudulent deductions. "The investors in the mare-lease program filed tax returns with the IRS claiming false tax deductions of over $500 million, which resulted in a tax loss to the government of over $200 million," the Justice Department and the IRS said in a statement. According to Daily Racing Form, the defendants could face prison, but after Monday's hearing, assistant U. S. attorney and lead prosecutor Allen Garten said that the Plummers and Ms. Green are cooperating in the continuing investigation of ClassicStar. The IRS is pursuing ClassicStar investors to recoup federal tax revenue they owe, the report states, citing Mr. Garten. Headquartered in Lexington, Kentucky, ClassicStar LLC operated as a thoroughbred horse breeder. The Company also leased horses and rents out the reproductive systems of select thoroughbred mares. The Company filed for Chapter 11 protection Sept. 14, 2007 (Bankr. E.D. Ky. Case No.07-51786). Attorneys at Henry Watz Gardner Sellars & Gardner, PLLC, represented the Debtor while attorneys at Stites & Harbison, PLLC, represented the Creditors Committee. In April 2008, Judge William S. Howard converted the case to a Chapter 7 liquidation, at the behest of the U.S. Trustee. In its petition, the Debtor said assets totalled T $227 million, comprised of account receivable from National Equine Lending Corp., and debts of $72.7 million. CLEARWATER GROUP: Files for Chapter 7 Liquidation ------------------------------------------------- Clearwater Group has filed for bankruptcy protection under Chapter 7, listing $10.5 million in debts owed to more than 200 creditors. David Bracken at News & Observer reports that Clearwater owes money to banks that include Paragon, First Federal, Regions, Wake Forest Federal, Fifth Third, and SunTrust. Some Clearwater employees filed claims for unpaid vacation, and Durham County filed a claim for $20,000 in taxes from 2008 and 2009, News & Observer states. Clearwater's assets, which included 38 lots and homes in Durham, Wake Forest, Raleigh, and Youngsville, have a combined tax value of $9.1 million, says News & Observer. Raleigh custom home builder Clearwater Group was started by Rich Glass and John Toomey in the mid-1990s and has since built more than 500 homes. Clearwater designed and built high-end homes priced at $500,000 and above in neighborhoods like Wakefield Plantation, Heritage Wake Forest, Bedford at Falls River in Raleigh and Treyburn Country Club Estates in Durham. COBRA ELECTRONICS: Lenders Waive Financial Covenant Violations -------------------------------------------------------------- Cobra Electronics Corporation said that the impact of the global economic downturn, as well as the delay by certain customers in receipt dates for products from the third to the fourth quarter of 2009, has resulted in the Company's failure to satisfy the financial covenants relating to third quarter set forth in its amended loan agreement. The Company has been in discussions with its lenders who have agreed to waive the violations; such waiver is expected to be executed in the next several days. Based on the Company's strong outlook for the fourth quarter, management believes that it will be in compliance with the covenants for this forthcoming period and Cobra continues to have sufficient availability under its credit line to operate its business. Cobra had interest-bearing debt of $21.9 million as of September 30, 2009, and cash of $1.2 million, for "net debt" of $20.6 million, as compared to "net debt" of $10.7 million the prior year. Inventory at the end of the third quarter increased to $30.3 million from $29.6 million the prior year and accounts receivable at the end of the quarter were $20.0 million, a decline from $22.8 million one year earlier. Third Quarter Results Cobra reported a net loss of $509,000, or $0.08 per share, for the third quarter of 2009, as compared to net income of $142,000, or $0.02 per share, in the third quarter of 2008, as sales declined to $27.4 million from $33.2 million in the prior year. The Performance Products Limited segment realized an increase in sales from the third quarter of 2008 of 15.6 percent due to the demand for its truck and RV navigation products but this increase was insufficient to offset a decline of 20.2 percent for the Cobra segment as Citizens Band radio and radar detection sales continued to suffer from the decline in consumer spending. On a year-to- date basis, which includes a $9.6 million tax valuation allowance taken in the second quarter, Cobra reported a net loss of $12.0 million, or $1.86 per share, as compared to net income of $1.9 million, or $0.30 per fully diluted share, in the prior year. "Cobra's third quarter results reflect the effects of the continuing global recession, as distributors and retailers are closely managing working capital and consumers have curtailed spending in response to high unemployment and the decline in overall household wealth," said Jim Bazet, Cobra's Chairman and Chief Executive Officer. "In part, our third quarter results reflect the direction of our customers to defer shipments to the latest possible time that permits them to still have products in stock. As a result, we have seen a significant shift of business from the third quarter to the fourth quarter. Additionally, as we observe the buying patterns of our consumers, it is evident that purchasing habits have shifted and that even when consumers elect to make a purchase, they are selecting lower price point products which, in turn, provide lower revenue and gross margin to Cobra. The professional driver, a core constituency for Cobra, has been particularly hurt by the economic downturn as freight traffic has declined markedly resulting in a reduction in their disposable income, directly impacting sales of Citizens Band radios. Nevertheless, we are beginning to see some signs of the economy bottoming out. The sales decline for the Cobra segment in the third quarter was materially less than the 24.1 percent decline experienced in the first two quarters of this year. Moreover, PPL generated an increase in sales due to the strength of their new product introductions -- mobile navigation products tailored to the needs of the professional driver and the recreational vehicle owner. Cobra has recently launched in the U.S. a mobile navigation product for the professional driver that utilizes this successful PPL platform. We are aggressively pursuing new opportunities and expect a substantial improvement in fourth quarter results. We are also pleased to announce that we have executed an agreement with a major manufacturer of mobile phones and mobile navigation products to include the AURA(TM) database in their North American and European navigation products that will be released early next year. This is a significant step in our plan to make AURA the preeminent provider of photo-enforcement alerts globally and is expected to contribute to revenues and earnings in the second half of 2010." The year-over-year decline in third quarter net sales of $5.8 million was attributable to a decline of $6.2 million for the Cobra segment offset, in part, by a $385,000 increase in net sales for the PPL segment. Sales declines were particularly severe for the Citizens Band radio and radar detection product lines in the Cobra segment, as sales declined by 31.0 percent and 28.6 percent, respectively. The decline in radar detection sales is attributable, in part, to a change in merchandising strategy at one of Cobra's accounts that led to a reduction in store count, as well as the bankruptcy of Circuit City, which accounted for more than 3.0 percent of radar detection sales in the third quarter of last year. It is evident, as well, that consumer purchases of radar detectors are skewing toward lower price point models, resulting in a decline in sales and margins in this category. Citizens Band radio sales also have been adversely impacted by consumers foregoing higher priced products, such as Cobra's exclusive Bluetooth(R)-equipped 29 LTD BT. International sales, including sales to Canada and throughout Europe, also declined markedly from the prior year with similar patterns as were evident in the U.S. Offsetting these declines, in part, were initial shipments of Cobra's new mobile navigation device for the professional driver as well as a 20.6 percent increase in two-way radio sales as Cobra established its position as the exclusive supplier of two-way radios to a major retailer. PPL segment sales increased by $385,000, or 15.6 percent, as compared to the third quarter of last year; unfavorable exchange rate movements partly mitigated the stronger increase of 33.6 percent when expressed in pounds sterling. The most significant factor contributing to this increase were sales in both the U.K. and throughout Europe of satellite navigation products designed for professional drivers and recreational vehicle owners. These products, with large visible screens and routing and points of interest software tailored to the needs of these users, have been received well by the market and sales have actually been constrained by the lack of available units as demand has exceeded supply. Cobra reported a decline in gross margins as compared to the third quarter of 2008, primarily due to product mix for both the Cobra and PPL segments. On a consolidated basis, Cobra's gross margin decreased to 24.2 percent from 29.2 percent in the prior year. This reflected a decline in gross margins for the Cobra reporting segment to 23.9 percent from 27.3 percent, primarily due to the decline in Citizens Band radio sales as a proportion of overall sales, as well as the mix of sales within the Citizens Band radio and radar detection product lines, as consumers purchased lower price point products. The PPL segment gross margin declined to 26.5 percent from 52.8 percent in the prior year. In part, this reflects the benefit that PPL received in 2008 from the strength of the pound sterling relative to the dollar as all purchases are made in dollars. Additionally, there was an increase in deferred revenue due to increased sales of navigation products bundled with the AURA database and a vendor settlement that resulted in a writedown of inventory. Selling, general and administrative expenses declined to $7.4 million in the third quarter from $8.9 million in the prior year. This decline reflects lower sales and associated variable selling expenses, as well as a concerted effort by management to curtail expenses, including headcount reductions and lower professional fees. Due primarily to a gain in the cash surrender value of life insurance that the Company owns for the purpose of funding deferred compensation programs for several current and former officers of the company, Cobra recorded other income of $422,000 in the third quarter of 2009 as compared to other expense of $135,000 in the prior year's period. The gain on the cash surrender value in the most recent period was $475,000 as compared to a loss of $318,000 in the prior year. On a year-to-date basis, consolidated net sales for the nine-month period have declined to $72.5 million from $96.4 million, or 24.8 percent, reflecting the overall weakness in the global economy. The decline for the Cobra segment was $19.1 million, or 22.7 percent, while the decline for the PPL segment was $4.8 million, or 39.9 percent. The decline in Cobra segment sales was attributable primarily to declines in radar detection and Citizens Band radios domestically, as well as significant weakness in foreign sales. The bankruptcy and subsequent liquidation of Circuit City had a significant effect on sales of radar detection, resulting in a loss of more than $1.3 million of sales in comparison to the prior year. Net sales for the PPL segment on a year-to-date basis primarily reflect a decline in satellite navigation sales due to the effect of the recession on consumer spending and the sale last year by PPL of the speed camera database for smartphone use. Cobra's consolidated gross margin, on a year-to-date basis, declined to 24.7 percent from 31.2 percent in the prior year. The decline is attributable primarily to product mix within each segment, as well as exchange rate volatility at PPL. The Cobra segment experienced lower sales of higher margin products as the consumer curtailed purchases of higher margin products. The gross margin for the PPL segment in 2008 was higher due to the high- margin sale of the database for smartphone use -- that sale has not been repeated to this point in 2009 -- and the benefit to cost of sales of the pound sterling's strength relative to the dollar. Additionally, within each segment, fixed components of the cost of sales, including the amortization of certain costs associated with the acquisition of PPL, were expensed across a lower level of sales. Substantial efforts have been made to contain selling, general and administrative expenses in 2009, which is evident from the year- to-date results. SG&A expenses have declined to $22.2 million through three quarters of 2009 from $26.0 for the same period in 2008. Variable selling expense reductions accounted for approximately 50 percent of this decline; the balance was the result of decreases in fixed operating expenses, including personnel reductions and lower professional fees. As a result of the decline in sales and margins, offset in part by lower operating expenses, Cobra has incurred a net loss for the first nine months of 2009 of $12.0 million, or $1.86 per share, as compared to net income of $1.9 million, or $0.30 per fully diluted share, in the prior year. As noted previously, the loss for the current year includes a tax valuation allowance of $9.6 million. The impact of the global economic downturn, as well as the delay by certain customers in receipt dates for products from the third to the fourth quarter, has resulted in the Company's failure to satisfy the financial covenants relating to third quarter set forth in its amended loan agreement. The Company has been in discussions with its lenders who have agreed to waive the violations; such waiver is expected to be executed in the next several days. Based on the Company's strong outlook for the fourth quarter, management believes that it will be in compliance with the covenants for this forthcoming period and Cobra continues to have sufficient availability under its credit line to operate its business. Cobra had interest-bearing debt of $21.9 million as of September 30, 2009, and cash of $1.2 million, for "net debt" of $20.6 million, as compared to "net debt" of $10.7 million the prior year. Inventory at the end of the third quarter increased to $30.3 million from $29.6 million the prior year and accounts receivable at the end of the quarter were $20.0 million, a decline from $22.8 million one year earlier. In discussing the outlook for the balance of 2009, Mr. Bazet said, "Cobra anticipates a strong fourth quarter for both the Cobra and PPL segments. Revenues are expected to increase from the prior year and the company is expected to be profitable. We are continuing to address all opportunities to contain expenses in light of reduced consumer spending." Based in Chicago, Illinois, Cobra Electronics Corporation -- http://www.cobra.com/-- designs and markets communication and navigation products. Building upon its leadership position in the GMRS/FRS two-way radio, radar detector and Citizens Band radio industries, Cobra identified new growth opportunities and has aggressively expanded into the marine market and has expanded its European operations. The Consumer Electronics Association, Forbes and Deloitte & Touche have all recently recognized Cobra for the Company's innovation and industry leadership. COLOR-CROWN: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Color-Crown Corporation dba Stardek 928 Sligh Avenue Seffner, FL 33584 Bankruptcy Case No.: 09-24398 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Middle District of Florida (Tampa) Judge: Michael G. Williamson Debtor's Counsel: Buddy D. Ford, Esq. 115 N. MacDill Avenue Tampa, FL 33609-1521 Tel: (813) 877-4669 Fax: (813) 877-5543 Email: Buddy@tampaesq.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 $1,265,910, and total debts of $3,057,088. 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/flmb09-24398.pdf The petition was signed by Edward P. Benus, president of the Company. COLT DEFENSE: S&P Assigns 'B+' Rating on $225 Mil. Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' issue-level rating and '4' recovery rating to Colt Defense LLC's proposed issuance of $225 million of senior unsecured notes due 2017. Colt will issue the notes via SEC Rule 144A with registration rights and will co-issue them with Colt Finance Corp., which has no assets, revenues, or other liabilities and was established solely to co-issue the notes. At the same time, S&P affirmed its 'B+' corporate credit rating on the arms supplier. S&P will withdraw its ratings on the company's existing credit facility, which it will refinance with the proceeds from the new notes, once the transaction closes. West Hartford, Connecticut-based Colt is proposing to refinance its existing term loan (about $131 million outstanding as of July 5, 2009) and subordinated notes ($58 million) with the proceeds from $225 million of senior unsecured notes. The company also proposes to replace its existing $20 million revolving credit facility with a new $50 million secured revolver (not rated). Solid demand for the company's products in recent years has resulted in significant increases in revenue, earnings, and cash flow, as well as better-than-expected credit protection measures. Although demand from the U.S. military is slowing, S&P expects the company to replace this business with international sales and new products. "If the company is successful and management commits to maintaining debt to EBITDA below 3x and funds from operations to total debt above 20%, S&P could raise the ratings," said Standard & Poor's credit analyst Christopher DeNicolo. "We could lower the ratings if the company cannot profitably replace the lost U.S. military business or increased debt to fund acquisitions, or if dividends result in debt to EBITDA above 4.5x and FFO to total debt below 15% for a sustained period," he continued. DAMON'S INTERNATIONAL: Files for Chapter 11 Bankruptcy Protection ----------------------------------------------------------------- Gary Reinert Sr. has put his Damon's International Inc. into Chapter 11 bankruptcy protection. Court documents say that Damon's has $1 million to $10 million in assets, against $1 million to $10 million debts owed to 199 to 1,000 creditors. Damon's International Inc. was founded in 1979. It has 50 units in 15 states and the United Kingdom. Locally, restaurants are at The Waterfront in Homestead and in Monroeville and Collier. DANIEL FARKAS: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Daniel T. Farkas PO Box 75 Oakdale, NY 11769 Bankruptcy Case No.: 09-78159 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Eastern District of New York (Central Islip) Judge: Alan S. Trust Debtor's Counsel: Ronald D. Weiss, Esq. 734 Walt Whitman Road, Suite 203 Melville, NY 11747 Tel: (631) 271-3737 Fax: (631) 271-3784 Email: weiss@ny-bankruptcy.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 $1,460,970, and total debts of $2,154,214. A full-text copy of Mr. Farkas' petition, including a list of his 13 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nyeb09-78159.pdf The petition was signed by Mr. Farkas. DAVID LAPIN: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: David Lapin, LP 953 E. Sahara Ave., #200 Las Vegas, NV 89104 Bankruptcy Case No.: 09-30316 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Debtor's Counsel: Samuel A. Schwartz, Esq. 626 S Third St Las Vegas, NV 89101 Tel: (702) 385-5544 Fax: (702) 385-2741 Email: sam@schwartzlawyers.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 According to the schedules, the Company has assets of $3,576,540, and total debts of $12,189,272. 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/nvb09-30316.pdf The petition was signed by Susan Crisp. DAYTON SUPERIOR: S&P Withdraws 'D' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings, including its 'D' corporate credit rating, on Dayton, Ohio-based Dayton Superior Corp., following the company's announcement that it had emerged from Chapter 11 bankruptcy protection. In conjunction with the emergence, the company's outstanding prepetition senior subordinated notes were converted into new stock of the reorganized company. The specialized products provider for the nonresidential concrete construction market had previously filed voluntary petitions for reorganization in the U.S. Bankruptcy Court on April 19, 2009, as a result of the tight credit markets and inability to refinance its senior subordinated notes. DELPHI CORP: WTC Withdraws Appeal on UAW Special Attrition Plans ---------------------------------------------------------------- To recall, Wilmington Trust Company, as indenture trustee to Delphi Corp.'s senior notes, filed a notice of appeal to the U.S. District Court for the Southern District of New York on May 18, 2006, from Judge Drain's May 12, 2006 order approving the UAW Special Attrition Program. The Debtors and Wilmington Trust submitted to the District Court a joint stipulation dismissing Wilmington Trust's Appeal of the UAW Attrition Program Order on October 9, 2009. District Court Judge Leonard B. Sand approved the dismissal stipulation on October 14, 2009, and directed the Clerk of the District Court to close the case. On July 17, 2006, Wilmington Trust also filed another notice of appeal to the District Court of Judge Drain's July 7, 2009 order approving the UAW Supplemental Agreement and the IUE-CWA Special Attrition Program. In a separate stipulation, the Debtors and Wilmington Trust executed on October 9, 2009, a stipulation jointly dismissing Wilmington Trust's Appeal of the UAW Supplemental Special Attrition Program Order. District Court Judge Richard M. Berman approved the dismissal of stipulation on October 13, 2009, and directed the Clerk of the District Court to close the case. About Delphi Corp Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DOLLAR THRIFTY: Prices Offering of 5,750,000 Common at $19.25 ------------------------------------------------------------- Dollar Thrifty Automotive Group, Inc. disclosed Wednesday that it has priced a public offering of 5,750,000 shares of its common stock at a price to the public of $19.25 per share. The underwriters will have a 30-day option to purchase up to an additional 862,500 shares of common stock from the Company. The offering is expected to close on November 3, 2009, subject to customary closing conditions. The Company intends to use the net proceeds from the offering, which are expected to be approximately $105 million (without giving effect to any exercise of the underwriters' option to purchase additional shares), for general corporate purposes. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are serving as joint book-running managers for the offering. Shares of DTAG common stock are listed on the New York Stock Exchange under the symbol "DTG." On October 29, 2009, the last reported sale price of the shares of the common stock on the New York Stock Exchange was $19.48 per share. As reported by the Troubled Company Reporter on October 29, 2009, Dollar Thrifty intends to offer, subject to market and other conditions, 5,750,000 shares of its common stock in an underwritten public offering under an effective shelf registration statement on file with the Securities and Exchange Commission. The proposed offering will be made only by means of a prospectus and related prospectus supplement, which may be obtained by visiting the SEC's Web site at http://www.sec.gov/or by contacting Goldman, Sachs & Co. (Attention: Prospectus Department, 85 Broad Street, New York, New York 10004; telephone: (917) 343- 8000; facsimile: (212) 902-9316; email: prospectus- ny@ny.email.gs.com) or J.P. Morgan Securities Inc. (Attention: Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717; telephone: (631) 254-1735). In a prospectus, the Company said it may from time to time offer to sell shares of its common stock, par value $.01 per share, shares of its preferred stock, par value $.01 per share, or debt securities, separately or together, in one or more offerings up to $500,000,000. A full-text copy of DTAG's Prospectus dated October 26, 2009, is available at no charge at http://ResearchArchives.com/t/s?47bc A full-text copy of DTAG's Prospectus Supplement to Prospectus dated October 26, 2009, is available at no charge at: http://ResearchArchives.com/t/s?47bb About Dollar Thrifty Automotive Group Dollar Thrifty Automotive Group, Inc. -- http://www.dtag.com/, http://www.dollar.com/and http://www.thrifty.com/-- is headquartered in Tulsa, Oklahoma. The Company's brands, Dollar Rent A Car and Thrifty Car Rental, serve value-conscious travelers in over 70 countries. Dollar and Thrifty have over 600 corporate and franchised locations in the United States and Canada, operating in virtually all of the top U.S. and Canadian airport markets. The Company's approximately 6,400 employees are located mainly in North America, but global service capabilities exist through an expanding international franchise network. As of June 30, 2009, the Company had $2.58 billion in total assets and $2.35 billion in total liabilities. * * * As reported in the Troubled Company Reporter on Oct. 26, 2009, Standard & Poor's Ratings Services placed its long-term ratings, including the 'CCC' corporate credit rating, on Tulsa, Oklahoma- based Dollar Thrifty Automotive Group Inc. on CreditWatch with positive implications. DONNA ZYNEL: Case Summary & 26 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Donna M. Zynel aka Donna Marie Zynel fka Donna Marie Ory fka Donna Marie Chepon fka Donna Marie Henn 27800 Michigan Street Bonita Springs, FL 34135 Bankruptcy Case No.: 09-24417 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Middle District of Florida (Ft. Myers) Debtor's Counsel: Charles PT Phoenix, Esq. Phoenix Law PA 12800 University Drive, Suite 260 Fort Myers, FL 33907 Tel: (239) 461-0101 Fax: (239) 461-0083 Email: phoenixlawpa@gmail.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 $1,172,632, and total debts of $2,219,796. A full-text copy of Ms. Zynel's petition, including a list of her 26 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flmb09-24417.pdf The petition was signed by Ms. Zynel. E*TRADE FIN'L: Net Loss Widens to $832MM for Sept. 30 Quarter ------------------------------------------------------------- E*TRADE FINANCIAL Corporation reported a net loss of $832 million, or $0.66 per share, for its third quarter ended September 30, 2009, compared with a net loss of $143 million, or $0.22 per share, in the prior quarter and a net loss of $50 million, or $0.09 per share, a year ago. The third quarter results included a $968 million pre-tax non-cash charge for corporate debt extinguishment in relation to the Company's successful $1.74 billion debt exchange, which had an after-tax impact of approximately $773 million, or $0.61 per share. Excluding the impact of this item, the Company reported a net loss of $59 million, or $0.05 per share. The debt exchange also resulted in a $708 million increase in paid-in-capital. The net effect of the exchange to book equity was a reduction of $65 million. As of September 30, the Company had $48.48 billion in total assets against $44.84 billion in total liabilities. As of September 30, the Company had $$2.03 billion in accumulated deficit and $3.64 billion in shareholders' equity. "During the quarter we successfully completed a comprehensive recapitalization, substantially improving the Company's financial position," said Donald H. Layton, Chairman and CEO, E*TRADE FINANCIAL Corporation. "Our online brokerage business continues to perform strongly: brokerage accounts grew solidly, our average commission per trade is higher, and our interest rate spread remains strong despite very low market rates. While [Daily Average Revenue Trades] were down seasonally from the second quarter, year-over-year they were up seven percent and year-to- date, we have recorded our highest DART level for the first nine months of any year." The Company reported total DARTs of 196,000 in the third quarter, an 11 percent sequential quarterly decrease off a record quarter and a seven percent increase versus the year ago quarter. The Company added 14,000 net new brokerage accounts during the period. At quarter end, E*TRADE reported 4.5 million customer accounts, which included a record 2.7 million brokerage accounts. Customer security holdings increased 17 percent or $14.1 billion, and brokerage-related cash increased by $2.1 billion during the quarter. Net new customer assets were a negative $0.2 billion during the quarter and were impacted by a $1.3 billion decline in savings and other bank-related customer deposits, as the Company continued to execute its balance sheet reduction strategy. Customers were net sellers of approximately $1 billion of securities during the quarter. Margin receivables increased from $3.1 billion to $3.4 billion. Commissions, fees and service charges, principal transactions, and other revenue in the third quarter were $231 million, compared with $238 million in the second quarter. This included a $0.45 increase in average commission per trade to $11.50, offset by the sequential decline in trading activity. The Company reported net interest income of $321 million, compared with $340 million in the second quarter, as a result of a nine basis point contraction in the interest income spread to 2.82 percent and a $918 million decline in average interest-earning assets to $44.3 billion. The decline in spread from the prior quarter was due largely to a return to a normalized level of income from stock loan transactions. Total operating expense decreased by $28 million to $302 million from the prior quarter, largely due to the industry-wide special FDIC assessment recorded in the second quarter of approximately $22 million. Compensation and benefits increased in the quarter due to higher variable compensation, reflecting the Company's strong year-to-date operating results. The Company continued to make progress during the third quarter in reducing balance sheet risk as its loan portfolio contracted by $1.7 billion from last quarter, of which $0.9 billion was related to prepayments or scheduled principal reductions and $0.4 billion was related to the sale of a pool of home equity loans. For the Company's entire loan portfolio, total special mention delinquencies (30-89 days) declined by four percent and total at- risk delinquencies (30-179 days) declined by 10 percent in the quarter. In the home equity portion of the portfolio, which represents the Company's greatest exposure to loan losses, special mention delinquencies increased one percent in the quarter, while at-risk delinquencies declined 10 percent. Third quarter provision for loan losses decreased $57 million from the prior quarter to $347 million. Total net charge-offs in the quarter were $352 million, a decrease of $35 million from the prior quarter. Total allowance for loan losses was flat at $1.2 billion, or six percent of gross loans receivable. The Company continues to maintain Bank capital ratios substantially in excess of regulatory well-capitalized thresholds. As of September 30, the Company reported Bank Tier 1 capital ratios of 6.72 percent to total adjusted assets and 13.15 percent to risk-weighted assets. The Bank had excess risk-based total capital (i.e., above the level regulators define as well- capitalized) of $985 million as of September 30, 2009. These capital ratios reflect $100 million of cash that was contributed as Tier 1 equity to the Bank during the quarter. In late August, the Company completed its $1.74 billion debt exchange, materially reducing its debt burden. The exchange reduced the Parent company's annual interest payments by more than half, to $160 million per year, and extended maturities. As of September 30, approximately $592 million of the convertible debt had been converted to equity. In addition, the Company successfully raised $150 million of cash equity during the quarter, further enhancing the Parent company's liquidity and bringing the total cash gross proceeds from common stock issuances this year to $765 million. A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?47d3 About E*TRADE Financial The E*TRADE FINANCIAL (NASDAQ: ETFC) family of companies provides financial services including trading, investing and related banking products and services to retail investors. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Bank products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. * * * The Company's current senior debt ratings are Caa3 by Moody's Investor Service, CC/CCC-(3) by Standard & Poor's and B (high) by Dominion Bond Rating Service. The Company's long-term deposit ratings are Ba3 by Moody's Investor Service, CCC+ (developing) by Standard & Poor's and BB by DBRS. EASTMAN CHEMICAL: Moody's Assigns Ratings on $250 Mil. Notes ------------------------------------------------------------ Moody's Investors Service assigned a Baa2 rating to Eastman Chemical Company's new $250 million ten year senior unsecured notes. Proceeds from these notes will be used for general corporate purposes. The outlook is stable. Moody's also rated the company's universal shelf registration (senior unsecured at (P)Baa2). Eastman's Baa2 ratings are supported by a relatively diverse product portfolio, solid performance from four of its five business segments in the third quarter, very strong liquidity, proprietary process technologies and a moderate amount of balance sheet debt (roughly $1.5 billion). Additionally, the company's back-integration into coal-based methanol provides a competitive cost advantage in fibers and acetyls. Furthermore, the company's credit profile has been enhanced by the announced delays in its gasification project, which will likely result in a sizable cash balance over the next three years, at a minimum. The company's ratings are tempered by cyclical nature of its commodity chemicals and plastics, which constitute a majority of the company's sales, the sizable exposure to volatile feedstock costs, and the sometimes aggressive competitive environment in several of the company's end-markets. Eastman's outlook is stable despite the potential for a further weakening of financial metrics by the end of 2009, largely due to the expected increase in pension liabilities (tied to the lower discount rate). Moody's adjusted metrics at year end could temporarily weaken below levels expected for an investment grade chemical company. However, Moody's believes that Eastman's strong liquidity and relatively conservative financial management will allow the company to return metrics to levels that are more appropriate for the rating within the next 12-18 months. At this time there is limited upside or downside to the company's ratings. Ratings assigned: Eastman Chemical Company -- $250 million senior unsecured notes due 2019 at Baa2 - senior unsecured shelf registration at (P) Baa2 -- preferred stock shelf registration at (P)Ba1 Moody's last rating action on Eastman was in 2005 when Moody's raised Eastman's rating for commercial paper to Prime-2. Headquartered in Kingsport, Tennessee, Eastman Chemical Company is a major producer of PET plastics, acetate tow, and a broad array of specialty plastics and resins as well as both commodity and specialty chemicals. Eastman reported sales of roughly $5 billion for the LTM ending September 30, 2009. EMILIA DONIS DONSON: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Emilia Donis Donson 3622 Yupon St Houston, TX 77006 Bankruptcy Case No.: 09-38023 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Matthew Hoffman, Esq. Law Offices of Matthew Hoffman, P.C. 2777 Allen Parkway, Suite 1000 Houston, TX 77019 Tel: (713) 654-9990 Fax: (713) 654-0038 Email: mhecf@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Ms. Donson. ERICKSON RETIREMENT: Wants Injunction Against Utility Companies --------------------------------------------------------------- In the ordinary course of business, Erickson Communities Retirement LLC and its units receive electricity, power, gas, telephone, Internet, water, sewer, and trash removal services from 15 utilities and possess more than 43 individual accounts. A schedule of the Debtors' Utility Companies is available for free at http://bankrupt.com/misc/ERC_UtilitiesList.pdf Cass Information Services provides consolidated billing and payment services to the Debtors. Certain Utility Companies send their invoices directly to Cass. Cass then combines the invoices into a single consolidated bill amount, which is forwarded to the Debtors for payment. Once the Debtors' payment is received, Cass transmits payment to the appropriate Utility Companies. The Debtors pay Cass a monthly fee in exchange for the firm's services. The Debtors estimate that their cost for the Utility Services during the first 30 days after the Petition Date will be $350,000. Vincent P. Slusher, Esq., at DLA Piper LLP, in Dallas, Texas, relates that Section 366 provides that a utility may not, during the first 30 days of the case, alter, refuse, or discontinue services to a debtor in a Chapter 11 case solely because of unpaid prepetition amounts. However, the utility may do so thereafter unless the debtor furnishes "adequate assurance" of payment. In this context, the Debtors believe that a one-month deposit constitutes adequate assurance of payment. The Debtors assure the Court that they current on all amounts owing to the Utility Companies, other than payment interruptions that may be caused by the commencement of their Chapter 11 cases. The Debtors expect to operate at a profit postpetition and thus, will have funds available for payment to the Utility Companies, according to Mr. Slusher. The Debtors also expect to have access to Cash Collateral and thus, acquire the liquidity sufficient to keep their utility obligations current. More importantly, Mr. Slusher maintains that the continued Utility Services are vital to the Debtors' ability to sustain their operations during their Chapter 11 cases. Accordingly, by this motion, the Debtors ask the Court pursuant to Section 366 of the Bankruptcy Code to: (a) prohibit Utilities from altering, refusing, or discontinuing service to them by virtue of their bankruptcy filings; (b) authorize them to pay the Utilities a one-month deposit and deem the Utilities adequately assured of future performance; and (c) approve proposed procedures for determining requests for additional adequate assurance. The Debtors further seek the Court's authority to maintain their prepetition practices with respect to Cass, the third party vendor. With respect to the Utility Companies seeking additional assurance of future payment, the Debtors propose these procedures: (a) Absent any further order of the Court, a Utility Company may not alter, refuse or discontinue service to, or discriminate against, the Debtors on account of their bankruptcy or any unpaid prepetition charges, or request payment of a deposit or receipt of other security in connection with any unpaid prepetition charges; (b) The Debtors will serve the Utility Injunction Motion and any order granting that Motion to all Utility Companies; (c) A Utility Company may seek additional assurance of payment within 30 days after the Petition Date by submitting an Additional Assurance Request to DLA Piper LLP, the Debtors' counsel; (d) If a Utility Company makes a timely Additional Assurance Request that the Debtors believe is reasonable, then the Debtors will be authorized in their sole discretion to comply with that request without further Court order; (e) Any Additional Assurance Request must: (i) be in writing; (ii) indicate the location for which utility services are provided; (iii) include a summary of the Debtors' payment history relevant to the affected accounts, including any security deposits or other prepayments or assurances previously provided by the Debtors; (iv) detail the reasons why the treatment afforded pursuant to the procedures does not constitute satisfactory adequate assurance of payment; and (v) include a proposal for what treatment would constitute adequate assurance of payment from the Debtors, along with an explanation of why the proposal is reasonable; (f) If the Debtors believe that the Additional Assurance Request is unreasonable, then the Debtors will schedule a hearing to determine the adequate assurance to that Utility Company as necessary at the next omnibus hearing scheduled in these Chapter 11 cases; (g) Pending resolution of that issue at any Determination Hearing, any Utility Company making an Additional Assurance Request will be prohibited from altering, refusing, or discontinuing service to the Debtors; and (h) A Utility Company will be deemed to have adequate assurance of payment unless and until a future order of the Court is entered requiring further adequate assurance of payment. Although the Debtors believe that the Utility Companies List is complete, they seek authority, without further order of the Court, to supplement the Utility Companies List if any Utility Company has been inadvertently omitted. If the Debtors supplement the Utility Companies List, they will serve a copy of the Utility Injunction Motion and the signed order granting that Motion on any Utility Company that is added to the List. The added Utility Company will have 30 days from the date of service of the Utility Injunction Motion and the Final Utility Injunction Order to make an Additional Assurance Request. If an Additional Assurance Request is made, the Debtors will abide by the Procedures, as applicable. About Erickson Retirement The Baltimore, Maryland-based Erickson Retirement Communities LLC owns 20 continuing care retirement communities in 11 states. Among Erickson's 20 communities, eight are completed, 11 are open although in construction, and one is in development. They have 23,000 residents in total. Erickson, along with affiliates, filed for Chapter 11 on Oct. 19, 2009 (Bankr. N.D. Tex. Case No. 09-37010). DLA Piper LLP (US) serves as counsel to the Debtors. BMC Group Inc. serves as claims and notice agent. Houlihan, Lokey, Howard & Zoukin, Inc., is also serving as investment and financial consultant. Alvarez & Marsal is serving as restructuring adviser. As of September 30, 2009, on a book value basis, ERC had approximately $2.7 billion in assets, including $2.2 billion of property and equipment, and $3.0 billion in liabilities. Liabilities include $195.8 million on the revolving credit, $347.5 million on construction credit, $64 million in accounts payable, $47.8 million in subordinate debt, and $475 million in purchase option deposits. Bankruptcy Creditors' Service, Inc., publishes Erickson Retirement Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Erickson Retirement Communities LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ERICKSON RETIREMENT: Wants to Assume S. Miller Employment Pact -------------------------------------------------------------- Erickson Retirement Communities LLC and its units seek the Court's authority to assume a Services Agreement executed between Scott D. Miller and Erickson Retirement Communities, LLC, on April 1, 2009. Pursuant to the Miller Agreement, Mr. Miller agreed to render services to ERC's board of directors as the Board's Executive Vice Chairman. By its terms, the Miller Agreement is set to expire on December 31, 2011. Under the Miller Agreement, Mr. Miller would receive $900,000 in 2009 and $300,000 per year in 2010 and 2011 for his services. Mr. Miller is an independent contractor and is not an employee of ERC. Thus, he will not receive any benefits. As Executive Vice Chairman, Mr. Miller's duties to the Debtors will include: -- advising and consulting with ERC's executive management team with respect to the Debtors' business, operations, finances, marketing, development, and restructuring; -- overseeing ERC's long-term capital structure; and -- during the restructuring process, coordinating with ERC's executive management and its advisors in devising and implementing strategic and tactical decisions. In light of Mr. Miller's vast business experience, Mr. Miller is a vital part of the Debtors' restructuring, Vincent P. Slusher, Esq., at DLA Piper LLP, in Dallas Texas, asserts. Mr. Miller has a significant role in negotiations with various lenders and potential buyers of ERC, and he has rendered advice and made representations to the Board concerning the restructuring, Mr. Slusher tells the Court. The Board depends on Mr. Miller, as Executive Vice Chairman, and his understanding of the company when making important tactical and strategic decisions regarding the restructuring, the Debtors maintain. About Erickson Retirement The Baltimore, Maryland-based Erickson Retirement Communities LLC owns 20 continuing care retirement communities in 11 states. Among Erickson's 20 communities, eight are completed, 11 are open although in construction, and one is in development. They have 23,000 residents in total. Erickson, along with affiliates, filed for Chapter 11 on Oct. 19, 2009 (Bankr. N.D. Tex. Case No. 09-37010). DLA Piper LLP (US) serves as counsel to the Debtors. BMC Group Inc. serves as claims and notice agent. Houlihan, Lokey, Howard & Zoukin, Inc., is also serving as investment and financial consultant. Alvarez & Marsal is serving as restructuring adviser. As of September 30, 2009, on a book value basis, ERC had approximately $2.7 billion in assets, including $2.2 billion of property and equipment, and $3.0 billion in liabilities. Liabilities include $195.8 million on the revolving credit, $347.5 million on construction credit, $64 million in accounts payable, $47.8 million in subordinate debt, and $475 million in purchase option deposits. Bankruptcy Creditors' Service, Inc., publishes Erickson Retirement Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Erickson Retirement Communities LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) EVANS INDUSTRIES: Adams & Reese Subpoena Quashed in Conflict Suit ----------------------------------------------------------------- Law360 reports that a magistrate judge has ruled that Adams & Reese LLP, embroiled in a conflict of interest case brought by Asset Funding Group LLC over an asset sale in the bankruptcy of Evans Industries LLC, cannot depose an erstwhile insurance broker who now manages the reorganized maker of promotional accessories. Headquartered in Harvey, Louisiana, Evans Industries, Inc. -- http://www.evansindustriesinc.com/-- manufactures and distributes steel drums. The Company filed for Chapter 11 protection on April 25, 2006 (Bankr. E.D. La. Case No. 06-10370). Eric J. Derbes, Esq., and Melanie M. Mulcahy, Esq., at The Derbes Law Firm, LLC, represent the Debtor. C. Davin Boldissar, Esq., at Locke Liddell & Sapp, LLP, represents the Official Committee of Unsecured Creditors. In its petition, Evans estimated having assets below $1 million and debts between $10 million and $50 million. EXTENDED STAY: 66 Affiliates' Schedules of Asses & Debts -------------------------------------------------------- Sixty-six affiliated debtors of Extended Stay Inc. disclosed assets ranging from zero to $369 million, and liabilities of up to $4 billion: Debtor Affiliate Assets Liabilities ---------------- ------------- -------------- ESA P Portfolio TXNC Properties LP $369,930,380 $4,099,849,448 ESA TX Properties LP $218,596,808 $4,099,849,448 ESH/Homestead Portfolio LLC $147,538,688 $4,099,849,448 ESA 2005 Portfolio LLC $137,262,979 $4,099,849,448 ESH/TX Properties LP $125,346,885 $4,099,849,448 ESA P Portfolio MD Trust $108,404,527 $4,099,849,448 ESA FL Properties LLC $97,601,401 $4,099,849,448 ESA MD Properties Business Trust $87,668,772 $4,099,849,448 ESA P Portfolio PA Properties LLC $85,336,692 $4,099,849,448 ESA Canada Properties Trust $73,354,816 $4,099,849,448 ESA Alaska LLC $72,779,072 $4,099,849,448 ESA Acquisition Properties LLC $68,307,847 $4,099,849,448 ESA P Portfolio Operating Lessee $41,819,452 $4,107,732,289 ESA PA Properties LLC $38,144,790 $4,099,849,448 ESH/TN Properties LLC $34,262,863 $4,099,849,448 ESA Operating Lessee Inc. $24,561,536 $4,099,849,448 ESA 2005-San Jose LLC $24,315,971 $4,099,849,448 ESA 2005-Waltham LLC $18,348,156 $4,099,849,448 ESA MN Properties LLC $17,128,079 $4,099,849,448 ESA UD Properties LLC $14,161,997 $8,500,000 Homestead Village LLC $12,715,473 $4,099,849,448 ESH/MSTX Property LP $7,149,883 $4,099,849,448 ESA Canada Operating Lessee Inc. $2,601,147 $4,099,849,448 ESA 2005 Operating Lessee Inc. $2,056,070 $4,099,849,448 ESA 2007 Operating Lessee Inc. $244,565 $8,500,000 ESA Canada Trustee Inc. $0 $4,099,849,448 ESA Canada Properties Borrower LLC $0 $4,099,849,448 ESA Canada Beneficiary Inc. $0 $4,099,849,448 ESA MD Borrower LLC $0 $4,099,849,448 ESA P Portfolio MD Borrower LLC $0 $4,099,849,448 ESA P Portfolio MD Beneficiary LLC $0 $4,099,849,448 ESH/Homestead Mezz 7 LLC $0 $400,000,000 ESA Mezz 7 LLC $0 $400,000,000 ESA P Mezz 7 LLC $0 $400,000,000 ESH/Homestead Mezz 6 LLC $0 $400,000,000 ESA Mezz 6 LLC $0 $400,000,000 ESA P Mezz 6 LLC $0 $400,000,000 ESA Mezz 5 LLC $0 $400,000,000 ESH/Homestead Mezz 5 LLC $0 $400,000,000 ESA P Mezz 5 LLC $0 $400,000,000 ESH/Homestead Mezz 4 LLC $0 $400,000,000 ESA P Mezz 4 LLC $0 $400,000,000 ESA Mezz 4 LLC $0 $400,000,000 ESH/Homestead Mezz 3 LLC $0 $400,000,000 ESA P Mezz 3 LLC $0 $400,000,000 ESA Mezz 3 LLC $0 $400,000,000 ESH/Homestead Mezz 2 LLC $0 $400,000,000 ESA Mezz 2 LLC $0 $400,000,000 ESA P Mezz 2 LLC $0 $400,000,000 ESH/Homestead Mezz LLC $0 $300,000,000 ESA Mezz LLC $0 $300,000,000 ESA P Mezz LLC $0 $300,000,000 ESH/Homestead Mezz 9 LLC $0 $200,000,000 ESA Mezz 9 LLC $0 $200,000,000 ESA P Mezz 9 LLC $0 $200,000,000 ESH/Homestead Mezz 8 LLC $0 $200,000,000 ESA Mezz 8 LLC $0 $200,000,000 ESA P Mezz 8 LLC $0 $200,000,000 ESH/Homestead Mezz 10 LLC $0 $195,455,540 ESA P Mezz 10 LLC $0 $195,455,540 ESA Mezz 10 LLC $0 $195,455,540 Extended Stay Hotels LLC $0 $0 ESA Management L.L.C. $0 $0 ESA Business Trust $0 $0 ESA MD Beneficiary LLC $0 $0 ESA P Portfolio Holdings LLC $0 $0 About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. For the year ending December 31, 2008, Extended Stay's audited financial statements show consolidated assets (including nondebtor affiliates) totaling approximately $7.1 billion and consolidated liabilities totaling approximately $7.6 billion. Consolidated revenues for the 12 months ending December 31, 2008 were approximately $1 billion. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). EXTENDED STAY: 66 Affiliates' Statements of Financial Affairs ------------------------------------------------------------- Sixty-six debtor subsidiaries of Extended Stay Inc. separately filed statements of financial affairs with the Court on Sept. 28, 2009. Twenty-four Extended Stay affiliates disclosed that they earned from the operation of their businesses during the two years before the Petition Date: Net Income (Net Loss) -------------------------------------- 01/01/09 - Debtor Entity 06/14/09 2008 2007 ------------- ---------- ------------ ----------- ESA P Portfolio TXNC Properties LP $16,251,029 $42,027,115 $42,929,434 ESA TX Properties LP $8,423,694 $23,352,661 $23,505,509 ESH/Homestead Portfolio LLC $8,467,357 $23,807,155 $25,795,471 ESA 2005 Portfolio LLC $4,101,380 $12,245,735 $13,107,172 ESH/TX Properties LP $9,120,661 $24,159,593 $23,529,772 ESA P Portfolio MD Trust $3,239,283 $8,344,230 $9,512,848 ESA FL Properties LLC $3,088,411 $7,817,561 $8,571,823 ESA MD Properties Business Trust $2,628,984 $6,547,920 $7,197,929 ESA P Portfolio PA Properties LLC $2,926,965 $8,184,856 $8,672,396 ESA Canada Properties Trust $2,229,807 $6,676,647 $5,991,277 ESA Alaska LLC $2,480,738 $7,391,603 $6,733,751 ESA Acquisition Properties LLC $2,327,796 $5,841,492 $7,997,995 ESA P Portfolio Operating Lessee Inc $179,730,845 $496,723,561 $533,250,730 ESA PA Properties LLC $1,296,297 $3,637,081 $4,054,432 ESH/TN Properties LLC $1,805,107 $5,870,497 $6,511,900 ESA Operating Lessee Inc. $96,371,796 $261,718,450 $281,363,262 ESA 2005-San Jose LLC $658,138 $2,119,810 $2,190,967 ESA 2005-Waltham LLC $362,248 $1,543,949 $1,589,647 ESA MN Properties LLC $509,423 $1,208,791 $1,758,600 ESA UD Properties LLC $500,656 $1,060,262 $698,566 ESH/MSTX Property LP $403,847 $1,077,613 $1,146,581 ESA Canada Operating Lessee Inc. $4,257,073 $12,974,007 $11,567,003 ESA 2005 Operating Lessee Inc. $6,615,169 $20,243,895 $19,480,084 ESA 2007 Operating Lessee Inc. $763,780 $1,984,915 $1,308,664 However, more than 40 Extended Stay affiliates disclosed that they did not earn income from the operation of their businesses within two years of the Petition Date. They are: ESA Canada Trustee Inc. ESA Canada Properties Borrower LLC ESA Canada Beneficiary Inc. ESA MD Borrower LLC ESA P Portfolio MD Borrower LLC ESA P Portfolio MD Beneficiary LLC ESH/Homestead Mezz 7 LLC ESA Mezz 7 LLC ESA P Mezz 7 LLC ESH/Homestead Mezz 6 LLC ESA Mezz 6 LLC ESA P Mezz 6 LLC ESA Mezz 5 LLC ESH/Homestead Mezz 5 LLC ESA P Mezz 5 LLC ESH/Homestead Mezz 4 LLC ESA P Mezz 4 LLC ESA Mezz 4 LLC ESH/Homestead Mezz 3 LLC ESA P Mezz 3 LLC ESA Mezz 3 LLC ESH/Homestead Mezz 2 LLC ESA Mezz 2 LLC ESA P Mezz 2 LLC ESH/Homestead Mezz LLC ESA Mezz LLC ESA P Mezz LLC ESH/Homestead Mezz 9 LLC ESA Mezz 9 LLC ESA P Mezz 9 LLC ESH/Homestead Mezz 8 LLC ESA Mezz 8 LLC ESA P Mezz 8 LLC ESH/Homestead Mezz 10 LLC ESA P Mezz 10 LLC ESA Mezz 10 LLC Extended Stay Hotels LLC ESA Management L.L.C. ESA Business Trust ESA MD Beneficiary LLC ESA P Portfolio Holdings LLC Homestead Village LLC Ten Extended Stay Entities reported that they earned income from sources other than employment or operation of business during the two-year period preceding the Petition Date. They are: * ESA Canada Properties Trust Year 2007 Interest Income $70,572 Year 2008 Interest Income $3,063 * ESA Acquisition Properties LLC Year 2008 Interest Income $488 Year 2009 Misc refunds $6,856 * ESA P Portfolio Operating Lessee Inc Year 2007 Interest Income $693,213 Year 2008 Interest Income $468,402 Year 2009 Interest Income $11,592 * ESA Operating Lessee Inc. Year 2007 Interest Income $165,081 Misc. Refunds $31,812 Year 2008 Construction Refund $34,223 Easement proceeds $155,834 Interest Income $104 Misc. Refunds $21,407 * ESA 2005-San Jose LLC Year 2008 Interest Income $163 * ESA MN Properties LLC Year 2008 Condemnation proceeds $16,500 * Homestead Village LLC Year 2007 Insurance Proceeds $34,266 Interest Income $336,459 Year 2008 Interest Income $160,818 Misc refunds $38,921 Year 2009 Construction Bonds $11,985 Interest Income $1,761 Misc Refunds $24,869 * ESA Canada Operating Lessee Inc Year 2007 Interest Income $63,962 Year 2008 Interest Income $31,856 YEar 2009 Interest Income $1,047 * ESA 2005 Operating Lessee Inc Year 2007 Interest Income $80,615 Year 2008 Vendor settlement $81,803 Year 2009 Interest Income $530 * ESA 2007 Operating Lessee Inc Year 2008 Interest income $7,423 Year 2007 Interest income $379 Six entities paid creditors within 90 days immediately before filing for bankruptcy protection. They are: Entity Details ------ ------- ESA P Portfolio Operating Paid $39,532,115 to HVM LLC for Lessee Inc. regular funding for accounts payable disbursement activity ESA Operating Lessee Inc. Paid $45,172,470 to HVM LLC for regular funding for accounts payable disbursement activity ESA UD Properties LLC Paid $71,651 to Bank of America Homestead Village LLC Paid an aggregate of $25,789,420, about $24.7 million of which was paid to HVM LLC for regular funding for accounts payable disbursement activity ESA Canada Operating Paid $22,761 to HVM LLC for regular Lessee Inc funding for accounts payable disbursement activity ESA 2005 Operating Paid $3,303,275 to HVM LLC for Lessee Inc. regular funding for accounts payable disbursement activity ESA 2007 Operating Paid $460,131 to HVM LLC for regular Lessee Inc. funding for accounts payable disbursement activity Homestead Village LLC also related that it paid an aggregate of $2,002,365 to certain firms for debt counseling or bankruptcy advice within one year of the Petition Date. The firms include Fried Frank Harris Shriver, Houlihan Lokey Howard & Zukin Inc., Kurtzman Carson Consultants LLC, Lazard Freres & Co LLC and Weil Gotshal & Manges LLP. Twenty five entities paid insider creditors these aggregate amounts within a year before the Petition Date: ESA P Portfolio TXNC Properties LP $3,863,000 ESA TX Properties LP $2,482,139 ESH/Homestead Portfolio LLC $13,131,177 ESA 2005 Portfolio LLC $692,698 ESH/TX Properties LP $12,223,519 ESA P Portfolio MD Trust $600,384 ESA FL Properties LLC $737,985 ESA MD Properties Business Trust $793,772 ESA P Portfolio PA Properties LLC $750,082 ESA Canada Properties Trust $584,206 ESA Alaska LLC $466,973 ESA Acquisition Properties LLC $293,309 ESA P Portfolio Operating Lessee Inc $201,708,453 ESA PA Properties LLC $138,597 ESH/TN Properties LLC $2,874,987 ESA Operating Lessee Inc. $112,826,190 ESA 2005-San Jose LLC $50,564 ESA 2005-Waltham LLC $30,289 ESA MN Properties LLC $101,049 ESA UD Properties LLC $121,683 Homestead Village LLC $1,196,966 ESH/MSTX Property LP $700,704 ESA Canada Operating Lessee Inc. $4,672,393 ESA 2005 Operating Lessee Inc. $7,237,529 ESA 2007 Operating Lessee Inc. $1,003,910 Sixteen Extended Stay affiliates also reported losses within two years of the Petition Date. They are: ESA P Portfolio TXNC Properties LP $1,138,293 ESA TX Properties LP $785,398 ESH/Homestead Portfolio LLC $269,355 ESA 2005 Portfolio LLC $115,827 ESH/TX Properties LP $266,511 ESA P Portfolio MD Trust $18,195 ESA FL Properties LLC $94,665 ESA MD Properties Business Trust $5,000 ESA P Portfolio PA Properties LLC $89,500 ESA Alaska LLC $15,718 ESA Acquisition Properties LLC $118,308 ESA PA Properties LLC $3,200 ESH/TN Properties LLC $12,390 ESA 2005-San Jose LLC $21,000 ESA MN Properties LLC $20,271 ESA UD Properties LLC $55,000 The books of the Extended Stay affiliates were kept or were in the possession of H.V.M. LLC and The Lighthouse Group within two years before the Petition Date. Full-text copies of the Extended Stay Affiliates' SOFAs are available for free at: http://bankrupt.com/misc/ESI_sofa_ESAFLProperties.pdf http://bankrupt.com/misc/ESI_sofa_ESAMDPropBusTrust.pdf http://bankrupt.com/misc/ESI_sofa_ESAPPortfolioPAProp.pdf http://bankrupt.com/misc/ESI_sofa_ESACanPropTrust.pdf http://bankrupt.com/misc/ESI_sofa_ESAAlaska.pdf http://bankrupt.com/misc/ESI_sofa_ESAAcquisitionProp.pdf http://bankrupt.com/misc/ESI_sofa_ESAPPortfolioOpLessee.pdf http://bankrupt.com/misc/ESI_sofa_ESAPAProperties.pdf http://bankrupt.com/misc/ESI_sofa_ESHTNProperties.pdf http://bankrupt.com/misc/ESI_sofa_ESAOperatingLessee.pdf http://bankrupt.com/misc/ESI_sofa_ESA2005SanJose.pdf http://bankrupt.com/misc/ESI_sofa_ESA2005Waltham.pdf http://bankrupt.com/misc/ESI_sofa_ESAMNProperties.pdf http://bankrupt.com/misc/ESI_sofa_ESAUDProperties.pdf http://bankrupt.com/misc/ESI_sofa_HomesteadVillage.pdf http://bankrupt.com/misc/ESI_sofa_ESHMSTXProperty.pdf http://bankrupt.com/misc/ESI_sofa_ESACanadaOpLessee.pdf http://bankrupt.com/misc/ESI_sofa_ESA2005Operating.pdf http://bankrupt.com/misc/ESI_sofa_ESA2007OpLessee.pdf http://bankrupt.com/misc/ESI_sofa_ESACanadaTrustee.pdf http://bankrupt.com/misc/ESI_sofa_ESACanPropBorrower.pdf http://bankrupt.com/misc/ESI_sofa_ESACanadaBeneficiary.pdf http://bankrupt.com/misc/ESI_sofa_ESAMDBorrower.pdf http://bankrupt.com/misc/ESI_sofa_ESAPPortfolioMDBorr.pdf http://bankrupt.com/misc/ESI_sofa_ESAPPortfolioMDBen.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomesteadMezz7.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz7.pdf http://bankrupt.com/misc/ESI_ESAPMezz7.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomesteadMezz6.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz6.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz6.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz5.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomestead http://bankrupt.com/misc/ESI_sofa_ESAPMezz5.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomesteadMezz4.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz4.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz4.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomesteadMezz3.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz3.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz3.pdf http://bankrupt.com/misc/ESI_ESHHomesteadMezz2.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz2.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz2.pdf http://bankrupt.com/misc/ESI_ESHHomesteadMezz.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomesteadMezz9.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz9.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz9.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomesteadMezz8.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz8.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz8.pdf http://bankrupt.com/misc/ESI_sofa_ESHHomesteadMezz10.pdf http://bankrupt.com/misc/ESI_sofa_ESAPMezz10.pdf http://bankrupt.com/misc/ESI_sofa_ESAMezz10.pdf http://bankrupt.com/misc/ESI_sofa_ExtendedStayHotels.pdf http://bankrupt.com/misc/ESI_sofa_ESAManagement.pdf http://bankrupt.com/misc/ESI_sofa_ESABusinessTrust.pdf http://bankrupt.com/misc/ESI_sofa_ESAMDBeneficiary.pdf http://bankrupt.com/misc/ESI_sofa_ESAPPortfolioHoldings.pdf About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. For the year ending December 31, 2008, Extended Stay's audited financial statements show consolidated assets (including nondebtor affiliates) totaling approximately $7.1 billion and consolidated liabilities totaling approximately $7.6 billion. Consolidated revenues for the 12 months ending December 31, 2008 were approximately $1 billion. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). EXTENDED STAY: Lichtenstein Appeals Decision on Line Trust Dispute ------------------------------------------------------------------ Lightstone Group LLC Chairman David Lichtenstein took an appeal to the U.S. District Court for the Southern District of New York of a Bankruptcy Court ruling requiring the transfer of a lawsuit filed against him by Line Trust Corporation Ltd. and Deuce Properties Ltd. Bankruptcy Judge James Peck for the Southern District of New York earlier ordered for the removal of the Lawsuit to the New York Supreme Court after determining that it is not a core proceeding. In a 20-page document, Judge Peck opined that the claim of Line Trust and Deuce Properties against Mr. Lichtenstein "does not arise in a case under the Bankruptcy Code" since it is a "claim by a non-debtor against a non-debtor involving guarantees." The Bankruptcy Court also ruled that the Debtors' motion to intervene in the lawsuit does not need to be considered in light of its ruling to transfer the lawsuit. Line Trust and Deuce Properties filed the lawsuit after Mr. Lichtenstein for allegedly failing to make a $100 million payment as guarantor under certain guaranty agreements. The Plaintiffs also accused Mr. Lichtenstein of being induced by lenders to push the Debtors into bankruptcy to leave junior loan holders out of the money, and that the lenders promised to indemnify him against $100 million in liabilities and provide a $5 million "litigation defense war chest" to resist potential claims from junior lenders. The lawsuit was initially filed in the Supreme Court but was moved to the Bankruptcy Court as a result of the Debtors' Chapter 11 filings. Line Trust and Deuce Properties, however, asked Judge Peck to transfer the case back to the Supreme Court on grounds that it is not related to the Debtors' bankruptcy and that they are merely seeking money damages for "pure state law claims." Earlier, Line Trust and Deuce Properties blocked the approval of Bank of America N.A. and U.S. Bank N.A.'s motion to dismiss the lawsuit, contending that they have sufficiently pleaded claims against the banks. BofA and U.S. Bank, meanwhile, countered that the Plaintiffs failed to plead an injury caused by the banks' alleged wrongful conduct which is an essential element of the plaintiffs' claims. About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. For the year ending December 31, 2008, Extended Stay's audited financial statements show consolidated assets (including nondebtor affiliates) totaling approximately $7.1 billion and consolidated liabilities totaling approximately $7.6 billion. Consolidated revenues for the 12 months ending December 31, 2008 were approximately $1 billion. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). FAIRPOINT COMMS: Has Interim Approval to Borrow $20 Million ----------------------------------------------------------- Bill Rochelle at Bloomberg News reports that FairPoint Communications Inc., the local exchange carrier with 1.7 million access lines that filed under Chapter 11 on Oct. 26, was given formal authorization for $20 million in interim financing on Oct. 28. A hearing will be held on Nov. 18 for final approval of $75 million in financing for the reorganization designed for conversion of $1.7 billion of debt into equity. Prepetition FairPoint reached terms of a comprehensive financial restructuring plan with lenders holding more than 50% of the outstanding debt under its secured credit facility. The plan is expected to reduce the Company's debt by $1.7 billion thereby providing a long-term solution for the Company's balance sheet. The Plan contemplates exchanging $2 billion under a credit agreement for 98 percent of the new stock, a $1 billion term loan, and cash in excess of $40 million. Unsecured creditors, if they accept the plan, are to have 2 percent of the new stock and warrants for 5 percent more. If they reject the plan, they receive nothing. About FairPoint Communications FairPoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- is an industry leading provider of communications services to communities across the country. FairPoint 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 symbols FRP and FRP.BC. Fairpoint and its affiliates filed for Chapter 11 on October 26, 2009 (Bankr. D. Del. Case No. 09-16335). Rothschild Inc. is acting as financial advisor for the Company; AlixPartners, LLP as the restructuring advisor; and Paul, Hastings, Janofsky & Walker LLP is the Company's counsel. BMC Group is claims and notice agent. As of June 30, 2009, Fairpoint reported $3.24 billion in total assets, $321.41 million in total current liabilities, $2.91 billion in total long-term liabilities, and $1.23 million in total stockholders' equity. Bankruptcy Creditors' Service, Inc., publishes Fairpoint Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fairpoint Communications Inc. and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FLETCHER-TERRY COMPANY: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: The Fletcher-Terry Company 65 Spring Lane Farmington, CT 06032 Bankruptcy Case No.: 09-23110 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Connecticut (Hartford) Debtor's Counsel: James Berman, Esq. Zeisler and Zeisler 558 Clinton Avenue P.O. Box 3186 Bridgeport, CT 06605 Tel: (203) 368-4234 Email: jberman@zeislaw.com Matthew K. Beatman, Esq. Zeisler and Zeisler 558 Clinton Avenue P.O. Box 3186 Bridgeport, CT 06605 Tel: (203) 368-4234 Email: MBeatman@zeislaw.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/ctb09-23110.pdf The petition was signed by Terry B. Fletcher, president and chairman of the Company. FOOTHILLS OF FERNLEY: Hires Belding Harris as Attorney ------------------------------------------------------ The U.S. Bankruptcy Court for the District of Nevada authorized Foothills of Fernley LLC to employ Belding Harris & Petroni Ltd. as attorney. The firm has agreed to, among other things, examine records and reports, prepare applications and proposed orders, and proofs of claim. The firm' professionals and their standard hourly rates: Stephen R. Harris, Esq. $400 Gloria M. Petroni, Esq. $370 Chris D. Nichols, Esq. $350 Paraprofessionals $195 The Debtor assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Based in Reno, Nevada, Foothills of Fernley LLC filed for Chapter 11 protection on Oct. 14, 2009 (Bankr. D. Nevada Case No. 09- 53614). In its petition, the Debtor listed assets between $10 million and $50 million, and $1 million and $10 million. FOOTHILLS OF FERNLEY: Section 341(a) Meeting Set for November 23 ---------------------------------------------------------------- The U.S. Trustee for Region 17 will convene a meeting of creditors of Foothills of Fernley on Nov. 23, 2009, at 2:00 p.m., 300 Booth Street, Room 2110 in Reno, Nevada. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. Based in Reno, Nevada, Foothills of Fernley LLC filed for Chapter 11 protection on Oct. 14, 2009 (Bankr. D. Nevada Case No. 09- 53614). In its petition, the Debtor listed assets between $10 million and $50 million, and $1 million and $10 million. FOREST CITY: S&P Puts 'B-' Rating on $200 Mil. Convertible Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' credit rating to the $200 million convertible notes due October 2016 issued by Forest City Enterprises Inc. (B+/Negative/--). At the same time, S&P assigned a recovery rating of '6' to this issue, indicating S&P's expectations for negligible recovery (0%-10%) in the event of default. The note issue carries a 5% coupon and a 27.5% conversion premium. Forest City will use proceeds from the offering to pay down its $750 million revolving credit facility ($192.1 million outstanding at Oct. 16, 2009), which matures March 2010, and possibly retire other debt obligations with earlier maturities, including some debt that is puttable to Forest City in 2011. The company also intends to use roughly 8%-10% of the proceeds to hedge against the expected ultimate share dilution. This new convertible note issue, in combination with several recent loan refinancings and extensions, reduces bank line usage in advance of credit facility renewal discussions, modestly lengthens the company's debt maturity schedule, and could ultimately result in modest deleveraging if the newly issued debt is eventually converted into common stock. S&P's ratings on the company acknowledge sufficient liquidity to meet funding needs through 2011, but S&P believes Forest City's higher leverage levels and large investment in currently non- income producing development projects will continue to weigh on presently weak debt coverage measures. Rating List Forest City Enterprises Inc. Credit rating B+/Negative Rating Assigned Forest City Enterprises Inc. $200M convertible notes due 2016 B- Recovery rating 6 FORUM HEALTH: Court to OK Interim CEO Hiring If Filings Complete ---------------------------------------------------------------- George Nelson at Business Journal Daily reports that U.S. Bankruptcy Judge Kay Woods said that she would approve Forum Health Inc.'s hiring of an interim CEO, but not until attorneys submit a supplemental affidavit detailing any potential conflicts of interest involving FTI Consulting Inc., the firm Forum wants to contract with for the services of Charles Neumann as interim CEO. According to Business Journal, Judge Woods said that she is concerned that the disclosure of connections wasn't included with Forum Health's motion and questioned why it wasn't part of the filing. Forum Health's lawyers, Shawn Riley, said that since Forum Health isn't hiring Mr. Neumann under a professional services agreement but instead contracting with FTI as "an employment agency," he didn't think the disclosure was required, although providing the affidavit wouldn't be a problem, Business Journal states. Mr. Neumann "was being employed as a professional person," and so the disclosure rule applied, Business Journal says, citing Judge Woods. Based in Warren, Ohio, Forum Health -- http://www.forumhealth.org/ -- offers health care services. The primary service area consists of the northeast Ohio counties of Mahoning, Trumbull and Columbiana; and northeast Ohio counties of Ashtabula, Geauga and Portage and the Pennsylvania counties of Mercer and Lawrence. Forum Health and its affiliates filed for Chapter 11 protection on March 16, 2009 (Bankr. N.D. Ohio Lead Case No. 09-40795). Paul W. Linehan, Esq., and Shawn M Riley, Esq., at McDonald Hopkins LLC, serve as lead counsel to the Debtors. The Debtors have also tapped Michael A. Gallo, Esq. at Nadler Nadler & Burdman Co., LPA as co- counsel; Kurtzman Carson Consultants LLC as claims, noticing and balloting agent; and Huron Consulting Services LLC as financial advisors. Alston & Bird LLP represents the official committee of unsecured creditors formed in the Chapter 11 cases. At the time of its filing, Forum Health estimated that it had assets and debts both ranging from $100 million to $500 million. GENCORP INC: Moody's Give Positive Outlook, Affirms 'B3' Rating --------------------------------------------------------------- Moody's Investors Service has changed the rating outlook of GenCorp, Inc. to positive from negative, while affirming all of the company's existing ratings, including the company's B3 Corporate Family Rating and Caa1 Probability of Default Rating. The change in outlook is driven by GenCorp's improved free cash generation and stronger liquidity position which should enable the company to address the potential put on 1/16/2010 of its $125 million 4% convertible subordinated notes. This reduces a significant near term risk that has weighed on the rating, and in conjunction with further balance sheet strengthening and continuation of recent improvement in revenue and earnings could lead to a rating upgrade. With the company's cash position, $158 million as of August 31, 2009 and expected to increase by fiscal year end November, Moody's now believes the company has improved opportunity and leverage to amend its senior credit facility and to refinance the subordinated debt should this be the company's desired course of action. The change to a positive outlook incorporates this improved state as well as expectation that the company should continue to show at least modest operating improvement in the coming year, though recognizes the budgetary pressures in Washington, D.C. Despite the improved operating results, Moody's believes an upgrade to the Corporate Family Rating requires further clarity as to planned steps to improve the capital structure and either increase the equity base or stretch out debt maturities. Notably the 2.25% $146.4 million of convertible subordinated debt also has a possible cash put coming in November 2011. While GenCorp's stock price has shown much improvement over the last six months, it still remains far short of the conversion price (for both convertible issues). Accordingly, since it is not clear that sufficient cash flow from operations can be generated in the period remaining to the November 2011 put, Moody's believes that some form of refinancing will be necessary to address it and possibly the 9.5% $97.5 million senior subordinated notes due 2013. These ratings have been affirmed: * Corporate Family Rating, B3; * Probability of Default Rating, Caa1; * Senior secured credit facilities, Ba3 (LGD1, 5%); * Senior subordinated notes, B1 (LGD2, 18%); * Convertible subordinated notes, Caa2 (LGD4, 60%). The last rating action was on January 16, 2009, when GenCorp, Inc.'s Corporate Family Rating and Probability of Default Rating were downgraded to B3 and Caa1 respectively. GenCorp Inc., headquartered in Rancho Cordova, CA, through its Aerojet-General subsidiary produces propulsion systems and products used in the aerospace and defense industries and has a real estate segment whose activities relate to re-zoning, entitlement, sale, and leasing of the Company's excess real estate assets in the Sacramento, CA area. Revenue for the last twelve month period ended 8/31/09 was approximately $754 million. GENERAL MOTORS: AP Services Reports on Fees for June-August ----------------------------------------------------------- AP Services, LLC, as crisis managers in the Debtors' cases, submitted to the Court a report covering the compensation earned and expenses incurred in the Chapter 11 cases for the period from June 1 to August 31, 2009. According to Chief Restructuring Officer Albert A. Koch, APS' professionals performed services behalf of the Debtors during these two discrete time periods: (1) the Pre-Closing Period from June 1 to July 9, 2009; and (2) the Post-Closing Period from July 10 to August 31, 2009. During the Pre-Closing Period, APS assisted the Debtors with managing the transition into Chapter 11, complying with the duties and obligations of debtors-in-possession imposed by the Bankruptcy Code, Bankruptcy Rules and the Office of the United States Trustee, and effectuating the sale of substantially all their assets pursuant to Section 363 of the Bankruptcy Code. Services rendered by APS in the Post-Closing Period include managing all aspects of the Debtors' day-to-day business operations and overseeing the Debtors' Chapter 11 cases. A summary of APS' Services during the two periods is available for free at http://bankrupt.com/misc/APS_1stQServicesSummary.pdf Mr. Koch disclosed that in rendering services to the Debtors, APS invoiced a total amount of $23,056,025 for compensation and expenses in relation to their North American and European operations. According to Mr. Koch, the Retention Order approved APS' application of the Retainer postpetition to certain fees earned and expenses incurred prepetition, which were in excess of amounts estimated within May 2009 invoices. Based on recently finalized billing and expense records for the pre-petition period, the True-Up amount is $507,130. After application of the Retainer to the True-Up Amount, the remaining balance is $19,492,869, Mr. Koch noted. Mr. Koch also provided a summary of the services it rendered to the Debtors during the First Quarter of the Chapter 11 cases, indicating APS' professionals and their compensation, which aggregated $23,159,018 as of August 31, 2009. The firm incurred expenses totaling $1,171,226 within the First Quarter, Mr. Koch reported. A full-text copy of the Compensation and Expenses Report is available for free at: http://bankrupt.com/misc/APS_1stQFees&Expenses.pdf Objections to APS' Compensation and Expenses Report, if any, must be than November 12, 2009. Absent timely filed objections, APS' fees and expenses for the First Quarter will be deemed to have satisfied the reasonableness standards of Sections 330 and 331 of the Bankruptcy Code. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). GENERAL MOTORS: Jenner & Block to Provide Services to New GM ------------------------------------------------------------ Motors Liquidation Co., formerly General Motors Corp., previously hired Jenner & Block LLP as counsel in its Chapter 11 cases. In his second supplemental affidavit, Daniel R. Murray, Esq., a partner of Jenner & Block LLP, in Chicago, Illinois, tells the Court that General Motors LLC wishes to engage his firm to continue to perform professional services relating to the ongoing enterprise that will serve to enhance the value of GM LLC and, thereby, inure to the benefit of the Debtors as the owners of 10% of the equity interests in General Motors LLC and warrants to acquire additional equity. Jenner & Block also would continue to serve as special counsel for the Debtors with respect to certain matters pursuant to Section 327(e) of the Bankruptcy Code. GM LLC would be responsible for the costs and expenses of its engagement of Jenner & Block. The principal matters as to which Jenner & Block has performed services relating to GM LLC in connection with the consummation of the 363 Transaction as well as those areas where it is contemplated that Jenner & Block will continue to perform legal services to GM LLC in the future are: A. Services Related to Consummation of 363 Transaction * Restructuring of certain equipment leases which may be assigned to and assumed by, and for the benefit of, GM LLC; B. Ongoing Services Projected to be Provided to GM LLC * General corporate law and securities law advice, including counsel in connection with GM LLC's public disclosure obligations, potential holding company reorganization and potential funding of pension plans; * Assistance with certain real estate matters, including negotiations regarding new and amended leases to be entered into by GM LLC; * Certain litigation matters, including government investigations and product liability suits, in which GM LLC directly or indirectly is alleged to be liable or in which current or former employees and officers of GM LLC and/or the Debtors are witnesses; and * Other matters specifically requested by GM LLC from time to time. Further, in light of the closing of the 363 Transaction and the completion of Jenner & Block's substantial role in that process, Jenner & Block and the Debtors have agreed that Jenner & Block's post-closing representation of the Debtors under Section 327(e) will be limited to: * Specific bankruptcy matters for which Weil, Gotshal & Manges LLP cannot represent the Debtors because of a conflict; * Certain product liability suits retained by the Debtors, disputes with respect to equipment financing, and contract and lease rejections and related negotiations; and * Any other matters as the Debtors may specifically request during the pendency of the chapter 11 cases for which WGM is not advising the Debtors. Mr. Murray continues to declare that Jenner & Block will not represent GM LLC in litigation where the interest of GM LLC is directly adverse to the Debtors with respect to specific matters on which Jenner & Block is employed. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). GENERAL MOTORS: Nine Directors Report Ownership of MLCO Securities ------------------------------------------------------------------ In separate filings with the Securities and Exchange Commission dated October 22, 2009, nine directors and officers of Motors Liquidation Company disclosed that they initially do not own any securities of Motors Liquidation: * James E. Selzer * Edward J. Stenger * Wendell H. Adair, Jr. * Ashley K. Braden * Stephen H. Case * James P. Holden * Alan M. Jacobs * Alan C. Johnson * Albert A. Koch About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). GEORGES MARCIANO: GUESS? Founder Sent to Chapter 11 by Ex-Staff --------------------------------------------------------------- According to Law360, three of the five former employees of Georges Marciano who won a $370 million libel judgment against him in July have filed an involuntary bankruptcy petition for the Guess Inc. co-founder in an effort to claim their $95.3 million share of the pot. Guess? Inc. (NYSE: GES) -- http://www.guessinc.com/-- designs, markets, distributes and licenses a lifestyle collection of contemporary apparel, accessories and related consumer products. At May 5, 2007, the company operated 336 retail stores in the United States and Canada. The company also distributes its products through better department and specialty stores around the world, including the Philippines, Hungary and the Dominican Republic. GGNSC HOLDINGS: Moody's Affirms Corporate Family Rating at 'B2' --------------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family and Probability of Default ratings of GGNSC Holdings, LLC. At the same time, Moody's revised the ratings on the first lien senior secured credit facility to Ba2 from Ba3. The revision reflects the reduced size of the first lien credit facility given a number of prepayments on the term loan made over the last several years. This change is in accordance with the application of Moody's Loss Given Default Methodology. The rating on the second lien facility is unchanged at B3. The outlook remains stable. The B2 Corporate Family Rating is supported by GGNSC's large scale and broad geographic footprint within the US. The ratings are also supported by favorable demographics and the relative stability of demand for GGNSC's long-term care and therapy services. While the skilled nursing business has made progress in improving case mix and revenue per patient day, gains have been largely offset by softness in occupancy rates. Further, the company's free cash flow remains minimal relative to adjusted debt, due in part to the considerable level of capital expenditures. Moody's believes GGNSC's free cash flow will remain constrained for the foreseeable future as the company upgrades its properties to be more competitively positioned to attract higher acuity, more profitable patients. The ratings are also constrained by the company's financial leverage, which when considering the $1.3 billion of CMBS financing, remains considerable. Ratings affirmed: -- Corporate Family Rating, B2, -- Probability of Default Rating, B2, -- $100 million senior secured second lien term loan, due 2011, To B3, LGD4, 59% from B3, LGD4, 68% Ratings Revised: -- $50 million senior secured revolving credit facility, due 2011, to Ba2, LGD2, 20% from Ba3, LGD2, 26% -- $213 million senior secured term loan, due 2011, to Ba2, LGD2, 20% from Ba3, LGD2, 26% -- The outlook for the ratings is stable. The last rating action was September 27, 2006, when Moody's upgraded the credit facility ratings in accordance with the Loss Given Default Methodology. GGNSC's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record of tolerance for risk. These attributes were compared against other issuers both within and outside of GGNSC's core industry and GGNSC's ratings are believed to be comparable to those other issuers of similar credit risk. GGNSC is a leading national provider of long-term care services. As of September 30, 2009, GGNSC operated 245 nursing facilities, 14 assisted living centers, and 65 hospice and six home health locations. In addition, through its subsidiaries, GGNSC operates a rehabilitation therapy company, and an administrative services company, as well as certain other ancillary businesses. For the twelve months ended September 2009, GGNSC reported revenues of approximately $2.2 billion. GIGABEAM CORP: Sold to Lenders on $6.1 Million Credit Bid --------------------------------------------------------- GigaBeam Corp. was authorized on Oct. 27 to sell assets to secured lenders in exchange for $6.1 million in debt and payment of the cost of curing contract defaults. The Debtor agreed to sell all direct or indirect, right, title and interest of seller in and to the tangible and intangible assets, properties, rights, claims and contracts related to the business. Durham, North Carolina-based GigaBeam Corporation provides wireless communication equipment. It filed for Chapter 11 on Sept. 2, 2009 (Bank. D. Del. Case No. 09-13113). Carl D. Neff, Esq., Daniel K. Astin, Esq. and Mary E. Augustine, Esq. at Ciardi Ciardi & Astin represent the Debtor in its restructuring effort. GK ELEVEN: Section 341(a) Meeting Slated for November 30 -------------------------------------------------------- The U.S. Trustee for Region 4 will convene a meeting of creditors of GK Eleven LLC on Nov. 30, 2009, at 09:00 a.m., 6305 Ivy Lane, Sixth Floor in Greenbelt, Maryland. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. Based in Ocean City, Maryland, GK Eleven LLC filed for Chapter 11 protection on October 15, 2009 (Bankr. D. Md. Case No. 09-29800). In its petition, the Debtor listed both assets and debts between $10 million and $50 million. GK ELEVEN: Selects Russack Associates as Counsel ------------------------------------------------ GK Eleven LLC asks the U.S. Bankruptcy Court for the District of Maryland for permission to employ Russack Associates LLC as its counsel. The firm has agreed to, among other things: a) legal advice in the continued possession and management of its property; b) prepare Statement of Financial Affairs, Schedules, Statement of Executory Contracts and other statements and schedules required by the Bankruptcy Code, Bankruptcy Rules or Local Bankruptcy Rules; and c) represent the Debtor, as Debtor-in Possession, in connection with any proceedings for relief from stay which may be instituted in this Court. The firm's standard hourly rates for professionals: Senior Attorney $375 Associate Attorney $275 Paralegal $150 The Debtor assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Based in Ocean City, Maryland, GK Eleven LLC filed for Chapter 11 protection on October 15, 2009 (Bankr. D. Md. Case No. 09-29800). In its petition, the Debtor listed both assets and debts between $10 million and $50 million. GMAC INC: Pay Czar Raises Regular Salaries ------------------------------------------ David Enrich and Deborah Solomon at The Wall Street Journal report that the U.S. Treasury Department pay czar Kenneth Feinberg substantially increased regular salaries, after disclosing last week sharp cuts in total compensation at the finance and auto companies under his control. Mr. Feinberg oversees these firms that accepted bailout packages: -- American International Group Inc., -- Citigroup Inc., -- Bank of America Corp., -- General Motors Corp., -- GMAC Financial Services, -- Chrysler Group, and -- Chrysler Financial. According to The Journal, Mr. Feinberg decided last week that 136 employees and executives working at the seven companies will earn much less this year than in 2008, even after accounting for the rise in regular salaries. The Journal states that Mr. Feinberg then increased base salaries at companies when the banks complained. Mr. Feinberg, says The Journal, adjusted base salaries for the bulk of those employees, in some cases boosting them by hundreds of thousands of dollars. The Journal notes that on average, base salaries climbed to $437,896 per year as a result of Mr. Feinberg's review, compared with $383,409 previously, a 14% increase. The Journal states that of the 136 employees, about 89 saw their base salaries increase. GMAC Financial Services -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a bank holding company with operations in North America, South America, Europe and Asia- Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of December 31, 2008, the company had $189 billion in assets and serviced 15 million customers around the world. GMAC is the biggest lender to GM's 6,500 dealers nationwide, most of which get the financing they need to operate and buy vehicle inventory from the automaker, CNNMoney.com notes. GMAC Financial Services is wholly owned by GMAC LLC. Cerberus Capital Management LP led a group of investors that bought a 51% stake in GMAC LLC from General Motors Corp. in December 2006 for $14 billion. On December 24, 2008, GMAC Financial Services' application to become a bank holding company under the Bank Holding Company Act of 1956, as amended, was approved by the Board of Governors of the Federal Reserve System. In addition, GMAC Bank received approval from the Utah Department of Financial Institutions to convert to a state bank. * * * As reported in the Troubled Company Reporter on May 5, 2009, Standard & Poor's Ratings Services maintains its CCC/Negative/C rating on GMAC LLC despite the Company's announcement that it entered into an agreement with Chrysler Financial Services Americas LLC to provide future automotive financing products and services to Chrysler dealers and customers. GREATER SOUTHEAST: D.C. Cir. Leaves Fee Settlement Undisturbed -------------------------------------------------------------- In 1999, Greater Southeast Community Hospital Foundation, Inc., and three affiliates filed Chapter 11 petitions (Bankr. D.C. Case No. 99-1159). On October 23, 2001, the bankruptcy court entered an order confirming the debtors' bankruptcy plan. The Plan established a three-member "Plan Committee" consisting of Eaton Vance representing bondholders, Stanley Zupnik representing creditor Welcome Homes, Inc., and Elloitt R. Wolff representing creditor Advantage Health Plan Inc. The Plan also provided for a "Plan Agent," which position was filled by Patrick J. Potter, Esq., at Pillsbury Winthrop Shaw Pittman LLC. Pillsbury acted as counsel for both the Plan Committee and the Plan Agent. Eaton Vance resigned from the Plan Committee in June 2007. On August 3, 2007, Mr. Potter and Pillsbury Winthrop resigned and asked the bankruptcy court to approve payment of their fees. In late November, 2007, Mr. Zupnik -- with the knowledge of the Plan Committee members and the Plan Committee's new counsel -- offered to settle the fee dispute with Pillsbury for $100,000. 391 B.R. at 529. In early December 2007, Plan Committee counsel met with Pillsbury to discuss a settlement. Id. at 529-30. According to Plan Committee counsel, the parties reached a settlement and Plan Committee counsel agreed to draft a settlement agreement and a motion to be filed pursuant to Bankruptcy Rule 9019. Advantage disputed that the Plan Committee authorized a settlement. Id. On December 7, 2007, the Plan Committee moved to dismiss Mr. Potter's motion for fees and expenses. Then, on December 13, 2007, counsel for the Plan Committee filed emergency motions to withdraw because of a conflict with the Plan Committee and, accordingly, to continue the trial on the Pillsbury settlment, which had been scheduled to begin on January 8, 2008. The bankruptcy court immediately scheduled a hearing on the motions for December 14, 2007. Mr. Wolff responded by letter to the court that he would be unable to attend the December hearing "because of an essential commitment made four months ago" but he supported the Plan Committee counsel's motions to withdraw and to continue the trial and the Plan Committee's motion to dismiss Pillsbury's motion for fees and expenses. Id. at 530. At the December 14, 2007, hearing, the court directed the withdrawing Plan Committee counsel and Potter to file a notice of settlement of the fee dispute and a motion for approval thereof and scheduled a settlement approval hearing for December 21, 2007, with a deadline of 5:00 p.m. on December 19 for filing objections to the settlement. A notice of the hearing was electronically filed after the hearing and a copy was sent to Mr. Wolff via e- mail. In accordance with the court's directive, on December 17 the Plan Committee filed a consent motion (purportedly among the Plan Committee, Mr. Potter and Pillsbury) seeking approval of the settlement. The following day, the bankruptcy court issued an order finding that "a settlement was reached among the Plan Committee, [Pillsbury] and [Mr.] Potter, and that such settlement included all of the necessary terms for an enforceable settlement agreement" and that "[n]o evidence was presented that the Plan Committee reached a decision that the Plan Committee should not proceed with the settlement or that the documents that have been drafted and exchanged among the parties . . . fail to reflect the terms of the settlement." Accordingly, the order deferred disposition of the emergency motions for withdrawal and continuance pending resolution of the Rule 9019 motion and again provided notice of the December 21 hearing and the December 19 objection deadline. On December 18, 2007, Advantage submitted an objection to the settlement signed by Mr. Wolff. The Objection asserted that Advantage had not approved the settlement as required, the bankruptcy hearing schedule "operated to preclude Advantage from participating in the recent and critical judicial deliberations in th[e] litigation to the prejudice of Advantage and of the other Unsecured Creditors" and there had not been "full and fair disclosure" of the settlement to creditors. On December 20, 2007, Pillsbury filed a response and motion to strike the Objection on the ground that Mr. Wolff was not a licensed lawyer and therefore could not represent Advantage. The next morning, the court issued an order directing that "the objection of Advantage [be] stricken in its entirety because it was not filed by a licensed attorney authorized to practice before the Court." The held a hearing on December 21, 2007, and approved the settlement. Advantage and Mr. Wolff filed a notice of appeal, and the District Court affirmed the Bankruptcy Court's orders. 391 B.R. 521. Advantage and Mr. Wolffe appealed again to the United States Court of Appeals for the D.C. Circuit. In a decision issued on October 27, 2009, WestLaw reports, Circuit Judge Karen LeCraft Henderson affirmed the lower court decisions and held that (1) striking objection was warranted, since Mr. Wolff was not a licensed attorney authorized to practice before the Bankruptcy Court, and (2) Mr. Wolff lacked prudential standing to appeal the settlement approval order. HAWKVIEW ESTATES LLC: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Hawkview Estates, LLC 253 Main Street Nashua, NH 03060 Bankruptcy Case No.: 09-14116 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of New Hampshire Live Database (Manchester) Judge: J. Michael Deasy Debtor's Counsel: Robert L. O'Brien, Esq. DeBruyckere Roth & Associates, PLLC 231 Sutton Street, Suite 1B North Andover, MA 01845 Tel: (603) 459-9965 Fax: (603) 250-0822 Email: robjd@mail2firm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Company says it does not have unsecured creditors who are non insiders when they filed their petition. The petition was signed by Vatche Manoukian, managing member of the Company. HEARTHSIDE HOMES INC: Case Summary & 25 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Hearthside Homes, Inc. 6 Executive Circle, Suite 250 Irvine, CA 92614 Bankruptcy Case No.: 09-21717 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Central District of California (Santa Ana) Debtor's Counsel: Joshua M. Mester, Esq. 865 S Figueroa St., Ste. 2900 Los Angeles, CA 90017 Tel: (213) 694-1200 Fax: (213) 694-1234 Email: mesterj@hbdlawyers.