/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/110126.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, January 26, 2011, Vol. 15, No. 25 Headlines 1 ASHBURY: Voluntary Chapter 11 Case Summary 1ST CENTENNIAL: FDIC Sues 14 Former Bank Officers, Directors A-CAR TRUCKING: Files for Chapter 7 Liquidation ABE ALIZADEH: Arrested for Not Paying State Taxes ACCREDITED HOME: Settles Overtime Suit for 10% of Claim AGRI-BEST HOLDINGS: Advantage Capital to Probe Wells Fargo ALL AMERICAN GROUP: No Date Yet for Meeting to Approve Merger ALLIED SECURITY: S&P Affirms 'B' Rating; Outlook 'Negative' ALLY FINANCIAL: S&P Raises Preferred Stock Rating to 'CC' ALTER COMMUNICATIONS: H.G. Roebuck to Appeal Plan Confirmation AMBAC FINANCIAL: Fixes March 2, 2011, as Claims Bar Date AMBAC FINANCIAL: LTDC is New Trustee for DISCS Purchasers AMBAC FINANCIAL: Time to Remove Actions Extended on Interim AMBAC FINANCIAL: Wins OK for KPMG as Tax Consultant AMERICAN HOME: Liquidating Trustee Wants Loan Docs. Destroyed APPLESEED'S INTERMEDIATE: Organizational Meeting on Jan. 28 APPLESEED'S INTERMEDIATE: Has OK to Hire Kurtzman as Claims Agent ATA AIRLINES: Dist. Ct. Rejects Bid for New Trial in FedEx Suit ATLANTIC SOUTHERN: To Voluntarily Delist Common Stock from Nasdaq ATTACHMATE CORP: S&P Puts 'BB-' Rating on Proposed $865MM Facility AVIV HEALTHCARE: Moody's Rates Proposed Sr. Unsec. Notes 'B1' AXION INTERNATIONAL: Appoints Steve Silverman as New CEO BANNING LEWIS: Bankruptcy Won't Affect Water Supply BERNARD L MADOFF: Ponzi Victims Sue U.S. for SEC's Negligence BIG TREE: Files for Chapter 7 Liquidation BLOCKBUSTER INC: Court Denies Equityholders' Exam on Valuation BLOCKBUSTER INC: Lease Decision Deadline Extended to April 21 BLOCKBUSTER INC: Wins OK to Continue Store Closing Sales CARIS DIAGNOSTICS: Moody's to Keep 'B2' Corporate Rating CHATEAU DE VILLE: Combined Hearing on Plan & DS Set for Feb. 4 CHATEAU DE VILLE: Court Sets February 25 as Claims Bar Date CHATEAU DE VILLE: Motion to Sell 6 Units at Renton Property Denied CIENA CORP: S&P Affirms 'B' Corporate; Outlook Now 'Negative' CLST HOLDINGS: Gets Confidential Treatment of FCC Agreements CNL HOTELS: Feb. 1 Debt Payment Looms; Lender Groups Negotiate CONSOLIDATED HORTICULTURE: Court Fixes March 31 as Claims Bar Date CORNERSTONE BANCSHARES: R. Vercoe Appointed Community Bank CCO COSINE COMMUNICATIONS: Effects Reverse/Forward Stock Split CPI INT'L: S&P Assigns 'B+' to Proposed Sr. Credit Facility CROWN AMERICAS: S&P Rates $700MM Unsec. Note Offering at 'BB-' DAMON PURSELL: Plan Outline Filed; All Claims to Be Paid Over Time DANA HOLDING: Moody's Puts 'B3' Rating on New Sr. Unsecured Notes DEL MONTE FOODS: Fitch Cuts IDR to 'B' on More Debt from Buyout DELTA AIR: Discloses Sale of $474 Mil. in Certificates DELTA AIR: Files Post-Confirmation Report for Third Quarter DELTA AIR: Flight Attendants Reject AFA Representation DELTA AIR: Reports December 2010 Traffic Results DELTA AIR: Signs Note Purchase Agreement With U.S. Bank DELTA PETROLEUM: S&P Cuts Senior Unsecured Debt Rating to CCC- DIVERSIFIED INDUSTRIES: Proofs of Claim Due February 7 DUNE ENERGY: S&P Cuts Second-Lien Secured Rating to 'CC' DYNEGY INC: Seneca Wants Poison Pill Waived to Buy More Shares EMERGENCY MEDICAL: S&P Puts 'BB' Corporate on CreditWatch Negative ENCOMPASS DIGITAL: Moody's Gives 'Caa1' on 5.3x debt-to-EBITDA EXTENDED STAY: Affiliates File Post-Confirmation Report for Q4 EXTENDED STAY: Files Declarations for Nov.-Dec. Disbursements F&G LEONARD: Taberna Country Club Owner Mulls Bankruptcy FAIRPOINT COMMUNICATIONS: New Stock Begins Trading on Nasdaq FEDERAL MORTGAGE: Founders Face Suit for Alleged Ponzi Scheme FLINT TELECOM: Files Prospectus for 12-Mil. Shares Held by Kodiak FOR 1031: Voluntary Chapter 11 Case Summary FUQI INT'L: NASDAQ Grants Firm's Request for Continued Listing GALLE GLOBAL: Hedge Fund to Liquidate Amid Losses GR HOLDING: Voluntary Chapter 11 Case Summary GULF FLEET: U.S. Trustee Appoints Seven-Member Creditors Committee HELIX ENERGY: S&P Downgrades Senior Unsecured Rating to 'CCC+' HONOLULU MEDICAL: Process to Release Patient Records Ongoing HUNTINGTON INGALLS: Fitch to Give 'BB' After Northrop Spin-Off HUNTINGTON INGALLS: Moody's Assigns 'Ba2' Corp. Family Rating HII HOLDING: Loan Upsize Won't Change Term Loan's 'B1' Rating INSIGHT HEALTH: Faces Last-Minute Challenges to Restructuring JEFFERSON WINDOMERE: Case Summary & 5 Largest Unsecured Creditors LANDAMERICA FIN'L: Class Suit Goes Back to C.D. Calif. Ct. LEHMAN BROTHERS: CalPERS Recoups Losses From LBHI Collapse LEHMAN BROTHERS: E&Y Seeks Transfer of Lawsuit to Federal Court LEHMAN BROTHERS: LBI Trustee Opposes Newport Plea for Affidavit LEHMAN BROTHERS: Ruld, Ex-Execs. Seek Dismissal of Retirees Suit MAJESTIC STAR: Plan Confirmation Hearing Set for March 3 MAXUM PETROLEUM: S&P Puts 'B-' Rating on Proposed $250MM Notes METROPOLIS SHEETMETAL: Case Summary & Creditors List MGM RESORTS: CityCenter Issues $1.5-Bil. of Sr. Secured Notes MILLENNIUM MULTIPLE: Court Extends Claims Bar Date to February 14 MILLENNIUM TRANSIT: Plan Outline OK'd; Feb. 4 Confirm. Hearing Set MILLENNIUM MULTIPLE: U.S. Trustee Names 3 Add'l Committee Members MOONLIGHT BASIN: Hearing on Office Building Sale Moved to Feb. 14 MORTGAGE LENDERS: Liquidating Trustee Wants Loan Docs. Destroyed MOSDOS CHEFETZ: Filed for Chapter 11 to Hold Off State Suit NAMCO CAPITAL: Chapter 11 Trustee Sues Ezri Namvar Family NEOMEDIA TECHNOLOGIES: JMC Holds 23.63% Equity Stake NEVADA STAR: Hearing on Madison Plan Outline Continued to March 2 NEW JERSEY: Christie Bankruptcy Remark Amid Bond Sale Criticized NMH HOLDINGS: S&P Raises Corporate Rating to 'B', Outlook Stable NORTEL NETWORKS: Purchase Price to Be Set by Judge, Not Arbitrator NYC OFF-TRACK: Chapter 9 Bankruptcy Case Dismissed ODYSSEY PROPERTIES: Golfview Cases' Dismissal Sought by BB&T ODYSSEY PROPERTIES: Gets Final Nod to Use Cash Collateral OTC HOLDINGS: Able to Reduce Interest on Exit Loan OVERLAND STORAGE: Christopher Gopal's Employment Terminated PARK WINE: Files for Chapter 7 Liquidation PAUL TRANSPORT: Disclosure Statement Hearing Continued to Feb. 2 PENZANCE CASCADES: Lender Battles Properties Over Cash in Ch. 11 PHILADELPHIA RITTENHOUSE: Creditor Protests Bid to Hire Adviser PHOENIX FOOTWEAR: Deregisters Securities Unsold to Employees POINT BLANK: Chapter 11 Plan Draws Objection on WaMu Ground R & G ENTERPRISES: San Luis Tortilla in Chapter 11 REALOGY CORP: S&P Rates Proposed $700MM Secured Notes at 'CC' REALOGY CORP: Moody's Assigns 'Caa1' to Proposed $700MM Sr. Notes R.H. HOOVER: Case Summary & 18 Largest Unsecured Creditors RHI ENTERTAINMENT: Settles with Crown Media & Hallmark ROCK-TENN: Moody's Reviews Low-B Ratings for Likely Downgrade ROSETTA RESOURCES: S&P Cuts Senior Unsecured Rating to 'B-' ROSMART PLAZA: Files for Chapter 7 Liquidation S & E PROPERTIES: Case Summary & 3 Largest Unsecured Creditors SANDRA ANN READ: Time for Property Tax Appeal Extended SATELITES MEXICANOS: Has Deal with Noteholders for U.S. Prepack SCHAEFER SALT: Gets Sanctions for Improper Chapter 7 Filing SCITOR CORP: Moody's Assigns 'B2' Corporate Family Rating SCOTLAND-COLORADO: Case Summary & 5 Largest Unsecured Creditors SECURECARE SERVICES: Emerges From Receivership with Invotex's Aid SMURFIT-STONE: Moody's to Withdraw Ratings After Rock Tenn Deal SONRISA PROPERTIES: Compass Plan Heads to Confirmation Hearing SPECIALTY TRUST: Wants Plan Exclusivity Period Extended to March 4 T3 MOTION: Delivers $1MM Unsecured Note to Alfonso/Mercy Cordero TERRESTAR NETWORKS: Committee Joins Sprint Suit vs. U.S. Bank TERRESTAR NETWORKS: Creditors Committee Sues U.S. Bank TERRESTAR NETWORKS: Sprint Nextel Defends Claims TERRESTAR NETWORKS: Wants Until May 17 to Decide on Leases TIG, LLC: Case Summary & 2 Largest Unsecured Creditors TRIBUNE LTD: S&P Lowers Ratings on Notes to 'D' From 'CCC-' USG CORP: Subsidiary Closes Gypsum Rock Quarry Facilities UNITED CONTINENTAL: PAR Entities Have 4.7% Equity Stake VITRO SAB: Agrees to Dismiss Chapter 15 Petition VITRO SAB: Appeals Plan Dismissal in Mexico WARNER MUSIC: Paris Court Finds CEO Guilty in Vivendi Lawsuit WESTERN SUPREME: Voluntary Chapter 11 Case Summary WORKFLOW MANAGEMENT: Unsecureds-Backed Plan Hearing on Feb. 24 W.R. GRACE: Garlock Has Approval to Access Rule 2019 Statements YITC-GP LLC: Sequoia Wants Dismissal of Involuntary Ch. 11 Case * Corporate Debt Discharged in Officer's Bankruptcy * Industry Review Cues S&P's Rating Actions on U.S. Oil & Gas Cos. * Reports on State Debt Woes Exaggerated, Nonprofit Group Says * Restructuring of Hotel Portfolio Debts Seen This Year * Colony-Led Group Said to Buy $820MM in Failed Bank Mortgages * Bradley Arant Attorneys Publish Creditors' Rights Law Handbook * Upcoming Meetings, Conferences and Seminars ********* 1 ASHBURY: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: 1 Ashbury Court Partners LLC dba Ashbury Court Apartments Siena Court Apartments 3053 Fillmore Street, Suite 260 San Francisco, CA 94123 Bankruptcy Case No.: 11-10131 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court District of Kansas (Wichita) Judge: Robert E. Nugent Debtor's Counsel: L. Donald Huelson, Esq. HUELSON LAW FIRM, LLC 16029 S. Bradley Olathe, KS 66062 Tel: (913)254-1400 Fax: (913)254-1411 E-mail: dhuelson@huelsonlawfirm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Ross Meyeraan, manager member of managing member. 1ST CENTENNIAL: FDIC Sues 14 Former Bank Officers, Directors ------------------------------------------------------------ Edvard Pettersson at Bloomberg News reports that the Federal Deposit Insurance Corp. sued 14 former officers and directors of First Centennial Bank for negligence, saying it had to pay $163 million to depositors after the bank failed in January of 2009. 1st Centennial Bank, based in Redlands, California, was closed in January 2009 by the California Department of Financial Institutions, which then appointed the FDIC as receiver. Following the closing, the FDIC entered into a purchase and assumption agreement with First California Bank, in Westlake Village, California, to assume the insured deposits of 1st Centennial. As of January 9, 2009, 1st Centennial had total assets of $803.3 million and total deposits of $676.9 million, of which there were approximately $12.8 million that exceeded the insurance limits. 1st Centennial Bank's failure was estimated to cost the FDIC's Deposit Insurance Fund $227 million. A-CAR TRUCKING: Files for Chapter 7 Liquidation ----------------------------------------------- The Orlando Sentinel reports that Melbourne, Florida-based A-Car Trucking & Paving Inc. on Jan. 19 filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code, disclosing listing $0 assets and $75,049 in liabilities. The Company's major creditor is APAC Macasphalt in Melbourne, $61,000. A meeting of creditors is set for Feb. 14, 2011. ABE ALIZADEH: Arrested for Not Paying State Taxes ------------------------------------------------- The Sacramento Bee reports that Abe Alizadeh has been arrested on grand theft charges in connection with an alleged failure to pay state taxes. The Bee says the attorney general's office accused Mr. Alizadeh of not paying millions of dollars in sales and unemployment taxes. A court declaration by Sandra Gutierrez, an investigator with the Board of Equalization, said Mr. Alizadeh "made intentional decisions not to pay the taxes." According to the Bee, jail records show Mr. Alizadeh was being held in lieu of $1 million bail at the Placer County jail. Abe Alizadeh was a longtime Jack in the Box Inc. franchisee in Northern California. In September 2009, Mr. Alizadeh sent four entities that operate his Jack in the Box Inc. franchised restaurants to Chapter 11 bankruptcy protection. ACCREDITED HOME: Settles Overtime Suit for 10% of Claim ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Accredited Home Lenders Holding Co. agreed to settle a $96.7 million claim at a discount of about 90%. The settlement will come to bankruptcy court for approval on Feb. 24. Mr. Rochelle relates that when Accredited acquired Aames Home Loan, Aames already had been named in a class action for violating California state labor laws. The plaintiff filed a claim for $96.7 million against Accredited, the largest part representing unpaid overtime. The parties agreed to settle by allowing a claim for $9.5 million. About Accredited Home San Diego, California-based Accredited Home Lenders Holding Co. -- http://www.accredhome.com/-- was a mortgage banker servicing U.S. markets for conforming and non-prime residential mortgage loans operating throughout the U.S. and in Canada. Accredited sold its mortgage-servicing business in July 2009 as part of its bankruptcy. Accredited Home Lenders and its affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 09-11516) on May 1, 2009. Gregory G. Hesse, Esq., Lynnette R. Warman, Esq., and Jesse T. Moore, Esq., at Hunton & William LLP, serve as the Debtors' bankruptcy counsel. Laura Davis Jones, Esq., James E. O'Neill, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as Delaware counsel. Kurtzman Carson Consultants is the Debtors' claims agent. Andrew I Silfen, Esq., Schuyler G. Carroll, Esq., Robert M. Hirsch, Esq., at Arent Fox LLP in New York, and Jeffrey N. Rothleder, Esq., at Arent Fox LLP in Washington, DC, represent the official committee of unsecured creditors as co-counsel. Neil R. Lapinski, Esq., and Shelley A. Kinsella, Esq., at Elliott Greenleaf, represent the Committee as Delaware and conflicts counsel. As reported in the TCR on January 4, 2011, the Debtors submitted to the Bankruptcy Court a proposed Plan of Liquidation and an explanatory Disclosure Statement, as twice amended. The Plan does not contemplate a continuation of the Debtors' collective businesses. According to its bankruptcy petition, Accredited Home's assets range from $10 million to $50 million and its debts from $100 million to $500 million. AGRI-BEST HOLDINGS: Advantage Capital to Probe Wells Fargo ---------------------------------------------------------- Ameet Sachdev and Alejandra Cancino, writing for the Chicago Tribune, report that the bankruptcy court recently allowed Advantage Capital Partners' Chicago lawyer, Steve Jakubowski, to start deposing Wells Fargo Bank's employees about the circumstances that led to Advantage Capital's $7.8 million investment in Protein Solutions -- over the bank's objection. Advantage Capital Partners is a St. Louis-based investment firm that specializes in small-business finance. The Tribune report calls Protein Solution's liquidation unusual as it received $7.85 million with the help of state tax credits just four months before it filed for bankruptcy, financial support many small businesses are begging for. The funding was meant to foster job creation in low-income communities. The funds were supposed to reduce Protein Solutions' debt and support its continued growth. "It seems crazy that they got all this money and then went bankrupt," said Darrell Rudd, whose Chicago company supplied cardboard boxes to Protein Solutions and is owed nearly $40,000, according to the Tribune. "We'll survive it, but it's not good." The Tribune relates Advantage Capital stands to lose about $5 million because of Protein Solutions' collapse, according to court documents. The Tribune says Advantage Capital blames Wells Fargo, Protein Solutions' main lender. The Tribune relates that Advantage Capital said in a statement in response to Tribune questions, that shortly after its investment in Protein Solutions, Wells Fargo unexpectedly limited the availability of credit to the meat supplier. The lack of borrowing power triggered a financial crisis from which the Protein Solutions was unable to recover, Advantage Capital said. It called Wells Fargo's actions "egregious" and "inappropriate." The Tribune relates court papers filed by the committee of unsecured creditors support Advantage Capital's view. According to the Tribune, the committee said Wells Fargo stopped advancing credit after it declared Protein Solutions in default of the credit agreement. The default was not triggered by a missed a payment. The company came up short on meeting a pretax income threshold for the first six months of 2010, a violation of the agreement. The shortfall did not justify curtailing credit, the committee said. The Tribune notes that when Protein Solutions filed for bankruptcy, Wells Fargo had a claim of more than $13.7 million, but it was secured by equipment, inventory, accounts receivable and property. The Tribune relates that according to people involved in the case, the value of the collateral is expected to cover Wells Fargo's claim. Wells Fargo declined to comment, the Tribune says. According to the report, Wells Fargo has denied Advantage Capital's allegations. The Tribune notes Protein Solutions' bankruptcy lawyer, Steven Towbin, said Advantage Capital's criticism of Wells Fargo amounts to sour grapes. "Advantage is supposed to be a sophisticated investor," said Mr. Towbin. "They didn't have to close the deal if they felt something was wrong or the terms had changed." The Tribune notes Wells Fargo has to approve legal fees paid to Mr. Towbin and other lawyers at his firm, according to court documents. The Tribune also reports that Protein Solutions' remaining equipment will be auctioned later this month. About Agri-Best Chicago, Illinois-based Agri-Best Holdings LLC, dba Protein Solutions and Agri-Best Properties, LLC, processes and distributes portion control meat products to national restaurant chains, food distributors, and consumers. Agri-Best filed for Chapter 11 bankruptcy protection on October 5, 2010 (Bankr. N.D. Ill. Lead Case No. 10-44595). Agri-Best estimated its assets and debts at $10 million to $50 million as of the Petition Date. Chicago, Illinois-based Agri-Best Properties LLC filed for Chapter 11 bankruptcy protection on October 5, 2010 (Bankr. N.D. Ill. Case No. 10-44600). Steven B. Towbin, Esq., at Shaw Gussis, Fishman Glantz, Wolfson & Towbin, LLC, represented Agri-Best Properties in the Chapter 11 case. Agri-Best Properties estimated its assets and debts at $1 million to $10 million. Judge Eugene R. Wedoff converted the Debtor's Chapter 11 case to Chapter 7, effective as of December 1, 2010. Ronald Peterson, Esq., at Jenner & Block, was appointed Chapter 7 trustee. ALL AMERICAN GROUP: No Date Yet for Meeting to Approve Merger ------------------------------------------------------------- All American Group, Inc., is planning to hold a special meeting of shareholders at a yet-to-be-determined date to seek approval of the proposed Agreement and Plan of Merger dated as of November 8, 2010, among All American Group Holdings, LLC, as Acquiror, All American Acquisition Corporation as Acquisition Sub, AAG and Richard M. Lavers as Shareholders Representative. If the merger is completed, Acquisition Sub will merge with and into AAG, AAG -- as the surviving corporation -- will become a wholly owned subsidiary of Acquiror and holders of the common shares, without par value of AAG -- other than AAG, Acquiror and its affiliates, and shareholders that perfect their dissenters' rights under Indiana law -- will be entitled to receive $0.20 in cash and all shareholders, other than shareholders that perfect their dissenters' rights under Indiana law, will receive one unit of beneficial interest in a liquidating trust that will represent a contingent right to receive proceeds from the potential sale of AAG's Specialty Vehicles business in accordance with the merger agreement, for each common share they own. Holdings and Acquisition Sub are affiliates of the Company's lender, H.I.G. All American LLC. The Troubled Company Reporter published a story on the proposed merger in its November 15, 2010 edition. A copy of the preliminary prospectus in connection with the upcoming meeting is available at http://is.gd/TFVxWV About All American Group Elkhart, Indiana-based All American Group, Inc., formerly Coachmen Industries, Inc., (OTC:COHM.PK) says it is one of America's premier systems-built construction companies under the ALL AMERICAN BUILDING SYSTEMS(R), ALL AMERICAN HOMES(R), and MOD-U- KRAF(R) brands, as well as a manufacturer of specialty vehicles. The Company's balance sheet at Sept. 30, 2010, showed $74.38 million in total assets, $40.95 million in total liabilities, and stockholders' equity of $33.43 million During the first quarter of 2010, the Company failed to meet certain financial covenants of the credit agreement with H.I.G. All American LLC. H.I.G. did not declare the Company to be in default of any covenant. The parties entered into various accommodations waiving those defaults. ALLIED SECURITY: S&P Affirms 'B' Rating; Outlook 'Negative' ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Conshohocken, Pa.-based Allied Security Holdings LLC. The outlook is negative. At the same time, S&P assigned 'B+' issue-level ratings on the Company's proposed $75 million revolving credit facility due in February 2016 and proposed $395 million first-lien term loan due in February 2017. The recovery ratings on both debt issues are '2', indicating S&P's expectation of substantial (70% to 90%) recovery in the event of a payment default. S&P also assigned a 'CCC+' issue-level rating on the Company's proposed $190 million second-lien term loan due in February 2018. The recovery rating is '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. Issue-level ratings are based on preliminary documentation and are subject to review upon final documentation. S&P will withdraw S&P's 'BB-' issue-level ratings on the Company's existing senior secured credit facilities upon completion of the proposed transaction and repayment of existing indebtedness. S&P estimates Allied will have about $585 million in debt outstanding when the transaction is completed. "The ratings reflect S&P's opinion that privately held Allied Security has a highly leveraged financial risk profile, primarily because of the Company's aggressive financial policy, high debt, and weak cash flow protection measures," said Standard & Poor's credit analyst Brian Milligan. Pro forma for the proposed refinancing, S&P calculate that Allied had adjusted leverage of 5.7x at Sept. 30, 2010. S&P assesses the Company's business risk profile as weak, reflecting its No. 3 position in the highly fragmented and competitive contract security officer industry and narrow business focus. S&P's financial risk profile assessment reflects Allied's high leverage and S&P's expectation that the Company's financial policy will remain aggressive, keeping leverage above 5x for the next year. The proposed refinancing could improve the Company's financial risk profile; the transaction will extend debt maturities and reduce borrowing costs. The reduced borrowing costs should create an estimated incremental $17 million in free operating cash flow. S&P could revise S&P's assessment of the Company's financial risk profile to aggressive if the Company uses its free operating cash flow to accelerate both debt repayment and leverage reduction. Allied has a narrow business focus in the highly competitive and fragmented contract security officer industry. S&P believe industry consolidation is under way. Tuck-in acquisitions will likely remain part of Allied's growth strategy, but S&P believe the Company's highly leveraged capital structure will limit this opportunity. S&P's business risk profile assessment also reflects the industry's low customer switching costs and barriers to entry that create intense pricing pressure and the possibility of losing contracts. Allied's diversified customer base (its largest customer accounts for about 2% of sales) partially mitigates this risk. The outlook for Allied Security is negative, reflecting S&P's opinion that the Company's highly leveraged financial risk profile will limit its financial flexibility and may reduce its competitive position in a highly competitive and fragmented industry. The outlook also reflects S&P's opinion that the Company's financial policy will remain aggressive, keeping leverage above 5x for the next year. S&P could revise the outlook to stable if the Company makes meaningful improvement in its credit measures, resulting in leverage returning to the low-5x area. Although this could occur with high-single-digit revenue growth and slight EBITDA margin expansion, S&P believe a combination of growth and accelerated debt repayment will be necessary to return leverage to the low-5x area. S&P could lower the rating if revenue declines, possibly from losing multiple contracts or significant pricing pressure, or if the Company's financial policy remains aggressive, thereby restricting steady credit measure improvement. More specifically, S&P could lower the rating if leverage approaches 6.5x, which S&P believes could occur if revenue declines slightly and EBITDA margins erode by about 80 basis points. ALLY FINANCIAL: S&P Raises Preferred Stock Rating to 'CC' --------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on the preferred stock of Ally Financial Inc. (Ally; B/Stable/C) to 'CC' from 'C'. Ally (formerly GMAC Inc.) improved its liquidity position and alleviated some funding pressure at its holding Company in recent months, making it easier to meet obligations on its preferred stock. Nevertheless, the Company faces significant debt maturities at its holding Company in 2011 and 2012, which is reflected in the 'CC' rating. Ally has added liquidity at its holding Company, through both demonstrated access to the public debt markets and the amortization of receivables. Ally issued more than $8 billion in long-term unsecured debt in 2010. Also, the U.S. Treasury's recent conversion of $5.5 billion of its $11.4 billion in Ally convertible preferred shares into common stock reduces the Company's preferred dividend obligations by about $500 million annually. The Treasury's conversion allows Ally to expand the use of its commercial bank subsidiary, Ally Bank, to finance its operations, alleviating some holding-Company funding pressure. That is because the conversion diluted the ownership of General Motors Co. (GM), Ally's largest business partner, to less than 10%. As a result, the Federal Reserve no longer considers GM an "affiliate" of Ally Bank, a designation that previously limited the bank's ability to finance GM-related receivables. This change should gradually shift more of Ally's total funding toward bank deposits and away from the wholesale and unsecured financing issued outside of the bank. To be sure, Ally will continue to rely heavily on nonbank funding- -likely for several years -- and has significant debt obligations to meet in 2011 and 2012. Roughly $9.5 billion and $12.6 billion of its unsecured debt matures in 2011 and 2012, respectively. Its funding profile remains subject to a high degree of confidence sensitivity, in S&P's view. Any unexpected problems could sharply limit its access to the debt markets. Still, S&P believes the Company will have sufficient liquidity to meet obligations and its preferred dividends this year, partly because of its recent efforts and the conversion of Treasury shares. Ratings List Ally Financial Inc. Counterparty Credit Rating B/Stable/C Upgraded To From Ally Financial Inc. Preferred Stock CC C Preferred Blocker Inc. Preferred Stock ALTER COMMUNICATIONS: H.G. Roebuck to Appeal Plan Confirmation -------------------------------------------------------------- Melanie Cohen, writing for Dow Jones' Daily Bankruptcy Review, reports that printing company H.G. Roebuck & Son Inc., whose claim Alter Communications Inc. disputed, said Alter's bankruptcy plan wasn't filed in good faith and that it "discriminates unfairly." Alter's bankruptcy-exit plan was approved by a judge last month. Under the Plan, unsecured creditors were to divide 85% of the company's earnings over the next five years. "The debtor's goals in this case are transparent," H.G. Roebuck attorneys said in court papers, according to DBR. "It wants to avoid paying Roebuck while paying the legally indistinguishable claims of the other unsecured creditors." According to DBR, Roebuck said it waited to file an appeal until after the bankruptcy plan was filed because it wasn't sure it could make it by the court-imposed deadline. It said that it would submit the appeal after it had "the opportunity to conduct discovery." DBR relates Roebuck attorneys also said in court papers that Alter wants to keep the same owners, the Buerger family, "so that they can reap the benefit of having eliminated Roebuck's claim for a nominal sum . . . without subjecting itself or the Buerger family to the risk that a plan will be proposed by Roebuck or someone else that is less insider-friendly." DBR relates that, according to the Maryland Daily Record, the dispute started after Alter and Roebuck split up over a cost issue with two years left on the contract. Roebuck sued in December 2009 and was awarded $362,000. The company had another claim for more than $1 million in damages pending, according to the newspaper. Based in Baltimore, Maryland, Alter Communications publishes the Baltimore Jewish Times. Other publications include the magazine Style, with 90,000 circulation, and Chesapeake Life, with a circulation of 57,000. Alter Communications filed for Chapter 11 (Bankr. D. Md. Case No. 10-18241) on April 14, 2010. Alan M. Grochal, Esq., and Maria Ellena Chavez-Ruark, Esq., at Tydings and Rosenberg, in Baltimore, serve as the Debtor's bankruptcy counsel. The Debtor estimated assets and debts between $1 million and $10 million in its Chapter 11 petition. According to the Baltimore Business Journal, Judge James F. Schneider of the Baltimore bankruptcy court approved Alter Communications' Chapter 11 exit plan on December 16, 2010. AMBAC FINANCIAL: Fixes March 2, 2011, as Claims Bar Date -------------------------------------------------------- Judge Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York has established March 2, 2011, at 5:00 p.m., as the deadline by which all persons and entities must file proofs of claim, other than certain exempt parties against Ambac Financial Group Inc., including requests for payment under Section 503(b)(9) of the Bankruptcy Code. The Court has also fixed May 9, 2011, at 5:00 p.m., as the deadline by which all governmental units must file proofs of claim against the Debtor. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMBAC FINANCIAL: LTDC is New Trustee for DISCS Purchasers --------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, Anthony A. Bocchino, Jr., managing director at Law Debenture Trust Company of New York, relates that his firm is successor-in-interest to Bank of New York Mellon as trustee under a Junior Subordinated Indenture dated February 12, 2007, by and between Ambac Financial Group, Inc., as company, and The Bank of New York Mellon, formerly known as The Bank of New York. Under the Indenture, AFG issued $400 million aggregate principal amount of 6.15% Directly Issued Subordinated Capital Securities due February 7, 2087. The DISCS are registered in the name Cede & Co. Mr. Bocchino discloses that the claims of the beneficial holders of the DISCS and the Successor Indenture Trustee under the Indenture consist of: (i) all unpaid principal and unpaid interest on all outstanding DISCS, plus other amounts due under the Indenture; (ii) the Successor Indenture Trustee's fees and expenses, reasonable disbursements, expenses and advances incurred or made by the Successor Indenture Trustee, including the reasonable compensation, disbursements and expenses of the Successor Indenture Trustee's agents and counsel; and (iii) all other amounts, including all indemnification rights, that are due or become due to the Noteholders or the Successor Indenture Trustee under the Indenture and the DISCS. The Noteholders initially acquired their claims upon their purchases of the DISCS. However, some of the Noteholders may have purchased their DISCS in the secondary market, Mr. Bocchino says. Mr. Bocchino maintains that the Successor Indenture Trustee does not own, as Trustee, any claims or DISCS of the Debtor. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMBAC FINANCIAL: Time to Remove Actions Extended on Interim ----------------------------------------------------------- Judge Shelley C. Chapman extended the time by which Ambac Financial Group, Inc., must file notices of removal of related civil actions to which it is or may become a party to, through the later of: (i) the date of entry of a final order granting the Action Removal Period Extension Motion; or (ii) the hearing date for the final approval of the Action Removal Period Extension Motion, which is currently scheduled for February 2, 2011. The Interim Action Removal Period Extension Order will be without prejudice to (i) the Debtor's right to request a further extension of time to file notices of removal of the Civil Actions; and (ii) to any position the Debtor may take regarding whether Section 362 of the Bankruptcy Code applies to any Civil Action, Judge Chapman ruled. The Debtor separately filed with the Court a proposed final order extending the Action Removal Period Deadline to the later of (i) June 7, 2011, or (ii) 30 days after entry of an order terminating the automatic stay with respect to a certain civil action sought to be removed. A full-text copy of the proposed final order is available for free at: http://bankrupt.com/misc/Ambac_PropFORemovalMo.pdf About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMBAC FINANCIAL: Wins OK for KPMG as Tax Consultant --------------------------------------------------- The Bankruptcy Court approved Ambac Financial Group Inc.'s employment of KPMG LLP to serve as its tax consultant. Judge Shelley C. Chapman, however, clarified that the Debtor is not authorized to employ KPMG LLP to provide services in connection with the adversary proceeding commenced by the Debtor against the Internal Revenue Service absent an agreed upon allocation between the Debtor and Ambac Assurance Corporation or further order of the Court on appropriate application for fees and expenses in connection with the IRS Action. If and when the Debtor and AAC agree on an allocation relating to the IRS Action Costs, which allocation will be subject to prior review and consultation with the Official Committee of Unsecured Creditors, the Debtor may submit a revised proposed order approving the employment of KPMG, nunc pro tunc to the Petition Date, to provide services in connection with the IRS Action without the need to first notice a further hearing on the Debtor's Application. As reported in the Dec. 20, 2010 edition of the Troubled Company Reporter, As the Debtor's tax consultant, KPMG will provide audit, tax consulting and bankruptcy administration services, including, but not limited to these services: (A) Audit of Consolidated Financial Statements (a) Audit of the consolidated balance sheet of the Debtor and non-debtor affiliates as of December 31, 2010 and 2009, the related consolidated statements of operations, Stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2010, and schedules and notes supporting those financial statements prepared in accordance with U.S. generally accepted accounting principles; and (b) Audit of the internal control over financial reporting as of December 31, 2010 in accordance with the standards of the Public Company Accounting Oversight Board Auditing Standard No. 5; -- performing tests of the accounting records and other procedures, as KPMG considers necessary in the circumstances, to provide a reasonable basis for KPMG's opinions; -- assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation; and -- obtaining an understanding of internal control over financial reporting, testing and evaluating the design and effectiveness of internal control over financial reporting, and performing other procedures as KPMG considered necessary in the circumstances. (c) Review, in accordance with Statement on Auditing Standards No. 100, Interim Financial Information, the consolidated balance sheets of AFG as of June 30 and September 30, 2010 and March 31, 2011, and the related consolidated statements of operations, stockholders' equity, and cash flows for the quarterly and year-to- date periods then ended and notes, which are to be included in the quarterly reports; (d) Audits of the statutory statements of admitted assets, liabilities and surplus of non-debtor affiliates as of December 31, 2010 and 2009, the related statements of operations, capital and surplus, and cash flow for each of the years in the two-year period ended December, 31, 2010, and schedules supporting those financial statements, prepared in accordance with statutory statements of accounting principles; (e) Audits of the balance sheets of the non-debtor affiliates Juneau and Aleutian, as of December 31, 2010 and 2009, the related consolidated statements of operations, stockholder's equity, and cash flows for each of the years in the two-year periods ended December 31, 2009, and schedules supporting such financial statements, prepared in accordance with U.S. generally accepted accounting principles; (f) Issuance of a comfort letter if required and requested; (g) Report to the Audit and Risk Assessment Committee in writing regarding corrected misstatements, uncorrected misstatements, significant difficulties encountered with the Debtor and other matters required to be communicated by auditing standards; (h) Read minutes of Audit and Risk Assessment Committee meetings for consistency with KPMG's understanding of the communications; (i) Issue a written report upon audit of Ambac Financial Group, Inc. Savings Incentive Plan, including audit of financial statements and supplemental schedules of the Savings Plan as of December 31, 2010 and 2009, and for the years ended December 31, 2010 and 2009; (j) Assistance regarding certain events and accounting pronouncements, which may have a significant impact on KPMG's audit efforts. Examples of Out-of-Scope Audit Services to be evaluated for their impact on KPMG's efforts include: -- significant acquisitions; -- dispositions of businesses; -- significant and infrequent transactions with complex business implications; -- accounting and auditing matters related to this bankruptcy case to the extent it results in additional audit effort; -- change in operating segments or reporting units; -- asset impairment analyses; -- fresh start accounting and related audit efforts; -- review of registration statements or comfort letters provided to third parties; -- review and comment on comment letters received from the United States Securities and Exchange Commission and the Office of the Commissioner of Insurance of Wisconsin and responses provided to those letters related to accounting matters; and -- the adoption of new accounting or auditing pronouncements, etc. (B) Tax Consulting Services (a) Analysis of Section 382 of the Internal Revenue Code issues including updating the existing Section 382 analysis performed by KPMG, including a sensitivity analysis to reflect the impact of the proposed or hypothetical equity transactions pursuant to the restructuring; (b) Analysis of net unrealized built-in gains and losses and Notice 2003-65 as applied to the ownership change, if any, resulting from or in connection with the restructuring; (c) Analysis of the Debtor's tax attributes including net operating losses, tax basis in assets, and tax basis in stock of subsidiaries; (d) Analysis of cancellation of debt income, including the application of Section 108 of the Internal Revenue Code and consolidated tax return regulations relating to the restructuring of debt; (e) Analysis of the application of the attribute reduction rules under Section 108(b) and Section 1.1502-28 of the Treasury Regulations; (f) Analysis of the tax implications of any internal reorganizations and proposal of restructuring alternatives; (g) Analysis of the tax implications of any dispositions of assets or subsidiary stock pursuant to the restructuring; (h) Analysis of the potential bad debt and retirement tax losses; and (i) Investigate and review facts and tax issues, as requested by Dewey & LeBoeuf LLP, to support Dewey & LeBoeuf's representation of the Debtor in the adversary proceeding between the Debtor and the Internal Revenue Service, Case No. 10-04210, commenced in the Court on November 9, 2010. (C) Bankruptcy Administration Services (a) Operational protocols: Support the Debtor's management with its operational protocols for bankruptcy reporting; (b) Bankruptcy reporting: Support the Debtor's management in its preparation of a Statement of Financial Affairs, a Schedule of Assets and Liabilities and a Monthly Operating Report by debtor entity as well as Rule 26 of the Federal Rules of Bankruptcy Procedure, if required; (c) Disclosure statement and plan of reorganization: Assist in the preparation of financial information required in the disclosure statement and plan of reorganization, including the pro forma balance sheet reflecting fresh start accounting. KPMG's assistance will depend upon the Debtor's direction but tasks may pertain to, preparation of detailed financial information, liquidity analysis, best interest of creditors' test and plan feasibility; (d) External responses: Support the Debtor's management in its response to requests from the various stakeholders in the bankruptcy, including but not limited to the Office of the US Trustee for Region 2, and any statutorily appointed committees that may be established; (e) Claims analysis: Support the Debtor's management in its response to the claims reconciliation process, including matching claims to scheduled liabilities, evaluating claims, preparing exhibits to objections, and analyzing transfers to determine preferential treatment; (f) Project planning: Assist with timeline and critical path development and tracking; (g) Approach and work steps: Assist with the consideration of the alternatives in approach, timing, order, and adoption dates for fresh start reporting; the alternatives for on-going efficient processing of detailed accounting records; and the potential approaches for updating detailed records to reflect changes in values and the new accounting requirements subsequent to emergence; (h) Status meetings: Coordinate and conduct status update meetings with key Debtor's management personnel, for all work-streams; and (i) Coordination of advisors and key partners: Liaise with the Debtor's advisors and key business partners, including valuation team, attorneys, bankers, etc, throughout the course of the engagement. In connection with the Integrated Audit, KPMG will provide for services to be charged at both a fixed rate as well as an hourly rate. First, a fixed fee of $2.63 million is applicable to In- Scope Audit Services, for which KPMG bills AFG on a monthly basis in equal installments of $219,167 for a period of 12 months for the Integrated Audit, and a fixed fee of $40,000 is applicable to the Plan Audit Services. Of the In-Scope Fixed Fee, $1,550,000 was paid before the Petition Date. The Plan Fixed Fee has not yet been paid. Of the Fixed Fees, the Debtor is responsible for $68,000, of which $49,217 was paid prepetition. With respect to any Out-of-Scope Audit Services to be performed for the Integrated Audit, KPMG will be paid according its professionals' hourly rates: Audit, Audit-Related & Other Services Discounted Rates ------------------------------------- ---------------- Partner/Managing Director $475 to $575 Senior Manager/Manager $350 to $425 Staff $215 to $300 While non-debtor Ambac Assurance Corporation pays KPMG out of its account for the Integrated Audit services, AAC later allocates certain amounts to the Debtor and respective non-debtor entities resulting in intercompany claims for the charges for which the Debtor and non-debtor entities must reimburse AAC. Thus, $68,000 of the Fixed Fees was allocated to the Debtor, and hourly fees for Out-Of-Scope Audit Services will be allocated to the Debtor as applicable. Although KPMG will not charge for its In-Scope and Plan Audit Services on an hourly basis, KPMG has informed the Debtor that it will nonetheless maintain records of time spent by its professionals in connection with the rendering of the In-Scope and Plan Audit Services. KPMG's tax consulting and bankruptcy administration services will be invoiced to AAC. AAC will pay KPMG out of its account for those services and later allocate those amounts to the Debtor and respective non-debtor entities resulting in intercompany claims for the charges for which the Debtor and non-debtor entities must reimburse AAC. The allocation of the bankruptcy administration services will be 100% to the Debtor, and the allocation of the tax consulting services, although dependent upon the nature of the work done, is anticipated to be 20% to the Debtor. KPMG informed the Debtor that the majority of fees to be charged for tax consulting and bankruptcy administration services reflect a reduction of approximately 15% to 40% from KPMG's normal and customary rates, depending on the types of services to be rendered. Professional fees for bankruptcy administration services will not exceed a blended hourly rate of $425, tested on a monthly basis. The hourly rates for tax consulting and bankruptcy services to be rendered by KPMG are: Tax Consulting Services Discounted Rate ----------------------- --------------- Partner $635 Managing Director $550 Senior Manager $500 Manager $470 Senior Associate $400 Associate $275 Bankruptcy Administration Services Discounted Rate ---------------------------------- --------------- Partner/Principal/Managing Director $565 Director $550 Manager $485 Senior Associate $385 Associate $265 Intern/Para-Professional $115 KPMG also will seek reimbursement for reasonable necessary expenses incurred. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMERICAN HOME: Liquidating Trustee Wants Loan Docs. Destroyed ------------------------------------------------------------- Reuters and Bloomberg News report that federal bankruptcy judges in Delaware were due to hold separate hearings Monday on requests by trustees liquidating Mortgage Lenders Network USA and American Home Mortgage to destroy thousands of boxes or original loan documents. Scot J. Paltrow, writing for Reuters, reports that: -- Neil Luria, the liquidating trustee for Mortgage Lenders, sought Judge Peter Walsh's permission to destroy nearly 18,000 boxes of records now warehoused by document storage company, Iron Mountain Inc. According to Reuters, Mr. Luria said destruction is necessary to eliminate $16,000 per month in storage costs as he disposes of the last assets of the bankrupt company. -- Steven Sass, the liquidating trustee for American Home Mortgage, sought Judge Christopher Sontchi's permission to approve destruction of 4,100 boxes of loan documents stored in a dank parking garage beneath the company's former headquarters in Melville, Long Island. Mr. Sass stated that the local fire marshal wants the documents removed as a fire hazard, and he said the cost of moving them would be prohibitive. In accordance with a 2009 court order, the bankrupt company earlier had destroyed the contents of thousands of other boxes after banks and other loan servicers had been given a chance to request and pick up particular files. Reuters says the requests come despite intense concerns that paperwork critical to foreclosures and securitized investments may be lost. Phil Milford and Dawn McCarty, writing for Bloomberg News, report that the U.S. government objected to Mortgage Lenders' request. According to Bloomberg, Delaware U.S. Attorney Charles M. Oberly III argues that Mortgage Lenders' plan "threatens to impair federal law enforcement efforts." Mr. Oberly III also told the judge the company's records "may be relevant to pending federal criminal investigations into mortgage fraud." Bloomberg further relates that Mr. Oberly proposed, as an alternative, to require Mr. Luria to provide government officials "with notice of the specific documents proposed to be destroyed" and "an opportunity to respond." According to Reuters, people involved with the cases said the overlapping timing of the two hearings Monday is coincidental. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- was a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for Chapter 11 protection on August 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. American Home filed a de-consolidated plan of liquidation on August 15, 2008. The former home mortgage lender's liquidating Chapter 11 plan was confirmed in February 2009. About Mortgage Lenders Middletown, Connecticut-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- was once the 15th largest mortgage lender in the United States. The Company filed for Chapter 11 protection on February 5, 2007 (Bankr. D. Del. Case No. 07-10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor. Blank Rome LLP represents the Official Committee of Unsecured Creditors. In the Debtor's schedules of assets and liabilities filed with the Court, it disclosed total assets of $464,847,213 and total debts of $556,459,464. The Honorable Peter J. Walsh approved the Company's liquidating Chapter 11 plan in February 2009. A full-text copy of the Debtor's First Amended Liquidating Plan under Chapter 11 of the Bankruptcy Code, dated December 19, 2008, is available at http://is.gd/1a3YGat no charge. APPLESEED'S INTERMEDIATE: Organizational Meeting on Jan. 28 ----------------------------------------------------------- Roberta A. DeAngelis, United States Trustee for Region 3, will hold an organizational meeting on January 28, 2011, at 10:00 a.m. in the bankruptcy case of Appleseed's Intermediate Holdings LLC, et al. The meeting will be held at DoubleTree Hotel Wilmington, 700 King Street, Wilmington, Delaware 19801. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. About Appleseed's Intermediate Based in Beverly, Massachusetts, Appleseed's Intermediate Holdings LLC, aka Appleseed's Intermediate Holdings, Inc., aka Orchard Brands sells clothing to people 55 and older. Orchard Brands has 17 brands including Appleseed's, Draper's & Damon's, Gold Violin, Haband and Norm Thompson. It publishes catalogs and has stores under its Appleseed's and Draper's & Damon's brands. It has annual sales of about $1 billion and earnings before interest, taxes, depreciation and amortization are about $50 million, sources said told Bloomberg. Appleseed's is owned by Golden Gate Capital Corp., which also hold stakes in retailers Express Inc., Eddie Bauer Holdings Inc. and Zale Corp. Appleseed's Intermediate and its affiliates filed for Chapter 11 bankruptcy protection on January 19, 2011 (Bankr. D. Del. Lead Case No. 11-10160). Richard M. Cieri, Esq., Joshua A. Sussberg, Esq., at Brian E. Schartz, at Kirkland & Ellis LLP, serves as the Debtors' bankruptcy counsel. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP, serves as local counsel to the Debtors. Moelis & Company LLC is the Debtors' investment banker and financial advisor. Alvarez & Marshal North America, LLC, is the Debtors' restructuring advisor. Pricewaterhousecoopers LLP is the Debtors' independent auditor. Kurtzman Carson Consultants LLC is the Debtors' notice and claims agent. Appleseed's Intermediate estimated assets at $100 million to $500 million and debts at $500 million to $1 billion in its Chapter 11 petition. APPLESEED'S INTERMEDIATE: Has OK to Hire Kurtzman as Claims Agent ----------------------------------------------------------------- Appleseed's Intermediate Holdings LLC, et al., sought and obtained authorization from the U.S. Bankruptcy Court for the District of Delaware to employ Kurtzman Carson Consultants LLC as notice, claims and balloting agent. KCC will, among other things: a. prepare and serve notices in the Debtors' Chapter 11 cases; b. receive, examine and maintain copies of proofs of claim and proofs of interest filed in the Debtors' Chapter 11 cases; c. maintain an official claims register in the Debtors' Chapter 11 cases by docketing all proofs of claim and proofs of interest in a claims database; and d. provide access to the public for examination of claims and the claims register at no charge. KCC will charge the Debtor for its services, expenses and supplies at the rates or prices set by KCC and in effect as of the date of the service agreement in accordance with the KCC fee structure. To the extent permitted by applicable law, KCC will receive a retainer in the amount of $30,000 that may be held by KCC as security for the Debtor's payment obligations under the agreement. A copy of the Service Agreement is available for free at: http://ResearchArchives.com/t/s?7277 Albert H. Kass, Vice president of Corporate Restructuring Services for KCC, assured the Court that the firm is a "disinterested person" as that term defined in Section 101(14) of the Bankruptcy Code. About Appleseed's Intermediate Based in Beverly, Massachusetts, Appleseed's Intermediate Holdings LLC, aka Appleseed's Intermediate Holdings, Inc., aka Orchard Brands sells clothing to people 55 and older. Orchard Brands has 17 brands including Appleseed's, Draper's & Damon's, Gold Violin, Haband and Norm Thompson. It publishes catalogs and has stores under its Appleseed's and Draper's & Damon's brands. It has annual sales of about $1 billion and earnings before interest, taxes, depreciation and amortization are about $50 million, sources said told Bloomberg. Appleseed's is owned by Golden Gate Capital Corp., which also hold stakes in retailers Express Inc., Eddie Bauer Holdings Inc. and Zale Corp. Appleseed's Intermediate and its affiliates filed for Chapter 11 bankruptcy protection on January 19, 2011 (Bankr. D. Del. Lead Case No. 11-10160). Richard M. Cieri, Esq., Joshua A. Sussberg, Esq., at Brian E. Schartz, at Kirkland & Ellis LLP, serves as the Debtors' bankruptcy counsel. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP, serves as local counsel to the Debtors. Moelis & Company LLC is the Debtors' investment banker and financial advisor. Alvarez & Marshal North America, LLC, is the Debtors' restructuring advisor. Pricewaterhousecoopers LLP is the Debtors' independent auditor. Appleseed's Intermediate estimated assets at $100 million to $500 million and debts at $500 million to $1 billion in its Chapter 11 petition. ATA AIRLINES: Dist. Ct. Rejects Bid for New Trial in FedEx Suit --------------------------------------------------------------- The Indianapolis Star's Carrie Ritchie reports that U.S. District Court Judge Richard Young will not allow a new trial in a lawsuit that netted nearly $66 million in damages for ATA Airlines. As reported by the Troubled Company Reporter on October 28, 2010, Patrick Fitzgerald, writing for Dow Jones' Daily Bankruptcy Review, said a federal jury in Indianapolis, Indiana, ruled that FedEx Corp. should pay $66 million for canceling a military shipping contract with ATA that accounted for most of ATA's revenue and directly led to ATA's decision to shut down. The Indianapolis Star says the jury determined the breach of contract by FedEx cost ATA about $21.99 million in lost net profits in 2008 and $43.99 million in 2009. The Indianapolis Star reports FedEx claimed the jury's verdict went against evidence presented at trial. FedEx also asked the judge to reconsider the nearly $66 million in damages the jury awarded ATA. According to The Indianapolis Star, Judge Young held that the jury's verdict was supported by the evidence and that the damages awarded were appropriate based on ATA's calculation of losses. The Indianapolis Star notes FedEx could still appeal to the U.S. Circuit Court of Appeals for the Seventh Circuit in Chicago. About ATA Airlines Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was a diversified passenger airline operating in two principal business lines -- a low cost carrier providing scheduled passenger service that leverages a code share agreement with Southwest Airlines; and a charter operator that focused primarily on providing charter service to the U.S. government and military. ATA Airlines and its affiliates filed for Chapter 11 protection on October 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). The Honorable Basil H. Lorch III confirmed the Debtors' plan of reorganization on January 31, 2006. The Debtors' emerged from bankruptcy on February 28, 2006. Global Aero Logistics acquired certain of ATA's operations after its first bankruptcy. The remaining ATA affiliates that were not substantively consolidated in the Company's first bankruptcy case were sold or otherwise liquidated. ATA Airlines filed for Chapter 22 (Bankr. S.D. Ind. Case No. 08-03675) on April 2, 2008, citing the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. ATA discontinued all operations subsequent to the bankruptcy filing. ATA's Chapter 22 bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. The Debtor was represented in its Chapter 22 case by Haynes and Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel. The United States Trustee for Region 10 appointed five members to the Official Committee of Unsecured Creditors. Otterbourg, Steindler, Houston & Rosen, P.C., served as bankruptcy counsel to the Committee. FTI Consulting, Inc., acted as its financial advisors. ATA Airlines submitted to the Court its Chapter 11 Plan of Reorganization and accompanying Disclosure Statement on December 12, 2008, two weeks after it completed the sale of its key assets to Southwest Airlines Inc. The First Amended Chapter 11 Plan was confirmed on March 26, 2009. The Plan became effective March 31, 2009. ATLANTIC SOUTHERN: To Voluntarily Delist Common Stock from Nasdaq ----------------------------------------------------------------- Atlantic Southern Financial Group, Inc., the parent company of Atlantic Southern Bank, announced its intent to voluntarily delist the Company's common stock from the Nasdaq Stock Market. The Board determined the costs, expenses and administrative burden of maintaining the listing outweighed the benefits, given the level of trading activity in the common stock and the expenses associated with continued listing, including listing fees and compliance costs relating to certain issues. The Company has immediately proceeded with delisting by providing a written notice to Nasdaq on January 20, 2011 of its intention to delist and will file a Form 25 with the Securities Exchange Commission on January 31, 2011. The Company anticipates that Nasdaq will suspend trading in the common stock within ten days of submission of its written notice and expects the delisting from Nasdaq to become effective February 10, 2011, ten days after filing its Form 25. Following clearance by the Financial Industry Regulatory Authority of a Form 211 application filed by a market maker in the Company's common stock, the Company expects that its shares will be quoted on the OTC Bulletin Board. The Company will remain subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended. The Company has previously reported its receipt of notices from Nasdaq indicating that the Company is not in compliance with the following Nasdaq Global Market listing requirements: (i) Marketplace Rule 5450(b)(1)(C), which requires a minimum market value of publicly held shares of $5,000,000; and (ii) Marketplace Rule 5450(a)(1), which requires a minimum closing bid price of $1.00 per share. The Company has been given until January 31, 2011 and June 8, 2011 to comply with the MVPHS and bid price requirements, respectively. After delisting, the Company will continue to provide investors access to information filed with the Securities Exchange Commission or other information required to be made public under securities laws on the Atlantic Southern Bank Web site at http://www.atlanticsouthernbank.com/ About Atlantic Southern Macon, Ga.-based Atlantic Southern Financial Group, Inc. (NASDAQ: ASFN) operates nine banking locations in the middle Georgia markets of Macon and Warner Robins, five locations in the coastal markets of Savannah, Darien, Brunswick, one location in the south Georgia market of Valdosta, Georgia and one location in the northeast Florida market of Jacksonville, Florida. The Company specializes in commercial real estate and small business lending. The Company's balance sheet at September 30, 2010, showed $852.6 million in total assets, $832.4 million in total liabilities, and stockholders' equity of $20.2 million. "As a result of the extraordinary effects of what may ultimately be the worst economic downturn since the Great Depression, the Company's and the Bank's capital have been significantly depleted," the Company said in its Form 10-Q for the quarter ended Sept. 30, 2010. The Company recorded a net loss of $59.2 million in 2009, and a net loss of $9.3 million in the first nine months of 2010. The Company's ability to raise additional capital will depend on conditions in the capital markets at that time, which are outside its control, and on its financial performance. Accordingly, the Company cannot be certain of its ability to raise additional capital on terms acceptable to them. The Company's inability to raise capital or comply with the terms of the Order [to Cease and Desist] raises substantial doubt about its ability to continue as a going concern." On September 11, 2009, the Company's wholly-owned subsidiary bank, Atlantic Southern Bank, entered into a Stipulation and Consent to the Issuance of an Order to Cease and Desist with the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance, whereby the Bank consented to the issuance of an Order to Cease and Desist. ATTACHMATE CORP: S&P Puts 'BB-' Rating on Proposed $865MM Facility ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its 'B' rating outlook on Seattle-based host connectivity and systems and security management provider Attachmate Corp. to positive from stable. All existing ratings on the Company were affirmed. Additionally, S&P assigned a 'BB-' issue-level rating and a '1' recovery rating to the Company's proposed $865 million first lien facility, consisting of a new $40 million revolving credit facility due 2016 and a $825 million term loan. The '1' recovery rating indicates S&P's expectation of very high (90%-100%) recovery in the event of a payment default. The Company also has a proposed $225 million second lien, which S&P does not rate. The Company intends to use the proceeds, along with about $800 million of equity from existing shareholders, to acquire the operations of Novell Inc. and to extinguish approximately $610 million of Attachmate's existing debt. The ratings reflect S&P's expectation that the combined entity will likely benefit from operational and end-market synergies, but that operational integration risk will be substantial as Novell is nearly 3x the size of Attachmate. For 2009, Attachmate's stand- alone revenues were approximately $300 million, compared with $860 million for Novell. Attachmate's growth has been stagnant and Novell's operations have been under pressure, with revenues down approximately 6% year over year (year to date), and down almost 10% in fiscal 2009. While uncertainty about the timing and execution of a strategic buyer for Novell may have led some customers to delay purchasing decisions, Attachmate still faces the challenge of reversing the negative revenue trend at Novell. S&P also notes that the proposed financing could be a deleveraging transaction given the capital contributions from existing shareholders and a combined EBITDA base that will likely be improved by cost rationalization at Novell. Operating lease-adjusted leverage for stand-alone Attachmate was 5.5x at Sept. 30, 2010, and will likely be into the low-4.0x range as a combined Company, before even moderate cost savings. AVIV HEALTHCARE: Moody's Rates Proposed Sr. Unsec. Notes 'B1' ------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the prospective senior unsecured notes offering of Aviv Healthcare Properties Limited Partnership. Moody's has also assigned a Ba3 corporate family rating to Aviv. The notching between the corporate family rating and the senior unsecured rating reflects significant proportion of secured debt in Aviv's capital structure which is expected to remain in the medium term. The rating outlook is stable. This is the first time Moody's has rated Aviv. These ratings were assigned with a stable outlook: -- Aviv Healthcare Properties Limited Partnership -- corporate family rating at Ba3; prospective senior unsecured debt rating at B1. Aviv's Ba3 corporate family and B1 senior unsecured ratings reflect the REIT's successful track record and managerial expertise, as well as small size and private company status. Aviv's focus on skilled nursing facilities is a key credit concern due to the relatively low profitability of this sector, in addition to heavy dependence on government reimbursements. Moody's acknowledges, however, that Aviv has been strategically addressing this risk by diversifying its portfolio among 24 states thereby reducing the likelihood of exposure to severe budget cuts in any one state. Positively, Aviv has been strategic in choosing states with more predictable reimbursement regimes and overall more favorable operating environment. Aviv's portfolio is further diversified by operator with over 32 SNF operators net leasing Aviv's properties. While many of Aviv's operators are smaller private firms, this is typical for the highly fragmented SNF industry. Aviv has strategically cultivated long-term relationships with its tenants for many of which it is the only or the largest landlord. The REIT has reaped the benefits of this strategy in terms of de-minimus lease rollovers and successful collections. Also positively, Aviv maintains master or cross- default leases with its operators which provide additional structural protection. Aviv's liquidity is adequate following a substantial equity investment by Lindsay Goldberg LLC in September 2010, and is expected to be strengthened further with the addition of a $25 million revolver simultaneously with the proposed $200 million 8-year notes offering. The proceeds from the unsecured debt issuance will be used to repay approximately $30 million outstanding on Aviv's $100 million acquisition facility due 2015 and to pay down its $405 million term loan due 2015. Positively, Aviv has no near-term maturities; its capital commitments are minor, and it anticipates Lindsay Goldberg LLC to make additional equity contributions to its future acquisitions. Aviv's credit profile is solid for the rating category with effective leverage of approximately 54% and secured leverage expected to decline closer to 31% following the note issuance. Despite increased interest cost of the bond offering, Aviv's fixed charge is expected to be over 2.4x. Positively, Aviv has no joint ventures. The stable outlook reflects Aviv's predictable cash flow from its long term triple net leases and no debt maturities until 2015. These credit positives counterbalance Aviv's small size and operating focus on a relatively less profitable sector subject to uncertainty associated with government reimbursement, as well as its private company status. A rating upgrade would be difficult in the short-term, and would depend on the REIT's size increasing to over $1 bn in terms of gross assets, with secured debt under 30% of gross assets and fixed charge consistently above 2.5x. Improvement in the size and quality of Aviv's unencumbered pool, as well as ample liquidity at all times, would also be needed for an upgrade. Negative rating movement would most likely be precipitated by a deterioration in Aviv's credit profile beyond current levels, any liquidity concerns, or operational challenges resulting in a significant decline in the level of rent collections. This is the first time Moody's has rated Aviv Healthcare Properties Limited Partnership. The principal methodology used in this rating was Global Rating Methodology for REITs and Other Commercial Property Firms published in July 2010. Aviv is a private, Chicago-based real estate company, organized as a REIT, with a primary focus on owning, acquiring and developing skilled nursing facilities. Aviv generates its revenues by entering into long-term triple-net leases with local, regional and national operators throughout the US. AXION INTERNATIONAL: Appoints Steve Silverman as New CEO -------------------------------------------------------- Axion International announced that its Board of Directors has appointed Axion's current President and COO, Steve Silverman, as its new Chief Executive Officer while retaining his title of President, effective immediately. Jim Kerstein, Axion's current Chief Executive Officer and Chief Technology Officer, will continue as CTO and focus increasingly on developing new products and applications for Axion's unique recycled plastic structural material while promoting the strategic relationships that have proven to be the foundation of the business. "This is an exciting period for Axion. As we move into a high- growth phase of our development I am pleased to hand over the position of CEO to such a highly qualified management executive thereby allowing myself to focus on continued business and technology development," stated Mr. Kerstein. "Steve's organizational management and decision-making experience across various emerging companies will provide Axion and its shareholders with a new and exceptionally dynamic leader. As proven with his successful management style and various new contract-wins since his appointment as Axion's President and COO, I have absolute confidence that Steve is the executive to fulfill our strategic goals as we position Axion as a major building supply company. I look forward to working with Steve to continue building Axion." Since joining Axion as President and COO in October, 2010, Mr. Silverman has been instrumental in laying the foundation for Axion's product management initiatives, and developing strong partnerships that will allow Axion to achieve growth going forward. In his prior experience Mr. Silverman was a major contributor to a five-fold increase in revenues at Archbrook Laguna, LLC. He led the company's diversification strategy, formed unique joint ventures with international companies, and held a key role in the company's organizational restructuring and long-term strategic development. He also led the merger team that integrated BDI and Laguna into one company. "I am honored and excited to accept the appointment of Axion's Chief Executive Officer and I couldn't agree more that we are entering an exciting phase in Axion's development," said Mr. Silverman. "Jim and the company have done a tremendous job developing Axion's unique recycled plastic technology with Rutgers University and proving its efficacy across numerous industrial applications, which in many respects is the most difficult aspect of developing an innovative product. Moving forward we plan to further strengthen our capital structure and product management initiatives, while simultaneously accelerating our growth by bringing Axion's game-changing structural composites to mass market. Building upon our prior success, Axion will continue to develop strong partnerships and drive our proven materials into widespread acceptance across the rail, marine and heavy road and bridge-building industries. As 2011 unfolds, I look forward to leveraging Axion's proven industry performance to become the leading provider of alternative structural building products, all while maintaining a keen focus on revenue growth and an unequivocal commitment to shareholder value." In addition to appointing Steve Silverman as Axion's new Chief Executive Officer, the Board of Directors has approved a change of Axion's fiscal year-end from September 30 to December 31 to bring the company in line with a more traditional financial reporting calendar. The Company anticipates filing its Form 10K for the transition period ended December 31, 2010, within the required period. Developed in conjunction with Rutgers University's Materials Sciences and Engineering Department, Axion's Recycled Structural Composite is designed from 100% recycled plastics and is used in structural applications such as composite railroad ties, I-beams, pilings, bulkhead and cross beams. RSC is inert and contains no toxic materials. It will never leach, warp and is impervious to insect infestation. Because it is lighter than traditional materials, transporting RSC is less expensive and reduces energy costs. In addition, RSC is completely recyclable at the end of its functional life. About Axion International New Providence, N.J.-based Axion International Holdings, Inc. (OTC BB: AXIH) -- http://wwwaxionintl.com/-- is a structural solution provider of cost-effective alternative infrastructure and building products. The Company's "green" proprietary technologies allow for the development and manufacture of innovative structural products made from virtually 100% recycled consumer and industrial plastics. The Company's balance sheet at Sept. 30, 2010, showed $1.7 million in total assets, $2.1 million in total liabilities, and a $439,089 stockholders' deficit. Jewett, Schwartz, Wolfe and Associates, in Hollywood, Florida, expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's results for the fiscal years ended September 30, 2009 and 2010. The independent auditors said that the Company's need to seek new sources or methods of financing or revenue to pursue its business strategy, raise substantial doubt about the Company's ability to continue as a going concern. BANNING LEWIS: Bankruptcy Won't Affect Water Supply --------------------------------------------------- KRDO's Scott Harrison reports it is unclear whether the Banning Lewis Ranch housing development in east Colorado Springs, Colorado, will build 60,000 homes as expected, but some citizens worry it will mean having to supplement, through higher water rates, the $880 million cost of the Southern Delivery water supply system. According to Mr. Harrison, Colorado Springs Utilities, however, said there's no cause for concern. The Utilities' spokeswoman Janet Rummel said rates will not change beyond the 12% annual increase all customers must pay through 2016, and the Southern Delivery System remains on schedule to begin pumping water in 2017. According to the report, Ms. Rummel describes the Banning Lewis bankruptcy as a short-term situation that should gradually improve as the economy improves, growth continues and demand for water climbs. The utility already provides water to more than 200 homes in the development. As reported by the Troubled Company Reporter on January 6, 2011, Judge Kevin J. Carey authorized Banning Lewis to conduct sales of building lots under Section 363 of the Bankruptcy Code. KeyBank National Association -- as administrative agent under a senior secured revolving credit agreement dated Sept. 7, 2007, with the Debtors -- consented to the sale of the lots free and clear of any lien. The Debtors were authorized and empowered, but not required, to honor Banning Lewis Ranch Development I & II LLC's pre- and postpetition sale contracts. The sale proceeds will be used to pay the customary costs of each closing including state and county transfers taxes, title and escrow fees, legal and recording fees, charges for preparation of deeds and other documents. About Banning Lewis Banning Lewis Ranch Co. is the owner of the undeveloped portion of a 21,000-acre ranch in Colorado Springs, Colo. Banning Lewis Ranch is a master-planned community in Colorado Springs, Colorado. The first section built, the 350-acre Northtree Village, opened in September 2007 and will have 1,000 homes priced from the high $100,000s to the mid-$300,000s. Banning Lewis Ranch filed for Chapter 11 bankruptcy protection from creditors on October 28, 2010 (Bankr. D. Del. Case No. 10-13445). It estimated assets of $50 million to $100 million and debts of $100 million to $500 million in its Chapter 11 petition. An affiliate, Banning Lewis Ranch Development I & II, LLC, also filed for Chapter 11 (Bankr. D. Del. Case No. 10-13446). Kevin Scott Mann, Esq., at Cross & Simon, LLC, serves as counsel to the Debtors. Edward A. Phillips of Eisner Amper LLP has been retained as the Company's chief restructuring officer. BERNARD L MADOFF: Ponzi Victims Sue U.S. for SEC's Negligence ------------------------------------------------------------- David Glovin at Bloomberg News reports that victims of Bernard L. Madoff's Ponzi scheme sued the U.S. government, alleging negligence on the part of the U.S. Securities and Exchange Commission. The lawsuit filed January 25 in Manhattan federal court by nine investors in Bernard L. Madoff Investment Securities LLC follow similar suits also assailing the SEC, which failed to detect Mr. Madoff's multibillion-dollar fraud until he turned himself in. "The SEC must be held accountable and responsible for its own negligent actions and inactions that directly and proximately caused the loss of billions of investor funds," the complaint says. The case is Applestein v. U.S., Case No. 11-cv-521 (S.D.N.Y.). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) As of October 29, 2010, a total of US$5.69 billion in claims by investors has been allowed, with US$741.2 million to be paid by the Securities Investor Protection Corp. Investors are expected to receive additional distributions from money recovered by Mr. Picard from lawsuits or settlements. BIG TREE: Files for Chapter 7 Liquidation ----------------------------------------- The Orlando Sentinel reports that Ormond Beach, Florida-based Big Tree Daytona Properties LLC on Jan. 19 filed for liquidation under Chapter 7 of the Bankruptcy Code. The Company disclosed $950,000 in assets, and $651,000 in liabilities. A meeting of creditors is set for Feb. 25, 2011. BLOCKBUSTER INC: Court Denies Equityholders' Exam on Valuation -------------------------------------------------------------- Bankruptcy Judge Burton Lifland denied a request by an Ad Hoc Committee of Equity Security Holders to conduct an examination of Blockbuster Inc. and its units pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. The Ad Hoc Equity Committee held that the value of the Debtors' enterprises is worth considerably more than the $1.2 billion value line set by the Debtors. Counsel to the Committee, Paul Rachmuth, Esq., at Gersten Savage LLP, in New York, relates that the Debtors have represented in various filings in the bankruptcy proceeding that the value of their estates are less than their debts. Contrary to the Debtors' assertions, the Ad Hoc Committee believes that the value of the Debtors' enterprises is worth considerably more than the $1.2 billion value line set by the Debtors. Unfortunately, Mr. Rachmuth asserted, the public information available to the Ad Hoc Committee is sufficiently opaque so as to make an accurate valuation -- and hence an investment decision -- impossible. Judge Lifland, however, believes that there is very little value in Blockbuster, at least that has been shown, Caroline Humer of Reuters reports. "It's pretty hard to say that this debtor is anything but insolvent," Reuters quoted Judge Lifland as saying, adding that he wondered to what lengths Blockbuster would need to go to continue operating beyond the three-month extension he had just awarded for lease negotiations. 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. The Official Committee of Unsecured Creditors has retained Cooley LLP as its counsel. 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: Lease Decision Deadline Extended to April 21 ------------------------------------------------------------- Bankruptcy Judge Burton Lifland extended Blockbuster Inc. and its units' time to assume or reject their unexpired leases through and including the earlier of (i) April 21, 2011, and (ii) entry of an order confirming a Chapter 11 plan of reorganization, provided that the assumption or rejection of Unexpired Leases pursuant to a Plan confirmed prior to April 21, 2011, may become effective on the effective date of the Plan, which assumption or rejection of Unexpired Leases will not be later than April 21 or the later deadline as may be agreed to by each applicable landlord pursuant to Section 365(d)(4)(B)(ii). The extension is without prejudice to the right of the Debtors to request, with the prior written consent of the lessor, further extensions of the time to assume or reject their Unexpired Leases as provided in Section 365(d)(4)(B) of the Bankruptcy Code. The Debtors previously told the Court that a number of the objections against the request have been resolved. Oyster Point Plaza LLC and Shelby Creek, L.L.C., also informed the Court of the withdrawal of their objections. 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. The Official Committee of Unsecured Creditors has retained Cooley LLP as its counsel. 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: Wins OK to Continue Store Closing Sales -------------------------------------------------------- Judge Burton Lifland granted Blockbuster Inc. and its units ' request to continue conducting store closing sales. All objections to the request that have not been withdrawn, waived, settled, or specifically addressed in the order, and all reservations of rights included in those objections, are overruled in all respects on the merits and denied. Prior to the entry of the order, the Debtors told Judge Lifland that they have reviewed the objections against the Store Closing Motion and have revised the proposed order and Store Closing Sales Procedures in an effort to resolve the Objections. The Debtors told the Court they expect a majority of the Objections to be resolved by the time the Court hears their request. The Court also approved the Store Closing Sales Procedures, provided that the Debtors and landlords are authorized to enter into agreements modifying the Store Closing Sales Procedures without further Court order, and provided further that the agreements do not have a material adverse effect on the Debtors or their bankruptcy estates. A copy of the approved Store Closing Sales Procedures is available for free at: http://bankrupt.com/misc/BBI_StoreClosing_Procedures.pdf Pursuant to Section 363(f) of the Bankruptcy Code, the assets being sold pursuant to the Store Closing Sales and Bulk Inventory Sales will be sold free and clear of any and all mortgages, security interests, liens, encumbrances or other claims, including the liens and security interests of the DIP Lenders, with those Liens, if any, attaching to the proceeds. The Court also allowed the Closing Stores to "go-dark" after the Store Closing Sales and remain "dark" despite any lease restriction to the contrary, and to hang signs and interior or exterior banners advertising the Store Closing Sales in accordance with the Store Closing Sales Procedures or as otherwise agreed between the Debtors and the landlords. In resolution of the objections of the Taxing Authorities, Judge Lifland ruled that for any Closing Store within their jurisdiction, the Debtors will maintain, as adequate protection for the secured claims of the Tax Authorities, a cash reserve in an amount equal to the sum of (i) ad valorem taxes assessed and unpaid as of the date of the Store Closing Sale for the Closing Stores, and (ii) for ad valorem taxes not yet assessed but for which Ad Valorem Liens have attached prior to the date of the Store Closing Sale, an amount based on the prior year's assessed ad valorem taxes for the Closing Stores. 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. The Official Committee of Unsecured Creditors has retained Cooley LLP as its counsel. 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) CARIS DIAGNOSTICS: Moody's to Keep 'B2' Corporate Rating -------------------------------------------------------- Moody's Investors Service commented that Caris Diagnostics, Inc.'s movement to seek an amendment to its credit facility has no immediate impact on the company's ratings or outlook, including the B2 Corporate Family Rating and B3 Probability of Default Rating. If the company can complete the necessary amendment to prevent a breach of the financial covenants, Moody's would expect to maintain the current ratings and stable rating outlook. However, Moody's could take negative rating action if the amendment cannot be completed timely. At that time, Moody's would also consider any other options the company may have to remedy non-compliance with the required covenant levels. Moody's last rating action on Caris was on January 14, 2010, when Moody's assigned the initial ratings to the company, including the B2 Corporate Family Rating. The principal methodologies used in this rating were Global Business & Consumer Service Industry published in October 2010 and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Caris Diagnostics, Inc., headquartered in Irving, Texas, is a privately owned provider of anatomic pathology laboratory services, with a focus on gastrointestinal pathology, urological pathology, dermatopatholgy and hematopathology. The company offers testing and information services used by physicians in the detection, diagnosis, evaluation and treatment of cancer and other medical conditions. The company serves approximately 5,000 physicians throughout the United States who primarily treat patients in outpatient settings. CHATEAU DE VILLE: Combined Hearing on Plan & DS Set for Feb. 4 -------------------------------------------------------------- Chateau de Ville, LLC, has filed with the U.S. Bankruptcy Court for the Western District of Washington a combined plan and disclosure statement in its Chapter 11 case. The hearing to the disclosure statement and confirm the Plan will be held on February 4, 2011, at 9:30 a.m., before Judge Marc Barecca. Objections to the disclosure statement or to the confirmation of the Plan must be filed with the Court not later than January 28, 2011. Payments and distributions under the Plan will be funded by the sales of the units as proposed in pending motions before the Court. There is only one secured creditor: First-Citizens Bank and Trust Company (Class 4). The Debtor has put together a schedule for liquidating the remaining 47 condominium units at the Chateau De Ville that will pay off the outstanding debt owed to First- Citizens Bank and Trust Company in full. It is based on a pricing structure that reduces the pre-petition asking prices by an average of 36% for the remaining one-bedroom units and an average of 26% for the two-bedroom units. General unsecured creditors (Class 5) include eight subcontractors who hold liens against the Chateau De Ville property and two deed of trust holders who are subordinated to First Citizens Bank. Under Section 506, these claims are deemed unsecured, as the rights of these creditors in the Chateau De Ville property are junior to the rights held by First-Citizens Bank and Trust Company and therefore have no equity to attach to their liens, rendering the claims unsecured. After the payment of all administrative claims (Class 1), priority tax claims (Class 3) and secured claims (Class 4), it is anticipated that there will be no funds available to pay unsecured creditors (Class 5). In the event the sale of units at the Chateau De Ville produces revenues in excess of that needed to satisfy Class 1 Claims, Class 3 Claims and Class 4 Claims, those funds would be distributed to Class 5 unsecured creditors pro rata. To the extent that the Debtor does not retain any property that has a value in excess of the exemptions allowed by law, then the balances of all Class 5 claims will be discharged. There are no known Priority Pre-petition Wage Claims (Class 2) creditors. The Debtor believes that general unsecured creditors in Class 5, which includes the subordinated lien holders, are impaired and that holders of claims in each of these classes are therefore entitled to vote to accept or reject the Plan. The Debtor believes that Class 4 First Citizens Bank and Trust is unimpaired and that holders of claims in each of these classes, therefore, do not have the right to vote to accept or reject the Plan. Classes 1, 2, and 3 are unimpaired under the Plan. Class 6 is the debtor, Chateau de Ville LLC. The Plan is silent as to the treatment of this Class. A copy of the combined Plan of Reorganization and Disclosure Statement is available for free at: http://bankrupt.com/misc/CDV.combinedPlanDS.pdf Renton, Washington-based Chateau de Ville LLC was formed to develop a multi-unit residential building on a parcel of raw land that it owned in downtown Renton. Today, 36 units of 50 individual units in the building are fully completed. The Company filed for Chapter 11 bankruptcy protection on September 30, 2010 (Bankr. W.D. Wash. Case No. 10-21648). Larry B. Feinstein, Esq., at Vortman & Feinstein, assists the Debtor in its restructuring effort. In its schedules, Chateau de Ville disclosed $12,000,000 in assets and $10,106,000 in liabilities as of the petition date. CHATEAU DE VILLE: Court Sets February 25 as Claims Bar Date ----------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington set February 25, 2011, as deadline for creditors of Chateau de Ville, LLC, to file proofs of claim in the Debtor's Chapter 11 case. Proofs of claim should be filed with the Clerk, U.S. Courthouse, 700 Stewart Street, Room 6301, Seattle, WA 98101. Renton, Washington-based Chateau de Ville LLC was formed to develop a multi-unit residential building on a parcel of raw land that it owned in downtown Renton. Today, 36 units of 50 individual units in the building are fully completed. The Company filed for Chapter 11 bankruptcy protection on September 30, 2010 (Bankr. W.D. Wash. Case No. 10-21648). Larry B. Feinstein, Esq., at Vortman & Feinstein, assists the Debtor in its restructuring effort. In its schedules, Chateau de Ville disclosed $12,000,000 in assets and $10,106,000 in liabilities as of the petition date. CHATEAU DE VILLE: Motion to Sell 6 Units at Renton Property Denied ------------------------------------------------------------------ On January 19, 2011, the U.S. Bankruptcy Court for the Western District of Washington, after a finding that cause does not exist to grant the relief being requested, denied the motion of Chateau de Ville, LLC, to sell Units 410, 207, 205, 404, 411, and 312 at its multi-unit residential building located at Williams Avenue South, in Renton, Washington. Secured Creditor Janes Gypsum Floors Inc. objected to the motion, as did Brotherton Painting, Inc. The Court gave no additional details as to its reasons for the denial of the motion. Renton, Washington-based Chateau de Ville LLC was formed to develop a multi-unit residential building on a parcel of raw land that it owned in downtown Renton. Today, 36 units of 50 individual units in the building are fully completed. The Company filed for Chapter 11 bankruptcy protection on September 30, 2010 (Bankr. W.D. Wash. Case No. 10-21648). Larry B. Feinstein, Esq., at Vortman & Feinstein, assists the Debtor in its restructuring effort. In its schedules, Chateau de Ville disclosed $12,000,000 in assets and $10,106,000 in liabilities as of the petition date. CIENA CORP: S&P Affirms 'B' Corporate; Outlook Now 'Negative' ------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'B' corporate credit and senior unsecured ratings on Linthicum, Md.-based communications networking provider Ciena Corp. At the same time, S&P removed the ratings from CreditWatch with negative implications, where they were placed on Oct. 12, 2010. The outlook is negative. "The rating reflects our expectation that the MEN business integration will be fully completed during the fiscal year and that additional restructuring expenses remain moderate," said Standard & Poor' credit analyst William Backus. "We expect that recent sales momentum will be sustained and that free operating cash flows will become nominally positive. We believe that EBITDA generation will improve modestly throughout the year as duplicative expenses related to its transition service agreement ends." S&P believes that integration risks related to the acquisition are materially diminished after nearly a year as a combined operation. The Company remains highly leveraged, which reflects, in part, high integrations costs and duplicative operating expenses related to its transition service agreement with an affiliate of Nortel. CLST HOLDINGS: Gets Confidential Treatment of FCC Agreements ------------------------------------------------------------ CLST Holdings, Inc. submitted an application under Rule 24b-2 requesting confidential treatment for information it excluded from the Exhibits to a Form 8-K filed on November 3, 2010. Based on representations by CLST Holdings, Inc. that this information qualifies as confidential commercial or financial information under the Freedom of Information Act, 5 U.S.C. 552(b)(4), the Division of Corporation Finance has determined not to publicly disclose it. Accordingly, the Securities and Exchange Commission entered an order granting confidential treatment. The SEC ruled that excluded information from the following exhibits will not be released to the public until November 3, 2020: (a) Exhibit 10.3 - Sale and Assignment entered into between CLST Asset Trust II and FCC Investment Trust I; and (b) Exhibit 10.4 - Sale and Assignment entered into between FCC Investment Trust I and 50-by-50 LLC. In the Nov. 3 Form 8-K, the Company recounted that in 2008, it consummated two acquisitions of consumer notes receivable portfolios. On November 10, 2008, the Company, through CLST Asset I, LLC, a wholly owned subsidiary of CLST Financo, Inc., which is one of the Company's direct, wholly owned subsidiaries, entered into a purchase agreement to acquire all of the outstanding equity interests of FCC Investment Trust I from a third party. The purchase price payable in the Trust I Purchase Agreement was financed pursuant to the terms and conditions set forth in the credit agreement, dated November 10, 2008, among Trust I, Fortress Credit Co LLC, as a lender, FCC Finance, LLC, as the initial servicer, and various other parties. On December 12, 2008 we, through CLST Asset Trust II, a newly formed trust wholly owned by CLST Asset II, LLC, a wholly owned subsidiary of Financo, entered into a purchase agreement to acquire certain receivables, installment sales contracts and related assets owned by SSPE Investment Trust I and SSPE, LLC. Funding for Trust II included a revolving loan, which Trust II entered into with Summit Consumer Receivables Fund, L.P., as originator, SSPE and SSPE Trust, as co- borrowers, Summit and Eric J. Gangloff, as Guarantors, Fortress Credit Corp., as a lender, Summit Alternative Investments, LLC, as the initial servicer, and various other parties. Both Trust I and Trust II had been notified that they were in default of certain of their obligations under their respective credit agreements, and the Company's investment in Trust I and Trust II was at a substantial risk of loss. The Company's outstanding balances under the Trust I Credit Agreement and the Trust II Credit Agreement were $21.9 million and $4.0 million, respectively, as of August 31, 2010. The Company had been in discussions with Fortress and Fortress Corp. regarding these matters and has entered into the Trust I and Trust II settlement transactions discussed below in resolution of these matters. Trust I and Trust II Settlement Transactions On October 29, 2010, the Trust I Credit Agreement was amended, effective August 31, 2010. Among other things, the First Amendment provided additional funding to Trust I to enable it to purchase the receivables portfolio of Trust II and pay in full the outstanding principal balance in addition to all accrued interest. Trust I executed an Amended and Restated Note in favor of Fortress, dated October 29, 2010, in the face amount of $25,763,950 which modifies, restates and replaces that certain Note, dated as of November 10, 2008, executed by Trust I in the original face amount of $34,891,977. Pursuant to the First Amendment, the Administrative Agent and Lenders (i) consented to the Sale and Assignment Agreement and (ii) waived all prior events of default under the Trust I Credit Agreement and the accrual and collection of default rate interest in connection with such events of default for the period from September 1, 2010 through October 29, 2010. In addition, the parties agreed that certain ineligible receivables acquired by Trust I under the Trust I Purchase Agreement would be repurchased by Drawbridge Special Opportunities Fund LP, or one of its affiliates, for an amount equal to $176,964. These ineligible receivables were sold pursuant to the Ineligible Receivables Sale and Assignment Agreement. Also, the CLST Parties and the Fortress Parties agreed to a mutual release which released and discharged all claims, demands and causes of action they may have against one another related to the Trust I Credit Agreement, the Trust II Credit Agreement and certain other related transaction documents. The First Amendment also amended certain terms and conditions of the Trust I Credit Agreement including, among others (i) the definitions of "Change of Control," "Defaulted Receivable," "Facility Amount" and "Interest Rate" and (ii) the Annualized Default Rate triggers and Delinquent Accounts Ratio triggers. In connection with the Trust I and Trust II Settlement Transactions, Trust I entered into a Sale and Assignment, effective as of August 31, 2010, with Trust II, whereby Trust I purchased from Trust II its portfolio of receivables along with all related security and rights to income and proceeds from the receivables for a purchase price of approximately $5.9 million. Also, Trust I entered into a Sale and Assignment, effective as of October 29, 2010, with 50-by-50 LLC, an affiliate of Drawbridge, whereby Trust I sold certain ineligible receivables acquired under the Trust I Purchase Agreement to Buyer for an amount equal to $176,964. About CLST Holdings CLST Holdings, Inc. (OTC: CLHI) does not have significant operations. Previously, it operated as a distributor of wireless products and provider of distribution and value-added logistics services to the wireless communications industry, serving network operators, agents, resellers, dealers, and retailers with operations in the North American and Latin American Regions. The company was formerly known as CellStar Corporation and changed its name to CLST Holdings, Inc. in March 2007. CLST Holdings, Inc. was founded in 1981 and is based in Dallas, Texas. On March 26, 2010 the Company filed a certificate of dissolution with the Delaware Secretary of State which became effective on June 24, 2010. As a result of the effectiveness of the certificate of dissolution, the Company was dissolved and, except to the limited extent provided for by Delaware law, its corporate existence ceased. The corporation has three years to liquidate its assets, prosecute and defend suits, satisfy or provide for its liabilities, including contingent liabilities, to the extent of the corporation's assets, and distribute the net proceeds or the assets in kind, if any, to its stockholders. During this time period, the corporation must cease to carry on the business for which it was established, except as may be necessary or incidental to the winding up of the corporation's affairs. The Company expects that it could take a couple of years for the Company to complete its plan of dissolution and make final liquidating distributions to its stockholders. CNL HOTELS: Feb. 1 Debt Payment Looms; Lender Groups Negotiate -------------------------------------------------------------- The Wall Street Journal's Kris Hudson and Eliot Brown report that investors led by Paulson & Co. and Winthrop Realty Trust reached an agreement earlier this month with Morgan Stanley Real Estate Fund V to take control of CNL Hotels & Resorts Inc., exchanging their $600 million of CNL's corporate mezzanine debt for the company's equity, according to court documents and people familiar with the matter. According to the Journal, the Paulson-Winthrop group, which also includes Capital Trust, is slated to formally seize control of the assets in a foreclosure auction set for Friday. The Morgan Stanley fund financed its 2007 purchase of the CNL resorts portfolio by saddling the properties with $3.3 billion of debt. According to the Journal, dozens of lenders and investors hold various slices of CNL's mortgages and mezzanine debt. Five of CNL's eight resorts are pledged as collateral for $1.5 billion of debt due February 1. The other three are collateral for $1 billion of debt due in 2012. The Journal relates that debt-research companies including Realpoint LLC calculate that CNL's resorts collectively are worth less than their total debt, meaning junior claims such as those held by the Paulson-Winthrop group are at risk of being wiped out in a restructuring or bankruptcy. The Morgan Stanley fund wrote off its stake in 2009. According to the Journal, people familiar with the matter say that, for the Paulson-Winthrop group to postpone the impending due date and avoid losing its claim, it likely will need to pay down several hundred-million dollars of CNL's more senior debt. If no agreement is reached, lenders with more senior claims can foreclose after February 1. But any lender doing so would then need to try to extend any debt senior to their own claims by paying it down. The Journal relates that people familiar with the debt explained that, to extend the February 1 deadline, the Paulson-Winthrop group must reach agreements with holders of $525 million of mezzanine debt on the five resorts, including debt held by MetLife Inc.; Government of Singapore Investment Corp., or GIC; and Five Mile Capital. The group also must do so with holders of the portfolio's $1 billion securitized mortgage, which is overseen by special servicer Midland Loan Services. KSL Capital Partners LLC, which owned the resorts until 2004, is a major holder of the mortgage. Sources also told the Journal that the Paulson-Winthrop group is discussing extensions with each group. The sources said a combination of KSL and GIC are the most likely challengers to the Paulson-Winthrop group for control of CNL, since KSL and GIC previously have worked together with GIC as an investor in KSL's funds. The Journal also relates that a more-junior investor, Eastern Property Fund, filed a lawsuit last week in Delaware state court to block the Paulson-Winthrop group from foreclosing, given that such an action would wipe out Eastern's investment. A hearing on that case is scheduled for Thursday. CONSOLIDATED HORTICULTURE: Court Fixes March 31 as Claims Bar Date ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware established March 31, 2011, at 4:00 p.m. prevailing Eastern time as the last day for any individual or entity to file proofs of claim against Consolidated Horticulture Group LLC, et al. The Court set April 15, 2011, at 4:00 p.m. prevailing Eastern time as the governmental unit bar date. The Court also set March 31, 2011, at 4:00 p.m. prevailing Eastern time as the last day for all parties asserting administrative expenses against the Debtors' estates (i) arising between the Petition Date and March 18, 2011 (but excluding claims for fees and expenses of professionals retained in these proceedings and members of the Committee in this case) and (ii) whenever arising under Section 503(b)(9) of the U.S. Bankruptcy Code, to file a request for payment of the administrative expense. Proofs of claim may be filed: if by first-class mail: CHG Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5112 New York, NY 10150-5112 if by hand-delivery or overnight mail: Epiq Bankruptcy Solutions, LLC Attn: CHG Claims Processing Center 757 Third Avenue, 3rd Floor New York, NY 10017 About Consolidated Horticulture Irvine, California-based Consolidated Horticulture Group LLC, doing business as Hines Nurseries LLC -- http://www.hineshorticulture.com/-- operates nursery facilities located in Arizona, California, Oregon and Texas. Through its affiliate, the company produces and distributes horticultural products. Black Diamond Capital Management LLC purchased Hines Nurseries Inc. in a bankruptcy sale in January 2009. The resulting reorganization plan, confirmed in January 2009, paid secured creditors in full on their $35.9 million in claims while providing as much as $12 million toward debt owing to suppliers both before and after the bankruptcy filing. The business bought by Black Diamond was renamed to Consolidated Horticulture. Consolidated Horticulture and its affiliates filed for Chapter 11 protection on October 12, 2010 (Bankr. D. Del. Lead Case No. 10-13308). Laura Davis Jones, Esq. and Timothy P. Cairns, Esq. at Pachulski Stang Ziehl & Jones LLP, serve as Delaware counsel to the Debtors. Attorneys at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., serve as bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Lowenstein Sandler PC as counsel and Blank Rome LLP as co-counsel. Consolidated Horticulture estimated $100 million to $500 million in assets and $50 million to $100 million in debts in the Chapter 11 petition. CORNERSTONE BANCSHARES: R. Vercoe Appointed Community Bank CCO -------------------------------------------------------------- On January 21, 2011, Cornerstone Bancshares, Inc., announced that Cornerstone Community Bank of Chattanooga appointed J. Robert (Bob) Vercoe, Jr., a Senior Vice President and Relationship Manager, as Executive Vice President and Chief Credit Officer effective January 7, 2011. Vercoe has more than 30 years' experience in the banking industry, having served in executive positions with banks in Charlotte, N.C.; Nashville, TN; and, most recently, Chattanooga. Originally from Raleigh, North Carolina, he holds a bachelor's degree in U.S. History and an MBA in finance from the University of North Carolina at Chapel Hill. Vercoe has lived in Chattanooga the past 20 years. He and his wife have four grown children and reside on Signal Mountain. "We are extremely pleased to welcome Bob aboard," said Cornerstone Community Bank President & CEO Frank Hughes. "With his vast knowledge and expertise, he will undoubtedly be a tremendous asset to Cornerstone." Cornerstone is a single-bank holding company, with $480 million in assets, serving the Chattanooga, Tennessee MSA, with five branches throughout Chattanooga and one loan production office in Dalton, Georgia. Locally owned and locally operated, Cornerstone specializes in providing a comprehensive range of customized financial solutions for businesses and individuals. Effective January 4, 2011, Jerry D. Lee resigned from his positions as Executive Vice President and Chief Credit Officer of the Company. Mr. Lee's resignation is not the result of a disagreement with the Company. About Cornerstone Bancshares Chattanooga, Tenn.