/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/110705.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, July 5, 2011, Vol. 15, No. 184 Headlines AHERN RENTALS: Moody's Withdraws 'Caa3' Corporate Family Rating ALISAL WATER: Fitch Affirms Issuer Derfault Rating at 'BB-' ALLEN FAMILY: Seaford to Open July 25 Auction ALLIANCE ONE: Cut by Moody's to SGL-4; Outlook Negative ALLIED IRISH: Completes Acquisition of EBS Building Society ALLIED IRISH: To Raise EUR5 Billion Capital from NPRFC ALLIED IRISH: Has Settlement With Aurelius, Minister of Finance ALLIED IRISH: DBRS Downgrades Subordinated Debt Rating to 'D' ALLIED SPECIALTY: Moody's Withdraws Ratings, Including 'B2' PDR ALLIED SPECIALTY: S&P Withdraws 'B+' Corporate Credit Rating AMBAC FIN'L: Has Motion for Securities Class Actions Settlement AMBAC FIN'L: D&O Claims Bar Date Extended to Aug. 1 AMBAC FIN'L: OCI Seeks State Court Nod to Retain Roger Peterson AMBAC FIN'L: Incentive Plan Annual Report to Be Filed Late AMERICAN AXLE: Extends Maturity of 2004 Credit Facility to 2016 AMERICAN GREETINGS: S&P Affirms 'BB+' CCR; Outlook Positive AMERICAN RESOURCES: A.M. Best Affirms FSR at 'B' ANCHOR BANCORP: McGladrey & Pullen Raises Going Concern Doubt ANGLO IRISH BANK: DBRS Downgrades Senior Debt Rating to 'CCC' ARCADIA RESOURCES: BDO USA Raises Going Concern Doubt ARIZONA ELITE: Case Summary & 3 Largest Unsecured Creditors AXIS EQUIPMENT: DBRS Puts BB Provisional Rating on Class D Notes BANKUNITED FIN'L: Court OKs Bast Amron for Avoidance Suits BANNING LEWIS: Amending Disclosure to Reflect Auction BARNES BAY: To Face Purchasers at Aug. 4 Plan Hearing BERNARD L MADOFF: Trustee Loses Forum Fight With Mets Owners BERNARD L MADOFF: Each Feeder Fund to Lose $500,000 With Ruling BERRY-HILL GALLERIES: Paulson Fund Buys Debt for $10-Mil. BING CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors BIOJECT MEDICAL: Sells Notes to Directors and Officers BLUEGREEN CORP: Board Seeks to Sell Communities Business BORDERS GROUP: Najafi to Open July 19 Auction for Assets BORDERS GROUP: $505MM DIP Facility Extended to Allow Sale Process BORDERS GROUP: Withdraws 51-Store Closing Sales Motion BORDERS GROUP: Proposes To Sell Torrance Mortgage Loan for $6.6MM BRIAR RIDGE: Case Dismissed; Re-Filing Barred Until May 2012 C.A.A.R.T ENTERPRISES: Voluntary Chapter 11 Case Summary CASCADIA PARTNERS: Contested Plan Hearing on Thursday CATALYST PAPER: Re-Build of Port Alberni-Area Dam Set to Begin CATHOLIC CHURCH: Milw. Committee Proposes Info Access Protocol CATHOLIC CHURCH: Milw. Panel Proposes BMI as Computer Consultant CATHOLIC CHURCH: Milw. Raises Concerns on Berkeley Hiring CENTERPOINT ENERGY: Moody's Upgrades Debt Ratings From 'Ba1' CIRCLE ENTERTAINMENT: Huff Fund Adds More Insiders in Suit CLARK ATLANTA: Moody's Affirms Ba2 Rating on Series 1995 Bonds COMPOSITE TECHNOLOGY: SingerLewak LLP Approved as Accountants COMPOSITE TECHNOLOGY: Files Schedules of Assets and Liabilities CONFORCE INTERNATIONAL: Recurring Losses Cue Going Concern Doubt CONSOL ENERGY: Moody's Changes 'Ba3' Rating Outlook to Stable CORUS BANKSHARES: Disclosure Statement Hearing on July 29 COUNTRY-WIDE INSURANCE: A.M. Best Downgrades FSR to 'C+' DARLING INTERNATIONAL: Moody's Reviews 'Ba3' CFR For Upgrade DAVID'S BRIDAL: Moody's Upgrades Rating on Term Loan to 'B1' DBSD N.A.: Wins Tentative OK for Plan to Emerge Under Dish DEARBORN LODGING: Plan Outline Requires Additional Revision DEB SHOPS: Organizational Meeting to Form Panel on July 11 DELMARVA RURAL: Files for Chapter 7 Liquidation DENNIS BROWN: Voluntary Chapter 11 Case Summary EAST COAST: Court Approves James A. McFarland as Sole Member EAST COAST: Brian Geschickter OK'd to Handle Jamestown Pender Case EASTMAN KODAK: ITC Modifies Judge's Findings in Patent Lawsuit EDISON INTERNAIONAL: Moody's Lowers CFR to B3; Outlook Negative EL PASO CORP: Moody's Corrects Ratings for Preferred Stock & Debt ELDORADO ARTESIAN: Ehrhardt Keefe Raises Going Concern Doubt ELEPHANT & CASTLE: Files for Bankruptcy to Pursue Asset Sale ELITE PHARMACEUTICALS: Significant Losses Cue Going Concern Doubt EMBLEMHEALTH, INC: A.M. Best Affirms 'B' Fin'l Strength Rating EMISPHERE TECHNOLOGIES: Mark Rachesky Holds 44.4% Equity Stake ENCOMPASS GROUP: Posts $2.4 Million Net Loss in Dec. 31 Quarter ENRON CORP: Redemption of Commercial Paper Immune From Recovery ENTRAVISION COMMUNICATIONS: S&P Affirms 'B' CCR; Outlook Stable EVEREADY INSURANCE: A.M. Best Downgrades FSR to 'C++' EXIDE TECHNOLOGIES: Claims Objection Deadline Extended to July 31 EXIDE TECHNOLOGIES: Wins Approval of Pacific Dunlop Settlement EXIDE TECHNOLOGIES: Settles $800-Mil. EPA Claim for $68-Mil. FIRST MARINER: Tontine Partners No Longer Owns Shares FIRST SECURITY: Director Marler Resigns to Spend Time With Family FULTON HOMES: Bankruptcy Court Confirms Plan of Reorganization GENERAL GROWTH: Court Closes 67 Affiliates' Chapter 11 Cases GFI GROUP: Moody's Assigns 'Ba2' Issuer Rating GEORGE-MARSHALL: Dominion Realty Buys 1.8 Acres for $2.05MM GP WEST: Taps Bufete Law Firm as Bankruptcy Counsel GP WEST: Hires Carrasquillo as Financial Consultant GREAT ATLANTIC: Has Deals Extending Lease Decision Deadline HARRISBURG, PA: Legislature Takes Bankruptcy Off the Table HEARUSA INC: Posts $46.9 Million Net Loss in Q1 Ended April 2 HILL DAIRY: Case Summary & 20 Largest Unsecured Creditors HOVNANIAN ENTERPRISES: S&P Cuts CCR to 'CCC'; Outlook Negative JACKSON GREEN: Returns to Ch. 11; Lender Wants Case Dismissed JCK HOTELS: Files Schedules of Assets and Liabilities JER INVESTORS: May Have to File for Ch. 7 or Ch. 11 Bankruptcy JOHNSON COUNTY: Case Summary & 6 Largest Unsecured Creditors KB HOME: S&P Affirms 'B+' Corp. Credit Rating; Outlook Negative KIK CUSTOM: Moody's Affirms 'Caa1' Corporate Family Rating LAS VEGAS MONORAIL: Heading for Sept. 14 Confirmation LEHMAN BROTHERS: Proposes to Implement Claim Determination Process LEHMAN BROTHERS: To Terminate U.S. Bank Derivative Contracts LEHMAN BROTHERS: LBI Trustee Seeks Confirmation on TBA Claims LEHMAN BROTHERS: Seeks Changes to Asset Disposal Process LEHMAN BROTHERS: Wins Approval for Urbanism Sharing Agreement LEVEL 3: John Griffin Discloses 4.88% Equity Stake LOS ANGELES DODGERS: Organizational Meeting on July 13 LOS ANGELES DODGERS: MLB Takeover Inevitable, Attorneys Say LOS ANGELES DODGERS: Warns Monitor Not to Interfere With Team LOS ANGELES DODGERS: MLB Settlement Paved Way for $60-Mil. Loan OK LOUISVILLE SYMPHONY: Set for Aug. 15 Plan Confirmation LUBBOCK HOUSING: Moody's Lifts Rating on Refunding Bonds to Ba2 MARKETING WORLDWIDE: Receives $250,000 from Sale of Debenture MAYHEW CREEK: Case Summary & 5 Largest Unsecured Creditors MERIT GROUP: Court Approves July 20 Auction for All Assets MERRITT AND WALDING: Can Access Bryant Bank Cash Collateral MERUELO MADDUX: Shareholders' Competing Plan Approved MGM RESORTS: Board to Amend Incentive Awards to Exec. Officers MILLENNIUM GLOBAL: Chapter 15 Case Summary MP-TECH: Court OKs Employment of Finley Colmer as Fin'l Advisor MSR RESORT: Court Maintains Plan Filing Exclusivity NAT'L RETAIL PROPERTIES: Fitch Rates Preferred Stock at 'BB+' NBC ACQUISITION: Expects to Report $98.3MM Net Loss in Fiscal 2011 NEOMEDIA TECHNOLOGIES: To Sell $1.05-Mil. Debenture to YA Global NET ELEMENT: TGR Capital Approves 2011 Equity Incentive Plan NET TALK.COM: Amends Security Purchase Agreements with Investors NORTEL NETWORKS: Cassidy Turley OK'd as Santa Clara Asset Broker NORTEL NETWORKS: Gets Dec. 14 Extension of Stay Period Under CCAA NORTHERN BERKSHIRE: Court OKs Claims Agent Hiring NORTHERN BERKSHIRE: U.S. Trustee Names 5-Member Creditors Panel NORTHERN BERKSHIRE: Final Cash Collateral Hearing on Thursday NORTHERN BERKSHIRE: Sec. 341 Creditors Meeting on July 22 ONEBEACON INSURANCE: Moody's Assigns '(P)Ba1' Pref. Stock Rating ORCHARD SUPPLY: Moody's Lowers Corporate Family Rating to 'B3' OVERLAND STORAGE: Board OKs Retention Grants to Exec. Officers PBJT935927 2008: Case Summary & 3 Largest Unsecured Creditors PCS EDVENTURES!.COM: Reocurring Losses Prompt Going Concern Doubt PEGASUS RURAL: Seeks Extension of Schedules Filing to July 18 PILGRIM'S PRIDE: Moody's Downgrades CFR to B2; Outlook Stable PITTSBURGH CORNING: Asks Court to Reconsider Chapter 11 Plan POINT BLANK: Debtor & Committees Have Exclusivity Until October PRE-PAID LEGAL: Moody's Affirms 'B1' Corporate Family Rating PRE-PAID LEGAL: S&P Affirms 'B' CCR on Financing Modification QUEPASA CORP: Files Form S-8; Registers 2 Million Common Shares QUINCY MEDICAL: Case Summary & 20 Largest Unsecured Creditors RADIENT PHARMACEUTICALS: Settles Alpha Capital Securities Suit RADIENT PHARMACEUTICALS: Enters Into Noteholders Exchange Pact RAINBOWVISION SANTA: Case Summary & 20 Largest Unsecured Creditors RENT-A-CENTER INC: Moody's Affirms 'Ba2' Corporate Family Rating RIVIERA HOLDINGS: S&P Assigns 'CCC+' Corporate; Outlook Stable ROBERT J SAUSA: Lawyer Fees Denied for Lack of Hiring Approval ROPER INDUSTRIES: Moody's Raises Sr. Unsecured Rating From 'Ba1' ROUND TABLE: Frank Rimerman Approved to Prepare Financial Reports ROUND TABLE: Court Approves Davis Wright to Handle Tax Law ROUND TABLE: Farella Braun OK'd on Non-Bankruptcy Corporate Law SAGITTARIUS RESTAURANTS: Moody's Affirms 'Caa1' Corporate Rating SHEARER'S FOODS: Moody's Confirms CFR at B2; Outlook Negative SHILO INN: Case Summary & 17 Largest Unsecured Creditors SIRIUS XM: S&P Affirms 'BB-' Corporate Credit Rating SOURCEGAS LLC: Moody's Reviews 'Ba2' CFR for Possible Upgrade SPECIALTY TRUST: Exits Chapter 11 Under Northlight STANDARD STEEL: S&P Puts 'B' Credit Rating on Watch Positive STERLING FINANCIAL: Fitch Upgrades Long-Term IDR to 'B' SUNWEST MANAGEMENT: Thompson & Knight Exits Class Action Suit SUPERMEDIA INC: S&P Affirms CCR at 'B-'; Outlook Stable TAYLOR BEAN: Former Chair Farkas Sentenced to 30 Years in Prison TECHDYNE LLC: Has Green Light to Hire Jennings Strouss as Counsel TECHDYNE LLC: Sec. 341 Creditors' Meeting on July 12 TEN X: Case Summary & Largest Unsecured Creditor THEMEING SOLUTIONS: Case Summary & 20 Largest Unsecured Creditors TRANS ENERGY: Elects Three New Members to Board of Directors TRIBUNE CO: Judge Carey Tells Rival Plan Groups To Continue Talks TRIBUNE CO: Wants Removal Period Extended to Oct. 31 TRIBUNE CO: Stay of Avoidance Suits Extended to Dec. 30 TRIBUNE CO: Debtor & Noteholders Make Closing Arguments for Plans TROPICANA ENT: Court OKs Settlements With Kirkland, AlixPartners TROPICANA ENT: Fee Allocation Dispute Still Pending in Court UNIFI INC: S&P Affirms 'B' Corp. Credit Rating; Outlook Positive UNITY MUTUAL: A.M. Best Withdraws C++ Financial Strength Rating UNIVERSAL CITY: Moody's Raises Notes Rating to 'Baa2' From 'B3' VISHAY INTERTECHNOLOGY: S&P Hikes CCR to 'BB+' on Higher Profit VISUALANT INC: Closes Security Purchase Pact with Ascendiant VISUALANT INC: Intends to Acquire Eagle for $1 Million VITRO PACKAGING: Chapter 15 Case Summary VITRO SAB: No Ruling Yet on Involuntaries Against U.S. Units VITRO SAB: Court Denies Petitioning Creditors' Lift Stay Motion WASHINGTON MUTUAL: Judge Grants FDIC's Bid to Toss Kickback Suit WASHINGTON MUTUAL: Preferreds to Share Docs With Equity Panel WCK, INC: Case Summary & 4 Largest Unsecured Creditors WEST END FINANCIAL: Albert Togut Named Examiner WEST PENN: Fitch Places Bonds on Rating Watch Evolving WESTFORD SPECIAL: Wins Dismissal of Liquidation Petition WESTMINSTER MANOR: Fitch Affirms 'BB+ Rating on Revenue Bonds WOODEND, LLC: Case Summary & 4 Largest Unsecured Creditors WPCS INTERNATIONAL: Receives Default Notice from Bank of America W.R. GRACE: Lan Proceedings Before Judge Buckwalter on June 29 W.R. GRACE: Plan Proceedings Before Judge Buckwalter on June 28 W.R. GRACE: To Release Q2 Financial Results on July 26 W.R. GRACE: Proposes to Bid for "Confidential" Acquisition XL GROUP: Fitch Affirms BB+ Ratings on Preferred Ordinary Shares * Remainder Interest in Trust Protected From Creditors * Same-Sex Bankruptcy May Go Directly to Circuit Court * FDIC to Discuss on Agency's New Powers to Liquidate Large Firms * Presidential Candidate Ron Paul Suggests Bankruptcy for U.S. * Hawaii Bankruptcy Filings Down 25.6% in June * Dewey & LeBoeuf Corporate Trust Pro Joins Drinker Biddle * Large Companies With Insolvent Balance Sheets ********* AHERN RENTALS: Moody's Withdraws 'Caa3' Corporate Family Rating --------------------------------------------------------------- Moody's Investors Service has withdrawn all ratings of Ahern Rentals, Inc., including the Caa3 Corporate Family Rating and Ca/LD Probability of Default Rating. RATINGS RATIONALE The credit rating has been withdrawn because Moody's Investors Service believes it has insufficient or otherwise inadequate information to support the maintenance of the credit rating. These ratings were withdrawn: -- Corporate Family Rating, Caa3; -- Probability of Default Rating, Ca/LD; -- $238 million 9.25% second priority global notes due August 2013, Ca (LGD-4, 66%) Speculative Grade Liquidity Rating, SGL-4. Ahern Rentals, Inc., headquartered in Las Vegas, NV, is an equipment rental company with a network of 71 branches in the United States. The company specializes in high reach equipment. For the twelve months ended September 30, 2010 Ahern reported revenues of $283 million. ALISAL WATER: Fitch Affirms Issuer Derfault Rating at 'BB-' ----------------------------------------------------------- As part of its continuous surveillance effort, Fitch Ratings takes these actions on Alisal Water Corporation (Alco): -- $7.7 million of outstanding 2007A senior secured taxable bonds affirmed at 'BB+'; -- Issuer Default Rating affirmed at 'BB-'. The Rating Outlook is Stable. Rating Rationale: -- Alco's ratings reflect the utility's relatively weak financial metrics, particularly with regard to liquidity, although a recent rate increase has somewhat improved Alco's financial profile. -- Operations are limited, exposing the credit to potentially significant volatility in financial performance. -- While the California regulatory environment is relatively predictable, with the utility achieving rate relief as needed, rates are high. -- The customer base is small and includes a narrow economic profile and very high unemployment. -- Capital needs are manageable, which should help improve Alco's capital structure over time. -- The utility provides an essential service and water supplies are sufficient to meet long-term demands. Key Rating Drivers: -- Sustained performance of key financial metrics and improvement in liquidity levels; -- Improvement in capital structure and structure of expected debt issuance; -- Changes in California's regulatory environment. Security: The bonds are secured by a security interest in pledged collateral, which consists of all tangible and intangible assets owned by Alco. Rating Rationale: Despite a modest decline in water sales, Alco's overall financial position improved for calendar 2010 (Alco's fiscal year also ends December 31) as a result of various surcharges and the accounting for a general rate increase, which was approved in March 2011 by the California Public Utilities Commission (CPUC). For 2010, EBITDA covered interest by 3.2 times (x) (up from 1.9x in 2009) and EBITDA covered total debt service by 2.2x (up from 1.2x). Likewise, funds from operations improved to 17.7% of outstanding debt in 2010 from just 6.5% the year prior. While the rate adjustments enhanced Alco's financial profile overall, because the rate adjustments were not enacted until 2011, actual cash flows did not improve at the level of audited net income. This, coupled with ongoing capital expenditures that exceeded depreciation expense, led to a drawdown of around one- half of Alco's reserve levels. As a result, liquidity fell to a marginal 14 days cash in 2010 from an already weak 32 days in 2009. With the rate base adjustments, Alco's liquidity position should rebound somewhat for 2011 and allow some further improvement in the following years as rate adjustments take effect and future rate offsets for capital expenditures are recovered. The utility is regulated by the CPUC but regulations are fairly well defined and the utility has received timely rate relief. However, as a result of the recent rate increase passed by the CPUC, Alco's residential charges, which were already relatively high, have risen to a very high 1.4% of median household income based on 1,400 cubic feet per month. While Fitch expects the CPUC will allow future adjustments to cover necessary operating and capital expenditures and to generate a continued return on equity commensurate with other similarly-sized private water utilities in the state (currently in the 10% range), the system's level of charges poses some concern. Debt-to-total-capital remained relatively high for the rating category at 85% for 2010, largely unchanged from the prior year. However, with the increase in net income in 2010, debt-to-EBITDA improved to 4.2x (average for the rating level) after being much greater in recent years. The system's elevated debt profile continues to be a major credit factor and this is expected to continue, as Alco anticipates issuance of an additional $5.7 million in senior secured bonds later this year. Somewhat mitigating the concern of the additional debt on Alco's capital structure is that a portion of the bond proceeds is expected to refund some of Alco's existing obligations and also will provide for the effective conversion of some loans to an equity position. As a result, Alco's capital structure should not be significantly diminished over the intermediate term and should ultimately improve over time with the higher equity position and steady amortization of principal, which is above average compared to other water and sewer utilities nationwide. Alco serves as a private retail water company in Monterey County, California, serving a portion of the city of Salinas and a population of around 29,000. Part of Alco's certificated service area includes undeveloped land within the city's extra-territorial jurisdiction. Water supplies are derived exclusively from groundwater sources, which are estimated to be sufficient to meet customer demands for the foreseeable future. ALLEN FAMILY: Seaford to Open July 25 Auction --------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware approved proposed bidding procedures in connection with the sale of substantially all of the assets of Allen Family Foods, Inc. and its debtor affiliates. The deadline for submission of bids for the Debtors' Available Assets is July 20, 2011 at 12:00 noon prevailing Eastern Time. If Qualified Bids are timely received, the Debtors may conduct an auction on July 25, 2011, at 10:00 a.m. prevailing Eastern Time, at the offices of Young Conaway Stargatt & Taylor LP, in Wilmington, Delaware. A sale hearing is to be held on July 27, at 11:00 a.m. prevailing Eastern Time. Objection to the sale of the Available Assets must be filed with the Court no later than July 20. The Debtors are currently proposing to sell substantially all of their assets to Seaford Milling Company for $30 million plus inventory in an amount not to exceed $38 million, including assumption of very limited liabilities, pursuant to an abbreviated sale process and subject to higher and better bids. The Court has approved the award of a break-up fee and expense reimbursement, as modified, to Seaford if the firm is not chosen as the successful bidder in any conducted auction. The aggregate amount of the Break-Up Fee and Expense Reimbursement will not, under any circumstances, exceed $2,100,000; provided that any portion of the $600,000 Expense Reimbursement not applied to actual out-of-pocket fees and expenses will be payable to Seaford as part of the Break-Up Fee, Judge Carey ruled. The obligations of the Debtors to pay the Break-Up Fee and Expense Reimbursement will be entitled to administrative expense claim status under the Bankruptcy code, the Court added. All objections to the Bid Procedures Motions to the extent not withdrawn, waived or settled are overruled and denied on their merits. Before the entry of the Court's ruling, the U.S. Trustee for Region 3 and the Official Committee of Unsecured Creditors filed formal objections to the Court. Both parties complained that the proposed $2,625,000 Break-Up Fee plus the $600,000 Expense Reimbursement are excessive and warranted. The U.S. Trustee further contended that the sale timeline is extremely fast and constitutes another reason why the sale process provides an unfair advantage for the stalking horse bidder. For its part, the Creditors' Committee expressed concerned that the Bid Procedures appear to dispose of the assets quickly, without regard to the many creditors that will be left without recovery. About Allen Family Foods Allen Family Foods Inc. is a 92-year-old Seaford, Del., poultry company. Allen Family Foods, along with two affiliates, filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-11764) on June 9, 2011. It estimated assets and liabilities between $50 million and $100 million in its petition. Affiliates that filed separate Chapter 11 petitions are Allen's Hatchery Inc. and JCR Enterprises Inc. Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serve as counsel to the Debtors. BMO Capital Markets is the Debtors' investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Lowenstein Sandler PC and Womble Carlyle Sandridge & Rice, PLLC, serve as counsel for the official committee of unsecured creditors. J.H. Cohn LLP serves as the Committee's financial advisor. ALLIANCE ONE: Cut by Moody's to SGL-4; Outlook Negative ------------------------------------------------------- Moody's Investors Service downgraded Alliance One International, Inc.'s Speculative Grade Liquidity Rating to SGL-4 from SGL-3 and revised the company's outlook to negative from stable. Moody's also affirmed all of the company's long-term ratings including its Corporate Family Rating and Probability of Default Rating of B2. RATINGS RATIONALE The negative outlook reflects Moody's expectation that operating risks in the tobacco leaf sector have materially increased and will continue to pressure operating profitability and cash flow generation for the next 12 to 18 months. While Moody's expects supply conditions to self-correct overtime, ongoing structural changes in the industry including customer vertical integration will likely keep competition elevated. Moody's affirmation of the company's long-term ratings, including its Corporate Family Rating of B2, reflects Moody's view that AOI's operating performance will gradually stabilize as it begins to realize the benefits of key cost and strategic initiatives. The downgrade of the company's Speculative Grade Liquidity rating to SGL-4 reflects its weak intrinsic liquidity profile driven by limited covenant cushion and depressed cash flow. "AOI's ratings reflect the prospect for greater near-term volatility in profitability due to a significant oversupply in the tobacco leaf market as well as risks associated with the company successfully executing a series of key strategic initiatives needed to improve operating margins and competitive position," says Moody's Senior Vice President Janice Hofferber. "These risks are heightened by the company's very high leverage and weakened liquidity as well as ongoing risks associated with its heavy commodity orientation, exposure to geopolitical and currency risk," added Ms. Hofferber. Ratings downgraded of AOI include: - Speculative Grade Liquidity rating to SGL-4 from SGL-3 Ratings of AOI affirmed (point estimates revised) include the following: - Corporate family rating of B2 - Probability of default rating of B2 - $290 million senior secured revolving credit facility due March 2013 at Ba2 (LGD1, 4%); - $635 million 10% senior unsecured notes due July 2016 at B2 (LGD4, 55%); - $6 million 8.5% senior notes due 2012 at B2 (LGD 4, 55%); and - $115 million subordinated convertible debt due July 2014 at Caa1 (LGD6, 95%). Outlook is negative Alliance One International, Inc. and Intabex Netherlands, B.V. are co-borrowers under the senior secured revolving credit facility. The principal methodology used in rating Alliance One International Inc. was the Global Food - Protein and Agriculture Industry Methodology, published September 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history. Headquartered in Morrisville, North Carolina, Alliance One International, Inc. is one of the world's leading tobacco merchants and processors. Its principal products include flue- cured, burley and oriental tobaccos, which are major ingredient in American -- blend cigarettes. Total revenues for the twelve months ending March 2011 were approximately $2.3 billion. ALLIED IRISH: Completes Acquisition of EBS Building Society ----------------------------------------------------------- Allied Irish Banks, p.l.c., completed the acquisition of EBS Building Society and the formation of one of two pillar banks in Ireland. David Hodgkinson, executive chairman of AIB said, "This is a very significant development for the Irish banking sector and a major step in its repair. The combination of AIB and EBS marks the beginning of a reshaped and revitalised banking sector which will be focused on supporting economic growth and meeting the financial needs of the Irish people. Customers can be assured that, on completion of the planned recapitalisation, the new bank will be very strongly capitalised and its capital will be put to work in the rebuilding of the Irish economy. " EBS, which will now be called EBS Limited, will operate as a standalone, separately branded subsidiary of AIB with its own branch network. The Executive Directors of EBS Limited are Fergus Murphy and Emer Finnan. Non Executive Directors are Philip Williamson and Jim Ruane. They will be joined by Catherine Woods, AIB Non Executive Director and Senior Executives from AIB - Bernard Byrne, Eamonn Hackett and Denis O'Callaghan. Fergus Murphy, EBS Chief Executive will initially report to the Executive Chairman of AIB and will join the AIB Executive Committee. Certain functions within EBS will have dual reporting lines within EBS and to functions within AIB. Every account in EBS Building Society will become an account of the same amount with the new EBS entity and the terms and conditions will remain unchanged, including share accounts. Depositors and borrowers of EBS can continue to carry out their business in the normal way. No action is required on the part of customers. The EUR100,000 Deposit Guarantee Scheme protection continues to apply to EBS customers and AIB customers on a separate basis. For example, an EBS customer will be protected for up to EUR100,000 of deposits in EBS and up to EUR100,000 of deposits in AIB. Customers above EUR100,000 continue to be covered by the Eligible Liabilities Guarantee Scheme. Products held by the same customer in either institution will be treated as totally separate. Neither entity (AIB or EBS) will have rights over a customer's product holding in the separate institution. Customers who have enquiries on the completion of this acquisition can contact the Company on the Company's customer contact number 1850 654 321 Monday to Friday 9.00am to 6.00pm. About Allied Irish Banks, p.l.c. Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a major commercial bank based in Ireland. It has an extensive branch network across the country, a head office in Dublin and a capital markets operation based in the International Financial Services Centre in Dublin. AIB also has retail and corporate businesses in the UK, offices in Europe and a subsidiary company in the Isle of Man and Jersey (Channel Islands). Since the onset of the global and Irish financial crisis, AIB's relationship with the Irish Government has changed significantly. As at Dec. 31, 2010, the Government, through the National Pension Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary shares of the Company (the share of the voting rights at shareholders' general meetings), 10,489,899,564 convertible non- voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On April 8, 2011, the NPRFC converted the total outstanding amount of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby increasing its holding to 92.8% of the ordinary share capital. In addition to its shareholders' interests, the Government's relationship with AIB is reflected through formal and informal oversight by the Minister and the Department of Finance and the Central Bank of Ireland, representation on the Board of Directors (three non-executive directors are Government nominees), participation in NAMA, and otherwise. As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland, noted that there are a number of material economic, political and market risks and uncertainties that impact the Irish banking system, including the Company's continued ability to access funding from the Eurosystem and the Irish Central Bank to meet its liquidity requirements, that raise substantial doubt about the Company's ability to continue as a going concern. The Company reported a net loss of EUR10.16 billion on EUR1.84 billion of interest income for 2010, compared with a net loss of EUR2.33 billion on $2.87 billion of interest income for 2009. The Company's balance sheet at Dec. 31, 2010, showed EUR145.2 billion in total assets, EUR140.9 billion in total liabilities, and stockholders' equity of EUR4.3 billion. ALLIED IRISH: To Raise EUR5 Billion Capital from NPRFC ------------------------------------------------------ Allied Irish Banks, p.l.c., announced that it has concluded discussions with the Government and has agreed the final terms of its capital raising transaction, pursuant to which it proposes to raise EUR5 billion of equity share capital from the National Pensions Reserve Fund Commission and up to EUR1.6 billion by the issue of contingent capital notes to the Minister for Finance. On May 26, 2011, AIB announced that it had signed an agreement with, amongst others, the Minister to acquire Educational Building Society, subject to receipt of all regulatory approvals required. As announced by AIB earlier, completion of the acquisition of EBS by AIB has now taken place. The Minister has stated that the merger of AIB and EBS will form one of the two pillars of Irish banking. On March 31, 2011, the Central Bank of Ireland prescribed a minimum capital target for certain Irish credit institutions of 10.5% Core Tier 1 Capital under a base scenario and 6% Core Tier 1 Capital under a given stress scenario, plus allowing for an additional protective buffer. As a result, AIB is required to increase its Core Tier 1 Capital by c.EUR13.3 billion, and EBS is required to increase its Core Tier 1 Capital by c.EUR1.5 billion. These capital increases are to be completed by July 31, 2011. Following completion of the EBS merger, it is expected that AIB will be required to raise a total of c.EUR14.8 billion of Core Tier 1 Capital, of which c.EUR1.6 billion may be in the form of contingent capital. The Capital Raising will comprise an equity placing of ordinary share capital of EUR5 billion to the NPRFC and an issue of up to EUR1.6 billion of contingent capital convertible notes to the Minister. The Placing will comprise an issue of new Ordinary Shares for cash at a price of EUR0.01 per share. The Contingent Capital Notes Issue will comprise an issue of contingent capital notes for cash. The Contingent Capital Notes will be subordinated tier 2 capital instruments with a five year and one day maturity denominated in units of EUR1,000, issued at par with an aggregate principal amount of up to EUR1.6 billion. In certain circumstances, including if AIB's Core Tier 1 Capital ratio falls, or is likely in the opinion of the Central Bank to fall, below 8.25%, the Contingent Capital Notes will convert immediately and mandatorily in their entirety into ordinary shares at a conversion price of EUR0.01 per Ordinary Share. The Contingent Capital Notes carry a fixed annual mandatory interest rate of 10% of the principal amount, but this may be increased by the Minister up to a maximum amount of 18% per annum if the Contingent Capital Notes are to be sold by the Minister. It has been indicated to AIB by the Minister that it is his intention that any portion of the PCAR Requirement that has not been satisfied by the Capital Raising, other capital generating exercises undertaken by AIB and EBS and any further burden-sharing with the Group's subordinated debt holders, will be satisfied by way of a capital contribution to be made by the State to AIB once the Minister is satisfied that an appropriate level of burden- sharing has been achieved with the Group's subordinated debt holders. It is expected that the Capital Contribution would be given to AIB by the State for no consideration and accordingly no new Ordinary Shares will be issued by AIB to the State in return for the Capital Contribution. The proceeds of the Placing, the Contingent Capital Notes Issue and the Capital Contribution will be used to fund the day-to-day operations of the Group. By strengthening the Group's capital position, the Capital Raising and the Capital Contribution should facilitate the objective of providing for a sustainable future as a systemically important pillar bank, continuing to support customers, and contributing to economic recovery. AIB's continued listing on the Enterprise Securities Market of the Irish Stock Exchange enables Shareholders to continue to trade their shares, ensures that AIB remains subject to market oversight, disclosure and reporting obligations and facilitates AIB's wish to maintain investor relationships and market analyst coverage. The Placing and the Contingent Capital Notes Issue will have a significant positive impact on the Group's capital ratios, further details of which are set out in the circular referred to below to be dispatched to Shareholders shortly in connection with the Capital Raising. The Capital Contribution will also have a positive impact on the Group's capital ratios. To avoid any potential conflict of interest, the three Directors appointed by the Government, Mr Declan Collier, Mr Dick Spring and Dr Michael Somers, have not taken part in the Board's decision to proceed with the Placing and the Contingent Capital Notes Issue. AIB's Board of Directors acknowledges the continued support of the Minister and the Irish State. Circular and Shareholder Meeting To implement the Capital Raising, AIB will dispatch a circular to Shareholders, including a notice to convene an EGM to be held at 10.00 a.m. on Tuesday, July 25, 2011, at Bankcentre, Ballsbridge, Dublin 4, to consider, and if thought fit, pass necessary shareholder resolutions. AIB's Annual General Meeting will also be held on Tuesday, July 26, 2011, commencing at 12 noon at Bankcentre, Ballsbridge, Dublin 4. A separate circular will be dispatched to Shareholders shortly, including a notice to convene the AGM, to consider, and if thought fit, pass the shareholder resolutions to be proposed at the AGM. Pursuant to the Placing, AIB will issue 500,000,000,000 new Ordinary Shares to the NPRFC. Upon completion of the Placing, and following a further allotment of new Ordinary Shares to the NPRFC in lieu of part of the 2011 annual cash dividend on the 2009 Preference Shares that was deferred on May 13, 2011, the NPRFC will hold c.99.8% of the enlarged total issued ordinary share capital of AIB. AIB will at that time have 513,491,220,350 Ordinary Shares in issue, however, it is possible that the total number of Ordinary Shares in issue may decrease by 36,212,608 if a 5% increment, that is prescribed by the terms of the 2009 Preference Shares due to the deferral of part of the 2011 annual dividend, is waived. About Allied Irish Banks, p.l.c. Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a major commercial bank based in Ireland. It has an extensive branch network across the country, a head office in Dublin and a capital markets operation based in the International Financial Services Centre in Dublin. AIB also has retail and corporate businesses in the UK, offices in Europe and a subsidiary company in the Isle of Man and Jersey (Channel Islands). Since the onset of the global and Irish financial crisis, AIB's relationship with the Irish Government has changed significantly. As at Dec. 31, 2010, the Government, through the National Pension Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary shares of the Company (the share of the voting rights at shareholders' general meetings), 10,489,899,564 convertible non- voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On April 8, 2011, the NPRFC converted the total outstanding amount of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby increasing its holding to 92.8% of the ordinary share capital. In addition to its shareholders' interests, the Government's relationship with AIB is reflected through formal and informal oversight by the Minister and the Department of Finance and the Central Bank of Ireland, representation on the Board of Directors (three non-executive directors are Government nominees), participation in NAMA, and otherwise. As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland, noted that there are a number of material economic, political and market risks and uncertainties that impact the Irish banking system, including the Company's continued ability to access funding from the Eurosystem and the Irish Central Bank to meet its liquidity requirements, that raise substantial doubt about the Company's ability to continue as a going concern. The Company reported a net loss of EUR10.16 billion on EUR1.84 billion of interest income for 2010, compared with a net loss of EUR2.33 billion on $2.87 billion of interest income for 2009. The Company's balance sheet at Dec. 31, 2010, showed EUR145.2 billion in total assets, EUR140.9 billion in total liabilities, and stockholders' equity of EUR4.3 billion. ALLIED IRISH: Has Settlement With Aurelius, Minister of Finance --------------------------------------------------------------- Allied Irish Banks p.l.c. announced a settlement of the proceedings before the High Court of Ireland involving Aurelius Capital Master Ltd and the Minister for Finance of Ireland. The Court has declared that the subordinated liabilities order issued by the Court on April 14, 2011, under the Credit Institutions (Stabilisation) Act 2010 in respect of (i) AIB's GBP368,253,000 12.5 per cent. Subordinated Notes due June 25, 2019, and (ii) AIB's EUR868,518,000 12.5 per cent. Subordinated Notes due 2015 is effective as of April 22, 2011, to amend the terms of the Subordinated Liabilities as follows: (i) any interest that may fall due on those liabilities will only be payable at the option of AIB; and (ii) the maturity date of each such liability has been extended to June 25, 2035. Further to AIB's announcement of June 22, 2011, and in accordance with the amendments effected by the SLO, no payment of interest which would otherwise have been due on June 25, 2011, will be made by AIB in relation to the GBP368,253,000 12.5 per cent. Subordinated Notes due June 25, 2019. AIB notes that the SLO is now effective as from April 22, 2011, in respect of all 18 series of Notes which were the subject of the Tender and Consent Memorandum dated May 13, 2011, issued by AIB. About Allied Irish Banks, p.l.c. Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a major commercial bank based in Ireland. It has an extensive branch network across the country, a head office in Dublin and a capital markets operation based in the International Financial Services Centre in Dublin. AIB also has retail and corporate businesses in the UK, offices in Europe and a subsidiary company in the Isle of Man and Jersey (Channel Islands). Since the onset of the global and Irish financial crisis, AIB's relationship with the Irish Government has changed significantly. As at Dec. 31, 2010, the Government, through the National Pension Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary shares of the Company (the share of the voting rights at shareholders' general meetings), 10,489,899,564 convertible non- voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On April 8, 2011, the NPRFC converted the total outstanding amount of CNV shares into 10,489,899,564 ordinary shares of AIB, thereby increasing its holding to 92.8% of the ordinary share capital. In addition to its shareholders' interests, the Government's relationship with AIB is reflected through formal and informal oversight by the Minister and the Department of Finance and the Central Bank of Ireland, representation on the Board of Directors (three non-executive directors are Government nominees), participation in NAMA, and otherwise. As reported by the TCR on May 31, 2011, KPMG, in Dublin, Ireland, noted that there are a number of material economic, political and market risks and uncertainties that impact the Irish banking system, including the Company's continued ability to access funding from the Eurosystem and the Irish Central Bank to meet its liquidity requirements, that raise substantial doubt about the Company's ability to continue as a going concern. The Company reported a net loss of EUR10.16 billion on EUR1.84 billion of interest income for 2010, compared with a net loss of EUR2.33 billion on $2.87 billion of interest income for 2009. The Company's balance sheet at Dec. 31, 2010, showed EUR145.2 billion in total assets, EUR140.9 billion in total liabilities, and stockholders' equity of EUR4.3 billion. ALLIED IRISH: DBRS Downgrades Subordinated Debt Rating to 'D' ------------------------------------------------------------- DBRS Inc. has downgraded the ratings of certain subordinated debt issued by Allied Irish Banks p.l.c. to "D" from "C". The downgrade follows the execution of the Group's note purchase offer. Almost all of these instruments have been extinguished. The default status for the purchased and now-extinguished notes reflect DBRS's view that bondholders were offered limited options, which is considered a default under DBRS policy, as discussed in DBRS's press release dated May 19, 2011. For AIB's GBP 500 million Dated Subordinated Debt due 2025 and its EUR 500 million Dated Subordinated Debt due 2017, which are still outstanding due to the lack of consent for a clean up call, DBRS has downgraded their ratings to 'D'. The downgrade reflects DBRS's expectations that the interest payments of these outstanding subordinated instruments will be halted on the next payment date, as allowed by the Irish High Court. Further, the downgrade considers the extension of the final maturity dates, which are now extended to 2035. Given that bondholders are unlikely to receive interest as agreed upon and that the expected maturity has been extended, DBRS views these actions as disadvantageous to bondholders, which is considered a default under DBRS policy. However, the rating of AIB's GBP368.253 million Dated Subordinated Debt due 2019, which is still outstanding, is unchanged at 'C', Under Review with Negative Implications. This rating considers that these notes have not yet been amended by AIB pursuant to the Subordinated Liabilities Order from the Irish High Court as a challenge in respect to these notes is ongoing before this Court. ALLIED SPECIALTY: Moody's Withdraws Ratings, Including 'B2' PDR --------------------------------------------------------------- Moody's Investors Service has withdrawn the ratings of Allied Specialty Vehicles including its B2 PDR and CFR and the rating on the $165 million senior secured lien term loan B due 2016 for business reasons. RATINGS RATIONALE Moody's has withdrawn the rating for its own business reasons. Please refer to the Moody's Investors Service's Policy for Withdrawal of Credit Ratings available on its Web site, www.moodys.com. Allied Specialty Vehicles, Inc., is a designer, manufacturer and marketer of a broad range of specialty vehicles and vehicle bodies. The company operates in three segments: fire and emergency, recreational vehicles, and commercial vehicles including school buses, terminal trucks, and road construction equipment. Revenues for 2010 were over $800 million. ALLIED SPECIALTY: S&P Withdraws 'B+' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its 'B+' corporate credit rating on Orlando, Fl.-based Allied Specialty Vehicles at the company's request. AMBAC FIN'L: Has Motion for Securities Class Actions Settlement --------------------------------------------------------------- Ambac Financial Group Inc. filed a motion for bankruptcy court approval of a previously announced settlement calling for payment of $2.5 million in cash to resolve several securities law class- action suits first filed in January 2008. Peter A. Ivanick, Esq., at Dewey & LeBoeuf LLP, in New York, tells Judge Chapman that resolution of the Securities Actions, which have been pending since 2008, through the proposed Settlement Stipulation will significantly aid the Debtor in resolving a substantial dispute before confirmation of a plan of reorganization and will provide greater certainty with respect to the Debtor's claims pool. In contrast, if the Securities Actions are not settled, the Debtor inevitably will be subjected to discovery requests by the plaintiffs and the other defendants, causing the Debtor to incur substantial expense responding to those requests, Mr. Ivanick stresses. Moreover, the Debtor's management would likely be distracted by those discovery demands at a time when their attention is best served reorganizing the Debtor, he points out. The proposed Settlement Stipulation requires no further payment from the Debtor beyond the sum of $2.5 million which the Debtor deposited into an escrow account prepetition and will allow the Debtor to avoid the cost of continued litigation, thus preserving the value of the Debtor's estate, Mr. Ivanick assures the Court. Settlement Stipulation The Settlement was entered to fully, finally, and forever resolve, discharge and settle any and all manner of claims, asserted in any of these Securities Actions or the Derivative Actions: (1) A consolidated class action captioned in In re Ambac Fin. Group, Inc. Sec. Litig., No 08-cv-411-NRB (S.D.N.Y.) filed by purchasers of the Debtor's common stock against the Debtor, and certain of its current or former directors or officers, for violations of the Securities Exchange Act of 1934. (2) A case entitled Tolin v. Ambac Financial Group, Inc., et al., No. 08-cv-11241-CM (S.D.N.Y.), which alleged violations of the federal securities laws based on certain factual allegations similar to certain of the factual allegations in the Ambac Class Action, but on behalf of a different class of purchasers, was filed. (3) Certain shareholders commenced shareholder derivative actions against certain of the Debtor's directors and officers, which were consolidated into these cases: In re Ambac Financial Group, Inc. Derivative Litigation, No. 08-cv-854-SHS (S.D.N.Y.), In re Ambac Financial Group, Inc. Shareholder Derivative Litigation, C.A. No. 3521-VCL (Del. Ch.), and In re Ambac Financial Group, Inc. Shareholder Derivative Litigation, No. 650050/2008E (N.Y. Sup.). The parties to the Settlement Stipulation are: (i) Lead Plaintiffs in the Ambac Class Action: the Public Teachers' Pension & Retirement Fund of Chicago; Arkansas Teacher Retirement System, the Public Employees' Retirement System of Mississippi Plaintiff Painting Industry Insurance and Annuity Funds; and plaintiffs in the Tolin Action, Stanley Tolin, and Edward Walton, on behalf of themselves and members of the Class; (ii) the Debtor; and (iii) Individual Defendants, namely: Michael A. Callen; Jill M. Considine; Robert J. Grenader; W. Grant Gregory; Philip B. Lassiter; Sean T. Leonard; Thomas G. Theobald; John W. Uhlein, III; Laura S. Unger; Henry D.G. Wallace; David W. Wallis; Gregg L. Bienstock; Kevin J. Doyle; Philip Duff; Thomas J. Gandolfo; Kathleen McDonough; William T. McKinnon; Douglas C. Renfield-Miller; and Robert G. Shoback. On May 25, 2011, the Settling Parties executed a First Amendment to the Settlement Stipulation to clarify that excluded from the Settlement and the release were any Employee Retirement Income Security Act claims in the action entitled Veera v. Ambac Administrative Committee, et al., Case No. 10-cv-4191, pending in the U.S. District Court for the Southern District of New York. The Settling Parties stipulated to the certification of a class consisting of all persons who purchased or otherwise acquired any of the Debtor's securities, including the Debtor's equity or debt securities or options thereon, or any STRATS during the period from October 19, 2005, through and including July 18, 2009. On May 4, 2011, AFG, its D&O insurers and the Individual Defendants entered into an Insurer Agreement, pursuant to which the D&O Insurers agreed to pay the sum of $24,600,000 into the Escrow Account. On May 19, 2011, the Bankruptcy Court approved a stipulation lifting the automatic stay to permit parties to the Securities Actions to seek approval of the Settlement Stipulation in the New York District Court. On June 14, 2011, the District Court preliminarily approved the proposed settlements. The District Court scheduled a final fairness hearing on the matter for September 28, 2011. The salient terms of the Settlement Stipulation are: (A) In consideration of the settlement of the Settled Claims against the Debtor and the Individual Defendants, the Debtor and the D&O Insurers will severally pay the total sum of $27,100,000. (B) The D&O Insurers will be required to pay the sum of $24,600,000 in consideration of the settlement. The Debtor previously paid the sum of $2,500,000 in cash into an escrow account in consideration of the Settlement and that the Debtor has no responsibility to make any other payments into the Escrow Account or in consideration of the Settlement. (C) Upon entry of an order by the District Court preliminarily approving the Settlement and directing that notice be provided to the Settlement Class, lead counsel may pay from the Escrow Account, without further approval from the Settling Defendants or the D&O Insurers or further order of the District Court, all reasonable notice and administration costs in an amount not to exceed $500,000. In the event that the Settlement is not consummated, all notice and administration costs actually paid or incurred, including related fees, will not be returned or repaid to the Settling Defendants or the D&O Insurers. (D) Plaintiffs and each of the members of the Class will release, and will be deemed by operation of law to have fully, finally and forever released, relinquished, waived, discharged and dismissed, each and every Settled Claim against the Debtor and Individual Defendants, and will forever be enjoined and barred from prosecuting any or all Settled Claims against the Debtor and the Individual Defendants, and against any of the Released Ambac Parties. The Plaintiffs further covenant on their own behalf and on behalf of the Class not to sue any Released Ambac Party on the basis of any of the Settled Claims against the Debtor and Individual Defendants or to assist any person in commencing or maintaining any lawsuit relating to any Settled Claim against the Debtor and Individual Defendants, including any derivative lawsuit. (E) The Released Ambac Parties will release and be deemed to have released, waived, discharged and dismissed each and every of the Released Parties' Claims, and will forever be enjoined from prosecuting any or all of the Released Parties' Claims against Plaintiffs, their officers, directors, employees, agents and attorneys, and all other Class Members. (F) The Individual Defendants will release and discharge the Debtor of and from any right of indemnity with respect to the Settled Claims against the Debtor and Individual Defendants that are released under the terms of the Settlement Stipulation, except as otherwise provided in the Settlement Stipulation, in the Insurer Agreement, or in the Proposed Judgment. (G) The Debtor and the Individual Defendants will be deemed to have released claims and claims over for contribution or indemnity against the Underwriter Defendants in connection with the Securities Actions, and any other actions arising out of the same subject matter. Consummation of the Settlement is contingent upon, among other things: (1) final approval of the Settlement by the District Court, and the entry of a judgment, which has become final; and (2) entry of either (i) an order of the Bankruptcy Court confirming a plan of reorganization, which contains any necessary approvals related to the Debtor's entry into and performance of any obligations under the Settlement Stipulation or; (ii) an order of the Bankruptcy Court pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, approving the Debtor's entry into and performance of any obligations under the Settlement Stipulation. While the Settlement Stipulation provides a carve out for certain claims of the Underwriter Defendants against the Debtor, any claims of that kind would be subordinated under Section 510(b) of the Bankruptcy Code, and thus would not affect the distribution to the Debtor's creditors, Mr. Ivanick assures the Court. The Underwriter Defendants to the Securities Actions and Derivative Actions are Citigroup Global Markets, Inc., UBS Securities LLC, Goldman, Sachs & Co., J.P. Morgan Securities Inc., HSBC Securities (USA) Inc., Merrill Lynch, Pierce, Fenner, & Smith Incorporated, and Wachovia Capital Markets, LLC, now known as Wells Fargo Securities, LLC. A full-text copy of the Settlement Stipulation is available for free at http://bankrupt.com/misc/Ambac_SettlementStipulation.pdf Insurer Agreement The Debtor further asks the Bankruptcy Court to approve the Insurer Agreement with the D&O Insurers, as amended, which pact is integral to the Settlement Stipulation. The D&O Insurers are National Union Fire Insurance Company of Pittsburg, Pa.; St. Paul Mercury Insurance Company; ACE Bermuda Insurance Ltd.; and Federal Insurance Company. The Insurers consent to the first amendment to the Settlement Stipulation. The Insurer Agreement provides that: (A) Within 15 business days after (i) entry of preliminary approval of the Settlement Stipulation by the District Court, and (ii) the provision to the D&O Insurers of wire transfer or check payment instructions, the Insurers will pay by wire transfer or check, severally, the sum of $24,600,000 into the Escrow Account. (B) The Debtor, on its own behalf and on behalf of each of its present or former subsidiaries, and the Individual Defendants agreed to release and discharge the Insurers and each of the Insurers' affiliates of and from all manner of claims, which any of the Debtor or any of its present or former subsidiaries may have against the Insurers with respect to the Settled Claims that are released in accordance with the Settlement Stipulation. (C) The D&O Insurers released and discharged the Debtor and the Individual Defendants from all manner of claims, which Insurers now have, claim to have, or in the future may have against the Debtor and the Individual Defendants with respect to the Settled Claims. (D) The Insurer Agreement will be null and void and of no force and effect, if certain conditions are not met, including entry of an order confirming a Chapter 11 Plan of Reorganization in the Debtor's Chapter 11 case A full-text copy of the Insurer Agreement is available for free at http://bankrupt.com/misc/Ambac_InsurerAgreement.pdf If the Bankruptcy Court does not approve the Debtor's Motion, all funds in the Escrow Account will be returned to the Debtor and the D&O Insurers in accordance with the Settlement Stipulation, Mr. Ivanick says. The Debtor further asks the Bankruptcy Court to approve the injunctions and releases set forth in the Settlement Stipulation. Mr. Ivanick contends that the Injunctions and Releases are an integral part of the Settlement Stipulation as the Settling Parties have conditioned the effectiveness of the Settlement upon the Bankruptcy Court's express approval of the Injunctions and Releases. He stresses that the D&O Insurers have indicated that they are unwilling to pay their portion of the Settlement Amount absent the Bankruptcy Court's approval of the Injunctions and Releases and the Insurer Agreement. Indeed, the D&O Insurers have informed the Debtor that they seek finality through the Settlement Stipulation and are unwilling to settle if there is a risk of future claims by members of the Class who may assert Settled Claims that are released by the Settlement or by the Ambac Entities or creditors or shareholders purporting to sue on behalf of the Ambac Entities related to the facts giving rise to the Securities Actions and Derivative Action, Mr. Ivanick reasons. The Injunctions provide a mechanism by which the Settling Parties can fully, and forever, resolve any and all claims connected with the facts giving rise to the Securities Actions and Derivative Actions, Mr. Ivanick insists. The Court will consider the Debtor's request on July 19, 2011. Objections are due no later than July 12. 