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,000,001 to $500,000,000 A full-text copy of the Debtor's petition, including a list of its 25 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-21717.pdf The petition was signed by Raymond J. Pacini, CEO of the Company. HELLER EHRMAN: To Seek Approval of Disc. Statement on Nov. 9 ------------------------------------------------------------ Heller Ehrman, LLP, filed with the U.S. Bankruptcy Court for the Northern District of California a Joint Plan of Liquidation and an explanatory disclosure statement. The Debtor will seek approval of the Disclosure Statement on November 9. It will begin soliciting votes on the Plan from impaired creditors as soon as approval of the Disclosure Statement is obtained. According to the Disclosure Statement, the Plan provides that the Liquidating Debtor will continue to wind down its affairs and make distributions to creditors. Administrative claimants, priority claimants and secured creditors will recover 100 cents on the dollar. Secured lenders Bank of America and Citibank will be paid in full by applying their cash collateral to effect a payment of the principal and interest owed to them. Holders of allowed priority employee claims will receive payment on the effective date of the Plan or in the ordinary course. Holders of unsecured claims in Class 5 will be paid from available cash -- in an undisclosed amount -- at "the times as is reasonably prudent." Holders of unsecured claims estimated to range from $97 to $115 million will recover 20% to 60% of their allowed claims. The estimated dividend is based on projected litigation recoveries. The actual dividend could be less than 20%, or if the litigations are extremely successful, could be higher than 60%. To the extent that all unsecured claimants have been paid in full, including postpetition interest on the allowed claim at the annual rate of 5% per annum, the remaining funds will be available for disbursement to interest holders under Class 6. On the Effective Date, the interest holders will have no ability to direct or control the affairs of the Liquidating Debtor, but will retain their status as partners of the Liquidating Debtor. A full-text copy of the Disclosure Statement is available for free at http://researcharchives.com/t/s?47cf A full-text copy of the Joint Plan of Liquidation is available for free at http://researcharchives.com/t/s?47ce About Heller Ehrman Headquartered in San Francisco, California, Heller Ehrman, LLP LP -- http://www.hewm.com/-- was an international law firm of more than 730 attorneys in 15 offices in the United States, Europe, and Asia. The firm filed a voluntary petition under Chapter 11 of the Bankruptcy Code on December 28, 2008 (Bankr. N.D. Calif., Case No. 08-32514). Members of the firm's dissolution committee led by Peter J. Benvenutti approved a plan dated September 26, 2008, to dissolve the firm. The Hon. Dennis Montali presides over the case. John D. Fiero, Esq., and Miriam Khatiblou, Esq., at Pachulski, Stang, Ziehl, Young and Jones, represent the Debtors as counsel. Thomas A. Willoughby, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi LLP, represents the official committee of unsecured creditors of the Debtor. The firm listed assets and debts between $50 million and $100 million each in its bankruptcy petition. According to reports, the firm still has roughly $63 million in assets and 54 employees at the time of its filing. HHI CHANDLER LLC: Case Summary & 25 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: HHI Chandler, L.L.C. 6 Executive Circle, Suite 250 Irvine, CA 92614 Bankruptcy Case No.: 09-21718 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Central District of California (Santa Ana) Debtor's Counsel: Joshua M. Mester, Esq. 865 S Figueroa St., Ste. 2900 Los Angeles, CA 90017 Tel: (213) 694-1200 Fax: (213) 694-1234 Email: mesterj@hbdlawyers.com Estimated Assets: $0 to $50,000 Estimated Debts: $100,000,001 to $500,000,000 A full-text copy of the Debtor's petition, including a list of its 25 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-21718.pdf The petition was signed by Raymond J. Pacini, CEO of the Company. HHI CHINO II LLC: Case Summary & 25 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: HHI Chino II, L.L.C. 6 Executive Circle, Suite 250 Irvine, CA 92614 Bankruptcy Case No.: 09-21719 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Central District of California (Santa Ana) Debtor's Counsel: Joshua M. Mester, Esq. 865 S Figueroa St., Ste. 2900 Los Angeles, CA 90017 Tel: (213) 694-1200 Fax: (213) 694-1234 Email: mesterj@hbdlawyers.com Estimated Assets: $0 to $50,000 Estimated Debts: $100,000,001 to $500,000,000 A full-text copy of the Debtor's petition, including a list of its 25 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-21719.pdf The petition was signed by Raymond J. Pacini, CEO of the Company. INDIAN SADDLE LCC: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Indian Saddle, LCC 1580 Brockton Lane Winston Salem, NC 27106 Bankruptcy Case No.: 09-11186 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Western District of North Carolina (Asheville) Judge: George R. Hodges Debtor's Counsel: Edward C. Hay Jr., Esq. Pitts, Hay & Hugenschmidt, P.A. 137 Biltmore Avenue Asheville, NC 28801 Tel: (828) 255-8085 Fax: (828) 251.2760 Email: ehay@phhlawfirm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 According to the schedules, the Company has assets of $1,772,200, and total debts of $991,450. 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/ncwb09-11186.pdf The petition was signed by Pepper Quenten Rodgers, member/manager of the Company. INTEGRATED TECH: Creditor's Consequential Damage Claim Allowed -------------------------------------------------------------- WestLaw reports that damages to which a creditor was entitled under New Mexico law based on a prepetition determination by a state court that a Chapter 11 debtor had breached a contract to install functioning computer and telephone systems for the creditor's business, for purposes of calculating the creditor's allowable claim against the Chapter 11 estate, was the amount that the creditor had paid to other companies that corrected problems with the computer and telephone systems installed by the debtor, less any amounts paid to these other companies for "litigation services" or services unrelated to correcting the debtor's work, less any amounts that the creditor saved by terminating its contract with the debtor before the full contract price had been paid, plus any consequential damages that the creditor incurred as a result of having to pay employees to perform inventory and accounting services manually due to its not having a functioning computer system. However, these consequential damages did not include wages paid to employees by companies under the same common ownership as the creditor, absent evidence that the creditor was obligated to reimburse its sister companies for such expenditures. In re Integrated Technology Solutions, Inc., --- B.R. ----, 2009 WL 3031415 (Bankr. D. N.M.) (Jacobvitz, J.). Integrated Technology Solutions, Inc., a computer consulting and engineering business that provides a range of computer services to its clients, including the purchase, installation, configuration, maintenance, and upgrade of computer hardware and software, filed a voluntary Chapter 11 petition (Bankr. D. N.M. Case No. 08-13832) on Nov. 10, 2008. A copy of the Debtor's chapter 11 petition is available at http://bankrupt.com/misc/nmb08-13832.pdfat no charge. INTERMET CORP: Role of Lender Liquidating Trustee Clarified ----------------------------------------------------------- The Hon. Kevin J. Gross of the U.S. Bankruptcy Court for the District of Delaware clarified the confirmation order of the Chapter 11 Plan of Intermet Corp. and its debtor-affiliates. Huron Consulting Group, through its operating affiliate Huron Consulting Services, LLC and acting liquidating trustee for the Intermet Lender Liquidating Trust DST sought clarification of the order to implement and fully consummate the Plan. The Court said that the Huron will, among other things: -- authorized to act on behalf of the Lender Liquidating Trust as the Lender Liquidating Trustee and possesses the rights and benefits afforded by the Operative Lender Liquidating Trust Agreement, the Plan, the Confirmation Order and the Modification Order; -- deemed to have automatically transferred to the Lender Liquidating Trust all of their right, title and interest in and all of the additional Lender Liquidating Trust Assets and Wind Down Cash, subject only to the allowed claims of the applicable Liquidating Trust Beneficiaries, and the reasonable fees and expenses; -- authorized to sell any portion of the Lender Liquidating Trust Assets, free and clear of claims and liens. The proceeds of the sale will be paid to the Lender Liquidating Trustee, on behalf of the Lender Liquidating Trust. About Intermet Corp. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The Company and its debtor- affiliates filed for Chapter 11 protection on August 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as the Debtors' claims, notice and balloting agent. An official committee of unsecured creditors has been formed in this case. In its petition, Intermet Corp. listed assets of $50 million to $100 million and debts of $100 million to $500 million. This is the Debtors' second bankruptcy filing. Intermet Corp., along with its debtor-affiliates, filed for Chapter 11 protection on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represented the Debtors. In their previous bankruptcy filing, the Debtors listed $735,821,000 in total assets and $592,816,000 in total debts. Intermet Corporation emerged from its first bankruptcy filing in November 2005. INTERMET CORP: Sells Palmyra & Monroe City Plants ------------------------------------------------- Brent Engel at Hannibal Courier-Post reports that Continental Castings LLC has acquired two Intermet Corp. plants in Palmyra and Monroe City. Terms were not disclosed, according to Courier-Post. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The Company and its debtor- affiliates filed for Chapter 11 protection on August 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as the Debtors' claims, notice and balloting agent. An official committee of unsecured creditors has been formed in this case. In its petition, Intermet Corp. listed assets of $50 million to $100 million and debts of $100 million to $500 million. This is the Debtors' second bankruptcy filing. Intermet Corp., along with its debtor-affiliates, filed for Chapter 11 protection on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represented the Debtors. In their previous bankruptcy filing, the Debtors listed $735,821,000 in total assets and $592,816,000 in total debts. Intermet Corporation emerged from its first bankruptcy filing in November 2005. INTERPUBLIC GROUP: Fitch Comments on Third Quarter Earnings ----------------------------------------------------------- Interpublic Group of Companies, which is rated 'BB+' with a Positive Outlook by Fitch Ratings, has released earnings. As expected, third quarter revenues were down (18%), driven by organic revenue decline of 14.2%. While the top line performance has been slightly worse than Fitch expected, cost cutting initiatives (particularly on office and general) have been aggressive enough to maintain EBITDA margin contractions within Fitch's expectation of around 200 basis points. The company has aggressively cut cost in both salaries (headcount down 11% with salaries expense down 6.5% organically year to date) and office and general (down 13.4% organically YTD). This attention to margins has helped keep credit measures in line with IPG's rating and outlook. The weak revenue performance is a result of the current advertising and marketing environment and has affected all of IPG's peers. Fitch still expects IPG to look more like its investment grade peers within the next 12 to 18 months. The ratings continue to reflect these: -- IPG's position in the industry as one of the largest global advertising holding companies, the inherent scalability of its cost structure, its diverse client base and the company's ample liquidity. -- IPG's business risk profile and credit metrics could reflect investment-grade characteristics in late 2010. Fitch believes management has the willingness, ability and incentive to achieve investment-grade ratings. -- Credit metrics have improved significantly from 2005 levels (leverage is down from 12.4 times to 3.0x). While 2009 has been challenging for IPG and all global advertising agency holding companies, Fitch has always incorporated a potential downturn into IPG's ratings. In considering a potential upgrade, Fitch will focus on several factors over the next 12 to 18 months. First, Fitch will monitor IPG's ability to achieve 2009 organic revenue trends and margin compression generally in-line with the industry. Next, Fitch will evaluate the degree of working capital volatility and IPG's ability to manage working capital swings such that they do not meaningfully minimize Free Cash Flow generation. FCF for September 2009 LTM was approximately $400 million. Fitch expects FCF to be positive in the range of $100 to $300 million for the year. As of Sept. 30, 2009, IPG's liquidity position is supported by the $1.8 billion in cash and equivalents and $241 million available under its $335 bank credit facility due July 2011 (reduced by $94 million in letters of credit). Fitch calculates unadjusted gross leverage of approximately 3.0x and expects that year end unadjusted gross leverage will be in the range of 3.0x to 3.25x, which is within IPG's rating and outlook. While IPG's leverage ratio covenant has limited room for further deterioration (a 4% decline in covenant EBITDA would likely breach the 3.25x leverage ratio), Fitch believes the company could potentially obtain a waiver or an amendment to resolve this issue. Such a negotiation could involve amendment fees or potentially revised pricing. Also, IPG could cancel the bank facility and cash collateralize its existing LOCs ($94 million as of September 2009). The company does not utilize the revolver for operations, and the company's significant cash balance should provide sufficient liquidity. IPG's ratings are: -- Issuer Default Rating 'BB+'; -- Senior unsecured notes 'BB+'; -- Bank credit facility 'BB+'; -- Preferred stock 'BB-'. The Rating Outlook is Positive. JETBLUE AIRWAYS: Reports $15 Million Net Income in Q3 2009 ---------------------------------------------------------- JetBlue Airways Corporation reported net income of $15 million for the three months ended September 30, 2009, compared with a net loss of $8 million in the same period of 2008. Operating income for the three months ended September 30, 2009, was $66 million compared to $22 million for the same period last year, and the Company's pre-tax margin increased 3.8 points from 2008, to 2.7%. Operating revenues decreased 5%, or $48 million, to $854 million from $902 million in the same period in 2008 primarily due to a 5%, or $43 million, decrease in passenger revenues. The decrease in passenger revenues was attributable to a 0.3 point decrease in load factor on 3% more capacity and an 8% decrease in yield over the third quarter of 2008. Other revenue decreased 5%, or $5 million, primarily due to lower change fees. Other revenue also decreased due to lower marketing revenues, offset by an increase in excess baggage revenue and higher concession revenues from the Company's new terminal at JFK. "Despite a tough economic environment, we reported our third consecutive quarterly profit, thanks in large part to the hard work of our dedicated crewmembers," said Dave Barger, JetBlue's chief executive officer. "The actions we took last year, including restructuring our fuel hedge portfolio, reallocating capacity and selling and deferring aircraft, have led to significantly improved results. While the uncertain economic environment continues to pressure demand for air travel, we have been able to leverage our strong brand and superior product to introduce innovative ways to attract new customers and build customer loyalty." Operating expenses decreased 10%, or $92 million, over the same period in 2008, primarily due to lower fuel prices, partially offset by increased salaries, wages and benefits and maintenance expense. Operating capacity increased 3% to 8.4 billion available seat miles. Operating expenses per available seat mile decreased 13% to 9.40 cents for the three months ended September 30, 2009. Excluding fuel, the Company's cost per available seat mile for the three months ended September 30, 2009, was 9% higher compared to the same period in 2008. Operating expenses on a unit basis have increased due to a shift in capacity from transcontinental flying to shorter haul, which resulted in a 5% decrease in the Company's average stage length year over year. Aircraft fuel expense decreased 38%, or $148 million, due to a 40% decrease in average fuel cost per gallon, or $160 million after the impact of fuel hedging, offset by an increase of 4 million gallons of aircraft fuel consumed, resulting in $12 million more in fuel expense. The Company recorded $23 million in effective fuel hedge losses during the third quarter of 2009 versus $22 million in effective fuel hedge gains during the third quarter of 2008. Average fuel cost per gallon was $2.07 for the third quarter of 2009 compared to $3.42 for the third quarter of 2008. Salaries, wages and benefits increased 14%, or $26 million, primarily due to increases in pilot wages and related benefits under the Company's new pilot employment agreements and a 7% increase in average full-time equivalent employees. Landing fees and other rents increased 9%, or $4 million, due primarily to higher landing fee rates and an 8% increase in departures over 2008, offset by $4 million reduction in airport rents at JFK from 2008 due to the Company's terminal move. Depreciation and amortization increased 9%, or $5 million, primarily due to $5 million in amortization associated with Terminal 5, which the Company began operating from in October 2008, and $6 million related to having on average nine more owned aircraft in 2009. Sales and marketing expense remained relatively flat, due to $1 million in lower credit card fees resulting from decreased passenger revenues offset by $1 million in higher advertising costs. Maintenance, materials, and repairs increased 25%, or $8 million, due to an average of nine additional average operating aircraft in 2009 and the age of the Company's fleet compared to the same period in 2008. Nine Months Ended September 30 For the nine months ended September 30, 2009, the Company reported net income of $47 million, compared with a net loss of $27 million in the corresponding period last year. Operating income for the nine months ended September 30, 2009, was $215 million compared to $60 million for the same period in 2008, and the Company's pre-tax margin increased 4.7 points from 2008 to 3.2%. Operating revenues decreased 5%, or $123 million, to $2.191 billion from $2.334 billion in the same period in 2008 primarily due to a 6%, or $143 million, decrease in passenger revenues. The decrease in passenger revenues was attributable to a 1.1 point decrease in load factor on 1% less capacity and a 3% decrease in yield over 2008, offset by the addition of the Company's Even More Legroom optional upgrade product, which the Company introduced in mid-2008. Other revenues increased 8%, or $20 million, primarily due to higher excess baggage revenue resulting from new bag fees introduced in 2008 and increased rates for these and other ancillary services in 2009. Other revenue also increased due to additional LiveTV third party revenues and higher concession revenues from our new terminal at JFK, partially offset by a reduction in charter revenue. Balance Sheets At September 30, 2009, the Company's consolidated balance sheets showed $6.533 billion in total assets, $5.022 billion in total liabilities, and $1.511 billion in total stockholders' equity. The Company had long-term debt, including current maturities, of $3.157 billion at September 30, 2009, compared with $3.204 billion at June 30, 2009, and $2.841 billion at December 31, 2008. A full-text copy of the Company's consolidated financial statements for the three and nine months ended September 30, 2009, is available for free at http://researcharchives.com/t/s?47d0 Liquidity and Capital Resources At September 30, 2009, the Company had unrestricted cash and cash equivalents of $951 million compared to $561 million at December 31, 2008. Cash flows from operating activities were $357 million for the nine months ended September 30, 2009, compared to $109 million for the nine months ended September 30, 2008. The increase in operating cash flows includes the impact of the 35% lower price of fuel in 2009 compared to 2008 and the return of $25 million in restricted cash that collateralizes letters of credit issued to the Company's primary credit card processor. Cash flows used in investing activities were $321 million for the nine months ended September 30, 2009, compared to $227 million for the nine months ended September 30, 2008. During the nine months ended September 30, 2009, capital expenditures related to the Company's purchase of flight equipment included expenditures of $303 million for 11 aircraft and two spare engines, $19 million for flight equipment deposits and $8 million for spare part purchases. Capital expenditures for other property and equipment, including ground equipment purchases and facilities improvements, were $61 million. Proceeds from the sale of two aircraft were $58 million. Investing activities also included $54 million in proceeds from the sale of certain auction rate securities. Cash flows from financing activities were $354 million for the nine months ended September 30, 2009, compared to $493 million for the nine months ended September 30, 2008. Financing activities for the nine months ended September 30, 2009, consisted of (1) the Company's issuance of $201 million of 6.75% convertible debentures, raising net proceeds of approximately $197 million, (2) the Company's public offering of approximately 26.5 million shares of common stock for approximately $109 million in net proceeds, (3) the Company's issuance of $143 million in fixed equipment notes to banks and $102 million in floating rate equipment notes to banks secured by three Airbus A320 and six EMBRAER 190 aircraft, (4) paying down a net of $107 million on the Company's lines of credit collateralized by the Company's auction rate securities, (5) scheduled maturities of $110 million of debt and capital lease obligations, (6) the repurchase of $20 million principal amount of 3.75% convertible debentures due 2035 for $20 million, and (7) reimbursement of construction costs incurred for Terminal 5 of $42 million. The Company had working capital of $321 million at September 30, 2009, compared to a working capital deficit of $119 million at December 31, 2008. Working capital includes the fair value of the Company's fuel hedge derivatives, which was an asset of $10 million and a liability of $128 million at September 30, 2009, and December 31, 2008, respectively. The Company also had approximately $205 million in auction rate securities, including the related put option, classified as short term at September 30, 2009. The Company's auction rate securities held at December 31, 2008 were classified as long term. The Company expects to meet its obligations as they become due through available cash, investment securities and internally generated funds, supplemented as necessary by financing activities, as they may be available to the Company. The Company believes that its working capital will be sufficient to meet its cash requirements for at least the next 12 months. "JetBlue's strong liquidity position affords us the flexibility to weather the economic downturn while making prudent investments to position us for long-term growth," said Ed Barnes, JetBlue's chief financial offier. About JetBlue Airways Based in Forest Hills, New York, JetBlue Airways Corporation (NASDAQ: JBLU) -- http://www.jetblue.com/-- is a passenger airline company, currently serving 58 cities with 550 daily flights. JetBlue operates primarily on point-to-point routes with its fleet of 107 Airbus A320 aircraft and 35 EMBRAER 190 aircraft. For the year ended December 31, 2008, JetBlue was the 7th largest passenger carrier in the United States based on revenue passenger miles as reported by those airlines. * * * As reported in the Troubled Company Reporter on October 28, 2009, Moody's Investors Service affirmed the Caa2 corporate family and probability of default ratings of JetBlue Airways Corp., the Ca senior unsecured rating on the 3.75% Senior Convertible Notes due 2035 and its ratings on the company's three outstanding series of Enhanced Equipment Trust Certificates. Moody's also assigned an SGL-3 Speculative Grade Liquidity rating to JetBlue and changed the ratings outlook to stable from negative. JOHN MCCLELLAND: Appraisers Have No Liability to Debtor ------------------------------------------------------- WestLaw reports that even assuming appraisers whom the debtor retained only in his capacity as an individual Chapter 11 debtor- in-possession to value estate property owed a duty of care to the debtor individually to properly conduct the appraisal in order to maximize any surplus potentially available for distribution to the debtor, their alleged error, in relying solely on an income approach to value certain rent-producing property, despite the fact that the property could have been marketed for sale, did not rise to the level of "gross negligence," for which the appraisers could be liable to debtor. A bankruptcy judge in New York held that the appraisers performed an adjudicatory function similar to that performed by Chapter 11 trustees, for immunity purposes. In re McClelland, --- B.R. ----, 2009 WL 3326126 (Bankr. S.D.N.Y.) (Morris, J.). This case, the Honorable Cecelia G. Morris noted, presented a question of first impression for the Court: Where a professional is retained by Order of the Court, on application of the Debtor, and that professional's work results in the disposition of a major asset of the bankruptcy case, which achieves a 100 percent plan, may the Debtor subsequently attack the acts of that professional as grossly negligent or fraudulent? Judge Morris holds that the Debtor failed to plead acts by the Appraisers that were so egregious and wanton as to constitute gross negligence; additionally, the Debtor failed to plead any intent to defraud on the part of the Appraisers that was contemporaneous with any relevant representation. John S. McClelland sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-37997) on Dec. 19, 2003. By Order dated August 24, 2005, the Bankruptcy Court confirmed Mr. McClelland's second amended plan of reorganization, providing that general unsecured creditors would receive 100 percent of their allowed claims. It appears that Mr. McClelland's creditors were, in fact, paid in full, and Mr. McClelland sued the Appraisers (Bankr. S.D.N.Y. Adv. Pro. No. 07-9014) arguing that he was short-changed. JOHNSON BROADCASTING: TV Stations Up for Auction on December 7 -------------------------------------------------------------- According to Bill Rochelle at Bloomberg News, Johnson Broadcasting Inc. has a buyer for its television stations for $14.825 million, although the Company has the right instead to seek confirmation of a reorganization plan paying all creditors in full. The report relates that to compromise an effort by the secured creditor for the appointment of a Chapter 11 trustee, Johnson agreed to the appointment of a manager and a dual-track plan for selling the business to an outsider or confirming a full-payment plan if the current owner can nail down financing. The secured creditor, owed $4.2 million, is an affiliate of Merrill Lynch & Co. A hearing before the Bankruptcy Court will be held Nov. 23 for approval of the disclosure statement explaining the dualtrack Chapter 11 plan. Other bids for the business are due Dec. 1, followed by an auction on Dec. 7. A pivotal hearing will be held Dec. 1 where, to avoid having the stations sold to a third party, Johnson must prove the feasibility of obtaining financing to pay all creditors in full. If a full- payment plan isn't in the cards, the bankruptcy court will conduct a hearing on Dec. 11 to approve sale. In addition to the Merrill claim, there is $3 million owing in financing for the reorganization and almost $30 million coming to unsecured creditors. Based in Houston, Texas, Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. own and operate television stations in Texas. Closely held Johnson Broadcasting Inc. and Johnson Broadcasting of Dallas Inc. filed separate petitions for Chapter 11 relief on October 13, 2008 (Bankr. S.D. Texas Case No. 08-36583 and 08-36585, respectively). Johnson sought Chapter 11 protection in October 2008 when the lessor of equipment sought to foreclose. The controlling shareholder, Douglas R. Johnson, also filed in Chapter 11 (Bankr. S.D Tex. Case No. 08-35584). John James Sparacino, Esq., Joseph Peak Rovira, Esq., and Timothy Alvin Davidson, II, Esq., at Andrews and Kurth, serve as counsel to the Debtors. In its schedules, Johnson Broadcasting Inc. listed total assets of $7,759,501 and total debts of $14,232,988. KAINOS PARTNERS: Can Access DIP Financing Until November 30 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the consent order entered among Kainos Partners Holding Company, LLC, et.al., the CIT Group/Equipment Financing, Inc., Kainos Investment Partners II, LLC, and Dunkin Brands Inc., and the Official Committee of Unsecured Creditors appointed in the cases, extending the financing period until Nov. 30, 2009. The Court also authorized the Debtors to: -- obtain extensions of credit up to $1.5 million from the DIP lenders; -- use of cash collateral; -- grant adequate protection to the DIP lender and the prepetition lenders. The Debtors related that it owed the prepetition lenders in respect of loans, advances and other financial accommodations: 1. CIT - $24.9 million 2. DBI - $4.1 million 3. PCEPH KPHC Holdings, Inc. - $530,000 4. Bridge lenders - $633,000 The prepetition obligations were secured by valid, enforceable and properly perfected first priority liens, mortgages and security interests in various assets. The Bridge obligations were given a first priority priming lien and security interest in the Bridge collateral, superior in all respects to the liens securing the prepetition loan documents; and the prepetition lenders were given a second priority lien and security interest in the Bridge collateral, subject to the lien securing the bridge obligations. The Debtors said it is in need to obtain funds and financial accommodations to continue their business operations. The Debtors were unable to obtain secured credit. The DIP lenders expressed willingness to make loans, advances and other financial accommodations to the Debtors, and prepetition lenders consented to the Debtors' use of cash collateral. The Debtors' access to the financing will expire on the earliest of (i) Nov. 30, 2009; or (ii) the occurrence of a termination event. About Kainos Partners Holding Greer, South Carolina-based Kainos Partners Holding Company, LLC - - http://www.kainospartners.com/-- operates the "donut-and- coffee" franchises. The Company and its affiliates filed for Chapter 11 on July 6, 2009 (Bankr. D. Del. Lead Case No. 09-12292.) Two of its affiliates filed for separate Chapter 11 petitions on Sept. 15, 2009 (Bankr. D. Del. Case Nos. 09-13213 to 09-13214.) An affiliate filed for separate Chapter 11 petition on Sept. 23, 2009 (Bankr. D. Del. Case No. 09-13285.) Attorneys at the Law Offices of Joseph J. Bodnar represent the Debtors in their restructuring efforts. The Debtor did not file a list of 20 largest unsecured creditors. In its petition, the Debtors listed assets and debts both ranging from $10 million and $50 million. KRONOS INTERNATIONAL: Moody's Raises Corp. Family Rating to 'Caa1' ------------------------------------------------------------------ Moody's Investors Service raised Kronos International, Inc.'s Corporate Family Rating to Caa1 from Caa3 and the rating on the EUR400 million senior secured notes due 2013 to Caa2 from Ca. The upgrade reflects KII's improved liquidity profile and a modest recovery in titanium dioxide (TiO2) market conditions. The rating outlook was moved to stable. The improved liquidity results from an amendment to KII's revolving credit facility that significantly lowers the immediate potential for a covenant violation and allows it to borrow up to EUR51 million under its EUR80 million revolving credit facility. (KII had lost access to its revolver after a shortfall in first quarter 2009 EBITDA resulted in non-compliance with the revolver's financial covenants.) The amendment waives the compliance requirement for the original leverage covenant (Net Secured Debt to EBITDA not greater than 70%) until the borrowers can meet the original requirement. Additional financial covenants are imposed by the revolver amendment (minimum EBITDA levels, minimum net working capital to net financial debt) until the company meets the original leverage covenant. The waivers of covenant compliance received during 2009 and amendment resulted in KII not being in default under the revolver's financial covenants, but under the terms of the amendment the company cannot borrow more than a total of EUR51 million under the EUR80 million agreement until files its first quarter 2010 compliance certificates demonstrating compliance with the minimum EBITDA, net working capital to net financial debt and net financial debt to equity covenants. Moody's does expect the company to be able to comply with these financial covenants, but expects that the company's EBITDA will not recover sufficiently to meet the original leverage test until the second half of 2010, at the earliest. Capacity under the amended revolver and cash balances are expected to provide sufficient liquidity over the next twelve months. KII's cash balances have improved steadily in 2009 as it sharply reduced its working capital, generating $93 million in cash flow from working capital reductions during the first half of the year. Inventories had ballooned in the fourth quarter of 2008 when the company failed to curtail production as the TiO2 market demand plummeted. This summarizes the ratings changes: Ratings upgraded: Kronos International Inc. * Corporate family rating -- Caa1 from Caa3 * Probability of default rating -- Caa1 from Caa3 * EUR400 million 6.5% Sr Sec Notes due 2013 -- Caa2 (LGD5, 72%) from Ca (LGD5%, 72%) * Outlook: Stable Moody's expects marked improvement in KII's performance in the second half 2009 as demand for TiO2 rebounds somewhat from very low levels earlier in the year, KII's capacity utilization rates increase, high cost inventory has been sold and announced price increases are at least partially realized. As a result of de- stocking of the supply chain abating, end demand increasing and certain industry capacity being shutdown, the TiO2 industry supply demand fundamentals have become more favorable. However, the Caa1 CFR reflects the overall depressed TiO2 market demand as a result of a slow economic recovery in KII's main European markets, uncertainty over pace of the future recovery in end market demand, the need to renegotiate its revolving credit facility well before the facility's May 2011 maturity and the potential for negative free cash flow until KII's sales volumes and profitability further improve. The stable ratings outlook primarily reflects the improvement in liquidity that is expected to adequately support KII's liquidity needs over the next twelve months and the modest recovery in the TiO2 market. The ratings however could come under negative pressure if liquidity were to decline significantly (e.g., if KII generated negative free cash flow on an ongoing basis, or if it were not able to continue to have access to its committed revolving credit facility). Moody's most recent announcement concerning the ratings for KII was on May 8, 2009, when KII's CFR was lowered to Caa3 from Caa1 reflecting the inability to meet the revolver financial covenants and KII's delay in getting an amendment. At that time, a negative outlook was assigned. Kronos International, Inc., produces and markets TiO2 pigments in Europe, and is a wholly owned subsidiary of Kronos Worldwide, Inc., headquartered in Dallas, Texas. For the LTM ended June 30, 2009, the company reported sales of $790 million. LAMBERT PROPERTIES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Lambert Properties, LLC 1103 N Hickory Street, Suite C Loxley, AL 36551 Case No.: 09-14987 Type of Business: The Debtor operates a real estate business. Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Southern District of Alabama (Mobile) Debtor's Counsel: Barry A. Friedman, Esq. Barry A. Friedman and Associates P.C. P.O. Box 2394 Mobile, AL 36652-2394 Tel: (251) 439-7400 Email: bky@bafmobile.com Estimated Assets: $10,000,001 to $50,000,000 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. LARRY HORTON: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Joint Debtors: Larry D. Horton Mary Ann Horton 5375 Brooks Woods Road Lothian, MD 20711 Bankruptcy Case No.: 09-30657 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Maryland (Baltimore) Judge: James F. Schneider Debtors' Counsel: James Greenan, Esq. 6411 Ivy Lane, Suite 200 Greenbelt, MD 20770 Tel: (301) 441-2420 Email: jgreenan@mhlawyers.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 $1,054,474, and total debts of $1,260,004. 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/mdb09-30657.pdf The petition was signed by the Joint Debtors. LESLIE'S POOLMART: Moody's Affirms Corporate Family Rating at 'B3' ------------------------------------------------------------------ Moody's Investors Service affirmed Leslie's Poolmart, Inc.'s B3 Corporate Family and Probability of Default Ratings, and raised the rating on its Senior Unsecured Notes due 2013 to B1 from B2 as per Moody's Loss Given Default methodology. The ratings outlook is stable. Leslie's B3 corporate family rating is constrained by the company's weak credit metrics stemming from its very high consolidated debt load, which includes sizeable debt obligations at its holding company. The rating also reflects Leslie's small scale relative to other rated global retailers and its very high seasonality. Positive consideration is given to Leslie's good liquidity and consistent operating performance in a difficult retail environment, as profitability remains strong and comparable store sales relatively stable. The rating also reflects the company's leading position in the very narrow pool supply sub- sector of retail and national footprint. The stable rating outlook reflects the expectation that Leslie's will continue to maintain solid operating margins and good liquidity in a still-challenging economic and retail environment. Ratings affirmed: * Corporate Family Rating at B3; * Probability of Default Rating at B3; Ratings raised: * Senior Unsecured Notes due 2013 to B1 (LGD2, 24%) from B2 (LGD4, 62%) The ratings outlook is stable. The last rating action on Leslie's was on August 24, 2007, when Moody's downgraded the company's CFR to B3 with a stable outlook. Leslie's Poolmart, Inc., headquartered in Phoenix, Arizona, is the largest chain for specialized pool supplies in the United States. The company markets its products under the trade name "Leslie's Swimming Pool Supplies;" operating 621 stores in 35 states, a mail order catalogue, and internet web store. Revenues for the LTM period ended June 27, 2009, approached $500 million. The company is majority owned by affiliates of Leonard Green & Partners, LP. LILLIAN VERNON: Lift Stay Requested in RDA Case to Continue Suit ---------------------------------------------------------------- The plan administrator and the Official Committee of Unsecured Creditors of LV Liquidation Corp., formerly known as Lillian Vernon Corporation, ask the U.S. Bankruptcy Court for the Southern District of New York pursuant to Section 362(d)(1) of the Bankruptcy Code to modify the automatic stay so that the LV Estate Parties may file a claim objection and initiate an adversary proceeding in the LV Debtor's bankruptcy case against Direct Holdings U.S. Corp., a Debtor in the bankruptcy cases of The Reader's Digest Association Inc. Jay R. Indyke, Esq., at Cooley Godward Kronish LLP, in New York, relates that DHUS possesses by far the largest and one of the last disputed claims against the LV Debtor, who has confirmed a plan of liquidation, fully-administered and closed the LV Debtor's affiliate bankruptcy estates, and is in the process of winding down its affairs so that it may make distributions to holders of allowed unsecured claims and close the LV Debtor's Chapter 11 case. DHUS was also a party to a transaction that was the proximate cause of the LV Debtor's and its affiliates' bankruptcy. After thorough review and investigation, Mr. Indyke contends that the LV Estate Parties have concluded that (i) the DHUS Claim is without merit, and is the proper subject of a claim objection, and (ii) an adversary proceeding should be commenced against DHUS as a result of its role, and the role of its direct and indirect affiliates, in the LV Debtors' bankruptcy and subsequent liquidation. The LV Estate Parties, however, are precluded by the automatic stay imposed by the commencement of the Debtors' Chapter 11 cases from taking the necessary actions to expunge the DHUS Claim, which must be objected to before December 7, 2009, under the terms of the plan confirmed in the LV Case, Mr. Indyke tells Judge Drain. Hence, and because the DHUS Claim must be adjudicated before the Plan Administrator can make distributions to holders of allowed unsecured claims and fully administer the LV Debtor's estate, he asserts that the pendency of the DHUS's Chapter 11 case has in effect handcuffed the LV Estate Parties from taking the steps necessary to wind-down the LV Case. The LV Debtor's present inability to object to the DHUS Claim has the potential to significantly prejudice the interests of the LV Debtor's estate, Mr. Indyke further contends. Indeed, he asserts, if the Plan Administrator is unable to file an objection to the DHUS Claim before the fast-approaching claims objection deadline, then the unmeritorious DHUS Claim will be deemed allowed under the Plan and DHUS will receive a large distribution from the remaining assets of the LV Debtors' estates, one to which it is not entitled, to the severe detriment of the holders of properly allowed unsecured claims. Accordingly, the LV Estate Parties submit that cause exists to modify the automatic stay to allow the Plan Administrator to file an objection to the DHUS Claim and the LV Committee to commence an adversary proceeding against DHUS. A hearing to consider LV Estate Parties' request will be held on November 20, 2009. Objections to the request are due November 16. About Lillian Vernon Based in Virginia Beach, Virginia, Lillian Vernon Corp. -- http://www.lillianvernon.com/-- and its affiliates are direct mail specialty catalog and online companies concentrating on the marketing of gifts, holiday products, toys and children's products, personal and home accessories, kitchen and houseware products and garden and outdoor products. They have developed a proprietary customer database containing information about its customers, including such data as order frequency, size and date of last order and type of products purchased. The database contains information with respect to over 27 million customers, gift recipients and people who have requested its catalogs. In the fiscal year ended Feb. 22, 2003, they published 33 catalog editions and mailed approximately 150,000,000 catalogs to past and prospective customers. They also offer products over the Internet. The company and six of its affiliates filed for Chapter 11 protection on Feb. 20, 2008 (Bankr. D. Del., ase No. 08- 10323). Ann C. Cordo, Esq., Daniel B. Butz, and Esq., J. Dehney, Esq. at Morris, Nichols, Arsht & Tunnell, L.L.P. represent the Debtors in their restructuring efforts. Lillian Vernon's parent, Sun Capital Partners Inc., a privately held investment company with offices in Boca Raton, Fla., is not included in the bankruptcy filing. The U.S. Trustee for Region 3 has appointed creditors to serve on an Official Committee of Unsecured Creditors in these cases. The company listed assets of $1 million to $100 million and debts of $1 million to $100 million in its bankruptcy filing. MAGNA ENT: Lone Star Park Sold to Global Gaming ----------------------------------------------- Magna Entertainment Corp. conducted another auction for its Lone Star Park racing track in Grand Prairie, near Dallas. According to Bill Rochelle at Bloomberg, after 43 rounds of bidding, the original bidder, Global Gaming LSP LLC, emerged as the winning bidder with an offer of $47.3 million. Global's original offer was $27 million. The auction was reopened after a competing offer was made by Penn National Gaming Inc., who dangled $40 million. The Bankruptcy Court set up sale procedures for Pimlico and Laurel Park in Maryland, Santa Anita and Golden Gate Fields in California, and Gulfstream in Florida. Magna Entertainment has proposed: * an auction for the tracks in Pimlico and Laurel Park in Maryland on Jan. 8, with bids due November 2, and a sale hearing on Jan. 11; * a Feb. 25 auction for the tracks Santa Anita and Golden Gate Fields in California, and Gulfstream in Florida; with bids due Feb. 10 and a sale hearing on Feb. 26 Magna previously sold several tracks to generate between $157 million and $205 million. The tracks already sold include Remington Park and Thistledown. About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a 50% interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del. Lead Case No. 09-10720). Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. Mark D. Collins, Esq., L. Katherine Good, Esq., and Maris J. Finnegan, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC is the Debtors' investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent for the Debtors. Magna Entertainment Corp. had total assets of US$1.054 billion and total liabilities of US$947.3 million based on unaudited consolidated financial statements as of Dec. 31, 2008. MAGNA ENT: Wants to Cut Ties With Laurel Park & Pimlico Ex-Owners ----------------------------------------------------------------- Hanah Cho at the Baltimore Sun reports that Magna Entertainment Corp. has sought the bankruptcy court's permission to terminate a 2002 profit-sharing agreement to split any potential slots proceeds with former Laurel Park and Pimlico Race Course owners, including Joseph De Francis, before the two racetracks will be auctioned on January 8, 2010. Baltimore Sun relates that under the agreement, Mr. Francis, his sister, Karin, and others would receive 65% of pre-tax slots profit during the first five years, 50% for the next five years and 40% in the following decade. About 20 after the debut of slots, Magna Entertainment would keep everything, says the report. Magna Entertainment's lawyer said in court documents that the slots profit-sharing deal could hinder the sale of Laurel Park. According to court documents, Magna Entertainment said that the restriction imposed by the 2002 deal on any new owner "places a considerable cloud over the amount that prospective purchasers may be willing to attribute to such [an alternative gambling] revenue stream," and it is in the best interest of Magna to terminate the deal and "remove this perceived risk and to provide clarity in connection with the auction process." According to Baltimore Sun, Maryland Horse Racing Commission chairperson John Franzone said that he's not sure whether the profit-sharing deal is relevant anymore, since the state has prescribed a certain share of slots proceeds for operators. Under the state law authorizing slots in Maryland, operators have a 33% share of slots proceeds. A Magna attorney said during a hearing this month that Mr. De Francis and other former owners also were interested in bidding. Mr. De Francis said he and other former owners submitted several proposals to Magna to recapitalize the Maryland tracks. Baltimore Sun reports that Mr. De Francis said that he and other former owners "intend to oppose the filing vigorously. We think it's dead wrong, and there isn't too much to say besides that." Magna Entertainment, according to Baltimore Sun, was disqualified in its bid to bring slot machine gambling to Laurel Park. Baltimore Sun relates that the sole recognized bidder, Cordish Cos., has run into problems securing zoning approval for a proposed 4,750-machine slots facility near Arundel Mills mall. The Maryland commission gave set a December 17 deadline for a solution of the zoning matter, saying that it might reject the Cordish bid if the matter isn't resolved. Baltimore Sun states that the Anne Arundel County Council will consider two proposals on December 7: to rezone the mall area and let the Cordish plan move forward if it also wins a state slots license; and to put the casino in an industrial area south of Route 32, which includes Laurel Park. According to the report, Cordish has no interest in that area. Baltimore Sun says that potential bidders for the Maryland tracks have until November 2 to submit offers to Magna Entertainment, with the requirement that buyers keep the Preakness Stakes, middle leg of racing's Triple Crown, in Maryland, and the Company will submit to the court a lead bid for the two tracks on November 9. Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a 50% interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del. Lead Case No. 09-10720). Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. Mark D. Collins, Esq., L. Katherine Good, Esq., and Maris J. Finnegan, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC is the Debtors' investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent for the Debtors. Magna Entertainment Corp. had total assets of US$1.054 billion and total liabilities of US$947.3 million based on unaudited consolidated financial statements as of Dec. 31, 2008. MAINSTREAM DEV'T: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------ Mainstream Development LLC has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Nashville, listing $1 million to $10 million in assets and $1 million to $10 million in debts owed to less than 50 creditors, six of which holding a total of $1.26 million in unsecured claims. Elliott W. Jones, Esq., at Drescher & Sharp assists Mainstream Development in its restructuring efforts. E. Thomas Wood at NashvillePost.com reports that most of the required financial disclosures and other schedules have not yet been filed in the court. Franklin-based Mainstream Development LLC owns 61 acres of land in or near Fayetteville. It has also developed a residential community in that city called Robert E. Lee Garden Estates. MAINSTREAM DEVELOPMENT: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Mainstream Development, LLC 3109 St. Stephens Way Franklin, TN 37064 Bankruptcy Case No.: 09-12315 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: Elliott Warner Jones, Esq. Drescher & Sharp PC 1720 West End Avenue, Suite 300 Nashville, TN 37203 Tel: (615) 425-7121 Fax: (615) 425-7111 Email: ejones@dsattorneys.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 William S. Carman Sr., chief manager of the Company. MAMMOTH CORONA: Section 341(a) Meeting Slated for November 20 ------------------------------------------------------------- The U.S. Trustee for Region 16 will convene a meeting of creditors of Mammoth Corona 1 LLC on Nov. 20, 2009, at 09:00 a.m., 411 W Fourth St., Room 1-159 in Santa Ana, California. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. Based in San Juan Capistrano, California, Mammoth Corona 1 LLC filed for Chapter 11 on Oct. 16, 2009 (Bankr. C.D. Calif. Case No. 09-21220). Thomas C. Corcovelos, Esq., represents the Debtor. In its petition, the Debtor listed both assets and debts between $10 million and $50 million. MANUFACTURING WHITSELL: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Manufacturing, Whitsell Inc. 32910 Saginaw East Rd. Cottage Grove, OR 97424 Bankruptcy Case No.: 09-65831 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Oregon Judge: Frank R. Alley III Debtor's Counsel: Stephen L. Behrends, Esq. POB 10552 Eugene, OR 97440 Tel: (541) 344-7472 Email: sbehrends@oregon-attorneys.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/orb09-65831.pdf The petition was signed by Bonnie Parmenter, secretary/treasurer of the Company. MASHANTUCKET PEQUOT: Has Forbearance from Lenders Until Jan. 20 --------------------------------------------------------------- The Mashantucket Pequot Tribal Nation said that following negotiations with lenders during the past several weeks, the senior lenders have agreed to a forbearance agreement extending through January 20, 2010. The Tribe said it won't provide further updates on the discussions with its creditors until they are concluded. It says it remains committed to working with its lenders to reach consensual resolutions. The Tribe said its debt restructuring efforts are separate and distinct from operations at Foxwoods and they will not have any impact on guests, employees, suppliers or business partners at Foxwoods or MGM Grand at Foxwoods. Foxwoods remains committed to providing its guests with its signature guest service, unparalleled gaming options, the very best in entertainment, and world-class services, dining and amenities. About the Mashantucket Pequot The Mashantucket Pequots are an Eastern Woodland people with its traditional homelands in Southeastern Connecticut having endured centuries of conflict, survival and continuity on and around one of America's oldest Indian reservations, established in 1666. The Mashantucket Pequot Tribal Nation owns one of the largest resort casino in the world, Foxwoods Resort Casino -- http://www.foxwoods.com/,along with several other economic ventures including the Lake of Isles Golf Course -- http://www.lakeofisles.com/-- a joint-venture partnership establishing the MGM Grand at Foxwoods, The Spa at Norwich Inn and Foxwoods Development Company dedicated to world-class resort development throughout the United States and Caribbean. The Tribe employs approximately 10,000 people and, through its slot contribution agreement, it has contributed nearly $3 billion to the State of Connecticut since January 1993. * * * Moody's previous rating action was on August 26, 2009, when the Tribe's Corporate Family Rating was lowered to Caa2 from B1 and all of its ratings were placed on review for possible downgrade MIDWEST BANC HOLDINGS: Lender Agrees to Forbear Until March 31 -------------------------------------------------------------- Midwest Banc Holdings, Inc., previously disclosed it is in violation of covenants under its revolving line of credit and term note and the related loan documents relating to the level of nonperforming loans and the failure to report a quarterly profit, as of June 30, 2009; did not make a required $5.0 million principal payment due on July 1, 2009 under the covenant waiver for the third quarter of 2008, for which the Company was advised by its lender that such noncompliance constituted a continuing event of default; and did not pay the lender all of the aggregate outstanding principal on the revolving line of credit at its maturity date of July 3, 2009, which constituted an additional event of default under the Credit Agreements. In addition, the Company did not make a required $5.0 million principal payment due on October 1, 2009. As a result, the lender possesses certain rights and remedies, including the ability to demand immediate payment of amounts due totaling $63.6 million plus accrued interest or foreclose on the collateral supporting the Credit Agreements, being 100% of the stock of the Company's wholly-owned subsidiary, Midwest Bank & Trust Company. The Company said in a filing with the Securities and Exchange Commission that on October 22, 2009, it entered into a Forbearance Agreement with its lender. The lender has agreed to forbear from exercising the rights and remedies available to it under the Credit Agreements (other than the continued imposition of the default rates of interest) for a period commencing on July 3, 2009 and ending on the first to occur of: (a) March 31, 2010; (b) the date on which the Company breaches or defaults in any of its representations, warranties or obligations to the lender under the Forbearance Agreement; (c) the date on which the Company defaults in complying with any of its continuing obligations under the Credit Agreements; and (d) the date on which Midwest Bank becomes subject to a receivership by the Federal Deposit Insurance Corporation, or the date on which the Company becomes subject to a bankruptcy or insolvency type proceeding. The Company has entered into a Deposit Account Security and Control Agreement in favor of the lender and has deposited $325,000 into the DDA account described therein (the "Account"). The Company has also entered into a Tax Refund Security Agreement in favor of lender. Upon receipt by the Company of one of its federal tax refunds (approximating $2.1 million), the Company must deliver the proceeds received to lender, which proceeds will be maintained in the Account and shall be subject to the Deposit Agreement. The Company must pay all accrued interest, accrued late fees, principal payments and interest due under the Credit Agreements during the Forbearance Period, and make all other payments or reimbursement required by the Credit Agreements; provided, however, that (1) all such payments shall be made by lender debiting the amounts maintained in the Account, and (2) if there is no money in the Account, the Company shall not be obligated to make any such payments to lender prior to the termination of the Forbearance Period. Immediately upon the termination of the Forbearance Period for any reason: (i) the forbearance provided by the Forbearance Agreement shall terminate; (ii) the term note and the revolving line of credit shall be immediately due and payable without further notice; (iii) the Credit Agreements shall be enforceable against the Company in accordance with their terms; and (iv) the lender shall be entitled to exercise all its rights and remedies under the Credit Agreements and at law (without any further notice or demand). During the Forbearance Period, lender shall be entitled to take any actions deemed necessary by it to preserve its rights and its interests under the Credit Agreements. Third Quarter Results Midwest Banc Holdings recorded a net loss of $41.3 million for the third quarter of 2009 compared to a net loss of $159.7 million in the third quarter of 2008, and a net loss of $76.5 million for the second quarter of 2009. On a per share basis, net loss per share for the quarter was $1.52, compared to a net loss per share of $5.76 in the third quarter of 2008 and net loss per share of $2.78 in the second quarter of 2009. Results for the third quarter include a $37.5 million provision for credit losses, which increased the allowance for loan losses to 3.4 percent of loans from 2.5 percent at June 30, 2009. The company also completed its annual goodwill impairment study as of September 30, 2009 and determined that goodwill was not impaired. "As a result of great effort, foresight, and aggressive action by management, as of September 30, 2009 our Bank remains `well- capitalized' by all regulatory measures," said Roberto R. Herencia, chief executive officer. "While significantly increasing the loan loss provision, our Bank also maintained its `well- capitalized' status through aggressive cost-cutting actions, loan portfolio reductions and a capital contribution from the holding company." "We have improved the quality of the Bank's balance sheet over the past two quarters through building of loan loss reserves, repositioning of the investment portfolio to provide an extremely high level of liquidity and re-assessing the valuation of our deferred tax assets, while maintaining our Bank's regulatory capital ratios as we execute a complex and comprehensive capital plan." "We have hired new credit talent and our objective is to get in front of credit issues. We have performed several special portfolio reviews, increased our vigilance to allow for early identification of problem loans, significantly increased resources available to manage problem loans, and tightened pricing and underwriting standards - all in less than six months. Our provision for loan losses continues to be double our net charge- offs, and ratio of the allowance for loan losses to loans increased significantly to 3.40 percent at September 30, 2009, from 2.50 percent at June 30, 2009 and 1.58 percent at September 30, 2008. Timely recognition of exposure allows us to work with our customers who are feeling the effects of the downturn in the Chicago commercial real estate market, including the construction and development segment, prior to the need to charge-off uncollectible amounts." A full-text copy of the company press release on its third quarter results is available at http://researcharchives.com/t/s?47cd About Midwest Banc Holdings Midwest Banc Holdings, Inc. (NASDAQ:MBHI) is a community-based bank holding company. It has two principal operating subsidiaries; Midwest Bank and Trust Company and Midwest Financial and Investment Services, Inc. Midwest Bank has 26 locations serving the diverse needs of both urban and suburban Chicagoland businesses and consumers through its Commercial Banking, Wealth Management, Corporate Trust and Retail Banking areas. The Company had total assets of $3.54 billion against debts of $3.36 billion as of Sept. 30, 2009. Midwest Banc Holdings said in its quarterly report for the period ended June 30, 2009, that there is substantial doubt about its ability to continue as a going concern. MINCO GOLD: NYSE Extends Listing Until February 8, 2010 ------------------------------------------------------- Minco Gold Corporation on October 28 disclosed that it advised in a news release dated August 13, 2009 that on August 7, 2009 the Company received a notice from NYSE Amex LLC advising that the Company is not in compliance with the continued listing standards of the Exchange as set out in the Exchange's company guide. The main reason the Company did not meet the minimum requirements of net asset value is due to over C$9 million in acquisition and exploration costs expensed in the 2008 fiscal year under US General Accepted Accounting Principles on the Company's Changkeng gold project in the Guangdong province, China, and over C$2.5 million due on the payment for the exploration permit payable by other joint venture partners for the Project accrued as a loan payable on the Company's financial statements. The Company believes that, while these treatments may be what is required under both Canadian and US GAAP, they do not best reflect the potential economic value of this Project as the Company has defined a one million ounce gold resource on the Project. The Company was afforded the opportunity to submit a plan of compliance to the Exchange and on September 4, 2009 and October 9, 2009 respectively, the Company presented its plan to the Exchange. On October 23, 2009 the Exchange notified the Company that it accepted the Company's plan of compliance and granted the Company an extension until February 8, 2010 to regain compliance with Section 1003(a)(iv) of the Guide and until February 7, 2011 to regain compliance with Sections 1003(a)(i), 1003(a)(ii), and 100(a)(iii) of the Guide. The Company will be subject to periodic review by Exchange staff during the extension period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards by the end of the extension period could result in the Company being delisted from the Exchange. The Company is working diligently to meet the schedule deadlines and to regain compliance with the Exchange's continued listing standards in due course. About Minco Gold Minco Gold Corporation (CA:MMM) (NYSE Amex: MGH)(FRANKFURT: MI5) -- http://www.mincomining.ca/-- is a Canadian mining company involved in the direct acquisition and development of high-grade, advanced stage gold properties. The Company owns an exploration property portfolio covering more than 1,000 square kilometres of mineral rights in China. MCG CAPITAL: Fitch Assigns 'BB+' Rating on $34.3 Mil. Notes ----------------------------------------------------------- Fitch Ratings has assigned a rating of 'BB+' to MCG Capital Corporation's $34.3 million of senior unsecured notes. All relevant ratings are listed at the end of this release. These notes effectively replace and extend the maturity of existing series 2005-A unsecured notes which were scheduled to mature in October 2010. The maturity of the new notes will be October 2011. In exchange for the maturity extension, the interest rate on the notes will increase 100 basis points to 9.98% and MCG will make a $5 million principal payment on its existing unsecured debt, which will be applied pro rata to the new notes and the notes maturing in October 2012 based on the current amount outstanding. Additionally, the cash sweep of net proceeds on unencumbered asset sales will increase from 40% to 45% after the SunTrust facility receives its 7.5% sweep on the sale of the first $100 million of unencumbered assets. Fitch's rates MCG: MCG Capital Corporation -- Long-term Issuer Default Rating 'BB+'; -- Senior unsecured debt 'BB+'. The Rating Outlook is Negative. MOUNTAIN RUN: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Mountain Run, LLC PO Box 1722 Glen Allen, VA 23060 Bankruptcy Case No.: 09-37005 Debtor affiliate filing separate Chapter 11 petition: Debtor Case No. ------ -------- Mountain Run Golf, Inc. 09-37000 dba Federal Club Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Eastern District of Virginia (Richmond) Judge: Chief Judge Douglas O. Tice Jr. Debtor's Counsel: Douglas Scott, Esq. Douglas A. Scott, PLC 1805 Monument Avenue, Suite 311 Richmond, VA 23220 Tel: (804) 257-9860 Email: BankruptcyCounsel@gmail.com Estimated Assets: $0 to $50,000 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 Richard Laibstain, president of the Company. MOVIE GALLERY: Late on Rents, May Shut 200 More Stores ------------------------------------------------------ Bloomberg News reported that Movie Gallery Inc. is renegotiating leases and past-due rent and may close 200 more stores as customers defect to mail-order and kiosk retailers. Movie Gallery has shuttered 250 stores since Sept. 1, cutting the number of outlets to 2,921, Bloomberg cited Chief Marketing Officer Clifford Torng as saying. Another 150 to 200 may close by year-end, he said. Movie Gallery, according to Bloomberg, failed to adapt to a changing market after leaving bankruptcy last year. Netflix Inc., which rents movies by mail, and Coinstar Inc., operator of Redbox kiosks, have taken customers from traditional stores, deepening the impact of an industrywide drop in DVD sales this year. "I don't think it's any secret that the industry is experiencing quite a radical shift," Torng said in an Oct. 27 telephone interview with Bloomberg. "We're looking to position ourselves as best we can for the long term." About Movie Gallery Movie Gallery, Inc. is a home entertainment specialty retailer serving urban, rural and suburban markets in North America. The Company owns and operates approximately 3,290 retail stores, located throughout North America, that rent and sell digital versatile discs (DVDs), blu-ray discs and video games. The Company operates through three brands: Movie Gallery, Hollywood Video and Game Crazy. In March 2007, the Company acquired substantially all of the assets, technology, network operations and customers of MovieBeam, Inc, an on-demand movie service. During the fiscal year ended January 6, 2008 (fiscal 2007), the Company ceased operations of its MovieBeam business. On May 20, 2008, the Company announced that it has emerged from Chapter 11 bankruptcy protection The Company and its debtor-affiliates filed for Chapter 11 protection on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Kirkland & Ellis LLP and Kutak Rock LLP represented the Debtors. The Bankruptcy Court confirmed a reorganization plan for Movie Gallery in April 2008, which paved way for the Company's emergence a month later. William Kaye was appointed plan administrator and litigation trustee. NETFLIX INC: Moody's Assigns 'Ba2' Corporate Family Rating ---------------------------------------------------------- Moody's Investors service assigned a Ba2 Corporate Family Rating and Ba1 Probability-of-Default Rating to Netflix, Inc. Additionally, Moody's assigned a Ba2 rating to Netflix's proposed $200 million issuance of senior unsecured notes and an SGL-1 speculative grade liquidity rating. Proceeds from the new note issuance will be used to repurchase stock, repay outstanding borrowings under the company's $100 million revolving credit facility, fund fees and expenses and for general corporate purposes. The one notch differential between Nexflix's CFR and PDR reflects the company's all bond debt structure (assuming the termination of its revolving credit facility upon completion of the note issuance), and the higher associated loss given default (LGD) expectation and lower probability of default relative to other Ba2-rated companies consistent with Moody's LGD Methodology. The rating outlook is stable. Netflix's Ba2 CFR reflects the company's position as the largest online movie rental subscription service in the U.S., low pro forma debt-to-EBITDA leverage of 1.9x for the trailing twelve months ended September 30, 2009 and Moody's expectation that leverage will be sustained at or below a relatively moderate 2.5x (including Moody's standard adjustments) level going forward. The rating also reflects the benefits the company garners from its significant level of cash and short-term investments (approximately $156 million as of September 30, 2009), its strong subscriber growth, positive yet modest free cash flow generation, meaningful scale and hybrid physical and digital service offering. Moody's also notably expects that the major motion picture studios will preserve the DVD business over the intermediate term, and that adoption and mass migration of consumers to new forms of distribution such as streaming will be beyond the next five years. However, the CFR also reflects the risks associated with the company's relatively young history, business concentration, low barriers to entry and the potential for disintermediation from alternative forms of content delivery as technology evolves over the longer-term. The rating is also impacted by the substantial level of competition in the distribution of content, the company's predisposition for share repurchases, relatively low EBITDA margins compared to traditional media, and significant subscriber churn. The company's SGL-1 speculative grade liquidity rating reflects Moody's expectation that a solid liquidity profile will be maintained over the next twelve months, and further assumes the termination of its $100 million revolving credit facility upon completion of the proposed note issuance. Moody's subscribers can find further details in the Netflix Credit Opinion published on Moodys.com. Ratings / assessments assigned: Netflix, Inc. * Corporate family rating -- Ba2 * Probability-of-default rating -- Ba1 * Senior unsecured notes -- Ba2 (LGD 5, 74%) * Speculative grade liquidity rating -- SGL-1 The rating outlook is stable. This is the first time Moody's has assigned ratings to Netflix. Netflix's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (iii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Netflix's core industry and believes Netflix's ratings are comparable to those of other issuers with similar credit risk. Netflix, Inc., with its headquarters in Los Gatos, California, is the largest online movie rental subscription service in the United States with annual revenues of approximately $1.6 billion. NETFLIX INC: S&P Assigns 'BB-' Rating, One Ding Lower Than Fitch's ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it assigned its 'BB-' corporate credit rating to Los Gatos, California-based Netflix Inc. At the same time, S&P assigned a 'BB-' rating and a '3' recovery rating to the company's proposed $200 million unsecured notes that matures in 2017. The notes will be issued under rule 144A with registration rights. The '3' recovery rating indicates that lenders can expect meaningful recovery of principal (50%- 70%). The outlook is stable. "Proceeds from the offering will be used to refinance the company's existing credit facility and for general corporate purposes including capital expenditures, share repurchases, working capital and strategic transactions," said Standard & poor's credit analyst Diane Shand. The ratings on Netflix reflect the risks of operating in a mature and declining video rental industry, the company's dependence on decisions made by movie studios, and the technology risks associated with delivery of video movies to the home. These risks are partially mitigated by Netflix's good market position though in a declining sector, good cash flow generating capabilities, ability to grow its subscriber base, and low leverage. Netflix is the No. 1 player in the by-mail video rental market, with 11 million subscribers. Blockbuster is its closest competitor with two million on-line subscribers. In terms of the overall rental market, Netflix is the third largest player with a 17% share, compared with Blockbuster's 27% share and Movie Gallery's 18% share. The remainder of the industry is highly fragmented. Netflix's business focus is different than Blockbuster's, because it focuses on library content, while Blockbuster's business primarily is new releases. S&P believes fundamentals in the video retail market are weak. The overall rental market has been declining since 2002. Adams Media Research forecasts that the DVD home-video market will decline 22% annually from 2009 to 2014, while the broadband home- video market will increase 63% annually over the same period (from $881 million in 2008 to $16.6 billion). The overall movie rental business is expected to grow less than 1% annually during the same period. Still, Netflix should be able to gain share from video rental stores for at least the next three to five years. As the overall DVD rental market declines, the economics of video stores will be pressured -- especially for independents, which represent about 38% of the DVD rental market. NEW CEDAR: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: New Cedar Holdings, LLC 805 Cross St Lakewood, NJ 08701 Case No.: 09-38636 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of New Jersey (Trenton) Debtor's Counsel: Timothy P. Neumann, Esq. Broege, Neumann, Fischer & Shaver 25 Abe Voorhees Drive Manasquan, NJ 08736 Tel: (732) 223-8484 Email: tneumann@bnfsbankruptcy.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. NEW CENTURY: Insurers Found Liable in Blast Fax Spat ---------------------------------------------------- Law360 reports that a magistrate judge has found that a $2 million settlement paid by New Century Mortgage Corp. to end a class action over unsolicited fax advertisements should be covered by its insurance policies under their "advertising injury" provisions. Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- is a real state investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. New Century Financial and its affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07- 10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Court confirmed the Debtors' second amended joint Chapter 11 plan on July 15, 2008. NEW RIVER BOAT: No Sanctions Imposed on Auctioneer -------------------------------------------------- WestLaw reports that although the auctioneer who conducted the failed auction of a Chapter 7 debtor's marina facility did not initially seek bids in increments of $100,000, as required by the bankruptcy court's sale order, the auctioneer's failure to do so was largely, if not wholly, cured when the auction was "restarted" and the bidding increment of $100,000 was thereafter honored. A bidder thus was not damaged or defrauded as a result of the auctioneer's conduct, a Florida bankruptcy court held, declining to impose sanctions. In re New River Boat Club, Inc., --- B.R. -- --, 2009 WL 3152470 (Bankr. S.D. Fla.) (Olson, J.). New River Boat Club, Inc., dba New River Marina, operated a full service marina near downtown Fort Lauderdale on the New River, and sought chapter 11 protection (Bankr. S.D. Fla. Case No. 07-11531) on March 7, 2007, represented by James H. Fierberg, Esq., in Miami. After unsuccessfully attempting to confirm a plan of liquidation, which included the sale of substantially all of its assets under Chapter 11, the case was converted to Chapter 7 on October 7, 2008. NORTEL CORP: Auction for GSM/GSM-R Postponed to Nov. 20 ------------------------------------------------------- Nortel Networks Corporation has preferred to schedule the auction in relation to the sale of its GSM/GSM-R business at a later date than initially planned. The anticipated auction date will be postponed from November 9, 2009 to November 20, 2009. Qualified bidders will be required to submit offers by November 16, 2009. As previously announced, Nortel plans to sell substantially all of its global GSM/GSM-R business by "open auction", including the transfer of specified patents predominantly used in the GSM business and granting of non-exclusive licenses of other relevant patents. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for our customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL CORP: CCAA Stay Extended Until December 18 ------------------------------------------------- Nortel Networks Corp. announced that it, its principal operating subsidiary Nortel Networks Limited and its other Canadian subsidiaries that filed for creditor protection under the Companies' Creditors Arrangement Act have obtained an order from the Ontario Superior Court of Justice further extending, to December 18, 2009, the stay of proceedings that was previously granted by the Canadian Court. The purpose of the stay of proceedings is to allow the Nortel companies to consummate planned sales, continue to advance in discussions with interested parties for the sale of its other businesses, continue to assess other restructuring alternatives if it is unable to maximize value through sales and file a plan of arrangement. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for our customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL CORP: $10-Mil. Sale of Packet Core Approved by Courts ------------------------------------------------------------ Nortel Networks Corp. announced that it, Nortel Networks Limited and Nortel Networks Inc., obtained orders from the United States Bankruptcy Court for the District of Delaware and the Canadian Court approving the agreement with Hitachi, Ltd. for the sale of certain assets associated with the development of next generation packet core network components for a purchase price of US$10 million. Under the agreement, the assets include software to support the transfer of data over existing wireless networks and the next generation of wireless communications technology, including relevant non-patent intellectual property, equipment and other related tangible assets, as well as a non-exclusive license of certain relevant patents and other intellectual property. Consummation of the transaction is subject to the satisfaction of regulatory and other customary conditions. The sale is expected to close in 2009. As previously announced, Nortel does not expect that the company's common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for our customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) ORYX TECHNOLOGY: To Liquidate Assets Out of Court ------------------------------------------------- Oryx Technology Corp. (Pink Sheets:ORYX), announced October 27 that its Board of Directors and its stockholders have determined that it is in the best interests of the Company to liquidate the Company's assets and to dissolve the Company. In connection with this determination, the Company's Board unanimously approved a Plan of Dissolution of the Company and stockholder approval subsequently took place on or about October 16, 2009, with more than 60% of the Company's outstanding shares voting to approve such dissolution upon written consent without a meeting, all as provided under Delaware law. The Plan of Dissolution contemplates an orderly wind down of the Company's business and operations. The Company filed a certificate of dissolution today October 27, 2009, its record date for determining stockholders entitled to share in its distribution of assets, if any. On the record date, the Company instructed its transfer agent to close its stockholder record books and cease securities transfers at the end of day when the market closes. Effective with the stockholders' action approving the dissolution, the Company ceased all operations other than those related to the shutdown. The Company intends to satisfy or resolve all its remaining known liabilities and obligations, including contingent liabilities, costs associated with the liquidation and dissolution, and has made reasonable provisions for unknown claims and liabilities. This includes payment of approximately $18,750 to its preferred stockholders, which amount represents the liquidation value of such preferred shares. Thereafter, the Company intends to distribute its remaining cash and/or other assets, if any, to its common stockholders as of the record date, on a pro rata basis. All such distributions will be subject to applicable legal requirements. The Company has analyzed its assets' liquidation value and currently estimates that the value of any distributions to common stockholders is likely to be nominal. After providing for the liabilities, the Company believes the only assets available for distribution to stockholders will be its direct holdings of S2 Technologies, a private, closely held company offering embedded systems design software. If the Company chooses to sell its S2 holdings for fair market value, in lieu of distributing the shares directly to shareholders it would then distribute the cash value thereof. At this time the Company cannot determine the value of its S2 Technologies but it presently expects same to be nominal, if any. The total amount of any distributions will also be based on a number of factors, including the resolution of outstanding known and contingent liabilities, the possible assertion of claims that are currently unknown to the Company and costs incurred to wind down the Company's business. The Company contemplates promptly sending a formal notice of these actions to all stockholders. In the interim, investors are urged to contact Philip Micciche for any questions. PACIFIC ENERGY: Cook Inlet Sale Hits Speed Bumps ------------------------------------------------ Law360 reports that Pacific Energy Resources Ltd. is facing a raft of objections to its proposed sale of oil and gas assets in Alaska's Cook Inlet region, a month after a bankruptcy judge gave Pacific Energy the go-ahead to abandon the facilities when no buyers initially emerged. Headquartered in Long Beach, California, Pacific Energy Resources Ltd. -- http://www.pacenergy.com/-- engages in the acquisition and development of oil and gas properties, primarily in the United States. The Company and seven of its affiliates filed for Chapter 11 protection on March 8, 2009 (Bankr. D. Del. Lead Case No. 09-10785). Attorneys at Pachulski Stang Ziehl & Jones LLP, represent the Debtors as counsel. The Debtors proposed Rutan & Tucker LLP as special corporation and litigation counsel; Schully, Roberts, Slattery & Marino, PLC, as special oil and gas and transactional counsel; Devlin Jensen as special Canadian counsel; Scott W. Winn, at Zolfo Cooper Management, LLC, as chief restructuring officer; Lazard Freres & Co. LLC as investment banker; and Albrecht & Associates, Inc., as agent for the Debtors in the sale of their oil and gas properties. Omni Management Group, LLC, is the claims, balloting, notice and administrative agent for the Debtors. When the Debtors filed for protection from their creditors, they listed between $100 million and $500 million each in assets and debts. PAMELA KAY ROBERTSON: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Pamela Kay Robertson 19289 Rt. 66 North Sayre, OK 73662 Bankruptcy Case No.: 09-16051 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Western District of Oklahoma (Oklahoma City) Judge: Richard L. Bohanon Debtor's Counsel: O. Clifton Gooding, Esq. The Gooding Law Firm 1200 City Place Building 204 N Robinson Avenue Oklahoma City, OK 73102 Tel: (405) 948-1978 Fax: (405) 948-0864 Email: cgooding@goodingfirm.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 $1,619,932, and total debts of $3,641,565. The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Ms. Robertson. PARLUX FRAGRANCES: In Talks with Bank to Extend Forbearance ----------------------------------------------------------- Parlux Fragrances, Inc., is currently in negotiations with Regions Bank regarding an extension of the forbearance period, which expires on October 28, 2009, under its Forbearance Agreement with Regions, effective as of August 31, 2009, with respect to certain obligations under the Loan and Security Agreement, dated as of July 22, 2008, as amended, with Regions Bank, as lender. The Company anticipates making an announcement regarding the extension in the next few days. Regions Bank Forbearance As reported by the Troubled Company Reporter, Parlux Fragrances and its subsidiary, Parlux Ltd., as borrowers, on August 31, 2009, entered into a Forbearance Agreement regarding its Loan and Security Agreement, dated as of July 22, 2008, with Regions Bank, as lender. The current outstanding principal balance under the Credit Agreement is $6,680,612. Pursuant to the Forbearance Agreement, Regions Bank has agreed to forbear from the exercise of certain rights and remedies that it has under the Credit Agreement and supporting documents until the earlier of (1) an additional event of default under the Credit Agreement, (2) an event of default under the Forbearance Agreement, or (3) October 28, 2009. The Company is currently negotiating replacement financing with several potential sources and expects to have a new financing arrangement in place in the near future. No assurance can be given that the Company will be able to enter into a new financing arrangement. About Parlux Fragrances Based in Fort Lauderdale, Florida, Parlux Fragrances, Inc. (Nasdaq:PARL) is a manufacturer and international distributor of prestige products. It holds licenses for Paris Hilton, Jessica Simpson, GUESS?, Nicole Miller, Josie Natori, Queen Latifah, Marc Ecko, Rihanna, Kanye West, XOXO, Ocean Pacific (OP), Andy Roddick, babyGund, and Fred Hayman Beverly Hills designer fragrances, as well as Paris Hilton watches, cosmetics, sunglasses, handbags and other small leather accessories. PC GROUP: Receives Delisting Notice From NASDAQ ----------------------------------------------- PC Group, Inc. on October 28 disclosed that it received a NASDAQ Staff Determination on October 22, 2009 indicating that the Company has not regained compliance with NASDAQ Marketplace Rule 5450(b)(1)(C) within the extension period granted to the Company through October 19, 2009. NASDAQ Marketplace Rule 5450(b)(1)(C) requires a $5 million minimum market value of publicly held shares for continued listing on The NASDAQ Global Market. The Company expects to file an appeal of the Staff Determination by October 29, 2009 and request a hearing before the NASDAQ Hearings Panel to review the Staff Determination, which will stay any action with respect to the Staff Determination until the Panel renders a decision subsequent to the hearing. There can be no assurance that the Panel will grant the Company's request for continued listing. If the Company's common stock were delisted, such delisting may have a material adverse impact on the price of its shares of common stock, the volatility of the price of its shares, and/or the liquidity of an investment in its shares of common stock. PC Group, Inc., formerly Langer, Inc., -- http://www.langercorporate.com/-- designs, manufactures and distributes medical products and services targeting the long-term care, orthopedic, orthotic and prosthetic markets. Through its wholly owned subsidiaries, Twincraft, Inc. and Silipos, Inc., the Company also offers a line of personal care products for the private label retail, medical and therapeutic markets. The Company sells its medical products primarily in the United States and Canada, as well as in more than 30 other countries, to national, regional, and international distributors. It sells personal care products primarily in North America to branded marketers of such products, specialty retailers, direct marketing companies, and companies that service various amenities markets. On January 18, 2008, the Company sold its wholly owned subsidiary, Langer (UK) Limited (Langer UK) to an affiliate of Sole Solutions, a retailer of specialty footwear based in the United Kingdom. PEACH HOLDINGS: Moody's Keeps 'C' Rating; Outlook Now Stable ------------------------------------------------------------ Moody's Investors Service confirmed the C corporate family and senior secured bank credit facility ratings of Peach Holdings Inc. and assigned a stable outlook. The rating action concludes the review for possible upgrade initiated on August 6, 2009. The confirmation of Peach's ratings reflects Moody's concern that the company has made only modest progress in establishing alternative funding sources. Peach continues to be materially financing constrained, which adversely affects its ability to generate revenues and maintain adequate liquidity. Furthermore, Moody's believes there is a heightened potential that Peach could fail to comply with the covenants in its debt agreement. Additionally, Moody's asset recovery analysis in the event of default supports debt ratings at the C level. Should Peach make material progress in establishing sound alternative funding sources in order to continue operations and maintain sufficient liquidity, the company's ratings could be considered for upgrade. The last rating action was on August 6, 2009, when Moody's placed the ratings on review for possible upgrade. Peach Holdings, Inc., is located in Boynton Beach, FL; the company reported assets of approximately $482 million at June 30, 2009. PFAU, PFAU: $23-Mil. Loan Extended; Joint Venture in the Works -------------------------------------------------------------- Yasheng ECO-Trade Corporation provided an update on a proposed joint venture with Pfau, Pfau & Pfau LLC. As announced by the Company on August 21, 2009, together with Yasheng Group, it entered a Memorandum of Understanding with Pfau members for the purpose of creating a joint venture for the development and operation of three properties owned by Pfau. On October 22, 2009, Pfau had reached an agreement with its secured creditor for an extension of its secured first position debt in the approximate amount of $23 million. The agreement has been approved by the bankruptcy court. "We are thrilled that an agreement has been reached on Pfau's properties, especially the 28,000 acre property that has been designated for an Olive Oil project," commented Yossi Attia, President and CEO of Yasheng ECO-Trade Corporation. "We are anxious to begin implementation of our plans. We believe the extension on the $23 million debt is a major step forward in establishing our joint venture." Pfau has commenced negotiations with its second and third level secured creditors and the Company will provide updates, if any, as further development occurs on the progress of the restructuring of Pfau's second and third secured debt. "Our goal, with the potential involvement of Yasheng Group, is to create an olive tree plantation within the United States as well as developing California grown and produced olive oil," said Greg Rubin, Chairman of Yasheng ECO-Trade Corporation. Dr. Rubin is headed to Moscow to meet Yasheng Group's Chairman and President to go over several projects with the Company, as well as other new business opportunities in Russia. There is no guarantee that Pfau will successfully exit bankruptcy or enter an extension or restructuring agreement with its second and third tier creditors, that a definitive agreement will be entered or that Yasheng Group will actively be engaged in this project. Headquartered in Beverly Hills, California, Yasheng ECO-Trade Corporation's business is the identification and acquisition of undervalued assets within emerging industries for the purpose of consolidation and development of these businesses and sale if favorable market conditions exist. The company is currently in the focused on the development of a logistics center in Southern California. Fallbrook, California based Pfau, Pfau & Pfau, LLC, is a real estate developer. The Company filed for Chapter 11 on Dec. 16, 2008 (Bankr. S.D. Calif. Case No. 08-12840). Thomas C. Nelson, Esq., represents the Debtor. The petition says assets total $130,767,480 while debts total $48,709,138. PHH CORP: Targets Realogy for Mortgages, to Renew Merrill Pact -------------------------------------------------------------- On October 26, Jerome J. Selitto was named as president and chief executive officer of PHH Corp. Mr. Selitto, who served most recently as a senior consultant and then member of the senior management team of mortgage industry software provider Ellie Mae and, before that, as Chief Executive Officer of DeepGreen Financial, an online home equity lender that he helped found, said PHH expects to increase loans through its partnership with Realogy Corp. and renew a contract with Bank of America Corp.'s Merrill Lynch unit. Mr. Selitto said in an October 27 interview with Bloomberg that PHH Corp. can win a greater share of Realogy customers because more than 130 lenders have failed since 2007 and remaining rivals keep changing underwriting rules. According to Bloomberg, Merrill Lynch contributed 21 percent of 2008 originations at PHH and was sold in January to Bank of America, which has its own mortgage unit. Mr. Selitto is seeking to bolster a turnaround at PHH, which was profitable in the first half after $282 million of losses from 2006 through 2008. About PHH Corporation Headquartered in Mount Laurel, New Jersey, PHH Corporation is a leading outsource provider of mortgage and vehicle fleet management services. Its subsidiary, PHH Mortgage Corporation, is one of the top five retail originators of residential mortgages in the United States, and its subsidiary, PHH Arval, is a leading fleet management services provider in the United States and Canada. On June 30, 2009, PHH reported $8.93 billion in assets against debts of $7.54 billion In August 2009, Fitch Ratings affirmed the long-term Issuer Default Rating of PHH at 'BB+ and short-term IDR at 'B'; -- Commercial paper at 'B', with a negative outlook. PHOENIX BUSINESS TRUST: Case Summary & 3 Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Phoenix Business Trust 39572 Avenida Bonita Murrieta, CA 92562 Bankruptcy Case No.: 09-35646 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Peter Carroll Debtor's Counsel: Vance F. VanKolken, Esq. 57310 Valley Vista Dr POB 390696 Anza, CA 92539 Tel: (951) 763-2114 Fax: (951) 763-4017 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 3 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-35646.pdf The petition was signed by Barry Blythe, trustee of the Company. PHOENIX ENTERPRISES: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Phoenix Enterprises, LLC 120 Central Street Rear Hudson, MA 01749 Bankruptcy Case No.: 09-44519 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Massachusetts (Worcester) Judge: Joel B. Rosenthal Debtor's Counsel: Stephan M. Rodolakis, Esq. Pojani, Hurley, Ritter & Salvidio, LLP 446 Main Street Worcester, MA 01608 Tel: (508) 798-2480 Email: phrsbankruptcy@yahoo.