-based Cornerstone Bancshares, Inc. is a bank holding company. Its wholly-owned subsidiary, Cornerstone Community Bank, is a Tennessee-chartered commercial bank with five full-service banking offices located in Hamilton County, Tennessee. The Company's balance sheet as of June 30, 2010, showed $523.4 million in total assets, $494.0 million in total liabilities, and stockholders' equity of $29.4 million. As reported in the Troubled Company Reporter on April 6, 2010, Hazlett, Lewis & Bieter, PLLC, in Chattanooga, Tenn., expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year ended December 31, 2009. The independent auditors noted that the Company was not in compliance with certain of its debt covenants at December 31, 2009. In addition, as of December 31, 2009, Cornerstone Community Bank was restricted from paying dividends to the Company due to the Bank's recent operating losses and the Bank's reduced capital levels. Consent Order The Company disclosed in 10-Q for the quarter ended June 30, 2010, that following the issuance of a written report by the Federal Deposit Insurance Corporation and the Tennessee Department of Financial Institutions concerning their joint examination of Cornerstone Community Bank in October 2009, the Bank entered a consent order with the FDIC on April 2, 2010, and a written agreement with the TDFI on April 8, 2010, each concerning areas of the Bank's operations identified in the report as warranting improvement and presenting substantially similar plans for making those improvements. The consent order and written agreement, which the Company collectively refers to as the "Action Plans", convey specific actions needed to address certain findings from the joint examination and to address the Company's current financial condition. The Action Plans contain a list of strict requirements ranging from a capital directive, which requires the Company to achieve and maintain minimum regulatory capital levels in excess of the statutory minimums to be well-capitalized, to developing a liquidity risk management and contingency funding plan, in connection with which the Company will be subject to limitations on the maximum interest rates it can pay on deposit accounts. The Action Plans also contain restrictions on future extensions of credit and requires the development of various programs and procedures to improve the Company's asset quality as well as routine reporting on its progress toward compliance with the Action Plans to the Board of Directors, the FDIC and the TDFI. As of April 2, 2010, the date of the Action Plans, the Bank was deemed to be "adequately capitalized." COSINE COMMUNICATIONS: Effects Reverse/Forward Stock Split ---------------------------------------------------------- CoSine Communications, Inc. announced that it has filed amendments to its Certificate of Incorporation to effect a 1-for-500 reverse stock split of its common stock immediately followed by a 500-for- 1 forward stock split, as previously approved by CoSine's stockholders on January 10, 2011. According to an announcement by the Financial Industry Regulatory Authority, the reverse and forward stock splits will take effect on January 21, 2011. On the Effective Date, the amendments will result in CoSine's stockholders of record owning less than 500 shares of common stock receiving a cash payment of $2.24 per share, on a pre-split basis, in lieu of owning fractional shares and participating in the forward stock split. The reverse stock split will be followed immediately by the 500-for-1 forward stock split. CoSine stockholders holding shares in "street name" through a nominee, such as a bank or a broker, regardless of the number shares held, and CoSine's stockholders of record owning 500 or more shares of common stock will not be impacted by the reverse/forward stock splits and will retain their current numbers of shares of common stock without change. CoSine anticipates that upon completion of the reverse and forward stock splits, CoSine will have fewer than 300 stockholders of record, enabling CoSine to deregister its common stock under the Securities Exchange Act of 1934, as amended, and as a result thereof, to terminate its periodic reporting obligations with the Securities and Exchange Commission. CoSine intends to continue to provide interim unaudited financial information and annual audited financial information to its stockholders. CoSine is taking these steps to avoid the substantial and increasing cost and expense of being an SEC reporting company and of regulatory compliance under the Sarbanes-Oxley Act of 2002, and to focus CoSine's resources on the redeployment of its existing assets to acquire, or invest in, one or more operating businesses with existing or prospective taxable income, or from which it can realize capital gains, that can be offset by use of its net operating loss carry-forwards. On the Effective Date, CoSine's transfer agent, BNY Mellon Shareholder Services, will provide instructions to stockholders relating to payments to cashed out stockholders and to the issuance of new certificates to continuing stockholders. About Cosine Communications Los Gatos, California-based CoSine Communications, Inc. (Pink Sheets:COSN.pk) was founded in 1998 as a global telecommunications equipment supplier. As of December 31, 2006, CoSine had ceased all its product and customer service related operations. CoSine's strategic plan is to redeploy its existing resources to identify and acquire, or invest in, one or more operating businesses with the potential for generating taxable income or capital gains. The Company's balance sheet at Sept. 30, 2010, showed $21.84 million in total assets, $189.0 thousand in liabilities, all current, and stockholders' equity of $21.65 million. Burr Pilger Mayer Inc. of San Jose, California, which audited the Company's annual report for 2009, said that that the CoSine Communications' actions in September 2004 in connection with its ongoing evaluation of strategic alternatives to terminate most of its employees and discontinue production activities in an effort to conserve cash, raise substantial doubt about its ability to continue as a going concern. CPI INT'L: S&P Assigns 'B+' to Proposed Sr. Credit Facility ----------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B+' issue rating and a recovery rating of '2' to CPI International Inc.'s proposed new senior credit facility, consisting of a five-year $30 million revolving credit facility and a six-year $150 million first-lien term loan. S&P also assigned a 'CCC+' issue rating and a recovery rating of '6' to the Company's proposed new $215 million of senior notes due 2018. S&P are leaving the existing ratings on CreditWatch with negative implications. Once Veritas Capital completes its acquisition of CPI, S&P expects to lower the CPI corporate credit rating to 'B' from 'B+' and withdraw the ratings on the existing debt as well as the corporate credit rating on Communications and Power Industries, the issuer. S&P also plan to remove the CPI corporate credit rating from CreditWatch and assign a stable outlook at that time. "The expected 'B' corporate credit rating reflects the Company's higher leverage following the pending acquisition, its modest scope of operations, and its exposure to some cyclicality and variability in demand in some of its end markets," said Standard & Poor's credit analyst Lisa Jenkins. CPI produces vacuum electron devices as well as power and control products for commercial and defense applications requiring high- power and/or high-frequency power generation such as radar, electronic warfare, satellite communications, and certain medical, industrial, and scientific applications. CROWN AMERICAS: S&P Rates $700MM Unsec. Note Offering at 'BB-' -------------------------------------------------------------- Standard & Poor's Ratings Services assigned a senior unsecured debt rating of 'BB-' (one notch below the 'BB' corporate credit rating) and a recovery rating of '5' to the offering of $700 million in senior unsecured notes due in 2021 to be issued jointly by Crown Americas LLC and Crown Americas Capital Corp. III, subsidiaries of Crown Holdings Inc. The recovery rating indicates S&P's expectation of modest (10% to 30%) recovery in the event of a payment default. At the same time, S&P affirmed its 'BB' corporate credit rating on Crown Holdings Inc. ("Crown"). S&P also affirmed its 'BB-' senior unsecured debt rating and '5' recovery rating on existing debt that is guaranteed by Crown Holdings Inc. and certain of its subsidiaries and affirmed S&P's 'B+' senior unsecured debt rating and '6' recovery rating on debt that is not guaranteed. Based on S&P's updated recovery analysis, S&P lowered its senior secured debt rating to 'BB+' with a recovery rating of '2' from 'BBB-' with a recovery rating of '1'. "The ratings on Crown reflect its satisfactory business risk profile as a leading global can manufacturer with annual sales of about $8 billion and a significant financial risk profile," said Standard & Poor's credit analyst Cynthia Werneth. "The Company's business strengths include leading shares in a number of segments; global operations, including good positions in emerging markets with favorable long-term growth prospects; and greater customer diversity than most peers." In addition, metal packaging producers benefit from fairly stable demand because most of the business is related to the food and beverage industry. They also benefit from a relatively consolidated industry structure, and timely contractual pass-through of raw material cost fluctuations to customers. These factors combine to create comparatively stable earnings and cash flow over economic cycles. Philadelphia-based Crown Holdings Inc. is a leading global producer of metal cans for food, aerosols, and beverages. DAMON PURSELL: Plan Outline Filed; All Claims to Be Paid Over Time ------------------------------------------------------------------ Damon Pursell Construction Company has filed with the U.S. Bankruptcy Court for the Western District of Missouri a disclosure statement explaining its Chapter 11 Plan of Reorganization dated December 18, 2010. On the Effective Date of the Plan, the Reorganized Debtor will assume and continue to own and operate its business and assets presently being operated by the Debtor. Michael Pursell will remain as President and will continue to manage the day-to-day operations of the Debtor. The Debtor anticipates that the operation of its will generate sufficient cash to pay all Allowed Claims that are to be paid by or on the Effective Date of the Plan, and all remaining Allowed Claims will be paid in full over an extended period of time from the Debtor's operating revenue in accordance with the Plan. The Debtor says the Plan may be in effect for as long as six years since the Plan calls for the payments to continue for six years for unsecured allowed claims. The Debtor relates that it will make every effort to refinance the pre-petition loans with other financial institutions after the Plan is confirmed. In fact, the Debtor states that several other local bank and financing organizations have expressed an interest in refinancing portions of the pre-petition Debt. Thus, the Debtor will seek to pay off many of the allowed claims as early as possible, and the time frame of the Plan could be substantially reduced for many creditors. With the exception of administrative convenience claims (Class 1) and interest holders (Class 27), all classes are impaired under the Plan. The Debtor will pay all administrative claims in the amount of $1,000 or below within 30 days of the confirmation of the Plan. The aggregate amount of Class 1 Allowed Claims is $24,798. The interest of the member and owner of the Debtor (Class 27) will not be modified by the Plan. A copy of the disclosure statement describing the Chapter 11 Plan is available for free at: http://bankrupt.com/misc/DamonPursell.DS.pdf About Damon Pursell Construction Company Kansas City, Missouri-based Damon Pursell Construction Company owns and operates the Rockridge Quarry, which sells crushed rock and rip rap products for road construction and other construction projects. The Quarry is located at 9001 Hickman Mills Drive, in Kansas City, Missouri. The Debtor also owns a construction business that provides grading, excavation, utility and other miscellaneous construction services. Michael Pursell owns 100% of the Company. The Company filed for Chapter 11 bankruptcy protection on September 15, 2010 (Bankr. W.D. Mo. Case No. 10- 44965). Thomas G. Stoll, Esq., at Dunn & Davison, LLC, assists the Debtor in its restructuring effort. In its schedules, the Debtor disclosed $18,458,000 in assets and $11,981,801 in liabilities as of the Petition Date. DANA HOLDING: Moody's Puts 'B3' Rating on New Sr. Unsecured Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Dana Holding Corporation's new senior unsecured notes. In a related action Dana's Corporate Family and Probability of Default ratings were affirmed at B1, and a Ba1 rating was assigned to Dana's amended and extended senior secured asset based revolving credit facility. This action follows Dana's announcement that it is offering $700 million of senior unsecured notes to be used, along with cash on hand, to repay its existing senior secured term loan. Concurrent with the completion of the note offering, Dana also will amend and extend its existing asset based revolving credit facility. The amended and extended asset based revolving credit facility will have a reduced commitment amount of $500 million down from $650 million. The Speculative Grade Liquidity Rating was affirmed at SGL-2. The rating outlook remains stable. Ratings assigned: -- New senior unsecured unguaranteed 8-year notes, B3 (LGD5 88%); -- New senior unsecured unguaranteed 10-year notes, B3 (LGD5 88%); -- Amended and extended $500 million senior secured asset based revolving credit facility, Ba1 (LGD1, 8%); Ratings affirmed: -- Probability of Default Rating, B1; -- Corporate Family Rating, B1; -- Speculative Grade Liquidity Rating at SGL-2; -- Existing $650 million senior secured asset based revolving credit facility, Ba1 (LGD2, 19%) - this rating will be withdrawn upon repayment; -- Existing $869 million (originally $1.4 billion) senior secured term loan, Ba2 (LGD2, 26%) - this rating will be withdrawn upon repayment The affirmation of Dana's B1 Corporate Family Rating and stable rating outlook continues to anticipate an improving near-term earnings outlook as increased revenues from rising auto production volumes are leveraged by the operating efficiencies from the company's restructuring initiatives. In addition, a lower amount of funded debt should support modestly stronger credit metrics including debt/EBITDA and EBIT/Interest coverage. The proposed transaction, along with other announced cash uses including $120 million for the increased investment in Dana's Chinese joint venture, will significantly reduce the company's cash balances. Yet, the company is expected to maintain a good liquidity profile supported by internal cash flow generation and availability under its ABL. It is noted, that the amended revolving credit facility and the new unsecured notes will have indebtedness baskets that permit significant additional secured debt and allow more flexibility for restricted payments. The ratings anticipate that the company will maintain a prudent financial profile and do not incorporate aggressive utilization of the incremental debt capacity allowed under the debt agreements. The B3 rating on the $700 million of senior unsecured notes reflects its priority of payout under Moody's LGD Methodology. The notes will be issued by Dana Holding Corporation, a holding company, and upon issuance will not be guaranteed by the company's subsidiaries. As a result, the notes will be subordinated to other non-debt liabilities, including unfunded pension amounts and trade payables, considered under the LGD Methodology. The proposed note will contain a springing guarantee covenant under which the notes will be granted an unconditional guarantee from any restricted subsidiary which guarantees other debt. Dana is expected to continue to demonstrate a good liquidity profile over the next twelve months as indicated by the Speculative Grade Liquidity Rating of SGL-2, supported by the Company's expectation of positive free cash flow generation over the near-term and availability under the bank credit facility. The company's cash balances at September 30, 2010 were approximately $1,137 million. Cash balances are expected to reduce over the near-term to supplement the net proceeds of the note offering for the repayment of the existing term loan, fund the increase in investment in Dana's Chinese joint venture, and other items. Yet, cash balances combined with the Company's positive free cash flow expectation are anticipated to more than support higher required working capital needs and higher reinvestment in plant and equipment as net new business improves with industry conditions. External liquidity will be supported by an amended and extended $500 million asset based revolving credit facility. Availability under the existing $650 million asset based revolving credit facility at September 30, 2010, was approximately $238 million, based on borrowing base limitations, and $146 million of outstanding letters of credit. Dana also maintains an undrawn European receivables loan facility of Euro 170 million, maturing in July 2012. Accounts receivable balances available as collateral under the program would have supported a US$ equivalent of $96 million in borrowings. The last rating action for Dana Holding Corporation was on January 13, 2011, when the Corporate Family Rating was raised to B1. The principal methodologies used in this rating were Global Automotive Supplier Industry published in January 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Dana, headquartered in Maumee, Ohio, is a world leader in the supply of axles, driveshafts, sealing, thermal management products, as well as genuine service parts. The customer base includes virtually every major vehicle in the global automotive, commercial vehicle, and off-highway markets. The company employs approximately 22,500 people in 26 countries. Revenues in 2009 were $5.2 billion. DEL MONTE FOODS: Fitch Cuts IDR to 'B' on More Debt from Buyout --------------------------------------------------------------- Fitch Ratings downgraded these Issuer Default Ratings of Del Monte Foods Company and its wholly-owned operating subsidiary Del Monte Corporation: Del Monte Foods Company (Borrower/Issuer) -- Long-term IDR downgraded to 'B' from 'B+'. Del Monte Corporation (Operating Subsidiary) -- Long-term IDR downgraded to 'B' from 'B+'. Fitch has also assigned new ratings to the company's proposed $3.25 billion of secured credit facilities and offering of up to $1.6 billion senior unsecured notes, as follows: Del Monte Foods Company (Borrower/Issuer) -- $750 million asset-based loan (ABL) revolver at 'BB/RR1'; -- $2.5 billion term loan B at 'BB/RR1'; -- Up to $1.6 billion senior unsecured notes at 'B-/RR5'. Finally, Fitch has affirmed the following ratings on Del Monte Corporation's existing senior secured bank facility and senior subordinated notes. These ratings will be withdrawn once the proposed credit agreement and debt issuance close and the subordinated note tender offers discussed below are completed. Del Monte Corporation (Operating Subsidiary) -- Senior secured bank facility at 'BB+'; -- Senior subordinated notes at 'B'. The Rating Outlook is Positive. These actions resolve the Negative Rating Watch Fitch placed on Del Monte's ratings on Nov. 30, 2010, following the company's announcement that it had signed a definitive agreement to be acquired by Kohlberg Kravis Roberts & Co., Vestar Capital Partners and Centerview Partners for approximately $5.3 billion, excluding fees and expenses. Fitch downgraded Del Monte's IDR to 'B+' from 'BB+', secured ratings to 'BB+' from 'BBB-' and subordinated debt rating to 'B' from 'BB' to reflect Fitch's expectation that the credit quality of this debt would not remain as high once Del Monte became a more leveraged entity. Fitch anticipates that the buy-out, which is scheduled to close during the first calendar quarter of 2011, will be roughly 70% debt/30% equity financed excluding fees and expenses. Total debt is expected to include a seven-year $2.5 billion secured term loan and up to $1.6 billion of senior unsecured notes. Del Monte's new capital structure will also include a 5-year $750 million ABL. The ABL will have a first-priority lien on accounts receivable, inventory and cash while the secured term loan will have a first- priority lien on substantially all other assets and a second- priority lien on ABL Priority Collateral. All debt is expected to be guaranteed by substantially all domestic operating subsidiaries. Credit facility terms are expected to include a springing fixed-charge coverage ratio along with standard debt- incurrence-based covenants. In connection with the proposed buy-out, Del Monte's new owners commenced cash tender offers, and corresponding consent solicitations, for any and all of Del Monte's existing senior subordinated notes, including its $250 million 6.75% and $450 million 7.5% tranches due Feb. 15, 2015 and Oct. 15, 2019, respectively. Given the total consideration for the tender, which includes a consent payment, Fitch anticipates 100% bondholder participation. The consent payment deadline is Feb. 1, 2011, and the tender offer expiration date is Feb. 16, 2011. The downgrade of Del Monte's IDRs is due to the significant increase in financial leverage and annualized interest expense following the buy-out. Total debt will increase to approximately $4.1 billion from $1.5 billion at Oct. 31, 2010, and gross interest expense is expected to exceed more than $250 million annually, up from $116 million during fiscal 2010. Based on latest 12-month Operating EBITDA of $611.6 million, as calculated by Fitch, pro forma total debt-to-operating EBITDA is 6.7 times (x) while pro forma operating EBITDA-to-gross interest expense could approximate 2.4x. The Positive Outlook reflects Fitch's view regarding Del Monte's future ability to de-lever its balance sheet, given its annual free cash flow generation, relatively high EBITDA margins, and leading No. 1 and No. 2 U.S. market share positions in the processed produce and many of the pet food and pet snack categories in which it competes. For the year ended May 2, 2010, the company's Consumer Products segment represented 53% of sales and 39% of operating income while its Pet Products segment represented 47% of sales and 61% of operating income. Fitch does not expect Del Monte's operating strategy, which has focused on accelerating growth with higher margin pet products and packaged produce, to change as a result of the buy-out. Furthermore, for the LTM period ended Oct. 31, 2010, Del Monte generated $214.7 million of FCF and had an operating EBITDA margin of 16.5%. Despite significantly higher projected interest expense and the expectation that inflationary cost pressures will grow in fiscal 2012, Fitch believes on-going productivity savings and additional cost savings accruing from the buy-out by KKR, Vestar and Centerview will mitigate potential margin compression. According to Fitch's modeling, Del Monte has the capacity to generate normalized FCF in the $100 million-$150 million range and to maintain adequate liquidity following its buy-out. Should FCF be utilized for debt reduction, as Fitch expects, total debt-to- operating EBITDA could decline to below 6.0x within 18-24 months of the transaction. Leverage below 6.0x along with relatively stable margins and continued meaningful FCF generation could result in future rating upgrades. The 'RR1' Recovery Rating on Del Monte's $3.25 billion of proposed secured debt indicates that Fitch views recovery prospects on these obligations as outstanding at 91% or better. The 'RR5' rating assigned to the company's senior unsecured notes denotes below-average recovery in the 11%-30% range if the bonds went into default. However, Fitch recognizes that recovery could be higher given the historical stability of Del Monte's cash flow and the strength of its position in the higher margin fast growing pet food/snack category for which it competes. DELTA AIR: Discloses Sale of $474 Mil. in Certificates ------------------------------------------------------ Delta Air Lines, Inc., disclosed with the Securities and Exchange Commission that on June 28, 2010, it entered into an underwriting agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and Deutsche Bank Securities, Inc., as representatives of the underwriters named therein, in connection with the issuance and sale of a total of $474,072,000 of the Certificates. The Certificates are being offered pursuant to the Prospectus Supplement, dated November 15, 2010, to the Prospectus, dated June 28, 2010, which forms a part of the Company's automatic shelf registration statement on Form S-3 (Registration No. 333-167811), filed with the Securities and Exchange Commission on June 28, 2010. The Underwriting Agreement contains customary representations, warranties, covenants and closing conditions for a transaction of this type. The Underwriting Agreement also contains provisions pursuant to which the Company agrees to hold harmless and indemnify the Underwriters against damages under certain circumstances, which are customary for a transaction of this type. Delivery of the Certificates was made under the Underwriting Agreement on November 22, 2010, with an interest rate of 4.95% per annum. The Certificates were issued by a pass through trust. The Underwriters purchased the Certificates from the pass through trust at 100% of the principal amount thereof. The pass through trust will use the proceeds from the sale of Certificates to acquire the Series A Equipment Notes from the Company. Payments on the Series A Equipment Notes will be passed through to the certificateholders of the trust. The Company expects to use the proceeds from the issuance of the Series A Equipment Notes issued with respect to each 2001-1 Aircraft and Mortgaged Aircraft to reimburse itself, in part, for the prepayment or repayment at maturity, as applicable, of the existing financing of such 2001-1 Aircraft and Mortgaged Aircraft. The Company will use the balance of any such proceeds not used in connection with the foregoing, along with the proceeds from the issuance of the Series A Equipment Notes issued with respect to the Owned Aircraft, to pay fees and expenses relating to the offering and for general corporate purposes. About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Files Post-Confirmation Report for Third Quarter ----------------------------------------------------------- Delta Air Lines, Inc. Consolidated Balance Sheets As of September 30, 2010 (In Millions) ASSETS Current Assets: Cash and cash equivalents $3,436 Short-term investments 439 Restricted cash 418 Accounts receivable, net 1,512 Expendable parts & supplies inventories 278 Deferred income taxes, net 167 Prepaid expenses and other 1,071 ------ Total current assets 7,321 Property and Equipment, Net: Property and equipment, net 20,184 Other Assets: Goodwill 9,794 Identifiable intangibles, net 4,766 Other noncurrent assets 1,088 ------ Total other assets 15,648 ------ Total assets $43,153 ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt and capital leases $2,302 Air traffic liability 3,767 Accounts payable 1,661 Frequent flyer deferred revenue 1,610 Accrued salaries and related benefits 1,280 Taxes payable 592 Other accrued liabilities 608 ------ Total current liabilities 11,820 Noncurrent Liabilities: Long-term debt and capital leases 13,063 Pension, postretirement & related benefits 11,383 Frequent flyer deferred revenue 2,916 Deferred income taxes, net 1,734 Other noncurrent liabilities 1,522 ------ Total noncurrent liabilities 30,618 Commitments and Contingencies Stockholders' Equity: Common stock at $0.0001 par value -- Additional paid-in capital 13,900 Accumulated deficit (9,271) Accumulated other comprehensive loss (3,716) Treasury stock, at cost (198) ------ Total stockholders' equity 715 ------ Total liabilities and stockholders' equity $43,153 ====== Delta Air Lines, Inc. Consolidated Statements of Operations Three Months Ended September 30, 2010 (In Millions) Operating Revenue: Passenger: Mainline $6,204 Regional carriers 1,571 ------ Total passenger revenue 7,775 Cargo 227 Other, net 948 ------ Total operating revenue 8,950 Operating Expense: Aircraft fuel and related taxes 2,023 Salaries and related costs 1,669 Contract carrier arrangements 1,236 Aircraft maintenance materials/outside repairs 405 Contracted services 398 Passenger commissions/other selling expenses 404 Depreciation and amortization 375 Landing fees and other rents 331 Passenger service 190 Aircraft rent 92 Profit sharing 185 Restructuring and merger-related items 206 Other 433 ------ Total operating expense 7,947 ------ Operating Income (Loss) 1,003 Other (Expense) Income: Interest expense (256) Amortization of debt discount, net (53) Interest income 7 Loss on extinguishment of debt (360) Miscellaneous, net 25 ------ Total other expense, net (637) ------ Income (Loss) Before Income Taxes 366 Income Tax (Provision) Benefit (3) ------ Net Income (Loss) $363 ====== Delta Air Lines, Inc. Condensed Consolidated Statements of Cash Flow Nine Months Ended September 30, 2010 (In Millions) Net cash provided by operating activities $2,514 Cash Flows From Investing Activities: Property and equipment additions: Flight equipment, incl. advance payments (753) Ground property and equipment (168) (Purchase) redemption of investments (353) Proceeds from sales of flight equipment 28 Proceeds from sale of subsidiary 21 Increase in restricted cash (18) Other investments (98) Other, net (16) ------ Net cash used in investing activities (1,357) Cash Flows From Financing Activities: Payments on long-term debt and capital lease obligations (2,546) Proceeds from long-term obligations 223 Other, net (5) Net cash (used in) provided by ------ financing activities (2,328) Net (Decrease) Increase in Cash and ------ Cash Equivalents (1,171) Cash and cash equivalents at beginning of period 4,607 ------ Cash and cash equivalents at end of period 3,436 A copy of Delta's Post-Confirmation Report is available for free at http://bankrupt.com/misc/Delta_PostCon_3QReport_Sep2010.pdf About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Flight Attendants Reject AFA Representation ------------------------------------------------------ Delta Air Lines has received notification from the National Mediation Board (NMB) in November last year that a majority -- more than 53 percent -- of flight attendants voting in the election rejected representation by the Association of Flight Attendants (AFA). In response, Delta Senior Vice President of In-Flight Service Joanne Smith issued this message to its 20,000 flight attendants: "We are happy to share the results of the Delta flight attendant representation election we received today from the National Mediation Board. The majority of voters rejected AFA representation. This is a win for all Delta flight attendants. We are pleased not just with the outcome, but also with the fact that so many of you let your voice be heard. There were 18,760 votes cast and 53% voted against AFA representation. There were 19,887 eligible voters, of which only 44% voted for AFA. No matter how you voted, thank you for participating. I could not be more proud of our flight attendants. So how soon can we fly together, open single bids for base transfers and fully integrate? Just as soon as we are able to align pay, benefits, work rules and produce a single seniority list. We hope to be able to move quickly, as we have with other workgroups where representation has been resolved. Rates of pay would be the first to be aligned -- and that would be the first day of the first bid period after our flight attendants' decision becomes final. We will release the transition plan with anticipated timelines for full integration as soon as we can. The AFA has until November 12 to file interference claims with the NMB. If they do not file those claims, you can expect to hear our plans for integration very soon thereafter. If interference claims are filed, we will not be in a position to align pay, benefits and work rules until final resolution is achieved. As I have heard from so many of you, we are anxious to complete our integration and move forward as soon as possible. We have said we respect our flight attendants' choice. We urge the AFA to show that same respect. It has been two years since the completion of our merger and I want to thank you for your professionalism. You've been waiting a long time for today, and I know we've all grown weary of the election debate. You have spoken and it is time to move forward. Your leadership team will do our best to build upon your trust and confidence." About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Reports December 2010 Traffic Results ------------------------------------------------ Delta Air Lines reported traffic results for December 2010. System traffic in December 2010 increased 2.4 percent compared to December 2009 on a 3.9 percent increase incapacity. Load factor decreased 1.1 points to 80.1 percent. Domestic traffic increased 0.5 percent year over year on a 1.2 percent increase incapacity. Domestic load factor decreased 0.6 points to 79.6 percent. International traffic increased 5.3 percent year over year on an 8.1 percent increase incapacity, and load factor decreased 2.1 points to 80.7 percent. "December's severe winter weather throughout the United States and Western Europe reduced Delta's net profit for the fourth quarter by about $45 million from our previous expectations," said Ed Bastian, Delta's president. "My thanks go out to the Delta team for their hard work to quickly restore normal operations and their dedication to our customers during the difficult weather environment." Delta Air Lines Monthly Traffic Results Dec-10 Dec-09 Change RPMs (000): Domestic 8,943,543 8,898,552 0.5% Mainline 7,030,105 6,930,192 1.4% Regional 1,913,438 1,968,360 (2.8%) International 6,092,932 5,785,913 5.3% Latin America 1,062,456 1,205,296 (11.9%) Mainline 1,049,250 1,183,889 (11.4%) Regional 13,206 21,407 (38.3%) Atlantic 3,095,523 2,873,364 7.7% Pacific 1,934,953 1,707,253 13.3% System 15,036,475 14,684,465 2.4% ASMs (000): Domestic 11,230,161 11,095,195 1.2% Mainline 8,717,084 8,529,601 2.2% Regional 2,513,077 2,565,594 (2.0%) International 7,549,919 6,984,072 8.1% Latin America 1,343,181 1,540,978 (12.8%) Mainline 1,322,544 1,511,356 (12.5%) Regional 20,637 29,622 (30.3%) Atlantic 3,843,958 3,448,999 11.5% Pacific 2,362,780 1,994,095 18.5% System 18,780,080 18,079,267 3.9% Load Factor: Domestic 79.6% 80.2% (0.6) pts Mainline 80.6% 81.2% (0.6) pts Regional 76.1% 76.7% (0.6) pts International 80.7% 82.8% (2.1) pts Latin America 79.1% 78.2% 0.9 pts Mainline 79.3% 78.3% 1.0 pts Regional 64.0% 72.3% (8.3) pts Atlantic 80.5% 83.3% (2.8) pts Pacific 81.9% 85.6% (3.7) pts System 80.1% 81.2% (1.1) pts Passengers Boarded 12,705,281 12,496,900 1.7% Mainline Completion 95.5% 98.0% 2.5 pts Factor Cargo Ton Miles (000): Passenger Cargo 202,020 169,905 18.9% Freighter Cargo 0 51,102 (100.0%) System 202,020 221,007 (8.6%) Delta Air Lines Year To Date Traffic Results Dec-10 Dec-09 Change RPMs (000): Domestic 115,811,403 114,979,088 0.7% Mainline 91,106,082 89,965,474 1.3% Regional 24,705,321 25,013,614 (1.2%) International 77,357,958 73,964,194 4.6% Latin America 13,153,017 12,604,482 4.4% Mainline 12,869,243 12,380,350 3.9% Regional 283,774 224,132 26.6% Atlantic 41,893,719 41,804,840 0.2% Pacific 22,311,223 19,554,872 14.1% System 193,169,361 188,943,282 2.2% ASMs (000): Domestic 139,737,482 138,793,389 0.7% Mainline 108,260,400 106,501,202 1.7% Regional 31,477,082 32,292,187 (2.5%) International 92,946,758 91,537,178 1.5% Latin America 16,552,393 16,067,131 3.0% Mainline 16,159,276 15,751,697 2.6% Regional 393,117 315,434 24.6% Atlantic 50,216,837 51,536,843 (2.6%) Pacific 26,177,528 23,933,204 9.4% System 232,684,240 230,330,567 1.0% Load Factor: Domestic 82.9% 82.8% 0.1 pts Mainline 84.2% 84.5% (0.3) pts Regional 78.5% 77.5% 1.0 pts International 83.2% 80.8% 2.4 pts Latin America 79.5% 78.4% 1.1 pts Mainline 79.6% 78.6% 1.0 pts Regional 72.2% 71.1% 1.1 pts Atlantic 83.4% 81.1% 2.3 pts Pacific 85.2% 81.7% 3.5 pts System 83.0% 82.0% 1.0 pts Passengers Boarded 162,614,714 161,070,926 1.0% Cargo Ton Miles (000): Passenger Cargo 2,272,212 1,741,102 30.5% Freighter Cargo 0 547,333 (100.0%) System 2,272,212 2,288,435 (0.7%) About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Signs Note Purchase Agreement With U.S. Bank ------------------------------------------------------- Delta Air Lines, Inc., disclosed with the Securities and Exchange Commission that on November 22, 2010, it entered into a Note Purchase Agreement with U.S. Bank Trust National Association, as Subordination Agent and Pass Through Trustee under the pass through trust newly formed by the Company, U.S. Bank National Association, as Escrow Agent under the Escrow Agreement, and U.S. Bank Trust National Association as Paying Agent under the Escrow Agreement. The Note Purchase Agreement provides for future issuance by the Company of Series A equipment notes in the aggregate principal amount of $474,072,000 secured by 28 aircraft: (1) (a) six Boeing 737-832 aircraft delivered new to Delta in 2000, (b) one Boeing 757-232 aircraft delivered new to Delta in 2001 and (c) three Boeing 767-332ER aircraft delivered new to Delta in 2000, in each case currently subject to liens under a prior enhanced equipment trust certificate transaction entered into by Delta in September 2001; (2) (a) two Boeing 737-732 aircraft delivered new to Delta in 2009, (b) six Boeing 757-251 aircraft delivered new in 1996 to Northwest Airlines, Inc., which was acquired by Delta in October 2008 and subsequently merged into Delta on December 31, 2009 with Delta as the surviving entity, (c) one Boeing 777-232LR delivered new to Delta in 2009 and (d) one Airbus A330-223 aircraft delivered new to Northwest Airlines in 2004 -- the "Mortgaged Aircraft", in each case currently subject to liens under separate mortgage financings; and (3) (a) three Boeing 757-351 aircraft delivered new to Northwest Airlines in 2003, (b) one Airbus A320-211 aircraft delivered new to Northwest Airlines in 2003, (c) one Airbus A330-323 aircraft delivered new to Northwest Airlines in 2005 and (d) three McDonnell Douglas MD-90-30 aircraft delivered new to third parties from McDonnell Douglas from 1996 to 1997 and acquired by Delta in 2009 and 2010 -- the "Owned Aircraft". Pursuant to the Note Purchase Agreement, the Trustee will purchase the Series A Equipment Notes by (a) October 31, 2011, with respect to the 2001-1 Aircraft; (b) April 30, 2011 with respect to the Mortgaged Aircraft; and (c) within 90 days of the date of the execution of the Note Purchase Agreement with respect to the Owned Aircraft. The Series A Equipment Notes will be issued under an Indenture and Security Agreement with respect to each Aircraft to be entered into by the Company and U.S. Bank Trust National Association, as Loan Trustee. The Note Purchase Agreement also provides for the possible future issuance of another series of equipment notes to be secured by the Aircraft. Each Indenture contemplates the issuance of Series A Equipment Notes, bearing interest at the rate of 4.95% per annum in the aggregate principal amount equal to $474,072,000. The Series A Equipment Notes will be purchased by the Trustee, using the proceeds from the sale a total of $474,072,000 of Delta Air Lines, Inc. Pass Through Certificates, Series 2010-2A. Pending the purchase of the Series A Equipment Notes, the proceeds from the sale of the Certificates were placed in escrow by the Trustee pursuant to an Escrow and Paying Agent Agreement, dated as of November 22, 2010, among U.S. Bank National Association, as Escrow Agent and Paying Agent, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated, Deutsche Bank Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Agricole Securities (USA) Inc., UBS Securities LLC, and the Trustee. The escrowed funds were deposited with the Bank of New York Mellon, under a Deposit Agreement. The interest on the escrowed funds is payable on May 23, 2011, and interest on the Series A Equipment Notes is payable semiannually on each May 23 and November 23 following the issuance thereof, beginning on May 23, 2011. The principal payments on the Series A Equipment Notes are scheduled on May 23 and November 23 of certain years, beginning on May 23, 2011. The final payments on the Series A Equipment Notes will be due on November 23, 2016, November 23, 2018 and May 23, 2019, depending on the aircraft type. Maturity of the Series A Equipment Notes may be accelerated upon the occurrence of certain events of default, including failure by the Company to make payments under the applicable Indenture when due or to comply with certain covenants, as well as certain bankruptcy events involving the Company. The Series A Equipment Notes issued with respect to each Aircraft will be secured by a lien on such Aircraft and will also be cross- collateralized by the other Aircraft financed pursuant to the Note Purchase Agreement. About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA PETROLEUM: S&P Cuts Senior Unsecured Debt Rating to CCC- -------------------------------------------------------------- Standard & Poor's Ratings Services took several rating actions on 16 U.S. oil and gas exploration and production companies following an industry review. S&P's review on the sector followed S&P's Sept. 30, 2010, revision of S&P's exploration and production recovery criteria. The new approach aims to better reflect S&P's expectation for commodity prices and reserve values in a default scenario. The rating actions S&P took, were on speculative-grade companies and affected specific issues and their respective recovery ratings. S&P did not take any corporate credit rating actions. (Standard & Poor's recovery rating scale ranges from '6', indicating expectations of negligible [0%-10%] recovery in a payment default, to '1+', indicating expectations of full [100%] recovery.) S&P included in its reviews an updated reserve report utilizing S&P's new price deck. Ratings List Issue Ratings lowered; Recovery Ratings Revised To From Quicksilver Resources Inc. (B+/Stable/--) Senior Unsecured B B+ Recovery Rating 5 3 BreitBurn Energy Partners (B+/Stable/--) Senior Unsecured B B+ Recovery Ratings 5 4 Helix Energy Solutions Group Inc. (B/Stable/--) Senior Unsecured CCC+ B- Recovery Ratings 6 5 Rosetta Resources Inc. (B/Stable/--) Senior Unsecured B- B+ Recovery Rating 5 2 Chaparral Energy Inc. (B/Stable/--) Senior Unsecured B B+ Recovery Rating 4 2 NFR Energy LLC (B/Stable/--) Senior Unsecured B- B Recovery Rating 5 4 Venoco Inc. (B/Stable/--) Second-Lien Secured B BB- Recovery Rating 4 1 Delta Petroleum Corp. (CCC/Negative/--) Senior Unsecured CCC- CCC Recovery Rating 5 4 Dune Energy Inc. (CCC-/Negative/Unsolicited) Second-Lien Secured CC CCC- Recovery Rating 5 4 Issue Ratings Raised; Recovery Ratings Revised To From Penn Virginia Corp. (BB-/Stable/--) Subordinated B+ B Recovery Rating 5 6 Forest Oil Corp. (BB-/Stable/--) Senior Unsecured BB- B+ Recovery Rating 4 5 Clayton Williams Energy Inc. (B/Stable/--) Senior Unsecured B B- Recovery Rating 4 5 Issue Ratings Unchanged; Recovery Ratings Revised To From Whiting Petroleum Corp. (BB/Stable/--) Recovery Rating 4 3 Range Resources Corp. (BB/Stable/--) Recovery Rating 3 4 Bill Barrett Corp. (BB-/Stable/--) Recovery Rating 3 4 PetroQuest Energy Inc. (B/Stable/--) Recovery Rating 4 3 DIVERSIFIED INDUSTRIES: Proofs of Claim Due February 7 ------------------------------------------------------ Diversified Industries Ltd. disclosed that the company's Proposal to Creditors under the Bankruptcy and Insolvency Act, R.S.C. 1985, was approved by the Supreme Court of British Columbia on January 24, 2011. The Company's creditors have until February 7, 2011 to submit a proof of claim form to G. Powroznik Group Inc., of G- Force Group, the Trustee under the Proposal. A copy of the Proposal and relevant documents is posted on the Trustee's Web site, at http://www.g-forcegroup.ca/current- projects/diversified-industries The Trustee will immediately begin working with the Company to implement the terms of the Proposal, including retiring all the Company's liabilities, selling all of its assets, and preserving the tax pools as the only remaining material asset of the Company. The Trustee expects the Company to complete the terms of the Proposal by approximately February 28, 2011. DUNE ENERGY: S&P Cuts Second-Lien Secured Rating to 'CC' -------------------------------------------------------- Standard & Poor's Ratings Services took several rating actions on 16 U.S. oil and gas exploration and production companies following an industry review. S&P's review on the sector followed S&P's Sept. 30, 2010, revision of S&P's exploration and production recovery criteria. The new approach aims to better reflect S&P's expectation for commodity prices and reserve values in a default scenario. The rating actions S&P took, were on speculative-grade companies and affected specific issues and their respective recovery ratings. S&P did not take any corporate credit rating actions. (Standard & Poor's recovery rating scale ranges from '6', indicating expectations of negligible [0%-10%] recovery in a payment default, to '1+', indicating expectations of full [100%] recovery.) S&P included in its reviews an updated reserve report utilizing S&P's new price deck. Ratings List Issue Ratings lowered; Recovery Ratings Revised To From Quicksilver Resources Inc. (B+/Stable/--) Senior Unsecured B B+ Recovery Rating 5 3 BreitBurn Energy Partners (B+/Stable/--) Senior Unsecured B B+ Recovery Ratings 5 4 Helix Energy Solutions Group Inc. (B/Stable/--) Senior Unsecured CCC+ B- Recovery Ratings 6 5 Rosetta Resources Inc. (B/Stable/--) Senior Unsecured B- B+ Recovery Rating 5 2 Chaparral Energy Inc. (B/Stable/--) Senior Unsecured B B+ Recovery Rating 4 2 NFR Energy LLC (B/Stable/--) Senior Unsecured B- B Recovery Rating 5 4 Venoco Inc. (B/Stable/--) Second-Lien Secured B BB- Recovery Rating 4 1 Delta Petroleum Corp. (CCC/Negative/--) Senior Unsecured CCC- CCC Recovery Rating 5 4 Dune Energy Inc. (CCC-/Negative/Unsolicited) Second-Lien Secured CC CCC- Recovery Rating 5 4 Issue Ratings Raised; Recovery Ratings Revised To From Penn Virginia Corp. (BB-/Stable/--) Subordinated B+ B Recovery Rating 5 6 Forest Oil Corp. (BB-/Stable/--) Senior Unsecured BB- B+ Recovery Rating 4 5 Clayton Williams Energy Inc. (B/Stable/--) Senior Unsecured B B- Recovery Rating 4 5 Issue Ratings Unchanged; Recovery Ratings Revised To From Whiting Petroleum Corp. (BB/Stable/--) Recovery Rating 4 3 Range Resources Corp. (BB/Stable/--) Recovery Rating 3 4 Bill Barrett Corp. (BB-/Stable/--) Recovery Rating 3 4 PetroQuest Energy Inc. (B/Stable/--) Recovery Rating 4 3 DYNEGY INC: Seneca Wants Poison Pill Waived to Buy More Shares -------------------------------------------------------------- Seneca Capital has asked the Special Committee of the Board of Directors of Dynegy Inc. -- consisting of Patricia Hammick, David Biegler, Victor Grijalva, William Trubeck and Howard Sheppard -- for limited waivers of Dynegy's Stockholder Protection Rights Agreement dated as of November 22, 2010 as amended, to permit Seneca (i) to work in concert with others for the purpose of acquiring additional Dynegy common stock at a price greater than $5.50 per share, and (ii) to acquire additional non-voting Beneficial Ownership of Dynegy common stock at a price that is greater than $5.50 per share. Seneca is the second largest shareholder of Dynegy with a 12% economic interest, including 9.3% voting common stock. A full- text copy of Seneca's letter is available at http://is.gd/GKlvTK On Monday, Seneca filed with the Securities and Exchange Commission a presentation dubbed "Saving Dynegy: For All Shareholders" in connection with its attempts to block Dynegy's sale to an affiliate of Icahn Enterprises. The presentation reiterates Seneca's view that the Icahn deal is being made at the wrong price, wrong time, and for the wrong reasons. Seneca insists Dynegy is worth $7.50 to $8.50 per share today with significant upside in a recovery. Seneca also accuses the Dynegy board of rushing to sell the Company. According to Seneca, management stands to benefit from $36 million in change-of-control severance payments (nearly 6% of Dynegy's equity value) that are largely irrespective of the deal price. Seneca said the Special Committee of Dynegy's Board that abandoned its promise of a "careful standalone review" in favor of yet another sale agreement and an ill-timed auction for Dynegy during the heart of the holiday season, is comprised of members that have only purchased a combined total of less than 16,000 shares. The Troubled Company Reporter has chronicled Dynegy's attempts to sell itself. In August, Dynegy struck a deal to be acquired by an affiliate of The Blackstone Group at $4.50 a share. That offer was raised to $5.00 a share in November. Through Icahn and Seneca's efforts, shareholders thumbed down both offers. On December 22, 2010, an affiliate of IEP commenced a tender offer to purchase all of the outstanding shares of Dynegy common stock for $5.50 per share in cash, or roughly $665 million in the aggregate. In its presentation, Seneca disclosed that it retained a Big Four accounting/consulting firm to analyze the potential cost cutting opportunity at Dynegy by utilizing various benchmarking techniques and publicly available information on Dynegy and industry peers in a 'Top Down' analysis. The accounting firm, Seneca, said did not consent to the use of its name in the presentation. Among others, Seneca said the Big 4 firm's report identified between $82 million and $157 million of incremental cost-cutting potential starting from financials for the 12 months ended September 30, 2010. A full-text copy of Seneca's presentation is available at http://is.gd/n1NX9h NYPSC Green Lights Icahn Deal Dynegy on Friday announced that at a January 20, 2011, session of the New York Public Service Commission, NYPSC granted authorization for the proposed transaction between Dynegy and Icahn. A written ruling to that effect is expected to be issued by NYPSC in due course. This determination by NYPSC satisfies one of the closing conditions of the IEP tender offer. The IEP tender offer is currently set to expire at midnight (Eastern Time) on January 25, 2011, unless extended in accordance with the terms of the IEP-Dynegy merger agreement. Dynegy has filed with the Securities and Exchange Commission a Solicitation/ Recommendation Statement on Schedule 14D-9 regarding the tender offer. The U.S. Department of Justice and the Federal Trade Commission have granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act related to the proposed acquisition of Dynegy by an affiliate of IEP. The only remaining regulatory approval necessary to satisfy the closing conditions of the IEP tender offer relates to the Federal Energy Regulatory Commission. A joint application filed by Dynegy and IEP is currently subject to review by FERC, and an order is expected to be forthcoming. Goldman, Sachs & Co. and Greenhill & Co., LLC are serving as financial advisors and Sullivan & Cromwell LLP is serving as legal counsel to Dynegy. About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE:DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. As reported by the Troubled Company Reporter on November 26, 2010, Fitch Ratings downgraded the ratings of Dynegy Inc. and its subsidiaries: Dynegy Inc. Issuer Default Rating to 'CCC' from 'B-'; Dynegy Holdings, Inc. IDR to 'CCC' from 'B-'; Secured bank credit facilities and notes to 'B+/RR1' from BB-/RR1; Senior unsecured to 'CCC/RR4' from 'B/RR3'; and Dynegy Capital Trust I preferred to 'C/RR6' from 'CCC/RR6'. The downgrade reflects Fitch's belief that the rejection of The Blackstone Group's bid to acquire Dynegy for $5/share will likely lead to another transaction and capital restructuring by Dynegy's management as activist stockholders seek to maximize shareholder values. The downgrade also reflects the underperformance of Dynegy's merchant generation operations. There is a high correlation ofDynegy's future financial performance to improvement in power prices, shrinkage in the reserve capacity margins in the wholesale markets Dynegy owns and operates its generating plants, and improvement in electricity demand. In October 2010, Moody's Investors Service lowered the ratings of Dynegy Holdings, 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. The rating action followed the expiration of the 40-day "go shop" period, according to Moody's, 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. Moody's said 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. To the extent that the transactions with Blackstone and NRG are not completed, Moody's said 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. Moody's Investors Service believes that the ratings and negative rating outlook for Dynegy, Inc., and its subsidiary, Dynegy Holdings, Inc (Caa1 Corporate Family Rating) will remain unchanged at this time following the announcement that its board had agreed to be acquired by Icahn Enterprises LP for $5.50 per share in cash, or approximately $665 million. EMERGENCY MEDICAL: S&P Puts 'BB' Corporate on CreditWatch Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BB' corporate credit rating for Greenwood Village, Colo.