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 (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 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. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. 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. Lazard Freres & Co. LLC is the Committee's financial advisor. AMBAC FIN'L: D&O Claims Bar Date Extended to Aug. 1 --------------------------------------------------- Ambac Financial Group, Inc. notifies the Bankruptcy Court and parties-in-interest that the Claims Bar Date for the assertion of claims by its former officers and directors for indemnification, contribution, or reimbursement has been extended to August 1, 2011. The previously set D&O Claims Bar Date is July 2, 2011. Pursuant to the March 1, 2011 Court order extending the deadline for filing of claims for the D&Os, the Claims Bar Date may be further extended with respect to any claim by any of the Debtor's Former Officers or Directors at the discretion of the Debtor and without further notice or order of the Court. 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 (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 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. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. 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. Lazard Freres & Co. LLC is the Committee's financial advisor. AMBAC FIN'L: OCI Seeks State Court Nod to Retain Roger Peterson --------------------------------------------------------------- The Office of the Commissioner of Insurance of the State of Wisconsin revised has submitted an application to the Circuit Court for Dane County in Wisconsin for the approval of the engagement of Roger A. Peterson as Special Deputy Commissioner for the Segregated Account of Ambac Assurance Corporation, pursuant to a public statement dated June 10, 2011. The application states that under a consulting agreement reached between Mr. Peterson and Theodore K. Nickel, Commissioner of Insurance, Mr. Peterson will resign from his position as the Deputy Administrator of the Division of Regulation and Enforcement at OCI and move to New York to devote his full-time professional efforts and time to the performance of the Special Deputy Commissioner of the AAC Segregated Account. The agreement is subject to approval from the Court. Over the course of the Rehabilitation process, which commenced on March 24, 2010, it has become increasingly evident to Commissioner Nickel and OCI that the role of Special Deputy Commissioner in a rehabilitation process of this magnitude and complexity demands a person working full-time on matters pertaining to the Segregated Account and who can be regularly on- site in the insurer's offices in New York. Earlier this year, Commissioner Nickel concluded that one person at OCI could no longer occupy a dual role of supervising regulatory duties on matters unrelated to AAC in Wisconsin and also as Special Deputy Commissioner for the Segregated Account. Commissioner Nickel concluded that it was necessary to engage an independent contractor to serve full-time in the role of Special Deputy Commissioner who would be based on-site in New York. In this role, Mr. Peterson will report to the Rehabilitator and will be subject to the authority of the Rehabilitator. The application cites Mr. Peterson's two decades of experience in the financial examination of insurers and his proven ability to address the unique and complex challenges posed by this rehabilitation. He has been directly involved in assessing and addressing Ambac's financial situation since its long-term outlook began to deteriorate in late 2007 and early 2008. The application was filed in Circuit Court on June 8, 2011. 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 (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 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. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. 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. Lazard Freres & Co. LLC is the Committee's financial advisor. AMBAC FIN'L: Incentive Plan Annual Report to Be Filed Late ---------------------------------------------------------- Ambac Financial Group, Inc. filed with the U.S. Securities and Exchange Commission on June 30, 2011, of a notice of late filing of an annual report for Ambac Assurance Corporation Savings Incentive Plan f/k/a Ambac Financial Group, Inc. Savings Incentive Plan on Form 11-K for the year ended December 31, 2010. Savings Plan Administrator Diana N. Adams said the Form 11-K is being filed in order to report the information required of the Ambac Assurance Corporation Savings Incentive Plan. The AAC Incentive Plan is unable to timely file its Form 11-K because additional information gathering is required that could not be completed timely without unreasonable expense and thus, the audit of the Plan's financial statements is still in process pending receipt of that additional information, Ms. Adams reasoned. The annual report on Form 11-K or portion thereof will be filed on or before the 15th calendar year following the prescribed due date, Ms. Adams told the SEC. Ms. Adams also said there is a significant change in results of operations from the corresponding period for the last fiscal year reflected by the earnings statements to be included in the Form 11-K. Specifically, the change in net assets available for plan benefits of the Plan was lower by approximately $11 million for the year ended December 31, 2010 as compared to the year December 31, 2009, she disclosed. The reduction in the change in net assets available for plan benefits was primarily the result of lower contributions, lower net investment income, and higher benefit payments during 2010, she explained. 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 (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 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. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. 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. Lazard Freres & Co. LLC is the Committee's financial advisor. AMERICAN AXLE: Extends Maturity of 2004 Credit Facility to 2016 --------------------------------------------------------------- American Axle & Manufacturing, Inc., amended and restated the Credit Agreement dated as of Jan. 9, 2004, among American Axle & Manufacturing Holdings, Inc., as guarantor, AAM, as borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint lead arrangers and joint bookrunners. The Revolving Credit Amendment and Restatement Agreement dated as of June 30, 2011, required the satisfaction of certain conditions precedent, including the termination of the Credit Agreement dated as of Sept. 16, 2009, as amended, among the Company, AAM and General Motors Company, as lender. The Amended and Restated Revolving Credit Agreement, among other things, increased the aggregate commitments by approximately $79 million and extended the maturity of $235 million of the aggregate commitments to June 30, 2016. The class D facility includes loans held by lenders that agreed to extend and increase their respective commitments and new lenders to the facility. The Amended and Restated Revolving Credit Agreement also includes a class A loan facility of approximately $53 million, which matures on Dec. 31, 2011, and a class C loan facility of approximately $87 million, which matures on June 30, 2013. Borrowings under the Amended Revolving Credit Facility bear interest at rates based on adjusted LIBOR or an alternate base rate, plus an applicable margin. The applicable margin for LIBOR based loans for lenders with commitments under the new class D facility will be between 3.00% and 4.50%, depending upon the corporate ratings of the Company. The applicable margin for the class A and class C facilities remains the same. Under the Amended Revolving Credit Facility, certain negative covenants were revised to provide increased flexibility. In addition, in the event AAM achieves investment grade corporate credit ratings from S&P and Moody's, AAM may elect to release all of the collateral from the liens granted pursuant to the Collateral Agreement, subject to notice requirements and other conditions. The Amended Revolving Credit Facility is secured on a first priority basis by all or substantially all of the assets of AAM and each guarantor under the Collateral Agreement dated as of Nov. 7, 2008, as amended and restated as of Dec. 18, 2009, and as further amended on June 30, 2011, among AAM, the Company and its domestic subsidiaries (other than AAM) and JPMorgan Chase Bank, N.A., as collateral agent for the lenders under the Amended and Restated Revolving Credit Agreement and the secured noteholders under the Indenture dated as of Dec. 18, 2009, among AAM, as issuer, the guarantors and U.S. Bank National Association, as trustee. A copy of the Amended and Restated Revolving Credit Agreement is available for free at http://is.gd/j6VBm6 About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- manufactures, engineers, designs and validates driveline and drivetrain systems and related components and chassis modules for light trucks, sport utility vehicles, passenger cars, crossover vehicles and commercial vehicles. AXL has financial support from GM, its largest customer which accounted for 78% of sales in 2009. The Company's balance sheet at March 31, 2011, showed $2.16 billion in total assets, $2.58 billion in total liabilities, and a $415.40 million total stockholders' deficit. * * * In June 2011, Standard & Poor's Ratings Services raised its corporate credit rating on American Axle & Manufacturing Holdings Inc. to 'BB-' from 'B+'. The outlook is stable. "At the same time, we raised our issue-level ratings on the company's senior secured debt to 'BB' from 'BB-' and on the unsecured debt to 'B' from 'B-'. All the recovery ratings on the debt remain unchanged," S&P stated. "The upgrade reflects our opinion that American Axle's credit measures will improve further over the next 12 months under the gradual recovery in North American auto demand, and that the company's leverage will decline to 3.5x," said Standard & Poor's credit analyst Lawrence Orlowski. As reported by the TCR on June 3, 2011, Moody's Investors Service raised American Axle's Corporate Family Rating and Probability of Default Rating to 'B1' from 'B2'. The raising of American Axle's CFR to B1 incorporates Moody's expectation that the company's improved year-over-year EBIT margin will largely be sustained over intermediate-term despite potential temporary automotive production disruptions and high gasoline prices. AMERICAN GREETINGS: S&P Affirms 'BB+' CCR; Outlook Positive ----------------------------------------------------------- Standard & Poor's Rating Services revised its outlook on Ohio- based American Greetings Corp. to positive from stable and affirmed its corporate credit rating of 'BB+'. "At the same time, we affirmed the 'BB+' rating on the company's unsecured debt, and we revised our recovery rating on this debt to '3', indicating our expectation that lenders would receive meaningful (50% to 70%) recovery in the event of a payment default, from '4'," S&P said. "The outlook revision reflects the company's improved credit metrics and our expectation for the company to maintain a moderate financial policy," said Standard & Poor's credit analyst Linda Phelps. "In addition, we expect the company's operating performance to be relatively stable following divestiture of noncore businesses over the past few years and completion of the integration of Recycled Paper Greetings and Papyrus." "Our ratings on American Greetings reflect our view that the company's business risk profile is fair, given its strong market position, broad product offerings within the greeting card industry, and renewed focus on the core greeting card business. These benefits are tempered by the company participating in the mature, low-growth greeting card sector. Our ratings also reflect a financial risk profile that we characterize as modest, reflecting its low leverage, moderate financial policy, and strong liquidity," S&P related. The rating outlook is positive. "We expect the company's operating performance to remain relatively unchanged, particularly given its renewed focus on the core greeting card business," said Ms. Phelps. AMERICAN RESOURCES: A.M. Best Affirms FSR at 'B' ------------------------------------------------ A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of B- (Fair) and issuer credit rating of "bb-" of American Resources Insurance Company, Incorporated. The revised outlook reflects ARIC's improved risk-adjusted capitalization in recent years, which includes the elimination of debt and higher levels of liquid assets. The rating affirmations reflect the continued orderly run off of ARIC's liabilities, which began in late 2007 when it entered into quota share reinsurance agreements with Hermitage Insurance Company and its wholly owned subsidiary, Kodiak Insurance Company, which effectively led to ARIC ceding off its earned premiums and associated losses and underwriting expenses as of October 1, 2007. A.M. Best will continue to monitor the uncertainties and execution risk surrounding ARIC's run-off liabilities over the near to intermediate term. ANCHOR BANCORP: McGladrey & Pullen Raises Going Concern Doubt ------------------------------------------------------------- Anchor Bancorp Wisconsin Inc. reported a net loss of $41.18 million on $85.08 million of net interest income for the fiscal year ended March 31, 2011, compared with a net loss of $176.91 million on $84.96 million of net interest income for the fiscal year ended March 31, 2010. Anchor BanCorp announced a net loss available to common equity of $21.7 million, or $1.02 per common share, for the three months ended March 31, 2011. This compares to a net loss available to common equity of $29.8 million, or $1.40 per common share, for the same time period in 2010. McGladrey & Pullen, LLP, in Madison, Wisconsin, expressed substantial doubt about Anchor Bancorp Wisconsin's ability to continue as a going concern after auditing the Company's financial results for fiscal year ended March 31, 2011. The independent auditors noted that at March 31, 2011, all of the subsidiary bank's regulatory capital amounts and ratios are below the capital levels required by the consent order. "The subsidiary bank has also suffered recurring losses from operations. Failure to meet the capital requirements exposes the Corporation to regulatory sanctions that may include restrictions on operations and growth, mandatory asset dispositions, and seizure of the subsidiary bank." In addition, the Company's outstanding balance under the Amended and Restated Credit Agreement is currently in default, according to the Form 10-K filed with the Securities and Exchange Commission. "Management continues to make steady progress in executing the Bank's capital plan," said Chris Bauer, President and Chief Executive Officer of the Corporation and the Bank, in a statement. "We continue working to improve the financial and operating performance of the Bank, which will increase the likelihood that we will attract outside capital." Although the financial performance of the Bank has improved, ABCW, as the holding company of the Bank, continues to be burdened with significant senior debt and preferred stock obligations. As of March 31, 2011, $116.3 million is owed to various lenders under an Amended and Restated Credit Agreement. Interest expense on the Credit Agreement negatively impacted results by $15.0 million for the fiscal year ended March 31, 2011. On May 31, 2011, the various lenders, led by U.S. Bank, agreed to the extension of the Corporation's Credit Agreement through Nov. 30, 2011. "This extension is an important step in our efforts to raise capital, and we will continue to work closely with U.S. Bank over the next six months," said Bauer. The Company's balance sheet at March 31, 2011, showed $3.395 billion in total assets, $3.408 billion in total liabilities, and a stockholders' deficit of $13.17 million. A full-text copy of the press release announcing the financial results is available for free at http://is.gd/Q4gJUK A copy of the annual report on Form 10-K is available at http://is.gd/Tjps05 Madison, Wisconsin-based Anchor BanCorp Wisconsin Inc. is a registered savings and loan holding company incorporated under the laws of the State of Wisconsin. The Company is engaged in the savings and loan business through its wholly owned banking subsidiary, AnchorBank, fsb. ANGLO IRISH BANK: DBRS Downgrades Senior Debt Rating to 'CCC' ------------------------------------------------------------- DBRS Inc. has downgraded the non-guaranteed senior debt and deposit ratings of Anglo Irish Bank Corporation Limited, including its Issuer Rating, to CCC from B (low). All non-government guaranteed ratings remain Under Review with Negative Implications, where they were placed on September 10, 2010. The rating action does not impact the various Government guaranteed debt and deposits rating of Anglo Irish which remain at 'A' with a Negative trend. As noted in DBRS's press release on April 4, 2011, DBRS viewed non-guaranteed senior bondholders of Anglo Irish at an increased risk of adverse actions given the state of the Irish banking system and the wind-down mode of Anglo Irish. The rating action reflects the recent statements by the Minister for Finance which, in DBRS's opinion, firmly underline the Government's intent to pursue burden sharing by senior bondholders of what the Irish Government defines as 'non-going concern' banks, such as Anglo Irish. As such, DBRS sees the probability of adverse actions towards senior bondholders as significantly increased. DBRS notes that the Irish Government has stated that it will only pursue such actions should it receive approval from the European Central Bank. However, at this time the ECB and other E.U. members have been firm in their position that no such actions be taken towards senior bondholders of banks. The non-government guaranteed ratings remain Under Review with Negative Implications reflecting the lack of specific details of any potential forthcoming legislation or liability management exercises. DBRS will review the terms of any offer to non- guaranteed senior bondholders; however, DBRS considers it likely that any offer will be disadvantageous and coercive to bondholders. As such, DBRS would view such an offer as tantamount to a default. ARCADIA RESOURCES: BDO USA Raises Going Concern Doubt ----------------------------------------------------- Arcadia Resources, Inc., filed on June 28, 2011, its annual report on Form 10-K for the fiscal year ended March 31, 2011. BDO USA, LLP, in Troy, Michigan, expressed substantial doubt about Arcadia Resources' ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and has a net capital deficiency. The Company reported a net loss of $14.35 million on $100.04 million of revenues for the fiscal year ended March 31, 2011, compared with a net loss of $31.09 million on $98.08 million of revenues for the fiscal year ended March 31, 2010. The Company recognized a Pharmacy goodwill impairment charge of $2.5 million in fiscal 2011. The company recorded a goodwill impairment charge of approximately $14.6 million associated with the Services segment in fiscal 2010. At March 31, 2011, the Company's balance sheet showed $26.13 million in total assets, $46.19 million in total liabilities, and a stockholders' deficit of $20.06 million. A copy of the Form 10-K is available at http://is.gd/GXdXDe Indianapolis, Indiana-based Arcadia Resources, Inc., is a national provider of pharmacy, home care, and medical staffing services operating under the service mark Arcadia HealthCare. The Company operates in two reportable business segments: Pharmacy and Home Care/Medical Staffing Services ("Services"). The Company conducts its business from approximately 65 facilities located in 18 states. The Company has pharmacy operations in Indiana and California and has customer service centers in Michigan and Indiana. ARIZONA ELITE: Case Summary & 3 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Arizona Elite Property Investment Group, LLC 6970 N. 95th Avenue Glendale, AZ 85305 Bankruptcy Case No.: 11-18466 Chapter 11 Petition Date: June 27, 2011 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Charles G. Case, II Debtor's Counsel: Lyndon B. Steimel, Esq. LAW OFFICE OF LYNDON B. STEIMEL 14614 N. Kierland Boulevard, #N-135 Scottsdale, AZ 85254 Tel: (480) 367-1188 Fax: (480) 367-1174 E-mail: lyndon@steimellaw.com Scheduled Assets: $2,350,000 Scheduled Debts: $3,566,736 A list of the Company's three largest unsecured creditors filed together with the petition is available for free at: http://bankrupt.com/misc/azb11-18466.pdf The petition was signed by Cameron Eghlimi, managing member. AXIS EQUIPMENT: DBRS Puts BB Provisional Rating on Class D Notes ---------------------------------------------------------------- DBRS has assigned provisional ratings to the following classes issued by Axis Equipment Finance Receivables LLC: - Class A rated AA (sf) - Class B rated A (sf) - Class C rated BBB (sf) - Class D rated BB (sf) - Class E-1 rated B (sf) BANKUNITED FIN'L: Court OKs Bast Amron for Avoidance Suits ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida has approved BankUnited Financial Corp.'s application to employ Bast Amron LLP, as special counsel to pursue certain avoidance actions. Bast Amron's employment will be limited to the investigation, analysis and, if advisable, pursuit of avoidance of actions, other than those avoidance which the Official Committee of Unsecured Creditors has obtained standing to pursue. The Debtors said tThe services to be performed by Bast Amron will not be duplicative of any bankruptcy-related work performed by BankUnited Financial's general counsel, Greenberg Traurig, P.A., or by the Committee's counsel. Likewise, Bast Amron will coordinate with BankUnited Financial's other professionals to ensure its services are, to the maximum extent possible, complimentary to other professional's services. Bast Amron will charge the Debtors' estates in accordance with its customary hourly rates. The firm's hourly rates are: Personnel Hourly Rate --------- ---------- Brett M. Amron, Esq. $410 Richard Lubliner, Esq. $325 John Eder, Esq. $245 Angelica Fiorentino $195 Jane de Pina $165 About BankUnited Financial BankUnited Financial Corp. (OTC Ticker Symbol: BKUNQ) -- http://www.bankunited.com/-- was the holding company for BankUnited FSB, the largest banking institution headquartered in Coral Gables, Florida. On May 21, 2009, BankUnited FSB was closed by regulators and the Federal Deposit Insurance Corporation facilitated a sale of the bank to a management team headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank, and a group of investors led by W.L. Ross & Co. BankUnited, FSB, had assets of $12.8 billion and deposits of $8.6 billion as of May 2, 2009. The Company and its affiliates filed for Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 09-19940) on May 22, 2009. Stephen P. Drobny, Esq., and Peter Levitt, Esq., at Shutts & Bowen LLP; Mark D. Bloom, Esq., and Scott M. Grossman, Esq., at Greenberg Traurig, LLP; and Michael C. Sontag, at Camner, Lipsitz, P.A., represent the Debtors as counsel. Corali Lopez-Castro, Esq., David Samole, Esq., at Kozyak Tropin & Throckmorton, P.A.; and Todd C. Meyers, Esq., at Kilpatrick Stockton LLP, serve as counsel to the official committee of unsecured creditors. In its bankruptcy petition, BankUnited Financial Corp. disclosed $37,729,520 in assets against $559,740,185 in debts. Aside from those assets, BankUnited said that a "valuable" asset is its $3.6 billion net operating loss carryforward. Wilmington Trust Co., U.S. Bank, N.A., and the Bank of New York were listed among the company's largest unsecured creditors in their roles as trustees for security issues. BankUnited estimated the Bank of New York claim tied to convertible securities at $184 million. U.S. Bank and Wilmington Trust are owed $120 million and $118.171 million on account of senior notes. BANNING LEWIS: Amending Disclosure to Reflect Auction ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Banning Lewis Ranch reported the results of the auction to the bankruptcy judge at a hearing last week. According to Mr. Rochelle, one of the lawyers told the judge the Banning assets, or the southern portion of the project, had an opening bid of $16 million. The winning bid of $26.25 million was from Ultra Resources Inc. The Devco assets, or the northern portion, went to KeyBank NA as agent for lenders with a credit bid of $24.5 million. Given a "vibrant auction," the disclosure statement explaining the Chapter 11 plan will require "some pretty severe changes," one of the lawyers said. The hearing for approval of the disclosure document was pushed back to July 28, according to the report. The company filed a Chapter 11 plan in May structured around the auction to determine who would sponsor a reorganization. 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 (Bankr. D. Del. Case No. 10-13445) on Oct. 28, 2010. 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. BARNES BAY: To Face Purchasers at Aug. 4 Plan Hearing ----------------------------------------------------- Disgruntled creditors on Thursday forced Barnes Bay Development Ltd. to revise the disclosure statement explaining its Chapter 11 plan, raising questions over disparate treatment of similar unsecured creditors. U.S. Bankruptcy Judge Peter J. Walsh directed the resort's attorneys to make additional disclosures about the plan on July 1 before sending it to creditors for a vote. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the description of the reorganization plan is being supplemented to provide additional information sought by people who made deposits to buy units before bankruptcy. At the June 30 hearing to approve the disclosure statement, eight purchasers who made $6.8 million in deposits complained about how the proposed reorganization plan unjustifiably would put them in one of three different classes. They also objected because the plan might cut off their rights under Anguilla law to have the status of secured creditors. The bankruptcy judge gave the purchasers until July 22 to file papers challenging their classification in the plan. The judge will hold a hearing Aug. 4, according to the Bloomberg report. Barnes Bay and its Official Committee of Unsecured Creditors on June 13, 2011, jointly filed a Second Amended Joint Chapter 11 Plan of Liquidation and an explanatory disclosure statement. The Debtors and the Committee believe that the Plan provides a substantially better recovery for certain classes of creditors than the original plan filed by the Debtors in April. Among other changes, the Plan now provides for the payment in full of all holders of allowed Class 5 general unsecured creditors. A copy of the Second Amended Joint Plan is available at: http://bankrupt.com/misc/barnesbay.2ndamendedjointplan.pdf About Barnes Bay Beverly Hills, California-based Barnes Bay Development Ltd., owns the Viceroy Anguilla Resort & Residences on the British West Indies island of Anguilla. Barnes Bay and two affiliates filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-10792) on March 17, 2011, to facilitate the sale of the resort. Barnes Bay disclosed $3,331,282 in assets and $481,840,435 in liabilities as of the Chapter 11 filing. Akin Gump Straus Hauer & Feld LLP is the Debtors' bankruptcy counsel, and Keithley Lake & Associates is the Debtors' special Anguillan counsel. Kurtzman Carson Consultants LLC is the Debtors' claims, noticing, solicitation and balloting agent. The U.S. Trustee appointed five members to the official committee of unsecured creditors in the Debtors' cases. Brown Rudnick LLP serves as the Committee's co-counsel, and Womble Carlyle Sandridge & Rice, PLLC, as its Delaware co-counsel. C.R. Hodge & Associates is the Committee's foreign counsel. FTI Consulting, Inc., serves as the Committee's financial advisors. BERNARD L MADOFF: Trustee Loses Forum Fight With Mets Owners ------------------------------------------------------------ Christie Smythe at Bankruptcy Law360 reports that the trustee overseeing recovery for Bernard L. Madoff's victims lost a fight Friday to keep a $1 billion lawsuit against the owners of the New York Mets in a New York bankruptcy court, with a federal judge ruling the case belongs in his ballpark. Law360 says trustee Irving Picard has lodged hundreds of suits in bankruptcy court against investors and other parties associated with the Madoff scheme as part of the recovery effort. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping $50 billion. On Dec. 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 Feb. 18, 2011, a total of $6.85 billion in claims by investors has been allowed, with $791.1 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. BERNARD L MADOFF: Each Feeder Fund to Lose $500,000 With Ruling --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the trustee liquidating Bernard L. Madoff Investment Securities Inc. and the Securities Investor Protection Corp. won a victory June 28 when the bankruptcy judge ruled that investors in feeder funds don't have customer claims in the Madoff liquidation. U.S. Bankruptcy Judge Burton R. Lifland concluded in his 33-page opinion that the plain language of the Securities Investor Protection Act doesn't give feeder-fund customers claims in the Madoff liquidation. Mr. Rochelle notes that the June 28 ruling has $500,000 in practical significance for each customer of the 19 feeder funds that funneled money into Madoff. If the feeder-fund investors qualified as customers of Madoff, each customer could have been entitled to a $500,000 payment from the SIPC fund. Denial of customer status means that the customers of each feeder fund will receive only what that feeder fund receives on its one claim against the Madoff firm. Mr. Rochelle discloses that the Madoff trustee has affirmative claims against many feeder funds for preferences or receipt of fraudulent transfers, which would have the effect of further reducing recoveries by feeder-fund customers. Judge Lifland noted that feeder-fund customers never signed customer account agreements with Madoff. Instead, he said they purchased ownership interests in the feeder funds themselves. Judge Lifland said they invested in the feeder funds, "not through the feeder funds." Judge Lifland also rejected the argument that feeder funds should be treated like so-called introducing brokers. Judge Lifland said that feeder funds, unlike introducing brokers, aren't registered with the Securities and Exchange Commission and aren't members of SIPC. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping $50 billion. On Dec. 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 Feb. 18, 2011, a total of $6.85 billion in claims by investors has been allowed, with $791.1 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. BERRY-HILL GALLERIES: Paulson Fund Buys Debt for $10-Mil. --------------------------------------------------------- Erica Orden, writing for The Wall Street Journal, reports that Paulson Credit Opportunities Master Ltd. -- a fund run by John Paulson's Paulson & Co. -- has purchased a loan to American-art specialist Berry-Hill Galleries for about $10 million, as well as the mortgage on the gallery's property in an elegant townhouse near the Frick Collection, according to public records and people familiar with the matter. The Journal recounts Berry-Hill defaulted last year on a debt of $9.5 million to an entity now known as American Capital Ltd., according to public records. Dozens of paintings and sculptures used as collateral were seized from the gallery's headquarters on East 70th Street. Shortly afterward, the gallery's previous mortgage lender began foreclosure proceedings on a $16 million mortgage, according to public records. The Journal reports that according to court filings and an attorney for the gallery, Paul Niehaus, the Paulson fund's acquisition of Berry-Hill's debt and mortgage ended the lawsuit and foreclosure proceedings against the gallery, and the artwork has been restored to its Upper East Side home. The Journal says American Capital couldn't be reached for comment. A spokesman for Paulson & Co., Armel Leslie, declined to comment. Armel Leslie is a Principal at Walek & Associates and heads the Global Capital practice group. He may be reached at: Armel Leslie WALEK & ASSOCIATES 317 Madison Avenue, Suite 2300 New York, NY 10017 Tel: (212) 889-4113 Fax: (212) 889-7174 E-mail: aleslie@walek.com The Journal recounts the gallery filed for bankruptcy in federal court in 2005 after being accused by creditors of manipulating an auction to boost the value of its own paintings. Gallery owners have denied allegations of manipulation. Berry-Hill emerged from bankruptcy protection in 2007, at which point it took out a loan from American Capital. BING CONSTRUCTION: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Bing Construction Company aka Bing Custom Homes 2930 South Telegraph Road Bloomfield Hills, MI 48302-1058 Bankruptcy Case No.: 11-57853 Chapter 11 Petition Date: June 28, 2011 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Howard M. Borin, Esq. John J. Stockdale, Jr., Esq. Michael E. Baum, Esq. SCHAFER AND WEINER, PLLC 40950 Woodward Ave., Ste. 100 Bloomfield Hills, MI 48304 Tel: (248) 540-3340 Fax: (248) 642-2127 E-mail: hborin@schaferandweiner.com jstockdale@schaferandweiner.com mbaum@schaferandweiner.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/mieb11-57853.pdf The petition was signed by Ralph Binggeser, authorized person. BIOJECT MEDICAL: Sells Notes to Directors and Officers ------------------------------------------------------ Bioject Medical Technologies, Inc., entered into a Convertible Note Purchase and Warrant Agreement with Al Hansen, Mark Logomasini, Ed Flynn, and Ralph Makar pursuant to which Bioject issued Convertible Promissory Notes and warrants to purchase Common Stock. Pursuant to the Agreement, Bioject sold Notes in the principal amount of $75,000 to each of Messrs. Hansen and Logomasini, $50,000 to Mr. Flynn, and $25,000 to Mr. Makar. Each of Messrs. Flynn, Hansen, Logomasini, and Makar is a director of Bioject; Mr. Makar is also Bioject's Chief Executive Officer. In addition, Mr. Hansen is a managing director of Signet Health Partners, an affiliate of one of Bioject's principal shareholders, Life Sciences Opportunities Fund II, L.P., Life Sciences Opportunities Fund II (Institutional), L.P. The Notes bear interest at the rate of 10% per year with all principal and interest due Dec. 29, 2011, which maturity date may be extended to June 28, 2012, at the option of the holder, and may not be prepaid without the written consent of the holders of a majority in interest of the Notes. The Notes are convertible at any time by the Purchasers into Bioject's common stock at the rate of $0.19 per share, or, in the case of a qualified financing, into the securities sold in the financing at a price equal to the financing price. The number of shares for which each Warrant is exercisable automatically increases if the holder exercises his option to extend the maturity date of his Note. If no holder exercises his option to extend the maturity date of his Note, the Warrants will be exercisable for an aggregate of 118,422 shares of Bioject's common stock. If all holders exercise their options to extend the maturity date of their Notes, the Warrants will be exercisable for an aggregate of 236,844 shares of Bioject's common stock. The Warrants' exercise price is $0.19 per share. Each Warrant is immediately exercisable and expires three years from the date of issuance. Bioject also entered into a Registration Rights Agreement with each Purchaser granting piggy-back registration rights. About Bioject Medical Bioject Medical Technologies Inc. (OTCBB: BJCT) -- http://www.bioject.com/-- based in Portland, Oregon, is an innovative developer and manufacturer of needle-free injection therapy systems. The Company is focused on developing mutually beneficial agreements with leading pharmaceutical, biotechnology, and veterinary companies. The Company reported a net loss of $1.47 million on $5.57 million of revenue for the year ended Dec. 31, 2010, compared with a net loss of $1.08 million on $6.69 million of revenue during the prior year. The Company's balance sheet at March 31, 2011, showed $3.95 million in total assets, $3.68 million in total liabilities, and $270,855 in total shareholders' equity. As reported by the TCR on April 5, 2011, Moss Adams LLP, in Portland, Oregon, noted that the Company has suffered recurring losses, has had significant recurring negative cash flows from operations, and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. BLUEGREEN CORP: Board Seeks to Sell Communities Business -------------------------------------------------------- Bluegreen Corporation previously disclosed it is exploring strategic alternatives for its Bluegreen Communities business segment. In connection with that process, on June 30, 2011, the Board of Directors of the Company made a determination to seek to sell the business segment or all or substantially all of its assets. As a consequence, Bluegreen Communities will be accounted for as a discontinued operation in the Company's financial statements. Further, the Company expects that an impairment charge, which may be material, will be taken in the quarter ended June 30, 2011. The Company is determining the appropriate amount of such impairment, which will be based on a current valuation of the business segment. The Company has not entered into any agreement or agreements with respect to the sale of the business segment or its assets, and there is no certainty that the Company will successfully consummate a sale or sales on terms acceptable to the Company. About Bluegreen Corp. Bluegreen Corporation -- http://www.bluegreencorp.com/-- provides places to live and play through its resorts and residential community businesses. In December 2010, Standard & Poor's Rating Services raised its corporate credit rating on Bluegreen Corp to 'B-' from 'CCC'. S&P's rating outlook on the Company is stable. S&P believes that Bluegreen will grow its fee-based sales commission revenue from $20 million in 2009 to an estimated $50 million in 2010. At this time, S&P expects that Bluegreen may be able to generate at least the same amount of commission based revenue in 2011. While the increase in fee- based revenue allowed Bluegreen to expand the level of sales that do not require financing, S&P believes that the company will likely remain heavily reliant on its lines of credit, receivable- backed warehousing facilities, and access to the timeshare securitization markets to fund timeshare sales. In S&P's view, Bluegreen currently has adequate sources of liquidity to cover its needs over the next 12-18 months mainly due to the successful closing of a timeshare securitization transaction. The Company reported a net loss of $35.87 million on $365.67 million of revenue for the year ended Dec. 31, 2010, compared with net income of $3.90 million on $367.36 million of revenue during the prior year. The Company's balance sheet at March 31, 2011, showed $1.21 billion in total assets, $892.12 million in total liabilities, and $320.03 million in total shareholders' equity. * * * In December 2010, Standard & Poor's Rating Services raised its corporate credit rating on Bluegreen Corp to 'B-' from 'CCC'. S&P's rating outlook on the Company is stable. S&P believes that Bluegreen will grow its fee-based sales commission revenue from $20 million in 2009 to an estimated $50 million in 2010. At this time, S&P expects that Bluegreen may be able to generate at least the same amount of commission based revenue in 2011. While the increase in fee- based revenue allowed Bluegreen to expand the level of sales that do not require financing, S&P believes that the company will likely remain heavily reliant on its lines of credit, receivable- backed warehousing facilities, and access to the timeshare securitization markets to fund timeshare sales. In S&P's view, Bluegreen currently has adequate sources of liquidity to cover its needs over the next 12-18 months mainly due to the successful closing of a timeshare securitization transaction. BORDERS GROUP: Najafi to Open July 19 Auction for Assets -------------------------------------------------------- Borders Group, Inc. has entered into an asset purchase agreement with Direct Brands, a portfolio company of Najafi Companies, and intends to move forward with submitting the agreement to the Court to serve as the "stalking horse" bid for a Court-supervised auction of the business under Section 363 of the U.S. Bankruptcy Code. Borders believes a sale provides the best path forward to reposition the business for a successful future and to maximize value for the Company's stakeholders. Under the terms of the agreement and subject to further due diligence, Direct Brands would purchase substantially all of the Company's assets for $215.1 million plus the assumption of approximately $220 million of liabilities, subject to the auction and Bankruptcy Court approval. Najafi Companies is a Phoenix, Ariz.-based private investment company with extensive experience in several customer-focused businesses. The firm acquired Direct Brands in 2008, including Book-of-the-Month Club, Doubleday Book Clubs and Columbia House. The tentative purchase agreement will occur prior to the Court hearing on July 21. If consummated and under the terms of the agreement, Borders would operate as a wholly owned subsidiary of Direct Brands. As part of the agreement with Direct Brands, Hilco and Gordon Brothers have agreed to acquire any store locations that are ultimately not included in the sale and will close those stores in an orderly manner. Mike Edwards, Borders Group President, said, "We are pleased to take another important step forward as we position Borders for a vibrant future and sustainable earnings growth. Since the filing, we have made significant progress in reducing our cost structure, refocusing our merchandise offering, and building our eBook business. We look forward to working with a supportive partner as we continue to execute on our turnaround strategy." Under its turnaround plan, Borders introduced a revitalized in- store experience particularly with respect to its Kids offering and a new Borders Cafe program in its superstores featuring a new Cafe design and tailored menu items. On the digital front, Borders is capturing a larger share of the eBook market through an expanded partnership with Kobo. In addition to providing customers with access to Kobo's vast inventory of digital books, the Company recently introduced the new Kobo eReader Touch Edition to great reviews, and the device will be available in stores in early July. Mr. Edwards concluded, "We appreciate the continued support of our employees, customers and business partners as we work toward a successful resolution to our restructuring." During the sale process, Borders is continuing to conduct business and serve customers in the ordinary course, including honoring its Borders Rewards program, gift cards and other customer programs. In addition to the Company's filing a motion today with the Bankruptcy Court seeking authorization to conduct a Court- supervised auction, the Company also submitted an alternative proposal required under the Company's DIP financing agreement, in the event that a going-concern sale is not consummated, that comprises an orderly sale of all the assets of the business by a joint venture led by Hilco and Gordon Brothers. The Company anticipates completing the sale process by late July. Borders legal advisors are Kasowitz, Benson, Torres & Friedman LLP and Baker & McKenzie, and its financial advisor is Jefferies & Company, Inc. Alix Partners is serving as Restructuring Advisor. Advisors for Najafi Companies include Ballard Spahr LLP and New York-based Debevoise & Plimpton LLP. About Borders Group Borders Group is a leading operator of book, music and movie superstores and mall-based bookstores. At Jan. 29, 2011, the Debtors operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders- branded airport stores in the United States, of which 639 stores are located in the United States and 3 in Puerto Rico. Two of Borders' flagship stores (along with other less prominent stores) are located in Manhattan. In addition, the Debtors operate a proprietary e-commerce Web site, http://www.Borders.com/, launched in May 2008, which includes both in-store and online e-commerce components. As of Feb. 11, 2011, Borders employed a total of 6,100 full-time employees, 11,400 part-time employees, and approximately 600 contingent employees. Borders Group Inc. and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. Lead Case No. 11-10614) in Manhattan on Feb. 16, 2011. David M. Friedman, Esq., David S. Rosner, Esq., Andrew K. Glenn, Esq., and Jeffrey R. Gleit, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, serve as counsel to the Debtors. Jefferies & Company's Inc. is the financial advisor. DJM Property Management is the lease and real estate services provider. AP Services LLC is the interim management and restructuring services provider. The Garden City Group, Inc., is the claims and notice agent. Attorneys at Morgan, Lewis & Bockius LLP, and Riemer & Braunstein LLP, serve as counsel to the DIP Agents. National law firm Lowenstein Sandler has been appointed to represent the official unsecured creditors committee for Borders Group. Bruce S. Nathan and Bruce Buechler, members of Lowenstein Sandlers' Bankruptcy, Financial Reorganization & Creditors' Rights Group, are leading the team. The Debtor disclosed $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010 Borders Group has sought approval to sell merchandise and owned furniture, fixtures and equipment located at approximately 200 of their stores and, at Borders' option, up to 75 of 136 potential other stores, through store closing sales. Bankruptcy Creditors' Service, Inc., publishes BORDERS GROUP BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Borders Group Inc., the United States' second largest bookstore chain. (http://bankrupt.com/newsstand/or 215/945-7000) BORDERS GROUP: $505MM DIP Facility Extended to Allow Sale Process ----------------------------------------------------------------- Borders Group, Inc. and its debtor affiliates sought and obtained approval from Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York to enter into a second amendment of their $505 million debtor-in-possession financing agreement with lenders led by GE Capital Markets. The bankruptcy judge approved the amendment that extends deadlines in the DIP Facility to allow Borders to sell its business in a dual-track process by the end of July and avoid the need for Borders to close 40 of its more profitable stores, which the bookseller chain intends to include in a sale, said Borders spokesperson Mary Davis, according to Steven Church and Chris Dolmetsch of Bloomberg News. "The stores will stay open for the foreseeable future," Ms. Davis told Bloomberg. At a June 22, 2011 hearing, however, Judge Glenn expressed "some reluctance" to approve the $1 million fee to be paid by Borders to the DIP lenders in connection with the second DIP Loan amendment, Bloomberg relays, citing an audio transcript. Counsel to Borders, Andrew K. Glenn, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, reasoned to Judge Glenn that the fee is lower than what was originally proposed, according to the audio transcript obtained by Bloomberg. "There were arm's-length and vigorous negotiations of that amount, the committee was involved in those negotiations and tried to get it even lower than that but $1 million was the best we could do," Borders' lawyer explained to the bankruptcy judge. "The reluctance is I think you're getting raped, is the best way I can describe it," Judge Glenn stated at the hearing, according to Bloomberg. "These fees are out of sight. The other side of the coin is, its the only game in town, so it is with reluctance that I approve the motion. A million dollar fee for very minimal extension in these dates is an extraordinary fee, very close to me saying, 'No,'" the bankruptcy judge commented. Mr. Glenn further described the fee as a pill most bankrupt companies have to swallow when renegotiating loans, according to a separate report by Reuters. "That's a pretty big pill," the bankruptcy judge responded, Reuters relays. Borders' lawyer stressed that if the bookseller chain cannot meet the deadlines, it will have to liquidate its business, Reuters states. The Borders lawyer said he hopes for a robust auction, but that at least some additional stores will likely have to close, Reuters relays. Judge Glenn also stated at the June 22 hearing that the aggressive timetable makes him "very scared" because of the possibility of a multi-day auction or problems with the approval of those procedures for that auction, Joseph Checkler of Dow Jones Daily Bankruptcy Review relays. "I'll find a way to live with that," Judge Glenn was quoted by Dow Jones as saying at the hearing. Borders was scheduled to file a proposal by July 1 to sell itself at a court-approved auction with a guaranteed buyer, known as a 'stalking horse,' making an initial bid, Ms. Davis told Bloomberg. The additional asset sale deadlines are: July 15, 2011 -- Deadline to obtain court order approving stalking horse bid/bidding procedures. July 19, 2011 -- The Debtors will conduct an auction. July 22, 2011 -- Sale Hearing July 29, 2011 -- Sale Closing If unsuccessful in finding a buyer for substantially all of its assets, Borders will give itself to liquidators. Court's Order Judge Glenn authorized the Debtors to perform all acts; and to make, execute and deliver all instruments and documents in connection with the Second DIP Loan Amendment that may be reasonably required, necessary, or requested by the DIP Agents, including, without limitation, the payment of the Amendment Fee. The Debtors will deliver to the Official Committee of Unsecured Creditors copies of all reports, certificates, notices and other documentation they are required to deliver to the DIP Agents pursuant to the DIP Loan Documents, including the appraisal referenced in the Second Amendment. However, nothing in this provision obligates any DIP Secured Parties to deliver copies of any those reports, certificates, notices and other documentation to the Committee; and the Committee is not entitled to copies of any reports or other materials prepared internally by any DIP Secured Party or by any professionals retained by any DIP Secured Party, including, without limitation, any attorneys, accountants, appraisers or financial advisors. Judge Glenn finds that the Second DIP Loan Amendment has been negotiated in good faith and at arm's-length among the Debtors, the DIP Agents and the DIP Lenders. To the extent the Debtors are permitted, under the Second DIP Loan Amendment, to exclude their intellectual property assets and interests in leases in or from a Sale Transaction, the Debtors will include those assets in a Sale Transaction only after consultation with the Committee and the Committee reserves its rights to object to the Debtors' inclusion of those assets in a Sale Transaction in the event the Debtors seek to include them after the consultation. Any and all objections to the DIP 2nd Amendment Motion not withdrawn or resolved are overruled on the merits in all respects, Judge Glenn ruled. Terms of DIP Loan Second Amendment The primary modifications under the DIP Loan Second Amendment are: (A) The Debtors will pay an Amendment Fee of $1,000,000. (B) The DIP Credit Agreement will be amended to permit (i) dispositions in connection with 10 Small-Format Store Liquidations if landlords elect to terminate any lease with kick-out rights, and (ii) dispositions in connection with a Sale Transaction (x) in the case of a Full Chain Liquidation, commencing not later than July 22, 2011, or (y) in the case of a GC Sale, consummated not later than July 29, 2011 as to the GC Sale portion of the Sale Transaction, with any related Remainder Chain Liquidation commencing not later than July 22, 2011, and in either case resulting in the repayment in full in cash at the closing of those Sale Transactions of all the Debtors' Obligations under the DIP Facility. (C) The DIP Credit Agreement will be amended to increase the minimum available requirements from $25 million to $30 million. (D) The amended events of default are: * On or before June 17, 2011 the Credit Parties will have failed to distribute to all interested parties informational packages and solicitations for bids in connection with a Full Chain Liquidation, and any informational packages sent for solicitations of bids for a Full Chain Liquidation will fail to contain supporting due diligence documentation as necessary to enable the solicitation of bids for the liquidation of Inventory on an equity basis, and as to furniture, fixtures and equipment, on an equity or commission basis. * On or before July 1, 2011, (x) the Credit Parties will have failed to file a motion seeking approval of bidding procedures, including bid protections for one or more binding stalking horse bids and seeking approval of the related stalking horse bidder; or (y) the Credit Parties will fail to have received and accepted, after consultation with the Agents, a Stalking Horse Bid that is reasonably acceptable to Agents. In the event no reasonably acceptable Stalking Horse Bid for a GC Sale is received and accepted, the Credit Parties will have failed to receive and accept, on or before July 1, 2011, a Stalking Horse Bid for a Full Chain Liquidation. * In the event the Stalking Horse Bid for the Sale Transaction (A) does not provide for payment in full in cash at the closing of the Sale Transaction of all Obligations or (B) is not acceptable to the Agents, then by July 1, 2011 (x) the Credit Parties will have failed to distribute to all interested parties informational packages and solicitations for bids in connection with the sale of the Credit Parties' intellectual property and interests in leases, or any informational packages sent for solicitations of bids for the sale will fail to contain supporting due diligence documentation as reasonably requested by Agents; or (y) the Credit Parties' intellectual property assets and interest in leases will fail to be included in the auction applicable to the balance of the Sale Transaction. * On or before July 15, 2011, the Court will not have entered an order approving the Sales Procedure Motion and Stalking Horse Bids. * On or before July 22, 2011, the Credit Parties will have failed to receive approval from the Court of a Sale Transaction in an amount sufficient to result in the repayment in full in cash of all Obligations