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/raid1/www/Hosts/bankrupt/TCR_Public/091216.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, December 16, 2009, Vol. 13, No. 347 Headlines ACCURIDE CORP: Amends Plan Ahead of Dec. 18 Hearing AERO INVENTORY: Creditors File Involuntary Chapter 11 Petition AHERN RENTALS: Moody's Cuts Probability of Default Rating to Caa3 AMERICAN TRAILER: Balloon-Payment Plan Feasible & Confirmed AMBRILIA BIOPHARMA: To End Verdun Facilities Lease Dec. 31 AMBRILIA BIOPHARMA: Extends License Option Deal with ZBx AMCORE FINANCIAL: Receives Non-Compliance Notice From NASDAQ AMERICAN HOMEPATIENT: Forbearance Agreement Extended to Jan. 16 AMERICAN INT'L: CEO Benmosche Says Key Staff Get Pay Cut ARCH ALUMINUM: U.S. Trustee Appoints 7-Member Creditors Panel ARMOUR RESIDENTIAL: Receives Non-Compliance Notice From NYSE Amex ASARCO LLC: Montana Gets $190 Mil. Under Environmental Pact ASARCO LLC: Paid $1.79 Bil. to Settle Environmental Claims ASARCO LLC: Thornton Seeks to Intervene in Suit vs. Parent ASCALADE COMMUNICATIONS: Returns Capital to Shareholders ATLANTIC CITY: Moody's Cuts Preferred Securities Ratings to 'Ba1' AURORA OIL: Court Confirms Plan; Shareholders Get Nothing AXIA INCORPORATED: Case Summary & 20 Largest Unsecured Creditors BANKUNITED FSB: FDIC Blames 15 Ex-Officials for Bank's Failure BEARINGPOINT INC: U.S. & Deloitte Object to Liquidating Plan BEAZER HOMES: Fitch Sees Light at End of Tunnel for Homebuilders BH S&B: Cerberus Sues Paul Hastings for Bad Advice on Loans BONEYARD LLC: Case Summary & 8 Largest Unsecured Creditors BRIAN R TUTTLE: Court Dismisses Chapter 7 Liquidation Case BULLY'S SPORTS: 9 Stores to Remain Open, 300 Workers to Keep Jobs CALUMET SPECIALTY: S&P Affirms Corporate Credit Rating at 'B' CAMP COOLEY: May File Schedules & Statements Today CANADIAN SUPERIOR: Gets Notification of Class Action Lawsuit in NY CENTRAL PACIFIC: Bank Agrees to Consent Order with FDIC CHINA CERAMICS: Receives Delisting Notice From NYSE Amex CHRYSLER LLC: Old CarCo Files Liquidating Chapter 11 Plan CHRYSLER LLC: High Court Rebuffs Indiana Pension Fund CIRCUIT CITY: Ramps Up Recovery Effort With $19M Suit CITIGROUP INC: Fitch Upgrades Individual Rating to 'C/D' CLEAR CHANNEL: Moody's Assigns Corporate Family Rating at 'B2' COLONIAL BANCGROUP: Obtains Interim OK to Access Non-Deposits COYOTES HOCKEY: NHL Signs LOI to Sell Team to Ice Edge CYFRED: Files for Bankruptcy After Superior Court Seized Property COMMERCECONNECT: Names Former Journal Communications CEO as CFO DECODE GENETICS: DIP Agreement With Saga Approved DELTA AIR: Amends List of Unsecured Priority Claimants DELTA AIR: Inks $688MM Pass-Through Trust Pact with Underwriters DELTA AIR: Reiterates Opposition to Union Voting Change DELTA PETROLEUM: S&P Raises Ratings on Senior Notes to 'CCC' DENNIS S SPIELBAUER: Wants Continued Access to Property Rentals DIGITAL ANGEL: Receives Non-Compliance Notice From Nasdaq DOLLAR FINANCIAL: Moody's Affirms 'B2' Corporate Family Rating D.R. HORTON: Fitch Sees Light at End of Tunnel for Homebuilders DURA AUTOMOTIVE: Patriarch Partners Acquires Majority Interest ENRON CORP: Appeals Securities Settlement Decision ECHO THERAPEUTICS: Posts $1.2 Million Net Loss in Q3 2009 EDGE PETROLEUM: Mariner Energy to Purchase Operations ETELOS INC: September 30 Balance Sheet Upside-Down by $11.95 Mil. EVERGREEN GAMING: Century Casinos to Acquire Silver Dollar FAYETTEVILLE MARKETFAIR: Case Summary & Unsecured Creditors FIRSTFED FINANCIAL: Heimbuch Resigns; Giraldin Takes CEO Post FLYING J: El Paso Offers $99.5MM for Unit, Wants to Reopen Bidding FONTAINEBLEAU LV: 'No Credit Bidding' Detrimental, Says Examiner FONTAINEBLEAU LV: Retail Units DIP Joinder Pact Has Interim Nod FONTAINEBLEAU LV: WTC Sues Contractors to Subordinate Liens FORUM HEALTH: Moves Pishkur's Hearing to Jan. 12 to Evaluate Bids FREMONT GENERAL: Ranch Capital Files Plan to Resolve Claims FRONTERA COPPER: To Defer Paying December 15 Interest GATEWAY ETHANOL: Court Extends Ch. 11 Plan Filing Until January 28 GENERAL GROWTH: Court Confirms Reorganization for $10-Bil. Loans GI JOE'S: Court Allows Distributor's Non-Redundant Claims GLOBAL ENERGY: Has Until January 25 to File Schedules & Statement GLOBAL ENERGY: Meeting of Creditors Scheduled for January 4 GORDON RAMSAY: Has New Projects After Near Brush with Bankruptcy GPX INTERNATIONAL: Court OKs $54.2MM Sale of Assets to Alliance GREYSTONE PHARMACEUTICALS: Gets Initial OK for BLN Capital Loan GSI GROUP: U.S. Trustee Sets Meeting of Creditors for Dec. 18 HANESBRANDS INC: Moody's Raises Ratings on $494 Mil. Notes to 'B1' HAUPPAUGE DIGITAL: NASDAQ Grants Request for Continued Listing HOLLEY PERFORMANCE: Court OKs Auction of Clean Power on January 5 HOVNANIAN ENTERPRISES: Fitch Sees Light at the End of the Tunnel IDEARC INC: Sees Bankruptcy Exit by Yearend After Court OKs Plan INTEGRATED BIOPHARMA: Posts $937,000 Net Loss in Qtr Ended Sept 30 INVITEL HOLDINGS: Magyar Secures Consents for Waivers, Amendments JONES STEPHENS: Files for Bankruptcy with Exit Plan JOSEPH GILCHRIST: Case Summary & 20 Largest Unsecured Creditors KB HOME: Fitch Sees Light at End of Tunnel for Homebuilders LEHMAN BROTHERS: FINRA Compensates Investor for Notes LEHMAN BROTHERS: HKMA Updates on Probe on Minibonds LEHMAN BROTHERS: LBI Trustee Has Deal on Misdirected Transfers LEHMAN BROTHERS: LBSF Ch. 11 Case Recognized as Main Proceeding LEHMAN BROTHERS: Reps Mull Deal to Determine Intercompany Balances LEHMAN BROTHERS: Varde, JPM Buying Millions in Claims MAINEPCS LLC: Files for Chapter 11 Bankruptcy MEDIALINK WORLDWIDE: Earns $48,000 in Q2 2009 MED-TRANS OF TENNESSEE: To Auction Off Assets on Wednesday MOVIE GALLERY: Selects Moelis & Company as Financial Advisor NETBANK INC: Supervisor's Deal With Holland & Knight OK'd NEW ENERGY SYSTEMS: Appoints Anytone Co-Founder Yu as Chairman NEWPORT TELEVISION: S&P Junks Corporate Credit Ratings From 'B-' NOVADEL PHARMA: Files Form 25 to Remove Shares from NYSE Listing NOVADEL PHARMA: Files Redacted Copies of Mist and ECR Agreements OPTI CANADA: Unveils 2010 Capital Program and Project Update PALM ENERGY: Chevron Faults Plan Over Oil Well Contracts PATIENT SAFETY: Names Marc Rose as CFO, Treasurer and Secretary PILGRIM'S PRIDE: JBS to Sell US$2BB Bonds in Unit to Aid in Buyout POWER SPORTS: Sept. 30 Balance Sheet Upside-Down by $4.48 Million PRECISION DRILLING: Moody's Gives Stable Outlook, Keeps Ba2 Rating RANCHER ENERGY: U.S. Trustee Unable to Appoint Creditors Committee REFCO INC: Administrators Find Chapter 7 Trustee's Fees Too High RENEW ENERGY: Valero to Buy 2 VeraSun, 1 Renew Energy Plant RIVER WEST: Files Chapter 11 Plan of Reorganization RIVER WEST: Gets Court's Interim Nod to Access to Cash Collateral RIVER WEST: Sec. 341 Creditors Meeting Set for Jan. 11 RIVER WEST: Taps Meltzer Purtill as Bankruptcy Counsel SANDISK CORP: S&P Gives Positive Outlook, Affirms 'B' Rating SECURUS TECHNOLOGIES: S&P Affirms 'B-' Corporate Credit Rating SIX FLAGS: Bondholders Disclose UBS Raising $2-Bil. Exit Funding SMURFIT-STONE: To Permanently Close Missoula and Ontonagon Mills SONIC AUTOMOTIVE: Board Adopts Supplemental Exec Retirement Plan SPANISH BROADCASTING: Receives Nasdaq Staff Determination SPANSION INC: Morgens Waterfall, et al., Disclose 5.31% Stake ST JOHNSBURY: Moody's Cuts Ratings on $3.3 Mil. Debt to 'Ba1' STERLING FINANCIAL: Receives Non-Compliance Notice From NASDAQ STOUDEMIRE'S DOWNTOWN: Files for Ch. 11 Due to Revenue Drop STRATUS MEDIA: Posts $598,000 Net Loss in Q3 2009 SUMMIT AT COPPER: Owners to Control Unsold Units Under Plan SUPERIOR ENERGY: Hallin Deal Won't Affect Moody's 'Ba3' Rating TARRAGON CORP: Court Extends Solicitation Period Until February 8 TARRAGON CORP: Can Access $4.51MM DIP Loan from Westminster TOUSA INC: Lenders Amend Note on Payments Subject to Disgorgement TOUSA INC: Proposes to Pay Termination Fee to Lennar Texas TOUSA INC: Transeastern Lenders Reiterate Appeal on Fraud Transfer TRONOX INC: Huntsman Ready to Raise Bid, Alleges Breach of Deal TROPICANA ENT: T. Recine Named Las Vegas VP for Food & Beverage UAL CORP: Reports November 2009 Traffic Results US AIRWAYS: Completed Majority Improvement Program in November US AIRWAYS: Files S-3 Registration Under 1933 Act US AIRWAYS: M. Gray Named as VP for Business Technology US AIRWAYS: Says Review Should Start at Present State of Industry UTGR INC: To End Dog Racing as Part of Bankruptcy Reorganization VISTEON CORP: Debt Recovery Buys Philips' $613,600 Claim VISTEON CORP: E. Burgess Wants to File Late Claim VISTEON CORP: Wants to Expand E&Y Services WALKING CO: Wants 30-Day Extension of Schedules Filing Deadline WALKING CO: Wants Tiger Capital as Liquidation Consultant WALKING CO: Wants to Conduct Store Closing Sales at 90 Stores WALKING CO: Wants to Employ CTG as Financial Advisor WEGENER CORP: Receives Non-Compliance Notice From Nasdaq WORKSTREAM INC: Closes Note Exchange and Restructuring WORLDSPACE INC: Committee Considers De-Orbiting Satellite Plan XERIUM TECHNOLOGIES: Lenders Extend Loan Covenant Waiver XIOM CORP: Becomes Unit of Environmental Infrastructure Holdings YL WEST: U.S. Trustee Set Meeting of Creditors for January 5 * Dubai's New Restructuring Law Aims to Calm Creditors * Fitch Sees Light at the End of the Tunnel for US Homebuilders * High Court Lets Pension Termination Fee Ruling Stand * Marlin Equity Partners Closes $650 Million Equity Funds * PricewaterhouseCoopers Acquires Alaris Consulting's Assets * Upcoming Meetings, Conferences and Seminars ********* ACCURIDE CORP: Amends Plan Ahead of Dec. 18 Hearing --------------------------------------------------- Accuride Corp. amended its proposed plan of reorganization and explanatory disclosure statement that were filed November 17, 2009. Accuride filed the updated version of the documents ahead of the December 18 hearing to consider the adequacy of the information of the disclosure statement. The reorganization plan filed on December 11 did not contain any major changes from the original version of the Plan. If Accuride wins approval of the disclosure statement, creditors would be required to return ballots by January 29 for a plan that offers to return 100 cents on the dollar to unsecured creditors and gives 98% of the new stock to holders of subordinate notes. Only impaired creditors -- general unsecured claimants are not impaired -- are voting on the Plan. Additional terms of the Plan are: -- Accuride will amend its existing secured credit agreement to modify certain financial covenants and extend its maturity through June 30, 2013. Recovery would be 100%. -- Accuride's $291.22 million of subordinated notes will be converted into 98,000,000 shares of new stock (98% of the stock) of reorganized Accuride. Recovery would be 42.9% -- Unsecured trade creditors will be unimpaired and will be paid in full. Recovery would be 100%. -- Holders of preferred equity interests will be paid with a $100 liquidation preference in cash. Recovery would be 100%. -- Accuride's common stock will be cancelled and, if the equity holders of equity interests vote to accept the Plan, they will receive 2,000,0900 shares (2% of the stock) and warrants to purchase an additional 22,058,824 shares. -- The Reorganized Debtors and Accuride Canada Inc., will enter into a restructured credit facility in an amount equal to $308.2 million. -- The reorganized Accuride will complete a $140 million rights offering of new senior unsecured convertible notes to current noteholders. A hearing to consider confirmation of the plan is tentatively scheduled for February 10. Objections are due January 29. About Accuride Corp. Accuride Corp. and its affiliates are among the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. The Company's products include wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components marketed under several well-recognized brands in the industry, including Accuride, Gunite, Imperial, Bostrom, Fabco, Brillion and Highway Original. According to filings by Accuride, the Company is seeking to restructure in excess of $675 million in debt through its bankruptcy proceeding. The bankruptcy cases are pending in the United States Bankruptcy Court for the District of Delaware. Jeffrey M. Reisner and Tavi C. Flanagan, Esq., at Irell & Manella LLP's Newport Beach-based bankruptcy practice, will serve as lead counsel to the Official Committee of Unsecured Creditors in the affiliated debtors' bankruptcy cases. Mr. Reisner chairs the firm's bankruptcy practice. Kurt Gwynne, Esq., at Reed Smith LLP, serves as Delaware counsel and Joel Dryer of Morris Anderson & Associates will serve as financial advisors to the Official Committee of Unsecured Creditors. The Chapter 11 filing includes Accuride Corp. and a number of subsidiaries and affiliates, including Accuride Cuyahoga Falls, Inc., Accuride Distributing, LLC, Accuride EMI, LLC, Accuride Erie L.P., Accuride Henderson Limited Liability Company, AKW General Partner L.L.C., AOT Inc., Bostrom Holdings, Inc., Bostrom Seating, Inc., Bostrom Specialty Seating, Inc., Brillion Iron Works, Inc., Erie Land Holding, Inc., Fabco Automotive Corporation, Gunite Corporation, Imperial Group Holding Corp. -1, Imperial Group Holding Corp. -2, Imperial Group, L.P., JAII Management Company, Transportation Technologies Industries, Inc., and Truck Components Inc. AERO INVENTORY: Creditors File Involuntary Chapter 11 Petition -------------------------------------------------------------- Law360 reports that three aircraft parts companies have filed an involuntary Chapter 11 petition for U.K.-based aircraft maintenance and inventory management company Aero Inventory (UK) Ltd., claiming the company is too heavily invested in the U.S. to proceed under the bankruptcy laws reserved for foreign companies. Aero Inventory (UK) Limited -- http://www.aeroinventory.com/-- is a service provider to companies in the aerospace industry, providing a comprehensive procurement and inventory management service. Aero Inventory's ultimate goal is to become the world's leading aircraft consumable parts service provider. Aero Inventory is listed on the Alternative Investment Market of the London Stock Exchange with operations in the United Kingdom, Australia, Canada, China, Bahrain, Hong Kong, Indonesia, Japan, Switzerland and the United States of America. Aero Inventory (UK) Limited Ltd. filed a Chapter 15 petition on November 12, 2009 (Bankr. D. Calif. Case No. 09-41758). The Chapter 15 Petitioner's counsel are James Tucker, Richard Hels and Allan Graham, Esq., at ____. The Company said it had US$100 million to US$500 million in assets and US$500 million to US$1 billion in debts in its petition. AHERN RENTALS: Moody's Cuts Probability of Default Rating to Caa3 ----------------------------------------------------------------- Moody's Investors Service downgraded the probability of default rating of Ahern Rentals, Inc., to Caa3 from Caa2 and downgraded the rating on Ahern's $290 million 9.25% second lien notes due August 2013 to Ca (LGD 4, 54%) from Caa3 (LGD 5, 76%). The corporate family rating of Caa2, the speculative grade liquidity rating of SGL-4, and the negative outlook remain unchanged. The action follows Ahern's December 7, 2009 announcement of a second lien notes consent solicitation statement, and a related debt exchange the company has planned with a second lien note holder. The planned transaction, among other specified terms, would enable a certain second lien note holder to exchange $53.3 million face value of notes for $40 million of new first lien debt, and the investor would also contribute $50 million in cash, raising the new first lien debt balance to $90 million. The cash would be used to repay revolver borrowings and some may be held on hand, depending on the success of Ahern's second lien consent solicitation results. Related to the envisioned transaction, Ahern is reportedly seeking to amend the second lien note indenture's priority lien debt incurrence terms. As well, Ahern has stated that it is negotiating an amendment to its first lien asset-based revolving credit facility to permit the new first lien debt, and to amend other terms -- including required financial covenants. Ahern has stated that, should it receive the first lien amendment, it will proceed with the second lien exchange transaction regardless of whether or not it receives majority second lien consent. Moody's will likely consider the foregoing transaction to be a distressed exchange. Without the transaction, in Moody's view, the company's financial flexibility would be minimal with near- term risk of a first lien financial covenant breach, and potential for further used equipment price declines to accompany low equipment rental demand in 2010. The Caa3 probability of default rating captures Ahern's rising leverage (debt to EBITDA 6.8 times), a weak liquidity profile, an unfavorable demand outlook for non-residential construction, and expectation that the proposed transaction would position remaining second lien note holders less advantageously within Ahern's capital structure. Upon the conclusion of the exchange offer, Moody's expects to revise the ratings to reflect the post-exchange credit profile; at that time, to denote the limited default, an "LD" designation would be added to the probability of default rating. The negative outlook reflects high leverage, likelihood of sustained weak demand, and recognition that Ahern's asset-based first lien credit agreement requires a 4.5 times maximum leverage test and a 1.0 time minimum fixed charge coverage test that activate when availability declines below $25 million; as of September 2009, availability was $27 million. Moody's rated $290 million 9.25% second priority global notes due August 2013 to Ca LGD4, 54% from Caa3 LGD5, 76%. Moody's last rating action on Ahern occurred March 2, 2009, when the probability of default rating was downgraded to Caa2 from B3. Ahern Rentals, Inc., headquartered in Las Vegas, NV, is a regional equipment supplier with 61 branches predominately in the Southwest region of the United States. The company specializes in high reach equipment. For the twelve months ended September 2009 Ahern generated revenues of $303 million. AMERICAN TRAILER: Balloon-Payment Plan Feasible & Confirmed ----------------------------------------------------------- WestLaw reports that the mere fact that a debtor's proposed Chapter 11 plan provided for a final balloon payment from the proceeds of an anticipated refinancing, after the debtor, which was making payments to its largest secured creditor based on a ten-year amortization schedule, had reduced this debt to between 55% and 58% percent of its current level over the five-year term of its plan, did not make the plan "infeasible" and incapable of being confirmed. The useful economic life of the collateral securing this creditor's claim was very long, and there was evidence that it had actually appreciated in value while the case was pending. Moreover, the debtor had not missed a single debt service payment during the case and had not needed additional financing to pay its postpetition expenses, such that its current financial problems seemed to be related to the economic downturn of the national economy as a whole, rather than to any poor management decisions. In re American Trailer and Storage, Inc., - -- B.R. ----, 2009 WL 3756975 (Bankr. W.D. Mo.) (Dow, J.). Based in Kansas City, American Trailer & Storage, Inc. provides temporary storage and transportation to various industries in the U.S. The company operates in locations in Kansas City, St. Louis and Lincoln, Neb. The company filed for Chapter 11 relief on Sept. 23, 2008 (Bankr. W.D. Mo. Case No. 08-43929). Donald G. Scott, Esq., at McDowell Rice Smith & Buchanan, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed assets of $1 million to $10 million, and debts of $1 million to $10 million. On June 15, 2009, the Debtor filed its Second Amended Disclosure Statement and First Amended Plan of Reorganization. On June 24, 2009, the Court approved the Debtor's Second Amended Disclosure Statement. Bank of the West, the Debtor's largest secured creditor, owed nearly $6 million, voted against the Plan and objected to confirmation. Months of litigation followed, culminating in Judge Dow overruling the Bank's objections and confirming the Debtor's plan on Nov. 9, 2009. AMBRILIA BIOPHARMA: To End Verdun Facilities Lease Dec. 31 ---------------------------------------------------------- Ambrilia Biopharma Inc. is providing its bi-weekly Default Status Report under National Policy 12-203 - Cease Trade Orders for Continuous Disclosure Defaults. On November 16, 2009, Ambrilia announced that the filing of its interim financial statements, management's discussion and analysis and related CEO and CFO certifications for the third quarter ended on September 30, 2009, was being delayed beyond the filing deadline thereof. On August 11, 2009, Ambrilia had previously announced that the filing of its interim financial statements, management's discussion and analysis and related CEO and CFO certifications for the second quarter ended on June 30, 2009, was being delayed beyond the filing deadline thereof. Ambrilia reports that, since its most recent default announcement on November 16, 2009, there have not been any material changes to the information contained therein, nor any failure by Ambrilia to fulfill its intentions with respect to satisfying the provisions of the alternative information guidelines, and there have been no additional defaults subsequent to such announcement. Further, there have been no material changes respecting Ambrilia and its affairs since its last bi-weekly Default Status Report dated November 30, 2009, other than those described below. Ambrilia intends to file, if required, its next Default Status Report by December 28, 2009. Ambrilia also announced December 14 that Dr. Francois Lombard has resigned as a member of its Board of Directors, effective immediately. Mr. Frederic Porte, Chairman of the Board of Directors of Ambrilia stated "On behalf of the Board, I wish to thank Francois for his significant contribution to Ambrilia since he joined the Board in 2006." Further, Ambrilia announced that it has taken additional cost- cutting actions resulting in the closure of its manufacturing facility and a further reduction in cash consumption and headcount. These actions will further preserve its cash into 2010. Finally, Ambrilia announced that it has notified its landlord that it is terminating its lease agreement for its Verdun facilities effective December 31, 2009. Ambrilia will relocate to smaller and less expensive facilities given its reduced number of employees and activities. The Initial Order issued on July 31, 2009, by the Commercial Division of the Superior Court of Montreal in favor of, inter alia, Ambrilia under the Companies' Creditors Arrangement Act (Canada) authorizes Ambrilia to repudiate any contracts as it deem appropriate. Any recovery for creditors and other stakeholders, including shareholders, is uncertain and is highly dependent upon a number of factors, including the outcome of Ambrilia proceedings under the CCAA. About Ambrilia Biopharma Inc. Ambrilia Biopharma Inc. -- http://www.ambrilia.com/-- is a biotechnology company focused on the discovery and development of novel treatments for viral diseases and cancer. The Company's strategy aims to capitalize on its broad portfolio and original expertise in virology. Ambrilia's product portfolio is comprised of oncology and antiviral assets, including two new formulations of existing peptides for cancer treatment, a targeted delivery technology for cancer, an HIV protease inhibitor program as well as HIV integrase and entry inhibitors, Hepatitis C virus inhibitors and anti-Influenza A compounds. Ambrilia's head office, research and development and manufacturing facilities are located in Montreal. The Company is currently subject to court protection under the CCAA. AMBRILIA BIOPHARMA: Extends License Option Deal with ZBx -------------------------------------------------------- Ambrilia Biopharma Inc. has extended the exclusive license option agreement with ZBx Corporation that granted ZBx the worldwide rights to develop, manufacture and commercialize Ambrilia's PSP94 technology in ZBx's Zap(TM) Rapid Test System and Assays. The terms of the extension provide an additional period ending on May 31, 2010. During this period, ZBx intends to have completed a third party evaluation of Ambrilia's PSP94 technology in the detection of prostate cancer and to advance the adaptation of the PSP94 technology to the ZAP(TM) Rapid Test System and other testing systems for commercial exploitation. At any time during the extended evaluation period, ZBx is entitled to exercise its option to an exclusive license, upon which Ambrilia would be eligible to receive up to a total of $US3.6 million with the achievement of all development and commercialization milestones. In addition, Ambrilia would be entitled to royalties on sales, as well as a percentage share of any sublicense proceeds. ZBx will cover all costs associated with the evaluation and future costs associated with the further development, manufacturing and commercialization. No additional financial details were disclosed. Any recovery for creditors and other stakeholders, including shareholders, is uncertain and is highly dependent upon a number of factors, including the outcome of Ambrilia proceedings under the CCAA. About Ambrilia Biopharma Inc. Ambrilia Biopharma Inc. -- http://www.ambrilia.com.-- is a biotechnology company focused on the discovery and development of novel treatments for viral diseases and cancer. The Company's strategy aims to capitalize on its broad portfolio and original expertise in virology. Ambrilia's product portfolio is comprised of oncology and antiviral assets, including two new formulations of existing peptides for cancer treatment, a targeted delivery technology for cancer, an HIV protease inhibitor program as well as HIV integrase and entry inhibitors, Hepatitis C virus inhibitors and anti-Influenza A compounds. Ambrilia's head office, research and development and manufacturing facilities are located in Montreal. The Company is currently subject to court protection under the CCAA. AMCORE FINANCIAL: Receives Non-Compliance Notice From NASDAQ ------------------------------------------------------------ AMCORE Financial, Inc., received a notice from The Nasdaq Stock Market stating that because the minimum bid price of the Company's common stock was below $1.00 per share for 30 consecutive business days, the Company was therefore not in compliance with Nasdaq Marketplace Rule 5450(a)(1). The notification letter has no effect at this time on the listing of the Company's common stock on The Nasdaq Global Select Market and the Company's common stock will continue to trade under the symbol AMFI. The letter was issued in accordance with standard NASDAQ procedures. AMCORE is provided a grace period of 180 calendar days in which to regain compliance with the minimum bid price rule. If at any time before June 7, 2010, the bid price of AMCORE's stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, NASDAQ will provide written confirmation to AMCORE that it has regained compliance. If AMCORE does not regain compliance with the bid price rule by June 7, 2010, NASDAQ will notify the Company that its common stock is subject to delisting from The Nasdaq Global Select Market. In that event, the Company may appeal the delisting determination to a Hearings Panel or the Company may be eligible for an additional grace period of 180 days if it meets the initial listing standards, with the exception of bid price, and is approved for transfer to The Nasdaq Capital Market (formerly the Nasdaq SmallCap Market). AMCORE intends to actively monitor the bid price for its common stock between now and June 7, 2010, and will consider available options to regain compliance with the NASDAQ minimum bid price requirements. ABOUT AMCORE AMCORE Financial, Inc. -- http://www.AMCORE.com/-- is headquartered in Northern Illinois with 66 locations in Illinois and Wisconsin. AMCORE provides a full range of consumer and commercial banking services, a variety of mortgage lending products and wealth management services including trust, brokerage, private banking, financial planning, investment management, insurance and comprehensive retirement plan services. AMCORE common stock is listed on The NASDAQ Stock Market under the symbol "AMFI." AMERICAN HOMEPATIENT: Forbearance Agreement Extended to Jan. 16 --------------------------------------------------------------- American HomePatient, Inc. (OTCBB: AHOM), one of the nation's largest home health care providers, announced that it has entered into a sixth forbearance agreement with NexBank, SSB, the agent for its senior debt, and the holders in interest of a majority of the senior debt. Approximately $226 million was due to be repaid in full on the maturity date of August 1, 2009 pursuant to the terms of the Company's secured promissory note to the Agent. The parties to the forbearance agreement have agreed to not exercise, prior to January 16, 2010, any of their rights or remedies for the Company's failure to repay the debt in full on the maturity date. The Company, the Agent, and the Forbearance Holders continue to work toward a resolution of the debt maturity issue. However, there can be no assurance a resolution will be reached with favorable terms to the Company and its stockholders or at all. American HomePatient, Inc. is one of the nation's largest home health care providers with operations in 33 states. Its product and service offerings include respiratory services, infusion therapy, parenteral and enteral nutrition, and medical equipment for patients in their home. American HomePatient, Inc.'s common stock is currently traded in the over-the-counter market or, on application by broker-dealers, in the NASD's Electronic Bulletin Board under the symbol AHOM or AHOM.OB. AMERICAN INT'L: CEO Benmosche Says Key Staff Get Pay Cut -------------------------------------------------------- Serena Ng at The Wall Street Journal reports American International Group CEO Robert Benmosche said 10 individuals who report directly to him have lost a combined $168 million in prior years' pay since the U.S. bailout of AIG in September 2008. Another five employees at AIG's financial-products division, who are unwinding its derivative trades, have lost $88 million in prior pay. According to the Journal, the executives lost that money when their cash bonuses were cut and unvested stock salary and stock options they previously earned were rendered almost worthless after AIG's near failure. Mr. Benmosche told the Journal his biggest challenge in recent negotiations with U.S. pay czar Kenneth Feinberg was about "getting sufficient cash to these people, who are starting from scratch in many ways." The Journal reports Mr. Feinberg on Friday announced 2009 pay for top employees at AIG and three other companies that have received large amounts of government aid. Mr. Feinberg, according to the Journal, limited salaries for roughly 75 individuals at each firm to $500,000 and said cash compensation should not exceed 45% of their total pay. Mr. Feinberg also determined that at least half of each employee's compensation must be held for three years, in stock or some other long-term instrument. In AIG's case, the Journal relates, Mr. Feinberg agreed to let the insurer make substantial cash "retention payments" it earlier promised to certain executives, without subjecting those employees to much tougher federal curbs on cash salaries. The Journal says his decision followed weeks of discussions with Mr. Benmosche, AIG's board and officials from the Federal Reserve Bank of New York and Treasury, who had reasoned that AIG needed to keep certain individuals to improve its chances of repaying taxpayers. The insurer's board also had some leeway to approve pay above $500,000 for a small number of employees. "I believe that working with Ken Feinberg and his team, we've found a pretty good balance," Mr. Benmosche told the Journal. "Is it perfect? No. But it's a good deal when both parties walk away a little unhappy." The Journal says AIG's next pay milestone will be in February, when Mr. Feinberg is expected to set 2010 compensation for AIG's top 100 executives. "I don't think we'll have as much difficulty next year as we had this year because we now have a good framework," Mr. Benmosche said. Mr. Benmosche also said in the interview AIG, in its current form, is too large and needs to shrink. "I feel strongly that AIG is too big today--it is extremely complex to manage and we need to make sure it's more transparent, that it's smaller, and that we can make it on our own," he told the Journal. About AIG 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. ARCH ALUMINUM: U.S. Trustee Appoints 7-Member Creditors Panel ------------------------------------------------------------- The United States Trustee has appointed seven parties to the Official Committee of Unsecured Creditors of Arch Aluminum & Glass Co., Inc. and its affiliates. The Committee members are: -- Pilkington North America Inc. -- Guardian Industries Corp. -- Ryder Truck Rental, Inc. -- The William L. Bonnell Company, Inc. -- Zeledyne, LLC -- Solutia, Inc. -- AGC Flatglass, North America NetDockets says the representative of Pilkington North America Inc. has been appointed as the temporary chairperson of the Creditors' Committee. About Arch Aluminum & Glass Tamarac, Florida-based Arch Aluminum & Glass Co. -- http://www.archaluminum.net/-- is one of North America's largest architectural glass and aluminum fabricators and distributors. Arch Aluminum & Glass and various affiliates -- Arch Aluminum L.C.; AWP, LLC, dba Yale-Ogron; Arch Aluminum and Glass International Inc.; and AAG Holdings, Inc. -- filed for Chapter 11 bankruptcy protection November 25, 2009 (Bankr. S.D. Fla. Case No. 09-36232). Arch Aluminum & Glass listed $100,000,001 to $500,000,000 in assets and $100,000,001 to $500,000,000 in liabilities. The Debtors are seeking to sell substantially all of their assets, with an affiliate of Grey Mountain Partners, LLC, a private equity firm located in Boulder, Colorado, acting as the stalking horse bidder. Paul J. Battista, Esq., at Genovese Jblove & Battista, P.A., assists the Debtors in their restructuring efforts. Schnader Harrison Segal & Lewis LLP is the Debtors' special counsel. Vincen J. Colistra at Phoenix Management Services is the Debtors' restructuring services provider. Michael Dillahunt and Piper Jaffrey & Co. is the Debtors' investment banker. ARMOUR RESIDENTIAL: Receives Non-Compliance Notice From NYSE Amex ----------------------------------------------------------------- ARMOUR Residential REIT, Inc. received notice from the Staff of the NYSE Amex, LLC on December 7, 2009 indicating that the Company no longer complies with the Exchange's continued listing standards due to the fact that the Company's current market capitalization is below $50,000,000 and the Company does not currently have at least 400 public shareholders, as required by Sections 101(c)(2), 101(d)(1) and 102(a) of the NYSE Amex Company Guide, and that its securities are therefore subject to being delisted from the Exchange. On December 10, 2009, the Company appealed this determination and requested a hearing before a committee of the Exchange. There can be no assurance that the Company's request for continued listing will be granted. As an alternative to listing on the Exchange, the Company has commenced a listing application process with The NASDAQ Stock Market. ARMOUR Residential REIT, Inc. ARMOUR is Maryland corporation focused on investing in residential mortgage-backed securities. ARMOUR is externally managed and advised by ARRM. ARMOUR intends to elect and qualify to be taxed as a real estate investment trust for U.S. federal income tax purposes, commencing with ARMOUR's taxable year ending December 31, 2009. ASARCO LLC: Montana Gets $190 Mil. Under Environmental Pact ----------------------------------------------------------- Montana Governor Brian Schweitzer said the state of Montana received nearly $195 million to clean up ASARCO LLC's contaminated sites within the state, Montana's News Station.com reports. "It's been a long process," Mr. Schweitzer was quoted by Montana's News as saying. "But the settlement funds will pay dividends to Montana's Restoration Economy for over a decade. We know that at least 31 high-paying jobs and about $2.6 million will come back to the local economies for every $1 million spent on environmental restoration and cleanup," he continued. According to a separate report by McClatchy-Tribune Information Services, ASARCO is expected to hand over its Montana properties to a custodial trust, along with $138 million for cleanup work, plus another $39.5 million directly to the state of Montana for natural resource damages, as part of ASARCO's Court-approved environmental settlement with various states and government agencies. McClatchy-Tribune relates that ASARCO will relinquish title to 3,980 acres of land at four sites in Montana. Cleaned sites will be sold and developed for commercial, industrial, residential or other purposes, with the sale proceeds to revert back to the trust to be used for additional cleanup work. "Now that Montana has actually received the settlement funds, we are looking forward to putting them to work cleaning up unhealthy and contaminated site so that people can use and enjoy them again for generations to come," Montana's News quotes Montana Department of Environmental Quality Director Richard Opper as saying. The settlement funds will be used to clean sites in the former lead smelter site in East Helena, the Mike Horse Site at the Upper Blackfoot Mining Complex near Lincoln, the lead and silver mines at the Barker Hughesville Superfund Site near Monarch, the Black Pine Mine Site near Philipsburg, and the Flat Creek/Iron Mountain Mine Site near Superior. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). On December 9, 2009, Grupo Mexico, S.A.B. consummated the Chapter 11 plan that it sponsored for Asarco LLC. The Plan, which was confirmed both by the bankruptcy and district courts, reintegrated Asarco LLC back to parent Grupo Mexico concluding the four-year Chapter 11 proceeding. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) About Grupo Mexico Grupo Mexico SA de C.V. -- http://www.grupomexico.com/-- through its ownership of Asarco and the Southern Peru Copper Company, Grupo Mexico is the world's third largest copper producer, fourth largest silver producer and fifth largest producer of zinc and molybdenum. * * * As of August 14, 2009, Grupo Mexico continues to carry Fitch Ratings' BB+ Issuer Default ratings. ASARCO LLC: Paid $1.79 Bil. to Settle Environmental Claims ---------------------------------------------------------- As a result of the largest environmental bankruptcy in U.S. history, $1.79 billion has been paid to fund environmental cleanup and restoration under a bankruptcy reorganization of American Smelting and Refining Company LLC (ASARCO), the Justice Department, Environmental Protection Agency, Department of the Interior and Department of Agriculture announced. ASARCO is a leading producer of copper and one of the largest nonferrous metal producers in the United States. It is based in Arizona and is responsible for sites around the country that are contaminated with hazardous waste. The money from environmental settlements in the bankruptcy will be used to pay for past and future costs incurred by federal and state agencies at more than 80 sites contaminated by mining operations in 19 states. Those states are Arizona, Alabama, Arkansas, California, Colorado, Idaho, Illinois, Indiana, Kansas, Missouri, Montana, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Texas, Utah, and Washington. "The effort to recover this money was a collaborative and coordinated response by the states and federal government. Our combined efforts have resulted in the largest recovery of funds to pay for past and future clean up of hazardous materials in the nation's history. Today is a historic day for the environment and the people affected across the country," said Associate Attorney General Tom Perrelli. "Today's landmark enforcement settlement will provide almost one billion dollars to clean up polluted Superfund sites," said Cynthia Giles, Assistant Administrator for the EPA's Office of Enforcement and Compliance Assurance. "This will mean cleaner land, water and air for communities across the country." "This settlement exemplifies government at all levels working effectively for the American taxpayer to recover damages from polluters and restore and protect important national landscapes and significant wildlife resources that have been injured," said Interior Assistant Secretary Tom Strickland. "In consultation and collaboration with our state and tribal co-trustees, this money will be used exclusively to restore, replace or acquire the equivalent of resources injured at more than a dozen sites where ASARCO operated and we have identified natural resource damage." "I would like to thank the Department of Justice, the Environmental Protection Agency and USDA Office of General Counsel for their diligence in reaching this comprehensive settlement that will so benefit restoration of public lands," said Joel Holtrop, Deputy Chief for the National Forest System, U.S. Forest Service, Department of Agriculture. "This settlement provides significant resources to address land restoration from past mining activities on National Forest System lands in Arizona, California, Idaho, Montana and Washington." Under the terms of the plan, all allowed claims were paid in full along with interest. Funds were distributed as follows: -- The United States received approximately $776 million which will be distributed in accordance with the underlying settlements to address over 35 different sites; -- The Coeur d'Alene Work Trust was paid $436 million; -- The three custodial trusts -- which address the owned but not operating properties of ASARCO and involve a total of 13 states and 24 sites -- were paid a cumulative total of approximately $261 million; and -- Payments totaling in excess of $321 million were paid to 14 different states to fund environmental settlement obligations at over 36 individual sites. In total, the payment will address environmental cleanup and restoration at more than 80 sites around the country. Much of the money paid to the United States will be placed in special accounts in the Superfund to be used by EPA to pay for future cleanup work. It will also be placed into accounts at the Department of Interior and the Department of Agriculture to pay for natural resource restoration. ASARCO filed for protection under Chapter 11 of the U.S. bankruptcy code on Aug. 9, 2005. American Smelting and Refining Company or ASARCO has operated for nearly 110 years -- first as a holding company for diverse smelting, refining, and mining operations throughout the United States and now as the Arizona- based integrated copper-mining, smelting, and refining company. By the time it filed for bankruptcy, ASARCO's core operating assets were limited to certain operations in the states of Arizona and Texas. However, it continued to own numerous non-operating properties that were highly contaminated and was subject to environmental claims at sites that were not owned by the company. In August 2009, following lengthy litigation, the U.S. Bankruptcy Court for the Southern District of Texas held a two-week hearing on competing plans of reorganization for ASARCO that would allow the company to be purchased out of bankruptcy. During this hearing, two competing plans emerged that proposed to pay creditors in full with interest. On Aug. 31, 2009, Judge Richard Schmidt of the U.S. Bankruptcy Court in Corpus Christi issued a recommendation to the U.S. District Court for the Southern District of Texas to confirm the plan proposed by ASARCO's parent company -- a subsidiary of Grupo Mexico. U.S. District Judge Andrew Hanen in Brownsville accepted Judge Schmidt's recommendation and confirmed Grupo Mexico's plan on Nov. 13, 2009. On Dec. 9, 2009, Grupo Mexico met its funding obligations and the plan was consummated. Additionally, the environmental payment and property transfer obligations outlined in the numerous settlement agreements, which had been approved by the Bankruptcy Court over the course of the litigation, were complied with. The full payment of environmental claims, plus interest, will facilitate the cleanup of contamination and restoration of natural resources at numerous sites across the country. The reorganized company remains liable for environmental liabilities at the properties that it will continue to own and operate. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). On December 9, 2009, Grupo Mexico, S.A.B. consummated the Chapter 11 plan that it sponsored for Asarco LLC. The Plan, which was confirmed both by the bankruptcy and district courts, reintegrated Asarco LLC back to parent Grupo Mexico concluding the four-year Chapter 11 proceeding. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) About Grupo Mexico Grupo Mexico SA de C.V. -- http://www.grupomexico.com/-- through its ownership of Asarco and the Southern Peru Copper Company, Grupo Mexico is the world's third largest copper producer, fourth largest silver producer and fifth largest producer of zinc and molybdenum. * * * As of August 14, 2009, Grupo Mexico continues to carry Fitch Ratings' BB+ Issuer Default ratings. ASARCO LLC: Thornton Seeks to Intervene in Suit vs. Parent ---------------------------------------------------------- Charlotte M. Thornton, doing business as WorldARC Trust, ReCLAIM Trusts, U-LINC Energy and Americas Solar & Remediation Co., seeks leave from the Bankruptcy Court to intervene in the adversary proceeding initiated by ASARCO LLC against Americas Mining Corporation on certain fraudulent transfers pursuant to Rules 24(a) and (b) of the Federal Rules of Civil Procedure, and to file a complaint-in-intervention setting forth claims for which intervention is sought. Ms. Thornton is the founder and chief executive officer of a significant solar natural resource-based energy provider, U-LINC ENERGY + SOLAR UTILITY. She discloses that U-LINC ENERGY possesses technology and explicit expertise and know how that is able to transform within the decade the one-of-a-kind ASARCO LLC assets in the U.S. Sunbelt into the analog equivalent of the U.S geological formations known as the Salt Domes where the U.S. Strategic Petroleum Reserves are held. She tells the Court that U-LINC ENERGY is able to transform ASARCO's assets into a national security asset with economic benefit. Ms. Thornton says that it is of enormous concern and frustration that ASARCO's CEO has chosen to overlook her progressive workout scenario for ASARCO, and its potential to quadruple ASARCO's earnings by Year 6 even after being presented the scenario in his own Board Room. Ms. Thornton avers that she has consistently and appropriately regarded the matter of National Security concerns embedded in her filings, and continues to attempt to have the Court treat them as matters with potential National Security concerns. Hence, Ms. Thornton asks the Court for the right to file relevant intervention argument and documentation under seal. Accordingly, Ms. Thornton asks the Bankruptcy Court to rule that upon the occurrence of the effective date of the Parent's Plan of Reorganization, all assets that Americas Mining Corporation has placed into escrow as security for the Final Judgment not be released by the escrow agent to AMC, and that the Court reconsider entirely the legitimacy of the Parent's Plan that expressly provides for the release of the SCC Final Judgment, among other requests. In another request, Ms. Thornton asks the Court to appoint an attorney for her in connection with her request to intervene, pursuant to the Guidelines for Litigants without Lawyers Southern District of Texas No. 15. AMC Objects AMC contends that Ms. Thornton's asserted interest in the Adversary Complaint -- a desire to acquire ASARCO land and attendant "solar natural reserve rights" that she claims could be used with certainty to offset the nation's dependency upon foreign oil within the decade -- is facially absurd. AMC adds that Ms. Thornton's request does not satisfy the requirements of Civil Rule 24, and that her attempt at intervention comes a year and a half after the well-publicized trial in the ASARCO LLC-AMC Adversary Complaint and more than seven months after final judgment was entered. As AMC's confirmed plan of reorganization for ASARCO is on the cusp of closing, Ms. Thornton's intervention now would result in significant prejudice to AMC as well as to ASARCO and its creditors, AMC asserts. ASARCO LLC opposes the approval of Ms. Thornton's request and joins in AMC's response. * * * Judge Schmidt granted AMC's request to modify the June 2, 2009 Memorandum Opinion and Order to eliminate all registration, bonding and security requirements; to allow the release of the escrowed assets securing the Court's April 15, 2009 Final Judgment; and to lift the voting and transferability restrictions on AMC's Southern Copper Corporation stock, as of the effective date of the Parent's Plan of Reorganization. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). On December 9, 2009, Grupo Mexico, S.A.B. consummated the Chapter 11 plan that it sponsored for Asarco LLC. The Plan, which was confirmed both by the bankruptcy and district courts, reintegrated Asarco LLC back to parent Grupo Mexico concluding the four-year Chapter 11 proceeding. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) About Grupo Mexico Grupo Mexico SA de C.V. -- http://www.grupomexico.com/-- through its ownership of Asarco and the Southern Peru Copper Company, Grupo Mexico is the world's third largest copper producer, fourth largest silver producer and fifth largest producer of zinc and molybdenum. * * * As of August 14, 2009, Grupo Mexico continues to carry Fitch Ratings' BB+ Issuer Default ratings. ASCALADE COMMUNICATIONS: Returns Capital to Shareholders -------------------------------------------------------- Ascalade Communications Inc. disclosed return of capital in the amount of C$0.159 per common share will be payable on December 22, 2009 to all shareholders of record as of December 8, 2009. All assets of the Company have been realized upon and these proceeds are being disbursed to the shareholders as a return of capital. The Company is subject to proceedings under the Companies' Creditors Arrangement Act. To facilitate the realization of the Company's assets and the winding-up of the Company and its business, on March 3, 2008 Deloitte & Touche Inc. was appointed Monitor of the Company pursuant to the Company's CCAA filing. In June 2008 the Company's Plan of Compromise or Arrangement was presented to the Company's creditors, who voted in favour of accepting the Plan. As a result of the creditors' acceptance of the Plan, a court order was obtained on June 26, 2008 whereby the Supreme Court of British Columbia sanctioned the approval of the Plan. Pursuant to the Plan, on December 3, 2009 payment of 100% of all proven creditor's claims had been made by the monitor. The Monitor proposes obtaining an Order of the B.C. Supreme Court on or about December 22, 2009 authorizing it to distribute the remaining cash resulting from the sale of the assets of the Company, to the Shareholders, passing its accounts and obtaining its discharge. On December 8, 2009 the Monitor obtained a court order permitting the Monitor to serve all interested parties with notice of the proposed distribution and finalization of these proceedings by serving all parties who had filed appearances in the CCAA Proceedings or by filing this press release and posting all supporting materials in respect of the proposed distribution and finalization on the Monitor's website: http://www.deloitte.com/ca/ascalade. About Ascalade Communications Inc. Based in Richmond, British Columbia, Ascalade Communications Inc. (TSE:ACG) -- http://www.ascalade.com/-- is an innovative product company that designs, develops and manufactures digital wireless and communication products. The company deliver products by offering its partners and customers complete vertical integration, from product design and development to final production. The company's products include digital cordless phones, Voice over Internet Protocol phones, digital wireless baby monitors and digital wireless conference phones. Ascalade products have been distributed in more than 35 countries and under 80 regional brands. Ascalade also has facilities in Qingyuan, China, Hong Kong and a sales office in Hertfordshire, United Kingdom. As reported by the Troubled Company Reporter on March 4, 2008, Ascalade announced its decision to seek protection from creditors under the Companies' Creditors Arrangement Act with the British Columbia Supreme Court. On April 29, 2008, Jervis Rodrigues, senior vice-president of Deloitte & Touche Inc., filed separate petitions for protection under Chapter 15 of the U.S. Bankruptcy Code on behalf of Ascalade Communications Inc. and its debtor-affiliate (Bankr. N.D. Ill. Case Nos. 08-10612 and 08-10616). Jeffrey G. Close, Esq., at Chapman and Cutler LLP represents the Petitioner in the Chapter 15 case. Ascalade's financial condition as of September 2007 showed total assets of $99,630,000 and total debts of $40,410,000. ATLANTIC CITY: Moody's Cuts Preferred Securities Ratings to 'Ba1' ----------------------------------------------------------------- Moody's Investors Service downgraded the Issuer Rating for Atlantic City Electric Company to Baa2 from Baa1. Separately, Moody's affirmed ACE's First Mortgage Bonds at A3 and its commercial paper rating at Prime-2. The rating outlook for ACE is stable. "The downgrade of ACE's Issuer Rating is driven by a reduced cash flow profile through mid-2012 associated with the company's refund of previously over-collected non-utility generator charges" said Moody's Vice President Scott Solomon. "The rating action also considers a widening gap between the price ACE pays for fixed power under NUG contracts and what the power is sold for in the wholesale market, resulting in a under-recovered position that has further stressed ACE's cash flow in 2009" added Solomon. ACE's parent Pepco Holdings, Inc. (Baa3 senior unsecured, stable outlook), has provided funding support for the under-collection in the form of $129 million of capital contributions to date in 2009. As a result, ACE's debt balance has remained relatively stable. The affirmation of ACE's first mortgage bonds is driven by Moody's industry-wide rating action on August 3, 2009, when the rating agency widened the notching between regulated utilities' senior secured and senior unsecured ratings from the typical one to two alpha-numeric ratings pursuant to historical default studies. Because of ACE's negative outlook the company was excluded from this previous rating action. ACE is refunding approximately $66 million annually or approximately $254 million of previously over-collected NUG charges to ratepayers during the four-year period ending June 2012. The return of these amounts will continue to pressure ACE's cash flow and result in financial metrics that, when combined with the relatively supportive regulatory environment, are more in line with a Baa2 Issuer Rating. NUG contracts continue to add volatility to ACE's cash flows. ACE is party to three long-term NUG contracts and sells the electricity purchased under these long-term contracts into the wholesale power market. Prices in the wholesale power market had exceeded those paid by ACE to the NUG's, causing an over- collection that is now being refunded. This year the price for electricity in the wholesale power market has declined to below those paid by ACE to the NUG's, causing an under-collection that has grown to approximately $70 million for the nine months ended September 30, 2009. ACE filed a request with the New Jersey Board of Public Utilities in May 2009 to increase rates by approximately $80 million annually to offset the under-collection. A decision by the BPU is expected in early-to-mid 2010. ACE has been entitled to recover from its customers all of its costs, including NUG costs, incurred in providing basic generation service. Failure by the BPU to provide recovery could create new pressure on the ratings. The stable outlook is based on an expectation that the BPU will allow ACE to recover the NUG under-collection in the near-term and that the company will achieve debt metrics of cash flow from operations pre-changes in working capital (CFO Pre-W/C) to adjusted debt in the neighborhood of 15% in 2010. Excluding recovery of the under-collection, ACE's cash flow from operations pre-changes in working capital to debt for 2010 would decline to approximately 10%. This metric is expected to improve in 2011, assuming no further significant volatility in NUG prices, to approximately 16% due in large part to an expected increase in electric distribution base rates as a result of the rate case submitted by ACE to the BPU requesting an increase in its distribution base rates in August 2009 by $54 million annually. A procedural schedule has not yet been established. ACE's ratings downgraded: * Issuer Rating, downgraded to Baa2 from Baa1; * Preferred Securities, downgraded to Ba1 from Baa3. ACE's ratings affirmed: * First Mortgage Bonds at A3; * Commercial Paper at Prime-2. Moody's last rating action on ACE occurred on July 3, 2008, when the rating outlook was changed to negative from stable. ACE is a wholly-owned subsidiary of Washington, D.C.