-based Emergency Medical Services Corp., as well as all related issue-level ratings for subsidiaries EmCare HoldCo and AMR HoldCo, on CreditWatch with negative implications. CreditWatch with negative implications means that the ratings could either be lowered or affirmed following the completion of S&P's review. The CreditWatch placement follows reports that Emergency Medical may be subject to a takeover by a private equity firm. In S&P's opinion, a meaningfully debt-laden transaction would weaken Emergency Medical's credit metrics below current levels, which include lease-adjusted debt to EBITDA of about 1.9x and funds from operations to total debt of about 37% for the 12 months ended Sept. 30, 2010. S&P expects Emergency Medical to maintain leverage below 3x to maintain the current 'BB' rating. In addition, S&P believes the Company could absorb an additional $750 million of debt without affecting the financial risk profile and triggering a downgrade. However, S&P would consider a downgrade of the ratings if leverage exceeds 3x and S&P expects it to remain there on a sustained basis. Emergency Medical had $424 million of reported debt as of Sept. 30, 2010. Currently, S&P views the Company's business risk profile as fair and its financial risk profile as intermediate. "We will resolve the CreditWatch listing when more information regarding a potential transaction and financing becomes available," said Standard & Poor's credit analyst Rivka Gertzulin. "We will then assess the Company's financial policy and the impact of any potential transaction on the Company's capital structure." ENCOMPASS DIGITAL: Moody's Gives 'Caa1' on 5.3x debt-to-EBITDA -------------------------------------------------------------- Moody's Investors Service assigned a Caa1 Corporate Family Rating and a Caa1 Probability of Default Rating for Encompass Digital Media, Inc. Moody's also assigned B2 (LGD2 - 29%) ratings to the company's proposed $20 million first lien revolver due 2016 and $175 million first lien term loan B due 2016, which fund the $120 million acquisition of the content and distribution business of Ascent Media Inc. and refinance existing debt. The rating outlook is stable. These ratings were assigned: Issuer: Encompass Digital Media, Inc. -- Corporate Family Rating: Caa1 -- Probability of Default Rating: Caa1 -- New first lien revolver due 2016 -- B2 (LGD2, 29%) -- New first lien term loan B due 2016 -- B2 (LGD2, 29%) -- The rating outlook is stable. Encompass' Caa1 CFR broadly reflects high financial risk, as evidenced by debt-to-EBITDA leverage of approximately 5.3x and weak fixed charge coverage of just over one time, and business risks associated with being a provider of outsourced services. The majority of revenues is generated from large content providers, including major cable and broadcast networks, some of which provide most of their own, in-house origination and transmission. Encompass provides third-party origination and transmission for a portion of these clients' needs. Customers are willing to outsource a portion of their business to the extent Encompass provides competitive service and technology, thereby allowing them to avoid capital spending on infrastructure and technology upgrades to bring such business in-house. A track record for providing the latest technology as well as dependable, error free transmission and 24/7 service is critical. Ratings are supported by multi-year contracts for more than 80% of revenues combined with a $549 million backlog. Ratings are also supported by the company's consistent relationships and high renewal rates. Given maturation of cable channel proliferation, incremental demand for third-party origination and distribution services is expected to be driven by the outsourcing of upgraded content management in High Definition/3D versus Standard Definition, proliferation of multiple file formats, potential demand for disaster recovery services, and development of TV broadcast central-casting. Revenues are not advertising-based and dollars spent on origination and distribution were sustained during the economic downturn. The Caa1 CFR reflects very limited free cash flow-to-total debt of about 4%-to-5% as expected in the first year, and accommodates the accrual of PIK interest on $95 million of unrated second lien debt' held entirely by Tennenbaum Funds. The total interest rate, including PIK and cash component, exceeds the rate on the 1st lien debt and results in 1.2x EBITDA - capex coverage of interest expense and roughly flat debt balances for the first 12 months. Encompass has grown through acquisitions, and with the pending purchase of Ascent Media's content distribution businesses revenues and EBITDA are expected to double in size. Risks arise from the rapid growth through acquisition; however, the pending transaction geographically diversifies operations across the U.S. and establishes facilities in the UK and Singapore. In addition, the combined entities have a track record of capital spending in excess of the company's current business plan. To the extent Encompass chooses to increase capital spending above its plan, liquidity would notably be strained given modest free cash flow and approximately $15 million of expected revolver availability. The stable outlook reflects Moody's view that Debt-to EBITDA will be sustained below 5.75x after the first 12 months as Encompass assimilates newly acquired operations in the U.S. as well as the U.K. and Singapore. The outlook also reflects expectations that the company's multi-year backlog will continue to support predictable revenue performance, liquidity will be adequate and EBITDA margins will remain at current levels. Ratings could be downgraded if revenue and EBITDA fall short of management's plan due to a decline in contract renewals or an inability to develop new business resulting in Debt-to-EBITDA ratios greater than 6.0x. A decrease in backlog and erosion of margins resulting in weakened liquidity and deterioration in EBITDA cushion relative to financial maintenance covenant requirements would create downward rating pressure. An upgrade could be considered if total debt-to- EBITDA is sustained comfortably below 4.75x and first lien debt- to-EBITDA is sustained comfortably below 2.0x, with free cash flow-to-debt ratios greater than 7%. The principal methodology used in determining instrument ratings was Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Encompass Digital Media, Inc., headquartered in Los Angeles, CA, is a leading provider of outsourced network origination and transmission services to broadcasters, cable channels and other media companies. With the acquisition of satellite services businesses of Crawford Communications in January 2010 and the pending acquisition of the content distribution businesses of Ascent Media, Encompass becomes a leading provider of outsourced services to the major producers and distributors of motion pictures and television programs in the U.S., Europe and Asia. Encompass is owned primarily through an investment of an affiliate of Wasserstein & Co. in addition to executive management and Tennenbaum Funds. Through December 31, 2010, pro forma LTM revenue was approximately $197 million. EXTENDED STAY: Affiliates File Post-Confirmation Report for Q4 -------------------------------------------------------------- Extended Stay Inc. prepared a post-confirmation quarterly operating report for 74 of its affiliated debtors whose Fifth Amended Joint Chapter 11 Plan of Reorganization had been confirmed by the U.S. Bankruptcy Court for the Southern District of New York. The Operating Report, which covers the period October 1 to December 31, 2010, disclosed that the Plan Debtors had $230,586,968 in total cash receipts and $197,020,337 in total disbursements for the reporting period. Plan-related payments disbursed during the reporting period total $127,726,544. The Plan Debtors did not sell or transfer any assets outside the normal course of business or outside the restructuring plan during the reporting period. The Plan Debtors are also current on all post-confirmation plan payments, according to the Report. A full-text copy of the Oct. to Dec. 2010 Post-Confirmation Quarterly Operating Report is available without charge at: http://bankrupt.com/misc/ESI_PostConQReportDec3110.pdf About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors tapped Gilbert Backenroth, Esq., Mark T. Power, Esq., and Mark S. Indelicato, Esq., at Hahn & Hessen LLP, in New York, as counsel. Extended Stay had assets of $7.1 billion and debts of $7.6 billion as of the end of 2008. Extended Stay Inc. in October successfully emerged from Chapter 11 protection. An investment group including Centerbridge Partners, L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI, L.P. has purchased 100 percent of the Company for $3.925 billion in connection with the Plan of Reorganization confirmed by the Bankruptcy Court in July. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). EXTENDED STAY: Files Declarations for Nov.-Dec. Disbursements ------------------------------------------------------------- Joseph Teichman, secretary and general counsel of Extended Stay Inc., filed declarations with the U.S. Bankruptcy Court for the Southern District of New York disclosing that the company has not made any disbursements in the past two months. Mr. Teichman filed the declaration in lieu of ESI's monthly operating reports for November and December 2010, and in compliance with a recent agreement between the U.S. Trustee and Weil Gotshal Manges LLP, under which ESI won't be required to file the report if it has not made any disbursements during the reporting period. ESI is not part of the restructuring plan that was confirmed by the Court and thus, is still required to continue to file a monthly operating report. ESI's 74 affiliated debtors, which were reorganized pursuant to the confirmed Plan, have been required to file operating reports on a quarterly basis after the restructuring plan took effect on October 8, 2010. About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors tapped Gilbert Backenroth, Esq., Mark T. Power, Esq., and Mark S. Indelicato, Esq., at Hahn & Hessen LLP, in New York, as counsel. Extended Stay had assets of $7.1 billion and debts of $7.6 billion as of the end of 2008. Extended Stay Inc. in October successfully emerged from Chapter 11 protection. An investment group including Centerbridge Partners, L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI, L.P. has purchased 100 percent of the Company for $3.925 billion in connection with the Plan of Reorganization confirmed by the Bankruptcy Court in July. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). F&G LEONARD: Taberna Country Club Owner Mulls Bankruptcy -------------------------------------------------------- Laura Oleniacz at ENCToday reports that the owners of the Taberna Country Club and Golf Course will likely file for Chapter 11 bankruptcy in an attempt to head off a creditor's foreclosure and subsequent sale of the property, an attorney for the owners said. "We will stop the foreclosure before it occurs," Rodney Currin, an attorney with the firm Stubbs & Perdue, said. "The people who are running the club will continue to run it in the same fashion that it was run before. In other words, the club is not going to shut down or go out of business." Mr. Currin said members should not notice any change in the club's operations in the event of a Chapter 11 filing. According to the report, documents filed January 5 in the Craven County Courthouse, says Club owner F&G Leonard LLC had a balance of more than $2.73 million on the $3.75 million loan as of Dec. 31, 2010. A hearing on the foreclosure is scheduled for Thursday, Jan. 27, and the foreclosure sale of the 218-acre property that contains the club and golf course is scheduled for Feb. 25. FAIRPOINT COMMUNICATIONS: New Stock Begins Trading on Nasdaq ------------------------------------------------------------ FairPoint Communications, Inc. (FRP 24.50, +1.50, +6.52%), announced January 25 that shares of its common stock have begun trading on the Nasdaq Stock Market under the ticker symbol FRP. "Today's Nasdaq listing marks the culmination of the recent financial restructuring process," said Paul H. Sunu, CEO of FairPoint. On January 24, 2011, FairPoint emerged from Chapter 11 bankruptcy protection with a considerably deleveraged balance sheet. As of the emergence date, the Company had approximately $1.0 billion of debt outstanding and approximately 26.3 million shares outstanding (including shares held in reserve for certain pre-petition claims). FairPoint will continue to use Bank of New York Mellon as the transfer agent for its common stock. Questions for the transfer agent should be directed to Bank of New York Mellon Shareowner Services at 1-877-295-8608. About FairPoint Communications FairPoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television and broadband services. FairPoint is traded on the New York Stock Exchange under the symbols FRP and FRP.BC. FairPoint and its affiliates filed for Chapter 11 protection on October 26, 2009 (Bankr. S.D.N.Y. Case No. 09-16335). Rothschild Inc. is acting as financial advisor for the Company; AlixPartners, LLP as the restructuring advisor; and Paul, Hastings, Janofsky & Walker LLP is the Company's counsel. BMC Group is claims and notice agent. As of June 30, 2009, FairPoint reported $3.24 billion in total assets, $321.41 million in total current liabilities, $2.91 billion in total long-term liabilities, and $1.23 million in stockholders' equity. Andrews Kurth is counsel to the Official Committee of Unsecured Creditors. Altman Vilandrie is the operational consultant to the Creditors' Committee. Verrill Dana is the Creditors' Committee's special regulatory counsel. Jeffries serves as the Creditors' Committee's financial advisor. FairPoint Communications on January 24, 2011, successfully completed its balance sheet restructuring and emerged from Chapter 11. As a result of the restructuring, FairPoint has reduced its outstanding debt by approximately 64%, from approximately $2.8 billion (including interest rate swap liabilities and accrued interest) to approximately $1.0 billion. In addition, the Company has a $75 million revolving credit facility available for working capital and general corporate purposes. Existing stock in the Company was cancelled and holders did not receive any distributions. * * * This concludes the Troubled Company Reporter's coverage of FairPoint Communications until facts and circumstances, if any emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. FEDERAL MORTGAGE: Founders Face Suit for Alleged Ponzi Scheme ------------------------------------------------------------- The Edmonton Journal's Gary Lamphier reports that Jay Peers and his two sons are facing a class action lawsuit for running "a classic Ponzi scheme" that cost investors in his now-bankrupt companies tens of millions of dollars. According to the Edmonton Journal, the civil suit, filed by two West Coast residents who invested more than $3.1 million in Edmonton, Canada-based Federal Mortgage Corp. Ltd. and Peers Foster Kristiansen Inc., alleges that returns from Mr. Peers' failed companies were covered by funds from incoming investors. The suit says "So far as is known to date, of a total invested of $72 million, over $30 million was shown to have been invested in ventures or properties owned directly or indirectly by Robert, Marc and Jay Peers." The Edmonton Journal says none of the allegations made in the suit have been proven in court and as of late Friday, a statement of defence had not been filed with the court. The Edmonton Journal relates the class-action lawsuit was filed by plaintiffs Robert and Charity Mewburn in Edmonton's Court of Queen's Bench of Alberta against Mr. Peers, his sons Robert and Marc -- who ran two related firms in Calgary -- and FMC directors Dawn Vader, Sharma Laleeni and David Kauffman. Mr. Peers' companies filed for bankruptcy in early December, and PricewaterhouseCoopers Inc., the court-appointed bankruptcy trustee, held its first meetings with creditors on Jan. 12. The Mewburns' suit was filed two days later. The Edmonton Journal relates more than 400 investors, their spouses, lawyers and accountants attended the Jan. 12 creditors' meetings at Edmonton's Mayfield Inn. Some of the unsecured creditors named in the trustee's filings are owed $500,000 or more, and many are senior citizens who appear to have put the bulk of their life savings into FMC. The Mewburns are seeking a court order certifying the suit as a class action proceeding on behalf of other FMC and PFK investors. FLINT TELECOM: Files Prospectus for 12-Mil. Shares Held by Kodiak ----------------------------------------------------------------- Flint Telecom Group, Inc., filed a registration statement on Form S-1 with the Securities and Exchange Commission on January 21, 2011, for the resale by shareholder Kodiak Capital Group, LLC, of up to 12,000,000 shares of the Company's common stock, par value $0.01 per share. The shares of common stock offered under this prospectus by Kodiak are issuable to Kodiak pursuant to the Investment Agreement entered into by and between Kodiak and the Flint Telecom Group, Inc., dated November 26, 2010 and subsequently amended on January 21, 2011. The Company will not receive any proceeds from the sale of these shares by Kodiak. This registration statement covers only a portion of the shares of common stock that may be issuable pursuant to the IA. The Company may file subsequent registration statements covering the resale of additional shares of common stock issuable pursuant to the IA with Kodiak. The Company will bear all costs associated with this registration statement. Kodiak may sell the shares of common stock in a number of different ways and at varying prices. The Company provides further information about how Kodiak may sell its shares of common stock in the section entitled "Plan of Distribution." Kodiak is an "underwriter" within the meaning of the Securities Act of 1933, as amended, in connection with the resale of the Company's common stock under the IA. The Company's shares of common stock are quoted on the OTCBB under the symbol "FLTT.OB." On January 19, 2011, the closing sale price of the Company's common stock was $0.017 per share. About Flint Telecom Overland Park, Kan.-based Flint Telecom Group, Inc. (OTC BB: FLTT) -- http://www.flinttelecomgroup.com/-- delivers next-generation IP communications Products and Services. As part of the Company's ongoing emphasis on streamlining its operations and reaching sustainable profitability, during the year ended June 30, 2010, the Company shut down and disposed of four operating companies: CVC Int'l, Phone House Inc. of Florida, Dial-Tone Communications and Starcom Alliance. The Company's balance sheet at September 30, 2010, showed $2.2 million in total assets, $14.8 million in total liabilities, all current, $4.6 million in redeemable equity securities, and a $17.3 million stockholders' deficit. As reported in the Troubled Company Reporter on October 26, 2010, L.L, Bradford & Company, LLC, in Las Vegas, Nev., expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's results for the fiscal year ended June 30, 2010. The independent auditors noted that the Company has suffered losses from operations, negative cash flows from operations and current liabilities exceed current assets. FOR 1031: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: FOR 1031 Dorado LLC 12426 W. Explorer Drive Boise, ID 83713 Bankruptcy Case No.: 11-10215 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court District of Delaware (Delaware) Judge: Peter J. Walsh Debtor's Counsel: Natasha M. Songonuga, Esq. GIBBONS PC 1000 N. West Street, Suite 1200 Wilington, DE 19801 Tel: (302) 295-4875 Fax: (302) 295-4876 E-mail: nsongonuga@gibbonslaw.com Scheduled Assets: $1,821,225 Scheduled Debts: $2,121,839 The Company did not file a list of creditors together with its petition. The petition was signed by Conrad Myers, as Trustee of the DBSI R.E. Liquidating Trust, successor. FUQI INT'L: NASDAQ Grants Firm's Request for Continued Listing -------------------------------------------------------------- FUQI International, Inc. disclosed that a NASDAQ Listing Qualifications Panel has granted the Company's request for an extension of time, as permitted under NASDAQ's Listing Rules, to comply with the annual shareholder meeting and proxy solicitation requirements set forth in NASDAQ Listing Rules 5620(a) and 5620(b), respectively. In accordance with the Panel's decision, the Company must solicit proxies and hold its annual meeting on or before May 9, 2011. As previously reported, on September 29, 2010, FUQI received a NASDAQ notice of noncompliance due to the delay in certain filings with the Securities and Exchange Commission and that the Company's securities were subject to delisting unless it requested a hearing. The Company timely requested a hearing and appeared before the Panel on November 11, 2010. On December 9, 2010, the Panel rendered its determination to continue the Company's listing subject to an extension through March 28, 2011, by which date the Company must file with the SEC all delayed reports and any required restatements. About FUQI International Based in Shenzhen, China, FUQI International, Inc. is a leading designer, producer and seller of high quality precious metal jewelry in China. FUQI develops, promotes, manufactures and sells a broad range of products consisting of unique styles and designs made from gold and other precious metals such as platinum and Karat gold. GALLE GLOBAL: Hedge Fund to Liquidate Amid Losses ------------------------------------------------- Saijel Kishan at Bloomberg News reports that Galle Global Macro Partners LLC, the hedge fund founded by Sri "Wije" Wijegoonaratna, a former Fortress Investment Group LLC executive, is shutting down about a year after it started. The firm, based in New York, plans to return most money to investors next month, Mr. Wijegoonaratna said in a letter to clients January 13. "With the past few months' redemptions, our asset base has unfortunately become too unstable to support our original vision of a full-scale institutional macro business," he said in the letter, a copy of which was obtained by Bloomberg News. "As a result, we have decided that it is in the best interests of the GGM investors to close all of our funds as of January 31." Mr. Wijegoonaratna, who started his firm in February with $450 million, said he was "disappointed" with his performance. Macro funds, which trade everything from currencies to commodities, returned 2.2% on average last year, according to data compiled by Bloomberg, while hedge funds of all types averaged gains of 7% as global markets rallied. Bloomberg News also reports that Shafiq Karmali, a former Goldman Sachs Group Inc. trader, planned to shut his hedge fund, Cypress Lane, a little more than a year after starting it, three people briefed on the decision said in November. GR HOLDING: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: GR Holding, LLC 9708 Fort Colony Way Tampa, FL 33615 Bankruptcy Case No.: 11-01074 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court Middle District of Florida (Tampa) Debtor's Counsel: Tom H. Billiris, Esq. TOM H. BILLIRIS, PA 2311 ALT 19 STE 5 Palm Harbor, FL 34683-2631 Tel: (727) 786-7200 E-mail: tbilliri@tampabay.rr.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Galal Ramadan, member. GULF FLEET: U.S. Trustee Appoints Seven-Member Creditors Committee ------------------------------------------------------------------ R. Michael Bolen, U.S. Trustee for Region 5 appointed seven members to the official committee of unsecured creditors in the Chapter 11 cases of Gulf Fleet Holdings, Inc., et al. The Creditors Committee members are: 1. Hudson Drydocks, Inc. Attn: Wendle Huddleston 1809 West Garner Street Morgan City, LA 70380 Tel: (985) 384-6492 (985) 759-1131 2. Vacco Marine, Inc. Attn: Laura Lee Smith P.O. Box 8032 Houma, LA 70361 Tel: (985) 851-4400 Fax: (985) 851-4141 3. Cummins Mid-South, LLC Attn: Mark Whitehead 3770 South Perkins Road Memphis, TN 38118 Tel: (901) 577-0670 Fax: (901) 522-8758 4. Qorval, LLC Attn: Judy M. Levy 2210 Vanderbilt Beach Road, Suite 1206 Naples, FL 34109 Tel: (239) 280-5799 Fax: (239) 435-9777 5. Thoma-Sea Boat Builders, L.L.C.(non-voting member) Attn: Walter Thomassie P.O. Box 399 Bourg, LA 70343 Tel: (985) 532-5515 Fax: (985) 853-0702 6. NREC Power Systems Attn: Bryan F. Chaisson P.O. Box 3016 5222 Highway 311 Houma, LA 70361-3010 Tel: (985) 872-5480 Fax: (985) 872-0611 7. Doerle Food Services, LLC Attn: Christie Boutte 113 Kol Drive Broussard, LA 70518 Tel: (337) 252-8551 (ext. 1011) Fax: (337) 252-8559 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. The Committee is represented by: Alan H. Goodman, Esq. 601 Poydras, No. 2100 New Orleans, LA 70112 Tel: (504) 584-9419 Email: agoodman@lemle.com Christopher D. Johnson, Esq. Hugh M. Ray, Jr., Esq. 600 Travis, Suite 7000 Houston, TX 77002 Tel: (713) 485-7300 Fax : (713) 485-7344 Email: cjohnson@mckoolsmith.com About Gulf Fleet Lafayette, Louisiana-based Gulf Fleet Holdings, Inc. -- along with affiliates Star Marine, LLC; Gulf Wind, LLC; Gulf Service, LLC; Gulf Worker, LLC; Hercules Marine, LLC; Gulf Fleet, LLC; Gulf Fleet Marine, Inc.; Gulf Fleet Management, LLC; Gulf Fleet Offshore, LLC; and Gulf Ocean Marine Services, LLC -- sought Chapter 11 protection (Bankr. W.D. La. Case No. 10-50713) on May 14, 2010. Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard in New Orleans, La., represent the Debtors. The Debtor is operating under the terms of cash collateral agreements with lenders led by Comerica Bank and Brightpoint Capital Partners Master Fund, L.P. Gulf Fleet estimated $100 million to $500 million in assets and $50 million to $100 million in debts in its Chapter 11 petition. In their schedules, affiliate Gulf Fleet, LLC, disclosed $2,088,277 in assets and $83,891,116 in liabilities; Gulf Fleet Management, LLC, disclosed $943,256 in assets and $45,071,399 in liabilities; and Gulf Ocean Marine Services, LLC, disclosed $15,777,138 in assets and $79,513,230 in liabilities. HELIX ENERGY: S&P Downgrades Senior Unsecured Rating to 'CCC+' -------------------------------------------------------------- Standard & Poor's Ratings Services took several rating actions on 16 U.S. oil and gas exploration and production companies following an industry review. S&P's review on the sector followed S&P's Sept. 30, 2010, revision of S&P's exploration and production recovery criteria. The new approach aims to better reflect S&P's expectation for commodity prices and reserve values in a default scenario. The rating actions S&P took, were on speculative-grade companies and affected specific issues and their respective recovery ratings. S&P did not take any corporate credit rating actions. (Standard & Poor's recovery rating scale ranges from '6', indicating expectations of negligible [0%-10%] recovery in a payment default, to '1+', indicating expectations of full [100%] recovery.) S&P included in its reviews an updated reserve report utilizing S&P's new price deck. Ratings List Issue Ratings lowered; Recovery Ratings Revised To From Quicksilver Resources Inc. (B+/Stable/--) Senior Unsecured B B+ Recovery Rating 5 3 BreitBurn Energy Partners (B+/Stable/--) Senior Unsecured B B+ Recovery Ratings 5 4 Helix Energy Solutions Group Inc. (B/Stable/--) Senior Unsecured CCC+ B- Recovery Ratings 6 5 Rosetta Resources Inc. (B/Stable/--) Senior Unsecured B- B+ Recovery Rating 5 2 Chaparral Energy Inc. (B/Stable/--) Senior Unsecured B B+ Recovery Rating 4 2 NFR Energy LLC (B/Stable/--) Senior Unsecured B- B Recovery Rating 5 4 Venoco Inc. (B/Stable/--) Second-Lien Secured B BB- Recovery Rating 4 1 Delta Petroleum Corp. (CCC/Negative/--) Senior Unsecured CCC- CCC Recovery Rating 5 4 Dune Energy Inc. (CCC-/Negative/Unsolicited) Second-Lien Secured CC CCC- Recovery Rating 5 4 Issue Ratings Raised; Recovery Ratings Revised To From Penn Virginia Corp. (BB-/Stable/--) Subordinated B+ B Recovery Rating 5 6 Forest Oil Corp. (BB-/Stable/--) Senior Unsecured BB- B+ Recovery Rating 4 5 Clayton Williams Energy Inc. (B/Stable/--) Senior Unsecured B B- Recovery Rating 4 5 Issue Ratings Unchanged; Recovery Ratings Revised To From Whiting Petroleum Corp. (BB/Stable/--) Recovery Rating 4 3 Range Resources Corp. (BB/Stable/--) Recovery Rating 3 4 Bill Barrett Corp. (BB-/Stable/--) Recovery Rating 3 4 PetroQuest Energy Inc. (B/Stable/--) Recovery Rating 4 3 HONOLULU MEDICAL: Process to Release Patient Records Ongoing ------------------------------------------------------------ Dan Nakaso, writing for the Honolulu Star-Advertiser, reports that Honolulu Medical Group Inc. is still sending records to patients. The Star-Advertiser relates attorney James Wagner said the process is continuing to get all requested records to patients by a July 11 deadline, when all records will be destroyed. The report relates Mr. Wagner said that, after paying a $42 fee, patients should expect a 60- to 90-day turnaround period to receive their records. A Web site where patients can request their records has been created at http://honmed.com/ Honolulu Medical Group once claimed to be the state's largest multispecialty clinic and traced its history back 106 years when it was founded as Hawaii's first physician group by Dr. James Judd and Dr. W.D. Baldwin. By 2009, the Honolulu Medical Group's roster of 40 physicians had dwindled to just 11 and the group filed for bankruptcy protection, saying it owed creditors more than $1 million. As reported by the Troubled Company Reporter on November 6, 2009, Honolulu Medical Group Inc. filed for Chapter 11 bankruptcy in Honolulu, Hawaii. Erika Engle of Star Bulletin reported that the Company's attorney James Wagner cited the near-unavoidable national debate on health care costs as a reason the company fell so deeply behind. The Company estimated assets of less than $50,000 and debts of between $1 million and $10 million in its Chapter 11 petition. HUNTINGTON INGALLS: Fitch to Give 'BB' After Northrop Spin-Off -------------------------------------------------------------- Fitch Ratings expects to assign a 'BB' Issuer Default Rating to Huntington Ingalls Industries Inc. upon the completion of the company's potential spin-off from Northrop Grumman Corporation. Fitch also expects to rate HII's proposed five-year senior secured $600 million term loan facility, five-year $650 million revolving credit facility, and approximately $1.18 billion of Rule 144A senior unsecured notes. Proceeds from the term loan and the notes will be used to pay a transfer to NOC, repay intercompany debt owed to NOC, and fund HII's initial liquidity. Fitch expects the debt transactions and spin-off will be completed in the first quarter of 2011. Fitch expects to assign these ratings on HII: -- Long-term IDR at 'BB'; -- Senior secured term loan at 'BBB-'; -- Senior secured revolving credit facility at 'BBB-'; -- Senior unsecured notes at 'BB'. The Rating Outlook is expected to be Stable. Fitch expects HII will have approximately $1.9 billion of outstanding debt after the potential spin-off including the debt mentioned above and approximately $105 million of senior unsecured legacy debt. The ratings reflect HII's position as a leading company in the defense shipbuilding industry with core capabilities in building aircraft carriers, nuclear submarines, large amphibious attack vessels, and surface combatants. The company is the sole source manufacturer on about 66% of its revenues, including building and overhauling aircraft carriers for the U.S. Navy, and it has a large and highly visible backlog. HII is well-positioned in the current defense spending environment, with roles on four of the U.S. Dept. of Defense's (DOD) top 12 programs in the fiscal 2011 budget. HII also has a high percentage of cost-plus and fixed- price incentive contracts, which have less risky terms than firm fixed-price contracts, although margins are generally lower. Fitch expects the company will follow a conservative financial strategy after the potential spin-off, and Fitch projects that most of HII's financial metrics will be solid for the expected ratings. Finally, HII's pension funding position is relatively healthy compared to many other large defense contractors. Fitch's key concerns include HII's revenue concentration with the U.S. Navy and Coast Guard, the ongoing restructuring at the company's Gulf Coast operations, and uncertainty about U.S. defense spending after fiscal 2012. HII generates nearly all of its revenues from the U.S. government, exposing the company to changes in U.S. Navy and U.S. Coast Guard plans regarding future fleet needs. HII will be undergoing an extensive reorganization at least through 2012 to address performance issues at its Gulf Coast operations; this restructuring includes the closing of its Avondale shipyard. Additional rating concerns include the company's relatively low margins, weak free cash flow in the past two years, program execution risks, the percentage of the workforce that is unionized, exposure to hurricanes, and the lack of a track record as a standalone company. HII will need to develop in-house support functions which are currently handled by NOC, including some information technology. Fitch's expectation to notch up the senior secured credit facility by two rating notches from the IDR to 'BBB-' is based on the coverage provided by HII's tangible assets and operating EBITDA compared to the fully drawn facility. The collateral for the facility includes substantially all of HII's assets with the exception of the Avondale shipyard and a few other exclusions. In assigning the rating, Fitch noted Newport News' solid backlog and strategic importance to the U.S. Navy. The amount of secured debt compared to the amount of unsecured debt and equity in HII's expected capital structure also supported Fitch's notching analysis. HII is expected to have approximately $600 million of liquidity consisting of $200 million-$300 million of cash with the remainder provided by the $650 million revolving facility, with up to $350 million usable for letters of credit. The actual liquidity level may exceed the targeted $600 million if HII does not utilize the full Letter of Credit allowance under the revolving facility, but Fitch's forecasts include the assumption that a substantial portion of the LC facility will be used to cover workers' compensation. Debt maturities will be minimal for the next several years other than amortization of the term loan. Required pension contributions should also be manageable given HII's funding position. After the spin-off and debt issuances Fitch expects HII will have leverage of approximately 3.2 times (x)- 3.4x, with the potential for steady improvement over the next several years with some debt reduction and restructuring-driven margin expansion. Lower discretionary pension contributions, a smaller increase in working capital and lower capital expenditures eased the pressure on HII's free cash flow in 2010. HII's FCF in 2009 was negative $269 million, and Fitch expects FCF to be weak in 2010 and 2011, although improved from 2009. Through the nine months ended Sept. 30, 2010, HII's FCF was $55 million, compared to negative $329 million for the same period in 2009. Fitch expects that FCF could improve materially in 2012 and 2013 as restructuring abates and some capital spending projects are completed. Fitch's projections include no share repurchases or dividends, although HII's dividend policy will be established by the board of directors based on HII's financial conditions and other factors. Fitch's financial projections show that HII should be able to build cash based on the assumptions of a successful Gulf Coast restructuring and continued support of the company's programs in the defense budget. Defense spending is a key driver of HII's financial performance and credit quality. HII generated approximately 99% of its estimated 2010 revenues from the U.S. government, primarily the U.S. DOD. Fitch believes the outlook for HII's operations is still favorable through fiscal 2012. Beyond fiscal 2012 there is more uncertainty for core spending levels, due to federal budget pressures. Fitch believes that HII has credit metrics strong enough to withstand lower defense spending levels while retaining the current ratings. HII currently is an operating unit of NOC responsible for approximately 18% of the company's revenues. HII is the nation's sole industrial designer, builder, and refueler of nuclear-powered aircraft carriers and one of only two companies capable of designing and building nuclear-powered submarines for the U.S. Navy. HII is also one of the nation's leading full-service systems providers for the design, engineering, construction, and life cycle support of major surface ships for the U.S. Navy, U.S. Coast Guard, and international navies. HII has good diversity within its product lineup as the majority of revenues are driven by seven to eight major programs. However, the divestiture will expose HII to changes in future U.S. Navy and U.S. Coast Guard funding plans as the company lacks diversification outside of shipbuilding. Fitch received three years of audited financial statements of HII's standalone operations. HUNTINGTON INGALLS: Moody's Assigns 'Ba2' Corp. Family Rating ------------------------------------------------------------- Moody's Investors Service assigned new debt ratings to Huntington Ingalls Industries Inc. including: Ba2 corporate family and probability of default ratings, Baa3 senior secured bank credit facility rating, Ba3 senior unsecured bond rating, and a speculative grade liquidity rating of SGL-2. The rating outlook is stable. The Ba2 CFR reflects Huntington Ingalls' established position as a critical shipbuilding contractor to the U.S. Navy, with stable revenues although a moderate return on assets of about 2% to 3%. Moody's expects 2011 debt to EBITDA of about 4.0 times, which would be consistent with the Ba2 rating level. Moody's also anticipates operating margins should gradually improve over time which should produce declining financial leverage. Moody's said, "Huntington Ingalls is a sole builder of U.S. Navy aircraft carriers, is one of two contractors for U.S. Navy submarines, and holds a strong position as a surface warship contractor. We anticipate the Navy continuing to award contracts at a pace that basically maintains the company's current backlog level, which provides good visibility of forward revenues. Assuming costs in line with recent levels, the rating envisions EBIT margin improving to the mid-single digit percentage range. This gradually improving EBIT margin should lower leverage over time. Longer term, U.S. fiscal deficits could pressure ship building outlays but we do not see that as a risk to intermediate- term revenues. "We do not anticipate Gulf Coast segment margins will approach those of the Newport News segment for some time, even with the planned closure of the Avondale, Louisiana yard. Although charges related to the Avondale closure and problems on amphibious ship contracts have likely concluded, the rating acknowledges that completing vessels LPD 23 and LPD 25 -- as Avondale closes -- could prove a challenge. Operational improvements made in recent periods should permit better performance on future surface combatant ship contracts, especially the DDG-51 program re-start. Huntington Ingalls appears reasonably positioned to receive a meaningful portion of the U.S. Navy's DDG-51 ship construction contracts, which would be handled by the Gulf Coast segment. "The speculative grade liquidity rating of SGL-2 reflects a good liquidity profile, which adds support to the Ba2 CFR. A beginning cash balance of about $300 million and no beginning borrowing expected on the $650 million five-year revolver, provide a comfortable level of available liquidity. Near-term maturities will be limited and we expect the company should be cash flow generative over 2011. The SGL-2 anticipates adequate headroom under the first lien credit facility's financial ratio covenant tests. "Upward rating momentum would develop with backlog continuing at current levels and steadily improving Gulf Coast operations, leading to an expectation of EBIT margin in the upper single digit percentage range (8% to 9%). At this margin level, assuming a balanced financial policy, leverage metrics would likely improve to include debt to EBITDA of 3.0 times and free cash flow to debt above 10%. Expectation of a good liquidity profile would as well accompany an upgrade." Downward rating momentum would develop if backlog were to materially weaken or if Moody's were to expect return on assets sustained below 1%. Debt to EBITDA exceeding 5.0 times, or a weakening liquidity profile could also cause a ratings downgrade. Ratings assigned, subject to review of final documentation: -- $650 million senior secured revolving credit due 2016, Baa3 LGD2, 21% -- $600 million senior secured term loan B due 2016, Baa3 LGD2, 21% -- $575 million senior unsecured notes due 2018, Ba3 LGD5, 74% -- $600 million senior unsecured notes due 2021, Ba3 LGD5, 74% -- Speculative grade liquidity, SGL-2 When Huntington Ingalls' separation from Northrop Grumman Corporation occurs, the remaining $22 million of 4.55% Gulf Opportunity Zone Industrial Revenue Bonds due 2028 will become an obligation of Huntington Ingalls' main operating company. At that time, the GoZone Bonds will no longer benefit from the credit support of Northrop Grumman Corporation (Baa1). Moody's therefore expects to lower the rating of the GoZone Bonds to Ba3 LGD5, 74% from Baa1 following the spin-off. The principal methodologies used in this rating were Global Aerospace and Defense published in June 2010, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Huntington Ingalls Industries, Inc., after it is spun off of Northrop Grumman Corporation, will be an independent company. Huntington Ingalls provides full service design, engineering, construction, and lifecycle support of major surface ship programs for the U.S. Navy. Moody's estimates revenues in 2010 were approximately $6.5 billion. HII HOLDING: Loan Upsize Won't Change Term Loan's 'B1' Rating ------------------------------------------------------------- Moody's Investors Service said HII Holding Corporation's plan to upsize its Term Loan B to $450 million from $315 million does not change the firm's Corporate Family Rating or the proposed term loan's B1 issue rating. The principal methodology used in this rating was Global Chemical Industry rating methodology published in December 2009. HII Holding Corporation's operating subsidiary, Houghton International Inc., is a specialty chemicals manufacturer and services firm headquartered in Valley Forge, Pennsylvania, with a focus on metalworking fluids and chemical management services. Houghton has announced plans to acquire Shell's metalworking and hot rolling oil business in 2011. The company is privately owned by funds managed by AEA Investors LLC. INSIGHT HEALTH: Faces Last-Minute Challenges to Restructuring ------------------------------------------------------------- Dow Jones' DBR Small Cap reports that InSight Health Services Holdings Corp. said that it's facing a last-minute bid by some of its creditors to derail its restructuring plan, which the bankruptcy court is slated to consider approving. According to DBR, after noteholders questioned the propriety of the votes cast in favor of InSight's Chapter 11 plan of reorganization, six of those accepting voters have stepped forward to ask the bankruptcy court to let them now reject the plan. In court papers filed, InSight said the creditors' timing was "highly suspect" and said their request shouldn't be countenanced, the report notes. The Chapter 11 Plan The Honorable Arthur J. Gonzalez was scheduled to convene a combined hearing on Jan. 25, 2011, to pass on the adequacy of the disclosure statement used to solicit acceptances of InSight Health Services Holdings Corp.'s prepackaged chapter 11 plan of reorganization, and to consider whether that plan should be confirmed. Under the plan, the Debtors' senior secured notes -- the only class of claims or interests entitled to vote on the plan -- will be converted into equity. The Debtors' general unsecured creditors are unimpaired and will receive a full recovery on their general unsecured claims. Additionally, the Debtors' senior secured noteholders agree to convey to the equityholders warrants to acquire two percent of the fully diluted equity in the reorganized Debtors, in recognition of the Debtors' existing equityholders' efforts to achieve a successful, consensual restructuring that preserves value for the Debtors' businesses and creditors. Upon the Petition Date, the Debtors have obtained votes accepting the plan from the holders of over two thirds of the amount of the senior secured notes. The Debtors believe that they will obtain further acceptance of the plan by the proposed December 27, 2010 voting deadline and be able to confirm the plan expeditiously. The Debtors expect to emerge from the chapter 11 process as a substantially deleveraged enterprise well positioned to compete successfully in the competitive diagnostic medical imaging industry going forward. A full-text copy of the Plan is available for free at: http://bankrupt.com/misc/InsightHealth_Plan_DS.pdf About Insight Health InSight Health Services Holdings Corp. provides diagnostic medical imaging services through a network of fixed-site centers and mobile facilities. Its services-including magnetic resonance imaging, positron emission tomography and computed tomography, traditional computed tomography, mammography, bone densitometry, ultrasound and x-ray-are noninvasive procedures that generate representations of internal anatomy on film or digital media, which are used by physicians for the diagnosis and assessment of diseases and other medical conditions. The Company operates in more than 30 states and target specific regional markets. Insight Health Services Holdings Corp. and its affiliate, InSight Health Services Corp., sought Chapter 11 protection (Bankr. D. Del. Case Nos. 07-10700 and 07-10701) on May 29, 2007, with a prepackaged bankruptcy plan that was confirmed on July 10, 2007, and declared effective on August 1, 2007. InSight Health Services Holdings Corp. made a second trip to the bankruptcy court (Bankr. S.D.N.Y. Lead Case No. 10-16564) on Dec. 10, 2010, with another prepackaged Chapter 11 plan of reorganization Sixteen affiliates also filed for Chapter 11 protection. InSight is represented by Edward O. Sassower, Esq., James H.M. Sprayregan, Esq., and Ryan Blaine Bennett, Esq., at Kirkland & Ellis LLP. Zolfo Cooper is the Debtors' financial advisor, and BMC Group Inc. is the claims and noticing agent. Chris L. Dickerson, Esq. -- chris.dickerson@skadden.com -- and Matthew M. Murphy, Esq. -- matthew.murphy@skadden.com -- at Skadden, Arps, Slate, Meagher & Flom LLP in Chicago, Ill., represent an ad hoc group of Noteholders in the Debtors' cases. The Debtors' prepetition secured lenders are represented by C. Edward Dobbs, Esq. -- edobbs@phrd.com -- at Parker, Hudson, Rainer & Dobbs LLP in Atlanta, Ga. JEFFERSON WINDOMERE: Case Summary & 5 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Jefferson Windomere, LLC dba Zangwood Villas Zangwood Villa Apartments 509 N. Winnetka Avenue, Suite 201 Dallas, TX 75208 Tel: (214) 941-5600 Bankruptcy Case No.: 11-30507 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Stephen Warner Tiemann, Esq. STEPHEN W. TIEMANN, ATTORNEY AT LAW 2000 E. Lamar Boulevard, Suite 600 Arlington, TX 76006 Tel: (817) 275-7245 Fax: (817) 275-1056 E-mail: steve@swtlaw.net Scheduled Assets: $725,689 Scheduled Debts: $1,138,918 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/txnb11-30507.pdf The petition was signed by Anil Malhotra, director and member. LANDAMERICA FIN'L: Class Suit Goes Back to C.D. Calif. Ct. ---------------------------------------------------------- Bankruptcy Judge Kevin R. Huennekens granted the plaintiffs' request to abstain from hearing the suit, Robert Hagan, Lori Northcutt and John Ray, v. Lawyers Title Insurance Corporation, Commonwealth Land Title Company, Chicago Title Insurance Company, Fidelity National Financial, Inc., and Fidelity National Title Insurance Company, Adv. Pro. No. 10-03168 (Bankr. E.D. Va.), and transfer venue back to the United States Bankruptcy Court for the Central District of California pursuant to 28 U.S.C. Sec. 1412 and Federal Rule of Bankruptcy Procedure 7087. The Plaintiffs filed the original complaint before the Superior Court of the State of California, County of Orange, on April 2, 2010. The Original Complaint, styled as a class action, asserts four causes of action against the Defendants seeking severance benefits on behalf of individuals who were or are employed in California by Lawyers Title or Commonwealth Title. On May 26, 2010, the Defendants removed the Original Complaint to the California Bankruptcy Court. On September 29, 2010, the California Bankruptcy Court granted the Defendants' Amended Motion to Transfer Venue and transferred the removed action to the Chapter 11 case of LandAmerica Financial Group, Inc. Judge Huennekens held that the Virginia Bankruptcy Court has subject matter jurisdiction over the lawsuit and that mandatory abstention under 28 U.S.C. Sec. 1334(c)(2) is improper. Nevertheless, the Court has carefully chosen to exercise its discretion under 28 U.S.C. Sec. 1334(c)(1) to abstain from hearing the removed action. Judge Huennekens said the adversary proceeding will have only a minimal effect upon the administration of the LandAmerica Bankruptcy Case. A copy of Judge Judge Huennekens' January 21, 2011 Memorandum Opinion is available at http://is.gd/pahbZvfrom Leagle.com. About LandAmerica Financial LandAmerica Financial Group, Inc., provided real estate transaction services with offices nationwide and a vast network of active agents. LandAmerica Financial Group and its affiliate LandAmerica 1031 Exchange Services, Inc. filed for Chapter 11 protection Nov. 26, 2008 (Bankr. E.D. Va. Lead Case No. 08-35994). Attorneys at Willkie Farr & Gallagher LLP and McGuireWoods LLP served as co-counsel. Zolfo Cooper served as the restructuring advisor. Epiq Bankruptcy Solutions served as claims and notice agent. Attorneys at Akin Gump Strauss Hauer & Feld LLP and Tavenner & Beran, PLC, served as counsel to the Creditors Committee of 1031 Exchange. Bingham McCutchen LLP and LeClair Ryan served as counsel to the Creditors Committee of LFG. In its bankruptcy petition, LFG reported total assets of $3,325,100,000, and total debts of $2,839,800,000 as of Sept. 30, 2008. On March 6, 2009, affiliate LandAmerica Assessment Corporation, aka National Assessment Corporation, filed its own Chapter 11 petition. Affiliate LandAmerica Title Company filed for for Chapter 11 relief on March 27, 2009. LandAmerica Credit Services, Inc., filed for Chapter 11 in July 2009. LandAmerica filed a Joint Plan of Liquidation on Sept. 9, 2009. The Bankruptcy Court confirmed that plan on Nov. 23, 2009, and the plan took effect on Dec. 7, 2009. LEHMAN BROTHERS: CalPERS Recoups Losses From LBHI Collapse ---------------------------------------------------------- The California Public Employees' Retirement System is now worth just as much as when Lehman Brothers Holdings Inc. went bankrupt in 2008 and wiped out $6.8 trillion in U.S. stock-market value in six months, according to a January 19, 2011 report by Bloomberg News. Even with the gain, the largest U.S. public pension today has only about 70% of the money it needs to cover benefits promised to government workers. CalPERS, which lost almost a third of its value in the crash, has had to demand more from taxpayers to cover those costs. Calpers had assets of about $225 billion when Lehman filed for bankruptcy. That fell to $164.7 billion by January 31, 2009, and reached $227 billion as of January 13 this year. Its all-time high was about $260 billion in October 2007 when the global recession began, according to the report. David Crane, former chief adviser of Governor Arnold Schwarzenegger on jobs and the economy, said the fund is still on the hook to pay for benefit increases. "It's debt as real as any other debt and it's taking an enormous amount of money away from other programs," Bloomberg News quoted Mr. Crane as saying. "What matters is disclosure. When the state in 1999 retroactively granted pension increases for state workers, that's the same thing as issuing debt," Mr. Crane told Bloomberg. In 1999, flush with profits from the dot-com boom, CalPERS won passage of legislation that retroactively boosted retirement benefits at the same time it lowered contributions from the state and local governments. Proponents of the increase at the time said investment gains that would push the Dow Jones Industrial Average to more than 20,000 points by 2010 would cover the cost. Then the financial crisis hit in 2008, which resulted in CalPERS losing a decade's worth of value, Bloomberg reported. 