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 L. Pazzaneze, member/manager of the Company. PREMIER STORAGE CONDOS: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Premier Storage Condos. of N. Phx. LLC 22230 N. Black Canyon Hwy., Phoenix, AZ 85027-9012 Bankruptcy Case No.: 09-27321 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Debtor's Counsel: Richard H. Lee, Esq. Law Offices Of Richard H. Lee P.O. Box 7749 Phoenix, AZ 85011-7749 Tel: (602) 680-3420 Fax: (602) 680-3420 Email: lee@azbar.org Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Roger Farmer, member/manager of the Company. PRESTIGE REALTY: Case Summary & 9 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Prestige Realty & Developers, Inc. 953 E. Sahara Ave., Ste. 200 Las Vegas, NV 89104 Bankruptcy Case No.: 09-30312 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Debtor's Counsel: Samuel A. Schwartz, Esq. 626 S Third St Las Vegas, NV 89101 Tel: (702) 385-5544 Fax: (702) 385-2741 Email: sam@schwartzlawyers.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 $3,000,000, and total debts of $4,342,143. A full-text copy of the Debtor's petition, including a list of its 9 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-30312.pdf The petition was signed by Susan Crisp, officer of the Company. RAINIER PACIFIC: Receives Non-Compliance Notice From Nasdaq ----------------------------------------------------------- On October 23, 2009, Rainier Pacific Financial Group, Inc. received notice from the Nasdaq Stock Market stating that the market value of publicly held shares of the Company's common stock was below $5.0 million for 30 consecutive business days and that the Company was therefore not in compliance with Marketplace Rule 5450(b)(1)(c). The Rule provides the Company until January 21, 2010 to regain compliance. The Company can regain compliance if the Company's total market value of publicly held shares at market close is $5.0 million or more for ten consecutive business days. The Company intends to actively monitor the market value for its common stock between now and January 10, 2010 and will consider available options. Should the Company not regain compliance by January 10, 2010, Nasdaq will provide written notification to the Company that the Company's common stock will be delisted, and the Company could apply to transfer its common stock to The NASDAQ Capital Market if it satisfies all of the requirements other than the minimum bid price requirement for initial listing on The NASDAQ Capital Market set forth in Marketplace Rule 5505. Rainier Pacific Financial Group, Inc. -- http://www.rainierpac.com/-- is the bank holding company for Rainier Pacific Bank, a Tacoma, Washington-based state-chartered savings bank operating 14 full-service locations in the Tacoma- Pierce County and City of Federal Way market areas. RANCHER ENERGY: Files for Chapter 11 Reorganization --------------------------------------------------- Rancher Energy Corp. has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Rancher Energy Corp. intends to continue normal business operations today and throughout its reorganization process. Specifically, it expects to continue to: -- Provide employee wages, healthcare coverage, vacation, sick leave and similar benefits without interruption; and -- Pay suppliers for goods and services received during the reorganization process. "Rancher Energy is committed to continuing its business and successfully emerging from the reorganization process," said Jon Nicolaysen, President and CEO. "To be clear, we filed to restructure our debt and finances and our customers and employees can be confident that we intend to keep producing oil." "By filing for Chapter 11, we will now have the time and legal protection necessary to obtain additional financing and enhance our liquidity." Rancher Energy's Chapter 11 case was filed today in U.S. Bankruptcy Court for the District of Colorado. Rancher will be filing motions with the Court seeking interim relief that will ensure the Company's continued ability to conduct normal operations, including the ability to: -- Provide employee wages, healthcare coverage, vacation, sick leave and similar benefits without interruption; -- Use cash collateral to pay employees, suppliers and vendors; and -- Retain necessary professionals to assist in the reorganization. Rancher Energy's principal bankruptcy counsel is Dufford & Brown, P.C. About Rancher Energy Corp. Rancher Energy Corp. develops and produces oil in North America. It operates three fields, including the South Glenrock B Field, the Big Muddy Field, and the Cole Creek South Field in the Powder River Basin, Wyoming in the Rocky Mountain region of the United States. The company was formerly known as Metalex Resources, Inc. and changed its name to Rancher Energy Corp. in April 2006. Rancher Energy Corp. was founded in 2004 and is headquartered in Denver, Colorado. READER'S DIGEST: Gets Nod to Assumption of 29 Executory Contracts ---------------------------------------------------------------- The Reader's Digest Association, Inc., and certain of its debtor affiliates seek the Court's authority to assume certain executory contracts and cure any prepetition defaults arising under those contracts. A schedule of the Assumed Contracts is available for free at http://bankrupt.com/misc/RDA_Assume_Contracts_100609.pdf According to James H.M. Sprayregen P.C., Esq., at Kirkland & Ellis LLP, in New York, the goods and services the Debtors obtain pursuant to the Assumed Contracts relate generally to order fulfillment and processing, marketing and advertising, inbound and outbound customer care, warehousing and distribution, licensing and Web site design, hosting and maintenance. The Debtors anticipate paying $11,492,342 as cure to the Contract Parties. Mr. Sprayregen says the original aggregate cure amount that would be owed to the Contract Counterparties to assume the Contracts under a Chapter 11 plan is $12,765,170 but because of the Debtors' early assumption of the Contracts, the Contract Parties agreed to reduce the cure amounts to a total of $1,272,828. Creditors Committee's Statement The Official Committee of Unsecured Creditors filed a statement with the Court raising several concerns regarding the Debtors' omnibus motion to assume certain executory contracts and cure any prepetition defaults arising under those contracts. Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., in New York, points out that: (a) Given that the Debtors' proposed plan of reorganization provides for assumption of all contracts that are not previously rejected or identified in the Plan Supplement to be rejected, the Assumption Request could be viewed as premature; (b) In assuming the Contracts for the Cure Costs Savings now, the Debtors may be unjustifiably burdening their bankruptcy estates with administrative costs should the Contracts be breached or rejected before the Debtors exit from bankruptcy; and (c) In the context of a plan that poses challenging issues with respect to, among other things, valuation and disparate treatment of unsecured creditors, the Creditors' Committee is hard pressed to understand how the modest Cure Costs Savings justify paying $11 million now when unsecured creditors are slated to receive a distribution ranging from zero to a pro rata share of $3 million under the Proposed Plan. The Assumption Request does not make a compelling case for why the Contracts could not be assumed a mere two months or so in the future pursuant to the Proposed Plan, Mr. Hazan argues. He notes that as the Debtors concede, executory contracts remain in effect and creditors are bound to honor them, and that the financial resources of their DIP Financing provide the Contract Parties with sufficient adequate assurance of future performance. Mr. Hazan further points out that the Debtors do not face any justifiable or reasonably predictable loss on account of the Contract Parties not performing in accordance with the current terms of the Contracts. He adds that the Cure Cost Savings are modest and the Debtors propose to make only non-essential modifications to the Contracts. "With a cautious eye on the issue of valuation that must be faced in these cases and focusing on the paramount goals of maximizing the recovery for all unsecured creditors and the Debtors exiting bankruptcy as a viable going concern, the Committee remains committed to cooperating with the Debtors with the hope of reaching a basis for a consensual plan of reorganization," Mr. Hazan says. As a result, the Creditors Committee says it has determined not to object to the Assumption Request, but feels compelled to express its concerns. * * * The Court granted the Debtors' request. Judge Drain authorized the Debtors, but not directed, to assume the Contracts, as same may have been or may be modified by agreement of the parties, provided that the modification is not adverse to the Debtors' bankruptcy estates. In light of concessions made by, and compromises reached among, the Debtors and the Contract Parties with respect to the assumption of the Contracts and to ensure the Debtors are able to obtain the goods and services provided by the Contract Parties for the duration of the Chapter 11 cases, the Debtors are authorized to pay the Cure Amounts set forth on the Debtors' assumption schedule. Judge Drain also maintained that all costs payable under the terms of the Order on account of Cure Amounts to the Contract Parties, pursuant to Section 365(b)(1)(A) of the Bankruptcy Code, will be paid in cash by October 29, 2009, upon which payment, (i) the Contract Parties will be deemed adequately assured of the Debtors' future performance with respect to the Contracts, and (ii) the Debtors will be deemed to have fully cured and finally satisfied all prepetition defaults arising under the Contracts required to be cured under Section 365(b)(1)(A), provided that payment of the Cure Amounts will neither constitute nor be deemed or construed as an administrative expense under Section 503. 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: LV Estate Wants Lift Stay to Commence Suit ----------------------------------------------------------- The plan administrator and the Official Committee of Unsecured Creditors of LV Liquidation Corp., formerly known as Lillian Vernon Corporation, ask the U.S. Bankruptcy Court for the Southern District of New York pursuant to Section 362(d)(1) of the Bankruptcy Code to modify the automatic stay so that the LV Estate Parties may file a claim objection and initiate an adversary proceeding in the LV Debtor's bankruptcy case against Direct Holdings U.S. Corp., a Debtor in the bankruptcy cases of The Reader's Digest Association Inc. Jay R. Indyke, Esq., at Cooley Godward Kronish LLP, in New York, relates that DHUS possesses by far the largest and one of the last disputed claims against the LV Debtor, who has confirmed a plan of liquidation, fully-administered and closed the LV Debtor's affiliate bankruptcy estates, and is in the process of winding down its affairs so that it may make distributions to holders of allowed unsecured claims and close the LV Debtor's Chapter 11 case. DHUS was also a party to a transaction that was the proximate cause of the LV Debtor's and its affiliates' bankruptcy. After thorough review and investigation, Mr. Indyke contends that the LV Estate Parties have concluded that (i) the DHUS Claim is without merit, and is the proper subject of a claim objection, and (ii) an adversary proceeding should be commenced against DHUS as a result of its role, and the role of its direct and indirect affiliates, in the LV Debtors' bankruptcy and subsequent liquidation. The LV Estate Parties, however, are precluded by the automatic stay imposed by the commencement of the Debtors' Chapter 11 cases from taking the necessary actions to expunge the DHUS Claim, which must be objected to before December 7, 2009, under the terms of the plan confirmed in the LV Case, Mr. Indyke tells Judge Drain. Hence, and because the DHUS Claim must be adjudicated before the Plan Administrator can make distributions to holders of allowed unsecured claims and fully administer the LV Debtor's estate, he asserts that the pendency of the DHUS's Chapter 11 case has in effect handcuffed the LV Estate Parties from taking the steps necessary to wind-down the LV Case. The LV Debtor's present inability to object to the DHUS Claim has the potential to significantly prejudice the interests of the LV Debtor's estate, Mr. Indyke further contends. Indeed, he asserts, if the Plan Administrator is unable to file an objection to the DHUS Claim before the fast-approaching claims objection deadline, then the unmeritorious DHUS Claim will be deemed allowed under the Plan and DHUS will receive a large distribution from the remaining assets of the LV Debtors' estates, one to which it is not entitled, to the severe detriment of the holders of properly allowed unsecured claims. Accordingly, the LV Estate Parties submit that cause exists to modify the automatic stay to allow the Plan Administrator to file an objection to the DHUS Claim and the LV Committee to commence an adversary proceeding against DHUS. A hearing to consider LV Estate Parties' request will be held on November 20, 2009. Objections to the request are due November 16. 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: Targets December Confirmation Hearings ------------------------------------------------------- The Reader's Digest Association, Inc., and its debtor affiliates ask Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York to approve the disclosure statement explaining their Joint Plan of Reorganization dated October 10, 2009, and to find that the Disclosure Statement contains "adequate information" pursuant to Section 1125 of the Bankruptcy Code. Section 1125 of the Bankruptcy Code provides that a plan proponent must provide holders of impaired claims with adequate information regarding a proposed plan of reorganization for a debtor. James H.M. Sprayregen P.C., Esq., at Kirkland & Ellis LLP, in New York, contends that the Disclosure Statement contains the pertinent information necessary for holders of eligible claims to make an informed decision about whether to vote to accept or reject the Plan. In connection with their recently filed Join Plan of Reorganization and accompanying Disclosure Statement, the Debtors ask the Court to approve procedures for the solicitation and tabulation of votes to accept or reject the Plan, including: (a) the form and manner of the previously circulated Disclosure Statement Hearing Notice pursuant to the Court's order establishing certain notice, case management and administrative procedures; (b) establishing November 5, 2009, as the record date; (c) approving the forms of ballots; (d) approving the solicitation packages and procedures for their distribution; (e) establishing procedures for voting on the Plan; (f) scheduling a hearing and establishing notice and objection procedures in respect of confirmation of the Plan; (g) approving rights offering procedures and the subscription form; and (h) authorizing the Debtors to retain Financial Balloting Group LLC, as subscription agent in connection with the Rights Offering. The Debtors also propose these Plan confirmation schedule: Event/Deadline Date/Schedule -------------- ------------- Disclosure Statement November 3, 2009 Objection Deadline Disclosure Statement November 5, 2009 Hearing Record Date November 5, 2009 Solicitation Deadline Five days from date Solicitation Procedures Order is entered Deadline to Publish the November 23, 2009 Confirmation Hearing Notice Voting Resolution Event November 30, 2009 Deadline Plan Supplement December 2, 2009 Filing Date Voting Deadline December 7, 2009 Plan Objection Deadline December 7, 2009 Deadline to Reply to December 13, 2009 Confirmation Objections Confirmation Hearing December 18, 2009 The Debtors also propose the following schedule for the Rights Offering: Event/Deadline Date/Schedule -------------- ------------- Record Date November 5, 2009 Subscription Five days from date Solicitation Commencement Date Procedures Order is entered Subscription Expiration December 7, 2009 Date The Debtors also seek the Court's permission to employ Financial Balloting Group LLC as subscription agent in connection with the Rights Offering and pursuant to an engagement letter between the Debtors and FBG, dated as of October 19, 2009. The person at FBG with primary responsibility for fulfilling the Debtors' requirements in the cases will be Jane Sullivan, FBG's executive director. Among other things, FBG provide advice to the Debtors and their counsel regarding the subscription procedures and documents needed for the Rights Offering, and establish a subscription account for the Debtors in connection with FBG's role as subscription agent. The Chapter 11 Plan The Reader's Digest Association, Inc., and its debtor affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York their Joint Plan of Reorganization on October 10, 2009, and a Disclosure Statement for that Plan on October 9. The Plan provides for certain financial restructurings for the Debtors, cancellation of equity, and the issuance of new common stocks. The Plan also provides for, among other things, post- emergence capital structure and exit credit agreement. Under the Plan, holders of unsecured claims related to ongoing operations will receive 100 cents on the dollar. Other unsecured creditors will recover 2.5% to 2.7% of their claims. A full-text copy of the Chapter 11 Plan is available for free at http://bankrupt.com/misc/RDA_Chapter_11_Plan_101009.pdf A full-text copy of the Disclosure Statement explaining the Chapter 11 Plan is available for free at: http://bankrupt.com/misc/RDA_DisclosureStatement_100909.pdf 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: U.S. Trustee Opposes Waiver of Sec. 345 Rules -------------------------------------------------------------- Section 345(b) of the Bankruptcy Code and the United States Trustee's Operating Guidelines and Reporting Requirements were promulgated to protect all creditors of bankrupt entities against the loss of estate funds deposited or invested by debtors. To recall, on August 26, 2009, the Court granted, on an interim basis, the Debtors' request to continue their existing cash management system, to waive requirements of the Section 345 investment guidelines, and to continue to invest their cash in accordance with their prepetition Investment Policy. The Debtors subsequently sought the Court's permission to continue to utilize certain foreign bank accounts in the ordinary course of their business. Diana G. Adams, the United States Trustee for Region 2, submits a limited objection to the Debtors' request to waive the requirements of Section 345(b) and the Guidelines, and to permit them to maintain estate funds in unprotected, foreign and U.S. bank accounts. "The Debtors have failed to establish their burden of proof that actual 'cause' exists for the Court to excuse compliance with the Bankruptcy Code and the Guidelines," Ms. Adams contends referring to the use of the foreign bank accounts. She points out that the request is unsupported by affidavit or other competent evidence to warrant the Court's waiving the protections in Section 345(b). "Without more, the Debtors' request appears more convenience-based than based upon the requisite cause to waive the statutory requirements," Ms. Adams tells the Court. Hence, she asks the Court to deny the request for waiver. Should the Court determine that cause exists for one or more of the bank accounts to remain open, she asserts that the Debtors should be required to obtain the appropriate bond in favor of the United States of America or other security. 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) RECTICEL NORTH AMERICA: Files for Bankruptcy -------------------------------------------- Recticel North America filed for bankruptcy October 29 in Detroit (Bankr. E.D. Mich. Case No. 09-73411). Recticel North America is a maker of dashboards and glove boxes for cars. Steven Church at Bloomberg News reported that Recticel blamed the filing on declining automobile sales. The Company "underestimated the material cost and number of employees required to produce consistently high-quality components," Recticel Director of Finance and Accounting Derek Strehl said in court papers. The company has been losing $860,000 a month on two supply contracts. The Auburn Hills, Michigan-based Recticel North America, an affiliate of Belgium foam-maker Recticel SA, listed debt of between $100 million and $500 million and assets of less than $50 million in a Chapter 11 petition filed in Detroit. Recticel and its affiliate Recticel Interiors North America, which also filed for bankruptcy, employ 252 people and have manufacturing plants in Auburn Hills and in Tuscaloosa, Alabama. The interior trims the companies make are used in the Mercedes- Benz M-Class, the Cadillac STS and the Buick Enclave. R.H. DONNELLEY: Brower Piven Leads Class Suit for Shareholders -------------------------------------------------------------- Brower Piven disclosed that a class action lawsuit has been commenced in the United States District Court for the District of Delaware on behalf of purchasers of the publicly traded securities of RH. Donnelley Corporation during the period between, July 26, 2007, and May 28, 2009, inclusive. No class has yet been certified in the above action. Members of the Class will be represented by the lead plaintiff and counsel chosen by the lead plaintiff. If you wish to choose counsel to represent you and the Class, you must apply to be appointed lead plaintiff no later than December 22, 2009 and be selected by the Court. The lead plaintiff will direct the litigation and participate in important decisions including whether to accept a settlement and how much of a settlement to accept for the Class in the action. The lead plaintiff will be selected from among applicants claiming the largest loss from investment in the Company during the Class Period. You are not required to have sold your shares to seek damages or to serve as a Lead Plaintiff. The complaint accuses the defendants of violations of the Securities Exchange Act of 1934 by virtue of the Company's failure to disclose during the Class Period that the Company was not adequately reserving for its bad debts in violation of GAAP, causing its financial results to be materially misstated; that the Company was experiencing lower advertising revenue not only due to cyclical challenges, as represented, but was also due to a permanent shift in customers moving away from print yellow pages advertising; and the true extent of the Company's exposure to liquidity concerns and ratings downgrades such that the Company had no reasonable basis to make projections about its 2008 results. According to the complaint, as the truth began to evolve until the Company filed for bankruptcy on May 29, 2009, the value of RH Donnelley's stock declined significantly. If you have suffered a net loss for all transactions in RH Donnelley publicly traded securities during the Class Period (including shares or possibly calls purchased during, but not sold until after the end of the Class Period or possibly put options sold but not covered until after the end of the Class Period), you may obtain additional information about this lawsuit and your ability to become a lead plaintiff by contacting: Brower Piven at http://www.browerpiven.com hoffman@browerpiven.com 410-986-0036 Brower Piven A Professional Corporation, The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202. 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: Izard Nobel LLP Files Class Action Lawsuit ---------------------------------------------------------- The law firm of Izard Nobel LLP, which has significant experience representing investors in prosecuting claims of securities fraud, announces that a lawsuit seeking class action status has been filed in the United States District Court for the District of Delaware on behalf of purchasers of the securities of R.H. Donnelley Corporation between July 26, 2007 and May 28, 2009, inclusive. The complaint charges that R.H. Donnelley's directors and officers violated federal securities laws by issuing misleading statements concerning the Company's business and financial results. The complaint further alleges that defendants caused the company to fail to properly account for its bad debt expense and timely write down its impaired goodwill. As a result of defendants' false and misleading statements, R.H. Donnelley's stock traded at artificially inflated prices during the Class Period, trading as high as $66.67 in July 2007. However, beginning in February 2008, defendants began to acknowledge problems in the Company's operations and with its financial results. On March 12, 2009, R.H. Donnelley announced that it had retained a financial advisor to assist in the evaluation of its capital structure, including various balance sheet restructuring alternatives. Then, on May 29, 2009, R.H. Donnelley filed for bankruptcy. The stock now trades at around six cents per share. If you are a member of the class, you may, no later than December 22, 2009, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a class member that acts on behalf of other class members in directing the litigation. Although your ability to share in any recovery is not affected by the decision whether or not to seek appointment as a lead plaintiff, lead plaintiffs make important decisions which could affect the overall recovery for class members. Izard Nobel LLP http://www.izardnobel.com/rhdonnelley/ Izard Nobel LLP (800) 797-5499 firm@izardnobel.com. 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) RICHARD BULAN: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Richard R. Bulan aka Richard R. Bulan aka Richard Bulan 446 Old County Rd., 2nd Floor Pacifica, CA 94044 Bankruptcy Case No.: 09-33310 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Northern District of California (San Francisco) Debtor's Counsel: Guy A. Odom Jr., Esq. Law Offices of Guy A. Odom Jr. 800 W El Camino Real #180 Mountain View, CA 94040 Tel: (650) 965-4400 Email: odomlawoffices@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Mr. Bulan. RIDER AUTO: May Sell Some Assets to Sutliff Motors -------------------------------------------------- Nick Malawskey at Centre Daily Times reports that John Sutliff owner of Sutliff Motors and could become Sutliff Buick, GMC, and Cadillac may purchase some of Rider Auto, Inc.'s General Motors assets. According to Centre Daily, The Hon. John J. Thomas of the U.S. Bankruptcy Court for the Middle District Bankruptcy Court in Wilkes-Barre has approved a sales agreement between Rider Auto and Sutliff Motors, contingent on a small modification in the sale agreement's language. The language to be agreed upon deals mostly with Rider Auto's Pontiac assets, a brand that is also being phased out by General Motors, Centre Daily states, citing Sutlif Motors' lawyer, Tim Hoy. Centre Daily relates that the groups involved in the sale have seven days to agree on final language within the sales agreement. State College, Pennsylvania-based Rider Auto, Inc., was one of the largest dealerships in Centre County. The Company filed for Chapter 11 bankruptcy protection on December 1, 2008 (Bankr. M.D. Pa. Case No. 08-04493). Robert E. Chernicoff, Esq., at Cunningham and Chernicoff PC assists the Company in its restructuring efforts. The Company listed $1,000,000 to $10,000,000 in assets and $1,000,000 to $10,000,000 in debts. RIVERHEAD PARK: Landowner Stops Foreclosure with Chapter 11 ----------------------------------------------------------- Riverhead Park Corp. owns a vacant parcel of land in Riverhead, New York. On October 27, it filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 09-78152) to stop the next day's foreclosure of a $5.8 million mortgage. The lender is Parlex Investors LLC. The petition claims the property, on the east end of Long Island, is worth $10 million. Debt, almost all secured, totals $6 million. RIVERHEAD PARK: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Riverhead Park Corp. 1747 Old Country Road Riverhead, NY 11901 Case No.: 09-78152 Type of Business: The Debtor operates a real estate business. Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Eastern District of New York (Central Islip) Judge: Robert E. Grossman Debtor's Counsel: Harold M. Somer, Esq. 1025 Old Country Road, Suite 404 Westbury, NY 11590 Tel: (516) 248-8962 Fax: (516) 333-0654 Email: harold.somer@verizon.net Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $10,020,000, and total debts of $5,995,696. The petition was signed by Mr. Sheikh. Debtor's List of 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Edward J. Bagley $150,000 c/o Thomas J. Mcgann, Esq. Andrew J. Campanelli & $8,348 Assoc. RITCHIES AUCTIONEERS: Forced Into Bankruptcy -------------------------------------------- Toronto Star reports that Ritchies Auctioneers has been forced into bankruptcy by its landlord, after months of financial turmoil surrounding the business. Toronto Star relates that former Ritchies Auctioneers President Stephen Ranger had been trying to acquire the Company from majority owner Ira Hopmeyer for much of the past year, but talks reportedly descended into formalized bickering, which led to Mr. Ranger's resignation. According to Toronto Star, there were allegations of funds withdrawn from Ritchies Auctioneers accounts that thwarted talks. Ritchies Auctioneers regularly held multi million-dollar auctions in Toronto. ROBERT MACKLIN: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Robert L. Macklin 1584 Avalon Ave Augusta, GA 30909 Bankruptcy Case No.: 09-12685 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Southern District of Georgia (Augusta) Debtor's Counsel: James C. Overstreet Jr., Esq. Klosinski Overstreet, LLP #7 George C. Wilson Ct. Augusta, GA 30909 Tel: (706) 863-2255 Fax: (706) 863-5885 Email: jco@klosinski.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 $3,224,482, and total debts of $1,629,922. A full-text copy of Mr. Macklin's petition, including a list of his 7 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/gasb09-12685.pdf The petition was signed by Mr. Macklin RURAL/METRO CORP: Refinancing Cues S&P to Update CreditWatch ------------------------------------------------------------ Standard & Poor's Ratings Services said that it has updated its CreditWatch listing on Rural/Metro Corp. and its subsidiary, Rural/Metro LLC. The Oct. 20, 2009, CreditWatch listing was prompted by the plans of Rural/Metro Corp. to refinance its credit facility due 2011, including its revolver due 2010, and to launch a tender offer for its 12.75% senior discount notes due 2016. The refinancing will extend the maturity of the credit facility and give the company the ability to continue to use its free cash flow to prepay debt. Since 2005, the company has used $64 million of internally generated funds to reduce its senior secured debt. Additionally, the tender offer of the senior discount notes, which convert to cash-pay in March 2010, reduces the complexity of the capital structure by eliminating the restricted payments basket associated with that debt. Moreover, the refinancing of the high- cost senior discount notes would likely reduce the company's annual cash interest expense. "If the proposed refinancing and tender offer are successful, S&P expects the corporate credit rating to be upgraded to 'B+' from 'B'; S&P expects the rating outlook to be stable," said Standard & Poor's credit analyst Rivka Gertzulin. Additionally, because there will be additional debt senior to the senior subordinated notes due 2015, the recovery rating would be revised to '5' from '4', indicating the expectation for a modest (10%-30%) recovery. The issue rating on those notes would remain 'B' (one notch lower than the expected corporate credit rating). SALTON INC: S&P Assigns Corporate Credit Rating at 'B' ------------------------------------------------------ Standard & Poor's Ratings Services said it assigned its 'B' corporate credit rating to small appliance manufacturer Salton Inc. The outlook is stable, reflecting S&P's expectation that the company will continue to improve its operating performance and credit measures. In addition, Standard & Poor's assigned its issue-level and recovery ratings to Salton's proposed $180 million senior secured term loan maturing 2013. The facility is rated 'B', the same as the corporate credit rating. The recovery rating is '4', indicating S&P's expectation that lenders will have average recovery (30%-50%) in the event of a payment default. The company will use proceeds from the $180 million term loan to pay fees and expenses and to refinance existing debt of about $160 million. "The ratings on Salton Inc. reflect the company's narrow business focus, participation in the highly competitive small appliance industry, customer concentration, and leveraged financial profile," said Standard & Poor's credit analyst Rick Joy. The company benefits from its portfolio of well recognized brands, leading positions in the kitchen appliance market, and geographic diversification. Salton Inc. is a marketer and distributor of small kitchen and home appliances, pet and pest products, and personal care products. It sells through mass merchandisers, specialty retailers, and appliance distributors primarily in North America, South America, Europe, and Australia. In December 2007, Salton merged with Applica Inc., and the resulting portfolio of brands currently includes Black & Decker, George Foreman, LitterMaid, Orva, Toastmaster, Farberware, Juiceman, Breadman, and Russell Hobbs. Salton holds market leading positions in kitchen products but has high customer concentration, with the top four customers accounting for more than 40% of total revenues. The overall small appliance industry has low growth, and is characterized by the commodity nature of the products, and its susceptibility to overall consumer spending trends. The outlook is stable reflecting S&P's expectation that the company will maintain its market positions, improve profitability, and reduce debt leverage over the near term, despite the current difficult economic environment. S&P expects leverage to trend toward the 6x area to maintain the stable outlook. S&P estimate that given the company's cost structure improvements and anticipated input cost savings, sales could decline at a mid single-digit rate over the next 12 months and still result in leverage in the 6x area. If Salton encounters operating shortfalls and/or if credit measures deteriorate, S&P could revise the outlook to negative. The current ratings and outlook do not incorporate any debt-financed dividends or acquisitions. If the company can continue to improve performance and EBITDA margins, maintain adequate liquidity and reduce leverage to below the rating category medians, S&P could revise the outlook to positive. SCOTT CONSTRUCTION: Equipment Auctioned Off After Foreclosure ------------------------------------------------------------- WCAX News reports that Scott Construction is being liquidated. WCAX News relates that the Chittenden Bank foreclosed on Scott Construction and auctioned off its equipment earlier this month. According to WCAX News, the city of Montpelier accidentally overpaid Scott Construction three years ago and was only paid back a fraction of the money before the Company went collapsed. SEQUENOM INC: Settles Ibis Biosciences Patent Suit; to Get $1-Mil. ------------------------------------------------------------------ Sequenom, Inc., reports that on October 22, 2009, it entered into a Non-Exclusive License and Settlement Agreement with Ibis Biosciences, Inc., related to the settlement of patent infringement litigation filed by Sequenom against Ibis Biosciences in the U.S. District Court for the District of Delaware. Ibis Biosciences has agreed to pay Sequenom $1 million within 30 days. Sequenom has agreed to grant Ibis Biosciences and its affiliates, including Abbott Laboratories, a non-exclusive license under the three mass spectrometry-based patents involved in the lawsuit and certain pending mass-spectrometry-based applications and foreign counterparts to manufacture, use, practice, sell, offer to sell, and import products and methods protected by the licensed patents. Sequenom also agreed to dismiss the litigation with prejudice and have granted Ibis Biosciences, and its affiliates, immunity from suit for patent infringement for past, present or future damages related to Ibis Biosciences' T5000 Biosensor System and T6000 System. About Sequenom Inc. Sequenom, Inc. (NASDAQ:SQNM) is a diagnostic testing and genetics analysis company. The Company is focused on providing products, services, diagnostic testing, applications and genetic analysis products that translate the results of genomic science into solutions for biomedical research, translational research, molecular medicine applications, and agricultural, livestock and other areas of research. At June 30, 2009, the Company's balance sheet showed total assets of $113.8 million, total liabilities of $26.3 million and stockholders' equity of $87.5 million. The Company added that there is substantial doubt about its ability to continue as a going concern. Although the Company related that its cash, cash equivalents and current marketable securities will be sufficient to fund its operating expenses and capital requirements through 2010, it will require significant additional financing in the future to fund its operations. SILVER FALLS BANK: FDIC Orders Online Auction of FF&E ----------------------------------------------------- Penny Worley Auctioneers announces the online auction of furniture, fixtures and equipment from FDIC Receivership for Silver Falls Bank in Salem and Silverton, Ore., according to Jerry Jenkins. Items in this online bank auction include: computers, executive office furniture, IT equipment, copier/printers, office equipment, vaults, storage and shelving, as well as bank technology like check readers, coin sorters and currency counters. "This is a great opportunity to purchase computer and IT equipment along with office furniture," said Jenkins. "All of these items will sell to the highest bidders." Jenkins said the items were ordered sold by the Federal Deposit Insurance Corporation (FDIC) as receivership for Silver Falls Bank. In 2008, Penny Worley Auctioneers was named an official auctioneer for the FDIC. The online auction is open to the public. Bidding ends November 18. Bidders must register prior to bidding. For more information, visit http://www.WorleyAuctioneers.com/,or call Jerry Jenkins at (513) 313-9178. About Silver Falls Bank Silver Falls Bank, based in Silverton, Oregon, was closed on Feb. 20, 2009, by the Oregon Department of Consumer and Business Services, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Citizens Bank, Corvallis, Oregon, to assume all of the deposits of Silver Falls Bank. As of February 9, 2009, Silver Falls Bank had total assets of approximately $131.4 million and total deposits of $116.3 million. Citizens Bank did not pay a premium to acquire the deposits of Silver Falls Bank. SILVER STATE: Student Loan Xpress to Forgive $112.8MM in Loans -------------------------------------------------------------- Brian Maffly at The Salt Lake Tribune reports that Student Loan Xpress will forgive $112.8 million in loans to Silver State Helicopter LLC's 2,300 flight students. The Salt Lake Tribune notes that up to 75% of their debt to Student Loan will be erased under the agreement reached between Silver State and 12 states' attorneys general. According to The Salt Lake Tribune, the amount of debt each student will have forgiven depends on how much of their training was completed at the time Silver State collapsed. The agreement, says the report, also prevents Student Loan from conveying negative information about borrowers to credit-reporting agencies. Silver State Helicopters, LLC, filed a voluntary petition for Chapter 7 liquidation on February 4, 2008. James F. Lisowski, Sr., was appointed as bankruptcy trustee to administer the case. The petition was a "skeleton" petition inasmuch as it was accompanied only by a list of 20 largest unsecured creditors and a mailing matrix, but no schedules of assets and liabilities or a statement of financial affairs. Affiliate Silver State Services Corp. also filed for Chapter 7 bankruptcy. SIMMONS CO: Tempur to Dismiss Patent Infringement Litigation ------------------------------------------------------------ Simmons Bedding Company disclosed that Tempur-Pedic Management, Inc. and Tempur-Pedic North America, LLC have agreed to voluntarily dismiss the patent infringement lawsuit that Tempur- Pedic filed on June 10, 2009 in the U.S. District Court for the Western District of Virginia. The suit named 17 mattress manufacturers, including Simmons and its subsidiary, The Simmons Manufacturing Co., LLC. The Tempur-Pedic lawsuit alleged that two Simmons products infringed its U.S. Patent No. 7,507,468, titled "Laminated Visco- Elastic Support". Simmons denied Tempur-Pedic's allegations of infringement and in addition, requested that the U.S. Patent and Trademark Office reexamine the validity of the '468 Patent. Tempur-Pedic cited Simmons' request that the USPTO reexamine the validity of the '468 Patent as the impetus for its decision to dismiss the lawsuit. Pursuant to the terms of the settlement agreement, the lawsuit will be dismissed without prejudice subject to the court's entry of a stipulated order. Stephen G. Fendrich, President and Chief Operating Officer of Simmons, said, "We're pleased that Tempur-Pedic has made the decision to end this legal action against Simmons. We maintain that the '468 Patent is not valid and its review by the USPTO through the reexamination process remains pending." Prepack Chapter 11 Plan As reported by the TCR on October 21, 2009, Simmons Bedding Co. and its parent Simmons Co. are soliciting votes on a prepackaged reorganization plan. According to the disclosure statement included in the pre- bankruptcy solicitation package sent to debtholders, holders of $298,775,125 in 10% senior discounted notes issued by the holding company will recover 3.7% to 5.6% by splitting $10 million to $15 million cash. They also have the right to trade cash for ownership of Class A common stock. Holders of $221 million in 7.875% senior subordinated notes due 2014 issued by SBC, the operating company, will divide $185 million to $190 million cash for a recovery of 83.4% to 85.7%. Trade creditors and other unsecured creditors with $56.7 million in claims are to be paid in full. Lenders owed $542 million for borrowings made to SBC and secured by first priority liens on the assets, will also be paid in full in cash. Holders of equity interests in SBC and Holdco won't receive anything. Holders of equity interests in Bedding Holdco Incorporated will not receive distributions on account of their equity interests, but will obtain recovery on account of their ownership of Holdco Note Claims. Creditors will receive the high end of their projected recovery if restructuring expenses by Simmons won't exceed $38 million. Ares Management LLC and Ontario Teachers' Pension Plan, the sponsors of the plan, will acquire Simmons in return for a $310 million equity investment and $425 million in exit financing. Simmons is soliciting votes from senior bank lenders, holders of its 7.875% senior subordinated notes, and holders of Simmons' 10% discount notes. The consent solicitation will expire on November 12, 2009, unless extended. The disclosure statement assumes a Chapter 11 filing Nov. 15. In connection with the plan, Simmons Bedding also has arranged for a $35 million debtor in possession revolving credit facility with certain lenders, pursuant to which Deutsche Bank Trust Company Americas will act as the administrative agent and collateral agent and Deutsche Bank Securities Inc. will act as the sole book runner and lead arranger. A copy of the Disclosure Statement, which was filed with the Securities and Exchange Commission, is available for free at: http://researcharchives.com/t/s?4728 A copy of the Plan Sponsor Agreement is available for free at: http://researcharchives.com/t/s?45a6 About Simmons Company Simmons Company -- http://www.simmons.com/-- is one of the top three US mattress makers alongside rivals Sealy and Serta. Simmons Bedding Company is the indirect subsidiary of Simmons Company. Simmons Bedding manufactures and markets a broad range of products including Beautyrest(R), Beautyrest Black(R), Beautyrest Studio(TM), ComforPedic by Simmons(TM), ComforPedic Loft(TM), Natural Care(R), Beautyrest Beginnings(TM) and BeautySleep(R). Simmons Bedding operates 19 conventional bedding manufacturing facilities and two juvenile bedding manufacturing facilities across the United States, Canada and Puerto Rico. Simmons Bedding also serves as a key supplier of beds to many of the world's leading hotel groups and resort properties. Simmons Bedding is committed to developing superior mattresses and promoting a higher quality sleep for consumers around the world. As of June 27, 2009, Simmons Co. had $895.9 million in total assets and $1.26 billion in total liabilities, resulting in stockholder's deficit of $367.5 million. Weil, Gotshal & Manges LLP is acting as legal counsel and Miller Buckfire & Co., LLC is acting as financial advisor to Simmons. Sullivan & Cromwell LLP is acting as legal counsel and Goldman, Sachs & Co., is acting as financial advisor to Ares and Teachers'. SOUTH MARSH: Section 341(a) Meeting Slated for November 19 ---------------------------------------------------------- The U.S. Trustee for Region 16 will convene a meeting of creditors of South Marsh Developers, LLC on Nov. 19, 2009, at 11:00 a.m., 220 W. Garden Street, Suite 700 in Pensacola, Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. Based in Ft. Walton, Florida, South Marsh Developers LLC filed for Chapter 11 protection on Oct. 15, 2009 (Bankr. N.D. Fla. Case No. 09-32148). Bruce C. Fehr, Esq., at Liberis & Associates, P.A., represents the Debtor. In its petition, the Debtor listed both assets and debts between $10 million and $50 million. SPANSION INC: Files Reorganization Plan & Disclosure Statement -------------------------------------------------------------- Spansion Inc., Spansion Technology LLC, Spansion LLC, Cerium Laboratories LLC, and Spansion International, Inc., delivered their Joint Plan of Reorganization and accompanying Disclosure Statement before the United States Bankruptcy Court for the District of Delaware on October 26, 2009. The Plan is sponsored by the Debtors and supported by the Debtors' Official Committee of Unsecured Creditors and the Ad Hoc Consortium of Holders of Senior Secured Floating Rate Notes due 2013. The Debtors believe that the Plan will lead to reorganization, the satisfaction of billions of dollars of claims and the preservation of jobs and commercial relationships. Under the Plan, the Debtors will be reorganized through, among other things, the consummation of these transactions: (a) the Distribution of Cash, New Senior Notes, New Convertible Notes and New Spansion Common Stock to Holders of FRNs in satisfaction of all Claims arising under the FRNs; (b) the Distribution of New Spansion Common Stock to Holders of General Unsecured Claims in satisfaction of the Claims; (c) the cancellation of the Old Spansion Interests; and (d) the revesting of the Assets of the Debtors in the Reorganized Debtors. As a result of these transactions, the Debtors anticipate having significantly less liabilities than what they had as of the Petition Date. Claims and Interest A. Classification Section 1123 of the Bankruptcy Code requires that a plan of reorganization classify the claims against and equity interests in a debtor. Pursuant to Section 1123, the Plan classifies all Claims against and Interests in the Debtors into 14 Classes: Class Designation ----- ----------- N/A Administrative Expense Claims N/A Priority Tax Claims 1 Secured Credit