-based Pepco Holdings, Inc. AURORA OIL: Court Confirms Plan; Shareholders Get Nothing --------------------------------------------------------- The Hon. Scott W. Dales of the U.S. Bankruptcy Court for the Western District of Michigan confirmed Aurora Oil & Gas Corporation and Hudson Pipeline & Processing Co., LLC's Plan of Reorganization. The Plan provides that holders of administrative claims and DIP facility claims will be paid in full, in cash. Outstanding letters of credit issued under the debtor-in-possession financing facility may be converted to LoCs issued under the exit facility. According to the Court-approved disclosure statement, first lien lenders owed in excess of $73.8 million will recover 63% of their claims through the issuance of new secured notes and 32 million shares of the preferred stock of reorganized Aurora. Holders of second lien loan claims in excess of $56 million will receive 56 million shares of class A common stock of reorganized Aurora, for a 0.000002% recovery. Holders of general unsecured claims against Aurora will receive their pro rata share of $150,000 cash allocated to them, for a 6% to 9% recovery. Holders of allowed general unsecured claims against HPPC will split $50,000 in cash, for a recovery of 72% to 100%. Holders of existing common stock won't receive anything. A copy of the Plan filed on Oct. 7, 2009, is available for free at http://bankrupt.com/misc/AuroraOil_DiscStatement.pdf A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/AuroraOil_Plan.pdf About Aurora Oil & Gas Based in Traverse City, Michigan, Aurora Oil & Gas Corporation (Pink Sheets: AOGS) is an independent energy company focused on unconventional natural gas exploration, acquisition, development and production, with its primary operations in the Antrim Shale of Michigan, the New Albany Shale of Indiana and Kentucky. The Company and one affiliate filed for Chapter 11 protection on July 12, 2009 (Bankr. W.D. Mich. Case Nos. 09-08254 and 09-08255). Judge Scott W. Dales presides over the case. Stephen B. Grow, Esq., at Warner Norcross & Judd, LLP, in Grand Rapids, Michigan; and Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., at Cahill Gordon & Reindel LLP, in New York, serve as the Debtors' counsel. Aurora listed between $100 million and $500 million each in assets and debts. AXIA INCORPORATED: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Axia Incorporated fdba Ames Taping Tool Systems Company fdba Premier fdba TapeTech Tool Co., Inc. fdba FBH Contracting Services Corporation fdba Premier International 3350 Breckinridge Blvd., Suite 100 Duluth, GA 30096 Bankruptcy Case No.: 09-14407 Debtor-affiliate filing separate Chapter 11 petition: Entity Case No. ------ -------- Ames Holding Corp. 09-14406 Ames Taping Tool Systems, Inc. 09-_____ TapeTech Tool Co., Inc. 09-_____ About the Business: Axia Inc. is a manufacturer of automatic taping and drywall finishing tools. Axia is controlled by Aurora Equity Partners. Chapter 11 Petition Date: December 14, 2009 Court: United States Bankruptcy Court District of Delaware (Delaware) About the Business: Debtors' Counsel: L. Katherine Good, Esq. Richards, Layton & Finger, P.A. 920 North King Street Wilmington, DE 19801 Tel: (302) 651-7700 Fax: (302) 651-7701 Email: good@rlf.com Mark D. Collins, Esq. Richards Layton & Finger One Rodney Square PO Box 551 Wilmington, DE 19899 Tel: (302) 651-7700 Fax: (302) 651-7701 Email: collins@RLF.com Estimated Assets: $100,000,001 to $500,000,000 Estimated Debts: $100,000,001 to $500,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/deb09-14407.pdf Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Amsterdam Acquisition, LLC Sub. Bank Debt $8,178,808 John O'Hare (Unknown Saybrook Capital, LLC secured) 401 Wilshire Boulevard, Suite 850 Santa Monica, CA 90401 Berlin Acquisition, LLC Sub. Bank Debt $5,852,622 John O'Hare (Unknown Saybrook Capital, LLC secured) 401 Wilshire Boulevard, Suite 850 Santa Monica, CA 90401 Booker Promotions Trade Debt $8,451 Britton, Jeffery R. Compensation/ $73,385 Wages Buchanan, William A. Compensation/ $11,418 Wages Carl. R. Winn Compensation/ $231,071 dba Viking Consul Wages Cedar Creek SPIRET Loan Sub. Bank Debt $6,882,683 Trust (Unknown Douglas Gervolino secured) 677 Washington Blvd. 6th Floor Tower Stamford, CT 06901 D.E. Shaw Laminar Sub. Bank Debt $10,289,087 Portfolios, LLC (Unknown Maureen Welby Knoblauch secured) D.E. Shaw & Co., L.P. 1166 Avenue of the Americas, Fifth Fl. New York, NY 10036 Dooley, Jr., Thomas J. Compensation/ $7,366 Wages General Electric Capital Sub. Bank Debt $6,061,652 Corporation (Unknown Scott W. Renzulli, CFA secured) Vice President, Bank Loan Group 201 Merritt Seven Norwalk, CT 06856 Goldman Sachs Global Sub. Bank Debt $1,720,671 Opportunities Fund (Unknown Offshore, Ltd., Sandra secured) Stulberger Goldman Sachs Asset Management 30 Hudson Street, 37th Floor Jersey City, NJ 07302 Goldman Sachs Global Sub. Bank Debt $1,147,114 Opportunities Fund (Unknown Sandra Stulberger secured) Goldman Sachs Asset Management 30 Hudson Street, 37th Floor Jersey City, NJ 07302 GSC Recovery III Asset Sub. Bank Debt $15,211,213 Trust (Unknown Philip Raygorodetsky, secured) Managing Dir. GSC Group 500 Campus Drive, Suite 220 Florham Park, NJ 07932 GSC Recovery III Parallel Sub. Bank Debt $13,555,487 Fund Asset Tr. (Unknown Philip Raygorodetsky, secured) Managing Dir. GSC Group 500 Campus Drive, Suite 220 Florham Park, NJ 07932 Kline, Loren R. Compensation/ $7,781 Wages Phlipps, Laura B. Compensation/ $10,277 Wages SPCP Group, LLC Sub. Bank Debt $1,170,524 c/o Silver Point Capital (Unknown Nancy Weir secured) 2 Greenwich Plaza Greenwich, CT 06830 UBS-Par Loan Trading Sub. Bank Debt $11,705,243 Dougleas Gervolino (Unknown 677 Washington Blvd., secured) 6th Floor Tower Stamford, CT 06901 Van Kampen Dynamic Credit Sub. Bank Debt $4,664,257 Oppor. Fund (Unknown Robert Drobny, Executive secured) Director 1 Parkview Plaza Suite 100, 4th Floor Villa Park, IL 60181 Viking Consulting, LLC Compensation/ $39,140 Wages The petition was signed by Peter Alexander, chief restructuring officer of the Company. BANKUNITED FSB: FDIC Blames 15 Ex-Officials for Bank's Failure -------------------------------------------------------------- Brian Bandell at South Florida Business Journal says the Federal Deposit Insurance Corp. blamed 15 former executives and directors of BankUnited FSB for failure of the bank. Mr. Bandell says the FDIC is seeking payment for unspecified civil damages. The agency alleged that the officials encouraged an "overly reckless and aggressive growth strategy" that lacked property oversight and fostered a lending mentality to "make the loan long as the borrower has a puls," he notes. About BankUnited, FSB BankUnited, FSB, Coral Gables, Florida, was closed by regulators on May 20, 2009, and the Federal Deposit Insurance Corporation was appointed receiver. BankUnited, a newly chartered federal savings bank, acquired the banking operations, including all of the nonbrokered deposits, of BankUnited, in an FDIC-facilitated transaction. BankUnited, the successor institution, is the largest independent bank in Florida, as was its predecessor. The management team is headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank. Bank United, FSB, had assets of $12.80 billion and deposits of $8.6 billion as of May 2, 2009. The new BankUnited assumed $12.7 billion in assets and $8.3 billion in nonbrokered deposits. The FDIC and BankUnited entered into a loss-share transaction and Agreed to share in the losses on approximately $10.7 billion in assets covered under the agreement. BEARINGPOINT INC: U.S. & Deloitte Object to Liquidating Plan ------------------------------------------------------------ According to Law360, the U.S. government and Deloitte LLP have both filed objections to BearingPoint Inc.'s second amended Chapter 11 liquidation plan, saying the technology consulting firm's plan attempts to escape liabilities to both the U.S. and Deloitte. The Official Committee of Unsecured Creditors, on the other hand, supports the liquidating plan, saying that it "provides the highest and best recoveries for creditors. As reported by the TCR on Nov. 5, 2009, BearingPoint Inc. has received approval of the disclosure statement explaining its proposed liquidating Chapter 11 plan, Bill Rochelle at Bloomberg reported. As a result, BearingPoint will be able to proceed with the solicitation of votes for, then seek confirmation of, the Plan. The confirmation hearing is scheduled for December 17. The liquidating plan -- which amended the reorganization Plan filed Feb. 18, 2009 -- calls for secured claims will be paid in full in full. Holders of general unsecured claims aggregating $225,171,340 will recover 2.6% to 5.1% of their allowed claims. Holders of $203 million worth of Series C notes and holders of $40 million in FFL notes will get 7.6% to 14.7% of their claims. Series A and B noteholders owed $452,121,889 and equity holders may receive beneficial interests in a liquidating trust, but are currently expected to recover 0% of their claims or interests. The Feb. 18 plan contemplated a reorganization for BearingPoint. BearingPoint has instead pursued a sale of its units, after determining that creditor recoveries would be maximized through sales of the businesses. Copies of the Amended Plan and Disclosure Statement are available for free at: http://bankrupt.com/misc/BearingPoint_DS_Oct09.pdf http://bankrupt.com/misc/BearinPoint_Plan_Oct09.pdf BearingPoint's initial plan called for secured lenders to swap a $500 million loan for a $272 million loan and a letter of credit. Under the earlier plan, unsecured creditors were to get different classes of common stock. About BearinPoint Inc. BearingPoint, Inc. -- http://www.BearingPoint.com/-- was one of the world's largest providers of management and technology consulting services to Global 2000 companies and government organizations in more than 60 countries worldwide. BearingPoint, Inc., fka KPMG Consulting, Inc., together with its units, filed for Chapter 11 protection on February 18, 2009 (Bankr. S.D.N.Y., Case No. 09-10691). The Debtors' legal advisor is Weil, Gotshal & Manges, LLP, their restructuring advisor is AlixPartners LLP, and their financial advisor and investment banker is Greenhill & Co., LLC. Jeffrey S. Sabin, Esq., at Bingham McCutchen LLP represents the Creditors' Committee. Garden City Group serves as claims and notice agent. BearingPoint disclosed total assets of $1.655 billion and debts of $2.201 billion as of December 31, 2008. A full-text copy of the Company's 2008 annual report is available for free at: http://researcharchives.com/t/s?3db8 On the petition date, BearingPoint filed a Chapter 11 plan of reorganization negotiated with lenders prepetition. BearingPoint, however, changed course and has instead pursued a sale of its units, after determining that creditor recoveries would be maximized through sales of the businesses. BearingPoint Inc. is presently soliciting votes for the liquidating Chapter 11 plan. The confirmation hearing is scheduled for December 17. BEAZER HOMES: Fitch Sees Light at End of Tunnel for Homebuilders ---------------------------------------------------------------- With various macroeconomic housing and related statistics bottoming about mid-year 2009 and subsequently moving forward in fits and starts, a four-year downturn has evidently come to an end for U.S. homebuilders, according to Fitch Ratings in its outlook report for the sector. While Fitch maintains a Negative Outlook for U.S. homebuilding in 2010, the expected conclusion of the national housing credit has positively influenced housing data over the last few months. Pending home sales, existing home sales, single family housing starts and single family new home sales have been generally showing improvement after bottoming out earlier this year. The same holds true for new home inventories, home pricing and consumer and builder sentiment. Importantly, the U.S. economy apparently moved from recession to expansion in third quarter-2009 (3Q'09). However, challenges remain, especially the expected upcoming surge in delinquencies and foreclosures for both Alt-A and option adjustable-rate mortgages. Fitch raised its forecasts for starts and new home sales earlier this year, the first positive adjustments in these metrics in over three years. Nevertheless, Fitch anticipates that the early stages of this expansion may be more muted than the average. During the first 12-15 months off the bottom, the recovery may appear jaw-toothed as substantial foreclosures now in the pipeline present as distressed sales, and as meaningful new foreclosures arise from Alt-A and option ARM resets. High unemployment rates and the probable tightening of certain FHA loan standards (higher minimum credit scores for new borrowers and greater upfront cash requirements) will be notable headwinds early in the upcycle. "The continuation and expansion of the national housing credit should partially help offset expected seasonal declines during the winter months through the spring of 2010," said Managing Director and lead U.S. homebuilding analyst Robert Curran. "The federal government's continuing efforts to moderate foreclosures may also show some success in 2010." Despite having fewer competitors, public builders will continue to be challenged and need to maintain tight controls over costs and expenses during 2010. Ratings Rationale: Housing continues to be weak. Fitch expects that the public builders by and large to typically stabilize their aggregate land positions over the next 6-to-12 months or selectively add to owned, developed lot holdings. The still irregular flow of appropriately priced land from banks and others tends to support this conclusion. "With operational and financial pressures moderating to some extent, most public homebuilders have to operate successfully within this still challenging environment or wither away," said Curran. Companies have to at least maintain current cost profiles or continue to downsize to the point where they can remain/be profitable (excluding nonrecurring real estate charges). That means possible further moderate cuts in staffing and other overhead, as well as other cost reductions. The builders' gross profit margins and selling, general, and administrative expense/sales ratios will confirm the success of their efforts. The public homebuilders cannot significantly influence revenue trends and profitability at present, but they can manage their balance sheets and their liquidity. In a period when liquidity is still an issue for all U.S. companies, Fitch believes that, overall, the U.S. homebuilding sector has adequate liquidity. However, some weaker companies face greater liquidity risk. Many companies in this sector have generated meaningful free cash flows over the past 12 months while terming out borrowings, and for some maintaining access to committed bank facilities, which together provide room to handle maturities and fund working capital needs over the next year and beyond. Admittedly, most facilities have been substantially slimmed down as builders sought covenant relief in amendments. For certain builders, cash flow has been enhanced by relatively recent debt offerings, large land sales, tax refunds, and even some public equity offerings (e.g. Meritage Homes Corp.; Hovnanian Enterprises, Inc.; Lennar Corp.; M/I Homes, Inc.) or other external cash infusions (Standard Pacific Corp.). Recently passed legislation that extends the net operating losses carryback to offset taxable profits from the previous five years will result in meaningful tax refunds for most public homebuilders early in 2010 further enhancing liquidity and tangible net worth. Compared with the last major housing downturn in the latter 1980s into the early 1990s, leverage was lower during the later part of this past upcycle and at the peak. Fitch notes that during the past two years primarily non-cash charges against tangible net worth have raised debt/capital ratios. For the majority of public homebuilders, debt composition 15-to-20 years ago was mostly, or all, short-term construction loans and possibly a secured credit line. By contrast, the debt often is weighted most heavily to well-laddered public debt (a more appropriate balance with longer lived real estate assets), and, to a lesser degree, to an unsecured revolving credit facility. All the public homebuilders in Fitch's coverage that have revolving credit facilities have unsecured facilities, except for Beazer Homes U.S.A Inc., M/I Homes and Standard Pacific, which have secured or partially secured revolving credit facilities. D.R. Horton, Inc., Ryland Group, Inc., Meritage and Hovnanian recently terminated their revolving credit facilities. Beazer and Standard Pacific have sharply lowered the size of their credit facilities. Fitch will continue to assess each homebuilder's approach and performance relating to land and development spending, balance sheet (inventory) contraction, FCF generation, and debt reduction when considering its ratings, as well as builders' credit metrics, liquidity, size, geographic and product diversification, margins, and the frequency and the size of real estate writedowns and option writeoffs. Despite the Negative Outlook for the sector, continued progress in industry and company metrics could prompt a reassessment and possible revision of some of the U.S. homebuilder Rating Outlooks. 2009 and 2010: Some of the key drivers of the downturn remain in place although the worldwide and U.S. recovery have begun. Notably, U.S. households are deleveraging and retrenching at a rapid pace, in response to significant job losses, ongoing declines in certain asset prices, and tight credit conditions. In combination with sharp cutbacks in corporate spending and ongoing declines in residential investment, Fitch forecasts U.S. GDP to fall by 2.5% this year, and unemployment to possibly touch 10.3% in 2010. With unemployment still rising, consumer confidence at low levels and household wealth until recently still being affected by real estate and equity price declines, there seems limited prospect that the deleveraging process will end in the near term. Fitch's forecasted 1% decline in consumer spending in 2009 implies a further increase in the saving ratio. Fitch expects the economy to return to positive growth next year, primarily reflecting the impact of the fiscal stimulus package, but also some likely stabilization in housing investment and a weakening inventory overhang. The CBO predicts federal government spending grew by 34% in nominal terms in fiscal 2009 (ending September), which should have an important subsequent multiplier effect on wider spending. Lower household tax rates should also help ease the pace at which consumers deleverage through cutting expenditures, while lower commodity prices will also support consumers' real income. However, while the forecast assumes that policy measures aimed at stabilizing the financial sector gain traction, ongoing household deleveraging will weigh on private sector demand, keeping GDP growth in 2010 well below potential. Rates on 30-year fixed mortgages averaged 6.03% in 2008, off 31 basis points (bps) from the 6.41% in 2006 (and 6.34% in 2007). Fitch expects rates to decline as much as 90-100 bps for all of 2009 as the Fed continues to execute its plan to buy mortgage securities and the economy struggles. Fitch's initial outlook for the housing sector in 2009 started quite bearish due to the influence of a softening economy, even tighter credit standards for homebuyers and the effect of late 2008 disruptions in the credit markets. However, by mid-year the outlook brightened, prompting lesser forecast declines for a number of housing metrics. Fitch most recently forecast a contracting economy during first half-2009, with a mild recovery beginning in 3Q'09 and continuing through 2010. Real GDP is forecast to decrease 2.5% for all of 2009. Investment is expected to plunge 17.6%, with consumer spending to fall 1%, exports to drop 11.6% and imports to see a 16.6% decline. Government spending (up 5.1%) was the economic positive in 2009. Inflation is expected to be a negative 0.2%, compared with a positive 3.8% in 2008. As noted earlier, interest rates are expected to meaningfully recede. An economy in the midst of a severe recession has been another blow to housing. In particular, a deteriorating economy further eroded consumer confidence and accelerated job losses, and consequently, foreclosures. The MBA and John Burns Real Estate Consulting forecast 2.76 million annual foreclosure starts in 2009, up from 2.27 million in 2008, and project 2.94 million foreclosure starts in 2010. The Center for Responsible Lending forecasts 2.43 million foreclosures in 2009 and 8.1 million foreclosures over the next four years. Various programs from Washington are designed to stimulate the economy, stem foreclosures, and improve housing demand. However, these actions are unlikely to stabilize and then boost housing demand until later in 2010 or beyond. In 2009, total housing starts are projected to fall 41.1% to 530,000 with single-family volume declining 30.6% to 430,000. New home sales are forecast to decrease 23.1% to 373,000, while existing home sales are flat at 4.91 million. Average and median single-family new home prices are projected to fall 8.7% and 8.6%, respectively, in 2009. Fitch is forecasting a stronger economy in 2010, although still noticeably below the historical trend line. Real GDP is projected to grow 1.8%. Consumer spending and government spending are forecast to expand 0.3% and 10.8%, respectively. Investment should fall 4.9%, while inflation is expected to be about 0.8%. Total and single-family housing starts are forecast to grow 15.1% and 18.6%, respectively, in 2010. New home sales should expand approximately 20%. Existing home sales should increase about 7.5%. New home prices could average 2%-to-3% higher in 2010. Implications for the Companies and the Ratings: For the full year of 2009, homebuilders' revenues could drop 42% on average. For those builders who are profitable, EBITDA before real estate charges could fall approximately 55%. Current credit metrics (LTM EBITDA/interest incurred, debt to LTM EBITDA, and FFO interest coverage) are considerably lower than at 3Q'08 end and that will also be the case at calendar year-end 2009. Debt/capitalization ratios have deteriorated for the majority of builders over the past three years, largely as a result of erosion in TNW from sizeable real estate charges and FAS 109 adjustments. Although some builders have been more proactive than others in reducing inventories and lowering debt levels, most, in retrospect, started relatively late during this cyclical downturn. For most, inventories and debt are now meaningfully lower than at their peaks: owned inventories down 64.5% from the peak; debt down 35.5% from the peak. Given Fitch's macroeconomic forecast for 2010, public builders are likely to experience a mild recovery next year. On average, revenues should expand low double digit despite lower home prices due to a mix shift to smaller, often entry level homes. Gross margins should improve 150-200 basis points reflecting earlier real estate charges and lesser selling incentives. With higher volume the typical SG&A expense/sales ratio may diminish. As a consequence, most public builders should report modest profits on an EBITDA and pretax basis in 2010. That being said, Fitch still expects modest to moderate land value write downs in 2010. Excluding tax refunds, average CFFO is likely to be lower in 2009 relative to 2008 and to be neutral to modestly negative in 2010. On average, credit metrics, particularly profit related metrics (LTM EBITDA/interest coverage, debt to LTM EBITDA), should stabilize and then start to improve later in 2010. Tangible net worth should grow. Debt leverage should at least modestly improve. Since credit pressures will persist, at least in the intermediate term, it will be imperative that builders continue to manage their balance sheets, selectively reducing or stabilizing land and development spending, with the exception of markets where lot positions dip below minimum acceptable levels and land (preferably rolling option, developed lots) is available on a sharply discounted price basis. Fitch expects homebuilders to reduce debt where possible and to exercise restraint as to share repurchases, dividends, and company acquisitions in these still uncertain times. Builders should be cautious about reacting prematurely to a market bottom and early- stage recovery with overly aggressive real estate purchases. Fitch rates the builders within the context of a typical cycle. In the midst of a non-typical upcycle, as took place in the 1992- 2005 period, a number of builders realized higher credit ratings. Conversely, due to this sharper than expected contraction, which has lasted longer than the norm, and as builders' operating and credit metrics have been even more stressed, ratings have been lowered. While the possibility remains for a few additional company downgrades, the likelihood of such action has diminished. Continued progress in industry and company metrics could prompt a positive revision of a number of Rating Outlooks. This is a list of Fitch rated U.S. homebuilders and their current Issuer Default Ratings and Rating Outlooks: -- Beazer Homes USA ('CCC'; Outlook Negative); -- D.R. Horton, Inc. ('BB'; Outlook Negative); -- Hovnanian Enterprises, Inc. ('CCC'; Outlook Negative); -- KB Home ('BB-'; Outlook Negative); -- Lennar Corp. ('BB+'; Outlook Negative); -- M.D.C. Holdings, Inc. ('BBB-'; Outlook Stable); -- Meritage Homes Corp. ('B+'; Outlook Negative); -- M/I Homes, Inc. ('B'; Outlook Negative); -- NVR, Inc. ('BBB'; Outlook Stable); -- Pulte Homes ('BB+'; Outlook Negative); -- Ryland Group ('BB'; Outlook Negative); -- Standard Pacific Corp. ('CCC'; Outlook Negative); -- Toll Brothers, Inc. ('BBB-'; Outlook Stable). BH S&B: Cerberus Sues Paul Hastings for Bad Advice on Loans ----------------------------------------------------------- Nate Raymond at New York Law Journal reports that Ableco Finance LLC, a unit of Cerberus Capital Management LP, has sued Paul, Hastings, Janofsky & Walker and partner John F. Hilson, claiming that the law firm gave it bad advice in connection with a loan the private equity firm made to a company looking to bring Steve & Barry's out of bankruptcy. Ableco filed a complaint in Manhattan Supreme Court seeking $55 million it lost because of a $125 million loan. Ableco claims it would never have made the loan last year if the Paul Hastings team had advised it that the buyer would not have rights to all of Steve & Barry's inventory, which Ableco understood would back the loan. Shapiro Forman Allen & Sava represents Ableco Finance. Paul Spagnoletti, Esq., at Davis Polk & Wardwell represents Paul Hastings. About BH S&B BH S&B Holdings LLC filed for bankruptcy protection together with seven other affiliates on November 19, 2008 (Bankr. S.D.N.Y. Lead Case No. 08-14604). The seven debtor-affiliates are BH S&B Distribution LLC, BH S&B Lico LLC, BH S&B Retail LLC, BHY S&B Intermediate Holdco LLC, Cubicle Licensing LLC, Fashion Plate Licensing LLC, and Heritage Licensing LLC. BH S&B was formed by investment firms Bay Harbour Management and York Capital Management in August 2008 to acquire the business operations and assets of bankrupt retailer Steve & Barry's for $163 million in August 2008. Steve & Barry's had 240 locations when it was bought and the new owners had planned to cut that down to 173 stores. Due to disappointing sales, Steve & Barry's returned to bankruptcy in November 2008. BH S&B and its affiliates' Chapter 11 cases are presided over by the Honorable Martin Glenn. Joel H. Levitin, Esq., and Richard A. Stieglitz, Jr., Esq., at Cahill Gordon & Reindel LLP, in New York, serve as bankruptcy counsel to BH S&B and its affiliates. RAS Management Advisors LLC acts as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and notice agent. BONEYARD LLC: Case Summary & 8 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Boneyard, LLC c/o The LePlastier Companies 19800 MacArthur Blvd., Suite 1500 Irvine, CA 92612 Bankruptcy Case No.: 09-23930 Chapter 11 Petition Date: December 14, 2009 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Richard W. Esterkin, Esq. 300 S Grand Ave, 22nd Fl Los Angeles, CA 90071-3132 Tel: (213) 612-2500 Fax: (213) 612-2501 Email: resterkin@morganlewis.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Geoffrey R. Le Plastrier. Debtor's List of 8 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Pacific Western Bank Bank Loan $13,148,822 Value of Security: $11,450,000 Le Plastrier Management Loan $62,442 Company, Inc. Armstrong/Robitaille/ Trade Debt $18,678 Reigle Kabo Equipment, Inc. Trade Debt $2,402 California Real Estate Trade Debt $1,238 Advisors Long Beach Water Trade Debt $126 Department The Alamitos Ridge, LLC Executory Contract Unknown Barto/Signal Petroleum, Executory Contract Unknown Inc. BRIAN R TUTTLE: Court Dismisses Chapter 7 Liquidation Case ---------------------------------------------------------- The Hon. Paul G. Hyman of the U.S. Bankruptcy Court for the Southern District of Florida approved a motion by Brian R. Tuttle and Merja A. Tuttle for the dismissal of their Chapter 7 case. The Debtors related that they can better address their financial issues by working with their creditors outside of the bankruptcy case. The Debtors' Chapter 11 case was converted to a Chapter 7 on August 11, 2009. The Court also ordered that the Debtors pay Ruden, McClosky, attorneys for the Trustee, Michael R. Bakst, fees in the amount of $3,354. Brian R. Tuttle and Merja A. Tuttle of West Palm Beach, Florida, are real estate developers. They filed for bankruptcy on October 15, 2008, before the U.S. Bankruptcy Court for the Southern District of Florida (Case No. 08-25253). Debtor- affiliates that filed separate Chapter 11 petitions are Tuttle Land Holding Corp. (Case No. 08-25255) and TLH-BOS Corp. (Case No. 08-25256). Judge Paul G. Hyman Jr. presides over the case. Robert C. Furr, Esq., and Alvin S. Goldstein, Esq., at Furr & Cohen, represent the Debtors as counsel. In their schedules, the Debtors listed total assets of $69,338,910 and total debts of $23,605,666. On October 15, 2008, the Tuttles filed with the Court a Chapter 11 statement of current monthly income, disclosing $18,333 in total current monthly income, including $14,000 net monthly income from business operations. BULLY'S SPORTS: 9 Stores to Remain Open, 300 Workers to Keep Jobs ----------------------------------------------------------------- Northern Nevada Business Weekly says Bully's Sports & Grill Inc.'s president, Paul Sonner, said that the Company's nine store locations will not shut down and 300 workers will keep their jobs. Bully's Sports Bar & Grill Inc., with 15 locations in Nevada, filed for Chapter 11 reorganization on Dec. 4 in Reno (Bankr. D. Nev. Case No. 09-54325). Bully's Sports Bar & Grill owns 15 bars and restaurants in Reno, Sparks and Carson City, Nevada. The petition says assets and debt are both less than $10 million. CALUMET SPECIALTY: S&P Affirms Corporate Credit Rating at 'B' ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Calumet Specialty Products Partners L.P. and revised the outlook to stable from negative. The rating action follows Calumet's success in pricing an offering of 3 million common units for proceeds of about $52 million. The company intends to use the proceeds to repay outstanding borrowings on its revolving credit facility. "As a result, S&P expects liquidity will likely exceed $100 million at Dec. 31, 2009, and provide both a greater cushion to what S&P believes will be another year of volatile and weak refining margins," said Standard & Poor's credit analyst Paul B. Harvey. Additionally, the improved liquidity will support increased working capital needs as Calumet commences its naphthenic base oils marketing agreement with Houston Refining L.P. (a wholly owned subsidiary of LyondellBasell Industries). S&P expects capital expenditures and quarterly distributions to remain within operating cash flows. The ratings on Indianapolis-based Calumet Specialty Products Partners L.P. reflect its position as a small, independent petroleum refiner structured as a master limited partnership; its high debt leverage; significant cash distributions that limit the able to repay debt; and continued weak market conditions in the refining industry. Ratings also incorporate Calumet's improving liquidity, and the modest asset and market diversity provided by its three refineries and Penreco assets. S&P expects Calumet will likely maintain adequate liquidity despite weak margins. Capital spending and distributions should remain within operating cash flows. S&P could lower ratings if liquidity falls below $65 million, or adjusted debt leverage exceeds 4x. At this time positive rating actions are not anticipated given expectations for continued weak industry conditions throughout 2010. CAMP COOLEY: May File Schedules & Statements Today -------------------------------------------------- In early December, Camp Cooley Ltd. filed a motion, asking the U.S. Bankruptcy Court for the Western District of Texas to extend until December 16, 2009, the time to file its schedules of assets and liabilities and statement of financial affairs. The Debtor relates that the schedules and statements have been drafted and are being finalized. Franklin, Texas-based Camp Cooley Ltd. operates an agricultural and farming business. The Company filed for Chapter 11 bankruptcy protection on November 8, 2009 (Bankr. W.D. Tex. Case No. 09- 61311). R. Glen Ayers Jr., Esq., at Langley and Banack, Inc, assists the Company in its restructuring effort. In its petition, the Company listed $50,000,001 to $100,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. CANADIAN SUPERIOR: Gets Notification of Class Action Lawsuit in NY ------------------------------------------------------------------ Canadian Superior Energy Inc. has been notified of a class action lawsuit commenced in the United States District Court for the Southern District of New York. The lawsuit purports to be brought on behalf of purchasers of the common stock of Canadian Superior between January 14, 2008 and February 17, 2009. The complaint alleges that certain former executives of Canadian Superior violated the Securities Exchange Act of 1934 by failing to disclose information concerning its prospects in Trinidad and Tobago. The complaint also names a current officer of Canadian Superior as a defendant. Canadian Superior has not been named a defendant in the case as it sought protection under Canadian bankruptcy and reorganization laws and has since reorganized. Canadian Superior intends to take any necessary steps to protect its interests in this matter. About Canadian Superior Canadian Superior Energy Inc. (TSX:SNG)(NYSE Amex:SNG) -- http://www.cansup.com/-- is a Calgary, Alberta, Canada-based diversified global energy company engaged in the exploration and production of oil and natural gas, and liquefied natural gas projects, with operations offshore Trinidad and Tobago, offshore Nova Scotia, Canada, in Western Canada, in the United States and in North Africa. On March 5, 2009, Canadian Superior made an application for protection under the Companies' Creditors Arrangement Act and an Initial Order was granted by the Court of Queen's Bench of Alberta for creditor protection for 20 days, which was subsequently extended to May 4, 2009, June 4, 2009, July 24, 2009, and Sept. 15, 2009. Deloitte & Touche Inc. was appointed Interim Receiver of the Company's Participation Interest in Block 5(c) Trinidad pursuant to a Court Order granted by the Court of Queen's Bench of Alberta. At June 30, 2009, the Company estimates its net obligation to the receiver to be approximately $49.5 million, which includes $74.6 million paid by the receiver net of $25.1 million of Block 5(c) joint interest billings collected by the receiver on the Company's behalf. The Court appointed Hardie and Kelly Inc. as Monitor of the Company. Canadian Superior said September 17 it has completed its financial restructuring and has emerged from protection under the Companies' Creditors Arrangement Act (Canada). CENTRAL PACIFIC: Bank Agrees to Consent Order with FDIC ------------------------------------------------------- Central Pacific Financial Corp. (NYSE: CPF) announced December 16 that its primary subsidiary, Central Pacific Bank (CPB), agreed to a Stipulation to the Issuance of a Consent Order with the Federal Deposit Insurance Corporation (FDIC) and the Hawaii Division of Financial Institutions (HDFI). The Consent Order requires CPB to improve its capital position, asset quality, liquidity, and management oversight, among other matters. CPB will continue to offer a full range of financial products and services, and its deposits continue to be insured by the FDIC. The bank elected to continue its participation in the extended FDIC insurance program, which in addition to the $250,000 coverage per depositor, provides unlimited insurance coverage on transactional accounts earning less than a one-half percent interest rate. The Consent Order requires CPB to take numerous actions that include increasing its Tier 1 Capital to maintain a minimum leverage capital ratio of 10% and total risk-based capital ratio of 12%, as well as the development of a contingency plan if those ratios are not attained by March 31, 2010. An adequate allowance for loan and lease losses must be maintained at all times, and the amount of commercial real estate loans, particularly land development and construction loans, must be reduced systematically. The company has filed a Form 8-K with the U.S. Securities and Exchange Commission reporting this Consent Order, which can be referenced for more information. "We have been in close communication with our regulators, and as previously disclosed, expected to agree to this Consent Order," said Ronald K. Migita, Chairman, President, and Chief Executive Officer. "With a major loan sale completed this week, we have already made progress toward the regulatory order and are fully committed to meeting the requirements of the agreement." On December 8, 2009, CPB completed the sale of a $47.5 million package of commercial real estate loans at par value. Additional loans, primarily commercial real estate loans, with an aggregate book value of $62 million as of Sept. 30, 2009, have also been sold or are contracted to be sold in this quarter at a net discount of 10% of book value. The company has engaged an outside loan review firm, Alvarez & Marsal, to conduct an independent review of its commercial real estate loan portfolio and expects to continue pursuing sales of certain loans, in addition to loan restructurings and renegotiations with its borrowers, over the coming quarters. "The loan review and loan sales are important steps in reaching our capital and asset quality goals in order to comply with the Consent Order," said Migita. The company continues to work with its financial advisors, Sandler O'Neill + Partners, L.P. and RBC Capital Markets, to evaluate options for raising additional capital, including private placements of equity securities and public stock offerings. Central Pacific Financial Corp. shareholders approved increasing the number of authorized shares of common stock on October 22, 2009, which provides the company with added flexibility in addressing their capital needs. CPB recently announced its plan to exit the California market, where many of its commercial real estate loans are located, and to focus on business development in Hawaii. The bank has not made a loan in California for more than 18 months and intends to wind down or dispose of its existing California loan portfolio over the next two years. "Hawaii is our market, and despite the local economic conditions, our core deposit base has grown by 17% from a year ago," Migita stated. "We are committed to continue being a leading force in supporting home ownership and small businesses in Hawaii." About Central Pacific Central Pacific Financial Corp. -- http://www.centralpacificbank.com/-- is a Hawaii-based financial institution with $5.2 billion in assets. Central Pacific Bank, its primary subsidiary, operates 37 branches, a residential mortgage subsidiary, and more than 100 ATMs throughout the State of Hawaii. CHINA CERAMICS: Receives Delisting Notice From NYSE Amex -------------------------------------------------------- China Ceramics Co., Ltd., received a notice from the NYSE Amex Staff that it no longer complies with the NYSE Amex's continuing listing standards because of its failure to meet NYSE Amex initial listing standards immediately after the recently completed business combination with Success Winner Limited, as set forth in Section 341 of the Company Guide, and that its securities are, therefore, subject to being delisted from the NYSE Amex. China Ceramics has not yet determined whether to appeal this determination. In the event that China Ceramics is delisted from NYSE Amex, its securities are expected be quoted on the OTCBB. China Ceramics is a leading manufacturer of exterior ceramic tiles for commercial and residential properties in the PRC. CHRYSLER LLC: Old CarCo Files Liquidating Chapter 11 Plan --------------------------------------------------------- Chrysler LLC, now known as Old Carco LLC following the sale of its business to Fiat S.p.A. and the U.S. government, filed a Chapter 11 plan of liquidation. Under the Plan, recovery by general unsecured creditors is contingent on, among other things, a successful outcome in a lawsuit initiated by the Official Committee of Unsecured Creditors against Daimler AG and certain related parties. Under the Plan, the Daimler Litigation will be pursued by the Liquidation Trust established by the Plan. If a sufficient recovery is not achieved in the Daimler Litigation, holders of General Unsecured Claims will receive no distributions under the Plan. "Until it is clear that such a recovery will be available, the Debtors anticipate that the review and allowance of General Unsecured Claims will be delayed. Such delay could be substantial," the disclosure statement explaining the Plan said. In addition, potential recoveries to holders of General Unsecured Claims are contingent on general unsecured creditors (Class 3A) and holders of first lien secured claims (Class 2A) voting in favor of the Plan. Absent Confirmation and implementation of the Plan, the Debtors anticipate that holders of general unsecured claims, as well as most holders of unsecured priority claims, would receive no distributions in a liquidation of the Debtors under Chapter 7 of the Bankruptcy Code. The Plan is premised upon the liquidation of the remaining assets, generally comprised of collateral of the First Lien Lenders and the Government DIP Lenders; the prosecution of an action against Daimler, the former owner of Debtors; and the distribution of such proceeds and various escrows created at the time of the Fiat S.p.A. transaction or thereafter and funded by the U.S. and Canadian governments, serving as the debtor in possession lenders in the Chapter 11 Cases. The Plan provides for zero recovery to the U.S. for its $4 billion loan under the Troubled Asset Relief Program while repaying some secured lenders in full. Holders of "other secured claims" of $20.6 million will get an estimated 100% recovery. Holders of first lien claims will receive their collateral or the proceeds from the sale of their collateral, for a recovery of "less than 100%". DaimlerChrysler North America Finance Corporation and Madeleine L.L.C. won't recover anything for a second lien loan. Cerberus Capital Management, L.P., which is owed $500 million for a second lien debt, had forgiven the debt pursuant to a settlement. Holders of equity interests won't recovery anything. "The TARP Financing Deficiency Claims of approximately $3.7 billion is a General Unsecured Claim; however, the U.S. Treasury will receive no recovery on account of such Claim pursuant to the terms of the Plan," according to the Disclosure Statement. The confirmation hearing, at which the Bankruptcy Court will consider approval of the Plan, currently is tentatively scheduled for March 16, 2010 beginning at 10:00 a.m., Eastern Time. A copy of the Liquidating Plan is available for free at: http://bankrupt.com/misc/Chrysler_Chapter11_Plan.pdf A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Chrysler_DiscStatement.pdf About Chrysler Group LLC Headquartered in Auburn Hills, Michigan, Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep, Ram, Dodge, Mopar and Global Electric Motorcars (GEM) brand vehicles and products. 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) CHRYSLER LLC: High Court Rebuffs Indiana Pension Fund ----------------------------------------------------- WestLaw reports that the United States Supreme Court has granted certiorari, vacated the judgment, and remanded with instructions to dismiss the appeal as moot, in a case in which the Second Circuit affirmed a bankruptcy court's order approving a proposal by Chrysler, an automobile manufacturer which had filed for bankruptcy under Chapter 11, to sell substantially all of its operating assets to a new company in which ownership was divided between the automobile manufacturer Fiat, a pension fund for Chrysler employees, and the governments of the United States and Canada. The question presented in the petition for certiorari filed by state pension funds was whether 11 U.S.C. Sec. 363(b), which allows a Chapter 11 debtor-in-possession to sell property outside the ordinary course of business after notice and a hearing, "may freely be used as a 'side door' to reorganize a debtor's financial affairs without adherence to the creditor protections provided by the chapter 11 plan confirmation process." Chrysler's brief in opposition argued that the petition was moot because the sale had closed and, under Sec. 363(m) of the Bankruptcy Code, the validity of an asset sale would not be affected by reversal of the bankruptcy court's order because the new company had proceeded in good faith. Indiana State Police Pension Trust v. Chrysler LLC, --- S.Ct. ----, 2009 WL 2844364, 78 USLW 3107 (U.S.). The case below is In re Chrysler LLC, 576 F.3d 108 (2d Cir. 2009). CIRCUIT CITY: Ramps Up Recovery Effort With $19M Suit ----------------------------------------------------- Law360 reports that Circuit City Stores Inc. has filed a $19 million breach of contract suit accusing advertising broker Active Media Services Inc. of unlawfully holding on to assets and cash that were meant to have funded television spots prior to the retailer's Chapter 11 filing. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- was a specialty retailer of consumer electronics, home office products, entertainment software and related services in the U.S. and Canada. Circuit City Stores together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (Bankr. E.D. Va. Lead Case No. 08- 35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc., and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of August 31, 2008. Circuit City has opted to liquidate its 721 stores. It has obtained the Bankruptcy Court's approval to pursue going-out-of- business sales, and sell its store leases. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Circuit City Stores Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). CITIGROUP INC: Fitch Upgrades Individual Rating to 'C/D' -------------------------------------------------------- Fitch Ratings has upgraded the Individual and Trust Preferred ratings of Citigroup Inc. and its subsidiaries and removed them from Rating Watch Positive: -- Individual to 'C/D' from 'D/E'; -- Trust Preferred to 'BB-' from 'B'; In addition, Fitch has affirmed these ratings: -- Long-term Issuer Default Rating at 'A+'; -- Short-term IDR at 'F1+'; -- Support rating at '1'; -- Support rating floor at 'A+'. These rating actions follow the announcement of Citi's plan to repay trust preferred stock held by the U.S. government. Further, Citi will exit its loss sharing agreement with the U.S. government on a sizeable pool of loans and securities. The upgrade of the Individual rating incorporates Fitch's view that asset quality has a high probability of stabilizing in the near term. However, Citi's individual rating is still constrained by its relatively weak core earnings and comparatively large asset quality problems. The IDR affirmations are derived from Citi's continued systemic importance and U.S. government support and as such continue to carry a Stable Rating Outlook. Fitch has also affirmed Citi's long- and short-term deposits, long- and short-term debt and subordinated debt. The ratings of these debt instruments are linked to Citi's IDRs. A detailed ratings list follows at the end of this release. Fitch believes the transactions are a net positive for the risk profile of Citi. Fitch views government approval of these transactions as a significant endorsement by regulators that Citi now possesses adequate financial resources to manage through a still challenging financial environment. In addition, the plan further improves Citi's capital composition with a significantly larger weighting of tangible common equity (TCE) in the overall capital structure. To fund the repayment of $20 billion of government TARP trust preferred, Citi is issuing $17 billion of new common equity (with $2.5 billion overallotment option) and $3.5 billion of tangible equity units, of which 80% counts toward Tier I common equity for regulatory purposes. In addition, Citi plans to issue $1.7 billion of common stock to employees (subject to shareholder approval in the second quarter of 2010 [2Q'10]) in lieu of a portion of cash compensation. These capital actions increase the amount of Fitch core capital significantly. On a pro forma basis, TCE will reach approximately $120 billion and will represent approximately 85% of total capital (consisting of TCE and remaining preferred and trust preferred) versus approximately 70% at the end of 3Q'09. Coupon costs on trust preferred instruments will decline by approximately $2 billion per year. Consequently, deferral risk on remaining trust preferred instruments is significantly reduced. There are continued signs that credit losses may be leveling off in the U.S. consumer market, although Fitch still expects a challenging outlook well into 2010. Internationally, key markets appear to be turning positive in both delinquency and net-charge off trends. Commercial real estate exposure is expected to be far less of an issue for Citi relative to the U.S. banking industry given Citi's comparatively lower loan exposure to CRE. The corporate loan book may perform better in future periods as leveraged finance and other troubled exposures have been well identified and charged down. Capital markets-related charges are expected to be more modest as Citi has worked down various troubled exposures including collateralized debt obligations and Alt-A mortgage securities among other categories. Fitch believes future losses with the pool of assets formerly covered by the government's loss sharing agreement will be manageable within the context of Citi's own financial resources. Particularly through the first half of 2009, U.S. government support measures have been instrumental in helping Citi strengthen its liquidity. Liquidity has also benefited from management's efforts to sell non-core businesses and work down non-core assets under the Citi Holdings umbrella. Deposit trends throughout the franchise have been positive in 2009, and Citi has been able to issue considerable levels of non-government guaranteed debt as the year progressed. Currently, liquidity and funding at both the holding company and banking levels appear adequate. Looking into 2010, Fitch will assess the prospective stability of Citi's liquidity and funding profile as the company ends the use of government funding support, including guaranteed debt issues under the FDIC's TLGP program and unlimited coverage of demand deposits through the FDIC's TAG program. The U.S. government's ownership interest in Citi stood at 34% following the September 2009 completion of Citi's exchange offer which converted the bulk of preferred stock and a portion of trust preferred securities to common equity. In concert with Citi's new share issue, the U.S. government will sell up to $5 billion of its common shares in a secondary offering and potentially sell its remaining stake over the next six to 12 months. These Ratings have been upgraded and removed from Rating Watch Positive: Citigroup Inc. -- Individual to 'C/D' from 'D/E'. Citibank, N.A. -- Individual to 'C/D' from 'D/E'. Citibank (South Dakota), N.A. -- Individual to 'C/D' from 'D/E'. Citibank Banamex USA -- Individual to 'C/D' from 'D/E'. Citigroup Capital III, VII, VIII, IX, X, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXIX, XXX, XXXI, and XXXII -- Trust Preferred to 'BB-' from 'B'. Adam Capital Trust III, Adam Statutory Trust III-V -- Trust Preferred 'BB-' from 'B'. These Ratings have been affirmed with a Stable Outlook: Citigroup Inc. -- Long-term IDR at 'A+'; -- Senior unsecured at 'A+'; -- Subordinated at 'A'; -- Preferred at 'C'; -- Short-term IDR at 'F1+'; -- Support at '1'; -- Support Floor at 'A+'; -- Long-term FDIC guaranteed debt at 'AAA'; -- Short-term FDIC guaranteed debt at 'F1+'. Citigroup Funding Inc. -- Long-term IDR at 'A+'; -- Senior unsecured at 'A+'; -- Short-term IDR at 'F1+'; -- Short-term debt 'F1+'; -- Long-term FDIC guaranteed debt at 'AAA'; -- Short-term FDIC guaranteed debt at 'F1+'. Citigroup Global Markets Holdings Inc. -- Long-term IDR at 'A+'; -- Senior unsecured at 'A+'; -- Subordinated 'A'; -- Short-term IDR at 'F1+'; -- Short-term debt at 'F1+'. Citibank, N.A. -- Long-term IDR at 'A+'; -- Long term deposits at 'AA-'; -- Short-term IDR at 'F1+'; -- Short-term deposits at 'F1+'; -- Support at '1'; -- Support Floor at 'A+'; -- Long-term FDIC guaranteed debt at 'AAA'; -- Short-term FDIC guaranteed debt at 'F1+'. Citibank International PLC -- Long-term IDR at 'A+'; -- Short-term IDR at 'F1+'; -- Support at '1'. Citibank (South Dakota), N.A. -- Long-term IDR at 'A+'; -- Long-term deposits at 'AA-'; -- Short-term IDR at 'F1+'; -- Short-term deposits at 'F1+'; -- Support at '1'; -- Support floor at 'A+'. Citibank Banamex USA -- Long-term IDR at 'A+'; -- Subordinated at 'A'; -- Long-term deposits at 'AA-'; -- Short-term IDR at 'F1+'; -- Short-term deposits at 'F1+'; -- Support at '1'; -- Support Floor at 'A+'. CitiFinancial Europe plc -- Long-term IDR at 'A+'; -- Senior unsecured at 'A+'; -- Senior shelf at 'A+'; -- Subordinated at 'A'. Citigroup Derivatives Services LLC. -- Long-term IDR at 'A+'; -- Short-term IDR 'F1+'; -- Support at '1'. Citibank Canada -- Long-term IDR at 'A+'; -- Long-term deposits at 'A+'. Citibank Japan Ltd. -- Long-term IDR at 'A+'; -- Short-term IDR at 'F1+'; -- Support at '1'. Commercial Credit Company -- Senior unsecured at 'A+'. Associates Corporation of North America -- Senior unsecured at 'A+'; -- Subordinated at 'A'. Egg Banking plc -- Senior unsecured at 'A+'; -- Subordinated 'A'. CLEAR CHANNEL: Moody's Assigns Corporate Family Rating at 'B2' -------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating and B1 Probability-of-Default Rating to Clear Channel Outdoor Holdings, Inc.'s wholly-owned intermediate holdco subsidiary, Clear Channel Worldwide Holdings, Inc. Additionally, Moody's assigned a B1 rating to CCW's planned $750 million issuance of Senior Unsecured Notes due 2017 ($600 million Series A and $150 million Series B), and a speculative grade liquidity rating of SGL-2. Clear Channel Communications, Inc. (Caa3 Negative) maintains an 89% ownership interest in CCO (the remaining 11% is publicly owned). The rating outlook is stable. While Moody's Loss Given Default Rating Methodology suggests a potential rating of Ba3 may be appropriate for the proposed new Senior Unsecured Notes, the rating committee assigned a B1 rating based on the close proximity of the expected loss level to the B1 rating category, in conjunction with an expectation of additional debt issuance through a potential upsizing and/or further follow- on note offering at the same legal entity and priority level in the near- to intermediate-term. While considering that CCW's pro forma leverage (including Moody's standard adjustments) on a stand-alone basis (parent company CCU's debt holders have recourse only to the equity and the intercompany loan balance) falls in the mid-single-digit range, one may conclude that CCW possesses a moderate leverage profile, particularly considering that the company is presently at the bottom of a cyclical downturn. However, Moody's note that all of the company's free cash flow is swept up to its controlling parent, which is significantly reliant upon CCW to help it service its enormous debt burden. The CCW rating is subsequently considerably constrained by the highly leveraged balance sheet of CCU, and specifically an agreement which allows CCU to sweep all excess cash from CCO. The company is not expected to retain any real free cash flow for the foreseeable future, or until CCU restructures what Moody's believe to be an unsustainable capital structure. Moody's quantify that overhang by calculating the implied amount of debt that will be serviced based on the cash swept from CCO to CCU, and the company's borrowing rate. When this is calculated, projected pro forma debt-to-EBITDA leverage high at around 7x (incorporating Moody's standard adjustments) based on Moody's 2010 forecast (and considerably higher at present on a proforma basis for the financing). This also assumes a netting of the loan due to CCU with the intercompany amount due from CCU, though in a CCU bankruptcy, a netting would not likely occur as the obligation from CCU is junior in ranking to its significant secured debt. "In addition, Moody's believe that there is risk that CCW could increase its debt levels beyond the amount contemplated by the notes offering to provide more capital to CCU in support of its restructuring and debt service as maturities approach in 2013," stated Neil Begley, Moody's Senior Vice President, though mostly only on a junior priority basis to the new notes contemplated here given the restrictions governed by the senior unsecured debt. Also reflected is Moody's expectation that both unadjusted EBITDA margins and free cash flow (before dividends) will likely be substantially below historical levels as weak economic conditions will likely continue to persist for the coming years. CCW's rating benefits from its strong market position in the outdoor advertising space, significant scale and broad geographic reach. The company's ability to obtain secured financing that would subordinate the new notes is restricted by a limitation on liens up to $250 million, as well as by the secured bank debt at CCU. Proceeds from the note issuance will be applied toward the partial repayment of CCO's $2.5 billion intercompany note due to CCU, which matures in August 2010. The balance of the intercompany note will be extended to match the maturity of the new notes. The notes will be guaranteed on a senior unsecured basis by CCO and Clear Channel Outdoor, Inc., and contain upstream guarantees from CCW's current and future domestic subsidiaries, though the foreign subsidiaries will not provide guarantees. The issuance will be divided into two tranches - Series A, having no restricted payments covenant, and Series B, which will allow CCU to continue to sweep cash flow. "As stated in Moody's issuer comment dated June 4, 2009, completion of an external refinancing of the intercompany debt and maturity extension of the remaining portion effectively refinances the company's maturing 2010 debt and improves its liquidity profile, and the expected cash repayment of a portion of the intercompany notes essentially removes the possibility of a near-term bank facility breach at CCU," stated Begley. The one notch differential between the CFR and PDR reflects the below average family recovery given the predominantly all-bond financing structure, and the limited downside protections afforded to bondholders as a means to otherwise mitigate more meaningful deterioration in enterprise value prior to default. Moody's has assigned these ratings: Issuer - Clear Channel Worldwide Holdings, Inc. * Corporate Family Rating -- B2 * Probability of Default Rating -- B1 * Senior Unsecured Notes due 2017 -- B1 (LGD 3, 42%) * Speculative grade liquidity rating -- SGL -- 2 * Outlook -- Stable This is the first time Moody's has assigned ratings to Clear Channel Worldwide Holdings, Inc. CCW'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 CCW's core industry and believes CCW's ratings are comparable to those of other issuers with similar credit risk. Clear Channel Outdoor Holdings, Inc., headquartered in San Antonio, Texas, is a leading global outdoor advertising company that operates in 54 countries and generates annual revenues of approximately $2.7 billion. COLONIAL BANCGROUP: Obtains Interim OK to Access Non-Deposits ------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Alabama authorized, on an interim basis, The Colonial BancGroup, Inc., to: -- use cash from sources other than the deposits to supplement the use of cash collateral; and -- grant replacement liens as adequate protection to the affected creditors. A final hearing on the Debtor's motion will be held at the U.S. Bankruptcy Court, U.S. Courthouse, One Church Street, Courtroom 4C in Montgomery, Alabama at 10:00 a.m. (Central Time) on January 21, 2010. The Debtor requires additional cash collateral to pay monthly operating and bankruptcy expenses; and professional fees and expenses. The Debtor won use cash representing collateral for secured lenders' claims. Alabama taxing authorities, Branch Banking & Trust Co., and the FDIC all claim security interests in Colonial's deposit accounts: a) The State of Alabama Department of Revenue -- $9,000,000 which was revised to a sum less than $7 million. b) BB&T -- $24,027,299, which amount remains on deposit with BB&T under prior orders of the Court and the Debtor does not seek to make any change in the status quo as to the funds; and c) The FDIC-Receiver -- asserts a security interest in and a right of offset with respect to the deposits that is duplicative of the lien asserted by BB&T in the deposits and is based upon the same Security Agreement asserted by BB&T as the basis of its claim. Headquartered in Montgomery, Alabama, The Colonial BancGroup, Inc. (NYSE: CNB) was holding company to Colonial Bank, N.A, its banking subsidiary. Colonial bank -- http://www.colonialbank.com/ -- operated 354 branches in Florida, Alabama, Georgia, Nevada and Texas with over $26 billion in assets. On August 14, 2009, Colonial Bank was seized by regulators and the Federal Deposit Insurance Corporation was named receiver. The FDIC sold most of the assets to Branch Banking and Trust, Winston-Salem, North Carolina. BB&T acquired $22 billion in assets and assumed $20 billion in deposits of the Bank. Colonial BancGroup filed for Chapter 11 bankruptcy protection on August 25, 2009 (Bankr. M.D. Ala. Case No. 09-32303). W. Clark Watson, Esq., at Balch & Bingham LLP and Rufus T. Dorsey IV, Esq., at Parker Hudson Rainer & Dobbs LLP, assist the Company in its restructuring effort. The Company listed $45,000,000 in assets and $380,000,000 in debts in its bankruptcy filing. COYOTES HOCKEY: NHL Signs LOI to Sell Team to Ice Edge ------------------------------------------------------ National Hockey League Deputy Commissioner Bill Daly said Friday the league has signed a letter of intent to sell the Phoenix Coyotes to Ice Edge Holdings. "The NHL and Ice Edge Holdings announced [December 11] that they have entered into a Letter of Intent to proceed in attempting to document and close a proposed transaction pursuant to which Ice Edge would purchase the Phoenix Coyotes' franchise. While much remains to be done, the NHL looks forward to working closely with Ice Edge to bring the sale to conclusion as expeditiously as possible. Ice Edge has committed to keep the Coyotes in Glendale, Arizona," Commissioner Daly said in a statement. An article by Eric Morath posted at The Wall Street Journal's Bankruptcy Beat relates the investment group is still seeking to have the team play five games a year in Saskatoon, Saskatchewan. "I think that continues to be an ask on their part; I know it's part of their letter of intent," Commissioner Daly told NHL.com, according to Mr. Morath. The article relates Mr. Daly said the Coyotes' availability to play home games away from Jobing.com Arena in Glendale, Arizona, will be part of the negotiations between Ice Edge and the city, which owns the arena. The league's board of governors would also have to approve such an arrangement, Mr. Daly said. The Bankruptcy Beat article notes the Coyotes have never been profitable since they moved to Arizona in 1996, and signing the letter of intent is a step toward stabilizing the team's ownership situation for the first time since the team filed for bankruptcy in May. The article also notes Ice Edge's offer essentially reprises its bid for the team while it operated under bankruptcy protection. Ice Edge dropped out of the bidding, and a bankruptcy judge chose the NHL's $140 million offer for the Coyotes over BlackBerry barron Jim Balsillie's $212.5 million bid, which would have moved the club to Canada for all 41 home games. The NHL has said all along that it intended only to be a temporary owner while it looked for a buyer that would commit to keeping the Coyotes in the desert, Mr. Morath says. Ice Edge's offer is expected to approach $150 million, Mr. Morath cites a report by The Associated Press. Dewey Ranch Hockey LLC, Arena Management Group, LLC, Coyotes Holdings, LLC, and Coyotes Hockey, LLC -- owners and affiliates of the Phoenix Coyotes National Hockey League team -- filed for Chapter 11 protection (Bankr. D. Ariz. Case No. 09-09488) on May 5, 2009. The Debtors are represented by Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey, LLP, in Phoenix, and estimate their assets and liabilities are between $100 million and $500 million. In November 2009, Judge Redfield T. Baum approved the sale of the Phoenix Coyotes to the National Hockey League, which had bought the team to quash a plan by bidder Jim Balsillie's to move the team to Ontario, Canada. Coyotes was sent to Chapter 11 to effectuate a sale by owner Jerry Moyes to Mr. Balsillie. The city of Glendale, Ariz., is seeking to convert the Coyotes' Chapter 11 case to a Chapter 7, echoing the Debtors and unsecured creditors' belief that the city is trying to wriggle out of having its bankruptcy claim estimated. The team's former owners have filed a Chapter 11 plan of liquidation, to rebuff the Chapter 7 conversion bid. CYFRED: Files for Bankruptcy After Superior Court Seized Property ---------------------------------------------------------------- Kevin Kerrigan at Pacific News Center reports that Cyfred Ltd. filed for Chapter 11 bankruptcy in federal court after the superior court of Guam seized the Company's 85 lots, which is set to be auctioned off in an attempt to pay residents of the Gill Baza subdivision. Ms. Kerrigan says the plaintiff's representative said the company tried to delay and evade the execution sale. Based in Guam, Cyfred Ltd. is a real estate developer. COMMERCECONNECT: Names Former Journal Communications CEO as CFO --------------------------------------------------------------- According to the Business Journal of Milwauke, Paul Bonaiuto was named chief financial officer of Cygnus Business Media Inc. Mr. Bonaiuto is the former executive vice president and chief financial officer of Journal Communications Inc. Based in Fort Atkinson, Wisconsin, CommerceConnect Media Holdings Inc. operates an advertising and marketing business. The Company and three of its affiliates -- including Cygnus Business Media Inc. -- filed for Chapter 11 protection on Aug. 3, 2009 (Bankr. D. Del. Lead Case No. 09-12765). Richards, Layton & Finger P.A. and Curtis, Mallet-Prevost, Colt & Mosle LLP represent the Debtor in their restructuring efforts. When the Debtors filed for protection from their creditors, they both listed assets and debts between $100 million and $500 million. DECODE GENETICS: DIP Agreement With Saga Approved ------------------------------------------------- A bankruptcy judge has approved deCODE Genetics Inc.'s $11 million debtor-in-possession financing agreement with stalking horse bidder Saga Investments LLC over the objections of unsecured creditors who said the agreement was self-serving and attempted to block them from involvement, Law360 reports. deCODE genetics, Inc., has sought the approval of the U.S. Bankruptcy Court for the District of Delaware to convene an auction where Saga would be lead bidder for its most valuable assets, including equity interests of its subsidiary ehf and other assets related to the operations of ehf and its wholly-owned Icelandic subsidiary including compounds DG041, DG051, and DG071. Under a stalking horse agreement, the stalking horse bidder Saga - - a Delaware limited liability company formed by Polaris Venture Partners and ARCH Venture Partners to acquire ehf and assts of the Debtor related to Icelandic operations -- will (i) pay to the Debtor the Base Cash Price, which will be the greater of the $11 million or the Loan Amount; (ii) pay to the Debtor the Additional Cash Price, which consists of 25% of the net cash proceeds from the sale, license, or other monetization of the Purchased Compounds received within 24 months after the Closing ate minus $3 million; and (iii) will convey to the Debtor the Non- Cash Price, which is non-voting junior convertible, non-redeemable preferred membership interests in the Stalking Horse Bidder with a non-participating liquidation preference of $7,153,845 in the aggregate. The Debtor is seeking that a deadline for the submission of bids be set for December 17, 2009, at 5:00 p.m., and that the auction be held on December 21, 2009, at 10:00 a.m. The Debtor is also asking that the sale hearing be scheduled for December 22, 2009. The Debtor also proposes a December 15, 2009 deadline for objecting to approval of the proposed sale. About deCODE Genetics deCODE Genetics Inc. is a global leader in analysing and understanding the human genome. deCODE has identified key variations in the sequence of the genome conferring increased risk of major public health challenges from cardiovascular disease to cancer, and employs its gene discovery engine to develop DNA-based tests to assess individual risk of common diseases; to license its tests and intellectual property to partners; and to provide comprehensive, leading- edge contract services to companies and research institutions around the globe. The Company was founded in 1996 and is headquartered in Reykjavik, Iceland. deCODE's balance sheet at June 30, 2009, showed total assets of US$69.85 million and total liabilities of US$313.92 million, resulting in a stockholders' deficit of US$244.07 million. The Company filed for Chapter 11 on November 16, 2009 (Bankr. D. Del. Case No. 09-14063). The petition listed assets of US$69.9 million against debt of US$314 million. Liabilities include US$230 million on 3.5 percent senior convertible notes. DELTA AIR: Amends List of Unsecured Priority Claimants ------------------------------------------------------ Delta Air Lines, Inc.'s Chief Financial Officer Samuel H. Halter, Jr. filed with the Court an amended schedule of the Debtor's creditors holding unsecured non-priority claims. The Amended Schedule reflects that these three claimants have been deleted from the List: Claimant Claim Amount -------- ------------ Employee ID# 017573601 $299,740 Office of Financial Management 18,252 Unclaimed Property Unit 810 First Street, NE Washington, D.C. 20002 Contributions, Donations 7,000 EDU INC 2625 Piedmont Road Ste 56315 Atlanta, GA 30324 The aggregate amount of unsecured non-priority claims is $8,574,738,314, according to Mr. Halter. About Delta Air Lines With its acquisition of Northwest Airlines, Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- became the world's largest airline following merger with Northwest Airlines in 2008. From its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its Northwest subsidiary and Delta Connection carriers offer service to more than 376 destinations worldwide in 66 countries and serves more than 170 million passengers each year. The merger closed on October 29, 2008. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines has $44,853,000,000 in assets against total debts of $43,953,000,000 in debts as of Sept. 30, 2009. For the third quarter ended Sept. 30, 2009, Delta Air Lines reported a net loss of $161 million, which reflect significant weakness in the airline revenue environment due to the global recession. Delta Air Lines and Northwest Airlines carry a 'B/Negative/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's. DELTA AIR: Inks $688MM Pass-Through Trust Pact with Underwriters ---------------------------------------------------------------- In a regulatory filing with the United States Securities and Exchange Commission dated November 24, 2009, Delta Air Lines, Inc., said that on November 18, it entered into an underwriting agreement with Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated in connection with the issuance and sale of a total of $688,740,000 of Delta Pass Through Certificates, Series 2009- 1. The Certificates are being offered pursuant to the Prospectus, dated November 18, 2009, which forms a part of the Company's automatic shelf registration statement, filed with the SEC, Delta Senior Vice President and Chief Financial Officer Hank Halter, disclosed. The Underwriting Agreement contains customary representations, warranties, covenants and closing conditions, as well as provisions pursuant to which the Company agrees to hold harmless and indemnify the Underwriters against damages under certain circumstances. Delivery of the Certificates was made under the Underwriting Agreement on November 24, 2009, in two different series, comprised of (i) $568,796,000 of Class A Certificates with an interest rate of 7.75% per annum and (ii) $119,944,000 of Class B Certificates with an interest rate of 9.75% per annum. According to Mr. Halter, each class of Certificates was issued by a different pass through trust. The Underwriters purchased the Certificates from the pass through trusts at 100% of the principal amount. The pass through trusts will use the proceeds from the sale of Certificates to acquire equipment notes from the Company. The equipment notes will be secured by 27 Boeing aircraft owned by the Company. Payments on the equipment notes held in each Pass Through Trust will be passed through to the certificate holders of the Trust. The Company expects to use the proceeds from the issuance of the equipment notes to refinance 22 aircraft currently supporting its outstanding 2000-1 EETC after the final maturity in November 2010 and to prepay its obligations under financings for five aircraft delivered in 2009. The Company will use any proceeds not used in connection with the prepayment or refinancing to pay fees and expenses related to the offering and for general corporate purposes, Mr. Halter added. Separately, on November 24, 2009, Delta, U.S. Bank Trust National Association, as Subordination Agent and Pass Through Trustee under two pass through trusts newly formed by the Company, U.S. Bank National Association, as Escrow Agent under the certain escrow agreements, and U.S. Bank Trust National Association as Paying Agent under the Escrow Agreements, entered into a Note Purchase Agreement. The Note Purchase Agreement provides for future issuance by the Company of equipment notes in the aggregate principal amount of $688,740,000 secured by the 2000-1 Aircraft, which were delivered new to the Company in 1999 and 2000, and the 2009 Aircraft, which were delivered new to the Company in 2009. Pursuant to the Note Purchase Agreement, the Trustee will purchase the Equipment Notes by December 31, 2010, with respect to the 2000-1 Aircraft and within 90 days of the date of the execution of the Note Purchase Agreement. The Equipment Notes will be issued under an Indenture and Security Agreement with respect to each Aircraft to be entered into by the Company and U.S. Bank Trust National Association, as Loan Trustee. Each Indenture contemplates the issuance of Equipment Notes in two series: -- Series A, bearing interest at the rate of 7.75% per annum in the aggregate principal amount equal to $568,796,000; and -- and Series B, bearing interest at the rate of 9.75% per annum in the aggregate principal amount equal to $119,944,000. The Equipment Notes will be purchased by the Trustee, using the proceeds from the sale of the Certificates. Pending the purchase of the Equipment Notes, the proceeds from the sale of the Certificates of each Class were placed in escrow by the Trustee pursuant to an Escrow and Paying Agent Agreement, dated as of November 24, 2009, among U.S. Bank, Goldman and Morgan Stanley, and the Trustee corresponding to the Class. The escrowed funds were deposited with the Bank of New York Mellon, under a Deposit Agreement corresponding to each Class of Certificates. The interest on the Escrowed Funds is payable on June 17, 2010, and interest on the Equipment Notes is payable semiannually on each June 17 and December 17 beginning on June 17, 2010. The principal payments on the Equipment Notes are scheduled on June 17 and December 17 of certain years, beginning on June 17, 2010. The final payments will be due on December 17, 2019, in the case of the Series A Equipment Notes, and December 17, 2016, in the case of the Series B Equipment Notes. Maturity of the Equipment Notes may be accelerated upon the occurrence of certain events of default, including failure by the Company to make payments under the applicable Indenture when due or to comply with certain covenants, as well as certain bankruptcy events involving the Company, Mr. Halter told the SEC. A full-text copy of Delta's 8K filing with the SEC is available for free at http://ResearchArchives.com/t/s?4b87 About Delta Air Lines With its acquisition of Northwest Airlines, Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- became the world's largest airline following merger with Northwest Airlines in 2008. From its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its Northwest subsidiary and Delta Connection carriers offer service to more than 376 destinations worldwide in 66 countries and serves more than 170 million passengers each year. The merger closed on October 29, 2008. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines has $44,853,000,000 in assets against total debts of $43,953,000,000 in debts as of Sept. 30, 2009. For the third quarter ended Sept. 30, 2009, Delta Air Lines reported a net loss of $161 million, which reflect significant weakness in the airline revenue environment due to the global recession. Delta Air Lines and Northwest Airlines carry a 'B/Negative/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's. DELTA AIR: Reiterates Opposition to Union Voting Change ------------------------------------------------------- Delta Air Lines Inc. criticized the U.S. National Mediation Board for "[abandoning] any semblance of neutrality" by proposing a rule change that would ease worker unionizing, Freep.com reported on December 8, 2009. At a December 8 NMB hearing in Washington, Delta stepped up its opposition to the Board's proposal, which calls for adjusted election procedures in union representation voting proposed in November 2008 by the American Federation of Labor and Congress of Industrial Organizations. Delta indicated that they would outline "substantial legal objections," to the proposal, the report added. The proposed modifications -- which would replace a system requiring support of most employees in a class, not just those who cast ballots -- may cause an essential change in Delta's election scenario. If made final after a 60-day comment period, the proposed rule change may affect airlines with large work groups that haven't been organized, including Delta, Freep.com added. Unions: Adjusted Voting System will be Fairer Edward Wytkind, president of the AFL-CIO's transportation trades department said that "the current voting procedures are undemocratic . . . [because] by counting nonvoting employees as no votes, they encourage employers to wage voter-suppression campaigns," Freep.com noted. Employees might not vote for "any number" of reasons, so the absence of an employee's ballot shouldn't be counted as opposition, said Joel Parker of the Transportation Communications International Union. Meanwhile, Robert Siegel, a lawyer for the Air Transport Association airline trade group in Washington, slammed the proposed change because it means that a union may be elected to represent a group of employees without majority support of all class members, which counters a 75-year practice in vote tallying. "There has been no relevant change in circumstances that would warrant such a radical departure from longstanding practice," Mr. Siegel said during the meeting, according to the report. Delta Declines AFA-CWA Election under Proposed Rules Delta declined the request of the Association of Flight Attendants-CWA for an immediate union representation election for over 21,000 Delta-Northwest flight attendants under the proposed new rules, the Atlanta Journal-Constitution reported on December 4, 2009. As previously reported, the Delta AFA-CWA Campaign Coordinating Committee offered that if management recognized the official results of a yes/no type ballot, then AFA-CWA would file for an election immediately. "We believe that the law should be applied even-handedly and that the flight attendant election should take place under the existing majority voting rules," Delta executive vice president of labor relations Michael Campbell said in a letter to AFA-CWA, according to AJC. About Delta Air Lines With its acquisition of Northwest Airlines, Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- became the world's largest airline following merger with Northwest Airlines in 2008. From its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its Northwest subsidiary and Delta Connection carriers offer service to more than 376 destinations worldwide in 66 countries and serves more than 170 million passengers each year. The merger closed on October 29, 2008. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines has $44,853,000,000 in assets against total debts of $43,953,000,000 in debts as of Sept. 30, 2009. For the third quarter ended Sept. 30, 2009, Delta Air Lines reported a net loss of $161 million, which reflect significant weakness in the airline revenue environment due to the global recession. Delta Air Lines and Northwest Airlines carry a 'B/Negative/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's. DELTA PETROLEUM: S&P Raises Ratings on Senior Notes to 'CCC' ------------------------------------------------------------ Standard & Poor's Ratings Services raised its issue-level rating on Delta Petroleum Corp.'s (CCC/Developing/--) senior unsecured notes to 'CCC' (the same as the corporate credit rating on the company) from 'CC'. At the same time, Standard & Poor's revised the recovery rating on this debt to '4' from '6'. A recovery rating of '4' indicates expectations of average recovery (30%-50%) in the event of payment default. "The rating action follows a recent decline in the size of the asset-based lending facility and updated information on reserves," said Standard & Poor's credit analyst Marc Bromberg. The exploration and production company has a $185 million ABL, which S&P does not rate. The corporate credit rating on Delta is 'CCC'. The outlook is developing. Rating List Delta Petroleum Corp. Corporate Credit Rating CCC/Developing/-- Rating Raised; Recovery Rating Revised Delta Petroleum Corp. Senior Unsecured Notes CCC CC Recovery Rating 4 6 DENNIS S SPIELBAUER: Wants Continued Access to Property Rentals --------------------------------------------------------------- Dennis S. Spielbauer asks the U.S. Bankruptcy Court for the Northern District of California for authorization to continue to use cash collateral on these properties, which some are pending close of escrow: a. 167 East William Street, San Jose, California b. 292 Tradewinds Drive, No. 3 San Jose, California (HOA payment only) c. 424 N. 8th Street, San Jose, California d. 484 - 486 South 5th Street, San Jose, California (insurance payment only) e. 499 South 5th Street, San Jose, California f. 511 - 513 B Street, Roseville, California g. 5209 Cribari Hills, San Jose, California (HOA payment only) h. 721 S. 10th Street, San Jose, California The Debtor's interim use of cash collateral expired on Dec. 9, 2009. The Debtor relates that as of March 10, 2009, it held deed of trust to 22 pieces of properties used as rentals. The Debtor adds that several properties had been foreclosed upon, while some had closed escrows. The Debtor adds that some creditors contented to the use of cash collateral, while the others objected to it. The Debtor will use the cash collateral to fund the daily operations of its properties. About Dennis S. Spielbauer Headquartered in San Jose, California, Dennis S. Spielbauer dba Royal Pacific Properties, Golden Gate Financial Management filed for Chapter 11 protection on March 10, 2009 (Bankr. N.D. Calif. Case No. 09-51654). David A. Boone, Esq., at the Law Offices of David A. Boone, represents the Debtor. When the Debtor filed for protection from its creditors, he listed between $10 million and $50 million each in assets of and debts. DIGITAL ANGEL: Receives Non-Compliance Notice From Nasdaq --------------------------------------------------------- Digital Angel disclosed that on December 10, 2009, it received notice from The Nasdaq Stock Market that the minimum bid price of the Company's common stock closed below $1.00 per share for 30 consecutive business days and that Digital Angel was therefore not in compliance with Nasdaq's listing rules (Rule 5550(a)(2)). In accordance with the rules, Digital Angel has 180 calendar days, or until June 8, 2010, to regain compliance. If at any time before that date the bid price of the Company's common stock closes at $1.00 per share or more for at least 10 consecutive business days, Nasdaq will provide written notification that the Company complies with the rules (Rule 5810(c)(3)(A)). If compliance is not achieved by June 8, 2010, Digital Angel will be eligible for an additional compliance period of 180 days provided that it meets The Nasdaq Capital Market initial listing criteria (Rule 5505), with the exception of the bid price requirement. If the Company is not eligible for an additional compliance period, Nasdaq will provide written notification that the Company's securities will be delisted. At that time, Digital Angel may appeal Nasdaq's determination that the Company's common stock will be delisted from The Nasdaq Capital Market. About Digital Angel Digital Angel -- http://www.digitalangel.com/-- is an advanced technology company in the field of animal identification and emergency identification solutions. Digital Angel's products are utilized around the world in such applications as pet identification using its patented, FDA-approved implantable microchip; livestock identification and tracking using visual and radio frequency identification (RFID) ear tags; and global positioning systems (GPS) search and rescue beacons for use on aircraft, ships and boats, and by adventure enthusiasts. DOLLAR FINANCIAL: Moody's Affirms 'B2' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed the Corporate Family Rating of Dollar Financial Group at B2. Moody's also upgraded the senior secured debt rating to B1 from B2. Finally, Moody's assigned a rating of B2 to the $600 million senior unsecured debt issue of Dollar's indirect wholly-owned Canadian subsidiary, National Money Mart Company (versus Moody's previously noted expectation that it would assign a rating of Caa1 to the issue). The outlook on all ratings is stable. The rating action follows Dollar's announcement of December 11, 2009 that it had upsized the senior unsecured debt offering of National Money Mart Company to $600 million from $350 million. Dollar stated that it intends to use a portion of the net proceeds of the offering to finance the previously announced acquisition of Military Financial Services, LLC, and to prepay approximately $350 million of outstanding borrowings under the term loan portion of its senior secured credit facility. The remainder of the proceeds will be utilized for general corporate purposes. Moody's rating actions are contingent upon Dollar applying the proceeds of the senior unsecured offering as stated in its December 11, 2009 announcement. The rating actions reflect the substantial shift in proportions of secured debt and unsecured debt in Dollar's capital structure. With the upsizing of the senior unsecured bond offering and the concurrent payoff of all but $20 million of the company's $370 million senior secured term loan facility, unsecured debt will comprise 86% of the company's total debt, with senior secured debt comprising the remaining 14% (assumes full utilization of the U.S. dollar equivalent $100 million senior secured revolving credit facility and U.S. dollar equivalent $10 million U.K. overdraft facility). This shift in proportions to a larger amount of senior unsecured debt enhances the recovery prospects for all debt holders, therefore justifying the upward rating adjustments. Moody's last rating action on Dollar was on December 1, 2009, when Moody's affirmed the CFR and senior secured credit facilities ratings at B2; announced that Moody's expected to assign a Caa1 rating to the planned senior unsecured note issue; and assigned a stable outlook. Dollar is a wholly-owned subsidiary of Dollar Financial Corp. (ticker symbol DLLR), a leading international financial services company serving under-banked consumers. Dollar, based in Berwyn, PA, reported total assets of $956 million at September 30, 2009. D.R. HORTON: Fitch Sees Light at End of Tunnel for Homebuilders --------------------------------------------------------------- With various macroeconomic housing and related statistics bottoming about mid-year 2009 and subsequently moving forward in fits and starts, a four-year downturn has evidently come to an end for U.S. homebuilders, according to Fitch Ratings in its outlook report for the sector. While Fitch maintains a Negative Outlook for U.S. homebuilding in 2010, the expected conclusion of the national housing credit has positively influenced housing data over the last few months. Pending home sales, existing home sales, single family housing starts and single family new home sales have been generally showing improvement after bottoming out earlier this year. The same holds true for new home inventories, home pricing and consumer and builder sentiment. Importantly, the U.S. economy apparently moved from recession to expansion in third quarter-2009 (3Q'09). However, challenges remain, especially the expected upcoming surge in delinquencies and foreclosures for both Alt-A and option adjustable-rate mortgages. Fitch raised its forecasts for starts and new home sales earlier this year, the first positive adjustments in these metrics in over three years. Nevertheless, Fitch anticipates that the early stages of this expansion may be more muted than the average. During the first 12-15 months off the bottom, the recovery may appear jaw-toothed as substantial foreclosures now in the pipeline present as distressed sales, and as meaningful new foreclosures arise from Alt-A and option ARM resets. High unemployment rates and the probable tightening of certain FHA loan standards (higher minimum credit scores for new borrowers and greater upfront cash requirements) will be notable headwinds early in the upcycle. "The continuation and expansion of the national housing credit should partially help offset expected seasonal declines during the winter months through the spring of 2010," said Managing Director and lead U.S. homebuilding analyst Robert Curran. "The federal government's continuing efforts to moderate foreclosures may also show some success in 2010." Despite having fewer competitors, public builders will continue to be challenged and need to maintain tight controls over costs and expenses during 2010. Ratings Rationale: Housing continues to be weak. Fitch expects that the public builders by and large to typically stabilize their aggregate land positions over the next 6-to-12 months or selectively add to owned, developed lot holdings. The still irregular flow of appropriately priced land from banks and others tends to support this conclusion. "With operational and financial pressures moderating to some extent, most public homebuilders have to operate successfully within this still challenging environment or wither away," said Curran. Companies have to at least maintain current cost profiles or continue to downsize to the point where they can remain/be profitable (excluding nonrecurring real estate charges). That means possible further moderate cuts in staffing and other overhead, as well as other cost reductions. The builders' gross profit margins and selling, general, and administrative expense/sales ratios will confirm the success of their efforts. The public homebuilders cannot significantly influence revenue trends and profitability at present, but they can manage their balance sheets and their liquidity. In a period when liquidity is still an issue for all U.S. companies, Fitch believes that, overall, the U.S. homebuilding sector has adequate liquidity. However, some weaker companies face greater liquidity risk. Many companies in this sector have generated meaningful free cash flows over the past 12 months while terming out borrowings, and for some maintaining access to committed bank facilities, which together provide room to handle maturities and fund working capital needs over the next year and beyond. Admittedly, most facilities have been substantially slimmed down as builders sought covenant relief in amendments. For certain builders, cash flow has been enhanced by relatively recent debt offerings, large land sales, tax refunds, and even some public equity offerings (e.g. Meritage Homes Corp.; Hovnanian Enterprises, Inc.; Lennar Corp.; M/I Homes, Inc.) or other external cash infusions (Standard Pacific Corp.). Recently passed legislation that extends the net operating losses carryback to offset taxable profits from the previous five years will result in meaningful tax refunds for most public homebuilders early in 2010 further enhancing liquidity and tangible net worth. Compared with the last major housing downturn in the latter 1980s into the early 1990s, leverage was lower during the later part of this past upcycle and at the peak. Fitch notes that during the past two years primarily non-cash charges against tangible net worth have raised debt/capital ratios. For the majority of public homebuilders, debt composition 15-to-20 years ago was mostly, or all, short-term construction loans and possibly a secured credit line. By contrast, the debt often is weighted most heavily to well-laddered public debt (a more appropriate balance with longer lived real estate assets), and, to a lesser degree, to an unsecured revolving credit facility. All the public homebuilders in Fitch's coverage that have revolving credit facilities have unsecured facilities, except for Beazer Homes U.S.A Inc., M/I Homes and Standard Pacific, which have secured or partially secured revolving credit facilities. D.R. Horton, Inc., Ryland Group, Inc., Meritage and Hovnanian recently terminated their revolving credit facilities. Beazer and Standard Pacific have sharply lowered the size of their credit facilities. Fitch will continue to assess each homebuilder's approach and performance relating to land and development spending, balance sheet (inventory) contraction, FCF generation, and debt reduction when considering its ratings, as well as builders' credit metrics, liquidity, size, geographic and product diversification, margins, and the frequency and the size of real estate writedowns and option writeoffs. Despite the Negative Outlook for the sector, continued progress in industry and company metrics could prompt a reassessment and possible revision of some of the U.S. homebuilder Rating Outlooks. 2009 and 2010: Some of the key drivers of the downturn remain in place although the worldwide and U.S. recovery have begun. Notably, U.S. households are deleveraging and retrenching at a rapid pace, in response to significant job losses, ongoing declines in certain asset prices, and tight credit conditions. In combination with sharp cutbacks in corporate spending and ongoing declines in residential investment, Fitch forecasts U.S. GDP to fall by 2.5% this year, and unemployment to possibly touch 10.3% in 2010. With unemployment still rising, consumer confidence at low levels and household wealth until recently still being affected by real estate and equity price declines, there seems limited prospect that the deleveraging process will end in the near term. Fitch's forecasted 1% decline in consumer spending in 2009 implies a further increase in the saving ratio. Fitch expects the economy to return to positive growth next year, primarily reflecting the impact of the fiscal stimulus package, but also some likely stabilization in housing investment and a weakening inventory overhang. The CBO predicts federal government spending grew by 34% in nominal terms in fiscal 2009 (ending September), which should have an important subsequent multiplier effect on wider spending. Lower household tax rates should also help ease the pace at which consumers deleverage through cutting expenditures, while lower commodity prices will also support consumers' real income. However, while the forecast assumes that policy measures aimed at stabilizing the financial sector gain traction, ongoing household deleveraging will weigh on private sector demand, keeping GDP growth in 2010 well below potential. Rates on 30-year fixed mortgages averaged 6.03% in 2008, off 31 basis points (bps) from the 6.41% in 2006 (and 6.34% in 2007). Fitch expects rates to decline as much as 90-100 bps for all of 2009 as the Fed continues to execute its plan to buy mortgage securities and the economy struggles. Fitch's initial outlook for the housing sector in 2009 started quite bearish due to the influence of a softening economy, even tighter credit standards for homebuyers and the effect of late 2008 disruptions in the credit markets. However, by mid-year the outlook brightened, prompting lesser forecast declines for a number of housing metrics. Fitch most recently forecast a contracting economy during first half-2009, with a mild recovery beginning in 3Q'09 and continuing through 2010. Real GDP is forecast to decrease 2.5% for all of 2009. Investment is expected to plunge 17.6%, with consumer spending to fall 1%, exports to drop 11.6% and imports to see a 16.6% decline. Government spending (up 5.1%) was the economic positive in 2009. Inflation is expected to be a negative 0.2%, compared with a positive 3.8% in 2008. As noted earlier, interest rates are expected to meaningfully recede. An economy in the midst of a severe recession has been another blow to housing. In particular, a deteriorating economy further eroded consumer confidence and accelerated job losses, and consequently, foreclosures. The MBA and John Burns Real Estate Consulting forecast 2.76 million annual foreclosure starts in 2009, up from 2.27 million in 2008, and project 2.94 million foreclosure starts in 2010. The Center for Responsible Lending forecasts 2.43 million foreclosures in 2009 and 8.1 million foreclosures over the next four years. Various programs from Washington are designed to stimulate the economy, stem foreclosures, and improve housing demand. However, these actions are unlikely to stabilize and then boost housing demand until later in 2010 or beyond. In 2009, total housing starts are projected to fall 41.1% to 530,000 with single-family volume declining 30.6% to 430,000. New home sales are forecast to decrease 23.1% to 373,000, while existing home sales are flat at 4.91 million. Average and median single-family new home prices are projected to fall 8.7% and 8.6%, respectively, in 2009. Fitch is forecasting a stronger economy in 2010, although still noticeably below the historical trend line. Real GDP is projected to grow 1.8%. Consumer spending and government spending are forecast to expand 0.3% and 10.8%, respectively. Investment should fall 4.9%, while inflation is expected to be about 0.8%. Total and single-family housing starts are forecast to grow 15.1% and 18.6%, respectively, in 2010. New home sales should expand approximately 20%. Existing home sales should increase about 7.5%. New home prices could average 2%-to-3% higher in 2010. Implications for the Companies and the Ratings: For the full year of 2009, homebuilders' revenues could drop 42% on average. For those builders who are profitable, EBITDA before real estate charges could fall approximately 55%. Current credit metrics (LTM EBITDA/interest incurred, debt to LTM EBITDA, and FFO interest coverage) are considerably lower than at 3Q'08 end and that will also be the case at calendar year-end 2009. Debt/capitalization ratios have deteriorated for the majority of builders over the past three years, largely as a result of erosion in TNW from sizeable real estate charges and FAS 109 adjustments. Although some builders have been more proactive than others in reducing inventories and lowering debt levels, most, in retrospect, started relatively late during this cyclical downturn. For most, inventories and debt are now meaningfully lower than at their peaks: owned inventories down 64.5% from the peak; debt down 35.5% from the peak. Given Fitch's macroeconomic forecast for 2010, public builders are likely to experience a mild recovery next year. On average, revenues should expand low double digit despite lower home prices due to a mix shift to smaller, often entry level homes. Gross margins should improve 150-200 basis points reflecting earlier real estate charges and lesser selling incentives. With higher volume the typical SG&A expense/sales ratio may diminish. As a consequence, most public builders should report modest profits on an EBITDA and pretax basis in 2010. That being said, Fitch still expects modest to moderate land value write downs in 2010. Excluding tax refunds, average CFFO is likely to be lower in 2009 relative to 2008 and to be neutral to modestly negative in 2010. On average, credit metrics, particularly profit related metrics (LTM EBITDA/interest coverage, debt to LTM EBITDA), should stabilize and then start to improve later in 2010. Tangible net worth should grow. Debt leverage should at least modestly improve. Since credit pressures will persist, at least in the intermediate term, it will be imperative that builders continue to manage their balance sheets, selectively reducing or stabilizing land and development spending, with the exception of markets where lot positions dip below minimum acceptable levels and land (preferably rolling option, developed lots) is available on a sharply discounted price basis. Fitch expects homebuilders to reduce debt where possible and to exercise restraint as to share repurchases, dividends, and company acquisitions in these still uncertain times. Builders should be cautious about reacting prematurely to a market bottom and early- stage recovery with overly aggressive real estate purchases. Fitch rates the builders within the context of a typical cycle. In the midst of a non-typical upcycle, as took place in the 1992- 2005 period, a number of builders realized higher credit ratings. Conversely, due to this sharper than expected contraction, which has lasted longer than the norm, and as builders' operating and credit metrics have been even more stressed, ratings have been lowered. While the possibility remains for a few additional company downgrades, the likelihood of such action has diminished. Continued progress in industry and company metrics could prompt a positive revision of a number of Rating Outlooks. This is a list of Fitch rated U.S. homebuilders and their current Issuer Default Ratings and Rating Outlooks: -- Beazer Homes USA ('CCC'; Outlook Negative); -- D.R. Horton, Inc. ('BB'; Outlook Negative); -- Hovnanian Enterprises, Inc. ('CCC'; Outlook Negative); -- KB Home ('BB-'; Outlook Negative); -- Lennar Corp. ('BB+'; Outlook Negative); -- M.D.C. Holdings, Inc. ('BBB-'; Outlook Stable); -- Meritage Homes Corp. ('B+'; Outlook Negative); -- M/I Homes, Inc. ('B'; Outlook Negative); -- NVR, Inc. ('BBB'; Outlook Stable); -- Pulte Homes ('BB+'; Outlook Negative); -- Ryland Group ('BB'; Outlook Negative); -- Standard Pacific Corp. ('CCC'; Outlook Negative); -- Toll Brothers, Inc. ('BBB-'; Outlook Stable). DURA AUTOMOTIVE: Patriarch Partners Acquires Majority Interest -------------------------------------------------------------- Affiliates of Patriarch Partners, LLC, on Friday said they have entered into an agreement to recapitalize and acquire a majority interest in DURA Automotive Systems, Inc. Under the agreement, Patriarch will invest up to US$125 million of capital and will take a controlling stake in DURA. This transaction completes the transformation of DURA, a company that emerged from Chapter 11 bankruptcy protection in June, 2008, into an automotive supplier with a strong balance sheet, industry- leading intellectual property and a broad low-cost global presence. The transaction is subject to customary closing conditions, including German regulatory approval. At the same time, Patriarch is also announcing its intention to pursue an integration of Global Automotive Systems, another Patriarch-affiliated company, with DURA. GAS has a broad range of metal-forming, welding and assembly capabilities, with material expertise ranging from aluminum and low-carbon steel to ultra high-strength steel. That expertise would provide DURA with a North American-based manufacturing footprint for expanding its Structure & Safety Systems product lines, which include door structures, parking brakes and other components. The combined companies would operate under the DURA brand name. "Patriarch is committed to the preservation of jobs and the strengthening of industry through the confluence of manufacturing and technology. This investment exemplifies that strategy," said Lynn Tilton, CEO of Patriarch Partners. "The strategic investment in DURA and subsequent integration with Global Automotive Systems significantly enhances DURA's capabilities in North America and creates a robust global supplier with the depth and breadth that will offer rich benefits to DURA's customers and other stakeholders." "Over the last 15 months DURA has accomplished a comprehensive business restructuring and is now financially poised for growth," said Timothy D. Leuliette, chairman, president and CEO of DURA. "That operational restructuring made our company more globally competitive and is a testament to the commitment and skills of our employees. "That hard work drew Patriarch's interest in DURA, and we are pleased that they recognized the untapped value in our company. We are very excited about this transaction and about the integration of GAS and DURA. These transactions will make DURA one of the least-leveraged suppliers in the auto industry, expand our North American footprint and give us greater access to capital. We look forward to a bright future together," Mr. Leuliette said. About Patriarch Patriarch Partners, LLC -- http://www.patriarchpartners.com/-- is a vertically-integrated private equity firm with robust in-house operational turn-around expertise. Founded in 2000, Patriarch was built upon a patented financial model designed to manage and monetize the distressed portfolios of financial institutions. Patriarch has since evolved into a global investment firm that concentrates on direct investments in and the transformation of complex businesses, building integrated industry platforms. Patriarch manages funds with over US$7 billion of equity and secured loan assets, with equity investments in more than 70 companies and controlling interests in approximately two-thirds of these. About DURA DURA Automotive Systems, Inc. -- http://www.DURAauto.com/-- is a independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. DURA markets its automotive products to every North American, Asian and European original equipment manufacturer (OEM) and to many leading Tier 1 automotive suppliers. DURA is headquartered in Rochester Hills, Mich. It had sales of US$1.75 billion in 2008 and has 9,800 employees in 33 manufacturing operations in 16 countries. The Debtors filed for chapter 11 petition on Oct. 30, 2006, (Bankr. D. Del. Case No. 06-11202). On April 3, 2008, the Court approved the Debtors' revised Disclosure Statement explaining their revised Chapter 11 plan of reorganization. On June 27, 2008, the Debtors emerged from Chapter 11 bankruptcy protection. ENRON CORP: Appeals Securities Settlement Decision -------------------------------------------------- Law360 reports that Enron Creditors Recovery Corp. is appealing a decision that had been hailed as a victory for investors who collect securities settlements from soon-to-be bankrupt companies. As reported by the TCR on Dec. 10, 2009, Judge Colleen McMahon of the U.S. District Court for the Southern District of New York reversed the decision of Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York relating to the appeal of Alfa, S.A.B. de C.V., and ING VP Balanced Portfolio, Inc., and ING VP Bond Portfolio, Inc., in the adversary proceeding Enron Creditors Recovery Corp. v. J.P. Morgan Securities, Inc. The appeal is issue is whether the "safe harbor" provision under Section 546(e) of the Bankruptcy Code, which bars avoidance of transfers that constitute "settlement payments" made in connection with transactions in securities, extends to transactions in which commercial paper is redeemed by the issuer prior to maturity, using the customary mechanism of the Depository Trust Company for trading in commercial paper, without regard to extrinsic facts about the nature of the redemption, the motive behind the redemption, or the circumstances under which the payments were made. Alfa and the ING Entities, supported by the Securities and Exchange Commission, take the position that prepayment of debt evidenced by commercial paper using the mechanism of the DTC, is a "transaction in securities." They further argue that every payment made to close out that transaction qualifies as a "settlement payment" as long as it is effected by a broker or financial institution, without regard to whether the underlying transaction was out of the ordinary from a commercial point of view. Enron takes the opposite position: that the prepayment of debt is not a "transaction in securities" because there was no "purchase or sale" of securities. For that reason, Enron argues, the payment used to effect the redemption and retirement of the debt securities does not qualify as a "settlement payment," no matter the role of the DTC or any broker or financial institution. Judge Gonzalez accepted Enron's argument. Judge McMahon reversed the holding of the Bankruptcy Court insofar as it limited the definition of settlement payment -- and restricted the availability of Section 546(e)'s safe harbor from avoidance -- to payments "commonly made" in the securities trade. Judge McMahon ruled that the "rule of the last antecedent" provides that a limiting clause or phase should ordinarily be read as modifying only the noun or phrase that it immediately follows. Judge McMahon pointed out that commercial paper is included in the definition of "security" under the Bankruptcy Code. Specifically, a security is defined, inter alia, as a "note," "stock," "treasury stock," "bond," "indenture," "collateral trust certificate," "pre- organization subscription or certificate," "transferable share," "voting-trust certificate," "certificate of deposit," or a "certificate of deposit for security." Enron, she noted, does not dispute that the short-term notes at issue fall within the Bankruptcy Code's definition of "securities." However, Enron, citing no authority, urged the District Court to discard the Bankruptcy Code's definition of "security" and instead apply the definition found in the Securities Exchange Act of 1934. Judge McMahon said courts interpreting Section 546(e)'s reach, however, have routinely rejected this argument and have applied the Bankruptcy Code's definition of security under Section 101(49) in deciding whether the safe harbor applied. Judge McMahon said she will do likewise. On the question whether the payments to Alfa and ING that Enron seeks to avoid are "settlement payments," the District Court concludes that because the redemption of the notes, as security, involved the "delivery and receipt of funds and securities, it qualifies as a "securities transaction" for safe harbor purposes, regardless of whether Enron, itself or through an agent, acquired title to the notes. Judge McMahon further ruled that the transfers of cash to the former noteholders and securities contemplated the consummation of a "securities transaction," and that alone qualifies the transfers as "settlement payments" for purposes of Section 546(e). She added that the transfers were made by and to "financial intermediaries" who are involved in the national clearance and settlement system -- namely JP Morgan and Chase IPA. Moreover, she pointed out that the Redemption implicated the participants in the system of intermediaries and guarantees that characterize the clearing and settlement process of public markets -- notably the DTC. Judge McMahon found that none of the authorities on which Enron relies suggest any persuasive reason why transfers made to consummate a "securities transaction" consisting of the redemption and retirement of debt instruments do not qualify as "settlement payments" for purposes of Section 546(e). For the reasons stated, the District Court reversed Judge Gonzalez's decision. The District Court remands to the Bankruptcy Court with instructions that summary judgment be entered in favor of Alfa and ING. A full-text copy of Judge McMahon's Opinion and Order is available for free at http://bankrupt.com/misc/enroningord.pdf About Enron Corp. Based in Houston, Texas, Enron Corporation filed for Chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Enron hired lawyers at Togut Segal & Segal LLP; Weil, Gotshal & Manges LLP, Venable; Cadwalader, Wickersham & Taft, LLP for its bankruptcy case. The Official Committee of Unsecured Creditors in the case tapped lawyers at Milbank, Tweed, Hadley & McCloy LLP. The Debtors filed their Chapter Plan and Disclosure Statement on July 11, 2003. On January 9, 2004, they filed their fifth Amended Plan and on the same day the Court approved the adequacy of the Disclosure Statement. On July 15, 2004, the Court confirmed the Debtors' Modified Fifth Amended Plan and that plan was declared effective on November 17, 2004. After the approval of the Plan, the new board of directors decided to change the name of Enron Corp. to Enron Creditors Recovery Corp. to reflect the current corporate purpose. ECRC's sole mission is to reorganize and liquidate certain of the operations and assets of the "pre-bankruptcy" Enron for the benefit of creditors. ECRC has been involved in the MegaClaims Litigation, an action against 11 major banks and financial institutions that ECRC believes contributed to Enron's collapse; the Commercial Paper Litigation, an action involving the recovery of payments made to commercial paper dealers; and the Equity Transactions Litigation, which ECRC filed against Lehman Brothers Holdings, Inc., UBS AG, Credit Suisse and Bear Stearns to recover payments made to the four banks on transactions involving Enron's stock while the company was insolvent. (Enron Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ECHO THERAPEUTICS: Posts $1.2 Million Net Loss in Q3 2009 --------------------------------------------------------- Echo Therapeutics, Inc., reported a net loss of $1.2 million for the three months ended September 30, 2009, compared with a net loss of $2.9 million for the same period of 2008. The Company signed two licensing agreements in May and June 2009, each of which required an up-front non-refundable license payment at the start of the license period of at least 10 years. The total up-front non-refundable license payments received in cash totaled $1.25 million. The Company is recognizing the upfront, nonrefundable payments as revenue on a straight-line basis over the Company's contractual or estimated performance period. Accordingly the Company determined that approximately $204,000 of the non-refundable license revenue was recognizable in the three months ended September 30, 2009. There was no licensing revenue or deferred revenue in the three months ended September 30, 2008. The Company also recorded other revenue of approximately $293,000 for the three months ended September 30, 2009, consisting of revenue recognized on reimbursed research and development services expenses (contract engineering services). There was no other revenue in the three months ended September 30, 2008. Interest expense was approximately $17,000 for the three months ended September 30, 2009, compared to interest expense of approximately $303,000 for the same period in 2008, a decrease of approximately $286,000. On September 30, 2008, the Company exchanged an aggregate principal amount of $2,077,886 of its Senior Convertible Notes, including notes for amounts related to interest expense, for 1,539,161 shares of Series A Preferred Stock and five-year warrants to purchase 153,912 shares of the Company's common stock at an exercise price of $1.00 per share. The Company recorded an extinguishment loss of $844,760 in connection with this exchange. The Company had no loss on extinguishment of debt during the third quarter of 2009. Nine Months Results The Company reported a net loss of $9.2 million on total revenues of $618,277 for the nine months ended September 30, 2009, compared with a net loss of $9.2 million on $-0- revenues for the same period last year. Balance Sheet At September 30, 2009, the Company's consolidated balance sheets showed $10.5 million in total assets, $5.5 million in total liabilities, and $5.0 million in total stockholders' equity. The Company's consolidated balance sheets at September 30, 2009, also showed strained liquidity with $602,419 in total current assets available to pay $5.1 million in total current liabilities. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?4bca Going Concern Doubt As of September 30, 2009, the Company had cash of $144,464, a working capital deficit of approximately $4.5 million and an accumulated deficit of approximately $65.7 million. Although the Company has been able to issue securities through senior promissory notes, secured promissory notes and a series of private placements to raise capital in order to fund its operations, it is not known whether the Company will be able to continue this practice, or be able to obtain other types of financing to meet its cash operating expenses. This, in turn, raises substantial doubt about the Company's ability to continue as a going concern. About Echo Therapeutics Based in Franklin, Mass., Echo Therapeutics, Inc. (OTC BB: ECTE) - - http://www.echotx.com/-- is a transdermal medical device and specialty pharmaceutical company developing a non-invasive (needle-free), wireless, transdermal continuous glucose monitoring system for people with diabetes and for use in hospital critical care units, as well as a wide range of topical reformulations of pharmaceutical products previously approved by the United States Food and Drug Administration. EDGE PETROLEUM: Mariner Energy to Purchase Operations ----------------------------------------------------- Mariner Energy, Inc. (NYSE: ME) announced that it has agreed to purchase the subsidiaries and operations of Edge Petroleum Corporation in a transaction valued at approximately $215 million after anticipated purchase price adjustments. Mariner expects the transaction to close by December 31, 2009, with an effective date of June 30, 2009. The transaction has been approved by the bankruptcy court in which Edge's Chapter 11 case is pending, subject to any appeals. Mariner will utilize its revolving credit facility to fund the acquisition. Transaction and asset highlights include: -- Edge reported year-end 2008 estimated proved reserves of 124 billion cubic feet of natural gas equivalent (Bcfe), all fully engineered by independent reservoir evaluation consultants, approximately 90% by Ryder Scott Company, L.P. Mariner estimates that at December 31, 2009, the properties include approximately 106 Bcfe in estimated proved reserves, 70% of which are developed (72% gas, 28% liquids). -- More than 80% of the reserves are located in South Texas, establishing a new core area for Mariner. Approximately 45% of the reserves are based in the Flores/Bloomberg field in Starr County. -- Third quarter 2009 daily production from the assets averaged approximately 29 million cubic feet of natural gas equivalent. -- The assets also include nearly 70,000 net undeveloped acres, primarily in Texas and New Mexico. -- Mariner structured the transaction to preserve certain tax attributes of the Edge subsidiaries, including the tax basis of the assets acquired and net operating losses. Mariner estimates the potential value of these tax attributes to be approximately $95 million. "Consistent with our stated strategy of expanding our onshore presence, the Edge transaction establishes a new core area for the company. Based on year-end 2008 results, the combination results in more than half of Mariner's proved reserves being onshore. The economic metrics of the transaction are compelling, potentially further enhanced by the preservation of the tax attributes. We expect the assets to generate excess cash flow while self-funding future development costs. We look forward to welcoming the Edge personnel to our company," said Scott D. Josey, Chairman, Chief Executive Officer and President of Mariner. About Mariner Energy, Inc. Mariner Energy -- http://www.mariner-energy.com/-- is an independent oil and gas exploration, development, and production company headquartered in Houston, Texas, with principal operations in the Permian Basin and the Gulf of Mexico deepwater and shelf. About Edge Petroleum Edge Petroleum Corporation (Nasdaq:EPEX) (Nasdaq:EPEXP) is a Houston-based independent energy company that focuses its exploration, production and marketing activities in selected onshore basins of the United States. At September 30, 2009, the Company had total assets of $247.5 million, total liabilities of $244.2 million, and a stockholders' deficit of $3.3 million. Edge Petroleum filed for Chapter 11 on October 2, 2009 (Bankr. S.D. Tex. Case No. 09-20644). The Company has retained Akin Gump Strauss Hauer and Feld as legal counsel, Jordan, Hyden, Womble, Culbreth & Holzer, P.C., as local counsel, and Parkman Whaling LLC as financial advisor. Kurtzman Carson Consultants LLC serves as claims and notice agent. ETELOS INC: September 30 Balance Sheet Upside-Down by $11.95 Mil. ----------------------------------------------------------------- Etelos, Inc.'s balance sheets at September 30, 2009, showed $1,221,000 in total assets and $13,167,000 in total liabilities, resulting in a $11,946,000 shareholders' deficit. At September 30, 2009, the Company's consolidated balance sheets also showed strained liquidity with $1,132,000 in total current assets available to pay $5,891,000 in total current liabilities. The Company reported a net loss of $1,200,000 on revenue of $5,000 for the three months ended September 30, 2009, compared with net income of $1,651,000 on revenue of $10,000 for the same period of 2008. The decrease in net income from 2008 to 2009 was primarily due to the $4,200,000 change in the mark to market valuation of derivative and warrant liabilities primarily due to the decrease in the Company's stock price at September 30, 2008, from June 30, 2008, offset by a loss on the cancellation of promissory notes in exchange for 10% Senior Secured Debentures on September 30, 2009, of $288,000, and a decrease in operating expenses of $1,234,000. The Company reported a net loss of $4,725,000 on revenue of $131,000 for the nine months ended September 30, 2009, compared with a net loss of $22,153,000 on revenue of $55,000 for the same period last year. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?4bcb Going Concern Doubt The Company has experienced net losses of $4,725,000 and $22,153,000 for the nine months ended September 30, 2009, and 2008, respectively, and has a total stockholders' deficit of $11,946,000 and $10,842,000, as of September 30, 2009, and December 31, 2008, respectively, all of which raise substantial doubt about its ability to continue as a going concern. About Etelos Inc. Based in Maple Valle, Wash., Etelos, Inc. (OTC BB: ETLO) -- http://www.Etelos.com/-- is the developer of a Web app distribution platform for delivering Web apps for businesses. Unlike other cloud computing and Platform-as-a-Service (PaaS) solutions, Etelos enables software manufacturers to migrate existing applications or to create new applications, then to package, distribute, host, bill, market and support their Software-as-a-Service (SaaS) enabled applications through a number of third-party branded application marketplaces, all based on the Etelos Platform Suite. EVERGREEN GAMING: Century Casinos to Acquire Silver Dollar ---------------------------------------------------------- Century Casinos, Inc. (Nasdaq: CNTY; Vienna Stock Exchange: CNTY) announced that the Company's Austrian subsidiary, Century Casinos Europe GmbH, has entered into a definitive agreement to acquire 100% of the outstanding common stock of Frank Sisson's Silver Dollar Ltd. and 100% of the outstanding common stock of EGC Properties Ltd, the owner and operator of Silver Dollar casino in Calgary, Alberta, Canada and the related land. The total consideration for the transaction is $10,650,000 (USD), plus/minus a working capital adjustment. The Silver Dollar is a 93,000 square-foot casino facility located on approximately seven acres of land in Calgary. The casino facility includes 504 slot machines, 16 table games, 15 video lottery terminals, two restaurants, a lounge, a 5,000 square foot showroom, an 18,000 square foot convention center and a 38-lane bowling alley. On April 15, 2009, Evergreen Gaming Corporation, the company that acquired the Silver Dollar in 2007, filed for protection from creditors under the Companies' Creditors Arrangement Act in Vancouver. On June 24, 2009, a receiver was appointed by the courts to manage the assets of FSSD and EGC. We believe its current performance is not indicative of its real potential. Century Casinos already owns and operates a casino in Alberta, Canada, namely the Century Casino & Hotel in Edmonton. That property generated net operating revenue of CAD 23,200,000 and Adjusted EBITDA* of CAD 8,000,000 for the trailing twelve months ending September 30, 2009. "We are excited about expanding in Alberta, Canada, by entering the Calgary gaming market with the addition of the Silver Dollar to Century's portfolio of casino hotels. Once we have made certain improvements at the property and refined its market position, we believe the Silver Dollar has the potential to substantially contribute to our overall performance", said the Company's Co CEOs Erwin Haitzmann and Peter Hoetzinger. The transaction is subject to customary closing conditions, including the receipt of necessary regulatory and governmental approvals. The transaction is expected to close in the first quarter 2010. The total purchase price will be paid out of the Company's cash on hand. About Century Casinos Century Casinos, Inc. is an international casino entertainment company that owns and operates the Womacks Casino & Hotel in Cripple Creek, Colorado, the Century Casino & Hotel in Central City, Colorado, and the Century Casino & Hotel in Edmonton, Canada. The Company also operates casinos aboard five luxury cruise vessels (Silver Cloud, Regatta, Insignia, Nautica, Mein Schiff). Through its Austrian subsidiary, Century Casinos Europe GmbH, the Company holds a 33.3% ownership interest in Casinos Poland Ltd., the owner and operator of seven full casinos and one slot casino in Poland. Century Casinos, Inc. continues to pursue other international projects in various stages of development. About Evergreen Gaming British Columbia-based Evergreen Gaming Corporation -- http://www.evergreengaming.com/-- and its affiliates own and operate 10 casinos in Washington State and a 100,000 square-foot casino in Calgary, Alberta. Deloitte & Touche Inc. filed a Chapter 15 petition for Evergreen Gaming and its affiliates on April 15, 2009 (Bankr. W.D. D.C. Case No. 09-13567). The Debtors has $1 million to $10 million in assets and $10 million to $50 million in debts. FAYETTEVILLE MARKETFAIR: Case Summary & Unsecured Creditors ----------------------------------------------------------- Debtor: Fayetteville Marketfair Investors, LLC 6100 SW 76th Street Miami, FL 33143 Bankruptcy Case No.: 09-10859 Chapter 9 Petition Date: December 14, 2009 Court: United States Bankruptcy Court Eastern District of North Carolina (Wilson) Judge: Randy D. Doub Debtor's Counsel: William P. Janvier, Esq. Everett Gaskins Hancock & Stevens, LLP PO Box 911 Raleigh, NC 27602 Tel: (919) 755-0025 Fax: (919) 755-0009 Email: bill@EGHS.