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 disclosed 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: E&Y Seeks Transfer of Lawsuit to Federal Court --------------------------------------------------------------- Ernst & Young LLP has asked for the transfer of a lawsuit by New York's former attorney general over its audits of Lehman Brothers Holdings Inc. to federal court from state court, according to a January 19, 2011 report by Reuters. The firm said the litigation over whether it complied with federal auditing standards must be heard in federal court, citing U.S. securities law and the Sarbanes-Oxley corporate governance act. It wants the case assigned to U.S. District Judge Lewis Kaplan who is handling similar legal issues in another Lehman case, Reuters reported. Andrew Cuomo, former New York state attorney general, filed the lawsuit against Ernst & Young for allegedly approving the so- called repo transaction, an artificial sale and buy-back deal that enabled Lehman to hide billions of debts from regulators and allowed the company to look healthier when it reported quarterly financial data. Mr. Cuomo accused the firm of giving clean opinions on Lehman's financial statements although they concealed massive repo transactions instead of exposing the accounting fraud. The New York state aims to recover over $150 million Ernst & Young charged Lehman from 2001 to 2008. A spokesman for current New York Attorney General Eric Schneiderman did not issue an immediate comment, Reuters noted. 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 disclosed 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: LBI Trustee Opposes Newport Plea for Affidavit --------------------------------------------------------------- James W. Giddens, as trustee for the liquidation of the business of Lehman Brothers Inc. pursuant to the Securities Investor Protection Act of 1970, asks the Court to deny in all respects Newport Global Opportunities Fund L.P.'s request to compel him to sign an affidavit that Newport's 3,663,125 shares of Amtrol Holdings Inc. common stock previously held by LBI in segregated, safekeeping, at the request of Newport, are lost. David W. Wiltenburg, Esq., at Hughes Hubbard & Reed LLP, in New York, tells the Court that Newport is one of approximately 300 hedge funds and similar clients of the worldwide Lehman enterprise, who maintained securities in margin accounts at Lehman Brothers International (Europe) rather than LBI; and yet Newport asserts to be a "customer" of LBI under SIPA, asserting that its maintenance of accounts with LBIE rather than LBI is of no consequence under SIPA, a legal argument that may come before the Court in due course. Evidence suggests that Newport and its management are aware that the Amtrol Shares are not lost and are also aware that their characterizations of their dealings with LBI as set forth in the request and supporting declaration are not accurate, Mr. Wiltenburg asserts. In another filing, Mr. Giddens sought and obtained the Court's authority to file the unredacted exhibits to his objection under seal. He asserted that the exhibits contain highly sensitive confidential and commercial information relating to Newport's assets, its purported claims in the LBI proceeding and his resolution of claims related to those assets. 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 disclosed 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Ruld, Ex-Execs. Seek Dismissal of Retirees Suit ---------------------------------------------------------------- Richard Fuld and other former directors of Lehman Brothers Holdings Inc. have sought for the dismissal of a lawsuit that seeks to hold them liable for investing workers' retirement savings in the investment bank's stock, according to a January 21, 2011 report by The Wall Street Journal. In court papers, the directors said the board's appointment of a committee to oversee the employee-retirement programs does not make them responsible for the committee's choices or require them to share insider knowledge of the company's finances. They argued that they "had no legal duty to disclose non-public business information to the benefit committee," the Journal reported. The directors also said the employees failed to cite any facts showing that the independent directors were aware of Repo 105's use, according to the report. An attorney for the Lehman employees, Mark Rifkin, Esq., at Wolf Haldenstein Adler Freeman & Herz LLP, in New York, said they disagree that the directors had no duty to inform Lehman's senior executives on the benefits committee, the Journal reported. "That argument is merely an attempt by the director-defendants to shift responsibility to others for the huge losses suffered by plan participants," Mr. Rifkin said. The former Lehman employees filed the lawsuit alleging that the directors invested their retirement savings in stock at the same time the company was using the repo transactions to cover up its financial condition. They claimed that the senior Lehman officials knew about the repo transactions and should have made the retirement-plan fiduciaries aware of the risk created by those deals. The employees said those responsible for the retirement plan should have known the transactions rendered Lehman's financial statements "materially inaccurate" and should have advised the plan of the risk. 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 disclosed 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. 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) MAJESTIC STAR: Plan Confirmation Hearing Set for March 3 -------------------------------------------------------- As reported in the Troubled Company Reporter on January 18, 2011, Majestic Star Casino LLC received approval of the disclosure statement explaining its proposed Chapter 11 plan. The voting deadline will be on March 3, 2011, at 4:00 p.m. The Debtors may extend the voting deadline in their sole discretion without further of the Court. The confirmation hearing is scheduled for March 10, 2011, at 2:30 p.m. Objections to confirmation of the Plan must be filed with the Court no later than 4:00 p.m. on March 1, 2011. The Chapter 11 Plan As reported in the Jan. 18, 2011 edition of the Troubled Company Reporter, according to Bill Rochelle, the bankruptcy columnist for Bloomberg News, the Plan, revised again on Jan. 6, offers senior secured credit facility lenders, owed $65.3 million, full payment by receiving some cash and rolling over remaining debt. If new financing is available, the existing facility will be paid in cash. Holders of $348.4 million in senior secured notes are in line for a 52% recovery from 58% of the new equity and $100.6 million in cash. If new financing isn't available, noteholders will receive new debt instead of cash. Holders of the senior notes are to be given 42% of the new equity for their approximately $233 million in debt, resulting in a 25% recovery. General unsecured creditors are being offered 25% in cash or a share in $1 million, whichever is less. Holders of $72.6 million in discount notes are to receive nothing. According to the Disclosure Statement, under the Plan, the Debtors will retain and reorganize around their casino gaming properties in Gary, Indiana, Tunica County, Mississippi, and Black Hawk, Colorado, subject, in the case of the Black Hawk, Colorado gaming property, to obtaining all governmental licenses, suitability determinations, and other approvals required for such property on or prior to 240 days following the Confirmation Date. About Majestic Star The Majestic Star Casino, LLC -- aka Majestic Star Casino, aka Majestic Star -- is based in Las Vegas, Nev., and is a wholly owned subsidiary of Majestic Holdco, LLC, which is a wholly owned subsidiary of Barden Development, Inc. The Company was formed on December 8, 1993, as an Indiana limited liability company to provide gaming and related entertainment to the public. The Company commenced gaming operations in the City of Gary at Buffington Harbor, located in Lake County, Inc., on June 7, 1996. The Company is a multi-jurisdictional gaming company with operations in three states -- Indiana, Mississippi and Colorado. The Company sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 09-14136) on November 23, 2009. The Company's affiliates -- The Majestic Star Casino II, Inc., The Majestic Star Casino Capital Corp., Majestic Star Casino Capital Corp. II, Barden Mississippi Gaming, LLC, Barden Colorado Gaming, LLC, Majestic Holdco, LLC, and Majestic Star Holdco, Inc. -- filed separate Chapter 11 petitions. The Majestic Star Casino's balance sheet at June 30, 2009, showed total assets of $406.42 million and total liabilities of $749.55 million. Kirkland & Ellis LLP is the Debtors' bankruptcy counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, are the Debtors' Delaware counsel. Xroads Solutions Group, LLC, is the Debtors' financial advisor, while EPIQ Bankruptcy Solutions LLC serves as the Debtors' claims and notice agent. MAXUM PETROLEUM: S&P Puts 'B-' Rating on Proposed $250MM Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' issue-level rating to Maxum Petroleum Operating Co.'s proposed $250 million senior unsecured notes due 2019, based on preliminary terms and conditions. The recovery rating on this debt is '5', indicating S&P's expectation of modest (10% to 30%) recovery in the event of a payment default. S&P expects the Company to use proceeds to repay outstanding debt, including about $150 million outstanding under it credit facility, and for general purposes, including potential acquisitions. The rating on Maxum Petroleum Operating Co. (B/Stable/--) reflects the Company's thin margins, highly fragmented market, improving economic activity levels, and significant working capital needs. The rating on Maxum also reflects the Company's leading market position, low maintenance-capital expenditure needs, and adequate liquidity. Ratings List Maxum Petroleum Operating Co. Corporate credit rating B/Stable/-- New Ratings $250 million senior unsecured notes due 2019 B- Recovery rating 5 METROPOLIS SHEETMETAL: Case Summary & Creditors List ---------------------------------------------------- Debtor: Metropolis Sheetmetal Contractors, Inc. 56 Eads Street West Babylon, NY 11704 Bankruptcy Case No.: 11-70252 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court Eastern District of New York (Central Islip) Judge: Robert E. Grossman Debtor's Counsel: Salvatore LaMonica, Esq. LAMONICA HERBST AND MANISCALCO 3305 Jerusalem Avenue Wantagh, NY 11793 Tel: (516) 826-6500 Fax: (516) 826-0222 E-mail: sl@lhmlawfirm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 17 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nyeb11-70252.pdf The petition was signed by Michael Luca, president. MGM RESORTS: CityCenter Issues $1.5-Bil. of Sr. Secured Notes ------------------------------------------------------------- CityCenter Holdings, LLC, announced that it has issued $900 million aggregate principal amount of its 7.625% senior secured first lien notes due 2016 and $600 million aggregate principal amount of its 10.75% senior secured second lien PIK toggle notes due 2017. The interest rate on the senior secured second lien notes increases by 0.75% if CityCenter elects to pay interest in the form of additional debt. The Company also received approximately $77 million in aggregate equity contributions from its owners, MGM Resorts International and Infinity World Development Corp. The net proceeds from the offering and the contributed equity were used to reduce the outstanding principal balance of the Company's senior secured credit facilities from approximately $1.85 billion to $500 million, to establish an interest escrow for the Company's first lien notes and remaining senior credit facilities balance for approximately 18 months, and to pay fees and expenses associated with the transactions. Concurrently with the consummation of the offering, the Company's senior secured credit facilities were amended and restated, and the remaining $500 million balance was extended to January 21, 2015. MGM Resorts International Chairman and Chief Executive Officer James J. Murren, who also serves as the Chairman of the Company's Board of Directors, said: "The success of this financing puts CityCenter on solid long term financial footing, and allows CityCenter the opportunity to continue to grow its brand awareness, market share, and cash flows." William Grounds, President and Chief Operating Officer of Infinity World Development Corp said: "We are very pleased with the strong support shown by the investment community for this financing. It is particularly gratifying that CityCenter was able to upsize the first lien notes from $500 million to $900 million, which affirms Infinity World's belief in the strong long-term potential of CityCenter." CityCenter's President and Chief Executive Officer, Bobby Baldwin, said: "The ARIA Hotel and Casino, along with the other components of CityCenter, continue to build momentum and are benefitting from the completion of construction in their vicinity." About CityCenter CityCenter is an urban mixed-use development on the Las Vegas Strip that includes ARIA Resort & Casino, a 4,004-room casino resort; Mandarin Oriental Las Vegas, a 392-room non-gaming boutique hotel with 225 luxury condominium residences; Crystals, a retail dining and entertainment district; Vdara Hotel and Spa, a 1,495-room luxury hotel-condominium; and the Veer Towers, which contain 669 luxury condominium residences. CityCenter opened in December 2009. CityCenter Holdings, LLC is a 50/50 joint venture of MGM Resorts International and Infinity World Development Corp (a wholly owned subsidiary of Dubai World). About MGM Resorts MGM Resorts International (NYSE: MGM) -- http://www.mgmresorts.com/-- has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, Illinois and Macau. * * * As reported by the Troubled Company Reporter on October 18, 2010, Standard & Poor's Ratings Services revised its rating outlook on MGM Resorts to stable from developing. At the same time, S&P affirmed all of its existing ratings on MGM, including the 'CCC+' corporate credit rating. The 'CCC+' corporate credit rating reflects MGM's significant debt burden, S&P's expectation for meaningful declines in cash flow generation in 2010, and the company's weak liquidity position. While MGM maintains a leading presence on the Las Vegas Strip, 2010 will be another challenging year for the Strip, and prospects for a meaningful rebound in 2011 are uncertain. The recent pricing of the primary offering of common stock has bolstered liquidity; however, the company's ability to weather the current downturn and continue to service its debt obligations over the longer term relies on continued progress toward addressing its challenging debt maturity schedule, as well as a substantial rebound in cash flow generation. The TCR also reported that Fitch Ratings revised the Rating Outlook for MGM Resorts to Positive following the company's equity issuance. In addition, Fitch affirmed the Issuer Default Rating at 'CCC'. MGM's 'CCC' IDR continues to reflect a credit profile with substantial credit risk. MGM's probability of default still displays a high sensitivity to an uninterrupted recovery in the Las Vegas market, significant reliance on a favorable refinancing and capital markets environment due to its heavy debt maturity schedule, a highly leveraged balance sheet despite potential debt reduction from the equity issuance, and a weak near-term free cash profile. In addition, MGM's obligation under the CityCenter completion guarantee continues to escalate, and Fitch believes the company is currently under-investing in its properties, which will likely impact asset quality. MILLENNIUM MULTIPLE: Court Extends Claims Bar Date to February 14 ----------------------------------------------------------------- Upon the motion of the Official Committee of Unsecured Creditors of Millennium Multiple Employer Welfare Benefit Plan, the U.S. Bankruptcy Court for the Western District of Oklahoma extended the deadline for the filing of proofs of claim and interest in the Debtor's Chapter 11 case to 4:30 p.m. on February 14, 2011. Proofs of claim and interest must be filed before the bar date with the Clerk of the United States Bankruptcy Court for the Western District of Oklahoma, 215 Dean A. McGee Avenue, Oklahoma City, Oklahoma 73102. About Millennium Multiple Richardson, Texas-based Millennium Multiple Employer Welfare Benefit Plan filed for Chapter 11 bankruptcy protection on June 9, 2010 (Bankr. W.D. Okla. Case No. 10-13528). G. Blaine Schwabe, III, Esq., at Mock Schwabe Waldo Elder Reeves & Bryant, assists the Company in its restructuring effort. Eric D. Madden, Esq., and Brandon V. Lewis, Esq., at Diamond McCarthy LLP, in Dallas; and Kyung S. Lee, Esq., at Diamond McCarthy LLP, in Houston, serve as counsel to the Official Committee of Unsecured Creditors. The Company estimated its assets and debts at $50,000,001 to $100,000,000 as of the petition date. MILLENNIUM TRANSIT: Plan Outline OK'd; Feb. 4 Confirm. Hearing Set ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Mexico has approved the disclosure statement explaining Millennium Transit Services, LLC's proposed Chapter 11 Plan of Reorganization. Ballots are due on February 4, 2011. The Court set a confirmation hearing for February 4, 2011, at 1:30 p.m. Objections to confirmation must be filed no later than February 4, 2011. The Debtor believes the Plan is feasible because all unsecured creditors will be paid on the Initial Distribution Date from new funds to be loaned to the Debtor from James Ludvik. Although the Debtor hopes that emerging from bankruptcy will allow the Debtor to sell new buses, there is currently no plan to immediately restart the manufacturing plant. The Chapter 11 Plan The Debtor estimates secured claims (including the unsecured portion of undersecured claims) of $41,000,000, priority tax claims of $0, and general unsecured claims of $6,218,157. All classes are Impaired Under the Plan. The Plan proposes the following treatment for the various claims and interests in the Debtor: Class 1. Secured Claim of Pioneer Bank. The Class 1 Claim will be paid in accordance with the pre-petition loan documents, without modification. The first payment will be made on the Initial Payment Date, and subsequent payments will be made monthly. Class 2. Pre-Petition Secured Claim of James A. Ludvik. The Class 2 Claim will be paid as funds permit after payment of other creditor claims. Class 3. Other Secured Claims. Allowed Class 3 Claims will be paid in the full amount of the Allowed Secured Claim in equal payments of principal and interest made over 5 years from the Effective Date of the Plan, with interest. The first payment will be made on the Initial Payment Date, and subsequent payments will be made monthly. There are no known creditors in this class. Class 4. Post-Petition Secured Claim of James A. Ludvik. The Class 4 Claim will be paid as funds permit after payment of other creditor claims. Class 5. Priority Claims. There are no known creditors in this class. The Debtor will make equal installments of principal and interest, to the Holders of all Allowed Class 5 Claims so that Class 5 Claims are paid in full within five years after the Effective Date of the Plan, with Interest. Class 6. General Unsecured Non-Priority Claims. Class 6 consists of all allowed Unsecured Non-Priority Claims, other than Class 7 and Class 8 claims, including but not limited to claims arising from rejection of executory contracts and unexpired leases and unsecured deficiency claims. The Allowed Class 6 claimants will be paid by Debtor from an unsecured creditors' fund in the amount of $150,000 which will be set up by Debtor at confirmation of the plan. The Debtor will disburse the funds in the account within 10 days after all unsecured claims have been finally allowed or disallowed. The Allowed Class 6 claims will be paid on a pro-rata basis. Class 7. Post-Petition Liabilities. The Class 7 claims, including any administrative claims not approved by the Court, will not be paid under the Plan. Class 8. Equity. The equity owners will retain ownership of their stock in the Debtor. A copy of the disclosure statement describing the Debtor's Chapter 11 Plan is available at: http://bankrupt.com/misc/MillenniumTransit.DS.pdf About Millennium Transit Roswel, New Mexico-based Millennium Transit Services LLC is a New Mexico limited liability company organized for the purpose of operating a bus manufacturing facility in Roswell, New Mexico. The Company filed for Chapter 11 relief on August 29, 2008 (Bankr. D. N.M. Case No. 08-12848). Currently, MTS is managed by Millennium Transit LLC, which is owned by James Ludvik. David T. Thuma, Esq., at Jacobvitz, Thuma & Walker, represents the Debtor as counsel. George M. Moore, Esq., at Moore, Berkson & Gandarilla, P.C., represents the official committee of unsecured creditors. The Debtor estimated $10 million to $50 million in assets and debts in its Chapter 11 petition. MTS is not currently building buses due to a lack of demand for its products and issues with obtaining working capital or investment capital to fund a re-start of the manufacturing process. MILLENNIUM MULTIPLE: U.S. Trustee Names 3 Add'l Committee Members ----------------------------------------------------------------- On January 2011, Richard A. Wieland, the U.S. Trustee for Region 20, appointed three additional unsecured creditors to the Official Unsecured Creditors' Committee in Millennium Multiple Employer Welfare Benefit Plan's Chapter 11 case now pending in the U.S. Bankruptcy Court for the Western District of Oklahoma. The three additional Committee members are Legal Reprographics, Inc., T. Matera & Associates, Inc., and Hugh M. Cunningham, Inc. The Creditors Committee is now composed of: 1. Various Participants Representative: John Malesovas 816 Congress Avenue, Suite 1265 Austin, TX 78701 Tel: (512) 708-1777 2. Various Participants Representative: Kathryn E. Barnett 1650 One Nashville Place 150 Fourth Avenue North Nashville, TN 37219 Tel: (615) 313-9000 3. Vivek Khetpal Representative: Vivek Khetpal 1275 Mockingbird Lane Durant, OK 74701 Tel: (580) 931-0500 4. Juli Jessen Representative: Christina Economou 370 South Main Street Yuma, AZ 85364 Tel: (928) 819-1576 5. Jeffrey Epstein Representative: Jeffrey Epstein 1015 Redcedar Lane Houston, TX 77094 Tel: (281) 556-8495 6. Shahe E. Vartivarian Representative: Salpi Vartivarian 7777 Southwest Freeway, Suite 610 Houston, TX 77074 Tel: (713) 339-9949 7. Lester Lewis Representative: Lester Lewis 9821 Spring Hill Drive Anchorage, AK 99507 Tel: 907-346-3869 8. Legal Reprographics, Inc. Representative: Steven Beaver 13151 Stone Canyon Road Poway, CA 92064-2175 9. T. Matera & Associates, Inc. Representative: Tom Matera 1518 Herbert Street Downers Grove, IL 60515 10. Hugh M. Cunningham, Inc. Representative: Dan Townsend 13755 Benchmark Drive Dallas, TX 75234 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Millennium Multiple Richardson, Texas-based Millennium Multiple Employer Welfare Benefit Plan filed for Chapter 11 bankruptcy protection on June 9, 2010 (Bankr. W.D. Okla. Case No. 10-13528). G. Blaine Schwabe, III, Esq., at Mock Schwabe Waldo Elder Reeves & Bryant, assists the Company in its restructuring effort. Eric D. Madden, Esq., and Brandon V. Lewis, Esq., at Diamond McCarthy LLP, in Dallas; and Kyung S. Lee, Esq., at Diamond McCarthy LLP, in Houston, serve as counsel to the Official Committee of Unsecured Creditors. The Company estimated its assets and debts at $50,000,001 to $100,000,000 as of the petition date. MOONLIGHT BASIN: Hearing on Office Building Sale Moved to Feb. 14 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Montana has continued to Monday, February 14, 2011, at 9:00 a.m., the hearing on Moonlight Basin Ranch LP's motion to sell designated property outside the ordinary course of business and to use the cash collateral resulting from the sale. The motion, which was filed November 17, seeks the sale of the Debtor's office building (Lots 6 and 7 of the Ennis Hot Springs Subdivision in Madison County, Montana), to Highway 287 Office LLC for $244,000 in cash. The Debtor will retain an option to repurchase the property for a cash price of $264,252 exercisable on or before October 1, 2011. The Debtor will retain possession, without payment of rent, during the repurchase period. The amount of the cash proceeds, combined with the proceeds of sale of other Designated Properties will not exceed $1,127,500. Lehman Commercial Paper, Inc., who holds a security interest and mortgage interest in, and lien on, all or substantially all of the Debtor's assets including the Office Building Property subject of this motion, has agreed to release the sale proceeds of the Designated Properties for specified purposes described in the debtor in possession financing Final Order. This sale is proposed in accordance with the "Designated Properties" provisions of the Final Order and the Senior Secured Super-Priority Debtor-in-Possession Credit Agreement. About Moonlight Basin Ennis, Montana-based Moonlight Basin Ranch LP is a golf and ski resort in Montana. The Company filed for Chapter 11 bankruptcy protection on November 18, 2009 (Bankr. D. Mont. Case No. 09-62327). Craig D. Martinson, Esq., and James A. Patten, Esq., who have offices in Billings, Montana, assist the Debtor in its restructuring effort. In its amended schedules, the Debtor disclosed $45,519,089 in assets and $97,407,467 in liabilities as of the petition date. Debtor-affiliate Moonlight Lodge, LLC, also filed a separate Chapter 11 petition (Bankr. D. Mont. Case No. 09-62329) on November 18, 2009. The Company estimated $10 million to $50 million in assets and $50 million to $100 million in debts in its Chapter 11 petition. MORTGAGE LENDERS: Liquidating Trustee Wants Loan Docs. Destroyed ---------------------------------------------------------------- Reuters and Bloomberg News report that federal bankruptcy judges in Delaware were due to hold separate hearings Monday on requests by trustees liquidating Mortgage Lenders Network USA and American Home Mortgage to destroy thousands of boxes or original loan documents. Scot J. Paltrow, writing for Reuters, reports that: -- Neil Luria, the liquidating trustee for Mortgage Lenders, sought Judge Peter Walsh's permission to destroy nearly 18,000 boxes of records now warehoused by document storage company, Iron Mountain Inc. According to Reuters, Mr. Luria said destruction is necessary to eliminate $16,000 per month in storage costs as he disposes of the last assets of the bankrupt company. -- Steven Sass, the liquidating trustee for American Home Mortgage, sought Judge Christopher Sontchi's permission to approve destruction of 4,100 boxes of loan documents stored in a dank parking garage beneath the company's former headquarters in Melville, Long Island. Mr. Sass stated that the local fire marshal wants the documents removed as a fire hazard, and he said the cost of moving them would be prohibitive. In accordance with a 2009 court order, the bankrupt company earlier had destroyed the contents of thousands of other boxes after banks and other loan servicers had been given a chance to request and pick up particular files. Reuters says the requests come despite intense concerns that paperwork critical to foreclosures and securitized investments may be lost. Phil Milford and Dawn McCarty, writing for Bloomberg News, report that the U.S. government objected to Mortgage Lenders' request. According to Bloomberg, Delaware U.S. Attorney Charles M. Oberly III argues that Mortgage Lenders' plan "threatens to impair federal law enforcement efforts." Mr. Oberly III also told the judge the company's records "may be relevant to pending federal criminal investigations into mortgage fraud." Bloomberg further relates that Mr. Oberly proposed, as an alternative, to require Mr. Luria to provide government officials "with notice of the specific documents proposed to be destroyed" and "an opportunity to respond." According to Reuters, people involved with the cases said the overlapping timing of the two hearings Monday is coincidental. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- was a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for Chapter 11 protection on August 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. American Home filed a de-consolidated plan of liquidation on August 15, 2008. The former home mortgage lender's liquidating Chapter 11 plan was confirmed in February 2009. About Mortgage Lenders Middletown, Connecticut-based Mortgage Lenders Network USA Inc. -- http://www.mlnusa.com/-- was once the 15th largest mortgage lender in the United States. The Company filed for Chapter 11 protection on February 5, 2007 (Bankr. D. Del. Case No. 07-10146). Pachulski Stang Ziehl & Jones LLP represents the Debtor. Blank Rome LLP represents the Official Committee of Unsecured Creditors. In the Debtor's schedules of assets and liabilities filed with the Court, it disclosed total assets of $464,847,213 and total debts of $556,459,464. The Honorable Peter J. Walsh approved the Company's liquidating Chapter 11 plan in February 2009. A full-text copy of the Debtor's First Amended Liquidating Plan under Chapter 11 of the Bankruptcy Code, dated December 19, 2008, is available at http://is.gd/1a3YGat no charge. MOSDOS CHEFETZ: Filed for Chapter 11 to Hold Off State Suit ----------------------------------------------------------- Steve Lieberman at The Journal News reports that Mosdos Chofetz Chaim Inc., a Ramapo New York-based yeshiva that is building adult-student housing on Grandview Avenue, filed for Chapter 11 bankruptcy protection, to prevent a state judge from holding an investigatory hearing into whether the yeshiva illegally housed families in 17 apartments beyond his approval at the site just outside New Hempstead. The Journal News reports that a supreme court justice held the hearing anyway in the Rockland County Courthouse in New City and plans on hearing testimony and accepting evidence on Jan. 31, 2011. The congregation's leader, Rabbi Aryeh Zaks, was subpoenaed to testify but didn't show up at the Jan. 19 hearing. Mr. Zakz is expected at the next hearing date. Mosdos Chefetz Chaim Inc., filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 11-22062) on Jan. 18, 2011, in White Plains, New York. Arnold Mitchell Greene, Esq., at Robinson Brog Leinwand Greene Genovese & Gluck, P.C., in New York, represents the Debtor. In its schedules, the Debtor disclosed assets of $4,530,000 and debts of $16,412,113. Mr. Zaks signed the Chapter 11 petition. NAMCO CAPITAL: Chapter 11 Trustee Sues Ezri Namvar Family --------------------------------------------------------- Adam Popescu at the Beverly Hills Courier reports that Bradley D. Sharp, the chapter 11 trustee of Namco Capital Group, filed a new lawsuit against alleged ponzi-schemer Ezri Namvar's children, sisters, brothers and their wives for money that they allegedly took out of the Company and used to fund real estate development ventures, stock purchases, and a $200,000 wedding party for Ezri Namvar's brother Ramin Namvar. The report relates that According to the 40-page suit, the trustee claimed the Namvars "would pick a property and have Namco provide equity funding, without any security or any written agreement beyond a journal entry. Then they would form one or more LLCs to hold title and would distribute LLC ownership interests directly and indirectly to various combinations of Namvar family members," without the family members adding any equity to the deal. The lawsuit, according to the report, alleges that because there was no written agreement with Namco, the Namvar brothers exercised broad flexibility to manage the funds however they saw fit. Hundreds of LLCs were created in this way. Ezri Namvar, Chairman, CEO, is founder and principal shareholder of Namco Capital Group, Inc., a privately held holding company for companies engaged in real estate investments and financial services. Creditors with $7.7 million in claims filed involuntary Chapter 11 petitions on December 22, 2008, against Mr. Namvar and Namco Capital (Bankr. C.D. Calif. Case No. 08-32349, and 08- 32333). Mr. Popescu notes Mr. Namvar pleaded not guilty on Oct. 4, 2010, to charges that he was involved in a scheme to shift $23 million in client funds to pay off creditors of another bankrupt company he controlled. Mr. Namvar will face trial on May 3, 2011, at the U.S. District Court in downtown Los Angeles. NEOMEDIA TECHNOLOGIES: JMC Holds 23.63% Equity Stake ---------------------------------------------------- In an amended Schedule 13D filing with the Securities and Exchange Commission on January 21, 2011, each of JMC Holdings, L.P. and Michael J. Cline disclosed beneficial ownership of 11,032,736 shares of common stock of NeoMedia Technologies, Inc., representing 23.63% of the shares outstanding, based on 35,660,877 shares of Common Stock outstanding as of January 18, 2011. JMC and Mr. Cline own 1,446,916 shares of Common Stock and 265 shares of Series C Convertible Preferred Stock, par value $0.01 per share, which is convertible into Common Stock at the request of the holder pursuant to the Certificate of Designation of the Preferred Stock. The Certificate of Designation provides that each share of the Preferred Stock is convertible into Common Stock of the Company equal to the quotient of the liquidation amount divided by the conversion price. The liquidation amount is equal to $1,000 per share of Preferred Stock. The conversion price is equal to, at the option of the holder, the lesser of (i) $0.50 or (ii) 97% of the lowest closing bid price of the Common Stock for the 125 trading days immediately preceding the date of conversion, as quoted by Bloomberg LP. The Certificate of Designation further provides that no holder of the Preferred Stock shall be entitled to convert the Preferred Stock to the extent that such conversion would cause the aggregate number of shares of Common Stock beneficially owned by such holder to exceed 9.99% of the outstanding shares of Common Stock following such conversion. Assuming a conversion price of $0.027645, if the Preferred Stock were to be converted as of the date hereof, the Reporting Persons would own 11,032,736 shares of Common Stock in the aggregate of the Issuer which would represent approximately 23.63% of the total shares of Common Stock outstanding at such time. However, the Certificate of Designation prohibits the Reporting Persons from converting the Preferred Stock to the extent such conversion would result in the Reporting Persons beneficially owning in excess of 9.99% of the then issued and outstanding shares of Common Stock. The Preferred Stock has voting rights on an as converted basis together with the Common Stock shareholders and as otherwise provided under the laws of the State of Delaware. Mr. Cline, as the General Partner of JMC, has the sole voting and dispositive power with respect to the Preferred Stock reported pursuant to this Schedule 13D. About NeoMedia Technologies Atlanta, Ga.-based NeoMedia Technologies, Inc., provides mobile barcode scanning solutions. The Company's technology allows mobile devices with cameras to read 1D and 2D barcodes and provide "one click" access to mobile content. The Company's balance sheet at September 30, 2010, showed $9.04 million in total assets, $83.31 million in total liabilities, $8.37 million in Series C convertible preferred stock, $2.50 million in Series D convertible preferred stock, and a stockholders' deficit of $85.14 million. At September 30, 2010, the Company has an accumulated deficit of $237.99 million. The Company also has a working capital deficit of $82.05 million, of which of which $68.51 million is related to the Company's financing instruments, including $30.71 million related to the fair value of warrants and those debentures that are recorded as hybrid financial instruments, and $37.80 million related to the amortized cost carrying value of certain of the Company's debentures and the fair value of the associated derivative liabilities. As reported in the Troubled Company Reporter on April 1, 2010, Kingery & Crous, P.A., in Tampa, Fla., expressed substantial doubt about the Company's ability to continue as a going concern following the Company's 2009 results. The independent auditors noted that the Company has suffered recurring losses from operations and has ongoing requirements for additional capital investment. NEVADA STAR: Hearing on Madison Plan Outline Continued to March 2 ----------------------------------------------------------------- Judge Peter Carroll of the U.S. Bankruptcy Court for the Central District of California will convene another hearing on March 2 to consider approval of the disclosure statement for explaining the plan of liquidation for Nevada Star, LLC, and Claudia Raffone, as proposed by creditor Madison Realty Capital, L.P. Following a hearing on Dec. 15, 2010, Judge Carroll approved in part and denied in part the disclosure statement explaining the plan proposed by Madison. Madison was required to submit an amended plan and disclosure statement this month. A hearing on the amended disclosure statement was scheduled for Feb. 16. As reported in the Nov. 19, 2010 edition of the Troubled Company Reporter, Madison, holder of a first priority security interest in and lien upon the Debtor's multi-unit dwelling facility in New York, filed a plan that seeks to accomplish payments to creditors by selling Nevada Star's property and paying creditors with the proceeds of the sale. If necessary, the Plan provides for the sale of Ms. Raffone's property and paying her creditors (some of which overlap with the claims asserted against Nevada Star). Nevada Star's principal asset is a 49 unit apartment building, located at 114 West 86th Street in New York City, and all fixtures and incidental personal property that is used for the operations and maintenance of the building. Ms. Raffone's principal assets are two single family residences located in Beverly Hills, California and Florida. Under the Plan, all secured claims will be paid in full. Unsecured creditors will be paid from remaining cash after administrative claims and secured claims are paid in full. The Debtors, along with creditors Fox Rothschild LLP, Casey Ciklin Lubitz Martens & O'Connell, Henry Douglas Campbell, the IRS objected to the Disclosure Statement. Feb. 16 Hearing Moved to March 2 The Court has approved a stipulation filed by the Debtors, Madison, the Official Committee of Unsecured Creditors and Henry Douglas Campbell, in addition to other creditors holding allowed claims, seeking a continuance of the Chapter 11 status conference hearing and the hearing on the first amended disclosure statement set by the Court on February 16, 2011 to March 2, 2011, at 9:30 a.m. The stipulation provides that Madison will file the first amended disclosure statement by January 28, 2011. Madison Realty is represented by: BRYAN CAVE LLP Katherine M. Windler, Esq. 120 Broadway, Suite 300 Santa Monica, California 90401-2386 Telephone: (310) 576-2100 Facsimile: (310) 576-2200 E-mail: katherine.windler@bryancave.com About Nevada Star Beverly Hills, California-based Nevada Star, LLC, filed for Chapter 11 protection on April 26, 2010 (Bankr. C.D. Calif. Case No. 10-26188). Michael Jay Berger, Esq., who has an office in Beverly Hills, California, represents the Debtor. The Company disclosed $22,274,634 in assets and $12,191,750 in liabilities as of the Petition Date. NEW JERSEY: Christie Bankruptcy Remark Amid Bond Sale Criticized ---------------------------------------------------------------- Brendan A. McGrail at Bloomberg News reports that New Jersey Governor Chris Christie's comments that rising health-care costs might "bankrupt" the state, made the same day of a planned bond sale, drew criticism for poor timing and may have driven up borrowing costs. The Troubled Company Reporter first ran a story on the "bankruptcy" remark on January 14. About 20 minutes after Gov. Christie, 48, made the bankruptcy reference in a town-hall meeting in Paramus January 13, the New Jersey Economic Development Authority cut its tax-exempt school bond offering by almost half to $777.5 million and its taxable offering 50% to $123.2 million. "He is scaring some people when he says the state is going bankrupt," said Gary Pollack, head of bond trading at Deutsche Bank Private Wealth Management in New York. Gov. Christie, a first-term Republican, said health-care spending "will bankrupt" the state unless it requires its workers to pay more for medical coverage. New Jersey will spend $4.3 billion on employee and retiree health insurance this year, and that cost will rise 40% within four years, he said. NMH HOLDINGS: S&P Raises Corporate Rating to 'B', Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Boston, Mass.-based NMH Holdings LLC (doing business as National Mentor Holdings Inc.) to 'B' from 'B-'. The rating outlook is stable. In addition, S&P assigned National Mentor Holding Inc's proposed $75 million senior secured revolving credit facility due in 2016 and $505 million term loan due in 2017 S&P's 'B+' issue-level rating (one notch higher than the 'B' corporate credit rating on the Company). S&P also assigned this debt a recovery rating of '2', indicating S&P's expectation of substantial (70%-90%) recovery for lenders in the event of a payment default. At the same time, S&P assigned the Company's $275 million notes due 2018 a rating of 'CCC+' (two notches lower than the 'B' corporate credit rating) with a recovery rating of '6', indicating S&P's expectation of negligible (0%-10%) recovery for noteholders in the event of a payment default. The rating upgrade reflects the elimination of near-term maturity risk, including the approaching applicable high-yield discount obligation payment requirement. The 'B' rating reflects the Company's significant exposure to reimbursement risk, fairly thin operating margins, and limited ability to reduce financial leverage through debt reduction given its emphasis on acquisitions. NORTEL NETWORKS: Purchase Price to Be Set by Judge, Not Arbitrator ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that in the liquidation of Nortel Networks Inc., the bankruptcy judge, not an arbitrator, will determine a disputed price adjustment following the sale of the Internet telephony business to Genband Inc. When the bankruptcy judge in Delaware approved the sale in March 2010, Nortel advertised the price as generating $182 million after adjustments. Mr. Rochelle relates that the dispute centers on a price adjustment related to an interpretation of the phrase "services to be performed or products to be provided" after the closing date. If Genband is correct in its interpretation, the final price would be $142.9 million. If Nortel is right, it's $182 million. According to Mr. Rochelle, U.S. Bankruptcy Judge Kevin Gross wrote an opinion on Jan. 21 concluding that an arbitration provision in the purchase contract doesn't apply. He said arbitration applies only to accounting disputes. Since the dispute is only over the interpretation of the contract, Judge Gross ruled that he, not the arbitrator, must decide the final sale price. A copy of Judge Gross' January 21, 2011 Memorandum Opinion is available at http://is.gd/Y7CcFGfrom Leagle.com. About Nortel Networks Nortel Networks (OTC BB: NRTLQ) -- http://www.nortel.com/-- was once North America's largest communications equipment provider. It has sold most of the businesses while in bankruptcy. 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. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. Certain of Nortel's European subsidiaries also made consequential filings for creditor protection. On May 28, 2009, at the request of the Administrators, the Commercial Court of Versailles, France ordered the commencement of secondary proceedings in respect of Nortel Networks S.A. On June 8, 2009, Nortel Networks UK Limited filed petitions in this Court for recognition of the English Proceedings as foreign main proceedings under chapter 15 of the Bankruptcy Code. Nortel Networks divested off key assets while in Chapter 11. In March 2009, the U.S. Bankruptcy Court entered an order approving the sale of the Layer 4-7 assets to Radware Ltd. as the successful bidder at auction. In July 2009, Nortel sold its CDMA and LTE-related assets to Telefonaktiebolaget LM Ericsson (Publ). In September 2009, the Court Nortel sold its Enterprise Solutions business to Avaya Inc. In October 2009, the Court approved the sale of assets associated with Nortel's Next Generation Packet Core network components to Hitachi, Ltd. On December 2, 2009, the Court approved the sale of assets associated with Nortel's GSM/GSM-R business to Telefonaktiebolaget LM Ericsson (Publ) and Kapsch Carriercom AG. In December 2009, the Debtors sold their Metro Ethernet Networks business to Ciena Corporation. In March 2010, Nortel sold its Carrier Voice Over IP and Application Solutions business to GENBAND Inc. In September 2010, Nortel sold its Multi-Service Switch business to Ericsson. Nortel Networks has filed a proposed plan of liquidation in the U.S. Bankruptcy Court. The Plan generally provides for full payment on secured claims with other distributions going in accordance with the priorities in bankruptcy law. NYC OFF-TRACK: Chapter 9 Bankruptcy Case Dismissed -------------------------------------------------- Tiffany Kary at Bloomberg News reports that New York City Off-Track Betting Corp.'s bankruptcy case was dismissed, ending the last effort to recover funds for creditors following last year's shutdown of the operator of horse-racing wagering parlors. According to the report, U.S. Bankruptcy Judge Martin Glenn said January 25 the Chapter 9 bankruptcy failed, as there is nothing left to reorganize. He dismissed a union's request to appoint a trustee to recover funds paid out by OTB, which oversaw betting on races at New York's Aqueduct, Belmont and Saratoga tracks since 1955. "All day-to-day and wind down operations have ceased, all employees have been terminated, all cash has been disbursed with the exception of an account reserved to honor un-cashed checks and all officers have resigned," Judge Glenn wrote in his ruling. NYC OTB filed the motion asking the U.S. Bankruptcy Court to dismiss its Chapter 9 case. As reported by the Troubled Company Reporter, NYC OTB began closing down December 7, 2010, after the state Senate voted down legislation for a bailout to be effected through a Chapter 9 reorganization plan. Trustee Denied Bloomberg relates that a union representing 1,027 of about 1,200 former OTB employees sought a trustee to recover "hundreds of millions" of dollars in transfers made by the Company to the state and the New York tracks before the bankruptcy filing, arguing the money should return to the estate for distribution to all creditors. Trustees have limited power to undo transfers made in a Chapter 9 debtor's exercise of a political or governmental function, Jude Glenn said in denying the request, according to the Bloomberg report. About NYC OTB New York City Off-Track Betting Corporation is a public benefit corporation, which operates an off-track pari-mutuel betting system on thoroughbred and harness horse races held at all 11 race tracks located in New York State and certain race tracks located outside of the State. Since NYC OTB's inception in 1971, it has made payments of nearly $2 billion to the State horse racing industry, more than $1.4 billion to New York City and nearly $600 million to the State. In 2008 alone, NYC OTB made statutory contributions in an aggregate amount of $128.6 million to the State horse racing industry, the State, the City, and other local municipalities. NYC OTB's operations are regulated by the State. NYC OTB filed for bankruptcy under Chapter 9 of the Bankruptcy Code on December 3, 2009 (Bankr. S.D.N.Y. Case No. 09-17121). OTB is represented by Richard Levin, Esq., at Cravath, Swaine & Moore LLP., in New York, and Michael S. Fox, Esq., Herbert C. Ross, Esq., David Y. Wolnerman, Esq., at Olshan Grundman Frome Rosenzweig & Wolosky LLP in New York. At September 30, 2009, NYC OTB had $18,468,147 in total assets against $74,912,742 in total current liabilities, $6,982,887 in long-term liabilities, and $201,020,000 in long-term post employment benefits. ODYSSEY PROPERTIES: Golfview Cases' Dismissal Sought by BB&T ------------------------------------------------------------ Creditor Branch Banking And Trust Company asks the U.S. Bankruptcy Court for the Middle District of Florida to dismiss the Chapter 11 bankruptcy cases of Century (III) DP III, LLC, and Odyssey (III) DP III, LLC -- the Golfview Debtors -- or convert the cases to Chapter 7, due to substantial and continuing losses and diminution of the estates, and the absence of a reasonable likelihood of rehabilitation. The Golfview Debtors' Monthly Operating Reports and cash flow reports show that the Golfview Self Storage project doesn't generate sufficient income to cover its operating expenses and the significant accrued yet unpaid bankruptcy administrative expenses, let alone make debt service payments to its secured lender BB&T. At a hearing held November 1, 2010, the Court made a finding that the Golfview Debtors meet the definition of "single asset real estate". Since that time, the Golfview Debtors breached their obligations under the U.S. Bankruptcy Code and have made only one monthly interest payment. That single payment, issued on or about November 17, 2010, was returned when a check bounced due to insufficient funds, BB&T says. BB&T states that it didn't receive the replacement funds until November 30, 2010. According to BB&T, the Golfview Debtors didn't make any monthly interest payment in December 2010 and haven't made any payment for January 2011. BB&T claims that the costs of reorganization in these cases is significantly diminishing the value of the estates, and that the harm is being compounded by the fact that administrative costs being incurred by the Golfview Debtors are unusually high due to the multiple levels of administration put in place for the benefit of Odyssey Properties III, LLC, the parent company. "The storage facility is run by the onsite employees, who are paid a salary for their operation of the Project. There is also the monthly management fee paid to a management company owned and controlled by the owners of the Golfview Debtors. In addition, the Chief Restructuring Officer receives a significant fee for assisting the Jointly Administered Debtors with their bankruptcy filings and planning. Finally, in addition to U.S. Trustee fees, the attorneys for the Jointly Administered Debtors are undoubtedly incurring their own significant fees. All of these layers of administrative pockets are to somehow be filled by a Project that can't even cover its own operating expenses or real estate taxes," BB&T states. According to BB&T, the Golfview Debtors' estates are essentially being burdened with a "common enterprise tax" that isn't commensurate with the benefit -- if any -- of being associated with the other Jointly Administered Debtors. "Simply put, these cases are only benefiting the insiders and professionals," BB&T claims. BB&T says that the overall value of the Project has continued to decline in the nearly six months since the petition date. The most recent projected budget provided by the Jointly Administered Debtors' counsel for January 2011 through March 2011 shows that the Golfview Project will have a negative cash flow of more than $90,000 during the first quarter of 2011. The Golfview Debtors' cash flow report for the week ending December 26, 2010, shows that Golfview Debtors had a cumulative negative cash flow of $5,870 for the first five months of the case, even before including attorneys fees and unpaid CRO fees. "It appears that the only way the Golfview Debtors have been able to avoid showing a cumulative negative cash flow on their weekly cash collateral reports is by ceasing interest payments to BB&T, curtailing their Legal and Professional payments, and by including borrowed funds from the DIP Lender in their calculation of 'Net Cash from Operations'," BB&T states. BB&T says that the Golfview Debtors' weekly cash flow reports and the available monthly operating reports show that the income produced by the Golfview Project insufficient to cover its operating expenses. The most recent Monthly Operating Report shows that the Golfview Debtors had negative cash flow of $37,382.75 during the first four months of the case. The Court has set a preliminary hearing for February 7, 2011, at 11:00 a.m. to consider and act upon BB&T's request to have the Golfview Debtors' bankruptcy cases dismissed. BB&T is represented by David J. Lienhart, Esq. -- dlienhart@ralaw.com -- and W. Glenn Jensen, Esq. -- gjensen@ralaw.com -- at Roetzel & Andress. Odyssey Properties Lakeland, Florida-based Odyssey Properties III, LLC, is engaged in the business of developing, owning, and operating commercial properties, including anchored and unanchored retail centers, office buildings, flex and warehouse space, and self-storage centers, primarily in central Florida. Odyssey Properties and certain affiliates filed for Chapter 11 protection on August 2, 2010 (Bankr. M.D. Fla. Case No. 10-18713). Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, represents the Debtor. The Debtor estimated its assets and debts at $10 million to $50 million as of the Petition Date. ODYSSEY PROPERTIES: Gets Final Nod to Use Cash Collateral --------------------------------------------------------- Odyssey Properties III, LLC, et al., obtained final authorization from the Hon. Catherine Peek McEwen of the U.S. Bankruptcy Court for the Middle District of Florida to use cash collateral. Odyssey Properties III owe $29 million to holders of the investor notes. The Debtors also have obligations to lenders -- financing obtained from the Debtors' mortgage lenders, Wells Fargo Bank, National Association, successor by merger to Wachovia Bank, National Association, Branch Banking & Trust Company, successor in interest to Colonial Bank by asset acquisition from the Federal Deposit Insurance Corporation as Receiver for Colonial Bank (BB&T), and Flagstar Bank, FSB. The Lenders and the noteholders may assert that they have liens on the rents and leases at the projects and that they therefore have an interest in the Debtors' cash collateral. Edward J. Peterson, III, at Stichter Riedel Blain & Prosser, P.A., explained that the Debtors need access to the cash collateral to fund their Chapter 11 case, pay suppliers and other parties. The Debtors will use the collateral pursuant to a budget, a copy of which is available for free at: http://bankrupt.com/misc/Oddyssey_Properties_cashcoll_budget.pdf The Debtors will provide cash-basis profit and loss statements on a weekly basis to the counsel for each of the Lenders and the counsel to the indenture trustee for the Noteholders by 5:00 p.m. (EST) on Friday of the following week. The Lenders and Noteholders are granted as adequate protection postpetition replacement liens against the Debtors' cash collateral to the same extent, validity, and priority as existed as of the Petition Date. Use of cash collateral will be segregated on a project basis, such that cash collateral generated by a particular project will only be used for that specific project. Any cash received from a project that is not used pursuant to the terms of the Budget will remain segregated by the Debtor owning the project pending further court order. Odyssey Properties Lakeland, Florida-based Odyssey Properties III, LLC, is engaged in the business of developing, owning, and operating commercial properties, including anchored and unanchored retail centers, office buildings, flex and warehouse space, and self-storage centers, primarily in central Florida. Odyssey Properties and certain affiliates filed for Chapter 11 protection on August 2, 2010 (Bankr. M.D. Fla. Case No. 10-18713). Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, represents the Debtor. The Debtor estimated its assets and debts at $10 million to $50 million as of the Petition Date. OTC HOLDINGS: Able to Reduce Interest on Exit Loan -------------------------------------------------- Bill Rochelle, the bankruptcy columnist at Bloomberg News, reports that Oriental Trading Co. is reducing the interest rate offered for the $200 million credit needed to finance its emergence from Chapter 11 reorganization. The bankruptcy judge in New York confirmed the Chapter 11 plan on Dec. 16. According to the report, OTC is now offering 5.5 percentage points more than the London interbank borrowed rate, rather than 6.5 percentage points as before. The Libor floor is now 1.5%, rather than 1.75%. To increase the yield, the lenders now would pay 99% of par, rather than 98% of the face amount, according to a person familiar with the negotiations. About OTC Holdings Corporation Omaha, Nebraska-based OTC Holdings Corporation filed for Chapter 11 protection on August 25, 2010 (Bankr. D. Del. Case No. 10-12636). Affiliates OTC Investors Corporation (Bankr. D. Del. Case No. 10-12637), Oriental Trading Company, Inc. (Bankr. D. Del. Case No. 10-12638), Fun Express, Inc. (Bankr. D. Del. Case No. 10-12639), and Oriental Trading Marketing, Inc. (Bankr. D. Del. Case No. 10-12640), filed separate Chapter 11 petitions on August 25, 2010. The Debtors disclosed $463 million in assets and $757 million in liabilities as of the Chapter 11 filing. Richard Hahn, Esq., My Chi To, Esq., Jae-Sun Chung, Esq., Huyue Angela Zhang, Esq., and Jessica Katz, Esq., at Debevoise & Plimpton LLP, represent the Debtors. Joel A. Waite, Esq., and Kenneth J. Enos, Esq., at Young, Conaway, Stargatt & Taylor, serve as the Debtors' local counsel. Jefferies & Company, Inc., is the Debtors' financial advisor. Protiviti, Inc., is the Debtors' restructuring consultant. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The Official Committee of Unsecured Creditors' counsel is Ashby & Geddes, P.A. OVERLAND STORAGE: Christopher Gopal's Employment Terminated ----------------------------------------------------------- On January 14, 2011, the employment of Christopher Gopal, one of Overland Storage, Inc.'s named executive officers in fiscal 2010, terminated following a leave of absence which commenced in July 2010. At the time of his leave of absence, Mr. Gopal was serving as the Company's Vice President of Worldwide Operations and his responsibilities were assumed by Eric L. Kelly, the Company's President and Chief Executive Officer. About Overland Storage San Diego, Calif.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of data management and data protection solutions across the data lifecycle. By providing an integrated range of technologies and services for primary, nearline, offline, archival and cloud data storage, Overland makes it easy and cost effective to manage different tiers of information over time. The Company's balance sheet at September 30, 2010, showed $39.27 million in total assets, $41.74 million in total liabilities, and a stockholders' deficit of $2.47 million. As reported in the Troubled Company Reporter on September 28, 2010, Moss Adams LLP, in San Diego, Calif., expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's results for the fiscal year ended June 30, 2010. The independent auditors noted of the Company's recurring losses and negative operating cash flows. PARK WINE: Files for Chapter 7 Liquidation ------------------------------------------ The Orlando Sentinel reports that Orlando, Florida-based Park Wine Merchants LLC on Jan. 19 filed for liquidation under Chapter 7 of the Bankruptcy Code. The Company disclosed $154,293 in liabilities. The Company's major creditors are Republic National Distributors Company, Tampa, owed $52,278; Chase Moneyline, Louisville, Kentucky, $50,000; American Express, El Paso, Texas, $11,200. PAUL TRANSPORT: Disclosure Statement Hearing Continued to Feb. 2 ---------------------------------------------------------------- The U.S. Bankruptcy Court has continued to February 2, 2011, at 9:30 a.m. the hearing on the disclosure statement explaining Paul Transportation, Inc.'s Chapter 11 Plan of Reorganization. Under the Plan, the Reorganized Debtor will pay most Claims over time. The Plan includes alternative treatments, dependent on whether Class 22, which is the Class of Unsecured Claims of more than $10,000, accepts or rejects the Plan. Should Class 22 accept the Plan, Troy Paul will serve as President of the Reorganized Debtor and sole member of its Board of Directors. If Class 22 rejects the Plan, the Reorganized Debtor's management will be governed by its shareholders consistently with applicable law. New Paul will be managed by Troy Paul on the same terms and conditions under which he would have been employed by the Reorganized Debtor had Class 22 accepted the Plan. Under the Plan, if Class 22 accepts the Plan, the Reorganized Debtor will pay: i) in full Priority Claims and Secured Claims, with most Claims being paid over time; ii) thirty-five cents on the dollar on Unsecured Claims of $10,000 or less or Unsecured Claims reduced to $10,000, with the payment occurring on or about the Plan Effective Date; and (iii) forty cents on the dollar, without interest, on Unsecured Claims of more than $10,000, with payment occurring over time. Should Class 22 accept the Plan, the Interest Holder will retain his Pre-Petition equity security interest. Should Class 22 reject the Plan, Claimants holding Priority Claims will be paid in full, again generally over time, either by the Reorganized Debtor, which will be vested will all unencumbered assets of the Estate (which the Debtor believes has negligible if any value), or by New Paul, which will be an Oklahoma limited liability company formed and wholly-owned by Troy Paul and, generally, will be vested with all assets not vested in the Reorganized Debtor. New Paul will fully pay Secured Claims as provided in the Plan, again over time, and perform under assumed and assigned executory contracts and unexpired leases. Should Class 22 reject the Plan, Claimants holding Unsecured Claims will receive a pro-rata distribution of one hundred percent (100%) of the equity securities of the Reorganized Debtor, and the Interest Holder's Pre-Petition equity security interest will be canceled, and he will not receive or retain anything on account of his Pre- Petition equity security interest. As owners of the Reorganized Debtors, Claimants holding Unsecured Claims will effectively control the assets of the Reorganized Debtor, subject to the terms of the Plan, which requires the Reorganized Debtor to use its assets to first pay any unpaid Priority Claims, and then requires use of its remaining assets to pay Claimants holding Unsecured Claims pro-rata. The Debtor in Possession does not believe it likely that Unsecured Creditors would receive any distributions should Class 22 reject the Plan. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/PaulTransportation.DS.pdf The Debtor also filed a summary of the Plan and a limited Disclosure Statement intended specifically for Claimants holding Claims in Class 21 under the Plan, which consists of Unsecured Claims of $10,000 or less, and Unsecured Claims voluntarily reduced to $10,000. The Debtor believes that approximately 200 claimants hold Unsecured Claims of $10,000 or less, which those claims aggregating $189,898. The remaining Unsecured Claims, which the Debtor believes total $4,351,760, are held by about 40 Claimants. The Pre-Petition Claims evidenced by the Schedules and the timely- filed proofs of claim, however, show total unsecured claims of $15,591,947. A copy of the Limited Disclosure Statement for Class 21 Claimants is available for free at: http://bankrupt.com/misc/PaulT.LimitedDSforClass21.pdf About Paul Transportation Enid, Oklahoma-based Paul Transportation Inc. provides flatbed transportation services across the lower 48 states. The Debtor hauls a variety of goods, including pipe, steel, wallboard, coils, paper, lumber and other products used in the construction and oil and gas industries. The Debtor maintains service terminals in Oklahoma City, Oklahoma; Houston, Texas; and Fort Dodge,Iowa. Troy Paul is the Debtor's sole shareholder, officer and stockholder. The Debtor employs 142 people. In addition, the Debtor also contracts with approximately 67 independent owner- operator drivers. Paul Transportation filed for Chapter 11 bankruptcy protection on May 18, 2010 (Bankr. W.D. Okla. Case No. 10-13022). Matthew C. Goodin, Esq., and Stephen W. Elliott, Esq., at Kline, Kline, Elliott & Bryant, assist the Debtor in its restructuring effort. Lyle R. Nelson, Esq., L. Vance Brown, Esq., Eric Huddleston, Esq., an Karolina D. Roberts, Esq., at Elias, Books, Brown & Nelson, PC, represent the Official Committee of Unsecured Creditors. In its schedules, the Debtor reported $38,249,443 in total assets and $23,535,843 in total liabilities. PENZANCE CASCADES: Lender Battles Properties Over Cash in Ch. 11 ---------------------------------------------------------------- Bankruptcy Law360 reports that a special servicer for $107 million in debt is opposing efforts by four bankrupt commercial property entities controlled by Garrison Investment Group to tap cash on hand for operations, having accused the investor of seeking Chapter 11 in bad faith. About Penzance Cascades Penzance Cascades North LLC, along with affiliates, filed for bankruptcy protection in Manhattan (Bankr. S.D.N.Y. Lead Case No. 10-16643). The affiliates that filed are Penzance Cascades West LLC (Bankr. S.D.N.Y. Case No. 10-16644), Penzance Parkridge Two, LLC (Case No. 10-16645) and Penzance Parkridge Five, LLC (Case No. 10-16646). The Penzance entities own office buildings in Reston, Virginia. They filed Chapter 11 petitions on Dec. 15, 2010, to head off foreclosure the next day. The properties, whose ultimate owner is a fund managed by Garrison Investment Group, owe $107 million on a mortgage where $67.5 million of the debt is now held in a securitization. Penzance Cascades North, owner of a five-story building in Reston, Virginia, estimated assets of $10 million to $50 million and debt of $100 million to $500 million. Harvey A. Strickon, Esq., at Paul,Hastings, Janofsky & Walker LLP, in New York, serves as counsel to the Debtors. PHILADELPHIA RITTENHOUSE: Creditor Protests Bid to Hire Adviser --------------------------------------------------------------- Rachel Feintzeig at Dow Jones' DBR Small Cap reports that an affiliate of the secured creditor that prompted Philadelphia Rittenhouse Developer L.P. to seek bankruptcy protection is now insisting the Company has no prospects for reorganization or cash flow as it wades through its Chapter 11 case. According to the report, iStar Tara LLC, the iStar Financial Inc. affiliate that pumped $240 million into the Philadelphia Rittenhouse's downtown luxury condo project, is protesting the Company's bid to hire New World Realty Advisors LLC as its financial adviser. In papers filed with the U.S. Bankruptcy Court in Philadelphia, iStar called the proposed engagement an "unreasonable waste of time and resources" incapable of producing any benefit for the company or its creditors, the report notes. "This is a single asset real estate case where the debtor has no cash flow, no prospect for cash flow, no equity in its property and no ability to reorganize," the report quoted iStar as saying. About Philadelphia Rittenhouse Philadelphia Rittenhouse Developer, L.P. is a joint venture between ARC Properties, Inc., based in Clifton, New Jersey, and Philadelphia-based Wheeler Brothers Holdings, LLC. The company was formed to develop 10 Rittenhouse Square, a 33-story condominium building in Philadelphia. Rittenhouse Developer filed for chapter 11 bankruptcy in response to an action in Pennsylvania state court seeking to appoint a receiver for the development project, which was brought by one of the Company's lenders, iStar Tara, LLC. Philadelphia Rittenhouse filed for Chapter 11 bankruptcy protection on December 30, 2010 (Bankr. E.D. Pa. Case No. 10- 31201). Albert A. Ciardi, III, Esq., at Ciardi Ciardi & Astin, P.C., serves as the Debtor's bankruptcy counsel. The Debtor estimated its assets and debts at $100 million to $500 million. iStar Tara, LLC is represented in the chapter 11 case by the firm of Blank Rome LLP. PHOENIX FOOTWEAR: Deregisters Securities Unsold to Employees ------------------------------------------------------------ On January 21, 2011, Phoenix Footwear Group, Inc. filed Post- Effective Amendments with the Securities and Exchange Commission to Form S-8 filings to deregister securities offered to employees under the Phoenix Footwear Group, Inc. Amended and Restated 2001 Long-Term Incentive Plan that were registered and have not been sold: (a) 900,000 shares of common stock originally declared effective by the SEC on June 10, 2004; (b) 349,204 shares of common stock originally declared effective by the SEC on September 7, 2001; and (c) 1,000,000 shares of common stock originally declared effective by the SEC on January 3, 2007. About Phoenix Footwear Based in Carlsbad, California, Phoenix Footwear Group, Inc. (NYSE Amex: PXG) specializes in quality comfort women's and men's footwear with a design focus on fitting features. Phoenix Footwear designs, develops, markets and sells footwear in a wide range of sizes and widths under the brands Trotters(R), SoftWalk(R), and H.S. Trask(R). The brands are primarily sold through department stores, leading specialty and independent retail stores, mail order catalogues and internet retailers and are carried by approximately 650 customers in more than 900 retail locations throughout the U.S. Phoenix Footwear has been engaged in the manufacture or importation and sale of quality footwear since 1882. The Company's balance sheet at October 2, 2010, showed $10,837,000 in total assets, $6,760,000 in total liabilities, and $4,077,000 in stockholders' equity. As reported by the Troubled Company Reporter on November 29, 2010, the Company said in its quarterly report on Form 10-Q for the period ended October 2, 2010, that the severe global recession has been challenging during the past two years and has dramatically affected the Company's business as it is dependent on consumer demand for its products. During this time, the Company has faced significant working capital constraints as the result of the decline in sales, expenditures, and obligations associated with its restructuring and diminished borrowing capacity. These factors, together with net losses and negative cash flows during the past three fiscal years, raise substantial doubt about the Company's ability to continue as a going concern. POINT BLANK: Chapter 11 Plan Draws Objection on WaMu Ground ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that one of the grounds relied on by U.S. Bankruptcy Judge Mary F. Walrath in refusing to confirm the Washington Mutual Inc. reorganization plan is resonating in another Delaware bankruptcy. Mr. Rochelle relates that in the Chapter 11 case of Point Blank Solutions Inc., shareholder Rodney McFadden filed an objection to the disclosure statement explaining the Point Blank plan. Mr. McFadden said the plan can't be confirmed because it only allows current shareholders who are so-called accredited investors to buy stock in the rights offering that provides part of the financing for reorganized Point Blank. According to Mr. Rochelle, Mr. McFadden pointed to Judge Walrath's Jan. 7 WaMu opinion in which she said it was unfair discrimination to give new stock only to creditors holding more than $2 million in one of the creditor classes. She said discrimination wasn't justified by administrative convenience or economy resulting from having a company with few shareholders not required to report to the U.S. Securities and Exchange Commission. Mr. Rochelle notes that the Point Blank case is pending before U.S. Bankruptcy Judge Peter J. Walsh, and one bankruptcy judge is not obliged to follow the rulings of another. Until now, it had been common practice for rights offerings to be available only to accredited investors, in part so the reorganized company wouldn't be a reporting company. Point Blank Plan The U.S. Bankruptcy Court for the District of Delaware will convene a hearing on February 14, 2011, at 2:00 p.m. (prevailing Eastern time), to consider adequacy of the Disclosure Statement. Objections, if any, are due February 8, at 4:00 p.m. The Plan Proponents are the Debtors, the Official Committee of Unsecured Creditors, the Official Committee of Equity Security Interest Holders, Privet Fund Management LLC, as investment manager for Privet Opportunity Fund I, LLC and Privet Fund LP, Privet Opportunity Fund I, LLC, Prescott Group Capital Management, LLC, and Lonestar Capital Management, LLC, as investment advisor to Lonestar Partners, LP and manager of PB Funding, LLC. The Plan Proponents will begin soliciting votes on the Plan following Disclosure Statement approval. The Plan contemplates the reorganization and continuation of the Debtors' business through a restructuring of each Debtor's debt obligations and the generation of new capital through a Rights Offering of new common stock in the Reorganized Debtors, backstopped by the Backstop Parties. The Rights Offering, combined with the Debtors' available cash from operations going forward and exit financing, if necessary and available, will provide the funding necessary to consummate the Plan and pay remaining secured and unsecured creditors in accordance with the terms of the Plan. All of the prepetition equity Interests in Parent will be surrendered, and 100% of the equity securities interests in the Reorganized Parent will be acquired pursuant to the Rights Offering. Generally, the Plan is structured around three key components. a) The Rights Offering/Direct Subscription. In addition to cash on hand and an Exit Facility, if one is necessary and available, the Debtors intend to fund their reorganization effort-including the payment of all amounts due under the Plan-through the issuance and sale of shares of New Common Stock in Reorganized Parent in a minimum amount of $15,000,000 and (subject to certain consents and other conditions) up to a maximum of $25,000,000. The New Common Stock will be sold (i) through a Rights Offering to eligible holders of Allowed General Unsecured Claims and Allowed Old Equity Interests, backstopped by the Debtors' existing DIP Lenders, and (ii) through a direct subscription of shares to two of the existing DIP Lenders, Privet and Prescott. b) The Inter-Debtor Compromise. The Plan Proponents have identified several potential Claims, Causes of Action and other disputes that may exist between the several Debtors, including existing and potential disputes regarding (i) the value and disposition of Intercompany Claims, (ii) the valuation of the individual Debtor's Estates, (iii) the individual Debtor's respective ownership interest in certain potentially valuable lawsuits, (iv) the susceptibility of two or more of the Debtors' Estates to substantive consolidation and (v) the consideration, if any, that should be paid by Parent to retain its existing Interests in the Debtor Subsidiaries. c) The Recovery Trust. Under the Plan, holders of Allowed General Unsecured Claims, Allowed Subordinated Unsecured Claims, Allowed Class Action Claims and Allowed Old Equity Interests will be issued beneficial interests in a Recovery Trust established for the purpose of liquidating certain assets and distributing the proceeds thereof to the trust beneficiaries and making certain disbursements or distributions to Reorganized Parent. On the Effective Date, the Reorganized Debtors will fund a Recovery Trust with a cash payment of $3 million, an additional $1 million for expenses and rights to certain potentially valuable Causes of Action, the proceeds of which will be distributed to the beneficiaries of the Recovery Trust in accordance with the waterfall. The Debtors intend to pay in full administrative claims and secured claims. General unsecured claims will receive ratable proportion of distributions from the recovery trust, and rights to participate in the rights offering. Holders of subordinated unsecured claims will receive ratable proportion of distributions, if any, from the recovery trust after payment in full of the general unsecured claims. Holders of equity interests will receive ratable proportion of distributions from the recovery trust, pari passu, and rights to participate in the rights offering. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/POINTBLANK_DS.pdf About Point Blank Headquartered in Pompano Beach, Florida, Point Blank Solutions, Inc. -- http://www.pointblanksolutionsinc.com/-- designs and produces body armor systems for the U.S. Military, Government and law enforcement agencies, as well as select international markets. The Company maintains facilities in Pompano Beach, Florida, and Jacksboro, Tennessee. The Company's former chief executive officer and chief operating officer were convicted in September 2010 of orchestrating a $185 million fraud. Point Blank Solutions, formerly DHB Industries, filed for Chapter 11 protection on April 14, 2010 (Bankr. D. Del. Case No. 10-11255). Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as bankruptcy counsel to the Debtor. Olshan Grundman Frome Rosenweig & Wolosky LLP serves as corporate counsel. T. Scott Avila of CRG Partners Group LLC is the restructuring officer. Epiq Bankruptcy Solutions serves as claims and notice agent. The U.S. Trustee has appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Equity Security Holders in the case. The Equity Committee has tapped Morrison Cohen LLP, and The Bayard, P.A., as counsel. Robert M. Hirsh, Esq., and Heike M. Vogel, Esq., at Arent Fox LLP, serve as counsel to the Creditors Committee, and Frederick B. Rosner, Esq., and Brian L. Arban, Esq., at Messana Rosner & Stern LLP, serve as co-counsel. R & G ENTERPRISES: San Luis Tortilla in Chapter 11 -------------------------------------------------- Rick Desloge at St. Louis Business Journal reports that R & G Enterprises LLC, which is under Chapter 11 protection, operates a business locally under the name San Luis Tortilla Co. The Company makes and sells tortillas. The Company is half-owned by Barbara Abeyta and Greg Abeyta, both of Arnold, Missouri. In its schedules, the Debtor disclosed $110,286 in assets and $1,129,538 in debts. St. Louis Business Journal reports the majority of Maryland Heights, Missour-based Company's assets are $42,332 in accounts receivable and $52,400 in machinery, fixtures and equipment. The largest unsecured creditors include Minsa Corp. of Muleshoe, Texas, with a claim of $205,021 from a judgment; Corn Flour Producers LLC of Worthington, Ind., with a claim of $169,509 for materials; and Serapio's Tortilla Factory of Oklahoma City, with a claim of $158,000 for supplies. The largest secured creditor is a unit of the Internal Revenue Service, with a tax lien of $60,409. Three of the four other secured creditors are taxing authorities. St. Louis Business Journal relates that, in addition to the judgment owed to Minsa, the bankruptcy filing shows R & G was a party to five other collection actions in the last year and one landlord-tenant lawsuit; R&G faces judgments in three of those five collection matters, and the landlord action is pending in St. Louis County Circuit Court. R & G Enterprises, LLC, filed for Chapter 11 protection (Bankr. E.D. Mo. Case No. 11-40439) in St. Louis, Missouri, on Jan. 18, 2011. Edward J. Karfeld, Esq., at Karfeld Law Firm, P.C., in St. Louis, represents the Debtor in the Chapter 11 case. REALOGY CORP: S&P Rates Proposed $700MM Secured Notes at 'CC' ------------------------------------------------------------- Standard & Poor's Ratings Services assigned Realogy Corp.'s proposed $700 million senior secured notes due 2019 its preliminary issue-level rating of 'CC'. S&P also assigned this debt S&P's preliminary recovery rating of '6', indicating S&P's expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default. While the notes will be secured by the same collateral as the Company's existing first-lien credit facility, the priority of the lien on the notes will be junior to that of the first-lien facility. Proceeds from the notes will be used to prepay extended term loan balances under the first-lien credit facility. The 'CC' corporate credit rating, along with all existing issue- level ratings for Realogy, remain on CreditWatch with positive implications, where they were placed Jan. 18, 2011. The CreditWatch listing reflects S&P's expectation that Realogy's liquidity profile would be improved upon the close of the proposed transactions, which include the amendment and extension of the Company's first-lien credit facility. S&P believes these transactions would decrease the level of senior secured first-lien debt in the Company's capital structure, and would also provide the Company a sufficient cushion under its first-lien senior secured net leverage covenant (the covenant steps down to 4.75x in March 2011) over the intermediate term. Ratings List Realogy Corp. Corporate Credit Rating CC/Watch Pos/-- New Rating Realogy Corp. $700M sr secd nts due 2019 CC(prelim) Recovery Rating 6(prelim) REALOGY CORP: Moody's Assigns 'Caa1' to Proposed $700MM Sr. Notes ----------------------------------------------------------------- Moody's Investors Service assigned a Caa1 to Realogy Corporation's proposed $700 million of senior secured notes and affirmed all other ratings including the Caa2 Corporate Family Rating. The rating outlook remains positive. On January 18, 2011, Realogy commenced a solicitation among its lenders seeking amendments to the first lien secured credit facility to, among other things, extend the maturity of a portion of such facility from 2013 to 2016. The proposed amendment and extension of Realogy's first lien credit facility is contingent upon approval by a majority of credit facility lenders and the issuance of $700 million of the proposed secured notes. The proceeds from the secured note offering will be used to repay extended term debt. The credit facility is also expected to be amended to carve out the proposed secured notes from the senior secured leverage ratio. The proposed secured notes are expected to provide for liens on substantially all of the company's domestic assets and 65% of the stock of foreign subsidiaries. The liens will be junior to the liens securing the first lien credit facility but senior to the liens securing the second lien term loans. Realogy's SGL-3 speculative grade liquidity rating and the positive rating outlook are contingent upon the completion of the proposed refinancing. Moody's assigned the following rating (LGD assessments): -- $700 million senior secured notes due 2019, Caa1 (LGD 2, 24%) -- All other ratings were affirmed. The Caa2 Corporate Family Rating and Caa3 Probability of Default Rating reflects very high leverage, negative free cash flow and uncertainty regarding the timing and strength of a recovery of the residential housing market in the US. Moody's expects Debt to EBITDA of about 14 times for the 2010 calendar year. Despite the recently completed and proposed improvements to the debt maturity profile, the Caa2 CFR continues to reflect Moody's view that current debt levels are unsustainable and that a substantial reduction in debt levels will be required to stabilize the capital structure. Assuming a recovery in the housing market over the next two years, the balance sheet could be restructured through a conversion of the $2.1 billion of subordinated debt into equity in conjunction with an equity offering. The ratings are supported by the company's leading market positions, strong brands, solid EBITDA margins and the potential for EBITDA growth upon a recovery in the housing market. The positive outlook reflects the improved debt maturity profile pro forma for the refinancing and anticipates moderate Adjusted EBITDA growth in 2011. Profitability growth will be driven by modest improvement in the top line and the realization of cost reductions initiated in 2010. The ratings could be upgraded if home sale volume or pricing rebounds solidly in 2011 or 2012 leading to strong growth in Adjusted EBITDA, improved credit metrics and liquidity. A balance sheet restructuring that meaningfully reduces leverage could also lead to an upgrade. The ratings or outlook could be pressured if the housing market downturn continues into 2011 leading to a material decline in Realogy's profitability and liquidity. The principal methodologies used in this rating were Global Business & Consumer Service Industry published in October 2010, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Realogy Corporation is a leading global provider of real estate and relocation services. Realogy is substantially owned and controlled by an affiliate of Apollo Management, L.P. (Apollo), and reported revenues of about $4.2 billion in the twelve months ended September 30, 2010. R.H. HOOVER: Case Summary & 18 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: R.H. Hoover, Inc. dba Hoover Premier Homes 9209 East Mission Avenue, Suite F Spokane, WA 99206-4096 Bankruptcy Case No.: 11-00295 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court Eastern District of Washington (Spokane/Yakima) Debtor's Counsel: Brett T. Sullivan, Esq. SULLIVAN STROMBERG, PLLC 827 W. 1st Avenue, Suite 425 Spokane, WA 99201-3914 Tel: (509) 413-1004 Fax: (509) 413-1078 E-mail: bretts@sullivanstromberg.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 18 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/waeb11-00295.pdf The petition was signed by Karen L. Dorsey, treasurer. RHI ENTERTAINMENT: Settles with Crown Media & Hallmark ------------------------------------------------------ BankruptcyData.com reports that RHI Entertainment, Inc., is seeking approval of a settlement with Crown Media Holdings, Inc., Hallmark Cards, Inc. and MATn Movies & Televisions Productions GmbH & Co. Project IV KG in connection with their disputes regarding certain distribution rights and obligations. According to BData, terms of the settlement include: -- the transfer of Picture Rights by RHI Entities; -- the payment by Hallmark of settlement Amount and adherence to the continuing guaranty, waiver of indemnification claim against RHI; -- the assignment of Crown Media license fees; -- the payments of third party obligations; -- the future exploitation of picture rights; -- the rights to gross receipts of picture rights; -- the entry into a new distribution agreement; -- the survival of sublicense agreements; -- the termination of transaction documents; and -- the dismissal of lawsuits and releases among parties. Eric Morath, writing for Dow Jones' Daily Bankruptcy Review, notes that RHI Entertainment is handing over its rights to the "Phantom Racer" film to National Bank of Canada to settle a $650,000 debt. The bank loaned the funds necessary to produce the movie and retained a lien on the film after RHI acquired it. According to Mr. Morath, RHI said in papers filed with the Bankruptcy Court that the "Phantom Racer" is one of several movies it intends to hand over to lenders as part of its reorganization plan. About RHI Entertainment New York-based RHI Entertainment, Inc., develops, produces and distribute new made-for-television movies, mini-series and other television programming worldwide. It filed for Chapter 11 bankruptcy protection on December 10, 2010 (Bankr. S.D.N.Y. Case No. 10-16536). D.J. Baker, Esq., Rosalie Walker Gray, Esq., Keith A. Simon, Esq., Adam S. Ravin, Esq., and Jude Gorman, Esq., at Latham & Watkins LLP, serve as the Debtors' bankruptcy counsel. The Debtor disclosed $524,722,000 in total assets and $834,094,000 in total debts in its chapter 11 petition. Affiliates RHI Entertainment, LLC (Bankr. S.D.N.Y. Case No. 10-16537), RHIE Holdings Inc. (Bankr. S.D.N.Y. Case No. 10-16538), RHI Entertainment Holdings II, LLC (Bankr. S.D.N.Y. Case No. 10-16541), RHI Entertainment Distribution, LLC (Bankr. S.D.N.Y. Case No. 10-16549), RHI International Distribution Inc. (Bankr. S.D.N.Y. Case No. 10-16550), RHI Entertainment Productions, LLC (Bankr. S.D.N.Y. Case No. 10-16551), HE Pro Tunes, Inc. (Bankr. S.D.N.Y. Case No. 10-16552), HEGOA INC. (Bankr. S.D.N.Y. Case No. 10-16553), HEP Music, Inc. (Bankr. S.D.N.Y. Case No. 10-16554), HEP SS Music Inc. (Bankr. S.D.N.Y. Case No. 10-16555), Don Quixote, Inc. (Bankr. S.D.N.Y. Case No. 10-16556), Independent Projects, Inc. (Bankr. S.D.N.Y. Case No. 10-16557), Library Storage, Inc. (Bankr. S.D.N.Y. Case No. 10-16558), Metropolitan Productions, Inc. (Bankr. S.D.N.Y. Case No. 10-16560), NGP Holding, Inc. (Bankr. S.D.N.Y. Case No. 10-16561), and SLB Productions, Inc. (Bankr. S.D.N.Y. Case No. 10-16562) filed separate Chapter 11 petitions. Logan & Company, Inc., serves as the Debtors' claims and noticing agent. RHI's First Lien Lenders are represented by Michael A. Chapnick, Esq. -- mchapnick@morganlewis.com -- and Wendy S. Walker, Esq. -- wwalker@morganlewis.com -- at Morgan, Lewis & Bockius LLP, and RHI's Second Lien Lenders are represented by Mark R. Somerstein, Esq. -- mark.somerstein@ropesgray.com -- and Patricia I. Chen, Esq. -- patricia.chen@ropesgray.com -- at Ropes & Gray LLP. As reported in the Troubled Company Reporter on Dec. 16, 2010, RHI Entertainment Inc., won approval to put its prepackaged Chapter 11 case on a fast track and hold a combined disclosure statement and restructuring plan confirmation hearing as early as Feb. 17, 2011. The Prepackaged Plan provides that, on its Effective Date, (a) the First Lien Lenders will receive (i) $300 million of New Term Loan Obligations and (ii) roughly 99% of the New Common Stock (subject to dilution); and (b) the Second Lien Lenders will receive (i) roughly 1% of the New Common Stock (subject to dilution), (ii) New Warrants representing 15% ownership of the New Common Stock on a fully diluted basis, and (iii) a limited fee and expense reimbursement of up to $250,000. A hearing has been scheduled for Feb. 17, 2011, to consider the adequacy of the Disclosure Statement. ROCK-TENN: Moody's Reviews Low-B Ratings for Likely Downgrade ------------------------------------------------------------- Moody's Investors Service placed all ratings of Rock-Tenn Company on review for possible downgrade, including the company's Ba1 Corporate Family Rating, Ba1 Probability of Default Rating and individual instrument ratings. The rating action was prompted by Rock Tenn's announcement that it has agreed to acquire Smurfit- Stone Container Corporation. Moody's review will focus on the amount of acquisition debt financing taken on to fund the transaction; the size and pace of any cost synergies that can be realized; post-closing credit metrics taking into consideration SSCC's large unfunded pension liability; the integration of higher cost linerboard mills that may need increased capital spending; and Rock Tenn's ability to maintain adequate liquidity. The aggregate purchase price being paid for SSCC's equity in the transaction is approximately $3.5 billion, consisting of approximately $1.8 billion of cash and the issuance of 30.9 million shares of Rock Tenn common stock. Rock Tenn has received $3.7 billion in committed bank financing to finance the cash portion of the transaction, to refinance existing debt and to provide liquidity for the combined operations. The acquisition is expected to close in the second calendar quarter of 2011 and is subject to regulatory clearances and other customary closing conditions. Assuming the transaction closes as anticipated, existing debt at Smurfit-Stone Container Enterprises, Inc., will likely be repaid and all of Moody's ratings of that entity withdrawn. These ratings were placed on review: On Review for Possible Downgrade: Issuer: Rock-Tenn Company -- Probability of Default Rating, Placed on Review for Possible Downgrade, currently Ba1 -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently Ba1 -- Senior Secured Bank Credit Facility, Placed on Review for Possible Downgrade, currently Baa3 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba2 Outlook Actions: Issuer: Rock-Tenn Company -- Outlook, Changed To Rating Under Review From Stable Moody's last rating action was on November 30, 2009, when it increased Rock Tenn's corporate family rating to Ba1 from Ba2 reflecting the company's improved credit protection metrics. The principal methodology used in rating Rock Tenn was the Moody's Global Paper and Forest Products Industry Rating Methodology, published in September 2009. Headquartered in Norcross, Georgia, Rock-Tenn Company is a manufacturer of paperboard, containerboard and consumer and corrugated packaging. The company had annual net sales of approximately $3 billion in its fiscal year ending September 30, 2010, and has operating locations in the United States, Canada, Mexico, Chile and Argentina. ROSETTA RESOURCES: S&P Cuts Senior Unsecured Rating to 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services took several rating actions on 16 U.S. oil and gas exploration and production companies following an industry review. S&P's review on the sector followed S&P's Sept. 30, 2010, revision of S&P's exploration and production recovery criteria. The new approach aims to better reflect S&P's expectation for commodity prices and reserve values in a default scenario. The rating actions S&P took, were on speculative-grade companies and affected specific issues and their respective recovery ratings. S&P did not take any corporate credit rating actions. (Standard & Poor's recovery rating scale ranges from '6', indicating expectations of negligible [0%-10%] recovery in a payment default, to '1+', indicating expectations of full [100%] recovery.) S&P included in its reviews an updated reserve report utilizing S&P's new price deck. Ratings List Issue Ratings lowered; Recovery Ratings Revised To From Quicksilver Resources Inc. (B+/Stable/--) Senior Unsecured B B+ Recovery Rating 5 3 BreitBurn Energy Partners (B+/Stable/--) Senior Unsecured B B+ Recovery Ratings 5 4 Helix Energy Solutions Group Inc. (B/Stable/--) Senior Unsecured CCC+ B- Recovery Ratings 6 5 Rosetta Resources Inc. (B/Stable/--) Senior Unsecured B- B+ Recovery Rating 5 2 Chaparral Energy Inc. (B/Stable/--) Senior Unsecured B B+ Recovery Rating 4 2 NFR Energy LLC (B/Stable/--) Senior Unsecured B- B Recovery Rating 5 4 Venoco Inc. (B/Stable/--) Second-Lien Secured B BB- Recovery Rating 4 1 Delta Petroleum Corp. (CCC/Negative/--) Senior Unsecured CCC- CCC Recovery Rating 5 4 Dune Energy Inc. (CCC-/Negative/Unsolicited) Second-Lien Secured CC CCC- Recovery Rating 5 4 Issue Ratings Raised; Recovery Ratings Revised To From Penn Virginia Corp. (BB-/Stable/--) Subordinated B+ B Recovery Rating 5 6 Forest Oil Corp. (BB-/Stable/--) Senior Unsecured BB- B+ Recovery Rating 4 5 Clayton Williams Energy Inc. (B/Stable/--) Senior Unsecured B B- Recovery Rating 4 5 Issue Ratings Unchanged; Recovery Ratings Revised To From Whiting Petroleum Corp. (BB/Stable/--) Recovery Rating 4 3 Range Resources Corp. (BB/Stable/--) Recovery Rating 3 4 Bill Barrett Corp. (BB-/Stable/--) Recovery Rating 3 4 PetroQuest Energy Inc. (B/Stable/--) Recovery Rating 4 3 ROSMART PLAZA: Files for Chapter 7 Liquidation ---------------------------------------------- The Orlando Sentinel reports that Melbourne, Florida-based Rosmart Plaza Inc., on Jan. 16 filed for liquidation under Chapter 7 of the U.S. Bankruptcy Code. The Company disclosed $407,186 in liabilities. A meeting of creditors is set for Feb. 14, 2011. S & E PROPERTIES: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: S & E Properties, LLC P.O. Box 489 Nitro, WV 25143 Bankruptcy Case No.: 11-30045 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court Southern District of West Virginia (Huntington) Judge: Ronald G. Pearson Debtor's Counsel: Marshall C. Spradling, Esq. 100 Capitol Street, Suite 703 Charleston, WV 25301 Tel: (304) 343-2544 Fax: (304) 343-2546 E-mail: marshallspradling@wvdsl.net Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's three largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/wvsb11-30045.pdf The petition was signed by Scott Cable. SANDRA ANN READ: Time for Property Tax Appeal Extended ------------------------------------------------------ WestLaw reports that a bankruptcy statute that extended, for two years postpetition, the time period fixed under applicable nonbankruptcy law for a debtor to commence an action, where such time period had not expired before the petition date, applied to permit a Chapter 11 debtor to contest, under state law, the tax assessments for her investment properties, since the 60-day window within which such a challenge had to be raised under state law had not expired before the debtor filed her bankruptcy petition. After finding ambiguous a statutory limitation on the bankruptcy court's power to determine ad valorem taxes that was added to the Bankruptcy Code by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a Florida bankruptcy court concluded that the limitation applied in cases in which no prior final adjudication of ad valorem tax liability had been made and the applicable nonbankruptcy period for contesting the tax obligation expired prior to the debtor's petition filing. In re Read, --- B.R. ----, 2011 WL 180085 (Bankr. M.D. Fla.) (Williamson, J.). A copy of the Honorable Michael G. Williamson's Memorandum Opinion dated Jan. 19, 2011, discussing the interplay of 11 U.S.C. Sec. 108 and 11 U.S.C. Sec. 505 in her bankruptcy proceeding, is available at http://is.gd/idQ8cofrom Leagle.com. Sandra Ann Read sought chapter 11 protection (Bankr. M.D. Fla. Case No. 09-25809) on Nov. 10, 2009, and is represented by Herbert R. Donica, Esq., at the Donica Law Firm PA in Tampa, Fla. At the time of the filing, Ms. Read estimated her assets and debts at $1 million to $10 million. SATELITES MEXICANOS: Has Deal with Noteholders for U.S. Prepack --------------------------------------------------------------- Satelites Mexicanos, S.A. de C.V. (Satmex SAB) has reached an agreement with the holders of more than two-thirds of the outstanding principal amount of its Second Priority Senior Secured Notes due 2013 regarding a comprehensive recapitalization to be effected through the solicitation of a prepackaged plan of reorganization to be filed in the United States bankruptcy court. The recapitalization will provide the resources for the Company to finance the timely completion of Satmex 8, a satellite scheduled to be launched in 2012 to replace the Company's Satmex 5 satellite, and to lay the groundwork for the future construction of Satmex 7, which is intended to replace the Company's Solidaridad 2 satellite. Satmex has joined in a Restructuring Support Agreement among the Supporting Holders and Holdsat Mexico S.A.P.I. de C.V., a Mexican company which was newly formed in cooperation with the Supporting Holders to effect the proposed recapitalization, and which will be majority controlled by certain Mexican partners in compliance with applicable Mexican foreign investment laws. The Plan contemplates that the recapitalization will be financed with the proceeds of an offering of up to $325 million in aggregate principal amount of new senior secured debt financing and the proceeds of a rights offering of equity securities in the indirect parent of reorganized Satmex to eligible holders of Second Priority Senior Secured Notes in an aggregate amount of up to $96.25 million. Eligible holders of Second Priority Senior Secured Notes will also have the right to invest in their pro rata share of a follow-on issuance of equity securities in an aggregate amount of up to $40 million, which may be called by the reorganized company for purposes of funding the construction and launch of Satmex 7. Under the terms of the Plan, holders of Satmex's First Priority Senior Secured Notes due 2011 will be paid out in cash at par plus accrued interest. Holders of Satmex's Second Priority Senior Secured Notes will receive their pro rata share of (i) a pool of equity interests in the indirect parent of reorganized Satmex (the "Parent Interests"), (ii) the Primary Rights to invest in additional Parent Interests, and (iii) the Follow-On Rights, but only to the extent that holders have exercised their Primary Rights. In the alternative, such holders may elect to receive, in lieu of the Parent Interests, Primary Rights and Follow-On Rights, a cash payment of 38 cents for every dollar of Second Priority Senior Secured Notes held by such electing holders, which payment will be funded by certain of the Supporting Holders. It is anticipated that other creditors, including trade creditors, will be paid in full under the Plan. If the Plan is consummated and certain other conditions are satisfied, existing stockholders of Satmex will receive their share of $6.25 million under a purchase agreement with Holdsat Mexico S.A.P.I. de C.V. as part of the recapitalization transactions. The Restructuring Support Agreement provides that the Supporting Holders will vote in favor of the Plan. Furthermore, Centerbridge Partners, L.P., Monarch Alternative Capital, L.P., Moneda Asset Management, New Generation Advisors, LLC and Outrider Management, LLC and certain of their affiliates have committed to exercise all of the rights granted to them under the Plan as holders of the Second Priority Senior Secured Notes and to purchase any interests which are not subscribed by other holders. "We are pleased by the confidence in Satmex shown by the investment commitment of the Supporting Holders," said Patricio Northland, Chief Executive Officer of Satmex. "As a result of these initiatives our debt and interest expense will be reduced and our liquidity and equity capital will be greatly enhanced. This will provide support for ongoing service to our customers in the near term and will facilitate a number of important operating initiatives, including the completion of construction and the launch of our Satmex 8 satellite, and the entry into a construction and launch agreement for our Satmex 7 satellite. These initiatives will ensure that Satmex continues to provide our customers with the broadest and most flexible C and Ku band coverage across the hemisphere, and allow us to capitalize on the attractive growth opportunities in our core markets. We intend to move forward as expeditiously as possible to complete the recapitalization, and we anticipate that the process will have no day-to-day impact on our suppliers, customers or employees." Mr. Northland also stated that he is grateful to the Company's employees for their dedication and to Satmex's customers and business partners for their continued support over the past year. Jared S. Hendricks, a Managing Director of Centerbridge Partners, expressed appreciation on behalf of the Backstop Parties to Satmex's management team for their tireless efforts in bringing the Company to this important threshold. "This transaction would not have been possible without the dedication and leadership of Satmex's management team, whom the Backstop Parties are excited to support as the Company enters this next stage of its corporate development," said Mr. Hendricks. "We believe in the opportunities for growth in the markets served by Satmex and are pleased to be part of the Company's continued development" said Josiah Rotenberg, a Managing Principal of Monarch Alternative Capital. "We look forward to a long and mutually beneficial relationship." Completion of the transaction is subject to certain regulatory approvals and other conditions precedent. Lazard and its Mexican alliance partner, Alfaro, Davila y Rios, S.C. are serving as financial advisors to Satmex, and Greenberg Traurig is serving as U.S. counsel and Santamarina y Steta and Rubio Villegas & Asociados are serving as the Company's Mexican counsels. Jefferies & Company, Inc. is serving as the financial advisor to certain holders of the Second Priority Senior Secured Notes, and Ropes & Gray LLP is serving as U.S. counsel and Cervantes Sainz as Mexican counsel to this group. The bonds maturing this year are trading at par while the bonds due in 2013 traded on Jan. 19 for 39.5 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority, Bloomberg News reported. U.S. Bankruptcy in 2006 Bill Rochelle, the bankruptcy columnist at Bloomberg News, notes that Satelites Mexicanos will be seeking a prepackaged bankruptcy reorganization in the U.S. less than five years after emerging from a prior U.S. Chapter 11 case. Mr. Rochelle recounts that litigated disputes began in May 2005, when bondholders filed an involuntary Chapter 11 petition against Satmex. The company responded in June 2005 by filing a concurso mercantil, the Mexican version of reorganization. It later asked the U.S. bankruptcy judge to dismiss the involuntary petition. A partial settlement was made in mid-2005 entailing a dismissal of the involuntary Chapter 11 petition while Satmex filed a Section 304 ancillary petition in New York, so that the bankruptcy court could assist the Mexican court by enjoining legal actions in the U.S. The Section 304 ancillary petition was the predecessor to what is now Chapter 15 for cross-border insolvencies. After reaching final agreement with bondholders to restructure $800 million in debt, the Company filed a prepackaged Chapter 11 petition in New York. The plan called for swapping $203.4 million of senior secured floating notes for $234.4 million in first-lien senior-secured notes, while $320 million in 10.125% unsecured notes became $140 million of second-lien notes and 78% of the new common stock. The prior petition listed assets of $906 million against debts totaling $743.5 million. In August 2003, Satmex defaulted on $320 million in senior unsecured notes. It was roughly half owned by Loral Space & Communications Ltd., with the remainder split between Mexican shareholders and the Mexican government, which had 23% of the stock. Satellite manufacturer Loral underwent its own Chapter 11 reorganization in July 2003. About Satmex SAB Satelites Mexicanos, S.A. de C.V., (Satmex) is a Mexico-based satellite service provider in Latin America. Satmex's fleet offers hemispheric and regional coverage throughout the Americas. Satmex balance sheet a June 30, 2010, showed US$438.29 million in assets, US$516.55 million in liabilities, and a US78.26 million shareholders' deficit. Satmex had a net loss of US$6.12 million on US$53.06 million of revenue for the six months ended June 30, 2010, compared with a net loss of US$8.81 million on US$50.35 million of revenue for six months ended June 30, 2009. Satmex has a 'C' issuer rating and 'Ca' long term corporate family rating, with negative outlook, from Moody's Investors Service. SCHAEFER SALT: Gets Sanctions for Improper Chapter 7 Filing ----------------------------------------------------------- Bankruptcy Judge Novalyn L. Winfield imposed sanctions against Schaefer Salt Recovery, Inc., and Nicholas Khoudary, SSR's Vice President and counsel, in connection with an improperly filed Chapter 7 petition. Judge Winfield awarded Carol Segal (a) $9,239 for fees and $7.90 for expenses in connection with the Chapter 7 case Mr. Khoudary commenced on SSR's behalf; and (b) $2,220 for fees in connection with a Motion for Reconsideration. On May 12, 2004, a mere eight days after it was formally incorporated as a business entity, SSR filed a bare bones Chapter 11 petition (Bankr. D. N.J. Case No. 04-_____). SSR's only assets were mortgages on three properties as to which tax lien foreclosure actions brought by Ms. Segal were pending in the Superior Court of New Jersey. At Ms. Segal's behest, the Bankruptcy Court dismissed the Chapter 11 petition by order dated July 6, 2004, on a finding that it had been filed in bad faith, but struck language in the proposed order that would have barred SSR from filing another petition for 180 days. Following the dismissal, the foreclosure actions were reinstated in the Superior Court. On August 13, 2004, SSR filed a new petition (Bankr. D. N.J. Case No. 04-36630), this time pursuant to Chapter 7, for no apparent reason other than to cause the automatic stay to again kick in. Ms. Segal sought dismissal of the Chapter 7 petition. At a hearing on August 24, 2004, Mr. Khoudary advised the Bankruptcy Court that SSR consented to the dismissal of the Chapter 7 petition and that he saw no need to appear. At the hearing, the Bankruptcy Court held that sanctions should be imposed against Mr. Khoudary and SSR under 28 U.S.C. Sec. 1927. The Bankruptcy Court subsequently determined that it could not impose sanctions because of the supervisory rule articulated in Pensiero v. Lingle, 847 F.2d 90 (3d Cir. 1988). Ms. Segal first filed a motion for reconsideration, which was denied. She then appealed to the U.S. Court of Appeals for the Third Circuit, which reversed in 2008. According to Judge Winfield, in dismissing the Chapter 11 case the Bankruptcy Court made it known that it considered the case to be lacking a reorganizational purpose. "This alone certainly should have caused Khoudary and SSR to pause and consider whether the Chapter 7 case had an actual bankruptcy purpose," Judge Winfield said. Given the timing of the filing and the events outlined that precipitated the Chapter 7 filing, Judge Winfield said it is readily apparent that Mr. Khoudary and SSR made no objective assessment of the bankruptcy purpose that could be achieved from a Chapter 7 case. A copy of the Court's January 21, 2011 Letter Decision is available at http://is.gd/tWuiY9from Leagle.com. SCITOR CORP: Moody's Assigns 'B2' Corporate Family Rating --------------------------------------------------------- Moody's Investors Service assigned B2 corporate family and probability of default ratings to Scitor Corporation. Concurrently, a senior secured bank credit facility rating of B2 has been assigned. The ratings outlook is stable. The ratings assigned anticipate increasing leverage from the company's planned $305 million senior secured credit facility which will refinance an existing credit facility, fund retirement of the company's subordinated debt, and provide for preferred stock redemption and a common stock dividend. The B2 CFR encompasses Scitor's elevated financial leverage against a solid niche position as a services contractor to the U.S. intelligence community, historically good EBITDA margins, and an expectation of free cash flow to debt in the high single digit percentage range. The company's work centers on highly classified programs in the intelligence areas that should continue realizing federal outlay funding and growth. Long-established relationships across the intelligence and U.S. Department of Defense community and technical expertise in science and engineering disciplines bodes well for continuing competitiveness. Substantial backlog, historical re-compete contract win rates and low employee turnover should support good revenue growth with free cash flow reducing the debt load materially over the next few years. The rating also encompasses debt to EBITDA proforma for the transaction in the mid-7.0 times range and risk from contract concentration. Moody's notes some potential for tighter margins in the future as U.S. fiscal deficits could encourage non-fixed price contractors with good margins, like Scitor, to demonstrate greater pricing flexibility as a means of maintaining re-compete rates. Upward rating momentum could develop with an expectation of debt to EBITDA sustained below 5.5 times with EBITDA to interest approaching the mid- 2.0 times range and a good liquidity profile. Downward pressure could mount if the company were to sustain debt to EBITDA beyond 7.0 times, or if backlog were to deteriorate significantly. Ratings assigned, subject to review of final documentation: -- Corporate family and probability of default, B2 -- $30 million senior secured revolving credit due 2016, B2 LGD 3, 46% -- $275 million senior secured term loan B due 2017, B2 LGD 3, 46% The principal methodologies used in this rating were Global Aerospace and Defense published in June 2010, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Scitor Corporation, is a provider of engineering, management consulting and information services for highly classified programs to the U.S. Intelligence Community. Revenues in FY2010 were approximately $600 million. SCOTLAND-COLORADO: Case Summary & 5 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Scotland-Colorado, LLC Main Office 1777 Borel Place Suite 1000 San Mateo, Ca 94402 Bankruptcy Case No.: 11-30246 Chapter 11 Petition Date: January 23, 2011 Court: U.S. Bankruptcy Court Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: Neil Jon Bloomfield, Esq. LAW OFFICES OF NEIL JON BLOOMFIELD 901 E. Street, #100 San Rafael, CA 94901 Tel: (415) 454-2294 E-mail: njbloomfield@njblaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/canb11-30246.pdf The petition was signed by Robert J. Howie, manager. SECURECARE SERVICES: Emerges From Receivership with Invotex's Aid ----------------------------------------------------------------- Raymond J. Peroutka, Jr., Managing Director and CEO of Invotex Group, disclosed that the firm has successfully reorganized the financially troubled SecureCare Services, Ltd., which has been renamed Compass, Inc., and its Receivership has been dismissed by the Circuit Court for Montgomery County, Maryland. Prior to Invotex's July 2008 appointment by the Secretary of the Department of Health and Mental Hygiene as Receiver for SecureCare, the company was deeply insolvent and had posted a loss of $2.9 million for the prior 12 months. Over a period of 24 months, Invotex implemented a complete reorganization of SecureCare, its staff, resident housing, quality of care systems and financial reporting systems. In addition, SecureCare's new Executive Director, Andrea Kolp, helped guide SecureCare during the process with the goal of remaking SecureCare into a model DDA agency. The unaudited financial statements of the now not-for- profit, which is overseen by a volunteer board of directors, shows net income in excess of $1.5 million for the period ended June 30, 2010. According to Peroutka, "This was a big win for everyone involved, including the staff, creditors, state regulators and, most importantly, the constituents. In a very brief time following our appointment as receiver, we were able to assess the operational and financial problems, impose controls and begin corrective action. This was all accomplished while assuring the health and safety of more than 90 developmentally disabled individuals. Not only did they receive uninterrupted service throughout the receivership, but today they have a stronger, financially stable agency upon which they can depend." About Compass Inc. Since 1994, Compass has supported individuals with developmental disabilities to live and work in communities of their choice. Almost immediately from its beginnings, Compass became recognized as one of the outstanding providers of residential services in Maryland with a niche in supporting individuals with coexisting Mental Health conditions and Developmental Disabilities. Further, Compass' new 501(c)(3) designation will enhance its ability to obtain grants and raise funds from charitable sources. SMURFIT-STONE: Moody's to Withdraw Ratings After Rock Tenn Deal --------------------------------------------------------------- Moody's commented on Rock Tenn Company's acquisition of Smurfit- Stone Container Corporation. In connection with the transaction funding, Rock Tenn intends to retire the senior secured term loan at Smurfit-Stone Container Enterprises, Inc. Assuming the transaction closes as anticipated, SSCE's existing debt will likely be repaid and all of Moody's ratings of that entity withdrawn. Moody's last rating action was on June 30, 2010, when it removed the provisional designation on SSCE's B2 term loan, corporate family and probability of default ratings. The principal methodology used in rating SSCE was the Moody's Global Paper and Forest Products Industry Rating Methodology, published in September 2009. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. Headquartered in Creve Coeur, MO, Smurfit-Stone Container Corporation operates through a wholly-owned subsidiary company, Smurfit-Stone Container Enterprises, Inc. The company is an integrated producer of containerboard and corrugated containers and is a large collector, marketer, and exporter of recycled fiber. SONRISA PROPERTIES: Compass Plan Heads to Confirmation Hearing -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas approved the disclosure statement explaining the Second Amended Plan of Reorganization filed by Compass Bank for Sonrisa Properties, Ltd. As reported by the Troubled Company Reporter on January 20, 2011, Compass Bank filed a disclosure statement explaining its proposed Plan of Liquidation, as twice amended, for the Debtor. Compass Bank, the Debtor's largest secured creditor, is owed a principal balance of roughly $7,100,000 plus accrued interest exceeding $800,000. The Court fixed February 15, 2011, as the last day for submitting written acceptances or rejections of the Plan. The Court will convene a hearing on February 22, 2011, at 10:30 a.m., to consider confirmation of the Compass Bank Plan. Objections are due February 8, 2011. At the Feb. 22 hearing, the Bankruptcy Court will also consider confirmation of the Plan proposed by the Debtor's management. Compass Bank Plan The Compass Plan provides for the sale of the Debtor's property via an auction to take place within 120 days of the Effective Date of the Plan. The Auction will be conducted by Auction Resolutions dba Tranzon Auction Resolutions, a Texas limited liability company based in Cypress, Texas. The Property will be sold at Auction via one or more cash sales and/or a credit bid sale. Net Sales Proceeds will be distributed by the Disbursing Agent in accordance with the Plan. The Disbursing Agent will also liquidate any remaining assets and distribute Other Liquidation Proceeds and Pre-Confirmation Remaining Sale Proceeds in accordance with the Plan. Under the Plan of Compass Bank, each holder of a unsecured claim under Class 5 will receive (in full satisfaction of such Allowed Claim) its pro rata share of (a) Net Sale proceeds after payment in full of Allowed Claims in Classes 1-4 and funding of the Disbursing Agent Reserve, and (b) Other Liquidation Proceeds plus interest at the Federal Judgment Interest Rate from the Petition Date until the date of payment. The distribution to holders of Allowed Class 5 Claims will in the aggregate be no less than (i) the General Unsecured Minimum Payment, and (ii) any portion of the Unsecured Priority Tax Minimum Payment remaining after payment of Allowed Class 2 Claims. Compass Bank projects that each Unsecured Creditor would receive at least 10% of its Allowed Claim under the Plan. If there is insufficient cash sales proceeds to fund these payments, they would be paid directly by Compass Bank. A copy of the Compass Bank Second Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/Sonrisa.2ndAmendedCompassDS.pdf Compass Bank is represented by: Bruce J. Ruzinsky, Esq. JACKSON WALKER L.L.P. 1401 McKinney, Suite 1900 Houston, Texas 770 I0 Tel: (713) 752-4204 Fax: (713) 481-6262 E-mail: bruzinsky@jw.com Management Plan Sonrisa Properties, Ltd., is seeking confirmation of a plan that proposes to (1) obtain financing from a third party ($4,750,000 from Briar Capital Group) in order to restructure the Compass Bank indebtedness over a five year term; (2) subordinate the first lien position of Compass by granting Briar Capital Group a first lien position in the collateral; and (3) a payout to holders of undisputed and allowed unsecured claims after payment in full to Briar Capital Group and Compass. Pursuant to the Plan, Compass will partially release its lien as properties are sold and receive $1.30 per square foot for any property for which a partial release is requested. 100% of net proceeds remaining from any sale will be first applied to the Briar Note until the Briar Note is paid in full. Randal M. Hall, the president of the Debtor's general partner, will disburse all plan funds. About Sonrisa Properties League City, Texas-based Sonrisa Properties, Ltd., owns roughly 4 acres of unimproved real property in League City, Galveston County, Texas located on/near the Gulf Freeway at the FM 646 intersection. The Company filed for Chapter 11 bankruptcy protection on January 4, 2010 (Bankr. S.D. Texas Case No. 10- 80012), to stop Compass Bank, the largest secured creditor, from foreclosing on the property. Karen R. Emmott, Esq., who has an office in Houston, Texas, assists the Company in its restructuring effort. The Company disclosed $21,098,818 in assets and $8,420,540 in liabilities as of the Petition Date. SPECIALTY TRUST: Wants Plan Exclusivity Period Extended to March 4 ------------------------------------------------------------------ Specialty Trust, Inc., and its debtor affiliates, ask the U.S. Bankruptcy Court for the District of Nevada for an extension of their exclusive right to file a plan for an additional 45 days, or until March 4, 2011, except as to the committee of equity holders, as well as an extension of their exclusive right to obtain acceptances of that plan through and including May 3, 2011, except as to the Committee. If the Committee files a plan that is not co-sponsored by the Debtors, the holder of the Debtors' subordinated notes, Taberna Preferred Funding VII, Ltd., would also be entitled to file a plan without further order of the Court. The Debtor relate that they have been negotiating with all interested parties with respect to a consensual plan, but that it would be premature for them to file a plan of reorganization "at this juncture". The Court previously extended the exclusive period for the Debtors to file a plan from August 18, 2010, to October 18, 2010. On December 17, 2010, the Court further extended the exclusivity period for the Debtors to file a plan through January 18, 2011, except as to the Committee. As to the Committee only, the Debtor's exclusivity to file a plan was terminated as of October 19, 2010. The hearing on the motion is scheduled for March 2, 2011, at 10:00 a.m. About Specialty Trust Reno, Nevada-based Specialty Trust, Inc., filed for Chapter 11 bankruptcy protection on April 20, 2010 (Bankr. D. Nev. Case No. 10-51432). Sallie B. Armstrong, Esq., and Michelle N. Kazmar, Esq., at Downey Brand LLP, in Reno, Nevada; and Ira D. Kharasch, Esq., Scotta E. McFarlan, Esq., and Victoria A. Newmark, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, Calif., serve as the Debtor's bankruptcy counsel. On May 24, 2010, a committee of equity holders was appointed. On September 2, 2010, the Court appointed Grant Lyon as chief restructuring officer ("CRO") of the Debtors. In its schedules, the Debtor disclosed assets of $201,452,048 and liabilities of $109,022,194 as of the petition date. On April 20, 2010, affiliates Specialty Acquisition Corp. (Bankr. D. Nev. Case No. 10-51437) and SAC II (Bankr. D. Nev. Case No. 10-51440) filed separate petitions for Chapter 11 relief. In its amended schedules, Specialty Acquisition disclosed assets of $3,886,113 and liabilities of $49,068,173 as of the petition date. In its amended schedules, SAC II disclosed assets of $40,955,000 an liabilities of $39,445,118 as of the petition date. T3 MOTION: Delivers $1MM Unsecured Note to Alfonso/Mercy Cordero ---------------------------------------------------------------- On January 14, 2011, T3 Motion, Inc., delivered a 10% unsecured promissory note in the principal amount of $1,000,000 that matures on October 1, 2013, to Alfonso G. Cordero and Mercy B. Cordero. The Note was dated as of September 30, 2010. Interest payments of $8,333.33 are due on the first day of each calendar month commencing November 1, 2010 and continuing each month thereafter. The Noteholder subsequently waived payment obligations from November 1, 2010 through January 1, 2011 and the parties agreed that accrued interest during that time would be paid at February 6, 2011. The Company may prepay the Note, but must prepay in full only. The Company will be in default under the Note upon: (1) failure to timely make payment; and (2) failure to perform other agreements under the Note within 10 days of request from the holder of the Note. Upon such event of default, the Holder may declare the Note immediately due and payable. The applicable interest rate will be upon default will be increased to 15% or the maximum rate allowed by law. About T3 Motion Costa Mesa, Calif.-based T3 Motion, Inc., develops and manufactures T3 Series vehicles, which are electric three-wheel stand-up vehicles that are directly targeted to the public safety and private security markets. The Company's balance sheet as of September 30, 2010, showed $3.81 million in total assets, $16.56 million in total liabilities, and a stockholders' deficit of $12.75 million. At September 30, 2010, the Company has an accumulated deficit of $40.41 million, a working capital deficit of $14.32 million and a cash balance of $40,966. KMJ Corbin & Company LLP, in Costa Mesa, Calif., expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's 2009 results. The independent auditors noted that the Company has incurred significant operating losses and had negative cash flows from operations since inception and at December 31, 2009, has a working capital deficit of $11.01 million and an accumulated deficit of TERRESTAR NETWORKS: Committee Joins Sprint Suit vs. U.S. Bank ------------------------------------------------------------- The Official Committee of Unsecured Creditors in TerreStar Networks Inc.'s Chapter 11 cases filed an intervenor complaint against U.S. Bank, in its capacity as Indenture Trustee and Collateral Agent for the 15.0% Senior Secured Payment-In-Kind Notes due 2014 issued by Debtor TerreStar Networks Inc. The Committee's complaint joins the action Sprint Nextel commenced, which seeks a declaration regarding the priority, scope, validity and enforceability of any security interests granted by TSN and certain of its affiliates in licenses, authorizations, waivers, permits and other related regulatory approvals granted by the Federal Communications Commission and the proceeds and value derived from the FCC Licenses. Pursuant to a security agreement, TSN and its affiliates purported to grant a security interest in the FCC Licenses and any proceeds thereof to Defendant U.S. Bank as Collateral Agent for the Senior Secured Noteholders. David M. Posner, Esq., at Otterbourg Steindler Houston & Rosen P.C., in New York, contends that a present, justiciable dispute exists as to the priority, scope, validity, and enforceability of the liens purportedly granted by a certain security agreement between the Debtors and U.S. Bank. The Security Agreement purports that the Debtors grant a security interest in the FCC Licenses and any related proceeds to Defendant U.S. Bank as collateral agent for the Senior Secured Noteholders. "Applicable law prohibits the grant of a security interest in the FCC Licenses, and any prepetition lien purportedly held by U.S. Bank or the Senior Secured Noteholders on the proceeds of the FCC Licenses would not, in any event, attach to any proceeds or value derived from the FCC Licenses after the filing of the bankruptcy cases by TSN and its affiliates," Mr. Posner asserts. In their proposed Chapter 11 Plan of Reorganization, as presently contemplated, TSN and certain of the affiliated debtors propose to transfer 97% of the equity of the reorganized Debtor entities to the Senior Secured Noteholders and only approximately 3% of the equity to unsecured creditors. In connection with this, the TSN Debtors have acknowledged that the S-Band License to use 20 MHz of spectrum in the 2 GHz spectrum band is one of their critical assets, and the TSN Debtors have valued the S-Band License at a range of $1.02 billion to $1.28 billion pursuant to a total reorganization value for purposes of the Plan of $1.07 billion to $1.37 billion. The Plan is clearly premised upon the assumption that the Senior Secured Noteholders have a lien on substantially all of the TSN Debtors' assets, including the S-Band, Mr. Posner points out. He contends that applicable Federal law precludes the Senior Secured Noteholders from having a valid security interest in the S-Band License, which is the most valuable asset of the TSN Debtors and comprises a substantial portion of the total reorganization value under the Plan. The unsecured creditors that comprise the constituency represented by the Committee, Mr. Posner argues, are entitled to share in the value derived from the unencumbered S-Band License and should therefore receive substantially more than the approximate 3% of the equity in the reorganized entity. Resolution of the present dispute as to the validity and enforceability of the Senior Secured Noteholders' alleged lien on the S-Band license and all proceeds thereof and therefrom will promote judicial economy and the interests of justice, and from the perspective of the Committee, provide the legal and equitable basis to establish the competing priority of claims to the assets of certain of the TSN Debtors' estates in these bankruptcy cases, Mr. Posner tells Judge Lane. U.S. Bank Answers Complaint U.S. Bank, through its counsel, Franklin Ciaccio, Esq., at Carter Ledyard & Milburn LLP, in New York, filed an answer to Sprint Nextel's complaint generally denying all allegations. U.S. Bank generally asserts that it doesn't have knowledge or information sufficient to form a belief as to the truth of Sprint Nextel's allegations. The Debtors and the Ad Hoc Noteholder Group filed separate joinders to U.S. Bank's answer. About TerreStar Networks Reston, Va.-based TerreStar Corporation (NASDAQ: TSTR) -- http://www.terrestar.com/-- is in the mobile communications business through its ownership of TerreStar Networks, its principal operating subsidiary, and TerreStar Global. TerreStar Networks, in cooperation with its Canadian partners, TerreStar Canada and TerreStar Solutions, majority-owned subsidiaries of Trio 1 and 2 General Partnerships, plans to launch an innovative wireless communications system to provide mobile coverage throughout the United States and Canada using integrated satellite-terrestrial smartphones and other devices. This system build out will be based on an integrated satellite and ground- based technology intended to provide communication service in most hard-to-reach areas and will provide a nationwide interoperable, survivable and critical communications infrastructure. The Company intends to provide multiple communications applications, including voice, data and video services. As of June 30, 2010, the Company had four wholly owned subsidiaries, MVH Holdings Inc., Motient Holdings Inc., TerreStar Holdings Inc., and TerreStar New York Inc. Motient Ventures Holding Inc., a wholly owned subsidiary of MVH Holdings Inc., directly holds approximately 89.3% and 86.5% interest in TerreStar Networks and TerreStar Global, respectively. TerreStar Networks Inc. and Its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Lead Case No. 10-15446). The Debtors' parent, TerreStar Corporation (NASDAQ: TSTR), is not among the Chapter 11 filers. Michel Wunder, Esq., Ryan Jacobs, Esq., and Jarvis Hetu, Esq., at Fraser Milner Casgrain LLP and Ira Dizengoff, Esq., Arik Preis, Esq., and Ashleigh Blaylock, Esq., at Akin Gump Strauss Hauer & Feld LLP, serve as bankruptcy counsel to the Debtors. Blackstone Advisory Partners LP is the financial advisor. The Garden City Group, Inc., is the claims and noticing agent in the Chapter 11 cases. Otterbourg Steindler Houston & Rosen P.C. is the counsel to the Official Committee of Unsecured Creditors. FTI Consulting, Inc., is the Committee's financial advisor Bankruptcy Creditors' Service, Inc., publishes TerreStar Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TerreStar Networks Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TERRESTAR NETWORKS: Creditors Committee Sues U.S. Bank ------------------------------------------------------ The Official Committee of Unsecured Creditors in TerreStar Networks Inc.'s Chapter 11 cases has commenced an adversary complaint against U.S. Bank National Association, in the bank's capacity as Indenture Trustee and Collateral Agent for the 15.0% Senior Secured Payment-In-Kind Notes due 2014 issued by Debtor TerreStar Networks Inc. Under the Complaint, the Creditors Committee seeks to avoid an alleged security interest claimed by U.S. Bank in the certain assets of TSN consisting of and relating to TSN's interest in TerreStar-2, the Debtors' ground spare satellite under construction at Space Systems/Loral, Inc. David M. Posner, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., in New York, relates that pursuant to a security agreement among TSN, as issuer, and TerreStar National Services, Inc. and TerreStar License Inc., as guarantors, in favor of U.S. Bank, as Collateral Agent for the holders of the Senior Secured Notes, TSN, TerreStar National Services, Inc. and TerreStar License Inc. purported to grant a lien upon certain of their assets. The Security Agreement provides that the Indenture Trustee has a lien on all personal property of the Debtors other than "Excluded Property," which includes any property or assets subject to a "Permitted Lien." The Permitted Liens include liens related to the issuance of purchase money indebtedness incurred to finance the procurement, construction and launch of one or more satellites or ground-based beam-forming earth stations in an amount at any time outstanding not to exceed $100 million. Mr. Posner notes that upon information and belief, provisions of the Indenture and Security Agreement were intended to exclude TSN's interest in TS-2 from the collateral pool of the Senior Secured Noteholders until a time as a certain purchase money indebtedness is paid in full. A $100 million Purchase Money Credit Agreement was entered into by TSN, as borrower, U.S. Bank, as collateral agent, and Harbinger Capital Partners LLC and EchoStar Corporation, as the original lenders, following the execution of the Indenture. Pursuant to the terms of the PMCA, monies were advanced as required to fund SS/L's construction of TS-2. A first lien on all of TSN's rights in TS-2, along with TSN's interest in raw materials, work-in-process, construction agreement, insurance, books and records and all related proceeds secured the PMCA. Accordingly, pursuant to the terms of the Security Agreement, from February 5, 2008, onwards, TSN's interest in TS-2 and the TS-2 Related Assets constituted Excluded Property and therefore were "carved out" of the collateral pool securing the Senior Secured Notes because all of TSN's interest in TS-2 and the TS-2 Related Assets were pledged to secure the PMCA, Mr. Posner asserts. Notwithstanding the fact that TSN's interest in TS-2 and the TS-2 Related Assets had already been carved out of the collateral pool securing the Senior Secured Notes by the express terms the Security Agreement as originally entered into on March 24, 2008, U.S. Bank filed a UCC-3 Amendment with the Delaware Department of State that specifically terminated whatever security interest that U.S. Bank might claim to have in TSN's interest in TS-2 and the TS-2 Related Assets, Mr. Posner tells Judge Lane. He adds that the U.S. Bank UCC-3 did not contain any conditional release, or "springing lien," that would limit the purpose of such filing. Mr. Posner further contends that even if the PMCA were to be paid in full and its lien with respect to TSN's interest in TS-2 and TS-2 Related Assets released, any security interest in those assets claimed by U.S. Bank would remain unperfected because the UCC-1 financing statement originally filed by U.S. Bank with the Delaware Secretary of State in 2007 was effectively negated as to TSN's interest in TS-2 and the TS-2 Related Assets by U.S. Bank's filing of the U.S. Bank UCC-3 on or about March 24, 2008. Subsequently, the Debtors filed for Chapter 11 protection in October 2010 and obtained a debtor-in-possession financing, which included a stipulation that U.S. Bank has a perfected security interest in the "Collateral," as the term is defined in the Indenture. Representing the Creditors Committee, Mr. Posner argues that TSN's interest in TS-2 and the IS-2 Related Assets did not constitute "Collateral" for the Senior Secured Notes since by reason of an unpaid balance remaining with respect to the PMCA. "Those assets continued to constitute Excluded Property specifically carved out from U.S. Bank's collateral pool by the Security Agreement," he maintains. Mr. Posner also points out that under the TSN Debtors' Fourth Amended Disclosure Statement for the Joint Chapter 11 Plan, the TSN Debtors acknowledged that "there is a litigable issue as to whether the holders of the Senior Secured Notes have a lien on the TSN's rights in TerreStar-2." TSN has not assumed the Amended and Restated Contract for TerreStar-2 dated December 12, 2007, which governs the construction of TS-2, Mr. Posner reveals. He adds that upon information and belief, U.S. Bank has claimed that its Alleged Interest in TSN's interest in TS-2, the TS-2 Related Assets and all related proceeds that it claims on behalf of, and as agent for, the Senior Secured Noteholders, are valid and enforceable security interests. The Creditors Committee disputes the validity and enforceability of any liens on TSN's interest in TS-2 and the TS-2 Related Assets and proceeds purportedly granted to U.S. Bank as Collateral Agent for the Senior Secured Noteholders. The recoveries to be realized by the Committee's unsecured creditor constituency stands to be increased significantly if the liens on TSN's interest in TS-2 and the TS-2 Related Assets or the related proceeds claimed by the Senior Secured Noteholders are either (i) declared to be invalid; (ii) if deemed at one time to have been valid, then declared to have been released; or (iii) avoided as unperfected under the Committee's present complaint, Mr. Posner emphasizes. Mr. Posner thus contends that a present and justifiable dispute exists as to the scope, validity and enforceability of the Alleged Interest in TSN's interest in TS-2, the TS-2 Related Assets and all related proceeds, and that the dispute must be decided either prior to, or contemporaneously with, issues related to confirmation of the TSN Debtors' Plan. He further points out that a complete and final determination of whether liens purportedly granted by the Security Agreement to secure the obligations owed by the Debtors on account of the Senior Secured Notes extend to and encumber TSN's rights in TS-2 and the TS-2 Related Assets is not readily obtainable in another form of action or proceeding. "Accordingly, any declaration by [the Bankruptcy] Court that such assets are not encumbered by the liens granted to U.S. Bank under the Security Agreement will not constitute an advisory opinion," Mr. Posner says. A pre-trial conference with respect to the adversary complaint has been set for March 8, 2011, at 10:00 a.m. About TerreStar Networks Reston, Va.-based TerreStar Corporation (NASDAQ: TSTR) -- http://www.terrestar.com/-- is in the mobile communications business through its ownership of TerreStar Networks, its principal operating subsidiary, and TerreStar Global. TerreStar Networks, in cooperation with its Canadian partners, TerreStar Canada and TerreStar Solutions, majority-owned subsidiaries of Trio 1 and 2 General Partnerships, plans to launch an innovative wireless communications system to provide mobile coverage throughout the United States and Canada using integrated satellite-terrestrial smartphones and other devices. This system build out will be based on an integrated satellite and ground- based technology intended to provide communication service in most hard-to-reach areas and will provide a nationwide interoperable, survivable and critical communications infrastructure. The Company intends to provide multiple communications applications, including voice, data and video services. As of June 30, 2010, the Company had four wholly owned subsidiaries, MVH Holdings Inc., Motient Holdings Inc., TerreStar Holdings Inc., and TerreStar New York Inc. Motient Ventures Holding Inc., a wholly owned subsidiary of MVH Holdings Inc., directly holds approximately 89.3% and 86.5% interest in TerreStar Networks and TerreStar Global, respectively. TerreStar Networks Inc. and Its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Lead Case No. 10-15446). The Debtors' parent, TerreStar Corporation (NASDAQ: TSTR), is not among the Chapter 11 filers. Michel Wunder, Esq., Ryan Jacobs, Esq., and Jarvis Hetu, Esq., at Fraser Milner Casgrain LLP and Ira Dizengoff, Esq., Arik Preis, Esq., and Ashleigh Blaylock, Esq., at Akin Gump Strauss Hauer & Feld LLP, serve as bankruptcy counsel to the Debtors. Blackstone Advisory Partners LP is the financial advisor. The Garden City Group, Inc., is the claims and noticing agent in the Chapter 11 cases. Otterbourg Steindler Houston & Rosen P.C. is the counsel to the Official Committee of Unsecured Creditors. FTI Consulting, Inc., is the Committee's financial advisor Bankruptcy Creditors' Service, Inc., publishes TerreStar Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TerreStar Networks Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TERRESTAR NETWORKS: Sprint Nextel Defends Claims ------------------------------------------------ As reported in the Jan. 3, 2011 edition of the Troubled Company Reporter, TerreStar Networks Inc. and its units seek the entry of a Bankruptcy Court order expunging, disallowing, or reducing Sprint Nextel Corporation's Claim Nos. 49 through 52, 66 through 70, and 79 through 82. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, contends that by filing identical claims aggregating more than $104 million against each of the TSN Debtors, Sprint Nextel opportunistically and inequitably is attempting to turn the bankruptcy claims process "on its head and create claims that did not previously exist, either legally or factually." In response, the basic facts underlying the claims asserted by Sprint Nextel Corporation are not in dispute, Eric T. Moser, Esq., at K&L Gates LLP, in New York, relates. He points out that the Debtors do not dispute that Sprint Nextel has completely cleared the spectrum band licensed by the Debtors, thereby making the spectrum available for the Debtors to provide mobile satellite services. Mr. Moser notes that the Debtors' omnibus objection to Sprint Nextel's claims can be reduced to two issues: (1) Which Debtor entities are liable for the amount owed to Sprint Nextel; and (2) What is the amount owed. On the first issue, the Debtors contend that the only debtor entities liable for the reimbursement obligation are TerreStar Networks Inc.; TerreStar License Inc.; and TerreStar National Services Inc. On the second issue, the Debtors contend that Sprint Nextel has failed to provide sufficient information to validate its claim, and in violation of the applicable regulatory scheme, failed to identify what amount they admit owing. The resolution of both issues, Mr. Moser relates, is controlled by the order entered by the Federal Communications Commission on September 29, 2010, resolving a number of issues regarding the reimbursement obligations of MSS providers. He elaborates that among other things, the 2010 Declaratory Ruling clarified that each corporate affiliate that comprises an integrated MSS enterprise is liable for any reimbursement obligation owed to Sprint Nextel. The Debtors have repeatedly represented and admitted that they collectively comprise a single MSS enterprise, Sprint Nextel notes. The integrated nature of the Debtors' operations is demonstrated by the fact that they have structured their operations so that various Debtor entities hold different assets and provide different services, each of which is necessary for the operation of the Debtors' network. "Based on their own self- description and their operational structure, the Debtors constitute an integrated MSS enterprise, and each Debtor entity involved in that structure is jointly and severally liable for the reimbursement obligation owed to Sprint Nextel," Mr. Moser contends. On behalf of Sprint Nextel, Mr. Moser asserts that the arguments presented by the Debtors in their objection to avoid joint and several liability to Sprint Nextel's claims are weak and unpersuasive for these reasons: 1. No legal support exists for the Debtors' argument that it is inequitable for Sprint Nextel to assert claims against each of the Debtors. The equitable doctrine of "laches" does not apply because Sprint is not seeking an equitable remedy, rather, Sprint is seeking monetary damages and the statute of limitations for Sprint to assert its claims has not expired. Mr. Moser notes that the facts demonstrate that Sprint Nextel has not delayed in asserting its claims and that the Debtors have not suffered any prejudice that would support an equitable defense, even if it were to apply. 2. The Debtors misread the 2010 Declaratory Ruling and ignored its plain terms by arguing from the premise that the order never uses the term "joint and several liability." The 2010 Declaratory Ruling states that the FCC intended to clarify when multiple affiliates would be subject to "enterprise liability." Enterprise liability is a legal doctrine that imposes joint and several liability and therefore, there was no need for the FCC to use the phrase "joint and several liability," Mr. Mosner relates. 3. The 2010 Declaratory Ruling did not state that only the nominal licensee, like the license-holding entity, and its corporate parent are subject to enterprise liability. The history of the FCC proceedings and the language of the 2010 Declaratory Ruling itself demonstrate that all corporate affiliates that comprise an integrated MSS enterprise are jointly and severally liable for the reimbursement obligation. 4. The Debtors ignored their regulatory history and operational structure when they asserted that TerreStar Canada and 0887729 B.C. Ltd are not part of the Debtors' integrated MSS enterprise because they are Canadian entities with no operations in the United States. The S- Band License held by TLI was issued with several conditions, including (i) the requirement that the Debtors obtain an appropriate license from Industry Canada for the operation of the Debtors' satellite and (ii) the requirement that the Debtors certify that they own an operational satellite by a certain deadline. Thus, for regulatory purposes, the Debtors' U.S. operations are integrated with the Canadian operations. Without the licenses and assets held by the TerreStar Canada and 088, there would be no domestic operations because the Debtors would never have been able to satisfy the conditions imposed by the FCC upon the issuance of the S-Band License, Mr. Moser asserts. For these reasons, Sprint Nextel asks the Court to reject the Debtors' arguments and find that each of the Debtors is jointly and severally liable for the reimbursement obligation owed to it. With respect to the amount of the claims, Mr. Moser asserts that the 2010 Declaratory Ruling imposes a strict burden of proof and production on both Sprint Nextel and the Debtors. He maintains that once Sprint Nextel satisfies its burden of production, the Debtors cannot challenge the amount owed unless they provide (i) an independent estimate of what they believe the costs to be, and (ii) evidentiary support for that estimate. Mr. Moser points the Court to the detail that the Debtors never stated in their Claim Objection what they believe the correct amount of the claim to be, nor did they provide any evidence to challenge the amount claims by Sprint Nextel. Instead, the Debtors contended that Sprint Nextel has not provided the information required by the 2010 Declaratory Ruling, Mr. Moser cites. Sprint Nextel has complied with the order by providing a detailed statement showing a calculation of the amount owed, audit statements to verify the claimed amounts, and copies of the various frequency relocation agreements that were executed in connection with the band-clearing efforts, Mr. Moser reminds Judge Lane. Accordingly, because the Debtors have not provided any evidentiary support to demonstrate that the amount claimed by Sprint Nextel is incorrect, there is no basis to reduce the amount claimed by Sprint Nextel, Mr. Moser asserts. For each of these reasons, Sprint Nextel asks Judge Lane to overrule the Debtors' Omnibus Objection and allow its claims in full. About TerreStar Networks Reston, Va.