Facility Claims 2 UBS Credit Facility Claims 3 FRN Claims 4 Other Secured Claims 5 General Unsecured Claims 6 Convenience Class Claims 7 Non-Compensatory Damages Claims 8 Interdebtor Claims 9 Old Spansion Interests 10 Other Old Equity 11 Other Old Equity Rights 12 Securities Claims 13 Non-Debtor Intercompany Claims 14 Spansion Thailand Claims Classes 1, 3, 5, 7, 8, 9, 11 and 12 Impaired. Classes 2, 4, 6 and 10 Unimpaired. Classes 7, 8, 9, 11 and potentially Classes 13 and 14 -- depending on the treatment afforded to Class 13 Claims and Class 14 Claims pursuant to the Plan -- are deemed to have rejected the Plan and are not entitled to vote on the Plan. Classes 2, 4, 6, 10 and potentially Classes 13 and 14, are deemed to have accepted the Plan and are not entitled to vote on the Plan. Class 1, Class 3 and Class 5 are entitled to vote on the Plan. B. Treatment Estimated Aggregate Class Allowed Amount Class Treatment ----- -------------- --------------- 1 $7 million Claims held by the holders of Class 1 claims based on any contingent or other obligations will be extinguished. The Debtors will enter into documentation with the holder of the Class 1 Claims reflecting the post-Effective Date relationship between those parties, which treatment and documentation will be satisfactory to the Ad Hoc Consortium and the Creditors' Committee. The obligations of the Reorganized Debtors on account of the Allowed Class 1 Claims will be secured by the Class 1 Collateral Estimated Recovery: 100% 2 $68.4 million Reinstatement Estimated Recovery: 100% 3 $633.3 million (i) $100 million plus postpetition interest in Cash; (ii) $225 million of New Senior Notes; (iii) 250 million of New Convertible Notes; and (iv) 6,703,933 shares of New Spansion Common Stock Estimated Recovery: 100% 4 $1 million At the option of the Debtors: (i) Reinstatement, (ii) Cash in an amount equal to the Allowed Amount of that Claim; or (iii) the collateral securing that Claim Estimated Recovery: 100% 5 $900 million 39,546,691 shares of New Spansion to $1.4 billion Common Stock Estimated Recovery: 25% to 40% 6 $2 million to Payment in full in Cash up to $2,000 $2.5 million per convenience Class Claim Estimated Recovery: 100% 7 $0 million No distribution Estimated Recovery: 0% 8 $19.2 million No distribution Estimated Recovery: 0% 9 N/A No distribution Estimated Recovery: 0% 10 N/A Reinstatement Estimated Recovery: 100% 11 N/A No distribution Estimated Recovery: 0% 12 Unknown No distribution Estimated Recovery: 0% 13 $150 million No distribution; provided that the Debtors reserve the right to amend the Plan prior to the hearing on the Disclosure Statement to leave all Class 13 Claims Unimpaired Estimated Recovery: 0%/100% 14 $70 million No distribution; provided that the Debtors reserve the right to amend the Plan prior to the hearing on the Disclosure Statement to leave all Class 14 Claims Unimpaired Estimated Recovery: 0%/100% Effective as of October 1, 2009, the Debtors will not pay any Administrative Expense Claim in excess of $100,000 other than any Administrative Expense Claims for Professional Compensation, liabilities incurred by any of the Debtors in the ordinary course of the conduct of its business, the fees and expenses of the Ad Hoc Consortium's professionals, the professionals of the Holders of the Secured Credit Facility Claims, compensation or expenses to the Indenture Trustees or Indenture Trustees' professionals, without the prior consent of the Ad Hoc Consortium and the Creditors' Committee. The Debtors currently estimate that the total amount of Priority Tax Claims that will be Allowed under the Plan is between approximately $1.4 million and $3.5 million. At the election of the Debtors, each Holder of an Allowed Priority Tax Claim will receive in full satisfaction of the Allowed Priority Tax Claim (a) payments in Cash, in regular installments over a period ending not later than five years after the Petition Date, of a total value, as of the Effective Date, equal to the Allowed amount of the Claim; (b) a lesser amount in one Cash payment as may be agreed upon in writing by the Holder and the Debtors or Reorganized Debtors, as applicable; or (c) other treatment as may be agreed upon in writing by the Holder and the Debtors or Reorganized Debtors, as applicable. Sources of Cash for Distribution All Cash necessary for the Debtors or Reorganized Debtors to make payments required by the Plan will be obtained from existing Cash balances, the operations of the Debtors or Reorganized Debtors, the Exit Financing Facility, and other Cash available to the Debtors or Reorganized Debtors, as applicable. Directors and Officers of Reorganized Debtors The Initial Board will consist of nine persons. The Ad Hoc Consortium will be entitled to designate three directors; the Creditors' Committee will be entitled to designate four members, and the Ad Hoc Consortium and Creditors' Committee, together, shall be permitted to jointly designate the remaining two directors, one of which will be the chief executive officer of Reorganized Spansion Inc. The identity of the Persons selected for the Initial Board will be included in a Plan Supplement. The Initial Board will choose the members of the Boards of Directors of each of the other Reorganized Debtors on the Effective Date or as soon as practicable thereafter. New Spansion Stock Reorganized Spansion Inc. will reserve 9,714,291 shares of New Spansion Common Stock for issuance under an equity incentive plan for employees, Management and the directors of Reorganized Spansion Inc. and the other Reorganized Debtors, provided, that grants of no more than 3,749,375 shares of New Spansion Common Stock may be issued for an exercise, conversion or purchase price below (i) in the 90 days following the effective date, the greater of (A) the value per share of New Spansion Common Stock issued under the Plan or (B) the fair market value per share of New Spansion Common Stock at the time of issuance and (ii) the fair market value per share of New Spansion Common Stock at the time of grant. The exact terms of and distribution under the equity incentive plan will be determined by the Initial Board within 90 days after the Plan Effective Date. Reorganized Spansion Inc. will use good faith efforts to list the New Spansion Common Stock on a national securities exchange or over-the-counter trading market within 90 days of the Effective Date. On the Effective Date, all Old Spansion Interests and all Other Old Equity Rights will be cancelled. All Other Old Equity will be Unimpaired. Plan Supplement The Plan Supplement will contain, among other things, (a) forms of the New Governing Documents, (b) a form of the indenture for the New Senior Notes and the form of New Senior Note, (c) a form of the indenture for the New Convertible Notes and the form of New Convertible Notes, (d) a list of the Persons who will serve on the Initial Board, (e) the Contract/Lease Schedule, (f) the identity of the Claims Agent, and (g) the proposed Confirmation Order. The Plan Supplement shall be in form and substance satisfactory to each of the Debtors, the Ad Hoc Consortium and the Creditors' Committee, and will be filed with the Bankruptcy Court seven days prior to the Voting Deadline. Feasibility of the Plan The Bankruptcy Code requires that, for the Plan to be confirmed, the Debtors must demonstrate that consummation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Debtors. The Debtors believe that they or the Reorganized Debtors, as applicable, will be able to timely perform all obligations described in the Plan and, therefore, that the Plan is feasible. The Debtors formulated Pro Forma Financial Projections for Fiscal Years 2010 through 2012 and related assumptions, full-text copies of which are available for free at: http://bankrupt.com/misc/Spansion_Projections.pdf Best Interests of Creditors Test The Debtors believe that the Plan meets the "best interests" test of Section l129(a)(7) of the Bankruptcy Code because Holders of Allowed Claims and Interests in each Impaired Class will receive a Distribution under the Plan that is in all cases no less, and in many cases significantly more, than they would in a liquidation in a hypothetical Chapter 7 case. The Debtors assert that holders of most Claims will receive a better recovery through the Distributions contemplated by the Plan because the continued operation of the Debtors as going concerns rather than a forced liquidation will allow the realization of more value for the Assets. Moreover, Holders of Claims like the Debtors' employees will retain their jobs and most likely make fewer Claims against the Estates. In the event of liquidation, the aggregate amount of Unsecured Claims would increase significantly, and the Claims would be subordinated to Priority Claims and Administrative Expense Claims that would be created, the Debtors note. The Debtors also believe that distributions to Holders of Claims in a Chapter 7 liquidation would not occur for a substantial period of time, and in most if not all cases, the distributions would be made significantly later than the Distributions contemplated under the Plan. Liquidation Analysis The Debtors' "Liquidation Analysis" shows the hypothetical distribution creditors would receive in the event the Plan is not Confirmed and the Chapter 11 Cases are converted to Chapter 7 liquidations. The Liquidation Analysis was prepared by the Debtors with the input of their restructuring and bankruptcy advisors and is unaudited. The estimated proceeds per the Liquidation Analysis are based on assumptions considering the Debtors' assets if these assets were to be liquidated in accordance with Chapter 7 of the Bankruptcy Code. The preparation of the Liquidation Analysis involved extensive use of estimates and assumptions, that although considered reasonable by the Debtors, are inherently subject to significant business, economic and competitive uncertainties beyond the control of the Debtors. A full-text copy of the Liquidation Analysis may be accessed for free at http://bankrupt.com/misc/Spansion_LiquidationAnalysis.pdf Debtors' Reorganized Value Analysis The Debtors have been advised by Gordian Group with respect to a number of financial matters relevant to the Chapter 11 Cases, including the consolidated Enterprise Value of the Reorganized Debtors on a going-concern basis. Based in part on information provided by the Debtors and its own analyses of that and other information, Gordian Group has concluded that the Enterprise Value of the Reorganized Debtors ranges from $625 to $900 million, with a midpoint of $762.5 million as of an assumed Effective Date of January 1, 2010. After giving effect to net value associated with the ARS of approximately $42.9 million, proceeds from the sale of Spansion's Suzhou facility to Powertech, which are anticipated to be collected in early 2010, of approximately $24.7 million and estimated ash and equivalents on hand at emergence of $239.1 million, Gordian Group's estimate of midpoint Distributable Value equals approximately $1.07 billion. Making deductions from that figure for estimated Administrative Expense Claims and Priority Claims of approximately $72.5 million in the aggregate, the $100 million (plus postpetition interest) Cash payment to Holders of Class 3 Claims, the estimated par value of liabilities associated with assumed capital leases of $5 million, $250 million of New Convertible Notes and $225 million of New Senior Notes, Gordian Group's mid-point estimate for the value of the New Spansion Common Stock to be issued to Holders of Allowed Class 3 Claims and Allowed Class 5 Claims under the Plan is $416.7 million. Assuming 46,250,624 primary shares of New Spansion Common Stock in the aggregate are distributed to the Holders of Allowed Class 3 Claims and Holders of Allowed Class 5 Claims pursuant to the Plan, the value of New Spansion Common Stock is equal to approximately $9.01 per share. These values do not give effect to, among other things, (i) the potentially dilutive impact of any shares issued pursuant to an employee equity incentive plan (ii) the conversion of the New Convertible Notes, (iii) any incremental NOL Value, and (iv) any Litigation Recoveries. Gordian Group's estimate of Enterprise Value does not constitute an opinion as to fairness from a financial point of view of the Distributions to be made under the Plan or of the terms and provisions of the Plan. The assumed enterprise value range, as of the assumed Effective date of January 1, 2010, reflects work performed by Gordian group on the basis of information available to Gordian Group current as of October 12, 2009. Net Operating Losses The Reorganized Debtors expect to have net operating losses available to them as of their emergence from bankruptcy. The NOLs relate to losses the Reorganized Debtors generated in historical periods before filing for bankruptcy. Gordian Group has assigned no value to the NOLs for purposes of this analysis. To the extent the Reorganized Debtors are able to utilize NOLs following their emergence from bankruptcy, any NOL Value would be incremental to Gordian Group's Enterprise Value. Litigation Recoveries As previously noted, the Debtors commenced the Spansion ITC Action and the Spansion Delaware Action against Samsung and certain other parties in November 2008. Samsung counterclaimed in the Spansion Delaware Action against the Debtors for infringement of its own patents seeking damages and an injunction. On January 28, 2009, Samsung filed the Samsung Japan Action against Spansion Japan seeking both injunctive relief and damages based upon Japanese patents owned by Samsung. Samsung subsequently filed actions against one or more of the Debtors with the ITC and in Germany. The Debtors believe that they have good claims against Samsung that could possibly result in a recovery in the hundreds of millions of dollars. However, the Debtors' litigation against Samsung is very complex, fact-intensive and will require adjudication of a number of technical patent and other issues. In addition, like virtually all litigation, the actual outcome of the litigation with Samsung is uncertain and depends on a number of factors, one of which is the amount of resources, both in time and money that the Debtors are able and willing to expend in prosecuting and defending these actions. At the same time, Samsung has asserted patent infringement claims against the Debtors that, if successful, could reduce, potentially significantly, or exceed any recovery by the Debtors, or, if the Debtors are unsuccessful in their claims against Samsung, could result in significant actual net damages against the Debtors. The Debtors estimate that the aggregate cost of prosecuting and defending these actions will be in the tens of millions of dollars, with the actual costs dependent in large part on the duration of the litigation. Gordian Group has assigned no value to Litigation Recoveries, including those associated with claims against Samsung. To the extent the Reorganized Debtors are able to realize Litigation Recoveries following their emergence from bankruptcy, any Litigation Recoveries would be incremental to Gordian Group's Enterprise Value. Plan Must be Confirmed The Debtors, the Creditors' Committee and the Ad Hoc Consortium believe that the best interests of all Entities would be served through confirmation of the Plan. For these reasons, the Debtors, the Creditors' Committee and the Ad Hoc Consortium urge all holders of claims and interests entitled to vote to "accept" the plan. A full-text copy of the Plan is available for free at: http://bankrupt.com/misc/Spansion_Plan.pdf A full-text copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Spansion_DS.pdf About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: G. Delfassy Resigns as Member of Board ---------------------------------------------------- Gilles Delfassy notified Spansion Inc. on October 14, 2009, of his resignation as a member of the Company's Board of Directors, effective immediately. According to Mr. Delfassy, he did not resign because of a disagreement with the Company on any matter relating to the Company's operations, policies or practices. Meanwhile, in separate Form 4 filings with the U.S. Securities and Exchange Commission, two officers of Spansion Inc., disclosed that they acquired shares of Spansion Class A Common Stock: Shares Shares Beneficially Owned Officer Date Acquired After Transaction -------- ---- -------- ------------------ Eby Thomas T 10/20/09 1,875 64,374 Nawaz Ahmed 10/20/09 750 23,931 Mr. Nawaz further disclosed that on October 21, 2009, he disposed of 346 shares of Class A Common Stock at $0.27. At the end of the transaction, Mr. Nawaz beneficially owned 23,585 shares. Moreover, the directors disclosed that they disposed of derivative securities of Restricted Stock Units: Derived Shares Shares Beneficially Owned Officer Date Disposed After Transaction -------- ---- -------- ------------------ Eby Thomas T 10/20/09 1,875 11,250 Nawaz Ahmed 10/20/09 750 4,500 Each restricted stock unit represents a contingent right to receive one share of Spansion Inc. Class A Common Stock. There is no exercise price or expiration date. Restricted stock units were granted to Messrs. Eby and Nawaz on April 20, 2007, and vest over a four-year period. One quarter of the shares subject to the award vested on the one year anniversary date. The remaining shares subject to the award vest in equal installments quarterly, until 100% vested on April 20, 2011. Vested shares are delivered to the reporting person on each vesting date. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Insists Samsung Claims Not Arising Postpetition ------------------------------------------------------------- Samsung Electronics Co., Ltd., previously commenced a patent infringement suit against Debtor Spansion International Inc., and Dr. Reinhard Weigl, in Dusseldorf Regional Court, in Germany, seeking (i) an injunction against Spansion International from manufacturing and selling certain products that allegedly infringe Samsung's patent, in Germany, (ii) compensatory damages for the postpetition infringement, and (iii) the recall and destruction of all those products. The U.S. International Trade Commission said August 28 that it has voted to institute an investigation of certain flash memory and products containing same. The products at issue in this investigation are flash memory chips and products such as GPS devices, routers, and network storage products that contain flash memory chips. Pursuant to an October 1, 2009 Order, Bankruptcy Judge Kevin Carey concluded that Samsung violated the automatic stay of Section 362 of the Bankruptcy Code by filing the ITC Action to enforce postpetition patent infringement claims against the Chapter 11 Debtors and the Foreign Debtor. Judge Carey held that the Samsung Action does not fall within the police and regulatory powers exception to the automatic stay. The Debtors have now sought to enforce automatic stay against Samsung with respect to the prosecution of the German Complaint. The Debtors aver that they did not begin any infringing conduct on March 2, 2009. The Debtors maintain that they did not introduce any new or modified products on that day or engage in any new or different business activities from those activities that they had engaged in prior to the Petition Date. According to the Debtors, their conduct that is the alleged basis for the German Complaint predated March 2, 2009, by months. Samsung asserts that the German Action has significantly different facts and circumstances than were present in the International Trade Commission Action. Samsung avers that the German Action should be allowed to proceed, unencumbered by the automatic stay and without the imposition of any other equitable injunction because: (a) The German Action involves a dispute over the German designation of a European patent under German law, which under settled Federal Circuit law, must be litigated in German courts; (b) The patent subject to the German Action is not and has never been included in the Delaware Action or the ITC Action; (c) Unlike the ITC Action, where patent infringement claims where brought prior to the Petition Date, the claims in the German Action were not brought until after the Petition Date. In their reply, Spansion Inc. and its units say assert that there can be no dispute that Samsung Electronics Co., Ltd. could have initiated the German Action prior to the Petition Date. The Debtors tell the Court that they did not introduce any new products on March 2, 2009, nor did they alter or change how they manufactured or marketed their products on that date. Rather, the Debtors note, they continued to manufacture the same products in the same way on March 2, 2009, the day after the Petition Date, as they did in the days and weeks prior to the Petition Date. According to the Debtors, the only reason that Samsung selected March 2, 2009, as the initial date of infringement was because it was postpetition. The Debtors maintain that the German Action appears to be part of Samsung's litigation strategy to force the Debtors to defend themselves in multiple actions in multiple courts around the world. Thus, the Debtors aver, Samsung, like the International Trade Commission Action, is geared to put improper pressure on the Debtors by causing them to wage a multi-front war at the very time that they are attempting to reorganize in Chapter 11. With regards to Samsung's assertion that the automatic stay should not apply because of the foreign nature of the German Action, the Debtors argue that this is also without support or merit. The Debtors contend that the automatic stay applies worldwide from the moment the bankruptcy petition is filed. The Ad Hoc Consortium of Floating Rate Noteholders joins and supports the Debtors' motion to enforce automatic stay against Samsung Electronics Co., Ltd. Subsequently, HSBC Bank USA, National Association, as successor Indenture Trustee, under the Indenture, dated as of May 18, 2007, concurs with and joins the joinder of the Ad Hoc Consortium. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Foundry Pact Should Be Scrapped Despite Objections ---------------------------------------------------------------- Spansion Inc., and its debtor affiliates are seeking the Court's authority to reject a Second Amended and Restated Foundry Agreement, dated as of March 2007, with Spansion Japan Limited. GE Financial Services Corporation, as administrative agent, security agent, and secured lender, for itself and on behalf of members of an official committee of secured creditors of Spansion Japan Limited, asks the Court to deny the Rejection Motion because damages flowing from rejection of the Foundry Agreement are likely to be enormous. Spansion LLC is required under the plain terms of the Foundry Agreement to purchase no less than 95% of the total capacity of SJL for each quarter for an indefinite time. Should LLC fail to make these purchases, it is required to use reasonable efforts to find an alternative purchaser and to make up the payment shortfall. GE asserts that although the costs of rejection are concrete and significant, any corresponding benefits of rejection at this time are speculative at best. Moreover, GE notes, the reported assumption of the Foundry Agreement by the SJL Trustee in the SJL Reorganization Proceeding prior to the entry of an order approving LLC's rejection of that same agreement gives rise to issues of comity. According to GE, the rejection is also premature because issues involving the Debtors' rights to certain intellectual property remain unresolved. The receivables generated by the Foundry Agreement are the collateral of SJL Secured Lenders, and the proposed rejection would give rise not only to potentially enormous rejection damages but also to huge administrative claims, likely negating any benefit that may possibly be achieved by the rejection. For its part, Spansion Japan Limited tells the Court that it is no coincidence that it has yet to assert in excess of $340 million in administrative claims against the Debtors. According to Spansion Japan, the limited information it has been able to learn during this time seriously calls into question whether the Debtors would realize any value from rejection, especially when one considers the substantial impact rejection will have on the Debtors' estates and their reorganization effort, including: * Rejection damage claims against the Debtors' estates resulting to the loss of more than $1 billion of the value that Spansion Japan would have realized from the parties' performance of the Foundry Agreement over the next 20 years; and * Spansion Japan would be under no further obligation to ship wafers to the Debtors and, as a result, understand that the Debtors' operations will suffer a revenue shortfall of approximately $43 million during the fourth quarter 2009. Spansion Japan asserts that a final evidentiary hearing on the Motion should be scheduled for a later date, which will provide it with the opportunity to seek limited expedited discovery from the Debtors and prepare an evidentiary presentation that will permit the Court to make the necessary factual findings for adjudication of the Motion. However, Spansion Japan maintains, if the Court determines to authorize rejection now, it requests that any rejection be conditioned on: (a) an effective date of rejection of October 27, 2009, given that the Debtors continued to request product from Spansion Japan and Spansion Japan delivered to the Debtors based on those requests after October 9, 2009; (b) a time period of at least 60 days from the date of that rejection order for Spansion Japan to file its rejection damage claim against the Debtors given the complexities of that claim and the fact that the Debtors will suffer little, if any, harm from allowing Spansion Japan at least 60 days in which to file that claim; and (c) Spansion Japan's retention of its intellectual property rights under the Foundry Agreement and related documents, pursuant to Section 365(n) of the Bankruptcy Code. Debtors Respond to Objections The Debtors ask the Court to overrule the objections with respect their rejection request. The Debtors contend that the question of damages from rejection is irrelevant to the matter sub judice. According to the Debtors, rejection damages claims, if any, will be adjudicated during the claims reconciliation process, and those claims will be comprised pursuant to their plan of reorganization. The Debtors maintain that they have not presented the Rejection Motion for an improper purpose. Even assuming that they had the intention of negotiating a different economic arrangement with Spansion Japan to replace the Foundry Agreement, it strains credibility to suggest that Chapter 11 debtors do not routinely take advantage of the power of rejection for precisely this purpose, the Debtors add. The Debtors further assert that the suggestion of comity issue with Spansion Japan Limited's insolvency is meritless -- the assumption of a contract by one party cannot determine the ability of the counterparty to assume or reject the same contract in its own insolvency proceeding. Moreover, the Debtors note, the rights afforded under Section 365(n) of the Bankruptcy Code do not apply to every contract; rather, they only apply to contracts whose primary purpose is licensing of intellectual property. The Debtors note that they are willing to afford Spansion Japan 60 days within which to present its rejection damage claim. The Debtors filed with the Court a letter agreement between Spansion LLC and GE Capital Leasing Corporation, a full-text copy of which is available for free at: http://bankrupt.com/misc/Spansion_GEAgreement.pdf In response, GE Financial Services Corporation, as administrative agent, security agent, and secured lender, for itself and on behalf of members of an official committee of secured creditors, asserts that the Spansion Japan Secured Lenders are creditors and parties-in-interest with standing to object to the Rejection Motion. GE further asserts that the Debtors have not demonstrated the need for extraordinary relief for ordering nunc pro tunc rejection and that relief should be denied. According to GE, expedited discovery in connection with the Rejection Motion will not cause any undue delay. In fact, GE notes, after receipt of the Debtors' reply, the SJL Secured Lenders contacted counsel for the Debtors, requested to meet and confer about discovery scope and schedule, and served discovery requests so that an expedited process can commence immediately. GE maintains that while the SJL Secured Lenders disagree with the arguments presented in the Rejection Motion and Omnibus Reply, the Debtors' attempt to shield from scrutiny the alleged exercise of their business judgment in pursuing the Rejection Motion, both by seeking to silence the SJL Secured Lenders, who have a direct pecuniary interest in the outcome of the Rejection Motion, and by denying discovery to SJL and the SJL Secured Lenders, necessitated the response. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Says Japan Unit Not Selling Chip Line --------------------------------------------------- Spansion Inc., denied news reports that its Japanese subsidiary, Spansion Japan Ltd., is close to selling a chip production line, Bloomberg said. Citing an unidentified source, The Nikkei newspaper had reported that Spansion Japan Ltd. plans to sell a chip making facility completed in 2007 with investment of over JPY100 billion. The 300-mm wafer facility at a plant in Fukushima Prefecture is now worth JPY20 billion, the report said, citing the unnamed source. Kosuke Hirako, a Tokyo-based spokesman at Spansion Japan's unit, said, "We are weighing all possible options to help advance reorganization, but no concrete plans have been made to sell the facilities," Bloomberg reported. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) STAGE COACH VENTURE: Case Summary & 2 Largest Unsec. Creditors -------------------------------------------------------------- Debtor: Stage Coach Venture LLC 2487 Gloucester Way Riverside, CA 92505 Bankruptcy Case No.: 09-35719 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Meredith A. Jury Debtor's Counsel: Thomas C. Nelson, Esq. 550 W C St., Ste. 1850 San Diego, CA 92101 Tel: (619) 236-1245 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 2 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-35719.pdf The petition was signed by Kevin A. Tucker, managing member of the Company. STANDARD MOTOR: Reports $3.1 Million Net Income in Q3 2009 ---------------------------------------------------------- Standard Motor Products, Inc. disclosed Tuesday its consolidated financial results for the three months and nine monhts ended September 30, 2009. The Company also announced that it is engaged in exploratory discussions with the managers of its European business regarding their interest in acquiring the business via a management buy-out. Proposed terms of a transaction would include the sale of the European distribution business for GBP1.8 million ($2.9 million) in cash and a promissory note and approximately GBP1.8 million ($2.9 million) in assumed debt. The Company reported net earnings of $3.1 million for the three months ended September 30, 2009, compared with a net loss of $1.2 million in the corresponding period in the prior year. Commenting on the results, Mr. Lawrence Sills, Standard Motor Products' chairman and chief executive officer, stated, "We are quite pleased with our third quarter results. For the first time this year, sales were ahead of the comparable quarter of 2008, despite the continued headwinds of the loss of a major account at the end of 2008, the divestiture of Blue Streak Electronics, and the fall-off of OE sales. Contributing to the sales increase was new Temperature Control business from two major retailers, and pipeline orders for Engine Management for CSK, as stores and inventories were being upgraded as part of the O'Reilly acquisition. Sales for the nine months, however, remain behind 2008 for the reasons stated above. "Gross margin percentage edged up slightly, for the quarter and the nine months, as our facilities in Mexico continue to grow and improve. We now have over 800 people in three plants in Reynosa, a significant increase over the last two years, with plans for increased growth in 2010. "Our people continue to do an excellent job controlling Selling, General and Administrative (SG&A) expenses. SG&A expenses were $4 million below 2008 for the quarter and $18 million below 2008 for the nine months. A key part of the saving was a reduction of over 100 salaried employees over the last 12 months, roughly 10% of the total. "All this added up to a substantial increase in earnings per share, excluding non-operational gains and losses. "At the same time we were able to make significant improvements in our balance sheet. In July we retired the balance of our convertible bonds. Our total debt has been reduced by over 50% in the last twelve months, from $230 million to $111 million. In all, we are extremely proud of our people for what they have been able to accomplish. "Looking at the balance of the year, due to the seasonal nature of our Temperature Control business, we typically budget a small loss for the fourth quarter. We expect that this fourth quarter will follow historical patterns. "Finally, as stated above, we are in exploratory discussions to sell our European distribution business to our local management team. We have concluded that this does not represent a core business for the Company. However, we intend to keep our manufacturing operation in Bialystok, Poland. With a low cost structure, and the availability of highly skilled people, we believe this operation will play a major role in our future." Consolidated net sales for the three months ended September 30, 2009, were $205.6 million, an increase of $2.7 million, or 1.3%, compared to $202.9 million in the same period of 2008. The increase in consolidated net sales resulted from an increase in net sales of $5.8 million, or 10.8%, in the Company's Temperature Control Segment, partially offset by a $3.6 million, or 31.2%, decline in the Company's European Segment. Net sales in the Company's Engine Management Segment were essentially flat. Temperature Control sales benefitted from incremental new customer sales volumes and increased customer demand within our retail channel. The reduction in sales in the Company's European Segment is the result of a decrease in original equipment sales volumes and an unfavorable change in foreign currency exchange rates. Gross margins, as a percentage of consolidated net sales, increased slightly to 24.2% in the third quarter of 2009, compared to 24% in the third quarter of 2008. Operating income was $9.7 million in the third quarter of 2009, compared to $5.8 million in the third quarter of 2008. The increase of $3.9 million was due primarily to the higher sales volumes, the positive impact of an increase in gross margins in the Company's Temperature Control Segment and lower SG&A expenses reflecting the impact of the Company's postretirement benefit amendment and cost reduction programs, offset by an increase in restructuring and integration expenses related to the Company's closure of the Wilson, North Carolina manufacturing plant and a workforce reduction charge resulting from the Company's wire and cable business acquisition during the quarter. Balance Sheets At September 30, 2009, the Company's consolidated balance sheets showed $537.7 million in total assets, $364.6 million in total liabiities, and $173.1 million in total stockholders' equity. The Company had total long-term debt, including current maturities, of $110.9 million at September 30, 2009, compared with $194.2 million at December 31, 2008. A full-text copy of the Company's consolidated financial statements for the three and nine months ended September 30, 2009, is available for free at http://researcharchives.com/t/s?47d1 Nine Month Results For the nine months ended September 30, 2009, the Company reported net earnings of $8.9 million, compared with net earnings of $10.7 million in the same period of 2008. Consolidated net sales for the nine months ended September 30, 2009 were $575.3 million, a decrease of $51.1 million, or 8.2%, compared to $626.4 million in the same period of 2008. The decrease in consolidated net sales resulted from declines in Engine Management net sales of $36.8 million, or 8.8%, European Segment net sales of $12 million, or 33.9%, and $3 million of net sales in the Company's Other Operating Segment, which consists primarily of the Company's Canadian operations. Operating income was $21.8 million in the nine months ended September 30, 2009, compared to $15 million in 2008. The increase of $6.8 million was due primarily to lower SG&A expenses which more than offset the gross margin impact from a decline in net sales. Liquidity and Capital Resources During the nine months of 2009, cash provided by operations amounted to $96.5 million compared to cash used in operations of $708,000 in the same period of 2008. The year-over-year increase in cash provided by operations is primarily the result of the impact of the Company's customer accounts receivable factoring program and improved working capital management. Cash used in investing activities was $10.1 million in the nine months of 2009, compared to cash provided by investing activities of $25.7 million in the same period of 2008. Investing activities in 2009 included a $6 million payment to complete the Company's core sensor asset purchase transaction entered into in 2008, a $6.8 million payment in connection with the Company's acquisition of a wire and cable business offset by a $4 million cash receipt in connection with the Company's December 2008 divestiture of certain of its joint venture equity ownerships and $3.9 million in proceeds received in connection with the redemption of preferred stock of a third-party issuer. Cash used in financing activities was $85.3 million in the first nine months of 2009, compared to $25 million in the same period of 2008. During the first nine months of 2009, the Company reduced its borrowings under its revolving credit facilities by $56.4 million and retired $32.2 million of long-term debt, including the remaining $32.1 million balance of its 6.75% convertible subordinated debentures. In addition, in May 2009 the Company exchanged $12.3 million aggregate principal amount of its outstanding 6.75% convertible subordinated debentures due 2009 for a like principal amount of newly issued 15% convertible subordinated debentures due 2011. The debt reduction was partially offset by the issuance of $5.4 million of 15% unsecured promissory notes. No dividends were paid in 2009. The Company anticipates that its present sources of funds, including funds from operations and additional borrowings, will continue to be adequate to meet its financing needs over the next twelve months. About Standard Motor Standard Motor Products, Inc. (NYSE: SMP), headquartered in Long Island City, New York, is an automotive replacement parts manufacturer and distributor, with total sales of $775.2 million in 2008. The Company is organized into two major operating segments, each of which focuses on a specific line of replacement parts. The Company's Engine Management Segment manufactures ignition and emission parts, ignition wires, battery cables and fuel system parts. The Company's Temperature Control Segment manufactures and remanufactures air conditioning compressors, air conditioning and heating parts, engine cooling system parts, power window accessories, and windshield washer system parts. * * * As reported by the Troubled Company Reporter on July 17, 2009, Moody's Investors Service withdrew all ratings of Standard Motor Products' after the only rated debt having been redeemed upon maturity. Ratings withdrawn include the Corporate Family Rating at Caa1, and $32 million convertible subordinated debentures due July 2009 at Caa2. The last rating action occurred on June 30, 2009, when its CFR was upgraded to Caa1 from Caa2. On June 23, the TCR said Standard & Poor's Ratings Services withdrew its 'CC' corporate credit rating and other debt ratings on Standard Motor Products at the company's request. There is a small amount of rated debt remaining after the recently completed exchange offer. STATION CASINOS: Boyd Gaming "Serious" About Buying Assets ---------------------------------------------------------- Boyd Gaming Corporation on October 27 reported that net income was $6.3 million, or $0.07 per share, for the third quarter compared with $8.7 million, or $0.10 per share, in the same period last year. In the report, Boyd Gaming reiterated its intent to acquire some or all of the assets of Station Casinos. Keith Smith, Boyd Gaming's President and CEO, said, "We remain very serious about acquiring Station's assets when permitted by the bankruptcy court. We believe an acquisition would deliver immediate value to our shareholders, and represents a very attractive and timely solution for Station, its creditors, employees and customers." In February 2009, Boyd Gaming delivered a non-binding preliminary indication of interest for certain of certain properties of Station Casinos. Boyd estimated at that time that the assets are worth $950 million. Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) -- http://www.boydgaming.com/-- is a leading diversified owner and operator of 16 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana, and Louisiana. About Station Casinos Station Casinos, Inc., is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Station Casinos Inc., together with its affiliates, filed for Chapter 11 on July 28, 2009 (Bankr. D. Nev. Case No. 09-52477). Station Casinos has hired Milbank, Tweed, Hadley & McCloy LLP as legal counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck, LLP, as regulatory counsel; and Lewis and Roca LLP as local counsel. The Debtor is also hiring Lazard Freres & Co. LLC as investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent. In its bankruptcy petition, Station Casinos said that it had assets of $5,725,001,325 against debts of $6,482,637,653 as of June 30, 2009. About 4,378,929,997 of its liabilities constitute unsecured or subordinated debt securities. Bankruptcy Creditors' Service, Inc., publishes Station Casinos Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Station Casinos Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) STATION CASINOS: Wants Plan Exclusivity Until March 25 ------------------------------------------------------ Station Casinos Inc., asks the Court to extend its exclusive period to file a Chapter 11 plan until March 25. The hearing on Station Casinos' first request for an extension is scheduled for November 20. Bill Rochelle at Bloomberg relates that the Debtor says the business is "yet to stabilize." Station points to "intercreditor tensions" as inhibiting the ability to formulate a reorganization proposal. The Company speculates that it alone may be able to mediate a reorganization among the warring creditor factions. About Station Casinos Station Casinos, Inc., is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Station Casinos Inc., together with its affiliates, filed for Chapter 11 on July 28, 2009 (Bankr. D. Nev. Case No. 09-52477). Station Casinos has hired Milbank, Tweed, Hadley & McCloy LLP as legal counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck, LLP, as regulatory counsel; and Lewis and Roca LLP as local counsel. The Debtor is also hiring Lazard Freres & Co. LLC as investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent. In its bankruptcy petition, Station Casinos said that it had assets of $5,725,001,325 against debts of $6,482,637,653 as of June 30, 2009. About 4,378,929,997 of its liabilities constitute unsecured or subordinated debt securities. Bankruptcy Creditors' Service, Inc., publishes Station Casinos Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Station Casinos Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) STERLING MINING: Bankruptcy Court Resolved Lease Dispute -------------------------------------------------------- WestLaw reports that to the extent that any issues of Idaho law related to construction or termination of the lease executed by landowners and the Chapter 11 debtor were unsettled, the bankruptcy court was not required to "refer" the issues to the Supreme Court of Idaho but, instead, could endeavor to determine how such issues would be resolved by that court. Although the bankruptcy court acknowledged that state law had to be applied to decide the question of rights under the parties' lease and whether the lease was terminated prior to bankruptcy, it did not concede that there were any "unsettled" issues of law in the present case that triggered a certification inquiry. Rather, it found that the issues identified by the movant were matters for appeal, not certification. In re Sterling Min. Co., --- B.R. ----, 2009 WL 1739996 (Bankr. D. Idaho) (Myers, J.). Judge Myers issued this opinion after determining that (1) a lease between Sterling Mining Company and Sunshine Precious Metals, Inc., was not terminated pre-bankruptcy and is subject to assumption under Sec. 365 of the Bankruptcy Code; (2) a Sterling's motion to assume that lease would be approved; and (3) Sterling's motion to obtain post-petition financing would be approved, and Sunshine moved for reconsideration. After considering the matter, Judge Myers determined that Sunshine's motion for reconsideration "is not well taken [and] will be denied." Based in Coeur d'Alene, Idaho, Sterling Mining Company (OTCBB:SRLM and FSE:SMX) -- http://www.SterlingMining.com/-- is a mineral resource development and exploration company. The company has a long term lease on the Sunshine Mine in North Idaho's Coeur d'Alene Mining District. The Sunshine Mine is comprised of 5,930 patented and unpatented acres, and historically produced over 360 million ounces of silver from 1884 until its closure in early 2001. Sterling Mining leased the Sunshine Mine in June 2003, along with a mill, extensive mining infrastructure and equipment, a large land package, and a database encompassing a long history of exploration, development and production. Sterling Mining filed for bankruptcy protection on March 3, 2009 (Bankr. D. Idaho Case No. 09-20178). Bruce A. Anderson, Esq., at Elsaesser Jarzabek Anderson Marks Elliott & McHugh, Chartered, represents the Debtor as counsel. In its bankruptcy schedules, the Debtor listed total assets of $11,706,761 and total debts of $14,159,010. SYMBION INC: Moody's Affirms Corporate Family Rating at 'B2' ------------------------------------------------------------ Moody's Investors Service affirmed the ratings of Symbion, Inc., including the B2 Corporate Family and Probability of Default Ratings. The outlook for the ratings remains negative. The affirmation of the B2 Corporate Family Rating reflects the company's considerable financial leverage and modest interest coverage. Credit metrics have not improved at the pace that had been anticipated following the August 2007 LBO of the company. However, the rating also considers the company's strong margins and stable cash flow generation. Further, the rating also reflects Moody's expectation that as one of the larger operators of ambulatory surgery centers in a highly fragmented sector, the company should be well positioned to benefit from the continued movement of services to the outpatient setting. While Moody's acknowledges improvements in case volume growth and the company's ability to maintain positive free cash flow, after considering the benefit of the election of the PIK option on the company's senior notes, Moody's remain concerned about the potential impact on margin performance should the recent slowing of pricing growth continue. Additionally, the negative ratings outlook anticipates restrictions on the company's ability to access its revolver due to covenant limitations and a reduction in headroom as covenant levels become more restrictive at December 31, 2009, and again at December 31, 2010. This is a summary of Moody's rating actions. Ratings affirmed: * $100 million senior secured revolving credit facility, Ba3 (LGD2, 28%) * $125 million senior secured term loan A due 2013, Ba3 (LGD2, 28%) * $125 million senior secured term loan B due 2014, Ba3 (LGD2, 28%) * Senior unsecured PIK toggle notes due 2015, Caa1 (LGD5, 83%) * Corporate Family Rating, B2 * Probability of Default Rating, B2 * Speculative Grade Liquidity Rating, SGL-3 The rating outlook remains negative. Moody's last rating action was on May 21, 2008, when Moody's assigned a Caa1 rating to the senior unsecured PIK toggle notes, downgraded the Speculative Grade Liquidity Rating to SGL-3 from SGL-2, changed the rating outlook to negative from stable and affirmed all other ratings. Symbion's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record of tolerance for risk. These attributes were compared against other issuers both within and outside of Symbion's core industry and Symbion's ratings are believed to be comparable to those other issuers of similar credit risk. Symbion, headquartered in Nashville, Tennessee, owns and operates a network of short-stay surgical facilities providing non- emergency surgical procedures in various specialties, including orthopedics, pain management, gastroenterology and ophthalmology. As of June 30, 2009, Symbion owned and operated 55 ambulatory surgery centers and four surgical hospitals. The company also managed eight additional surgery centers and two physician networks. For the twelve months ended June 30, 2009, the company recognized revenues of approximately $341 million. TARRAGON CORPORATION: Bermuda Unit Can Use BofA's Cash Collateral ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey authorized on a final basis, Bermuda Island Tarragon LLC, a debtor-affiliate of Tarragon Corporation, to: -- use cash securing repayment of loan with Bank of America, N.A.; and -- grant adequate protection to BofA. BofA holds a valid and perfected and enforceable liens as acknowledged in the Settlement Agreement dated Aug. 20, 2009. Bermuda Island asserts it does not have sufficient unencumbered cash or other assets with which to continue to manage its properties in Chapter 11 without the use of the Lender's cash collateral. As adequate protection, the lender is granted: (i) a replacement perfected security interest in the postpetition collateral and proceeds thereof, including funds in the new bank account, as the lender held in the prepetition collateral; and (ii) an allowed superpriority administrative claim and all rights and benefits. In the event that Bermuda Island defaults under or violates this order, the lender may request a hearing within 10 days. About Tarragon Corporation Based in New York City, Tarragon Corporation (NasdaqGS:TARR) -- http://www.tarragoncorp.com/-- is a leading developer of multifamily housing for rent and for sale. Tarragon's operations are concentrated in the Northeast, Florida, Texas, and Tennessee. Tarragon and its affiliates filed for Chapter 11 protection on January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon. Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R. Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A. TARRAGON CORPORATION: Court Extends Solicitation Period to Nov. 5 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey, in its bridge order, extended until November 5, 2009, Tarragon Corporation and its debtor-affiliates' exclusive period to solicit acceptances of the Chapter 11 Plan of Reorganization. The motion was adjourned to November 5, 2009, after the exclusivity deadline. Objections, if any, were due on October 29, 2009. As reported in the TCR on August 7, 2009, Tarragon has already filed a Chapter 111 plan of reorganization and an explanatory disclosure statement. Under the Plan, affiliated debt-holders are expected to get 60% of the common stock in turn for the waiver of about $40 million of unsecured claims. In exchange for HFZ Capital Group LLC agreeing to purchase certain preferred stock of Reorganized Tarragon having a cumulative preferred dividend of 8% in an amount of up to $5 million of which at least $1 million will be purchased on the effective date to provide initial working capital to Reorganized Tarragon, HFZ will receive 40% of the new issue common stock of Reorganized Tarragon. Subsequent to the effective date, HFZ will purchase, at par, at such time or times as required by the affiliated debt holders, additional preferred stock of Reorganized Tarragon in an amount equal to $5 million less the amount of the initial Preferred Stock Purchase in increments of no less than $500,000. The proceeds of such sale shall be used to enable Reorganized Tarragon to pay, when required, its future operating costs and expenses, including liquidation expenses of Liquidation Assets and debt service, to the extent that the income of Reorganized Tarragon, as reasonably determined by the affiliated debt holders, is insufficient to pay in a timely manner such costs and expenses. In addition, the affiliated debt holders will receive 60% of the common stock of Reorganized Tarragon in exchange for the waiver of approximately $40 million of affiliated unsecured claims held by the affiliated debt holders. A full-text copy of the joint Chapter 11 plan of reorganization is available for free at http://ResearchArchives.com/t/s?40d0 A full-text copy of the disclosure statement is available for free at http://ResearchArchives.com/t/s?40d1 Based in New York City, Tarragon Corporation (NasdaqGS:TARR) -- http://www.tarragoncorp.com/-- is a leading developer of multifamily housing for rent and for sale. Tarragon's operations are concentrated in the Northeast, Florida, Texas, and Tennessee. Tarragon and its affiliates filed for Chapter 11 protection on January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon. Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R. Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A., represent the Debtor as bankruptcy counsel. Kurztman Carson Consultants LLC serves as notice and claims agent. Daniel A. Lowenthal, Esq., at Patterson Belknap Webb & Tyler, LLP, in New York, represents the official committee of unsecured creditors appointed in the case. Tarragon has said equity holders are out of the money with regard to its bankruptcy case. As of September 30, 2008, the Debtors had $840,688,000 in total assets and $1,035,582,000 in total debts. THORNBURG MORTGAGE: Court Directs Chapter 11 Trustee Appointment ---------------------------------------------------------------- TMST, Inc., formerly known as Thornburg Mortgage, Inc., reports that on October 23, 2009, the United States Bankruptcy Court for the District of Maryland ordered that a Chapter 11 Trustee be appointed for the Company, TMST Acquisition Subsidiary and TMST Home Loans, Inc. On October 26, 2009, the Bankruptcy Court ordered that a Chapter 11 Trustee be appointed for TMST Hedging Strategies, Inc. In open court, on October 21, 2009, the U.S. Trustee withdrew its motion that a Chapter 11 Trustee be appointed for ADFITECH, Inc., a subsidiary of the Company. TMST also reports that Anne-Drue M. Anderson, David A. Ater, Francis I. Mullin, III, Eliot R. Cutler and Thomas F. Cooley submitted their resignations as directors of TMST dated October 23, 2009, October 23, 2009, October 24, 2009, October 25, 2009, and October 26, 2009, respectively. Ms. Anderson also submitted her resignation as the President of the Company. The resignations will be effective upon the appointment of a Chapter 11 Trustee for the Company. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- was a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable rate mortgages. It originated, acquired, and retained investments in adjustable and variable rate mortgage assets. Its ARM assets comprised of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. Thornburg Mortgage, Inc., and its four affiliates filed for Chapter 11 on May 1 (Bankr. D. Md. Lead Case No. 09-17787). Judge Duncan W. Keir is handling the case. David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, has been tapped as counsel. Orrick, Herrington & Sutcliffe LLP is employed as special counsel. Jim Murray, and David Hilty, at Houlihan Lokey Howard & Zukin Capital, Inc., have been tapped as investment banker and financial advisor. Protiviti Inc. has also been engaged for financial advisory services. KPMG LLP is the tax consultant. Epiq Systems, Inc., is claims and noticing agent. In its bankruptcy petition, Thornburg listed total assets of $24,400,000,000 and total debts of $24,700,000,000, as of January 31, 2009. TOWNSEND CONSTRUCTION: Owner's Felony Pretrial Set for Nov. 23 -------------------------------------------------------------- The Daily Courier reports that Yavapai County Superior Court Judge Thomas Lindberg has set Townsend Construction Inc. owner Elise Townsend's pretrial conference on her two felony charges for November 23. According to The Daily Courier, Ms. Townsend continued her release on her own recognizance so she could go home to Pass Christian, Mississippi. Ms. Townsend, says The Daily Courier, had pleaded not guilty to two felony charges, fraud schemes, and theft by converting services or property in an amount exceeding $100,000 back in January 2007. The Daily Courier relates that Ms. Townsend allegedly took $180,000 from her Prime Excavation Company bank account, even though she knew it would cause numerous subcontractors' checks to bounce. The Yavapai County Attorney's Office, according to the report, concluded that Ms. Townsend's actions caused her business partner and nine businesses involved in a Prescott Lakes subdivision construction project to lose $308,585. Headquartered in Prescott, Arizona, Townsend Construction Inc. -- http://www.townsendhomes.com/-- is a semi-custom, custom home builder. Townsend Construction is owned by Elise Townsend, who dropped out from an Arizona Senate Election in 2006 due to suspicious business relations with Yavapai County Assessor Victor Hambrick. State and county officials have stated they are investigating Ms. Townsend and Mr. Hambrick. The company filed for Chapter 11 protection on April 16, 2007 (Bankr. D. Ariz. Case No. 07-01693) in order to prevent major lender Consolidated Mortgage LLC from selling Townsend's 1,120 vacant lots in southern Arizona. At that time, Ms. Townsend indicated she had no intention of selling off the company under Chapter 7 liquidation. Mark J. Giunta, Esq., represents the Debtor in its restructuring efforts. As of May 1, 2007, the Debtor had $31,079,840 in total assets and $34,911,845 in total debts. The Debtor's Chapter 11 case was subsequently converted to Chapter 7 liquidation. The court has appointed William Pierce to be the interim U.S. trustee in the converted case. TOYS "R" US: Will Launch FAO Schwarz Boutiques in Stores -------------------------------------------------------- Stephanie Rosenbloom at The New York Times reports that Toys "R" Us, Inc., will be launching FAO Schwarz boutiques inside almost 600 Toys "R" Us stores on Sunday. FAO.com, says The NY Times, would start selling toys on Tuesday, and the FAO Schwarz holiday catalog will arrive in customers' mailboxes on November 10. Toys "R" Us, headquartered in Wayne, New Jersey, is the largest specialty retailer of toys, with annual revenues of around $14 billion. It operates stores both in the U.S. and internationally, as well as the Babies "R" Us format. As of August 1, 2009, the company had $8.172 billion in total assets; total current liabilities of $2.085 billion, long-term debt of $5.496 billion, deferred tax liabilities of $55 million, deferred rent liabilities of $269 million, and other non-current liabilities of $372 million. As of August 1, 2009, the company had Toys "R" Us, Inc. stockholders' deficit of $214 million and noncontrolling interest of $109 million, and total stockholders' deficit of $105 million. The Company carries a 'B2' probability of default rating from Moody's, "B" issuer credit ratings from Standard & Poor's, and "B-" long term issuer default rating from Fitch. TRIAD ENERGY: Magnum Hunter to Buy Appalachian Assets for $81MM --------------------------------------------------------------- Magnum Hunter Resources Corporation (NYSE Amex: MHR) announced October 29, 2009 it has entered into a definitive agreement with an Appalachian Basin energy company, privately-held Triad Energy Corporation and affiliates, to purchase substantially all of Triad's oil and gas exploration and production operating assets. Additionally, as part of the transaction, 100% of Triad's ownership interests in certain oilfield service related drilling, pipeline and salt water disposal assets are being acquired. The acquisition of Triad by Magnum Hunter will occur upon the effectiveness of Triad's reorganization plan under Chapter 11 of the United States Bankruptcy Code. Under Triad's proposed plan of reorganization, the assets of Triad along with certain affiliates would be acquired by a wholly-owned subsidiary of Magnum Hunter. Magnum Hunter has agreed to pay cash, issue securities and assume or refinance Triad's outstanding debt obligations in the aggregate of approximately $81 million. The $81 million total purchase price is broken out in components of (i) the assumption and refinancing of approximately $58 million of senior debt owed to secured lenders, (ii) issuance to Triad or its designees $15 million in Redeemable Convertible Preferred Stock with a 2.75% fixed coupon payable quarterly and (iii) up to $8 million in cash. The closing of this transaction is subject to customary conditions, as well as final approval of the Federal Bankruptcy Court. Magnum Hunter has obtained an agreement with Triad and its principal secured and unsecured creditors to fully support the proposed transaction. The closing of the transaction is expected to occur in late 2009 or early 2010. Gary C. Evans, Chairman of the Company, commented, "We are extremely pleased to make this announcement concerning Magnum Hunter's agreement to acquire the assets of Triad Energy and its related entities. This has been a long and difficult negotiation for our management team. With 5.2 MMBoe of total proved reserves and 88,417 net acres within this portfolio, the acquisition of these assets will provide Magnum Hunter a unique opportunity to establish a very cost effective ownership position in the Appalachian Basin. Specifically, the emerging Marcellus Shale play, which is one of the most active and most economically attractive hydrocarbon plays in the United States today, should provide our shareholders significant future growth potential. This transaction offers Magnum Hunter shareholders incremental and accretive upside from a variety of perspectives and demonstrates the type of acquisition we discussed when Ron Ormand and I first joined Magnum Hunter in late May. When you combine Triad's low- decline rate and long-life producing assets (the reserves-to- production ratio approximates 25 years) with its stable and predictable production levels and cash flows, and the Company's upside potential from behind-pipe reserves, numerous undrilled locations, waterflood enhancement opportunities and, most exciting of all, Triad's untapped Marcellus Shale horizontal development potential, this easily becomes a Company changing event for Magnum Hunter." "Additionally, we have identified a number of opportunities to reduce operating expenses on the existing oil and gas properties, where approximately 75% of the leases are 'held by production.' We believe Triad's existing pipelines and right-of-ways in the Marcellus Shale will allow for not only the efficient delivery the natural gas we produce or own, but also new and untapped opportunities to transport and market third party natural gas in the area. Triad comes with both the oilfield equipment and the infrastructure to provide for a strategic area of core operations for Magnum Hunter. Potential revenue enhancement projects have already been identified by our management team and can be implemented upon final closing." About Triad Energy and Affiliates Triad Energy Corporation is a 23 year old Reno, Ohio headquartered oil and natural gas exploration and production company focused exclusively in the Appalachian Basin with operations in Ohio, West Virginia and Kentucky. As of June 30, 2009, supported by a third party independent engineering report prepared by an independent third party engineering firm, Triad had total proved reserves of approximately 5.2 MMBoe (69% crude oil and 69% classified as proved developed producing). The Company had a present value on proved reserves discounted at 10% ($69.89 per Bbl and $3.835 per Mcf) as of June 30, 2009 of $74.1 million. Daily production from over 2,000 wells is approximately 1,000 Boe. The third party engineering report does not reflect any future potential that may exist from the drilling of horizontal wells in the Marcellus Shale formation. Triad presently controls approximately 88,417 net mineral acres located in Ohio, West Virginia and Kentucky, with approximately 75% of this acreage classified as held by production "HBP." Of this total acreage position, approximately 47,000 net acres (53% of the total net acres) overlay the Marcellus Shale play. Triad's lease acreage position is concentrated and contiguous with existing Triad operations and production. Proved reserves and upside production potential is reflected in Triad's mature oil fields currently under primary and secondary development, conventional fields with additional development and behind pipe potential and horizontal drilling of Triad's Marcellus Shale acreage position. Other assets owned by Triad include (i) oilfield service equipment (three air drilling rigs, pole units, frac tanks, trailers, gang trucks, vacuum trucks, etc.), (ii) salt water disposal facilities with a 1,000 Bpd average disposal rate and (iii) the control of over 55 miles of existing natural gas pipelines and pipeline right-of-ways ("Eureka Pipeline"). It is anticipated that the midstream assets can be utilized to solve a portion of the existing Appalachian Basin regional takeaway challenges and allow Magnum Hunter to expand this natural gas transportation and processing business to third parties. About Magnum Hunter Magnum Hunter Resources Corporation and subsidiaries -- http://www.magnumhunterresources.com/-- are a Houston, Texas based independent exploration and production company engaged in the acquisition of exploratory leases and producing properties, secondary enhanced oil recovery projects, exploratory drilling, and production of oil and natural gas in the United States. TROPICANA ENT: Fee Auditors OK $9.8MM in Fees for Nov.-Jan. ----------------------------------------------------------- Judge Kevin Carey has approved the Third Interim Applications of eight bankruptcy professionals retained in Tropicana Entertainment Inc.'s cases in the amounts recommended by Warren H. Smith & Associates as the fee auditor. The Applications cover services rendered by the professionals from November 2008 to January 2009. The Court also approved the Fee Auditor's interim fee request for services it rendered for the same Fee Period. Judge Carey further approved expenses of the Official Committee of Unsecured Creditors for the period from May 14, 2008, through December 4, 2008. The approved Fees total $9,800,079 million and the approved Expenses total $585,668. Fee Amount Expense Amount Applicant Approved Approved --------- ---------- -------------- Committee Expenses (Franklin Mutual Advisers LLC) $0 $5,698 Ernst & Young LLP (Tax) $547,699 $8,789 Ernst & Young LLP (Audit) $408,598 $11,454 Richards Layton & Finger PA $65,927 $8,721 Paul Hastings Janofsky & Walker LLP $344,458 $11,546 Stroock & Stroock & Lavan LLP $1,596,627 $122,578 Alix Partners LLP $2,467,611 $187,744 Kirkland & Ellis LLP $3,366,189 $173,030 Capstone Advisory Group LLP $886,635 $24,409 Morris Nichols Arhst & Tunnel LLP $66,825 $31,656 Warren H. Smith & Associates $49,458 $39 A table of the Fee Applicants and the corresponding requested and approved fees and expenses for the period November 2008 to January 2009 is available for free at: http://bankrupt.com/misc/TROPI_ApprvedFees_Nov08toJan09.pdf About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The Company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and its debtor-affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. The OpCo Debtors, a group of Tropicana entities owning casinos and resorts in Atlantic City, New Jersey and Evansville, Indiana have emerged from bankruptcy pursuant to a reorganization plan. A group of Tropicana entities, known as the LandCo Debtors, which own Tropicana casino property in Las Vegas, have emerged from Chapter 11 via a separate Chapter 11 plan. On April 29, 2009, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711). Judge Judith H. Wizmur presides over the cases. Adamar and Manchester Mall or the New Jersey Debtors are both affiliates of Tropicana Entertainment LLC. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. The New Jersey Debtors own and operate one of the largest, and one of the most established, destination casino resorts in Atlantic City, New Jersey, known as Tropicana Casino and Resort - Atlantic City, which ranks third in gaming positions among Atlantic City's 11 casino properties. The New Jersey Debtors initiated the Chapter 11 cases to effectuate a sale of substantially all their assets in accordance with a mandate issued by the New Jersey Casino Control Commission pursuant to the New Jersey Casino Control Act. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: NJ Debtors Want to Expand Cooper's Services ---------------------------------------------------------- Adamar of New Jersey Inc. and its affiliates ask the Court for permission to: (i) expand the scope of their retention of Cooper, Levenson, April, Niedelman & Wagenheim, P.A., as special litigation counsel, to include representation of Mark Giannantonio and Tama Hughes in the Edwards State Court Action; and (ii) pay the defense costs on behalf of the Key Personnel. William and Caroline Edwards filed a prepetition lawsuit in the Superior Court of New Jersey, Atlantic County, Law Division under Docket No. ATL-L-1474/09 against the New Jersey Debtors, retired New Jersey Supreme Court Justice Gary S. Stein, Ms. Hughes, Mr. Giannantonio, the New Jersey Casino Control Commission, and NJ Commission Chair Linda Kassekert. The Bankruptcy Court entered an order on July 23, 2009, preliminarily enjoining the Edwardses from proceeding in the Edwards State Court Action until the later of the closing of the Debtors' Section 363 sale of assets or October 31, 2009. The Injunction Order expressly states it is without prejudice to the New Jersey Debtors' ability to seek an extension of the preliminary injunction beyond October 31, 2009, should the closing not occur before then, Justice Stein, as trustee and conservator of Adamar of New Jersey, Inc., notes. As of October 22, 2009, the closing on the sale of the New Jersey Debtors' assets has not occurred, and the New Jersey Debtors are in the process of evaluating whether an extension of the preliminary injunction should be requested, Justice Stein relates. In the event the preliminary injunction is not extended beyond October 31, 2009, the Key Personnel will be required to defend the Edwards State Court Action. The Key Personnel have chosen Cooper Levenson as their counsel in the Edwards State Court Action, according to Justice Stein. The New Jersey Debtors maintain a practice of providing defense to and funding settlements on behalf of their employees who are named or sued individually in various types of matters while acting within the scope of their employment, Justice Stein informs the Court. In accordance with the New Jersey Debtors' practice of indemnifying their employees in the defense of litigation filed against them while in the scope of their employment, the Debtors wish to expand the scope of Cooper Levenson's retention to include representation of the Key Personnel in the Edwards State Court Action. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The Company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and its debtor-affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. The OpCo Debtors, a group of Tropicana entities owning casinos and resorts in Atlantic City, New Jersey and Evansville, Indiana have emerged from bankruptcy pursuant to a reorganization plan. A group of Tropicana entities, known as the LandCo Debtors, which own Tropicana casino property in Las Vegas, have emerged from Chapter 11 via a separate Chapter 11 plan. On April 29, 2009, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711). Judge Judith H. Wizmur presides over the cases. Adamar and Manchester Mall or the New Jersey Debtors are both affiliates of Tropicana Entertainment LLC. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. The New Jersey Debtors own and operate one of the largest, and one of the most established, destination casino resorts in Atlantic City, New Jersey, known as Tropicana Casino and Resort - Atlantic City, which ranks third in gaming positions among Atlantic City's 11 casino properties. The New Jersey Debtors initiated the Chapter 11 cases to effectuate a sale of substantially all their assets in accordance with a mandate issued by the New Jersey Casino Control Commission pursuant to the New Jersey Casino Control Act. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: LandCO Debtors Q3 Post-Confirmation Report --------------------------------------------------------- Michael Usgaard, corporate controller of the LandCo Debtors, submitted separately the post-confirmation quarterly summary reports of the LandCo Debtors for the reporting period from July 1, 2009, to September 30, 2009: Beginning Ending LandCo Debtor Cash Balance Cash Balance ------------- ------------ ------------ Adamar of Nevada Corporation $0 $0 Hotel Ramada of Nevada Corporation 0 0 Tropicana Development Company LLC 0 0 Tropicana Enterprises 0 0 Tropicana Las Vegas Holdings, LLC 0 0 Tropicana Las Vegas Resort and Casino LLC 0 0 Tropicana Real Estate Company, LLC 0 0 Tropicana Las Vegas, Inc., made a $2,482,133 disbursement on behalf of Hotel Ramada, according to Mr. Usgaard. He notes that the other LandCo Debtors do not presently maintain any bank accounts and have not made any disbursements or payments during the Reporting Period. The Chapter 11 Plan of the LandCo Debtors was confirmed on May 5, 2009, and was subsequently declared effective on July 1, 2009. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The Company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and its debtor-affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. The OpCo Debtors, a group of Tropicana entities owning casinos and resorts in Atlantic City, New Jersey and Evansville, Indiana have emerged from bankruptcy pursuant to a reorganization plan. A group of Tropicana entities, known as the LandCo Debtors, which own Tropicana casino property in Las Vegas, have emerged from Chapter 11 via a separate Chapter 11 plan. On April 29, 2009, Adamar of New Jersey, Inc., doing business as Tropicana Casino and Resort, and its affiliate, Manchester Mall, Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711). Judge Judith H. Wizmur presides over the cases. Adamar and Manchester Mall or the New Jersey Debtors are both affiliates of Tropicana Entertainment LLC. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. The New Jersey Debtors own and operate one of the largest, and one of the most established, destination casino resorts in Atlantic City, New Jersey, known as Tropicana Casino and Resort - Atlantic City, which ranks third in gaming positions among Atlantic City's 11 casino properties. The New Jersey Debtors initiated the Chapter 11 cases to effectuate a sale of substantially all their assets in accordance with a mandate issued by the New Jersey Casino Control Commission pursuant to the New Jersey Casino Control Act. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRUMP ENTERTAINMENT: Court Revives Richard Fields Lawsuit --------------------------------------------------------- Jordana Mishory at Daily Business Review reports that Broward Circuit Judge Jeffrey Streitfeld, at the behest of Richard T. Fields, has revived a lawsuit by Trump Hotels & Casino Resorts Development that sought an estimated $1 billion payment from Mr. Fields and the Seminole Hard Rock Hotel & Casinos developers. A 2008 settlement had fallen through, says Daily Business Review. According to Daily Business Review, Trump Hotels claimed that Mr. Fields' former confidant conspired to cut him out of a deal to develop two casinos for the tribe. Daily Business Review relates that Mr. Fields, to end the fight over the Seminole casinos, agreed in 2008 top acquire an Atlantic City casino from Trump Entertainment Resorts for $316 million, but the deal collapsed when Trump Entertainment's companies filed for bankruptcy. Judge Streitfeld has agreed to vacate a stay imposed in 2008 and set a trial date next fall, Daily Business Review states. Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ: TRMP) -- http://www.trumpcasinos.com/-- owns and operates three casino hotel properties in Atlantic City, New Jersey, which include Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. The Company conducts gaming activities and provides customers with casino resort and entertainment. Donald Trump is a shareholder of the Company and, as its non- executive Chairman, is not involved in the daily operations of the Company. The Company is separate and distinct from Mr. Trump's privately held real estate and other holdings. Trump Entertainment Resorts, TCI 2 Holdings, LLC, and other affiliates filed for Chapter 11 on February 17, 2009 (Bankr. D. N.J., Lead Case No. 09-13654). The Company has tapped Charles A. Stanziale, Jr., Esq., at McCarter & English, LLP, as lead counsel, and Weil Gotshal & Manges as co-counsel. Ernst & Young LLP is the Company's auditor and accountant and Lazard Freres & Co. LLC is the financial advisor. Garden City Group is the claims agent. The Company disclosed assets of $2,055,555,000 and debts of $1,737,726,000 as of December 31, 2008. Trump Hotels & Casino Resorts, Inc., filed for Chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Trump Hotels' obtained the Court's confirmation of its Chapter 11 plan on April 5, 2005, and in May 2005, it exited from bankruptcy under the name Trump Entertainment Resorts Inc. UNBRIDLED ENERGY: Signs Forbearance Pact, Seeks to Sell Leases -------------------------------------------------------------- Unbridled Energy Corporation has signed a Forbearance Agreement with Huntington National Bank. The Bank has agreed to extend the maturity date of the Company's outstanding bank loan from November 16, 2009 to December 16, 2009, and to forbear from taking any further action to collect the bank loan until at least December 16, 2009. In exchange, the Company agreed to make an immediate principal payment of US$175,000 to the Bank and have one of the Company's U.S. subsidiaries, Unbridled Energy PA., LLC, execute an Agreement of Guaranty and Suretyship of the Loans, a related Open-End Mortgage, Indenture, Security Agreement, Financing Statement and an Assignment of Production Agreement in respect of the U.S. owned assets of Unbridled Energy PA., LLC. The primary asset of Unbridled Energy PA., LLC, in which the Bank will now have a mortgage lien, is its 1,158 acres of oil and gas leases in Lycoming County, Pennsylvania, an area in the main fairway of the Marcellus shale formation. The Company is seeking a purchaser for these leases. Unbridled Energy is an independent natural gas evaluation and production company specializing in shale gas and tight gas sands opportunities in two main basins within North America; the eastern US Appalachian Basin and the Western Canadian Sedimentary Basin. The Company is applying a lower risk production enhancement strategy on existing wells, and the latest horizontal drilling and fracing technologies on new wells in well known shale gas and TGS formations in the Appalachian Basin. Importantly, management is also employing a "first mover" approach to large scale shale gas and TGS resource opportunities in the 580,000 square mile Western Canadian Sedimentary Basin. The Company has offices in Pittsburgh, Pennsylvania and Calgary, Alberta. VIRGIL KEITH ROBERTSON: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Virgil Keith Robertson Rt 1 Box 102 Sayre, OK 73662 Bankruptcy Case No.: 09-16048 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Western District of Oklahoma (Oklahoma City) Judge: T.M. Weaver Debtor's Counsel: O. Clifton Gooding, Esq. The Gooding Law Firm 1200 City Place Building 204 N Robinson Avenue Oklahoma City, OK 73102 Tel: (405) 948-1978 Fax: (405) 948-0864 Email: cgooding@goodingfirm.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 $1,736,440, and total debts of $4,361,500. The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Virgil Keith Robertson. VISHAY INTERTECHNOLOGY: Moody's 'B1' Rating Unaffected by Spin-Off ------------------------------------------------------------------ Moody's Investors Service said that Vishay Intertechnology, Inc.'s B1 corporate family rating, stable ratings outlook as well as its SGL-2 speculative grade liquidity rating are currently not affected by announcement that the company will spin-off its measurements and foil resistor groups into an independent, publicly traded company to be named Vishay Precision Group. Despite VPG's contribution to Vishay's consolidated operating results (approximately 9% of revenues) and product diversification, Moody's believes that the loss of VPG would not have a material impact to Vishay's overall scale, market position, and credit metrics. Additionally, while balance sheet cash levels are expected to be reduced from the capitalization of VPG, Moody's believes that Vishay will continue to maintain a good liquidity profile supported by high cash levels, robust free cash flow generation as a result of effective cost management and reduced capex outlays, and sizeable availability under its senior secured revolver. The last rating action on Vishay was on September 25, 2006, when Moody's assigned a B1 probability-of-default rating and affirmed its B3 subordinated note rating as per Moody's Loss-Given-Default methodology. Vishay's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record of tolerance for risk. These attributes were compared against other issuers both within and outside of Vishay's core industry and Vishay's ratings are believed to be comparable to those other issuers of similar credit risk. Vishay Intertechnology, Inc., headquartered in Malvern, PA, is one of the largest manufacturers and suppliers of passive and discrete active electronic components, with operations in 17 countries. Revenues for the twelve months ended September 30, 2009 (including VPG) were approximately $2 billion. VISHAY INTERTECHNOLOGY: Spin-Off Won't Affect S&P's 'BB' Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Malvern, Pennsylvania-based Vishay Intertechnology Inc. (BB/Stable/--) are unaffected by the company's announcement that it intends to spin-off its measurements and foil resister businesses into an independent, publicly traded company to be named Vishay Precision Group Inc. The spin-off represents about 9% of Vishay Intertechnology revenues as of Sept. 30, 2009. While the company provided no details regarding profitability or capitalization of Vishay Precision, S&P assumes that the company's margins are in line with the consolidated business and that existing liquidity at Vishay Intertechnology will be nominally depleted. Vishay's credit protection measures are comfortable for the rating and provide adequate cushion for this transaction. Leverage is likely to increase slightly, pro forma for the spin-off, but remains within expectations for the rating. Headroom under Vishay's existing performance covenants should be sufficient to absorb any deterioration in the coverage ratios that result from the spin off. VISTA HOMES INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Vista Homes, Inc. 3539 Bradshaw Rd #B-317 Sacramento, CA 95827 Bankruptcy Case No.: 09-43306 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Eastern District of California (Sacramento) Judge: Thomas Holman Debtor's Counsel: W. Austin Cooper, Esq. 2525 Natomas Park Dr. #320 Sacramento, CA 95833 Tel: (916) 927-2525 Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/caeb09-43306.pdf The petition was signed by Elizabeth B. McCulloch, president of the Company. VISTEON CORP: Incurs $38 Million Net Loss in Third Quarter ---------------------------------------------------------- Visteon Corporation incurred a $38 million net loss or 29 cents per share, on total sales of $1.73 billion, fot the third-quarter 2009. For the third quarter of 2008, Visteon reported a net loss of $188 million, or $1.45 per share, on total sales of $2.12 billion. Adjusted EBITDA, as defined below, for third quarter 2009 was $125 million, compared with $5 million in third quarter 2008. For the third straight quarter, Visteon's product sales, gross margin and adjusted EBITDA improved sequentially, reflecting continued benefits from restructuring and cost-saving actions along with increases in OEM vehicle production. "Despite the difficult operating environment, our third-quarter results reflect the continued efforts of our employees to build a global framework for business success which is focused on serving our customers with innovative products and technologies," said Donald J. Stebbins, chairman and chief executive officer. "While we believe the global auto industry is recovering from historically low levels of production, there remain challenges as the industry stabilizes." Third quarter product sales to Ford Motor Co. and Hyundai-Kia each accounted for 27 percent of total product sales. Renault-Nissan and PSA Peugeot Citroen accounted for about 10 percent and 6 percent of sales, respectively. On a regional basis, Asia accounted for about 36 percent of total product sales, with Europe representing 35 percent, North America 22 percent and the balance in South America. Third Quarter 2009 Results For third quarter 2009, total sales were $1.73 billion, including product sales of $1.67 billion and services revenue of $61 million. Product sales decreased by about $340 million, or 17 percent, year-over-year as the impact of foreign currency and divestitures and facility closures reduced sales by about $130 million and $90 million, respectively. Lower production, net of new business, further reduced sales by about $90 million. Aside from the Asian region where sales were largely unchanged from the prior year, Visteon experienced lower sales in all the other major regions in which it operates, reflecting decreased customer production volumes in response to weak global economic conditions. Gross margin for third quarter 2009 was $116 million, or 6.7 percent of sales, an increase of $73 million compared with $43 million, or 2.0 percent of sales, for the same period a year ago. Favorable cost performance, reflecting ongoing operational efficiencies as well as recently implemented restructuring actions, and foreign currency more than offset the impact of lower production levels. Selling, general and administrative expense for third quarter 2009 totaled $95 million, a decrease of $43 million, or 31 percent, compared with the same period a year ago, reflecting the benefit of significant headcount and other cost-reduction actions. For third quarter 2009, the company reported a net loss of $38 million, or 29 cents per share. This compares with a net loss of $188 million, or $1.45 per share, in the same quarter a year ago. Restructuring and reorganization costs of $27 million and $23 million, respectively, were incurred during the quarter while reimbursement from customers totaled $4 million. Third-quarter 2008 results included $42 million of restructuring costs and $19 million of asset impairments and loss on divestiture, along with $39 million of escrow reimbursement. Equity in net income of non-consolidated affiliates increased $21 million to $26 million in third quarter 2009 as compared to the same period in 2008, largely reflecting continued customer production increases in Asia Pacific. Income tax expense for third quarter 2009 was $18 million compared with $31 million in the same period a year ago. Adjusted EBITDA for third quarter 2009 was $125 million, compared with $5 million for third quarter 2008. First Nine Months 2009 For the first nine months of 2009, total sales of $4.65 billion were lower by $3.2 billion, or 41 percent, compared with the same period a year earlier. For the first nine months of 2009, Visteon reported a net loss of $148 million, or $1.14 per share, compared with a net loss of $335 million, or $2.59 per share during the first nine months of 2008. Adjusted EBITDA for the first nine months of 2009 was $220 million, compared with $359 million in the same period last year. Cash Flow and Liquidity As of September 30, 2009, Visteon had cash balances totaling $814 million, $72 million higher than June 30, 2009 levels. Cash generated by operating activities totaled $84 million for third quarter 2009, a $244 million improvement over the cash use of $160 million during the same period a year ago. The improvement was attributable to lower net losses, as adjusted for non-cash items, and lower trade working capital outflows. Trade working capital in the third quarter 2009 reflected, among other items, the impact of pre-petition payables that have not been settled. Capital expenditures were $29 million for third quarter 2009, compared with $76 million in third quarter 2008, reflecting the company's continued management of program investment. Free cash flow, as defined below, was $55 million for third quarter 2009, or $291 million better than 2008, which was a use of $236 million. About Visteon Corp Visteon continues to win new business despite the difficult economic environment. During the first nine months of 2009, Visteon won more than $400 million in incremental new business. On a regional basis, Asia and North America each accounted for 41 percent of the total, with Europe accounting for the remaining 18 percent. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VITAMIN SHOPPE: Moody's Raises Corporate Family Rating to 'B2' -------------------------------------------------------------- Moody's Investors Service raised Vitamin Shoppe Industries, Inc.'s corporate family, probability of default and senior secured notes ratings to B2 from B3. The rating outlook is stable. The rating upgrade reflects Vitamin Shoppe's improved credit metrics and continued growth in same-store sales, illustrating the resilience of the company's operating performance in an environment of sluggish consumer spending. The upgrade also considers the debt reduction associated with Vitamin Shoppe's initial public offering. Vitamin Shoppe has generated positive same-store sales growth for 15 consecutive quarters, including during the period of a dramatic consumer-led recession. Reported operating margin also rose by 70 bps for the first half of 2009 compared with the same period of the previous year. Pro forma for its initial public offering, Vitamin Shoppe's total debt/EBITDA is near 5.0 times as of June 27, 2009, compared with more than 6.0 times prior to the IPO. As part of the transaction, the company will repay approximately $45 million of its $165 million senior secured notes due 2012, redeem $72.5 million of its $135 million preferred stock and convert the remainder into common stock. The B2 corporate family rating still reflects the high business risk associated with the potential product safety issues in the "VMS" sector (vitamins, minerals, and nutritional supplements), which can lead to recalls, create adverse publicity and liability claims, and ultimately damage the company's operating and financial profile. The stable outlook reflects Moody's expectation that the company's financial metrics will remain solid in the near term due to sound operating performance and a financial policy that does not result in significant re-leveraging. These ratings are affected by the action: Ratings upgraded: -- Corporate family rating to B2 from B3, -- Probability of default rating to B2 from B3, -- Senior secured notes due 2012 to B2 (LGD 4, 50%) from B3 (LGD 4, 50%) Moody's last rating action for Vitamin Shoppe occurred on April 28, 2009, when its corporate family rating and probability of default rating were affirmed. Vitamin Shoppe Industries, Inc., headquartered in North Bergen, New Jersey, retails vitamins, minerals, and nutritional supplements. Vitamin Shoppe's revenue was approximately $638 million for the last twelve-month period ended June 27, 2009. VITAMIN SHOPPE: S&P Raises Corporate Credit Rating to 'B+' ---------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its corporate credit rating on North Bergen, New Jersey-based Vitamin Shoppe Industries Inc. to 'B+' from 'B' after the company used a portion of proceeds from its recent IPO to pay down debt and because of the company's good operating performance. The long- term ratings were removed from CreditWatch, where they were placed with positive implications on July 27, 2009. S&P also raised its issue-level rating on Vitamin Shoppe's $165 million notes to 'BB-' from 'B'. The recovery rating is revised to '2', indicating an expectation for substantial (70%-90%) recovery of principal in the event of payment default, from '3'. The outlook is stable. "The ratings on Vitamin Shoppe reflect its highly leveraged capital structure, small size in the highly competitive and fragmented retail vitamin industry, narrow product focus, and the risks associated with its rapid store expansion," said Standard & Poor's credit analyst Jackie Oberoi. Vitamin Shoppe remains highly leveraged, with lease-adjusted total debt to EBITDA pro forma for the company's $45 million debt paydown of about 4.8x and EBITDA interest coverage of about 2x for the 12 months ended June 27, 2009. S&P does not expect a significant decrease in leverage in the near term, as continued growth in lease commitments should hinder the recovery of credit measures. With about 425 retail stores across 37 states and the District of Columbia, a nationally circulated catalog, and two Web sites, Vitamin Shoppe is a small but growing player in the $23 billion U.S. dietary supplements industry. Although the company does not have the retail footprint of its main competitor, General Nutrition Centers Inc. (more than 6,100 locations worldwide), it is an effective competitor because its multichannel distribution and broad product offerings provide consumers with greater choice than many of its competitors. WESTERN ISLES INSURANCE: A.M. Best Downgrades FSR to 'C++' ---------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating (FSR) to C++ (Marginal) from B+ (Good) and the issuer credit rating (ICR) to "b" from "bbb-" of Western Isles Insurance Company Limited (WIICL) (Isle of Man). The outlook for all ratings remains negative. Concurrently, A.M. Best has withdrawn the ratings at the company's request and assigned a category "NR-4" to the FSR and "nr" to the ICR. The rating downgrade of WIICL reflects a significant change in business profile and a considerable increase in risk-adjusted capital requirements. WIICL originally operated as a single parent captive reinsurer, providing its parent with access to the London reinsurance market. WIICL now writes business which generally originates from Russia and cedes it back to either its parent or other unrated reinsurance carriers. As a result of this, A.M. Best's considers that WIICL has significantly increased its credit exposure. WILLIAM WRIGHT: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------------- Joint Debtors: William Wright Elizabeth Wright fka Elizabeth Teunis 17268 Raven Rocks Rd. Bluemont, VA 20135 Bankruptcy Case No.: 09-18851 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Eastern District of Virginia (Alexandria) Judge: Stephen S. Mitchell Debtors' Counsel: Ann E. Schmitt, Esq. Culbert & Schmitt, PLLC 30C Catoctin Circle SE Leesburg, VA 20175 Tel: (703) 737-6377 Fax: (703) 737-6370 Email: aschmitt@culbert-schmitt.