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Stephan Johansson, the company's member. Debtor's List of 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ All American Heat & AC $438 Service Bass Air Conditioning $234 Berkowitz Dick Pollack & $19,767 Brant Cape Fear Commercial Lawn $5,105 Cape Finance, Inc. $13,650,000 PO Box 93330 ($0 secured) Chicago, IL 60673 Cape Finance, Inc. $5,881,695 PO Box 93330 ($0 secured) Chicago, IL 60673 Cape Finance, Inc. $515,746 PO Box 93330 ($0 secured) Chicago, IL 60673 Cape Finance, Inc. $257,040 PO Box 93330 ($0 secured) Chicago, IL 60673 Haire Plumbing $157 Image Supply $230 Infinity Fire Protections $9,721 It's Fashion $815 JDM Roofing $2,420 Joe Parker Electric $160 Norman Weider, Esq. $6,020 Orkin Pest Control $57 Securitas Security Svc $10,900 Stearns Weaver $6,859 Winstead Wilkinson $288 FIRSTFED FINANCIAL: Heimbuch Resigns; Giraldin Takes CEO Post ------------------------------------------------------------- Babette Heimbuch on December 9, 2009, tendered her resignation as Chief Executive Officer and as a member of the Board of Directors of FirstFed Financial Corp. and its wholly owned banking subsidiary, First Federal Bank of California, FSB, effective December 31, 2009. Ms. Heimbuch will cease serving as Chairman of the Board of Directors of the Company and the Bank effective immediately. Ms. Heimbuch's resignation did not result from any disagreement with the Company concerning any matter relating to the Company's operations, policies or practices. James Giraldin, who currently serves as President and Chief Operating Officer and as a member of the Board of Directors of the Company and the Bank, will become Chief Executive Officer and President, effective January 1, 2010. Mr. Giraldin, 57, has served as President and as a member of the Board of Directors of the Company and the Bank since April 2002, and as Chief Operating Officer of the Company and the Bank since 1997. Mr. Giraldin joined the Company and the Bank in 1992 as Executive Vice President and Chief Financial Officer. Prior to joining the Company and the Bank, Mr. Giraldin was Chief Executive Officer of Irvine City Bank for five years. He previously served as Chief Financial Officer for two other savings and loan associations and was a certified public accountant with KPMG LLP. Mr. Giraldin is on the Executive Board of the Boys and Girls Clubs of Santa Monica. About FirstFed Financial Corp. Los Angeles, California-based FirstFed Financial Corp. (OTC- FFED.PK) -- http:///www.firstfedca.com/-- is a savings and loan holding company. The Company owns and operates First Federal Bank of California, a federally chartered savings association. At September 30, 2009, the Company had $6,150,613,000 in total assets against $6,039,533,000 in total liabilities, resulting in stockholders' equity of $111,080,000. Going Concern "The ability of the Company and the Bank to continue to meet all of the requirements of the Amendments and the Orders will be affected by market conditions in the economy and other uncertainties. Declining real estate values and rising unemployment in the state of California could have a significant impact on future losses incurred on loans. In addition, there can be no assurance in the current economic environment that the Company will be able to raise capital to regain 'well capitalized' status or to meet future regulatory requirements. Due to these conditions and events, substantial doubt exists in the Company's ability to continue as a going concern," the Company said in its Form 10-Q filing for the quarterly period ended September 30, 2009. The Company noted that like its peers in the financial services industry, it has experienced deterioration in the quality of its loan portfolio since late 2007. This deterioration has primarily resulted from declining real estate values in California, borrowers who have reached their maximum allowable negative amortization recasting to higher payments they are unable to afford and the worsening employment market. These trends have caused the level of the Company's non-performing assets to increase significantly over the prior year, although the Company expects to report a decrease in non-performing assets from the second quarter of 2009. The Company and the Bank are operating under Amended Orders to Cease and Desist issued by the Office of Thrift Supervision on May 28, 2009. Under the terms of the Bank's Order, the Bank was required to meet and thereafter maintain a minimum Tier 1 Core Capital ratio of 7% and a minimum Total Risk- Based Capital ratio of 14% by September 30, 2009. The Bank failed to meet these required capital ratios, and, accordingly, as required by the Bank's Order, the Bank submitted to the OTS a contingency plan to accomplish either a merger of the Bank with, or an acquisition of the Bank by another federally insured institution or holding company thereof or a voluntary liquidation of the Bank. The Bank continues to pursue alternatives to increase the Bank's capital ratios to preclude the need to implement the contingency plan. FLYING J: El Paso Offers $99.5MM for Unit, Wants to Reopen Bidding ------------------------------------------------------------------ Daily Bankruptcy Review reports El Paso Corporation said it topped a $92 million offer for Flying J Inc.'s oil and gas production business. El Paso is offering $99.5 million for the unit. El Paso has asked the U.S. Bankruptcy Court for the District of Delaware to reopen the bidding for the unit. The Troubled Company Reporter, citing Daily Bankruptcy Review, said November 27, 2009, that Flying J is seeking approval from the Bankruptcy Court to sell its stake in its oil and gas production business to an affiliate of Citation Oil & Gas Corp. for $92 million. About Flying J Based in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com/-- is among the 20 largest private companies in America, with 2007 sales exceeding $16 billion. The fully integrated oil company employs approximately 14,700 people in the U.S. and Canada through its interstate operations, transportation, refining and supply, exploration and production, as well as its financial services and communications, divisions. Flying J and six of its affiliates filed for bankruptcy on December 22, 2008 (Bankr. D. Del. Lead Case No. 08-13384). Flying J sought Chapter 11 protections after a precipitous drop in oil prices and disruption in the credit markets brought to bear significant short-term pressure on the company's liquidity position. Attorneys at Kirkland & Ellis LLP represent the Debtors as counsel. Young, Conaway, Stargatt & Taylor LLP is the Debtors' Delaware Counsel. Blackstone Advisory Services L.P. is the Debtors' investment banker and financial advisor. Epiq Bankruptcy Solutions LLC is the Debtors' notice, claims and balloting agent. In its formal schedules submitted to the Bankruptcy Court, Flying J listed assets of $1,433,724,226 and debts of $640,958,656. An official committee of unsecured creditors has been appointed in the case. Pachulski Stang Ziehl & Jones LLP has been tapped as counsel for the creditors' panel. FONTAINEBLEAU LV: 'No Credit Bidding' Detrimental, Says Examiner ---------------------------------------------------------------- Jeffrey R. Truitt, the appointed Chapter 11 Examiner in the Fontainebleau Las Vegas Holdings LLC's Chapter 11 cases, relates that prior to the involvement of the Chapter 11 Examiner, the draft bidding procedures being considered by the Debtors' estates required potential bidders to submit only cash bids. No credit bids were allowed in the Auction. The Chapter 11 Examiner believed the exclusion of credit bids would have a detrimental impact on the Debtors' estates: * Limiting the Auction to only cash bids significantly eliminates an entire class of bidders who have the potential of creating a competitive Auction for the Debtors' assets. * Instead of "chilling the bidding," the allowance of reasonable credit bids ensures that multiple bidders participate in the Auction and encourage a competitive process that would culminate in obtaining the best price possible for the Debtors' assets. * In simple terms, credit bids have the potential of adding significant value to the Debtors' estates. * With these principles in mind, the Chapter 11 Examiner structured the bidding procedures in a way that would facilitate the submission of credit bids, making clear the minimum cash requirements for Qualified Bids and specifically allowing parties to make credit bids at the Auction. At the hearings held on November 23, 2009, and December 2, 2009, the Court approved the bidding procedures. Before the hearing on the Debtors' motion to establish bidding procedures, including the stalking horse bidder, the Chapter 11 Examiner had extensive discussions with representatives of the Mechanic Lien Claimants and the eventual Court-approved stalking horse bidder, Icahn Nevada Gaming Acquisition LLC, on an expedited process for determining the "priority, extent and validity" of the parties' liens for the purpose of allowing credit bids at the Auction. Based on these discussions, the Chapter 11 Examiner believes that Icahn and Mechanic Lien Claimants would support this process to determine the Mechanic Lien Claimants' credit bid rights: * As an initial matter, the Mechanic Lien Claimants must first obtain a final, non-appealable order determining their first priority status. By allowing an expedited process to consider summary judgment motions on the recently filed complaint by the Administrative Agent for the Term Lenders, the issue is now ripe for the Court's determination. * An estimation hearing would then be held to determine the validity and extent of the parties' asserted liens for the sole purpose of determining the maximum amount of each claimant's credit bid right. Given timing constraints, it is anticipated that parties would not seek Court approval of the full amount of their asserted claims but, rather, ask the Court to approve some lesser undisputed amount that could be easily established in the truncated estimation process. * To the extent that not all parties who assert mechanic lien claims against the Debtors agree to participate in making a credit bid, the Mechanic Lien Claimants must obtain a final, non-appealable order on how nonconsenting parties should be treated in the event that a credit bid is selected as the Successful Bid at the Auction, or agree to take the Project, subject to any non-participating mechanic lien holders and pay non-participating mechanic lien holders in full. * The process to determine the credit bid rights of the Mechanic Lien Claimants cannot derail the timeline established by the Bidding Procedures. * The Mechanic Lien Claimants must comply with the Bidding Procedures in all respects, including (i) the submission of bids by the January 15, 2010 deadline and (ii) provide sufficient cash consideration as set forth in the Bidding Procedures. * Finally, the process is without prejudice to any party objecting or taking any position with respect to the proceedings. The Chapter 11 Examiner is under no illusions that the process would require significant time and effort of all parties involved. Should the process, however, result in interested parties having the ability to make credit bids at the Auction, this would significantly enhance the value to the Debtors' estates by ensuring a competitive Auction process. Accordingly, the Chapter 11 Examiner strongly believes that credit bids would foster a competitive Auction, ensuring that the Debtors' estates obtain the best price for their assets and would support a process that would facilitate credit bids at the Auction. Court Disallows Credit Bidding The Court, having considered the Motion and all objections and responses, finds that cause exists to not allow credit bidding at the anticipated Section 363 sale of the Debtors' assets, and denies the Motion. Judge Cristol relates that there are five groups of mechanics and materialmen lien claimants, each represented by independent counsel, plus additional lien claimants not represented by counsel. Each of the over 300 lien claimants has a discrete claim of lien for a different amount, all of which are unliquidated and disputed as to priority. An adversary proceeding has been filed objecting to all the lien claims and therefore, they are not allowed secured liquidated claims. Judge Cristol says he is persuaded that there is insufficient time to determine the status of all lien claims prior to the sale scheduled for January 21, 2010. In the interest of fairness, Judge Cristol points out, the Court would necessarily be obligated to afford all creditors holding valid, liquidated, first liens the opportunity to credit bid, including the Term Lender Steering Group if they were determined to be in first priority. However, even the Term Lender Steering Group does not represent all lending institutions and a determination of the liens of the Term Lender Steering Group would not provide non- Steering Group lending institutions a method to credit bid or decline to credit bid. Even if the lien claims could be adjudicated as to validity, priority and amount, prior to the Section 363 sale scheduled for January 21, 2010, there is no feasible procedure to permit five different groups, plus additional unrepresented lien claimants and the dozens of bank mortgage lenders to bid as single bidders against prospective cash bidders, Judge Cristol says. The Court is given discretion to allow credit bidding; however, Judge Cristol avers, credit bidding is not a right to which all creditors are entitled, particularly in instances as the one before the Court, where there are too many alleged liens, and other variables, that will affect the determination of validity, priority and amount of each claim of lien or encumbrance. Delay of the sale would only deny all creditors the potential benefits of the Section 363 sale while continuing the erosion of value of the subject property at a rate between $100,000 and $200,000 per week, Judge Cristol says. About Fontainebleau Las Vegas Fontainebleau Las Vegas -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. Attorneys at Genovese Joblove & Battista, P.A., and Fox Rothschild, LLP, represent the Official Committee of Unsecured Creditors. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FONTAINEBLEAU LV: Retail Units DIP Joinder Pact Has Interim Nod --------------------------------------------------------------- To recall, Fontainebleau Las Vegas Holdings LLC and its units sought and obtained interim approval to borrow up to $51,209,985 from Icahn Nevada Gaming Acquisition LLC as Agent and DIP Lender and other DIP Lenders as may be applicable. Icahn is also the Stalking Horse Bidder in connection with a proposed sale of substantially all of the Debtors' assets. Pursuant to the DIP Credit Agreement and in order to induce the DIP Lenders to make Loans to Fontainebleau Las Vegas, LLC for the benefit of the Retail Debtors, the DIP Lenders have required under the DIP Credit Agreement that within 7 business days from the entry of the Interim DIP Order, each of the Retail Debtors execute a Joinder Agreement, whereby each Retail Debtor will become a Guarantor Loan Party that is bound by the DIP Credit Agreement and will thereby guarantee the payment and performance of the Obligations and be otherwise subject to the terms applicable to Guarantors. By way of this motion, Fontainebleau Las Vegas Retail Parent, LLC, Fontainebleau Las Vegas Retail Mezzanine, LLC and Fontainebleau Las Vegas Retail, LLC -- the Retail Debtors -- ask the Court for authority to (a) enter into the Joinder Agreement thereby guaranteeing the Obligations of Fontainebleau Las Vegas under the DIP Credit Agreement and becoming otherwise subject to the terms applicable to Guarantors; (b) obtain intercompany loans from Fontainebleau Las Vegas constituting proceeds of the DIP Credit Facility, and obtain other financial accommodations; and (c) grant super-priority priming liens to the DIP Agent for the benefit of the DIP Secured Parties pursuant to Section 364(d) of the Bankruptcy Code. Two parties filed responses to the proposal. A group of claimants known as the M&M Lienholders assert that their liens are senior to the interests of the Prepetition Co-Lenders' liens, the liens of the Senior Credit Facility lenders, and any other liens asserted against Project. The M&M Lienholders say they hold liens against the "property" and "any improvements for which the work, materials, and equipment were furnished or to be furnished" pursuant to Nevada Revised Statute 108.222. Lehman Brothers Holdings Inc. relates that obtaining postpetition credit by a debtor-in-possession is governed by Section 364 of the Bankruptcy Code. Because the Debtors seek to grant a senior lien to their proposed DIP Lenders, LBHI asserts that the Debtors must prove that the Retail Lenders are adequately protected. Faced with circumstances like those here, according to LBHI, courts have stressed the need for adequate protection. Following a hearing, the Court, on an interim basis, authorized the Retail Debtors to borrow from Fontainebleau Las Vegas, LLC, up to $234,000, to and including the Final Hearing Date, and to execute the Joinder Agreement thereby guaranteeing the Obligations of Fontainebleau Las Vegas under the DIP Credit Agreement and becoming otherwise subject to the terms of the Credit Agreement applicable to the Guarantors. The Court also approved the DIP Credit Agreement, dated as of November 23, 2009, among Fontainebleau Las Vegas, LLC, as Borrower, the Guarantors, the lenders party thereto, and Icahn Nevada Gaming Acquisition LLC, as administrative agent, collateral agent and arranger. Subject to the limitations applicable in the DIP Credit Agreement, the Debtors will use the proceeds of the Loans made pursuant to the DIP Documents and the Interim Order: (a) to fund, by way of one or more intercompany loans, the costs and expenses related to the filing and administration of the bankruptcy proceedings of the Retail Debtors in order to facilitate the disposition of the interest of the Retail Entities in the Project, in accordance with and up to the amount set forth in the Agreed Budget; (b) to pay costs and expenses of the administration of the Debtors' bankruptcy cases, given that the administration is essential to the Sale; (c) to fund stabilization of the Project; (d) to indefeasibly pay in full in cash the Used Cash Collateral pursuant to the Debtors' Interim Financing Order; (e) to pay interest and certain fees and expenses relating to the DIP Credit Facility when, as and to what extent set forth in the DIP Credit Agreement; and (f) to pay all other present and future costs and expenses of the DIP Secured Parties, including all reasonable fees and expenses of consultants, advisors and attorneys paid or incurred at any time in connection with the financing transactions when, as and to the extent provided in the Agreed Budget and the DIP Documents. The Court will conduct a final hearing on December 14, 2009, at 9:00 a.m. to consider the Retail Debtors' DIP Motion. Objections are due on December 10 by 4:30 p.m. Full-text copies of the Interim Order and the DIP Credit Agreement dated as of November 23, 2009, are available for free at: http://bankrupt.com/misc/FB_RDIntDIPOrd.pdf http://bankrupt.com/misc/FB_DIPCreditAg1123.pdf About Fontainebleau Las Vegas Fontainebleau Las Vegas -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. Attorneys at Genovese Joblove & Battista, P.A., and Fox Rothschild, LLP, represent the Official Committee of Unsecured Creditors. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FONTAINEBLEAU LV: WTC Sues Contractors to Subordinate Liens ----------------------------------------------------------- Wilmington Trust FSB, as successor to Bank of America, N.A., as administrative agent under the 2007 Credit Agreement, delivered to the Court on December 2, 2009, a complaint against: (a) A1 Concrete Cutting & Demolition, LLC; and (b) Approximately 340 Mechanic Lien Claimants, a list of which is available for free at: http://bankrupt.com/misc/FB_MLClaimants.pdf James H. Post, Esq., at Smith Hulsey & Busey, in Jacksonville, Florid, says that the Administrative Agent brought the adversary proceeding against the Mechanic Lien Claimants: (b) to determine the validity, priority and extent of the Mechanic Lien Claims; (c) to adjudicate the Administrative Agent's objections to the validity, priority and extent of the Mechanic Lien Claims; (d) for declaratory relief that the interests of the Mechanic Lien Claimants are contractually subordinate to the interests of the Administrative Agent; (e) for declaratory relief that the Mechanic Lien Claimants' proofs of claim are equitably subordinated to the 2007 Credit Agreement; and (f) for declaratory relief that the Administrative Agent and the 2007 Senior Lenders are equitably subrogated to the priority of a prior $150.7 million deed of trust. Mr. Post tells the Court that Turnberry West Construction, Inc., the general contractor to the "Tier A" casino hotel and resort -- the Project -- and the Mechanic Lien Claimants which expressly agreed to subordinate their interests to "any lender" on the Project now dispute the enforceability of those agreements under Nevada law. The Administrative Agent, therefore, asks the Court to "declare the rights and other legal relations" of the Administrative Agent and the Mechanic Lien Claimants under the subcontracts executed by the Mechanic Lien Claimants which require subordination of the subcontractors' rights to interests of the lenders advancing credit to Fontainebleau Las Vegas, LLC and Fontainebleau Las Vegas II, LLC. Mr. Post asserts that each Mechanic Lien Claimant agreed as a condition of Bank of America, N.A., as former administrative agent, and the 2007 Senior Lenders' advance of construction funds for the Project that their claims, including mechanic's liens, would be subordinate to the claims of BofA. Mr. Post relates that on March 18, 2005, Bank of America, as former administrative agent, held a first priority lien on the Property pursuant to a 2005 Credit Agreement and 2005 Liens. The 2005 Liens were recorded before any work was commenced by any of the Mechanic Lienors on any applicable part of the Project. As a result of the satisfaction and discharge of the 2005 Credit Agreement, along with the simultaneous release and reconveyance of the 2005 deeds of trust securing the debt, by and through the advance of funds under the 2007 Financing, the Administrative Agent is equitably subrogated under applicable Nevada law to the rights of the lenders under the 2005 Credit Agreement. Also, prior to June 6, 2007, work performed at the Project was performed pursuant to contracts directly with the Debtors and their affiliates. According to Mr. Post, work performed under these contracts constitute separate works of improvement, which were concluded and paid in full with funds disbursed by the Administrative Agent on June 7, 2007. There was no general contractor at the Project prior to June 7, 2007. On June 7, 2007, the Senior Lien of the Administrative Agent was recorded and the Debtors executed the contract with the Project's general contractor, TWC. Work performed on or after June 7, 2007, under the contract with TWC, did not relate back prior to June 7, 2007. The Mechanic Lien Claims relate to work performed after the Senior Lien was recorded and therefore do not have priority over the Senior Lien, Mr. Post says. Moreover, Wilmington Trust objects to the Mechanic Lien Proofs of Claim and requests that the Court (i) determine the validity, priority and extent of each Mechanic Lien Claim, and (ii) whether any of the Mechanic Lien Claimants are contractually subordinated to the rights and liens of the Administrative Agent on behalf of the 2007 Senior Lenders pursuant to the Subordination Agreements. About Fontainebleau Las Vegas Fontainebleau Las Vegas -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. Attorneys at Genovese Joblove & Battista, P.A., and Fox Rothschild, LLP, represent the Official Committee of Unsecured Creditors. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FORUM HEALTH: Moves Pishkur's Hearing to Jan. 12 to Evaluate Bids ----------------------------------------------------------------- George Nelson at Business Journal Daily reports that Forum Health asked the U.S. Bankruptcy Court to continue the hearing, until Jan. 12, 2010, regarding the approval of former chief executive officer Walter Pishkur's severance payment of $18,126, to evaluate the bids for the Company's assets filed by Nov. 13, 2009, and prepare a reorganization plan. The company has until Jan. 11, 2010, to file a plan, Mr. Nelson notes. 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. FREMONT GENERAL: Ranch Capital Files Plan to Resolve Claims ----------------------------------------------------------- Ranch Capital, LLC, and RC Fremont, LLC, filed with U.S. Bankruptcy Court for the Central District of California their proposed Chapter 11 Plan of Reorganization for Fremont General Corporation for the resolution of claims and equity interests. Ranch Capital is a holder of equity interests in Fremont General, and RC Fremont is a newly formed affiliated investment entity that is controlled by Ranch Capital and that has been created for the purpose of implementing the new equity investments. The proposed plan provides for this treatment of claims and equity interests: 1. Secured Claims (Class 1) - Each holder will be paid in full and final satisfaction of claim, in the sole discretion of the Reorganized Debtor, except to the extent any holder of an allowed secured claim agrees to a different treatment. 2. Priority Non-Tax Claims (Class 2) - All allowed priority non-tax claims not previously paid will be paid in full, in cash on the effective date or soon thereafter as is practicable after the claim becomes an allowed priority non- tax claim. 3. General Unsecured Claims (Class 3) - Holders of an allowed Class 3A Claim will be entitled to receive in full and complete satisfaction of its allowed claim, cash plus postpetition interest in the allowed amount on the effective date or soon thereafter as is practicable. Class 3B (Senior Note Claims) will be allowed in the aggregate amount of $176,402,106. On the effective date, each holder of the claim will be deemed to have an allowed Class 3B claim in an allowed amount equal to the sum of (x) the principal amount of the claim of the holder as of the petition date plus (y) any and all interest which accrued on the holder's claim any time on or before the petition date, plus (z) postpetition interest or the amount of interest which accrued on the holders' claims after the petition date. Class 3C (Junior Note and TOPrS Claims) will be allowed in the aggregate amount of $107,422,680. If Class 3C vote to accept the Plan, then the holders of allowed Class 3C Claims will receive their pro rata share of these: (i) on the effective date, or soon thereafter as sufficient cash becomes available, $50 million in Cash, without interest, (ii) on the effective date, an unsecured promissory note from the Reorganized Debtor in an amount equal to the sum of (A) $40 million and (B) accrued interest from the effective date on $40 million at 9% per annum payable in cash in quarterly installments on the last day of each quarter, which TOPrS Note will mature on December 1, 2021, and provided that the TOPrS Payment has been made, will be callable in cash by the Reorganized Debtor at the full face amount plus interest then owning by the Reorganized Debtor upon the second anniversary of the effective date, and (iii) on the effective date, 15 million shares of the common stock. 4. Class 4 (Equity Interest) - Holders of allowed equity interests in the Debtor will retain their equity interests subject to the dilution as a result of (i) the issuance of additional shares of common stock to RC Fremont and to Holders of Allowed Class 3C Claims receiving the Class 3C Consideration, in each case, pursuant to the Plan, (ii) the issuance of shares of common stock upon exercise of the warrants, and (iii) the issuance of any shares common stock required for satisfaction of Allowed Section 510(b) Claims. 5. Class of Claims Subordinated (Class 5) - Holders of the allowed 510(b) Claim will receive shares of stock in the Reorganized Debtor based on the average trading price of the common stock for 30 days preceding the date on which any Section 510(b) Claim becomes an allowed claim in full and final satisfaction of its claim. The amount of any the Allowed Claim will limited to the coverage amount of insurance policies maintained by the Debtor in satisfaction thereof. A full-text copy of the Chapter 11 Plan proposed by Ranch Capital is available for free at: http://bankrupt.com/misc/FremontGen_RanchPlan.pdf Based in Santa Monica, California, Fremont General Corp. (OTC: FMNTQ) -- http://www.fremontgeneral.com/-- was a financial services holding company with $8.8 billion in total assets at September 30, 2007. Fremont General ceased being a financial services holding company on July 25, 2008, when its wholly owned bank subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont Investment & Loan) completed the sale of its assets, including all of its 22 branches, and 100% of its $5.2 billion of deposits to CapitalSource Bank. Fremont General filed for Chapter 11 protection on June 18, 2008, (Bankr. C.D. Calif. Case No. 08-13421). Robert W. Jones, Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq., at Stutman Treister & Glatt, represent the Debtor as counsel. Kurtzman Carson Consultants LLC is the Debtor's noticing agent and claims processor. Lee R. Bogdanoff, Esq., Jonathan S. Shenson, Esq., and Brian M. Metcalf, at Klee, Tuchin, Bogdanoff & Stern LLP, represent the Official Committee of Unsecured Creditors as counsel. Fremont's formal schedules showed $330,036,435 in total assets and $326,560,878 in total debts. FRONTERA COPPER: To Defer Paying December 15 Interest ----------------------------------------------------- Frontera Copper Corporation on December 14 announced through its CEO Steve Vanry, that it is unable to make the interest payment due December 15, 2009, on its Series One (2010) Senior Notes. The Company's inability to make the payment is the result of a covenant contained in a Credit Agreement with its Mexican commercial banker. In order to fund mine restart activities, the Company's Mexican subsidiaries, Cobre del Mayo, S.A. de C.V. and Frontera Cobre del Mayo Inc. together with Frontera, entered into a previously disclosed US$93 million credit agreement with Banco Azteca, a Mexican commercial bank, on August 7, 2009. Pursuant to the Credit Agreement, CDM granted a security interest in newly acquired mining equipment as well as other mine assets and Frontera granted the Bank a security interest and option in the shares of CDM. The Credit Agreement has enabled CDM to substantially complete the restart of mining operations at its Piedras Verdes property. To date an aggregate of approximately US$37 million has been drawn under the Credit Agreement. Section 19 of the Credit Agreement contains a covenant under which Frontera and CDM are in default of their obligations to the Bank because Frontera did not effect a satisfactory restructuring of its 2010 and 2011 senior unsecured notes by December 11, 2010. Frontera's planned restructuring proposal is now nearing completion in principle. The Bank required the early restructuring covenant in order to protect its position for loans and capital leases by having restructuring certainty well in advance of the Notes maturity date. Because Frontera has not yet been able to formally propose and solicit approval for its planned restructuring offer, the Bank has no obligation to make further advances under the credit facility and it has been unwilling to allow CDM to advance additional funds to Frontera for Note interest until a restructuring is achieved. The Bank has however agreed, subject to negotiation of definitive documentation, to a standstill until February 3, 2010 with respect to any other enforcement of Frontera's default of the restructuring covenant. Frontera intends to issue a comprehensive press release within one week containing the material elements of its proposal to restructure the Notes. The restructuring plan is expected to be considered by Note holders at a meeting to be convened in early 2010. The restructuring proposal will provide for the delinquent interest to be brought current upon its approval. Frontera also expects to file a National Instrument 43-101 technical report updating Piedras Verdes mine activities this month. Frontera Copper Corporation -- http://www.fronteracopper.com-- is a Canada-based company formed to acquire and bring into production the Piedras Verdes project. The Company owns or controls the Piedras Verdes Mine through its 81% direct interest in Cobre del Mayo, S.A. de C.V. (CDM), and its 19% indirect interest in CDM, through its wholly owned subsidiary, Frontera Cobre del Mayo, Inc. (FCDM). The Piedras Verdes property consists of 27 mineral concessions. CDM directly owns 22 titled concessions totalling 3,581.29 hectares. During the year ended December 31, 2008, the Piedras Verdes operations produced 41.6 million pounds of copper cathode and sold 41.8 million pounds of copper. In May 2009, the Company was acquired by 0839073 BC Ltd., a wholly owned subsidiary of Invecture Group, S.A. de C.V. GATEWAY ETHANOL: Court Extends Ch. 11 Plan Filing Until January 28 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Kansas extended, for the sixth time, Gateway Ethanol, L.L.C.'s exclusive period to file a Chapter 11 plan and to solicit acceptances of that plan until January 28, 2010, and March 30, 2010, respectively. As reported in the Troubled Company Reporter on Nov. 23, 2009, the Debtor stated that its sale of assets to its primary secured lender, Dougherty Funding LLC, has not closed. The Debtor added that it needs to resolve pending objections to the asset sale, close the sale, and develop a Plan. Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol plant that has a capacity of 55 million gallons a year, according to Orion Ethanol's Web site. The Company filed for bankruptcy protection on October 5, 2008 (Bankr. D. Ks., Case No. 08-22579). Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E. McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its restructuring effort. In its schedules, the Debtor listed total assets of $94,545,022, and total debts of $93,353,654. GENERAL GROWTH: Court Confirms Reorganization for $10-Bil. Loans ---------------------------------------------------------------- General Growth Properties, Inc. announced December 15 the Bankruptcy Court's confirmation of the plans of reorganization for 194 debtors owning 85 regional shopping centers, including Ala Moana in Honolulu and St. Louis Galleria, 15 office properties and 3 community centers associated with approximately $10.25 billion of secured mortgage loans. The Plans allow for the restructuring of these 87 secured mortgage loans and the payment in full of all undisputed claims of creditors. Key provisions of the plans include maturity date extensions resulting in an average loan duration of approximately 6.4 years from Jan. 1, 2010, with no loan maturing prior to January 2014, and continuation of interest on the loans at the current non-default rate. The weighted average contract interest rate for the loans covered by these plans is 5.33%. The all-in-interest rate after amortization of fees to be paid in connection with these plans is 5.51%. These debtors will emerge from bankruptcy as soon as practicable. Confirmation of the plans of reorganization for 26 additional debtors owning 10 properties associated with an additional $1.7 billion of secured mortgage loans has been adjourned pending satisfaction of various conditions, including receipt of the approval of the Class B holders or mezzanine holders of such secured mortgage loans. Discussions with the Class B note holders and mezzanine holders are ongoing. "Confirmation of these plans of reorganization is a monumental step towards completion of GGP's overall corporate restructuring," said Thomas H. Nolan, Jr., President and Chief Operating Officer of GGP. "As a result of these plans, completed just eight months after our chapter 11 filing, we have created the foundation for the long term capital structure for GGP and the basis for emerging our remaining debtors from bankruptcy. We are hopeful that we will reach agreements with our remaining secured mortgage lenders expeditiously." A list of the properties covered by court-confirmed plans will be posted on http://www.ggp.com/ About General Growth Properties Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GI JOE'S: Court Allows Distributor's Non-Redundant Claims --------------------------------------------------------- WestLaw reports that a Bankruptcy Code provision requiring the court to disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on a claim of a creditor, to the extent that such claim for reimbursement or contribution is contingent as of the time of allowance or disallowance, did not require disallowance of a claim filed by a cooperative through whose buying program the debtor, a retail-member, had purchased goods from third-party vendors at favorable rates on the express agreement that the cooperative would stand behind the debtor to guarantee payment, to the extent that the cooperative had not yet made payment to third-party vendors for goods purchased by the debtor. The provision was designed only to preclude redundant recoveries on identical claims against insolvent estates, and did not apply in the absence of any duplicative claims by these third- party vendors. In re G.I. Joe's Holding Corp., --- B.R. ----, 2009 WL 3642765 (Bankr. D. Del.) (Gross, J.). Worldwide Distributors, a Washington cooperative association, sued Wells Fargo Retail Finance, LLC, Individually, and in its Capacity as Agent for the Pre-Petition Senior Lenders, Crystal Capital Fund Management, L.P., Individually, and in its Capacity as Agent for the Term Loan B Lenders and the Debtors, G.I. Joe's Holding Corporation, G.I. Joe's, Inc. (Bankr. D. Del. Adv. Pro. No. 09- 50888), asking the Court for for a determination that it held first priority lien in the debtors assets to secure their obligation, not only for goods that it had purchased on credit from cooperative, but in connection with its purchase of goods through cooperative directly from third-party vendors, pursuant to program whereby cooperative used its buying power to negotiate more favorable terms and stood behind its members to guarantee payment of third-party vendors. The Lenders argued that because Worldwide's claims were contingent, 11 U.S.C. Sec. 502(e)(1)(B) mandates disallowance of Worldwide's claim for any obligations which Worldwide has not actually paid. The Honorable Kevin Gross held that (1) the language in the security agreement was broad enough to give the cooperative a security interest to secure all of debtor's obligations, and (2) the Bankruptcy Code provision did not require disallowance of the cooperative's claim, to extent that the cooperative had not yet made payment to third-party vendors for goods purchased by the debtors. Headquartered Wilmington, Delaware, G.I. Joe's Holding Corporation -- http://www.joessports.com-- owned and operated retail stores selling sports apparel, and camping equipment and accessories. G.I Joe has more than 30 locations in Idaho, Oregon, and Washington. The G.I. Joe's Holding Corporation and G.I. Joe's Inc. filed for Chapter 11 protection on March 4, 2009 (Bankr. D. Del. Case Nos. 09-10713 and 09-10714). The Debtors hired Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, as their Delaware counsel and Patrick J. O'Malley, at Development Specialist Inc., as thier chief restructuring officer. When the Debtors filed for protection from their creditors, they estimated their assets and debts between $100 million and $500 million. In April 2009, a joint venture between Gordon Brothers Retail Partners, LLC, and Crystal Capital Fund Management won the auction of G.I. Joe's Holding Corp.'s Pacific Northwest chain, Joe's Outdoor and More, with a $61 million bid. GLOBAL ENERGY: Has Until January 25 to File Schedules & Statement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended until January 25, 2010, Global Energy Holdings Group, Inc.'s time to file its schedules of assets and liabilities. Atlanta, Georgia-based Global Energy Holdings Group, Inc. -- http://www.gnhgroup.com/-- is a diversified renewable energy company. Global develops renewable energy projects, including biomass gasification and landfill-gas-to-energy projects. The Company filed for Chapter 11 on November 25, 2009 (Bankr. D. Del. Case No. 09-14192). Charles J. Brown, Esq. at Archer & Greiner, P.C. represents the Debtor in its restructuring effort. As of Sept. 30, 2009, the Debtor listed total assets of $10.30 million and total debts of $5.27 million. GLOBAL ENERGY: Meeting of Creditors Scheduled for January 4 ----------------------------------------------------------- Roberta A. DeAngelis, the Acting U.S. Trustee for Region 3, will convene a meeting of creditors in Global Energy Holdings Group, Inc., et al.'s Chapter 11 case on January 4, 2009, at 1:30 p.m. The meeting will be held at J. Caleb Boggs Federal Building, 5th Floor, Room 5209, Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Atlanta, Georgia-based Global Energy Holdings Group, Inc. -- http://www.gnhgroup.com/-- is a diversified renewable energy company. Global develops renewable energy projects, including biomass gasification and landfill-gas-to-energy projects. The Company filed for Chapter 11 on November 25, 2009 (Bankr. D. Del. Case No. 09-14192). Charles J. Brown, Esq. at Archer & Greiner, P.C. represents the Debtor in its restructuring effort. As of Sept. 30, 2009, the Debtor listed total assets of $10.30 million and total debts of $5.27 million. GORDON RAMSAY: Has New Projects After Near Brush with Bankruptcy ---------------------------------------------------------------- An article by Jacqueline Palank posted at The Wall Street Journal's Bankruptcy Beat relates Gordon Ramsay -- owner of London-based Gordon Ramsay Holdings Ltd. -- is bouncing back from a rough year that almost saw his company declare bankruptcy. Ms. Palank recalls nearly one year ago KPMG recommended that London-based Gordon Ramsay Holdings file for bankruptcy, fire hundreds of employees and close all but its most-profitable restaurants. The recommendation came after Gordon Ramsay Holdings breached the terms of a GBP10.5 million ($17.1 million) loan and overdraft facility from Royal Bank of Scotland Group. Ms. Palank relates amid the company's distress, Mr. Ramsay had to ship off to the U.S. to shoot his reality show "Hell's Kitchen." "His days on camera would be followed by nights on the phone, discussing plans to save his company. In the chef's mind, bankruptcy wasn't on the table," Ms. Palank says. Ms. Palank relates Mr. Ramsay teamed up with his father-in-law and business partner to invest GBP9 million into the Company this year. They extended tax payments, cut staff at London headquarters and handed ownership of five restaurants to private- equity firm Blackstone Group LP, which pays Mr. Ramsay to oversee them. Amid other cost cutting efforts, Mr. Ramsay's company believes it's put its troubles behind it and is ready to start two new projects next year, Ms. Palank continues. GPX INTERNATIONAL: Court OKs $54.2MM Sale of Assets to Alliance --------------------------------------------------------------- Law360 reports that a bankruptcy judge has approved GPX International Tire Corp.'s $54.2 million sale of some of its U.S. and South African business assets to Alliance Tire Co., which won out against a rival bid by Titan International Inc. last week. According to SearchAutopart.com, the Bankruptcy Court also approved the sale of (i) Canadian subsidiary Dynamic Tire Corp. to Robert Sherkin and Peter Koszo; and (ii) solid tire division along with its Gorham, Maine, Red Lion and Hebei, China factories to MITL Acquistion Co. GPX International Tire Corporation is one of the largest independent global providers of specialty "off-the-road" tires for the agricultural, construction, materials handling and transportation industries. GPX is a worldwide company, headquartered in Malden, Massachusetts, with operations in NorthAmerica, China, Canada, and Germany. A third generation family-owned business, GPX and its predecessor companies have been in business since 1922. GPX International filed for Chapter 11 on Oct. 26, 2009 (Bankr. D. Mass. Case No. 09-20170). GPX is represented in U.S. Bankruptcy Court by attorneys Harry Murphy of Hanify & King, P.C. as bankruptcy counsel and Peggy Farrell of Hinckley Allen & Snyder LLP as corporate counsel. TM Capital Corp. served as investment banker to GPX in connection with these transactions and Argus Management Corporation served as GPX's financial advisor. The petition says assets and debts range from $100 million to $500 million. GREYSTONE PHARMACEUTICALS: Gets Initial OK for BLN Capital Loan --------------------------------------------------------------- The Hon. Paulette J. Delk of the U.S. Bankruptcy Court for the Western District of Tennessee authorized, on an interim basis, Greystone Pharmaceuticals, Inc., to: -- incur $300,000 in secured postpetition financing from BLN Capital Funding, LLC; and -- grant adequate protection to BLN. A final hearing on the Debtor's DIP financing will be held on December 22, 2009, at 11:00 a.m. at 200 Jefferson Avenue, Courtroom 630 in Memphis, Tennessee. Objections, if any, were due December 15, 2009. As of the petition date, the Debtor was indebted to BLN, its principal lender, $1.1 million, exclusive of interest, fees, attorneys' fees, costs, expenses and other charges provided for under the loan documents. As reported in the Troubled Company Reporter on Nov. 27, 2009, the Debtor could not obtain a postpetition credit facility to meet its working capital needs. BLN expressed willingness to lend money to the Debtor. In return for the line of credit, BLN will receive an equity interest in the Reorganized Debtor equal to 0.5% for making the loan available and an additional 0.5% if the Debtor draws more than $150,000; The debtor-in-possession loan will bear interest at 12% per annum, and will be repayable with interest only charges until the first quarter 2011. At that time, principal will be due in four equal quarterly payments; To secure repayment of the DIP loan, BLN will receive (i) a priority under Section 364 of the Bankruptcy Code; (ii) a senior lien on property of the estate (other than avoidance actions) that is not otherwise subject to a lien; (iii) a junior lien on property of the estate (other than avoidance actions) that is subject to valid, perfected and unavoidable liens; and (iv) a senior priming lien on property of the estate that is subject to a senior prepetition first lien in favor of BLN. About Greystone Pharmaceuticals Fort Myers, Florida-based Greystone Pharmaceuticals, Inc. -- aka Greystone Medical, Inc., and Greystone Medical Group, Inc. -- operates a pharmaceutical company. The Company filed for Chapter 11 bankruptcy protection on November 2, 2009 (Bankr. W.D. Tenn. Case No. 09-32236.) John L. Ryder, Esq. assists the Company in its restructuring effort. According to the schedules, the Company has assets of $25,467,546, and scheduled debts of $22,601,150. GSI GROUP: U.S. Trustee Sets Meeting of Creditors for Dec. 18 ------------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of creditors in GSI Group Inc. and its debtor-affiliates' Chapter 11 cases on December 18, 2009, at 9:30 a.m. The meeting will be held at J. Caleb Boggs Federal Building, 844 King Street, 5th Floor, Room 5209, Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. GSI Group Inc. supplies precision technology to the global medical, electronics, and industrial markets and semiconductor systems. GSI Group Inc.'s common shares are quoted on Pink Sheets OTC Markets Inc. The Company and two of its affiliates filed for Chapter 11 protection on Nov. 20, 2009 (Bankr. D. Del. Lead Case No. 09- 14110). William R. Baldiga, Esq., at Brown Rudnick LLP, represents the Debtors in their restructuring effort. Mark Minuti, Esq., at Saul Ewing LLP, as its local Counsel. The Debtors selected Garden City Group Inc. as their claims and notice agent. In their petition, the Debtors posted $555,000,000 in total assets and $370,000,000 in total liabilities as of Nov. 6, 2009. HANESBRANDS INC: Moody's Raises Ratings on $494 Mil. Notes to 'B1' ------------------------------------------------------------------ Moody's Investors Service upgraded Hanesbrands' existing $494 million senior unsecured notes due 2014 to B1 from B2. All other ratings including the Ba3 Corporate Family Rating and SGL-2 Speculative Grade Liquidity Rating were affirmed. The rating upgrade of the senior unsecured notes due 2014 reflects the closing of Hanesbrands' new $500 million B1 unsecured notes and new $1.15 billion Ba1 senior secured credit facilities. Proceeds from these new debt issues repaid the company's previous first and second lien credit facilities. With the full repayment of the company's second lien credit facilities and accompanying increase in the amount of unsecured debt in the capital structure, there is now less secured debt in Hanesbrands' capital structure. This improves the recovery prospects for the unsecured note holders. The affirmation of Hanesbrands' Ba3 Corporate Family Rating considers that the recently closed refinancing is neutral to the company's leverage which Moody's considers being high but is expected to improve from current level of Debt/EBITDA of about 6.0 times. The affirmation also acknowledges the relatively commoditized product categories in which the company operates, and significant customer concentrations. Hanesbrands' ratings are supported by the solid size and scale of the company's operations, its leading market shares, and relatively stable product demand characteristics. Although the recent transactions were neutral in terms of leverage, they did significantly extend Hanesbrands' debt maturities. Ratings raised: -- $494 million senior unsecured notes due 2014 to B1 (LGD 5, 75%) from B2 (LGD 5, 84%) Ratings affirmed: -- Corporate Family Rating at Ba3 -- Probability of Default Rating at Ba3 -- Speculative Grade Liquidity rating at SGL-2 -- $400 million senior secured first lien revolving credit facility expiring 2013 at Ba1 (LGD 2, 21%) -- $750 million senior secured first lien term loan B due 2015 at Ba1 (LGD 2, 21%) -- $500 million senior unsecured notes due 2016 at B1 (LGD 5, 75%) -- Senior Unsecured Shelf Program at (P) B1 Ratings withdrawn: -- $500 million first lien revolver expiring 2011 at Ba1 (LGD 2, 23%) -- $850 million first lien term loans due 2013 at Ba1 (LGD 2, 23%) -- $450 million second lien term loan due 2014 at Ba3 (LGD 4, 56%) Moody's last rating action on Hanesbrands was on December 1, 2009, when Moody's assigned a B1 rating to the company's $500 million senior unsecured notes due 2016. Hanesbrands Inc. is a manufacturer and marketer of branded innerwear and outerwear apparel. The company markets products under the "Hanes", "Champion", "Playtex", "Bali", "Wonderbra" and "L'eggs" brands. The company generates annual revenues of about $3.9 billion. HAUPPAUGE DIGITAL: NASDAQ Grants Request for Continued Listing -------------------------------------------------------------- Hauppauge Digital Inc. disclosed that a NASDAQ Listing Qualifications Panel has granted the Company's request for continued listing on The NASDAQ Stock Market. As previously disclosed, on October 6, 2009, NASDAQ notified the Company that it was subject to delisting based on the Company's failure to timely hold its annual meeting. In accordance with NASDAQ's Listing Rules, the Company requested a hearing before the Panel. On November 12, 2009, the Company appeared before the Panel and presented its plan to regain compliance. On December 9, 2009, the Company held its annual meeting and on December 10, 2009, the Panel rendered its determination to continue the Company's listing. The decision of the Panel is subject to review by the NASDAQ Listing and Review Council within 45 days following the issuance of the Panel's written decision. In addition to the delisting notice mentioned above, on November 18, 2009, the Company received a letter from NASDAQ indicating that the Company is not in compliance with the NASDAQ minimum bid rule. The letter noted that, for the thirty consecutive trading days prior to November 18, 2009, the Company's minimum closing bid price per share had been below the $1.00 minimum bid price requirement set forth in NASDAQ Rule 5450(a)(1). In accordance with NASDAQ Rule 5810(c)(3)(A), Hauppauge has 180 days from November 18,2009, or until May 17, 2010, to regain compliance. The Company intends to monitor the bid price for its common stock between now and May 17, 2010, and to consider available options to resolve the deficiency and regain compliance with the NASDAQ minimum bid price requirement, as to which no assurances can be given. About Hauppauge Digital Hauppauge Digital Inc. -- http://www.hauppauge.com/-- is a leading developer of analog and digital TV receiver products for the personal computer market. Through its Hauppauge Computer Works, Inc. and Hauppauge Digital Europe SARL subsidiaries, the Company designs and develops analog and digital TV receivers that allow PC users to watch television on their PC screen in a resizable window and enable the recording of TV shows to a hard disk, digital video editing, video conferencing, receiving of digital TV transmissions, and the display of digital media stored on a computer to a TV set via a home network. The Company is headquartered in Hauppauge, New York, with administrative offices in Luxembourg, Ireland and Singapore, sales offices in Germany, London, Paris, The Netherlands, Sweden, Italy, Spain, Singapore, Taiwan and California and engineering offices in Taiwan and Braunschweig Germany. HOLLEY PERFORMANCE: Court OKs Auction of Clean Power on January 5 ----------------------------------------------------------------- The Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware authorized Holley Performance Products Inc.'s sale of the Holley Clean Power original equipment manufacturer business and related assets to Actuant Corporation or another bidder, subject to higher or better offer. The Court set the auction of the assets for January 5, 2010, at 10:00 a.m. (Prevailing Eastern Time) at the offices of Ropes & Gray LLP at One International Place, Boston, Massachusetts. The sale hearing will be held on January 7, 2010, at 10:30 a.m. (Prevailing Eastern Time.) As reported in the Troubled Company Reporter on December 9, 2009, Actuant Corporation offered to purchase the Clean Power assets for $3,100,000, free and clear of all liens, claims, encumbrances, and interests pursuant to Section 363 of the Bankruptcy Code. The terms of the Stalking Horse Purchase Agreement include: a) Purchase Price - $3,100,000 plus assumed liabilities. b) Purchased Assets - Assets related to the Product Line, including copyrights, patents, customer records, machinery, inventory, and equipment, and certain assigned contracts. c) Excluded Assets - Assets excluded from Purchased Assets include (a) cash and cash equivalents on hand as of the Closing, (b) the Debtors' facility in Bowling Green, Kentucky, (c) contracts other than the Assigned Contracts, (d) accounts receivable, and (e) Holley's brand name. d) Assumed Liabilities - Buyer assumes certain cure obligations and post-closing obligations with respect to Assigned Contracts. e) Deposit - $200,000 cash deposit (currently held by Ropes & Gray LLP in an escrow account). f) Interim Operating Agreement - The sale is conditioned upon Holley's entry into an interim operating agreement to service the Product Line after the Closing for up to six months. g) Termination - the buyer may terminate the Stalking Horse Purchase Agreement (i) if the Bidding Procedures Order is not entered by 20 days after the date hereof, (ii) if the sale order is not entered by 45 days after the date hereof, or (iii) after ten business days after the entry of the sale order, if the closing has not occurred other than as a result of buyer's material breach. The Debtor is also authorized to pay a break-up fee of $100,000 plus the buyer's reasonable out of pocket legal and other fees and expenses incurred by buyer in connection with this transaction, payable if the Court approves a sale to another bidder at the auction and the sale closes. About Holley Performance Holley Performance and its affiliates are leading suppliers of performance automotive products. The Company designs, manufactures, and markets a diversified line of performance automotive products, including carburetors, fuel pumps, fuel injection systems, nitrous oxide injection systems, superchargers, exhaust headers, mufflers, and automotive performance plumbing products. Holley Performance and its affiliates filed for Chapter 11 on September 28, 2009 (Bankr. D. Del. Case No. 09-13333). Pepper Hamilton LLP represents the Debtors in their restructuring effort. Ropes & Gray LLP is corporate counsel. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The Debtors' cases have been assigned to Judge Peter J. Walsh. The petition says assets and debts are between $100 million and $500 million. Holley Performance returned to bankruptcy 19 months after winning court approval of its last reorganization plan. HOVNANIAN ENTERPRISES: Fitch Sees Light at the End of the Tunnel ---------------------------------------------------------------- With various macroeconomic housing and related statistics bottoming about mid-year 2009 and subsequently moving forward in fits and starts, a four-year downturn has evidently come to an end for U.S. homebuilders, according to Fitch Ratings in its outlook report for the sector. While Fitch maintains a Negative Outlook for U.S. homebuilding in 2010, the expected conclusion of the national housing credit has positively influenced housing data over the last few months. Pending home sales, existing home sales, single family housing starts and single family new home sales have been generally showing improvement after bottoming out earlier this year. The same holds true for new home inventories, home pricing and consumer and builder sentiment. Importantly, the U.S. economy apparently moved from recession to expansion in third quarter-2009 (3Q'09). However, challenges remain, especially the expected upcoming surge in delinquencies and foreclosures for both Alt-A and option adjustable-rate mortgages. Fitch raised its forecasts for starts and new home sales earlier this year, the first positive adjustments in these metrics in over three years. Nevertheless, Fitch anticipates that the early stages of this expansion may be more muted than the average. During the first 12-15 months off the bottom, the recovery may appear jaw-toothed as substantial foreclosures now in the pipeline present as distressed sales, and as meaningful new foreclosures arise from Alt-A and option ARM resets. High unemployment rates and the probable tightening of certain FHA loan standards (higher minimum credit scores for new borrowers and greater upfront cash requirements) will be notable headwinds early in the upcycle. "The continuation and expansion of the national housing credit should partially help offset expected seasonal declines during the winter months through the spring of 2010," said Managing Director and lead U.S. homebuilding analyst Robert Curran. "The federal government's continuing efforts to moderate foreclosures may also show some success in 2010." Despite having fewer competitors, public builders will continue to be challenged and need to maintain tight controls over costs and expenses during 2010. Ratings Rationale: Housing continues to be weak. Fitch expects that the public builders by and large to typically stabilize their aggregate land positions over the next 6-to-12 months or selectively add to owned, developed lot holdings. The still irregular flow of appropriately priced land from banks and others tends to support this conclusion. "With operational and financial pressures moderating to some extent, most public homebuilders have to operate successfully within this still challenging environment or wither away," said Curran. Companies have to at least maintain current cost profiles or continue to downsize to the point where they can remain/be profitable (excluding nonrecurring real estate charges). That means possible further moderate cuts in staffing and other overhead, as well as other cost reductions. The builders' gross profit margins and selling, general, and administrative expense/sales ratios will confirm the success of their efforts. The public homebuilders cannot significantly influence revenue trends and profitability at present, but they can manage their balance sheets and their liquidity. In a period when liquidity is still an issue for all U.S. companies, Fitch believes that, overall, the U.S. homebuilding sector has adequate liquidity. However, some weaker companies face greater liquidity risk. Many companies in this sector have generated meaningful free cash flows over the past 12 months while terming out borrowings, and for some maintaining access to committed bank facilities, which together provide room to handle maturities and fund working capital needs over the next year and beyond. Admittedly, most facilities have been substantially slimmed down as builders sought covenant relief in amendments. For certain builders, cash flow has been enhanced by relatively recent debt offerings, large land sales, tax refunds, and even some public equity offerings (e.g. Meritage Homes Corp.; Hovnanian Enterprises, Inc.; Lennar Corp.; M/I Homes, Inc.) or other external cash infusions (Standard Pacific Corp.). Recently passed legislation that extends the net operating losses carryback to offset taxable profits from the previous five years will result in meaningful tax refunds for most public homebuilders early in 2010 further enhancing liquidity and tangible net worth. Compared with the last major housing downturn in the latter 1980s into the early 1990s, leverage was lower during the later part of this past upcycle and at the peak. Fitch notes that during the past two years primarily non-cash charges against tangible net worth have raised debt/capital ratios. For the majority of public homebuilders, debt composition 15-to-20 years ago was mostly, or all, short-term construction loans and possibly a secured credit line. By contrast, the debt often is weighted most heavily to well-laddered public debt (a more appropriate balance with longer lived real estate assets), and, to a lesser degree, to an unsecured revolving credit facility. All the public homebuilders in Fitch's coverage that have revolving credit facilities have unsecured facilities, except for Beazer Homes U.S.A Inc., M/I Homes and Standard Pacific, which have secured or partially secured revolving credit facilities. D.R. Horton, Inc., Ryland Group, Inc., Meritage and Hovnanian recently terminated their revolving credit facilities. Beazer and Standard Pacific have sharply lowered the size of their credit facilities. Fitch will continue to assess each homebuilder's approach and performance relating to land and development spending, balance sheet (inventory) contraction, FCF generation, and debt reduction when considering its ratings, as well as builders' credit metrics, liquidity, size, geographic and product diversification, margins, and the frequency and the size of real estate writedowns and option writeoffs. Despite the Negative Outlook for the sector, continued progress in industry and company metrics could prompt a reassessment and possible revision of some of the U.S. homebuilder Rating Outlooks. 