-based TerreStar Corporation (NASDAQ: TSTR) -- http://www.terrestar.com/-- is in the mobile communications business through its ownership of TerreStar Networks, its principal operating subsidiary, and TerreStar Global. TerreStar Networks, in cooperation with its Canadian partners, TerreStar Canada and TerreStar Solutions, majority-owned subsidiaries of Trio 1 and 2 General Partnerships, plans to launch an innovative wireless communications system to provide mobile coverage throughout the United States and Canada using integrated satellite-terrestrial smartphones and other devices. This system build out will be based on an integrated satellite and ground- based technology intended to provide communication service in most hard-to-reach areas and will provide a nationwide interoperable, survivable and critical communications infrastructure. The Company intends to provide multiple communications applications, including voice, data and video services. As of June 30, 2010, the Company had four wholly owned subsidiaries, MVH Holdings Inc., Motient Holdings Inc., TerreStar Holdings Inc., and TerreStar New York Inc. Motient Ventures Holding Inc., a wholly owned subsidiary of MVH Holdings Inc., directly holds approximately 89.3% and 86.5% interest in TerreStar Networks and TerreStar Global, respectively. TerreStar Networks Inc. and Its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Lead Case No. 10-15446). The Debtors' parent, TerreStar Corporation (NASDAQ: TSTR), is not among the Chapter 11 filers. Michel Wunder, Esq., Ryan Jacobs, Esq., and Jarvis Hetu, Esq., at Fraser Milner Casgrain LLP and Ira Dizengoff, Esq., Arik Preis, Esq., and Ashleigh Blaylock, Esq., at Akin Gump Strauss Hauer & Feld LLP, serve as bankruptcy counsel to the Debtors. Blackstone Advisory Partners LP is the financial advisor. The Garden City Group, Inc., is the claims and noticing agent in the Chapter 11 cases. Otterbourg Steindler Houston & Rosen P.C. is the counsel to the Official Committee of Unsecured Creditors. FTI Consulting, Inc., is the Committee's financial advisor Bankruptcy Creditors' Service, Inc., publishes TerreStar Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TerreStar Networks Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TERRESTAR NETWORKS: Wants Until May 17 to Decide on Leases ---------------------------------------------------------- TerreStar Networks, Inc., and its debtor affiliates ask the United States Bankruptcy Court for the Southern District of New York to extend the time within which they must assume or reject unexpired non-residential real property leases pursuant to Section 365(d)(4) of the Bankruptcy Code to the earlier of: (i) the date an order is entered confirming a Chapter 11 plan in the Debtors' bankruptcy case, or (ii) an additional 90 days through and including May 17, 2011. Section 365(d)(4) provides that an unexpired non-residential real property lease under which a debtor is the lessee will be deemed rejected and will immediately be surrendered to the lessor, if the trustee does not assume or reject the unexpired lease by the earlier of (i) the date that is 120 days after a debtor filed for bankruptcy protection, or (ii) the date of the entry of an order confirming a plan in that debtor's case. The court may extend the lease decision period prior to the expiration of the 120-day period for 90 days on the motion of the trustee or lessor for cause. The Debtors' current lease decision deadline is February 16, 2011. The Debtors are parties to more than 40 non-residential real property leases that have not already been the subject of a notice of assumption or rejection in their Chapter 11 cases. The Unexpired Leases include headquarters leases, general office space leases, leases underlying the Debtors' ground operations including, two Gateway Earth Stations, the Debtors' 15 calibration earth stations located throughout the United States, and five CES located throughout Canada. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, tells the Court that a significant number of the Unexpired Leases are critical to the operation of the Debtors' core business functions because many of the Debtors' business operations are located at leased facilities or on premises that are subject to certain of the Unexpired Leases. Since the Petition Date, much of the Debtors' time has been devoted to significant and exigent matters, Mr. Dizengoff relates. He notes that the Debtors have been called upon to respond to myriad complex issues to ensure the continued viability of their businesses. Mr. Dizengoff also tells the Court that the Debtors' executive management is presently working, in consultation with their restructuring advisors, to make determinations regarding assumption and rejection of all of their executory contracts and unexpired leases. Thus, the review and assessment process for the Debtors' Unexpired Leases is in progress, but forcing a premature decision about assumption or rejection could have a detrimental impact on the Debtors' operations and estates, he maintains. "Notwithstanding the challenges faced in these cases to date, the Debtors have a proven resolve to work tirelessly toward a successful and rapid reorganization, an important component of which is optimizing their strategic choices in respect of their numerous Unexpired Leases," Mr. Dizengoff says. He notes that "as a result, however, the Debtors have not yet had sufficient time to complete a review and analysis of individual leases." Despite the many competing demands, the Debtors are in the process of evaluating their non-residential real property lease portfolio and have already rejected several leases that were no longer beneficial to the Debtors' businesses, Mr. Dizengoff reveals. He asserts that the proposed extension will provide the Debtors with the critical additional time needed to complete the process. The Court is set to consider the Debtors' request on February 1, 2011, at 12:30 p.m. The objection deadline is set on the same date at 12:00 p.m. About TerreStar Networks Reston, Va.-based TerreStar Corporation (NASDAQ: TSTR) -- http://www.terrestar.com/-- is in the mobile communications business through its ownership of TerreStar Networks, its principal operating subsidiary, and TerreStar Global. TerreStar Networks, in cooperation with its Canadian partners, TerreStar Canada and TerreStar Solutions, majority-owned subsidiaries of Trio 1 and 2 General Partnerships, plans to launch an innovative wireless communications system to provide mobile coverage throughout the United States and Canada using integrated satellite-terrestrial smartphones and other devices. This system build out will be based on an integrated satellite and ground- based technology intended to provide communication service in most hard-to-reach areas and will provide a nationwide interoperable, survivable and critical communications infrastructure. The Company intends to provide multiple communications applications, including voice, data and video services. As of June 30, 2010, the Company had four wholly owned subsidiaries, MVH Holdings Inc., Motient Holdings Inc., TerreStar Holdings Inc., and TerreStar New York Inc. Motient Ventures Holding Inc., a wholly owned subsidiary of MVH Holdings Inc., directly holds approximately 89.3% and 86.5% interest in TerreStar Networks and TerreStar Global, respectively. TerreStar Networks Inc. and Its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Lead Case No. 10-15446). The Debtors' parent, TerreStar Corporation (NASDAQ: TSTR), is not among the Chapter 11 filers. Michel Wunder, Esq., Ryan Jacobs, Esq., and Jarvis Hetu, Esq., at Fraser Milner Casgrain LLP and Ira Dizengoff, Esq., Arik Preis, Esq., and Ashleigh Blaylock, Esq., at Akin Gump Strauss Hauer & Feld LLP, serve as bankruptcy counsel to the Debtors. Blackstone Advisory Partners LP is the financial advisor. The Garden City Group, Inc., is the claims and noticing agent in the Chapter 11 cases. Otterbourg Steindler Houston & Rosen P.C. is the counsel to the Official Committee of Unsecured Creditors. FTI Consulting, Inc., is the Committee's financial advisor Bankruptcy Creditors' Service, Inc., publishes TerreStar Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by TerreStar Networks Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TIG, LLC: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------ Debtor: TIG, LLC fdba Downtown Loft Developers, LLC P.O. Box 630006 Hollywood, FL 33021 Bankruptcy Case No.: 11-11650 Chapter 11 Petition Date: January 24, 2011 Court: U.S. Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray Debtor's Counsel: Richard R. Robles, Esq. LAW OFFICES OF RICHARD R. ROBLES, P.A. 905 Brickell Bay Drive, #228 Miami, FL 33131 Tel: (305) 755-9200 E-mail: rrobles@roblespa.com Estimated Assets: $50,001 to $100,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's two largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flsb11-11650.pdf The petition was signed by Zusia Tenenbaum, managing member. TRIBUNE LTD: S&P Lowers Ratings on Notes to 'D' From 'CCC-' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the notes from Tribune Ltd.'s series 44, a synthetic collateralized debt obligation (CDO) transaction, to 'D (sf)' from 'CCC- (sf)'. The downgrade follows credit events in the underlying portfolio that resulted in the notes incurring a full principal loss. Rating Lowered Tribune Ltd. US$45 mil Tribune Limited Series 44 Rating Class To From Tranche D (sf) CCC- (sf) USG CORP: Subsidiary Closes Gypsum Rock Quarry Facilities --------------------------------------------------------- As part of USG Corporation's steps to adjust operations and staffing to market conditions, the Company's subsidiary, CGC Inc., is temporarily closing its gypsum rock quarry facilities in Windsor, Nova Scotia, Canada, effective February 28, 2011. The Company will record charges of approximately $16 million related to the closure of the quarry facilities in the fourth quarter of 2010. These charges include approximately $5 million for employee termination benefits, $9 million for contractual obligations and $2 million for asset write-offs. The Company estimates that it will incur cash expenditures of approximately $15 million in 2011 and later periods in connection with the closure. About USG Corp. USG Corporation, headquartered in Chicago, Illinois, is a leading producer and distributor of building materials in the Unites States, Canada and Mexico. The company manufactures and markets gypsum wallboard and operates a specialty distribution business that sells to professional contractors. It also manufactures ceiling tiles and ceiling grids used primarily in commercial applications. Revenues for the last 12 months through March 31, 2010, totaled approximately $3.1 billion. * * * As reported by the Troubled Company Reporter on November 8, 2010, Moody's Investors Service assigned a B2 rating to USG Corporation's new senior unsecured notes, and affirmed its Caa1 Corporate Family Rating and Caa1 Probability of Default Rating. USG's speculative grade liquidity rating remains SGL-3. The outlook is stable. The Caa1 Corporate Family Rating results from weak operating performance. Low capacity utilization rates of approximately 45% at its gypsum manufacturing facilities make it difficult for USG to overcome its high fixed costs. Moody's projects that potential demand increases for wallboard from North American new home construction and repair and remodeling will not be adequate to generate sufficient volumes and operating profits to cover USG's interest expense over the intermediate term. Furthermore, the non-residential construction end market, which accounts for about 30% of USG's revenues, is expected to face stagnant growth well into 2011. The amount of profits derived from the company's worldwide ceilings business is not enough to make up shortfalls in the gypsum and distribution businesses. For the last twelve months through September 30, 2010, operating margins remain substandard at negative 4.9% and leverage is very high at debt-to- EBITDA of 27.2 times. The company's inability to generate positive earnings will result in very weak credit metrics for the foreseeable future and will require cash to fund operating shortfalls. UNITED CONTINENTAL: PAR Entities Have 4.7% Equity Stake ------------------------------------------------------- In an amended Schedule 13G filing with the Securities and Exchange Commission on January 21, 2011, each of PAR Investment Partners, L.P., PAR Group, L.P. and PAR Capital Management, Inc., disclosed beneficially ownership of 15,011,990 shares of common stock of UAL Corporation representing 4.7% of the shares outstanding. As of October 18, 2010, there were 317,071,876 shares of United Continental Holdings, Inc. common stock outstanding. About United Continental United Continental Holdings, Inc. (NYSE: UAL) -- http://www.UnitedContinentalHoldings.com/, http://www.united.com/ and http://www.continental.com/-- is the holding company for both United Airlines and Continental Airlines. Together with United Express, Continental Express and Continental Connection, these airlines operate a total of approximately 5,800 flights a day to 371 airports throughout the Americas, Europe and Asia from their hubs in Chicago, Cleveland, Denver, Guam, Houston, Los Angeles, New York, San Francisco, Tokyo and Washington, D.C. United and Continental are members of Star Alliance, which offers more than 21,200 daily flights to 1,172 airports in 181 countries worldwide through its 28 member airlines. United's and Continental's more than 80,000 employees reside in every U.S. state and in many countries around the world. United Continental carries 'B2' corporate family and probability of default ratings, with stable outlook, from Moody's, 'B' issuer credit ratings, with stable outlook, from Standard & Poor's, and 'B-' issuer default rating from Fitch. UAL Corp filed for Chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors. Judge Eugene R. Wedoff confirmed a reorganization plan for United on Jan. 20, 2006. The Company emerged from bankruptcy on Feb. 1, 2006. At June 30, 2010, UAL had $20.134 billion in total assets against total current liabilities of $8.573 billion, long-term debt of $6.281 billion, long-term obligations under capital leases of $1.01 billion, other liabilities and deferred credits of $7.022 billion, and a stockholders' deficit of $2.756 billion. VITRO SAB: Agrees to Dismiss Chapter 15 Petition ------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vitro SAB agreed to dismiss the Chapter 15 petition it filed in New York in mid-December, according to a document submitted January 24 to the U.S. Bankruptcy Court in Fort Worth, Texas, where bondholders filed involuntary Chapter 11 petitions a month earlier against Vitro's U.S. subsidiaries. According to Mr. Rochelle, Vitro was forced into dismissing the Chapter 15 case following a ruling from a court in Mexico this month dismissing Vitro's attempted reorganization under that country's version of Chapter 11. Mr. Rochelle notes that a Chapter 15 case is exclusively to provide support for a bankruptcy case pending abroad. When the Mexican case was dismissed, the necessary predicate for the Chapter 15 petition in New York evaporated. Vitro is appealing the ruling by the judge in Mexico. About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and is now seeking to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. The offer was to expire December 7. Noteholders who oppose the exchange, namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. -- which hold US$75 million, or approximately 6% of the outstanding bond debt -- commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and nine other affiliates on November 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation Counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. The U.S. affiliates subject to the involuntary petitions are Vitro Chemicals, Fibers & Mining, LLC (Bankr. N.D. Tex. Case No. 10- 47472); Vitro America, LLC (Bankr. N.D. Tex. Case No. 10-47473); Troper Services, Inc. (Bankr. N.D. Tex. Case No. 10-47474); Super Sky Products, Inc. (Bankr. N.D. Tex. Case No. 10-47475); Super Sky International, Inc. (Bankr. N.D. Tex. Case No. 10-47476); VVP Holdings, LLC (Bankr. N.D. Tex. Case No. 10-47477); Amsilco Holdings, Inc. (Bankr. N.D. Tex. Case No. 10-47478); B.B.O. Holdings, Inc. (Bankr. N.D. Tex. Case No. 10-47479); Binswanger Glass Company (Bankr. N.D. Tex. Case No. 10-47480); Crisa Corporation (Bankr. N.D. Tex. Case No. 10-47481); VVP Finance Corporation (Bankr. N.D. Tex. Case No. 10-47482); VVP Auto Glass, Inc. (Bankr. N.D. Tex. Case No. 10-47483); V-MX Holdings, LLC (Bankr. N.D. Tex. Case No. 10-47484); and Vitro Packaging, LLC (Bankr. N.D. Tex. Case No. 10-47485). Vitro SAB on December 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, thereby commencing its voluntary concurso mercantil proceedings. Vitro SAB believes that, as a result of the implementation of the Concurso Plan through the Mexican Proceeding, the holders of the Restructured Debt will recover 68% to 75% of the face value of their respective claims. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on December 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Alejandro Francisco Sanchez-Mujica, as foreign representative of Vitro, has asked the U.S. Bankruptcy Court to enter an order recognizing the Mexican Proceeding as "foreign main proceeding" pursuant to 11 U.S.C. Secs. 1515 and 1517. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. VITRO SAB: Appeals Plan Dismissal in Mexico ------------------------------------------- Carlos Manuel Rodriguez and Thomas Black at Bloomberg News report that Vitro, S.A.B. de C.V. Chief Executive Officer Hugo Lara said the company filed an appeal in Mexican court to challenge a ruling dismissing the company's voluntary bankruptcy petition. According to Bloomberg, Mr. Lara said the appeal should be decided in one to three months. It was legal to use US$1.9 billion of intercompany debt to gain majority support for a debt plan that was rejected by third-party creditors, he added. As reported in the Troubled Company Reporter-Latin America on January 12, 2011, Bloomberg News said that Vitro SAB said that a Mexican judge rejected a bankruptcy plan the company filed in a Monterrey court. The company plans to appeal the judge's decision to dismiss the petition for bankruptcy, Vitro said in an e-mailed statement obtained by the news agency. Bloomberg says that following the ruling, the company agreed to withdraw its related bankruptcy petition in a New York court, according to a court document filed on January 24, 2011. Vitro Refused to Meet with Noteholders, Says Group The Ad Hoc Group of Vitro Noteholders on January 21 released a statement to provide the following details and clarifications in connection with Vitro SAB's restructuring process: a) Contrary to Vitro's statement that it sought an agreement with all of its creditors, despite being directly informed that the Ad Hoc Group of Vitro Noteholders, which collectively own more than $735 million of Vitro's $1.2 billion of outstanding Senior Notes, opposes the Company's plan, Vitro has refused to even meet with the Ad Hoc Group of Vitro Noteholders, much less attempt to reach agreement with its members. The Senior Notes have been in payment default for nearly two years and more than $300 million in aggregate past-due interest is owed by Vitro. b) Contrary to Vitro's allegation that its plan is opposed only by a small "minority" of noteholders, the plan has in fact been rejected (and is opposed) by the Ad Hoc Group of Vitro Noteholders, which collectively own more than 60% of outstanding Senior Notes and approximately 50% of Vitro's total third-party unsecured debt. c) Contrary to the allegations of Vitro regarding the reasons its plan has been rejected, the Ad Hoc Group of Vitro Noteholders has unanimously rejected Vitro's proposal, because the offer represents an unacceptably poor economic return to Noteholders that is inconsistent with the Company's financial capabilities, it improperly leaves the current shareholders unimpaired, and has been crafted solely between Vitro and certain affiliated parties in a direct attempt to transfer value away from third- party creditors. d) In an attempt to overcome the fact that its consent solicitation has received support from only 10% of Vitro's third-party creditors that were solicited, Vitro is relying on the support of (i) an affiliated party who has been induced to accept the consent solicitation with patently preferential transfers and other special consideration and (ii) $1.9 billion of purported intercompany claims controlled by direct and indirect subsidiaries of Vitro and which may have recently been manufactured to cram down the offer on non-consenting third- party creditors. e) Contrary to the allegations of Vitro regarding improper participation in Vitro's concurso proceeding, the Ad Hoc Group of Vitro Noteholders and its members have not participated in Vitro's pre-pack concurso in any form or fashion. The dismissal of the pre-pack concurso is only attributable to the procedural and substantive decisions made by the Company for an improper purpose. Specifically, the Mexican Court has referenced that the Company cannot use the $1.9 billion of intercompany claims to declare its pre-pack concurso effective and that the holders of intercompany claims are not creditors within the meaning of the concurso law. Also, Vitro failed to disclose that the Noteholders have commenced involuntary concurso cases against Vitro and certain of its subsidiaries which have not been dismissed and remain pending before the Mexican Court. f) Contrary to the allegations of Vitro that the efforts of the Ad Hoc Group of Vitro Noteholders put Vitro's business and employees at risk, any jeopardy to Vitro's business or employees has been caused solely by Vitro's shareholders' efforts to improperly retain their full ownership and control of the Company without providing a full recovery to creditors. The Ad Hoc Group of Vitro Noteholders cannot be faulted for merely trying to protect their rights as creditors. h) The Ad Hoc Group of Vitro Noteholders remains open to a negotiated settlement, so long as the consideration is consistent with the economic capabilities of Vitro and treats creditors according to their respective rankings and priorities. The Ad Hoc Group's statement was signed by JAIME R. GUERRA GONZALEZ, ESQ. Jesus Angel Guerra Mendez, esq. c/o: WHITE & CASE LLP, Esq. John Cunningham Phone: (305) 995-5252 E-mail: JCunningham@whitecase.com Richard Kebrdle Phone: (305) 995-5276 E-mail: RKebrdle@whitecase.com CHANIN CAPITAL PARTNERS LLC Brian Cullen Phone: (310) 445-4010 E-mail: BCullen@chanin.com Mark Catania Phone: (310) 445-4010 E-mail: MCatania@chanin.com About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and is now seeking to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. The offer was to expire December 7. Noteholders who oppose the exchange, namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. -- which hold US$75 million, or approximately 6% of the outstanding bond debt -- commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and nine other affiliates on November 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation Counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. The U.S. affiliates subject to the involuntary petitions are Vitro Chemicals, Fibers & Mining, LLC (Bankr. N.D. Tex. Case No. 10- 47472); Vitro America, LLC (Bankr. N.D. Tex. Case No. 10-47473); Troper Services, Inc. (Bankr. N.D. Tex. Case No. 10-47474); Super Sky Products, Inc. (Bankr. N.D. Tex. Case No. 10-47475); Super Sky International, Inc. (Bankr. N.D. Tex. Case No. 10-47476); VVP Holdings, LLC (Bankr. N.D. Tex. Case No. 10-47477); Amsilco Holdings, Inc. (Bankr. N.D. Tex. Case No. 10-47478); B.B.O. Holdings, Inc. (Bankr. N.D. Tex. Case No. 10-47479); Binswanger Glass Company (Bankr. N.D. Tex. Case No. 10-47480); Crisa Corporation (Bankr. N.D. Tex. Case No. 10-47481); VVP Finance Corporation (Bankr. N.D. Tex. Case No. 10-47482); VVP Auto Glass, Inc. (Bankr. N.D. Tex. Case No. 10-47483); V-MX Holdings, LLC (Bankr. N.D. Tex. Case No. 10-47484); and Vitro Packaging, LLC (Bankr. N.D. Tex. Case No. 10-47485). Vitro SAB on December 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, thereby commencing its voluntary concurso mercantil proceedings. Vitro SAB believes that, as a result of the implementation of the Concurso Plan through the Mexican Proceeding, the holders of the Restructured Debt will recover 68% to 75% of the face value of their respective claims. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on December 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Alejandro Francisco Sanchez-Mujica, as foreign representative of Vitro, has asked the U.S. Bankruptcy Court to enter an order recognizing the Mexican Proceeding as "foreign main proceeding" pursuant to 11 U.S.C. Secs. 1515 and 1517. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. WARNER MUSIC: Paris Court Finds CEO Guilty in Vivendi Lawsuit ------------------------------------------------------------- Warner Music Group Corp. announced that the Trial Court in Paris has found Edgar Bronfman, Jr., the company's Chairman and CEO, guilty of the previously disclosed charge relating to certain trades he made in the stock of Vivendi Universal in 2002. As a result of its finding, the Court imposed a fine on Mr. Bronfman and a suspended sentence. Mr. Bronfman has informed the company that he intends to appeal the trial court's decision to the Paris Court of Appeal. Under French law, the fine is suspended, pending the final outcome of the case. Scott M. Sperling, the Chair of the company's Executive Governance & Nominating Committee said, "The Board of Directors is disappointed with the decision in this matter, and fully supports Mr. Bronfman as he appeals this verdict." Michele J. Hooper, the company's lead independent director and Chair of the company's Audit Committee, added, "We did not expect this ruling as the Board has been thoroughly briefed on the underlying facts and has been closely monitoring the case, including through today's verdict, with the advice of our outside corporate governance counsel." Mr. Bronfman remarked, "I am disappointed that the Court differed with both the Paris public prosecutor and the lead civil claimant in the case, APPAC, who both took the position that I should be acquitted. I will appeal today's decision to the Paris Court of Appeal and continue to vigorously defend myself against this charge. As I have consistently stated, my trades were proper." About Warner Music Group Based in New York, Warner Music Group Corp. (NYSE: WMG) -- http://www.wmg.com/-- was formed by a private equity consortium of investors on November 21, 2003. The Company is the direct parent of WMG Holdings Corp., which is the direct parent of WMG Acquisition Corp. WMG Acquisition Corp. is one of the world's major music-based content companies and the successor to substantially all of the interests of the recorded music and music publishing businesses of Time Warner Inc. The Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing. The Company's Recorded Music business primarily consists of the discovery and development of artists and the related marketing, distribution and licensing of recorded music produced by such artists. The Company's Music Publishing operations include Warner/Chappell, its global Music Publishing company, headquartered in New York with operations in over 50 countries through various subsidiaries, affiliates and non-affiliated licensees. The Company's balance sheet at June 30, 2010, showed $3.65 billion in total assets, $3.82 billion in total liabilities, and a stockholders' deficit of $174 million. * * * As reported by the Troubled Company Reporter, Standard & Poor's Ratings Services on Aug. 13, 2010, revised its rating outlook on Warner Music Group Corp. to negative from stable. Ratings on the company, including the 'BB-' corporate credit rating, were affirmed. "The revised outlook reflects continued revenue and EBITDA declines amid a light album release schedule and ongoing challenges in maintaining profitability levels due to the digital transition taking place within the industry, notwithstanding vigilant cost management," said Standard & Poor's credit analyst Michael Altberg. As reported by the TCR on October 4, 2010, Fitch affirmed these ratings: Warner Music Group Corp. (IDR at 'BB-'.); WMG Holdings Corp. (IDR at 'BB-'; and -- Unsecured notes at 'B'); and WMG Acquisition Corp. (IDR at 'BB-'; Secured notes at 'BB'; Subordinated notes at 'B+'). Fitch's ratings are supported by WMG's market position as the third largest music distributor/label, with a 20% market share according to Nielsen SoundScan. Fitch said liquidity is sufficient, as the company generates sufficient cash to support operations and capital expenditures. As of June 30, 2010, WMG had $400 million in consolidated cash and cash equivalents (including $176 million of cash at the parent holding company). There are no maturities until 2014, when approximately $900 million in subordinated debt (including WMG Holdings Corp. notes) are due. Standard & Poor's Ratings Services lowered its corporate credit rating on New York City-based Warner Music Group Corp. to 'B+' from 'BB-'. The rating outlook is stable. WESTERN SUPREME: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Western Supreme, Inc. dba Sunny California Poultry United Food Company 11412 Drysdale Lane Los Alamitos, ca 90720 Tel: (213) 627-3861 Bankruptcy Case No.: 11-10976 Chapter 11 Petition Date: January 23, 2011 Court: U.S. Bankruptcy Court Central District of California (Santa Ana) Debtor's Counsel: Shawn A. McMillan, Esq. THE LAW OFFICES OF SHAWN A. MCMILLAN 4955 Via Lapiz San Diego, CA 92122 Tel: (858) 646-0069 Fax: (206) 600-4582 E-mail: attyshawn@netscape.net Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Frank B. Fogarty, chief executive officer. WORKFLOW MANAGEMENT: Unsecureds-Backed Plan Hearing on Feb. 24 -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Workflow Management Inc. scheduled a Feb. 24 confirmation hearing for approval of a Chapter 11 plan now supported by the official committee representing unsecured creditors. The bankruptcy court approved the explanatory disclosure statement on Jan. 21, allowing creditors to vote. Mr. Rochelle relates that the Creditors Committee removed its opposition when the pot for unsecured creditors was doubled to $2 million. Unsecured creditors of the operating companies with claims estimated at $25 million were originally projected to receive between 1% and 4%. The revised plan calls for an affiliate of Perseus LLC, the existing owner, to receive 41.5% of the new common stock in return for a $12.5 million investment. The Plan is supported by the agent for second-lien lenders owed $196.5 million. A copy of the disclosure statement to the Third Amended Plan of Reorganization, filed Jan. 21, 2011, is available for free at: http://bankrupt.com/misc/Workflow_3rdAmended_DS.pdf About Workflow Management Headquartered in Dayton, Ohio Workflow Management, Inc., fka Workflow Graphics, Inc. -- http://www.workflowone.com/-- 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. The Official Committee of Unsecured Creditors retained Venable LLP as counsel and Protiviti Inc. as financial advisor. Workflow Management estimated assets and debts at $100 million to $500 million as of the Chapter 11 filing. W.R. GRACE: Garlock Has Approval to Access Rule 2019 Statements --------------------------------------------------------------- Garlock Sealing Technologies LLC received approval from the Bankruptcy Court of its request for access to statements filed under Rule 2019 of the Federal Rules of Bankruptcy Procedure by law firms representing asbestos personal injury claims in 12 Chapter 11 cases, including the Chapter 11 case of W.R. Grace & Co. and its debtor affiliates. About W.R. Grace & Co. Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring effort. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace and its debtor affiliates, with the support of the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, have submitted a proposed Chapter 11 plan of reorganization. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. The Plan confirmation hearing wrapped up on January 25. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) YITC-GP LLC: Sequoia Wants Dismissal of Involuntary Ch. 11 Case --------------------------------------------------------------- Sequoia Capital Partners, LLC, asks the U.S. Bankruptcy Court for the Eastern District of Texas to dismiss YITC-GP, LLC's involuntary Chapter 11 bankruptcy case. The Debtor, Sequoia Capital, the other two creditors, and all other persons who have appeared in this case and asserted that they are parties in interest reached an agreement to have the bankruptcy case dismissed. The United States Trustee has agreed to the relief in this motion. The Debtor is a defendant in the adversary case styled David E. Girault et al. v. Rhoderick Tyrone Williams et al., Adv. No. 10- 07010, in the U.S. Bankruptcy Court for the Southern District of Texas, McAllen Division. David Girault, Las Pecheras, Inc., and Robert Yarto had each brought various claims against the Debtor and other parties in the Adversary Case. The parties to the Adversary Case, including the Debtor's primary creditor, General Electric Capital Corp., have reached a settlement of all claims and causes of action pending in the Adversary Case, including those against Debtor. The settlement was approved by the U.S. Bankruptcy Court for the Eastern District of Texas. Sequoia Capital says that based on the change in Debtor's circumstances that has resulted from its settlement with its creditors, cause exists to dismiss this case. The settlement agreement provides for the dismissal of this Chapter 11 case. The Court has set for February 7, 2011, at 10:00 a.m. a hearing on Sequoia Capital's request for dismissal. Sequoia Capital is represented by Richard W. Ward, who has an office Plano, Texas. Sequoia Capital Partners, LLC filed a Chapter 11 involuntary petition against Frisco, Texas-based YITC-GP, LLC, on April 27, 2010 (Bankr. E.D. Tex. Case No. 10-41309). * Corporate Debt Discharged in Officer's Bankruptcy --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals for the Seventh Circuit in Chicago ruled on Jan. 21 that fiduciary duties toward creditors thrust upon officers of an insolvent company don't mean that a corporate officer can't discharge a company debt in his own bankruptcy, Mr. Rochelle relates that the case involved the head of an advertising agency that went bankrupt. A client paid the agency to buy advertising space. When the agency went bankrupt, some media hadn't been paid, with the result that the client had to pay twice. When the agency's head filed for personal bankruptcy, the client sued in bankruptcy court for a declaration that the debt wasn't dischargeable. The client relied on the notion under most state law that officers of an insolvent company assume fiduciary duties to creditors of the company. The client argued that the company officer wasn't entitled to discharge the debt in his personal bankruptcy because he committed fraud while acting in a fiduciary capacity. According to Mr. Rochelle, upholding the bankruptcy court, U.S. Circuit Judge David F. Hamilton ruled that not every fiduciary duty under state law qualifies as the type of fiduciary duty on which a debt can be exempted from discharge. In the process, he agreed with the U.S. Court of Appeals in New Orleans and differed with several district and bankruptcy courts. Accepting the creditor's argument in the absence of fraud, Judge Hamilton said, "would go a long way toward imposing nondischargeable personal liability on corporate officers and directors for general corporate debts of faltering corporations." Judge Hamilton cited the familiar rule that exceptions to discharge must be construed narrowly. The appellate case is Follett Higher Education Group, Inc., an Illinois corporation, v. Jay Berman, No. 10-1882 (7th. Cir.). The three-judge panel consists of Circuit Judges Michael Stephen Kanne, John Daniel Tinder, and David Frank Hamilton. A copy of the January 21, 2011 decision, penned by Judge Hamilton, is available at http://is.gd/3uMDTzfrom Leagle.com. * Industry Review Cues S&P's Rating Actions on U.S. Oil & Gas Cos. ------------------------------------------------------------------ Standard & Poor's Ratings Services took several rating actions on 16 U.S. oil and gas exploration and production companies following an industry review. S&P's review on the sector followed S&P's Sept. 30, 2010, revision of S&P's exploration and production recovery criteria. The new approach aims to better reflect S&P's expectation for commodity prices and reserve values in a default scenario. The rating actions S&P took, were on speculative-grade companies and affected specific issues and their respective recovery ratings. S&P did not take any corporate credit rating actions. (Standard & Poor's recovery rating scale ranges from '6', indicating expectations of negligible [0%-10%] recovery in a payment default, to '1+', indicating expectations of full [100%] recovery.) S&P included in its reviews an updated reserve report utilizing S&P's new price deck. Ratings List Issue Ratings lowered; Recovery Ratings Revised To From Quicksilver Resources Inc. (B+/Stable/--) Senior Unsecured B B+ Recovery Rating 5 3 BreitBurn Energy Partners (B+/Stable/--) Senior Unsecured B B+ Recovery Ratings 5 4 Helix Energy Solutions Group Inc. (B/Stable/--) Senior Unsecured CCC+ B- Recovery Ratings 6 5 Rosetta Resources Inc. (B/Stable/--) Senior Unsecured B- B+ Recovery Rating 5 2 Chaparral Energy Inc. (B/Stable/--) Senior Unsecured B B+ Recovery Rating 4 2 NFR Energy LLC (B/Stable/--) Senior Unsecured B- B Recovery Rating 5 4 Venoco Inc. (B/Stable/--) Second-Lien Secured B BB- Recovery Rating 4 1 Delta Petroleum Corp. (CCC/Negative/--) Senior Unsecured CCC- CCC Recovery Rating 5 4 Dune Energy Inc. (CCC-/Negative/Unsolicited) Second-Lien Secured CC CCC- Recovery Rating 5 4 Issue Ratings Raised; Recovery Ratings Revised To From Penn Virginia Corp. (BB-/Stable/--) Subordinated B+ B Recovery Rating 5 6 Forest Oil Corp. (BB-/Stable/--) Senior Unsecured BB- B+ Recovery Rating 4 5 Clayton Williams Energy Inc. (B/Stable/--) Senior Unsecured B B- Recovery Rating 4 5 Issue Ratings Unchanged; Recovery Ratings Revised To From Whiting Petroleum Corp. (BB/Stable/--) Recovery Rating 4 3 Range Resources Corp. (BB/Stable/--) Recovery Rating 3 4 Bill Barrett Corp. (BB-/Stable/--) Recovery Rating 3 4 PetroQuest Energy Inc. (B/Stable/--) Recovery Rating 4 3 * Reports on State Debt Woes Exaggerated, Nonprofit Group Says -------------------------------------------------------------- Dow Jones Newswires' Kelly Nolan reports that the nonprofit Center on Budget and Policy Priorities said in a report Thursday recent media reports that suggest state and local governments could default on their debt or declare bankruptcy because of large budget deficits and unfunded pension liabilities overstate the issue. The nonpartisan policy group, according to Dow Jones, said commentators have conflated states' fiscal problems, caused by the recession, with longer-term issues of debt, pension obligations, and retiree health costs. This has created "the mistaken impression that drastic and immediate measures are needed to avoid an imminent fiscal meltdown," the report said. According to Dow Jones, Iris J. Lav wrote the report with Elizabeth McNichol. "States have adequate tools and means to meet their obligations," they wrote. "The potential for bankruptcy would just increase the political difficulty of using these other tools to balance their budgets, delaying the enactment of appropriate solutions." It is far "more constructive" to focus on fixing these basic building blocks of state and local finance than to "proclaim a crisis based on exaggerations of imminent threats," Ms. Lav said in a conference call with reporters, according to Dow Jones. Dow Jones also relates Ms. Lav estimated that states will face a $125 billion shortfall for fiscal 2012, which starts July 1 in most cases. But these financial woes should subside when the economy improves, she added. In the meantime, state and local governments have addressed these gaps through using reserve funds, cutting costs and raising taxes, among other things. * Restructuring of Hotel Portfolio Debts Seen This Year ------------------------------------------------------- A report by The Wall Street Journal's Mike Spector and Kris Hudson indicates several restructurings of pricey hotel portfolios taken private during the boom and loaded with debt will likely to occur this year. The WSJ report states that: -- CNL Hotels & Resorts Inc., a collection of eight U.S. luxury resorts held by a Morgan Stanley fund, has nearly a third of its $3.3 billion in debt coming due Feb. 1. -- Kerzner International Resorts Inc., owner of the Atlantis resort in the Bahamas, has half of its $2.6 billion of debt expiring in September. As reported in today's Troubled Company Reporter, people familiar with the matter have told the Journal Highland Hospitality Corp. is nearing a deal with creditors, including Ashford Hospitality Trust, Prudential Financial Inc., Barclays PLC and Blackstone Group LP, to restructure $1.8 billion in debt outside of bankruptcy court. The Journal notes the hotel-restructuring wave comes just as the hospitality sector rebounds from the recession. Hotel values had declined an estimated 55% between mid-2007 and mid-2009, according to Green Street Advisors Inc. Since then, values have recovered, along with hotel occupancy and nightly rates. Still, hotel values remain 25% below their mid-2007 peak, according to Green Street, according to the Journal. The upshot is that the hotel industry's resurgence isn't happening fast enough to help owners of troubled hotels refinance or pay down billions in mortgages that come due over the next two years, including more than $9 billion alone in securitized mortgages. That has left owners of troubled hotel properties scrambling to rework their debts, the Journal says. * Colony-Led Group Said to Buy $820MM in Failed Bank Mortgages -------------------------------------------------------------- According to The Wall Street Journal's Eliot Brown, people familiar with the matter said the Federal Deposit Insurance Corp. is set to announce as early as Wednesday that a group led by Colony Capital LLC was awarded two portfolios with $820 million of commercial and residential mortgages seized from failed banks. The price couldn't be determined. According to Mr. Brown, Colony is now emerging as one of the dominant players in the acquisition of distressed assets from the Federal Deposit Insurance Corp. Mr. Brown relates Los Angeles- based Colony, led by Chairman Tom Barrack, made headlines last year by joining a group that bought Miramax Films. Colony already has won four other portfolios of FDIC mortgages valued at more than $3 billion, making it the largest winner of multiple deals. Mr. Brown also notes the firm bid and lost on the single-biggest FDIC deal, the $4.5 billion in real-estate assets of the Chicago- based Corus Bank won by a Starwood Capital-led group. No other bidder has won more than two portfolios. The Journal notes the FDIC sold $11.8 billion of commercial- property assets last year through structures similar to the Colony deals, and analysts expect a similar volume this year. The Journal also relates Edward Loyd, CEO of Loyd Capital Management, one of the losing bidders on numerous FDIC deals, has said the fact that Colony keeps winning means that others will stop bidding, thus depressing prices from a lack of competition. "Economies of scale are killing the competitiveness of this process," Mr. Loyd said, as the number of bidders fell by the end of 2010. "It's a flawed system." As policy, the FDIC awards each portfolio to the highest bidder "that best maximizes the return," a spokeswoman said, according to the Journal. * Bradley Arant Attorneys Publish Creditors' Rights Law Handbook ---------------------------------------------------------------- Bradley Arant Boult Cummings LLP partners William L. Norton, IIII, and Roger G. Jones have co-authored the 2010 edition of the Norton Creditors' Rights Handbook. The attorneys have worked together for over twenty year and are members of the firm's Bankruptcy, Restructuring and Distressed Investing Group. The Norton Creditors' Rights Handbook, published by ThomsonReuters, is a definitive resource for bankruptcy attorneys, in-house counsel, credit managers and others regarding controlling credit transactions. It provides a narrative outline of the three major steps in the debtor-creditor relationship: inception, out- of-court workout, and bankruptcy. The text analyzes the important laws and regulations in effect, identifies potential problem areas at each juncture of the process, offers practice-proven strategies for avoiding creditor traps and pitfalls, and includes forms used to document various transactions. For more information, or to purchase a copy, visit http://ResearchArchives.com/t/s?7282 This is the second significant publication by members of the Bradley Arant Boult Cummings Bankruptcy, Restructuring and Distressed Investing Group in the past year. In the spring of 2010, Patrick Darby co-authored the ABI Guide to Chapter 9. About Bradley Arant Boult Cummings LLP Tracing its roots to 1871, Bradley Arant Boult Cummings LLP has more than 380 attorneys in seven offices. The law firm maintains offices in Birmingham, Huntsville, and Montgomery, Alabama; Jackson, Mississippi; Charlotte, North Carolina; Nashville, Tennessee; and Washington, D.C. The firm's lawyers serve clients locally, regionally, nationally and internationally, and provide services across a wide range of industries, including accounting, automotive, banking and finance, biotechnology, life sciences, construction, education, emerging business, energy, entertainment, equipment leasing, forest products, government contracts, health care, life sciences, hospitality, insurance, manufacturing, materials and aggregate production, media and communications, mining, municipal and public finance, oil and gas, pharmaceuticals and medical devices, public utilities, real estate, retail, steel, technology, telecommunications, textiles, transportation, and venture capital. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Feb. 3-5, 2011 AMERICAN BANKRUPTCY INSTITUTE Caribbean Insolvency Symposium Westin Casuarina Resort & Spa, Grand Cayman Island Contact: 1-703-739-0800; http://www.abiworld.org/ Feb. 18, 2011 WHARTON RESTRUCTURING CLUB 7th Annual Wharton Restructuring and Turnaround Conference The Union League, Philadelphia, Pa. Contact: http://whartonrestructuringconference.org/ Colin McGinnis -- mcginnic@wharton.upenn.edu Adam Piekarski -- adamjp@wharton.upenn.edu Avi Robbins -- arobb@wharton.upenn.edu Feb. 24-25, 2011 AMERICAN BANKRUPTCY INSTITUTE Valcon Four Seasons Las Vegas, Las Vegas, Nev. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 4, 2011 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Hyatt Regency Century Plaza, Los Angeles, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 7-9, 2011 AMERICAN BANKRUPTCY INSTITUTE Conrad Duberstein Moot Court Competition Duberstein U.S. Courthouse, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - Florida Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 10-12, 2011 AMERICAN BANKRUPTCY INSTITUTE SUCL/ Alexander L. Paskay Seminar on Bankruptcy Law and Practice Marriott Tampa Waterside, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 17-19, 2011 AMERICAN BANKRUPTCY INSTITUTE Byrne Judicial Clerkship Institute Pepperdine University School of Law, Malibu, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ April 27-29, 2011 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott, Chicago, IL Contact: http://www.turnaround.org/ May 5, 2011 AMERICAN BANKRUPTCY INSTITUTE Nuts and Bolts - New York City Association of the Bar of the City of New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ May 6, 2011 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Hilton New York, New York, N.Y. Contact: 1-703-739-0800; http://www.abiworld.org/ June 6, 2011 AMERICAN BANKRUPTCY INSTITUTE Canadian-American Cross-Border Insolvency Symposium Fairmont Royal York, Toronto, Ont. Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Mich. Contact: http://www.abiworld.org/ July 21-24, 2011 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Hyatt Regency Newport, Newport, R.I. Contact: 1-703-739-0800; http://www.abiworld.org/ July 27-30, 2011 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Sanctuary at Kiawah Island, Kiawah Island, S.C. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 4-6, 2011 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hotel Hershey, Hershey, Pa. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 14, 2011 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Tampa Convention Center, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. __, 2011 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Dublin, Ireland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 25-27, 2011 TURNAROUND MANAGEMENT ASSOCIATION Hilton San Diego Bayfront, San Diego, CA Contact: http://www.turnaround.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ April 3-5, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Grand Hyatt Atlanta, Atlanta, Ga. Contact: http://www.turnaround.org/ Apr. 19-22, 2012 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2012 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 2-4, 2012 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ November 1-3, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Westin Copley Place, Boston, Mass. Contact: http://www.turnaround.org/ Nov. 29 - Dec. 2, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ April 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ October 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: Jan. 25, 2011 ********* 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 by e-mail. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases by individuals and business entities estimating assets and debts or disclosing assets and liabilities at less than $1,000,000. The list includes links to freely downloadable images of the small-dollar business-related 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. Jhonas Dampog, 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 2011. 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 ***