under the DIP Facility. * In the event the approved Sale Transaction (i) is a Full Chain Liquidation, on or before July 22, 2011, the Credit Parties will have failed to have executed all of the agency documents or other relevant documents to be executed to effect the Full Chain Liquidation and the Full Chain Liquidation will not have commenced; or (ii) includes a GC Sale, (x) on or before July 22, 2011, the Credit Parties will have failed to have executed all of the agency documents or other relevant documents to be executed to effect the Remainder Chain Liquidation occurring on a parallel basis with the GC Sale, and the Remainder Chain Liquidation, if any, will not have commenced, and (y) on or before July 29, 2011, the Debtors will have failed to have executed all purchase agreements and other relevant documents in connection with the GC Sale and the GC Sale will not have been consummated; (E) The definition of "Eligible Inventory" is amended to exclude Inventory at any Store that is the subject of (i) a Permitted Store Closing or (ii) a Small-Format Store Liquidation, provided that the Inventory will be ineligible upon the earlier of (x) the Credit Parties' receipt of notice from the related landlord of the exercise of rights to compel the Credit Parties to vacate the Store, or (y) the commencement of the liquidation sale at the Store. (F) The definition of "Lease Assumption Reserve Commencement Date" is deleted and replaced with: "Lease Assumption Reserve Commencement Date" means (i) as to Inventory at any leased locations with respect to which the period for lease rejection/assumption has not been extended past October 31, 2011 or with respect to which the lease will expire on or prior to October 31, 2011, July 29, 2011; and (ii) as to Inventory at all other locations, the date that is 12 weeks prior to the Lease Rejection Date. (G) The definition of Minimum Excess Availability will be increased from $25 million to $30 million. (H) The DIP Lenders consent to the withdrawal of the Second Store Closing Motion and related bid packages and waive any Events of Default relating to it. (I) The DIP Lenders consent to the Debtors' filing a motion to assume and amend an agreement with Source Interlink Companies, Inc., the Debtors' national supplier of periodicals. (J) The Lenders and the Agents consent to the Borrowers' closure of Store No. 10-608, located at Ocean County Mall, in Toms River, New Jersey; Store No. 10-652, located at Valley River Center, in Eugene, Oregon; and Store No. 754, located at the McCarran Airport, in Las Vegas, Nevada, and the dispositions of collateral in connection with the Additional Store Closings; provided, that the Additional Store Closings are conducted pursuant to a Letter Agreement Governing Inventory Disposition, dated Dec. 9, 2010, between Borders, Inc. and Hilco Merchant Resources, LLC. (K) Updated Appraisal. The Debtors will provide an updated appraisal of their assets by June 30, 2011. About Borders Group Borders Group is a leading operator of book, music and movie superstores and mall-based bookstores. At Jan. 29, 2011, the Debtors operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders- branded airport stores in the United States, of which 639 stores are located in the United States and 3 in Puerto Rico. Two of Borders' flagship stores (along with other less prominent stores) are located in Manhattan. In addition, the Debtors operate a proprietary e-commerce Web site, http://www.Borders.com/, launched in May 2008, which includes both in-store and online e-commerce components. As of Feb. 11, 2011, Borders employed a total of 6,100 full-time employees, 11,400 part-time employees, and approximately 600 contingent employees. Borders Group Inc. and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. Lead Case No. 11-10614) in Manhattan on Feb. 16, 2011. David M. Friedman, Esq., David S. Rosner, Esq., Andrew K. Glenn, Esq., and Jeffrey R. Gleit, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, serve as counsel to the Debtors. Jefferies & Company's Inc. is the financial advisor. DJM Property Management is the lease and real estate services provider. AP Services LLC is the interim management and restructuring services provider. The Garden City Group, Inc., is the claims and notice agent. Attorneys at Morgan, Lewis & Bockius LLP, and Riemer & Braunstein LLP, serve as counsel to the DIP Agents. National law firm Lowenstein Sandler has been appointed to represent the official unsecured creditors committee for Borders Group. Bruce S. Nathan and Bruce Buechler, members of Lowenstein Sandlers' Bankruptcy, Financial Reorganization & Creditors' Rights Group, are leading the team. The Debtor disclosed $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010 Borders Group has sought approval to sell merchandise and owned furniture, fixtures and equipment located at approximately 200 of their stores and, at Borders' option, up to 75 of 136 potential other stores, through store closing sales. Bankruptcy Creditors' Service, Inc., publishes BORDERS GROUP BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Borders Group Inc., the United States' second largest bookstore chain. (http://bankrupt.com/newsstand/or 215/945-7000) BORDERS GROUP: Withdraws 51-Store Closing Sales Motion ------------------------------------------------------ In light of Borders Group's entry into a second amendment to their DIP Credit Facility, the Debtors withdrew their Second Store Closing Sales Motion and a June 20, 2011 hearing on the motion was cancelled. Before these developments, landlords KWK Investments, LLC and 10- 24 School Street Associates, LLC, filed objections to the Debtors' 2nd SCS Motion. KWK Investments asserted that Store No. 945 located in Key West, Florida should be removed from the list of Closing Stores as a result of a stipulation being executed and filed with the Court. 10-24 School Street, on the other hand, objected to the Debtors' request to (i) use any signage in a manner that contravenes state and local law, and (ii) abandon all unsold furniture, fixtures & equipment at the property located at 10-24 School Street, in Boston, Massachusetts. About Borders Group Borders Group is a leading operator of book, music and movie superstores and mall-based bookstores. At Jan. 29, 2011, the Debtors operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders- branded airport stores in the United States, of which 639 stores are located in the United States and 3 in Puerto Rico. Two of Borders' flagship stores (along with other less prominent stores) are located in Manhattan. In addition, the Debtors operate a proprietary e-commerce Web site, http://www.Borders.com/, launched in May 2008, which includes both in-store and online e-commerce components. As of Feb. 11, 2011, Borders employed a total of 6,100 full-time employees, 11,400 part-time employees, and approximately 600 contingent employees. Borders Group Inc. and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. Lead Case No. 11-10614) in Manhattan on Feb. 16, 2011. David M. Friedman, Esq., David S. Rosner, Esq., Andrew K. Glenn, Esq., and Jeffrey R. Gleit, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, serve as counsel to the Debtors. Jefferies & Company's Inc. is the financial advisor. DJM Property Management is the lease and real estate services provider. AP Services LLC is the interim management and restructuring services provider. The Garden City Group, Inc., is the claims and notice agent. Attorneys at Morgan, Lewis & Bockius LLP, and Riemer & Braunstein LLP, serve as counsel to the DIP Agents. National law firm Lowenstein Sandler has been appointed to represent the official unsecured creditors committee for Borders Group. Bruce S. Nathan and Bruce Buechler, members of Lowenstein Sandlers' Bankruptcy, Financial Reorganization & Creditors' Rights Group, are leading the team. The Debtor disclosed $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010 Borders Group has sought approval to sell merchandise and owned furniture, fixtures and equipment located at approximately 200 of their stores and, at Borders' option, up to 75 of 136 potential other stores, through store closing sales. Bankruptcy Creditors' Service, Inc., publishes BORDERS GROUP BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Borders Group Inc., the United States' second largest bookstore chain. (http://bankrupt.com/newsstand/or 215/945-7000) BORDERS GROUP: Proposes To Sell Torrance Mortgage Loan for $6.6MM ----------------------------------------------------------------- Borders Group and its affiliates ask the bankruptcy court to approve the sale of a mortgage loan and related loan documents owned and held by Borders, Inc. with respect to the Debtors' Torrance, California store, free and clear of all liens, to Hareff Torrance LLC for $6.6 million. The Debtors also ask the Court to approve a corresponding participation and servicing agreement between Borders and Hareff Torrance. The Torrance Store is an approximate 36,000 square foot 'box store.' The developer of the Torrance Store, NCC Torrance/B Associated Limited Partnership, which was succeeded in interest by Torrance Borders Partners Ltd., financed the transaction through a mortgage loan advanced by National Tenant Finance Corporation pursuant to a loan agreement dated November 10, 1994, and evidenced by two promissory notes, each dated November 10, 1994, one in the original principal amount of $3,383,000, and the second in the original principal amount of $7,049,000. The Mortgage Note is secured by, among other things, a Deed of Trust dated November 19, 1994, encumbering the Torrance Property. There is currently due and owing under the Mortgage Note a principal amount of $6,608,000, with a net amount of $6,324,500 after taking into consideration the $364,500 of accrued principal that will be funded into the Debt Service Fund at the closing of the contemplated sale. The Mortgage Note is not scheduled to be fully amortized and satisfied until the conclusion of the current term of the Torrance Lease on October 31, 2019. In April 2009, Borders retained Mortgage Corporation of America to actively market the Mortgage Note for sale in an attempt to sell the Mortgage Note. However, with rent for the Torrance Property being substantially above market for the Torrance, California area, there was limited interest in the purchase of the Mortgage Note and Borders only received limited acceptable proposals, none of which reached closing. At the end of 2010, Borders entered into negotiations with Hareff Torrance LLC, an affiliate of Kin Properties, for the sale of the Mortgage Note. Other affiliates of Kin Properties are landlords at eight Borders Superstores across the country. While negotiations ceased towards the end of January 2011, Hareff Torrance remained interested in purchasing the Mortgage Note, and with the assistance of MCA, Borders reopened negotiations. By June 2011, Borders and Hareff Torrance reached an agreement, subject to Court approval, on terms for the sale of the Loan and Mortgage Note and for a corresponding participation and servicing agreement. The salient terms of the Mortgage Loan Purchase Agreement and Participation Agreement are: (a) Borders will sell to Hareff Torrance all right, title and interest in and to the Loan and the Mortgage Note for the purchase price, which will be the outstanding principal balance of the Loan as of July 29, 2011 in the amount of $6,608,000, paid through a combination of cash and, pursuant to the Participation Agreement, a subordinated 50% participation interest in the Mortgage Note, at 50% of the current principal amount. (b) Borders will receive (i) an immediate cash payment of $2,773,374 plus (ii) a later, post-closing payment of $163,751, subject to adjustments based on the actual closing date, to be paid on the next principal and interest payment date of October 31, 2011 on account of pre-closing accrued interest, for a total cash payment of $2,937,125, subject to adjustments based on the actual closing date, and (iii) a 50% participation interest going forward in the Mortgage Note. (c) Subject to Borders' rights to reject the Torrance Lease, Borders will pay monthly rent as required under the Torrance Lease to Lead Lender who will account for the rent and release it as necessary to make the semi-annual debt service payments required under the Mortgage Note. (d) For the first 16 months after Closing, all debt service payments on account of the Note will be paid to Hareff Torrance, after which time, and provided there is no Event of Default under the Loan Documents, all debt service payments received on account of the Note will be shared equally by Hareff Torrance and Borders. (e) Borders' interest in the Mortgage Note is subordinate to Hareff Torrance's interest. Thus, should an Event of Default occur under the Loan Documents, all debt service payments will first be applied to satisfy Hareff Torrance's interest in the Mortgage Note. (f) If the Loan is in default, Hareff Torrance will be entitled to pursue remedies and take enforcement action, or omit to take the enforcement action (g) In the event of a foreclosure of the Collateral, either party may bid in its own name, in the amount as the party determines. If either Borders or Hareff Torrance is the successful bidder at the foreclosure sale, the certificate of sale or deed will be entered in the name of the party, solely and individually, the Participation Agreement will terminate, and neither party will have any rights to any further payment. (h) The proceeds of a foreclosure sale will be first applied to Hareff Torrance's interest in the Mortgage Note, until Hareff Torrance is paid in full, with any remaining amount then applied to Borders' interest in the Mortgage Note. (i) Hareff Torrance will reimburse Borders annually for $12,571 of Additional Rent paid by Borders. (j) Hareff Torrance will not charge a service fee for servicing the Loan. Hareff Torrance will be entitled to reimbursement of 50% of its actual expenses incurred in servicing and enforcing the Mortgage Note. (k) Hareff Torrance has a 1-year option from closing to purchase Borders' interest in the Mortgage Note at par with accrued interest. (l) Hareff Torrance has the right of first refusal, as well as last look, to purchase Borders's interest in the Mortgage Note. Full-text copies of the Agreements are available for free at: http://bankrupt.com/misc/Borders_MortgageLoanPurchasePact.pdf http://bankrupt.com/misc/Borders_ParticipationAgr.pdf The Debtors further ask Judge Glenn to grant all necessary and appropriate relief under the Bankruptcy Code to implement the transactions contemplated under the Purchase Agreement and Participation Agreement and to allow Hareff Torrance and Borders to exercise their rights and remedies, by authorizing all notices, demands, exercise of rights, consents, setoffs, indemnifications, transactions and other acts in connection with the Purchase Agreement and the Participation Agreement. Andrew K. Glenn, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, asserts that the Mortgage Loan Transaction will allow the Debtors to monetize an asset which otherwise provides no current income to their estates. The Mortgage Loan Transaction, Mr. Glenn adds, will result in a cash infusion to Borders' estate of approximately $3,000,000, and the Debtors will have an opportunity to realize additional income from the Mortgage Loan Transaction pursuant to its participation interest. Moreover, the Mortgage Loan Transaction will not interfere with or preclude Borders from continuing as a tenant under the Torrance Lease, subject to its rights to assume or reject the lease, he assures the Court. The Debtors have obtained the consent of the DIP Agents to the transaction contemplated by the Mortgage Loan Transaction, including the sale of the Loan and Mortgage Note to Hareff Torrance. There are no other known lienholders or parties with an interest in the Mortgage Note. The Debtors expect that those amounts would be used to pay down their DIP revolver facility, thus increasing borrowing availability if necessary. The Court will consider the Debtors' request on July 14, 2011. Objections are due no later than July 7. About Borders Group Borders Group is a leading operator of book, music and movie superstores and mall-based bookstores. At Jan. 29, 2011, the Debtors operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders- branded airport stores in the United States, of which 639 stores are located in the United States and 3 in Puerto Rico. Two of Borders' flagship stores (along with other less prominent stores) are located in Manhattan. In addition, the Debtors operate a proprietary e-commerce Web site, http://www.Borders.com/, launched in May 2008, which includes both in-store and online e-commerce components. As of Feb. 11, 2011, Borders employed a total of 6,100 full-time employees, 11,400 part-time employees, and approximately 600 contingent employees. Borders Group Inc. and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. Lead Case No. 11-10614) in Manhattan on Feb. 16, 2011. David M. Friedman, Esq., David S. Rosner, Esq., Andrew K. Glenn, Esq., and Jeffrey R. Gleit, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, serve as counsel to the Debtors. Jefferies & Company's Inc. is the financial advisor. DJM Property Management is the lease and real estate services provider. AP Services LLC is the interim management and restructuring services provider. The Garden City Group, Inc., is the claims and notice agent. Attorneys at Morgan, Lewis & Bockius LLP, and Riemer & Braunstein LLP, serve as counsel to the DIP Agents. National law firm Lowenstein Sandler has been appointed to represent the official unsecured creditors committee for Borders Group. Bruce S. Nathan and Bruce Buechler, members of Lowenstein Sandlers' Bankruptcy, Financial Reorganization & Creditors' Rights Group, are leading the team. The Debtor disclosed $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010 Borders Group has sought approval to sell merchandise and owned furniture, fixtures and equipment located at approximately 200 of their stores and, at Borders' option, up to 75 of 136 potential other stores, through store closing sales. Bankruptcy Creditors' Service, Inc., publishes BORDERS GROUP BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Borders Group Inc., the United States' second largest bookstore chain. (http://bankrupt.com/newsstand/or 215/945-7000) BRIAR RIDGE: Case Dismissed; Re-Filing Barred Until May 2012 ------------------------------------------------------------ Judge J. Philip Klingeberger of the U.S. Bankruptcy Court for the Northern District of Indiana terminated and closed the Chapter 11 case of Briar Ridge County Club Unit 16 LLC. In a May 26, 2011 ruling, the Court concluded that it is in the best interest of creditors that Briar Ridge's case should be dismissed for cause, based on finding of fact stated on the record at a May 25 hearing. Pursuant to Section 349 of the Bankruptcy Code, the Debtor is enjoined from filing a subsequent case under any chapter of title 11 to and including May 24, 2012, the Court ordered. The Clerk of the Court is prohibited from accepting any such petition from the Debtor, unless the act is approved by unanimous approval of all members of the Debtor. Before the dismissal order was entered, Timothy M. Rueth, as manager and owner of the Debtor, moved to terminate the services of A. Jack Kopko, Esq., at Law Office of Kevin W. Schmidt P.C., as counsel for the Debtor by mutual agreement of the parties. Schererville, Indiana-based Briar Ridge Courty Club, Unit 16, LLC, filed for Chapter 11 bankruptcy protection (Bankr. N.D. Ind. Case No. 11-20666) on March 3, 2011. In its schedules, the Debtor disclosed $10,750,000 in assets and $3,923,556 in liabilities as of the Chapter 11 filing. C.A.A.R.T ENTERPRISES: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: C.A.A.R.T Enterprises, Inc. dba Better Homes and Gardens Real Estate Desert Properties fka Remax Associates 2225 Village Walk Drive, Suite 260 Henderson, NV 89052 Bankruptcy Case No.: 11-20325 Chapter 11 Petition Date: June 29, 2011 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Michael C. Van, Esq. SHUMWAY VAN & HANSEN, CHTD 8985 S. Eastern Ave., #100 Las Vegas, NV 89123 Tel: (702) 478-7770 Fax: (702) 478-4779 E-mail: michael@shumwayvan.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Tracy Ruck, president. CASCADIA PARTNERS: Contested Plan Hearing on Thursday ----------------------------------------------------- Cascadia Partners LLC will be facing opposition at the July 7 confirmation hearing for its Chapter 11 plan of reorganization The County of Albemarle and Wells Fargo Bank N.A. have filed objections to the proposed Chapter 11 plan. According to Albemarle and the bank, the Plan is not feasible because the Debtor has no ability to perform under the Plan. They note that two principal components of the Plan are the hypothetical union loans and a lot purchase agreement. However, neither provides the Debtor any reasonable assurance of successfully reorganizing. Albermarle added that the Plan does not provide for the full and prompt repayment of its claim at the statutory rate of interest to which it is entitled. The confirmation hearing is set for July 7, 2011 at 10:00 a.m., at Lynchburg , Room 210, US Courthouse, 1101 Court Street in Lynchburg, Virginia. The Court approved on April 20 the adequacy of the disclosure statement explaining the Plan, a full-text copy of which is available for free at: http://bankrupt.com/misc/CASCADIAPARTNERS_DS.pdf The Plan contemplates the sale by the Debtor of its real property. Part of the property will be sold pursuant to the terms of a December 2010 Letter of Intent between "NVR" and the Debtor, and a draft Lot Purchase Agreement. The remaining property not covered by the Lot Purchase Agreement will be developed or sold on terms yet to be determined. Under the Plan, all creditors will be paid 100% of their allowed claims with interest within a term of five years from the date of the closing of the first lot sale under the Lot Purchase Agreement. The Debtor will obtain a $4.0 million construction/revolving loan from Union First Market, which will be used to develop the Real Property so that it may be sold pursuant to the terms of the Lot Purchase Agreement. Charlottesville, Virginia-based Cascadia Partners LLC owns and develops certain real property in Albermarle County, Virginia. It filed for Chapter 11 bankruptcy protection (Bankr. W.D. Va. Case No. 10-63442) on Dec. 1, 2010. W. Stephen Scott, Esq., at Scott Kroner, PLC, serves as bankruptcy counsel. The Debtor disclosed $12,074,100 in total assets, and $4,292,894 in total liabilities in its schedules. CATALYST PAPER: Re-Build of Port Alberni-Area Dam Set to Begin -------------------------------------------------------------- Catalyst Paper is about to begin re-building the Robertson Creek Dam. Catalyst is undertaking this work in a strategic alliance with the Hupacasath First Nation. The dam is located in Hupacasath traditional territory, and the first nation has been actively engaged in long-standing efforts to advance the re-build project. An independent engineering evaluation confirmed the need to replace this more than 50-year-old structure. The new dam will be fully compliant with recently strengthened provincial guidelines, and will be designed to withstand even peak flood conditions on Great Central Lake. The replacement plan underwent a full environmental assessment under federal regulatory requirements, and has been issued necessary provincial permits. Clearing in the immediate vicinity of the dam, which is located about 20 km northwest of Port Alberni and adjacent to the Robertson Creek Fish Hatchery, is scheduled to begin this week. Site preparation will extend into July, after which a temporary dam will be constructed just upstream from the existing one. The existing timber and stone structure is scheduled to be dismantled in July and August. And construction of a new earthen dam is scheduled to be completed by September 15, within a window of minimal fish presence. The cost of the work is budgeted at $1.7 million. "We're pleased this project is moving ahead and that we'll soon have an improved design that meets new provincial standards and reduces risks to public safety and the environment," said Tom Paisley, general manager of Catalyst's Port Alberni Division. Because the new dam will require a somewhat larger footprint than the old one, Catalyst will undertake compensatory fish habitat improvements within the local area. This will involve replacing a culvert with a free-span bridge at the Somass River Estuary near the Catalyst Port Alberni mill. About Catalyst Paper Catalyst Paper -- http://www.catalystpaper.com/-- manufactures diverse specialty mechanical printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills, located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.9 million tons. The Company is headquartered in Richmond, British Columbia, Canada and its common shares trade on the Toronto Stock Exchange under the symbol CTL. The Company posted a net loss of C$398.2 million on sales of C$1.229 billion during 2010. The Company's net loss in 2009 was C$5.6 million on sales of C$1.224 billion. The Company's balance sheet at March 31, 2011, showed C$1.64 billion in total assets, C$1.25 billion in total Liabilities, and C$389.60 million in equity. * * * Catalyst Paper carried Moody's Investors Service's 'Caa1' corporate family rating. Outlook in Negative. The Company also carries Standard & Poor's CCC+ long-term corporate credit rating, Outlook is Stable. CATHOLIC CHURCH: Milw. Committee Proposes Info Access Protocol -------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 case of the Archdiocese of Milwaukee asks the U.S. Bankruptcy Court for the Eastern District of Wisconsin to clarify the Committee's obligations under Section 1102(b)(3)(A) of the Bankruptcy Code to provide access to information to general unsecured creditors. Specifically, the Committee asks the Court to approve a protocol for information access and exclude from its Section 1102(b)(3)(A) responsibilities, information that is confidential or whose disclosure would result in a waiver of the attorney-client privilege. James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California, relates that among other things, the Committee is required to provide access to information to creditors who hold general unsecured claims who are not on the Committee and solicit and receive comments from those creditors. To that end, the Committee has established: -- a toll free number [(888)496-8643] and a case specific e-mail address (milwaukee.archdiocese@pszjlaw.com) for creditors to use in contacting the Committee's counsel; and -- a Web page (www.pszjlaw.com/milwaukee.archdiocese.html) which includes general information about the case and directions on how to access the docket and obtain publicly- filed documents. If approved, the toll free number, the e-mail address, and the Web page address will be featured on the Notice of Deadline for Submitting Abuse Survivor Proofs of Claim that will be served on all known abuse survivors, the Notice of Deadline for Filing Proofs of Claim that will be served on all other creditors. Mr. Stang relates that by responding to creditor inquiries via e-mail or phone and by providing information on the Web page and in the notices of the bar date, that the Committee will have satisfied its obligations to provide access to information to and to solicit and receive comments from creditors who are not on the Committee. In addition, the Committee also asks the Court not to require the Committee to provide access to any privileged information or any other information that subsequently becomes the subject of a Court-approved confidentiality agreement or protective order. About the Diocese of Milwaukee The Diocese of Milwaukee was established on Nov. 28, 1843, and was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The region served by the Archdiocese consists of 4,758 square miles in southeast Wisconsin which includes counties Dodge, Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington and Waukesha. There are 657,519 registered Catholics in the Region. The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wisc. Case No. 11-20059) on Jan. 4, 2011, to address claims over sexual abuse by priests on minors. The Archdiocese became at least the eighth Roman Catholic diocese in the U.S. to file for bankruptcy to settle claims from current and former parishioners who say they were sexually molested by priests. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The Official Committee of Unsecured Creditors in the bankruptcy case has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and Howard, Solochek & Weber, S.C., as its local counsel. The Archdiocese estimated assets and debts of $10 million to $50 million in its Chapter 11 petition. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Milw. Panel Proposes BMI as Computer Consultant ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 case of the Archdiocese of Milwaukee seeks authority from the U.S. Bankruptcy Court for the Eastern District of Wisconsin to retain Business Management International as its computer consultant, nunc pro tunc to May 17, 2011. The Committee says it needs BMI to assist its financial advisors -- Berkeley Research Group LLC -- with converting raw, electronic accounting data from the Debtor into readable format and running reports on that data necessary for the financial advisors to perform their asset analyses. The Debtor uses "Great Plains" accounting software and the Committee contends that BMI is a computer consultant firm that owns software licenses entitling it to run the Great Plains software. One of BMI's professionals, Susan Spitko, has extensive experience and training with the specific version of the Great Plains software that the Debtor uses. Ms. Spitko will be the professional at BMI who will perform most of the work on the project. She will work under the supervision of Laurel Loehlin, the vice president of BMI. The Committee tells the Court that if it uses a professional without a Great Plains license, the Committee must acquire the license for $10,000. Thus, hiring BMI is cost effective for the Debtor, the Committee asserts. Specifically, the services that BMI will render to the Committee include, but will not be limited to: a. coordinating the export of the Debtor's raw data on Great Plains to BRG and BMI; b. extracting raw data from Great Plains and rendering it readable to BRG; c. running reports of the raw data on Great Plains at the direction of the Committee, its counsel, and BRG. BMI is not being asked to analyze the Debtor's liability to any particular survivor of sexual abuse; and d. providing other services to the Committee and its professionals as may be necessary in the case. The Committee seeks an initial $15,000 cap in fees and expenses for BMI's work, subject to additional motions to increase that amount. Ms. Loehlin assures the Court that her firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About the Diocese of Milwaukee The Diocese of Milwaukee was established on Nov. 28, 1843, and was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The region served by the Archdiocese consists of 4,758 square miles in southeast Wisconsin which includes counties Dodge, Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington and Waukesha. There are 657,519 registered Catholics in the Region. The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wisc. Case No. 11-20059) on Jan. 4, 2011, to address claims over sexual abuse by priests on minors. The Archdiocese became at least the eighth Roman Catholic diocese in the U.S. to file for bankruptcy to settle claims from current and former parishioners who say they were sexually molested by priests. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The Official Committee of Unsecured Creditors in the bankruptcy case has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and Howard, Solochek & Weber, S.C., as its local counsel. The Archdiocese estimated assets and debts of $10 million to $50 million in its Chapter 11 petition. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Milw. Raises Concerns on Berkeley Hiring --------------------------------------------------------- The Official Committee of Unsecured Creditors formed in the Archdiocese of Milwaukee's Chapter 11 case filed a request to retain Berkeley Research Group LLC as its financial advisor. Patrick S. Layng, U.S. Trustee for Region 11, said in a court filing that it has no objection to the application. The Archdiocese said in a court filing that "has some concerns" regarding the application. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, points out that the Application only states that BRG is to be appointed pursuant to Section 328 of the Bankruptcy Code. "At first blush, it would seem that BRG would not be subject to the standards of evaluation of compensation for other professionals under Section 330 of the Bankruptcy Code. However, the Amended BRG Application later includes a reference to BRG's hourly compensation being subject to Section 330(a) of the Bankruptcy Code," he notes. In addition, the Debtor is also concerned with the Application's enumeration of several areas of inquiry relating to finances for which BRG intends to provide professional services to the Committee. "Particularly troublesome is the fact that BRG anticipates providing professional services before there is an analysis by legal counsel as to whether such work could reasonably be expected to lead to assets or claims that will benefit the Chapter 11 estate or its creditors," Mr. Diesing relates. The Debtor asks that the Court approve the Application only if modifications are made. Creditors Committee's Response The Committee assures the Archdiocese that it would file fee applications for BRG. James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California, contends that the Debtor proposes a novel -- and inappropriate -- litmus test for the Committee's use of a financial advisor. He notes that the Debtor proposes that it should be the gatekeeper for any forensic financial analyses that the Committee undertakes. "This position is based on the factually mistaken assertion that the Debtor is the exclusive party in interest that seeks to preserve estate assets by restricting professionals' fees," Mr. Stang argues. He explains that in reality, the Committee is equally, if not more so, inclined to preserve estate assets so that they can fund creditors' recoveries in the Chapter 11 case. Mr. Stang also argues that the Debtor's role as gatekeeper of Committee investigation is not workable because the Debtor and the Committee do not have aligned interests and strategies with regard to asset analysis at this juncture. About the Diocese of Milwaukee The Diocese of Milwaukee was established on Nov. 28, 1843, and was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius IX. The region served by the Archdiocese consists of 4,758 square miles in southeast Wisconsin which includes counties Dodge, Fond du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth, Washington and Waukesha. There are 657,519 registered Catholics in the Region. The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wisc. Case No. 11-20059) on Jan. 4, 2011, to address claims over sexual abuse by priests on minors. The Archdiocese became at least the eighth Roman Catholic diocese in the U.S. to file for bankruptcy to settle claims from current and former parishioners who say they were sexually molested by priests. Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The Official Committee of Unsecured Creditors in the bankruptcy case has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and Howard, Solochek & Weber, S.C., as its local counsel. The Archdiocese estimated assets and debts of $10 million to $50 million in its Chapter 11 petition. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CENTERPOINT ENERGY: Moody's Upgrades Debt Ratings From 'Ba1' ------------------------------------------------------------ Moody's Investors Service upgraded the long- and short-term ratings of the debt and supported obligations of CenterPoint Energy, Inc. (CNP, senior unsecured ratings to Baa3 from Ba1) and its subsidiary CenterPoint Energy Resources Corp. (CERC, senior unsecured ratings to Baa2 from Baa3). The ratings of CNP other subsidiary CenterPoint Energy Houston Electric, LLC (CEHE, Baa2 senior unsecured) were confirmed. The rating outlooks for all three entities are stable. RATINGS RATIONALE These rating actions conclude a review for possible upgrade that Moody's initiated in March following a favorable ruling by the Texas Supreme Court on CenterPoint's appeal of the stranded cost true-up order that was issued by the Public Utility Commission of Texas (PUCT). The appeal period for this decision ended earlier this month when the TSC denied all motions for a rehearing, paving the way for CenterPoint to file with the PUCT to recoup its award. "The substantial cash proceeds that CenterPoint will receive will enhance the company's financial flexibility over the next few years, supporting an already improving trend in its fundamental credit profile, " says Moody's vice president Mihoko Manabe. This longstanding litigation stemmed from a 2004 order, in which the PUCT disallowed $1.7 billion of pre-tax of stranded costs that CenterPoint had requested to recover resulting from the transition to competitive retail electric markets in Texas. CenterPoint estimates the judgment to be approximately $1.8 billion pre-tax, which is subject to the PUCT's final determination. The company will also request a financing order for securitization bonds, which it expects to issue late this year. It is Moody's understanding that the company will recover most of its estimated reward, since many of the disputed costs in the TSC decision have been well identified through many years of litigation. CenterPoint has not yet decided how it will use the securitization proceeds, but the rating upgrades and stable outlook are based on the company applying those proceeds to a prudent mix of growth investments, debt reduction, and modest stock repurchases. Moody's noted that although the large amount of cash resulting from the securitization raises M&A event risk, the ratings are based on CenterPoint financing any such transaction so as to defend its investment grade status. While the securitization debt could raise $1.8 billion in cash, it will also add that much of new debt to CEHE's and CNP's consolidated balance sheets. Moody's thus confirms CEHE's ratings, since the company was upgraded just last year and its credit metrics are still modest for its rating category. For example, the company's cash flow from operations before working capital changes-to-debt was 14% for the last twelve months ended March 31, 2011. CEHE's Baa2 senior unsecured rating, nevertheless, is supported by its relatively low business risk compared to other electric utilities as a transmission and distribution (T&D) only utility, lacking the operating risks of power generation that its vertically integrated peers face as well as the provider of last resort risks of other T&Ds. The rating upgrades for CNP and CERC are a culmination of the positive rating outlooks they had prior to the rating review, in recognition of their solid financial performance and improving financial positions. A series of rate increases and better rate designs have strengthened CERC's gas distribution operations, while pipeline projects have increased stable, rate-regulated revenues. The unregulated field services segment has grown also, but its volume and price risks have been mitigated in its contracts. CERC's cash flow pre-working capital-to-debt was 21% for the fiscal year ended December 2010, around the peak of seasonal borrowings. CNP's consolidated performance has strengthened, reflecting the rise in CERC's credit metrics. Its cash flow pre-working capital- to-debt was 15% at year-end 2010. The parent company's standalone credit quality, however, has also improved gradually from the reduction in parent-level debt and issuances of equity over the last few years. The stable rating outlook anticipates CNP using the securitization proceeds and financing its investments so as to maintain cash flow pre-working capital-to-debt in the mid-teens on a consolidated basis, in the low teens at CEHE, and the low 20% range at CERC. The ratings could go up if CNP applies the securitization proceeds so as to sustain cash flow pre-working capital-to-debt in the high teens on a consolidated basis, in the mid-teens for CEHE, and the mid 20% range for CERC, without increasing its overall business risk profile. The ratings could be downgraded if CNP undertakes a transaction which significantly increases its business risk profile and weakens its cash flow pre-working capital-to-debt level to the low teens on a consolidated basis, to the low 10% range for CEHE, and the mid to high teens for CERC. Upgrades: Issuer: Brazos River Authority, TX -- Senior Unsecured Revenue Bonds, Upgraded to Baa3 from Ba1 Issuer: CenterPoint Energy Resources Corp. -- Senior Unsecured Bank Credit Facility, Upgraded to Baa2 from Baa3 -- Senior Unsecured Shelf, Upgraded to (P)Baa2 from (P)Baa3 Issuer: CenterPoint Energy, Inc. -- Issuer Rating, Upgraded to Baa3 from Ba1 -- Multiple Seniority Shelf, Upgraded to (P)Baa3, (P)Ba1, (P)Ba2, (P)Ba2 from (P)Ba1, (P)Ba2, (P)Ba3, (P)Ba3 -- Subordinate Conv./Exch. Bond/Debenture, Upgraded to Ba1 from Ba2 -- Senior Unsecured Bank Credit Facility, Upgraded to Baa3 from Ba1 -- Senior Unsecured Regular Bond/Debenture, Upgraded to Baa3 from Ba1 Issuer: Matagorda County Navigation District 1, TX -- Senior Unsecured Revenue Bonds, Upgraded to Baa3 from Ba1 Outlook Actions: Issuer: CenterPoint Energy Houston Electric, LLC -- Outlook, Changed To Stable From Rating Under Review Issuer: CenterPoint Energy Resources Corp. -- Outlook, Changed To Stable From Rating Under Review Issuer: CenterPoint Energy, Inc. -- Outlook, Changed To Stable From Rating Under Review Confirmations: Issuer: Brazos River Authority, TX -- Senior Secured Revenue Bonds, Confirmed at A3 -- Senior Secured Revenue Bonds, Confirmed at A3 Issuer: CenterPoint Energy Houston Electric, LLC -- Issuer Rating, Confirmed at Baa2 -- Senior Secured Regular Bond/Debenture, Confirmed at A3 -- Senior Secured Shelf, Confirmed at (P)A3 -- Senior Unsecured Bank Credit Facility, Confirmed at Baa2 Issuer: CenterPoint Energy Resources Corp. -- Senior Unsecured Commercial Paper, Upgraded to P-2 -- Senior Unsecured Commercial Paper, Upgraded to P-3 Issuer: Gulf Coast Waste Disposal Authority, TX -- Senior Secured Revenue Bonds, Confirmed at A3 Issuer: Matagorda County Navigation District 1, TX -- Senior Secured Revenue Bonds, Confirmed at A3 Issuer: Reliant Energy HL&P -- Senior Secured First Mortgage Bonds, Confirmed at A3 The principal methodology used in this rating was Regulated Electric and Gas Utilities published in August 2009. CenterPoint Energy, Inc., is an electric and gas distribution company headquartered in Houston, Texas. CIRCLE ENTERTAINMENT: Huff Fund Adds More Insiders in Suit ---------------------------------------------------------- Circle Entertainment Inc. has been a nominal defendant in a derivative lawsuit filed on April 28, 2010, by stockholders The Huff Alternative Fund, L.P. and The Huff Alternative Parallel Fund, L.P., on behalf of the Company in the New York Supreme Court in Manhattan, New York against the Company's directors Harvey Silverman, Michael J. Meyer, John D. Miller, Robert Sudack, Paul C. Kanavos and Robert F.X. Sillerman for breach of fiduciary duty, and against Mr. Kanavos and Brett Torino, a stockholder and former officer of the Company, for usurpation of a corporate opportunity. The Company filed a motion to dismiss the lawsuit on July 16, 2010, and after various responsive filings and oral arguments before the Court during the fourth quarter of 2010, on May 24, 2011, the Court ruled on the Company's motion to dismiss the lawsuit as follows: * the Court dismissed the derivative action against the Company's directors without prejudice and granted Huff leave to serve and file an amended compliant with specific facts as to such derivative action within 30 days after service of the Court's ruling on Huff's counsel; * the Court dismissed the usurpation of a corporate opportunity action against Mr. Torino with prejudice for which Huff has 30 days to serve and file a notice of appeal as to this portion of the Court's ruling; and * the Court did not dismiss the usurpation of a corporate opportunity action against Mr. Kanavos. On June 27, 2011, Huff timely filed an amended complaint and a notice of appeal for the portion of the Court's ruling relating to dismissal of the action against Mr. Torino. In its amended complaint, Huff added Mitchell J. Nelson, the Company's General Counsel and Executive Vice President, as a new defendant as well as LIRA Property Owner, LLC, LIRA LLC, BPS Partners, LLC and BPS Parent, LLC, entities owned and controlled by Messrs. Sillerman, Kanavos and Torino, as new defendants and alleges, as it did in its original complaint, that the shareholder derivative and the direct actions are based on (i) the Company's former Las Vegas subsidiary entry into the lock-up and plan support agreement dated Oct. 30, 2009, and the Lock-Up Agreement's contemplated transfer of the Las Vegas subsidiary's Las Vegas property to the Insiders through a sale to LIRA Property Owner LLC and LIRA LLC and (ii) the Insiders' purchase through BPS Partners, LLC, and BPS Parent, LLC, of real property contiguous to the Las Vegas property. In addition to adding such new defendants, Huff increased the number of counts in its amended complaint to 11 from 2 in its original complaint. The counts in the amended complaint are summarized as follows: -- Count 1 is a derivative claim against the Insiders and the non-officer directors for breach of fiduciary duty in committing acts of disloyalty, bad faith, usurpation of corporate opportunity, and self-dealing based on the Lock-Up Agreement and failure to make an informed and independent business judgment concerning the Huff's debt restructuring proposals; -- Count 2 is a derivative claim against the Insiders and the non-officer directors for aiding and abetting the breach of fiduciary duty; -- Count 3 is a derivative claim against LIRA for usurpation of the opportunity to renegotiate the debt and take control of the Las Vegas property; -- Count 4 is a derivative claim against Messrs. Sillerman, Kanavos and Nelson for the same breach of fiduciary duty in diverting the opportunity for the Contiguous Property Transaction and for concealing the opportunity. This count further alleges against Kanavos and Nelson for participating in the purchase and alleging that the Contiguous Property Transaction was a corporate opportunity for the Company; -- Count 5 is a derivative claim against BPS and Mr. Torino for aiding and abetting the breach alleged in Count 4; -- Counts 6 and 7 are derivative claims against the Insiders, Mr. Nelson and BPS for unjust enrichment and conversion relating to the Contiguous Property Transaction; -- Count 8 is a derivative claim against the Insiders and Mr. Nelson for fraud and failure to disclose the opportunity for the Contiguous Transaction and the financing available; -- Count 9 is a derivative claim against the Insiders, Mr. Nelson and BPS for imposition of a constructive trust on the Contiguous Property Transaction so the Insiders and Nelson do not benefit; -- Count 10 is a direct claim against all the defendants for breach of fiduciary duty, aiding and abetting such breach, unjust enrichment, fraud and a constructive trust; and -- Count 11 is a derivative claim against Mr. Torino for breach of fiduciary duty (a restatement of the previously dismissed claim that Huff has appealed for the purpose of reserving rights). In its amended complaint, Huff requests among other relief: (a) awarding damages in an amount to be proven at trial, (b) punitive damages, (c) the defendants to be precluded from sharing any damages awarded from their own culpability, (d) a constructive trust over the real property comprising the Contiguous Property Transaction, and (e) appointing a temporary receiver to take control of the Company's assets, business and affairs. The Company believes the amended complaint is without merit and intends to vigorously defend against it. About Circle Entertainment Circle Entertainment Inc. (CEXE.PK), formerly FX Real Estate and Entertainment Inc., owns 17.72 contiguous acres of land located at the southeast corner of Las Vegas Boulevard and Harmon Avenue in Las Vegas, Nevada. The Las Vegas Property is currently occupied by a motel and several commercial and retail tenants with a mix of short and long-term leases. On June 23, 2009, as a result of the default under the first mortgage loan, the first lien lenders had a receiver appointed to take control of the property. The Company is headquartered in New York City. The Company's balance sheet at March 31, 2011, showed $1.97 million in total assets, $4.38 million in total liabilities, and a $2.41 million total stockholders' deficit. The Company disclosed in its Form 10-Q for the quarter ended June 30, 2010, that it has no current cash flow and cash on hand as of Aug. 13, 2010, is not sufficient to fund its short-term liquidity requirements, including its ordinary course obligations as they come due. On April 21, 2010, the Company's remaining Las Vegas subsidiary, namely FX Luxury Las Vegas I, LLC, filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Nevada (Case No. 10-17015). The Company's Las Vegas subsidiary filed for Chapter 11 bankruptcy on April 21, 2010, and a plan of liquidation or reorganization will eventually be implemented under which the Company will surrender ownership of the Las Vegas Property. Under such a plan, it is extremely unlikely the Company will receive any material interest or benefit. The Company reported net income of $346.81 million on $0 of revenue for the year ended Dec. 31, 2010, compared with a net loss of $114.68 million on $0 of revenue during the prior year. The net profit generated in the year was primarily on account of a $390.75 million gain from discharge of net assets due to bankruptcy plan. The Company's operating subsidiary sought Chapter 11 protection last year. As reported by the TCR on April 11, 2011, L.L. Bradford & Company, LLC, in Las Vegas, Nevada, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has limited available cash, has a working capital deficiency and will need to secure new financing or additional capital in order to pay its obligations. CLARK ATLANTA: Moody's Affirms Ba2 Rating on Series 1995 Bonds -------------------------------------------------------------- Moody's Investors Service has affirmed its Ba1 rating on Clark Atlanta University's $17 million of Series 1995 Revenue Bonds issued through the Development Authority of Fulton County. The rating outlook has been revised to negative from stable. SUMMARY RATING RATIONALE The Ba1 rating reflects the University's market position with low net tuition per student of $13,953, limited financial resource base and improved cash flow in support of debt service. The rating also reflects a favorable history of donor support, as well as limited borrowing plans despite ongoing capital needs. STRENGTHS * Solid market niche as a historically black institution with an applied studies and research focus with net tuition per student of $13,953 in fiscal year (FY) 2010. While full-time equivalent (FTE) enrollment has declined to 3,700 students in the fall of 2010 from 4,253 in the fall of 2006, overall net tuition revenue has grown. Management reports that confirmed students for fall 2011's entering undergraduate and graduate classes are ahead of last year. * Improved operating performance resulting from past program cuts and careful expense control. Moody's calculation of average operating performance of negative 0.1% at the end of FY 2010 proves a sharp contrast to the -6.1% average at the end of FY 2004. Cash flow from operations supported 1.3 times debt service coverage in FY 2010. * Clear management focus on information systems and processes to enhance the University's abilities around student recruitment, donor cultivation, faculty resource utilization, and other key management responsibilities. * Substantial donor support with gift revenue averaging $7.9 million over the last three years (FY 2008-FY 2010). Donor support when combined with research grants boosts revenue diversity with reliance on student charges as 69% in FY 2010. Revenue diversity is aided by research enterprise with $10.5 million in research expenses in FY 2010. CHALLENGES * Competitive market environment for students as indicated in a low 20.6% yield rate for the fall 2010 freshmen class. Economic climate could drive potential students to seek lower cost alternatives including public universities and private universities with larger endowments. Net tuition per student declined 4.9% to $13,953 in FY 2010, based on Moody's measures, a meaningful credit challenge for a tuition-dependent university (student charges provided 69% of operating revenues in FY 2010). * Third-party student housing project on the university's campus under economic distress. The Project tapped its debt service reserve fund in FY 2010 and expects to do so again in FY 2011. Although Moody's does not include the $51 million of debt on the University's balance sheet, Moody's notes the linkage as the project comprises approximately one-fourth of the housing stock on its campus. * Thin financial resource base relative to debt and operations. At the end of FY 2010, expendable financial resources of $19 million cushioned $52 million of direct debt by 0.4 times and 22% of annual operating expenses. Likewise, monthly days cash on hand is thin at 38 days. * Ongoing capital needs with age of plant at 12.5 years. DETAILED CREDIT DISCUSSION LEGAL SECURITY: General obligation secured by certain unrestricted revenues and a mortgage on the 1995 student housing facility. Debt service reserve fund. Additional bonds tests. INTEREST RATE DERIVATIVES: None. DEBT STRUCTURE: Conservative debt structure with no put risk. While the University has some variable rate debt (22% of direct debt as of June 30, 2010), it is all under The Historically Black College and University (HBCU) Capital Financing Program with interest rate costs linked to short term U.S. Treasury rates. STUDENT MARKET: Management reports that its investments in information technology are yielding benefits in responding to students in a timely manner with better communication and more rapid financial aid packaging. While year over year applications are down 11% for the entering class of fall 2011, admitted students are up 69% from the prior year. The University's operating performance in FY 2010 was negatively impacted by a return of federal financial aid funds for students who were not enrolled, with expenses reflecting an approximately $847,000 charge for this return. The University has tightened its controls of determining the withdrawal dates of students who withdraw without notifying the University. The lack of control resulted in overstated tuition revenue in fiscal years 2007 through 2009. PRIVATIZED HOUSING: ADA/CAU Partners, Inc. developed Heritage Commons (456 beds) and the Suites at Heritage Commons (598 beds) with bond proceeds from the $51.9 million Series 2004A and 2004B Student Housing Revenue Bonds. The relationship between the project and the University is governed through and Amended and Restated Ground Lease Agreement. While Moody's does not include this on the University's balance sheet as debt, Moody's considers this project to part of the broader credit profile