2009 and 2010: Some of the key drivers of the downturn remain in place although the worldwide and U.S. recovery have begun. Notably, U.S. households are deleveraging and retrenching at a rapid pace, in response to significant job losses, ongoing declines in certain asset prices, and tight credit conditions. In combination with sharp cutbacks in corporate spending and ongoing declines in residential investment, Fitch forecasts U.S. GDP to fall by 2.5% this year, and unemployment to possibly touch 10.3% in 2010. With unemployment still rising, consumer confidence at low levels and household wealth until recently still being affected by real estate and equity price declines, there seems limited prospect that the deleveraging process will end in the near term. Fitch's forecasted 1% decline in consumer spending in 2009 implies a further increase in the saving ratio. Fitch expects the economy to return to positive growth next year, primarily reflecting the impact of the fiscal stimulus package, but also some likely stabilization in housing investment and a weakening inventory overhang. The CBO predicts federal government spending grew by 34% in nominal terms in fiscal 2009 (ending September), which should have an important subsequent multiplier effect on wider spending. Lower household tax rates should also help ease the pace at which consumers deleverage through cutting expenditures, while lower commodity prices will also support consumers' real income. However, while the forecast assumes that policy measures aimed at stabilizing the financial sector gain traction, ongoing household deleveraging will weigh on private sector demand, keeping GDP growth in 2010 well below potential. Rates on 30-year fixed mortgages averaged 6.03% in 2008, off 31 basis points (bps) from the 6.41% in 2006 (and 6.34% in 2007). Fitch expects rates to decline as much as 90-100 bps for all of 2009 as the Fed continues to execute its plan to buy mortgage securities and the economy struggles. Fitch's initial outlook for the housing sector in 2009 started quite bearish due to the influence of a softening economy, even tighter credit standards for homebuyers and the effect of late 2008 disruptions in the credit markets. However, by mid-year the outlook brightened, prompting lesser forecast declines for a number of housing metrics. Fitch most recently forecast a contracting economy during first half-2009, with a mild recovery beginning in 3Q'09 and continuing through 2010. Real GDP is forecast to decrease 2.5% for all of 2009. Investment is expected to plunge 17.6%, with consumer spending to fall 1%, exports to drop 11.6% and imports to see a 16.6% decline. Government spending (up 5.1%) was the economic positive in 2009. Inflation is expected to be a negative 0.2%, compared with a positive 3.8% in 2008. As noted earlier, interest rates are expected to meaningfully recede. An economy in the midst of a severe recession has been another blow to housing. In particular, a deteriorating economy further eroded consumer confidence and accelerated job losses, and consequently, foreclosures. The MBA and John Burns Real Estate Consulting forecast 2.76 million annual foreclosure starts in 2009, up from 2.27 million in 2008, and project 2.94 million foreclosure starts in 2010. The Center for Responsible Lending forecasts 2.43 million foreclosures in 2009 and 8.1 million foreclosures over the next four years. Various programs from Washington are designed to stimulate the economy, stem foreclosures, and improve housing demand. However, these actions are unlikely to stabilize and then boost housing demand until later in 2010 or beyond. In 2009, total housing starts are projected to fall 41.1% to 530,000 with single-family volume declining 30.6% to 430,000. New home sales are forecast to decrease 23.1% to 373,000, while existing home sales are flat at 4.91 million. Average and median single-family new home prices are projected to fall 8.7% and 8.6%, respectively, in 2009. Fitch is forecasting a stronger economy in 2010, although still noticeably below the historical trend line. Real GDP is projected to grow 1.8%. Consumer spending and government spending are forecast to expand 0.3% and 10.8%, respectively. Investment should fall 4.9%, while inflation is expected to be about 0.8%. Total and single-family housing starts are forecast to grow 15.1% and 18.6%, respectively, in 2010. New home sales should expand approximately 20%. Existing home sales should increase about 7.5%. New home prices could average 2%-to-3% higher in 2010. Implications for the Companies and the Ratings: For the full year of 2009, homebuilders' revenues could drop 42% on average. For those builders who are profitable, EBITDA before real estate charges could fall approximately 55%. Current credit metrics (LTM EBITDA/interest incurred, debt to LTM EBITDA, and FFO interest coverage) are considerably lower than at 3Q'08 end and that will also be the case at calendar year-end 2009. Debt/capitalization ratios have deteriorated for the majority of builders over the past three years, largely as a result of erosion in TNW from sizeable real estate charges and FAS 109 adjustments. Although some builders have been more proactive than others in reducing inventories and lowering debt levels, most, in retrospect, started relatively late during this cyclical downturn. For most, inventories and debt are now meaningfully lower than at their peaks: owned inventories down 64.5% from the peak; debt down 35.5% from the peak. Given Fitch's macroeconomic forecast for 2010, public builders are likely to experience a mild recovery next year. On average, revenues should expand low double digit despite lower home prices due to a mix shift to smaller, often entry level homes. Gross margins should improve 150-200 basis points reflecting earlier real estate charges and lesser selling incentives. With higher volume the typical SG&A expense/sales ratio may diminish. As a consequence, most public builders should report modest profits on an EBITDA and pretax basis in 2010. That being said, Fitch still expects modest to moderate land value write downs in 2010. Excluding tax refunds, average CFFO is likely to be lower in 2009 relative to 2008 and to be neutral to modestly negative in 2010. On average, credit metrics, particularly profit related metrics (LTM EBITDA/interest coverage, debt to LTM EBITDA), should stabilize and then start to improve later in 2010. Tangible net worth should grow. Debt leverage should at least modestly improve. Since credit pressures will persist, at least in the intermediate term, it will be imperative that builders continue to manage their balance sheets, selectively reducing or stabilizing land and development spending, with the exception of markets where lot positions dip below minimum acceptable levels and land (preferably rolling option, developed lots) is available on a sharply discounted price basis. Fitch expects homebuilders to reduce debt where possible and to exercise restraint as to share repurchases, dividends, and company acquisitions in these still uncertain times. Builders should be cautious about reacting prematurely to a market bottom and early- stage recovery with overly aggressive real estate purchases. Fitch rates the builders within the context of a typical cycle. In the midst of a non-typical upcycle, as took place in the 1992- 2005 period, a number of builders realized higher credit ratings. Conversely, due to this sharper than expected contraction, which has lasted longer than the norm, and as builders' operating and credit metrics have been even more stressed, ratings have been lowered. While the possibility remains for a few additional company downgrades, the likelihood of such action has diminished. Continued progress in industry and company metrics could prompt a positive revision of a number of Rating Outlooks. This is a list of Fitch rated U.S. homebuilders and their current Issuer Default Ratings and Rating Outlooks: -- Beazer Homes USA ('CCC'; Outlook Negative); -- D.R. Horton, Inc. ('BB'; Outlook Negative); -- Hovnanian Enterprises, Inc. ('CCC'; Outlook Negative); -- KB Home ('BB-'; Outlook Negative); -- Lennar Corp. ('BB+'; Outlook Negative); -- M.D.C. Holdings, Inc. ('BBB-'; Outlook Stable); -- Meritage Homes Corp. ('B+'; Outlook Negative); -- M/I Homes, Inc. ('B'; Outlook Negative); -- NVR, Inc. ('BBB'; Outlook Stable); -- Pulte Homes ('BB+'; Outlook Negative); -- Ryland Group ('BB'; Outlook Negative); -- Standard Pacific Corp. ('CCC'; Outlook Negative); -- Toll Brothers, Inc. ('BBB-'; Outlook Stable). IDEARC INC: Sees Bankruptcy Exit by Yearend After Court OKs Plan ---------------------------------------------------------------- Daily Bankruptcy Review says the Bankruptcy Court cleared the way for Idearc Inc. to exit Chapter 11 protection and wipe $6.25 billion of debt off its books. On December 10, 2009, Idearc said following a two-day confirmation hearing, the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, has asked the Company to submit a proposed final order confirming Idearc's plan of reorganization for its review and execution. During the hearings, the Court also approved a global settlement agreement reached by Idearc and its major creditor groups that resolves all pending litigation among the parties and all objections by such parties to confirmation of the plan of reorganization. Subject to the Court's entry of a formal order expected to occur within the next two weeks, the Company anticipates emergence from its Chapter 11 bankruptcy proceedings on or about December 31, 2009. "We are very pleased with the progress over these past two days which positions the company to complete our financial restructuring by year-end," said Scott W. Klein, chief executive officer of Idearc Inc. "We anticipate we will emerge from this reorganization process with a much stronger balance sheet that will help support our future strategic business plans and objectives." Under Idearc's proposed plan of reorganization, the Company's total debt will be reduced from approximately $9 billion to $2.75 billion of secured bank debt, with the Company's current bank debt holders, bond holders and certain other creditors receiving new common stock of reorganized Idearc or, if they choose, cash (subject to proration and closing conditions). The proposed plan provides that the current holders of Idearc's common stock will not receive any distributions as part of the reorganization, and their equity interests will be cancelled and have no value once the plan becomes effective. "I appreciate the tireless commitment of our team," Klein said. "It is largely due to their hard work and dedication that we were able to achieve the timely completion of the Chapter 11 process. We are also grateful to our various constituencies for their support." About Idearc Inc. Headquartered in DFW Airport, Texas, Idearc, Inc. (NYSE: IAR) -- http://www.idearc.com/-- formerly known as Directories Disposition Corporation, provides yellow and white page directories and related advertising products in the United States and the District of Columbia. Products include print yellow pages, print white pages, Superpages.com, Switchboard.com and LocalSearch.com, the company's online local search resources, and Superpages Mobile, their information directory for wireless subscribers. Idearc is the exclusive official publisher of Verizon print directories in the markets in which Verizon is currently the incumbent local exchange carrier. Idearc uses the Verizon brand on their print directories in their incumbent markets, well as in their expansion markets. Idearc and its affiliates filed for Chapter 11 protection on March 31, 2009 (Bankr. N.D. Tex. Lead Case No. 09-31828). Toby L. Gerber, Esq., at Fulbright & Jaworski, LLP, represents the Debtors in their restructuring efforts. The Debtors have tapped Moelis & Company as their investment banker; Kurtzman Carson Consultants LLC as their claims agent. William T. Neary, the United States Trustee for Region 6, appointed six creditors to serve on an official committee of unsecured creditors of Idearc, Inc., and its debtor-affiliates. The Committee selected Mark Milbank, Tweed, Hadley & McCloy LLP, as counsel, and Haynes and Boone, LLP, co- counsel. The Debtors' financial condition as of Dec. 31, 2008, showed total assets of $1,815,000,000 and total debts of $9,515,000,000. INTEGRATED BIOPHARMA: Posts $937,000 Net Loss in Qtr Ended Sept 30 ------------------------------------------------------------------ Integrated Biopharma, Inc., and subsidiaries reported a net loss of $937,000 on net sales of $11.0 million for the three months ended September 30, 2009, compared with a net loss of $3.2 million on net sales of $9.4 million for the same period ended September 30, 2008. At September 30, 2009, the Company's consolidated balance sheets showed $16.2 million in total assets and $17.9 million in total liabilities, resulting in a $1.7 million shareholders' deficit. The Company's consolidated balance sheets at September 30, 2009, also showed strained liquidity with $11.8 million in total current assets available to pay $15.1 million in total current liabilities. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?4bc8 Going Concern Doubt The Company has incurred recurring operating losses and negative operating cash flows for the three consecutive fiscal years ended in June 30, 2009, including a net loss attributable to common stockholders of $19.4 million and negative operating cash flows of $2.8 million for the year ended June 30, 2009. For the three months ended September 30, 2009, the Company had net operating income of $26,000 and a net loss of $937,000. At September 30, 2009, the Company had cash and cash equivalents of approximately $2.0 million, a working capital deficit of $3.3 million, primarily attributable to the discounted amended Notes Payable in the amount of $7.7 million, with a stated principal amount of $7.8 million, and which are due on the earlier of the date stated in an Acceleration Notice (which must be at least two (2) business days following the date on which the notice is delivered), if any, or November 15, 2009, and an accumulated deficit of $45.3 million. As of the date of this filing, November 19, 2009, the Company has not received an Acceleration Notice, nor has it finalized any extensions or refinancing of the discounted amended Notes Payable with the stated maturity of November 15, 2009. The Company has historically raised capital in private placements, but continues to sustain losses and has only recently had positive cash flows from its operations. These factors may hinder the Company's efforts in raising new capital or refinancing its matured debt. Additionally, current economic conditions may cause a decline in business and consumer spending which could adversely affect the Company's business and financial performance. These factors raise substantial doubt as to the Company's ability to continue as a going concern. If the Company is unable to raise additional capital or successfully refinance its discounted amended Notes Payable of at least $7.8 million upon acceptable terms, it would have a material adverse effect on the Company. About Integrated BioPharma Based in Hillside, N.J., Integrated BioPharma, Inc. (INBP.OB) -- -- http://www.ibiopharma.com/-- together with its subsidiaries, manufactures, distributes, markets, and sells vitamins and nutritional supplements in the United States. INVITEL HOLDINGS: Magyar Secures Consents for Waivers, Amendments ----------------------------------------------------------------- Invitel Holdings A/S, on behalf of its subsidiary Magyar Telecom B.V., announced that consents from holders of a majority in aggregate principal amount of the Issuer's outstanding EUR125,675,000 Floating Rate Senior Notes due 2013 (ISIN: XS0297861279 (Reg S) and ISIN: XS027861436 (144A)) have been received for certain proposed waivers and amendments to the Indenture dated as of April 27, 2007, among inter alios the Issuer, the subsidiary guarantors party thereto and BNY Corporate Trustee Services Limited, as trustee, pursuant to which the Notes were issued. The purpose of the Proposed Amendments and Waivers is to amend the Indenture to permit Invitel and its subsidiaries to refinance certain of its indebtedness. The Proposed Waivers and Amendments are reflected in a Seventh Supplemental Indenture dated December 11, 2009, among, inter alios, the Issuer, the subsidiary guarantors party thereto and the Trustee. The payment date for the Consents received in accordance with the procedure set out in the consent solicitation statement dated December 7, 2009, is expected to be December 16, 2009 or as soon as practical thereafter. About Invitel Holdings A/S Invitel Holdings A/S is the number one alternative and the second- largest fixed line telecommunications and broadband Internet services provider in the Republic of Hungary. In addition to delivering voice, data and Internet services in Hungary, it is also a leading player in the Central and Eastern European wholesale telecommunications market. * * * As reported by the Troubled Company Reporter-Europe on Nov. 9, 2009, Standard & Poor's Ratings Services said it raised its long- term corporate credit rating on Hungary-based fixed-line telecommunications operator Invitel Holdings A/S and related entities Magyar Telecom B.V. and HTCC Holdco I B.V. to 'CCC+' from 'SD', reflecting S&P's review of the group's capital structure and liquidity profile after completing three debt exchange offers. The outlook is stable. At the same time, S&P raised the issue ratings on Magyar Telecom B.V.'s EUR142 million 10.75% notes due 2012 and EUR200 million floating-rate notes due 2013, and the issue rating on HTCC Holdco 1 B.V.'s EUR125 million junior subordinated payment-in-kind notes due 2013, to 'CCC-' from 'D'. The issue ratings on the senior secured EUR165 million credit facilities at the group's subsidiary Invitel Zrt. were raised to 'CCC+' from 'CC'. JONES STEPHENS: Files for Bankruptcy with Exit Plan --------------------------------------------------- Jones Stephens Corp., a specialty plumbing supplier, filed for bankruptcy (Bankr. D. Del. Case No. 09-14413) after working out a reorganization plan with some lenders. The Company in its petition said it had as much as $100 million in assets and as much as $500 million in debt. Jones Stephens said in a statement it has reached a financial restructuring agreement with a majority of its senior lenders and shareholders that includes the shareholders' commitment to invest $15 million of new equity capital in the business. The Company has entered Chapter 11 to implement the agreement and restructure its balance sheet. Jones Stephens stated that it does not anticipate any changes to its operations as a result of the filing and will continue to provide customers with a steady flow of product at competitive prices. As of December 15, 2009, the Company had cash on hand to support both the restructuring and ongoing operations; no debtor in possession financing is being sought. "We are delighted that our shareholders have demonstrated their commitment to our business by investing $15 million in new equity capital and that our lenders have agreed to reduce our debt. This restructuring and improvement to our capital structure will allow Jones Stephens to continue to add new products and fund our working capital as the construction industry recovers," said Byron Shaw, the Company's President. The restructuring agreement, which will be implemented through Chapter 11, includes a plan support agreement under which a majority of the senior lenders agreed to vote in favor of the Company's Chapter 11 plan of reorganization. The terms of the restructuring agreement provide that (a) the Company's senior secured debt will be reduced from $61.4 million to $31.4 million; (b) the Company's unsecured debt of approximately $25 million will be eliminated; (c) the maturity on the Company's senior secured debt will be extended to September 2015; and (d) the Company's management will remain in place. Implementation of the agreement is dependent upon a number of factors, including the filing of a plan of reorganization; the approval of a disclosure statement; and the confirmation and consummation of the plan in accordance with the provisions of the Bankruptcy Code. The court papers include requests for relief designed to ensure protection for the Company's key stakeholders. Employee wages and benefits are expected to continue without interruption. The Company filed its Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware. Vendors, customers, suppliers, employees and other stakeholders seeking more information about the filing may contact the Company's information hotline at 1.877.788.2812, or visit the information Web site at http://www.JSCinformation.com/ About Jones Stephens Corporation Headquartered in Moody, Alabama, Jones Stephens Corp. -- http://www.plumbest.com/-- is a designer, manufacturer, and distributor of specialty plumbing products, primarily serving plumbing wholesalers, do-it-yourself retailers and hardware stores. Jones Stephens offers its products under the Jones Stephens(TM) and PlumBest(R) brand names. Products are used in repair, remodel and new construction applications within both the residential and commercial markets. The company hired AlixPartners LLP as its financial adviser and Drinker Biddle & Reath LLP as its bankruptcy counsel. JOSEPH GILCHRIST: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Joseph Robert Gilchrist aka Joseph R. Gilchrist aka Joe Gilchrist 16296 Perdido Key Dr. Pensacola, FL 32507 Bankruptcy Case No.: 09-32501 Chapter 9 Petition Date: December 14, 2009 Court: United States Bankruptcy Court Northern District of Florida (Pensacola) Debtor's Counsel: John E. Venn, Esq. 220 W. Garden St., Suite 603 Pensacola, FL 32502 Tel: (850) 438-0005 Fax: (850) 438-1881 Email: johnevennjrpa@aol.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. Gilchrist. Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bank of America 10122 Nelle Ave., $262,500 PO Box 650070 Pensacola, FL- ($99,343 Dallas, TX 75265 secured) Bryant Bank Personal guaranty of $1,788,426 1502 North McKenzie St. debt of GW Sod I, LLC- Foley, AL 36535 Secured by acreage in Baldwin County, Alabama Central Progressive Bank 17395 Perdido Key $5,000,000 29092 Krentel Rd. Dr., Pensacola, FL ($1,299,000 Lacombe, LA 70445 and 17350 Perdido Key secured) Key Dr. v(Silver Moon ($957,784 Property) senior lien) Coastal Bank Personal guaranty of $949,924 & Trust debt of GW Sod, II, LLC 400 W. Garden St. -Secured by 41 acres Pensacola, FL 32502 in Baldwin County, AL Coastal Bank Personal guaranty of $949,924 400 W. Garden St. debt of GW Sod, II, LLC Pensacola, FL 32502 -Secured by 45 acres in Baldwin County, AL Coastal Bank & Trust 16296 Perdido Key $501,592 400 W. Garden St. Dr., Pensacola, FL ($1,705,222 Pensacola, FL 32502 (Also includes 16000 secured) Perdido Key Dr) ($1,889,969 senior lien) Colonial Bank 16296 Perdido Key $1,889,969 PO Box 830623 Dr., Pensacola, FL ($1,705,222 Birmingham, AL 35283 (Also includes 16000 secured) Perdido Key Dr) Colonial Bank Personal guaranty of $175,000 debt of Pat Mac, Inc.- Secured by real property next to Austinwood Apartments Colonial Bank Personal Guaranty of $7,444,706 PO Box 830623 debt of Pat Mac, Inc. Birmingham, AL 35283 (Secured by Austinwood Apartments, 9890 North Loop Rd) Compass Bank Personal guaranty of $566,991 PO Box 830927 debt of Gilchrist Birmingham, AL 35283 Glassell Partnership, LLP-Secured by 8 units at Landfall Condominiums in Perdido Countrywide 13937 Perdido Key Dr., $770,000 PO Box 660694 #1501, Pensacola, FL ($579,786 Dallas, TX 75266 (Mirabella Condominium) secured) First National Bank of Blue Angel Parkway, $137,925 Baldwin County Pensacola, FL ($362,217 1207 N. McKenzie St. Parcel ID's secured) Foley, AL 36535 232S311102000001 ($459,017 and senior lien) 232S311102001001) First National Bank of Blue Angel Parkway, $459,017 Baldwin County Pensacola, FL ($362,217 1207 N. McKenzie St. (Parcel ID's secured) Foley, AL 36535 232S311102000001 and 232S311102001001) First National Bank 1.5 acres on Gulf $3,223,640 Baldwin County (lot next to Flora ($2,300,000 1207 N. McKenzie St. Bama Lounge) secured) Foley, AL 36535 Golf Coast Community Bank 120 acres and 80 acres $5,000,000 40 N. Palafox St. Foley Beach Express, ($2,125,300 Pensacola, FL 32502 Baldwin County, secured) AL Internal Revenue Service Income taxes $230,165 Centralized Insolvency Operation PO Box 21126 Philadelphia, PA 19114 M&T Mortgage Units 1516&1517 $910,000 PO Box 1288 Phoenix Condominiums, ($848,700 Buffalo, NY 14240 Orange Beach, AL secured) Southeast Capital Personal guaranty of $3,000,000 6300 N. Sagewood Dr. debt of Flora Bama Suite H-117 Lounge & Package Store, Park City, UT 84098 Inc. Secured by real property Owned by Flora Bama Lounge & Package Store Inc. United Bank Debt of Woerner/ $591,507 PO Box 8 Gilchrist Partnership Atmore, AL 36504 Wachovia Bank 21.42 acres on Highway $300,000 PO Box 740502 98 in Lillian/Elberta, ($160,900 Atlanta, GA 30374 Alabama secured) (Co-owner is Donald Russell) KB HOME: Fitch Sees Light at End of Tunnel for Homebuilders ----------------------------------------------------------- With various macroeconomic housing and related statistics bottoming about mid-year 2009 and subsequently moving forward in fits and starts, a four-year downturn has evidently come to an end for U.S. homebuilders, according to Fitch Ratings in its outlook report for the sector. While Fitch maintains a Negative Outlook for U.S. homebuilding in 2010, the expected conclusion of the national housing credit has positively influenced housing data over the last few months. Pending home sales, existing home sales, single family housing starts and single family new home sales have been generally showing improvement after bottoming out earlier this year. The same holds true for new home inventories, home pricing and consumer and builder sentiment. Importantly, the U.S. economy apparently moved from recession to expansion in third quarter-2009 (3Q'09). However, challenges remain, especially the expected upcoming surge in delinquencies and foreclosures for both Alt-A and option adjustable-rate mortgages. Fitch raised its forecasts for starts and new home sales earlier this year, the first positive adjustments in these metrics in over three years. Nevertheless, Fitch anticipates that the early stages of this expansion may be more muted than the average. During the first 12-15 months off the bottom, the recovery may appear jaw-toothed as substantial foreclosures now in the pipeline present as distressed sales, and as meaningful new foreclosures arise from Alt-A and option ARM resets. High unemployment rates and the probable tightening of certain FHA loan standards (higher minimum credit scores for new borrowers and greater upfront cash requirements) will be notable headwinds early in the upcycle. "The continuation and expansion of the national housing credit should partially help offset expected seasonal declines during the winter months through the spring of 2010," said Managing Director and lead U.S. homebuilding analyst Robert Curran. "The federal government's continuing efforts to moderate foreclosures may also show some success in 2010." Despite having fewer competitors, public builders will continue to be challenged and need to maintain tight controls over costs and expenses during 2010. Ratings Rationale: Housing continues to be weak. Fitch expects that the public builders by and large to typically stabilize their aggregate land positions over the next 6-to-12 months or selectively add to owned, developed lot holdings. The still irregular flow of appropriately priced land from banks and others tends to support this conclusion. "With operational and financial pressures moderating to some extent, most public homebuilders have to operate successfully within this still challenging environment or wither away," said Curran. Companies have to at least maintain current cost profiles or continue to downsize to the point where they can remain/be profitable (excluding nonrecurring real estate charges). That means possible further moderate cuts in staffing and other overhead, as well as other cost reductions. The builders' gross profit margins and selling, general, and administrative expense/sales ratios will confirm the success of their efforts. The public homebuilders cannot significantly influence revenue trends and profitability at present, but they can manage their balance sheets and their liquidity. In a period when liquidity is still an issue for all U.S. companies, Fitch believes that, overall, the U.S. homebuilding sector has adequate liquidity. However, some weaker companies face greater liquidity risk. Many companies in this sector have generated meaningful free cash flows over the past 12 months while terming out borrowings, and for some maintaining access to committed bank facilities, which together provide room to handle maturities and fund working capital needs over the next year and beyond. Admittedly, most facilities have been substantially slimmed down as builders sought covenant relief in amendments. For certain builders, cash flow has been enhanced by relatively recent debt offerings, large land sales, tax refunds, and even some public equity offerings (e.g. Meritage Homes Corp.; Hovnanian Enterprises, Inc.; Lennar Corp.; M/I Homes, Inc.) or other external cash infusions (Standard Pacific Corp.). Recently passed legislation that extends the net operating losses carryback to offset taxable profits from the previous five years will result in meaningful tax refunds for most public homebuilders early in 2010 further enhancing liquidity and tangible net worth. Compared with the last major housing downturn in the latter 1980s into the early 1990s, leverage was lower during the later part of this past upcycle and at the peak. Fitch notes that during the past two years primarily non-cash charges against tangible net worth have raised debt/capital ratios. For the majority of public homebuilders, debt composition 15-to-20 years ago was mostly, or all, short-term construction loans and possibly a secured credit line. By contrast, the debt often is weighted most heavily to well-laddered public debt (a more appropriate balance with longer lived real estate assets), and, to a lesser degree, to an unsecured revolving credit facility. All the public homebuilders in Fitch's coverage that have revolving credit facilities have unsecured facilities, except for Beazer Homes U.S.A Inc., M/I Homes and Standard Pacific, which have secured or partially secured revolving credit facilities. D.R. Horton, Inc., Ryland Group, Inc., Meritage and Hovnanian recently terminated their revolving credit facilities. Beazer and Standard Pacific have sharply lowered the size of their credit facilities. Fitch will continue to assess each homebuilder's approach and performance relating to land and development spending, balance sheet (inventory) contraction, FCF generation, and debt reduction when considering its ratings, as well as builders' credit metrics, liquidity, size, geographic and product diversification, margins, and the frequency and the size of real estate writedowns and option writeoffs. Despite the Negative Outlook for the sector, continued progress in industry and company metrics could prompt a reassessment and possible revision of some of the U.S. homebuilder Rating Outlooks. 2009 and 2010: Some of the key drivers of the downturn remain in place although the worldwide and U.S. recovery have begun. Notably, U.S. households are deleveraging and retrenching at a rapid pace, in response to significant job losses, ongoing declines in certain asset prices, and tight credit conditions. In combination with sharp cutbacks in corporate spending and ongoing declines in residential investment, Fitch forecasts U.S. GDP to fall by 2.5% this year, and unemployment to possibly touch 10.3% in 2010. With unemployment still rising, consumer confidence at low levels and household wealth until recently still being affected by real estate and equity price declines, there seems limited prospect that the deleveraging process will end in the near term. Fitch's forecasted 1% decline in consumer spending in 2009 implies a further increase in the saving ratio. Fitch expects the economy to return to positive growth next year, primarily reflecting the impact of the fiscal stimulus package, but also some likely stabilization in housing investment and a weakening inventory overhang. The CBO predicts federal government spending grew by 34% in nominal terms in fiscal 2009 (ending September), which should have an important subsequent multiplier effect on wider spending. Lower household tax rates should also help ease the pace at which consumers deleverage through cutting expenditures, while lower commodity prices will also support consumers' real income. However, while the forecast assumes that policy measures aimed at stabilizing the financial sector gain traction, ongoing household deleveraging will weigh on private sector demand, keeping GDP growth in 2010 well below potential. Rates on 30-year fixed mortgages averaged 6.03% in 2008, off 31 basis points (bps) from the 6.41% in 2006 (and 6.34% in 2007). Fitch expects rates to decline as much as 90-100 bps for all of 2009 as the Fed continues to execute its plan to buy mortgage securities and the economy struggles. Fitch's initial outlook for the housing sector in 2009 started quite bearish due to the influence of a softening economy, even tighter credit standards for homebuyers and the effect of late 2008 disruptions in the credit markets. However, by mid-year the outlook brightened, prompting lesser forecast declines for a number of housing metrics. Fitch most recently forecast a contracting economy during first half-2009, with a mild recovery beginning in 3Q'09 and continuing through 2010. Real GDP is forecast to decrease 2.5% for all of 2009. Investment is expected to plunge 17.6%, with consumer spending to fall 1%, exports to drop 11.6% and imports to see a 16.6% decline. Government spending (up 5.1%) was the economic positive in 2009. Inflation is expected to be a negative 0.2%, compared with a positive 3.8% in 2008. As noted earlier, interest rates are expected to meaningfully recede. An economy in the midst of a severe recession has been another blow to housing. In particular, a deteriorating economy further eroded consumer confidence and accelerated job losses, and consequently, foreclosures. The MBA and John Burns Real Estate Consulting forecast 2.76 million annual foreclosure starts in 2009, up from 2.27 million in 2008, and project 2.94 million foreclosure starts in 2010. The Center for Responsible Lending forecasts 2.43 million foreclosures in 2009 and 8.1 million foreclosures over the next four years. Various programs from Washington are designed to stimulate the economy, stem foreclosures, and improve housing demand. However, these actions are unlikely to stabilize and then boost housing demand until later in 2010 or beyond. In 2009, total housing starts are projected to fall 41.1% to 530,000 with single-family volume declining 30.6% to 430,000. New home sales are forecast to decrease 23.1% to 373,000, while existing home sales are flat at 4.91 million. Average and median single-family new home prices are projected to fall 8.7% and 8.6%, respectively, in 2009. Fitch is forecasting a stronger economy in 2010, although still noticeably below the historical trend line. Real GDP is projected to grow 1.8%. Consumer spending and government spending are forecast to expand 0.3% and 10.8%, respectively. Investment should fall 4.9%, while inflation is expected to be about 0.8%. Total and single-family housing starts are forecast to grow 15.1% and 18.6%, respectively, in 2010. New home sales should expand approximately 20%. Existing home sales should increase about 7.5%. New home prices could average 2%-to-3% higher in 2010. Implications for the Companies and the Ratings: For the full year of 2009, homebuilders' revenues could drop 42% on average. For those builders who are profitable, EBITDA before real estate charges could fall approximately 55%. Current credit metrics (LTM EBITDA/interest incurred, debt to LTM EBITDA, and FFO interest coverage) are considerably lower than at 3Q'08 end and that will also be the case at calendar year-end 2009. Debt/capitalization ratios have deteriorated for the majority of builders over the past three years, largely as a result of erosion in TNW from sizeable real estate charges and FAS 109 adjustments. Although some builders have been more proactive than others in reducing inventories and lowering debt levels, most, in retrospect, started relatively late during this cyclical downturn. For most, inventories and debt are now meaningfully lower than at their peaks: owned inventories down 64.5% from the peak; debt down 35.5% from the peak. Given Fitch's macroeconomic forecast for 2010, public builders are likely to experience a mild recovery next year. On average, revenues should expand low double digit despite lower home prices due to a mix shift to smaller, often entry level homes. Gross margins should improve 150-200 basis points reflecting earlier real estate charges and lesser selling incentives. With higher volume the typical SG&A expense/sales ratio may diminish. As a consequence, most public builders should report modest profits on an EBITDA and pretax basis in 2010. That being said, Fitch still expects modest to moderate land value write downs in 2010. Excluding tax refunds, average CFFO is likely to be lower in 2009 relative to 2008 and to be neutral to modestly negative in 2010. On average, credit metrics, particularly profit related metrics (LTM EBITDA/interest coverage, debt to LTM EBITDA), should stabilize and then start to improve later in 2010. Tangible net worth should grow. Debt leverage should at least modestly improve. Since credit pressures will persist, at least in the intermediate term, it will be imperative that builders continue to manage their balance sheets, selectively reducing or stabilizing land and development spending, with the exception of markets where lot positions dip below minimum acceptable levels and land (preferably rolling option, developed lots) is available on a sharply discounted price basis. Fitch expects homebuilders to reduce debt where possible and to exercise restraint as to share repurchases, dividends, and company acquisitions in these still uncertain times. Builders should be cautious about reacting prematurely to a market bottom and early- stage recovery with overly aggressive real estate purchases. Fitch rates the builders within the context of a typical cycle. In the midst of a non-typical upcycle, as took place in the 1992- 2005 period, a number of builders realized higher credit ratings. Conversely, due to this sharper than expected contraction, which has lasted longer than the norm, and as builders' operating and credit metrics have been even more stressed, ratings have been lowered. While the possibility remains for a few additional company downgrades, the likelihood of such action has diminished. Continued progress in industry and company metrics could prompt a positive revision of a number of Rating Outlooks. This is a list of Fitch rated U.S. homebuilders and their current Issuer Default Ratings and Rating Outlooks: -- Beazer Homes USA ('CCC'; Outlook Negative); -- D.R. Horton, Inc. ('BB'; Outlook Negative); -- Hovnanian Enterprises, Inc. ('CCC'; Outlook Negative); -- KB Home ('BB-'; Outlook Negative); -- Lennar Corp. ('BB+'; Outlook Negative); -- M.D.C. Holdings, Inc. ('BBB-'; Outlook Stable); -- Meritage Homes Corp. ('B+'; Outlook Negative); -- M/I Homes, Inc. ('B'; Outlook Negative); -- NVR, Inc. ('BBB'; Outlook Stable); -- Pulte Homes ('BB+'; Outlook Negative); -- Ryland Group ('BB'; Outlook Negative); -- Standard Pacific Corp. ('CCC'; Outlook Negative); -- Toll Brothers, Inc. ('BBB-'; Outlook Stable). LEHMAN BROTHERS: FINRA Compensates Investor for Notes ----------------------------------------------------- A retail investor received payment of $200,000 after the Financial Industry Regulation Authority decided that her broker inappropriately sold her risky Lehman Brothers notes, according to a December 4 report by morningstar.com The case, one of the first involving the Lehman notes to be heard by a Finra arbitration panel, was brought for arbitration a year ago against UBS Financial Services, a unit of UBS. It sought $300,000 in damages because the broker recommended structured products. Jacob Zamansky, Esq., at Zamansky & Associates, in New York, who represented the investor in the arbitration case said the notes were "speculative derivative securities" and were "unsuitable" for unsophisticated investors, according to the report. UBS expressed disappointment over the decision, saying that "any client losses were the direct result of the unexpected and unprecedented failure of Lehman Brothers," which the company said affected all Lehman bondholders, morningstar.com reported. As in most arbitration awards, the three-person FINRA arbitration panel did not give reasons for its findings, the report said. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: HKMA Updates on Probe on Minibonds --------------------------------------------------- The Hong Kong Monetary Authority announced that there were 765 Lehman-Brothers-related non-minibond complaint cases which are under disciplinary consideration after detailed investigation by the HKMA, and there was a Lehman-Brothers-related non-minibond complaint case in which the relevant individual concerned has been disciplined after completion of the disciplinary process. Up till now, the HKMA has referred a total of 334 Lehman- Brothers-related non-minibond cases to the Securities and Futures Commission (SFC) for further action. These cases have been reviewed by the HKMA, which has determined that there are sufficient grounds for referring them to the SFC to facilitate its investigations into banks. The HKMA has, up to December 3, 2009, received 21,762 complaints concerning Lehman-Brothers-related products, of which 7,731 relate to non-minibond products. Of the Lehman-Brothers-related non- minibond complaints, 7,720 cases have gone through the preliminary assessment process and, as a result, the HKMA is currently investigating 3,103 cases and seeking further information on 1,246 cases. A total of 2,605 Lehman-Brothers-related non-minibond complaints have been closed as there was not sufficient prima facie evidence found after the preliminary assessment process or no sufficient grounds and evidence found after detailed investigations. A total of 765 Lehman-Brothers-related non- minibond complaint cases have led to, and are still under, disciplinary consideration and disciplinary action has been taken in respect of one case. Of the minibond complaints, 13,114 cases are eligible for the Lehman-Brothers Minibonds Repurchase Scheme ("the Scheme") or the voluntary offer made by the distributing banks to customers with whom they had reached settlements before the Scheme was introduced. Eight hundred and ninety-six minibond complaints involving customers who are not eligible for, or have indicated that they do not accept, the repurchase offer under the Scheme or whose cases require clarification from the banks will continue to be handled by the HKMA if the complaints cannot be resolved by the enhanced complaint handling system introduced by the distributing banks as agreed by the regulators. Since August 7, 2009, 16 minibond distributing banks have begun the issue of repurchase offer letters to eligible customers (about 25,000 customers) under the Scheme. Up to December 2, 2009, 24,669 customers have responded to the repurchase offers, of whom 24,399 customers or 98.9% have accepted the offers. As of 30 November 2009, for customers who had accepted the offer, 99.97% of them already received payment from the banks concerned, while the remaining payments will be settled soon (in any case no later than 30 days after having received the duly completed acceptance forms from these customers). Separately, about 4,800 customers who had reached settlements with the banks prior to the introduction of the Scheme are eligible for the voluntary offer made by the banks, with a view to bringing them in line with the eligible customers who accept the repurchase offer under the Scheme. For customers whose previous settlement amount was less than 60% (for customers aged below 65) or 70% (for customers aged 65 or above) of the principal invested, 99.5% had already received top-up payments from the banks concerned on November 30, 2009. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: LBI Trustee Has Deal on Misdirected Transfers -------------------------------------------------------------- James Giddens, trustee for Lehman Brothers Inc., obtained the Court's approval of the stipulations he entered into with these parties concerning the return of funds erroneously transferred to LBI's bank accounts: Parties Amount ------- ----------- Lehman Brothers Trust Company N.A. $102,788 Bernice Hornblass IRA Rollover $169,520 The David Harding No2 Settlement GBP35,828 Highstar Capital III LP $729,319 PFPC Trust Company $695,205 Barclays Capital Inc. $421,000 The Venus Trust/The Neptune Trust JPY54,905,898 FirstCaribbean International Bank (Bahamas) $1,000,000 FirstCaribbean International Bank (Cayman) $1,000,000 The Drake Offshore Master Fund Ltd./ The Drake Low Volatility Master Fund Ltd. $883,292 Mr. Giddens is awaiting the Court's approval of a stipulation he reached with Roslyn Greenberg Greenfield, which requires LBI to return $59,561. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: LBSF Ch. 11 Case Recognized as Main Proceeding --------------------------------------------------------------- The High Court of Justice of England and Wales issued an order recognizing the Chapter 11 case of Lehman Brothers Special Financing Inc. as a foreign main proceeding. The order came after LBSF applied for recognition of its bankruptcy case to the High Court on November 24, 2009. LBSF made the move to protect its properties in the U.K. from a group of noteholders. The noteholders including Perpetual Trustee Company Ltd. and Belmont Park Investments Pty Ltd. reportedly filed claims against BNY Corporate Trustee Services Ltd. to foreclose the collateral held in trust by BNY, which secures LBSF's interest in a credit default swap with an Irish corporation. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Reps Mull Deal to Determine Intercompany Balances ------------------------------------------------------------------ Representatives of the Lehman Brothers Group of Companies, who earlier this year agreed a Global Cross-Border Insolvency Protocol to enhance cooperation between the various Lehman entities, have held their second meeting. A key objective of the second meeting was to reach agreement on the determination of both Trading and Non-Trading Inter-Company Balances. The Global Protocol participants made very significant progress and a methodology for settling all Non-Trading balances between affiliates will be finalised shortly. This will involve accepting as a starting point for final determination, a set of balances as at September 14, 2008. These balances were produced following a worldwide accounting exercise to "close" the Lehman books as at that date, being the day before Lehman Brothers Holding Inc (LBHI) filed for bankruptcy. Edward Middleton, one of the Liquidators of the eight Lehman Hong Kong entities, says: "Determination of the inter-company positions lies on the critical path for pretty much all administrations and, ordinarily, one of the features of insolvency processes is that creditors are required to prove their claims almost on an item-by-item basis from day one of their relationship with the debtor. If we were to take that approach in Lehmans, however, the length of time over which balances were built up, plus the sheer volume of transactions making up those balances would have made the scale of such an exercise unimaginable. A better way had to be found and this is it. Lehmans traded normally right up until that very last Friday. Its accounting systems were robust and its routine daily, weekly and monthly accounting procedures were carried out uninterrupted. Accordingly, we have been able to gain comfort that the 'Global Close' exercise has produced a robust starting point for the validation of these inter-company balances, and will reduce by many thousands the hours that would otherwise have had to be spent." In the case of Trading Balances, the affiliates have agreed the methodology for valuing the various inter-company trades including stock loans, repos and OTC derivatives. Global Protocol participants will host another derivatives valuations seminar in January 2010 in New York, to coincide with the next meeting of Lehman affiliates. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Varde, JPM Buying Millions in Claims ----------------------------------------------------- The Office of the Clerk of the Bankruptcy Court received more than 30 notices of transfer of claims in Lehman Brothers Holdings Inc.'s Chapter 11 cases from November 24 to December 7, 2009: Claim Claim Transferors Transferees Number Amount ----------- ----------- ------ ---------- Robert Franz Andromeda Global 13065 $621,736 Credit Fund Ltd. Deutsche Bank AG Elliott Associates LP 12779 $4,000,000 London Branch Elliott International 12779 $6,000,000 TRG Global Opportunity JPMorgan Chase 27688 $2,712,517 Master Fund Ltd. Bank N.A. 27689 $2,712,517 LBBW Asset Management Morgan Stanley & Co. 49766 $1,068,225 Investmentgesellschaft International plc Morgan Stanley & Co. King Street Capital 58705 $5,040,674 International plc Master Fund Ltd. Morgan Stanley & Co. King Street Capital 58705 $2,109,218 International plc Morgan Stanley & Co. CVI GVF (Lux) 42289 $6,918,929 International Master Sarl Investec Funds Series Bank of America N.A. 26261 $2,976,290 IV-Capital Accumulator Investec Capital Bank of America N.A. 26262 $5,246,840 Accumulator Trust Ltd. Commonwealth Bank of Deutsche Bank AG 14975 $95,285,830 Australia London Branch Aliant Bank JPMorgan Chase 25427 $2,836,155 Bank N.A. 25383 $2,836,155 Alliance Bernstein LP Morgan Stanley & Co. 42289 $6,918,929 International plc. 42284 $2,920,327 EF Securities LLC JPMorgan Chase 11408 $12,808,558 Bank N.A. 11407 $12,808,558 Ellington Credit JPMorgan Chase 11404 $1,065,658 Fund Ltd. Bank N.A. 11403 $1,065,658 Ellington Mortgage JPMorgan Chase 11405 $285,521 Fund S/C Ltd. Bank N.A. 11406 $285,521 Ellington Mortgage JPMorgan Chase 11411 $4,782,753 Partners LP Bank N.A. 11412 $4,782,753 Ellington Special JPMorgan Chase 11410 $4,947,200 Opportunities Ltd. Bank N.A. 11409 $4,947,200 BlueMountain Timberline Varde Investment 24944 $5,718,758 Limited Partners L.P. 24945 $5,718,758 BlueMountain Equity Varde Investment 24946 $1,086,788 Alternatives Master Partners L.P. 24947 $1,086,788 Fund L.P. BlueMountain Credit Varde Investment 24940 $2,536,423 Alternatives Master Partners, L.P. 24941 $2,536,423 Fund L.P. 24942 $278,324 24943 $278,324 Longacre Opportunity SPCP Group LLC 7603 $440,084 Fund L.P. 7602 $440,084 1280 $444,376 1279 $444,376 About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MAINEPCS LLC: Files for Chapter 11 Bankruptcy --------------------------------------------- MaineBiz Online relates that MainePCS LLC made a voluntary Chapter 11 filing with assets and liabilities of more than $1 million. The company owes $194,000 to Oxford Networks and $29,000 to Advantage Payroll Services. MainePCS LLC is a telecommunications company in Buckfield. MEDIALINK WORLDWIDE: Earns $48,000 in Q2 2009 --------------------------------------------- Medialink Worldwide Incorporated reported net income of $48,000 on revenues of $3,550,000 for the three months ended June 30, 2009, compared with a net loss of $8,056,000 on revenues of $4,846,000 for the corresponding period last year. Revenues for the three months ended June 30, 2009, decreased by $1,296,000 or 26.7%, as compared to the 2008 period due primarily to a decline in the volume of work. The Company incurred a goodwill impairment charge of $3,429,000 in the second quarter of 2008 based on its goodwill impairment test at that time indicating that the carrying value of the goodwill exceeded its fair value. The Company incurred an operating loss of $276,000 in the second quarter of 2009 as compared to an operating loss of $4,434,000 in the comparable quarter in 2008. The Company recognized a gain of $294,000 on the extinguishment of its subordinated debentures in connection with the Payoff, Amendment and Settlement Agreements with the holders of its variable rate convertible debentures and the Agreement and General Release with the former debenture holders. The results of operations for the three months ended June 30, 2009, include income from discontinued operations of $11,000, while the results of operations for the three months ended June 30, 2008, include a loss from discontinued operations of $3,534,000 which consisted of a loss from operations of $2,614,000 and $920,000 for TTX (US) LLC and TTX Limited (collectively, "Teletrax") and Medialink UK Limited, respectively. Nine Month Results The Company reported a net loss of $1,450,000 on revenues of $6,732,000 for the six months ended June 30, 2009, compared with a net loss of $10,577,000 on revenues of $9,706,000 for the corresponding period last year. Balance Sheet At June 30, 2009, the Company's consolidated balance sheets showed $4,785,000 in total assets, $3,938,000 in total liabilities, and $847,000 in total stockholders' equity. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?4bc5 2008 Annual Report The Company reported a net loss of $14,586,000 on revenues of $19,629,000 for the year ended December 31, 2008, compared with a net loss of $4,601,000 on revenues of $21,898,000 for the year ended December 31, 2007. A full-text copy of the Company's 2008 annual report is available at no charge at http://researcharchives.com/t/s?4bc6 Going Concern Doubt The Company's ability to continue as a going concern is dependent on the ability of the Company to achieve sustained profitability or to obtain additional financing or investment from third-party investors. In July 2009, the Company entered into a merger agreement pursuant to which all of its outstanding common stock would be acquired, subject to stockholder approval. There can be no assurance that the merger will be consummated or that the Company will be successful in its other endeavors. If the Company is not successful in these efforts, it may not be able to finance its operations and commitments with its working capital, and therefore may not be able to continue as a going concern. This would result in the Company's inability to realize the carrying value of its assets and liquidate its liabilities, and would likely result in the Company ceasing operations. About Medialink Worldwide Based in New York, Medialink Worldwide Incorporated (Nasdaq: MDLK) -- http://www.medialink.com/--provides unique news and marketing media strategies and solutions t hat enable corporations and organizations to inform and educate their target audiences with maximum impact on television, radio, and the Internet. Based in New York, Medialink has offices in major cities throughout the United States. MED-TRANS OF TENNESSEE: To Auction Off Assets on Wednesday ---------------------------------------------------------- Jason Reynolds, staff writer at the Daily Post-Athenian, reports that Med-Trans of Tennessee will be auctioned off Wednesday with four unnamed companies -- excluding Rural Metro -- expressing interest in buying the Company. The Company decided that selling its assets was the best solution to pay its bills, source says. Based in Athens, Tennessee, Med-Trans of Tennessee, Inc., provides ambulance services. The company filed for Chapter 11 protection on June 2, 2009 (Bankr. E.D. Tenn. Case No. 09-13355). Richard C. Kennedy, Esq., at Kennedy, Fulton & Koontz, represents the Debtor in its restructuring efforts. In its petition, the Debtor listed assets and debts of between $1 million and $10 million. MOVIE GALLERY: Selects Moelis & Company as Financial Advisor ------------------------------------------------------------ Financial Times reports that Movie Gallery selected Moelis & Company as its financial advisor to help it navigate through the similar pitfalls that catalyzed its original restructuring in 2007-2008. The company is now operating under a 30-day grace period from lenders after failing to files its audited financials, FT notes. 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. NETBANK INC: Supervisor's Deal With Holland & Knight OK'd --------------------------------------------------------- Law360 reports that a bankruptcy judge has approved a settlement between NetBank Inc.'s liquidating supervisor and former debtor- in-possession counsel Holland & Knight LLP over roughly $350,000 in allegedly avoidable transfers that NetBank made to H&K early in the online bank's Chapter 11 proceedings. Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and provides ATM and merchant processing services. The Company filed for chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at Holland & Knight LLP, represents the Debtor. The U.S. Trustee for Region 21 appointed six creditors to serve on an Official Committee of Unsecured Creditors of the Debtor's case. Rogers Towers, Esq. at Kilpatrick Stockton LLP, represents the Committee in this case. Rogers Towers P.A. serves as co-counsel to the Committee. As of Sept. 25, 2007, the Debtor listed total assets of $87,213,942 and total debts of $42,245,857. NEW ENERGY SYSTEMS: Appoints Anytone Co-Founder Yu as Chairman -------------------------------------------------------------- New Energy Systems Group has appointed Weihe Yu as Chairman of the Board. Mr. Yu is one of the founders of Shenzhen Anytone Technology Co., Ltd., a high tech, integrated research, manufacturing and marketing company for lithium batteries that was acquired by New Energy Systems Group earlier this month. Mr. Weihe Yu has spent his career in the industrial sector where he has demonstrated his ability to maximize performance, streamline costs and increase sales. Most recently, he was one of the founders and the general manager of Shenzhen Anytone Technology Co., Ltd. After only three years the company became a leader in the mobile power industry with many patents and core technologies. Under his management, Anytone has become a highly recognized brand, and the company's revenue has grown more than 100% annually over the past four years. Prior to Anytone, Mr. Yu was general manager of Shenzhen Four Images Industrial Co., Ltd. whose business is to create protection circuits for lithium ion batteries. During his tenure there, the company's proprietary products were at the forefront of the industry and widely used by the largest customers of lithium ion batteries. From 1998 to 2000, Mr. Yu served in key management positions at the Yangxin Aluminum Alloy Wheel Co., Ltd, an automobile alloy wheel manufacturer. In his role there, he created a comprehensive marketing management and performance appraisal system that greatly enhanced the performance of the company. Mr. Yu graduated from the Huangshi Institute of Technology in Hubei Province in 1998. Mr. Fushun Li, Chief Executive Officer, commented, "With his extensive background and knowledge of our product offerings, Mr. Yu is an excellent choice for Chairman of our Board of Directors. His expertise in branding, marketing, sales and product performance in the industrial sector and lithium batteries, in particular, place him at an excellent vantage point to help guide our business operations and growth. We look forward to his contribution to New Energy in the coming months and years." Mr. Weihe Yu stated, "Taking on the role of Chairman of the Board after New Energy's merger with Anytone is an exciting development and I look forward to working with Mr. Fushun Li and the rest of the team to maximize shareholder value. Management has done a great job of bringing the company from a manufacturer of battery caps and shells to a fully integrated provider of complete batteries for end user products. Manufacturing the batteries and related accessories in an integrated environment will help propel our growth and margin expansion." Mr. Yu does not hold any other directorships with reporting companies in the United States. There are no family relationships between Mr. Yu and the directors, executive officers, or persons nominated or chosen by the Company to become directors or executive officers. During the last two years, there have been no transactions, or proposed transactions, to which the Company was or is to be a party, in which Mr. Yu (or any member of his immediate family) had or is to have a direct or indirect material interest, except that Mr. Yu is the general manager of Shenzhen Anytone Technology Co., Ltd. About New Energy Systems Group With offices in New York and Shenzhen, China, New Energy Systems Group (OTCBB: NEWN) -- http://www.chinadigitalcommunication.com/ -- manufactures and distributes lithium ion batteries. The company assembles and distributes finished batteries through its sales network and channel partners. The company also sells high- quality lithium-ion battery shell and cap products to major lithium-ion battery cell manufacturers in China. The company's products are used to power mobile phones, MP3 players, laptops, digital cameras, PDAs, camera recorders and other consumer electronic digital devices. On November 17, 2009, China Digital obtained approval from FINRA to change its name to New Energy Systems Group. In conjunction with the name change, the company's CUSIP number was changed to 643847106 and the stock began trading under the ticker symbol "NEWN" on November 18. At September 30, 2009, the Company had $17,622,130 in total assets against $3,197,717 in total liabilities, all current. At September 30, 2009, the Company had accumulated deficit of $4,660,858 and stockholders' equity of $14,424,413. Going Concern In its quarterly report on Form 10-Q, the Company said it believes it has sufficient cash to continue its current business through September 30, 2010, due to expected increased sales revenue and net income from operations. "However we have suffered recurring losses in the past and have a large accumulated deficit. These conditions raise substantial doubt about the Company's ability to continue as a going concern," the Company said. The Company has taken certain restructuring steps to provide the necessary capital to continue its operations. These steps included 1) acquire profitable operations through issuance of equity instruments, and 2) to continue actively seeking additional funding and restructure the acquired subsidiaries to increase profits and minimize the liabilities. NEWPORT TELEVISION: S&P Junks Corporate Credit Ratings From 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Kansas City, Missouri-based TV broadcaster Newport Television Holdings LLC and its operating subsidiary, Newport Television LLC, to 'CCC' from 'B-'. The rating outlook is negative. In conjunction with this action, S&P also lowered its issue-level ratings on Newport's debt by two notches. Recovery ratings on the company's debt issues remain unchanged. "The ratings action reflects S&P's concern about the potential outcome of litigation filed by one of Newport's lenders against Newport and its administrative agent under its credit agreement," said Standard & Poor's credit analyst Deborah Kinzer. The lawsuit seeks to prevent Newport and its administrative agent from declaring effective a recent amendment to the company's credit agreement. If the court rules that the amendment is ineffective and that Newport is in breach of its credit agreement, S&P believes the company would likely be declared in default. Newport recently amended its credit agreement after it received a notice of alleged default from its administrative agent. The amendment coincided with a reduction in the size of the revolving credit facility. It includes a higher interest-rate margin, a suspension of the requirement to comply with the preexisting consolidated secured leverage ratio covenant through the end of 2011 and a reset of secured leverage covenant compliance levels thereafter, and the initiation of a daily minimum liquidity covenant until the first quarter of 2011 and a minimum EBITDA covenant at the end of each fiscal quarter during 2011. In the third quarter of 2009, Newport's revenue fell 13% year over year, less than the industry average, because of continuing declines in core ad revenue and the absence of political ad revenue. EBITDA declined only 5%, however, because of sharp cutbacks in operating expenses. The EBITDA margin of 23% for the 12 months ending Sept. 30, 2009 remains relatively weak in a peer comparison. In early August, Newport's sponsor converted its senior interim pay-in-kind (PIK) loan, carried at $118.9 million at June 30, 2009, into additional equity interests in the company. Pro forma for the conversion of this PIK obligation, EBITDA coverage of cash interest was 1.1x for the 12 months ended Sept. 30, 2009. But EBITDA coverage of total interest expense remained fractional, at 0.8x, because the company has started to exercise the PIK feature on its senior toggle notes. Lease-adjusted debt to reported EBITDA was extremely high, at 12.0x, as of Sept. 30, 2009, although this was lower than the 14.0x leverage posted at the end of March, before the sponsor's PIK loan conversion. Discretionary cash flow was negative, and the company's already weak liquidity is dwindling because of declining cash balances and the reduction in the revolving credit facility, which had been fully drawn. The strength of ad demand and, in particular, political ad revenue for the midterm elections will be key factors determining whether Newport can achieve positive discretionary cash flow in 2010, given that the company is already exercising the PIK option on its bonds. NOVADEL PHARMA: Files Form 25 to Remove Shares from NYSE Listing ---------------------------------------------------------------- NovaDel Pharma Inc. filed a Form 25 with the Securities and Exchange Commission in connection with the removal from listing and registration of its common stock at the NYSE Amex LLC. Flemington, New Jersey-based NovaDel Pharma Inc. (NYSE AMEX: NVD) -- http://www.novadel.com/-- is a specialty pharmaceutical company developing oral spray formulations for a broad range of marketed drugs. The Company's proprietary technology offers, in comparison to conventional oral dosage forms, the potential for faster absorption of drugs into the bloodstream leading to quicker onset of therapeutic effects and possibly reduced first pass liver metabolism, which may result in lower doses. Oral sprays eliminate the requirement for water or the need to swallow, potentially improving patient convenience and adherence. As of September 30, 2009, the Company had $2.27 million in total assets against $9.67 million in total liabilities, resulting in stockholders' deficit of $7.40 million. The Company filed with the Securities and Exchange Commission its Annual Report for the year ended December 31, 2008, which included an audit opinion with a "going concern" explanatory paragraph. The going-concern explanatory paragraph from NovaDel's independent