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/raid1/www/Hosts/bankrupt/TCR_Public/101005.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 5, 2010, Vol. 14, No. 276 Headlines ACE CASH: Moody's Affirms Corporate Family Rating at 'B3' AIRTRAN HOLDINGS: Employee Retention Plan Adopted Amid SWA Bid ALTA MESA: Moody's Assigns Corporate Family Rating at 'B2' AMERICAN APPAREL: Denies Bankruptcy Plans Amid FTI Hiring AMERICAN INT'L: AIA Group IPO Could Fetch Up to $30.5-Bil. AMERICREDIT CORP: General Motors Deal Won't Affect Fitch B+ Rating ANGLO IRISH BANK: DBRS Junks Rating on Dated Subordinated Debt ARIZONA HEART: Court Approves Sale to Vanguard BLOCKBUSTER INC: Proposes Lease Rejection Procedures BLOCKBUSTER INC: Proposes to Reject Leases to 145 Closed Stores BLOCKBUSTER INC: Says Utilities Adequately Assured of Payment BLOCKBUSTER INC: U.S. Trustee Forms Unsecured Creditors Committee BLUEEGREEN CORP: Has $75MM Timeshare Facility with Liberty, et al BOSQUE POWER: Bank Debt Trades at 30% Off in Secondary Market BROOKSTONE COMPANY: 90.74% of 2012 Notes Tendered by October 1 BTA BANK: Permanent Injunction Hearing Set for Oct. 26 CATHOLIC CHURCH: Wilmington Diocese Files Plan of Reorganization CATHOLIC CHURCH: Wilmington Has Stay Extended for Parishes CELL THERAPEUTICS: Reports $3.58 Million Net Loss for August CENTRAL FALLS, RI: Mayor Challenges Receiver in Court CHEM RX: Seeks to Sell Stake in Chicago Subsidiary for $2.5MM CHEMICAL BUILDING: Files for Bankruptcy to Halt Foreclosure CHINA FRUITS: Posts $149,900 Net Loss in June 30 Quarter CLAIM JUMPER: Black Canyon Improves Offer as Landry Joins Bidding CLAIRE'S STORES: Bank Debt Trades at 13% Off in Secondary Market CLEAR CHANNEL: Bank Debt Trades at 21% Off in Secondary Market COAST CRANE: Proposes Clearlake-Led Auction for All Assets COAST CRANE: Gets Court's Interim Nod for $20MM in DIP Loans COAST CRANE: Gets Court's Nod to Hire T. Scott Avila as CRO COAST CRANE: Proposes to Continue Wells Fargo Credit Card Pact DAVITA INC: Moody's Assigns 'Ba2' Rating on Senior Secured Loan DBSD NA: Can Execute Plan After FCC OK of License Transfers DELPHI CORP: Blahnik Settles Fraud Case; 4 Execs. to Face Trial DELPHI CORP: Court Closes 20 Affiliates' Chapter 11 Cases DELPHI CORP: Judge Denies Dismissal of PBGC Charges DEX MEDIA WEST: Bank Debt Trades at 13% Off in Secondary Market DOLLAR THRIFTY: DBRS Confirms 'BB' Issuer Rating DRYSHIPS INC: Amends HSH Credit Pacts to Regain Compliance DYNEGY HOLDINGS: Moody's Junks Corporate Family Rating From 'B3' ENCORIUM GROUP: Posts $805,100 Net Loss in June 30 Quarter EVRAZ INC: Moody's Assigns 'B1' Rating on $650 Mil. Notes FEDERAL-MOGUL: Asbestos Trust Wants Injunction Widened for Allianz FEDERAL-MOGUL: Baldwin & Baldwin Represents PI Claimants FONTAINEBLEAU L.V.: Bank Debt Trades at 80% Off FORD MOTOR: Bank Debt Trades at 2% Off in Secondary Market FORD MOTOR: Hit by UAW Class in Visteon Retiree ERISA Suit FOREVERGREEN WORLDWIDE: Posts $95,400 Net Loss in June 30 Quarter FREMONT GENERAL: Asks for KPMG Docs. on $2.8M Fee Request GATEHOUSE MEDIA: Bank Debt Trades at 63% Off in Secondary Market GENERAL GROWTH: Proposes Exit Financing Transactions GENERAL GROWTH: Receives Approval of Brookfield Management Pact GENERAL GROWTH: Wins Approval of H.S. Wright Settlement Pact GENMED HOLDING: Posts $426,200 Net Loss in June 30 Quarter GEOEYE INC: Moody's Assigns 'B3' Rating on $125 Mil. Notes GEOKINETICS INC: Lenders Grant Financial Covenants Waiver GEOKINETICS INC: Lenders OK Financial Covenants Waiver GEOMET INC: Gets NASDAQ Global Market Listing Deficiency Notice HARMAN INTERNATIONAL: Moody's Raises Corp. Family Rating to 'Ba2' HARRISBURG, PA: Asks State For Help Solving Financial Woes HAWKER BEECHCRAFT: To Pay Interest In Cash for Senior Notes HEALTHSOUTH CORP: Completes Purchase of 30-Bed Rehabilitation Unit HELIX BIOPHARMA: Posts C$4.2-Mil. Net Loss in April 30 Quarter HERBST GAMING: Bank Debt Trades at 45% Off in Secondary Market HERCULES OFFSHORE: Bank Debt Trades at 14% Off in Secondary Market HERTZ CORPORATION: DBRS Confirms 'BB' Issuer Rating HORIZON BANCORPORATION: Swings to $117,000 Profit in Q2 2010 INTERNATIONAL GARDEN: File for Chapter 11 Protection ISTAR FINANCIAL: Did Not Pay $500MM Under 1st Lien Credit Pact ITC^DELTACOM INC: EarthLink Deal Won't Affect Moody's 'B3' Ratings JOECELESTIN CIVIL: Files for Chapter 11 Bankruptcy Protection LAKE ARROWHEAD AIRPORT: Foreclosure Sale Extended to October 26 LEVEL 3 COMMS: Bank Debt Trades at 9% Off in Secondary Market LODGENET INTERACTIVE: Withdraws Private Offering of Sr. Notes LOEHMANN'S CAPITAL: Misses Oct. 1 Interest Payment LOWER BUCKS: BNY Wants Court to Deny Plan Filing Extension Plea MARRIOT SUMMIT WATCH: Commercial Units Sent to Receivership MCA INDUSTRIES: To Start Liquidation of Assets METRO-GOLDWYN-MAYER: Bank Debt Trades at 56% Off MEXICANA AIRLINES: Hearing on Recognition Motion Moved to Oct. 21 MEXICANA AIRLINES: JPM Can Access $970,000 for Reimbursement MEXICANA AIRLINES: May Cut Workforce by Half, Resume Flying Dec. MORGANS HOTEL: Extends Hudson and Mondrian Loans Until Oct. 2011 MORRIS MANAGEMENT: Partners Want Case Converted to Chapter 7 MORTGAGEBROKERS.COM: Posts $65,800 Net Loss in June 30 Quarter MOVIE GALLERY: Wins Nod of Key Employee Incentive Plan NEUROLOGIX INC: Says Phase 2 Trial of NLX-P101 Successful NEUROLOGIX INC: Posts $4.5 Million Net Loss in June 30 Quarter NEWPORT PARTNERS: Lenders Extend Forbearance Until January 31 NIELSEN FINANCE: Fitch Assigns 'CCC/RR6' Rating on Senior Notes NILE SWIM: Tax Sale Threats Forced Chapter 11 Filing NOBLEPEAK VISION: Offers Patented Technology at Sealed Bid Sale NORTEL NETWORKS: Administrator for Pension Plans Named OSI RESTAURANT: Bank Debt Trades at 8% Off in Secondary Market PALI HOLDINGS: Former CEO Sues Glaser Weil Over Defense Fees PALMDALE HILLS: SunCal and Lehman File Competing Plans PAYMENT DATA: Posts $55,200 Net Loss in June 30 Quarter PETTERS COMPANY: Pleads Guilty to Fraud as Part of Deal PLANGRAPHICS INC: Posts $329,700 Net Loss in June 30 Quarter PMA CAPITAL: Fitch Upgrades Ratings on Senior Notes From 'BB+' POST PROPERTIES: Moody's Affirms 'Ba1' Preferred Stock Rating QOC I LLC: Files for Chapter 11 in Florida QOC I LLC: Case Summary & 4 Largest Unsecured Creditors RCLC INC: Trenton to Buy Aviation Biz. for $10.7 Million REALOGY CORP: Bank Debt Trades at 11% Off in Secondary Market SEALY CORP: Posts $15.82 Million Net Loss in August 29 Quarter SMITHFIELD FOODS: Fitch Keeps CCC/RR5 Rating on Sr. Unsecured Debt SOUTH BAY: Committee Fails to Win Authority to Pursue Suits SOUTH BAY: Removal Period Extended to February 15 SOUTH BAY: Wins Nod to Provide Incentives to 4 Key Employees SOUTH FINANCIAL: Fitch Upgrades Issuer Default Rating From 'CC' SPANSION INC: Firm Enters Into Settlement with Chipmos Tech SUNESIS PHARMA: Prices Underwritten Offering at $0.35/Unit SUNRISE REAL: Posts $506,900 Net Loss in June 30 Quarter SUNRISE SENIOR: Enters Into Purchase and Sale Deal With Ventas TECHNIPOWER SYSTEMS: Plan Confirmation Hearing Set for Oct. 26 THERMOENERGY CORP: Posts $5.6 Million Net Loss in June 30 Quarter TOR MINERALS: Extends BofA Line of Credit Maturity TRIBUNE CO: Court Denies Aurelius Plea to Disqualify Chadbourne TRIBUNE CO: Proposes Plan Settlement With Oaktree & Angelo Gordon TRIBUNE CO: Step One Lenders Say Oaktree Plan Hides Biggest Issue TRUMP ENTERTAINMENT: U.S. Trustee Protests Plan to Pay $20MM Fees UNITED AIRLINES: Fitch Affirms Issuer Default Rating at 'B-' UNITED WESTERN: Makes Payment to JPM After OTS Non-Objection US AEROSPACE: Appoints Jim Worsham as Chief Executive Officer US FIDELIS: Former Owners Give Up Assets to Creditors VALENCE TECHNOLOGY: Berg & Berg Buys 1.9 Million of Shares VERIFONE INC: Hypercom Deal Won't Affect Moody's 'B1' Rating VISTEON CORP: Hit by UAW Class in Retiree ERISA Suit WLNE-TV: In Receivership; CobbCorp Hired to Sell Channel 6 WORKFLOW MANAGEMENT: Asks for Court's Nod to Use Cash Collateral WORKFLOW MANAGEMENT: Taps Tavenner & Beran as Conflicts Counsel WORKFLOW MANAGEMENT: Wants FTI Consulting as Financial Advisor WORKFLOW MANAGEMENT: Moody's Downgrades Default Rating to 'D' YRC WORLDWIDE: Board Approves Reverse Stock Split * FDIC Plans to Auction Loans Totaling $1.12 Billion * Large Companies With Insolvent Balance Sheets ********* ACE CASH: Moody's Affirms Corporate Family Rating at 'B3' --------------------------------------------------------- Moody's Investors Service affirmed the ratings of ACE Cash Express (Corporate Family Rating and senior secured credit facility B3, senior unsecured debt Caa1), and changed the outlook to stable from negative. The rating action reflects ACE's improved profitability, cash flow, and interest coverage. In response to the recent recession ACE has reduced company-owned new store openings and acquisitions and accelerated its closing of underperforming stores. These actions, in addition to the maturation of stores opened during ACE's previous store expansion phase, as well as cost reductions from restructuring actions, have improved profitability, cash flow and interest coverage. ACE has also begun a push into new products, including title loans and internet-originated payday loans; these products are growing in volume but are still relatively modest in relation to the check cashing and payday loan products. Ace is comparable to peers such as Dollar Financial Group (B2/stable) in terms of key financial metrics including leverage (adjusted debt/EBITDAR) and interest coverage; however, ACE lacks Dollar's geographic diversification, which includes significant operations in Canada and the UK. Moreover, although ACE's intermediate term liquidity profile is acceptable, with significant unused capacity on its revolving credit facility, the company remains wholly reliant on wholesale funding and faces substantial maturities that will require refinancing in calendar 2013 (bank credit facilities) and 2014 (senior notes). The last rating action for ACE occurred on November 17, 2008, when Moody's affirmed the company's ratings and changed the outlook to negative from stable. Based in Irving, Texas, ACE Cash Express offers check cashing, payday lending, pre-paid debit card and bill payment services along with various other financial products. AIRTRAN HOLDINGS: Employee Retention Plan Adopted Amid SWA Bid -------------------------------------------------------------- The board of directors of AirTran Holdings Inc. adopted on September 26, 2010, an employee retention plan to address potential employee concerns related to the proposed acquisition of AirTran by Southwest Airlines Co. By providing enhanced financial security to Covered Employees during and following completion of the proposed Merger, the Retention Plan is meant to ensure that AirTran will have the continued dedication and support of these employees. The Retention Plan covers managerial and administrative employees who may be selected by the compensation committee of the Board or its designee, as administrator of the Retention Plan. Under the Retention Plan, a maximum of $10.2 million has been allocated to the payment of retention bonuses for designated officer and non- officer Covered Employees with the amount of any awarded Retention Bonus to be determined by the Administrator. Non-officer Covered Employees will be paid 100% of any awarded Retention Bonus on the first business day 90 days after the closing of the Merger if the Merger closes prior to the End Date, as defined in the Retention Plan. Officer Covered Employees will be paid 50% of their Retention Bonus in a lump-sum at the closing of the Merger and 50% on the first business day 180 days after closing of the Merger. The Board has determined that the officer Retention Bonus is equal to their current respective annual base salaries. The Board has determined that Messrs. Robert L. Fornaro, Steven A. Rossum, Richard P. Magurno, and Stephen J. Kolski are ineligible for Retention Bonuses. Retention Bonus payments are subject to acceleration in connection with the actual or constructive termination of employment of any officer Covered Employee within 180 days of closing and any non- officer Covered Employee within 90 days of closing. The Retention Plan requires, with limited exceptions, that a Covered Employee remain employed through the applicable Retention Bonus payment date to receive his or her Retention Bonus. If the closing of the Merger does not occur prior to the End Date then all Retention Bonuses due under the Retention Plan shall be forfeited and the Retention Plan will terminate. Under the Retention Plan AirTran also reserves, generally, the right to terminate or amend the Retention Plan at any time without consent of the Covered Employees prior to closing of the Merger. Deal Completion and Consulting Arrangements On September 26, 2010, the Board approved arrangements with Messrs. Robert L. Fornaro and Steven A. Rossum whereby, in lieu of Retention Bonuses, they were granted bonuses of 50% of their current respective annual base salaries contingent upon the successful completion of the Merger, provided that, at the time of payment, such executives acknowledge their intention to remain employed with AirTran, AirTran Airways, or Southwest for at least six months after the date the Merger becomes effective. Messrs. Robert L. Fornaro and Steven A. Rossum also entered into consulting agreements with AirTran that would become effective subsequent to the consummation of the proposed Merger. Each Consulting Agreement will become effective for a term of 24 months, unless earlier terminated, on such date as the applicable Consultant no longer serves as an executive of AirTran, AirTran Airways, or Southwest, after the closing of the Merger. Each Consulting Agreement provides for payment of a consultant fee equal to one- twelfth of such Consultant's annual base salary as an officer of AirTran as calculated immediately prior to the closing of the Merger. Such fee will be payable in arrears on the first business day of each month during the term of the Consulting Agreement. The Consulting Agreements also contain restrictions preventing either Consultant from using confidential information beyond what is necessary to perform the services described in such Consulting Agreement during the term of the Agreement and for two years after the termination of such Consulting Agreement. Additionally, each Consultant has specified limitations on competing with AirTran, Southwest, or their respective subsidiaries during the term of such Consulting Agreement. About Southwest Based in Dallas, Southwest Airlines (NYSE: LUV) -- http://www.southwest.com/-- is the nation's largest carrier in terms of originating domestic passengers boarded, now serving 69 cities in 35 states. Southwest currently operates more than 3,200 flights a day and has nearly 35,000 Employees systemwide. About AirTran Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE: AAI) -- http://www.airtran.com/-- through its wholly owned subsidiary, AirTran Airways, Inc., operates scheduled airline service throughout the United States and to selected international locations. At June 30, 2010, the Company had total assets of $2,257,171,000, total current liabilities of $718,560,000, long-term capital lease obligations of $17,165,000, long-term debt of $901,699,000, other liabilities of $110,829,000, deferred income taxes of $4,206,000, derivative financial instruments of $20,632,000, and stockholders' equity of $484,080,000. * * * In December 2009, Moody's Investors Service raised its ratings of AirTran Holdings' corporate family and probability of default ratings each to Caa1 from Caa2. The 'Caa1' corporate family rating considers the still high leverage and AirTran's exposure to cyclical risks in the airline industry. As reported by the Troubled Company Reporter on July 9, 2010, Standard & Poor's Ratings Services raised its ratings on AirTran Holdings, including the corporate credit rating, to 'B-' from 'CCC+'. The recovery rating on senior unsecured debt remains '6', indicating S&P's expectations of a negligible (0% to 10%) recovery in a default scenario. "S&P base the upgrade on consistent recent and expected financial performance and liquidity that should remain sufficient for operating needs and debt service," said Standard & Poor's credit analyst Philip Baggaley. AirTran reported one of the best earnings among U.S. airlines in 2009 (in terms of margins and absolute level), mainly due to the fact that the U.S. and global recession did not hurt its main market (domestic leisure travel) as badly as business and international traffic. "That said, S&P does not expect AirTran to benefit as much from this year's improvement in industry conditions (including in particular business and international traffic) as "legacy" airlines (large hub-and-spoke airlines, such as competitor Delta Air Lines Inc.)," he continued. Standard & Poor's Ratings Services placed its ratings, including the 'B-' corporate credit rating, on AirTran Holdings Inc. on CreditWatch with positive implications. Moody's Investors Service affirmed all of its debt ratings of Southwest Airlines, Inc., including the Baa3 senior unsecured rating, following the announcement that Southwest has entered into a definitive agreement to acquire 100% of the outstanding common stock of AirTran Holdings, Inc., for cash and common stock aggregating $1.4 billion. The outlook on Southwest's ratings is stable. Concurrently, Moody's placed all of its debt ratings of AirTran, including the Caa1 corporate family rating, under review for possible upgrade. Moody's also affirmed the SGL-3 Speculative Grade Liquidity Rating of AirTran. Completion of the proposed acquisition is subject to the approval of AirTran's stockholders, certain regulatory clearances and customary closing conditions. The companies indicated that a closing would not occur until sometime in the first half of 2011. ALTA MESA: Moody's Assigns Corporate Family Rating at 'B2' ---------------------------------------------------------- Moody's Investors Service assigned first time ratings to Alta Mesa Holdings, LP in conjunction with its $300 million senior unsecured note offering. The assigned ratings are a B2 Corporate Family Rating, a B3 (LGD4, 69%) rating to the senior unsecured notes, and a B2 Probability of Default Rating. The outlook is stable. Assignments: Issuer: ALTA MESA HOLDINGS, LP -- Probability of Default Rating, Assigned B2 -- Corporate Family Rating, Assigned B2 -- Senior Unsecured Regular Bond/Debenture, Assigned 69 - LGD4 to B3 Ratings Rationale "The B2 CFR reflects Alta Mesa's small scale, its limited partnership structure, its diverse portfolio of properties located in Texas, Louisiana, and Oklahoma, and its historically attractive finding and development costs " said Stuart Miller, Moody's Vice President. "The rating also considers the partnership's inventory of relatively low risk development opportunities and its stated intention to fund its capital program with internally generated cash flow." Alta Mesa was founded in 1987 but was transformed when Denham Capital Management LP became a limited partner investor in 2006 providing a source of equity capital to fuel the partnership's growth. Since 2006, Alta Mesa has successfully employed an acquire and exploit strategy realizing a 39% CAGR of its proved reserves. The partnership's most recent acquisition, the purchase of The Meridian Resources Corporation, closed in May 2010. The cash portion of the $163 million acquisition was financed with a combination of revolver borrowings and $50 million of new equity invested in Alta Mesa by Denham. TMR's assets are complementary to the legacy assets of Alta Mesa, and the cost of $13.00 per BOE of proved reserves represents an attractive multiple. The proceeds from the new senior unsecured note offering will be used to repay borrowings under the partnership's senior secured revolving credit facility and to pay a $50 million special dividend to Denham, essentially reversing its recent equity investment. As a result, the TMR acquisition was effectively 100% debt financed. Pro forma for the TMR acquisition and the application of the new note offering, Alta Mesa will have debt to proved developed reserves of $11.83 per BOE and debt to average daily production of $31,100, both of which map to a high Caa rating level. With pro forma average daily production of 12,100 BOE per day, Alta Mesa's scale also maps to a Caa level. However, the B2 CFR for Alta Mesa takes into account mitigating factors including relatively low three year finding and development costs (all sources) of $11.56 per BOE, a diversified portfolio of properties with significant production history, and a conservative management approach towards risk taking. Alta Mesa's three year finding cost maps to an "A" rating level according to Moody's E&P rating methodology. Drivers behind the partnership's relatively low finding cost are (1) the successful application of new technology to older, producing fields in East Texas and South Louisiana, and (2) the drilling of wells in areas where the potential exists for multiple pay zones, or multiple opportunities to complete a commercial well. In one of its riskier plays, the Deep Bossier in East Texas, Alta Mesa owns a 25% to 33% non- operated working interest, a level of exposure that is prudent given the partnership's limited scale. To mitigate commodity price risk, the partnership has used hedges to lock in the price for approximately 90% of its 2011 PDP production, and approximately 50% for 2012, 2013, and 2014. All of these factors position Alta Mesa for continuing reserve growth without an increase in leverage. In January 2012, Denham has the right to call for a liquidity event which could force a sale of Denham's partnership shares, or a sale of all of the partnership's assets. The uncertainty that is created by this right, and the potential for a recapitalization or sale of the partnership is a factor in the assigned ratings. Alta Mesa's liquidity after the note offering is projected to be $188 million. The partnership will have a $220 million borrowing base under its senior secured revolving credit with $56 million borrowed, and approximately $24 million of cash on hand. With management's stated intent to fund its budget using internally generated cash flow, the partnership appears to have adequate liquidity to continue the development of its non-producing reserves and to fund its modest exploration program. Due to the scale of Alta Mesa, a positive rating action is unlikely in the immediate future. A negative rating action could occur if the partnership's three year finding and development cost rises above $13 per BOE as this is a key factor offsetting the limited scale of the partnership. Additionally any property acquisitions that are financed primarily with debt or any liquidity event that increases leverage would likely lead to a negative rating action. This is a first time rating for Alta Mesa Holdings, LP. AMERICAN APPAREL: Denies Bankruptcy Plans Amid FTI Hiring --------------------------------------------------------- Bloomberg News reports that a lawyer for American Apparel Inc. said in an interview that FTI Consulting Inc. wasn't hired by the Company to advise on a bankruptcy restructuring. As reported in yesterday's Troubled Company Report, American Apparel said it entered into an amendment to its credit agreement with Lion Capital which, among other things, eliminates the minimum Consolidated EBITDA covenant for the dates through and including December 31, 2010, and provides for the minimum Consolidated EBITDA covenant to be tested monthly during 2011. Lyndon Lea, Founder and Partner of Lion Capital, said it is working with American Apparel to "realign the capital structure of American Apparel to support a number of key initiatives within the business, including the hiring of several new senior executives." American Apparel reported a $42.8 million net loss for the first quarter on revenue of $121.8 million. The Company is late in filing financial statement with the Securities and Exchange Commission for the second quarter. Bloomberg relates that Deloitte & Touche LLP, the auditor for 2009, resigned and said the company "has not maintained effective internal control over financial reporting." Deloitte warned that it needed further information to be sure there should be no change in the 2009 financials. About American Apparel American Apparel, Inc. (NYSE Amex: APP) -- http://www.americanapparel.com/-- is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California. As of September 30, 2010, American Apparel employed roughly 10,000 people and operated over 280 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea, and China. American Apparel also operates a leading wholesale business that supplies high quality T-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce website at http://www.americanapparel.com/ The Company's balance sheet as of March 31, 2010, showed $295.74 million in total assets, $180.40 million in total liabilities, and a stockholders' equity of $115.34 million. * * * As reported in the Troubled Company Reporter on August 19, 2010, the Company disclosed that based upon results of operations for the three months ended March 31, 2010, and trends occurring in the Company's business since the first quarter and projected for the remainder of 2010, the Company may not have sufficient liquidity necessary to sustain operations for the next twelve months. Also, the Company's current operating plan indicates that losses from operations are expected to continue through at least the third quarter of 2010. The Company also believes that it is probable that as of September 30, 2010, the Company will not be in compliance with the minimum Consolidated EBITDA covenant under the Lion Credit Agreement. The Company said the foregoing factors, among others, raise substantial doubt about its ability to continue as a going concern. AMERICAN INT'L: AIA Group IPO Could Fetch Up to $30.5-Bil. ---------------------------------------------------------- The Wall Street Journal's Alison Tudor and Serena Ng report that this month's initial public offering of AIA Group Ltd., the pan- Asian life insurance business of American International Group Inc., will likely value the Asian unit at between $28.5 billion and $30.5 billion, and could raise more than $15 billion in cash to repay U.S. taxpayers, people familiar with the deal said. In March 2010, Prudential plc said it would pay $35.5 billion cash and stock for all of AIA, but later tried to cut the price to $30.4 billion after shareholders of the U.K. insurer balked at the original deal. AIG's board of directors voted against the lower Prudential offer and opted to sell about half of AIA in an IPO. AIA is now slated to list in Hong Kong on Oct. 29, with marketing to kick off Tuesday. People familiar with the matter told the Journal the latest valuation levels reflect an indicative price range for AIA's shares of HK$18.38 to HK$19.68 (US$2.37 and US$2.54) each. An IPO of half the company would fetch about $15 billion, but the total amount raised could go up to $17.1 billion if investor demand exceeds the amount of shares offered and an option to sell additional shares is exercised. The Journal also reports Bruce Berkowitz, the founder and managing member of Fairholme Capital Management LLC, said on Monday one of his mutual funds intends to invest about $1 billion in the IPO. Fairholme is AIG's single-largest private shareholder. The Journal also relates another person familiar with the deal said Monday AIA has also secured a commitment of around $1 billion from the Kuwait Investment Authority. KIA is among the largest of a list of so-called cornerstone investors in the IPO, which also includes other sovereign-wealth funds and Hong Kong-based tycoons, the people said. KIA didn't immediately reply to a request for comment. About AIG American International Group, Inc. -- http://www.aig.com/-- is an international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services around the world. AIG 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. AIG almost collapsed under the weight of bad bets it made insuring mortgage- backed securities. The Company, however, was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to grow. The later rescue packages brought the total to $182 billion, making it the biggest federal bailout in U.S. history. AIG has been working to protect and enhance the value of its key businesses, execute an orderly asset disposition plan, and position itself for the future. 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. AMERICREDIT CORP: General Motors Deal Won't Affect Fitch B+ Rating ------------------------------------------------------------------ Fitch Ratings does not expect to alter AmeriCredit Corp.'s long- term Issuer Default Rating of 'B+' as a result of its acquisition by General Motors, which occurred. ACF's ratings are currently on Rating Watch Evolving. Resolution of the Rating Watch will be driven by Fitch's ability to complete an analysis of GM's credit profile and its structural relationship with ACF. While ACF is expected to maintain direct access to the capital markets, its credit ratings will be impacted by the relative strength of its parent. Positive rating momentum could be driven by the determination that GM has a superior credit profile relative to ACF's existing ratings, while negative rating action would result should Fitch believe GM has a higher default probability. If Fitch is unable to complete a thorough analysis of both entities, ACF's ratings could be withdrawn. Separately, upon closing of the merger, ACF's name was changed to General Motors Financial Company, Inc. The name change will be reflected on Fitch's web site. These ratings remain on Rating Watch Evolving: General Motors Financial Company, Inc. (f/k/a AmeriCredit Corp.) -- Long-term Issuer Default Rating 'B+'; -- Senior debt 'BB-/RR3'. ANGLO IRISH BANK: DBRS Junks Rating on Dated Subordinated Debt -------------------------------------------------------------- DBRS has downgraded the Dated Subordinated Debt rating of Anglo Irish Bank Corporation Limited (Anglo Irish or the Bank) to 'C' from BB. The rating actions do not impact the various Government Guaranteed debt ratings of Anglo Irish or the non-guaranteed senior ratings of Anglo Irish, including its Issuer Rating of BBB (low). All non-guaranteed ratings of Anglo Irish remain Under Review with Negative Implications, where they were placed on 10 September 2010. This rating action follows the Irish Minster for Finance's (the Minister) statement indicating that, together with the Attorney General's office, the Minister's office is working on resolution and reorganisation legislation that will enable the implementation of reorganisation measures specific to Anglo Irish Bank and Irish Nationwide Building Society (not rated by DBRS). Specifically, the legislation will address the issue of burden-sharing by subordinated debt holders. Given the Minister's statement and the likely actions, DBRS expects that the subordinated debt holders will be disadvantaged and will suffer losses as they are made to share in the costs of supporting Anglo Irish Bank. Accordingly, DBRS has lowered the Dated Subordinated Debt ratings to reflect the likelihood that the legislation would result in the reduction of principal and/or interest on the outstanding dated subordinated debt issued by Anglo Irish. DBRS has also discontinued Anglo Irish Dated Subordinated Debt rating for debts maturing on or before 29 September 2010 reflecting the expiration of the Credit Institutions (Financial Liabilities) Scheme, which expired on 29 September 2010. ARIZONA HEART: Court Approves Sale to Vanguard ---------------------------------------------- A bankruptcy judge has signed off on the sale of Arizona Heart Institute Ltd.'s assets to Vanguard Health Systems Inc., Dow Jones' DBR Small Cap reports. Phoenix, Arizona-based Arizona Heart Institute, Ltd., is a specialty outpatient clinic dedicated to the prevention, detection and treatment of cardiovascular diseases. It was founded by Edward B. Diethrich, M.D., in 1971, and at its height operated numerous offices across the Phoenix metropolitan area. Arizona Heart filed for Chapter 11 bankruptcy protection on July 30, 2010 (Bankr. D. Ariz. Case No. 10-24062). C. Taylor Ashworth, Esq., and Christopher Graver, Esq., at Stinson Morrison Hecker LLP, assist the Debtor in its restructuring effort. The Debtor disclosed $16,925,342 in assets and $8,115,541 in debts as of the Petition Date. BLOCKBUSTER INC: Proposes Lease Rejection Procedures ---------------------------------------------------- Blockbuster Inc. and its units ask the U.S. Bankruptcy Court to issue an order authorizing (i) the proposed expedited procedures for the future rejection of burdensome unexpired leases, and (ii) them to take any and all actions as may be necessary and appropriate to implement and effectuate the Rejection Procedures as approved by the Court, including the abandonment of personal property pursuant to Section 554(a) of the Bankruptcy Code. The Debtors are parties to thousands of unexpired leases, including real property leases for their retail locations. Although the Debtors are still reviewing the Leases and may assume certain Leases in connection with the administration of the cases or a Chapter 11 plan, in light of the need to close many underperforming stores, there will inevitably be a large number of Leases that no longer provide any benefit to their bankruptcy estates and should be rejected. Consistent with the practice in large debtor-retailer Chapter 11 cases, and in an effort to conserve the resources of the estates, the Debtors seek approval of these procedures to facilitate an expeditious and efficient process for rejecting burdensome Leases: (a) The Debtors will file on the docket for the cases a notice setting forth the proposed rejection of one or more Leases, and will serve the Rejection Notice on the non-Debtor counter party under the respective Lease, and to other notice parties, which include the statutory committee of unsecured creditors, indenture trustees, lenders and the United States Trustee; (b) With respect to non-residential real property Leases to be rejected, the Rejection Notice will set forth the street address of real property that is the subject of the Lease, the remaining term of the Lease and the name and address of the affected landlord. With respect to personal property Leases to be rejected, the Rejection Notice will set forth the name and address of the Lease counterparty, and a brief description of the personal property Lease to be rejected; (c) Should a party-in-interest object to the Debtors' proposed rejection of a Lease, the party must file and serve a written objection to the Notice Parties no later than 10 calendar days after the date the Rejection Notice is filed; (d) If no objection is timely filed and served, the applicable Lease will be deemed rejected on the effective date set forth in the Rejection Notice, or, if no date is set forth, the date the Rejection Notice is filed with the Court; (e) If a timely objection is filed, the Debtors will schedule a hearing on the objection and will provide at least five days' notice of the hearing to the objecting party and the Objection Notice Parties. If the Court ultimately upholds the Debtors' determination to reject the applicable Lease, then the applicable Lease will be deemed rejected as of the Rejection Date, or as otherwise determined by the Court; (f) Claims arising out of the rejection of Leases must be filed, on or before the later of the deadline for filing proofs of claim established by the Court in the cases, or 45 days after the Rejection Date. If no proof of claim is timely filed, the claimant will be forever barred from asserting a claim for rejection damages and from participating in any distributions that may be made in connection with the cases; and (g) If the Debtors have deposited funds with a Lease counterparty as a security deposit or other arrangement, the Lease counterparty may not set off or otherwise use the deposit without the prior authority of the Court or agreement of the parties. The Debtors also seek authority, prior to and through the Rejection Date, to remove, in their sole discretion, from premises that are the subject of any rejected Lease, consistent with the Debtors' ownership rights or other property interests, personal property that the Debtors have installed in or about the leased premises, like equipment, fixtures and furniture, which property is either owned by the Debtors, leased by the Debtors from third parties, or subject to any equipment financing agreements with third parties. To the extent that the Debtors determine that any of their interest in the property has little or no value or that preservation will be burdensome to their estates compared with the expense of removing and storing the property, the Debtors seek authority to abandon, in their sole discretion, the property remaining at the premises. No personal property subject to a true lease will be abandoned without first rejecting the underlying lease for the property. If the Debtors propose to abandon personal property that is subject to a true lease and located at a premises that is the subject of a Rejection Notice, the Rejection Notice will indicate their disposition, and the Debtors propose that the automatic stay be deemed modified to permit the personal property lessor to retrieve the abandoned property within seven days of the date the Rejection Notice is filed. Should the Debtors propose to abandon the property, the notice and objection procedures will apply to the personal property lessor and the Rejection Notice will set forth a description of the property proposed to be abandoned, as required by Rule 6007-1 of the Local Bankruptcy Rules for the Southern District of New York. In all events, including if property is not retrieved by the Collection Deadline, the Debtors request that the property be deemed abandoned pursuant to Section 554 of the Bankruptcy Code as of the Rejection Date and that the landlord be authorized to dispose of the abandoned property without liability to any third party claiming an interest in the abandoned property. The proposed Rejection Procedures will streamline the Debtors' ability to reject burdensome Leases, and thereby minimize unnecessary postpetition obligations, while also providing Lease counterparties with adequate notice of the rejection of any Lease and an opportunity to object to the rejection within a reasonable time period, Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts. Accordingly, the Debtors submit that the Rejection Procedures should be approved as they balance the interests of the parties; are an appropriate exercise of the Debtors' business judgment; and constitute a common form of relief in many bankruptcy cases in this and other jurisdictions. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (Pink Sheets: BLOKA, BLOKB) -- http://www.blockbuster.com/-- is a global provider of rental and retail movie and game entertainment. It has a library of more than 125,000 movie and game titles. Blockbuster said it had assets of $1,017,035,832 and debts of $1,464,939,759 as of August 1, 2010. Blockbuster Inc. and 12 U.S. affiliates initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan on September 23, 2010 (Bankr. S.D.N.Y. Case No. 10-14997). Martin A Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. A steering group of senior secured noteholders is represented by James P. Seery, Esq., and Paul S. Caruso, Esq., at Sidley Austin LLP. U.S. Bank National Association as trustee and collateral agent for the senior secured notes is represented by David McCarty, Esq., and Kyle Mathews, Esq., at Sheppard Mullin Richter & Hampton LLP. BDO Consulting is the financial advisor for U.S. Bank. Lenders led by Wilmington Trust FSB are providing the DIP financing. The DIP Agent is represented by Peter Neckles, Esq. and Alexandra Margolis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings. Bankruptcy Creditors' Service, Inc., publishes BLOCKBUSTER BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Blockbuster Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) BLOCKBUSTER INC: Proposes to Reject Leases to 145 Closed Stores --------------------------------------------------------------- Blockbuster Inc. and its units seek the Court's (i) approval of their rejection of 145 unexpired leases of nonresidential real property, effective as of the Petition Date, and (ii) permission to abandon certain equipment, fixtures, furniture or other personal property located in the premises associated with the rejected Leases. To the extent any Personal Property remains in the Leased Premises, the Debtors submit that the property is of de minimis value and is of no use or benefit to their bankruptcy estates or creditors. Prior to the Petition Date, Blockbuster Inc. operated approximately 3,000 retail store locations across the United States of America. Generally, Blockbuster does not own the real property on which its retail stores are located. Instead, Blockbuster leases the real property from numerous lessors and other counterparties. Blockbuster has reviewed and analyzed, prior to the Petition Date, its extensive lease portfolio and the performance of each of its retail stores. Blockbuster determined that closure of numerous underperforming stores would be in its best interests. Accordingly, the store locations associated with each of the Leases were closed prior to the Petition Date and Blockbuster has vacated the Leased Premises. Blockbuster has also returned the keys to the Leased Premises to the landlords. In connection with each of the prepetition retail store closures, Blockbuster removed personal property to the extent it was cost effective to do so, and to the extent the property could be utilized in its ongoing business operations, discloses Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New York. He notes that Blockbuster also disposed of a limited amount of personal property, where the property was of no value or unnecessary to its stores' ongoing operations. Personal Property of de minimis value was also left behind in almost all of the Leased Premises, which the Debtors seek authority to abandon. Because the Debtors no longer maintain operational retail stores at the Leased Premises, continued compliance with the terms of the Leases would be burdensome and would provide no corresponding benefit to Blockbuster or the stakeholders in the cases, Mr. Karotkin contends. He adds that the rejection of the Leases will maximize the value of the estates and eliminate Leases' associated operating losses. As of the Petition Date, Blockbuster continues to be obligated to pay rent under the Leases even though it has ceased operations at the premises. In addition to its obligation to pay rent, Blockbuster also is obligated to pay for certain property taxes, utilities, insurance and other related charges associated with the Leases. By rejecting the Leases, Blockbuster estimates that it will be able to achieve cost savings of approximately $19 million in rent and other related obligations over the remaining term of the Leases. Therefore, immediate rejection of the Leases will prevent the estates from potentially incurring unnecessary administrative expenses associated with Blockbuster's obligations under the Leases, Mr. Karotkin points out. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (Pink Sheets: BLOKA, BLOKB) -- http://www.blockbuster.com/-- is a global provider of rental and retail movie and game entertainment. It has a library of more than 125,000 movie and game titles. Blockbuster said it had assets of $1,017,035,832 and debts of $1,464,939,759 as of August 1, 2010. Blockbuster Inc. and 12 U.S. affiliates initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan on September 23, 2010 (Bankr. S.D.N.Y. Case No. 10-14997). Martin A Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. A steering group of senior secured noteholders is represented by James P. Seery, Esq., and Paul S. Caruso, Esq., at Sidley Austin LLP. U.S. Bank National Association as trustee and collateral agent for the senior secured notes is represented by David McCarty, Esq., and Kyle Mathews, Esq., at Sheppard Mullin Richter & Hampton LLP. BDO Consulting is the financial advisor for U.S. Bank. Lenders led by Wilmington Trust FSB are providing the DIP financing. The DIP Agent is represented by Peter Neckles, Esq. and Alexandra Margolis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings. Bankruptcy Creditors' Service, Inc., publishes BLOCKBUSTER BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Blockbuster Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) BLOCKBUSTER INC: Says Utilities Adequately Assured of Payment ------------------------------------------------------------- Blockbuster Inc. and its debtor-affiliates, as the marquee national retailers of movies and games, own and manage over 3,000 stores, 39 distributions centers, and eight corporate office centers. These properties are located throughout the United States of America and its territories, and each requires the continuous provision of utility services, like electricity, natural gas, oil, water, sewer, telecom, trash collection, and other services, from hundreds of local and regional utilities, as that term is used in Section 366 of the Bankruptcy Code. Given the large scale nature of their retail operations, the Debtors employ an outside vendor, Advantage IQ, Inc., to help them aggregate and manage the utility payments for their various properties. By this motion, the Debtors ask the Court to: (a) approve their proposed adequate assurance for postpetition Utility Services; (b) approve their proposed adequate assurance procedures; (c) establish procedures for resolving any objections by the Utility Companies relating to the Adequate Assurance Procedures; and (d) prohibiting the Utility Companies from altering, refusing or discontinuing service to, or discriminating against, the Debtors solely on the basis of the commencement of the Chapter 11 cases, a debt that is owed by the Debtors for services rendered prepetition, or on account of any perceived inadequacy of the Debtors' Proposed Adequate Assurance. Interruption or termination of the Utility Services during the pendency of the cases would severely hinder Blockbuster's business operations and its ability to successfully reorganize as unplanned "dark" stores or unexpected delays in the processing of rental product at its distribution facilities could result in consumers and the market misinterpreting the business disruptions as indications of Blockbuster's imminent liquidation, Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New York, tells Judge Burton Lifland. Accordingly, the Debtors seek to establish an orderly process for providing adequate assurance to their Utility Companies without jeopardizing their business operations. For the last 12 months, the Debtors have, on average, paid an aggregate of approximately $1.8 million per two-week period on account of Utility Services for stores and other facilities that they are currently operating. The Debtors have also provided approximately $4.3 million of surety bonds or cash deposits to secure certain of their obligations with respect to some of the Utility Companies. As of the Petition Date, the Debtors had approximately $25 million of cash on hand, and have sought authority to incur $125 million in postpetition financing, which will further ensure that sufficient funds are available to make postpetition payments to Utility Companies. Nonetheless, to the extent that any Utility Company believes additional assurance is required, the Debtors propose certain adequate assurance and procedures, pursuant to which they propose to deposit into a segregated account, an amount equal to two weeks of Utility Services, calculated as a historical average over the last 12 months. The Adequate Assurance Deposit will be maintained until the earlier of (i) entry of a Court order authorizing the return of the Adequate Assurance Deposit to the Debtors, or (ii) the effective date of a Chapter 11 plan for the Debtors. The Debtors, however, will have the right to reduce the Adequate Assurance Deposit to the extent (i) that deposit includes an amount on account of a Utility Company that the Debtors subsequently determine should be removed from the Utility Services List, or an additional assurance request is properly served by a Utility Company and any settlement results in the Utility Company's removal from the Utility Services List, among other reasons. The Debtors estimate that the total amount of the Adequate Assurance Deposit will be approximately $1.14 million. The Debtors submit that the Adequate Assurance Deposit, together with the Debtors' ability to pay for future Utility Services in the ordinary course of business with their postpetition financing constitutes sufficient adequate assurance to the Utility Companies. If any Utility Company believes additional assurance is required, however, it may request that assurance. In light of the severe consequences to the Debtors of any interruption in services by the Utility Companies, but recognizing the right of each Utility Company to evaluate the Proposed Adequate Assurance on a case-by-case basis, the Debtors propose that the Court approve and adopt certain procedures for any Utility Company not satisfied with the Proposed Adequate Assurance to request additional adequate assurance. The Debtors propose that a Utility Company may file an Additional Assurance Request, which the parties may resolve by mutual agreement. If an Additional Assurance Request is not mutually resolved, the Debtors will file a motion seeking a hearing to determine the adequacy of assurance of payment with respect to the requesting Utility Company. Pending resolution of any Determination Motion, the Utility Company will be prohibited from altering, refusing or discontinuing service to the Debtors on account of unpaid charges for prepetition services, the filing of these cases, or any objections to the adequacy of the Proposed Adequate Assurance. The Debtors further propose that any Utility Company that objects to the Adequate Assurance Procedures must file a written objection and serve the Objection on certain notice parties, which include the U.S. Trustee and the Lenders, by October 12, 2010. The hearing to consider the Motion is currently set for October 19, 2010. To the extent that the Debtors identify additional Utility Companies, the Debtors will promptly file amendments to the Utility Services List and will serve copies of the Motion and the Proposed Order on newly identified Utility Companies. In addition to securing Utility Services for Blockbuster's stores, distribution centers, and corporate headquarters directly from the Utility Companies, Blockbuster also obtains certain Utility Services pursuant to certain contracts with third party vendors, who purchase the underlying commodity for Blockbuster at a contractual rate and arrange for the delivery of the commodity to Blockbuster's properties. The Debtors expect that certain of the Utility Vendors will assert that the Provision Contracts constitute "forward" and "commodity" contracts and, as a result, attempt to terminate the Provision Contracts without notice to the Court on the basis of their purported exemption from the provisions of the automatic stay. Although the Debtors are not asserting a position with respect to whether the Provision Contracts are entitled to that extraordinary status, the Debtors submit that the continuous provision of Utility Services pursuant to the Provision Contracts is essential to Blockbuster's reorganization under Chapter 11, especially where over 175 of its stores are covered by those Provision Contracts. To avoid immediate and irreparable harm to the estates, the Debtors propose to provide each accepting Utility Vendor with a cash deposit in an amount equal to the average monthly spend under the Accepting Utility Vendor's Provision Contract, on the condition that the Commodity Deposit be applied solely against any amounts accrued and outstanding on a postpetition basis. In exchange for the Commodity Deposit, the Accepting Utility Vendor will be deemed to have agreed to forbear from exercising its termination rights, if any, for a period equal to the shorter of (i) entry of an order approving the Debtors' assumption and rejection of the Provision Contract pursuant to Section 365 of the Bankruptcy Code, or (ii) 90 days from the Petition Date, provided that in no event will acceptance of the proposed deposit be deemed a waiver and admission of the Accepting Utility Vendor's status as either a "forward merchant" or "utility provider" as the terms are defined in the Bankruptcy Code. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (Pink Sheets: BLOKA, BLOKB) -- http://www.blockbuster.com/-- is a global provider of rental and retail movie and game entertainment. It has a library of more than 125,000 movie and game titles. Blockbuster said it had assets of $1,017,035,832 and debts of $1,464,939,759 as of August 1, 2010. Blockbuster Inc. and 12 U.S. affiliates initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan on September 23, 2010 (Bankr. S.D.N.Y. Case No. 10-14997). Martin A Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. A steering group of senior secured noteholders is represented by James P. Seery, Esq., and Paul S. Caruso, Esq., at Sidley Austin LLP. U.S. Bank National Association as trustee and collateral agent for the senior secured notes is represented by David McCarty, Esq., and Kyle Mathews, Esq., at Sheppard Mullin Richter & Hampton LLP. BDO Consulting is the financial advisor for U.S. Bank. Lenders led by Wilmington Trust FSB are providing the DIP financing. The DIP Agent is represented by Peter Neckles, Esq. and Alexandra Margolis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings. Bankruptcy Creditors' Service, Inc., publishes BLOCKBUSTER BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Blockbuster Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) BLOCKBUSTER INC: U.S. Trustee Forms Unsecured Creditors Committee ----------------------------------------------------------------- Tracy Hope Davis, the U.S. Trustee for Region 2, appoints nine members to the Official Committee of Unsecured Creditors in the Chapter 11 cases of Blockbuster Inc., and its debtor affiliates: 1. The Bank of New York Mellon Trust Company, N.A. 101 Barclay Street - 8 West New York, New York 10286 Attention: Stuart Rothenberg, Vice President Telephone: (212) 298-1977 Fax: (212) 667-9465 2. Scott Siegel 1 Granada Lane Atlantic Beach, New York 11509 3. David A. Segal 3523 McKinney Avenue #611 Dallas, Texas 75204 4. Universal Studios Home Entertainment LLC 100 Universal City Plaza 1440 - 6th Floor Universal City, California 91608 Attention: John Roussey, Vice President - Credit Telephone: (818) 777-7601 Fax: (818) 866-2314 5. Integrated Process Technologies a/k/a FM Facility Maintenance 10 Columbus Blvd. - 4th Floor Hartford, Connecticut 06106 Attention: James Reavey, President/CEO Telephone: (860) 466-7404 Fax: (860) 466-7418 6. AT&T Services, Inc. One AT&T Way - Room 3A218 Bedminster, New Jersey 07921 Attention: James W. Grudus, General Attorney Telephone: (908) 234-3318 Fax: (832) 213-0157 7. Weingarten Realty 2600 Citadel Plaza Drive - Suite 125 Houston, Texas 77008 Attention: Jenny J. Hyun, Vice President/Associate General Counsel Telephone: (713) 866-6057 Fax: (713) 880-6146 8. Developers Diversified Realty Corp. 3300 Enterprise Parkway Beachwood, Ohio 44122 Attention: Eric C. Cotton, Associate General Counsel Telephone: (216) 755-5500 Fax: (216) 755-1615 9. Centro Properties Group 420 Lexington Avenue New York, New York 10170 Attention: Michael Moss - Executive Vice President Telephone: (212) 869-3000 Fax: (212) 302-4776 The Bank of New York Mellon, Universal Studios Home Entertainment, Integrated Process Technologies, AT&T, and Developers Diversified are among Blockbusters' 50 largest unsecured creditors, holding these claims: The Bank of New York Mellon $315,121,589 Universal Studios 8,286,890 Integrated Process 1,987,339 AT&T 2,732,933 Developers Diversified 1,245,523 About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (Pink Sheets: BLOKA, BLOKB) -- http://www.blockbuster.com/-- is a global provider of rental and retail movie and game entertainment. It has a library of more than 125,000 movie and game titles. Blockbuster said it had assets of $1,017,035,832 and debts of $1,464,939,759 as of August 1, 2010. Blockbuster Inc. and 12 U.S. affiliates initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan on September 23, 2010 (Bankr. S.D.N.Y. Case No. 10-14997). Martin A Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. A steering group of senior secured noteholders is represented by James P. Seery, Esq., and Paul S. Caruso, Esq., at Sidley Austin LLP. U.S. Bank National Association as trustee and collateral agent for the senior secured notes is represented by David McCarty, Esq., and Kyle Mathews, Esq., at Sheppard Mullin Richter & Hampton LLP. BDO Consulting is the financial advisor for U.S. Bank. Lenders led by Wilmington Trust FSB are providing the DIP financing. The DIP Agent is represented by Peter Neckles, Esq. and Alexandra Margolis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings. Bankruptcy Creditors' Service, Inc., publishes BLOCKBUSTER BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Blockbuster Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) BLUEEGREEN CORP: Has $75MM Timeshare Facility with Liberty, et al ----------------------------------------------------------------- Bluegreen Corporation said it has an existing $75.0 million timeshare receivables hypothecation facility with a syndicate of lenders led by Liberty Bank. The revolving advance period under this facility ended on August 27, 2010. On September 27, 2010, Liberty amended this facility to extend the revolving advance period of the facility to November 26, 2010. Additionally, through November 26, 2010, the interest rate on amounts outstanding under the facility will increase from one- month LIBOR plus 2.5%, subject to a floor of 5.75% to the Prime Rate plus 2.25%, subject to a floor of 6.5%. The Company said, "We are currently in discussions with Liberty regarding the extension of the advance period under this facility for an additional two years but there is no assurance that such extension will be obtained on favorable terms, if at all. If the advance period is not further extended by November 26, 2010, the interest rate charged on outstanding amounts will revert back to one-month LIBOR plus 2.5%, subject to a floor of 5.75%." Bluegreen Corporation -- http://www.bluegreencorp.com/-- is a provider of places to live and play through its resorts and residential community businesses. The company is organized into two divisions: Bluegreen Resorts and Bluegreen Communities. Bluegreen Resorts acquires, develops and markets vacation ownership interests (VOIs) in resorts located in drive-to vacation destinations and provides various services to third- party resort owners. Bluegreen Communities acquires, develops and subdivides property and markets residential land homesites, which are sold directly to retail customers who seek to build a home in a residential setting, in some cases on properties featuring a golf course and related amenities, and also offers real estate consulting and other services to third parties. It also generates income from its resort management business and through interest income earned from the financing of individual purchasers of VOIs, and homesites sold by Bluegreen Communities. Bluegreen Corp. has a 'CCC' corporate credit rating, with positive outlook, from Standard & Poor's Ratings Services. BOSQUE POWER: Bank Debt Trades at 30% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Bosque Power Company LLC is a borrower traded in the secondary market at 69.50 cents-on-the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.90 percentage points from the previous week, The Journal relates. The Company pays 525 basis points above LIBOR to borrow under the facility, which matures on December 22, 2014. Moody's has withdrawn its rating while Standard & Poor's does not rate the bank loan. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Laguna Park, Texas-based Bosque Power Company, LLC, owns and operates an 800-megawatt natural gas fired power plant. The power-generating facility located in Laguna Park, commenced operations as a natural-gas power plant in 2000. Bosque Power Partners owns 100% of the membership interest in Bosque Power. Bosque Power filed for Chapter 11 protection on March 24, 2010 (Bankr. W.D. Tex. Case No. 10-60348). Henry J. Kaim, Esq., at King & Spalding LLP, serves as bankruptcy counsel to the Debtor. The Debtor also tapped Morgan, Lewis & Bockius LLP as special corporate counsel; Greenhill & Co. LLC as financial advisor; and Kurtzman Carson Consultants LLC as claims agent. In its petition, the Debtor estimated assets and debts both ranging from $100 million to $500 million. BROOKSTONE COMPANY: 90.74% of 2012 Notes Tendered by October 1 -------------------------------------------------------------- Brookstone Company, Inc., said $154,263,000 principal amount of its 12% Second Lien Senior Secured Notes due 2012 had been tendered by 5:00 p.m. New York City time on October 1, 2010, in response to Brookstone's offer to purchase 2012 Notes for cash (subject to possible proration) or acquire them in exchange for new 13% Second Lien Senior Secured Notes due 2014. That is 90.74% of all of the outstanding 2012 Notes. Brookstone's offer will not expire until October 18, 2010 (or a later date if it is extended). However, the time for tendering holders to elect to receive cash expired at 5:00 p.m., New York City time on October 1. All holders who tender 2012 Notes after that time will receive their consideration solely in the form of 2014 Notes, at the rate of $900 principal amount of 2014 Notes per $1,000 principal amount of 2012 Notes. Also, the right of tendering holders to withdraw tenders expires at that time. One of the conditions to Brookstone's obligation to acquire 2012 Notes that are tendered in response to its offer is that at least 95% in principal amount of 2012 Notes be tendered. Tenders of an additional $7,237,000 of 2012 Notes before the offer expires would cause the 95% minimum tender condition to be met. Even if the condition is not satisfied by tenders between October 1 and the October 18 expiration of the offer, Brookstone has the right to waive the condition with the consent of holders of 66-2/3% of the 2012 Notes that were tendered by 5:00 p.m. on October 1. Tenders of 2012 Notes are automatically accompanied by consents to amend the Indenture that governs the 2012 Notes to remove all the covenants and events of default, other than those relating to the obligation to pay principal and interest when it is due, and to release the collateral for the 2012 Notes, which is substantially all the assets of Brookstone and its subsidiaries. If Brookstone acquires the tendered 2012 Notes, those assets will become collateral for the 2014 Notes. The consents that were received by October 1, 2010 are sufficient to enable Brookstone to amend the Indenture whenever Brookstone agrees to accept all the 2012 Notes that are validly tendered and not withdrawn and Brookstone waives all the conditions to its obligation to do that (including the condition that 95% in principal amount be tendered). As reported by the Troubled Company Reporter on June 14, 2010, Standard & Poor's Ratings Services lowered its unsolicited corporate credit rating on Brookstone Co. Inc. to 'CC' from 'CCC'. At the same time, S&P lowered its unsolicited issue-level rating on Brookstone Co. Inc.'s outstanding $170 million of 12% second- lien notes due 2012 to 'C' from 'CCC-'. The recovery rating on this debt remains '5'. The outlook is negative. The downgrades follow Brookstone's announcement that its wholly owned subsidiary, Brookstone Co. Inc., has commenced an offer to acquire its outstanding 12% second-lien notes due 2012 held by investors. The tendering holder can elect to either receive $800 million principal amount of new 12% second-lien notes due 2017 or $800 in cash for each $1,000 principal amount of 2012 notes. Brookstone will pay accrued interest on issued exchange notes from April 16 (the last interest payment date) and will pay 80% of accrued interest from that date for 2012 notes tendered for cash. The deal is conditioned on participation by two-thirds in principal amount of the outstanding issue. The deadline to exchange is June 18, 2010. S&P said the company's stockholders are contributing cash to buyback the 2012 notes, which is expected to be $13.33-$20 million range. If the total cash tenders exceed this amount, the cash portion will be prorated with the balance distributed in new exchange notes. A tendered 2012 note holder is expected to also deliver a consent to release the collateral securing the notes, which will then back the new 2017 notes, and eliminate covenants and some events of default. Approval of the release of the collateral requires consent of two-thirds by principal amount of the existing issue. If Brookstone were to complete an exchange offer, S&P would lower the corporate credit rating to 'SD' (selective default) and lower the existing exchanged issue-level ratings to 'D'. S&P would then assign a new corporate credit rating to Brookstone based on its assessment of its new capital structure and liquidity profile, while taking into account its business prospects and other relevant rating considerations. Based in Merrimack, New Hampshire, Brookstone is a nationwide specialty retailer offering an assortment of consumer products that are functional in purpose, distinctive in quality and design and not widely available from other retailers. BTA BANK: Permanent Injunction Hearing Set for Oct. 26 ------------------------------------------------------ The Honorable James M. Peck will hold a hearing in Manhattan at 10:00 a.m. on Oct. 26, 2010, to review a motion by Anvar Galimullaevich Saidenov, the Chairman of the Management Board and Foreign Representative of BTA Bank, for permanent injunctive relief in support of a court-approved and creditor-endorsed restructuring plan pursuant to 11 U.S.C. Secs. 105(a), 350, 1507(a), 1509(b)(2)-(3), 1517(d) and 1521(a). About BTA Bank BTA Bank AO (BTA Bank JSC), formerly Bank TuranAlem AO -- http://bta.kz/-- is a Kazakhstan-based financial institution, which is involved in the provision of banking and financial products for private and corporate clients. The BTA Group is one of the leading banking groups in the Commonwealth of Independent States and has affiliated banks in Russia, Ukraine, Belarus, Georgia, Armenia, Kyrgyzstan and Turkey. In addition, the Bank maintains representative offices in Russia, Ukraine, China, the United Arab Emirates and the United Kingdom. The Bank has no branch or agency in the United States, and its primary assets in the United States consist of balances in accounts with correspondent banks in New York City. As of November 30, 2009, the Bank employed 5,043 people inside and 4 people outside Kazakhstan. It has no employees in the United States. Most of the Bank's assets, and nearly all its tangible assets, are located in Kazakhstan. JSC BTA Bank, also known as BTA Bank of Kazakhstan, commenced insolvency proceedings in the Specialized Financial Court of Almaty City, Republic of Kazakhstan. Anvar Galimullaevich Saidenov, the Chairman of the Management Board of BTA Bank, then filed a Chapter 15 petition (Bankr. S.D.N.Y. Case No. 10-10638) on Feb. 4, 2010, estimating more than US$1 billion in assets and debts. On March 9, 2010, the Troubled Company Reporter-Europe reported that JSC BTA Bank was granted relief in the U.S. under Chapter 15 when the bankruptcy judge in New York recognized the Kazakh proceeding as the "foreign main proceeding." Consequently, creditor actions in the U.S. were permanently halted, forcing creditors to prosecute their claims and receive distributions in Kazakhstan. In the U.S., the Foreign Representative is represented by Evan C. Hollander, Esq., Douglas P. Baumstein, Esq., and Richard A. Graham, Esq. -- rgraham@whitecase.com -- at White & Case LLP in New York City. Bloomberg News reports that the Specialized Financial Court of Almaty approved BTA Bank's debt restructuring on Aug. 31, 2010, trimming its obligations from $16.7 billion to $4.2 billion, and extending its longest maturity dates to 20 year from eight. Creditors who hold 92 percent of BTA's debt approved the restructuring plan in May. BTA reportedly distributed $945 million in cash to creditors and new debt securities including $5.2 billion of recovery units (representing an 18.5% equity stake) and $2.3 billion of senior notes on Sept. 1, 2010. BTA forecasts profit of slightly more than $100 million in 2011, Chief Executive Officer Anvar Saidenov told reporters in Almaty. CATHOLIC CHURCH: Wilmington Diocese Files Plan of Reorganization ---------------------------------------------------------------- The Catholic Diocese of Wilmington, Inc., delivered to Judge Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware its Chapter 11 Plan of Reorganization on September 22, 2010. Bishop W. Francis Malooly signed the Plan, a copy of which is available for free at: http://bankrupt.com/misc/Church_W_Plan_09222010.pdf No accompanying disclosure statement was filed and no hearing was set for the approval of a disclosure statement. The Plan provides for a Pro Rata Distribution of Allowed Class 3A Personal Injury Tort Claims from the Personal Injury Tort Claims Payment Account. On the Plan's effective date, a Plan Trust will be created and a Plan Oversight Committee will be established. The Plan Oversight Committee will consist of two members of the Official Committee of Unsecured Creditors, two members of the Lay Employees Committee, and one Non-Diocese Pooled Investor, all to be chosen by the Bankruptcy Court at the Confirmation Hearing. The Plan also provides for alternative dispute resolution procedures, or ADR, and lists certain voluntary undertakings by the Diocese and the bishop. Liquidation and Allowance of Personal Injury Tort Claims Each holder of a Class 3A Personal Injury Tort Claim may elect on his or her Ballot to be treated as a holder of: (a) an ADR Personal Injury Tort Claim, allowance and liquidation of which will be governed by the Personal Injury Tort ADR Process; (b) a Litigation Personal Injury Tort Claim, allowance and liquidation of which will be governed by the Personal Injury Tort Litigation Process; or (c) a Convenience Personal Injury Tort Claim, allowance and liquidation of which will be governed by the terms of the Plan. Each Convenience Personal Injury Tort Claim will be Allowed for $75,000 for Claims against Diocesan priests or employees, or $25,000 for Claims against Religious Order priests, if the Special Arbitrator determines that the sworn statement, along with the Proof of Claim filed by the holder of the Claim, establish a prima facie case that the holder suffered sexual abuse for which the Debtor or a Non-Debtor Catholic Entity could be held civilly liable under applicable nonbankruptcy law. Within 10 days after Allowance of a Convenience Personal Injury Tort Claim, the holder of the Claim will receive a distribution from the Personal Injury Tort Claims Payment Account equal to 50% of the Allowed amount of his or her Class 3A Claim. Any distribution made pursuant to the Plan will be final and indefeasible, and will not be subject to reduction or disgorgement in the event the percentage distribution on other Allowed 3A Claims is less than 50%. After (i) every Class 3A Claim has been Allowed or Disallowed, and (ii) all fees and expenses payable from the Personal Injury Tort Claims Payment Account have been paid, each holder of an Allowed Class 3A Claim will receive a Pro Rata Distribution on the Claim from the Personal Injury Tort Claims Payment Account in full satisfaction of his or her Class 3A Claim, provided that the amount of Distribution to any holder of a Convenience Personal Injury Tort Claim will be reduced by the amount of the Distribution made under the Convenience Treatment of the Claim. The Plan Trust will assume all liabilities, and succeed to all rights and defenses, of the Diocese and the Third-Party Releasees with respect to Personal Injury Tort Claims arising from or relating to any sexual abuse that occurred prior to the Confirmation Date. To the extent not previously removed pursuant to Rule 9001 of the Federal Rules of Bankruptcy Procedure and Section 1452 of the Judicial and Judiciary Procedures Code, all cases pending in the Superior Court in which Personal Injury Tort Claims and Third- Party Indemnity Claims are asserted will be removed to the District Court for estimation and liquidation of Personal Injury Tort Claims under the Personal Injury Tort ADR Process or the Personal Injury Tort Litigation Process, as applicable. After the Confirmation Date, the Diocese will file a motion in the District Court pursuant to Section 502(c)(1) of the Bankruptcy Code to estimate for distribution purposes the aggregate Allowed amount of all Personal Injury Tort Claims. Personal Injury Tort ADR Process After consultation with the Creditors Committee, the Diocese will identify a disinterested person to serve as special arbitrator, and propose binding arbitration procedures, subject to approval by the Bankruptcy Court at the Confirmation Hearing, by which the Special Arbitrator will determine the Allowed amount of any ADR Personal Injury Tort Claims. Bishop Malooly says that the identity of the Special Arbitrator and the Arbitration Procedures will be set forth in a Supplemental Plan Document. At a minimum, the Arbitration Procedures will require, as a prerequisite to commencement of the arbitration, that the claimant will have tendered to the Plan Trust a sworn statement, along with demand as to the Allowed amount of the claimant's Personal Injury Tort Claim. The Plan Trust may either accept the demand or make a counter-demand. In the event the matter proceeds to arbitration, the Arbitration Procedures will require the claimant to establish, by a preponderance of the evidence, (i) the occurrence of sexual abuse for which the Diocese or a Non-Diocese Catholic Entity may be held civilly liable for damages under applicable nonbankruptcy law, and (ii) the amount of compensatory damages to which the claimant is entitled under applicable nonbankruptcy law, provided that nothing in the Arbitration Procedures will preclude the Plan Trust from stipulating to liability and proceeding with arbitration solely as to the amount of compensatory damages, if deemed appropriate by the Plan Trustee in his or her sole discretion. Personal Injury Tort Litigation Process Pursuant to Rule 9019-3 of the Local Rules of the United States Bankruptcy Court for the District of Delaware, the Bankruptcy Court will refer all Litigation Personal Injury Tort Claims to mediation before a disinterested person identified by the Diocese in consultation with the Creditors Committee not later than 21 days prior to the Voting Deadline and subject to approval at the Confirmation Hearing. The identity of the Special Mediator will be set forth in a Supplemental Plan Document. Should the Plan Trust and the holder of a Litigation Personal Injury Tort Claim be unable to reach agreement as to the Allowed amount of the claim via mediation, the claimant may elect (i) to submit to binding arbitration before the Special Arbitrator, which election will be irrevocable, or (ii) to proceed with litigation against the Plan Trust in the District Court, which election will be revocable. Effect of No Election Each holder of a Class 3A Claim, who does not elect on his or her Ballot to be treated as a holder of (i) an ADR Personal Injury Tort Claim, (ii) a Litigation Personal Injury Tort Claim, or (iii) a Convenience Personal Injury Tort Claim by making an election on the holder's Ballot will be deemed to have elected treatment as a holder of a Convenience Personal Injury Tort Claim, which election will be irrevocable. Civil Complaint by Personal Injury Litigation Tort Claimant If a holder of a Personal Injury Litigation Tort Claim has not filed a civil complaint alleging the Claim in the Superior Court or District Court before making an election to be treated as a holder of a Personal Injury Litigation Tort Claim, the holder must file in the District Court and serve on the Plan Trustee a petition within 60 days after the Effective Date. If a holder of a Personal Injury Litigation Tort Claim does not file and serve the complaint, the holder will be deemed to have elected treatment as a holder of a Convenience Personal Injury Tort Claim, which election will be irrevocable. Nothing in the Plan will preclude the holder of a Personal Injury Tort Claim and the Diocese or the Plan Trust from stipulating to the Allowed amount of a Class 3A Claim as otherwise permitted by the Bankruptcy Code and Bankruptcy Rules, Bishop Malooly clarifies. Settlement With Non-Diocese Catholic Entities Within 30 days after the Effective Date, the Non-Diocese Catholic Entities will contribute to the Plan Trust Cash or other property having a value not less than $1.461 million in the aggregate, in consideration for, and conditioned upon, two treatments: (1) Resolution of PIA Investment Claims; and (2) Release of Chapter 5 Actions against Non-Diocese Catholic Entities. The Confirmation Order will provide that the PIA Investment Claims of the Non-Diocese Pooled Investors will be Allowed in the amounts with respect to each of the Disputed Non-Diocese PIA Funds as set forth in the Plan, provided that to the extent any Disputed Non- Diocese PIA Funds are determined by a Final Order not to be Assets of the Estate, the PIA Investment Claims with respect to the Disputed Non-Diocese PIA Funds will be Disallowed. Effective upon receipt of the Diocese-Release Consideration by the Plan Trust, the Diocese, its representatives and its successors irrevocably and unconditionally will be deemed to have released, acquitted, and forever discharged each of the Diocese Releasees from any and all Chapter 5 Actions, which any Diocese Releasor has ever had against any Diocese Releasee or the property of any Diocese Releasee. Third-Party Release Consideration Within 30 days after the Effective Date, the Non-Diocese Catholic Entities will contribute to the Plan Trust Cash or other property having a value not less than $4.7 million in the aggregate, in consideration for, and conditioned upon, treatment as Third-Party Releasees under the Plan. As additional consideration for the treatment, the Non-Diocese Catholic Entities (i) will waive any and all Third-Party Indemnity Claims, (ii) consent to the compromise by the Plan Trust or the Reorganized Diocese of the Shared Insurance Policies, and (iii) contribute to the Plan Trust the rights under, or right to proceeds of, the Parish-Only Policies, all as will be set forth in the Confirmation Order. Vesting of Assets in the Plan Trust On the Effective Date, all Plan Trust Assets will vest in the Plan Trust, and the Diocese will be deemed for all purposes to have transferred legal and equitable title of all Plan Trust Assets to the Plan Trust for the benefit of the holders of Claims against its Estate, whether or not the Claims are Allowed Claims as of the Effective Date. The holders of Claims will be the sole beneficiaries of the Plan Trust. On the Effective Date, the Reorganized Diocese will take all actions reasonably necessary to transfer control of the Plan Trust Assets to the Plan Trust, provided that the Reorganized Diocese will administer the "IBNR Reserves" as set forth in the Plan. The IBNR Reserves consist of Plan Trust Assets in an amount necessary to adequately reserve for incurred-but-not-reported claims under the Diocese's self-insured lay and clergy health plans. Upon the transfer of control of Plan Trust Assets, the Reorganized Diocese will have no further interest in or with respect to the Plan Trust Assets or the Plan Trust. Pooled Investment Account To the extent that the PIA Custody Agreement between the Diocese and the Custodian dated as of July 23, 1999, is considered to be an Executory Contract, the Plan will constitute a motion to assume that Agreement and to assign it to the Reorganized Diocese. Unless otherwise determined by the Bankruptcy Court or agreed to by the parties prior to the Effective Date, no payments are required to cure any defaults of the Diocese existing as of the Confirmation Date with respect to the PIA Custody Agreement. To the extent that the Bankruptcy Court determines otherwise, the Diocese reserves the right to seek rejection of the PIA Custody Agreement or other available relief. The Reorganized Diocese will succeed to, and assume, all rights, responsibilities, and duties of the Diocese as trustee for the benefit of the Non-Diocese Pooled Investors under applicable bankruptcy law. The Confirmation Order will (i) identify all Disputed Non-Diocese PIA Funds as of the Confirmation Date, and (ii) provide that the Disputed Non-Diocese PIA Funds will be deemed to be held in custodia legis pending entry of a Final Order determining whether the funds constitute Unrestricted Assets of the Estate. After entry of an order estimating for distribution purposes the aggregate amount of Allowed Personal Injury Tort Claims, the Reorganized Diocese and the Plan Trustee will jointly direct the Custodian to liquidate and distribute, or distribute via in-kind or inter-custodial transfer, to the Non-Diocese Pooled Investor the Pro Rata share of Disputed Non-Diocese PIA Funds it would receive on account of its Allowed PIA Investment Claim if the Disputed Non-Diocese PIA Funds were determined by a Final Order to have been Unrestricted Assets of the Diocese's Estate. Distributions from the Disputed Non-Diocese PIA Funds other than as provided in the Plan will be subject to further Order of the Bankruptcy Court. Lay Pension Dispute Escrow The Confirmation Order will provide that the Lay Pension Fund will be deemed to be held in custodia legis subject to the provisions of the Plan. If the Lay Employee Committee will not have commenced an adversary proceeding for a declaration that the Lay Pension Fund is held in trust for the benefit of the Lay Pension Plan and is a Restricted Asset within 30 days after the Effective Date, the Reorganized Diocese will direct the Custodian to liquidate the Lay Pension Fund and contribute it to the Plan Trust on behalf of the Diocese. Upon entry of a Final Order determining the Lay Pension Fund to be an Unrestricted Asset of the Estate, the Reorganized Diocese will direct the Custodian to liquidate and distribute, or distribute via in-kind or inter-custodial transfer, the Lay Pension Fund to the Plan Trust on behalf of the Diocese. If otherwise, the Reorganized Diocese will direct the Custodian to liquidate and distribute, or distribute via in-kind or inter-custodial transfer, the Lay Pension Fund to the Lay Pension Plan Trust on behalf of the Diocese. Voluntary Undertakings (a) Pursuant to Section 524(c) of the Bankruptcy Code, the Reorganized Diocese will reaffirm the Diocese's obligations under the Lay Pension Plan to the extent set forth in the Lay Pension Plan Reaffirmation Agreement to be filed by the Diocese as a Supplemental Plan Document; (b) The Reorganized Diocese will establish and manage a charitable trust fund to provide medical, psychological, educational or other material assistance to Survivors and their families, as determined by the Bishop in his discretion. The fund will be capitalized initially with the Bishop's Discretionary Fund, and thereafter will be funded with the proceeds of any gifts and donations to the Reorganized Diocese for the benefit of Survivors; (c) To further promote healing and reconciliation and to continue efforts to prevent sexual abuse from occurring in the future, the Reorganized Diocese will establish and maintain for five years a document depository that will contain all non-privileged documents in its possession related to sexual abuse by, and supervision of, abusive clergy, and religious and lay employees. The depository will be open to the general public on Tuesday of each week, except during the weeks before and after Easter, Christmas, and New Year's Day, from 10:00 a.m. until 4:00 p.m.; (d) Within a reasonable time after the Allowance of any Personal Injury Tort Claim pertaining to sexual abuse by a Diocesan priest or lay employee, the Bishop will send a letter of apology to the Survivor stating that he or she was not at fault for the abuse and that the Diocese takes responsibility for the abuse; (e) The Reorganized Diocese will continue to comply in all respects with the Charter for the Protection of Children and Young People, and the For the Sake of God's Children program adopted by the Diocese in 2003. The Reorganized Diocese will publish on the Diocese's Web page, http://www.cdow.org,the results of the annual audit conducted pursuant to the Charter for the Protection of Young People; and (f) The Bishop will continue the current policy of releasing Survivors from any confidentiality provisions in settlement agreements, which they may have signed as a condition to the settlements in the past, and will continue the current policy of forbidding confidentiality provisions in any settlement agreement related to sexual abuse except at the written request of the Survivor. The Reorganized Diocese will attempt to contact counsel for all Survivors, who entered into confidentiality agreements to inform them that they are not bound by those agreements. In addition, the Reorganized Diocese agrees that all confidentiality agreements involving Survivors are terminated and that the identities of priests or lay persons named in settlement agreements containing confidentiality provisions may be made public. The Reorganized Diocese will not release or reveal any Survivor's identity without his or her permission. Conditions Precedent to Effective Date This Plan will not become effective unless and until each of these conditions will have been satisfied in full: (a) Approval of Disclosure Statement; (b) Approval of Plan Compromises; (c) The Confirmation Order will be in form and substance acceptable to the Diocese in its sole and absolute discretion; (d) Entry of Confirmation Order, and no request for revocation of the Confirmation Order under Section 1144 of the Bankruptcy Code will have been made, or, if made, will remain pending; (e) The Plan Trust will have been formed and funded with all Plan Trust Assets consisting of Cash, other than the IBNR Reserves, and all formation documents for the entity will have been properly executed and filed; (f) The appointment of the Plan Trustee will have been confirmed by Order of the Bankruptcy Court; and (g) The Diocese will have filed motions to estimate the aggregate Allowed amount of all Lay Pension Claims and all Personal Injury Tort Claims. Other Provisions On the Effective Date, the Official Committees will dissolve automatically. Nothing in the Plan will impair, affect or release the rights of any Non-Settling Insurer with respect to any Personal Injury Tort Claims, including all Insurance Company Defenses. The Diocese will, as the Reorganized Diocese, continue to exist after the Effective Date as a separate entity in accordance with the applicable laws of the state of Delaware, with all the powers of a not-for-profit, non-stock member corporation having tax- exempt status. The identities and affiliations of the persons proposed to serve as officers of the Reorganized Diocese will be set forth in a Supplemental Plan Document. The Confirmation Order will refer all disputes regarding the Reorganized Diocese's or the Bishop's compliance with the Voluntary Undertakings to mediation before the Special Mediator as a prerequisite to adjudication in the Bankruptcy Court. Treatment of Claims The Catholic Diocese of Wilmington, Inc.'s Chapter 11 Plan of Reorganization provides for these classification and treatment of claims: Class Description Treatment ----- ----------- --------- N/A Administrative Each holder of an Allowed Claims Administrative Claim will receive Cash equal to the Allowed amount of the Claim, unless the holder agrees or will have agreed to other treatment of the Claim no less favorable to the Diocese. N/A Statutory Fees All statutory fees due and payable, and not paid prior to the Effective Date will be paid in Cash as soon as practicable after the Effective Date. N/A Priority Tax With respect to each Allowed Claims Priority Tax Claim not paid prior to the Effective Date, the Plan Trust will pay the Claim in Cash as soon as practicable, or provide other treatment agreed to by the holder of the Claim and the Diocese, provided the treatment is no less favorable to the Diocese or the Plan Trust than the treatment set forth in the Plan. 1 Secured Claims With respect to each Allowed Class 1 Claim, the legal, equitable, and contractual rights to which the Allowed Claim entitles its holder will be reinstated in full on the Effective Date. 2 Priority Claims Unless the holder of an Allowed Class 2 Claim and the Diocese or the Plan Trustee agree to a different treatment, on the later of the Effective Date and the date a Class 2 Claim becomes an Allowed Claim, the Plan Trust will pay each Allowed Class 2 Claim in full, in Cash, without interest. 3A Personal Injury Class 3A Claims will be (i) Tort Claims estimated for distribution purposes, and (ii) liquidated and Allowed or Disallowed as Convenience Personal Injury Tort Claims, as ADR Personal Injury Tort Claims, or as Litigation Personal Injury Tort Claims, as applicable. 3B Lay Pension Each holder of an Allowed Class 3B Claims Claim will be entitled to a Pro Rata Distribution from the General Claims Payment Account in full satisfaction of the Claim, which distribution will be made to the Lay Pension Plan Trust on behalf of the holder. 3C Allied Irish The Diocese is in advanced Bank Claim negotiations with the holder of the Class 3C Claim regarding the Plan's treatment of its Claim and, in the interest of not upsetting those negotiations, declines to propose treatment at this time. The Diocese will amend the Plan at a later date to include the treatment of the Class 3C Claim. 3D Clergy Pension The legal, equitable and Claims contractual rights to which each Class 3D Claim entitles its holder will be reinstated in full on the Effective Date, provided that the Clergy Pension Fund is determined to have been an Unrestricted Asset of the Diocese, then as soon as practicable thereafter, the Reorganized Diocese, will, among other things, direct the Custodian to liquidate the Clergy Pension Fund and contribute the proceeds to the Plan Trust on behalf of the Diocese. 3E Gift Annuity The legal, equitable and Claims contractual rights to which each Class 3E Claim entitles its holder will be reinstated in full on the Effective Date, provided that to the extent any Gift Annuity Fund is determined to have been an Unrestricted Asset of the Diocese, then as soon as practicable thereafter, , the Reorganized Diocese, will, among other things, direct the Custodian to liquidate the Gift Annuity Fund and contribute the proceeds to the Plan Trust on behalf of the Diocese. 3F Other Unsecured Class 3F consists of General Claims Unsecured Claims other than the Personal Injury Tort Claims, Lay Pension Claims, Allied Irish Bank Claim, Clergy Pension Claims, and Gift Annuity Claims. Each holder of an Allowed Class 3F Claim will receive a Pro Rata distribution from the General Claims Payment Account in full satisfaction, settlement, and release of, and in exchange for, its Class 3F Claim. 4 Penalty Claims Holders of Class 4 Claims will not receive or retain any property under the Plan on account of the Claims. Classes 1 and 2 are Unimpaired by the Plan and holders of Claims in these Classes are conclusively presumed to have accepted the Plan. Class 4 is Impaired by the Plan, but because holders of Claims in this Class will not retain or receive any property under the Plan on account of the Claims, the Class is conclusively presumed to have rejected the Plan. Classes 3A, 3B, 3C, 3D, 3E and 3F are, or may be, Impaired by the Plan, and holders of Claims in these Classes will be entitled to vote to accept or reject the Plan. Bishop Malooly's Statement The Most Rev. W. Francis Malooly, Bishop of the Catholic Diocese of Wilmington, has issued this letter to the parishioners of the Diocese on the filing of the Catholic Diocese of Wilmington, Inc. Plan of Reorganization: My Dear People: This week we reached an important milestone in the diocesan bankruptcy case. The Catholic Diocese of Wilmington, Inc., filed with the Bankruptcy Court a Plan of Reorganization that will provide fair compensation to survivors of sexual abuse by diocesan priests; will provide security for the beneficiaries of our pension plans; will compensate our financial and trade creditors; and will enable the Diocese to emerge from bankruptcy and continue its charitable, educational and spiritual missions, and the ministries associated with them. From our first day in Bankruptcy Court, the Diocese continually has reaffirmed its goal of reaching a consensual resolution of the claims of the survivors of clerical sex abuse. While the Plan is not supported by all creditors at this time, its filing comes after months of negotiations with the official creditor committees and other constituencies. Although it took much longer than we hoped to begin these negotiations, with the assistance of the Bankruptcy Court we entered mediation in June, under the supervision of Bankruptcy Judge Kevin Gross, and former Philadelphia Court of Common Pleas Judge Thomas Rutter, who mediated several of our cases before we filed bankruptcy. The mediation process involved the Diocese and its insurers, the Creditors Committee, the Lay Employees Committee, and certain religious orders and their insurers. I personally participated in all seven days of formal mediation over the past three months. Substantial progress was made in these negotiations, but we have not yet reached an agreement on a global settlement of all claims. A global settlement remains our goal, and negotiations with the Creditors Committee and other constituencies are ongoing. But we face certain deadlines in the bankruptcy process that require the Diocese to file its Plan of Reorganization, to set forth how the Diocese will compensate its creditors and emerge from bankruptcy. Under the Plan a trust will be created to hold assets and pay claims. All of the unrestricted assets of the Diocese, the value of its real estate, and its insurance will be contributed to the trust. Other Catholic entities will contribute assets to the trust, to resolve abuse claims against them, thereby increasing the funds available to compensate abuse survivors. The Plan establishes a process for liquidating and allowing the claims of abuse survivors, and other claimants, to determine the amount of their compensation. The survivors, pension plan beneficiaries, and all other claimants and creditors will share pro rata in the trust assets, ensuring that everyone is treated fairly. The funds of diocesan affiliates and parishes invested in the Pooled Investment Account may be included in the trust depending on the outcome of the appeal of the Bankruptcy Court ruling that these funds are property of the bankruptcy estate. If the appeals court upholds this ruling, then the affiliates and parishes that participate in the Pooled Investment Account still will be able to recover their pro rata share of the assets in the Plan trust. If the appeals court reverses the Bankruptcy Court ruling, then the affiliates and parishes will retain control of their funds in the Pooled Investment Account. The Plan of Reorganization will provide substantial additional funding for the pension obligations of the Diocese. Coupled with annual contributions by the Diocese to the pension plan, this additional funding will help ensure that the participants will receive the benefits to which they are entitled. The Plan Trust will be administered by a Trustee appointed by the Bankruptcy Court. A Plan Oversight Committee also will be appointed to advise the Trustee. The expenses of administering the Plan Trust, including any litigation costs, will be paid by the Trust. Finally, the Plan of Reorganization includes a number of voluntary undertakings by the Diocese, and by me. These non-monetary provisions are designed to further promote healing and reconciliation, and reaffirm the commitment of the Diocese to preventing sexual abuse. In addition to our continued compliance with the Charter for the Protection of Children & Young People adopted by the U.S. Conference of Catholic Bishops in 2002, and our vigilant implementation of the For the Sake of God's Children program established by the Diocese in 2003, the non-monetary provisions of the Plan include making publicly available documents in diocesan files related to sexual abuse by abusive clergy, religious and lay employees. Under the Bankruptcy Rules, the Plan could be confirmed by the Court in about three months, but we anticipate that court approval will not occur that quickly. In the meantime we will continue to work with the Creditors Committee and other constituencies on a parallel track, to try to achieve the global settlement that we strongly prefer. But if continued negotiations are unsuccessful, then the Plan of Reorganization filed this week will ensure fair treatment of all survivors of abuse, our pension plan beneficiaries, and all of our creditors, and allow the Diocese to emerge from bankruptcy. The Plan will enable the Diocese to fulfill its legal and moral obligations to survivors, while continuing our charitable, educational and spiritual ministries. There should be no tension between our obligation to compensate those who have suffered so grievously by priests in whom they placed their trust, and our duty to continue the works of the Church in this Diocese. Indeed, it is fundamental to the ministry of the Church to make reparations and otherwise see to the healing of survivors of abuse by our priests. The Plan of Reorganization filed this week will enable the Diocese both to fulfill its obligation to survivors of abuse, and to continue its other ministries. I ask for your continued support and prayers as we work to achieve these goals. Most Rev. W. Francis Malooly Bishop of Wilmington About the Diocese of Wilmington The Diocese of Wilmington covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. The Delaware diocese is the seventh Roman Catholic diocese to file for Chapter 11 protection to deal with lawsuits for sexual abuse. Previous filings were by the dioceses in Spokane, Washington; Portland, Oregon; Tucson, Arizona; Davenport, Iowa, Fairbanks, Alaska; and San Diego, California. The bankruptcy filing automatically stayed eight consecutive abuse trials scheduled in Delaware scheduled to begin October 19. There are 131 cases filed against the Diocese, with 30 scheduled for trial. The Diocese filed for Chapter 11 on Oct. 18, 2009 (Bankr. D. Del. Case No. 09-13560). Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Diocese. The Ramaekers Group, LLC is the financial advisor. The petition says assets range $50,000,001 to $100,000,000 while debts are between $100,000,001 to $500,000,000. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Wilmington Has Stay Extended for Parishes ---------------------------------------------------------- In connection with its recent filing of a plan of reorganization, the Catholic Diocese of Wilmington, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to renew the existing extension of the automatic stay to certain parishes to prevent the continued prosecution of pending actions arising under the Delaware Child Victim's Act of 2007, in which the Diocese and a Parish are co- defendants. The Diocese also seeks to extend the automatic stay to include certain pending cases brought pursuant to the CVA against a Parish in which the Debtor is not named as a defendant. The extended automatic stay expired on September 24, 2010. From the onset of the bankruptcy case, it has always been the Diocese's goal to provide an efficient and equitable way to liquidate all claims of abuse survivors and to provide a fair recovery for all creditors, James L. Patton, Jr., Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court. He argues that as of September 22, 2010, the Mediation has not produced the hoped for settlement of the claims against all parties. He points out that the Plan represents the most viable means for a fair and equitable global resolution of the parties' issues and allows for a successful restructuring of the Diocese. Accordingly, the Diocese asks the Court to renew the extension of the automatic stay to stay the Parish Co-Defendant Cases and the Parish Only Cases in their entirety until the earlier of the conclusion of the Plan confirmation hearing or six months from September 22, 2010, without prejudice to the Diocese's right to seek a further extension. Mr. Patton contends that the new extension will provide the Diocese with a meaningful opportunity to seek confirmation of the Plan, which provides for, among other things, the establishment of a trust that will assume all liabilities of the Diocese and the Non-Debtor Catholic Entities with respect to Personal Injury Tort Claims. Absent a renewal of the existing extension of the stay, the Parishes and necessarily the Diocese will find themselves embroiled once again in the more than 70 pending Parish Co- Defendant Cases and Parish Only Cases, Mr. Patton argues. He asserts that in participating in those cases, the Diocese will simultaneously be involved in extensive discovery in connection with Plan confirmation, further negotiations with the Official Committee of Unsecured Creditors and other constituencies, and preparations for the Confirmation Hearing. * * * Judge Christopher Sontchi again extended the automatic stay to the Parish Co-Defendant Cases and Parish Only Cases until the earlier of the conclusion of the Confirmation Hearing or December 31, 2010. Judge Sontchi clarified that the automatic stay does not apply as to the Non-Debtor Defendants in these cases pending in the Delaware Superior Court: * John Doe #2 (C.A. No. 08C-06-017 (JTV)); * John Doe #3 (C.A. No. 08C-06-033 (JTV)); * John Doe #4 (C.A. No. 08C-10-028 (JTV)); * Vai (C.A. No. 08C-06-044 (JTV)); * Schulte (C.A. No. 08C-07-017 (JTV)); * Sowden (C.A. No. 08C-06-054 (JTV)); * Flanigan (C.A. No. 08C-05-040 (JTV)); * Joseph Curry (C.A. No. 08C-08-043 (CLS)); * Lamb (C.A. No. 09C-06-187 (CLS)); or * Donahue (C.A. No. S08C-09-007 (THG)). The stay under Sections 105(a) and 362 will continue to apply to Mary Dougherty, whose case is captioned Mary Dougherty v. Catholic Diocese of Wilmington, Inc., and Holy Rosary Roman Catholic Church, C.A. No. 08C-08-026 (THG), provided that the parties may proceed with scheduling a trial and related dates. About the Diocese of Wilmington The Diocese of Wilmington covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. The Delaware diocese is the seventh Roman Catholic diocese to file for Chapter 11 protection to deal with lawsuits for sexual abuse. Previous filings were by the dioceses in Spokane, Washington; Portland, Oregon; Tucson, Arizona; Davenport, Iowa, Fairbanks, Alaska; and San Diego, California. The bankruptcy filing automatically stayed eight consecutive abuse trials scheduled in Delaware scheduled to begin October 19. There are 131 cases filed against the Diocese, with 30 scheduled for trial. The Diocese filed for Chapter 11 on Oct. 18, 2009 (Bankr. D. Del. Case No. 09-13560). Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Diocese. The Ramaekers Group, LLC, is the financial advisor. The petition says assets range $50,000,001 to $100,000,000 while debts are between $100,000,001 to $500,000,000. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CELL THERAPEUTICS: Reports $3.58 Million Net Loss for August ------------------------------------------------------------ Cell Therapeutics Inc. filed with the U.S. Securities and Exchange Commission a document containing financial information pursuant to a request from the Italian securities regulatory authority, CONSOB, pursuant to Article 114, Section 5 of the Unified Financial Act. The Company disclosed, among other things, that for the month ended August 31, 2010, it incurred a US$3,008,000 operating loss and a $3,302,000 negative EBITDA. Net loss attributable to common shareholders was $3,578,000. A full-text copy of the Monthly Information Report is available for free at http://ResearchArchives.com/t/s?6c06 Going Concern Doubt San Francisco-based Stonefield Josephson, Inc., has included an explanatory paragraph in their report on Cell Therapeutics, Inc.'s December 31, 2009, 2008 and 2007 consolidated financial statements regarding their substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has sustained loss from operations over the audit periods, incurred an accumulated deficit, and has substantial monetary liabilities in excess of monetary assets as of December 31, 2009. Bankruptcy Warning In its Form 10-Q report for the period ended June 30, 2010, the Company said it does not expect that existing cash and cash equivalents, including the cash received from the issuance of its Series 6 preferred stock and warrants, will be sufficient to fund presently anticipated operations beyond the fourth quarter of 2010. The Company has commenced cost saving initiatives to reduce operating expenses, including the reduction of employees related to planned commercial pixantrone operations and continues to seek additional areas for cost reductions. However, the Company said it will need to raise additional funds and is currently exploring alternative sources of equity or debt financing. The Company said it may seek to raise such capital through public or private equity financings, partnerships, joint ventures, disposition of assets, debt financings or restructurings, bank borrowings or other sources of financing. The Company called an annual meeting of shareholders to ask shareholders to approve proposals, including a proposal to increase authorized shares of common and preferred stock from 810,000,000 to 1,210,000,000 shares, in order to raise capital. "If we fail to obtain additional capital when needed, we may be required to delay, scale back, or eliminate some or all of our research and development programs and may be forced to cease operations, liquidate our assets and possibly seek bankruptcy protection," the Company said. CENTRAL FALLS, RI: Mayor Challenges Receiver in Court ----------------------------------------------------- Charles Moreau, the mayor of Central Falls, Rhode Island, and four city councilors have filed a lawsuit claiming a law that put the cash-strapped city under control of a state-appointed receiver is unconstitutional, The Associated Press reports. The report relates Mayor Moreau's suit said that the receiver's powers are "too broad, too sweeping and too excessive." According to the report, the suit claims the receivership law, passed in the final days of the legislative session, violates state constitutional protections against excessive state action and illegally changed the city's form of government. The report notes Mayor Moreau is seeking damages caused by a reduction in salary, benefits and injury to his reputation. AP notes that the defendants include Department of Revenue Director Rosemary Booth Gallogly and the receiver she appointed, retired Judge Mark Pfeiffer. A spokeswoman for Pfeiffer says the state is confident of the law's legality, the report adds. CHEM RX: Seeks to Sell Stake in Chicago Subsidiary for $2.5MM ------------------------------------------------------------- Chem RX Corp. is seeking approval to sell separately its stake in its Chicago subsidiary, Dow Jones' DBR Small Cap reports. According to the report, the long-term care pharmacy, which supplies drugs and medical equipment to nursing homes and correctional facilities in four states, said in court papers that it has a $2.5 million offer lined up for its 49.9% stake in Chem RX Chicago LLC from the unit's majority owner. Dow Jones relates Chem RX said the majority owner, New York Boys Management LLC, is the best possible buyer for the unit in part because its bid topped rival offers, including that of the lead bidder for the rest of Chem RX's assets. As a result, the report notes, Chem RX, whose subsidiary ChemRx Care LLC specifically holds the 49.9% stake in the Chicago unit, is urging the U.S. Bankruptcy Court in Wilmington, Del., to let it close the deal with New York Boys without subjecting it to an auction process. Chem RX Chicago isn't under bankruptcy protection. About Chem RX Corporation Long Beach, N.Y.