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 A full-text copy of the Debtors' petition, including a list of their 16 largest unsecured creditors, is available for free at: [ Redacted June 17, 2014 ] The petition was signed by the Joint Debtors. WISH I LLC: Case Summary & 6 Largest Unsecured Creditors -------------------------------------------------------- Debtor: WISH I LLC 1111 N. HOYNE Chicago, IL 60622 Bankruptcy Case No.: 09-40340 Chapter 11 Petition Date: October 27, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Debtor's Counsel: Daniel L. Giudice, Esq. PO Box 2081 Glen Ellyn, IL 60138 Tel: (630) 674-2375 Fax: (630) 790-9590 Email: danlglaw@aol.com Estimated Assets: $0 to $50,000 Estimated Debts: $10,000,001 to $50,000,000 According to the schedules, the Company has assets of $1,000, and total debts of $40,260,514. A full-text copy of the Debtor's petition, including a list of its 6 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilnb09-40340.pdf The petition was signed by David E. Wish, managing member of the Company. WOODBURY COUNTRY: Shuts Down After Filing for Chapter 7 Bankruptcy ------------------------------------------------------------------ The Gloucester County Times reports that The Woodbury Country Club has been shut down as it seeking to settle millions of dollars in debt through Chapter 7 bankruptcy. The previous board of directors incurred a great deal of debt when they had the golf course's greens redone, re-landscaped, and rebuilt a number of years ago, The Gloucester County Times relates, citing a Woodbury Country member and bondholder Gerald O'Connor. The Woodbury Country will likely be auctioned to the highest bidder so that creditors can be paid back and Mr. O'Connor said he hopes a group of members buy the property and reestablish the Company sometime next year, The Gloucester County Times relates. W.R. GRACE: Closing Arguments on Plan Confirmation January 6 ------------------------------------------------------------ In connection with the confirmation hearings in W.R. Grace & Co. and its debtor affiliates' Chapter 11 cases, which were continued on October 13 and 14, 2009, Judge Judith K. Fitzgerald of the United States Bankruptcy Court for the District of Delaware established these schedules for post-trial briefs: (A) Post-Trial briefs for all parties other than the issues unique to Anderson Memorial Hospital and post-trial briefs by AMH on issues of feasibility and best interest that overlap with those of other parties, will be due on these dates: * November 2, 2009 -- Initial Post-Trial Briefs without hyper-links * November 9, 2009 -- Initial Post-Trial Briefs with hyper-links * November 20, 2009 -- Reply Briefs without hyper-links * December 2, 2009 -- Reply Briefs with hyper-links (B) Post-Trial Briefs on AMH-specific issues -- including (i) discrimination as to AMH, (ii) classification of AMH, and (iii) good faith as to AMH are due on these deadlines: * December 8, 2009 -- AMH's Post Trial Brief on all other AMH issues without hyper-links * December 11, 2009 -- AMH's Post Trial Brief on all other AMH issues with hyper-links * December 23, 2009 -- Reply Briefs on all other issues raised by AMH without hyper-links * December 28, 2009 -- Reply Briefs on all other issues raised by AMH with hyper-links There will be no continuances of any of the established dates, and no changes will be made to the briefs once they are initially filed in the non hyper-linked version, the Court ruled. The Debtors will also provide the Court on October 27, 2009: (i) a final chart of all exhibits, which will reflect (i) exhibits have been admitted into evidence and which have not, (ii) the rulings of the Court with respect to any restrictions placed on the admission of any exhibits, and (iii) the objections to all exhibits not admitted; (ii) final charts and binders of deposition and other prior testimony designations, which will outline any objections to the designations still being pursued; and (iii) a CD which contains all charts, exhibits and deposition and other prior testimony designations. Unless otherwise ordered by the Court, no further arguments will take place with respect to the admission of exhibits or deposition and other prior testimony designations. The Court will consider any pending objections or restrictions with respect to the exhibits or deposition and other prior testimony designations in the context of reviewing the Post-trial Briefs, Judge Fitzgerald ruled. Closing arguments will take place on January 6 and 7, 2010, and be allotted evenly between the Plan Proponents and the Plan Objectors: -- Part I Libby for 3 hours; -- Part II Traditional Insurer Issues for 3 hours; -- Part II Non-Insurer Issues for BNSF, State of Montana, Garlock, Maryland Casualty Company, National Union, FFIC and Longacre for 3 hours; -- Part IV General for 4 hours; and -- Part III Lenders for 3 hours. Judge Fitzgerald held that in the event the arguments do not conclude on January 7, 2009, the Lender arguments will be deferred to the next available Court date. On behalf of the Debtors, Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, disclosed that prior to the Court's approval of the Post-trial Brief Schedules, AMH objected to the language of the Schedules relating to the AMH Issues. However, AMH failed to specify any other issues that it seeks to address and how those issues should be briefed. Accordingly, the Debtors contend that the Schedules "accurately reflect the Court's directions and rulings, which have not been objected to by any party other than AMH." Creditors Committee Seeks Allowance of Frezza Testimony The Official Committee of Unsecured Creditors and certain lenders under the Prepetition Credit Facilities ask the Court to allow Robert Frezza to testify as an expert witness with respect to the Debtors' solvency during the Phase II confirmation hearing. The Bank Lender Group includes Anchorage Advisors, LLC, Babson Capital Management LLC, Bass Companies, Caspian Capital Advisors, LLC, Catalyst Investment Management Co., LLC, Cetus Capital, LLC, DE Shaw Laminar Portfolios, LLC, Farallon Capital Management, L.L.C., Halcyon Asset Management LLC, Intermarket Corp., JP Morgan Chase, N.A. Credit Trading Group, Loeb Partners Corporation, MSD Capital, L.P., Normandy Hill Capital, L.P., Onex Debt Opportunity Fund Ltd., P. Schoenfeld Asset Management, LLC, Restoration Capital Management, LLC, Royal Bank of Scotland, PLC, and Visium Asset Management LLC. To recall, the Debtors asked the Court to bar the Bank Lender and the Creditors' Committee from calling on Mr. Frezza as their expert witness. The Debtors argued that the Creditors Committee's and the Lenders' disclosure of Mr. Frezza as an expert on solvency at this point in the proceedings is a transparent attempt at "trial by ambush," as they purport to open the door to a whole new solvency analysis, notwithstanding the fact that Mr. Frezza has never submitted an expert report. Disputing the Debtors' contention, James S. Green, Esq., at Landis Rath & Cobb LLP, in Wilmington, Delaware, points out that the Debtors ignore Mr. Frezza's testimony and, instead, improperly and disingenuously focuses upon two unrelated and inapplicable matters relating to valuation and "quantification of liabilities" -- to which Mr. Frezza candidly stated he was not expert. "Mr. Frezza did neither a valuation nor a quantification of liabilities and had no reason to do so . . . [because] he performed a solvency analysis. [Moreover,] Mr. Frezza need not be a certified valuation professional in order to render a solvency opinion," Mr. Green emphasizes. Mr. Green contends that Mr. Frezza is extremely well qualified to render a solvency opinion based upon his 25 years of experience as a certified public accountant, and his personal experience working with the Creditors' Committee as its financial advisor in the Debtors' cases. Mr. Green adds that there is no issue at all regarding whether Mr. Frezza's opinions -- that Grace is solvent -- "fit" the issues in the Debtors' cases and should be of help to the Court as finder- of-fact. Clearly, Grace is solvent as of the contemplated effective date First Amended Joint Plan of Reorganization Plan. The issue of Grace's solvency is one that the Plan Proponents -- consisting of the Debtors, the Official Committee of Equity Security Holders, the Official Committee of Asbestos Personal Injury Claimants and the Future Asbestos PI Claims Representative -- demanded the Creditors' Committee and Bank Lender Group prove as part of their objections to the Plan premised in Section 1129 of the Bankruptcy Court. "There can be no dispute that solvency is an issue, or that Mr. Frezza's testimony directly addressed that issue by applying traditional, accepted methods of analyzing a company's solvency," Mr. Green maintains. Parties Resolve Deposition Issues To recall, the Plan Proponents proposed to preclude expert testimony on behalf of the claimants injured by exposure to asbestos from the Debtors' operations in Lincoln County, Montana, where materials relating to the testimony have not been produced. The Plan Proponents also asked the Court to strike "untimely and non-conforming designations" of the State of Montana. James O'Neill, Esq., at Pachulski, Stang, Ziehl & Jones LLP, in Wilmington, Delaware, disclosed that during the Confirmation Hearings, the issues raised by the Plan Proponents were resolved. Accordingly, the Plan Proponents asked the Court to approve statements embodying the resolution of the issues, which specifically provide for: * the dismissal of the Plan Proponents' request relating to the Libby Claimants; and * the State of Montana's withdrawal of its deposition designations. Mr. O'Neill also related that in October 2009, AMH provided to the Debtors a chart of the deposition designations it still seeks to admit as evidence in the Confirmation Proceedings. By October 27, the Debtors will file a chart containing their objections to AMH's Revised Designations and any counter-designations. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace and its debtor affiliates, with the support of the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, have submitted a proposed Chapter 11 plan of reorganization. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. The Plan confirmation hearing is scheduled to continue on October 13 and 14. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Reports $44.4 Mil. Net Income for Third Quarter ----------------------------------------------------------- W. R. Grace & Co. (NYSE: GRA) announced its financial results for the third quarter ended September 30, 2009. Highlights are: * Sales for the third quarter were $753.6 million compared with $889.4 million in the prior year quarter, a 15.3% decrease. The sales decrease was attributable primarily to lower sales volumes (9.8%), lower cost of metals passed through to customers (4.8%), and unfavorable currency translation (4.1%), partly offset by price increases (3.4%). Sales were down 22.2% in North America, 12.8% in Europe, and 12.9% in Asia and up 1.0% in Latin America. * Gross profit percentage for the third quarter was 34.8% compared with 29.1% in the prior year quarter and 33.8% in the second quarter of 2009. The improvement in gross profit percentage is attributable to price increases implemented primarily in the second half of 2008, a decrease in raw materials and energy costs since their peak in the fourth quarter of 2008, and lower factory overhead expenses resulting primarily from restructuring activities. The decline in raw materials and energy costs that Grace has experienced since late 2008 abated during the third quarter. Grace experienced increasing costs for certain raw materials during the quarter though raw materials and energy costs remained below prior year levels. * Core EBIT was $107.9 million in the third quarter, compared with $82.4 million in the prior year quarter, a 30.9% increase. Core EBIT for the third quarter included $22.2 million of gains on product line divestitures and $1.9 million of restructuring expenses. Excluding these two items, Core EBIT increased 6.3% over the prior year quarter. Core EBIT margin was 14.3% compared with 9.3% in the prior year quarter and 10.5% in the second quarter of 2009. Core EBIT margin in the third quarter was positively affected by 2.9 percentage points due to the gains on the previously announced product line divestitures. * Net income attributable to Grace (Grace net income) for the third quarter was $44.4 million, or $0.61 per diluted share, compared with $28.3 million, or $0.39 per diluted share, in the prior year quarter, a 56.9% increase. The 2009 and 2008 results were negatively affected by Chapter 11 expenses, litigation and other matters not related to core operations. Excluding Chapter 11 expenses, the loss on noncore activities, and their tax effects, Grace net income would have been $65.9 million for the third quarter of 2009 compared with $45.4 million calculated on the same basis for the prior year quarter, a 45.2% increase. Grace net income for the third quarter of 2009 included $22.2 million ($14.4 million after taxes) of gains on the product line divestitures. * Sales for the nine months ended September 30, 2009, were $2,146.7 million compared with $2,548.6 million for the prior year period, a 15.8% decrease. Grace net income for the nine months ended September 30, 2009, was $24.8 million, or $0.34 per diluted share, compared with Grace net income of $78.1 million, or $1.07 per diluted share, for the prior year period. * Core EBIT for the nine months ended September 30, 2009, was $178.9 million, down 29.1% from the prior year period. Adjusted operating cash flow was $338.3 million for the nine months ended September 30, 2009, compared with $172.0 million in the prior year period, a 96.7% increase. The increase in adjusted operating cash flow was attributable primarily to improvements in working capital and lower capital expenditures, partially offset by the impact of lower Core EBIT. "Grace had a good quarter under dynamic and challenging market conditions," said Fred Festa, Grace's Chairman, President and Chief Executive Officer. "We improved profitability and delivered strong cash flow. We benefited from a modest improvement in customer demand and from the cost reduction and restructuring actions we have implemented. We remain focused on our customers and positioning our business for the future." CORE OPERATIONS Grace Davison Third quarter sales for the Grace Davison operating segment, which includes specialty catalysts and materials used in a wide range of industrial applications, were $518.9 million, down 10.5% from the prior year quarter. The sales decrease was attributable primarily to lower cost of metals passed through to customers (7.4%), lower sales volumes (4.0%), and unfavorable currency translation (3.8%), partly offset by price increases (4.7%). Sales in the third quarter of 2009 were up 8.6% compared with sales in the second quarter of 2009. Excluding sales of hydroprocessing catalysts, which are subject to uneven order patterns, sales in the third quarter were up 4.6% compared with sales calculated on the same basis for the second quarter of 2009. Based on the expected order pattern, sales of hydroprocessing catalysts are expected to decrease in the fourth quarter of 2009 when compared with the third quarter. Sales of this operating segment are reported by product group as follows: * Refining Technologies -- sales of catalysts and chemical additives used by petroleum refineries were $267.9 million in the third quarter, down 12.3% from the prior year quarter. Third quarter sales in this product group were unfavorably affected by a decrease in the cost of molybdenum passed through to hydroprocessing customers, lower sales volumes, and foreign currency translation, partially offset by improved pricing in fluid catalytic cracking catalysts and additives. * Materials Technologies -- sales of engineered materials, coatings and sealants used in numerous industrial, consumer and packaging applications were $164.3 million in the third quarter, down 10.4% from the prior year quarter. Third quarter sales in this product group were unfavorably affected by lower customer demand and by foreign currency translation. * Specialty Technologies -- sales of highly specialized catalysts and materials used in unique or proprietary applications and markets were $86.7 million in the third quarter, down 4.7% from the prior year quarter. Third quarter sales in this product group were unfavorably affected by foreign currency translation and the lower cost of metals passed through to customers, partially offset by higher sales volumes and improved pricing. Segment operating income of Grace Davison for the third quarter was $112.5 million compared with $68.3 million in the prior year quarter, a 64.7% increase. Excluding the gain on a product line divestiture in the third quarter of 2009, segment operating income increased 36.6% over the prior year quarter. The favorable effects of improved pricing, raw material cost reductions, and lower operating expenses more than offset the unfavorable effects of lower sales volumes and foreign currency translation. Gross profit percentage was 33.6% compared with 26.1% in the prior year quarter and 32.3% in the second quarter of 2009. Segment operating margin was 21.7% compared with 11.8% in the prior year quarter and 17.1% in the second quarter of 2009. Segment operating margin in the third quarter was positively affected by 3.7 percentage points due to the gain on the product line divestiture. Sales of the Grace Davison operating segment for the nine months ended September 30, 2009, were $1,474.6 million, down 11.3% compared with the prior year period. Segment operating income for the nine month period ending September 30, 2009, was $234.3 million, a 3.1% increase compared with the prior year period, with segment operating margins at 15.9%, compared with 13.7% for the prior year period. These results reflect the favorable effects of price increases, a divestiture gain, and lower operating expenses, partially offset by the unfavorable effects of lower sales volume, selling high-cost inventories produced in the fourth quarter of 2008, and foreign currency translation. On September 21, 2009, Grace filed a motion with the United States Bankruptcy Court for the District of Delaware to sell a portion of its interest in its Advanced Refining Technologies (ART) hydroprocessing catalysts joint venture and to make other changes in the joint venture agreements with its partner Chevron Products Company. Subject to approval by the court, Grace would sell 5% of its 55% interest in the joint venture to Chevron, resulting in a balanced 50/50 ownership structure. Grace and Chevron would also amend certain of the joint venture agreements governing Grace's supply of catalyst and capital to the joint venture. These changes to the joint venture reflect the current scale and maturity of the business and position the venture for future opportunities. In addition, Grace would expect to deconsolidate the joint venture from its consolidated financial statements on a prospective basis. Grace Construction Products Third quarter sales for the Grace Construction Products operating segment, which includes specialty chemicals and building materials used in commercial, infrastructure and residential construction, were $234.7 million, down 24.2% from the prior year quarter. The sales decrease was attributable primarily to lower sales volumes (20.7%), and unfavorable currency translation (4.6%), partly offset by price increases (1.1%). Sales in the third quarter were unfavorably affected by the global construction slowdown. Sales of this operating segment are reported by geographic region as follows: * Americas -- sales of products to customers in the Americas were $119.5 million in the third quarter, down 27.3% from the prior year quarter. Lower sales volumes were partly offset by the favorable impact of 2008 pricing actions. In Latin America, price and volume increases were more than offset by unfavorable foreign currency translation, resulting in a 3.5% sales decrease from the prior year quarter. * Europe -- sales of products to customers in Eastern and Western Europe, the Middle East, Africa, and India were $79.1 million in the third quarter, down 25.4% from the prior year quarter. Revenues were unfavorably affected by significantly lower sales volumes across the region and by foreign currency translation. * Asia -- sales of products to customers in Asia (excluding India), Australia, and New Zealand were $36.1 million in the third quarter, down 7.9% from the prior year quarter. Revenues were unfavorably affected by foreign currency translation and lower sales volumes. Commercial construction starts in the U.S. were down approximately 45% from the prior year period. The sharp decline observed over the last year abated during the third quarter. Commercial construction activity in Europe and the Middle East continued to decline in the quarter. Segment operating income of Grace Construction Products for the third quarter was $37.4 million compared with $46.8 million for the prior year quarter, a 20.1% decrease. Excluding the gain on a product line divestiture in the third quarter of 2009, segment operating income decreased 26.5% from the prior year quarter. The unfavorable effects of lower volumes and foreign currency translation more than offset the favorable impact of operating expense controls and price increases. Gross profit percentage was 37.9% compared with 34.9% in the prior year quarter and 37.4% in the second quarter of 2009. Segment operating margin in the third quarter was 15.9% compared with 15.1% in the prior year quarter and 14.6% in the second quarter of 2009. Segment operating margin in the third quarter was positively affected by 1.2 percentage points due to the gain on the product line divestiture. Sales of the Grace Construction Products operating segment for the nine months ended September 30, 2009, were $672.1 million, down 24.2% compared with the prior year period. Segment operating income for the nine months ended September 30, 2009, was $83.7 million compared with $125.3 million for the prior year period, a 33.2% decrease, with segment operating margins at 12.5%, compared with 14.1% for the prior year period, reflecting continued weakness in the global construction market. Corporate Operating Costs Corporate support function costs decreased in the third quarter of 2009 compared with the prior year quarter due to lower employment costs. Other corporate costs increased in the third quarter compared with the prior year quarter primarily due to planned one time costs related to the IT transition announced in the second quarter of 2009 and higher pension related expenses. Pension Expense Pension expense related to core operations for the third quarter was $17.3 million compared with $11.4 million for the prior year quarter, a 51.8% increase. Pension expense related to core operations for the nine months ended September 30, 2009, was $51.4 million compared with $34.1 million in the prior year period, an increase of 50.7%. The increase in costs is primarily attributable to the decline in plan asset values in 2008. Pre-Tax Income (Loss) From Non-Core Activities Non-core activities include events and transactions not directly related to the generation of operating revenue or the support of core operations. The pre-tax loss from non-core activities was $12.1 million in the third quarter compared with a loss of $33.9 million in the prior year quarter, and $73.3 million for the nine months ended September 30, 2009, compared with $47.2 million in the prior year period. The decrease in the non-core loss in the third quarter is primarily attributable to lower legal spending and a smaller net difference between the change in value of non-U.S. dollar intercompany loans and the change in value of the associated currency hedge contracts. The increase in the non- core loss for the nine months ended September 30, 2009 is primarily attributable to higher legal spending and a larger net difference between the change in value of non-U.S. dollar intercompany loans and the change in value of the associated currency hedge contracts. Interest And Income Taxes Interest expense was $9.7 million for the third quarter compared with $13.2 million for the prior year quarter, and $28.5 million for the nine months ended September 30, 2009, compared with $42.8 million in the prior year period. The decrease in interest expense is due to a lower interest rate and a lower amount of pre- petition environmental obligations bearing interest. The annualized weighted average interest rate on pre-petition obligations for the third quarter was 3.51%. Income taxes are recorded at a global effective rate of approximately 30% before considering the effects of certain non- deductible Chapter 11 expenses, changes in uncertain tax positions and other discrete adjustments. Income taxes related to foreign jurisdictions are generally paid in cash, while Grace expects taxable income in the United States will be offset by available tax deductions. CHAPTER 11 PROCEEDINGS On April 2, 2001, Grace and 61 of its United States subsidiaries and affiliates, including its primary U.S. operating subsidiary W. R. Grace & Co.-Conn., filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in order to resolve Grace's asbestos-related liabilities. On September 19, 2008, Grace filed a Joint Plan of Reorganization, as well as several associated documents, including a disclosure statement, with the Bankruptcy Court. The Official Committee of Asbestos Personal Injury Claimants, the Representative for Future Asbestos Personal Injury Claimants, and the Official Committee of Equity Security Holders are co-proponents of the Plan. The committee representing general unsecured creditors and the Official Committee of Asbestos Property Damage Claimants and the Representative for Future Asbestos Property Damage Claimants are not co-proponents of the Plan. The Plan is consistent with the terms of the previously announced settlements of Grace's asbestos personal injury liability and claims related to its former attic insulation product. It also requires the establishment of two asbestos trusts under Section 524(g) of the United States Bankruptcy Code to which all present and future asbestos-related claims would be channeled. The evidentiary portion of the confirmation hearings on the Plan was completed on October 14, 2009. Closing arguments are scheduled for January 6 and 7, 2010. Most of Grace's non-core liabilities and contingencies -- including asbestos-related litigation, environmental claims and other obligations -- are subject to compromise under the Chapter 11 process. Grace has not adjusted its accounting for asbestos- related liabilities to reflect the filing of the Plan. At this time, Grace is unable to determine a reasonable estimate of the value of certain consideration payable to the trusts under the Plan. These values will ultimately be determined on the effective date of the Plan. Grace expects to adjust its accounting for the Plan when the consideration can be measured and material conditions to the Plan are satisfied. Grace expects that such adjustments may be material to Grace's consolidated financial position and results of operations. Expenses related to the Chapter 11 proceedings, net of filing entity interest income, were $18.4 million in the third quarter compared with $12.0 million in the prior year quarter. Cash Flow And Liquidity Grace's net cash provided by operating activities for the nine months ended September 30, 2009, was $245.5 million compared with $168.7 million used for operating activities for the prior year period. Capital expenditures for the nine months ended September 30, 2009, were $53.6 million compared with $93.1 million for the prior year period, a 42.4% decrease. At September 30, 2009, Grace had available liquidity of approximately $932.0 million, consisting of $765.4 million in cash and cash equivalents, $4.8 million in short-term investment securities, approximately $64.5 million of available credit under various non-U.S. credit facilities and approximately $97.3 million of available credit under its $165.0 million debtor-in-possession facility. Grace believes that these sources and amounts of liquidity and cash flow from operations are sufficient to support its business operations, strategic initiatives and Chapter 11 proceedings until a plan of reorganization is confirmed and Grace emerges from bankruptcy. Grace is seeking new financing of approximately $950 million to fund the Plan, and is in advanced discussions with potential lenders regarding the terms of the financing. W. R. Grace & Co. and Subsidiaries Consolidated Balance Sheets (Unaudited) ================================== Sept. 30, Dec. 31, Amounts in millions 2009 2008 ------------------- -------- -------- ASSETS Current Assets $765.4 $460.1 Investment securities 4.8 21.6 Cash value of life insurance, net - 67.2 Trade accounts receivable, net 442.1 462.6 Inventories 261.2 354.8 Deferred income taxes 42.5 45.8 Other current assets 75.3 86.1 -------- -------- Total Current Assets 1,591.3 1,498.2 Properties and equipment, net 686.6 710.6 Goodwill 120.2 117.1 Deferred income taxes 880.4 851.7 Asbestos-related insurance 500.0 500.0 Overfunded defined benefit pension plans 33.9 48.6 Other assets 124.4 149.3 -------- -------- Total Assets $3,936.8 $3,875.5 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Liabilities Not Subject to Compromise Current Liabilities Debt payable within one year $6.6 $11.2 Accounts payable 177.6 230.4 Other current liabilities 312.0 291.5 -------- -------- Total Current Liabilities 496.2 533.1 Debt payable after one year 0.4 0.6 Deferred income taxes 5.8 7.1 Underfunded defined benefit pension plans 397.6 392.3 Unfunded defined benefit pension plans 153.7 136.7 Other liabilities 42.2 46.6 -------- -------- Total Liabilities Not Subject to Compromise 1,095.9 1,116.4 Liabilities Subject to Compromise Prepetition bank debt plus accrued interest 843.7 823.5 Drawn letters of credit plus ccrued interest 30.9 30.0 Income tax contingencies 123.9 121.0 Asbestos-related contingencies 1,700.0 1,700.0 Environmental contingencies 147.5 152.2 Postretirement benefits 181.1 169.7 Other liabilities and accrued interest 126.1 116.5 -------- -------- Total Liabilities Subject to Compromise 3,153.2 3,112.9 Total Liabilities 4,249.1 4,229.3 Shareholders' Equity (Deficit) Common stock 0.8 0.8 Paid-in capital 441.6 436.6 Accumulated deficit (221.8) (246.6) Treasury stock, at cost (56.6) (57.4) Accumulated other comprehensive income (loss) (544.5) (560.3) -------- -------- Total W.R. Grace & Co. Shareholders' Equity (Deficit) (380.5) (426.9) Non-controlling interest 68.2 73.1 -------- -------- Total Shareholders' Equity (Deficit) (312.3) (353.8) -------- -------- Total Liabilities and Shareholders' Equity (Deficit) $3,936.8 $3,875.5 ======== ======== W. R. Grace & Co. and Subsidiaries Consolidated Statements of Operations Three Months Ended (Unaudited) Sept. 30, ===================================== ==================== Amounts in millions 2009 2008 ------------------- -------- -------- Net sales $753.6 $889.4 Cost of goods sold 491.1 630.8 -------- -------- Gross profit 262.5 258.6 Selling, general and administrative expenses 136.7 150.7 Restructuring expenses 1.9 - Gain on sales of product lines (22.2) - Research and development expenses 16.6 20.5 Defined benefit pension expense 21.5 14.1 Interest expense and related financing costs 9.7 13.2 Provision for environmental remediation 0.4 2.9 Chapter 11 expenses, net of interest income 18.4 12.0 Other (income) expense, net 5.1 17.1 -------- -------- 188.1 230.5 Income before income taxes 74.4 28.1 Benefit from (provision for) income taxes (23.6) 4.3 -------- -------- Net income (loss) 50.8 32.4 Less: Net loss attributable to W. R. Grace & Co. non-controlling interest (6.4) (4.1) -------- -------- Net income attributable to W.R. Grace & Co. shareholders $44.4 $28.3 ======== ======== W.R. Grace & Co. and Subsidiaries Consolidated Statements of Cash Flow Nine Months Ended (Unaudited) Sept. 30, ==================================== =================== Amounts in millions 2009 2008 ------------------- -------- -------- OPERATING ACTIVITIES Net income $34.7 $89.5 Reconciliation to net cash provided by (used for) operating activities: Depreciation and amortization 84.5 90.8 Chapter 11 expenses, net 36.4 48.4 Provision for (benefit from) income taxes 17.0 38.9 Income taxes paid, net of refunds (8.1) (44.3) Interest accrued on prepetition liabilities subject to compromise 26.9 38.8 Net (gain) loss on sales of investments (25.2) 0.3 Restructuring expenses 26.9 5.2 Defined benefit pension expenses 63.9 42.4 Payments under defined benefit pension arrangements (42.5) (57.4) Net payments under postretirement plans (1.5) (4.7) Net income from life insurance policies (1.2) (2.0) Provision for uncollectible receivables 2.9 0.8 Provision for environmental remediation 1.1 8.8 Expenditures for environmental remediation (5.8) (3.3) Expenditures for retained obligations of divested businesses - (0.1) Changes in assets and liabilities, excluding effect of foreign currency translation: Working capital items 99.5 (85.9) Other accruals and non-cash items (29.1) (30.0) -------- -------- Net cash provided by operating activities before Chapter 11 expenses and settlements 280.4 136.2 Cash paid to resolve Chapter 11 contingencies - (252.0) Chapter 11 expenses paid (34.9) (52.9) -------- -------- Net cash provided by (used for) operating activities 245.5 (168.7) INVESTING ACTIVITIES Capital expenditures (53.6) (93.1) Purchase of equity investment (1.5) (3.0) Proceeds from termination of life insurance policies 68.8 8.1 Net investment in life insurance policies (0.6) (0.2) Proceeds from sales of investment securities 17.7 61.5 Proceeds from disposal of assets 8.0 2.8 Proceeds from sales of product lines 26.7 - -------- -------- Net cash provided by (used for) investing activities 65.5 (23.9) FINANCING ACTIVITIES Dividends paid to non-controlling interests (14.3) (13.3) Proceeds from life insurance policy loans - 40.0 Net (repayments) borrowings (4.8) 1.5 Fees paid under DIP credit facility (1.4) (1.6) Proceeds from exercise of stock options 0.6 9.6 -------- -------- Net cash (used for) financing activities (19.9) 36.2 Effect of currency exchange rate changes on cash and cash equivalents 14.2 1.1 -------- -------- Increase (Decrease) in cash & cash equivalents 305.3 (155.3) Cash and cash equivalents, beginning of period 460.1 480.5 -------- -------- Cash and cash equivalents, end of period $765.4 $325.2 ======== ======== About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace and its debtor affiliates, with the support of the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, have submitted a proposed Chapter 11 plan of reorganization. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. The Plan confirmation hearing is scheduled to continue on October 13 and 14. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Settles New Jersey Environmental Claim -------------------------------------------------- In June 2005, the State of New Jersey Department of Environmental Protection commenced a state court action in the Superior Court at Mercer County in New Jersey against the Debtors and Robert J. Bettacchi, a former officer at Grace and Jay H. Burrill, a former employee at the Company. The State Court Action related to the environmental condition of the Hamilton Township Site operated by the Debtors, which were found to contain concentration of asbestos. The Debtors closed the Site in 1994. In September 2005, the Debtors removed the State Court Action to the United States District Court for the District of New Jersey in an action captioned New Jersey Department of Environmental Protection v. W R. Grace & Co., et al. However, the New Jersey District Court denied in May 2006, without prejudice, the Debtors' requests (i) to transfer venue of the New Jersey District Court Action to the U.S. District Court for the District of Delaware, and (ii) to remand the New Jersey District Court Action to the State Court. Subsequently, the Debtors commenced the adversary proceeding seeking to enjoin the State Court Action. The Bankruptcy Court had held that the automatic stay barred the State Court Action because it was not an exercise of the New Jersey Department's police and regulatory powers, and was therefore not subject to Section 362(b)(4) of the Bankruptcy Code. The Delaware District Court, however, disagreed with the Bankruptcy Court. As a result, the New Jersey Department took an appeal of the Delaware District Court's Order in the Injunction District Court Appeal in the Court of Appeals for the Third Circuit. To resolve their dispute, the Debtors agreed to allow the New Jersey Department a general unsecured claim for $1 million, to settle their liabilities relating to the Site, provided, however, that: (i) the Department will be entitled to interest only as set forth in the Stipulation, and will not be allowed any pre- or postpetition interest on the Department's Allowed Claim for any period of time prior to the date on which the Settlement becomes final and non-appealable; (ii) interest on the Department's Allowed Claim Amount will accrue at the rate and in the manner provided in the Debtors' First Amended Joint Plan of Reorganization for similarly situated General Unsecured Claims; and (iii) the interest accrual will commence on the date on which the Settlement becomes final and non-appealable, and continue until the date on which the Department receives payment in satisfaction of the Allowed Claim. Pursuant to the terms of the Plan, on or before 30 days after the Plan's Effective Date, the Debtors will pay to the New Jersey Department the Allowed Claim Amount, plus any applicable interest. The Department will file a proof of claim asserting the Allowed Claim Amount in the Debtors' cases. The Debtors' obligations relating to the Hamilton Township Site will be deemed disallowed and expunged for all purposes, and satisfied by payment of the Allowed Claim. The Claimant Release Parties -- consisting of (i) the New Jersey Department, (ii) the Department's Commissioner, (iii) the New Jersey Spill Compensation Fund, and (iv) the Administrator of the New Jersey Spill Compensation Fund -- are forever enjoined from asserting against the Debtors and Messrs. Bettacchi and Burrill any claims arising from the Settlement. Or before 30 days after the Settlement Order becomes final and non-appealable, the Debtors and the New Jersey Department will promptly take all actions necessary to cause the Appeals to be dismissed. The parties ask Judge Fitzgerald to approve their stipulation. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace and its debtor affiliates, with the support of the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, have submitted a proposed Chapter 11 plan of reorganization. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. The Plan confirmation hearing is scheduled to continue on October 13 and 14. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * Bill Seeks to Shift Rescue Costs to Big Banks ----------------------------------------------- ABI reports that the Obama administration and House Financial Services Committee Chairman Barney Frank (D-Mass.) unveiled legislation that would create a special fund, paid by assessments on financial companies with more than $10 billion in assets, to bear the costs of big firms that fail. * House Panel Advances Credit Rating Bill ----------------------------------------- Law360 reports that a key U.S. House of Representatives panel has approved a measure that would create tough new rules for credit rating agencies and expose the firms to additional legal liability. * Small and Midmarket Businesses Brace for Looming Fallout of CIT ----------------------------------------------------------------- As CIT struggles to gain bondholder support to avoid bankruptcy, the nation's small and midsize businessesare turning to other forms of financing to fund their day-to-day operations. While CIT's uncertain outcome had left many of the nearly one million businesses that rely on the lender for working capital -- particularly those in manufacturing and retail - feeling vulnerable, many are now finding that alternative sources of business financing is available to help them fund their growth, with many turning to The Receivables Exchange. The Receivables Exchange, which has seen an increased use of receivables financing by businesses of all sizes and across more than 40 industries, reported quarter-over-quarter growth of more than 190% on the third quarter 2009 Cash Flow Receivables Index. Businesses are signing on to tap into the $20 billion of liquidity available on the Exchange's transparent centralized marketplace for receivables financing. "The working capital limitations small and midsize companies are facing is unprecedented," said Justin Brownhill, co-founder and chief executive officer of The Receivables Exchange. "The demise of CIT will only exacerbate the struggle for these companies. For our economy -- and the small and midsize companies that drive it - to fully recover, it is imperative that they have broad access to small business financing. The Receivables Exchange provides a market-based solution that delivers an efficient source of liquidity at competitive rates." At The Receivables Exchange, small and mid-size businesses can sell their receivables on its online marketplace to a global network of accredited institutional investors. The Receivables Exchange provides a flexible, alternative source of receivables financing. Most businesses wait 60+ days to receive payment on their outstanding invoices -- many even longer as their larger customers are slowing down payments to meet their own cash flow needs. Members of The Receivables Exchange no longer have to wait for prolonged periods for their outstanding invoices to be paid. On the Exchange, companies can post their receivables one day and receive their funds the next business day. About The Receivables Exchange The Receivables Exchange -- http//www.receivablesXchange.com/ -- is the world's first online marketplace for real-time trading of accounts receivable. Changing the landscape of small business financing, The Receivables Exchange provides a new dimension in working capital management. The Exchange connects a global network of accredited institutional investors to the nation's millions of small and mid-sized businesses in search of capital to grow. Buyers get direct access to an $18 trillion new investable asset; Sellers gain access to a new competitive working capital management solution by having their receivables bid on in real- time by multiple Buyers. * Five New Associates Join Cohen & Grigsby's Pittsburgh Office -------------------------------------------------------------- Cohen & Grigsby, a business law firm with headquarters in Pittsburgh, PA and offices in Naples and Bonita Springs, FL, is pleased to announce the hiring of five new associates in two of its practice groups in the Pittsburgh office: -- Joseph P. Fridy joins the firm's Business Practice Group. He received his J.D. from the University of Pittsburgh School of Law and his B.A. in history from the University of Pittsburgh. -- Caitlin Price joins the firm's Business Practice Group. She earned her J.D. from the University of Pittsburgh School of Law and her B.A. in French from the University of Southern California in Los Angeles, CA. -- Allison D. Warden joins the firm's Business Practice Group. She received her J.D. from the Duquesne University School of Law and B.A. in political science from St. Bonaventure University in St. Bonaventure,NY. -- Kelly K. Iverson joins the firm's Litigation Practice Group. She received her J.D. from the Duquesne University School of Law and her B.A. in business management from Chatham College. -- Katie R. Jacobs joins the firm's Litigation Practice Group. She earned her J.D. from the University of Pittsburgh School of Law and her B.S. in criminal justice from Old Dominion University in Norfolk, VA. "At Cohen & Grigsby, we are excited to welcome these new associates to our Pittsburgh offices," said Jack Elliot, president and CEO of Cohen & Grigsby. "We are confident that they will become an asset to our clients as well as their Cohen & Grigsby colleagues." About Cohen & Grigsby Established in 1981 in Pittsburgh, PA, Cohen & Grigsby is a business law firm with headquarters in Pittsburgh and offices in Naples and Bonita Springs, FL. Cohen & Grigsby attorneys cultivate a culture of performance by serving as business counselors as well as legal advisors to an extensive list of clients that includes private and publicly held businesses, nonprofits, multinational corporations, individuals and emerging companies. The firm has more than 120 lawyers in seven practice groups - Business & Tax, Labor & Employment, Immigration/ International Business, Intellectual Property, Litigation, Bankruptcy & Creditors' Rights, and Estates & Trusts. * BOOK REVIEW: Inside Investment Banking, Second Edition -------------------------------------------------------- Author: Ernest Bloch Publisher: BeardBooks, Softcover: 430 pages List Price: $34.95 Review by Henry Berry Even though Bloch states that "no last word may ever be written about the investment banking industry," he nonetheless has written a timely, definitive book on the subject. Bloch wrote Inside Investment Banking book after discovering that no textbook on the subject was available when he began teaching a course on investment banking. Bloch's book is like a textbook, though one not meant to be restricted to classroom use. It's a complete, knowledgeable study of the structure and operations of the field of investment banking. With a long career in the field, including work at the Federal Reserve Bank of New York, Bloch has the background for writing the book. He sought the input of many of his friends and contacts in investment banking for material as well as for critical guidance to put together a text that would stand the test of time. While giving a nod to today's heightened interest in the innovative securities that receive the most attention in the popular media, Inside Investment Banking concentrates for the most part on the unchanging elements of the field. The book takes a subject that can appear mystifying to the average person and makes it understandable by concentrating on its central processes, institutional forms, and permanent aims. The author shows how all aspects of the complex and ever-changing field of investment banking, including its most misunderstood topic of innovative securities, leads to a "financial ecology" which benefits business organizations, individual investors in general, and the economy as a whole. "[T]he marketplace for innovative securities becomes, because of its imitators, a systematic mechanism for spreading risk and improving efficiency for market makers and investors," says Bloch. For example, Bloch takes the reader through investment banking's "market making" which continually adapts to changing economic circumstances to attract the interest of investors. In doing so, he covers the technical subject of arbitrage, the role of the venture capitalist, and the purpose of initial public offerings, among other matters. In addition to describing and explaining the abiding basics of the field, Bloch also takes up issues regarding policy (for example, full disclosure and government regulation) that have arisen from the changes in the field and its enhanced visibility with the public. In dealing with these issues, which are to a large degree social issues, and similar topics which inherently have no final resolution, Bloch deals indirectly with criticisms the field has come under in recent years. Bloch cites the familiar refrain "the more things change, the more they remain the same" and then shows how this applies to investment banking. With deregulation in the banking industry, globalization, mergers among leading investment firms, and the growing number of individuals researching and trading stocks on their own, there is the appearance of sweeping change in investment banking. However, as Inside Investment Banking shows, underlying these surface changes is the efficiency of the market. Anyone looking for an authoritative work covering in depth the fundamentals of the field while reflecting both the interest and concerns about this central field in the contemporary economy should look to Bloch's Inside Investment Banking. After time as an economist with the Federal Reserve Bank of New York, Ernest Bloch was a Professor of Finance at the Stern School of Business at New York University. ********* 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, Joy A. Agravante, Marites M. Claro, Rousel Elaine C. Tumanda, 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 **