registered public accounting firm -- J.H. Cohn LLP in Roseland, New Jersey -- expressed substantial doubt, based upon current financial resources, as to whether NovaDel can continue to meet its obligations beyond 2009 without access to additional working capital. NOVADEL PHARMA: Files Redacted Copies of Mist and ECR Agreements ---------------------------------------------------------------- NovaDel Pharma Inc. in October 2009 entered into a license and distribution agreement with privately held Mist Acquisition, LLC to manufacture and commercialize NitroMist(R), the lingual spray version of nitroglycerine for the treatment of angina pectoris. NovaDel in November entered into an exclusive license and distribution agreement with ECR Pharmaceuticals Company, Inc., to commercialize and manufacture NovaDel's ZolpiMist(TM) in the United States and Canada. NovaDel has filed with the Securities and Exchange Commission a redacted copy of the Mist Agreement, a full-text copy of which is available at no charge at http://ResearchArchives.com/t/s?4bce NovaDel has filed with the Securities and Exchange Commission a redacted copy of the ECR Agreement, a full-text copy of which is available at no charge at http://ResearchArchives.com/t/s?4bcf The confidential materials were omitted and filed separately with the SEC. About Novadel Pharma Flemington, New Jersey-based NovaDel Pharma Inc. (NYSE AMEX: NVD) -- http://www.novadel.com/-- is a specialty pharmaceutical company developing oral spray formulations for a broad range of marketed drugs. The Company's proprietary technology offers, in comparison to conventional oral dosage forms, the potential for faster absorption of drugs into the bloodstream leading to quicker onset of therapeutic effects and possibly reduced first pass liver metabolism, which may result in lower doses. Oral sprays eliminate the requirement for water or the need to swallow, potentially improving patient convenience and adherence. As of September 30, 2009, the Company had $2.27 million in total assets against $9.67 million in total liabilities, resulting in stockholders' deficit of $7.40 million. The Company filed with the Securities and Exchange Commission its Annual Report for the year ended December 31, 2008, which included an audit opinion with a "going concern" explanatory paragraph. The going-concern explanatory paragraph from NovaDel's independent registered public accounting firm -- J.H. Cohn LLP in Roseland, New Jersey -- expressed substantial doubt, based upon current financial resources, as to whether NovaDel can continue to meet its obligations beyond 2009 without access to additional working capital. OPTI CANADA: Unveils 2010 Capital Program and Project Update ------------------------------------------------------------ OPTI Canada Inc. said its Board of Directors has approved a $120 million capital program for 2010. OPTI's share of budgeted costs for Phase 1 of the Long Lake Project in 2010 is expected to be approximately $92 million. Completion of the ash processing unit in the Upgrader has been deferred to 2011 to manage 2010 capital costs. Phase 1 expenditures will be primarily directed towards sustaining capital for the SAGD operation and other initiatives to ensure the long- term reliability of the Project, including the installation of electric submersible pumps and the drilling of two new well pads. OPTI continues to estimate an average of $8 to $9 per barrel of sustaining capital over the life of the Project. In 2010, OPTI will invest approximately $23 million in advancing Phase 2 engineering and detailed execution plans with $5 million budgeted for development of Phases 3 through 6. OPTI and its joint venture partner, Nexen Inc., have agreed to defer the sanctioning of Phase 2 to late 2011 in order to gain additional Phase 1 operating experience prior to construction of future phases, as well as to potentially obtain greater clarity on carbon dioxide regulations. "At the Long Lake Project, plant reliability and performance have improved substantially since the turnaround in September," said Chris Slubicki, President and Chief Executive Officer of OPTI. "While it is early in the ramp-up process, we look forward to a significant ramp-up through 2010 with the reservoir responding to increasing and consistent steam volumes and the Upgrader fully operational and approaching design yields." Project Update Progress continues to be made in the ramp-up of the Project. Currently, steam injection is approximately 100,000 bbl/d with bitumen production of approximately 17,000 bbl/d. Average bitumen production for the month of November was approximately 15,200 bbl/d. After the turnaround in the third quarter, the number of well pairs receiving steam has increased to over 70, with 50 well pairs on production as of December 7, 2009. Upgrader on-stream time is increasing and, in November, improved reliability allowed the Project to process 95% of produced and purchased bitumen. The solvent deasphalter and thermal cracking units are now in operation, allowing the Upgrader to transition from gasifying vacuum residue to gasifying asphaltenes. As a result, PSC(TM) yields have increased to approximately 70%. Once this transition is complete the Company expects PSC(TM) yields to reach approximately 80%. ABOUT OPTI OPTI Canada Inc. is a Calgary, Alberta-based company focused on developing major oil sands projects in Canada using its proprietary OrCrude(TM) process. The first project, Phase 1 of Long Lake, consists of 72,000 barrels per day of SAGD (steam assisted gravity drainage) oil production integrated with an upgrading facility. The upgrader uses the OrCrude(TM) process combined with commercially available hydrocracking and gasification. Through gasification, this configuration substantially reduces the exposure to and the need to purchase natural gas. On a 100% basis, the Project is expected to produce 58,500 bbl/d of products, primarily 39 degree API Premium Sweet Crude with low sulphur content, making it a highly desirable refinery feedstock. Due to its premium characteristics, the Company expects PSC(TM) to sell at a price similar to West Texas Intermediate (WTI) crude oil. The Long Lake Project is being operated in a joint venture with Nexen Inc. OPTI holds a 35% working interest in the joint venture. OPTI's common shares trade on the Toronto Stock Exchange under the symbol OPC. * * * As reported by the Troubled Company Reporter on November 18, 2009, Moody's Investors Service lowered OPTI Canada's Caa1 Corporate Family Rating to Caa2, and Caa1 $1.75 billion second lien notes rating to Caa3. Moody's also assigned a B1 rating to OPTI's proposed C$150 million secured revolver and a B2 rating to its proposed secured notes issue. The rating outlook remains negative. The ratings on the existing C$350 million revolver will be withdrawn when the new C$150 million revolver closes. The TCR also said November 18, 2009, Standard & Poor's Ratings Services assigned its 'B+' debt rating to OPTI Canada Inc.'s proposed US$425 million senior secured notes due 2012, and its C$150 million secured revolving credit facility. (The closing of the new credit facility is subject to the notes' sale.) S&P will withdraw the ratings on OPTI's existing C$350 million credit facility when the proposed credit facility closes. S&P also assigned a '1' recovery rating to the notes and credit facility, indicating S&P's expectations of very high (90%-100%) recovery in the event of a default. S&P views the sale of the proposed notes as neutral to OPTI's credit profile. PALM ENERGY: Chevron Faults Plan Over Oil Well Contracts -------------------------------------------------------- Law360 reports that Chevron USA Inc. is the latest creditor to balk at Pisces Energy LLC's proposed $157 million debt restructuring, contending the reorganization plan drafted by the bankrupt oil and gas company and its chief lender Macquarie Bank Ltd. tramples Chevron's rights under contracts with the debtor. Palm Energy Partners LLC is an oil and gas explorer based in Metairie, Louisiana. Palm Energy Partners LLC and an affiliate filed for Chapter 11 bankruptcy in Houston (Bankr. S.D. Tex. Case No. 09-36593). It said in its petition that assets and debts both exceed $100 million. Attorneys from Haynes and Boone LLP and Schully Roberts Slattery & Marino PC represent Palm and affiliate Pisces Energy LLC. PATIENT SAFETY: Names Marc Rose as CFO, Treasurer and Secretary --------------------------------------------------------------- Patient Safety Technologies, Inc., reports that on November 24, 2009, the Company entered into an Employment Agreement with Marc L. Rose, CPA, its newly appointed Chief Financial Officer, Treasurer and Corporate Secretary. Effective November 24, 2009, Mary A. Lay, who has been acting as interim Chief Financial Officer, resigned such position in connection with Mr. Rose's appointment. Ms. Lay will continue to provide services to the company in a transitional capacity for a period of time. From November 2004 through November 2009, Mr. Rose, 44, served as Vice President Finance and Chief Financial Officer of Protalex, Inc., a development stage company engaged in developing a class of biopharmaceutical drugs for treating autoimmune and inflammatory diseases. Mr. Rose also served as Corporate Secretary of Protalex, Inc. from April 2005 through November 2009. From March 2001 to November 2004, Mr. Rose served as Vice President and Chief Financial Officer of the DentalEZ Group, a privately held manufacturer of dental equipment and dental handpieces located in Malvern, PA. From January 1998 to March 2001, Mr. Rose was Practice Manager of Oracle Consulting Services for Oracle Corporation responsible for designing and implementing Oracle financial and project applications. From September 1990 to January 1998, Mr. Rose held several positions with the controllership organization of Waste Management, Inc. and from June 1988 to September 1990, was an auditor with Ernst & Young in Philadelphia. Mr. Rose is a Certified Public Accountant in the Commonwealth of Pennsylvania and received his BA in Accounting/Finance from Drexel University. Under the Employment Agreement, Mr. Rose is an "at-will" employee and his initial base salary is $240,000 per year, subject to review on an annual basis by the Board of Directors. In addition to salary and participating in all of the equity compensation and any health & welfare benefit and savings plans, Mr. Rose also has the opportunity to receive an annual cash bonus under the executive bonus plan of not less than 25% of his annual base salary. Subject to a limited exception for violations of the non- compete covenant in the Employment Agreement, in the event Mr. Rose's employment is terminated without cause, or if he resigns for good reason (which includes resignation within two years of a change in control) or is due to his disability, Mr. Rose is entitled to a severance payment capped at his then annual base salary (which shall accrue during the first 12 months of his employment), a pro rated bonus and 12 months of health and welfare benefits (which shall accrue during the first 12 months of his employment). In the event of Mr. Rose's death, his heirs will receive a lump sum cash payment equal to his annual base salary. In the event of a change in control, all of Mr. Rose's unvested stock options (and deferred compensation, if any) will immediately vest. Mr. Rose is also entitled to a tax gross-up payment in the event any payments from the company constitute an "excess parachute payment" under Section 280G(b) of the Internal Revenue Code. Mr. Rose was granted the option to purchase 325,000 shares of the Company's common stock at an exercise price of $1.85 per share, pursuant to the terms and conditions of the 2009 Stock Option Plan. The option vests over 48 months with 6-month cliff vesting (which means that options to purchase 40,625 shares will vest and become exercisable on 05/24/2010 with the remainder vesting over a 42-month period at a rate of 1/48th of the grant such that 100% of the option is fully vested and exercisable on November 24, 2013). About Patient Safety Technologies Patient Safety Technologies, Inc. (OTC: PSTX) -- http://www.surgicountmedical.com/-- through its wholly owned operating subsidiary SurgiCount Medical, Inc., provides the Safety-Sponge(TM) System, a system designed to improve the standard of patient care and reduce health care costs by preventing the occurrence of surgical sponges and other retained foreign objects from being left inside patients after surgery. RFOs are among one of the most common surgical errors. At September 30, 2009, the Company had $8,297,000 in total assets against $10,190,000 in total liabilities, resulting in stockholders' deficit of $1,893,000. The September 30 balance sheet showed strained liquidity: The Company had $1,893,000 in total current assets against $7,590,000 in total current liabilities. At September 30, 2009, the Company had an accumulated deficit of roughly $53.3 million and a working capital deficit of roughly $5.7 million, of which $2.4 million represents the estimated fair value of warrant derivative liabilities. For the three and nine months ended September 30, 2009, the Company incurred net losses of roughly $3.4 and $10.8 million, respectively. For the nine months ended September 30, 2009 the Company used roughly $3.6 million in cash to fund its operating activities. The Company believes that existing cash resources, combined with projected cash flow from operations, will not be sufficient to fund its working capital requirement for the next 12 months. To continue to operate as a going concern it will be necessary to raise additional capital. PILGRIM'S PRIDE: JBS to Sell US$2BB Bonds in Unit to Aid in Buyout ------------------------------------------------------------------ Lucia Kassai at Bloomberg News reports that JBS SA plans to sell US$2 billion of convertible bonds to help pay for the acquisition of Pilgrim's Pride Corp and said it's in "advanced talks" with a potential investor. The report relates the company, citing a regulatory filing, said that the bonds will be convertible into 20% to 25% of the shares in JBS's U.S. unit. The investor may buy all the bonds and the deal may be announced in the next few days, the company added. As reported in the Troubled Company Reporter-Latin America on September 22, 2009, JBS SA, through its U.S. subsidiary, JBS USA Holdings, Inc., has agreed to purchase 64% of Pilgrim's Pride, currently in bankruptcy, for US$800 million in cash. The US$800 million will be funded with a portion of the US$2.5 billion from the sale of up to 26.3% common equity interest in JBS USA Holdings, the immediate parent of JBS USA, LLC, to a private investor. According to Bloomberg News speculations have emerged that JBS SA's planned initial public offering of the U.S. unit may not take place. JBS SA, the report relates, said that the bond investor would have the right to the company's shares if the IPO fails. "The market is reacting to a possible non-IPO in the U.S., meaning the bonds would be converted into shares of JBS SA, diluting the investor base," Rafael Cintra, an analyst with Link Investimentos SA, told Bloomberg News in a phone interview. JBS SA, the report says, is raising cash to pay for the acquisition of Pilgrim's Pride Corp. and fund a US$2 billion distribution network. Meanwhile, Bloomberg News relates, the company also said that it will price a US$2 billion initial public offering for the U.S. unit in January. JBS SA Chief Executive Officer Joesley Batista, the report adds, plans to give presentations to investors in the U.S. between January 4 and January 8, before setting the price for the public share sale in the week of January 11. About JBS SA JBS SA is one of the world's largest beef producers with operations in Brazil, the United States, Argentina, Australia and Italy. The company is the largest producer and exporter of fresh meat and meat by-products in Brazil, Argentina and Australian and the third largest in the USA. * * * As reported in the Troubled Company Reporter-Latin America on September 18, 2009, Standard & Poor's Ratings Services placed its ratings, including the 'B+' corporate credit ratings, on meat- processing companies JBS S.A and JBS USA LLC on CreditWatch with positive implications. In November 2009, following JBS's announcement of plans to buy Pilgrim's PRide COrp., Moody's affirmed JBS's 'B1' corporate family rating, with postiive outlook. "Given the positive outlook, a downgrade to the ratings is unlikely in the near term, but could be caused by weaker liquidity or a large debt-financed acquisition," the ratings agency said. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. Pilgrim's Pride Corp. and six other affiliates filed Chapter 11 petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No. 08-45664). The Debtors' operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process. Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges LLP, as bankruptcy counsel. Lazard Freres & Co., LLC, is the Company's investment bankers and William K. Snyder of CRG Partners Group LLC is chief restructuring officer. Kurtzman Carson Consulting LLC serves as claims and notice agent. Kelly Hart and Brown Rudnick represent the official equity committee. Attorneys at Andrews Kurth LLP represents the official committee of unsecured creditors. As of December 27, 2008, the Company had US$3,215,103,000 in total assets, US$612,682,000 in total current liabilities, US$225,991,000 in total long-term debt and other liabilities, and US$2,253,391,000 in liabilities subject to compromise. Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride Bankruptcy News. The newsletter tracks the Chapter 11 proceeding of Pilgrim's Pride Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) POWER SPORTS: Sept. 30 Balance Sheet Upside-Down by $4.48 Million ----------------------------------------------------------------- Power Sports Factory, Inc.'s balance sheets at Sept. 30, 2009, showed $1,570,287 in total assets and $6,388,752 in total liabilities, resulting in a $4,818,465 shareholders' deficit. The Company's consolidated balance sheets at September 30, 2009, also showed strained liquidity with $1,542,265 in total current assets available to pay $6,388,752 in total current liabilities. The Company reported a net loss of $23,366 on net sales of $157,338 for the three months ended September 30, 2009, compared with a net loss of $837,726 on net sales of $671,616 for the same period of 2008. The Company reported a net loss of $1,517,398 on net sales of $507,705 for the nine months ended September 30, 2009, compared with a net loss of $2,602,164 on net sales of $2,081,750 for the same period of the previous year. A full-text copy of the Company's quarterly report is available at no charge at http://researcharchives.com/t/s?4bc7 Going Concern Doubt Since the acquisition of Power Sports Factory, the Company has operated at a loss. The Company relies significantly on the private placement of debt and equity to pay operating expenses. As of September 30, 2009, the Company had $1,722 of cash on hand. The Company has incurred a net loss of $1,517,398 in the nine months ended September 30, 2009, and has working capital and stockholders' deficiencies of $4,846,487 and $4,818,465, respectively, at September 30, 2009. Power Sports Factory, Inc. presently does not have sufficient liquid assets to finance its anticipated funding needs and obligations. The Company's continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and achieve a level of revenue and production adequate to support its cost structure. Management is actively seeking additional capital to ensure the continuation of its current operations, complete its proposed activities and fund its current debt obligations. However, there is no assurance that additional capital will be obtained. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. About Power Sports Based in Pennsauken, N.J., Power Sports Factory, Inc., formerly known as Purchase Point Media Corp., was incorporated under the laws of the State of Minnesota. The Company, through a reverse acquisition is in the business of marketing, selling, importing and distributing motorcycles and scooters. The Company principally imports products from China. To date the Company has marketed significantly under the Yamati and Andretti brands. PRECISION DRILLING: Moody's Gives Stable Outlook, Keeps Ba2 Rating ------------------------------------------------------------------ Moody's Investors Service changed the rating outlook of Precision Drilling Corporation to stable from negative. At the same time, Moody's affirmed the company's Ba2 Corporate Family Rating and Ba1 senior secured rating. Moody's also affirmed Precision's SGL-3 Speculative Grade Liquidity rating, reflecting adequate liquidity. The stabilization of the outlook reflects the significant amount of debt reduction and associated interest costs over the first three quarters of 2009, to levels more consistent with Precision's current Ba2 CFR. Although the company's leverage profile deteriorated significantly in December 2008 following an increase in debt of approximately $1 billion related to the Grey Wolf acquisition, Precision has since reduced debt by approximately C$470 million through equity issuance and internally generated cash flow. Consequently, the company's debt to EBITDA and debt to capitalization measures have improved significantly, solidifying its position within the Ba2 rating category. While the debt reduction has lowered Precision's cash interest payments, overall debt service costs remain high as the company secured financing at steep costs during the depths of the credit crisis. Precision's Ba2 CFR reflects its substantial size and scale, reasonable leverage and history of conservative fiscal management, solid operating margins, and broad geographic presence in North America. The rating also considers Precision's very strong market position in Canada, longstanding customer relationships that have provided a measure of revenue visibility, and rig fleet. The rating is restrained by the inherent cyclicality of contract drilling, concentration in one general major market -- North America, and the weak fundamentals of the natural gas industry. Outlook Actions: Issuer: Grey Wolf, Inc -- Outlook, Changed To Rating Withdrawn From Negative Issuer: Precision Drilling Corporation -- Outlook, Changed To Stable From Negative Withdrawals: Issuer: Grey Wolf, Inc -- Senior Unsecured Conv./Exch. Bond/Debenture, Withdrawn, previously rated B1, LGD5, 89% The last rating action on Precision Drilling was on February 24, 2009, when Moody's withdrew the B1 rating on the proposed issuance of $250 million of senior unsecured notes. Precision Drilling Corporation is a subsidiary of Precision Drilling Trust, a Calgary, Alberta-based income trust engaged in onshore drilling and providing well completion and production services to upstream oil and gas companies in North America. RANCHER ENERGY: U.S. Trustee Unable to Appoint Creditors Committee ------------------------------------------------------------------ The Office of the U.S. Trustee for Region 19 notified the U.S. Bankruptcy Court for the District of Colorado that it was unable to appoint an official committee of unsecured creditors in the Chapter 11 cases of Rancher Energy Corp. Charles F. McVay, the U.S. Trustee said that there were too few unsecured creditors who are willing to serve on creditors' committee. Rancher Energy Corp., aka Rancher Energy Oil & Gas Corp., fka Metalix, Inc., 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. Rancher Energy filed for Chapter 11 bankruptcy protection on October 28, 2009 (Bankr. D. Col. Case No. 09-32943). Herbert A. Delap, Esq., who has an office in Denver, Colorado, assists the Debtor in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. REFCO INC: Administrators Find Chapter 7 Trustee's Fees Too High ---------------------------------------------------------------- Daily Bankruptcy Review reports the administrators overseeing the wind-down of defunct commodities brokerage Refco Inc. are balking at the $28 million in fees a Chapter 7 trustee is charging, saying it is the largest amount ever sought in such a bankruptcy case. Headquartered in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company has operations in Bermuda. The Company and 23 of its affiliates filed for Chapter 11 protection on October 17, 2005 (Bankr. S.D.N.Y. Case No. 05- 60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Milbank, Tweed, Hadley & McCloy LLP, represented the Official Committee of Unsecured Creditors. Refco reported US$16.5 billion in assets and US$16.8 billion in debts to the Bankruptcy Court on the first day of its Chapter 11 cases. The Court confirmed the Modified Joint Chapter 11 Plan of Refco Inc. and certain of its Direct and Indirect Subsidiaries, including Refco Capital Markets, Ltd., and Refco F/X Associates, LLC, on December 15, 2006. That Plan became effective on Dec. 26, 2006. Pursuant to the plan, RJM, LLC, was named plan administrator to reorganized Refco, Inc. and its affiliates, and Marc S. Kirschner as plan administrator to Refco Capital Markets, Ltd. Bankruptcy Creditors' Service, Inc., publishes Refco Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Refco Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) RENEW ENERGY: Valero to Buy 2 VeraSun, 1 Renew Energy Plant ----------------------------------------------------------- Valero Renewable Fuels Company, LLC, a wholly owned subsidiary of Valero Energy Corporation, signed an agreement with ASA Ethanol Holdings, LLC to buy two ethanol plants that had been previously owned by VeraSun Energy Corporation. ASA Ethanol Holdings, LLC is a company owned by a former syndicate of lenders to the facilities, agented by West LB AG, which acquired the plants through the VeraSun bankruptcy auction. The plants -- located in Linden, Ind., and Bloomingburg, Ohio -- each have an annual production capacity of 110 million gallons. Valero will pay $200 million to buy the plants. Additionally, Valero has received approval from a bankruptcy court to acquire Renew Energy's 110 million gallon per year ethanol facility located near Jefferson, Wis., for $72 million following a bankruptcy auction held Dec. 11. Together, Valero will buy the three plants for roughly 41 percent of their estimated replacement cost. These acquisitions expand the company's ethanol production capacity to 1.1 billion gallons per year. Valero Renewables also operates ethanol plants in Albert City, Charles City, Fort Dodge and Hartley, Iowa; Aurora, S.D.; Welcome, Minn.; and Albion, Neb. "The Linden and Bloomingburg plants have the same high-quality design that we got with our earlier purchase of seven ethanol plants, and they're also relatively new assets," said Valero Chairman and Chief Executive Officer Bill Klesse. "The purchase of the plant from Renew gives us additional production capacity. The ethanol plants we bought earlier this year have been very successful for Valero, and we expect these newly purchased plants to build on that success." The Linden and Bloomingburg plants are currently idled, but will be restarted within approximately three to six months following the closing of the transaction. Both plants will also produce dry distillers grains, a co-product of the ethanol production process that is sold as a livestock feed. The Renew facility is currently operating at reduced rates but is expected to increase to full production over time. Both transactions are expected to close in early 2010, following regulatory approvals including termination of the review period under the Hart-Scott-Rodino Act. Credit Suisse advised Valero on the Linden and Bloomingburg acquisition. Besides Valero's ethanol plant purchases, the Company has explored other alternative energy sources in the past year, including completing a 50 megawatt wind farm near its McKee Refinery in the Texas Panhandle and investing in companies that are developing technologies to produce cellulosic ethanol, biofuel from plant material, algae and animal fat, and a synthetic gasoline made from landfill waste. About Valero Energy Valero Energy Corporation -- http://www.valero.com/-- incorporated in 1981, owns and operates 16 refineries located in the United States, Canada, and Aruba that produce conventional gasolines, distillates, jet fuel, asphalt, petrochemicals, lubricants, and other refined products, as well as a slate of premium products, including conventional blendstock for oxygenate blending (CBOB) and reformulated gasoline blendstock for oxygenate blending (RBOB). The Company markets refined products on a wholesale basis in the United States and Canada through bulk and rack marketing network. It also sells refined products through a network of about 5,800 retail and wholesale branded outlets in the United States, Canada, and Aruba. The Company operates through two segments: refining and retail. * * * As of June 25, 2009, the company continues to carry Moody's "Ba1" Preferred Stock rating. About Renew Energy Headquartered in Jefferson, Wisconsin, Renew Energy LLC -- http://www.renewenergyllc.com/-- operates an ethanol plant facility. The Company filed for Chapter 11 on January 30, 2009 (Bankr. W.D. Wis. Case No. 09-10491). Christopher Combest, Esq., at Quarles & Brady LLP, represents the Debtor in its restructuring efforts. William T. Neary, the United States Trustee for Region 11, appointed five creditors to serve on an Official Committee of Unsecured Creditors. The Debtor disclosed $188,953,970 in total assets and $194,410,573 in total debts. RIVER WEST: Files Chapter 11 Plan of Reorganization --------------------------------------------------- River West Plaza-Chicago, LLC, has filed a Chapter 11 plan of reorganization with the U.S. Bankruptcy Court for the Northern District of Illinois. Holders of administrative claims will be paid in full, without interest, in cash on the 10th business day following the Effective date or the date on which the claims become due. Holders of priority claims will be paid in full, in cash, on the 10th business day after the effective date or the date on which the priority claims become allowed priority claims. The non- construction litigation claims will remain subject to the automatic stay through the effective date, or such other time as the Court may direct. Thereafter, the action in which non- construction litigation claims are pending may recommence in its existing state court venue, and the foregoing claims won't be discharged pursuant to this Plan, but will be Unimpaired. Requests for payment of administrative claims, including applications for final allowance of compensation and reimbursement of expenses of professionals incurred through the Effective Date, must be filed and served on the counsel for the Debtor and counsel for the lender no later than 30 days after the Effective Date On the Effective Date, holders of Class 1 Claims -- lender secured claims -- will receive the Replacement Loan Agreement, the Replacement Secured Note, the Replacement Mortgage, and the Replacement Assignment of Rents and Leases, each duly executed (and if appropriate, notarized) by the reorganized debtor and delivered to the lender. Holders of a Class 2 Claim -- mechanic's lien claims -- will receive payment of the claims in full, plus the Legal Rate per annum accrued from the Petition Date through the date of payment. The date of payment to each holder of a Class 2 Claim will be the later of 60 days after the Effective Date or five business days after the date on which the claim becomes an allowed claim. Holders of Allowed Class 3 Claims -- general unsecured claims, other than Allowed Insider Loan Claims -- will receive payment in full of the claims, plus the Legal Rate per annum accrued from the Petition date through the date of payment. The date of payment to each Holder of an Allowed Class 3 Claim will be the later of 60 days after the Effective Date or five business days after the date on which the claim becomes an Allowed Claim. Insider Loan Claims will be subordinated in right of payment to other Holders of Allowed Class 3 Claims. Holders of Class 4 Debtor Interests -- debtor interests -- won't receive or retain any interest, property or other consideration under this Plan on account of their Class 4 Interests, which will be deemed to be extinguished on the Effective Date. A copy of the reorganization plan is available for free at: http://bankrupt.com/misc/RIVER_WEST_plan.pdf River West Plaza-Chicago LLC, dba Joffco Square, is an Illinois limited liability company, with its principal office located at 5 Revere Drive, Suite 200, Northbrook, Illinois 60062. The Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. N.D. Ill. Case No. 09-46258). Forrest B. Lammiman, Esq., at Meltzer, Purtill & Stelle LLC assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. RIVER WEST: Gets Court's Interim Nod to Access to Cash Collateral ----------------------------------------------------------------- River West Plaza-Chicago, LLC, sought and obtained interim approval from the Hon. Eugene R. Wedoff of the U.S. Bankruptcy Court for the Northern District of Illinois to use until December 16, 2009, the cash collateral. The Debtor initially financed the acquisition and construction of the 95,000 square foot, five-story shopping center in Chicago, Illinois with a $28 million loan (the Initial Loan) from LaSalle National Bank. In July 2008, the Initial Loan was refinanced by Bank of America, N.A. (the Lender) as successor in interest to LaSalle, with a $27 million replacement loan (the 2008 Loan). The 2008 Loan matured on November 1, 2009, and the Debtor acknowledged that it hasn't met the required debt service coverage ratio necessary to extend the 2008 Loan. The Debtor further acknowledged that, as of the opening of business on the Petition Date, the aggregate total of the Obligations outstanding under the 2008 Loan is $26,158,002. As of the Petition Date, the Debtor's aggregate assets total $27,000,000 and the Debtor's liabilities total $32,500,000 including certain subordinated notes in favor of the members of the Debtor. Forrest B. Lammiman, Esq., at Meltzer, Purtill & Stelle LLC, the attorney for the Debtors, explained that the Debtor needs the money to fund its Chapter 11 case, pay suppliers and other parties. As adequate protection for the Lender's interest in the Cash Collateral, the Debtor proposed to use the Cash Collateral to pay all overhead and operating expenses of Joffco Square. The Debtor will be able to maintain Joffco Square -- the Lender's collateral -- and prevent it from diminishing in value. The Debtor will also continue to make interest payments (from rental income received) to the Lender pursuant to the Operating Budget on the full outstanding principal balance of the 2008 Loan at the "applicable nondefault contract rate". A copy of the budget is available for free at: http://bankrupt.com/misc/RIVER_WEST_budget.pdf The Debtor will continue to make interest payments (from rental income received) to the Lender pursuant to the operating budget on the full outstanding principal balance at the "applicable nondefault contract rate". The Debtor isn't providing the Lender with any additional liens. The continued hearing on the Debtor's use of the collateral will be held on December 16, 2009, at 10:00 a.m. Mr. Lammiman said that the Debtor also sought authorization to obtain up to $400,000 post-petition unsecured financing (the Member Unsecured/Admin Loan) from two of its members in order pay the Debtor's professional fees incurred during the pendency of this Chapter 11 case, without further order of the Court. Any amounts lent to the Debtor as part of the Member Unsecured/Admin Loan will be entitled to administrative expense priority. The principal balance of any such loan amounts will bear interest at the rate of 3.25% per annum. All amounts obtained by the Debtor pursuant to the Member Unsecured/Admin Loan will be obtained post-petition to pay administrative expenses incurred postpetition, namely the Debtor's Chapter 11 professional fees. The total outstanding balance in principal and interest on the Member Unsecured/Admin Loan will be payable: (a) up to 50% of the outstanding balance of accrued interest and up to 50% of the principal amount of the outstanding balance of the Member Unsecured/Admin Loan may be repaid on the date that is 60 days after the Effective Date of the Plan; and (b) the remaining principal balance of the loan will continue to bear interest thereafter at 3.25% per annum, and it will be repaid pursuant to the terms of the Member Unsecured/Admin Note. Repayment of the Member Unsecured/Admin Loan will be subordinated to the claims of the Lender in the manner provided in the Member Unsecured/Admin Note. Allowing the Debtor to obtain unsecured financing pursuant to the Member Unsecured/Admin Loan will be beneficial in two additional respects. First, the Debtor won't need to use the Lender's Cash Collateral to pay professional fees incurred during the pendency of the Chapter 11 case. Second, the Debtor's ability to obtain funds via the Member Unsecured/Admin Loan will increase the Debtor's operating cash and thus its ability to make timely payments to mechanic's lien and unsecured creditors as set forth in the Plan. River West Plaza-Chicago LLC, dba Joffco Square, is an Illinois limited liability company, with its principal office located at 5 Revere Drive, Suite 200, Northbrook, Illinois 60062. The Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. N.D. Ill. Case No. 09-46258). Forrest B. Lammiman, Esq., at Meltzer, Purtill & Stelle LLC assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. RIVER WEST: Sec. 341 Creditors Meeting Set for Jan. 11 ------------------------------------------------------ The U.S. Trustee for Region 11 will convene a meeting of River West Plaza-Chicago, LLC's creditors on January 11, 2010, at 1:30 p.m. at 219 South Dearborn, Office of the U.S. Trustee, 8th Floor, Room 802, Chicago, IL 60604. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. River West Plaza-Chicago LLC, dba Joffco Square, is an Illinois limited liability company, with its principal office located at 5 Revere Drive, Suite 200, Northbrook, Illinois 60062. The Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. N.D. Ill. Case No. 09-46258). Forrest B. Lammiman, Esq., at Meltzer, Purtill & Stelle LLC assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. RIVER WEST: Taps Meltzer Purtill as Bankruptcy Counsel ------------------------------------------------------ River West Plaza-Chicago, LLC, has sought the permission of the U.S. Bankruptcy Court for the Northern District of Illinois to employ Meltzer, Purtill & Stelle LLC as bankruptcy counsel. Forrest B. Lammiman, a member at Meltzer Purtill, says that the firm will, among other things: (a) attend meetings with, and negotiate with representatives of creditors and other parties in interest; (b) advise the Debtor in connection with contemplated sales or leases of real estate assets or business combinations, formulating and implementing bidding procedures, evaluating competing offers, drafting appropriate corporate documents with respect to the proposed sales or leases, and counseling the Debtor in connection with the closing of such sales or leases; (c) advise the Debtor in connection with postpetition and prepetition financing and cash collateral arrangements and negotiating and drafting documents, and providing advice to the Debtor in connection with the emergence financing and capital structure; and (d) advise the Debtor on matters relating to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts. Mr. Lammiman states that Meltzer Purtill will be paid based on the hourly rates of its professionals: Partners $350-$550 Associates $225-$390 Paralegals $180-$300 Mr. Lammiman assures the Court that Meltzer Purtill is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. River West Plaza-Chicago LLC, dba Joffco Square, is an Illinois limited liability company, with its principal office located at 5 Revere Drive, Suite 200, Northbrook, Illinois 60062. The Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. N.D. Ill. Case No. 09-46258). Forrest B. Lammiman, Esq., at Meltzer, Purtill & Stelle LLC, assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. SANDISK CORP: S&P Gives Positive Outlook, Affirms 'B' Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said it revised its outlook on Milpitas, California-based SanDisk Corp. to positive from stable. S&P also affirmed the 'B' corporate credit and senior unsecured ratings on the company. "The outlook revision follows two quarters of sequentially improving earnings, coupled with stability in industry pricing," said Standard & Poor's credit analyst Lucy Patricola. S&P believes debt to EBITDA, which could not be measured due to losses until the most recent quarter, will improve to about 4x for 2009. "Further," added Ms. Patricola, "S&P believes that operating conditions and pricing should be less volatile in 2010, as no new wafer supply has been added and technology transitions moderate due to increasing complexity. S&P therefore expects growth in supply to be muted, while demand continues to grow modestly." SECURUS TECHNOLOGIES: S&P Affirms 'B-' Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Rating Services said it affirmed its ratings on Dallas-based prison phone provider Securus Technologies Inc., including its 'B-' corporate credit rating and the 'B-' issue rating on the company's second-lien secured notes. However, S&P revised the second-priority senior secured notes' recovery rating to '3' from '4', indicating prospects for meaningful (50%-70%) recovery in the event of a payment default, from the prior average (30%-50%) recovery prospects in the event of a payment default. This revision reflects a reassessment of recovery in a default scenario. "The ratings on Securus reflect the company's highly leveraged financial risk profile, at about 6.2x leverage for the 12 months ended Sept. 30, 2009, and a narrow focus within a competitive and evolving niche marketplace," said Standard & Poor's credit analyst Catherine Cosentino. A largely recurring revenue base supported by long-term customer contracts fails to mitigate these risks. SIX FLAGS: Bondholders Disclose UBS Raising $2-Bil. Exit Funding ---------------------------------------------------------------- Daily Bankruptcy Review reports a group of Six Flags Inc. bondholders that are fighting to take the Debtors out of bankruptcy say they're close to lining up $2.1 billion in new debt financing from UBS AG. SIX FLAGS BANKRUPTCY NEWS reports that an ad hoc group of senior note holders of Six Flags on November 29, 2009, submitted to SFI's Board of Directors an alternative reorganization proposal, which, if adopted, would provide higher recoveries to the creditors of SFI and its debtor affiliates. In a letter dated November 25, the SFI Noteholders urged the Board to accept their alternative plan in favor of the Second Amended Joint Plan of Reorganization filed by Six Flags, Inc., and its debtor affiliates. The SFI Noteholders also urged the Board to engage in a thoughtful, deliberate restructuring process that will maximize recovery for all creditors, as opposed to the Debtors' Plan, which, according to the Noteholders, unfairly provides preferential treatment to holders of a series of 12-1/4% notes issued by Six Flags Operations to the detriment of the SFI Noteholders. The letter, the SFI Noteholders stated, further advocates for an alternative reorganization plan that provides a fully backstopped rights offering of $420 million. This alternative reorganization plan is supported by noteholders owning over $500 million of the approximately $870 million in senior notes issued by SFI. The Ad Hoc Committee argued that by virtue of the blocking position it holds, the Debtors are currently wasting valuable estate resources pursuing a plan that is not confirmable. The SFI Noteholders said its Plan materially and directly improves upon the Debtors' Plan in that: * Lenders are paid in full either with cash or through the reinstatement of their debt. * SFO Noteholders are paid in full with cash as opposed to receiving common stock and the ability to participate in a rights offering. * SFI Noteholders are allowed (i) approximately 19% of the new common stock and (ii) rights to participate in the convertible preferred stock offering to purchase as much as approximately 81% of the new common stock, subject to dilution by management's long term incentive plan. In contrast, the Debtors' Plan provides SFI Noteholders with approximately 5% of the new common stock. Specifically, the SFI Noteholders' Plan provides: (1) Lenders: While the Debtors' plan provides cash payment in full, the SFI Noteholder Plan reinstates the term loan and pays off the revolver in full in cash; (2) SFO Notes: While the Debtors' plan provides the holders of 12-1/4% Senior Notes issued by Six Flags Operations, Inc. with (i) approximately 25% of the new common stock in SFI and (ii) rights to participate in the equity offering to purchase an additional approximately 70% of the new common stock, the SFI Noteholder Plan provides the holders of SFO Notes with cash payment in full; (3) SFI Notes: While the Debtors' plan provides the holders of SFI Notes with approximately 5% of the new common stock, the SFI Noteholder Plan provides the holders of SFI Notes with (i) approximately 19% of the new common stock and (ii) rights to participate in the convertible preferred stock offering to purchase up to an additional approximately 81% of the new common stock. The SFI Noteholders compared the recoveries under the Debtors' Second Amended Plan and the SFI Noteholder Plan: Subject 2nd Amended Plan SFI Noteholder Plan ------- ---------------- ------------------- Prepetition Lenders Provides cash payment Reinstates the Term in full, Loans and pays off the revolver in full in cash SFO Notes The holders of SFO Provides the SFO Notes with Noteholders with (i) approximately 25% cash payment in of the new common full stock in SFI and (ii) rights to participate in the equity offering to purchase an additional approximately 70% of the new common stock SFI Notes Provides holders of Provides the SFI Notes with holders of SFI approximately 5% of with (i) approx. the new common stock 19% of the new common stock in SFI and (ii) rights to participate in preferred stock offering to purchase up to an additional 81% of the new common stock The letter states, in part, "The SFI Noteholder Plan allows the holders of SFI Notes to own nearly 100% of the new common stock as compared to merely 5% in the Debtors' plan. There is no question the SFI Noteholder Plan maximizes the recoveries of all creditors of the Debtors, and more fairly allocates the value of their estates." White & Case LLP is representing the SFI Noteholders as legal counsel and Chanin Capital Partners LLC is serving as financial advisor. The signatories to the commitment letter are holders or advisors to holders of over $500 million of the approximately $870 million of unsecured notes issued by Six Flags, Inc. On November 20, 2009, White & Case LLP delivered to the Debtors' legal and financial advisors the Commitment Letter under which the SFI Noteholders have committed to fully backstop a $420 million preferred stock rights offering in connection with a proposed plan of reorganization for the Debtors. About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SMURFIT-STONE: To Permanently Close Missoula and Ontonagon Mills ---------------------------------------------------------------- Smurfit-Stone Container Corporation plans to permanently close its Ontonagon, MI, and Missoula, MT, mills, effective December 31. The Ontonagon mill ceased operations in September when it began taking market-related downtime. The Missoula mill will continue operating until December 31. The Ontonagon mill has 182 employees and the Missoula mill has 417 employees. "These decisions were made to ensure the Company's long-term growth and profitability and do not reflect on the hard work and commitment of the employees at the Ontonagon and Missoula mills," said Steve Klinger, president and COO. He added, "We recognize that closing facilities is always difficult on our employees, their families and the communities, and we will work with our employees, union representatives and public officials during these transitions." The Ontonagon mill, which produces 280,000 tons of medium annually, and the Missoula mill, which produces 620,000 tons of liner annually, are high-cost facilities that do not provide adequate returns over the long term for the Company. The company expects to incur a restructuring charge of roughly $284 million, of which roughly $246 million is non-cash, in the fourth quarter of 2009. About Smurfit-Stone Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs roughly 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported roughly $7.450 billion in total assets and $5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed for Chapter 11 protection on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCooper LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. Bankruptcy Creditors' Service, Inc., publishes Smurfit-Stone Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Smurfit-Stone Container Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) SONIC AUTOMOTIVE: Board Adopts Supplemental Exec Retirement Plan ---------------------------------------------------------------- The Compensation Committee of the Board of Directors of Sonic Automotive, Inc., on December 7, 2009, approved and adopted the Sonic Automotive, Inc. Supplemental Executive Retirement Plan to be effective as of January 1, 2010. In connection with the adoption of the SERP, the Compensation Committee authorized the establishment of an irrevocable grantor trust known as a "rabbi trust" for the purpose of accumulating assets from which SERP liabilities may be paid. The SERP is a nonqualified deferred compensation plan that will be unfunded for federal tax purposes. The SERP is intended to be a "top hat" plan available only to a select group of management or highly compensated employees. The SERP is subject to Section 409A of the Internal Revenue Code. The purpose of the SERP is to attract and retain key employees by providing a retirement benefit in addition to the benefits provided by Sonic's tax-qualified and other nonqualified deferred compensation plans. The Compensation Committee designates the employees who will become SERP participants and may require that such employees execute a participation agreement as a condition of participation. On December 7, 2009, the Compensation Committee designated David P. Cosper, Vice Chairman and Chief Financial Officer, and Jeff Dyke, Executive Vice President of Operations, as Tier 1 participants in the SERP effective as of January 1, 2010, but in each case subject to his execution of a participation agreement. The Compensation Committee also administers the SERP and has the discretionary authority to make, amend, interpret and enforce appropriate rules for the administration of the SERP and to utilize its discretion to decide all questions and interpretations that may arise in connection with the SERP. Upon a participant's "normal retirement," the SERP generally provides an accrued benefit in the form of an annual payment equal to a specified percentage of the participant's "final average salary" for a period of 15 years. Final average salary generally means the average of the participant's highest three annual base salaries during the last five plan years prior to the participant's separation from service with Sonic. A participant is generally eligible for the normal retirement benefit upon retirement after reaching age 65 or age 55 with at least 10 years of employment with Sonic. When the Compensation Committee designates an employee as a SERP participant, it also designates the employee as a Tier 1 participant, Tier 2 participant or Tier 3 participant. The annual payments to a Tier 1 participant are 50% of final average salary. The annual payments to a Tier 2 participant are 40% of final average salary. The annual payments to a Tier 3 participant are 35% of final average salary. Participants are subject to a vesting schedule for their SERP benefits based on their "Years of Plan Service" (i.e., a 365-day period of employment beginning on the effective date of participation and each anniversary thereof). Unless otherwise specified by the Compensation Committee, participants vest in their SERP benefits as follows: Years of Plan Service Percent Vested --------------------- -------------- Less than 1 0% At least 1 but less than 2 20% At least 2 but less than 3 40% At least 3 but less than 4 60% At least 4 but less than 5 80% 5 or more 100% However, Mr. Cosper will vest in his SERP benefits as follows: Years of Plan Service Percent Vested --------------------- -------------- Less than 2 0% At least 2 but less than 4 20% At least 4 but less than 6 50% At least 6 but less than 8 75% 8 or more 100% Participants also become 100% vested upon normal retirement, death while employed with Sonic, disability while employed with Sonic or a change in control while employed with Sonic. If a participant leaves Sonic before qualifying for normal retirement, the participant's accrued benefit generally is reduced for early retirement (in addition to application of the vesting schedule). The benefit is reduced by 10% for each year the participant's payment commencement date precedes the earliest date the participant would have been eligible for normal retirement. The reduction for early retirement does not apply to Mr. Cosper. Generally, payment of benefits begins the first of the month following the month in which normal retirement or early retirement occurs. If the participant is a "specified employee" under Section 409A of the Code, the first payment following normal or early retirement generally must be postponed for six months following termination. Subsequent annual payments will be paid on the anniversary of the date the initial installment otherwise would have been made. If a participant terminates employment with Sonic within 2 years after a change in control, the participant will receive his normal retirement benefit or reduced early retirement benefit, as applicable, in a lump sum payment based on the present value of his unpaid, vested accrued benefit. If a participant dies during the 15-year payment period, payments continue to the participant's surviving spouse (if any). If a participant dies before terminating employment with Sonic, the lump sum value of his accrued benefit (calculated as if the date of death were the date of normal retirement) will be paid to his designated beneficiary. If a participant becomes disabled while employed with Sonic, the participant will be entitled to a regular SERP benefit payable for 15 years (calculated as if the date of disability were the date of normal retirement). If a participant is terminated for "cause" or it is discovered after termination that the participant could have been terminated for certain reasons constituting "cause," the participant will forfeit all benefits under the SERP, including any remaining unpaid benefits if already in pay status. If already in pay status, the SERP also provides that the participant must repay Sonic all benefit amounts previously received. Under the SERP, reasons constituting "cause" include material breach of the participant's obligations in any employment agreement which is not timely remedied, the participant's breach of any applicable restrictive covenants, conviction of a felony, actions involving moral turpitude, willful failure to comply with reasonable and lawful directives of Sonic's Board of Directors or the participant's superiors, chronic absenteeism, willful or material misconduct, illegal use of controlled substances, and if applicable, the final and non-appealable determination by a court of competent jurisdiction that the participant willfully and knowingly filed a fraudulent certification under Section 302 of the Sarbanes Oxley Act. In addition, the SERP provides that benefits are forfeited if a participant fails to comply with certain restrictive covenants related to Sonic and its business, including any remaining unpaid benefits if already in pay status. If already in pay status, the SERP also provides that the participant must repay Sonic all benefit amounts previously received. Subject to limited exceptions, these restrictive covenants generally prohibit (i) disclosing or using in any unauthorized manner any of Sonic's confidential or proprietary information, (ii) employing or soliciting employees of Sonic, its affiliates or subsidiaries, (iii) interfering with Sonic's relationships with its vendors, (iv) competing with Sonic within any Standard Metropolitan Statistical Area or county in which Sonic or any of its subsidiaries has a place of business, and (v) disparaging Sonic, its subsidiaries, affiliates, officers, directors, business or products. The restrictive covenants generally apply while a participant in the SERP, and if later, during the two-year period following separation from service with Sonic (except that the confidentiality and non-disparagement restrictions do not expire). If a rabbi trust exists at the time of a change in control of Sonic, the SERP requires that Sonic contribute, at the time of the change in control and then on each anniversary thereof, cash or liquid securities sufficient so that the value of assets in the rabbi trust at least equals the total value of all accrued benefits under the SERP. The Compensation Committee retains the discretion to amend or terminate the SERP at any time (provided that an amendment generally cannot reduce a participant's vested accrued benefits as of the date of the amendment). The SERP can be terminated and liquidated as permitted by Section 409A of the Code. About Sonic Automotive Headquartered in Charlotte, North Carolina, Sonic Automotive, Inc. (NYSE: SAH) -- http://www.sonicautomotive.com/-- is the nation's third-largest automotive retailer, operating 153 franchises. As of June 30, 2009, it operated 154 dealership franchises, representing 31 different brands of cars and light trucks, at 131 locations and 30 collision repair centers in 15 states. Its dealerships provide comprehensive services including sales of both new and used cars and light trucks, sales of replacement parts, performance of vehicle maintenance, manufacturer warranty repairs, paint and collision repair services, and arrangement of extended service contracts, financing, insurance and other aftermarket products for customers. As of September 30, 2009, the Company had total assets of $2.00 billion against total current liabilities of $988.30 million, long-term debt of $556.24 million, and other long-term liabilities of $109.56 million, resulting in stockholders' equity of $350.65 million. * * * As reported by the Troubled Company Reporter on September 22, 2009, Moody's Investors Service affirmed the Caa1 Corporate Family and Probability of Default ratings of Sonic Automotive and changed the outlook to positive from negative. The TCR said September 18, 2009, that Standard & Poor's Ratings Services placed its 'CCC+' corporate credit rating and related issue ratings on Sonic Automotive on CreditWatch with positive implications. At the same time, S&P assigned its 'CCC-' issue rating and a '6' recovery rating to the company's proposed $125 million convertible notes due 2029. SPANISH BROADCASTING: Receives Nasdaq Staff Determination --------------------------------------------------------- Spanish Broadcasting System, Inc., disclosed that, on December 7, 2009, it received written notification from The Nasdaq Stock Market, Inc., that, based upon the Company's failure to regain compliance with the $1.00 per share minimum bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) by December 4, 2009, the Company's common stock is subject to delisting at the opening of business on December 16, 2009, unless the Company requests a hearing before a Nasdaq Listing Qualifications Panel on or before 4:00 p.m. Eastern Time on December 14, 2009. On December 11, 2009, the Company requested such a hearing, which will stay any action with respect to the Staff Determination until the Nasdaq Listing Qualifications Panel renders a decision subsequent to the hearing. However, there can be no assurance that Nasdaq will grant the Company's request for continued listing. As previously announced on August 25, 2008 by the Company, it received a notice from Nasdaq on August 20, 2008 indicating that the Company failed to comply with the minimum bid price requirement because the bid price of its common stock closed under $1.00 per share for 30 consecutive business days. The notice also stated that, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company would be provided 180 calendar days, or until February 17, 2009, to regain compliance with the minimum bid price requirement. Due to Nasdaq's suspensions of enforcement of the bid price requirement in 2008 and 2009 and as disclosed by the Company in its filings of various Forms 8-K, 10-Q and 10-K, the Company's time period for regaining compliance was extended until December 4, 2009. To regain compliance, the closing bid price of the Company's common stock had to remain at or above $1.00 per share for a minimum of 10 consecutive business days prior to the market close on December 4, 2009. The Company did not regain compliance with the $1.00 minimum bid price requirement by such time, which resulted in the issuance of the Staff Determination. About Spanish Broadcasting System, Inc. Spanish Broadcasting System, Inc. -- http://www.spanishbroadcasting.com/-- is the largest publicly traded Hispanic-controlled media and entertainment company in the United States. SBS owns and/or operates 21 radio stations located in the top U.S. Hispanic markets of New York, Los Angeles, Miami, Chicago, San Francisco and Puerto Rico, including the #1 Spanish- language radio station in America, WSKQ-FM in New York City, as well as leading radio stations airing the Tropical, Mexican Regional, Spanish Adult Contemporary and Hurban format genres. The Company also owns and operates Mega TV, a television operation with over-the-air, cable and satellite distribution and affiliates throughout the U.S. and Puerto Rico. SBS also produces live concerts and events in the major U.S. markets and Puerto Rico. In addition, the Company operates www.LaMusica.com, a bilingual Spanish-English online site providing content related to Latin music, entertainment, news and culture. SPANSION INC: Morgens Waterfall, et al., Disclose 5.31% Stake ------------------------------------------------------------- Phaeton International (BVI) Ltd.; Phoenix Partners, L.P.; Phoenix Partners II, L.P.; Morgens, Waterfall, Vintiadis & Company, Inc.; and Edwin H. Morgens report that they beneficially own in the aggregate 6,000,000 shares of Class A Common Stock, $0.001 Par Value Per Share; and 48,300,000 Debentures, convertible into 2,741,609 shares of Common Stock, representing roughly 5.31% of the outstanding Common Stock of Spansion Inc. as of November 24, 2009. Morgens Waterfall is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, as amended. The business of Morgens Waterfall is the rendering of financial services and as such it provides discretionary investment advisory services to each of the Advisory Clients. In such capacity, Morgens Waterfall has the power to make decisions regarding the dispositions of the proceeds from the sale of the shares of Common Stock. Under the rules promulgated under the Securities and Exchange Act of 1934, as amended, Morgens Waterfall and its principal (Mr. Morgens) may be considered "beneficial owners" of securities acquired by the Advisory Clients. Each Advisory Client has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities held in such person's account. Phoenix is a limited partnership organized under the laws of the State of New York. Phoenix II is a limited partnership organized under the laws of the State of Delaware. Phaeton is an exempted company organized in the British Virgin Islands. Morgens Waterfall is a corporation organized under the laws of the State of New York. Morgens is a United States citizen. 