-based Chem RX Corporation, aka Paramount Acquisition Corp. -- http://www.chemrx.net/-- is a major institutional pharmacy serving the New York City metropolitan area, as well as parts of New Jersey, upstate New York, Pennsylvania and Florida. Chem Rx's client base includes skilled nursing facilities and a wide range of other long-term care facilities. Chem Rx annually provides more than six million prescriptions to more than 69,000 residents of more than 400 institutional facilities. The Company and five affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 10-11567) on May 11, 2010. Dennis A. Meloro, Esq., and Scott D. Cousins, Esq., at Greenberg Traurig, LLP, represents the Company in its restructuring. Cypress Holdings, LLC, is the Company's financial advisor. RSR Consulting, LLC, is the Company's chief restructuring officer. Brunswick Group LLP is the Company's public relations consultant. Grant Thornton LLP is the Company's independent auditor. Lazard Middle Market LLC is the Company's investment banker. Eichen & Dimeglio PC is the Company's tax advisor. Kurtzman Carson Consultants is the Company's claims and notice agent. The Company disclosed $169,690,868 in assets and $178,281,128 in debts as of February 28, 2010. CHEMICAL BUILDING: Files for Bankruptcy to Halt Foreclosure ----------------------------------------------------------- Chemical Building Acquisition LLC sought Chapter 11 protection on September 28, 2010, in Santa Monica, Missouri (Bankr. E.D. Mo. Case No. 10-51171). The Debtor estimated assets of $1 million to $10 million and debts of $10 million to $50 million. stltoday.com reports that Chemical Building sought bankruptcy protection to block a foreclosure action of Centrue Bank. The Company owes $7.8 million to Centrue, and $351,625 to Southern Bank. A former owner who lent the company $2.2 million also is listed as a creditor. Among other larger claims is one by Rosemann & Associates, a Kansas City-based architecture firm, owed $317,631 for professional services. Chemical Building is an entity of Civitas Development, a partnership between Heisman Properties and Crossland Capital Development, the owner and developer on the Alexa building, in St. Louis, Missouri, according to Evan Binns at the St. Louis Business Journal. CHINA FRUITS: Posts $149,900 Net Loss in June 30 Quarter -------------------------------------------------------- China Fruits Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $149,876 on $147,951 of revenue for the three months ended June 30, 2010, compared with a net loss of $65,381 on $294,887 of revenue for the same period last year. As of June 30, 2010, the Company had an accumulated deficit of $1.4 million. Cash flows provided by operating activities were $26,893 during the six months ended June 30, 2010, compared to cash flows of $636,840 used in operating activities for the six months ended June 30, 2009. Positive cash flows from operations for the six months ended June 30, 2010, were due primarily to the decrease in accounts receivable in the amount of $358,603, plus the decrease in inventories and other assets by $60,024 and $7,083, respectively, partially offset by the net loss of $239,980 and the decrease in accounts payable and tax payable by $163,237 and $32,252, respectively. The Company's balance sheet as of June 30, 2010, showed $4.0 million in total assets, $1.7 million in total liabilities, and stockholders' equity of $2.3 million. As reported in the Troubled Company Reporter on April 21, 2010, Lake & Associates CPA's LLC, expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009. The independent auditors noted of the Company's accumulated deficit and negative cash flow from operations. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c10 About China Fruits Based in Jiang Xi Province, the People's Republic of China, China Fruits Corporation was incorporated in the State of Delaware on January 6, 1993, as Vaxcel, Inc. On December 19, 2000, the Company changed its name to eLocity Networks Corporation. On August 6, 2002, the Company changed its name to Diversified Financial Resources Corporation. In May 2006, the Company's board decided to redomicile from the State of Delaware to the State of Nevada. On August 18, 2006, the Company changed its name to China Fruits Corporation. The Company is principally engaged in manufacturing, trading and distributing fresh tangerine, non- alcoholic and alcoholic beverages in the People's Republic of China. CLAIM JUMPER: Black Canyon Improves Offer as Landry Joins Bidding ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Claim Jumper Restaurants LLC is hoping for a successful auction when the operation goes up for bid on Oct. 28. Mr. Rochelle relates that a mini-auction was held in bankruptcy court last week when the Debtor sought approval of sale procedures. The Company was proposing for the stalking horse at the auction to be a company formed by Black Canyon Capital LLC and Bruckmann Rosser Sherrill & Co. Inc. Black Canyon is an affiliate of the unsecured mezzanine lender. The Black Canyon group was initially offering $24.5 million cash, plus the assumption of up to $23.3 million in liabilities. In addition, the buyer would collateralize $5 million in existing letters of credit. Landry's Restaurants Inc., another restaurant operator, appeared at the hearing and raised the price while committing to bid without a breakup fee, Claim Jumper lawyer Robert Jay Moore said in an interview with Bloomberg. Landry's, based in Houston, ultimately raised the cash portion of its bid to $27.5 million. Black Canyon raised its cash offer to $27 million and likewise agreed to drop a breakup fee. The bankruptcy judge selected Black Canyon as the stalking horse. Competing bids are due Oct. 24. The hearing for approval of the sale will be Nov. 2. DIP Financing Mr. Rochelle relates that at a hearing on Oct. 6, Claim Jumper will face opposition from the Official Committee of Unsecured Creditors on its request for DIP financing. The Committee believes the Company doesn't need $5 million in secured financing. The Committee argues that the Company may never need the loan if the sale of the business is completed the week the bankruptcy court gives approval. Or, if there is a draw on the loan facility, the loan would be repaid at closing a few days later. The Committee, according to the report, contends the loan is designed to give liens to pre-bankruptcy lenders on assets that aren't already their collateral. The loan would also end up giving the lenders proceeds from assets that aren't currently their collateral, in the Committee's opinion. About Claim Jumper Irvine, California-based Claim Jumper Restaurants, LLC -- http://www.claimjumper.com/-- operates a chain of casual dining restaurants. It was founded in 1977. It has locations in Arizona, California, Colorado, Illinois, Nevada, Oregon, Washington, and Wisconsin. Claim Jumper filed for Chapter 11 bankruptcy protection on September 10, 2010 (Bankr. D. Del. Case No. 10-12819). The Debtor estimated its assets at $50 million to $100 million and debts at $100 million to $500 million as of the Petition Date. The Debtor's affiliate, Claim Jumper Management, LLC, filed a separate Chapter 11 petition (Bankr. D. Del. Case No. 10-12820). Curtis A. Hehn, Esq., James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the Debtors' local counsel. Milbank, Tweed, Hadley & Mccloy LLP is the Debtors' general bankruptcy counsel. Piper Jaffray & Co. is the Debtors' financial advisors and investment bankers. Kurtzman Carson Consultants LLC is the Debtors' notice, claims and solicitation agent. The Creditors Committee has selected the law firms of Cooley LLP and Klehr Harrison Harvey Branzburg LLP as counsel. CLAIRE'S STORES: Bank Debt Trades at 13% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Claire's Stores, Inc., is a borrower traded in the secondary market at 86.59 cents- on-the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.59 percentage points from the previous week, The Journal relates. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank loan matures on May 29, 2014, and carries Moody's Caa2 rating and Standard & Poor's B- rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Claire's Stores, Inc. -- http://www.clairestores.com/-- operates as a specialty retailer of fashion accessories and jewelry for preteens and teenagers, as well as for young adults in North America and internationally. It offers jewelry products that comprise costume jewelry, earrings, and ear piercing services; and accessories, including fashion accessories, hair ornaments, handbags, and novelty items. Based in Pembroke Pines, Florida, Claire's Stores operates under two brands: Claire's(R), which operates worldwide and Icing(R), which operates only in North America. As of January 31, 2009, Claire's Stores, Inc., operated 2,969 stores in North America and Europe. Claire's Stores, Inc., also operates through its subsidiary, Claire's Nippon, Co., Ltd., 213 stores in Japan as a 50:50 joint venture with AEON, Co., Ltd. The Company also franchises 198 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. The Company's balance sheet at July 31, 2010, showed $2.76 billion in total assets, $2.641 billion in total liabilities, and a stockholders' deficit of $62.33 million The Company incurred a net loss of $8.34 million in the three months ended July 31, 2010, compared with a net loss of $3.73 million in the three months ended August 1, 2009. CLEAR CHANNEL: Bank Debt Trades at 21% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Clear Channel Communications, Inc., is a borrower traded in the secondary market at 78.71 cents-on-the-dollar during the week ended October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 0.81 percentage points from the previous week, The Journal relates. The Company pays 365 basis points above LIBOR to borrow under the facility. The bank loan matures on Jan. 30, 2016, and carries Moody's Caa1 rating and Standard & Poor's CCC rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Clear Channel Communications, Inc. -- http://www.clearchannel.com/ -- is a diversified media company with three primary business segments: radio broadcasting, outdoor advertising and live entertainment. Clear Channel Communications is the operating subsidiary of San Antonio, Texas-based CC Media Holdings, Inc. Clear Channel carries a 'Caa2' corporate family rating from Moody's Investors Service. COAST CRANE: Proposes Clearlake-Led Auction for All Assets ---------------------------------------------------------- Coast Crane Company asks for authorization from the U.S. Bankruptcy Court for the Western District of Washington to sell assets, free and clear of liens to either Coast Rainier Acquisition Company or an alternate bidder. Coast Rainier is a company formed by Clearlake Capital Group, a private investment firm. Coast Crane has signed an Asset Purchase Agreement with Coast Ranier, who will be the "stalking horse" bidder at the auction. Coast Crane will sell the assets to the Clearlake entity absent higher and better offer for the assets. Interested parties must submit offers to the Debtor by 12:00 p.m. PDT on October 25, 2010. Bids must be equal to or greater than the value of the total purchase price offered by Clearlake including a cash portion of bid of not less than $31,260,000, plus additional cash consideration of at least $500,000. Each bid must be accompanied by a good-faith cash deposit in an amount equal to at least $7,500,000, to be deposited with Debtor on or before the alternative bid deadline. If no qualified alternative bid is submitted for the assets, the Debtor will request at the hearing that the Court approve the proposed sale of the assets to CRAC pursuant to a purchase agreement. If one or more qualified alternative bids are submitted for the assets, the Debtor will conduct an auction to consider overbids on November 3, 2010, at 11:00 a.m. PDT. CRAC will have the opportunity to increase its offer to a level at least $100,000 in excess of the highest qualified alternative bid to be eligible to become the starting bid at the auction, provided that any increase by CRAC will be in cash, and provided further that CRAC will be entitled to credit bid its Break-Up Fee and the pre-auction expense reimbursement amount against the purchase price reflected in the qualified alternative bid. The Debtor will evaluate all qualified bids received and will determine, with the agreement of the senior lenders (unless the amount of the qualified bid is in excess of the amount necessary to satisfy the obligations owed to the senior lenders in full, in which case, in consultation with the senior lenders), which qualified bid reflects the highest and best offer as the starting auction bid for the assets. The Debtor will announce its determination of the starting auction bid at the commencement of the auction. Qualified bidders will be bound by their bids until the earlier of (i) the time as a definitive sale agreement is executed by the prevailing bidder and the Court has entered an order approving the sale to the prevailing bidder, or (ii) November 22, 2010. The first incremental competitive bid at the auction will be at least $100,000 over the opening bid, and bidding and will continue in minimum increments of at least $100,000 higher than the previous bid. Any bid by CRAC will be subject to a credit in the amount of the break-up fee and the pre-auction expense reimbursement amount; provided that CRAC will remain entitled to recover the break-up fee and expense reimbursement in the event it is not the successful bidder at the auction. If the Court approves the sale of substantially all of the assets to a buyer other than CRAC, the Debtor will, upon the closing of the transaction, pay CRAC, in cash, a break-up fee of $1.5 million plus an expense reimbursement. Responses or objections to entry of the sale order must be filed with the Court by October 29, 2010. About Coast Crane Seattle, Washington-based Coast Crane Company leases, sells and services tower cranes, forklifts, hoists, elevators, boom lifts, scissor lifts and other heavy equipment used in commercial construction throughout the world. Coast Crane filed for Chapter 11 bankruptcy protection on September 22, 2010 (Bankr. W.D. Wash. Case No. 10-21229). Brian L. Lewis, Esq., David C. Neu, Esq., and Michael J. Gearin, Esq., at K&L Gates LLP, assist the Debtor in its restructuring effort. The Debtor estimated its assets at $50 million to $100 million and debts at $100 million to $500 million. T. Scott Aliva at CRG Partners Group LLC is the Debtor's chief restructuring officer. COAST CRANE: Gets Court's Interim Nod for $20MM in DIP Loans ------------------------------------------------------------ Coast Crane Company obtained interim authorization from the U.S. Bankruptcy Court for the Western District of Washington to access postpetition secured financing from lenders led by PNC Bank, National Association, and use cash collateral of its prepetition lenders. The DIP lenders have committed to provide up to $20 million. Michael J. Gearin, Esq., at K&L GATES, LLP, explained that the Debtor needs the money to continue operations pending the consummation of the sale of substantially all of the Debtors' assets to Coast Rainier Acquisition Company or its assigns. Loans will be Domestic Rate Loans. Effective on September 24, 2010, the Domestic Rate Loans will bear interest for each day at a rate per annum equal to the Alternate Base Rate plus 6% per annum. An Alternate Base Rate is a rate per annum equal to the highest of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on the day plus 0.50%, and (iii) the Daily Libor Rate plus 1.00%. The Base Rate is 3.25% and the interest rate on the DP facility is 9.25% as of the Petition Date. As security for the repayment of the postpetition indebtedness arising under the DIP facility documents, the Lender will be granted valid, binding, enforceable and fully perfected liens. It will prime and be senior in all respects to the prepetition liens, the replacement liens, and the junior prepetition liens. In exchange for the use of cash collateral, PNC Bank, as prepetition administrative and collateral agent, is granted valid, binding, enforceable and fully perfected replacement liens in the collateral. The Prepetition Agent is granted in each of the Debtor's case an allowed administrative claim. The Debtor will pay the Prepetition Agent from cash collateral or revolving credit advances amounts they accrue in connection with the prepetition indebtedness. In consideration for the use of Knott Partners, L.P.'s junior prepetition collateral and priming of the junior prepetition liens, the junior lender is granted valid, binding, enforceable and fully perfected replacement liens in the collateral. The junior lender is granted an allowed administrative claim. The Court has set a final hearing for October 22, 2010, at 11:00 a.m., on the Debtor's request to obtain DIP financing and use cash collateral. The Debtor must have bidding procedures in connection with a sale of substantially all of its assets approved by the Court by October 11, 2010. The Debtor must be able to hold a sale hearing by November 5, 2010. The DIP facility will terminate 60 days after the Petition Date, on the effective date of a reorganization plan, or on the effective date of the sale. The Debtor will pay the DIP Lender: (i) a closing fee in an amount of 2.00% of the DIP facility amount; and (ii) an exit fee in an amount equal to 0.50% of the combined amount of the prepetition indebtedness and the postpetition indebtedness at the date payment is due. By Tuesday of each week, the Debtor will provide the DIP Lender with a weekly updated cash budget report. On Wednesday of each week, the Debtor's chief financial officer will participate in a conference call with the DIP Lender to discuss the weekly budget report and any other issues that the DIP Lender wishes to discuss. General Electric Capital Corporation will act as co-collateral agent and documentation agent, and will perform duties assisting the DIP Lender with respect to the collateral and documentation relating to the Debtor, as DIP agent. More information is available for free at: http://bankrupt.com/misc/COAST_CRANE_dipfinancinginterimok.pdf About Coast Crane Seattle, Washington-based Coast Crane Company leases, sells and services tower cranes, forklifts, hoists, elevators, boom lifts, scissor lifts and other heavy equipment used in commercial construction throughout the world. Coast Crane filed for Chapter 11 bankruptcy protection on September 22, 2010 (Bankr. W.D. Wash. Case No. 10-21229). Brian L. Lewis, Esq., David C. Neu, Esq., and Michael J. Gearin, Esq., at K&L Gates LLP, serve as counsel to the Debtor. T. Scott Aliva at CRG Partners Group LLC is the Debtor's chief restructuring officer. The Debtor estimated its assets at $50 million to $100 million and debts at $100 million to $500 million. COAST CRANE: Gets Court's Nod to Hire T. Scott Avila as CRO ----------------------------------------------------------- Coast Crane Company sought and obtained authorization from the U.S. Bankruptcy Court for the Western District of Washington to employ CRG Partners Group LLC to provide restructuring services and T. Scott Avila as chief restructuring officer. CRG will, among other things: a. prepare and review possible reorganization plans and strategic alternatives for maximizing the debt repayment and enterprise value of the Debtor and the Debtor's business; b. serve as the principal contact with the Debtor's creditors with respect to the Debtor's financial, operational, and reorganization matters. The CRO will be authorized to directly communicate with parties in interest in the bankruptcy case; c. assist the Debtor in the preparation and management of a potential bankruptcy process; and d. perform other services in connection with the reorganization as may be reasonably necessary to advance the Debtor's reorganization efforts under Chapter 11. CRG will be paid based on the hourly rates of its personnel: T. Scott Avila $625 Jeff Nerland $525 To the best of the Debtor's knowledge, CRG is a "disinterested person," as that term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code. About Coast Crane Seattle, Washington-based Coast Crane Company leases, sells and services tower cranes, forklifts, hoists, elevators, boom lifts, scissor lifts and other heavy equipment used in commercial construction throughout the world. Coast Crane filed for Chapter 11 bankruptcy protection on September 22, 2010 (Bankr. W.D. Wash. Case No. 10-21229). Brian L. Lewis, Esq., David C. Neu, Esq., and Michael J. Gearin, Esq., at K&L Gates LLP, serve as counsel to the Debtor. The Debtor estimated its assets at $50 million to $100 million and debts at $100 million to $500 million. COAST CRANE: Proposes to Continue Wells Fargo Credit Card Pact -------------------------------------------------------------- Coast Crane Company asks for authorization from the Hon. Brian D. Lynch of the U.S. Bankruptcy Court for the Western District of Washington to continue to obtain postpetition credit. The Debtor is authorized to incur up to $50,000 of indebtedness and other obligations under the credit card agreement with Wells Fargo Bank, N.A. Under the agreement, Wells Fargo extended up to a $50,000 credit to the Debtor, on a pre-petition basis. The balance owed under the credit card line as of the Petition Date is $0. The Debtor's obligations under the credit card line are secured by a security interest in a money market account, account no. 4123xxxxxx maintained by the Debtor with Wells Fargo, which, under the terms of the agreement, must maintain a minimum balance equal to the credit card line. The current balance of the account is $49.814. To secure the obligations under the postpetition credit line, Wells Fargo is granted a blanket, first-priority, security interest in the account. The postpetition security interest will be deemed to secure only the obligations under the postpetition credit line. Michael J. Gearin, Esq., at K&L Gates LLP, explained that the Debtor needs the money to fund its Chapter 11 case, pay suppliers and other parties. About Coast Crane Seattle, Washington-based Coast Crane Company leases, sells and services tower cranes, forklifts, hoists, elevators, boom lifts, scissor lifts and other heavy equipment used in commercial construction throughout the world. Coast Crane filed for Chapter 11 bankruptcy protection on September 22, 2010 (Bankr. W.D. Wash. Case No. 10-21229). Brian L. Lewis, Esq., David C. Neu, Esq., and Michael J. Gearin, Esq., at K&L Gates LLP, serve as counsel to the Debtor. T. Scott Aliva at CRG Partners Group LLC is the Debtor's chief restructuring officer. The Debtor estimated its assets at $50 million to $100 million and debts at $100 million to $500 million. DAVITA INC: Moody's Assigns 'Ba2' Rating on Senior Secured Loan --------------------------------------------------------------- Moody's Investors Service assigned a Ba2 (LGD2, 29%) rating to DaVita Inc's. proposed senior secured credit facility, consisting of a $250 million revolver, a $1,000 million term loan A and a $1,750 million term loan B. Moody's also assigned a B2 (LGD5, 83%) to the proposed $1,450 million of senior unsecured notes. Moody's understands the proceeds will be used to refinance the company's existing debt and raise additional funds for general corporate purposes, including potential acquisitions, share repurchases and other growth investments. Concurrently, Moody's affirmed DaVita's Ba3 Corporate Family and Probability of Default Ratings and the Speculative Grade Liquidity Rating of SGL-1. The outlook for the ratings is stable. The ratings on DaVita's existing debt instruments remain unchanged and Moody's expect to withdraw those ratings at the close of the refinancing transaction. Ratings assigned: -- $250 million senior secured revolving credit facility due 2015, Ba2 (LGD2, 29%) -- $1,000 million senior secured term loan A due 2015, Ba2 (LGD2, 29%) -- $1,750 million senior secured term loan B due 2016, Ba2 (LGD2, 29%) -- $1,450 million senior unsecured notes due 2018 and 2020, B2 (LGD5, 83%) Ratings affirmed: -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- Speculative Grade Liquidity Rating, SGL-1 Ratings unchanged (expected to be withdrawn at the close of the transaction): -- Senior secured revolving credit facility due 2011, Ba1 (LGD2, 22%) -- Senior secured term loan A due 2011, Ba1 (LGD2, 22%) -- Senior secured term loan B due 2012, Ba1 (LGD2, 22%) -- 6.625% senior unsecured notes due 2013, B1 (LGD4, 67%) -- 7.25% senior subordinated notes due 2015, B2 (LGD6, 90%) Ratings Rationale "The affirmation of the Ba3 Corporate Family Rating reflects the reduction in refinancing risk offset by a considerable increase in leverage," said Dean Diaz, Senior Credit Officer at Moody's. Moody's estimates that DaVita's pro forma adjusted leverage at June 30, 2010 would have approximated 4.1 times compared to 3.4 times before the proposed refinancing. The rating also reflects the company's position as the second largest dialysis service provider in an otherwise very fragmented segment. DaVita benefits from the recurring nature of the treatments and customers' high loyalty to their clinic, which is reflected in the company's robust margins and build up of available cash. However, the rating is constrained by the company's limited diversification of revenue streams and uncertainty around reimbursement issues, including trends in patient mix and upcoming changes to the Medicare reimbursement methodology. Moody's could consider upward pressure on the ratings if the company were to repay debt or grow earnings such that leverage metrics were expected to be sustained at or below the pre- refinancing level. For example, Moody's would consider changing the outlook to positive or upgrading the rating if cash flow from operations and free cash flow to adjusted debt ratios were expected to be sustained in the high and mid teens, respectively. Conversely, downward pressure could develop if leverage continues to increase following the transaction. For example, Moody's could consider changing the outlook to negative or downgrading the ratings if the Medicare bundled prospective payment system unfavorably impacts DaVita's business model or if the company takes on additional debt for acquisitions or shareholder initiatives in excess of Moody's expectations. Moody's last rating action on DaVita was on February 9, 2007, when Moody's assigned B1 to the issuance of up to $400 million of senior unsecured notes. DaVita, headquartered in Denver, CO, is an independent provider of dialysis services in the US for patients suffering from end-stage renal disease (chronic kidney failure). DaVita's services are predominantly provided in the company's outpatient dialysis centers. However, the company also provides home dialysis services, inpatient dialysis services through contractual arrangements with hospitals, laboratory services and other ancillary services. The company recognized approximately $6.3 billion of revenue for the twelve months ended June 30, 2010. DBSD NA: Can Execute Plan After FCC OK of License Transfers ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that DBSD North America Inc., which won approval of a Chapter 11 plan in a November confirmation order, is now able to enact the plan after the Federal Communications Commission approved license transfer applications. DBSD filed a notice with the bankruptcy court on Sept. 30 saying that the FCC approved license transfers. U.S. Bankruptcy Judge Robert E. Gerber confirmed the Plan in November. Mr. Rochelle relates that in confirming the Plan, Judge Gerber crammed down on two classes of creditors, one the first- lien creditor DISH Network Corp. and the other including unsecured creditor Sprint-Nextel Corp. Both DISH and Sprint-Nextel opposed approval of the license transfers by the FCC. The Chapter 11 Plan The Plan seeks, principally through substantial deleveraging and realignment of operations, to focus on the Debtors' core operations, to capitalize on opportunities in the future. The Debtors will reduce their funded debt and other financial obligations by converting all of their Second Lien Debt and general unsecured claims into equity of the reorganized Debtors. The Plan provides for the Debtors to continue to operate as a pre- revenue enterprise, implementing cost-saving initiatives until the Debtors obtain strategic partnerships with entities that are able to complement the Debtors' satellite offerings or obtain additional capital to continue funding the enterprise. Under the Plan, the Debtors will be deleveraged by over $600 million. The Plan currently contemplates that the Debtors will have $81 million in total debt at the Effective Date, and the total indebtedness can be projected to be in the range of $260 million by 2013. A copy of Judge Gerber's decision containing his Findings of Fact and Conclusions of Law is available for free at: http://bankrupt.com/misc/DBSD_Plan_Decision.pdf About DBSD North America Headquartered in Reston, Virginia, DBSD North America Inc. aka ICO Member Services Inc. offers satellite communications services. It has launched a satellite, but is in the developmental stages of creating a satellite system with components in space and on earth. It presently has no revenues. The Company and nine of its affiliates filed for Chapter 11 protection on May 15, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-13061). James H.M. Sprayregen, Esq., Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, in New York; and Marc J. Carmel, Esq., Sienna R. Singer, Esq., at Kirkland & Ellis LLP, in Chicago, serve as the Debtors' counsel. Jefferies & Company is the proposed financial advisors to the Debtors. The Garden City Group Inc. is the court-appointed claims agent for the Debtors. DBSD estimated assets and debts of $500 million to $1 billion in its Chapter 11 petition. DELPHI CORP: Blahnik Settles Fraud Case; 4 Execs. to Face Trial --------------------------------------------------------------- Former Delphi Corp. Treasurer and Vice President of Treasury John Blahnik will pay $100,000 to resolve an accounting fraud lawsuit filed by the U.S. Securities and Exchange Commission against him and four other former officers of Delphi, www.WebCPA.com reports. According to WebCPA.com, Judge Avern Cohn of the U.S. District Court for the Eastern District of Michigan directed Mr. Blahnik to pay $50,000 for disgorgement and prejudgment interest, and another $50,000 as civil monetary penalty. Mr. Blahnik was also ordered not to serve as officer or director of a public company for five years. In light of Mr. Blahnik's settlement, four former officers of Delphi will proceed to trial scheduled for October 18, 2010. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represented the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DELPHI CORP: Court Closes 20 Affiliates' Chapter 11 Cases --------------------------------------------------------- Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York entered a final decree and order closing the Chapter 11 cases of 20 of DPH Holdings Corp.'s debtor affiliates: Closing Debtor Case No. -------------- -------- Delphi NY Holding Corporation 05-44480 Environmental Catalysts, LLC 05-44503 Delphi Liquidation Holding Company 05-44542 Delphi Electronics (Holding) LLC 05-44547 Delphi Automotive Systems Tennessee, Inc. 05-44558 Delphi Automotive Systems Risk Management Corp. 05-44570 Exhaust Systems Corporation 05-44573 Delphi Automotive Systems Korea, Inc. 05-44580 Delphi International Services Inc. 05-44583 Delphi Automotive Systems Thailand, Inc. 05-44586 Delphi International Holdings Corp. 05-44591 Delco Electronics Overseas Corporation 05-44610 Aspire, Inc. 05-44618 Delphi Integrated Service Solutions, Inc. 05-44623 Packard Hughes Interconnect Company 05-44626 DREAL, Inc. 05-44627 Delphi Services Holding Corporation 05-44633 Delphi Automotive Systems Global (Holding), Inc. 05-44636 Delphi Foreign Sales Corporation 05-44638 Delphi Receivables LLC 05-47459 Delphi Automotive Systems Tennessee, Inc., is also known as PBR Automotive Tennessee, Inc. The Closing Debtors' Chapter 11 cases have been fully satisfied based on all six factors set forth in the Advisory Committee Note pursuant to Rule 3022 of the Federal Rules of Bankruptcy Procedure. The Reorganized Debtors will continue to pay applicable U.S. Trustee fees, including interest, if any, on account of all of the Chapter 11 cases of the Debtors -- including the Closing Debtors -- when those fees become due and payable. The Bankruptcy Court will retain its jurisdiction to hear and determine all matters arising from or relating to the implementation of the Closing Order. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represented the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DELPHI CORP: Judge Denies Dismissal of PBGC Charges --------------------------------------------------- The U.S. District Court for the Eastern District of Michigan denied dismissal of charges asserted by thousands of Delphi Corp.'s salaried retirees against the Pension Benefit Guaranty Corporation in relation to the termination of the Delphi salaried pension plan, Robert Snell of The Detroit News relates. District Judge Arthur J. Tarnow for the Eastern District of Michigan specifically declined to dismiss allegations against the PBGC that: -- The retirees' pension plan was terminated illegally in an agreement executed between Delphi and the PBGC, not by a court decision; and -- The retirees' constitutional rights were violated when the pension plan was terminated. Accordingly, Judge Arthur Tarnow denied the PBGC's summary judgment request for the termination of the charges. "It's just too early," Judge Tarnow was quoted by The Detroit News as saying with regards to his decision. The charges against PBGC were brought by Delphi salaried retirees in a class-action lawsuit in 2009. The Retirees sued the PBGC for improper termination of their pension plans and decrease of their retirement benefits. The Retirees also sued the U.S. Government's Treasury Department and Auto Task Force for their involvement in the negotiations of the pension termination. Representing the PBGC, John Menke, Esq., dispelled the allegations and insisted that there was not enough money left behind by Delphi to pay for the salaried retirees' pensions when PBGC took over the pension plan in 2009, according to the report. "I know the PBGC has been doing it this way for years, but just because they've been doing it wrong doesn't mean they should be able to continue to do this," retiree lawyer Anthony Shelley said, the report notes. "The parties that were hurt weren't even at the table." The District Court's ruling means that the salaried retirees will get a trial, a related report from Greg Gardner of the Detroit Free Press notes. Jack Hollis, a salaried retiree, is optimistic with how the pension-related action is proceeding. "We know this process takes a long time but we are pleased we will finally get our day in court," Mr. Hollis told The Detroit Free Press. GAO to Probe Into Auto Task Force's Pension Actions A federal agency will conduct an audit to determine whether the U.S. Department of the Treasury's Auto Task Force discriminated against Delphi salaried retirees when it made payments to union retirees to make up for reduced benefits but not to the salaried employees, Greg Gardner of the Detroit Free Press reports. Mr. Gardner notes that a $1.6 billion gap exists between what the salaried retirees are entitled to and what they are actually receiving after General Motors Corporation and Delphi Corp. terminated their pension plans and turned them over to the PBGC. The report cites that as part of GM's bankruptcy exit, the Auto Task Force agreed to pay $4.3 billion to Delphi's union retirees to make up the difference between their earned benefits and the PBGC-reduced benefits; however, no supplement of that kind was approved for the salaried retirees. Neil Barofsky, special inspector general for the Troubled Asset Relief Program, will conduct the audit with the General Accountability Office, the Detroit Free Press relates. The timetable for the issuance of the report however is unknown. U.S. Representative John Boehner and U.S. Senator Roger Wicker earlier made a request to the GAO to conduct an independent analysis of the federal financial aid given to GM and its treatment of Delphi salaried retirees. GM maintained that it is not in a position to fund those pension liabilities a second time. Lawmakers Demand Answers from Secretary Geithner U.S. Representative Christopher Lee pressed Secretary Geithner to answer questions regarding the federal government's treatment of Delphi workers and retirees. At a House Financial Services Committee hearing, Mr. Lee asked Secretary Geithner why he refused, despite repeated requests, to turn over documents relating to the decision that led to the unfair treatment of the Delphi salaried retirees. In a letter addressed to Secretary Geithner, U.S. Representative Barney Frank urged the Treasury Department officials to meet with the Delphi salaried retirees. "They certainly are people deserving of every consideration we can give them, given what has happened to them," Mr. Frank noted in his letter. In other matters, U.S. Representative Dale E. Kildee seeks support from the U.S. Congress to extend the Delphi salaried retirees' access to affordable health care. The Health Coverage Tax Credit, which pays 80% of health premiums for Delphi salaried retirees, will expire on December 31, 2010. This tax credit allows the Delphi salaried retirees to receive the necessary healthcare they would not otherwise be able to afford after the loss of their health insurance, Mr. Kildee explains. "Without an extension, thousands of Delphi retirees and other eligible individuals will see dramatic increases in their health insurance premiums." U.S. Representative Sandy Levin, through a correspondence to certain salaried retirees, expressed his support for the extension of the HCTC as well as the maintenance of the level of tax credit to the existing 80% of certain health insurance premiums. Another lawmaker, Sherrod Brown stated in a letter to the U.S. Senate that he supports the immediate passage of legislation that would extend the HCTC. Meanwhile, Representative Boehner assured the Delphi salaried retirees of his continued support, including his quest for answers from the federal government regarding its involvement in the unequal treatment of the Delphi salaried retirees. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represented the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DEX MEDIA WEST: Bank Debt Trades at 13% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Dex Media West LLC is a borrower traded in the secondary market at 86.74 cents-on- the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.64 percentage points from the previous week, The Journal relates. The Company pays 450 basis points above LIBOR to borrow under the facility, which matures on October 24, 2014. The debt is not rated by Moody's and Standard & Poor's. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Dex Media West, LLC, is a subsidiary of Dex Media West, Inc., and an indirect wholly owned subsidiary of Dex Media, Inc. Dex Media is a direct wholly owned subsidiary of R.H. Donnelley Corporation. Dex Media West is the exclusive publisher of the official yellow pages and white pages directories for Qwest Corporation, the local exchange carrier of Qwest Communications International Inc., in Arizona, Idaho, Montana, Oregon, Utah, Washington, and Wyoming. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09-11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. DOLLAR THRIFTY: DBRS Confirms 'BB' Issuer Rating ------------------------------------------------ DBRS has confirmed the ratings of Dollar Thrifty Automotive Group, Inc. (DTAG or the Company), including its Issuer Rating of B (high). Concurrently, DBRS assigned the ratings a Stable trend and removed the ratings from Under Review with Positive Implications, where they were placed on April 28, 2010. This rating action follows the announcement that the Company's shareholders have rejected the offer to be acquired by the Hertz Corporation (Hertz). Given this transaction is not expected to proceed, DTAG's ratings will not benefit from the uplift of being acquired by a higher-rated entity, as such the trend is now Stable. While DBRS recognizes that there are other potential suitors for the Company, the outcome is less than certain. DBRS will continue to closely monitor the evolving situation regarding potential changes in ownership and will provide comments in due course, as details of any definitive agreement become available. The current ratings reflect DTAG's strengthening balance sheet metrics, its solid financial performance, and the overall stable franchise. The ratings also consider the Company's reliance on secured sources of funding and limited diversification of revenues. DRYSHIPS INC: Amends HSH Credit Pacts to Regain Compliance ---------------------------------------------------------- DryShips Inc. has executed two supplemental agreements under its Senior and Junior Loan Facilities with HSH Nordbank AG, as agent, with an aggregate outstanding balance of $520.9 million as of September 29, 2010. As a result of the amendments in these new supplemental agreements, the Company will be, as of October 1, 2010, in full compliance with all its financial and non-financial covenants under the original facility, as subsequently amended. Furthermore, effective October 1, 2010, the margin under these facilities will revert back from the higher margins during the waiver period to lower pricing. Mr. George Economou, Chairman and CEO of DryShips Inc. said: "We are pleased to report that Dryships is now in compliance with the original loan covenants on a major portion of the outstanding debt on the drybulk fleet. It has been two years since the collapse of Lehman that led to an unprecedented crisis in the shipping industry. Our strategy of fixed rate charters in both drybulk and offshore combined with longstanding relationships with the banks has led to a substantial improvement in the Company's balance sheet." A full-text copy of the Supplemental Agreement Under Senior Loan Facility with HSH is available for free at: http://ResearchArchives.com/t/s?6c0a A full-text copy of the Supplemental Agreement Under Junior Loan Facility with HSH is available for free at: http://ResearchArchives.com/t/s?6c0b About DryShips Inc. Based in Greece, DryShips Inc. -- http://www.dryships.com/-- -- is an owner and operator of drybulk carriers and offshore oil deep water drilling units that operate worldwide. As of September 10, 2010, DryShips owns a fleet of 40 drybulk carriers (including newbuildings), comprising 7 Capesize, 31 Panamax and 2 Supramax, with a combined deadweight tonnage of over 3.6 million tons and 6 offshore oil deep water drilling units, comprising of 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships. DryShips's common stock is listed on the NASDAQ Global Select Market where it trades under the symbol "DRYS". DYNEGY HOLDINGS: Moody's Junks Corporate Family Rating From 'B3' ---------------------------------------------------------------- Moody's Investors Service lowered the ratings of Dynegy Holdings, Inc., including its Corporate Family Rating to Caa1 from B3 along with the ratings of various affiliates or parent company Dynegy Inc. The rating outlook for DHI and Dynegy remains negative. Ratings Rationale The rating action also follows last week's expiration of the 40- day "go shop" period, increasing the probability that Dynegy will be acquired by an affiliate of The Blackstone Group L.P. in a transaction valued at approximately $4.7 billion, including the assumption of existing debt. The rating action factors in Moody's review of the Dynegy's Preliminary Proxy Statement filed with the SEC as well as Wednesday's filing by DHI of an Amendment to its Registration Statement on Form S-4. Based on Moody's assessment of these public filings, Dynegy's financial profile is expected to be quite fragile, particularly during 2011 and 2012, when the company is projected to generate both negative operating cash flow and negative free cash flow due to weak operating margins and the required funding of their capital investment programs. Net proceeds from the planned sale of 3,884 megawatts of Dynegy's assets in California and Maine to NRG Energy, Inc., are expected to help fund cash shortfalls. While the NRG transaction could enhance liquidity, Dynegy's credit metrics are expected to weaken after the sale with NRG and the Blackstone merger are completed as the asset sale to NRG will reduce the company's owned capacity by 38% even though long-term debt is expected to remain largely unchanged. DHI's speculative liquidity rating remains unchanged at SGL-4 reflecting Moody's concern about DHI's internal liquidity sources over the next four quarters given the amount of negative free cash flow expected to be generated by the company, and the expected increased reliance by the company on cash on hand or borrowings under its secured revolving credit facility to fund negative free cash. Moody's understand that the company's ability to remain compliant with the EBITDA to interest covenant in the current DHI revolver will become more challenging given that the covenant test gradually increases over time during the next twelve months. Moody's also observe that the Blackstone merger is considered a change in control under the secured credit facilities and will cause the facilities to come due at merger close thus requiring outstanding indebtedness to be repaid. Based on the company's Proxy filing, restricted and unrestricted cash along with net cash proceeds from the NRG sale are expected to satisfy the obligations under the facility and replace any outstanding letters of credit at merger close. As such, should the merger with Blackstone and the subsequent asset sale to NRG be completed, a change in the SGL rating may be warranted, depending upon the manner in which the asset sales proceeds are deployed and liquidity needs are addressed. The continuing negative outlook factors in Moody's concern about Dynegy being owned by a private equity firm, and the related uncertainty around the sponsor's view surrounding several strategic issues including hedging, capital structure, liquidity and dividend / distribution policies. While the public filings provides some insight into these issues, material uncertainty remains about the intermediate term intentions of the potential new owners and the related implications to bondholders. That said, to the extent that the transactions with Blackstone and NRG are not completed, downward rating pressure at DHI and Dynegy will continue to exist given the weak financial prospects for the company over the next few years coupled with the liquidity concerns outlined above. In light of the weak financial prospects and the uncertainty concerning Dynegy's potential new owners, limited near-term prospects exist for the rating to be upgraded or the outlook to be stabilized. Downgrades: Issuer: Dynegy Capital Trust II -- Preferred Stock Shelf, Downgraded to (P)Caa3 from (P)Caa2 Issuer: Dynegy Capital Trust III -- Preferred Stock Shelf, Downgraded to (P)Caa3 from (P)Caa2 Issuer: Dynegy Holdings Inc. -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Corporate Family Rating, Downgraded to Caa1 from B3 -- Multiple Seniority Shelf, Downgraded to (P)Caa2, (P)Caa3 from (P)Caa1, (P)Caa2 -- Senior Secured Bank Credit Facility, Downgraded to B1, LGD1, 06% from Ba3, LGD1, 05% -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2, LGD4, 60% from B3, LGD4, 58% Issuer: Dynegy Inc. -- Multiple Seniority Shelf, Downgraded to (P)Caa3, (P)Caa3, (P)Caa3 from (P)Caa2, (P)Caa2, (P)Caa2 Issuer: NGC Corporation Capital Trust I -- Preferred Stock Preferred Stock, Downgraded to Caa3 from Caa2 Issuer: Roseton-Danskammer 2001 -- Senior Secured Pass-Through, Downgraded to Caa2, LGD4, 60% from B3, LGD4, 58% Headquartered in Houston, Texas, DHI is an independent power producer that owns a portfolio of more than 12,000 MW electric generating assets. DHI is wholly-owned by Dynegy, Inc. REGULATORY DISCLOSURES Information sources used to prepare the credit rating are these: parties involved in the ratings, parties not involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information, confidential and proprietary Moody's Analytics' information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. ENCORIUM GROUP: Posts $805,100 Net Loss in June 30 Quarter ---------------------------------------------------------- Encorium Group, Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $805,157 on $4.4 million of revenue for the three months ended June 30, 2010, compared with a net loss of $1.9 million on $5.3 million of revenue for the same period of 2009. The Company's balance sheet as of June 30, 2010, showed $10.0 million in total assets, $10.6 million in total liabilities, and a stockholders' deficit of $619,663. As reported in the Troubled Company Reporter on April 23, 2010, Deloitte and Touche, LLP, in Philadelphia, Pa., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted of the Company's recurring losses from operations, current available cash, and anticipated level of capital requirements. A full-text copy of the Form 10-Q available for free at: http://researcharchives.com/t/s?6c17 About Encorium Group Wayne, Pa.-based Encorium Group, Inc. (Nasdaq: ENCO) is a clinical research organization (CRO) that engages in the design and management of complex clinical trials for the pharmaceutical, biotechnology and medical device industries. The Company was initially incorporated in August 1998 in Nevada. In June 2002, the Company changed its state of incorporation to Delaware. In November 2006, the Company expanded its international operations with the acquisition of its wholly-owned subsidiary, Encorium Oy, a CRO founded in 1996 in Finland, which offers clinical trial services to the pharmaceutical and medical device industries. Since 2006 the Company has conducted substantially all of its European operations through Encorium Oy and its wholly-owned subsidiaries located in Denmark, Estonia, Sweden, Lithuania, Romania, Germany and Poland. On July 16, 2009, the Company sold substantially all of the assets relating to the Company's U.S. line of business to Pierrel Research USA, Inc., the result of which the Company no longer has any employees or significant operations in the United States. EVRAZ INC: Moody's Assigns 'B1' Rating on $650 Mil. Notes --------------------------------------------------------- Moody's Investors Service assigned a B1 senior unsecured rating to the proposed $650 million guaranteed note issuance by Evraz Inc. NA or "EINA" and Evraz Inc. NA Canada or "EICA" as co-borrowers. The notes will be guaranteed by the co-borrowers' principal operating subsidiaries. At the same time, Moody's assigned a B2 corporate family rating and a B2 probability of default rating to Evraz North America. The outlook is stable. This is the first time Moody's has rated ENA. Proceeds of the note issuance will be used to repay a portion of the shareholder loans from the ultimate parent -- Evraz Group S.A. (EGSA - B1 CFR). For the purposes of analysis, Moody's views EINA and EICA -- both of whom are jointly and severally liable for the bond offering -- as one consolidated entity. Going forward, Moody's will refer to this entity as ENA. Ratings Rationale ENA's B2 corporate family rating reflects its highly leveraged pro forma capital structure (including 100% of intercompany loans), relatively weak levels of interest coverage (measured by EBIT/interest), exposure to cyclical end markets, modest scale, and limited free cash flow relative to outstanding debt. The rating also incorporates the company's vulnerability to the cyclical nature of the steel industry, which subjects it to downward pricing pressure attributable to a number of factors, including product demand weakness, excess global capacity and trade factors. While Moody's anticipate ENA to achieve stronger operating performance and improving metrics in 2010 relative to 2009, Moody's expect recovery in the steel industry to be slow and anticipate that ENA's leverage, as measured by the debt/EBITDA ratio, will remain in a range of 6x to 7x. However, the rating acknowledges ENA's strong positions in its markets served from both a geographic -- majority of operations in the western U.S. and western Canada - and product perspective. Its products include plate, coiled plate, large and small diameter pipe, oil country tubular goods, welded and seamless pipe and casing, rail, and rod, with the focus being on more value added products such as pipe for the oil and gas transmission markets. In addition, ENA is one of only several rail manufacturers in North America and it has a leading market share. The nature of track maintenance requirements in the railroad industry and lead time order requirement for pipeline projects provides an underlying level of stability to ENA's business although it still remains exposed to the volatility of the steel industry. In addition, the rating considers the importance of ENA to its parent company, EGSA, and its inclusion as a material subsidiary in EGSA's notes due 2013,2015 and 2018 documentation, as well as other EGSA debt facilities documentation, which contain cross default language to payment defaults at material subsidiaries among other things. Going forward, the ratings could be lowered if ENA's operating performance deteriorated such that debt/EBITDA remains consistently above 6.5x, EBIT/interest remains consistently below 1.5x, or the ratio of operating cash flow minus dividends to debt remains below 10%. At this time, Moody's see limited upward pressure on ENA's ratings, given Moody's expectation for a slow recovery from the company's operational lows of 2009. However, should EBITDA and cash flow expand faster than anticipated, whereby debt/EBITDA and EBIT/interest approach 4.0x and 2.5x, respectively, the ratings could be upgraded. The stable outlook reflects Moody's expectation that ENA will continue to demonstrate improved operating performance and positive cash flow generation over the next 12 to 18 months. In addition, given the company's high pro forma leverage, Moody's expect it to exercise capital structure discipline as key credit metrics gradually improve to levels more comfortably within a B2 corporate family rating. Assignments: Issuer: Evraz Inc. NA -- Senior Unsecured Regular Bond/Debenture, Assigned B1, LGD 3, 32% Issuer: Evraz Inc. NA Canada -- Senior Unsecured Regular Bond/Debenture, Assigned B1, LGD 3, 32% Issuer: Evraz North America -- Probability of Default Rating, Assigned B2 -- Corporate Family Rating, Assigned B2 Evraz Inc. NA, headquartered in Portland, Oregon, is a steelmaking company with operations in the U.S. and Canada. Through its Oregon Steel Division, it operates two steel mills, one pipe mill, and one scrap processing facility. Its major products include discrete steel plate, coiled plate, structural tubing, large diameter line pipe, and electric resistance welded pipe. Through its Rocky Mountain Steel Mills Division, it operates steelmaking and finishing facilities, which include one of only two established rail manufacturing facilities in the U.S. Evraz Inc. NA Canada is organized into two business units: Regina Steel and Regina Tubular. Regina Steel operates steelmaking facilities, finishing facilities, and a plate mill that produces discrete steel plate and coiled plate. Regina Tubular operates pipe finishing facilities where it produces electric resistance welded line pipe and oil country tubular goods. Evraz Group S.A. is a leading global vertically integrated steel company headquartered in Russia with assets in Russia, the Ukraine, Europe, North America and South Africa. Through its mining division, the company also operates iron ore and coal mining complexes. The company generated $9.8 billion in revenue in 2009. Steel production was 15.3 million tons. FEDERAL-MOGUL: Asbestos Trust Wants Injunction Widened for Allianz ------------------------------------------------------------------ The Federal-Mogul U.S. Asbestos Personal Injury Trust asks Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware to extend to certain insurers, known as the Allianz Companies, protections afforded to a protected party pursuant to the Debtors' Fourth Amended Joint Plan of Reorganization. The Allianz Companies are: -- Allianz Global and Corporate Specialty AG, as successor-by- partial-merger to Allianz Versicherungs; -- Allianz Global Risks U.S. Insurance Company, formerly known as Alliance Insurance Company; and -- Allianz Underwriters Insurance Company, formerly known as Allianz Underwriters, Inc. The Debtors' Plan was confirmed on November 8, 2007, and was declared effective on December 27, 2007. Pursuant to the Plan, the Trust was established and has assumed all liability for Asbestos Claims that previously would have been asserted against Federal-Mogul Products, Inc. The Trust received, among other things, certain of Federal-Mogul Products' rights to the proceeds of certain insurance policies, including the policies that are the subject of a certain settlement agreement, which policies were issued to Studebaker-Worthington, Inc., and McGraw- Edison Company, each an alleged former parent of Wagner Electric Corporation, a predecessor of Federal-Mogul Products, Inc. Cooper LLC also asserts rights to coverage under the Wagner Policies, including Wagner Policies for which the Allianz Companies are allegedly responsible. Prior to entering into the Settlement Agreement, there were disputes among the Parties regarding their rights and obligations with respect to insurance coverage for Asbestos Claims under the Allianz Policies. On September 19, 2006, Federal-Mogul Products initiated an action against certain insurance companies, including certain of the Allianz Companies, in the Superior Court of New Jersey. Federal- Mogul Products sought declaratory relief, actual compensatory and consequential damages, plus interest, among other relief, and the Allianz Companies defendants denied that they owed any damages or relief as alleged and have defended against Federal-Mogul Products' claims. On July 28, 2008, the Trust was added as a plaintiff in the New Jersey Coverage Action. After months of negotiations, the Parties have reached an agreement to settle and resolve the Coverage Disputes as between them, to provide for mutual releases of certain claims under the Allianz Policies, to provide for dismissals with prejudice of the New Jersey Coverage Action and related litigation, and to limit the Allianz Companies' future actions against the Parties with respect to the Coverage Proceedings, all as fully set forth in the Settlement Agreement. In exchange for the releases and other benefits conveyed to the Allianz Companies under the Settlement Agreement, the Allianz Companies agree to pay an undisclosed "substantial sum" to the Trust, according to Kathleen Campbell Davis, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware. The Trust has concluded that the Allianz Companies' payment of the Settlement Amount constitutes reasonable consideration for the releases and other benefits conveyed to the Allianz Companies. Ms. Campbell asserts that under the Settlement Agreement, the Trust is required to file a request seeking extension of the Third Party Injunction to the Allianz Companies. Under the Settlement Agreement, Ms. Davis avers, the Trust agrees to defend the application of the Third Party Injunction as to claims asserted against the Allianz Companies that are subject to the Third Party Injunction. She adds that the Plan provides for extension of the Third Party Injunction as requested. About Federal-Mogul Federal-Mogul Corporation is a supplier of powertrain, chassis and as safety technologies, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy- duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Federal-Mogul was founded in Detroit in 1899. The Company is headquartered in Southfield, Michigan, and employs nearly 41,000 people in 33 countries. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Attorneys at Sidley Austin Brown & Wood, and Pachulski, Stang, Ziehl & Jones, P.C., represented the Debtors in their restructuring effort. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Attorneys at The Bayard Firm represented the Official Committee of Unsecured Creditors. The Debtors' Reorganization Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14, 2007. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Federal-Mogul Corp. to 'B+' from 'BB-'. "The ratings reflect Federal-Mogul's weak business risk profile as a major participant in the highly competitive global auto industry, and its aggressive financial risk profile," S&P said. Moody's Investors Service in April 2009, lowered corporate family rating of Federal-Mogul to B1 from Ba3. At that time, Moody's said the downgrade "reflects the company's weakened credit metrics as a result of the dramatic decline of global automotive production and the impact of the global recessionary environment on consumer spending." The ratings have remained the same at present. FEDERAL-MOGUL: Baldwin & Baldwin Represents PI Claimants -------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, Scott Baldwin, Jr., Esq., at Baldwin & Baldwin, LLP, in Marshall, Texas, disclosed that his firm represents over one thousand personal injury creditors, who have been injured by asbestos products manufactured, marketed, distributed, sold, or produced by the Debtors and others, and therefore, have claims against, inter alia, the Debtors. Pursuant to the Court's previous order, Mr. Baldwin says that exhibits to the Rule 2019 Statement are being provided in electronic format on CD to the Court's Clerk, attorneys for the Debtors and to the U.S. Trustee. The exhibits contain blank but unredacted exemplar of the contract authorizing Baldwin & Baldwin to act on behalf of the Creditors, and an excel spreadsheet containing the names and addresses of each Creditor, the amount of their claims, and other information. The nature of the claim held by each Creditor is a personal injury tort claim for damages caused by asbestos products manufactured, sold or distributed by the Debtors, Mr. Baldwin discloses. He asserts that since the Creditors were exposed to asbestos products manufactured, sold or distributed by the Debtors more than one year prior to the filing of the bankruptcy cases, each of the Creditors may have "acquired" his or her claim more than one year prior to the filing of the cases. The Creditors affirmatively assert that the statutes of limitations applicable to their claims did not begin to run on the date of exposure and reserve all procedural and substantive rights pertaining to their claims. Mr. Baldwin assures the Court that his firm does not hold any claims against or interests in the Debtors, except what some could characterize as a beneficial interest -- contingency fee -- in certain claims, settlements and judgment for asbestos personal injuries of some of the Creditors. About Federal-Mogul Federal-Mogul Corporation is a supplier of powertrain, chassis and as safety technologies, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy- duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Federal-Mogul was founded in Detroit in 1899. The Company is headquartered in Southfield, Michigan, and employs nearly 41,000 people in 33 countries. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Attorneys at Sidley Austin Brown & Wood, and Pachulski, Stang, Ziehl & Jones, P.C., represented the Debtors in their restructuring effort. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Attorneys at The Bayard Firm represented the Official Committee of Unsecured Creditors. The Debtors' Reorganization Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14, 2007. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Federal-Mogul Corp. to 'B+' from 'BB-'. "The ratings reflect Federal-Mogul's weak business risk profile as a major participant in the highly competitive global auto industry, and its aggressive financial risk profile," S&P said. Moody's Investors Service in April 2009, lowered corporate family rating of Federal-Mogul to B1 from Ba3. At that time, Moody's said the downgrade "reflects the company's weakened credit metrics as a result of the dramatic decline of global automotive production and the impact of the global recessionary environment on consumer spending." The ratings have remained the same at present. FONTAINEBLEAU L.V.: Bank Debt Trades at 80% Off ----------------------------------------------- Participations in a syndicated loan under which Fontainebleau Las Vegas is a borrower traded in the secondary market at 20.28 cents- on-the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.78 percentage points from the previous week, The Journal relates. The Company pays 325 basis points above LIBOR to borrow under the facility, which matures on June 6, 2014. Moody's has withdrawn its rating while Standard & Poor's does not rate the bank debt. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. 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 and its units filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represented the Debtors in their restructuring effort. 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. 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. In February 2010, Icahn Enterprises L.P. acquired from Fontainebleau Las Vegas and certain affiliated entities, the Fontainebleau property and improvements thereon located in Las Vegas, Nevada, for an aggregate purchase price of around $150 million. The bankruptcy case was subsequently converted to Chapter 7. Soneet R. Kapila has been named the trustee for the Chapter 7 case of Fontainebleau Las Vegas. FORD MOTOR: Bank Debt Trades at 2% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which Ford Motor Co. is a borrower traded in the secondary market at 97.98 cents-on-the- dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.03 percentage points from the previous week, The Journal relates. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank loan matures on Dec. 15, 2013, and carries Moody's Ba3 rating and Standard & Poor's BB rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The Company provides financial services through Ford Motor Credit Company. Ford Motor's balance sheet at June 30, 2010, showed $179.75 billion in total assets, $183.29 billion in total liabilities, and a $3.54 billion stockholders' deficit. * * * In August 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Ford Motor Co. and FordMotor Credit Co. LLC to 'B+' from 'B-'. "The upgrade reflects S&P's reassessment of Ford's business risk profile to weak from vulnerable, and its financial risk profile to aggressive from highly leveraged," said Standard & Poor's credit analyst Robert Schulz. S&P believes Ford is making progress in stabilizing, and perhaps improving, its U.S. market shares Still, S&P believes underlying business risks remain high. Ford Motor and its unit, Ford Motor Credit, carry 'BB-' issuer default ratings from Fitch Ratings. In August 2010, when Fitch raised the rating from 'B', it said, Ford's ratings reflect its continued strong financial performance and the substantial debt reduction accomplished in the second quarter." Ford Motor has a 'B1' corporate family rating from Moody's. FORD MOTOR: Hit by UAW Class in Visteon Retiree ERISA Suit ---------------------------------------------------------- Bankruptcy Law360 reports that Ford Motor Co. retirees have brought their contentious fight over health benefits to federal court, lodging a class action to stop Ford and its bankrupt spinoff Visteon Corp. from, they allege, breaching labor contracts by stripping more than 1,000 retirees and their families of lifetime health benefits. The United Auto Workers union and two of its members filed suit Thursday in the U.S. District Court for the Eastern District of Michigan, claiming Visteon plans to erase benefits, Law360 says. About Visteon Corp Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is an automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for automakers. 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 disclosed assets of US$4,561,000,000 and debts of US$5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring effort. 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. Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware entered an order on August 31, 2010, confirming the Fifth Amended Plan of Reorganization of Visteon Corporation and its debtor affiliates. Visteon emerged from Chapter 11 on October 1. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The Company provides financial services through Ford Motor Credit Company. Ford Motor's balance sheet at June 30, 2010, showed $179.75 billion in total assets, $183.29 billion in total liabilities, and a $3.54 billion stockholders' deficit. * * * In August 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Ford Motor Co. and FordMotor Credit Co. LLC to 'B+' from 'B-'. "The upgrade reflects S&P's reassessment of Ford's business risk profile to weak from vulnerable, and its financial risk profile to aggressive from highly leveraged," said Standard & Poor's credit analyst Robert Schulz. S&P believes Ford is making progress in stabilizing, and perhaps improving, its U.S. market shares Still, S&P believes underlying business risks remain high. Ford Motor and its unit, Ford Motor Credit, carry 'BB-' issuer default ratings from Fitch Ratings. In August 2010, when Fitch raised the rating from 'B', it said, Ford's ratings reflect its continued strong financial performance and the substantial debt reduction accomplished in the second quarter." Ford Motor has a 'B1' corporate family rating from Moody's. FOREVERGREEN WORLDWIDE: Posts $95,400 Net Loss in June 30 Quarter ----------------------------------------------------------------- ForeverGreen Worldwide Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $95,427 on $2.4 million of revenue for the three months ended June 30, 2010, compared with a net loss of $142,480 on $3.3 million of revenue for the comparable period in 2009. The Company had negative working capital of $2.8 million and an accumulated deficit of $19.6 million at June 30, 2010. The Company's balance sheet as of June 30, 2010, showed $14.9 million in total assets, $3.9 million in total liabilities, and stockholders' equity of $11.0 million. As reported in the Troubled Company Reporter on April 21, 2010, Chisolm, Bierwolf, Nilson & Morrill, in Bountiful, Utah, expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has a working capital deficiency, and has had negative cash flows from operations and recurring operating losses substantially since inception. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c15 About ForeverGreen Worldwide Orem, Utah-based ForeverGreen Worldwide Corporation through its wholly owned subsidiary, ForeverGreen International, LLC, produces and manufactures a wide array of whole foods, nutritional supplements, personal care products and essential oils. FREMONT GENERAL: Asks for KPMG Docs. on $2.8M Fee Request --------------------------------------------------------- Bankruptcy Law360 reports that Signature Group Holdings Inc., the reorganized form of Fremont General Corp., has asked a bankruptcy judge to force KPMG Corporate Finance LLC to produce documents to help mediate a dispute over a $2.8 million tab for work KPMG performed for the Debtor. Signature Group, in a motion filed Thursday in the U.S. Bankruptcy Court for the Central District of California, asked for an order compelling the production of documents detailing KPMG's services, according to Law360. About Fremont General 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. Fremont General Corporation emerged from bankruptcy and filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada on June 11, 2010, which, among other things, changed the Debtor's name to Signature Group Holdings, Inc. Signature's plan of reorganization became effective on June 11, 2010. As of that date Fremont General changed its name to Signature Group Holdings, Inc. GATEHOUSE MEDIA: Bank Debt Trades at 63% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which GateHouse Media, Inc., is a borrower traded in the secondary market at 37.13 cents-on- the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 1.36 percentage points from the previous week, The Journal relates. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank loan matures on Feb. 27, 2014, and carries Moody's Ca rating and Standard & Poor's CCC- rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. GateHouse Media, Inc. -- http://www.gatehousemedia.com/-- headquartered in Fairport, New York, is one of the largest publishers of locally based print and online media in the United States as measured by its 97 daily publications. GateHouse Media currently serves local audiences of more than 10 million per week across 21 states through hundreds of community publications and local Web sites. The Company's balance sheet at June 30, 2010, showed $572.2 million in total assets, $1.3 billion in total liabilities, and a $795.1 million stockholders' deficit. GENERAL GROWTH: Proposes Exit Financing Transactions ---------------------------------------------------- General Growth Properties, Inc., and its debtor affiliates ask the Court to permit them to: -- if they so elect, exercise certain clawback rights and incur related clawback fees; -- enter into a commitment letter, fee letter and side letter in connection with a potential $8.5 billion exit financing facility; and -- enter into an equity ROFO letter, a pre-emergence underwriting agreement and a guarantee. The Debtors also seek the Court's authority for UBS Securities LLC to act as one of the underwriters and lender commitment parties and for them to enter into potential engagement letter extensions. Clawback Election and Underwritten Offerings The Investment Agreements with REP Investments, LLC; Fairholme Capital Management, LLC, and Pershing Square Capital Management L.P. provide the Debtors with the latitude to propose a Plan that allows them to source additional financing through debt commitments from those existing investors or third parties and to replace portions of certain of the equity commitments under the Investment Agreements, Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court. This may be accomplished through a pre-emergence public exchangeable notes offering, or through a post-emergence public stock offering -- Underwritten Offerings, Mr. Holtzer explains. GGP expects to pursue the New GGP Post-Emergence Public Equity Offering. However, to maintain maximum flexibility, GGP is seeking approval of certain actions that would be necessary to effectuate either Underwritten Offering, Mr. Holtzer explains. Regardless of which Underwritten Offering is consummated, GGP expects to replace, in accordance with the clawback mechanism in the Investment Agreements, a substantial portion of the New GGP Common Stock that will be issued to the Investors. According to the Investment Agreements, exercising a Clawback Election after the effective date of the Third Amended Joint Plan of Reorganization requires GGP to pay a fee of $0.25 per reserved share, or a total of $38.75 million. If the Clawback Election is also made, the Debtors may elect to have $350 million of Pershing Square's equity capital commitment delivered in cash at closing in exchange for bridge notes. To facilitate either Underwritten Offering, GGP intends to enter into an equity right of first offer letter -- Equity ROFO Letter -- with Goldman Sachs & Co., Deutsche Bank AG, Wells Fargo Securities, RBC Capital Markets, Barclays PLC, and UBS Securities LLC, as joint lead bookrunning managers, and Macquarie Bank Limited and TD Securities (USA) LLC, as co-managers -- the Underwriters. The Equity ROFO Letter provides that New GGP will offer the Underwriters the exclusive right to serve as the Underwriters if New GGP proposes to issue equity securities in an underwritten public offering in connection with the clawback mechanism. If GGP changes its current financing intentions and pursues the Pre-Emergence Mandatorily Exchangeable Notes Offering instead, New GGP would issue up to $2.25 billion of mandatorily exchangeable notes. On the Effective Date, if New GGP elects, and subject to certain conditions, the New GGP Notes would be mandatorily exchanged into a fixed number of shares of New GGP Common Stock based on an exchange ratio that will be determined during the marketing process with potential investors. In connection, New GGP would enter into an underwriting agreement, which GGP would execute as a guarantor and which provides that New GGP will pay an underwriting fee in the form of a discount to the purchase price of the New GGP Notes, reimburse the Underwriters for certain reasonable expenses and provide traditional and customary indemnities to the Underwriters and their affiliates. Exit Financing and Related Letters GGP has secured commitments from Deutsche Bank Securities Inc.; Wells Fargo Securities, LLC, and RBC Capital Markets Corporation - - joint lead arrangers -- to provide a post-emergence source of liquidity and to, among other things, ensure a source of funding in the event reinstatement of certain Rouse Notes is not permitted. Under a Commitment Letter between the Debtors and those lenders, the Debtors may, but are not obligated to, borrow up to $1.8 billion in exit financing facility, composed of: (a) a senior secured revolving credit facility aggregating $300,000,000 -- the Standalone Revolving Facility; or (b) a senior secured revolving credit facility aggregating $300,000,000 and term facility totaling $1,500,000,000 -- the Combined Facility. A full-text copy of the Commitment Letter is available for free at http://bankrupt.com/misc/ggp_CommitmentLetter.pdf In consideration of those commitments, GGP Limited Partnership, GGPLP L.L.C. and GGP have agreed to pay certain fees and expenses to the Initial Lenders and the Joint Lead Arrangers in accordance with a Fee Letter. Pursuant to a Side Letter between the GGP Commitment Parties and the Joint Lead Arrangers, the GGP Commitment Parties have agreed not to list certain financial institutions on a list provided to the Joint Lead Arrangers that sets forth, among other things, institutions disqualified from participating as lenders under the Standalone Revolving Facility or Combined Facility and have reserved their consent rights with respect to those financial institutions becoming lenders under the Relevant Facility. Potential Engagement Letter Transactions The Debtors propose to execute agreements with Goldman, Sachs & Co. and Deutsche Bank Securities, Inc., extending the deadline by which the Debtors would be required to make certain payments to those parties. The terms of the Potential Engagement Letter Extensions are still being negotiated, Mr. Holtzer tells the Court. If the Debtors reach agreement on the terms with the Engagement Letter Parties, they will file the Potential Engagement Letter Extensions with the Court on or before the hearing on the Financing Motion. Mr. Holtzer avers that the contemplated transactions will provide GGP increased emergence flexibility and possibly funds that are integral to its emergence from Chapter 11. Absent GGP's agreement to pay the fees required under the Agreements and to undertake the indemnification obligations likewise, GGP's chances of securing the referenced financing commitments or others similar to those commitments would significantly decrease, he stresses. Indeed, payment of the underwriting fees pursuant to the Equity ROFO Letter and the Pre-Emergence Underwriting Agreement is required only upon completion of a successful completion of the underwriting, he points out. At best, the fees and other obligations contained in those Agreements are on market terms, he insists. As to the UBS retention, the Debtors believe that, given UBS's unique perspective and knowledge of the Debtors, UBS's serving as one of the Underwriters and Lender Commitment Parties will greatly assist the Debtors in their proposed capital raise, he asserts. The Debtors also ask the Court to find that the engagement will not cause UBS to fail to be a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Because the Fee Letter, the Side Letter, the Potential Engagement Letter Extensions, and the Equity ROFO Letter contain sensitive commercial information, GGP sought and obtained the Court's permission to tentatively file under seal those documents, provided that the issue whether those documents may remain under seal will be noticed for a hearing at an early date. Judge Allan Gropper further ruled that the Fee Letter, Side Letter, Potential Engagement Letter Extensions, and Equity ROFO Letter will remain under seal and confidential and will not be made available to any party other than the Court and these parties, subject to further order of the Court: (a) the U.S. Trustee for Region 2, (b) the Official Committee of Unsecured Creditors, (c) the Official Committee of Equity Security Holders, and (d) the Investors. The Debtors further seek a waiver of the 10-day stay pursuant to Rule 6004(h) of the Federal Rules of Bankruptcy Procedure. Among other things, waiving the 10-day stay period will enable the Joint Lead Arrangers to begin marketing the prospective credit facilities to potential lenders so as to increase the likelihood that the anticipated loan syndication will be viable on the Effective Date, Mr. Holtzer maintains. In a related request, the Debtors ask the Court to shorten the notice period with respect to the Financing Motion, and set the Financing Motion for a hearing on October 8, 2010. About General Growth 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 protection 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, serve 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) GENERAL GROWTH: Receives Approval of Brookfield Management Pact --------------------------------------------------------------- General Growth Properties, Inc., and its debtor affiliates received the U.S. Bankruptcy Court's permission to enter into a management services agreement with Brookfield Advisors LP, an affiliate of Brookfield Asset Management, Inc. In conjunction with the filing of its Third Amended Joint Plan of Reorganization and related Disclosure Statement, GGP is focusing its efforts on creating a framework to ensure the success of its business after consummation of the Plan, Sylvia A. Mayer, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court. A significant portion of those efforts will be devoted to the formation and initial operation of Spinco, Inc., a new public company that will be spun off from GGP upon its emergence pursuant to the 3rd Amended Plan and Investment Agreements, she notes. Spinco requires, among other things, an appropriately qualified management team to guide Spinco through its initial formation and implementation, and to position Spinco to capitalize on its long- term business and operational strategies, Ms. Mayer points out. Against this backdrop, GGP decided to engage another entity to provide a complete management team to direct Spinco on an interim basis. Specifically, GGP selected Brookfield Advisors as the best qualified and incentivized team to manage Spinco on an interim basis. The Management Services Agreement provides that Brookfield Advisors will manage the initial operations of Spinco and guide Spinco through the necessary processes that accompany the creation and development of a new public company. Under the agreement, Brookfield Advisors will: (a) provide services as are reasonably necessary to accomplish the spinoff; (b) provide overall strategic advice in relation to the business, including oversight of detailed asset plans for each of Spinco's material assets; (c) make recommendations for the development of projects, establishment of joint ventures, sales, or other similar transactions and overseeing the execution of those transactions; (d) oversee the preparation and implementation of an annual business plan, including an annual capital expenditure plan and overseeing the preparation and implementation of other strategic or long term plans as required for Spinco; (e) make recommendations concerning current and future financing requirements of Spinco and overseeing financing; (f) make recommendations concerning potential acquisitions or corporate transactions and overseeing the execution of those transactions; (g) make available qualified individuals to act as senior executives of Spinco; (h) oversee corporate functions, including accounting and management reporting, information systems, tax preparation and other corporate functions, to be provided on a transitional basis by certain subsidiaries of GGP following the Spinoff, and developing and overseeing implementation of a long term plan for those functions following termination of the Management Services Agreement; (i) advise and assist Spinco to establish, maintain and implement appropriate policies and procedures designed to ensure compliance with: -- the requirements of securities and other laws, including the Sarbanes-Oxley Act, or any permits and other obligations imposed by any governmental authority affecting Spinco; -- the annual business plan; and -- any other obligations by which Spinco is bound; (j) advise and assist with regard to the community and investor relations of Spinco; and (k) advise and assist with respect to the listing of Spinco's common stock on a national securities exchange. Brookfield Advisors will make available qualified persons to serve in Spinco's interim management, namely: * Chief Executive Officer: David Arthur * Chief Financial Officer: Rael Diamond * Chief Operating Officer: Steven Ganeless * Chief Development Officer: Ashley Lawrence * Executive Vice President - Master Planned Communities: David Harvie * General Counsel: Karen Ayre GGP believes that a strong interim management team will provide Spinco with the essential tools to successfully navigate its initial operations while developing and implementing a long-term business plan and establishing long-term management arrangements, Ms. Mayer asserts. Brookfield and its affiliates have extensive experience in real estate development, including the master planned community business, which will comprise a significant portion of Spinco's real estate assets, she stresses. More importantly, Brookfield and its affiliates have a dedicated interest in forging Spinco into a long-term successful company, given that REP Investments LLC, an affiliate of Brookfield, is a significant investor and a sponsor of GGP's Plan, she points out. To ensure that the requisite steps to create Spinco as a viable public entity and to prepare for a successful launch of Spinco as a separate company pursuant to the Spinoff, are completed in a timely manner, GGP further asks the Court to waive the requirements of 6004(h) of the Federal Rules of Bankruptcy Procedure and direct that any order granting the relief requested be effective immediately. A full-text copy of the Management Services Agreement is available for free at http://bankrupt.com/misc/ggp_BrookfieldMgtPact.pdf About General Growth 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 protection 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, serve 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) GENERAL GROWTH: Wins Approval of H.S. Wright Settlement Pact ------------------------------------------------------------ Debtor Elk Grove Town Center L.P. received the U.S. Bankruptcy Court for the Southern District of New York's permission to enter into a new settlement agreement, lien waiver and release with Howard S. Wright Constructors, L.P., resolving HSW's prepetition mechanic's lien claim. Prepetition, Elk Grove engaged HSW under a contract as general contractor to furnish all labor, material, tools, equipment and supervision necessary to produce the buildings, structures, improvements and related facilities for the Debtor's construction project known as the Elk Grove Promenade located at 10565 West Stockton Boulevard, in Elk Grove, California. HSW terminated the Construction Contract with the Debtor in February 2009. Subsequently, HSW timely filed a mechanics' lien for $26,986,121 plus interest, costs, attorneys' fees and other charges for its work at the Elk Grove Promenade Project. In April 2009, HSW initiated an action against the Debtor in the Superior Court of the State of California, Sacramento County, seeking, among others, damages and to foreclose on the Lien. Elk Grove also initiated a separate cross complaint against HSW. In November 2009, HSW timely filed two secured Claim Nos. 4792 and 5111, each asserting $26,986,121 against the Debtor and another Debtor, Elk Grove Town Center, LLC. Elk Grove and HSW previously entered into a Court-approved stipulation whereby Elk Grove made payments to HSW and its subcontractors for $4,561,851. In June 2010, Elk Grove satisfied the lien claim of one of HSW's subcontractors, CEI Roofing, Inc., as assigned to Capital Associates, International, Inc., for $2,330,894. In connection with that payment, HSW and Elk Grove entered into another stipulation whereby they agreed that the principal amount remaining on the HSW Lien as of June 29, 2010 was $20,543,143, exclusive of any interest, costs, attorneys' fees and other charges. HSW and Elk Grove have agreed that, as of August 30, 2010, the principal amount of the HSW Lien, representing the entire prepetition balance resulting from the Contract and the Work HSW provided is $20,093,375 exclusive of interest and attorneys' fees -- the Claim. After arm's-length negotiations, the parties entered into the Settlement Agreement resolving the Claim. The salient terms of the Settlement Agreement are: (a) The Debtor agrees to pay HSW 100% of the remaining amount of the Claim or $20,093,375, plus statutory interest through September 9, 2010 at the rate of 10% per year totaling $4,725,914, plus allowed attorneys' fees for $145,000. (b) HSW agrees to waive any and all present and future claims to attorneys' fees, interest and penalties associated with the HSW Lien and the Claim. (c) HSW agrees to deliver to the escrow agent, prior to payment by the Escrow Agent of the settlement payment, a full lien release for the HSW Lien as well as any liens or other claims from its subcontractors. HSW will satisfy all liens or claims arising from its work at the Elk Grove Project against the amounts paid to it under the Settlement Agreement and will fully exonerate the Debtor from any obligation to any lien holder or claimant relating to HSW's work on the Elk Grove Project. (d) HSW agrees that the HSW Proofs of Claim will be deemed satisfied and will be expunged from the claims register upon HSW's receipt of the Settlement Payment. (e) HSW and Elk Grove have agree to release all claims and causes of action relating to the Elk Grove Project, the Contract, or the Work. Notwithstanding the mutual release, provided that Elk Grove provides written notice of any specific claims before December 31, 2010, Elk Grove reserves any and all claims and causes of action relating to the Work performed by HSW and its subcontractors on the offsite public improvements and HSW reserves all defenses thereto. (f) HSW agrees to indemnify, defend and hold harmless the Debtors against any claims or cause of action asserted by HSW or its subcontractors, suppliers, or other parties providing labor, materials, equipment or supplies in connection with the work performed at the Elk Grove Project due to claims for non-payment or tort claims due to HSW's negligence. Adam P. Strochak, Esq., at Weil, Gotshal & Manges LLP, in New York, stresses that interest was accruing at the per diem rate of $5,520 and interest will continue to accrue should the Settlement Agreement not be approved. Against this backdrop, the Debtors believe that settling the HSW Claim now, under the Settlement Agreement, provides an opportunity for their estates to realize a more favorable resolution than waiting until later in the reorganization process, he relates. About General Growth 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 protection 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, serve 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) GENMED HOLDING: Posts $426,200 Net Loss in June 30 Quarter ---------------------------------------------------------- Genmed Holding Corp. filed its quarterly report on Form 10-Q, reporting a net loss of $426,180 on $503 of revenue for the three months ended June 30, 2010, compared with a net loss of $225,683 on $49,775 of revenue for the same period of 2009. The increase in net loss was due primarily to the fact that during the three months ended June 30, 2009, as part of the cancellation of the consulting agreement with London Finance Group, Ltd., the Company recognized a gain of $285,000, compared to no such gain for the comparable period in 2010. The Company had a minimum of net sales during the three months ended June 30, 2010, compared to $49,775 in net sales for the three months ended June 30, 2009. Such net sales primarily consisted of consulting services and did not include any sales of generic products. As at June 30, 2010, the Company has incurred an accumulated deficit of $63.5 million and has negative working capital of $1.7 million. The Company's balance sheet as of June 30, 2010, showed $5.8 million in total assets, $1.7 million in total liabilities, and stockholders' equity of $4.1 million. As reported in the Troubled Company Reporter on April 21, 2010, Meyler & Company, LLC, in Middletown, N.J., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has an accumulated deficit of $62.3 million since inception and had net losses and negative working capital in 2009 and 2008. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c11 Based in Zoetermeer, The Netherlands, Genmed Holding Corp. (OTC BB: GENM) -- http://www.genmed.nl/-- was incorporated in the State of Nevada. The Company engages, through its wholly owned subsidiary, Genmed B.V., in the distribution of generic drugs. GEOEYE INC: Moody's Assigns 'B3' Rating on $125 Mil. Notes ---------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Geoeye, Inc.'s proposed $125 million (gross proceeds) second lien note issuance. The company will use the note issuance proceeds largely to augment its liquidity position, and for general corporate purposes, as it continues the development and construction of its next generation Geoeye-2 satellite. As part of the ratings action, Moody's also upgraded the company's existing $400 million first lien senior secured notes to Ba3 from B1, due to the loss absorption provided by the new second lien notes in accordance with Moody's Loss Given Default Methodology. Ratings Rationale In addition, Moody's affirmed Geoeye's corporate family rating and its probability of default rating, each at B1. Geoeye's capital raise follows a National Geospatial-Intelligence Agency's (NGA) award under the EnhancedView program to of a new $2.8 billion contract over the next 10 years for satellite imagery collected on the company's existing Geoeye-1 satellite along with revenue commitments on imagery collected from future satellites. As such, the NGA will also fund $337 million towards the build and launch of Geoeye-2, expected to be deployed in 2013, which Moody's believes could cost up to $800 million. The contract also provides for $700 million of ancillary services that Geoeye will provide to NGA over the ten year period. Moody's has taken these rating actions: Issuer: Geoeye, Inc. * New Second Lien Senior Secured Notes, Assigned B3, LGD5 - 89% * Existing $400 million Senior Secured Notes, Upgraded to Ba3 LGD3 -- 38% from B1 LGD3 -- 49% * Corporate Family Rating, Affirmed B1 * Probability of Default Rating, Affirmed B1 * SGL Affirmed SGL-1 * Outlook is stable Geoeye's B1 CFR primarily reflects the company's solid position in the growing market for commercial satellite imagery, and the strong support for the industry by the US government. The ratings are also supported by the company's very good liquidity, as the company's cash balances and cash generated from operations should be sufficient to meet its share of the construction milestones of the planned Geoye-2 satellite. On the other hand, the company's near-term adjusted Debt/EBITDA leverage (adjusted primarily for deferred revenues and operating leases) will be elevated to about 4.0x and free cash flow will be negative during the satellite construction phase, as the company ramps up the design and development capital expenditures of Geoeye-2. The ratings are also tempered by the technology and business risks manifest in the company's high customer and asset concentration and the longer- term uncertainty relating to the company's strategy to meet shareholder return expectations. Geoeye's SGL-1 liquidity rating indicates very good liquidity. Over the 4-quarter horizon to June 30, 2011, Geoeye's main source of liquidity is expected to be cash on hand, which was about $230 mm at June 30, 2010, proforma for the release of the restricted cash following the NGA award. Proforma for the new $125 million note offering, an expected $27 million tax refund in 3Q 2010 and about $78 million preferred stock investment by Cerberus, would be roughly $460 million. Additionally, Geoeye may generate roughly $75 million of free cash flow over this 4-quarter period once capital expenditures relating to the early stage design and development of its next-generation satellite have been incurred. Ratings Outlook The stable outlook reflects Moody's view that continuing US government backing of the commercial satellite industry especially considering the increasing needs for high resolution surveillance and mapping applications, along with the pledge of the insurance proceeds on the satellites, mitigate the high emerging business risk of the commercial satellite sector in the near-term. What Could Change the Rating -- Up Prior to launch of Geoeye-2, rating migration could occur if the company successfully capitalizes on its goal to diversify its revenue stream away from the US government, and free cash flow generation reaches over $100 million per year. What Could Change the Rating -- Down Given the demonstrated support for the GeoEye's business by its major customer, the US Government, a rating downgrade over the next couple of years is unlikely barring the low probability of the NGA contract reversal. However, given the high technology risk endemic in the company's business model, ratings would come under pressure if there is a significant impairment of assets in space that is not covered by insurance. High payouts to shareholders could also drive negative rating actions. Moody's most recent rating action on Geoeye was September 17, 2009, when the rating agency assigned a B1 rating to the company's senior secured notes. Note that Moody's has transferred the methodology used in rating Geoeye from the Global Telecommunications Industry to the Global Aerospace and Defense Industry methodology. Headquartered in Dulles, VA, GeoEye, Inc., is a commercial satellite imagery company (formed as a result of ORBIMAGE's January, 2006 acquisition of Space Imaging) operating three earth imaging satellites -- Geoye-1, OrbView-2 and IKONOS. The company also owns and operates a network of ground stations and has an extensive archive of images and has advanced geospatial imagery processing capabilities. GEOKINETICS INC: Lenders Grant Financial Covenants Waiver --------------------------------------------------------- Lenders have granted Geokinetics Inc. a financial covenants waiver related to its Revolving Credit Facility due 2013 for the September 30, 2010 measurement date. In addition, effective September 30, 2010, the Company has amended its Revolving Credit Facility with Royal Bank of Canada. Among other things, the second amendment requires that the Company adheres to monthly consolidated total revenue and consolidated cumulative adjusted EBITDA targets commencing with the month ending September 30, 2010 through the month ending November 30, 2010. The permitted outstanding borrowing amount under the revolver remains unchanged at $40 million, of which $26 million was outstanding as of September 30, 2010. Richard F. Miles, President and Chief Executive Officer, stated, "We are very pleased to have been granted a financial covenants waiver related to the revolving credit facility for the third quarter of this year. Based on our current forecast, we believe that the revised monthly financial covenants through November 2010 are achievable. Our lenders continue to show confidence in our business model and management team, and we are pleased to have their support to fuel our expected growth." The second amendment does not address financial covenants related to the revolver at the December 31, 2010 measurement date and beyond. The Company is currently in discussions with its lenders about potential solutions that would provide future covenant relief. About Geokinetics Inc. Based in Houston, Texas, Geokinetics Inc. (NYSE Amex: GOK) -- http://www.geokinetics.com/-- provides seismic data acquisition, seismic data processing services and multi-client seismic data to the oil and gas industry worldwide. At June 30, 2010, the Company had total assets of $711,901,000; total liabilities of $543,947,000 and Series B Senior Convertible Preferred stock of $70,815,000; and stockholders' equity of $97,139,000. At December 31, 2010, stockholders' equity was $145,330,000. GEOKINETICS INC: Lenders OK Financial Covenants Waiver ------------------------------------------------------ Geokinetics Inc.'s lenders have granted the Company a financial covenants waiver related to the Revolving Credit Facility due 2013 for the September 30, 2010 measurement date. In addition, effective September 30, 2010, the Company has amended its Revolving Credit Facility with Royal Bank of Canada. Among other things, the second amendment requires that the Company adheres to monthly consolidated total revenue and consolidated cumulative adjusted EBITDA targets commencing with the month ending September 30, 2010, through the month ending November 30, 2010. The permitted outstanding borrowing amount under the revolver remains unchanged at $40 million, of which $26 million was outstanding as of September 30, 2010. Richard F. Miles, President and Chief Executive Officer, stated, "We are very pleased to have been granted a financial covenants waiver related to the revolving credit facility for the third quarter of this year. Based on our current forecast, we believe that the revised monthly financial covenants through November 2010 are achievable. Our lenders continue to show confidence in our business model and management team, and we are pleased to have their support to fuel our expected growth." The second amendment does not address financial covenants related to the revolver at the December 31, 2010 measurement date and beyond. The Company is currently in discussions with its lenders about potential solutions that would provide future covenant relief. About Geokinetics Inc. Geokinetics Inc. is a leading provider of seismic data acquisition, seismic data processing services and multi-client seismic data to the oil and gas industry worldwide. Headquartered in Houston, Texas, Geokinetics is the largest Western contractor acquiring seismic data onshore and in transition zones in oil and gas basins around the world. Geokinetics has the crews, experience and capacity to provide cost-effective world class data to our international and North American clients. GEOMET INC: Gets NASDAQ Global Market Listing Deficiency Notice --------------------------------------------------------------- GeoMet, Inc., received notice from The NASDAQ Stock Market on September 28, 2010, advising the Company that, for the previous 30 consecutive business days, the bid price for the Company's common stock had closed below the minimum $1.00 per share required under NASDAQ Marketplace Rule 5450(a)(1) for continued listing on the NASDAQ Global Market. The notification letter states that the Company will be afforded 180 calendar days to regain compliance with the minimum bid price requirement. In order to regain compliance, the bid price of the Company's common stock must close at $1.00 per share or more for a minimum of ten consecutive business days. The initial grace period expires on March 28, 2011. In the event that the bid price deficiency is not cured by that time, the Company's securities will be subject to delisting. An additional 180-day period will be available to regain compliance if the Company transfers its listing to the NASDAQ Capital Market and meets all other listing requirements. The notification letter has no effect on the listing or trading of the Company's common stock and preferred stock on the NASDAQ Global Market at this time. Commenting on the notice, Darby Sere, President and Chief Executive Officer, said, "We are obviously disappointed to receive this notice but it is important to point out that it does not impact the Company's financial stability or daily operations. No financial covenants or other agreements are impacted by this notice. The recent completion of the Company's $40 million rights offering and backstop transaction and its new three-year bank credit agreement, together with reductions in the Company's cost structure and natural gas hedges, provide the Company with the flexibility and liquidity it needs to execute its capital and operational plans." The Company intends to actively monitor the bid price for its common stock between now and March 28, 2011, and will consider all available options to resolve the deficiency and regain compliance with the NASDAQ Global Market minimum bid price requirement. About GeoMet, Inc. GeoMet, Inc. is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams ("coalbed methane") and non-conventional shallow gas. Our principal operations and producing properties are located in the Cahaba Basin in Alabama and the Central Appalachian Basin in West Virginia and Virginia. We also control coalbed methane and oil and gas development rights, principally in Alabama, British Columbia, Virginia, and West Virginia. HARMAN INTERNATIONAL: Moody's Raises Corp. Family Rating to 'Ba2' ----------------------------------------------------------------- Moody's Investors Service raised the ratings of Harman International Industries, Incorporated, Corporate Family Rating and Probability of Default Rating to Ba2 from B1. In a related action, the rating of the senior secured revolving credit was raised to Baa2. The rating outlook was changed to stable from positive. The Speculative Grade Liquidity Rating also was affirmed at SGL-2. The raising of Harman's Corporate Family to Ba2 reflects the company's much improved credit metrics and strong free cash flow generation following the recovery of automotive production levels beginning in late 2009. This trend, accompanied by restructuring actions taken in 2009, and the company's modest debt levels have resulted in improvements in gross margins to pre-industry downturn levels and Free Cash Flow/Debt (inclusive of Moody's standard adjustments) of approximately 23%. Improving general economic conditions and the company's announced backlog increase to $12.2 billion are expected to support the assigned rating over the intermediate-term. Approximately 73% of Harman's 2009 revenues came from the infotainment and audio segments of the automotive industry. While Moody's expects the global automotive industry to continue to recover from the industry troughs of 2009, regional recoveries will vary. Industry conditions in the U.S. have improved in 2010 with retail unit sales anticipated to increase to 11.5 million units for the full year. While first half 2010 car registrations in Europe also have improved over prior period levels, the second half of 2010 is expected to reflect seasonal softness and the impact of expired government scrappage programs. About 27% of Harman's 2009 revenues were derived from the consumer and professional audio markets which may be challenged by volatile consumer confidence and discretionary spending levels. Harman's EBIT/Interest (including Moody's standard adjustments) as of June 30, 2010, was approximately 2.4x. The stable rating outlook incorporates Moody's expectation that the company should generate credit metrics consistent with the assigned ratings over the intermediate term. The company's good liquidity profile also is expected to support operating flexibility in the event that general economic growth temporarily stalls. The SGL-2 Speculative Grade Liquidity Rating continues to indicate the expectation of a good liquidity profile over the next twelve months supported by cash balances and expected free cash flow generation. As of June 30, 2010, the company maintained $646 million of cash and cash equivalents. Moody's expects Harman to be free cash flow positive over the next twelve months resulting from continued growth in the company's end-markets. Availability under the company's $232 million multi-currency revolving credit facility, as of June 30, 2010, was $225 million after $6.6 million of letters of credit outstanding. Moody's expects the company to operate with ample headroom under the revolver's financial covenants over the near-term to maintain financial flexibility. Harman's capacity for additional borrowings outside of the multi-currency revolving credit facility is limited by lien limitations under this facility and a debt incurrence test under its convertible notes. Ratings raised: -- Corporate Family Rating, to Ba2 from B1; -- Probability of Default Rating, to Ba2 from B1; -- Secured multi-currency revolving credit due December 2011, to Baa2 (LGD1, 5%), from Ba1 (LGD1, 9%) Ratings affirmed: -- Speculative Grade Liquidity Rating, at SGL-2 The last rating action for Harman was on March 25, 2010 when the B1 Corporate Family Rating was affirmed and the rating outlook was changed positive. Harman International Industries, Incorporated, headquartered in Stamford, Conn., is a leading manufacturer of high quality, high fidelity audio products and electronic systems for the consumer, automotive, and professional markets. Revenues for fiscal year 2010 were approximately $3.4 billion. HARRISBURG, PA: Asks State For Help Solving Financial Woes ---------------------------------------------------------- Harrisburg, Pa., applied for the city to join the Act 47 program in which the state Pennsylvania provides oversight and assistance in attempting to repair the city's finances. Dow Jones' DBR Small Cap reports that Mayor Linda Thompson, warning the city "stands on the precipice of a full-blown financial crisis," said she has asked state of Pennsylvania officials to declare the capital city a distressed municipality under a 1987 state law that offers state help to financially ailing municipalities. The report relates that the program, known colloquially as Act 47, offers guidance on recovery plans, grants, loans and other forms of assistance. Nineteen cities and other local governments, the largest of which is Pittsburgh, are currently in the program, Thompson, whose city is wrangling with $288 million in incinerator debt, said seeking state help is only one step toward resolving Harrisburg's problems, and that "there are many difficult steps to come," the report notes. A city press release announcing the request was blunt in its description of how deep a hole Thompson and other officials face, the report adds. About Harrisburg, PA The city of Harrisburg is coping with debt related to a failed revamp of an incinerator. The outstanding principal on the Incinerator debt is $288 million. Total principal and interest on this debt would amount to approximately $458 million. Debt service payments on the total incinerator debt are $20 million per year. Of this total, Dauphin County, Pennsylvania, is responsible for roughly $10 million and Harrisburg is responsible for the other $10 million. The city is guarantor on 100% of the $288 million Incinerator debt. The City Council of Harrisburg, Pennsylvania, voted 5-2 on September 28 to seek professional advice on bankruptcy or state oversight. Harrisburg needed state aid to avoid default on $3.3 million of bond payments this month. The city has missed about $8 million in debt-service payments this year on bonds issued in connection with a trash-to-energy incinerator. The city owes another $40 million by the end of the year, and was sued by its home county, Dauphin, and Hamilton, Bermuda-based bond insurer Assured Guaranty Municipal Corp. over its failure to honor the commitments. HAWKER BEECHCRAFT: To Pay Interest In Cash for Senior Notes ----------------------------------------------------------- Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company said they may, at their option, elect to pay interest entirely in cash, entirely by increasing the principal amount, or 50% in cash and 50% by increasing the principal amount for any interest payment period prior to April 1, 2011, for its outstanding 8.875%/9.625% Senior PIK Election Notes due 2015. The Company is electing to pay cash interest for the interest period ending March 31, 2011. The Company will evaluate this option prior to the beginning of each eligible interest period, taking into account market conditions and other relevant factors at that time. In connection with this election, on September 30, 2010, the Company delivered notice to Deutsche Bank National Trust Company, in its capacity as Trustee under the Indenture governing the PIK Notes, that, with respect to the interest that will be due on such notes on the April 1, 2011 interest payment date, the Company will make such interest payment in cash. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, is a leading manufacturer of business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. The Company's balance sheet at March 28, 2010, showed $3.41 billion in total assets, $3.36 billion in total liabilities, and stockholders' equity of $56.5 million. Hawker Beechcraft reported a net loss of $63.4 million on $568.2 million of total sales for the three months ended March 28, 2010, compared with net income of $53.1 million on $537.6 million of sales for the three months ended March 29, 2009. HEALTHSOUTH CORP: Completes Purchase of 30-Bed Rehabilitation Unit ------------------------------------------------------------------ HealthSouth Corporation has completed its purchase of a 30-bed inpatient rehabilitation unit in Ft. Smith, Arkansas, from Health Management Associates (NYSE: HMA). The rehabilitation unit will be relocated from Health Management Associates' Sparks Regional Medical Center to HealthSouth Rehabilitation Hospital of Ft. Smith. "HealthSouth is committed to meeting the rehabilitative needs of patients in Ft. Smith, and we look forward to expanding our outreach in this market," said Jay Grinney, HealthSouth president and CEO. "We have provided rehabilitative care in Ft. Smith since 1989," said Terry Maxhimer, president of HealthSouth's Mid-Atlantic Region. "We have a terrific relationship with Sparks Regional Medical Center and will continue to work with them to provide a seamless continuum of care and ensure access to exceptional services for the patients of the Ft. Smith region." HealthSouth Rehabilitation Hospital of Ft. Smith serves Ft. Smith and the surrounding area, including Sebastian, Crawford and Logan counties in Arkansas as well as Adair, LeFore and Sequoyah counties in Oklahoma. HealthSouth operates four rehabilitation hospitals and one rehabilitation satellite unit throughout Arkansas in Fayetteville, Ft. Smith, Jonesboro, Little Rock and Sherwood. About HealthSouth Corp. Birmingham, Alabama-based HealthSouth Corporation (NYSE: HLS) -- http://www.healthsouth.com/-- is the nation's largest provider of inpatient rehabilitative healthcare services. Operating in 26 states across the country and in Puerto Rico, HealthSouth serves patients through its network of inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient rehabilitation satellites, and home health agencies. The Company's balance sheet at June 30, 2010, showed $1.7 billion in total assets, $2.1 billion in total liabilities, and a shareholders' deficit of $817.3 million. HealthSouth carries a 'B1' corporate family rating with "stable" outlook, from Moody's. It has 'B' foreign and local issuer credit ratings, with "positive" outlook, from Standard & Poor's. On October 1, 2010, the Troubled Company Reporter said HealthSouth's B1 Corporate Family Rating reflects the continued reduction in debt outstanding and management's commitment to strengthening the company's balance sheet. Moody's last rating on HealthSouth was on November 16, 2009 when Moody's assigned a Caa1 (LGD5, 80%) rating to the company's senior unsecured notes due 2020 and a Ba3 (LGD2, 25%) rating to the new tranche of term loan due 2014 created in the company's credit agreement amendment. Moody's also affirmed HealthSouth's B2 Corporate Family and Probability of Default Ratings at that time. HELIX BIOPHARMA: Posts C$4.2-Mil. Net Loss in April 30 Quarter -------------------------------------------------------------- Helix BioPharma Corp. reported a net loss of C$4.2 million on C$1.1 million of revenue for the three months ended April 30, 2010, compared with a net loss of C$4.1 million on C$924,000 of revenue for the three months ended April 30, 2009. The Company has yet to achieve net earnings from its operations. As of April 30, 2010, the Company had an accumulated deficit of C$84.1 million. The Company's balance sheet at April 30, 2010, showed C$20.3 million in total assets, C$1.8 million in total liabilities, and stockholders equity of C$18.5 million. The Company discloses that its ability to continue as a going concern is dependent on obtaining additional investment capital and the achievement of profitable operations, of which there can be no assurance. "While the Company estimates it has sufficient capital and liquidity to finance current operations through the next twelve months, the Company's long-term liquidity depends on its ability to access the capital markets, which depends substantially on the success of the Company's ongoing research and development programs." "The failure of the Company to obtain additional funding on a timely basis may result in the Company reducing, delaying or canceling one or more of its planned research, development and marketing programs and reducing related personnel, any of which could impair the current and future value of the business. It may also have a material adverse effect on the Company's ability to continue as a going concern." A full-text copy of the Company's unaudited consolidated financial statements for the three months ended April 30, 2010, is available for free at http://researcharchives.com/t/s?6c0d A full-text copy of the Company's Management's Discussion and Analysis for the three months ended April 30, 2010, is available for free at http://researcharchives.com/t/s?6c0e About Helix BioPharma Helix BioPharma Corp. -- http://www.helixbiopharma.com/-- is a Canadian biopharmaceutical company specializing in the field of cancer therapy. The Company is actively developing innovative products for the prevention and treatment of cancer based on its proprietary technologies. Helix's product development initiatives include its novel L-DOS47 new drug candidate and its Topical Interferon Alpha- 2b. Helix is listed on the TSX and FSE under the symbol "HBP" and the OTCQX International Market under the symbol "HXBPF". HERBST GAMING: Bank Debt Trades at 45% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Herbst Gaming Inc. is a borrower traded in the secondary market at 54.75 cents-on-the- dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 1.13 percentage points from the previous week, The Journal relates. The Company pays 187.5 basis points above LIBOR to borrow under the facility. The bank loan matures on Dec. 8, 2013. Moody's has withdrawn its rating, while Standard & Poor's does not assign a rating, on the bank debt. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. As reported by the Troubled Company Reporter on April 12, 2010, Standard & Poor's withdrew its ratings on Las Vegas-based Herbst Gaming Inc. at the company's request. Herbst filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in Nevada on March 22, 2009. The Bankruptcy Court issued an order on January 22, 2010, confirming the company's amended joint plan of reorganization. Although the plan became effective February 5, 2010, it will not be fully implemented until the substantial consummation date; this will not occur until certain conditions, including approval of gaming authorities in Nevada, Missouri, and Iowa have been satisfied. About Herbst Gaming Headquartered in Reno, Nevada, Herbst Gaming, Inc. -- http://www.herbstgaming.com/-- is a diversified gaming company. The Company and its subsidiaries focus on two business lines, slot route operations and casino operations. The Company's route operations involves the exclusive installation and, as of September 30, 2009, operation of around 6,300 slot machines in non-casino locations, such as grocery stores, drug stores, convenience stores, bars and restaurants. The casino operations consist of 16 casinos located in Nevada, Iowa and Missouri. The Company and 17 of its affiliates filed for Chapter 11 protection on March 22, 2009 (Bankr. D. Nev. Lead Case No. 09-50752). Thomas H. Fell, Esq., and Gerald M. Gordon, Esq., at Gordon Silver, represent the Debtors in their restructuring efforts. Herbst Gaming had $919.1 million in total assets; and $33.5 million in total liabilities not subject to compromise and $1.24 billion in liabilities subject to compromise, resulting in $361.0 million in stockholders' deficiency as of March 31, 2009. At December 31, 2009, Herbst Gaming, Inc., had $612.8 million in total assets and $1.232 billion in total liabilities. Cash and cash equivalents were $32.6 million at December 31, 2009. HERCULES OFFSHORE: Bank Debt Trades at 14% Off in Secondary Market ------------------------------------------------------------------ Participations in a syndicated loan under which Hercules Offshore, Inc., is a borrower traded in the secondary market at 86.04 cents-on- the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.79 percentage points from the previous week, The Journal relates. The Company pays 650 basis points above LIBOR to borrow under the facility. The bank loan matures on July 11, 2013, and carries Moody's B2 rating and Standard & Poor's B- rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. Hercules Offshore, Inc. (NASDAQ: HERO) -- http://www.herculesoffshore.com/-- provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the United States, Gulf of Mexico and internationally. The Company provides these services to integrated energy companies, independent oil and natural gas operators and national oil companies. The Company operates in six business segments: Domestic Offshore, International Offshore, Inland, Domestic Liftboats, International Liftboats and Delta Towing. As reported in the Troubled Company Reporter on June 10, 2010, Standard & Poor's took several rating actions on eight U.S. oil and gas companies, including Hercules Offshore, Inc., following an industry review. S&P reviewed companies with operating exposure to the Gulf of Mexico following the U.S. Department of the Interior's extension of the moratorium on drilling permits. S&P believes that when the moratorium is eventually lifted, there could be extensive delays in issuing new permits due to high initial volume and new safety and operating standards imposed. S&P downgraded Hercules Offshore's rating from (B/Negative/--) to (B-/Negative/--). The rating actions also reflect S&P's heightened concerns about the burgeoning scope of the Macondo well disaster. The flow of oil into the Gulf of Mexico is likely to continue until at least August. Uncertainty about the ultimate remediation cost and potential financial liabilities associated with the disaster has already resulted in a rating downgrade of the corporate credit rating of BP PLC (AA-/Watch Neg/A-1+). HERTZ CORPORATION: DBRS Confirms 'BB' Issuer Rating --------------------------------------------------- DBRS has confirmed the ratings of Hertz Corporation (Hertz or the Company), including its Issuer Rating of BB. Concurrently, the trend has been revised to Stable from Positive. This rating action follows Hertz's announcement that the Company has terminated its agreement to acquire Dollar Thrifty Automotive Group, Inc. (DTAG). The former positive trend, which was assigned on April 28, 2010, reflected DBRS's view that the now-terminated DTAG transaction would have had a positive and immediate impact on Hertz's overall solid franchise. In revising the trend to Stable, DBRS is merely removing the shorter term ratings impact that was expected to be gained through the completion of the transaction. Importantly, the revision of the trend does not reflect any expected changes to the Company's solid underlying earnings momentum. Over the near term, DBRS will monitor Hertz's operating performance, looking for ongoing positive momentum in the franchise as well as in the financial performance. The rating confirmation reflects the Hertz's strong business franchise and solid market position in the daily vehicle rental business, the improving financial performance, and solid fleet management. Further, the rating confirmation considers the improving industry fundamentals, which include increasing rental demand and volumes, solid pricing, and improved market-wide access to funding. HORIZON BANCORPORATION: Swings to $117,000 Profit in Q2 2010 ------------------------------------------------------------ Horizon Bancorporation, Inc., filed its quarterly report on Form 10-Q, reporting net income of $116,967 on $1.3 million of net interest income for the three months ended June 30, 2010, compared with a net loss of $6.9 million on $1.5 million of net interest income for the same period of 2009. The Company's balance sheet as of June 30, 2010, showed $187.8 million in total assets, $183.7 million in total liabilities, and stockholders' equity of $4.1 million. As reported in the Troubled Company Reporter on April 21, 2010, Francis & Co., CPA's, in Atlanta, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered heavy losses in calendar year 2009, reducing its capital accounts significantly. "Due to the 2009 losses, the significant decline in capital ratios, regulatory concerns over the adequacy of the allowance for loan and lease losses, as well as other concerns, a formal supervisory agreement was imposed by Federal and State regulators. Failure to fully comply with the requirements of the above agreement may lead to additional regulatory actions such as prompt corrective action directive (imposed in 2010) or even placing the Company into receivership/conservatorship." A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c12 About Horizon Bancorporation Horizon Bancorporation, Inc. (OTC BB: HZNB) -- http://www.horizonbankfl.com/-- is the bank holding company of Horizon Bank, a commercial bank chartered under the laws of Florida. The Company maintains its corporate offices and main banking center at 900 53rd Avenue East, in Bradenton, Florida. On September 10, 2010, Horizon Bank failed and the Federal Deposit Insurance Corporation was appointed as receiver for the Bank and its assets. The Company's existing management team, consisting of Charles S. Conoley, as President and CEO, and Kathleen M. Jepson, as CFO, and the Company's existing directors will continue to manage the affairs of the Company. Management and the Board of Directors are currently evaluating the possibility of the Company entering into one or more lines of business, which may or may not involve the ownership of a financial institution, while, in the short run, resolving all outstanding issues stemming from Horizon Bank's receivership. The Company intends to maintain, for the foreseeable future, the Company's status as a fully reporting public company. INTERNATIONAL GARDEN: File for Chapter 11 Protection ---------------------------------------------------- International Garden Products, Inc., disclosed that the company and four of its affiliates, including Weeks Wholesale Rose Grower and Iseli Nursery, Inc., have filed voluntary petitions in U.S. Bankruptcy Court for the District of Delaware for protection under Chapter 11 of the U.S. Bankruptcy Code. In the filing, IGP stated that, in the last several months, the companies' finances have been negatively affected by a number of issues unrelated to their own operations, including being adversely impacted by the financial difficulties at Jackson & Perkins, which resulted in J&P failing to assure payment on its $1.7 million order for the 2010 season; three contingent liability issues, totaling approximately $27.2 million, and current market conditions. The Company noted that it has worked diligently over an extended period of time to resolve the legacy contingent liability issues but that it has not been able to reach agreements with the parties. As a result, to protect the interests of its stakeholders -- and to bring these issues to a conclusion in an orderly manner -- the company decided to file for court-supervised protection under Chapter 11. In support of this process, the company said it has secured $7.5 million in debtor-in-possession (DIP) financing from a group led by Harris Bank. IGP said it believes the facility will be adequate to meet the needs of Iseli and Weeks and to continue operations during the reorganization process. IGP noted that Chapter 11 protection should enable it to conduct operations in the ordinary course. To that end, the company is seeking approval from the court for a variety of First Day Motions, including requests to make wage and salary payments and other benefits to employees and agents. The motions are typical in Chapter 11 filings. The company intends to pay providers of goods and services delivered post-petition in the ordinary course of business. The Company also emphasized that it does not anticipate an interruption in services, and that customers will continue to have the same contacts at both Iseli and Weeks and can place, with confidence, their orders for the spring 2011 season. IGP added that Iseli and Weeks are strong competitors in their respective markets, and that the Company is confident that this process will allow each company to emerge much stronger, and better positioned, to capitalize on industry opportunities. The Company stated that it expects the process to proceed smoothly, but cannot speculate on when it will conclude. About International Garden Products International Garden Products, Inc. was incorporated in 1996 as a holding company for Iseli Nursery, Inc., California Nursery Supply, Weeks Wholesale Rose Grower, and Old Skagit, Inc. The company's operating businesses, Iseli and Weeks, focus primarily on growing horticultural products for nationwide sale to independent garden centers, landscape suppliers, landscapers and similar parties. Iseli's is known in the industry as the premium source of dwarf conifers, Japanese maples and unique companion plants. Weeks is one of the largest wholesale breeders and growers of premium roses in the U.S. ISTAR FINANCIAL: Did Not Pay $500MM Under 1st Lien Credit Pact -------------------------------------------------------------- iStar Financial Inc. elected not to pay down its $1.0 billion First Priority Credit Agreement by $500 million on September 30, 2010. In lieu of making the single, optional $500 million payment, iStar will direct payments and prepayments of principal and net cash sale proceeds received in respect of assets serving as collateral for the First Priority Credit Agreement to the lenders under the agreement until the lenders receive $500 million in payments. iStar will retain interest and rental payments received in respect of the collateral. iStar's election not to make the payment on September 30, 2010, does not constitute a default or an event of default under the First Priority Credit Agreement or any of iStar's other debt instruments. Further, iStar's election will not trigger any change in the interest rates on outstanding borrowings under the First Priority Credit Agreement or iStar's other debt instruments. iStar may elect at any time to pay any unpaid balance of the $500 million payment. iStar's available cash currently exceeds $500 million. The First Priority Credit Agreement matures on June 26, 2012. About iStar Financial New York-based iStar Financial Inc. (NYSE: SFI) provides custom- tailored investment capital to high-end private and corporate owners of real estate, including senior and mezzanine real estate debt, senior and mezzanine corporate capital, as well as corporate net lease financing and equity. The Company, which is taxed as a real estate investment trust, provides innovative and value added financing solutions to its customers. As of June 30, 2010, iStar had $10.653 billion in total assets against total liabilities of $8.802 billion, redeemable non- controlling interests of $7.441 million, and non-controlling interests of $46.602 million, resulting in total equity of $1.843 billion. * * * As reported by the Troubled Company Reporter on July 13, 2010, Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on iStar Financial to 'CCC' from 'B-'. At the same time, S&P lowered the senior unsecured debt rating to 'CCC-' from 'CCC+.' The outlook is negative. iStar's limited funding flexibility and the severe credit quality deterioration in its loan portfolio continue to put negative pressure on the rating. "S&P's analysis indicates that the firm should not become insolvent and has ample liquidity to operate through 2010, but management faces a significant challenge with $3.0 billion in debt coming due in 2011 and $3.5 billion due in 2012," said Standard & Poor's credit analyst Jeffrey Zaun. In the longer term, the company's concentration in highly cyclical commercial real estate will limit the ratings. Although credit- market turmoil and a severe recession impeded capital formation through 2009, the firm's capital ratios improved slightly in first-quarter 2010. Management has been able to execute a rapid pull-back in operations through a protracted and severe recession in CRE markets. ITC^DELTACOM INC: EarthLink Deal Won't Affect Moody's 'B3' Ratings ------------------------------------------------------------------ Moody's Investors Service said that the proposed acquisition of ITC^DeltaCom Inc. by EarthLink, Inc., does not immediately impact DeltaCom's B3 corporate family rating or the B3 rating on its secured bonds. The closing of the merger will trigger a requirement that DeltaCom offer to purchase any or all of its 10.5% Senior Secured Notes due 2016. Notes not purchased in connection with the merger will remain outstanding as obligations of DeltaCom and its subsidiaries. Should a material amount of notes remain outstanding, Moody's will evaluate the potential benefits to bondholders related to the ownership of DeltaCom by EarthLink. Moody's most recent rating action on Deltacom occurred on March 25, 2010, when Moody's affirmed the B3 corporate family rating and positive outlook and assigned a B3 rating to the company's senior secured notes due 2016. A competitive local exchange carrier headquartered in Huntsville, AL, ITC^DeltaCom, Inc., serves small and medium-sized businesses in 45 markets in 8 states in the southeastern United States. DeltaCom generated approximately $470 million in revenue in 2009. JOECELESTIN CIVIL: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------- Joecelestin Civil Engineer & General Builder Corp. filed for Chapter 11 protection on Sept. 29, 2010 (Bankr. S.D. Fla. Case No. 10-39600). The Debtor estimated assets of $500,000,001 to $1 billion and debts of up to $50,000. Paul Brinkman at South Florida Business Journal reports that the bankruptcy is related to a 2009 foreclosure filed on former North Miami mayor Josaphat Celestin's home. The bankruptcy was filed as a single-asset real estate case. Developer Michael Swerdlow's Bonefish Partners filed that foreclosure over a 2006 loan for $400,000. M. Brinkmann says, when Mr. Celestin defaulted on the loan, former North Miami city attorney John Dellagloria stepped in to take on the foreclosure case. Joecelestin Civil Engineers is located at 369 NW 159th Street in North Miami, Florida. LAKE ARROWHEAD AIRPORT: Foreclosure Sale Extended to October 26 --------------------------------------------------------------- Glenn Barr, writing for The Mountain News, reports that the foreclosure sale of Lake Arrowhead Airport in California has been delayed. According to Mountain News, the sale, one of many slated for 1 p.m. on Sept. 23 outside the Chino City Hall, was continued by "mutual agreement," according to the Web site of Priority Posting and Publishing, the firm hired to conduct the auction. The rescheduled sale will take place at 1 p.m. on Oct. 26 at the same location, the site says. The Mountain News reported on September 9 that the sale of the 80-acre airport property, located on the old Squint's Ranch property northeast of Lake Arrowhead, was scheduled after owner Mark Bayley defaulted on five trust deeds held by Orange County businessman Vic Domines. Mr. Bayley said in that article he has been unable to refinance the loans, which total approximately $1.5 million, because financial institutions are unwilling to make loans in the current troubled economy. "We're working out a forbearance agreement," Mr. Domines has said, according to Mountain News. "It's not finished yet. The sale is postponed until Oct. 26." The report notes Mr. Bayley, who owns a heavy-equipment-rental business, plans to make the airport both an arrival spot for wealthy Lake Arrowhead land owners who want to fly to their vacation homes and a facility capable of evacuating mountain residents during wild fires and landing supplies on the mountain should an earthquake knock out local highways. According to the report, Mr. Bayley is seeking to acquire federal funds to improve an unpaved road linking the airstrip with Lake Arrowhead. He has submitted an application for $3.8 million to the office of Rep. Joe Baca (D-San Bernardino). LEVEL 3 COMMS: Bank Debt Trades at 9% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Level 3 Communications Inc. is a borrower traded in the secondary market at 91.29 cents-on-the-dollar during the week ended October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.66 percentage points from the previous week, The Journal relates. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank loan matures on March 1, 2014, and carries Moody's B1 rating and Standard & Poor's B+ rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. As reported by the Troubled Company Reporter on Sept. 16, 2010, Standard & Poor's assigned its 'CCC' issue-level rating and '6' recovery rating to Level 3 Communications Inc.'s proposed aggregate $175 million of convertible senior notes due 2016. The company intends to use the proceeds from the new notes for general corporate purposes, including the potential repurchase or redemption of its 5.25% convertible senior notes due in 2011. This facilities-based provider of communications services and transport reported just under $6.3 billion of consolidated debt at June 30, 2010. Headquartered in Broomfield, Colorado, Level 3 Communications, Inc., is a publicly traded international communications company with one of the world's largest communications and nternet backbones. Level 3 Communications carries a 'Caa1' corporate family rating, and 'Caa2' probability of default rating, with negative outlook from Moody's, a 'B-' issuer default rating from Fitch, and 'B-' long term issuer credit ratings from Standard & Poor's. LODGENET INTERACTIVE: Withdraws Private Offering of Sr. Notes ------------------------------------------------------------- LodgeNet Interactive Corporation has withdrawn its proposed private offering of senior secured notes, having determined the pricing and terms were not acceptable. LodgeNet announced the proposed offering on September 20, 2010, and the proceeds were to be used to fully repay borrowings and to terminate the commitments under the Company's existing credit facilities, pay certain financing and swap breakage fees and for general corporate purposes. On September 28, 2010, LodgeNet announced that a variety of other alternatives were also under consideration, including deferral of the transaction if the pricing and terms were not acceptable. LodgeNet is fully compliant with the covenants in its existing credit facility, and expects to remain compliant while executing its business plan. The Company will continue to evaluate its capital structure and optimize its overall cost of capital. About LodgeNet Interactive Sioux Falls, South Dakota-based LodgeNet Interactive Corporation (Nasdaq:LNET) -- http://www.lodgenet.com/-- provides media and connectivity solutions designed to meet the unique needs of hospitality, healthcare and other guest-based businesses. LodgeNet Interactive serves more than 1.9 million hotel rooms worldwide in addition to healthcare facilities throughout the United States. The Company's services include: Interactive Television Solutions, Broadband Internet Solutions, Content Solutions, Professional Solutions and Advertising Media Solutions. LodgeNet Interactive Corporation owns and operates businesses under the industry leading brands: LodgeNet, LodgeNetRX, and The Hotel Networks. The Company's balance sheet at June 30, 2010, showed $466.45 million in total assets, $522.34 million in total liabilities, and a stockholders' deficit of $55.89 million. * * * As reported by the Troubled Company Reporter on June 21, 2010, Standard & Poor's Ratings Services affirmed its ratings on Sioux Falls, S.D.-based LodgeNet Interactive, including the 'B-' corporate credit rating. At the same time, S&P revised the rating outlook to positive from stable. LOEHMANN'S CAPITAL: Misses Oct. 1 Interest Payment -------------------------------------------------- New York City-based Loehmann's Capital Corp. missed the Oct. 1, 2010, interest payment on its senior secured notes. Standard & Poor's believes the company is not likely to make the payment within the 30-day grace period. S&P lowered our corporate credit rating on Loehmann's Holdings Inc. to 'D' from 'CC' and the issue-level rating on the senior secured notes to 'D' from 'C'. As reported by the Troubled Company Reporter on September 27, 2010, Loehmann's on Friday said it is commencing a private offer to exchange its outstanding 12% Senior Secured Class A Notes due 2011, Senior Secured Class A Floating Rate Notes due 2011 and 13% Senior Secured Class B Notes due 2011 for 12% Senior Secured Class A Notes due 2014, Senior Secured Class A Floating Rate Notes due 2014 and 13% Senior Secured Class B Notes due 2014. In conjunction with the exchange offer, Loehmann's is also soliciting consents to (i) amend the indenture governing the old notes, along with other related documents, to add the new series of notes, (ii) increase the priority lien cap under the lease agreement and intercreditor agreement to which Loehmann's is a party, and (iii) waive certain provisions of the indenture, lease agreement, intercreditor agreement and related documents insofar as such provisions would otherwise prevent or restrict certain proposed actions by Loehmann's Operating Co. Holders tendering old notes for exchange will be deemed to consent to the proposed amendments and waivers, and holders may not deliver consents in the consent solicitation without tendering their old notes for exchange. The exchange offer and consent solicitation will expire at 11:59 p.m., New York City time, on October 27, 2010. Eligible holders that validly tender their old notes and validly consent to the proposed amendments and waivers at or prior to 11:59 p.m., New York City time, on October 13, 2010, will receive $1,000 principal amount of new notes of the same class for each $1,000 principal amount of their old notes that are accepted for exchange. Eligible holders that validly tender their old notes and validly consent to the proposed amendments and waivers after the early tender date but at or prior to the expiration date will receive $970 principal amount of new notes of the same class for each $1,000 principal amount of their old notes that are accepted for exchange. Loehmann's has entered into agreements with holders of approximately 34% of the old notes pursuant to which those holders have agreed to tender their old notes in the offer and consent to the amendments and waivers. The consummation of the exchange offer and consent solicitation will be subject to customary conditions, including the receipt of valid and unrevoked tenders of at least a majority in principal amount of the outstanding old notes, in the case of the consent solicitation, and at least 97% in principal amount of the outstanding old notes, in the case of the exchange offer. As reported by the TCR on June 18, 2010, Bill Rochelle at Bloomberg News said Loehmann's Inc. hired three financial advisory firms with experience in turnarounds and bankruptcy reorganizations. The firms are AlixPartners LLP, Perella Weinberg Partners and Clear Thinking Group LLC, according to people with knowledge of the situation. Reuters on April 6 reported that Loehmann's said it was fulfilling its financial obligations in response to new questions about its ability to keep its operations afloat. According to Reuters, Loehmann's denied a report in The New York Post that it missed a $6 million interest payment on its debt the previous week. But a source briefed on the situation said the store chain had delayed payments to CIT Group Inc. in order to make the interest payment. Reuters also reported that the NY Post, citing sources close to the situation, also said suppliers to the company were holding back shipments due to its deteriorating financial situation. A source told Reuters that CIT had suspended its factoring approvals for Loehmann's because the company had slowed payments to vendors and to CIT due to the interest payment. It was not immediately clear if CIT had reinstated its factoring approval, Reuters said. Loehmann's received a speculative-grade "CC" corporate credit rating from Standard & Poor's. The ratings agency said in March 2010, "we believe that current cash on hand and availability under the company's revolver may not be sufficient to cover operating needs over the near term." Loehmann's is a discount retailer with more than 60 stores. The Bronx, New York-based company is owned indirectly by Istithmar PJSC, an investment firm owned by the government of Dubai. Loehmann's emerged from a 14-month Chapter 11 reorganization with a confirmed plan in September 2000. At the time, it operated 44 stores in 17 states. LOWER BUCKS: BNY Wants Court to Deny Plan Filing Extension Plea --------------------------------------------------------------- Jo Ciavaglia at Bucks County Courier Times reports that the Bank of New York Mellon Trust Company asked the U.S. Bankruptcy in Philadelphia to deny a request by Lower Bucks Hospital to extend its exclusive period to file a plan until Jan. 9, 2010, and solicit acceptances of that plan until March 10, 2010, BNY, owed $24.8 million in hospital bond debt, says Lower Bucks Hospital has offered no factual support that an additional extension is necessary. Absent an extension, the Company's exclusive period to propose a plan would end on Oct. 11, 2010. About Lower Bucks Hospital Bristol, Pennsylvania-based Lower Bucks Hospital is a nonprofit hospital based in Bristol, Pennsylvania. The Hospital is currently licensed to operate 183 beds. Together with affiliates Advanced Primary Care Physicians and Lower Bucks Health Enterprises, Inc., Lower Bucks owns a 36-acre campus with several medical facilities. The Hospital's emergency room serves approximately 30,000 patients annually. For the fiscal year ending June 30, 2009, Lower Bucks had $114 million in consolidated revenues. The Hospital filed for Chapter 11 bankruptcy protection on January 13, 2010 (Bankr. E.D. Pa. Case No. 10-10239). The Hospital's affiliates -- Lower Bucks Health Enterprises, Inc, and Advanced Primary Care Physicians also filed Chapter 11 petitions. Jeffrey C. Hampton, Esq., and Adam H. Isenberg, at Saul Ewing LLP, assist the Hospital in its restructuring effort. Donlin, Recano & Company, Inc., is the Hospital's claims and notice agent. The Hospital listed $50,000,001 to $100,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. MARRIOT SUMMIT WATCH: Commercial Units Sent to Receivership ----------------------------------------------------------- Andrew Kirk at Park Record reports that Thompson National Properties has lost ownership of the Marriott Summit Watch commercial units and The Lift Lodge at Town Lift due to lack of payment on a $11.1 million mortgage. According to the report, on September 22, 2010, 3rd District Court Judge Keith Kelly approved handing the three units at The Lift Lodge and 11 commercial units at Summit Watch over to Scott Bennion of Commerce Real Estate Solutions to act as receiver, which is an independent manager that takes control of a property and manages it for creditors. The report relates Mr. Bennion is "vested with complete and exclusive control and possession of the property and all other collateral," according to Kelly's order. The report notes that NNN Summit Watch, a Thompson National Properties-controlled firm, was also ordered to surrender all keys, security codes, passwords, combinations, cash, bank accounts, deposits and "sums relating to the use of the property." The order, the report says, includes "any and all rents, past, present, and future." The request for a receiver was filed by attorneys on behalf of CMLT 2008-LS1 Main Street, LLC. That firm is a Utah-based entity for the Florida company LNR Partners, which obtained the mortgage for the property from the original lender, La Salle Bank, in early September. The report discloses that the court papers explained that the receiver's duty is to protect the assets of the property on behalf of the lender until they can be sold. The report relates that management, maintenance and marketing of the property are now in the hands of the receiver. Court papers also outline that Bennion will receive $200 per hour spent managing the property, a $1,000 one-time fee, and $1,500 per month or 3 percent of the gross collections of the property, depending on which is greater, the report says. The report notes that first-quarter "Property Update" sent to Marriott Summit Watch investors was emailed to The Park Record in Augustm, which explains that payments could not be made to investors because of "ongoing delinquencies and the dispute with the Condominium Owner's Association." That dispute is about unpaid fees to the Summit Watch homeowner's association estimated by the court to be more than $500,000, the report relates. According to the update, the report notes, the $11.1 million mortgage was eight months delinquent on June 30, 2010 and more than $810,000 was owed. Additional expenses were causing the property to run a deficit of $310,000 as of March 31, the report adds. MCA INDUSTRIES: To Start Liquidation of Assets ---------------------------------------------- Julia Sellers at The Augusta Chronicles reports that MCA Industries will start liquidation of assets and hold an auction in the next 60 days to pay creditors. The Augusta Chronicles says the Company, in a letter to vendors and creditors, cited a May electrical fire that halted all operations as one cause for closing. The company also said "high material costs and a lack of an improving economy severely impaired the company's ability to service its vendor obligations on a timely basis," according to The Augusta Chronicles. According to The Augusta Chronicles, the company said it will liquidate assets and hold an auction in the next 60 days to pay creditors, which includes a $6 million loan from Business Carolina Inc. to purchase equipment. "It is unclear whether the liquidation of the company's remaining assets will generate net proceeds sufficient to fund a pro rata distribution to our unsecured vendors," the letter stated, The Augusta Chronicles reports. The Augusta Chronicles reports the company stated that "commencement of an involuntary bankruptcy case or similar action" was not in the interest of creditors because it would "destroy any possible remaining value." Roche Management Group LLC, in Corry, Pa., will oversee the liquidation of assets. Based in Massillon, Ohio, MCA Industries is a custom manufacturer of signage, displays and retail graphic programs. METRO-GOLDWYN-MAYER: Bank Debt Trades at 56% Off ------------------------------------------------ Participations in a syndicated loan under which Metro-Goldwyn- Mayer Inc. is a borrower traded in the secondary market at 43.60 cents-on-the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 2.52 percentage points from the previous week, The Journal relates. The Company pays 275 basis points above LIBOR to borrow under the facility, which matures on April 8, 2012. The debt is not rated by Moody's and Standard & Poor's. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Metro-Goldwyn-Mayer Metro-Goldwyn-Mayer, Inc., is an independent, privately held motion picture, television, home video, and theatrical production and Distribution Company. The Company owns the world's largest library of modern films, comprising approximately 4,000 titles, and over 10,400 episodes of television programming. An investor consortium, comprised of Providence Equity Partners, TPG Capital, Sony Corporation of America, Comcast Corporation, DLJ Merchant Banking Partners and Quadrangle Group, owns MGM. MGM is grappling with $3.7 billion in debt. MGM has received a series of forbearance agreements from its bondholders and lenders, wherein the lenders extended the period during which MGM won't have to pay principal and interest on its bank debt, including a revolving credit facility. The latest forbearance agreement expires October 29. As reported by the Troubled Company Reporter on August 12, 2010, sources told The Wall Street Journal that MGM hopes to file a "prepackaged" bankruptcy sometime in mid-September, when the latest waiver on debt payments expires. J.P. Morgan Chase & Co., a major MGM creditor, is working on providing between $150 million and $200 million in debtor-in-possession financing to steer the studio through bankruptcy, one of the sources told the Journal. MGM tried to sell itself in March 2010 but received low bids. MGM has hired investment bank Moelis & Company and the law firm Skadden, Arps, Slate, Meagher & Flom. In August 2009, it hired the restructuring expert Stephen F. Cooper to help lead the company. MEXICANA AIRLINES: Hearing on Recognition Motion Moved to Oct. 21 ----------------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York adjourned from September 29 to October 21, 2010, the hearing on Mexicana Airlines' motion for recognition of its insolvency case in Mexico as a foreign main proceeding. The hearing was originally scheduled for September 8, 2010, but Mexicana Airlines asked for an adjournment in light of the appointment of the conciliator and administrator in its insolvency case in Mexico. Earlier, Banco Mercantil del Norte S.A. asked the Bankruptcy Court anew to permit the bank to "freely exercise" its rights to its collateral or to receive protection being granted to secured creditors as a condition to Mexicana Airlines' obtaining Chapter 15 recognition. In a statement filed with the Bankruptcy Court, Paul Hessler, Esq., at Linklaters LLP, in New York, pointed out that Banco Mercantil is prohibited from taking an action involving the collateral because of the ruling handed down by the Mexican court overseeing the airline's insolvency case. Banco Mercantil is a secured lender of Mexicana Airlines, which owes the bank as much as US$123.6 million under a 2008 credit agreement. The airline's debt under the agreement is secured by two deposit accounts pledged in favor of the collateral agent, Inter National Bank. Earlier, the Mexican court issued a ruling enjoining Banco Mercantil from taking any action involving the funds held as collateral in the deposit accounts. The ruling, the bank said, contradicts the August 18 order issued by the Bankruptcy Court which excluded it from the scope of injunctive protections granted to Mexicana Airlines. "It is disingenuous for Mexicana to claim that [Banco Mercantil] should not be entitled to adequate protection because it is free to exercise its rights on its collateral while Mexicana simultaneously takes and threatens further action in another jurisdiction if [Banco Mercantil] attempts to do so," according to Mr. Hessler. According to the bank's lawyer, Banco Mercantil is currently impeded from enforcing its interest because of the threat of sanction in Mexico. Mr. Hessler asked the Bankruptcy Court to grant the recognition only on the condition that Mexicana Airlines won't take any action to undermine the protections to which the bank and other secured creditors are entitled in the U.S. "The Chapter 15 recognition that Mexicana seeks comes with certain statutorily-imposed strings attached including the requirement that secured creditors either be adequately protected or free to exercise their rights against collateral," the lawyer argued. Mr. Hessler also criticized Mexicana Airlines' assertion that the bank is not entitled to protection because it is not based in the U.S. He pointed out that while the bank is the ultimate beneficiary, U.S.-based INB is the secured party whose rights are being abrogated. In a declaration filed with the Bankruptcy Court in support of Banco Mercantil's objection, Jorge Sepulveda, Esq., at Mexico- based Bufete Garcia Jimeno S.C., said that the bank may not demand replacement liens for the diminution of its collateral. Mr. Sepulveda pointed out that only the conciliator may decide on the replacement or creation of collateral under Mexican insolvency law. Meanwhile, Airbus Americas Customer Services Inc. has asked the Bankruptcy Court to allow the firm to file an objection to Mexicana Airlines' motion for recognition. The deadline for filing objections to the motion expired on September 20, 2010. The move came after Airbus received lately unexpected orders for replacement parts from Mexicana Airlines although the airline has already shut down its flight operations. The firm could not determine whether the orders were for third-party planes, or they were for Mexicana Airlines' aircraft which fall under their 2005 agreement. Airbus supplies aircraft parts to Mexicana Airlines under the 2005 agreement. The airline allegedly breached the contract after it failed to make the necessary payments. Airbus said the objection merely seeks payment for the materials it supplied under the 2005 agreement or permission from the Bankruptcy Court to refuse to ship parts to Mexicana until the defaults are cured. Maru Johansen Affirmed as Foreign Representative In a declaration, Gerardo Badin affirmed the appointment of Maru Johansen as Mexicana Airlines' foreign representative in the Chapter 15 case it filed before the U.S. Bankruptcy Court for the Southern District of New York. Mr. Badin was recently appointed as conciliator in Mexicana Airlines' insolvency case in Mexico. About Mexicana Airlines Compania Mexicana de Aviacion or Mexicana Airlines -- http://www.mexicana.com/-- is a privately held airline and a subsidiary of Nuevo Grupo Aeronautico. Founded in 1921, Mexicana is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City. Grupo Mexicana de Aviacion is the parent of Compania Mexicana. Two other units are Aerovias Caribe S.A. de C.V. (Mexicana Click) and Mexicana Inter S.A. de C.V. (Mexicana Link). Compania Mexicana de Aviacion or Mexicana Airlines, Mexico's largest airline, filed for bankruptcy in the U.S. and Mexico on August 2, 2010. In the U.S., the company filed in the U.S. Bankruptcy Court in Manhattan for Chapter 15 bankruptcy protection (case no. 10-14182), and in Mexico, it filed for the equivalent of Chapter 11. Maru E. Johansen, foreign representative of Compania Mexicana, estimated in the Chapter 15 petition that the company has assets of US$500 million to US$1 billion and debts of more than US$1 billion. William C. Heuer, Esq., at Duane Morris LLP, serves as counsel to Ms. Johansen. Mexicana de Aviacion stated that despite its bankruptcy filing, it expects to continue to operate normally, and that such filings Bankruptcy Creditors' Service, Inc., publishes Mexicana Airlines Bankruptcy News. The newsletter tracks the chapter 11 proceedings and the ancillary proceedings undertaken by Compania Mexicana de Aviacion and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MEXICANA AIRLINES: JPM Can Access $970,000 for Reimbursement ------------------------------------------------------------ Mexicana Airlines' foreign representative Maru Johansen entered into an agreement permitting JPMorgan Chase Bank N.A. to get funds for the reimbursement of more than $970,000, from the $2.76 million in cash held by the bank. The $2.76 million was posted as collateral to secure the obligations of Mexicana Airlines to reimburse JPMorgan for every amount drawn by the bank under the letters of credit issued by the bank. The letters of credit were issued to secure Mexicana Airlines' payment obligations to MK Aviation S.A. and Wells Fargo Bank Northwest N.A. under certain aircraft operating leases. As of September 3, 2010, JPMorgan paid Wells Fargo a total of $920,000, which was drawn from the letters of credit. Under the deal, Mexicana Airlines and JPMorgan also agreed that the bank will continue to hold the remaining funds to secure the airline's reimbursement obligations under the undrawn letters of credit. The Mexicana-JPMorgan deal is formalized in a six-page stipulation, a copy of which is available for free at: http://bankrupt.com/misc/Mexicana_StipJPMorganLoC.pdf The Bankruptcy Court will consider approval of the agreement at the hearing scheduled for October 1, 2010. About Mexicana Airlines Compania Mexicana de Aviacion or Mexicana Airlines -- http://www.mexicana.com/-- is a privately held airline and a subsidiary of Nuevo Grupo Aeronautico. Founded in 1921, Mexicana is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City. Grupo Mexicana de Aviacion is the parent of Compania Mexicana. Two other units are Aerovias Caribe S.A. de C.V. (Mexicana Click) and Mexicana Inter S.A. de C.V. (Mexicana Link). Compania Mexicana de Aviacion or Mexicana Airlines, Mexico's largest airline, filed for bankruptcy in the U.S. and Mexico on August 2, 2010. In the U.S., the company filed in the U.S. Bankruptcy Court in Manhattan for Chapter 15 bankruptcy protection (case no. 10-14182), and in Mexico, it filed for the equivalent of Chapter 11. Maru E. Johansen, foreign representative of Compania Mexicana, estimated in the Chapter 15 petition that the company has assets of US$500 million to US$1 billion and debts of more than US$1 billion. William C. Heuer, Esq., at Duane Morris LLP, serves as counsel to Ms. Johansen. Mexicana de Aviacion stated that despite its bankruptcy filing, it expects to continue to operate normally, and that such filings Bankruptcy Creditors' Service, Inc., publishes Mexicana Airlines Bankruptcy News. The newsletter tracks the chapter 11 proceedings and the ancillary proceedings undertaken by Compania Mexicana de Aviacion and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MEXICANA AIRLINES: May Cut Workforce by Half, Resume Flying Dec. ---------------------------------------------------------------- Mexicana Airlines is planning to eliminate half of its workforce and reduce its routes and fleet of aircraft by 70%, according to a September 28, 2010 report by Latin American Herald Tribune. Operations might also resume in December, says the report. Citing union sources, the Tribune reported that the cutbacks will mean 3,900 jobs will be eliminated and that the airline will fly only 30 airplanes on 23 routes. Six of these routes are domestic while the rest are international, most of them to and from the United States and Canada. At a recent forum on labor markets, Mexico's Labor Secretary Javier Lozano said the airline's business plan involves a "substantial (reduction) in the number of aircraft and routes and flight frequency" and a new workplace model. Mr. Lozano said it would lead to a "significant cutback in job posts," adding that there's talk that the airline may operate with just 30 airplanes instead of 110, according to the report. The business plan also involves signing a new collective bargaining agreement to be overseen by the government in order to ensure that work conditions and job cuts are in compliance with the law, says the report. Mr. Lozano acknowledged that it will not be easy for Mexicana Airlines but both business leaders and the unions are willing to resume the airline's operations, according to the report. A Mexican judge earlier allowed Mexicana Airlines to suspend payment on its debt and left it in the hands of Javier Christlieb Morales, the court-appointed administrator. About Mexicana Airlines Compania Mexicana de Aviacion or Mexicana Airlines -- http://www.mexicana.com/-- is a privately held airline and a subsidiary of Nuevo Grupo Aeronautico. Founded in 1921, Mexicana is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City. Grupo Mexicana de Aviacion is the parent of Compania Mexicana. Two other units are Aerovias Caribe S.A. de C.V. (Mexicana Click) and Mexicana Inter S.A. de C.V. (Mexicana Link). Compania Mexicana de Aviacion or Mexicana Airlines, Mexico's largest airline, filed for bankruptcy in the U.S. and Mexico on August 2, 2010. In the U.S., the company filed in the U.S. Bankruptcy Court in Manhattan for Chapter 15 bankruptcy protection (case no. 10-14182), and in Mexico, it filed for the equivalent of Chapter 11. Maru E. Johansen, foreign representative of Compania Mexicana, estimated in the Chapter 15 petition that the company has assets of US$500 million to US$1 billion and debts of more than US$1 billion. William C. Heuer, Esq., at Duane Morris LLP, serves as counsel to Ms. Johansen. Mexicana de Aviacion stated that despite its bankruptcy filing, it expects to continue to operate normally, and that such filings Bankruptcy Creditors' Service, Inc., publishes Mexicana Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings and the ancillary proceedings undertaken by Compania Mexicana de Aviacion and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MORGANS HOTEL: Extends Hudson and Mondrian Loans Until Oct. 2011 ---------------------------------------------------------------- Morgans Hotel Group Co. has amended and extended the non-recourse first mortgage loans secured by Hudson and Mondrian in Los Angeles until October 2011. Following the transaction, the amounts outstanding on the first mortgage loans are now $201.2 million secured by Hudson and $103.5 million secured by Mondrian in Los Angeles. MHG paid down the loan on Hudson with $8.0 million from cash on hand and $8.0 million from cash in a restricted account designated for Hudson and paid down the loan on Mondrian in LA with $8.5 million from cash on hand and $8.5 million from a restricted account designated for Mondrian in LA. MHG will have significantly less interest expense for the remaining term of the debt as its interest rate swaps on the mortgage and mezzanine loans, which expired in July 2010, had swapped LIBOR to approximately 5.0%, whereas LIBOR is less than 50 basis points. MHG has replaced the swaps with interest rate caps. The interest rate spreads were increased slightly to LIBOR plus 1.03% on the Hudson loan and LIBOR plus 1.64% on the Mondrian in Los Angeles loan. "These extensions cap a long list of successful transactions that we have completed to extend and refinance debt and add liquidity and flexibility to our capital structure. We appreciate the vote of confidence from yet another of our lenders. With the completion of these extensions, we have now extended or refinanced all significant near-term consolidated maturities and we are taking advantage of strong operating trends to drive growth across our Company," said Marc Gordon, President of Morgans Hotel Group. About Morgans Hotel Group Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) -- http://www.morganshotelgroup.com/-- is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. Morgans Hotel reported total assets of $774.4 million, total liabilities of $778.6 million and non-controlling interest of $12.7 million, and a total deficit of $4.2 million as of June 30, 2010. Morgans Hotel's forbearance agreements with the lenders which hold the mortgage loans secured by its Hudson and Mondrian Los Angeles hotels were extended until October 12, 2010. The loans are comprised of a $217.0 million first mortgage secured by the Hudson and a $120.5 million first mortgage loan secured by the Mondrian Los Angeles. MORRIS MANAGEMENT: Partners Want Case Converted to Chapter 7 ------------------------------------------------------------ Phil Ray at AltoonaMirror reports that certain business partners of Gregory S. Morris asked a federal bankruptcy court to convert the Chapter 11 case of Morris Management Real Estate LP to Chapter 7 liquidation proceeding on grounds that Mr. Morris: * withheld information when he originally filed for reorganization under the bankruptcy code in May, and * failed to disclose more than $600,000 in gambling debts, a $100,000 withdrawal of funds from the accounts of the Hampton Inn in Altoona and other financial moves including a $30,000 transfer of funds to Morris Management Inc., and the transfer for a jointly held bank account to his wife. The business partners also asked the court to find Morris in contempt of court and to remove him from the management roles he holds in 14 or more business entities. A hearing is set for Oct. 21, 2010, to consider the requests. Based in Altoona, Pennsylvania, Morris Management Real Estate, LP, filed for Chapter 11 bankruptcy protection on June 9, 2010 (Bankr. W.D. Penn. Case No. 10-70677). Robert O. Lampl, Esq., represents the Debtor. The Debtor listed assets of less than $50,000, and debts of between $10 million and $50 million. MORTGAGEBROKERS.COM: Posts $65,800 Net Loss in June 30 Quarter -------------------------------------------------------------- MortgageBrokers.com Holdings, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $65,810 on $4.5 million of revenue for the three months ended June 30, 2010, compared with a net loss of $42,619 on $4.4 million of revenue for the same period of 2009. The Company is in arrears on the tax withholdings due to Canada Revenue Agency related to employee salaries. As at the end of the reporting period, the Company had a tax liability with CRA of $226,930. CRA has registered a Certificate in the Canadian Federal Court and the Property Register of Ontario for the amount owing to CRA against one of the Company's Canadian subsidiaries. The liability currently bears interest at 9% annually. The Company's balance sheet at June 30, 2010, showed $1.9 million in total assets, $2.6 million in total liabilities, and a stockholders' deficit of $730,222. As reported in the Troubled Company Reporter on April 22, 2010, McGovern, Hurley, Cunningham, LLP, in Toronto, expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted of the Company's operating losses, negative working capital, and total capital deficiency. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c16 About MortgageBrokers.com Holdings Based in Toronto, Canada, MortgageBrokers.com Holdings, Inc., provides mortgage brokerage services in the Canadian provincial markets of Newfoundland, Nova Scotia, New Brunswick, Prince Edward Island, Ontario, Saskatchewan and Alberta. MOVIE GALLERY: Wins Nod of Key Employee Incentive Plan ------------------------------------------------------ Movie Gallery Inc. and its units won approval of their key employee incentive plan. The commencement of Movie Gallery's Chapter 11 cases and the subsequent liquidation of the Debtors' assets have resulted in the termination of substantially all of their employees. As a result, the remaining employees had to take on additional duties to maintain the smoothness of the wind-down process of the Debtors' business. At the same time, all of the Debtors' remaining employees are well aware that the Debtors are rapidly wrapping up their liquidation, and thus, that their positions will soon be eliminated, Michael A. Condyles, Esq., at Kutak Rock LLP, in Richmond, Virginia, tells the Court. In order to complete the wind-down of the Debtors' business in a manner that is both efficient and consistent with the Chapter 11 Plan of Liquidation, the Debtors have concluded that it is necessary and appropriate to establish a bonus plan to incentivize certain of their remaining employees whose ongoing efforts will be critical to the successful and timely completion of the liquidation process. Mr. Condyles relates that the Debtors have evaluated their existing compensation structure and historical bonus plans to create a fair incentive-based bonus plan for Key Employees that aligns the Key Employees' interests with those of the Debtors' stakeholders in optimizing recoveries from the liquidation of the Debtors' assets. The KEIP has two components, the Employee Incentive Plan and the Executive Incentive Plan. A. The Employee Incentive Plan The Employee Incentive Plan applies to 31 of the Debtors' employees in various departments whose continued focus is critical to the successful and timely conclusion of the Debtors' liquidation. Mr. Condyles discloses that each of the employees is already being -- and will continue to be -- asked to perform a wider range of duties and functions than they performed previously, both as a result of the reductions in the workforce, and as a result of additional tasks necessary to confirm and implement the Plan. He notes that given the expedited timeline set forth in the Term Sheet, the employees are required to complete those tasks under very compressed deadlines. "In effect, each of these employees is being asked to do more, with less, and to do it quickly," he says. Under the Employee Incentive Plan, Bonus payments represent either two, three or six months of the employee's current salary, depending on the function the particular employee will serve with the Debtors. Of the 31 employees covered by the Employee Incentive Plan, 28 would receive a two-month bonus, one would receive a three-month bonus, and two would receive a six-month bonus: a. Two Month Bonus: The KEIP provides that 28 accounting, finance, information technology, real estate, legal and human resources personnel who, in addition to their regular duties, assist with additional tasks including accounts payable reconciliation, inventory proceeds reconciliation, reconciliation of accounts, consolidation of cash management, employee benefits termination and wind-down, completion of tax returns and preparing objections to claims filed by taxing authorities, the conversion of the Debtors' information technology systems into a simplified database, the reconciliation of revenue sharing claims, the handling of certain real estate and other legal matters or the retention, organization and destruction of records, and who remain employed by the Debtors through at least September 30, 2010, subject to the conditions of the KEIP, will receive a bonus payment equal to, as to each individual, two months of the individual's base salary. b. Three Month Bonus: The KEIP also provides that one employee in the information technology department who, in addition to their regular duties, assists with the conversion of the Debtors' information technology systems into a simplified database, and who remains employed by the Debtors through a date certain to be agreed with the employee will receive, subject to the conditions of the KEIP, a bonus payment equal to three months of the individual's base salary. c. Six Month Bonus: The KEIP provides that two employees who, in addition to their regular duties, will also be responsible for keeping the Debtors' books and records, and preparing budgets and forecasts for the Debtors on a going forward basis, will receive, subject to the conditions of the KEIP, a bonus payment equal to, as to each individual, six months of the individual's base salary. The cost of the Employee Incentive Plan will not exceed $484,983 and is broken down across these departments: No. of Total KEIP Department Participants Payments ---------- ------------ ---------- Information Systems 10 $125,151 Finance 11 229,797 Tax 3 44,667 Merchandising 1 15,613 Legal 1 16,667 Real Estate 1 16,667 Human Resources 3 29,171 Utilities 1 7,250 ------------ ---------- Total 31 $484,983 B. The Executive Incentive Plan The Executive Incentive Plan applies to five of the Debtors' most senior executives, whose management services are crucial to the winding up of the Debtors' affairs, and who will have the potential to earn incentive bonuses dependent upon the ultimate amounts of liquidation proceeds distributed to the holders of Prepetition First Lien Term Loan Secured Claims after the Effective Date of the Plan. Payment of bonus payments under the Executive Incentive Plan will be conditioned upon the employee's satisfactory completion of defined tasks set out for each, and will not be made in the event that the employee's employment is terminated for a violation of the Debtors' employment policies. The five key executives who will participate in the Executive Incentive Plan are: -- Wes Sand (President), -- Donato Capobianco (General Counsel), -- Jeff Klemp (SVP Supply Chain Management), -- Thomas McKivor (SVP Information Technology), and -- Ben Riggsby (SVP Merchandising). The Key Executives will share in a bonus pool calculated as a percentage of the funds in excess of $50 million that are ultimately distributed to the holders of Prepetition First Lien Term Loan Secured Claims. Mr. Condyles explains that the bonus pool established under the Executive Incentive Plan will be funded with five-percent of all amounts in excess of $50 million, up to $57.5 million, that are distributed to the holders of Prepetition First Lien Term Loan Secured Claims under the Plan. Thereafter, the bonus pool will be funded with 15% of all amounts in excess of $57.5 million, up to $62 million, and 20% of all amounts in excess of $62 million that are distributed to the holders of Prepetition First Lien Term Loan Secured Claims under the Plan. Each of the Key Executives will share pro rata in the bonus pool, and will receive payments at times as distributions are made to the holders of Prepetition First Lien Term Loan Secured Claims. Payments to each of the five individual participants in the Executive Incentive Plan will be capped at 2.5 times their current base salaries, and any amounts in excess of the cap that would otherwise have been payable under the Executive Incentive Plan will instead remain available for distribution to beneficiaries of the First Lien Term Lenders Liquidating Trust. Based upon that cap, the maximum aggregate amount payable under the Executive Incentive Plan is $2.86 million. In order to be eligible to receive their pro rata portions of the bonus pool, each of the participants must meet certain individual performance objectives established for each of them by the chief restructuring officers. In addition, it is a condition to the payment of any bonuses under the Executive Incentive Plan that the Revolver Pre- Effective Date Secured Claims and the Creditor Funds, as well as any other claims payable on the Effective Date, have been paid in full in cash, and that any asserted Revolver Post-Effective Date Secured Claims have either been paid in full in cash, or an appropriate reserve on account of the claims has been established and fully funded. In connection with their receipt of any bonus payment under the Executive Incentive Plan, each employee will also be required to provide a full and complete release of the Debtors, the First Lien Term Lenders Liquidating Trust, the Trustee of the First Lien Term Lenders Liquidating Trust, the Prepetition Secured Parties and their directors, officers, employees, agents, principals, subsidiaries, affiliates, attorneys and advisors. Mr. Condyles, however, points out that there is no guarantee that any bonuses will be paid out under the Executive Incentive Plan. He further notes that bonuses will only be paid out under that plan to the extent that proceeds are actually distributed to the holders of Prepetition First Lien Term Loan Secured Claims exceeding $50 million. About Movie Gallery Based in Wilsonville, Ore., Movie Gallery, Inc., is the second largest North American video and game rental company, operating stores in the U.S. and Canada under the Movie Gallery, Hollywood Video and Game Crazy brands. Movie Gallery first filed for Chapter 11 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 Company emerged from bankruptcy on May 20, 2008, with private-investment firms Sopris Capital Advisors LLC and Aspen Advisors LLC as its principal owners. William Kaye was appointed plan administrator and litigation trustee. Movie Gallery returned to Chapter 11 protection on February 3, 2009 (Bankr. E.D. Va. Case No. 10-30696). Attorneys at Sonnenschein Nath & Rosenthal LLP and Kutak Rock LLP represent the Debtors in their second restructuring effort. Kurtzman Carson Consultants serves as claims and notice agent. Bankruptcy Creditors' Service, Inc., publishes Movie Gallery Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Movie Gallery Inc. and its various affiliates (http://bankrupt.com/newsstand/or 215/945-7000). NEUROLOGIX INC: Says Phase 2 Trial of NLX-P101 Successful --------------------------------------------------------- Neurologix, Inc., announced Friday that new details of the Company's landmark, randomized, double-blind Phase 2 clinical trial of NLX-P101, its investigational gene therapy for advanced Parkinson's disease, were presented during a symposium at the 2nd World Parkinson Congress in Glasgow, Scotland. Co-principal investigator of the trial, Dr. Peter Lewitt, Director of the Parkinson's Disease and Movement Disorders program at Henry Ford Hospital, reported that, in addition to statistically significant improvements over the entire blinded study period in the off- medication motor scores between the treated and sham groups on the Unified Parkinson's Disease Rating Scale (UPDRS) Part 3 (Motor section), 75% of patients in the treatment group were considered to have had a meaningful response to NLX-P101 (i.e., a five point or greater reduction in the off-medication UPDRS motor scores), which is comparable to the response rate of 71% in a recent study of Deep Brain Stimulation (Weaver FM, Follett K, Stern M, et al. Bilateral deep brain stimulation vs. best medical therapy for patients with advanced Parkinson's disease: a randomized controlled trial. JAMA 2009; 301:63-73). Parkinson's disease is a progressive and debilitating neurodegenerative disorder that arises from the gradual deterioration of nerve cells in the brain. Dr. Lewitt also emphasized that results showed a positive safety profile for NLX-P101, with no serious adverse events related to the gene therapy or surgical procedure reported. Although details regarding the study methodology were also provided, such as catheter placement in the subthalamic nucleus (STN), specific quantitative outcomes were not discussed during the presentation, as these will be presented in a peer-reviewed publication, currently under review. "We are very pleased that Dr. Lewitt had the opportunity to provide more information about our study methodology and some further details as to the nature of the improvements seen in patients treated in our Phase 2 study. We remain confident in our study results, which we feel confirm that NLX-P101 has great potential to offer an important new therapy for patients with Parkinson's disease," said Clark A. Johnson, President and Chief Executive Officer of the Company. Mr. Johnson added, "We continue to believe that the best venue for the full disclosure of our Phase 2 results would be in a respected peer-reviewed medical or scientific journal. All of the major details of our previous pre-clinical and clinical studies have been published in leading journals, including Science, The Lancet and the Proceedings of the National Academy of Sciences. We believe that the credibility provided by these publications enhance the value of our product and of our company." About Neurologix, Inc. Fort Lee, N.J.-based Neurologix, Inc. (OTC Bulletin Board: NRGX) -- http://www.neurologix.net/-- is a clinical-stage biotechnology company dedicated to the discovery, development, and commercialization of gene transfer therapies for serious disorders of the brain and the central nervous system. The Company's current programs address such conditions as Parkinson's disease, epilepsy, depression and Huntington's disease, all of which are large markets not adequately served by current therapeutic options. The Company's balance sheet at June 30, 2010, showed $5.8 million in total assets, $7.9 million in total liabilities, and a stockholders' deficit of $2.1 million. * * * BDO Seidman, LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has suffered recurring losses from operations, expects to incur future losses for the foreseeable future and has a net capital deficiency. NEUROLOGIX INC: Posts $4.5 Million Net Loss in June 30 Quarter -------------------------------------------------------------- Neurologix, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $4.5 million for the three months ended June 30, 2010, compared to a net loss of $2.2 million for the same period last year. The Company had cash and cash equivalents of $4.5 million and $9.6 million as of June 30, 2010, and December 31, 2009, respectively. Based on its cash flow projections, the Company will need additional financing to carry out its planned business activities and complete its plan of operations through December 31, 2010. At the Company's present level of activities, the Company's cash and cash equivalents are believed, at this time, to be sufficient to fund its operations only into the fourth quarter of this current fiscal year. The Company's balance sheet at June 30, 2010, showed $5.8 million in total assets, $7.9 million in total liabilities, and a stockholders' deficit of $2.1 million. BDO Seidman, LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has suffered recurring losses from operations, expects to incur future losses for the foreseeable future and has a net capital deficiency. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c0f About Neurologix, Inc. Fort Lee, N.J.-based Neurologix, Inc. (OTC Bulletin Board: NRGX) -- http://www.neurologix.net/-- is a clinical-stage biotechnology company dedicated to the discovery, development, and commercialization of gene transfer therapies for serious disorders of the brain and the central nervous system. The Company's current programs address such conditions as Parkinson's disease, epilepsy, depression and Huntington's disease, all of which are large markets not adequately served by current therapeutic options. NEWPORT PARTNERS: Lenders Extend Forbearance Until January 31 ------------------------------------------------------------- Newport Partners Income Fund said Monday certain of its subsidiaries have entered into a Fourth Amendment to the Forbearance Agreement under the Newport Group's senior credit agreement. Key terms of the Forbearance Extension include: * Forbearance period extended more than 3 months to January 31, 2011; * Further extensions contemplated subject to the lenders' discretion; and * Senior debt reduction milestones, which management believes can be achieved with cash-on-hand and planned assets sales. The Newport Group can now seek to modify its existing debt structure in an environment with decreased short term liquidity pressures. The Fund will continue to be prevented from paying any amounts of interest or principal on the Fund's unsecured subordinated convertible debentures until the forbearance period (or any extension thereunder) comes to an end and defaults under the senior debt have been remedied. Throughout the continuing forbearance period, the Newport Group intends to: * seek fresh financing, both to repay its existing senior secured loans and to provide supplemental second-tier secured loans; and * monetize non-core assets, but only on optimal terms. The Newport Group has addressed its key short term issues and now has an opportunity to consider how best to augment its capital structure. About Newport Partners Income Fund Newport Partners Income Fund is an unincorporated open-ended trust created to hold, through its investment in Newport Partners Commercial Trust, interests in Newport Private Yield LP, a limited partnership established under the laws of the Province of Ontario. NPF began trading on the TSX on August 8, 2005 under the symbol NPF.UN. Newport Partners Income Fund is a publicly-traded diversified fund that invests in successful Canadian private businesses. The Fund, currently has $452 million invested in 14 companies representing a diverse cross-section of the Canadian economy. NIELSEN FINANCE: Fitch Assigns 'CCC/RR6' Rating on Senior Notes --------------------------------------------------------------- Fitch Ratings has assigned a 'CCC/RR6' rating to Nielsen Finance LLC and Nielsen Finance Co.'s senior unsecured eight-year note offering. Both are indirect wholly-owned subsidiaries of The Nielsen Company, B.V. Proceeds of the offering are expected to be used to repay a portion of Nielsen Finance's $869 million senior unsecured notes due 2014. Rating Rationale: -- The Rating Watch Positive on the Nielsen Company B.V.'s ratings reflects the company's intention to dedicate $1.7 billion of the proceeds of its proposed $2 billion IPO toward debt reduction. Fitch believes the IPO will result in gross unadjusted leverage in the mid-5 times range compared with more than 6.5x at June 30, 2010. -- Since the company was acquired in 2006, new ownership has meaningfully restructured the organization around key business lines and aggressively streamlined costs. Given the contractual and diversified nature of its revenue stream and the benign competitive environment for key businesses, Nielsen was much more resilient during the downturn than other media companies, exhibiting revenue and EBITDA growth, as well as positive free cash flow through the trough of the downturn. Going forward, Fitch expects Nielsen will continue to generate meaningful organic revenue growth and that growth should be able to outpace the U.S. economy under most economic conditions/scenarios. -- Nielsen enjoys limited competition in its core audience measurement business, and over time, competitive threats could emerge. There are meaningful barriers to entry. Fitch believes there are significant investments that would be required by any potential competitors and meaningful complexity associated with attempting to replicate Nielsen's offerings. While increased competition could result in revenue pressure (lost share), incremental costs (talent/sales/services), and some free cash flow pressure (investments in offerings), this risk is accommodated in the rating. Key Rating Drivers: -- An upgrade of the company's IDR is possible if the IPO goes through as proposed. Even absent a successful near-term IPO, Fitch expects that continued improvement in operating trends over the next 18-24 months could result in positive ratings momentum. -- Near term, the most likely drivers of rating pressure include a material debt-funded acquisition, a coercive debt exchange that included a material reduction in terms for bondholders, or if credit market conditions permitted an attempt by private equity sponsors to extract capital through a leveraged dividend. Fitch believes Nielsen's liquidity is sufficient. At June 30, 2010, liquidity was composed of $369 million of cash on hand and $669 million available under the senior secured revolver due in 2012. The company returned to free cash flow generating in 2009 after using cash in 2007 and 2008, the result of higher EBITDA, reduced working capital usage (approximately $50 million use, versus $200 million use in 2008), and lower capital expenditures ($282 million, versus $370 million in 2008). In the 12 months ended June 30, 2010, Fitch calculates the company generated $200 million of FCF. Going forward, Fitch anticipates capex to remain below $300 million annually, driven by fewer Local People Meter roll-outs; fewer one-time, client-specific platform build- outs; and lower investment in rolling out the company's three- screen strategy globally. As a result, Fitch expects the company to continue to generate material positive FCF and anticipates that it will be dedicated toward debt repayment, smaller acquisitions, and eventually shareholder returns. Pro forma for the transaction, book value of total debt at June 30, 2010, was $8.4 billion, consisting primarily of the $4.5 billion in secured term loan ($3.3 billion due 2013 and $1.2 billion due 2016); a $500 million secured term loan due 2017; approximately $900 million of senior notes due 2014; $500 million of new senior notes due 2018 and approximately $1.8 billion of senior subordinates notes and senior notes due 2016. The company has been active in managing its near-term maturities, and they are manageable over the next several years. Fitch rates Nielsen and Nielsen Finance: Nielsen -- Issuer Default Rating 'B'; -- Short-term IDR 'B'; -- Senior Unsecured Notes 'CC/RR6'. Nielsen Finance -- IDR 'B'; -- Short-term IDR 'B'; -- Senior Secured Bank Facility 'BB-/RR2'; -- Senior Unsecured Notes 'CCC/RR6'; -- Senior Subordinated Notes 'CC/RR6'. Fitch currently has Nielsen's ratings, including the newly assigned senior notes at Nielsen Finance, on Rating Watch Positive. NILE SWIM: Tax Sale Threats Forced Chapter 11 Filing ---------------------------------------------------- Kristin E. Holmes at the Philadelphia Inquirer reports that Nile Swim Club of Yeadon is in bankruptcy protection to avoid a threatened tax sale of the nation's first African American-owned and African American-operated private swim club. According to the Inquirer, the club, which opened in 1959, owes a total of $90,049 in delinquent taxes through 2009, and $36,768 tax bill for this year is unpaid. The Nile Swim Club of Yeadon, Incorporated, filed for Chapter 11 protection on Sept. 14, 2010 (Bankr. E.D. Pa. No. 10-17853). The Debtor estimated assets and liabilities under $1 million. See http://bankrupt.com/misc/paeb10-17853.pdf NOBLEPEAK VISION: Offers Patented Technology at Sealed Bid Sale --------------------------------------------------------------- Joseph F. Finn, Jr., C.P.A., is offering for sale the patented technology to integrate germanium photodetectors with silicon circuits at the November 5, 2010 sealed bid sale of NoblePeak Vision Corp. assets. NoblePeak has developed and implemented a process flow that incorporates single crystal germanium photodetectors with CMOS circuits. Germanium detectors allow the detection of a much wider spectrum of light than silicon imagers. By forming an array of such detectors and combining them with on-chip imaging circuitry, visible-to-short wave infrared imagers have been fabricated at high volume with silicon economics. Germanium is a suitable material for photodetectors. Germanium is invariably used as a relatively dilute SiGe alloy (<30% Ge) in very thin layers. NoblePeak developed a special growth technique which circumnavigates the difficulties of growing thick pure layers of germanium. The intellectual property, fixed assets and inventory will be sold by a sealed bid sale at 12:00 noon on November 5, 2010. Persons interested in bidding must sign a Confidentiality Disclosure Agreement ("CDA") obtained from Finn's Office - jffinnjr@finnwarnkegayton.com or 781-237-8840. They will then receive a bid package. About Joseph F. Finn, Jr., C.P.A. Joseph F. Finn, Jr., C.P.A. is the owner of the firm Finn, Warnke & Gayton, Certified Public Accountants of Wellesley Hills, Massachusetts. He works primarily in the area of management consulting for distressed enterprises, bankruptcy accounting and related matters, such as assignee for the benefit of creditors and liquidating agent for a corporation. He has been involved in a number of loan workouts and bankruptcy cases for thirty-five (35) years. His most recent Assignments for the Benefit of Creditors in the biotech field include Spherics, Inc., ActivBiotics, Inc., Prospect Therapeutics, Inc. and Epix Pharmaceuticals, Inc. NORTEL NETWORKS: Administrator for Pension Plans Named ------------------------------------------------------ The Superintendent of Financial Services in Ontario has named Morneau Sobeco as the administrator for the purpose of winding up the Nortel Networks pension plans. Morneau Sobeco was selected for this appointment through a competitive tendering process. If you are a Nortel pension plan member and would like further information, please go to our website: http://www.pensionwindups.morneausobeco.com/ About Morneau Sobeco Income Fund Morneau Sobeco Income Fund is one of the largest Canadian human resources consulting and outsourcing firms focused on pension, benefit, employee assistance programs and workplace health management solutions. With approximately 2,400 employees in offices across North America, Morneau Sobeco Income Fund provides services to organizations across Canada, in the United States and around the globe. About Nortel Networks Nortel Networks (OTC BB: NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for the Company's customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor sought recognition of the CCAA Proceedings in the U.S. by filing a bankruptcy petition under Chapter 15 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10164). Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as the Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Certain of Nortel's European subsidiaries also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of US$11.6 billion and consolidated liabilities of US$11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about US$9 billion and liabilities of US$3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about US$4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) OSI RESTAURANT: Bank Debt Trades at 8% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which OSI Restaurant Partners, Inc., is a borrower traded in the secondary market at 91.58 cents-on-the-dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.88 percentage points from the previous week, The Journal relates. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank loan matures on May 9, 2014, and carries Moody's B3 rating and Standard & Poor's B+ rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. OSI Restaurant Partners, Inc., is the #3 operator of casual-dining spots (behind Darden Restaurants and Brinker International), with more than 1,400 locations in the U.S. and 20 other countries. Its flagship Outback Steakhouse chain boasts more than 950 locations that serve steak, chicken, and seafood in Australian-themed surroundings. OSI also operates the Carrabba's Italian Grill chain, with about 240 locations. Other concepts include Bonefish Grill, Fleming's Prime Steakhouse, and Cheeseburger In Paradise. Most of the restaurants are company owned. A group led by Chairman Chris Sullivan took the company private in 2007. The Company's balance sheet at June 30, 2010, showed $2.34 billion in total assets, $2.450 billion in total liabilities, and a deficit of $106.2 million. PALI HOLDINGS: Former CEO Sues Glaser Weil Over Defense Fees ------------------------------------------------------------ Bankruptcy Law360 reports that the former CEO of Pali Capital -- part of now-bankrupt Pali Holdings Inc. -- has filed an adversary proceeding against his ex-law firm Glaser Weil Fink Jacobs Howard & Shapiro LLP, in an attempt to avoid paying the firm nearly $1 million in legal fees related to a securities suit. According to Law360, Glaser Weil is billing Bradley Reifler upward of $900,000, even though he agreed with the firm that it should be billing Pali. Pali Holdings is a New York-based broker dealer. It filed for Chapter 11 protection on April 1, 2010 (Bankr. S.D.N.Y. Case No. 10-11727). Mark S. Indelicato, Esq., at Hahn & Hessen LLP, in New York, serves as counsel. The Debtor disclosed $716,257 in assets and $31,764,247 debts in its schedules. PALMDALE HILLS: SunCal and Lehman File Competing Plans ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that SunCal Cos. filed a Chapter 11 plan on Sept. 30 alongside a competing plan by affiliates of Lehman Brothers Holdings Inc., which are part-owners and lenders to the SunCal projects. A hearing will be held Nov. 5 for approval of disclosure statements explaining the competing plans. According to the report, SunCal's plan would provide for selling the properties. While Lehman would be permitted to bid cash at the sales, Lehman couldn't bid its secured debt in lieu of cash. SunCal would hold sale proceeds pending the resolution of lawsuits disputing the validity of the Lehman claims. Among other things, SunCal wants the Lehman claims subordinated on account of Lehman's conduct before and after SunCal's Chapter 11 filing. Lehman's plan would give it ownership of the properties while money would be made available in the nature of a settlement to make some payments to creditors with lower priorities. Mr. Rochelle relates that the SunCal cases with the competing plans involve about 20 companies. SunCal says that Lehman values the properties at $461 million while SunCal says the value is $246 million. Lehman's disputed claim is $1.94 billion, SunCal says. 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) About Palmdale Hills SunCal Companies is a California developer. Palmdale Hills Property LLC and other units were formed to develop various residential real estate projects located throughout the western United States. Lehman Brothers Holdings Inc. and an affiliate committed to SunCal on a $2.3 billion funding for the development of various residential real estate projects. The amounts were secured by, among other things, first priority trust deeds on the projects, which include oceanlots in San Clemente, in California. LBHI stopped funding after it filed for bankruptcy in September 15, 2008. Palmdale together with affiliates, which include SunCal Bickford, and LBL-SunCal Northlake LLC, filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 08-17206) on Nov. 6, 2008. In its petition, Palmdale estimated assets and debts between $100 million and $500 million. Paul J. Couchot, Esq., at Winthrop Couchot PC, represents the Debtors in their restructuring effort. PAYMENT DATA: Posts $55,200 Net Loss in June 30 Quarter ------------------------------------------------------- Payment Data Systems, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $55,174 on $604,184 of revenue for the three months ended June 30, 2010, compared with a net loss of $335,892 on $834,993 of revenue for the corresponding period last year. As of June 30, 2010, the Company has an accumulated deficit of $54.4 million, and a working capital deficit of $964,077. At June 30, 2010, the Company had $398,530 of cash and cash equivalents, compared to $565,597 of cash and cash equivalents at December 31, 2009. The Company believes that its current available cash and cash equivalents along with anticipated revenues may be insufficient to meet its anticipated cash needs for the foreseeable future. The Company's balance sheet as of June 30, 2010, showed $1.1 million in total assets, $1.6 million in total liabilities, and a stockholders' deficit of $471,750. As reported in the Troubled Company Reporter on April 21, 2010, Akin, Doherty, Klein & Feuge, P.C., in San Antonio, Tex., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has incurred substantial losses since inception, which has led to a deficit in working capital. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c14 San Antonio, Tex.-based Payment Data Systems, Inc. provides integrated electronic payment processing services to merchants and businesses, including credit and debit card-based processing services and transaction processing via the Automated Clearinghouse Network. The Company also operates an online payment processing service for consumers under the domain name http://www.billx.com/through which consumers can pay anyone. PETTERS COMPANY: Pleads Guilty to Fraud as Part of Deal ------------------------------------------------------- Bankruptcy Law360 reports that two bankrupt companies once under the control of convicted $3.7 billion Ponzi schemer Thomas J. Petters have entered guilty pleas to federal fraud charges as part of an agreement with prosecutors. Petters Co. Inc. and Petters Group Worldwide both entered guilty pleas in the U.S. District Court for the District of Minnesota on Wednesday, Law360 says. About Petters Group Worldwide Based in Minnetonka, Minn., Petters Group Worldwide LLC is named for founder and chairman Tom Petters. The group is a collection of some 20 companies, most of which make and market consumer products. It also works with existing brands through licensing agreements to further extend those brands into new product lines and markets. Holdings include Fingerhut (consumer products via its catalog and Web site), SoniqCast (maker of portable, WiFi MP3 devices), leading instant film and camera company Polaroid (purchased for $426 million in 2005), Sun Country Airlines (acquired in 2006), and Enable Holdings (online marketplace and auction for consumers and manufacturers' overstock inventory). Petters formed the company in 1988. Petters Company, Inc., is the financing and capital-raising unit of Petters Group Worldwide, LLC. Petters Company, Inc., Petters Group Worldwide, LLC, and eight other affiliates filed separate petitions for Chapter 11 protection (Bankr. D. Minn. Case No. 08-45257) on Oct. 11, 2008. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P., represents the Debtors as counsel. In its petition, Petters Company, Inc., estimated its debts at $500 million and $1 billion. Its parent, Petters Group Worldwide, LLC, estimated its debts at not more than $50,000. As reported in the Troubled Company Reporter on October 7, 2008, Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing business as Sun Country Airlines, Inc., and MN Airline Holdings, Inc., filed separate petitions for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Minnesota on October 6, 2008 (Case Nos. 08-45136, 08-35197 and 08- 35198). Petters Aviation, LLC is a wholly owned unit of Thomas Petters Inc. and owner of MN Airline Holdings, Inc., Sun Country's parent company. PLANGRAPHICS INC: Posts $329,700 Net Loss in June 30 Quarter ------------------------------------------------------------ PlanGraphics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $329,658 on $6.71 million of revenue for the three months ended June 30, 2010, compared with a net loss of $543,429 on $4.15 million of revenue for the three months ended June 30, 2009. At June 30, 2010, the Company had a working capital deficit of $4.59 million and an accumulated deficit of $5.04 million. The Company's balance sheet at June 30, 2010, showed $9.75 million in total assets, $13.27 million in total liabilities, and a stockholders' deficit of $3.52 million. Sherb & Co., LLP, in Boca Raton, Fla., expressed substantial doubt about the Company's ability to continue as a going concern, following its results for the fiscal year ended March 31, 2010. The independent auditors noted that the Company has suffered recurring losses and has a negative working capital position and a stockholders' deficit. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c1b PlanGraphics, Inc., is a short to medium-haul truckload carrier of general commodities headquartered in Sarasota, Florida. The Company provides dry van, hazardous materials, and temperature controlled truckload services. The Company is subject to regulation by the Department of Transportation and various state regulatory authorities. PMA CAPITAL: Fitch Upgrades Ratings on Senior Notes From 'BB+' -------------------------------------------------------------- Fitch Ratings has upgraded all ratings of PMA Capital Corp. and its subsidiaries to Old Republic's group rating following the announced closing of the merger. The Rating Outlook is Negative. A complete list of the rating actions follows at the end of this release. Fitch's upgrade is based on the PMA Companies being acquired by a better capitalized and higher credit quality insurer. Financial leverage will be modestly impacted, as ORI's debt to capital ratio will increase to approximately 10% from 8% as of June 30, 2010. Fitch expects the PMA Companies' operations to be minimally affected by the acquisition given that management is expected to remain in place. However, investment management will be centralized at ORI and the PMA Companies will adopt its reserving methodology, further supporting the rationale to assign it the group rating. ORI's workers' compensation insurance book will grow from 12% of total gross premiums to approximately 20% after its acquisition of the PMA Companies. The Negative Outlook for ORI reflects Fitch's concerns regarding the company's consumer credit indemnity portfolio written in its property/casualty unit, which provides credit protection against pools of prime second-lien mortgages. The company grew this product aggressively in 2006-2007, at the peak of the U.S. mortgage lending cycle. Delinquencies and losses on this product rose considerably through 2008 and 2009. However, the company has been actively managing claim remediation, and incurred losses on the CCI portfolio have been modest to date relative to capital. Fitch will continue to monitor this exposure closely for any changes. Fitch has upgraded these ratings with a Negative Outlook: Manufacturers Alliance Insurance Co. Pennsylvania Manufacturers' Association Insurance Co. Pennsylvania Manufacturers Indemnity Co. -- Insurer Financial Strength Rating to 'A+' from 'BBB+'. PMA Capital Corp. -- Insurer Default Rating to 'BBB+' from 'BBB-'; -- $54.9 million senior notes, 8.5% due June 15, 2018 to 'BBB' from 'BB+'; -- $.05 million convertible debt, 4.25% due Sept. 30, 2022 to 'BBB' from 'BB+'. POST PROPERTIES: Moody's Affirms 'Ba1' Preferred Stock Rating ------------------------------------------------------------- Moody's Investors Service affirmed the Baa3 senior unsecured and Ba1 preferred ratings of Post Properties, Inc. The outlook remains stable, which reflects Moody's expectations that key ratios will remain stable as the economy recovers and Post Properties advances its efforts to grow and enhance geographic diversity. Post Properties' rating is supported by very good liquidity. The company has ample capacity under its unsecured line of credit which had 96% available at the end of the second quarter. The only significant debt maturity before 2012 is the $100 million senior note coming due in December 2010, which Moody's believes Post has several options to address. Leverage for the company is among the lowest in the sector, with effective leverage at 39.5% and net debt/EBITDA at 7.8x at the end of the second quarter this year. Finally, Post continues to enjoy a brand that is supported by apartment communities of the highest quality. The key concerns for Moody's continue to be Post's portfolio which exhibits significant concentration in Atlanta and Dallas, and fixed charge coverage that is thin for a Baa3 rated issuer (1.8x YTD through June 30, 2010). Heightened secured debt levels (23.6% at the end of 2Q10) as a result of Post's use of GSE financing, as well as the related encumbering of the REIT's portfolio, and weak market conditions are also credit negatives. According to Moody's, an upgrade would depend upon Post Properties achieving net debt/EBITDA below 7x, fixed charge coverage greater than 2.25x and secured debt below 15% with corresponding increases in unencumbered assets. Evidence of growth in size and improved geographic diversity is also required. Conversely, should the REIT's financial profile and profitability substantially deteriorate, most likely due to renewed softness in the multifamily market, the ratings could come under downward pressure. Furthermore, any reversal in lowering its relative exposure to Atlanta or deterioration in coverage or secured leverage from current levels would also pressure the rating down. These ratings were affirmed with a stable outlook: * Post Properties, Inc. -- Ba1 preferred stock; (P)Ba1 preferred shelf. * Post Apartment Homes, LP -- Baa3 senior unsecured; (P)Baa3 senior unsecured shelf. In its last rating action with respect Post Properties, Moody's affirmed the company's ratings and revised the outlook to stable from developing in August 2008. Post Properties, Inc., is a real estate investment trust headquartered in Atlanta, Georgia and focuses on developing and managing Post(R) branded resort-style garden and high density urban apartments. In addition, the Company has also developed condominiums and converted existing apartments to for-sale multifamily communities. Post Properties owns 19,863 apartment units in 55 communities, including 1,747 apartment units in five communities held in unconsolidated entities and 396 apartment units in one community currently in lease-up. The Company is also developing and selling 277 luxury for-sale condominium homes in two communities through a taxable REIT subsidiary. QOC I LLC: Files for Chapter 11 in Florida ------------------------------------------ QOC I LLC sought Chapter 11 bankruptcy protection (Bankr. S.D. Fla. Case No. 10-40153) in West Palm Beach, Florida, on October 1, 2010. Boca Raton, Florida-based QOC I LLC is a purchaser of life insurance policies in the life settlement market. The Company purchased 295 life insurance policies from individuals age 60 or over. It currently owns 283 policies on the lives of 223 individuals with face values totaling $550 million. QOC says that the discounted value of the policies is $164.5 million as of August 31, 2010. The Debtor estimated assets and debts of $100 million to $500 million in its chapter 11 petition. QO1 filed a Chapter 11 petition after death benefits paid on the policies proved insufficient to cover premiums and service debt. In May 2008, the Debtor borrowed from Wachovia Capital Markets Inc., $120 million for the purchase and maintenance of the Policies and certain loan related costs such as interest. The loan from Wells Fargo Bank NA, as successor to Wachovia, matured May 2010. The Company says its minimum asset coverage ratio is 127%, in excess of the 122% required by the Wells Fargo loan. Road to Bankruptcy Steven M. Shapiro, president of non-debtor Q Capital Strategies, LLC, which provides management, administrative and operational services for QOC, said in a court filing, "Since 2009, QOC has operated in an extremely unfavorable global business environment, which included, among other things, a lack of liquidity in the credit markets and declining asset values. "As a result, during the course of the last year, the Debtor has had no real ability to recapitalize or reduce its debt burdens. Limited access to capital is particularly significant in light of the Debtor's large debt service obligations. Alternatives that the Debtor might have previously employed to extend maturities and maintain liquidity are no longer available. These adverse market changes have severely limited the Debtor's ability to satisfy its obligations as they come due," Mr. Shapiro added. "At the same time that the rapid softening of the economy and tightening of the financial markets was limiting the Debtor's financial flexibility, there have been less frequent Policy maturations in the Debtor's portfolio than had been projected and, thus, the portfolio has so far failed to yield forecasted revenues." Given QOC's current liquidity position and projected ongoing liquidity needs, QOC determined that it would not have sufficient liquidity to continue to service its debt and fund ongoing operations -- i.e., the payment of the Premiums, the servicing charges and interest payments to Wells Fargo -- in the upcoming months. Mr. Shapiro relates that in the context of its Chapter 11 case, the Debtor intends to explore a number of restructuring alternatives for emerging from Chapter 11 pursuant to a plan of reorganization, including a possible sale of the portfolio. QOC I LLC: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------- Debtor: QOC I LLC 901 Broken Sound Parkway, NW Suite 200 Boca Raton, FL 33487 Bankruptcy Case No.: 10-40153 Type of Business: QOC I LLC owns previously issued life insurance policies purchased in the life settlement market. Chapter 11 Petition Date: October 1, 2010 Bankruptcy Court: U.S. Bankruptcy Court Southern District of Florida (West Palm Beach) Bankruptcy Judge: Paul G Hyman Jr. Debtor's Counsel: Glenn D. Moses, Esq. Heather L Harmon, Esq. GENOVESE JOBLOVE & BATTISTA, P.A. 100 SE 2 St #4400 Miami, FL 33131 Tel: (305) 372-2522 Fax: (305) 349-2310 Email: gmoses@gjb-law.com HHarmon@gjb-law.com Estimated Assets: $100 million to $500 million Estimated Debts : $100 million to $500 million The petition was signed by Steven M. Shapiro, president. QOC I's List of 4 Largest Unsecured Creditors: Entity/Person Nature of Claim Claim Amount ------------- --------------- ------------ Deloitte Tax LLP Consulting $5,750 200 South Biscayne Blvd Miami, FL 33131-2310 Habersham Funding, LLC Servicing $3,537 Building 11, Piedmont Center 3495 Piedmont Road NE, Suite 910 Atlanta, GE 30305 Towers Watson Risk Consulting $2,862 Consulting, Inc. 901 North Glebe Road Arlington, VA 22203 Wells Fargo Bank NA Servicing $4,751 RCLC INC: Trenton to Buy Aviation Biz. for $10.7 Million -------------------------------------------------------- RCLC, Inc., formerly Ronson Corporation, entered into an Amended and Restated Asset Purchase Agreement with Ronson Aviation, Inc., the Company's wholly-owned subsidiary, and Trenton Aviation, LLC, a wholly-owned subsidiary of Ross Aviation, LLC for the sale of substantially all of the assets of the Company's aviation business. The Amended Asset Purchase Agreement modified the Asset Purchase Agreement previously entered into among the parties to reflect that Trenton Aviation was the successful bidder at the auction held by the bankruptcy court on September 27, 2010 and to reflect the increase in the cash portion of the purchase price from $9.4 million to $10.7 million. The Amended Asset Purchase Agreement provides for a purchase price of $10.7 million in cash, $0.25 million of which would be held in escrow for a period of three (3) years following the Company's compliance with the Industrial Site Recovery Act and the closure of an underground storage tank case in accordance with the requirements of the Amended Asset Purchase Agreement, and $0.25 million of which would be held in a remediation trust fund in accordance with ISRA pending the Company's compliance with ISRA. In addition, Trenton Aviation will assume, in the aggregate, up to $310,000 in Cure Amounts under assumed Ronson Aviation contracts and ordinary course trade payables, as well as honor up to $82,000 in unused vacation, time-off or sick leave of Ronson Aviation employees hired by Trenton Aviation. Consummation of the transaction is subject to, among other things, approval by Mercer County, New Jersey of the assignment of its lease agreement with the Company for property located at Trenton Mercer Airport to Trenton Aviation, as well as other customary closing conditions. On September 30, 2010, the sale was also approved by the Bankruptcy Court. The closing on the transaction is expected on or about October 15, 2010. About RCLC Inc. RCLC, Inc., formerly known as Ronson Corporation, in Woodbridge, New Jersey, historically, has been engaged principally in these businesses -- Consumer Products; and Aviation-Fixed Wing and Helicopter Services. Trenton, New Jersey-based Ronson Aviation, Inc., filed for Chapter 11 protection on August 17, 2010 (Bankr. D. N.J. Case No. 10- 35315). The Debtor estimated its assets at $10 million to $50 million and its debts at $1 million to $10 million. Affiliates RCLC, Inc. (Bankr. D. N.J. Case No. 10-35313), and RCPC Liquidating Corporation (Bankr. D. N.J. Case No. 10-35318) filed separate Chapter 11 petitions on August 17, 2010, each estimating their assets at $1 million to $10 million and debts at $1 million to $10 million. The cases, along with RCLC, Inc.'s, are jointly administered, with RCLC, Inc., as the lead case. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, assists the Debtors their restructuring effort. The Company's foreign subsidiary, RCC, Inc., formerly known as Ronson Corporation of Canada Ltd. is not included in the filing. REALOGY CORP: Bank Debt Trades at 11% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Realogy Corp. is a borrower traded in the secondary market at 88.71 cents-on-the- dollar during the week ended Friday, October 1, 2010, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.29 percentage points from the previous week, The Journal relates. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank loan matures on September 30, 2013, and carries Moody's B1 rating and Standard & Poor's CCC- rating. The loan is one of the biggest gainers and losers among 206 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Realogy Corp. Realogy Corp. -- http://www.realogy.com/-- a global provider of real estate and relocation services with a diversified business model that includes real estate franchising, brokerage, relocation and title services. Realogy's world-renowned brands and business units include Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group, ERA, Sotheby's International Realty, NRT LLC, Cartus and Title Resource Group. Collectively, Realogy's franchise systems have around 15,000 offices and 270,000 sales associates doing business in 92 countries around the world. Headquartered in Parsippany, N.J., Realogy is owned by affiliates of Apollo Management, L.P., a leading private equity and capital markets investor. Realogy fully supports the principles of the Fair Housing Act. The Company's balance sheet at June 30, 2010, showed $8.18 billion in total assets, $9.13 billion in total liabilities, and a stockholders' deficit of $951.00 million. Realogy carries a 'CC' corporate credit rating with a "developing" outlook from Standard & Poor's. S&P noted that leverage was high, at 15x at March 2010, although this was an improvement compared to 20x one year ago. It has 'Caa2' corporate family and probability of default ratings, with negative outlook, from Moody's. SEALY CORP: Posts $15.82 Million Net Loss in August 29 Quarter -------------------------------------------------------------- Sealy Corporation filed its quarterly report on Form 10-Q with the Securities and Exchange Commission, reporting a net loss of $15.82 million on $346.18 million of net sales for the three months ended Aug. 29, 2010, compared with net income of $12.06 million on $349.57 million of net sales for the three months ended Aug. 30, 2009. The Company's balance sheet at Aug. 29, 2010, showed $964.88 million in total assets, $206.78 million in total current liabilities, $749.66 million in long-term obligations, $58.00 million in other liabilities, $875,000 in deferred income tax liabilities, and a stockholders' deficit of $95.43 million. A full-text copy of the quarterly report on Form 10-Q is available for free at http://ResearchArchives.com/t/s?6c07 About Sealy Corp. Trinity, North Carolina-based Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- is the largest bedding manufacturer in the world with sales of $1.5 billion in fiscal 2008. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), including SpringFree(TM), PurEmbrace(TM) and TrueForm(R); Stearns & Foster(R), and Bassett(R) brands. Sealy operates 25 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to approximately 3,000 customers with more than 7,000 retail outlets. Sealy carries 'B' local and issuer credit ratings from Standard & Poor's. SMITHFIELD FOODS: Fitch Keeps CCC/RR5 Rating on Sr. Unsecured Debt ------------------------------------------------------------------ Fitch Ratings has affirmed the credit ratings of Smithfield Foods, Inc. The Rating Outlook has been revised to Positive from Stable. At Aug. 1, 2010, Smithfield had approximately $3 billion of total debt. Rating Rationale: Smithfield's ratings reflect its high financial leverage, low relative margins, volatile cash flow generation, and lack of diversity across proteins. Moreover, periodic instability in export markets and ambiguity surrounding internal hedging policies remain a concern. These negatives are partially offset by Smithfield's leading position in the pork industry, good liquidity, and the fact that near-term maturities are manageable. Furthermore, the company is currently generating positive free cash flow (FCF; defined as cash flow from operations less capital expenditures and dividends). The Positive Outlook is due to the fact that operating fundamentals and credit metrics have improved considerably over the past three quarters. Furthermore, in fiscal 2011, Fitch expects additional improvement in year-over-year earnings growth and meaningful debt reduction. Despite recent increases in grain costs, favorable protein supply/demand dynamics should support live hog and processed pork prices along with earnings in the near term. Debt repayment will be facilitated by significant cash on hand. Smithfield had $542 million of cash at Aug. 1, 2010, and will receive approximately $175 million of net proceeds from the divestiture of its 49% interest in Butterball, LLC. The sale is expected to close by Dec. 31, 2010. Credit Statistics: For the latest 12 months period ending Aug. 1, 2010, total debt- to-operating earnings before interest, taxes, depreciation and amortization was 5.8 times , down from peak leverage of 48.7x during the LTM period ended Nov. 1, 2009. Operating EBITDA-to- gross interest expense was 1.9x and funds from operations (FFO) fixed charge coverage was 1.4x. LTM FCF was $114 million and the company's consolidated EBITDA margin was 4.6%. Fitch continues to view margins of around 5% and FCF in the $100 million range as normal for the company and believes Smithfield can achieve these levels in fiscal 2011. Should total debt-to-operating EBITDA fall below 5.0x ratings are likely to be upgraded. Fitch currently projects that leverage can approximate 4.0x by the end of fiscal 2011 if the company repays its remaining 2011 maturities as discussed below. Debt Reduction: Since the end of the fiscal year ended May 2, 2010, Smithfield repurchased $69 million of its 7% senior unsecured notes due Aug. 1, 2011, leaving an estimated $533 million outstanding. Fitch believes additional repurchases of the 2011 notes are likely because terms of the company's $1 billion asset-based loan revolving facility stipulate that if more than $60 million of the company's 2011 notes remain outstanding at May 3, 2011, the facility becomes due at that time versus the stated maturity date of July 2, 2012. Given good access to capital for speculative rated entities, Smithfield could elect to refinance this maturity and/or its ABL but the company remains focused on deleveraging its balance sheet. Smithfield's goal is to reduce debt by $1 billion by fiscal 2013. Fitch views the timeline as aggressive but believes significant debt reduction is necessary to withstand the inherent volatility of the industry. Industry Fundamentals: Hog Production Smithfield's cumulative operating income has strengthened over the past three quarters as losses in Hog Production decelerated and turned positive during the first fiscal quarter ended Aug. 1, 2010. Fitch believes the hog production cycle has turned and expects Smithfield's business to continue to generate profits in the near term. Absent unexpected shocks to global pork demand and an outsized run up in corn costs, which are not anticipated, the segment should also generate profits in fiscal 2012. Smithfield announced a new long term Hog Production Cost Savings Initiative during the fourth quarter of fiscal 2010 which aims to improve the company's operating efficiencies and its overall competitive position. The plan, which includes farm reconfigurations and the termination of certain high cost third party breeding stock contracts, is expected to reduce the company's base hog raising costs by about $2/hundredweight by fiscal 2014. Smithfield's raising costs were $53.52/cwt during the quarter ended Aug. 1, 2010. Smithfield estimates that a total of approximately $40 million of expenses and charges will be incurred over a 2-3 year period for these efforts. Pork Operations Although Smithfield's Pork Processing Segment is experiencing higher raw material costs, pricing for the company's higher margin packaged meat business remains strong. During the first quarter ended Aug. 1, 2010, packaged meat sales increased 5% as a 12% average price increase offset a 6% decline in volume. Pricing increased 2% in fiscal 2010 and was flat in fiscal 2009. Fitch believes that pricing will remain firm due to tight supply and good overall demand. Furthermore, Smithfield achieved its targeted $55 million of fiscal 2010 cost savings from its Pork Restructuring Program completed at the end of fiscal 2010 and expects to realize $125 million of annualized savings beginning fiscal 2011. Liquidity and Maturities: At Aug. 1, 2010, Smithfield had $1.3 billion of total liquidity consisting of $759 million of ABL revolver availability and as mentioned earlier, $542 million of cash. Upcoming maturities include roughly $533 million of 7% unsecured notes due Aug. 1, 2011; $350 million 7.75% unsecured notes due May 15, 2013, $400 million of 4% convertible notes due June 30, 2013, and a $200 million secured term loan due Aug. 29, 2013. If industry fundamentals remain stable during the near-to-intermediate term the company should not have difficulties refinancing the large magnitude of calendar 2013 maturities. Debt Terms: Smithfield's ABL credit facility subjects the company to a springing fixed charge coverage financial covenant. If availability falls below 15% of the total commitment, the company must maintain a fixed charge coverage covenant of 1.1x. Smithfield's unsecured notes contain change of control provisions and its bond indentures limit the company's ability to incur certain indebtedness, such as debt not used to refinance existing debt, if interest coverage falls below 2.0x. At Aug. 1, 2010, Smithfield did not satisfy this trailing 12 month incurrence-based test. Fitch believes the company's LTM interest coverage ratio can exceed 2.0x in the near term. Recovery Ratings: The 'RR1' rating on Smithfield's approximate $1 billion of secured debt indicates that Fitch views recovery prospects on these obligations as outstanding at 91%-100%. The company's ABL is secured by a first-priority lien on accounts receivable (A/R) and inventory, which together totaled $2.4 billion at Aug. 1, 2010, and by a second-priority lien on property, plant and equipment which totaled $2.3 billion net of depreciation. Smithfield's secured term loan and secured notes have a first-priority lien on property, plant and equipment and a second-priority lien on A/R and inventory. While not anticipated, the 'RR5' rating assigned to Smithfield's senior unsecured notes reflects Fitch's opinion that recovery prospects would be below average at 11%-30% if the bonds went into default. Fitch has affirmed these ratings: Smithfield Foods, Inc. -- Long-term Issuer Default Rating at 'B-'; -- Asset-based revolver at 'BB-/RR1'; -- Secured term loan at 'BB-/RR1'; -- Secured notes at 'BB-/RR1'; -- Senior unsecured debt at 'CCC/RR5'. SOUTH BAY: Committee Fails to Win Authority to Pursue Suits ----------------------------------------------------------- The Official Committee of Unsecured Creditors of South Bay Expressway, L.P., asks the U.S. Bankruptcy Court for the Southern District of California, to grant the Creditors' Committee the avoidance power necessary to avoid statutory liens pursuant to Section 545 of the Bankruptcy Code and to preserve the priority of statutory liens under Section 551 of the Bankruptcy Code. A complaint -- adversary proceeding 10-ap-90172 -- pending in the Court, is poised to determine the validity, priority and perfection of three mechanic's liens on the Bankruptcy Estate aggregating between approximately $150,000,000 and $240,000,000. An action under Sections 545 and 551 in the Adversary Proceeding could potentially avoid the lien and preserve it for the Bankruptcy Estate generally, allowing the Creditors' Committee's constituency of unsecured creditors to share in a pro rata disbursement senior to the interests of the secured lenders, Daren R. Brinkman, Esq., at Brinkman Portillo Ronk, PC, in Westlake Village, California, relates. According to Mr. Brinkman, the Mechanic's Liens against the Bankruptcy Estate are: (1) On June 1, 2009, Otay River Constructors recorded in San Diego a mechanic's lien upon the nine-mile express toll road in southern California commonly known as State Road 125 or the South Bay Expressway and SBX's property rights therein for $233,110,946 plus interests and costs. (2) On September 3, 2009, ORC recorded in San Diego a mechanic's lien upon the Expressway and SBX's property rights therein for $145,476,376 plus interests and costs. (3) On February 12, 2010, Intrans Group, Inc., recorded in San Diego a mechanic's lien upon the Expressway and SBX's property rights therein for $9,002,000. SBX is prevented from bringing an action that would challenge the interests of the secured lenders due to the stipulated admissions it made in a stipulated cash collateral order, Mr. Brinkman notes. Consequently, SBX has refused to avoid and preserve the Mechanic's Liens with a claim under Sections 545 and 551, failing in its duty to represent the interests of the entire Bankruptcy Estate, including that of the Creditors' Committee, he adds. According to Mr. Brinkman, the Creditors' Committee intends to bring an avoidance action on behalf of the Bankruptcy Estate and therefore, seeks the Court's granting of avoidance and preservation powers under Sections 545 and 551 for these reasons: (a) The Creditors' Committee has a "colorable" claim under Sections 545 and 551. (b) SBX is legally barred from bringing an avoidance action on behalf of the Bankruptcy Estate. (c) The Creditors' Committee has rightfully yet unsuccessfully demanded from SBX the authority to avoid liens under Section 545. (d) SBX's refusal to assign the avoidance powers under Sections 545 and 551 is "particularly unjustified" because the res judicata bars the Debtor and the Creditors' Committee from bringing an avoidance action subsequent to the Adversary Proceeding. In support of its Motion for assignment of avoidance powers, the Creditors' Committee, in separate filings, asks the Court (i) to take judicial notice of certain documents previously filed with the Court, and (ii) to shorten the time to hear its request and a corresponding request to intervene so that the Creditors' Committee may be able to make a timely intervention in the Adversary Proceeding before October 12, 2010. * * * Judge Louise Adler ruled that the Creditors' Committee's request is not approved for a variety of reasons. The Court held that the Motion comes too late vis-a-vis the summary judgment motion and scheduled trial in the Adversary Proceeding. The proposed motion also makes no sense, the Court said. "The Debtor did not waive its rights to challenge the mechanics lien claims since that is precisely what it is doing by the adversary proceeding. It only waived its rights to challenge the Secured Financing Parties claims as a condition to use of Cash Collateral," Judge Adler pointed out. According to the Court, the Creditors' Committee misunderstands the function of Sec. 545 and 541. If the Court determines that the mechanics lien claim was not properly perfected on the Petition Date under applicable state law, it remains unsecured, Judge Adler held. She further noted that Sec. 551 doesn't function to improve the estate's rights. "If mechanics lien is unperfected, there is no need to avoid it." The proposed motion is a waste of time and money, Judge Adler concluded. About South Bay Expressway South Bay Expressway, L.P., dba San Diego Expressway, L.P., filed for Chapter 11 on March 22, 2010 (Bankr. S.D. Calif. Case No. 10-04516). Its affiliate, California Transportation Ventures Inc., also filed for bankruptcy. The Debtors developed and operate a four lane, nine mile express toll road in Southern California commonly referred to as the South Bay Expressway or State Road 125. Both estimated assets and debts of $500 million to $1 billion in their bankruptcy petitions. Robert Pilmer, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring effort. PricewaterhouseCoopers LLP is auditor and tax advisor. Imperial Capital LLC is financial advisor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The Debtors say that as of the bankruptcy filing, they have roughly $640 million in book value of total assets and roughly $570 million in book value of total liabilities. Bankruptcy Creditors' Service, Inc., publishes South Bay Expressway Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by South Bay Expressway LP and California Transportation Ventures Inc. (http://bankrupt.com/newsstand/or 215/945-7000). SOUTH BAY: Removal Period Extended to February 15 ------------------------------------------------- At a hearing held September 23, 2010, the U.S. Bankruptcy Court for the Southern District of California granted the Debtors' request to extend the period during which they may remove civil actions by 120 days, to no earlier than February 15, 2011. The Debtors told the Court that they have not had an opportunity to determine conclusively which Civil Actions they will seek to remove and instead have been focused on activities that are critically important to their reorganization, including, among other things, negotiating the structure for a consensual plan of reorganization and litigating the mechanics lien dispute with Otay River Constructors and InTranS Group, Inc. They further noted that the outcome of the mechanics lien dispute may negate the need to remove Civil Actions relating to the Contractors to the extent the Court determines that the Contractors have no liens on the Debtors' property or the liens are subordinate to the secured lenders' liens. The Debtors did not receive any pleadings in opposition to their extension request. About South Bay Expressway South Bay Expressway, L.P., dba San Diego Expressway, L.P., filed for Chapter 11 on March 22, 2010 (Bankr. S.D. Calif. Case No. 10-04516). Its affiliate, California Transportation Ventures Inc., also filed for bankruptcy. The Debtors developed and operate a four lane, nine mile express toll road in Southern California commonly referred to as the South Bay Expressway or State Road 125. Both estimated assets and debts of $500 million to $1 billion in their bankruptcy petitions. Robert Pilmer, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring effort. PricewaterhouseCoopers LLP is auditor and tax advisor. Imperial Capital LLC is financial advisor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The Debtors say that as of the bankruptcy filing, they have roughly $640 million in book value of total assets and roughly $570 million in book value of total liabilities. Bankruptcy Creditors' Service, Inc., publishes South Bay Expressway Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by South Bay Expressway LP and California Transportation Ventures Inc. (http://bankrupt.com/newsstand/or 215/945-7000). SOUTH BAY: Wins Nod to Provide Incentives to 4 Key Employees ------------------------------------------------------------ South Bay Expressway, L.P., and California Transportation Ventures, Inc., received the U.S. Bankruptcy Court's authority, but not direction, to implement a proposed key employee incentive program for four members of the Debtors' senior management, two of whom are "insiders" as defined under Section 101(31) of the Bankruptcy Code and two of whom the Debtors believe are not insiders as defined under Section 101(31). The Incentive Program contemplates performance incentive payments to: (1) Greg Hulsizer, chief executive officer; (2) Anthony Evans, chief financial officer; (3) Theresa Weeks, chief accounting officer; and (4) Shane Savgur, chief technology officer. Under no circumstances will the total incentive payments due to any of the Key Employees in a calendar year exceed 100% of his or her base salary, R. Alexander Pilmer, Esq., at Kirkland & Ellis LLP, in Los Angeles, California, tells the Court. Performance incentive payments will be based on performance of the Debtors, as measured by (i) the 2010 operating budget approved by the Debtors' board of directors and senior secured lenders, (ii) the project completion budget approved by the Board and the Secured Financing Parties, and (iii) the timing of the Debtors' emergence from Chapter 11 protection. The calculations of the bonuses under the Incentive Program based on the three Performance Metrics are: I. Performance Metric No. 1: Operating Cash Flows Relevant parties: Greg Hulsizer, Anthony Evans, Theresa Weeks, and Shane Savgur This provides opportunities for cash awards to each of the Key Employees based upon a comparison of the Debtors' earnings or "Actual EBITDA" and the budgeted EBITDA shown in the Budget. If Actual EBITDA and Budgeted EBITDA are the same, each Key Employee will receive a cash award at the "target" rate, calculated as a percentage of annual base salary: Target Bonus as Target Bonus as Key Employee % of Base Salary as Cash Amount ------------ ---------------- -------------- Greg Hulsizer 50% $137,500 Anthony Evans 50% 120,000 Theresa Weekes 40% 55,600 Shane Savgur 40% 55,600 --------- Target Bonus Pool $368,700 Each Key Employee's maximum bonus under Performance Metric No. 1 will be equal to 150% of his or her Target Bonus. If actual EBITDA is less than 90% of Budgeted EBITDA, no incentive payments will be made. Maximum Key Employee Cash Award ------------ ---------- Greg Hulsizer $206,250 Anthony Evans 180,000 Theresa Weekes 83,400 Shane Savgur 83,400 ---------- Total $553,050 II. Performance Metric No. 2: Project Completion Cost Relevant parties: Greg Hulsizer and Anthony Evans This provides for annual cash awards to the Debtors' CEO and CFO if outstanding capital expenditures and completion obligations under the Project Completion Budget are completed in a timely and cost-effective manner, meaning below budgeted cost. The pool for cash awards under this metric will equal 15% of the net cost savings. The Cost Savings will be the cumulative net total of the permanent cost savings and permanent cost increases calculated by looking at the work completed on each individual project. Expenditures deferred beyond 2010 will not constitute permanent savings and will not be included in the bonus calculation. The Cost Savings will be determined by the Board, subject to concurrence by the Secured Financing Parties' technical advisor, which will not be unreasonably withheld or delayed. The allocation of the bonus pool is: Project Completion Cost Savings Payout Allocation ------------------------------- Greg Hulsizer | 50% Anthony Evans | 50% If project completion costs exceed the Project Completion Budget, neither the CEO nor the CFO will receive a cash award on the basis of this metric. III. Performance Metric No. 3: Emergence Relevant parties: Greg Hulsizer and Anthony Evans This provides that the Debtors' CEO and CFO will be eligible for cash awards based on how quickly the Debtors emerge from Chapter 11 protection after the entry of an order by the Court determining the lien priority between the Secured Financing Parties and the mechanics lien claimants. Cash awards will be calculated as a percentage of base salary: Emergence after Resolution of Cash Award Priority Dispute as % of Base Salary ---------------- ------------------- Within 90 days 50% Within 135 days 25% Within 180 days 10% Maximum Total Awards: $257,500 The CEO and CFO will receive cash bonuses under the third metric only if the Debtors are able to formulate a plan of reorganization, solicit votes sufficient for confirmation, and substantially consummate the plan within six months of the Court entering an order determining the lien priority dispute. Accordingly, the third metric is not merely a reward for continued employment with the Debtors through emergence from Chapter 11. R. Alexander Pilmer, Esq., at Kirkland & Ellis LLP, in Los Angeles, California, contends that the Incentive Program, which will cost the Debtors' bankruptcy estates a maximum of $681,800, provides for the payment of performance-based cash bonuses that are commensurate with market practice; is cost-effective; and has been carefully tailored to ensure that the Key Employees remain focused on financial, operational and restructuring goals that will directly benefit the estates and their creditors. Beginning well before the Petition Date, the Debtors have relied and continue to rely on the Key Employees to discharge significant responsibilities related to the cases in addition to their regular duties, Mr. Pilmer tells Judge Louise DeCarl Adler. At the same time, he asserts, the Key Employees have seen their compensation suffer as a result of the cases and face uncertainty regarding employment upon the Debtors' emergence from Chapter 11. In the past and immediately prior to the Petition Date, the Debtors provided the Key Employees with opportunities to earn cash bonuses upon achieving budgeted financial goals, which have motivated the Key Employees to perform at a superlative level and increase the value of the Debtors' business, Mr. Pilmer says. He adds, among other things, that the Incentive Program aligns the interests of the Key Employees with the interests of the Debtors and the Debtors' stakeholders by rewarding the Key Employees' accomplishment of financial and bankruptcy-related milestones that directly increase the value of the estates. * * * The Court granted the Debtors' request in open court last September 23, 2010. An official order reflecting certain amounts negotiated with the U.S. Trustee & Otay River Constructors at the hearing is yet to be filed in the docket. About South Bay Expressway South Bay Expressway, L.P., dba San Diego Expressway, L.P., filed for Chapter 11 on March 22, 2010 (Bankr. S.D. Calif. Case No. 10-04516). Its affiliate, California Transportation Ventures Inc., also filed for bankruptcy. The Debtors developed and operate a four lane, nine mile express toll road in Southern California commonly referred to as the South Bay Expressway or State Road 125. Both estimated assets and debts of $500 million to $1 billion in their bankruptcy petitions. Robert Pilmer, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring effort. PricewaterhouseCoopers LLP is auditor and tax advisor. Imperial Capital LLC is financial advisor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The Debtors say that as of the bankruptcy filing, they have roughly $640 million in book value of total assets and roughly $570 million in book value of total liabilities. Bankruptcy Creditors' Service, Inc., publishes South Bay Expressway Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by South Bay Expressway LP and California Transportation Ventures Inc. (http://bankrupt.com/newsstand/or 215/945-7000). SOUTH FINANCIAL: Fitch Upgrades Issuer Default Rating From 'CC' --------------------------------------------------------------- Fitch Ratings has upgraded and subsequently withdrawn the ratings for The South Financial Group, Inc., and its principal banking subsidiary, Carolina First Bank, following the completion of TSFG's acquisition by Toronto Dominion Bank. TSFG's ratings were placed on Rating Watch Positive when the acquisition agreement was announced in May 2010. The upgrade equalized most of TSFG's ratings with those of TD's U.S. banking subsidiaries, and the ratings were then withdrawn as the legal entities have been merged into existing TD subsidiaries. Fitch views this transaction as consistent with TD's U.S. acquisition strategy although not material to its ratings. Fitch has upgraded and withdrawn these ratings: South Financial Group, Inc. (The) -- Long-term Issuer Default Rating to 'AA-' from 'CC'; -- Short-term IDR to 'F1+' from 'C'. Carolina First Bank -- Long-term IDR to 'AA-' from 'CC'; -- Long-term deposits to 'AA' from 'CCC/RR3'; -- Short-term IDR to 'F1+' from 'C'; -- Short-term deposits to 'F1+' from 'C'. Fitch has withdrawn these ratings: South Financial Group, Inc. (The) -- Individual 'F'; -- Support '5'; -- Support floor 'NF'; -- Preferred stock 'C/RR6'. Carolina First Bank -- Individual to 'F'; -- Support '5'; -- Support floor 'NF'. SPANSION INC: Firm Enters Into Settlement with Chipmos Tech ----------------------------------------------------------- ChipMOS TECHNOLOGIES (Bermuda) LTD. disclosed that ChipMOS TECHNOLOGIES, INC., a 91% owned subsidiary of ChipMOS, has entered into a settlement agreement with Spansion LLC for its general unsecured claim on breach of contract and liquidated damages rights reflected in the proof of claim, Claim No. 5, against Spansion Inc., Spansion Technology LLC, Spansion LLC, Spansion International Inc. and Cerium Laboratories LLC filed by ChipMOS Taiwan in United States Bankruptcy Court. Under the Agreement, the total amount of recognized damage on breach of contract and liquidated damages rights was US$135 million. Based on the Company's earlier disclosed information about this transaction on its January 14 and 26, 2010 press releases, ChipMOS Taiwan will be receiving approximately US$68 million from the above arrangement. About Chipmos Technologies (Bermuda) ChipMOS -- http://www.chipmos.com-- is a leading independent provider of semiconductor testing and assembly services to customers in Taiwan, Japan, and the U.S. With advanced facilities in Hsinchu and Southern Taiwan Science Parks in Taiwan and Shanghai, ChipMOS and its subsidiaries provide testing and assembly services to a broad range of customers, including leading fabless semiconductor companies, integrated device manufacturers and independent semiconductor foundries. 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. and its affiliates 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. As of Sept. 30, 2008, Spansion had 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. Judge Kevin J. Carey confirmed Spansion's Plan of Reorganization on April 16, 2010. A group of holders of Convertible notes and equity in Spansion presented an alternative plan, which would pay senior noteholders in full and has funding commitment of in excess of $425 million, but the plan was rejected. The Plan was implemented May 10, 2010. SUNESIS PHARMA: Prices Underwritten Offering at $0.35/Unit ---------------------------------------------------------- Sunesis Pharmaceuticals, Inc., announced Friday the pricing of an underwritten offering of roughly 44.1 million units, each consisting of one share of its common stock and a warrant to purchase 0.5 of a share of its common stock, at a public offering price of $0.35 per unit, for gross proceeds of approximately $15.5 million. The net proceeds from this offering are expected to be approximately $14.3 million, after deducting the underwriting discount and estimated offering expenses payable by Sunesis. The offering is expected to close on or about October 6, 2010, subject to customary closing conditions. The warrants will become exercisable six months after issuance at an exercise price of $0.42 per share, and will expire five years from the date of issuance. The shares of common stock and warrants are immediately separable and will be issued separately. Cowen & Company, LLC, is acting as the sole lead underwriter and ThinkEquity LLC is acting as co-underwriter in this offering. Sunesis anticipates using the net proceeds from the offering for funding VALOR, the planned pivotal Phase 3 clinical trial of vosaroxin in combination with cytarabine in patients with relapsed or refractory acute myeloid leukemia, and for working capital and general corporate purposes. The securities described above are being offered by Sunesis pursuant to a shelf registration statement previously filed with and declared effective by the Securities and Exchange Commission on May 20, 2010. A preliminary prospectus supplement related to the offering has been filed with the SEC and is available on the SEC's website at http://www.sec.gov. Copies of the preliminary prospectus supplement, and, when available, the final prospectus supplement, as well as the accompanying prospectus relating to this offering may be obtained on the SEC's website or from the offices of Cowen and Company, LLC (c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, Attn: Prospectus Department (631) 254-7106). This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction. About Sunesis Pharmaceuticals South San Francisco, Calif.-based Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS) -- http://www.sunesis.com/-- is a biopharmaceutical company focused on the development and commercialization of new oncology therapeutics for the treatment of hematologic and solid tumor cancers. Sunesis' balance sheet at June 30, 2010, showed $49.84 million in total assets, $5.53 million in total liabilities, $61,741 in non- current portion of deferred rent, and stockholders' equity of $44.25 million. * * * As reported in the Troubled Company Reporter on April 6, 2010, Ernst & Young, LLP, in Palo Alto, Calif., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted of the Company's recurring losses from operations. SUNRISE REAL: Posts $506,900 Net Loss in June 30 Quarter -------------------------------------------------------- Sunrise Real Estate Group, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $506,920 on $2.9 million of revenue for the three months ended June 30, 2010, compared with a net loss of $372,559 on $1.8 million of revenue for the same period of 2009. The Company ended the period with a cash position of roughly $2.3 million, as compared to roughly $3.4 million at December 31, 2009, and $514,366 at June 30, 2009. The Company's operating activities used net cash of $387,003 during the six months ended June 30, 2010. The Company's balance sheet as of June 30, 2010, showed $15.6 million in total assets, $17.8 million in total liabilities, $1.1 million in noncontrolling interests of consolidated subsidiaries, and a stockholders' deficit of $3.3 million. As reported in the Troubled Company Reporter on April 21, 2010, Kenne Ruan, CPA, P.C., in Woodbridge, Conn., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has significant accumulated losses from operations and has a net capital deficiency. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c13 About Sunrise Real Headquartered in Shanghai, the People's Republic of China, Sunrise Real Estate Group, Inc. was initially incorporated in Texas on October 10, 1996, under the name of Parallax Entertainment, Inc. On December 12, 2003, Parallax changed its name to Sunrise Real Estate Development Group, Inc. On April 25, 2006, Sunrise Estate Development Group, Inc. filed Articles of Amendment with the Texas Secretary of State, changing the name of Sunrise Real Estate Development Group, Inc. to Sunrise Real Estate Group, Inc., effective from May 23, 2006. The Company and its subsidiaries are engaged in the property brokerage services, real estate marketing services, property leasing services and property management services in China. SUNRISE SENIOR: Enters Into Purchase and Sale Deal With Ventas -------------------------------------------------------------- Sunrise Senior Living, Inc. and certain of its affiliates have entered into purchase and sale agreements with Ventas, Inc. and certain of its affiliates to sell to Ventas all of Sunrise's joint venture interests in nine limited liability companies in the U.S. and two limited partnerships in Canada, which collectively own 58 communities managed by Sunrise. The aggregate purchase price for the joint venture interests is approximately $41.5 million and is payable at closing, which is expected to occur in the coming months. The Company intends to use the proceeds from the transaction, after expenses, to pay down its bank credit facility and other debt obligations, and for working capital. Sunrise will continue to manage the 58 senior living communities, together with the other 21 senior living communities in the Ventas portfolio that are already wholly owned by Ventas. As a condition of the purchase agreement, Sunrise and Ventas will amend the existing master agreement and management agreements to set forth their revised rights and obligations with respect to the management and other matters related to these communities. "We are pleased that this agreement sets new performance, operating and reporting thresholds that, if met, will enable us to manage these assets for many years, and avoids the previously announced Ventas performance termination rights on a significant number of assets," said Mark Ordan, Sunrise's chief executive officer. "In addition, selling our joint venture interests to Ventas brings Sunrise additional funds to improve our balance sheet and provide a foundation for careful growth. We have seen clear improvements in performance, and we are excited to do all we can to continue this trend." Additional details on this announcement can be found in the Company's Form 8-K filed today with the Securities and Exchange Commission. About Sunrise Senior McLean, Va.-based Sunrise Senior Living, Inc. (NYSE: SRZ) -- http://www.sunriseseniorliving.com/-- is a provider of senior living services in the United States, Canada, the United Kingdom and Germany. At June 30, 2010, the Company operated 356 communities, including 307 communities in the United States, 15 communities in Canada, seven communities in Germany and 27 communities in the United Kingdom, with a total unit capacity of roughly 35,400. As reported in the Troubled Company Reporter of March 3, 2010, Ernst & Young LLP, in McLean Va., expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company cannot borrow under its bank credit facility and the Company has significant debt maturing in 2010 which it does not have the ability to repay. TECHNIPOWER SYSTEMS: Plan Confirmation Hearing Set for Oct. 26 -------------------------------------------------------------- Technipower Systems, formerly Solomon Technologies Inc., will present its reorganization plan for confirmation later this month. The U.S. Bankruptcy Court for the District of Connecticut on September 17, 2010, entered an order approving the disclosure statement explaining the Chapter 11 plan, and fixed the dates in connection with the plan confirmation process. Ballots of acceptance or rejection of the plan are due to be returned October 22. The Debtor will present the Plan for confirmation at a hearing on October 26, at 11:00 a.m. Objections are due October 22. Pursuant to the Plan, if approved, the holders of the Company's common stock on the record date will receive approximately 1% of the common stock of the reorganized Company. Under the Plan, if approved, the senior secured creditors of the Company will receive 62 1/2 of the common stock of the reorganized Company, the subordinated secured creditors of the Company will receive 12 1/2 of the common stock of the reorganized Company, the unsecured creditors of the Company will receive 20% of the common stock of the reorganized Company, and the holders of the preferred stock of the Company will receive 4% of the common stock of the reorganized Company. The record date for the issuance of all shares of common stock of the reorganized Company is October 26, 2010. Pursuant to the Plan, all of the technology and assets of the Company other than those described below will be transferred to a newly formed private entity in which the common stockholders of the Company will not have an interest. The principal assets to be retained by the reorganized Company are i) U.S. Patent No. 5,067,932, issued on November 26, 1991, entitled "Dual-Input Infinite-Speed Integral Motor and Transmission Device", which is the basis for the Company's Electric Wheel technology, ii) claims for infringement of this patent against Toyota Motor Corporation, and iii) malpractice and related claims by the Company against its former legal counsel with respect to litigation of the patent infringement case. No vote of the common stockholders with respect to the Plan is or will be requested, and the common stockholders will be deemed to have rejected the Plan. However, each common stockholder has the right to file an objection to the Plan pursuant to F.R.B.P. 3020(b) no later than October 22, 2010. A full-text copy of the Disclosure Statement, as amended, is available for free at http://ResearchArchives.com/t/s?6c04 Technipower Systems Inc., fka Solomon Technologies, makes power conversion systems for vehicles, vessels and photovoltaic systems. Technipower Systems filed for Chapter 11 protection in December 2009 (Bankr. D. Conn. Case No. 09-52444). The Company is represented by James Berman of Zeisler & Zeisler. THERMOENERGY CORP: Posts $5.6 Million Net Loss in June 30 Quarter ----------------------------------------------------------------- ThermoEnergy Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $5.6 million on $253,000 of revenue for the three months ended June 30, 2010, compared with a net loss of $2.3 million on $1.3 million of revenue for the same period of 2009. At June 30, 2010, the Company did not have sufficient working capital to satisfy its anticipated operating expenses for the next 12 months. As of June 30, 2010, the Company had a cash balance of roughly $1.8 million and current liabilities of $14.9 million, which consisted primarily of accounts payable of $968,000, short- term borrowings of $4.2 million (exclusive of discounts of $2.3 million), convertible debt in default of $5.3 million, contingent liability reserves of $3.0 million and unpaid payroll taxes of $1.9 million. The Company is presently in negotiations with its creditors to extend, settle or convert its obligations to equity. The Company's balance sheet at June 30, 2010, showed $3.5 million in total assets, $21.8 million in total liabilities, and a stockholders' deficit of $18.3 million. As reported in the Troubled Company Reporter on May 4, 2010, Kemp & Company, a Professional Association, in Little Rock, Ark., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has incurred net losses since inception and will require substantial capital to continue commercialization of the Company's technologies and to fund the Company's liabilities. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6c1c About ThermoEnergy Corporation Little Rock, Ark.-based ThermoEnergy Corporation is a clean technologies company engaged in the worldwide development of advanced municipal and industrial wastewater treatment systems and carbon reducing clean energy technologies. TOR MINERALS: Extends BofA Line of Credit Maturity -------------------------------------------------- TOR Minerals International, Inc. has amended its current U.S. credit agreement with Bank of America to extend the maturity date of borrowings under its Line of Credit. Under the terms of the amendment, the maturity date for the U.S. credit facility was extended from August 15, 2010 to February 15, 2011. The Company is working to establish a new U.S. corporate lending relationship to replace its credit agreement for its U.S. operations prior to the revised maturity date under the amended credit agreement. Under the Credit Agreement Amendment, the borrowing limit on the Line was reduced from $2,250,000 to $1,500,000 and the interest rate remained at Prime plus three percent. The loan covenant regarding the current ratio remained unchanged at 1.0 to 1.0 and the fixed charge coverage increased from 0.85 to 1.0 to 1.10 to 1.0. The Company's current ratio has remained well above the covenant range during the third quarter and was 1.6 to 1.0 as of the end of the second quarter ended June 30, 2010. The fixed charge ratio has also remained above the covenant levels during the current quarter and was 5.4 to 1.0 during the six month period ended June 30, 2010. As of September 30, 2010, the Company had $500,000 drawn on the Line and $1,000,000 was available. Corpus Christi, Tex.-based TOR Minerals International, Inc. (Nasdaq: TORM) -- http://www.torminerals.com/-- is a global manufacturer and marketer of specialty mineral and pigment products for high performance applications with manufacturing and regional offices located in the United States, Netherlands and Malaysia. * * * As reported in the Troubled Company Reporter on March 29, 2010, UHY LLP, in Houston, expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company's credit facility with a financial institution matures on August 15, 2010, at which time the credit facility will be terminated as indicated by the financial institution. As a result, the Company will be required to raise additional capital, find alternative means of financial support, or both. The Company may have difficulty in obtaining the necessary financing to repay this credit facility. TRIBUNE CO: Court Denies Aurelius Plea to Disqualify Chadbourne --------------------------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware denied the request of Aurelius Capital Management, LP, to disqualify Chadbourne & Parke LLP from acting on behalf of the Official Committee of Unsecured Creditors. At the hearing held September 22, 2010, Judge Carey denied Aurelius's Disqualification Motion to the extent it seeks to disqualify Chadbourne from participating in a mediation to be conducted by the Honorable Kevin Gross. To the extent the Disqualification Motion seeks relief other than in connection with the Mediation, the Court will hold a status conference on October 4, 2010, at which Aurelius will inform the Court whether and to what extent it wishes to press for additional relief as requested in the Disqualification Motion. Prior the entry of the Court's order, the Committee asked Judge Carey not to approve the Motion because the Court's approval of the retentions of Chadbourne and Zuckerman Spaeder LLP, after full disclosure of Chadbourne's connections and potential conflicts and the scope of its representation of the Committee, was -- and remains -- entirely correct. According to the Committee, Aurelius does not assert that new facts have suddenly come to light with respect to the disclosures made in Chadbourne's application. The Committee averred that the Motion to Disqualify is a tactical move by a creditor unhappy with positions taken by it. The Committee added that the Motion is designed to disrupt its ability to participate effectively in the upcoming Mediation by depriving it of the knowledge and experience of its chosen co-counsel. With respect to Aurelius's request to file under seal redacted portion of the Motion to Disqualify, the Committee argued that it holds no brief for secrecy or sealing of the redacted materials, which consist of three or four lines of text. Rather, the Committee suggested the redacted materials be stricken from both of Aurelius's underlying motions as an abuse of confidential settlement communications. Not all members of the Committee objected to the Disqualification Motion. Warner Bros. Television, Pension Benefit Guaranty Corporation, Washington-Baltimore Newspaper Guild, and William A. Niese join in the Committee's Objection. Deutsche Bank Trust Company of Americas and Wilmington Trust Company support Aurelius' Disqualification Motion. Deutsche Bank maintained that in order to preserve the integrity of the bankruptcy process, only Zuckerman should negotiate directly with the parties with whom Chadbourne has conflicts and that only Zuckerman should advise the Committee with respect to LBO-Related Causes of Action. Permitting Chadbourne to negotiate directly with parties whom it represents in other engagements creates an appearance of impropriety, Deutsche Bank said. Wilmington Trust said the Mediation is a critical event in the Debtors' cases. According to Wilmington Trust, there is reason to suspect that, if the mediation fails, the cases will rapidly devolve into aggressive litigation over competing plans of reorganization, claims allowance, and the pursuit of significant LBO-related claims against management, creditors, and third- parties. Thus, Wilmington Trust joined Aurelius's Motion to Disqualify. The Committee asserted that like the Disqualification Motion, the joinders of Deutsche Bank and Wilmington Trust failed to provide any evidence in support of the claim that the Committee's retention of Chadbourne should be limited or terminated 21 months into the Debtors' bankruptcy cases, even though the two Committee members know that the Committee has very recently re-examined this issue and confirmed that Chadbourne has no conflict and that a proper protocol is in place to address any possible allege appearance of impropriety. Specifically, the Committee maintained that the Deutsche Bank Joinder fails to disclose that a substantial part of the indentures of which it serves as indenture trustee was recently sold by Centerbridge to Aurelius. Aurelius' Response Aurelius clarified that it does not seek to disqualify Chadbourne from the Debtors' cases, but only seeks to disqualify Chadbourne from matters in which it has conflicts of interest. Aurelius maintained that the timing of the Disqualification Motion is appropriate considering that the Mediation is imminent and Chadbourne has refused repeated requests to police itself and abstain from advising the Committee on matters in which it is conflicted. According to Aurelius, Chadbourne has consistently advised the Committee in ways that are antithetical to how one would expect unbiased counsel to an official committee of unsecured creditors to act. As a result, unsecured creditors have reason to be concerned that the Committee's actions concerning the LBO-Related Causes of Action have resulted from conflicted advice from Chadbourne. Thus, Aurelius averred that in order to prevent the uncertainty regarding Chadbourne's conflicted motivations from irreparably tainting the Mediation and any proceeding that may follow, the Disqualification Motion should be granted. Parties Meet & Confer Judge Carey ordered the parties, including the U.S. Trustee, to meet and confer and attempt to develop and memorialize a delineation of responsibilities between Chadbourne and Zuckerman for use in connection with the upcoming mediation. In accordance to the Court's order, the relevant parties met and conferred on September 21 and 22, 2010, in an attempt to establish a mediation protocol. The parties, however, were unable to agree on Mediation Protocol acceptable to all. Accordingly, the Committee delivered to the Court a proposed Mediation Protocol. Consistent with the order of the Court, the Committee Protocol will be followed regarding delineation of responsibilities between Chadbourne and Zuckerman at the Mediation commencing on September 26, 2010. Pursuant to the Mediation Protocol proposed by the Committee, Chadbourne & Parke, in its role as general bankruptcy counsel, will participate in the mediation and negotiations in connection with issues relating to a plan of reorganization and the resolution of the LBO Claims. In addition, and consistent with the Committee's resolution in connection with Chadbourne and Zuckerman's participation in the Mediation: * Zuckerman is to be directly involved in all mediation sessions and in settlement discussions with respect to the LBO Claims. Zuckerman and Chadbourne are to coordinate their activities in connection with the mediation and settlement negotiations; * Zuckerman will advise the Committee directly in connection with the merits of the positions that are taken by parties in the mediation and settlement discussions with respect to the possible resolution of the LBO Claims; and * Zuckerman should, as appropriate, provide an assessment of the value of particular LBO Claims as those assessments become relevant to issues that are addressed in the mediation settlement discussion. About Tribune Co Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. And Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors had $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Proposes Plan Settlement With Oaktree & Angelo Gordon ----------------------------------------------------------------- Tribune Company and its debtor affiliates reached a settlement agreement with Oaktree Capital Management, L.P., and Angelo, Gordon & Co., L.P. The settlement was a result of mediation sessions among the parties overseen by Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware, the appointed mediator in the Debtors' bankruptcy cases. The Mediator, in a report filed September 28, 2010, stated that Oaktree, Angelo Gordon and the Debtors -- the "Settling Parties" - - reached an agreement on a plan of reorganization that will settle claims surrounding "Step 1" of Debtors' 2007 going private transaction. The settlement comes as a result of the court-ordered mediation requested by Tribune and overseen by Judge Gross; it has been approved by the Special Committee of Tribune's Board of Directors, comprised of independent members of the company's board. Oaktree and Angelo Gordon, who will be co-proponents of this plan, manage investment funds and accounts, which hold a total of about $8.6 billion of Senior Loan Claims in the Debtors' bankruptcy cases. The Lenders filed a plan of reorganization for the Debtors on September 17. "The plan addresses two primary issues that are fundamental to a successful reorganization of Tribune," said Don Liebentritt, Tribune's Chief Restructuring Officer. "First, it enables the company to exit Chapter 11 and distributes the equity of the reorganized Tribune and its subsidiaries to the holders