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) ST JOHNSBURY: Moody's Cuts Ratings on $3.3 Mil. Debt to 'Ba1' ------------------------------------------------------------- Moody's Investors Service has downgraded to Ba1 from Baa3 St. Johnsbury School District's (VT) general obligation bond rating, affecting approximately $3.3 million in outstanding rated debt, and assigned a stable outlook. The bonds are secured by a general obligation unlimited tax pledge. The downgrade reflects the district's negative General Fund balance position following a sizable fiscal 2008 operating deficit, narrow cash position which resulted in a missed tax anticipation note payment in June 2009, and reliance on market access to fund operations. The stable outlook reflects Moody's expectation that recent actions taken by the district to improve cash flow, strengthen budget monitoring and reduce the district's accumulated deficit will stabilize fiscal operations. The district's financial position has been weakened by consecutive operating deficits which resulted in an accumulated General Fund deficit of $1.1 million or a negative 8.8% of General Fund revenues at the end of fiscal 2008. Further, due to a declining cash position and insufficient revenue monitoring the district was unable to fully repay a $6 million TAN payable on June 30, 2009. Of note, the district relies on annual note borrowing as the bulk of property tax revenues are not received until December. The district remained $3 million short on its payment of a privately placed TAN until August 14th when it was granted a $3 million short-term (90 day) note. The note was paid in full and on time with a $5 million line of credit, payable June 30, 2010. Importantly, the district was able to fully pay its $520,000 September bond payment. Additionally, following the receipt of its fiscal 2008 audit, which indicated an accumulated deficit of $1.5 million, the district issued a one-year deficit reduction note for the same amount. The district expects to renew and pay down a portion of the deficit reduction note annually over a period of five to seven years with additional property tax revenues. Importantly, the district has taken several steps to stabilize operations. Supported by new fiscal management the district has improved cash flows by enhancing state aid receipts, particularly reimbursements for special education expenses, developed a multi- year deficit reduction plan, and improved oversight of the district's budget and cash position. Positively, the district's draft fiscal 2009 financial statements indicate a $417,000 General Fund operating surplus supported in large part by greater than budgeted special education reimbursements. The surplus reduced the district's accumulated General Fund deficit to $460,000 or a negative 3% of revenues. The fiscal 2010 budget represents a 4.26% increase over the prior year and includes a $200,000 appropriation for deficit reduction. Despite signs of stabilization challenges remain particularly given the district's continued reliance on market access to support operations and renew its deficit reduction note. Looking ahead, the district's ability to maintain structurally balanced operations and improve liquidity levels will be an important consideration in future rating reviews. Located in rural northeastern Vermont (GO rated Aaa/stable outlook), St. Johnsbury is a small, predominantly residential, regional center of approximately 7,500 residents. Wealth levels in the district are below state medians with per capita income at 81.5% of the state and median family income at 86.3% of the state. The county's unemployment rate (7% as of September 2009) has historically trended above the state median. The district currently has no plans to issue long-term debt and its debt portfolio consists entirely of fixed rate borrowing. The last rating action with respect to St. Johnsbury School District (VT) was on December 9, 2008, when the district's Baa3 rating was affirmed. STERLING FINANCIAL: Receives Non-Compliance Notice From NASDAQ -------------------------------------------------------------- Sterling Financial Corporation has been notified by the NASDAQ Stock Market that Sterling no longer meets the minimum $1.00 per share requirement for continued listing on the NASDAQ Global Select Market under Listing Rule 5450(a)(1). This notice does not result in the immediate delisting of Sterling's common shares from the NASDAQ Global Select Market because Sterling has a grace period of 180 calendar days under the listing rules, or until June 7, 2010, in which to regain compliance with the minimum bid price rule. The deficiency letter, dated Dec. 7, 2009, states that if the bid price of Sterling's securities closes at or above $1.00 per share for at least 10 consecutive business days before June 7, 2010, NASDAQ will notify Sterling that the matter will be closed. If Sterling does not regain compliance before June 7, 2010, Sterling may appeal NASDAQ's determination, which would stay any delisting action by NASDAQ pending a final decision by the Listing Qualifications Panel. Alternatively, NASDAQ stated that Sterling may be eligible for an additional grace period if it meets the initial listing standards, with the exception of bid price, and applies to transfer the listing of its common stock to the NASDAQ Capital Market. Sterling is evaluating its options following receipt of this notification and intends to take appropriate actions in order to retain the listing of its common stock on NASDAQ. About Sterling Financial Corporation Sterling Financial Corporation of Spokane, Wash., -- http://www.sterlingfinancialcorporation-spokane.com/-- is the bank holding company for Sterling Savings Bank, a commercial bank, and Golf Savings Bank, a savings bank focused on single-family mortgage originations. Both banks are state chartered and federally insured. Sterling offers banking products and services, mortgage lending, construction financing and investment products to individuals, small businesses, commercial organizations and corporations. As of Sept. 30, 2009, Sterling Financial Corporation had assets of $11.87 billion and operated 178 depository branches throughout Washington, Oregon, Idaho, Montana and California. STOUDEMIRE'S DOWNTOWN: Files for Ch. 11 Due to Revenue Drop ----------------------------------------------------------- Jahna Berry at The Arizona Republic says Stoudemire's Downtown filed for Chapter 11 bankruptcy protection blaming the recession, declining attendance at National Basketball Association games, and a rent dispute with the landlord. Based in Phoenix, Arizona, Stoudemire's Downtown operates a restaurant at 3 S. Second Street, Suite 113, near Second and Washington Streets. STRATUS MEDIA: Posts $598,000 Net Loss in Q3 2009 ------------------------------------------------- Stratus Media Group, Inc., reported a net loss of $598,043 for the three months ended September 30, 2009, compared with a net loss of $269,356 for the same period of 2008. Revenues for the three months ended September 30, 2009, were $-0-, which was the same for the three months ended September 30, 2008. There were no event revenues in the current period or the prior period. Stratus card revenues were $-0- in the current period and $-0- in the prior period. The sponsoring bank that conducted the "back end" banking requirements of the Stratus program stopped sending the Company statements in October 2007 and provided notice in March 2008 that it was discontinuing the program. While several cardmembers are continuing to use their cards with the former sponsor bank the Company has not recorded these new revenues since October 2007, and the Company is investigating legal redress against this bank. The Company is actively seeking a new sponsoring bank for the back end banking requirements of the program, but there can be no assurances that it will be able to do so. Balance Sheet At September 30, 2009, the Company's balance sheets showed $5,321,870 in total assets, $5,277,417 in total liabilities, and $44,453 in total shareholders' equity. The Company's balance sheets at September 30, 2009, also showed strained liquidity with $212,899 in total current assets available to pay $4,652,417 in total current liabilities. A full-text copy of the Company's quarterly report is available for free at http://researcharchives.com/t/s?4bcc Non-Reliance on Form 10-Q for the Period Ended June 30 In a regulatory filing dated December 2, 2009, the Company discloses that on November 6, 2009, the Company's acting chief financial officer concluded that the Company's financial statements for the period ended June 30, 2009, included in the Company's Form 10-Q that was filed on August 14, 2009, cannot be relied on because the financial statements did not include $78,775 of additional, non-cash, Black Scholes warrant expense in the three and six months ended June 30, 2009, largely related to the issuance of warrants to purchase 900,000 shares of the Company's common stock on April 30, 2009, to two new members of the Company's Board of Directors. On November 19, 2009, the Company filed an amendment to the report which addresses this non-reliance and corrected the financial statements. In the amended report, the Company reported a net loss of $709,803 for the three months ended June 30, 2009, compared with a net loss of $286,202 for the same period of the prior year. A full-text copy of the amended quarterly report for the three months ended June 30, 2009, is available at no charge at: http://researcharchives.com/t/s?4bcd Going Concern Doubt The Company has suffered losses from operations and currently lacks liquidity to meet its current obligations. The Company had a net loss in 2008 of $2,093,267 and a net loss for the three and nine months ended September 30, 2009, of $598,043 and $1,716,247, respectively. As of September 30, 2009, the Company had negative working capital of $4,439,518 and cumulative losses of $16,388,930. Unless additional financing is obtained, the Company may not be able to continue as a going concern. In the nine months ended September 30, 2009, the Company raised $795,500 in cash through the issuance of common stock. The Company is actively seeking additional capital. However, due to the current economic environment and the Company's current financial condition, the Company cannot assure current and future stockholders there will be adequate capital available when needed and on acceptable terms. About Stratus Media Based in Santa Barbara, Calif., Stratus Media Group, Inc. (OTC BB: SMDI) is focused on operating the Stratus Rewards program, and seeks to own and realize all available event revenue rights from tickets/admissions, corporate sponsorship, television, print, radio, Internet, merchandising and hospitality. The Company's operations consist of live sports events, music concerts, specialized live entertainment events, other entertainment events, and media platform marketing through its Stratus Rewards Visa program. SUMMIT AT COPPER: Owners to Control Unsold Units Under Plan ----------------------------------------------------------- Jahna Berry at the Arizona Republic says Summit at Copper Square filed a plan of reorganization in the U.S. bankruptcy court to allow its owners to retain control of unsold units and market them as upscale extended-stay hotel rooms to pay off debts. Lenders argued before the court to allow it to continue foreclosure of the company's property. Company owners said it feared that lender FNBC-Rescon I LLC will sell the remaining condos at low prices and further hurt property values, source says. Summit at Copper Square -- http://www.summitcoppersquare.com/-- owns a condo tower near chase field. SUPERIOR ENERGY: Hallin Deal Won't Affect Moody's 'Ba3' Rating -------------------------------------------------------------- Moody's Investors Service commented that Superior Energy Services, Inc.'s pending acquisition of Hallin Marine Subsea International Plc will not impact SESI, L.L.C.'s Ba3 Corporate Family Rating or its stable rating outlook. The last rating action affecting Superior occurred on June 16, 2008, when Moody's changed its outlook to stable from negative. Superior Energy Services, Inc., is an oilfield services company headquartered in New Orleans, Louisiana. TARRAGON CORP: Court Extends Solicitation Period Until February 8 ----------------------------------------------------------------- The Hon. Donald H. Steckroth of the U.S. Bankruptcy Court for the District of New Jersey, extended until February 8, 2010, Tarragon Corp. and its debtor-affiliates' exclusive period to solicit acceptances to the Chapter 11 Plan of Reorganization. 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 CORP: Can Access $4.51MM DIP Loan from Westminster ----------------------------------------------------------- The Hon. Donald H. Steckroth of the U.S. Bankruptcy Court for the District of New Jersey authorized, on a final basis, Tarragon Corporation and its debtor-affiliates to: -- obtain an aggregate committed amount of $4,510,000 from Westminster DIP Funding LLC; and -- grant adequate protection to Westminster. As reported in the Troubled Company Reporter on Dec. 9, 2009, the Debtors needed to obtain funds to continue operations and to administer and preserve the value of their estates. The Debtors were unable to obtain unsecured credit. The DIP lender agreed to provide financing, subject to, among other things: 1. the DIP lender will be granted and have a lien and security interest in the Arko termination fee ($375,000), which funds will be held by Arko's counsel, Greenberg Traurig, LLP, in escrow; 2. the DIP protection will be subject only to the Carve Out; 3. all DIP obligations will immediately be due and payable on January 22, 2010; 4. the Debtor will file a plan of reorganization and disclosure statement; and the Court will enter an order confirming the plan by no later than January 7, 2010. The loan is secured by first priority perfected liens and security interests on property and assets of the Debtors' estates and with priority over all administrative expenses. 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., 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. TOUSA INC: Lenders Amend Note on Payments Subject to Disgorgement ----------------------------------------------------------------- Citicorp North America, Inc., in its capacity as administrative agent to the First Lien Term Loan and certain First Lien Term Loan Lenders, filed with the Court on December 9, 2009, an amended accounting of amounts subject to disgorgement pursuant to Judge Olson's final judgment on the lawsuit commenced by the Official Committee of Unsecured Creditors against the Debtors' prepetition lenders. The Original Accounting previously disclosed that the total amount potentially subject to disgorgement under the Final Judgment by the First Lien Lenders total $117,114,252. Citicorp's counsel, Amy Denton Harris, Esq., at Stichter, Riedel, Blain & Prosser, P.A., in Tampa, Florida, related that the Original Accounting erroneously included $487,337 in principal and interest received by one of the lenders who have not been named as defendants in the Committee Action or who have been named but have not appeared in the totals received by the First Lien Lenders who appeared in the Committee Action, she pointed out. The Original Accounting also did not include certain professional fees allocated to the Appearing First Lien Lenders, totaling $608,215, she noted. Thus, the total amount potentially subject to disgorgement under the Final Judgment by the Appearing First Lien Lenders is $117,235,130, comprised of: Principal Payments $498,364 Interest Payments 24,194,159 Paydown Plus Pre-Judgment Interest 69,979,957 Professional Fees and Expenses 22,562,649 ------------- $117,235,130 As some of these professionals also provided services to the lenders under the Revolving Credit Facility, the payment for which are not subject to disgorgement, this required an apportionment of payments to these professionals as between services provided to the First Lien Term Loan Lenders and Revolver Lenders, Ms. Harris explained. In addition, during the period July 31, 2009 through the Petition Date, professionals who provided services to the First Lien Lenders also provided services to the lenders under the Second Lien Term Loan that were paid for by TOUSA, Inc. The total amount paid by TOUSA on behalf of the Second Lien Lenders based on an apportionment of these services among the Revolver Lenders, the First Lien Lenders and Second Lien Lenders, is $571,973. However, this amount is not subject to disgorgement by the First Lien Lenders as these services were not provided, and these payments were not made, on their behalf, Ms. Harris explained. A summary of the fees and expenses paid to professionals for services to the lenders under the First Lien Term Loan is available for free at: http://bankrupt.com/misc/Tousa_CiticorpFeeSummary.pdf Moreover, Wells Fargo Bank, N.A., as successor administrative agent pursuant to the Second Lien Term Loan Credit Agreement, and certain Second Lien Lenders also filed two more Amended Disclosures of payments subject to disgorgement pursuant to the Final Judgment. As previously reported, the Initial Disclosure indicated that $21,487,119 was paid to the Second Lien Defendants as adequate protection. The Second Amended Disclosure was submitted to the Court on November 18, 2009, indicating that $21,657,810 was paid to the Second Lien Defendants as adequate protection. By November 20, TOUSA noted that it had incorrectly advised the Second Lien Defendants that it had paid the June 2009 invoice of Seward & Kissel for $14,698. As a result, the amount of the Payments as indicated in the Second Amended Disclosure was overstated. Accordingly, under a Third Amended Disclosure dated November 20, the Second Lien Defendants submitted to the Court an updated exhibit that correctly sets forth the amount of the Payments as being $21,643,112. Based on this, the Second Lien Lenders will be posting several bonds in an aggregate amount equal to $23,807,423, being 110% of the Payments. The First Amended Disclosure also noted that TOUSA had made certain prepetition "Ad Hoc Group Payments" totaling $910,981. As part of its November 20 update to the Second Lien Lenders, TOUSA identified a further $68,500 in payments made for prepetition services. For the reasons stated under the First Amended Disclosure, the Second Lien Defendants have not included those payments in exhibits under the Third Amended Disclosure. Summaries of the Monthly Fees Paid by TOUSA to Wells Fargo and the Second Lien Lenders for 2008 and 2009 are available for free at http://bankrupt.com/misc/TOUSA_2009paymentstoWellsFargo.pdf Debtors Amend Valuation Analysis In a separate filing, the Debtors submitted to the Court on December 4, 2009, an amendment to their accounting of the value of the remaining assets of the Conveying TOUSA Subsidiaries that were subject to the avoided liens pursuant to the Final Judgment filed on November 12, 2009. With the Court's consent, the Remaining Value Analysis Amendment was filed under seal and designated as highly confidential material under a Stipulated Protective Order. The Debtors' counsel, Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami, Florida, reminded the Court that the Debtors previously reserved their right to modify or amend their Remaining Value Analysis as appropriate. He noted that the Remaining Value Analysis Amendment contains the Debtors' current estimates regarding the value of their remaining assets. The Debtors are seeking to sell their remaining assets, and the public release of these estimates would significantly impair the Debtors' ability to maximize the value of their estates by negotiating the optimal price for their assets, he pointed out. Thus, the Debtors formally sought the Court's authority to file under seal the Remaining Value Analysis Amendment. The Debtors further asked the Court to rule that the Remaining Value Analysis Amendment remain under seal after the close of their Chapter 11 cases. About Tousa Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08- 10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta, Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger Singerman, to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008 (Bankr. S.D. Fla. Case No. 08-20746). It listed assets between $1 million and $10 million, and debts between $1 million and $10 million. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets of $1,734,422,756 and total liabilities of $2,300,053,979. Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TOUSA INC: Proposes to Pay Termination Fee to Lennar Texas ---------------------------------------------------------- By this motion, TOUSA Inc. and its units ask the Court to allow Debtor Newmark Homes, L.P., to enter into a General Mutual Release Agreement with Lennar Homes of Texas, Land and Construction, Ltd. Lennar Texas is the sub-landlord of certain suites located at 300 E. Sonterra Boulevard, in San Antonio, Texas. Pursuant to a postpetition non-residential real property sublease dated July 2, 2008, Newmark subleased certain portions of the Property, Suite Nos. 1130 and 1170, from Lennar for use in connection with the operation of the Debtors' Texas division. Monthly base rent under the Sublease is $8,759, and the Sublease terminates on October 30, 2010. In line with their revised business plan, the Debtors shifted focus from new sales and construction and instead concentrated on selling remaining inventory and closing home sales. Consistent with this plan, the Debtors determined that they no longer need the office space occupied pursuant to the Lennar Sublease. Recognizing that the Sublease is a postpetition agreement, the Debtors endeavored to engage Lennar in discussions that would facilitate a termination of the Sublease and minimize administrative claims that could be asserted in connection with that termination, Paul Steven Bergerman, Esq., at Berger Singerman, P.A., in Miami, Florida, tells the Court. To that end, Newmark and Lennar engaged in arm's-length negotiations and recently reached a consensual agreement that will allow Newmark to terminate the Sublease in return for payment of a termination fee of $48,178. The Termination Fee represents half of the total amount of monthly base rent that would otherwise be due under the Sublease through October 2010. The Debtors estimate that they will save approximately $84,000, including base rent and additional cost savings associated with the Sublease, like utility expenses, under the terms of the proposed Termination Agreement. Consistent with the Termination Agreement and pending approval by the Court, Newmark noted its plan to have vacated the Property as of November 30, 2009. Pursuant to the terms of the Termination Agreement, however, Newmark will pay the Termination Fee to Lennar only upon approval of the Termination Agreement by the Court. Finally, the Termination Agreement contemplates mutual releases of all claims and causes of action relating to the Sublease. The Court will consider the Debtors' request at a December 16, 2009 hearing. About Tousa Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08- 10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta, Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger Singerman, to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008 (Bankr. S.D. Fla. Case No. 08-20746). It listed assets between $1 million and $10 million, and debts between $1 million and $10 million. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets of $1,734,422,756 and total liabilities of $2,300,053,979. Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TOUSA INC: Transeastern Lenders Reiterate Appeal on Fraud Transfer ------------------------------------------------------------------ Citicorp North America, Inc., in its capacity as Administrative Agent to the First Lien Term Loan, and certain First Lien Lenders reiterated the issues on appeal they want the U.S. District Court for the Southern District of Florida to consider with respect to Bankruptcy Judge John Olson's final judgment in the lawsuit the Official Committee of Unsecured Creditors commenced against the Debtors' prepetition lenders. Among others, Citicorp and the First Lien Lenders want the District Court to determine whether Judge Olson erred in finding that they did not act in good faith in entering into the First Lien Credit Agreement. For their part, the Senior Transeastern Lenders amended their notice of appeal on November 23, 2009. The Senior Transeastern Lenders are lenders under a $450 million Credit Agreement with the Debtors dated as of August 1, 2005. The Senior Transeastern Lenders amended their appeal in light of an order entered by the District Court on November 12, 2009, in the action captioned 3V Capital Master Fund, Ltd., et al., v. Official Committee of Unsecured Creditors of TOUSA, Inc., et al., Case Nos. 09-61308-CIV-AJ and 09-61437-CIV-AJ. The District Court, under the November 12 Order, dismissed as premature interlocutory appeals the Senior Transeastern Lenders' appeals of (1) the Order Granting Debtors' Motion to Strike the Senior Transeastern Lenders; and The CIT Group/Business Credit, Inc.'s Counterclaims and Third-Party Complaints entered on July 2, 2009; and (2) the Order Granting the Plaintiff's Motion for Summary Judgment on Defendants' Affirmative Defenses Based on Substantive Consolidation, Single Business Enterprise, and Alter Ego entered on July 8, 2009. In dismissing the interlocutory appeals, the District Court observed that the Senior Transeastern Lenders "can raise any issues resolved adversely to them by the bankruptcy court prior to entry of final judgment (including the ones raised in these interlocutory appeals)." Thus, in consideration of the District Court's observation and for the avoidance of any doubt about the issues presented on the appeal, the Senior Transeastern Lenders file their Second Amended Notice of Appeal. In light of their Amended Notice of Appeal, the Senior Transeastern Lenders also seek leave from the District Court to file and Amended Designation of Record and Statement of Issues on Appeal and raise in the current Amended Appeal all of the issued raised in their first two appeals. The Senior Transeastern Lenders reiterate their issues on appeal, which include, among others, level of scrutiny on appeal, errors in determining liability, errors in finding lack of good faith, errors in remedies ordered, and errors in preclusion of evidence. They also assert that remand of the case to a different judge is necessary. Debtors & Committee Object to Citicorp's Motion to Modify Stay Order, Citicorp Insists on Modifications Given that the Committee is prosecuting the Committee Action, the Debtors relate that they take no position with regard to Citicorp's Motion to Modify the Stay Order on certain portions of the Bankruptcy Court's Final Judgment on the Committee Action. However, to the extent the Senior Transeastern Lenders assert that the cost of a supersedeas bond would be taxable to the Debtors' estates if the Bankruptcy Court's Stay Order is reversed, the Debtors believe that the question is not yet ripe for decision, Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami, Florida, contends, on the Debtors' behalf. The Debtors thus reserve their right to dispute that argument if the issue becomes ripe. In another filing, the Committee's counsel, Patricia A. Redmond, Esq., at Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., in Miami, Florida, points out Citicorp's main criticism of the Stay Order is that each of the 30 First Lien Lenders appearing in the Committee Action should be permitted to post a separate bond covering its pro rata share of the group's liability. Citicorp have also sought permission to use sureties that are not A.M. Best Company A+ rated. Ms. Redmond contends that Citicorp could have sought clarification on those issues during a November 9, 2009 hearing before the Bankruptcy Court. She further points out that the Stay Order never contained a limitation that only a surety rated A+ or better would be acceptable. Instead, the Stay Order only says that A+ sureties are acceptable, she asserts. In this light, the Committee asks the District Court to deny Citicorp's Motion to Modify the Stay Order. In response to the objections asserted, Citicorp's counsel, Amy Denton Harris, Esq., at Stichter, Riedel, Blain & Prosser, P.A., in Tampa, Florida, notes that the Bankruptcy Court clarified at that the November 9 hearing that its use of the term "aggregate" in the Stay Order meant either one bond or multiple bonds. This clarification leaves intact Citicorp's major concern, which is that of the aggregate amount of the required bonding, she points out. With this clarification, Ms. Harris maintains, the Stay Order continues to require bonds in the aggregate amount of the monetary award or, $145,090,000 being the disgorgement amount of both the Appearing First Lien Lenders and the non-appearing First Lien Lenders. Moreover, Ms. Harris argues that as the Stay Order states that "supersedeas bonds will be approved if they are in the form of cash or bonds issued by an insurance company rated A+ by A.M. Best," a clear implication is that bonds from insurance companies with lower ratings will not be approved and in any event would leave that risk with the Appearing First Lien Lenders. Regardless of whether the Committee's interpretation of the Stay Order with respect to the A+ rated sureties is correct, modification is still required as the Stay Order raises the material risk that sureties with ratings below A+ will not be acceptable, Ms. Harris insists. Thus, Citicorp asks the District Court to: (a) reduce the aggregate amount of the bonds the Appearing Lenders are required to provide, either individually or collectively to $128,825,677, which is 110% of their disgorgement obligations under the Final Judgment, as amended; (b) delete the A+ bond rating requirement and instead allow the bond to be issued by any surety meeting the regulations of the United States Department of the Treasury for approved sureties; and (c) grant the Appearing First Lien Lenders 30 days from the District Court's order on the Motion to Modify to post the required bonds. District Court Modifies Stay Order, Closes Nov. 10 Appeals Judge Adalberto Jordan of the District Court grants in part and denied in part Citicorp's Motion to Modify. Wells Fargo and the Senior Transeastern Lenders joined in Citicorp's Motion. Judge Jordan further rules that the Stay Order will remain in place with these modifications: (1) Any bonds issued by surety companies with an A or above rating from A.M Best, Standard and Poors and Moody's will be sufficient for a stay. Citicorp and the Senior Transeastern Lenders will act at their own risk if they obtain bonds from surety companies with lower ratings. (2) The bonds posted by Citicorp and the Appearing First Lien Lenders need only be for $117.1 million plus 10%. (3) The deadline for posting the bonds is extended to December 22, 2009. (4) Bankruptcy Judge Olson may set a schedule in January 2010 for challenges to the adequacy of any bond and for a hearing on those challenges. The Secured Lenders previously argued that the bonds are too high because the amount that may ultimately be recovered by the appellees will be significantly lower than the amounts that Judge Olson ordered disgorged. However, Judge Jordan points out that the Secured Lenders have been ordered to disgorge hundreds of millions of dollars. That disgorgement judgment is the one that the Secured Lenders are appealing from, and in the absence of any authority on point, it seems that any bond should be set at 110% of the disgorgement judgment, Judge Jordan elaborates. A bond needs to be sufficient to cover the disgorgement judgment if it is upheld on appeal, Judge Jordan opines. Moreover, Judge Jordan formally closed on November 20, 2009, Appeal No. 09-23428 of the Senior Transeastern Lenders and Appeal No. 09-23426 of Citicorp. Judge Jordan also entered the order modifying the Stay Order on November 20, 2009. Citicorp Seeks Modifications to District Court's Order Subsequently, Citicorp asks the Bankruptcy Court to amend the District Court's November 20 Order solely to increase the total aggregate amount of bonds to be posted by the Appearing First Lien Lenders by December 22, 2009, from $128,810,000 to $128,958,643, to conform with the First Lien Lenders' Corrected Accounting of Amounts Subject to Disgorgement under the Final Judgment dated December 9, 2009. Citicorp's counsel, Richard Craig Prosser, Esq., at Stichter, Riedel, Blain & Prosser, P.A., in Tampa, Florida, explains that the Original Accounting erroneously included $487,337 in principal and interest payments received by one non-appearing Lender in the total received by the Appearing First Lien Lenders. The Corrected Accounting is reduced the total interest and principal received by the Appearing First Lien Lenders by this amount. Moreover, the Corrected Accounting includes professional fees for October 2009, totaling $608,215, that were not included in the Original Accounting, Mr. Prosser adds. He notes that these fees are reimbursable by the Debtors' estates pursuant to the Fourth Final Cash Collateral Order, which requires the Debtors to reimburse the Appearing First Lien Lenders for fees and expenses incurred through October 31, 2009. The Corrected Accounting thus increases the disgorged professional fees to be included in the bond amount by $608,215, Mr. Prosser points out. In this light, the Corrected Accounting indicates that the amounts subject to disgorgement by the Appearing Lenders total $117,235,130, Mr. Prosser asserts. As the Bankruptcy Court's Stay Order, as modified by the District Court, requires the posting of bonds in the aggregate amount of 110% of the disgorgement amounts, the Appearing First Lien Lenders seek that the bond amount be modified from $128.8 million or 110% of $117.1 million, to $128.9 or 110% of $117.2 million. Moreover, Mr. Prosser discloses that the Appearing First Lien Lenders provided a draft of the Corrected Accounting to the Official Committee of Unsecured Creditors and discussions with the Committee concerning a potential stipulation are ongoing. However, in order to clarify this issue before the December 22, 2009 date for the posting of bonds, the Appearing First Lien Lenders filed their Motion to Modify so that it can be heard by the Bankruptcy Court at a December 16, 2009 hearing. Fraud Transfer Ruling As reported by the TCR on Oct. 15, 2009, Judge John K. Olson of the U.S. Bankruptcy Court for the Southern District of Florida has held that the loans Citicorp North America, as administrative agent, and certain prepetition lenders extended to TOUSA Inc. and its affiliates barely six months before the Petition Date were fraudulent transfers. TOUSA, Inc. caused certain of its subsidiaries to borrow in July 2007 from certain lenders (i) a $200 million first lien term loan with Citicorp, as administrative agent under the parties' credit agreement, and (ii) a $300 million second lien term loan with Citicorp as administrative agent, as subsequently replaced by Wells Fargo Bank. To secure the Loans, the lenders were granted liens on substantially all of TOUSA's assets. The proceeds of the Loans were used to settle a litigation initiated by Senior Transeastern Lenders against TOUSA and its subsidiary, TOUSA Homes LP, that arose from the default on debt incurred to finance the Transeastern Joint Venture, a business venture that TOUSA undertook in 2005. Certain of TOUSA's affiliates, otherwise referred to as the "Conveying Subsidiaries," which were not defendants in the Transeastern litigation and were not liable to the entities that financed the Transeastern Joint Venture, nonetheless incurred liabilities and granted liens to secure the resolution of TOUSA Inc.'s liabilities as their parent company. A full-text copy of Judge Olson's 182-page Findings of Fact and Conclusions of Law dated October 13, 2009, is available for free at http://bankrupt.com/misc/TOUSA_JudgeOlsonOct13Findings.pdf About Tousa Inc. Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08- 10928). The Debtors have selected M. Natasha Labovitz, Esq., Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta, Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at Berger Singerman, to represent them in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008 (Bankr. S.D. Fla. Case No. 08-20746). It listed assets between $1 million and $10 million, and debts between $1 million and $10 million. The Official Committee of Unsecured Creditors hired Patricia A. Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff & Sitterson, P.A., as its local counsel. TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets of $1,734,422,756 and total liabilities of $2,300,053,979. Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Huntsman Ready to Raise Bid, Alleges Breach of Deal --------------------------------------------------------------- Daily Bankruptcy Review reports Huntsman Corporation says it's prepared to increase its $415 million offer for Tronox Incorporated in an attempt to fight off a rival bid for the Company from a group of bondholders. NetDockets meanwhile reports that Huntsman Corp., Huntsman Pigments LLC and Huntsman Australia R&D on Sunday asked Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York to compel Tronox to comply with the terms of a September 23, 2009 bidding procedures order and an August 23, 2009 Asset and Equity Purchase Agreement. Pursuant to the August 23rd agreement, NetDockets recalls, Huntsman Pigments and Huntsman Australia R&D agreed to act as a stalking horse bidder for certain of Tronox's assets, offering a purchase price of $415 million (subject to adjustments) for the assets. Judge Gropper entered the bidding procedures order, which scheduled an auction for the assets for December 8, 2009 and a sale hearing for December 10, 2009. The Asset and Equity Purchase Agreement also sets forth a timeline for approval of the sale and closing of the sale, which Tronox agreed to use reasonable best efforts to pursue. Pursuant to the timeline, the sale order was to be entered by December 11th (105 days after execution of the agreement) and the order is to be final by December 31st (125 after execution). NetDockets relates that Huntsman asserts that Tronox has failed to comply with the terms of the agreement and the bidding procedures order. Specifically, Huntsman contends that Tronox sought -- and received -- authority to adjourn the auction to December 21st and the sale hearing to December 22nd. According to NetDockets, Huntsman alleges that authority was requested at a December 3rd status conference that was held with no notice to Huntsman. Huntsman contends that the requested adjournments and the failure to notify Huntsman of the intent to seek such adjournments violated the terms of the agreement. According to NetDockets, its appears from the motion that Huntsman believes that Tronox's decision to adjourn the auction is a result of Tronox's negotiations with an ad hoc committee of bondholders regarding the terms of a possible plan of reorganization. Huntsman says the agreement does allow Tronox to terminate the agreement if it decides to pursue an alternative "Restructuring Transaction" that provides better value to their bankruptcy estates. As reported by the Troubled Company Reporter, Tronox on Monday confirmed it is engaged in active discussions on a term sheet that would provide a framework for a Chapter 11 plan of reorganization. The negotiations are with the Official Committee of Unsecured Creditors, a group of holders of Tronox's 9.5% Unsecured Notes due December 1, 2012, and the United States Attorney for the Southern District of New York, acting on behalf of certain federal government agencies. Tronox said the term sheet negotiations contemplate (i) debt financing currently under negotiation and (ii) an equity commitment of $105 million by the Ad Hoc Noteholders. The funding sources would be used in part to provide $115 million to fund certain environmental remediation trusts and a litigation trust that form part of a comprehensive settlement of Tronox's legacy environmental liabilities with the United States government. NetDockets relates that Huntsman asserts that Tronox is not entitled to "keep the AEPA alive, while at the same time suspending their obligations to Huntsman" and is obligated to comply with their best efforts obligations until the agreement is terminated by Tronox. The agreement also allows Tronox to pursue a "Competing Transaction" but Huntsman asserts that the discussions between Tronox and the bondholders also fail to comply with those provisions of the agreement. Huntsman has asked the Court to convene a hearing on its request on December 17, commencing at 11:00 a.m. (Eastern). Huntsman has proposed that objections to its request be filed by December 16. About Tronox Inc. Headquartered in Oklahoma City, Tronox Incorporated (Pink Sheets: TRXAQ, TRXBQ) is the world's fourth-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 535,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The Company's four pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries. In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide. Tronox has $1.6 billion in total assets, including $646.9 million in current assets, as at September 30, 2008. The Company has $881.6 million in current debts and $355.9 million in total noncurrent debts. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. S.D.N.Y. Case No. 09-10156). The case is before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represent the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants serves as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders have been appointed in the cases. The Creditors Committee has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until September 30, 2008, Tronox Inc. was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox Inc. has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of December 31, 2008, Tronox Inc. had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. Bankruptcy Creditors' Service, Inc., publishes Tronox Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tronox Inc. and its 14 affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: T. Recine Named Las Vegas VP for Food & Beverage --------------------------------------------------------------- Tropicana Las Vegas announced that Thomas Recine has been appointed Vice President of Food and Beverage. Mr. Recine will report to property president Thomas McCartney and will oversee all aspects of food and beverage operations, planning and development. "Tom brings a wealth of relevant experience to his post at Tropicana Las Vegas including venue development and strategic rebranding," said Mr. McCartney. "We are thrilled to have him on our team and eager to benefit from his expertise throughout the property's transformation." Mr. Recine has more than two decades of industry experience, most recently as Senior Vice President of Property Operations and Food and Beverage at Planet Hollywood Resort & Casino. In this position, he oversaw all food and beverage operations, catering and banquet services, environmental services, audio visual services as well as entertainment offerings. Prior to joining Planet Hollywood, he spent 20 years with MGM Mirage. During his tenure, Mr. Recine held senior leadership roles at New York New York, Luxor, MGM Grand, and The Mirage. Mr. Recine is a longtime Las Vegan and an alumnus of University of Nevada Las Vegas. About Tropicana Entertainment Tropicana Entertainment LLC and its units owned eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC and certain 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, non-debtor units of the OpCo Debtors, designated as the New Jersey Debtors -- Adamar of New Jersey, Inc., and its affiliate, Manchester Mall, Inc. -- filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711) to effectuate a sale of the Atlantic City Resort and Casino to a group of Investors-led by Carl Icahn. Judge Judith H. Wizmur presides over the cases. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. 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) UAL CORP: Reports November 2009 Traffic Results ----------------------------------------------- United Air Lines, Inc., reported its preliminary consolidated traffic results for November 2009. The company reported a November consolidated passenger load factor of 80.2 percent. Total consolidated revenue passenger miles (RPMs) increased in November by 1.8 percent on a consolidated capacity decrease of 2.7 percent in available seat miles (ASMs) compared with the same period in 2008. 2009 2008 Percent Nov. Nov. Change ----- ----- ------- Revenue passenger miles ('000) North America 4,287,765 4,332,844 (1.0%) Pacific 1,668,629 1,661,053 0.5% Atlantic 1,309,228 1,276,161 2.6% Latin America 219,609 262,390 (16.3%) Total International 3,197,466 3,199,604 (0.1%) Total Mainline 7,485,231 7,532,448 (0.6%) Regional Affiliates 1,139,801 940,003 21.3% Total Consolidated 8,625,032 8,472,451 1.8% Available seat miles ('000) North America 5,270,407 5,480,158 (3.8%) Pacific 2,037,972 2,257,564 (9.7%) Atlantic 1,645,957 1,652,477 (0.4%) Latin America 287,210 395,298 (27.3%) Total International 3,971,139 4,305,339 (7.8%) Total Mainline 9,241,546 9,785,497 (5.6%) Regional Affiliates 1,506,917 1,265,444 19.1% Total Consolidated 10,748,463 11,050,941 (2.7%) Load factor North America 81.4% 79.1% 2.3 pts Pacific 81.9% 73.6% 8.3 pts Atlantic 79.5% 77.2% 2.3 pts Latin America 76.5% 66.4% 10.1 pts Total International 80.5% 74.3% 6.2 pts Total Mainline 81.0% 77.0% 4.0 pts Regional Affiliates 75.6% 74.3% 1.3 pts Total Consolidated 80.2% 76.7% 3.5 pts Revenue passengers boarded ('000) Mainline 4,139 4,339 (4.6%) Regional Affiliates 2,083 1,795 16.0% Total Consolidated 6,222 6,134 1.4% Cargo ton miles (000) Freight 142,343 117,554 21.1% Mail 16,307 21,912 (25.6%) Total Mainline 158,650 139,466 13.8% About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The Company filed for Chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on January 20, 2006. The Company emerged from bankruptcy protection on February 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * UAL and United both carry a 'CCC' issuer default rating from Fitch Ratings. UAL carries a 'B-'' on 'watch negative', corporate credit rating from Standard & Poor's Ratings Services. US AIRWAYS: Completed Majority Improvement Program in November -------------------------------------------------------------- US Airways announced it has completed a series of transactions with key business partners designed to improve its near-term and future liquidity. The Company will significantly reduce capital expenditures over the next three years, eliminate the need to access aircraft finance markets in 2010 and extend certain debt maturities. These transactions improve projected year-end 2009 liquidity by approximately $150 million and generate, in aggregate, approximately $450 million of projected liquidity improvements by the end of 2010. "This is our third major strategic move in the past 100 days, following announcements of our innovative slot transaction with Delta Air Lines and the realignment of our network to focus on our most profitable flying," said US Airways Chairman and CEO Doug Parker. "These moves are part of our continuing efforts to improve our balance sheet and return the Company to profitability. Our employees are continuing to run a great airline and doing a terrific job taking care of our customers and, with these strategic initiatives behind us, we believe US Airways is well positioned to take full advantage of the recovering economy." US Airways Executive Vice President and Chief Financial Officer Derek Kerr stated, "By working with our key business and financial partners, we have structured a series of transactions that improve near-term liquidity by reducing capital spending and deferring certain debt repayments. These transactions also have eliminated the need to fund a fleet replacement program in capital markets that continue to be uncertain and expensive. We appreciate all of the support of our business partners in completing these transactions." The Company's actions include the deferral of 54 Airbus aircraft previously scheduled for delivery between 2010 and 2012 that are now to be delivered in 2013 and beyond. These deferral arrangements will reduce the Company's aircraft capital expenditures over the next three years by approximately $2.5 billion, and reduce near- and medium-term obligations to Airbus and others by approximately $132 million. In addition, commencement of US Airways' Airbus A350 XWB operations, with aircraft deliveries originally scheduled to start in 2015, will now be postponed until 2017. These deferrals will not significantly alter the airline's capacity plans as aircraft originally scheduled to be replaced will be retained until the rescheduled new aircraft delivery dates. "Although we will slow deliveries during the next three years, over that period we will continue to modernize our fleet, which is already one of the youngest in the United States. The Company will take delivery of two A320 and two A330 aircraft in 2010 and an additional 24 A320 family aircraft in 2011 and 2012," said Kerr. "We have financing commitments for all 28 aircraft and believe this is a more manageable delivery rate given the current economic environment." In addition to the aircraft deferral, US Airways has arranged credit facilities in the amount of $95 million and $180 million of aircraft financing commitments for the 2010 deliveries. Also, the Company has agreed with Barclays to permanently lower the monthly unrestricted cash condition precedent for the advance purchase of frequent flyer miles and defer for 14 months the amortization of $200 million advanced in connection with the previous purchase of miles. US Airways was advised in these transactions by Seabury Securities LLC, a unit of Seabury Group LLC. About US Airways US Airways, along with US Airways Shuttle and US Airways Express, operates more than 3,200 flights per day and serves more than 200 communities in the U.S., Canada, Europe, the Middle East, the Caribbean and Latin America. The airline employs more than 33,000 aviation professionals worldwide and is a member of the Star Alliance network, which offers its customers more than 17,000 daily flights to 916 destinations in 160 countries worldwide. And for the eleventh consecutive year, the airline received a Diamond Award for maintenance training excellence from the Federal Aviation Administration (FAA) for its Charlotte, North Carolina hub line maintenance facility. For more company information, visit http://www.usairways.com/ Under a Chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another Chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represented the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $8,805,972,000 in total assets and $8,702,437,000 in total debts. The USAir II bankruptcy plan became effective on September 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported by the TCR on Sept. 25, 2009, Moody's affirmed US Airways' Corporate Family and Probability of Default Ratings at 'Caa1'. US Airways Group carries a 'CCC' issuer default rating from Fitch. As of June 30, 2009, reorganized US Airways had total assets of $7,858,000,000 against debts of $8,194,000,000, for a stockholders' deficit of $336,000,000. US AIRWAYS: Files S-3 Registration Under 1933 Act ------------------------------------------------- US Airways Group, Inc., filed with the U.S. Securities and Exchange Commission on December 3, 2009, a Form S-3 registration statement under the Securities Act of 1933, a full-text copy of which is available for free at: http://ResearchArchives.com/t/s?4b86 US Airways, along with US Airways Shuttle and US Airways Express, operates more than 3,200 flights per day and serves more than 200 communities in the U.S., Canada, Europe, the Middle East, the Caribbean and Latin America. The airline employs more than 33,000 aviation professionals worldwide and is a member of the Star Alliance network, which offers its customers more than 17,000 daily flights to 916 destinations in 160 countries worldwide. And for the eleventh consecutive year, the airline received a Diamond Award for maintenance training excellence from the Federal Aviation Administration (FAA) for its Charlotte, North Carolina hub line maintenance facility. For more company information, visit http://www.usairways.com/ Under a Chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another Chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represented the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $8,805,972,000 in total assets and $8,702,437,000 in total debts. The USAir II bankruptcy plan became effective on September 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported by the TCR on Sept. 25, 2009, Moody's affirmed US Airways' Corporate Family and Probability of Default Ratings at 'Caa1'. US Airways Group carries a 'CCC' issuer default rating from Fitch. As of June 30, 2009, reorganized US Airways had total assets of $7,858,000,000 against debts of $8,194,000,000, for a stockholders' deficit of $336,000,000. US AIRWAYS: M. Gray Named as VP for Business Technology ------------------------------------------------------- US Airways announced in November the appointment of Madeleine Gray as vice president, business technology delivery. Ms. Gray will focus on airport and customer-facing technology and the systems that support it. She will lead a team of 110 technology professionals within the 500-person US Airways information technology (IT) organization. Her appointment was approved by the Company's board of directors. She reports to Brad Jensen, senior vice president and chief information officer. Ms. Gray fills an open position within the recently restructured IT group. She will lead the software development team, which is responsible for customer-facing applications, such as airport and online check-in tools and service recovery systems Ms. Gray joins US Airways from Southlake, Texas-based Sabre Holdings Corporation, where she served as senior director, air merchandising and core services, where she led a team of more than 100 developers, analysts, product managers and systems architects. In this role Gray managed a $22 million portfolio of air merchandising, schedules, inventory availability and connectivity products and services serving 350 airlines and more than 55,000 travel agencies. About US Airways US Airways, along with US Airways Shuttle and US Airways Express, operates more than 3,200 flights per day and serves more than 200 communities in the U.S., Canada, Europe, the Middle East, the Caribbean and Latin America. The airline employs more than 33,000 aviation professionals worldwide and is a member of the Star Alliance network, which offers its customers more than 17,000 daily flights to 916 destinations in 160 countries worldwide. And for the eleventh consecutive year, the airline received a Diamond Award for maintenance training excellence from the Federal Aviation Administration (FAA) for its Charlotte, North Carolina hub line maintenance facility. For more company information, visit http://www.usairways.com/ Under a Chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another Chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represented the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $8,805,972,000 in total assets and $8,702,437,000 in total debts. The USAir II bankruptcy plan became effective on September 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported by the TCR on Sept. 25, 2009, Moody's affirmed US Airways' Corporate Family and Probability of Default Ratings at 'Caa1'. US Airways Group carries a 'CCC' issuer default rating from Fitch. As of June 30, 2009, reorganized US Airways had total assets of $7,858,000,000 against debts of $8,194,000,000, for a stockholders' deficit of $336,000,000. US AIRWAYS: Says Review Should Start at Present State of Industry ----------------------------------------------------------------- In a letter to U.S. Secretary of Transportation Ray LaHood, US Airways' Chairman and CEO Doug Parker responded to Secretary LaHood's invitation to attend the Future of U.S. Aviation Forum being hosted by the Department of Transportation. In the letter, Mr. Parker shared the airline and industry's views about the future competitiveness of the U.S. aviation industry. "Like the DOT, we are concerned about the future competitiveness of the U.S. aviation industry and I wanted to share some of our views," Mr. Parker said. "While I believe the positions stated here are shared by most airlines, I obviously can only speak for US Airways." First and foremost, he said, any discussion about the future of U.S. aviation must begin with an assessment of the current financial state of our Nation's airlines. The fact is our industry is severely financially challenged because of massive losses over an extended period. The U.S. airline industry has lost nearly $60 billion since 2001, with $27 billion of those losses coming during the oil price spike and the global recession suffered in 2008 and 2009. As a result, most of the major airlines have borrowed heavily against their assets and business relationships and have little or no ability to raise additional capital. If we want a healthy and competitive airline business, we simply must figure out a way to make our industry profitable over the long term so we can attract new capital over time. This, of course, is what every unregulated industry in the U.S. must do to ensure it remains healthy and competitive, but for some reason this concept often gets dismissed when well-meaning, thoughtful people get together to discuss aviation policy. We cannot dismiss it any longer, said Mr. Parker. The reality is that every important issue . . . will not just be influenced by the industry's financial condition, but severely, if not completely, constrained by it. "This inability to produce long-term profits affects all of our constituents," Mr. Parker said. "Our employees rightfully worry about financial and job security. Our customers grow frustrated with ever-changing policies and concern about service quality. Those customers and the communities we serve worry about the viability of their air service. This is of particular concern to the smaller communities of the United States, most of which are only served by the larger and more vulnerable hub-and-spoke airlines. The good news is we are making important progress toward this objective of sustainability and have taken important steps toward long term industry profitability, Mr. Parker continued. The industry has taken aggressive and swift measures to improve performance and create stability. "We have reduced U.S. capacity in the last two years to better meet demand. The mergers of US Airways-America West and Delta-Northwest have helped to modestly consolidate an overly fragmented industry. We have instituted a la carte revenue programs that better match the cost to consumers with the services they use. We have reduced our expenses through aggressive cost management. We are improving operations as evidenced by the September Air Travel Consumer Report issued by DOT earlier the week. Industry on-time performance was 86.2%, the highest since 2003; cancellations declined by 70% versus September 2008; mishandled baggage declined by 22% and consumer complaints to the DOT declined 12%. And, of course, we accomplished all of this while maintaining an uncompromising commitment to safety and operating the safest aviation system in the world under the oversight of the FAA. " The result of all of this progress is that some analysts are actually projecting the U.S. airline business will be breakeven to slightly profitable in 2010. This alone won't be enough to ensure the viability of the industry over the longer term, but it certainly would be a first step in the right direction, Mr. Parker explained. But the challenge will remain -- how does our industry achieve the level of sustainable profitability necessary to achieve our objectives and those of our constituents? Historically, at the first sign of airline profitability, changes have been made to make it harder for us to succeed. Many of these changes have been made by airline management (adding new airplanes, signing labor contracts that can't be met, etc.) but many others have been imposed on us by our government in the form of new taxes, fees, unfunded mandates or increased regulation, Mr. Parker said. "We are hopeful that the current airline management teams have learned from the mistakes of the past. But we would also ask this Administration to be careful not to repeat the mistakes of your predecessors. It is important to note that, despite our challenges, no one in the airline industry is looking for a government bailout or the kind of assistance that was provided the banking, insurance and automobile industries. To the contrary, our request is to simply let us run our businesses, continuing on the path of progress we have already successfully begun," he said. In short, our request of the Administration as it relates to U.S. aviation is "Do No Harm." The "Do No Harm" prescription means two things as it relates to aviation policy. First, please do not impose any additional taxes, fees or unfunded mandates on this already over-taxed industry. Second, please allow us the ability to fix our industry through rational business decisions and actions and self-help mechanisms, Mr. Parker explained. As it relates to taxes and fees, in 2008, U.S. airlines paid nearly $18 billion in federally levied or approved special aviation taxes/fees, notes Mr. Parker. That's up from $12 billion in 2000. "In summary, we believe that if we are to have a viable, competitive U.S. aviation industry then we must work together to enable the industry to become sustainable and profitable over the long-term. This is not just one objective in a plan for success, but an imperative that must be met if we are to be successful on other objectives that are shared by DOT, the airline industry, our employees, customers and investors. To do this, we simply ask the Administration to allow us to compete, not impose any new taxes, fees, or costly mandates and support our efforts to make and execute rational business decisions," Mr. Parker maintains. About US Airways US Airways, along with US Airways Shuttle and US Airways Express, operates more than 3,200 flights per day and serves more than 200 communities in the U.S., Canada, Europe, the Middle East, the Caribbean and Latin America. The airline employs more than 33,000 aviation professionals worldwide and is a member of the Star Alliance network, which offers its customers more than 17,000 daily flights to 916 destinations in 160 countries worldwide. And for the eleventh consecutive year, the airline received a Diamond Award for maintenance training excellence from the Federal Aviation Administration (FAA) for its Charlotte, North Carolina hub line maintenance facility. For more company information, visit http://www.usairways.com/ Under a Chapter 11 plan declared effective on March 31, 2003, USAir emerged from bankruptcy with the Retirement Systems of Alabama taking a 40% equity stake in the deleveraged carrier in exchange for $240 million infusion of new capital. US Airways and its subsidiaries filed another Chapter 11 petition on September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). Brian P. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning, Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, represented the Debtors in their restructuring efforts. In the Company's second bankruptcy filing, it listed $8,805,972,000 in total assets and $8,702,437,000 in total debts. The USAir II bankruptcy plan became effective on September 27, 2005. The Debtors completed their merger with America West on the same date. (US Airways Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported by the TCR on Sept. 25, 2009, Moody's affirmed US Airways' Corporate Family and Probability of Default Ratings at 'Caa1'. US Airways Group carries a 'CCC' issuer default rating from Fitch. As of June 30, 2009, reorganized US Airways had total assets of $7,858,000,000 against debts of $8,194,000,000, for a stockholders' deficit of $336,000,000. UTGR INC: To End Dog Racing as Part of Bankruptcy Reorganization ---------------------------------------------------------------- The Associated Press reports Twin River, Rhode Island's only dog track, is seeking to end racing as part of bankruptcy reorganization. AP notes activists who alleged mistreatment of dogs led an effort that resulted in Massachusetts voters banning dog racing on January 1, 2010. Vermont and Maine have also outlawed racing. AP relates New Hampshire's two tracks ended live racing earlier this year for financial reasons and Connecticut's last greyhound track closed in 2006. The Troubled Company Reporter, citing Bloomberg's Bill Rochelle, said on November 20, 2009, UTGR received court approval of a settlement agreement with the Rhode Island Greyhound Owners Association Inc. UTGR said the settlement is "the most significant operational restructuring to be achieved." UTGR's racetrack-casino was losing $9 million a year under the parties' existing contract. The settlement calls for paying the association $2 million up front and another $3 million in installments over one year following confirmation of a Chapter 11 plan. In exchange, the association will allow the termination of the pact, which it says would have entitled it to damages of $99 million. UTGR Inc. is the operator of the Twin River racetrack-casino in Lincoln, Rhode Island. UTGR filed for Chapter 11 on June 23 (Bankr. D. Rhode Island Case No. 09-12418). The Debtors selected Jager Smith P.C. as counsel, and Winograd, Shine & Zacks P.C. as their co-counsel. It also hired Zolfo Cooper LLC as bankruptcy consultants and special financial advisors. Donlin Recano serves as claims and notice agent. In its bankruptcy petition, the Company estimated assets of less than $500 million and debt exceeding $500 million. VISTEON CORP: Debt Recovery Buys Philips' $613,600 Claim -------------------------------------------------------- Three more creditors informed the Court that they intend to transfer each of their claims against Visteon Corp. to these entities: Claim Transferor Transferee Amount ---------- ---------- ------- BYK Gardner Inc Claims Recovery Group LLC $10,759 Philips Automotive United States Debt Lighting North America Recovery III L.P. 613,676 Ameri Chem I Inc Liquidity Solutions, Inc. 199,155 Philips Automotive Opposes Transfer Philips Automotive Lighting North America, a division of Philips Electronics North America Corporation, Philips Lumileds Lighting Company, LLC, and Assembleon America, Inc., object to the transfer to United States Debt Recovery LLC of the claims of PLLC and AAI. The Philips Companies are suppliers to and creditors of one or more of the Debtors, and each has timely asserted one or more claims against the estates. Emiel Jorgerius, director of Finance for PALNA, executed the Transfer of Claim. By way of the transfer, PALNA indicated its intention to assign and transfer to US Debt Recovery certain claims that belong to PALNA, and inadvertently indicated an intention to assign to US Debt Recovery Claim Nos. 498 and 1848, which claims did not belong to it. PLLC and AAI maintain that they did not execute the Transfer nor give authority to PALNA or any agent or representative of PALNA to execute the transfer on their behalf. The Philips Companies thus ask the Court to vacate and strike the transfer. Subsequently, United States Recovery III, L.P., withdrew the purported transfer of the PALNA $613,676 claim. About Visteon Corp Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: E. Burgess Wants to File Late Claim ------------------------------------------------- Earl Thomas Burgess is an unsecured creditor of Visteon Corporation as a result of certain causes of action that arose during his employment with Visteon and Ford Motor Company in Tennessee. Mr. Burgess filed a complaint in Tennessee in the Chancery Court for Davidson County, asserting three claims against Ford Motor Company, Visteon Corp., and Visteon Automotive Components Holdings, LLC, for breach of contract, promissory estoppel, and unjust enrichment. Mr. Burgess asserts that he did not receive a copy of the bar Date Notice but only received a form of proof of claim during the early part of November 2009, after the Bar Date has passed. Mr. Burgess notes that he filed his proof of claim on November 20, 2009. Mr. Burgess thus asks the Court to allow his proof of claim as timely filed. About Visteon Corp Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Wants to Expand E&Y Services ------------------------------------------ Visteon Corp. and its units seek the Court's authority to expand the scope of Ernst & Young LLP's services to include certain risk and business process control assistance in connection with Visteon Corp.'s implementation of fixed asset valuation-related software, nunc pro tunc to November 2, 2009. The Debtors tell Judge Sontchi that they have determined that they are in need of risk and business process control assistance from E&Y related to these phases of their fixed asset management software implementation: (a) Planning: * Review of the baseline plan and other project management activities as defined by the Debtors' project management office. (b) Business Process Design: * Assess Fixed Asset business requirement as they relate to fresh-start accounting; * Assess critical reports and application controls; * Assist management with the documentation of IT general control processes and coordination of certain control processes; * Assess future state processes, data flows, and work instructions; * Assist management with the documentation and coordination of training; * Assess application security model; * Assist management with the documentation of certain planning strategy; * Oversee and manage the asset inventory procedures for the Corporate Headquarters location; and * Assist management with the documentation of the Application Control Review package. (c) Assessment of Configuration and Testing Assistance: * Assess alignment of system design with business requirements; * Assist functional business areas in facilitating integration points; * Assist management with the documentation of test scripts for system/user acceptance testing; * Coordination of test script execution and follow-up on identified defects; and * Assist management with the documentation of interim manual processes that may be necessary due to late implementation of customizations, schedule for migration of historical books, or other planed system integrations. (d) Deployment Assistance: * Assist management in the coordination and documentation of deployment activities. The Debtors will reimburse Ernst & Young for reasonable and necessary expenses incurred in connection with services, including without limitation, travel, meals, accommodations, telephone, photocopying, messenger services and other expenses incurred. The Debtors will pay Ernst & Young with regards to the additional services pursuant to these rates: A. For services prior to January 1, 2010 Level Hourly Rate ----- ----------- Partner/Executive $300 Senior Manager $240 Manager $190 Senior Professional $140 Staff $105 CSA/Intern $60 B. For services after January 1, 2010 Level Hourly Rate ----- ----------- Partner/Executive $356 Senior Manager $252 Manager $204 Senior Professional $158 Staff $128 CSA/Intern $64 Ernst & Young assures the Court that it is a "disinterested person" as that term is defined under Section 101(14) of the Bankruptcy Code as required by Section 327(a). In a separate filing, the Debtors certified to the Court that no objection was filed with respect to their request. About Visteon Corp Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon 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) WALKING CO: Wants 30-Day Extension of Schedules Filing Deadline --------------------------------------------------------------- The Walking Company has asked the Hon. Robin L. Riblet of the U.S. Bankruptcy Court for the Central District of California to extend by an additional 30 days until January 20, 2010, the deadline for the filing of schedules of assets and liabilities, schedule of current income and expenditures, schedule of executor contracts and unexpired leases, and statement of financial affairs. The Company says that it won't be able to complete its schedules within the 14-day day deadline because it is managing numerous competing demands, including right-sizing its lease portfolio and managing the associated store-closing sales and rapid reduction in inventory, as well as matters required by the U.S. Trustee like the submission of its seven-day package, closing its books, preparing of monthly operating reports and schedules. Headquartered in Santa Barbara, California, The Walking Company -- dba Alan's Shoes, Footworks, Overland Trading Co, Sole Outdoors, Martini Shoes, and TWC Acquisition Corporation -- consists of two distinct retail operations, which are largely focused on TWC, which is a leading specialty retailer of comfort footwear, operating 210 stores in premium malls across the nation. The Walking Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. C.D. Calif. Case No. 09-15138). Its affiliate, Big Dog USA, Inc., also filed for bankruptcy (Case No. 09-15137). Andy Kong, Esq., at Arent Fox LLP assists the Debtors in their restructuring efforts. The Walking Company listed $100,000,001 to $500,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. WALKING CO: Wants Tiger Capital as Liquidation Consultant --------------------------------------------------------- The Walking Company has asked for authorization from the U.S. Bankruptcy Court for the Central District of California to employ Tiger Capital Group LLC as liquidation consultant, effective December 7, 2009. Tiger will advise and assist the Debtor's management on its plans to close stores, identify and select stores, negotiate with landlords and other interested parties with respect to closings. The Debtor will pay Tiger an initial fee of $75,000 for the firm's services. The fee will be paid in weekly installments of $10,000, with the last installment being for $5,000, with the first payment due the week of December 14, 2009. Any additional fee will be mutually agreed upon by the Debtor and Tiger, with the consent of Wells Fargo Retail Finance, LLC. Albert T. Nassi, a principal of Tiger, assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Santa Barbara, California, The Walking Company -- dba Alan's Shoes, Footworks, Overland Trading Co, Sole Outdoors, Martini Shoes, and TWC Acquisition Corporation -- consists of two distinct retail operations, which are largely focused on TWC, which is a leading specialty retailer of comfort footwear, operating 210 stores in premium malls across the nation. The Walking Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. C.D. Calif. Case No. 09-15138). Its affiliate, Big Dog USA, Inc., also filed for bankruptcy (Case No. 09-15137). Andy Kong, Esq., at Arent Fox LLP assists the Debtors in their restructuring efforts. The Walking Company listed $100,000,001 to $500,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. WALKING CO: Wants to Conduct Store Closing Sales at 90 Stores ------------------------------------------------------------- The Walking Co. has sought authorization from the U.S. Bankruptcy Court for the Central District of California to conduct store closing sales at 90 underperforming stores during the holiday season. The Debtor says that to efficiently manage the shutdown of the large number of stores that must be closed, it needs to reduce store inventory levels to a manageable level without having to deeply discount inventory. According to the Debtor, mall traffic will drop off by 50% after the holiday season. The associated decline in sales will impact certain seasonal or gift categories of inventory particularly heavily, and it is these inventory categories that comprise the bulk of the Debtor's excess inventory. The Debtor states that the store closing procedures it is proposing are modeled closely on its very successful wind down of the Big Dog stores, which enabled the Debtor to recover substantially all of its inventory costs, unlike proposals from traditional inventory liquidators that had estimated recoveries of 30-40% of inventory costs. The Debtor says that generating higher revenues by conducting store closing sales during the holiday season and by following the store closing procedures will let the Debtor pay down a greater amount of its obligations to its senior secured lender, Wells Fargo Retail Finance, which the Debtor anticipates will provide exit financing. The Debtor also asked for the Court's approval to adopt customary rejection procedures to govern any rejections of unexpired non- residential real estate leases, including those associated with the unprofitable stores (the Underperforming Leases). The Debtor already ceased operations at the closed locations, removed its personal property from the locations, and turned over possession to the landlords in broom-clean condition. The Debtor says that it can no longer generate the funds needed to continue to run all of its stores, and the underperforming stores represent a significant drain on the Debtor's resources. The aggregate monthly rent for the 90 locations is $1.1 million. The Debtor proposes that on or before the applicable rejection date with respect to each lease, the Debtor and/or its agents will vacate the premises in the same condition as on the Petition Date, ordinary wear and tear excepted. The Debtor also determined that the rents under the closed store leases are above-market and the assignment or sublease of the leases is impracticable, as the rental market for the closed locations has further declined since the locations were first identified for closure, such that the leases have no value that could be captured for the benefit of its estates. A copy of the protocol for store closing/liquidation/going out of business sales is available for free at: http://bankrupt.com/misc/WALKING_CO_store_closing_procedures.pdf http://bankrupt.com/misc/WALKING_CO_gob_sales.pdf Landlords affiliated with Simon Property Group and landlords affiliated with GGP Limited Partnership, The Taubman Company and Federal Realty Investment Trust (the Objecting Landlords) have objected the Debtor's store closing sales and lease rejection requests, saying that the Debtor hasn't fully explain the objectives of the Debtors' "two-step" approach to the conduct of the store closing sales. According to the Objecting Landlords, the Debtor's proposed characterization of its inventory reduction sales as store closing sales is potentially misleading and may run afoul of state consumer protection laws, exposing the Debtor and the landlords to liability. The Objecting Landlords say that the characterization of the proposed sales as store closing sales or the representation in signage that "This Store Closing" shouldn't be permitted if the Debtors and WFRF want to maintain the option to keep secondary stores or targeted stores open should the Debtor's efforts to renegotiate those leases be successful. The Objecting Landlords are also asking that the Debtor define "regular inventory". The Objecting Landlords claimed that the Debtor's proposed store closing procedures are inadequate and incomplete, omitting important details and potentially leaving too much discretion with the Debtors, in contravention of the bargained for rights of the landlords and their shopping center tenants. The Objecting Landlords say that the store closing procedures lack many important features found in the sale guidelines approved by other bankruptcy judges and other national retail cases throughout the Ninth Circuit. The Objecting Landlords are asking that the proposed sale guidelines be modified. The Objecting Landlords contend that the proposed store closing procedures fail to contain any proposed procedure for the resolution of disputes concerning liquidation sales. The Objecting Landlords are represented by Ivan M. Gold, Esq., at Allen Matkins Leck Gamble Mallory & Natsis LLP. Headquartered in Santa Barbara, California, The Walking Company -- dba Alan's Shoes, Footworks, Overland Trading Co, Sole Outdoors, Martini Shoes, and TWC Acquisition Corporation -- consists of two distinct retail operations, which are largely focused on TWC, which is a leading specialty retailer of comfort footwear, operating 210 stores in premium malls across the nation. The Walking Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. C.D. Calif. Case No. 09-15138). Its affiliate, Big Dog USA, Inc., also filed for bankruptcy (Case No. 09-15137). Andy Kong, Esq., at Arent Fox LLP assists the Debtors in their restructuring efforts. The Walking Company listed $100,000,001 to $500,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. WALKING CO: Wants to Employ CTG as Financial Advisor ---------------------------------------------------- The Walking Company has sought permission from the U.S. Bankruptcy Court for the Central District of California to hire Clear Thinking as Financial Advisor, effective December 7, 2009. Lee Diercks, a partner at CTG, says that the firm will, among other things: (a) assist with the preparation of schedules, budgets and court related reporting; (b) assist in arranging debtor-in-possession financing for the Debtor, as requested; (c) assist in the development of financial data and presentations to the Debtor's Board of Directors, creditors, and other third parties as requested; and (d) providing expert witness testimony concerning any of the subjects encompassed by the other financial advisory services as requested. CTG will be paid based on the hourly rates of its professionals: Partner $450 Managing Director $400 Manager $350 Sr. Consultant $275 Consultant $225 Analyst $150 Administrative $75 Mr. Diercks assures the Court that CTG is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Santa Barbara, California, The Walking Company -- dba Alan's Shoes, Footworks, Overland Trading Co, Sole Outdoors, Martini Shoes, and TWC Acquisition Corporation -- consists of two distinct retail operations, which are largely focused on TWC, which is a leading specialty retailer of comfort footwear, operating 210 stores in premium malls across the nation. The Walking Company filed for Chapter 11 bankruptcy protection on December 7, 2009 (Bankr. C.D. Calif. Case No. 09-15138). Its affiliate, Big Dog USA, Inc., also filed for bankruptcy (Case No. 09-15137). Andy Kong, Esq., at Arent Fox LLP assists the Debtors in their restructuring efforts. The Walking Company listed $100,000,001 to $500,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. WEGENER CORP: Receives Non-Compliance Notice From Nasdaq -------------------------------------------------------- Wegener Corporation disclosed that on December 9, 2009, it received a letter from The Nasdaq Stock Market indicating that the Company's securities will be delisted from Nasdaq at the opening of business on December 16, 2009, and a Form 25-NSE will be filed with the Securities and Exchange Commission (the "Commission") which will remove the Company's securities from listing and registration on Nasdaq. However, the December 9th Letter also indicated that an official appeal by the Company to the Nasdaq Hearing Panel would stay the suspension of the Company's securities and the filing of the Form 25-NSE pending the Panel's determination. On December 11, 2009, the Company officially filed an appeal with the Nasdaq Hearing Panel. As previously reported in a Form 8-K as filed with the Commission on August 22, 2008, the Company previously received a notice from Nasdaq indicating that for the last 30 consecutive business days, the bid price of the Company's common stock had closed below the minimum $1.00 per share requirement for continued inclusion under Marketplace Rule 4310(c)(4). The notice also stated that the Company had been provided with 180 calendar days, or until February 17, 2009, to regain compliance in accordance with Marketplace Rule 4310(c)(8)(D). On October 16, 2008, Nasdaq announced it had temporarily suspended enforcement of the minimum bid price and minimum market value of publicly held shares through January 16, 2009. A subsequent suspension announced by Nasdaq extended the enforcement date through July 31, 2009, which gave the Company until December 7, 2009, to regain compliance with the Marketplace Rule. Because the Company was not in compliance with the Marketplace Rule or The Nasdaq Capital Market initial listing criteria on December 7, 2009, the Nasdaq staff sent the December 9th Letter. Also as previously reported in a Form 8-K as filed with the Commission on December 3, 2009, on November 30, 2009, the Company received a notice from Nasdaq indicating that the Company's shareholders' equity as of August 28, 2009, did not meet the minimum requirement of $2,500,000 for continued listing as set forth in Continued Listing Standards for Primary Equity Securities Rule 5550(b). In addition, the Notice stated that, as of November 27, 2009, the Company did not meet the Equity Rule's listing alternatives of (i) a market value of listed securities of $35 million, or (ii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years. The Company intends to address the issues relating to the Equity Rule as part of the Wegener Appeal relating to the Marketplace Rule. In particular, the Company currently intends to exercise its right, as provided under Nasdaq procedures, to present a plan to regain compliance with the Equity Rule, including a time line for compliance, at a hearing before the Nasdaq Hearing Panel. No assurances can be given that the Wegener Appeal and submission of a plan for compliance, if made and presented, will be successful. The Company's securities will continue to be listed on Nasdaq during this appeal process. About WEGENER WEGENER(R) (Wegener Communications, Inc.), a wholly-owned subsidiary of Wegener Corporation -- http://www.wegener.com/-- is an international provider of digital video and audio solutions for broadcast television, radio, telco, private and cable networks. With over 30 years experience in optimizing point-to- multipoint multimedia distribution over satellite, fiber, and IP networks, WEGENER offers a comprehensive product line that handles the scheduling, management and delivery of media rich content to multiple devices, including video screens, computers and audio devices. WEGENER focuses on long- and short-term strategies for bandwidth savings, dynamic advertising, live events and affiliate management. WEGENER's product line includes: iPump(R) media servers for file- based and live broadcasts; COMPEL(R) Network Control and COMPEL(R) Conditional Access for dynamic command, monitoring and addressing of multi-site video, audio, and data networks; and the Unity(R) satellite media receivers for live radio and video broadcasts. Applications served include: digital signage, linear and file- based TV distribution, linear and file-based radio distribution, Nielsen rating information, broadcast news distribution, business music distribution, corporate communications, video and audio simulcasts. WORKSTREAM INC: Closes Note Exchange and Restructuring ------------------------------------------------------ Workstream Inc. has entered into separate Exchange Agreements with each of the holders of its $19 million in senior secured promissory notes pursuant to which, among other things, each holder exchanged its senior secured note for: (i) a new senior secured non-convertible note for $9.5 million, (50% of outstanding notes) interest accrues at an annual rate of 9.5%, compounds quarterly basis and is payable, together with principal, on the maturity date, which is July 31, 2012 for all of the notes; (ii) a senior secured convertible note that is convertible into the Company's common shares at a conversion price of $.25, for $6,650,000 (35% of outstanding notes); and (iii) a senior secured convertible note that is convertible into the Company's common shares at a conversion price of $.10, for $2,850,000 (15% of outstanding notes). "In summary, we have extended the maturity of our notes out 32 months to July 2012, provided an equity feature to our note holders allowing the Company more time to build our business with them, and as partners, share in our success while we continue to grow," said Michael Mullarkey, Chief Executive Officer. Mr. Mullarkey further stated that, "Our note holders have been working with us in an effort to improve our balance sheet and create long-term value. One of our note holders, increased their ownership, and now owns more then half of the notes, understanding the growing market in SaaS Software and the strong products and customers Workstream serves. We can now move the Company forward with a new management team, balanced capital structure and a focus on our business." The aggregate principal amount of the notes issued pursuant to the Exchange Agreements with the Company's note holders is $21,511,000. Each note is secured by a lien on all of the assets of the Company and its subsidiaries. Interest on each Note accrues at an annual rate of 9.5%. Interest on the convertible notes compounds on a quarterly basis and is payable, together with principal, on the maturity date, which is July 31, 2012 for all of the notes. Interest on the non-convertible notes compounds on a quarterly basis and is payable on the maturity date, while principal is payable on a quarterly basis pursuant to an agreed upon schedule. Upon the occurrence of an event of default, as defined in the notes, a holder may require the Company to redeem all or a portion of such holder's notes. Upon a disposition of assets or liquidity event (each as defined in the notes), the Company is required to use 100% of the net proceeds to redeem the notes. Each note contains customary covenants with which the Company must comply. Each subsidiary of the Company has agreed to guarantee the obligations of the Company under each note. More details will be in the Company 8K. About Workstream Workstream -- http://www.workstreaminc.com/-- provides on-demand compensation; performance and talent management solutions and services that help companies manage the entire employee lifecycle -- from recruitment to retirement. Workstream's Talent Center provides a unified view of all Workstream products and services including Recruitment, Performance, Compensation, Development and Transition. Access to Talent Center is offered on a monthly subscription basis under an on-demand software delivery model to help companies build high performing workforces, while controlling costs. With offices across North America, Workstream services customers including Chevron, Kaiser Permanente and Nordstrom. WORLDSPACE INC: Committee Considers De-Orbiting Satellite Plan -------------------------------------------------------------- Chris Forrester at Rapid TV News says representative of the Official Committee of Unsecured Creditor of Worldspace Inc. have considered plans for de-orbiting the company's two satellites. Liberty Media unit is in control of the company. A person with knowledge of the matter said Liberty Media is working with Sirius satellite radio to expand its pay-radio service internationally. orldSpace, Inc. (WRSPQ.PK) -- http://www.1worldspace.com/-- provides satellite-based radio and data broadcasting services to paying subscribers in 10 countries throughout Europe, India, the Middle East, and Africa. 1worldspace(TM) satellites cover two- thirds of the earth and enable the Company to offer a wide range of services for enterprises and governments globally, including distance learning, alert delivery, data delivery, and disaster readiness and response systems. 1worldspace(TM) is a pioneer of satellite-based digital radio services. The Debtors and their affiliates operate two geostationary satellites, AfriStar and Asia Star, which are in orbit over Africa and Asia. The Debtor and two of its affiliates filed for Chapter 11 bankruptcy protection on October 17, 2008 (Bankr. D. Del., Case Nos. 08-12412 to 08-12414). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors as counsel. Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot Greenleaf, represent the Official Committee of Unsecured Creditors. When the Debtors filed for bankruptcy, they listed total assets of $307,382,000 and total debts of $2,122,904,000. XERIUM TECHNOLOGIES: Lenders Extend Loan Covenant Waiver -------------------------------------------------------- Xerium Technologies, Inc., has negotiated a non-binding framework for a comprehensive recapitalization term sheet with a steering committee of its lenders. The lenders have extended the existing loan covenant waiver through February 1, 2010, in order to facilitate continued negotiations. This extended waiver provides the lenders' forbearance over certain financial loan covenants for the third and fourth quarters of 2009 and any potential cross defaults with the interest rate hedges the Company has in place, subject to certain conditions. Other provisions of the extended waiver require the Company and the agent for the lenders to use their best efforts to execute a term sheet for the recapitalization of the Company's debt and equity, consistent with the framework negotiated between the lenders' steering committee and the Company, not later than December 31, 2009. If such term sheet is not executed by then, the waiver may be terminated by the agent upon five business days notice. "While there can be no assurance that we will complete these negotiations in the time frame specified and no assurance that the required one hundred percent of lenders will vote in favor of any transaction substantially consistent with the framework in order to implement the recapitalization without court assistance, we are working diligently and in a timely manner to finalize these activities," commented Stephen R. Light, Xerium's Chairman, CEO and President. The non-binding framework currently provides that (a) a significant amount of debt would be converted to equity in the Company, constituting substantially more than a majority of ownership of the Company, (b) existing shareholders would retain a meaningful minority equity ownership interest in the Company and (c) the Company would receive a new multi-million dollar term loan maturing in 2015 and a new revolving credit agreement. The precise equity ownership split between the lenders and the existing shareholders, as well as the amount of term and revolver debt, is subject to adjustment from the framework agreement targets, based upon a financial and cash flow forecast the Company is currently preparing. It is contemplated that Xerium would seek to maintain its public listing status on the NYSE throughout this process, though there is no assurance this will ultimately be possible. "I am very pleased with our progress toward significant debt reduction, both through operational improvements throughout the Company and through the recapitalization transaction," said Mr. Light. "This framework is consistent with our three part operating strategy, launched in early 2008, of reducing our debt load, introducing new products that our customers value and maximizing the contribution of our employees. We target finalizing our term sheet negotiations prior to year end and moving on to the implementation stage of our debt restructuring. I encourage investors to consider this announcement with the more detailed discussion of business risks contained in our Form 10-Q issued for the third quarter of 2009. We look forward to completing our debt restructuring and believe we will be well positioned for success in our competitive marketplace when this is accomplished." About Xerium Technologies Xerium Technologies, Inc., is a leading global manufacturer and supplier of two types of consumable products used primarily in the production of paper: clothing and roll covers. The Company, which operates around the world under a variety of brand names, utilizes a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 32 manufacturing facilities in 13 countries around the world, Xerium has approximately 3,300 employees. XIOM CORP: Becomes Unit of Environmental Infrastructure Holdings ---------------------------------------------------------------- Environmental Infrastructure Holdings Corp., and its wholly owned subsidiary, XIOM Corp. on December 7, 2009, entered into a Membership Interest Purchase Agreement dated as of December 7, 2009, by and among Environmental Infrastructure, XIOM, and each of the persons who held membership interests in Equisol, LLC. Pursuant to the Purchase Agreement, Environmental Infrastructure acquired all of the issued and outstanding membership interests of Equisol, and in exchange, the Sellers received shares of common stock of Environmental Infrastructure representing 40% of the issued and outstanding shares of the common stock of Environmental Infrastructure on a fully diluted basis. In connection with the Acquisition and immediately prior thereto, XIOM reorganized into a holding company structure, with XIOM becoming a wholly owned subsidiary of Environmental Infrastructure, and Environmental Infrastructure becoming the public reporting company. As a condition to the closing of the Acquisition, Environmental Infrastructure and XIOM raised a total of $705,000 in capital for working capital purposes of Environmental Infrastructure. The Purchase Agreement contains customary representations, warranties and covenants (including indemnification covenants) of Environmental Infrastructure, XIOM and the Sellers. Each of Michael D. Parrish, President and CEO of Equisol, and Kurt M. Given, Chief Operating Officer of Equisol, is a Seller under the Purchase Agreement. As a result of the Acquisition, Messrs. Parrish and Given will own roughly 24% and 14%, respectively, of the issued and outstanding common stock of Environmental Infrastructure. Upon the completion of the Acquisition, Messrs. Parrish and Given were elected to the Board of Directors of Environmental Infrastructure, and Mr. Parrish was named President, CEO and Chairman of Environmental Infrastructure. Equisol is an equipment solutions provider, delivering environmentally friendly products, services and engineering solutions to its customers. Equisol has a broad range of services, including those identified below, and a national presence that makes it different from any other consulting, manufacturing, distribution, engineering or service company in the environmental industry. Consulting -- On-site system reviews/audits and phone consultation services to answer questions on existing equipment systems to help customers determine the best available technology for their application needs. Design -- Equipment solutions that meet both customer's application needs and their budgets. The solutions can range from simple feed and control systems to full turn-key equipment packages. Sales -- Access to a wide range of products that represent the best available technology in the water industry. Equisol's model is unique because Equisol can procure from many different suppliers instead of being tied to a few key principle suppliers that may not have the best solution for an application. Equisol can sell complete equipment systems, basic Maintenance, Repair, and Operations components, or spare parts depending upon the need of a customer. Fabrication -- To eliminate the need to build equipment systems on-site from many different pieces and parts, Equisol can have systems fabricated as a complete turn-key skid and delivered to the plant. This provides a way to test the equipment prior to delivery and decrease the time needed for installation. Complete documentation, drawings, and system P&IDs are provided for each system. Installation -- Equisol uses its expertise to make sure the right equipment is installed correctly every time. With installation, Equisol also offer start-up and commissioning services as well as operator training. Equisol also has certified tank installers on staff to meet storage compliance and certification needs of customers. Services -- Both preventative maintenance and emergency response services to ensure customers' automation and instrumentation equipment is functioning properly. About XIOM Corp. Headquartered in West Babylon, New York, Xiom Corp. (OTC BB: XMCP) -- http://xiom-corp.com/-- manufactures industrial based thermal spray coating systems in the United States. It offers XIOM 1000 Thermal Spray system, which is used to apply plastic powder coatings on steel, aluminum, and non-ferrous substrates, as well as on wood, plastic, masonry, and fiberglass. The company also offers plastic powders designed specifically for thermal spraying. XIOM Corp. sells its spray systems directly to commercial customers and coating contractors. The company has introduced a new high production rate spray gun, the XIOM 5000, which sprays up to five times as fast as the current Xiom 1000 gun and has many benefits over the present technology. Xiom's balance sheet at June 30, 2009, showed total assets of $1,961,561 and total liabilities of $2,874,092, resulting in a stockholders' deficit of $912,531. The Company said that there is substantial doubt about its ability to continue as a going concern. The Company stated that it has a stockholders' deficit as of June 30, 2009, and incurred a net loss for the three and nine months then ended. However, the Company has seen steady sales orders for the patented industrial thermal spray technology and related powder formulas. Furthermore, the Company plans to continue raising capital through a series of private placement transactions during the next 12 months. It also plans to continue to expand sales by significantly increasing domestic marketing efforts, including pursuing major contracts through its network of strategic alliance relationships. As a result of these factors, management believes it will have sufficient resources to meet the Company's cash flow requirements for at least 12 months. YL WEST: U.S. Trustee Set Meeting of Creditors for January 5 ------------------------------------------------------------ The U.S. Trustee for Region 2 will convene a meeting of creditors in YL West 87th Street, LLC's Chapter 11 case on January 5, 2010, at 3:00 p.m. The meeting will be held at the Office of the U.S. Trustee, 80 Broad Street, Fourth Floor, New York City. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. New York-based YL West 87th Street, LLC, is owned by YL West 87th Holdings I. LLC. The Company filed for Chapter 11 bankruptcy protection on November 13, 2009 (Bankr. S.D.N.Y. Case No. 09- 16786). YL West 87th Holdings also filed for bankruptcy. Brian J. Hufnagel, Esq., and Gary M. Kushner, Esq., at Forchelli, Curto, Deegan, Schwartz, Mineo, Cohn & Terrana, LLP, assist YL West 87th Street in its restructuring effort. The Company listed $50,000,001 to $100,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. * Dubai's New Restructuring Law Aims to Calm Creditors ------------------------------------------------------ Law360 reports that with $10 billion of funding coming from Abu Dhabi, the government of Dubai introduced a new restructuring law on Monday to give the state-owned Dubai World the power to file for bankruptcy protection, in a move that attorneys say will help pacify creditors, many of whom are based in Europe and the United States. * Fitch Sees Light at the End of the Tunnel for US Homebuilders --------------------------------------------------------------- With various macroeconomic housing and related statistics bottoming about mid-year 2009 and subsequently moving forward in fits and starts, a four-year downturn has evidently come to an end for U.S. homebuilders, according to Fitch Ratings in its outlook report for the sector. While Fitch maintains a Negative Outlook for U.S. homebuilding in 2010, the expected conclusion of the national housing credit has positively influenced housing data over the last few months. Pending home sales, existing home sales, single family housing starts and single family new home sales have been generally showing improvement after bottoming out earlier this year. The same holds true for new home inventories, home pricing and consumer and builder sentiment. Importantly, the U.S. economy apparently moved from recession to expansion in third quarter-2009 (3Q'09). However, challenges remain, especially the expected upcoming surge in delinquencies and foreclosures for both Alt-A and option adjustable-rate mortgages. Fitch raised its forecasts for starts and new home sales earlier this year, the first positive adjustments in these metrics in over three years. Nevertheless, Fitch anticipates that the early stages of this expansion may be more muted than the average. During the first 12-15 months off the bottom, the recovery may appear jaw-toothed as substantial foreclosures now in the pipeline present as distressed sales, and as meaningful new foreclosures arise from Alt-A and option ARM resets. High unemployment rates and the probable tightening of certain FHA loan standards (higher minimum credit scores for new borrowers and greater upfront cash requirements) will be notable headwinds early in the upcycle. "The continuation and expansion of the national housing credit should partially help offset expected seasonal declines during the winter months through the spring of 2010," said Managing Director and lead U.S. homebuilding analyst Robert Curran. "The federal government's continuing efforts to moderate foreclosures may also show some success in 2010." Despite having fewer competitors, public builders will continue to be challenged and need to maintain tight controls over costs and expenses during 2010. Ratings Rationale: Housing continues to be weak. Fitch expects that the public builders by and large to typically stabilize their aggregate land positions over the next 6-to-12 months or selectively add to owned, developed lot holdings. The still irregular flow of appropriately priced land from banks and others tends to support this conclusion. "With operational and financial pressures moderating to some extent, most public homebuilders have to operate successfully within this still challenging environment or wither away," said Curran. Companies have to at least maintain current cost profiles or continue to downsize to the point where they can remain/be profitable (excluding nonrecurring real estate charges). That means possible further moderate cuts in staffing and other overhead, as well as other cost reductions. The builders' gross profit margins and selling, general, and administrative expense/sales ratios will confirm the success of their efforts. The public homebuilders cannot significantly influence revenue trends and profitability at present, but they can manage their balance sheets and their liquidity. In a period when liquidity is still an issue for all U.S. companies, Fitch believes that, overall, the U.S. homebuilding sector has adequate liquidity. However, some weaker companies face greater liquidity risk. Many companies in this sector have generated meaningful free cash flows over the past 12 months while terming out borrowings, and for some maintaining access to committed bank facilities, which together provide room to handle maturities and fund working capital needs over the next year and beyond. Admittedly, most facilities have been substantially slimmed down as builders sought covenant relief in amendments. For certain builders, cash flow has been enhanced by relatively recent debt offerings, large land sales, tax refunds, and even some public equity offerings (e.g. Meritage Homes Corp.; Hovnanian Enterprises, Inc.; Lennar Corp.; M/I Homes, Inc.) or other external cash infusions (Standard Pacific Corp.). Recently passed legislation that extends the net operating losses carryback to offset taxable profits from the previous five years will result in meaningful tax refunds for most public homebuilders early in 2010 further enhancing liquidity and tangible net worth. Compared with the last major housing downturn in the latter 1980s into the early 1990s, leverage was lower during the later part of this past upcycle and at the peak. Fitch notes that during the past two years primarily non-cash charges against tangible net worth have raised debt/capital ratios. For the majority of public homebuilders, debt composition 15-to-20 years ago was mostly, or all, short-term construction loans and possibly a secured credit line. By contrast, the debt often is weighted most heavily to well-laddered public debt (a more appropriate balance with longer lived real estate assets), and, to a lesser degree, to an unsecured revolving credit facility. All the public homebuilders in Fitch's coverage that have revolving credit facilities have unsecured facilities, except for Beazer Homes U.S.A Inc., M/I Homes and Standard Pacific, which have secured or partially secured revolving credit facilities. D.R. Horton, Inc., Ryland Group, Inc., Meritage and Hovnanian recently terminated their revolving credit facilities. Beazer and Standard Pacific have sharply lowered the size of their credit facilities. Fitch will continue to assess each homebuilder's approach and performance relating to land and development spending, balance sheet (inventory) contraction, FCF generation, and debt reduction when considering its ratings, as well as builders' credit metrics, liquidity, size, geographic and product diversification, margins, and the frequency and the size of real estate writedowns and option writeoffs. Despite the Negative Outlook for the sector, continued progress in industry and company metrics could prompt a reassessment and possible revision of some of the U.S. homebuilder Rating Outlooks. 2009 and 2010: Some of the key drivers of the downturn remain in place although the worldwide and U.S. recovery have begun. Notably, U.S. households are deleveraging and retrenching at a rapid pace, in response to significant job losses, ongoing declines in certain asset prices, and tight credit conditions. In combination with sharp cutbacks in corporate spending and ongoing declines in residential investment, Fitch forecasts U.S. GDP to fall by 2.5% this year, and unemployment to possibly touch 10.3% in 2010. With unemployment still rising, consumer confidence at low levels and household wealth until recently still being affected by real estate and equity price declines, there seems limited prospect that the deleveraging process will end in the near term. Fitch's forecasted 1% decline in consumer spending in 2009 implies a further increase in the saving ratio. Fitch expects the economy to return to positive growth next year, primarily reflecting the impact of the fiscal stimulus package, but also some likely stabilization in housing investment and a weakening inventory overhang. The CBO predicts federal government spending grew by 34% in nominal terms in fiscal 2009 (ending September), which should have an important subsequent multiplier effect on wider spending. Lower household tax rates should also help ease the pace at which consumers deleverage through cutting expenditures, while lower commodity prices will also support consumers' real income. However, while the forecast assumes that policy measures aimed at stabilizing the financial sector gain traction, ongoing household deleveraging will weigh on private sector demand, keeping GDP growth in 2010 well below potential. Rates on 30-year fixed mortgages averaged 6.03% in 2008, off 31 basis points (bps) from the 6.41% in 2006 (and 6.34% in 2007). Fitch expects rates to decline as much as 90-100 bps for all of 2009 as the Fed continues to execute its plan to buy mortgage securities and the economy struggles. Fitch's initial outlook for the housing sector in 2009 started quite bearish due to the influence of a softening economy, even tighter credit standards for homebuyers and the effect of late 2008 disruptions in the credit markets. However, by mid-year the outlook brightened, prompting lesser forecast declines for a number of housing metrics. Fitch most recently forecast a contracting economy during first half-2009, with a mild recovery beginning in 3Q'09 and continuing through 2010. Real GDP is forecast to decrease 2.5% for all of 2009. Investment is expected to plunge 17.6%, with consumer spending to fall 1%, exports to drop 11.6% and imports to see a 16.6% decline. Government spending (up 5.1%) was the economic positive in 2009. Inflation is expected to be a negative 0.2%, compared with a positive 3.8% in 2008. As noted earlier, interest rates are expected to meaningfully recede. An economy in the midst of a severe recession has been another blow to housing. In particular, a deteriorating economy further eroded consumer confidence and accelerated job losses, and consequently, foreclosures. The MBA and John Burns Real Estate Consulting forecast 2.76 million annual foreclosure starts in 2009, up from 2.27 million in 2008, and project 2.94 million foreclosure starts in 2010. The Center for Responsible Lending forecasts 2.43 million foreclosures in 2009 and 8.1 million foreclosures over the next four years. Various programs from Washington are designed to stimulate the economy, stem foreclosures, and improve housing demand. However, these actions are unlikely to stabilize and then boost housing demand until later in 2010 or beyond. In 2009, total housing starts are projected to fall 41.1% to 530,000 with single-family volume declining 30.6% to 430,000. New home sales are forecast to decrease 23.1% to 373,000, while existing home sales are flat at 4.91 million. Average and median single-family new home prices are projected to fall 8.7% and 8.6%, respectively, in 2009. Fitch is forecasting a stronger economy in 2010, although still noticeably below the historical trend line. Real GDP is projected to grow 1.8%. Consumer spending and government spending are forecast to expand 0.3% and 10.8%, respectively. Investment should fall 4.9%, while inflation is expected to be about 0.8%. Total and single-family housing starts are forecast to grow 15.1% and 18.6%, respectively, in 2010. New home sales should expand approximately 20%. Existing home sales should increase about 7.5%. New home prices could average 2%-to-3% higher in 2010. Implications for the Companies and the Ratings: For the full year of 2009, homebuilders' revenues could drop 42% on average. For those builders who are profitable, EBITDA before real estate charges could fall approximately 55%. Current credit metrics (LTM EBITDA/interest incurred, debt to LTM EBITDA, and FFO interest coverage) are considerably lower than at 3Q'08 end and that will also be the case at calendar year-end 2009. Debt/capitalization ratios have deteriorated for the majority of builders over the past three years, largely as a result of erosion in TNW from sizeable real estate charges and FAS 109 adjustments. Although some builders have been more proactive than others in reducing inventories and lowering debt levels, most, in retrospect, started relatively late during this cyclical downturn. For most, inventories and debt are now meaningfully lower than at their peaks: owned inventories down 64.5% from the peak; debt down 35.5% from the peak. Given Fitch's macroeconomic forecast for 2010, public builders are likely to experience a mild recovery next year. On average, revenues should expand low double digit despite lower home prices due to a mix shift to smaller, often entry level homes. Gross margins should improve 150-200 basis points reflecting earlier real estate charges and lesser selling incentives. With higher volume the typical SG&A expense/sales ratio may diminish. As a consequence, most public builders should report modest profits on an EBITDA and pretax basis in 2010. That being said, Fitch still expects modest to moderate land value write downs in 2010. Excluding tax refunds, average CFFO is likely to be lower in 2009 relative to 2008 and to be neutral to modestly negative in 2010. On average, credit metrics, particularly profit related metrics (LTM EBITDA/interest coverage, debt to LTM EBITDA), should stabilize and then start to improve later in 2010. Tangible net worth should grow. Debt leverage should at least modestly improve. Since credit pressures will persist, at least in the intermediate term, it will be imperative that builders continue to manage their balance sheets, selectively reducing or stabilizing land and development spending, with the exception of markets where lot positions dip below minimum acceptable levels and land (preferably rolling option, developed lots) is available on a sharply discounted price basis. Fitch expects homebuilders to reduce debt where possible and to exercise restraint as to share repurchases, dividends, and company acquisitions in these still uncertain times. Builders should be cautious about reacting prematurely to a market bottom and early- stage recovery with overly aggressive real estate purchases. Fitch rates the builders within the context of a typical cycle. In the midst of a non-typical upcycle, as took place in the 1992- 2005 period, a number of builders realized higher credit ratings. Conversely, due to this sharper than expected contraction, which has lasted longer than the norm, and as builders' operating and credit metrics have been even more stressed, ratings have been lowered. While the possibility remains for a few additional company downgrades, the likelihood of such action has diminished. Continued progress in industry and company metrics could prompt a positive revision of a number of Rating Outlooks. This is a list of Fitch rated U.S. homebuilders and their current Issuer Default Ratings and Rating Outlooks: -- Beazer Homes USA ('CCC'; Outlook Negative); -- D.R. Horton, Inc. ('BB'; Outlook Negative); -- Hovnanian Enterprises, Inc. ('CCC'; Outlook Negative); -- KB Home ('BB-'; Outlook Negative); -- Lennar Corp. ('BB+'; Outlook Negative); -- M.D.C. Holdings, Inc. ('BBB-'; Outlook Stable); -- Meritage Homes Corp. ('B+'; Outlook Negative); -- M/I Homes, Inc. ('B'; Outlook Negative); -- NVR, Inc. ('BBB'; Outlook Stable); -- Pulte Homes ('BB+'; Outlook Negative); -- Ryland Group ('BB'; Outlook Negative); -- Standard Pacific Corp. ('CCC'; Outlook Negative); -- Toll Brothers, Inc. ('BBB-'; Outlook Stable). * High Court Lets Pension Termination Fee Ruling Stand ------------------------------------------------------ The U.S. Supreme Court has declined to weigh whether companies can discharge fees owed to the Pension Benefit Guaranty Corp. when terminating a pension plan through Chapter 11, leaving alive a federal appeals court decision barring employers from doing so, according to Law360. * Marlin Equity Partners Closes $650 Million Equity Funds --------------------------------------------------------- Marlin Management Company, LLC, on Monday announced the first and final closing of Marlin Equity III, L.P., a $650 million institutional private equity fund established to seek capital appreciation through investments in businesses undergoing varying degrees of operational, financial or market driven change. Marlin targets companies across a variety of industries, including technology, healthcare, business services, consumer products, and manufacturing, among others. Marlin has closed three private equity funds since its inception in 2005 and has over $1 billion of capital under management. Fund III's limited partners comprise a mix of existing and new investors from leading endowments and foundations, public and private sector pension funds, family offices, financial institutions, and insurance companies. Fund III was three times oversubscribed from its original $450 million target and completed a first and final closing shortly after Marlin launched its limited marketing process in September 2009. David McGovern, Managing Partner of Marlin said, "We are extremely grateful for the strong support we received from such a prominent group of returning and new institutional limited partners. Our successful fundraise is a testament to our track record of creating value for our investors through complex transactions and operational improvements. Our increased capital base will enable us to fully take advantage of the vast number of attractive opportunities we see in the market today." In addition to Mr. McGovern, the Fund's senior investment team includes Nicholas Kaiser, George Kase, Steve Johnson, Andy Martinez, and Peter Spasov. Marlin has also assembled a team of seasoned operating professionals, with established track records of value creation, who work exclusively with Marlin's investment professionals throughout the investment process. The combined team enables Marlin to execute on complex and challenging situations where speed and certainty are a priority, including corporate divestitures, bankruptcies, operational and financial restructurings, recapitalizations, and MBOs, among others. Mac Hofeditz of Probitas Partners, which served as incumbent placement advisor to Marlin, added, "The unbelievably strong demand that Marlin received in this market environment speaks to the quality of its investment team, its differentiated strategy, and its strong returns. Marlin has firmly established itself as a leader in special situations investing." Bruce Ettelson and Karin Orsic of Kirkland & Ellis LLP served as legal counsel in the formation of the Fund. About Marlin Equity Partners Marlin Equity Partners -- http://www.marlinequity.com/-- is a Los Angeles, California-based private investment firm with more than $1 billion of capital under management. The firm is focused on providing corporate parents, shareholders and other stakeholders with tailored solutions that meet their business and liquidity needs in special situations. Marlin invests in businesses across multiple industries that are in the process of undergoing varying degrees of operational, financial or market-driven change where its capital base, industry relationships and extensive network of operational resources significantly strengthens a company's outlook and enhances value. Since its inception, Marlin, through its group of funds and related companies, has successfully completed over 30 acquisitions. About Probitas Partners Probitas Partners -- http://www.probitaspartners.com/-- founded in 2001, is an employee-owned, independent provider of alternative investment solutions, headquartered in San Francisco with offices in New York, London, and Hong Kong. Its integrated global practice includes capital raising for alternative investment funds, secondary market advisory and portfolio management. Probitas Partners is represented in the United Kingdom by PFG-UK Ltd., which is regulated by the Financial Securities Authority. * PricewaterhouseCoopers Acquires Alaris Consulting's Assets ------------------------------------------------------------ PricewaterhouseCoopers LLP on Tuesday announced it has acquired a substantial portion of the operating assets of Alaris Consulting, Inc., a supply chain management consulting firm focused on strategic sourcing, supply chain optimization, and the reduction of cost and complexity in supply chains. Alaris CEO, Michael Deering, has been admitted to the PwC partnership as a principal and joins PwC's Advisory practice as a member of the Strategy & Operations Solution group led by partner David Pittman. In addition, all of Alaris' U.S. professionals are joining PricewaterhouseCoopers. These consultants have deep industry and operational expertise, and focus primarily on the industrial products and retail and consumer products sectors. "In today's difficult economic environment, one of the top priorities shared by most large enterprises is the need to reduce costs and increase efficiencies, particularly in the areas of procurement transformation and supply chain effectiveness," said David Pittman, partner, PricewaterhouseCoopers. "The acquisition of Alaris Consulting's assets and resources will extend PricewaterhouseCoopers' consulting capabilities in supply chain management and sustainable cost reduction. We welcome the addition of Michael Deering and the Alaris team to our practice and look forward to working with them to help our clients solve their most pressing and complex supply chain issues." PricewaterhouseCoopers' Advisory practice includes a team of dedicated practitioners focused on Strategy & Operations Solutions, including professionals with skills in supply chain and back-office operations across multiple industries. These professionals help clients develop and achieve an agile and responsive supply chain that supports business strategy, helps improve processes and delivers sustainable cost reduction. Alaris Consulting's professionals will add expanded supply chain skills focused on business strategy, procurement transformation and overall supply chain effectiveness. "Bringing the assets and expertise of Alaris Consulting to PricewaterhouseCoopers will create a powerful consulting team focused on helping clients reduce costs and improve the management of their supply chain," said Michael Deering, former CEO of Alaris Consulting. "We are excited to be a part of PwC, and look forward to accessing PwC's extensive resources to deliver even greater value to our clients." Financial terms of the transaction have not been disclosed. About Alaris Consulting Established in 1990 and headquartered in Chicago, Alaris Consulting, Inc., is a management consulting firm dedicated to helping clients remove cost and complexity from their supply chains. About PwC's Advisory Practice PricewaterhouseCoopers' Advisory professionals help organizations improve business performance, respond quickly and effectively to crisis, and extract value from transactions. About PricewaterhouseCoopers PricewaterhouseCoopers -- http://www.pwc.com/-- provides industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- January 27-29, 2010 TURNAROUND MANAGEMENT ASSOCIATION Distressed Investing Conference, Bellagio, Las Vegas Contact: http://www.turnaround.org/ Feb. 21-23, 2010 INSOL International Annual Regional Conference Madinat Jumeirah, Dubai, UAE Contact: 44-0-20-7929-6679 or http://www.insol.org/ April 20-22, 2010 TURNAROUND MANAGEMENT ASSOCIATION Sheraton New York Hotel and Towers, New York, NY Contact: http://www.turnaround.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 6-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ October 25-27, 2011 TURNAROUND MANAGEMENT ASSOCIATION Hilton San Diego Bayfront, San Diego, CA Contact: http://www.turnaround.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: December 6, 2009 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Denise Marie Varquez, Philline Reluya, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. 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