of the Initial and Incremental Term Loan claims. Second, to the extent not settled prior to confirmation, all claims identified by the Examiner's Report relating to 'Step 2' of the company's going- private transaction are preserved and placed in a litigation trust. We remain confident that additional settlements will be reached." The Litigation Trust will allow an independent litigation trustee to pursue legal action relating to the remaining fraudulent conveyance issues alleged by various unsecured creditors, while avoiding the possible negative impact these litigation issues might have on the company's business operations. The plan's settlement resolves claims associated with the financing of "Step 1" of the going-private transaction, all of which the Examiner found to have less than 50% probability of success. The settlement, which has been overseen by the court- appointed mediator, provides for Tribune Company's senior bondholders to receive a total distribution of $300 million (approximately 23% of their claim amount) in cash plus their interest in the Litigation Trust. Pursuant to a plan, holders of Senior Loan Claims will receive an estimated recovery of $124 million while holders of Senior Loan Guaranty Claims are slated to recover $5.49 billion. Unsecured creditors of Tribune Company will receive the same percentage recovery, also in cash and an interest in Litigation Trust, which will allow them to seek redress for potential fraudulent conveyance issues. Unsecured creditors of Tribune Company's subsidiaries will have an opportunity to receive 50% of their claim amount in cash. Counsel for the Official Committee of Unsecured Creditors, Howard Seife, Esq., at Chadbourne & Parke, told Bloomberg News that the panel will oppose the agreed plan. The plan also provides for both Initial Term Loan Lenders and Incremental Term Loan Lenders to receive a pro rata distribution of cash, debt and equity of the reorganized Tribune and its subsidiaries pursuant to the terms of Credit Agreement. The term loan debt due June 2014 rose 3.5 cents, to 59 cents on the dollar, Bloomberg News reported citing people who declined to be identified because the trades are private. Oaktree and Angelo Gordon hold "significant amounts" of the term loans, the Debtors said. The Mediation took place on September 26, 2010, and the parties continued settlement on September 27, 2010, with the Mediator continuing to meet with some parties. The Mediator said he is confident that the Proposed Plan will lead to additional constructive discussions between and among the Debtors and other parties. Accordingly, the Mediator said does not consider the Mediation to be closed. The terms of the settlement are contained in the Term Sheet of Joint Plan of Settling Parties, a copy of which is available for free at http://bankrupt.com/misc/Tribune_OaktreeTermSheet.pdf About Tribune Co Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. And Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors had $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Step One Lenders Say Oaktree Plan Hides Biggest Issue ----------------------------------------------------------------- A group composed of 14 lenders who collectively hold approximately $730 million of Step 1 debt ask the Court not to approve the Disclosure Statement explaining the joint plan of reorganization for Tribune Company and its subsidiaries proposed by Oaktree Capital Management, L.P., and Angelo, Gordon & Co., L.P. Counsel to the Step One Lenders, Daniel B. Butz, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Delaware, asserts that the Disclosure Statement does not contain sufficient information to enable a reasonable person to make an "informed judgment about the plan." Indeed, Mr. Butz maintains, the Disclosure Statement contains serious mischaracterizations and omits critical and material information and facts regarding the proposed distributions to the Step One and Step Two Lenders that (i) will mislead holders of Claims or Interests and (ii) must be available to holders of Claims and Interests. The Step One Credit Agreement Lenders also assert that the Disclosure Statement mischaracterizes and obfuscates the single biggest issue in the Oaktree/Angelo Gordon Plan for holders of Step One debt, which lenders should bear the financial burden if Step Two is deemed a fraudulent conveyance due to the bad faith of the Step Two Lenders. On its face, Mr. Butz relates, the Oaktree/Angelo Gordon Plan ostensibly allows all Step One debt, while leaving Step Two debt disputed and subject to challenge. In economic substance, however, the Oaktree/Angelo Gordon Plan forces the Step One Lenders to pay more than 21 cents on the dollar of their recovery to the Step Two Lenders, thus protecting the Step Two Lenders from a determination that the Step Two Transactions constitute a fraudulent conveyance, Mr. Butz notes. According to Mr. Butz, rather than recovering the 88% described in the Disclosure Statement, the Step One Lenders would actually pay over 21 cents on the dollar of their rightful recovery to holders of Step Two debt and thus recover only 67%. The Step Two Lenders thus will insulate themselves from the misconduct detailed by the Examiner, using Step One funds, he adds. The Disclosure Statement, Mr. Butz says, does not disclose this improper scheme. Instead, he adds, the Disclosure Statement really suggests that this result is dictated by the "sharing provisions" of the Credit Agreement -- a provision that is exceedingly unlikely to be enforced. This attempted application of the Sharing Provision is contrary to law and common sense, Mr. Butz asserts. "The Disclosure Statement seeks to lure creditors, particularly Step One Lenders, into what can only be described as a bait and switch," Mr. Butz says. Oaktree/Angelo Plan Oaktree Capital Management, L.P., and Angelo Gordon & Co., L.P., delivered to the U.S. Bankruptcy Court for the District of Delaware on September 17, 2010, a proposed joint plan of reorganization and disclosure statement for Tribune Company and its debtor affiliates. Oaktree and Angelo Gordon manage investment funds and accounts, which holds a total of about $8.6 billion of Senior Loan Claims in the Debtors' bankruptcy cases. According to Bruce Bennett, Esq., at Hennigan, Bennett & Dorman LLP, in Los Angeles, California, Oaktree and Angelo Gordon -- also referred to as "Credit Agreement Lenders" -- filed the alternative reorganization plan for the resolution of all outstanding Claims against and Interests in all of the Debtors in their reorganization cases under Chapter 11 of the Bankruptcy Code. In accordance with the Credit Agreement Lender Plan, the Guarantor Non-Debtors will participate in the Plan with the Debtors. The Guarantor Non-Debtors are Tribune (FN) Cable Ventures, Inc., Tribune Interactive, Inc., Tribune ND, Inc., and Tribune National Marketing Company. The Credit Agreement Lender Plan is based on two main tenets: (1) It allows the Debtors to exit bankruptcy in order to maximize the value of the Estates for all creditors and to avoid prolonging the Chapter 11 cases while providing a mechanism to litigate or resolve over a longer time period the complex issues relating to the Debtors so-called "Leveraged ESOP Transactions" consummated in December 2007. (2) It preserves and allows for post-confirmation litigation of all claims and causes of action arising from the Leveraged ESOP Transactions as to which the Examiner, Professor Kenneth Klee, found to have a prospect of success of 50% or better. Those claims and certain others will be transferred to the Litigation Trust, with a Litigation Trustee selected by the members of the Official Committee of Unsecured Creditors maintaining full authority to pursue all relevant parties, including lenders, financial advisors, lawyers, shareholders, directors, and officers. As a condition to the confirmation of the Credit Agreement Lender Plan, Oaktree and Angelo Gordon will ask the Bankruptcy Court to determine that it is appropriate for the Plan to resolve and release certain claims and causes of action that the Examiner found to have less than a fifty percent prospect of success. The Credit Agreement Proponents clarify that their Plan is presented only as an alternative in the event that the upcoming mediation does not produce a fully-consensual resolution to the Debtors' cases. The Credit Agreement Proponents believe that rapid consummation of a plan of reorganization that permits the Tribune businesses to emerge from bankruptcy is critical and will benefit all stakeholders by enhancing the value of the Tribune enterprise. "At bottom, the Credit Agreement Lender Plan provides a mechanism for the Debtors to exit bankruptcy in the near future in the event that the mediation is not successful," asserts Mr. Bennett. Mr. Bennett tells the Court that the Credit Agreement Lender Plan is not a "take it or leave it" document. Rather, he adds, the Credit Agreement Proponents invite dialogue with all who might agree with the provisions of the Credit Agreement Lender Plan and all who might disagree. The Credit Agreement Proponents relate that they will seek to maximize consensus in all respects, including in an effort to resolve those issues and questions otherwise reserved for future determination and to reach agreement on procedures for obtaining judicial determinations of issues and questions that cannot be resolved even following good faith efforts. The Credit Agreement Lender Plan contains numerous individual plans, all of which are severable and would enable the Tribune chapter 11 subsidiaries to emerge from their bankruptcy cases prior to the time that a plan for Tribune Company can be confirmed. Mr. Bennett maintains that the Credit Agreement Lender Plan remains true to the Examiner's conclusions, enables the Debtors to exit bankruptcy in the near future, provides for a material initial distribution to holders of Credit Agreement claims, and allows structurally subordinated creditors of Tribune Company to receive a pro rata distribution of the value of Tribune Company plus interests in the litigation trust formed to pursue the claims that the Examiner found to be viable. The Credit Agreement Proponents intend to seek confirmation of the Credit Agreement Plan if the mediation does not prove successful. Tribune said in a statement that if the court-ordered mediation doesn't prove fruitful, the investment firms' proposal "may provide the next best alternative," according to Shira Ovide of the Wall Street Journal. Oaktree and Angelo Gordon assert that the valuation of the reorganized debtors prepared by their financial advisors, Lazard Freres. A full-text copy of the Credit Agreement Lender Plan is available for free at http://bankrupt.com/misc/Tribune_OaktreePlan.pdf A full-text copy of the Credit Agreement Lender Disclosure Statement is available for free at: http://bankrupt.com/misc/Tribune_OaktreeDS.pdf Management's Chapter 11 Plan Tribune Co. has filed its own proposed plan of reorganization. Tribune, however, has not yet obtained confirmation of the plan. The U.S. Bankruptcy Court for the District of Delaware appointed federal judge Kevin Gross as mediator to assist negotiations between Tribune and various creditor constituencies as the Company's Chapter 11 process moves forward. The Management Plan is built on a settlement of the buyout claims among some lower ranking creditors, lenders, including JPMorgan Chase & Co., and Tribune managers. The settlement is opposed by holders of $3.6 billion in prepetition secured debt who announced their opposition even before the settlement was formally disclosed. About Tribune Co Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. And Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors had $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRUMP ENTERTAINMENT: U.S. Trustee Protests Plan to Pay $20MM Fees ----------------------------------------------------------------- Donald Wittkowski at pressofAtlanticCity.com reports that U.S. Trustee Roberta A. DeAngelis objected to bondholders' plans to pay $19.5 million of legal and professional fees stemming from the Chapter 11 takeover for the Company and reimburse $2.2 million in fees paid to their financial adviser, arguing that the payments would violate federal law because the beneficiaries would be the new owners, not the Company. The U.S. Trustee says there are no documents supporting the reasonableness of those fees. According to the report, bondholders completed their $225 million purchase of the three Trump casinos in July, beating out billionaire investor Carl C. Icahn. Trump Entertainment had agreed in advance to pay the bondholders' fees if they were successful in buying the company. Trump, the bondholders and Icahn recently reached a settlement to end all litigation in the bankruptcy battle. Mr. Icahn, who holds the $486 million mortgage on the Trump casinos, had appealed the judge's ruling that gave bondholders control of the company, but will now drop the challenge, according to pressofAtlanticCity.com. According to Bankruptcy Law360, Icahn recently filed a motion that supports a settlement in which his side will get $15 million to cover its fees. Law360 says Beal Bank and Icahn Partners LP, the first-lien lenders to Trump Entertainment, said they backed the settlement, which will see its claims against the Company increase by $12.5 million. About Trump Entertainment Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ: TRMP) -- http://www.trumpcasinos.com/-- owns and operates three casino hotel properties in Atlantic City, New Jersey, which include Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. The Company conducts gaming activities and provides customers with casino resort and entertainment. Donald Trump is a shareholder of the Company and, as its non- executive Chairman, is not involved in the daily operations of the Company. The Company is separate and distinct from Mr. Trump's privately held real estate and other holdings. Trump Entertainment Resorts, TCI 2 Holdings, LLC, and other affiliates filed for Chapter 11 protection on February 17, 2009 (Bankr. D. N.J., Lead Case No. 09-13654). The Company has tapped Charles A. Stanziale, Jr., Esq., at McCarter & English, LLP, as lead counsel, and Weil Gotshal & Manges as co-counsel. Ernst & Young LLP is the Company's auditor and accountant and Lazard Freres & Co. LLC is the financial advisor. Garden City Group is the claims agent. The Company disclosed assets of $2,055,555,000 and debts of $1,737,726,000 as of December 31, 2008. Trump Hotels & Casino Resorts, Inc., filed for Chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Trump Hotels' obtained the Court's confirmation of its Chapter 11 plan on April 5, 2005, and in May 2005, it exited from bankruptcy under the name Trump Entertainment Resorts Inc. UNITED AIRLINES: Fitch Affirms Issuer Default Rating at 'B-' ------------------------------------------------------------ Fitch Ratings has affirmed the debt ratings of United Airlines, Inc., and Continental Airlines, Inc., following the closing of their merger. United and Continental are now both wholly-owned subsidiaries of the re-named United Continental Holdings, Inc. (formerly UAL Corp.). Fitch has affirmed these ratings: United Continental Holdings, Inc. -- Issuer Default Rating at 'B-'; -- Senior Unsecured ratings at 'CC/RR6'. United Airlines, Inc. -- IDR at 'B-'; -- Secured Bank Credit Facility at 'BB-/RR1'; -- Senior Secured Notes at 'BB-/RR1'; -- Senior Unsecured rating at 'CC/RR6'. Continental Airlines, Inc. -- IDR at 'B-'; -- Senior Secured Notes at 'BB-/RR1'; -- Senior Unsecured rating at 'CC/RR6'. The Rating Outlook for all three entities is Positive. On Sept. 10, 2010, Fitch upgraded United's ratings in anticipation of the closing of the merger. The upgrade followed steady strengthening in United's stand-alone credit profile during 2010 and clear progress toward the resolution of merger-related issues in recent weeks. Stand-alone profiles for United and Continental have been supported by steady improvements in revenue performance and a relatively benign jet fuel price environment since the air travel demand recovery began to take shape a year ago. Industry capacity constraint and a consistent rebound in business travel demand since last fall have helped drive solid gains in passenger yields and revenue per available seat mile (RASM), expanding margins and leading to a sharp turnaround in free cash flow generation during the economic recovery. Fitch continues to believe that the merger will ultimately support sustainable improvements in margins and FCF generation relative to other U.S. airlines, and will generally contribute to the establishment of a more disciplined approach toward capacity management in a cyclical industry that remains uniquely vulnerable to external demand and fuel price shocks. Management's commitment to a continuation of capacity discipline in 2011 and beyond represents an important risk mitigant at a time when the sustainability of the global economic recovery has become more uncertain. Even as industry revenue comparisons become more challenging, Fitch believes that the combined carrier retains sufficient fleet and network planning flexibility to successfully manage a more difficult demand environment, should it emerge, in 2011 and beyond. Assuming a slow and uneven U.S. economic expansion, relatively stable jet fuel prices below $2.50 per gallon and mid-single digit RASM growth during 2011, Fitch expects the combined carrier to generate positive FCF in excess of $1.5 billion next year, providing room to push pro forma lease-adjusted leverage down, while maintaining unrestricted cash balances above $7 billion. An upgrade of United's post-merger IDR to 'B' is possible in 2011 if a continuation of positive yield and RASM comparisons, coupled with a generally favorable fuel price scenario (average jet fuel prices below $2.50 per gallon) drive strongly positive FCF and allow the post-merger airline to fund next year's maturities largely out of internally generated cash flow and excess cash on the balance sheet. Conversely, a revision of the Rating Outlook to Stable could occur if a sharp slowdown in U.S. economic growth contributes to stagnating industry unit revenue growth or if a spike in global energy prices pressures the new United's 2011 operating margins, thereby weakening the carrier's FCF profile next year. Following the close of the transactions, ratings for CAL and United are closely linked as wholly-owned subsidiaries of the newly-created United Continental Holdings parent. Once a single operating certificate is received, more complete linkage of the two separately-rated entities will likely occur. UNITED WESTERN: Makes Payment to JPM After OTS Non-Objection ------------------------------------------------------------ United Western Bancorp and Equi-Mor Holdings Inc., a direct subsidiary of the Company, had entered into the Fourth Forbearance and Amendment Agreement with JPMorgan Chase Bank, N.A., on July 9, 2010. Subsequently, the Company reported that the Office of Thrift Supervision informed the Company that it would not approve the Company making the Forbearance Principal Payments and the Forbearance Interest Payments, as defined therein, pursuant to the terms of the Fourth Forbearance Agreement. Based upon the foregoing, the Company and JPMorgan negotiated and then entered into a Waiver and Amendment to Fourth Forbearance and Amendment Agreement dated September 28, 2010. The terms of the Waiver Agreement provide, among other things, that: i) JPMorgan agrees to waive the Fourth Forbearance Defaults and ii) the Fourth Forbearance Agreement is amended such that JPMorgan agrees to forbear from exercising its rights and remedies under the Credit Agreement dated June 29, 2007, as amended; the $25 million line of credit note dated September 30, 2009, as amended until the earlier of: (i) the end of business on October 31, 2010; or (ii) the occurrence of a default, other than the Disclosed Defaults, under any of the Loan Documents, the Fourth Forbearance Agreement or any other agreement required to be entered into by the Fourth Forbearance Agreement. In addition, the Waiver Agreement provides that upon the receipt by the Company of written non-objection from the OTS, the Company will pay JPMorgan monthly interest payments for the months of June, July, August, September, and October pursuant to the terms of the LOC Note: i) immediately, with respect to all accrued and unpaid monthly interest payments at the time of receipt by the Company of such non-objection; and ii) on the last day of each month, with respect to future monthly interest payments. The Company received the written non-objection from the OTS on September 28, 2010, allowing the Company to make the Amended Forbearance Interest Payments to JPMorgan. The Company has so far provided JPMorgan with the interest payments for the months of June, July, August and September of 2010. The Waiver Agreement also amends Section 5(J) of the Fourth Forbearance Agreement whereby both the Company and Equi-Mor Holdings, Inc. shall each continue to be entitled to receive the cash flows from the securities pledged as collateral for the Note in an amount not to exceed $3 million from each pledged account for the period beginning January 15, 2010 to October 31, 2010. A full-text copy of the Fourth Amended Forbearance Agreement is available for free at http://ResearchArchives.com/t/s?6c09 About United Western Bancorp Denver, Colorado-based United Western Bancorp, Inc. (NASDAQ: UWBK) -- http://www.uwbancorp.com/-- is a holding company whose principal subsidiary, United Western Bank, is a community bank focused on Colorado's Front Range market and selected mountain communities. US AEROSPACE: Appoints Jim Worsham as Chief Executive Officer ------------------------------------------------------------- U.S. Aerospace Inc. reported that Jim Worsham was appointed as Chief Executive Officer and a member of the board of directors on September 29, 2010. Mr. Worsham developed and has served as head of Aviation Marketing and Business Development for the Southern California Logistics Airport since October 2000, and is responsible for bringing General Electric Co., The Boeing Company, Pratt & Whitney division of United Technologies Corporation, Lockheed Martin Corporation, FedEx Corporation, the U.S. Air Force, U.S. Army, U.S. Marines, and others to SCLA. Worsham founded the SCLA School of Aviation Technology. From 1994 to 2000, Mr. Worsham ran Aircraft Marketing, Inc., where he arranged the sale of US-China Cargo from Evergreen to FedEx, oversaw the development of the first Maintenance, Repair and Overhaul facility in China, and constructed approximately 100 aircraft in China. From 1989 to 1993, he served as Chairman of the Asia Pacific and North America divisions of Guinness Peat Aviation, a commercial aircraft sales and leasing company valued at more than $4 Billion, where he oversaw the conversion of DC-8 aircraft to freighters and initiated the first aircraft leasing program in China. Mr. Worsham served as President of Douglas Aircraft Company for McDonnell Douglas Corporation, now Boeing, from 1982 to 1989. He secured military and commercial aircraft business for a family of seven different lines of aircraft, including the KC-10A Extender advanced tanker cargo aircraft for the U.S. Air Force, the C-17 Globemaster III large military transport aircraft for the U.S. Air Force, and the T-45 Goshawk for the U.S. Navy's VTXTS jet training system under U.S. Department of Defense. Mr. Worsham held executive positions with General Electric Co., where he rose from jet engine aero thermo designer, to Vice President Military Engines, Vice President Commercial Engines, and Vice President Market Development, from 1951 to 1982. His honors, awards and accomplishments include: Goddard Award, Collier Trophy, Aviation Week "Man of the Year" 2 years, AIAA/SAE Distinguished Speaker, Advisory Board for U.S. Air Force Military Airlift Command, and is the holder of 2 patents. Mr. Worsham served as a Captain in the U.S. Army. He received his BS in Mechanical Engineering, magna cum laude, from Vanderbilt University, his MS in Mechanical Engineering from University of Arkansas, and an honorary doctorate from Dartmouth Institute. Mr. Worsham entered into an employment agreement for an initial term of one year subject to mutually agreed extensions, at an annual salary of $100,000, plus cash performance bonuses upon achieving increased sales, revenues, or earnings, entering into sales or strategic cooperation agreements, or other improvements in the business or financial performance. He received options to purchase 2,000,000 shares of our common stock, half vesting over two years and half vesting upon achieving milestones and performance targets. All options vest upon death, disability or termination without cause. Mr. Worsham also agreed to the Code of Ethics and standard Indemnification Agreement for directors. U.S. Aerospace, Inc. -- http://www.USAerospace.com/-- is a publicly traded aerospace and defense contractor based in Southern California. The Company supplies aircraft assemblies, structural components and highly-engineered, precision-machined details for commercial and military aircraft. The Company's balance sheet at June 30, 2010, showed $5.67 million in total assets, $14.00 million in total liabilities, and a $8.31 million stockholders' deficit. US FIDELIS: Former Owners Give Up Assets to Creditors ----------------------------------------------------- Cory and Darain Atkinson, founders of U.S. Fidelis, have settled lawsuits brought against them and their wives by the Company and the Official Committee of Unsecured Creditors in the bankruptcy court. A chief restructuring officer took control of the Company after it sought bankruptcy protection. Brian Kelly at KMOX.com reports that the Atkinson brothers agreed to give up nearly everything they own to creditors. Except for a relatively small carve-out for their wives, Cory and Darain Atkinson are surrendering their homes, vehicles and other property under a proposed settlement filed with the bankruptcy court. According to Bloomberg News, the wives will each retain $500,000 plus specified jewelry and automobiles. If it turns out that assets were hidden, the creditors can automatically file a $50 million consent judgment against Darain and a $40 million judgment against Cory, according to Bill Rochelle, the bankruptcy columnist for Bloomberg News. Mr. Rochelle reports that the Debtor sued the Atkinson brothers to recover $101 million claimed to be "wrongfully and improperly appropriated" from the Company. The settlement will be up for approval at an Oct. 20 hearing. About US Fidelis Wentzville, Missouri-based US Fidelis, Inc., was a marketer of vehicle service contracts developed by independent and unrelated companies. The Company filed for Chapter 11 bankruptcy protection on March 1, 2010 (Bankr. E.D. Mo. Case No. 10-41902). Robert E. Eggmann, Esq., at Lathrop & Gage, assists the Company in its restructuring effort. According to the schedules, the Company had assets of $74,386,836, and total debts of $25,770,655 as of the petition date. VALENCE TECHNOLOGY: Berg & Berg Buys 1.9 Million of Shares ---------------------------------------------------------- Berg & Berg Enterprises LLC purchased on Sept. 28, 2010, 1,923,077 shares of Valence Technology Inc. common stock at a price per share of $1.04, the closing bid price of the Company's common stock on the purchase date. The aggregate purchase price for the shares was $2,000,000. Payment of the purchase price consisted of $2,000,000 in cash. This summary of the terms of the sale of shares to Berg & Berg is qualified by the text of that certain Letter Agreement dated September 28, 2010 between the Company and Berg & Berg. The shares were issued in a private placement transaction exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof. Under Rule 144 of the Securities Act, these shares are restricted from being traded by Berg & Berg for a period of six months from the date of issuance, unless registered, and thereafter may be traded only in compliance with the volume restrictions imposed by this rule and other applicable restrictions. On July 27, 2010, the Company's Board of Directors authorized the Company to engage in financing transactions with Berg & Berg, Carl E. Berg, or their affiliates from time to time in an aggregate amount of up to $10,000,000, if, and when needed by the Company, and as may be mutually agreed. The above transaction was made pursuant to this authorization and following such transaction, $2,500,000 remains available under this authorization. The managing member of Berg & Berg is Carl E. Berg, who is the Chairman of the Company's Board of Directors and the principal stockholder of the Company. A full-text copy of the Letter Agreement is available for free at http://ResearchArchives.com/t/s?6c05 About Valence Technology Austin, Texas-based Valence Technology, Inc. (NASDAQ: VLNC) -- http://www.valence.com/-- is a global leader in the development of safe, long-life lithium iron magnesium phosphate energy storage solutions and provides the enabling technology behind some of the world's most innovative and environmentally friendly applications. Valence Technology has its Research & Development Center in Nevada, its Europe/Asia Pacific Sales office in Northern Ireland and global fulfillment centers in North America and Europe. The Company's balance sheet at June 30, 2010, showed $22.75 million in total assets, $94.51 million in total liabilities, and a stockholders' deficit of $80.37 million. PMB Helin Donovan LLP expressed substantial doubt about Valence Technology Inc.'s ability as a going concern following the Company's fiscal 2010 results. The Company has incurred operating losses each year since its inception in 1989 and had an accumulated deficit of $581 million as of March 31, 2010. For the fiscal years ended March 31, 2010, 2009, and 2008 the Company sustained net losses available to common stockholders of $23.2 million, $21.4 million, and $19.6 million, respectively. VERIFONE INC: Hypercom Deal Won't Affect Moody's 'B1' Rating ------------------------------------------------------------ Moody's commented that VeriFone, Inc.'s B1 corporate family rating and stable ratings outlook are not affected by the Company's offer to purchase all of the outstanding common stock of electronic payment device competitor Hypercom Corporation for $5.25 per share in cash. VeriFone's proposal, which represented a total purchase price of $337 million (net of cash), was subsequently rejected by Hypercom on September 29, 2010. In Moody's view, based on the terms outlined in the Company's letter to Hypercom's Board of Directors, VeriFone's credit metrics would remain within the tolerance ranges expected for the Company's B1 Corporate Family Rating. If consummated, the acquisition would make VeriFone the largest electronic payment device provider and increase its global footprint. VeriFone also announced that the acquisition would be funded with a combination of cash on hand and borrowings under a new committed credit facility, which will also be used to refinance existing bank credit facilities. As of July 31, 2010, VeriFone reported cash balances of $400 million, although Moody's note that a significant portion of its cash balance are located in offshore locations. The Company's ratings are: * Corporate Family Rating -- B1 * Probability of Default Rating -- B1 * $40 million senior secured revolving credit facility (reduced to $25 million) due 2012 -- Ba2 (LGD2, 21%) * $223 million senior secured term loan due 2013 -- Ba2 (LGD2, 21%) The rating outlook is stable. Moody's most recent rating action for VeriFone was on December 30, 2009, when Moody's affirmed the company's B1 Corporate Family Rating and revised the ratings outlook to stable from negative. Headquartered in San Jose, California, VeriFone develops and provides secure point-of-sale electronic payment solutions to various financial, retail, hospitality, petroleum, transportation, government and healthcare vertical markets. Revenues for the LTM July 2010 period were $943 million. VISTEON CORP: Hit by UAW Class in Retiree ERISA Suit ---------------------------------------------------- Bankruptcy Law360 reports that Ford Motor Co. retirees have brought their contentious fight over health benefits to federal court, lodging a class action to stop Ford and its bankrupt spinoff Visteon Corp. from, they allege, breaching labor contracts by stripping more than 1,000 retirees and their families of lifetime health benefits. The United Auto Workers union and two of its members filed suit Thursday in the U.S. District Court for the Eastern District of Michigan, claiming Visteon plans to erase benefits, Law360 says. About Visteon Corp Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is an automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for automakers. 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 disclosed assets of US$4,561,000,000 and debts of US$5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring effort. 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. Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware entered an order on August 31, 2010, confirming the Fifth Amended Plan of Reorganization of Visteon Corporation and its debtor affiliates. Visteon emerged from Chapter 11 on October 1. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The Company provides financial services through Ford Motor Credit Company. Ford Motor's balance sheet at June 30, 2010, showed $179.75 billion in total assets, $183.29 billion in total liabilities, and a $3.54 billion stockholders' deficit. * * * In August 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Ford Motor Co. and FordMotor Credit Co. LLC to 'B+' from 'B-'. "The upgrade reflects S&P's reassessment of Ford's business risk profile to weak from vulnerable, and its financial risk profile to aggressive from highly leveraged," said Standard & Poor's credit analyst Robert Schulz. S&P believes Ford is making progress in stabilizing, and perhaps improving, its U.S. market shares Still, S&P believes underlying business risks remain high. Ford Motor and its unit, Ford Motor Credit, carry 'BB-' issuer default ratings from Fitch Ratings. In August 2010, when Fitch raised the rating from 'B', it said, Ford's ratings reflect its continued strong financial performance and the substantial debt reduction accomplished in the second quarter." Ford Motor has a 'B1' corporate family rating from Moody's. WLNE-TV: In Receivership; CobbCorp Hired to Sell Channel 6 ---------------------------------------------------------- Andy Smith at News Blog reports that a New York City media brokerage firm, CobbCorp LLC, has been hired to help sell WLNE-TV, Channel 6, which has been in receivership since July. According to the report, providence attorney Matthew McGowan of Salter McGowan Sylvia & Leonard, the court-appointed receiver, said 8 to 10 parties, including some from Rhode Island, have already expressed interest in buying the ABC affiliate, owned by Global Broadcasting of Southern New England. According to the trade journal Broadcasting & Cable, Global paid $14 million for the station in 2007, the report relates. Mr. McGowan, the report notes, said enough people have expressed interest in Channel 6 that CobbCorp was hired to coordinate the sales process. It's possible a purchase agreement could be in place by the end of the year, he added. The report discloses that former Providence Mayor Joseph R. Paolino Jr. is among those who have considered buying the station. WORKFLOW MANAGEMENT: Asks for Court's Nod to Use Cash Collateral ---------------------------------------------------------------- Workflow Management, Inc., et al., ask for authorization from the U.S. Bankruptcy Court for the Eastern District of Virginia to use until January 31, 2011, cash constituting as collateral of their prepetition lenders. The Debtors entered into a first lien credit agreement dated as of November 30, 2005, with various financial institutions from time to time parties thereto, Credit Suisse, Cayman Islands Branch, as administrative agent for the first lien lenders, and other agents. As of the Petition Date, the aggregate outstanding first lien obligations totalled approximately $146.5 million. The loans outstanding under the first lien credit facility continue to accrue postpetition interest. The Debtors entered into an amended and restated second lien credit agreement dated as of December 19, 2005, with financial institutions from time to time parties thereto, Silver Point Finance LLC, as administrative agent for the second lien lenders, and the other agents party thereto. As of the Petition Date, the aggregate outstanding second lien loan obligations totalled approximately $196.5 million. The amounts outstanding on account of the second lien credit facility continue to accrue postpetition interest. Douglas M. Foley, Esq., at McGuirewoods LLP, explains that the Debtors need the money to fund their Chapter 11 case, pay suppliers and other parties. In exchange for using the cash collateral, the Debtors propose to: (i) grant the prepetition agents valid and perfected replacement liens on the post-petition collateral; (ii) grant the prepetition agents administrative expense claims; and (iii) the first lien agent payment of interest and letter of credit fees at a non- default rate. The Debtors propose that interest on the outstanding second lien loan obligations will accrue post-petition at the non-default rate, and (i) the portion of the aggregate accrued interest that is payable pursuant to the second lien credit agreement by capitalizing that interest and adding it to the outstanding principal balance of the loans thereunder will continue to be paid in a manner on the applicable payment dates under the Second Lien Credit Agreement, and (ii) the remainder of the aggregate accrued interest will accrue and not be paid in cash during the course of the Debtors' Chapter 11 cases. The first lien agent will receive payment in cash of its reasonable professional fees and expenses under the first lien credit agreement. The professional fees and expenses of the second lien agent under the second lien credit agreement will accrue postpetition. The Debtors will use the collateral pursuant to a weekly budget, a copy of which is available for free at: http://bankrupt.com/misc/WORKFLOW_budget.pdf About Workflow Management Dayton, Ohio-based Workflow Management, Inc. -- http://www.workflowone.com/-- fka Workflow Graphics, Inc., offers commercial printing services, including print buying and document management capabilities, through three divisions: WorkflowOne, Freedom Graphics Services, and United Envelope. It also distributes office products and promotional items through an online ordering system. Its customers include both small and large companies throughout North America in such sectors as financial services, health care, retail, and government. Workflow Management Inc., and its affiliates, filed for Chapter 11 bankruptcy protection on September 29, 2010 (Bankr. E.D. Va. Lead Case No. 10-74617). Cullen A. Drescher, Esq., Daniel F. Blanks, Esq., Douglas M. Foley, Esq., and Patrick L. Hayden, Esq., at McGuireWoods LLP; Sarah Beckett Boehm, Esq., at McGuireWoods LLP; and Rosa J. Evergreen, Esq., at Arnold & Porter LLP, assist the Debtors in their restructuring effort. Tavenner & Beran, PLC, is the Debtors' co-counsel and conflicts counsel. Arnold & Porter LLP is the Debtors' special counsel. Kaufman & Canoles, P.C., is the Debtors' corporate counsel. FTI Consulting is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Workflow Management estimated its assets and debts at $100 million to $500 million as of the Petition Date. WORKFLOW MANAGEMENT: Taps Tavenner & Beran as Conflicts Counsel --------------------------------------------------------------- Workflow Management, Inc., et al., ask for authorization from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Tavenner & Beran, PLC, as conflicts counsel, effective as of the Petition Date. Tavenner & Beran will serve along with McGuire Woods LLP, the Debtors' lead bankruptcy counsel. Tavenner & Beran will coordinate with McGuireWoods and with the Debtors' other professionals to minimize any duplication of effort. Tavner & Beran will: (a) represent the Debtors in matters where McGuireWoods has a perceived and actual conflict of interest or is otherwise unable to represent the Debtors; and (b) other matters in which the Debtors determine to consult with Tavenner & Beran because of its particular strength in a given area, provided that Tavenner & Beran does not duplicate work being performed by McGuireWoods. Tavner & Beran will be paid $340 to $350 per hour for its services. Paula S. Beran, a member at Tavenner & Beran, assures the Court that the firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. About Workflow Management Dayton, Ohio-based Workflow Management, Inc. -- http://www.workflowone.com/-- fka Workflow Graphics, Inc., offers commercial printing services, including print buying and document management capabilities, through three divisions: WorkflowOne, Freedom Graphics Services, and United Envelope. It also distributes office products and promotional items through an online ordering system. Its customers include both small and large companies throughout North America in such sectors as financial services, health care, retail, and government. Workflow Management Inc., and its affiliates, filed for Chapter 11 bankruptcy protection on September 29, 2010 (Bankr. E.D. Va. Lead Case No. 10-74617). Cullen A. Drescher, Esq., Daniel F. Blanks, Esq., Douglas M. Foley, Esq., and Patrick L. Hayden, Esq., at McGuireWoods LLP; Sarah Beckett Boehm, Esq., at McGuireWoods LLP; and Rosa J. Evergreen, Esq., at Arnold & Porter LLP, assist the Debtors in their restructuring effort. Arnold & Porter LLP is the Debtors' special counsel. Kaufman & Canoles, P.C., is the Debtors' corporate counsel. FTI Consulting is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Workflow Management estimated its assets and debts at $100 million to $500 million as of the Petition Date. WORKFLOW MANAGEMENT: Wants FTI Consulting as Financial Advisor -------------------------------------------------------------- Workflow Management, Inc., et al., ask for authorization from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ FTI Consulting, Inc., as financial advisor and consultant effective as of the Petition Date. FTI will, among other things: a) assist management and the Board of Directors in managing the various aspects of the execution of a Chapter 11 filing; b) assist and provide support to the Debtors and their other professional advisors in negotiations with potential investors, banks and other secured lenders, the unsecured creditors committee appointed in any chapter 11 cases, the U.S. Trustee, other parties-in-interest and professionals hired by the same, as requested; c) assist and support the Debtors in cash flow monitoring and projections, cash collateral arrangements and any related reporting, as required; and d) advise and assist the Debtors in their preparation of analyses and monitoring of historical, current and projected financial affairs, as required. FTI will be paid based on the hourly rates of its personnel: Senior Managing Director $820-885 Directors/Managing Directors $620-775 Associates/Consultants $255-585 Gina Gutzeit, FTI Senior Managing Director, assures the Court that the firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. About Workflow Management Dayton, Ohio-based Workflow Management, Inc. -- http://www.workflowone.com/-- fka Workflow Graphics, Inc., offers commercial printing services, including print buying and document management capabilities, through three divisions: WorkflowOne, Freedom Graphics Services, and United Envelope. It also distributes office products and promotional items through an online ordering system. Its customers include both small and large companies throughout North America in such sectors as financial services, health care, retail, and government. Workflow Management Inc., and its affiliates, filed for Chapter 11 bankruptcy protection on September 29, 2010 (Bankr. E.D. Va. Lead Case No. 10-74617). Cullen A. Drescher, Esq., Daniel F. Blanks, Esq., Douglas M. Foley, Esq., and Patrick L. Hayden, Esq., at McGuireWoods LLP; Sarah Beckett Boehm, Esq., at McGuireWoods LLP; and Rosa J. Evergreen, Esq., at Arnold & Porter LLP, assist the Debtors in their restructuring effort. Tavenner & Beran, PLC, is the Debtors' co-counsel and conflicts counsel. Arnold & Porter LLP is the Debtors' special counsel. Kaufman & Canoles, P.C., is the Debtors' corporate counsel. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Workflow Management estimated its assets and debts at $100 million to $500 million as of the Petition Date. WORKFLOW MANAGEMENT: Moody's Downgrades Default Rating to 'D' ------------------------------------------------------------- Moody's Investors Service lowered the Probability of Default Rating of Workflow Management, Inc., to D from Caa3 and the Corporate Family Rating to Ca from Caa3. The downgrades follow Workflow's commencement of proceedings under Chapter 11 of the U.S. Bankruptcy Code on September 29, 2010. Subsequent to the actions, all of Workflow's ratings will be withdrawn because the company has entered bankruptcy. Moody's downgraded these ratings: -- Corporate Family Rating, to Ca from Caa3 -- Probability of Default Rating, to D from Caa3 Moody's affirmed these ratings (and revised the LGD point estimates as noted): -- First lien revolving credit facility, Caa1 (to LGD1, 9% from LGD2, 23%) -- First lien term loan due 11/30/11, Caa1 (to LGD1, 9% from LGD2, 23%) -- Second lien term loan due 11/30/12, Ca (to LGD3, 48% from LGD4, 65%) Ratings Rationale Workflow's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside Workflow's core industry and Workflow's ratings are believed to be comparable to those of other issuers of similar credit risk. Headquartered in Dayton, Ohio, Workflow Management, Inc., is a provider of managed print and promotional production and fulfillment solutions sources. In 2009, the company reported revenue of approximately $662 million. YRC WORLDWIDE: Board Approves Reverse Stock Split ------------------------------------------------- The board of directors of YRC Worldwide Inc. has approved a reverse stock split of the Company's common stock at a ratio of one-to-25. On September 30, 2010, the Company filed with the Secretary of State of Delaware a Certificate of Amendment to its Certificate of Incorporation to: i) effect the reverse stock split of the Company's common stock at a ratio of one-to-25 and ii) reduce the authorized shares of the Company's capital stock to 85,000,000 shares, of which 5,000,000 shares shall be preferred stock, $1.00 par value and 80,000,000 shares shall be common stock, $0.01 par value. The reverse stock split will be effective on NASDAQ on October 1, 2010. Fractional shares will not be issued in connection with the reverse stock split. Stockholders who otherwise would hold fractional shares will be entitled to a cash payment in respect of such fractional shares. Fractional shares will be collected and pooled by the Company's transfer agent and sold in the open market and the proceeds will be allocated to the stockholders' respective accounts pro rata in lieu of fractional shares. The reverse stock split will reduce the number of shares of Common Stock available for issuance under the Company's employee and director equity plans in proportion to the reverse stock split ratio. Under the terms of the Company's outstanding equity awards, the reverse stock split would cause a reduction in the number of shares of Common Stock issuable upon exercise or vesting of such awards in proportion to the reverse stock split ratio and would cause a proportionate increase in the exercise price of such awards to the extent they are stock options. The number of shares of common stock issuable upon exercise or vesting of outstanding equity awards will be rounded to the nearest whole share and no cash payment will be made in respect of such rounding. About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that through wholly owned operating subsidiaries offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. The company's balance sheet for June 30, 2010, showed $2.8 billion in total assets, $1.1 billion in total current liabilities, $913.4 million in long term debt, $146.2 million deferred income taxes, $352.6 million pension and post retirement, $359.2 million claims and other liabilities, $37,000 noncurrent liabilities, and a $77.2 million stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 18, 2010, KPMG LLP, in Kansas City, Missouri, expressed substantial doubt about YRC Worldwide's ability to continue as a going concern in its report on the Company's consolidated financial statements as of and for the year ended December 31, 2009. The independent auditors noted that the Company has experienced significant declines in operations, cash flows, and liquidity. * FDIC Plans to Auction Loans Totaling $1.12 Billion ---------------------------------------------------- Bloomberg News reports that the Federal Deposit Insurance Corp. plans to seek bids for about $1.12 billion of commercial and residential real estate loans as part of the agency's sale of assets seized from failed banks. According to Bloomberg, the scheduled sales are composed of about $773 million in residential acquisition, development and construction loans and $351 million of debt related to commercial properties, according to preliminary announcements dated Sept. 30 and obtained by Bloomberg News. Cushman & Wakefield Inc. and UniCorp Services Inc. are the marketing agents for the sealed-bid auctions. Bloomberg relates that the FDIC has completed at least 18 structured-asset sales, auctioning stakes in loans with a total face value of $21.2 billion, since May 2008, according to data on its Web site and purchaser announcements. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Total Share- Total Working Holders' Assets Capital Equity Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ ------- -------- AUTOZONE INC AZO US 5,571.6 (452.1) (738.8) LORILLARD INC LO US 3,140.0 1,654.0 (54.0) DUN & BRADSTREET DNB US 1,632.5 (475.7) (783.9) MEAD JOHNSON MJN US 2,032.0 357.5 (509.3) BOARDWALK REAL E BOWFF US 2,364.5 - (64.6) BOARDWALK REAL E BEI-U CN 2,364.5 - (64.6) TAUBMAN CENTERS TCO US 2,560.9 - (510.5) NAVISTAR INTL NAV US 9,418.0 2,011.0 (1,040.0) CHOICE HOTELS CHH US 390.2 (291.4) (97.0) WEIGHT WATCHERS WTW US 1,090.1 (344.4) (693.5) SUN COMMUNITIES SUI US 1,167.4 - (123.0) TENNECO INC TEN US 2,980.0 286.0 (47.0) UNISYS CORP UIS US 2,714.4 366.1 (1,080.1) WR GRACE & CO GRA US 4,053.3 1,257.7 (229.5) CABLEVISION SYS CVC US 7,631.6 3.8 (6,183.6) MOODY'S CORP MCO US 1,957.7 (134.2) (491.9) IPCS INC IPCS US 559.2 72.1 (33.0) UNITED CONTINENT UAL US 20,134.0 (1,590.0) (2,756.0) a THERAVANCE THRX US 232.4 180.2 (126.0) VENOCO INC VQ US 709.1 14.1 (118.6) DISH NETWORK-A DISH US 9,031.0 608.6 (1,580.3) HEALTHSOUTH CORP HLS US 1,756.1 112.5 (429.9) CHENIERE ENERGY CQP US 1,769.5 37.3 (503.5) VECTOR GROUP LTD VGR US 850.0 288.8 (19.6) NATIONAL CINEMED NCMI US 725.5 90.2 (381.7) OTELCO INC-IDS OTT-U CN 333.3 25.6 (1.2) INCYTE CORP INCY US 493.7 340.3 (104.8) PROTECTION ONE PONE US 562.9 (7.6) (61.8) ARVINMERITOR INC ARM US 2,817.0 313.0 (909.0) OTELCO INC-IDS OTT US 333.3 25.6 (1.2) CARDTRONICS INC CATM US 472.6 (25.3) (2.1) UNITED RENTALS URI US 3,574.0 24.0 (50.0) JUST ENERGY INCO JE-U CN 1,780.6 (470.0) (279.3) DISH NETWORK-A EOT GR 9,031.0 608.6 (1,580.3) LIBBEY INC LBY US 794.2 144.4 (11.7) KNOLOGY INC KNOL US 648.0 48.7 (13.5) TEAM HEALTH HOLD TMH US 828.2 80.0 (37.8) INTERMUNE INC ITMN US 161.4 84.7 (46.5) REGAL ENTERTAI-A RGC US 2,575.0 (219.7) (283.5) DOMINO'S PIZZA DPZ US 418.6 88.0 (1,263.1) BOSTON PIZZA R-U BPF-U CN 110.2 2.3 (117.7) REVLON INC-A REV US 776.3 76.9 (1,011.8) AFC ENTERPRISES AFCE US 114.5 (0.2) (4.0) FORD MOTOR CO F US 183,156.0 (23,512.0) (3,541.0) GRAHAM PACKAGING GRM US 2,096.9 228.4 (612.2) WORLD COLOR PRES WC CN 2,641.5 479.2 (1,735.9) SALLY BEAUTY HOL SBH US 1,517.1 345.6 (523.9) WORLD COLOR PRES WCPSF US 2,641.5 479.2 (1,735.9) WORLD COLOR PRES WC/U CN 2,641.5 479.2 (1,735.9) JAZZ PHARMACEUTI JAZZ US 97.3 (24.2) (16.3) SUPERMEDIA INC SPMD US 3,261.0 522.0 (22.0) PETROALGAE INC PALG US 6.1 (8.9) (47.4) COMMERCIAL VEHIC CVGI US 276.9 111.2 (10.4) ALASKA COMM SYS ALSK US 627.4 15.0 (11.3) US AIRWAYS GROUP LCC US 8,131.0 (220.0) (168.0) BLUEKNIGHT ENERG BKEP US 297.3 (431.2) (149.9) FORD MOTOR CO F BB 183,156.0 (23,512.0) (3,541.0) AMER AXLE & MFG AXL US 2,027.7 31.7 (520.4) RURAL/METRO CORP RURL US 288.5 34.6 (101.2) CENTENNIAL COMM CYCL US 1,480.9 (52.1) (925.9) HALOZYME THERAPE HALO US 51.5 38.3 (14.1) MORGANS HOTEL GR MHGC US 774.4 50.5 (4.3) RSC HOLDINGS INC RRR US 2,690.2 (120.0) (33.8) LIONS GATE LGF US 1,592.9 (783.4) (1.6) SINCLAIR BROAD-A SBGI US 1,539.8 52.1 (170.4) NPS PHARM INC NPSP US 193.8 129.0 (179.5) CC MEDIA-A CCMO US 17,286.8 1,240.8 (7,209.3) MANNKIND CORP MNKD US 239.6 11.0 (137.7) QWEST COMMUNICAT Q US 18,959.0 (424.0) (1,241.0) AMR CORP AMR US 25,885.0 (2,015.0) (3,930.0) MITEL NETWORKS C MITL US 624.5 162.6 (48.1) ACCO BRANDS CORP ABD US 1,064.0 242.5 (125.6) SANDRIDGE ENERGY SD US 3,128.7 (109.4) (118.5) PALM INC PALM US 1,007.2 141.7 (6.2) GENCORP INC GY US 981.8 150.8 (224.9) NEXSTAR BROADC-A NXST US 584.5 33.0 (187.2) PDL BIOPHARMA IN PDLI US 271.5 (66.5) (434.9) PLAYBOY ENTERP-A PLA/A US 189.0 (12.4) (27.6) PLAYBOY ENTERP-B PLA US 189.0 (12.4) (27.6) VIRGIN MOBILE-A VM US 307.4 (138.3) (244.2) ARQULE INC ARQL US 118.5 53.9 (4.1) CONSUMERS' WATER CWI-U CN 887.2 3.2 (258.0) CENVEO INC CVO US 1,553.4 199.9 (183.8) WARNER MUSIC GRO WMG US 3,655.0 (546.0) (174.0) GLG PARTNERS-UTS GLG/U US 400.0 156.9 (285.6) GLG PARTNERS INC GLG US 400.0 156.9 (285.6) LIN TV CORP-CL A TVL US 783.5 28.7 (156.5) EPICEPT CORP EPCT SS 11.4 3.3 (10.2) STEREOTAXIS INC STXS US 50.9 (0.2) (0.8) EASTMAN KODAK EK US 6,791.0 1,423.0 (208.0) GREAT ATLA & PAC GAP US 2,677.1 (51.0) (524.0) HOVNANIAN ENT-B HOVVB US 1,909.8 1,264.2 (207.4) EXELIXIS INC EXEL US 419.7 12.8 (214.7) ABSOLUTE SOFTWRE ABT CN 124.3 (5.1) (2.6) HOVNANIAN ENT-A HOV US 1,909.8 1,264.2 (207.4) PRIMEDIA INC PRM US 218.9 (5.9) (102.1) MAGMA DESIGN AUT LAVA US 74.6 9.6 (6.1) DENNY'S CORP DENN US 296.7 (23.2) (112.9) IDENIX PHARM IDIX US 77.2 38.1 (7.3) ALEXZA PHARMACEU ALXA US 71.3 21.0 (28.7) NEWCASTLE INVT C NCT US 3,594.5 - (837.5) ARRAY BIOPHARMA ARRY US 159.2 39.4 (116.7) ********* 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 2010. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***