of the University. The ADA/CAU Partners 2010 audit included a going concern opinion and has tapped its debt service reserve fund and will need to do so again for its July 2011 payment given relatively weak economic occupancy. In FY 2010 debt service coverage was 0.85 times, down from 1.17 times in 2009, and 1.20 times in 2008. The occupancy has suffered from various factors including perceived safety issues. In FY 2010 the University began providing a staffed security function in the project at its expense that it believes will help maintain a more secure community. ADA/CAU Partners developed a request for proposals related to management of the properties. The University considered but did not submit a proposal. According to management, American Campus Communities will likely be the new manager with an eye toward a closer working relationship with the University. The Series 2004 bonds are insured by ACA Financial Guaranty Corporation that remains a party to the property manager selection process. Moody's will continue to monitor the operating health of the ADA/CAU Partners project and the University's posture toward the project. INVESTMENT MANAGEMENT: Through the end of March 2011 the University reports a twelve month return of 18.9% in its primary long term pooled fund, following a 12% return during fiscal year 2010. As of March 31, 2011 the asset allocation was 68% domestic equities, 6% international equities, 15% fixed income, 6% alternatives, and 5% cash. Moody's views manager diversity as limited with one domestic equity manager holding 46% of assets (as of March 31, 2011), one fixed income manager with 15% of assets and another domestic equity manager with 14% of assets. Outlook The negative outlook reflects the limited financial resource base, competitive student market position as well as the potential credit impact of the stressed operations of the ADA/CAU Partners student housing project on the University. Depending on the ongoing health of the project, the University could consider a range of responses to support its broader goal of having safe and secure housing for its students. WHAT COULD MAKE THE RATING GO UP Growth in financial resources through fundraising, sponsored programs and operating surpluses; limited future borrowing; improvement in student market position. The rating outlook could return to stable with a more healthy debt service coverage for the ADA/CAU Partners project combined with broader improvement WHAT COULD MAKE THE RATING GO DOWN Decline in net tuition revenue; material increase in debt; weakened operating performance from support of the ADA/CAU project or other sources; ongoing decline in financial resources or debt service coverage KEY INDICATORS (Fall 2010 enrollment, FY 2010 Financial Information): Full-time equivalent enrollment: 3,700 students Selectivity rate: 69% Matriculation rate: 21% Expendable Resources to pro forma Direct Debt: 0.4 times Total financial resources: $39.4 million Total Direct Debt: $52.1 million Total Comprehensive Debt: $59.7 million (includes operating lease capitalization) Expendable financial resources to operations: 0.22 times Average operating margin: -0.1% Average debt service coverage: 1.3 times Operating Revenues: $86.6 million Reliance on student charges: 69% CONTACT University: Lucille Mauge, Vice President of Finance and Business Services, 404-880-6662 RATED DEBT Series 1995 Revenue Bonds: Ba1; insured by Ambac (Connie Lee) PRINCIPAL METHODOLOGY USED The principal methodology used in this rating was Moody's Rating Approach for Private Colleges and Universities published in September 2002. COMPOSITE TECHNOLOGY: SingerLewak LLP Approved as Accountants ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District Of California authorized Composite Technology Corporation, et al., to employ SingerLewak LLP as accountants and auditors. SingerLewak LLP is: -- performing an audit of consolidated financial statements as of and for the year ended Sept.30, 2011; -- performing an audit of internal control over financial reporting as of Sept. 30; -- conducting quarterly review services a review of the interim financial information of CTC and subsidiaries to be included in Forms 10-Q filed with the Securities and Exchange Commission for the year ending Sept. 30, in accordance with the professional practice standards established by the Public Company Accounting Oversight Board; and -- providing similar audit and quarterly review services thereafter for the time period in which the bankruptcy proceedings are on-going. James Pitrat, a partner at SingerLewak LLP, told the Court that SingerLewak LLP presented CTC prior to the Petition Date and the firm asserts a prepetition claim against for unpaid invoices in the amount of $142,587. The firm does not hold a retainer. The firm agreed to represent CTC on the condition that the firm be paid on the firm's monthly invoices. The firm's personnel fees include: Hourly Rate ----------- Concurring partner - Regular $500 Mr. Pitrat, manager $365 Mr. Pitrat, partner - Regular $500 Cecilia Sanudo, staff $175 Lauren Strom, supervising senior $255 For the Audit Work TBD, concurring partner - Regular $500 Mr. Pitrat, manager $335 Mr. Pitrat, partner - Regular $500 Cecilia Sanudo, staff $165 TBD, outside assistance/tax/IT, etc $200 Lauren Stom, supervising senior $255 To the best of the Debtors' knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Composite Technology Headquartered in Irvine, California, Composite Technology Corporation - http://www.compositetechcorp.com/-- develops, produces, markets and sells energy efficient and renewable energy products for the electrical utility industry. As of March 31, 2011, the Company has one business segment: CTC Cable Corporation. CTC Cable produces and sells ACCC(R) conductor products and related ACCC(R) hardware products. ACCC(R) conductor has been sold commercially since 2005 and is currently marketed worldwide to electrical utilities, transmission companies and transmission design/engineering firms. Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S. Wallace presiding over the case. The Debtor's bankruptcy case was reassigned to Judge Scott C. Clarkson on April 13, 2011. BCC Advisory Services LLC, BCC Ho1dco LLC's FINRA registered Broker/Dealer, serves as investment banker to provide exclusive equity financing services and debt financing services. The Company disclosed $5,855,670 in assets and $12,395,916 in liabilities as of the Chapter 11 filing. CTC Cable Corporation (Bankr. C.D. Calif. Case No. 11-15059) and Stribog, Inc. (Bankr. C.D. Calif. Case No. 11-15065) also filed for Chapter 11 protection. The cases are jointly administered, with Composite Technology as the lead case. Paul J. Couchot, Esq., at Winthrop Couchot PC, serves as the Debtors' bankruptcy counsel. The Debtors also tapped Marsch Fischmann & Breyfogle LLP as special intellectual property approval counsel; Knobbe, Martens, Olson & Bear, LLP as special patent litigation counsel; McIntosh Group as special intellectual property counsel. Peter C. Anderson, the U.S. Trustee for Region 16, appointed five members to the official committee of unsecured creditors in the Debtor's cases. Steptoe & Johnson LLP represents the Committee. COMPOSITE TECHNOLOGY: Files Schedules of Assets and Liabilities --------------------------------------------------------------- Composite Technology Corporation filed with the U.S. Bankruptcy Court for the Central District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $5,855,670 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $10,500,000 E. Creditors Holding Unsecured Priority Claims $751,618 F. Creditors Holding Unsecured Non-priority Claims $1,144,298 ----------- ----------- TOTAL $5,855,670 $12,395,916 About Composite Technology Headquartered in Irvine, California, Composite Technology Corporation - http://www.compositetechcorp.com/-- develops, produces, markets and sells energy efficient and renewable energy products for the electrical utility industry. As of March 31, 2011, the Company has one business segment: CTC Cable Corporation. CTC Cable produces and sells ACCC(R) conductor products and related ACCC(R) hardware products. ACCC(R) conductor has been sold commercially since 2005 and is currently marketed worldwide to electrical utilities, transmission companies and transmission design/engineering firms. Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S. Wallace presiding over the case. The Debtor's bankruptcy case was reassigned to Judge Scott C. Clarkson on April 13, 2011. BCC Advisory Services LLC, BCC Ho1dco LLC's FINRA registered Broker/Dealer, serves as investment banker to provide exclusive equity financing services and debt financing services. The Debtor estimated assets at $10 million to $50 million and $1 million to $10 million in debts as of the Chapter 11 filing. CTC Cable Corporation (Bankr. C.D. Calif. Case No. 11-15059) and Stribog, Inc. (Bankr. C.D. Calif. Case No. 11-15065) also filed for Chapter 11 protection. The cases are jointly administered, with Composite Technology as the lead case. Paul J. Couchot, Esq., at Winthrop Couchot PC, serves as the Debtors' bankruptcy counsel. The Debtors also tapped Marsch Fischmann & Breyfogle LLP as special intellectual property approval counsel; Knobbe, Martens, Olson & Bear, LLP as special patent litigation counsel; McIntosh Group as special intellectual property counsel. Peter C. Anderson, the U.S. Trustee for Region 16, appointed five members to the official committee of unsecured creditors in the Debtor's cases. Steptoe & Johnson LLP represents the Committee. CONFORCE INTERNATIONAL: Recurring Losses Cue Going Concern Doubt ---------------------------------------------------------------- Conforce International, Inc., filed on June 29, 2011, its annual report on Form 10-K for the fiscal year ended March 31, 2011. BDO Canada LLP expressed substantial doubt about ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring losses. The Company reported a net loss of $2.1 million on $305,824 of revenue for the fiscal year ended March 31, 2011, compared with a net loss of $729,903 on $920,937 on revenue for the fiscal year ended March 31, 2010. The Company's balance sheet at March 31, 2011, showed $8.4 million in total assets, $1.8 million in total liabilities, and stockholders' equity of $6.6 million. A copy of the Form 10-K is available at http://is.gd/vtaYyC Headquartered in Concord, Ontario, Canada, Conforce International, Inc., has been in the shipping container business repairing, selling or storing containers for over 25 years. The Company has been engaged in the research and development of a polymer based composite shipping container and highway trailer flooring product. As a result, the Company has developed EKO-FLOR. The Company is now outfitting its new manufacturing facility in Peru, Indiana for the production of EKO-FLOR for the North American highway trailer market. CONSOL ENERGY: Moody's Changes 'Ba3' Rating Outlook to Stable ------------------------------------------------------------- Moody's Investors Service changed its outlook for CONSOL Energy Inc. to stable from negative and affirmed the company's Ba3 corporate family rating, Ba3 probability of default rating, and B1 senior unsecured note rating. Moody's had changed its rating outlook for CONSOL to negative in March 2010 in response to the company's $3.47 billion acquisition of the gas operations of Dominion Resources. At the time, it seemed quite certain that the ongoing costs associated with drilling and developing the Dominion reserves, which include 750,000 net acres of Marcellus shale prospects in Pennsylvania, West Virginia and Ohio, would result in an extended period of capital expenditures in excess of CONSOL's operating cash flow. As it turns out, the company's strong operating cash flow, primarily due to higher steam coal prices and much higher metallurgical (met) coal prices, has enabled CONSOL to generate positive free cash flow for two of the last four quarters despite spending $1,143 million for capex over that same time. While Moody's believes the dynamics surrounding the cash expenditures related to the development of CONSOL's gas operations have not changed to a material degree, and that the company's greater emphasis on gas has altered its risk profile, for now cash flow from its coal operations is enabling the company to cover its capex and development costs without requiring further increases to debt. Hence, Moody's is stabilizing CONSOL's rating outlook. With CONSOL's low-vol met prices up about $70 per ton compared to last year, and approximately 4.5 million tons of its Northern Appalachian thermal coal being placed in the met market in 2011, CONSOL is experiencing positive momentum from its coal operations. In addition, Moody's notes the positive results, albeit at an early stage, of the company's Marcellus drilling program. The company is drilling longer laterals and fracking more intensely, which has improved well production rates. However, this has raised the average drilling and completion costs per well and natural gas prices remain low. So, CONSOL's gas operations are net users of funds, even after including its low-cost coalbed methane (CBM) production. CBM currently represents about 60% of CONSOL's gas production. The Ba3 corporate family rating reflects CONSOL's leading position in the Northern Appalachian coal basin, meaningful met coal production, sizable presence in the gas business, large reserves of coal and natural gas, and generally large scale and low-cost mines. The rating also recognizes its solid operating margin, strong and expanding operating cash flow and the stability provided by its long-term steam coal supply agreements. On the other hand, the ratings consider the company's heightened leverage following last year's acquisitions of Dominion and the 17% of CNX Gas that it did not already own, as well as the higher risk profile previously noted, one facet of which is the Marcellus development costs. In addition, the ratings consider CONSOL's sizable pension, OPEB, workers' compensation and reclamation liabilities, for which cash payments were $330 million in 2010. CONSOL's ratings could be raised if the company demonstrates that it can self-fund its gas and coal mine development costs, coal operating margins remain at recent levels for the balance of the year, trends are favorable within its gas operations, and it maintains good liquidity. The ratings could come under pressure if the company experiences a sustained period of lower coal or gas prices and/or higher operating costs during periods of high capital spending, there are adverse developments related to Marcellus shale, or if there is a significant production shortfall from targeted levels. The principal methodology used in rating CONSOL was the Global Mining Industry Methodology, published in May 2009. Other methodologies used include Loss Given Default for Speculative- Grade Issuers in the US, Canada and EMEA, published in June 2009. CONSOL is a leading diversified fuel producer in the Eastern U.S. It has 4.4 billion tons of coal reserves and 3.7 trillion cubic feet of proven gas reserves. Its revenues were $5.4 billion over the 12 months ended March 31, 2011. CORUS BANKSHARES: Disclosure Statement Hearing on July 29 --------------------------------------------------------- Corus Bankshares filed will seek approval from the U.S. Bankruptcy Court for the Northern District of Illinois at a hearing on July 29, 2011, of the disclosure statement explaining its proposed plan of reorganization. BankruptcyData.com reports that Corus Bankshares has amended the Plan and the Disclosure Statement. The Plan, BData relates, provides for the reorganization of the Debtor and for Holders of certain Allowed Claims to receive equity in the Reorganized Debtor, with the option for each Holder of TOPrS Unsecured Claims to receive instead a 'cash out' right of payment and/or a security that results in cash from certain of the Debtor's assets, including Cash held by the Debtor as of the Effective Date. The Debtor believes that the Plan will maximize the value of the Estate. In order to effectuate the distributions, the Plan provides that all of the assets of the Debtor's estate (including causes of action not expressly released under the Plan) will vest in the Reorganized Debtor. The Reorganized Debtor will continue to operate the Debtor's business as a going concern in the real estate and financial services sectors, and will pursue litigation, including litigation with the FDIC, and make distributions under the Plan. The New Board will be appointed as of the Effective Date and shall be responsible for implementing the Plan and operating the business of the Reorganized Debtor. About Corus Bankshares Chicago, Illinois-based Corus Bankshares, Inc., is a bank holding company. Its lone operating unit, Corus Bank, N.A., was closed on September 11, 2009, by regulators, and the Federal Deposit Insurance Corporation was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of Corus Bank. The Company sought Chapter 11 protection (Bankr. N.D. Ill. Case No. 10-26881) on June 15, 2010, disclosing $314,145,828 in assets and $532,938,418 in liabilities as of the Chapter 11 filing. Kirkland & Ellis LLP's James H.M. Sprayregen, Esq., David R. Seligman, Esq., and Jeffrey W. Gettleman, Esq., serve as the Debtor's bankruptcy counsel. Kinetic Advisors is the Company's restructuring advisor. Plante & Moran is the Company's auditor and accountant. Kilpatrick Stockton LLP's Todd Meyers, Esq., and Sameer Kapoor, Esq.; and Neal Gerber & Eisenberg LLP's Mark Berkoff, Esq., Deborah Gutfeld, Esq., and Nicholas M. Miller, Esq., represent the official committee of unsecured creditors. COUNTRY-WIDE INSURANCE: A.M. Best Downgrades FSR to 'C+' -------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to C+ (Marginal) from B- (Fair) and issuer credit rating to "b-" from "bb-" of Country-Wide Insurance Company (Country-Wide) (New York, NY). The outlook for both ratings has been revised to negative from stable. The rating actions reflect Country-Wide's marginal risk-adjusted capital position due to deterioration in its underwriting performance, increased levels of exposure growth, unfavorable loss reserve development trends and dependence on reinsurance. Although increased over the past several years, Country-Wide's capital position has been adversely impacted by unfavorable reserve development trends on prior accident years, driven by inadequate rates and the highly litigious downstate New York automobile marketplace. Country-Wide has implemented corrective measures and is engaged in several courses of action that management anticipates will improve its prospective performance. DARLING INTERNATIONAL: Moody's Reviews 'Ba3' CFR For Upgrade ------------------------------------------------------------ Moody's Investors Service placed Darling International's Ba3 Corporate Family and Probability of Default ratings under review for possible upgrade as well as the company's debt instrument ratings. The review for upgrade is supported by the company's material debt repayment in the first quarter of 2011 following its $293 million equity offering, expectations for stronger than anticipated financial performance in 2011 alongside what appears to be a relatively smooth integration process of Griffin Industries. As a consequence, along with the increase in the revolving credit facility, the speculative grade liquidity rating was upgraded to SGL-1 from SGL-2. The Griffin acquisition closed on December 17, 2010 and was very near in size to Darling with mostly complementary locations. Darling's first quarter operating performance was particularly strong driven by potentially "top-of-the-cycle" pricing with solid increases in finished product commodity prices and raw material volumes. The acquisition contributed positively to earnings in its first quarter as a combined company. This rating was upgraded: -- Speculative Grade Liquidity Rating to SGL-1 from SGL-2. These ratings were placed under review for possible upgrade: Darling International, Inc. -- Corporate Family Rating at Ba3; -- Probability of Default Rating at Ba3; -- $325 million revolving credit facility due 2015 at Ba2 (LGD 3, 33%); -- $60 million senior secured term loan B due 2016 at Ba2 (LGD 3, 33%); -- $250 million senior unsecured notes due 2018 at B2 (LGD 5, 86%); The review will primarily focus on the completion of the integration process with Griffin and Moody's forward view of the company's financial performance over the commodity cycle. Permanent debt reduction lends support to a possible upgrade of Darling's ratings mitigating the volatility in pricing inherent in most of Darling's businesses. RATINGS RATIONALE The current Ba3 Corporate Family Rating reflects Darling's attractive profitability and cash flow operating performance despite volatility from commodity prices and fluctuations in raw material, significant scale in rendering and recycling for the food industry, and its critical role in the waste handling process. End products are in mostly mature markets (pet food, animal feed, and fertilizer) and modest growth is expected. Opportunities for growth will be greater in bio-fuels, a small portion of Darling's revenues today. The acquisition of Griffin Industries about doubled Darling's revenues and EBITDA and improved the company's scale and raw material diversification. Synergies include better route efficiency and some higher margin products. Flexible pricing schemes somewhat balance extraordinary volatility in related commodities, changes in raw material volumes as well as the price of finished products. In addition, Darling's business can be adversely impacted by several factors outside its control including, animal disease, weather, regulation and trade disputes. Importantly, Moody's anticipates a conservative financial policy from the company, including modest leverage albeit as the company positions itself for future acquisition opportunities and investments. The principal methodology used in rating Darling International, Inc. was the Global Food - Protein and Agriculture Industry Methodology, published September 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Darling International, Inc., founded in 1882, is a leading provider of rendering, recycling and recovery solutions to the US food industry. Finished products, sold to producers of livestock, feed, oleo-chemicals, bio-fuels, soaps and pet foods, include meat and bone meal, bleachable fancy tallow, cookie meal, and yellow grease. Pro forma revenues for the combined company for the twelve months ended March 31, 2011 were $1.3 billion. The company is listed on the NYSE, symbol DAR. DAVID'S BRIDAL: Moody's Upgrades Rating on Term Loan to 'B1' ------------------------------------------------------------ Moody's Investors Service upgraded David's Bridal, Inc.'s senior secured term loan to B1 from B2 and affirmed the B2 Corporate Family Rating. The ratings outlook remains stable. The one notch upgrade in the term loan reflects a smaller proportion of senior secured debt in the capital structure relative to subordinated debt. As of April 2, 2011, the company had repaid approximately $40 million of its original $340 million term loan. RATINGS RATIONALE The B2 CFR continues to reflect the company's highly leveraged capital structure, despite debt reduction, and a relative lack of scale and product diversity compared to global retailers. As of April 2, 2011, using Moody's adjustments for operating leases and preferred stock (25% debt treatment), David's Bridal's financial leverage was 7.2 times, considered high for the rating category. The B2 rating is supported by the company's good liquidity profile, meaningful value associated with the David's Bridal and Priscilla of Boston brands, and its leading market position in the specialized and highly fragmented bridal sub-sector of retail. This niche remains relatively recession resistant, though products are vulnerable to changing consumer preferences. "In February 2011, David's Bridal introduced a Vera Wang collection which could expand its market share in bridal gowns and bridesmaid dresses selling at a higher average price point" stated Moody's analyst Suzanne Wingo. "As such, Moody's anticipates modest revenue and earnings growth over the next 12-18 months." Nonetheless, despite the potential for near-term earnings growth and debt reduction, Moody's expects financial leverage to remain above 6 times. The stable outlook reflects Moody's view that David's Bridal will maintain a good liquidity profile over the near-term, while modestly growing revenue and earnings. The ratings or outlook could be raised if debt reduction combined with sustained earnings growth leads to a material improvement in credit metrics, such that financial leverage is maintained below 6 times and interest coverage above 1.5 times. Conversely, the ratings could be downgraded if operating performance and liquidity were to deteriorate, causing financial leverage to exceed 7.5 times or interest coverage to fall below 1 time. Moody's upgraded the following instrument (and adjusted the LGD point estimated, as noted): -- $300 (originally $340) million senior secured term loan due January 2014, to B1 (LGD3, 36%) from B2 (LGD3, 44%) These ratings were affirmed: -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 DBP Holding Corp. is the largest bridal retailer in the United States. About 307 of its stores are operated under the David's Bridal brand. The Priscilla of Boston concept operates 18 stores and a wholesale business. In the twelve months ended April 2, 2011, the consolidated company generated about $700 million in revenue. David's Bridal is owned by Leonard Green & Partners, L.P. The principal methodology used in rating David's Bridal, Inc. was the Global Retail Industry Methodology, published December 2006. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. DBSD N.A.: Wins Tentative OK for Plan to Emerge Under Dish ---------------------------------------------------------- Judge Robert E. Gerber of the U.S. Bankruptcy Court in Manhattan told DBSD North America Inc. said he would confirm the plan as long as the company agreed with a language change that assured Sprint Nextel Corp. that it could collect on the full amount of its claim if it wins a lawsuit against DBSD over a licensing agreement. Joseph Checkler at Dow Jones Newswires reports that Judge Gerber all but signed off on the plan, telling parties that he would first allow them to voice any concerns they may have with language inserted to appease combative creditor Sprint Nextel Corp. According to Dow Jones, Judge Gerber said he prepared to confirm DBSD's plan to exit bankruptcy through a $1.4 billion sale to Dish Network Corp., more than two years after DBSD entered Chapter 11 and about six months after its prior exit plan was overturned on appeal. The Dow Jones report says the Plan pays in full DBSD's creditors, including bondholders owed $740 million. The main voters on the deal are equity holders led by DBSD's owner ICO Global Communications Inc., a group that stands to recover $280 million. ICO, which owns 99.8% of DBSD's equity, would also get an additional $10 million on top of that from Dish. Judge Gerber, Dow Jones relates, discussed at length Sprint's objection, which was over language regarding Sprint's rights in being considered an "unimpaired" creditor. Sprint and DBSD are currently in protracted litigation over a Sprint claim that it is owed more than $104 million for a satellite license agreement. The Dish sale agreement, Dow Jones notes, proposed a $40 million settlement that Sprint could have taken immediately, but didn't. If it prevails, Sprint will get 100 cents on the dollar of whatever it recovers in that litigation. K&L Gates LLP's John H. Culver III, a lawyer for Sprint, wanted to be sure that language in the Dish plan allows Sprint to receive the full amount for its claim if it wins in the litigation. Mr. Bennett, the DBSD lawyer, said it's unclear when the transaction would close, as it needs to clear regulatory hurdles. The Plan called for Dish-led bondholders to swap their $740 million in debt for a 95% stake in the reorganized company. Dish, the sole holder of $40 million in first-lien loans, would have had its debt continued with the new company under amended terms. But both Dish and Sprint objected to the confirmation, and in late 2010, a court overturned it. Dish had called the Plan unfeasible, and Sprint objected to the way the plan ranked it lower than other creditors. About DBSD North America Headquartered in Reston, Virginia, DBSD North America Inc., aka ICO Member Services Inc., offers satellite communications services. It has launched a satellite, but is in the developmental stages of creating a satellite system with components in space and on earth. It presently has no revenues. The Company and nine of its affiliates filed for Chapter 11 protection on May 15, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-13061). James H.M. Sprayregen, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, in New York; and Marc J. Carmel, Esq., and Sienna R. Singer, Esq., at Kirkland & Ellis LLP, in Chicago, serve as the Debtors' counsel. Jefferies & Company is the financial advisors to the Debtors. The Garden City Group Inc. is the claims agent for the Debtors. DBSD estimated assets and debts of $500 million to $1 billion in its Chapter 11 petition. Timothy A. Barnes, Esq., and Steven J. Reisman, Esq., at Curtis, Mallet-Prevost, Colt & Mosle LLP, in New York, represent the Official Committee of Unsecured Creditors. The ad hoc committee of certain parties that hold or manage holdings of those certain 7.5% Convertible Senior Secured Notes due 2009 issued by DBSD is represented by Dennis F. Dunne, Esq., Risa M. Rosenberg, Esq., and Jeremy S. Sussman, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York; and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in Washington, DC. Sprint Nextel is represented by Eric Moser, Esq., at K&L Gates LLP, in New York; and John H. Culver III, Esq., and Felton E. Parrish, Esq., at K&L Gates LLP, in Charlotte, North Carolina. DISH is represented in the case by J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in New York. DEARBORN LODGING: Plan Outline Requires Additional Revision ----------------------------------------------------------- Bankruptcy Judge Thomas J. Tucker declined to approve the First Amended Combined Liquidating Chapter 11 Plan of Reorganization and Disclosure Statement filed by Dearborn Lodging, Inc., on June 17, 2011, again citing flaws in the disclosure statement. Among other things, Judge Tucker pointed out that, with regard to each secured creditor, the Debtor must state, in addition to the amount of the claim, the property securing the claim (if real estate, the full address, including city and state); the fair market value of the property securing the claim; whether any portion of the claim is unsecured; and if so, whether the secured creditor will have an unsecured deficiency claim, to be included and treated in the class of general unsecured claims; and if so, the amount of such claim. Regarding the Class 4 general unsecured claims, Judge Tucker said the Debtor must estimate the total amount of general unsecured claims in this class. Judge Tucker noted that the plan outline states, in relevant part that "Creditors in this class shall be paid 100% of their provable and allowable claims to the extent that there are funds available following payment of higher priority classes." The Debtor's Liquidation Analysis indicates that unsecured creditors will not receive any distribution. Judge Tucker said the statement of the Class's proposed treatment, although technically accurate, may be misleading. The Debtor must revise the treatment of this class to include a statement that it appears that there will be no funds available for distribution to unsecured creditors. The Debtor also must revise its Liquidation Analysis: (1) The Debtor must identify the property and estimate the market and forced sale values of the property. (2) The Debtor must state how it arrived at those values. The plan amendments were due no later than June 29, 2011. A copy of Judge Tucker's June 24, 2011 Order is available at http://is.gd/WAAV6Jfrom Leagle.com. In an order dated June 13, Judge Tucker first directed Dearborn Lodging to amend the disclosure statement originally filed June 7, 2011. Dearborn Lodging, Inc., dba Metro Inn, in Farmington Hills, Michigan, filed for Chapter 11 bankruptcy (Bankr. E.D. Mich. Case No. 11-42920) on Feb. 7, 2011, represented by Jay S. Kalish & Associates, P.C. In its petition, the Debtor estimated under $50,000 in assets and $1 million to $10 million in debts. The petition was signed by Joseph Nofar, its president DEB SHOPS: Organizational Meeting to Form Panel on July 11 ---------------------------------------------------------- Roberta DeAngelis, the United States Trustee for Region 3, held an organizational meeting on July 11, 2011, at 1:00 p.m. in the bankruptcy case of DSI Holdings LLC, et al. a/k/a Deb Shops Inc., et al. The meeting will be held at: DoubleTree Hotel Wilmington 700 N. King Street Wilmington, DE 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 Deb Shops Deb Shops Inc., is a closely held women's-clothing retailer based in Philadelphia. Deb Shops sells junior and large-size clothing for girls and women ages 13 to 25 through more than 320 U.S. stores and through debshops.com. It was bought out by the New York investment firm Lee Equity Partners in October 2007. DSI Holdings Inc. and 54 affiliates, including Deb Shops, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 11-11941), on June 26, 2011, to sell all assets under 11 U.S.C. Sec. 363. As of April 30, 2011, the Debtors' unaudited financial statements reflected assets totaling $124.4 million and liabilities totaling $270.1 million. Lawyers at Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., serve as bankruptcy counsel. Rothschild Inc. serves as the Debtors' investment banker and financial advisors. Kurtzman Carson Consultants, LLC, serves as claims agent. Sitrick & Company serves as public relations consultants. The DIP Agent is represented by: Michael L. Tuchin, Esq. David A. Fidler, Esq. KLEE TUCHIN BOGDANOFF & STERN LLP 1999 Avenue of the Stars, 39th Floor Los Angeles, CA 90067 Tel: 310-407-4000 E-mail: mtuchin@ktbslaw.com dfidler@ktbslaw.com Conway Del Genio serves as financial advisors to the First Lien Lenders. Schulte Roth serves as corporate and tax advisors to the First Lien Lenders. Lender Lee DSI Holdings is represented by: Jennifer Rodburg, Esq. FRIED FRANK HARRIS SHRIVER & JACOBSON LLP One New York Plaza New York, NY 10004 Fax: 212-859-4000 E-mail: jennifer.rodburg@friedfrank.com DELMARVA RURAL: Files for Chapter 7 Liquidation ----------------------------------------------- The Republic reports that Delmarva Rural Ministries filed for Chapter 7 bankruptcy on June 29, 2011, estimating assets between $10 million and $50 million and liabilities between $1 million and $10 million. The largest unsecured claims against the agency include roughly $462,000 by the U.S. Rural Housing Service, IRS liens of more than $400,000 on its Dover office building, and a requested refund of $250,000 by the Longwood Foundation for a donation to an uncompleted capital campaign, The Republic discloses. Based in Dover, Delaware, Delmarva Rural Ministries is a nonprofit founded almost 40 years ago to provide health care, housing and other services to low-income residents of the Delmarva Peninsula. The group's operations included Kent Community Health Center in Dover, which was closed recently because of financial problems, and migrant rental housing in Bridgeville, Salisbury, Md., and Cape Charles, Va. DENNIS BROWN: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Dennis Brown Shaolin Wu-Shu Training Center, LLC 982 Largo Center Dr., Largo, MD 20744 Bankruptcy Case No.: 11-23446 Chapter 11 Petition Date: June 29, 2011 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Debtor's Counsel: Sharon Theodore-Lewis, Esq. PATRICK HENRY LLP 9470 Annapolis Rd., Suite 312 Lanham, MD 20706 Tel: (240) 296-3488 E-mail: stlewis@patrickhenry.net Estimated Assets: $50,001 to $100,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Dennis Brown, manager. EAST COAST: Court Approves James A. McFarland as Sole Member ------------------------------------------------------------ The Hon. Randy D. Doub of the U.S. Bankruptcy Court for the Eastern District of North Carolina authorized East Coast Development II, LLC, to employ James A. McFarland, Jr., its sole member. Mr. McFarland has been the sole member of the Debtor for approximately 15 years. The Court also authorized the Debtor to compensate Mr. McFarland for $6,000 per month. The Debtor related that Mr. McFarland's compensation was $8,500 every two weeks for a total of $204,000. Mr. McFarland received compensation of $204,000 in 2010, in the form of draws or loans. In addition to his compensation, the Debtor provided Mr. McFarland the use of a cell phone, which is paid monthly in an average amount of $763. In addition, the Debtor paid the vehicle insurance premiums, which are paid monthly in an average amount of $448 for a vehicle, 50% of which is owned by Mr. McFarland and 50% of which is owned by the Debtor. The Debtor also paid the premiums for health insurance for Mr. McFarland, his wife, and their three children, which are paid monthly in an average amount of $1,778, and the premiums for life insurance for Mr. McFarland, which are also paid monthly in an average amount of $178. About East Coast Development II Wilmington, North Carolina-based East Coast Development II, LLC, dba 100 Block of Market Street, LLC, is in the business of renting real property located in Onslow County, New Hanover County, Guilford County, Wake County, Brunswick County, North Carolina, and Greenville County, Charleston County, and Richland County, South Carolina. East Coast filed for Chapter 11 bankruptcy protection (Bankr. E.D. N.C. Case No. 11-02792) on April 8, 2011. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., serves as bankruptcy counsel. Laurie R. Brown, CPA, serves as accountant. Brian A. Geschickter, Attorney-at-Law, serves as special counsel. Keith Saieed of Blue Sky Services Real Estate serves as broker for the sale of the Debtor's properties. The Debtor disclosed $24,792,275 in assets and $12,172,815 in liabilities as of the Chapter 11 filing. The U.S. Trustee has not yet appointed a creditors committee in the Debtor's case. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. EAST COAST: Brian Geschickter OK'd to Handle Jamestown Pender Case ------------------------------------------------------------------ The Hon. Randy D. Doub of the U.S. Bankruptcy Court for the Eastern District of North Carolina authorized East Coast Development II, LLC, to employ Brian A. Geschickter, Attorney-at- Law, as special counsel. As reported in the Troubled Company Reporter on May 12, 2011, the law firm is assisting the Debtor with certain legal matters involving the Debtor, including but not limited to, a lawsuit against Jamestown Pender, et al., a lawsuit filed by Cindy York, Esq., and a lawsuit against the Debtor and others by the State of North Carolina. The law firm has represented the Debtor since 2007 in various legal matters. At the Petition Date, the Debtor owed the law firm $615 for prepetition services. The Debtor erroneously stated the amount to be $3,519. The firm agrees to be compensated on an hourly rate of $185. To the best of the Debtor's knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About East Coast Development II Wilmington, North Carolina-based East Coast Development II, LLC, dba 100 Block of Market Street, LLC, is in the business of renting real property located in Onslow County, New Hanover County, Guilford County, Wake County, Brunswick County, North Carolina, and Greenville County, Charleston County, and Richland County, South Carolina. East Coast filed for Chapter 11 bankruptcy protection (Bankr. E.D. N.C. Case No. 11-02792) on April 8, 2011. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., serves as bankruptcy counsel. Laurie R. Brown, CPA, serves as accountant. Keith Saieed of Blue Sky Services Real Estate serves as broker for the sale of the Debtor's properties. The Debtor disclosed $24,792,275 in assets and $12,172,815 in liabilities as of the Chapter 11 filing. The U.S. Trustee has not yet appointed a creditors committee in the Debtor's case. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. EASTMAN KODAK: ITC Modifies Judge's Findings in Patent Lawsuit -------------------------------------------------------------- Eastman Kodak Company announced that in response to the company's request, the U.S. International Trade Commission modified key findings of an ITC judge's initial recommendation in Kodak's patent infringement claim against Apple and Research In Motion. The Commission extended the target date for a final ruling until Aug. 30. In support of Kodak, the Commission modified the following key findings: * Kodak appealed the meaning of the patent term "at least three different colors." The Commission agreed with Kodak that all of Apple and RIM's accused phones infringe this term. * Kodak appealed the meaning of the patent terms "motion processor" and "still processor." The Commission revised the judge's interpretations and instructed him to make a new recommendation based on the revision. * Kodak appealed the meaning of the patent term "initiating capture." The Commission agreed with Kodak that RIM's accused phones and certain Apple phones infringe this term. With respect to other Apple phones, the Commission instructed the judge to reconsider his recommendation. * Kodak appealed the judge's invalidity ruling. The Commission sent the issue back to the judge for reconsideration in view of the revised meaning of the patent terms. * The Commission affirmed other determinations favorable to Kodak, including the enforceability of the patent, and the existence of domestic industry. "We are gratified that the Commission has decided to modify in our favor the judge's initial recommendation," said Laura G. Quatela, General Counsel, Chief Intellectual Property Officer and Senior Vice President, Eastman Kodak Company. "As we have said from the start, we remain extremely confident this case will ultimately conclude in Kodak's favor." The patent at issue relates to a method invented by Kodak for previewing images. This particular patent was validated by the U.S. Patent and Trademark Office in December 2010. Kodak has licensed its imaging patents, including the one at issue in the case currently before the ITC, to numerous leading technology companies including: LG, MEI/Panasonic, Motorola, Nokia, Olympus, Samsung, Sanyo, Sharp, Sony, and Sony Ericsson. Kodak initially filed an ITC complaint against Apple and RIM on Jan. 14, 2010, asserting that Apple's iPhones and RIM's camera- enabled Blackberry devices infringe a Kodak patent covering technology related to a method for previewing images. Kodak also has federal court actions pending against RIM and Apple in the Northern District of Texas and in the Western District of New York, where this same issue and additional infringement claims will be adjudicated. Kodak is proceeding with these actions, with the Texas case scheduled to begin on Aug. 1, 2011. About Eastman Kodak Headquartered in Rochester, New York, Eastman Kodak Company (NYSE:EK) -- http://www.kodak.com/-- provides imaging technology products and services to the photographic and graphic communications markets. The Company's balance sheet at March 31, 2011, showed $5.88 billion in total assets, $7.15 billion in total liabilities, and a $1.27 billion total deficit. * * * As reported by the Troubled Company Reporter on March 2, 2011, Standard & Poor's Ratings Services lowered its corporate credit rating on Eastman Kodak to 'CCC' from 'B-'. S&P removed the rating from CreditWatch, where S&P placed it with negative implications on Jan. 26, 2011. The rating outlook is negative. Issue-level ratings on the company's debt were also lowered and removed from CreditWatch in conjunction with the corporate credit rating change. The 'CCC' corporate credit rating reflects S&P's expectation that Eastman Kodak's pace of cash consumption will remain high over the near term. It also reflects S&P's expectation of continued secular volume decline of the traditional photographic products and services business, that the company's consumer digital imaging businesses will not quickly turn convincingly profitable, and that intellectual property earnings, which constitute a significant portion of the company's EBITDA, could decline significantly from 2010 levels. These factors underpin S&P's view of Kodak's business risk as vulnerable and support S&P's view that revenue and EBITDA will decline in 2011. S&P views the company's financial risk profile as highly leveraged because of the risk that its earnings and cash flow could become insufficient to support its debt. In the March 16, 2011 edition of the TCR, Fitch Ratings has affirmed its 'CCC' Issuer Default Rating on Kodak. The ratings and Negative Outlook reflect Kodak's continued struggles to gain traction in its digital businesses as secular declines persist and broaden to entertainment film within the traditional film business. EDISON INTERNAIONAL: Moody's Lowers CFR to B3; Outlook Negative --------------------------------------------------------------- Moody's Investors Service downgraded the long-term ratings of Edison Mission Energy and its subsidiary, Midwest Generation Company, LLC, including EME's senior unsecured notes to Caa1 from B3, and EME's Corporate Family Rating and Probability of Default Rating to B3 from B2. Moody's changed EME's speculative grade liquidity rating to SGL-4 from SGL-3. The rating outlook for EME and MWG is negative. Downgrades: Issuer: Edison Mission Energy -- Probability of Default Rating, Downgraded to B3 from B2 -- Corporate Family Rating, Downgraded to B3 from B2 -- Senior Secured Bank Credit Facility, Downgraded to B3 from B2 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 from B3 Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 Issuer: Midwest Generation, LLC -- Senior Secured Bank Credit Facility, Downgraded to Ba3/ LGD1, 3% from Ba2/ LGD1, 2% -- Senior Secured Pass-Through, Downgraded to Ba3/ LGD2, 13% from Ba2 / LGD2, 12% RATINGS RATIONALE The downgrade reflects Moody's belief that EME's cash flow credit metrics will decline appreciably from recent historical results in 2012 and remain in that range for the foreseeable future due to reduced operating margins driven principally by low energy and capacity prices. The downgrade also reflects the expected drop in operating cash flow over the intermediate-term due to the extension of bonus depreciation which is expected to result in delays in EME's receipt of future tax-allocation payments from its parent, Edison International (EIX: Baa2 senior unsecured). Moody's calculates that the ratio of EME's consolidated CFO pre-W/C (cash flow) to debt will decline to below 5% from the 11.1% ratio recorded at year-end 2010, and that EME cash flow coverage of interest expense will decline to below 1.7x from the 2.6x level that had existed for the past several years. Compounding the problem for EME is the fact that projected drop in credit metrics is expected to occur near the timeframe when the EME and MWG revolving credit facilities expire in June 2012 and when the company's $500 million of senior notes mature 12 months later in June 2013. While Moody's believes that the company will be able to address the expiry of the bank facilities and the bond maturity in a satisfactory way, Moody's observes that the delay in receipt of future tax-allocation payments adds another challenge to the company's credit and liquidity profile. The downgrade recognizes the continuing, multi-year challenge that EME faces in satisfying state and federal environmental requirements across its generation fleet. While MWG has received permits to retrofit some units utilizing dry scrubbing with sodium based sorbents to comply with combined pollutant standard requirements for sulfur dioxide emissions, it appears that scrubbers will need to be installed at two of the three units at the Homer City plant in western PA. Complicating the installation are the terms of the existing financing agreements at EME Homer City Generation Generating LLC (EME Homer City), which places limits on EME Homer City, including an ability to incur additional indebtedness. In order to satisfy the Clean Air Transport Rule in 2014, Moody's anticipates the company needing to reach decisions on the type, cost, and financing approach for the installations of scrubbers at Homer City 1 and 2 within the next several months. The downgrade also acknowledges the relationship that EME has with its parent, EIX, including the parent's clear position of not providing any direct or indirect credit support for EME and its subsidiaries. That said, Moody's believes that EIX views EME as an important holding that provides long-term option value to the corporation and, as such, Moody's believes that EIX and EME will continue to work through the numerous issues facing EME and its merchant operations. To that end, Moody's recognizes the company's track record in managing a competitive generation business during difficult times. Moody's also notes that today's rating action results in a very wide (8-notch) rating differential between EIX's senior unsecured rating and EME's CFR, further substantiating the degree of separateness that Moody's believes exists between EIX and EME. Moody's downgrade at MWG is prompted by the close interrelationship that exists between EME and MWG through the Powerton and Joliet sale leaseback agreement and by MWG's dominant position as the primary source of earnings and cash flow for EME. EME's speculative grade liquidity rating of SGL-4 reflects Moody's concern about EME's internal sources of liquidity over the next four quarters given the generation of negative free cash flow compounded by the delay in receiving future tax-allocation payments from its parent. The SGL-4 recognizes that EME's external sources of liquidity currently in place ($564 million EME revolver and the $500 million MWG revolver) expire within 12 months and such extension may prove challenging given EME's fundamental credit profile coupled with the delay in receiving tax-allocation payments. At March 31, 2011, EME had substantial total liquidity that exceeded $2 billion including $1.183 billion of consolidated cash and availability of $981 million under the EME and MWG revolvers. Extension of these bank credit facilities remains an important milestone for EME, particularly, since EME has $500 million of senior notes maturing June 2013. Both credit facilities have financial covenants which EME and MWG should be able to maintain over the next twelve months. The EME revolver requires recourse debt to total capitalization not exceed 75% and requires interest coverage (as defined in the credit agreement) be greater than 1.20x. At March 31, 2011, EME's recourse debt to total capitalization was 52% and its interest coverage ratio was 2.13x. The MWG revolver requires debt to total capitalization not to exceed 60%. At March 31, 2011, MWG's total debt to total capitalization was 14%. Moody's observes that many of the company's assets are pledged to creditors which places limits on the company's ability to raise additional liquidity from asset sales. The negative rating outlook for EME and MWG primarily reflects uncertainties surrounding the company's near-term liquidity prospects in light of anticipated weaker operating margins and cash flows, the delay in receiving tax-allocation payments, and the near-term expiration of the company's two credit facilities all of which precedes the senior note debt maturity in June 2013. The negative outlook also considers the uncertainty that remains about EME Homer City's requirement to install scrubbers at Unit 1 and 2 of the Homer City plant, along with the lingering overhang that persists for EME given its coal concentration. In light of these challenges, limited prospects exist for the rating to be upgraded. However, the rating outlook could be stabilized if the near-term liquidity challenges at EME are adequately addressed and if a workable plan for installing the scrubbers at Homer City is outlined. In light of the June 2012 expiry date for the EME and MWG revolvers and the June 2013 bond maturity, the rating could be downgraded should meaningful progress in addressing the company's liquidity needs does not occur by first quarter 2012. Additionally, the ratings could be downgraded if there are major extended outages at key MWG plants or at more than one of the Homer City units or if wholesale market prices decline further resulting in additional deterioration in the credit metrics such that cash flow to debt declined to 3% and cash flow interest coverage was under 1.5x. The principal methodologies used in this rating action were Global Unregulated Utilities and Power Companies published in August 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Santa Ana, California, EME is an unregulated generation company and an indirect wholly-owned subsidiary of EIX. At December 31, 2010, EME had an ownership or leased interests of 9,852 megawatts (MW) of electric capacity, of which MWG owned or had a leasehold interest in 5,477 MW of base load and mid-merit coal-fired assets and oil/gas peaking assets in the Midwest and EME Homer City, had a leasehold interest in the Homer City Generation Station, a 1,884 MW coal-fired base load plant in Western PA. EL PASO CORP: Moody's Corrects Ratings for Preferred Stock & Debt ----------------------------------------------------------------- Moody's Investors Service has corrected the ratings for Preferred Stock and Subordinate Debt issued by El Paso Corporation and its subsidiaries El Paso Energy Capital Trust I and El Paso CGP Company to B2 from B3. On June 13, 2011 Moody's took rating action on El Paso Corporation and its subsidiaries. As part of that rating action, LGDs were updated: senior notes and senior debentures to LGD 4, 55%; credit facility -- LGD upgraded to LGD 2, 28%; subordinated and preferred securities -- LGD adjusted to LGD 6, 97%. Due to an internal administrative error, in that same rating action, Preferred Stock and Subordinate ratings were erroneously downgraded to B3 from B2. Moody's is now correcting these ratings to B2. No other ratings of the group are affected by today's correction. The principal methodology used in rating El Paso Corporation was the Natural Gas Pipeline Industry Methodology published December 2009. Other methodologies used include Independent Exploration and Production Industry published December 2008. ELDORADO ARTESIAN: Ehrhardt Keefe Raises Going Concern Doubt ------------------------------------------------------------ Eldorado Artesian Springs, Inc., filed on June 29, 2011, its annual report on Form 10-K for the fiscal year ended March 31, 2011. Ehrhardt Keefe Steiner & Hottman PC, in Denver, expressed substantial doubt about ability to continue as a going concern. The independent auditors noted that cash flows generated from operations and its line of credit will not likely be sufficient to meet its working capital requirements for the foreseeable future. In addition, the Company projects that it not be able to pay the balance due on one of the notes (payable to American National Bank) that is due in February 2012 in the amount of $1,406,502. The Company reported a net loss of $457,526 on $8.85 million of revenue for the fiscal year ended March 31, 2011, compared with a net loss of $360,921 on $8.48 million on revenues for the fiscal year ended March 31, 2010. The Company's balance sheet at March 31, 2011, showed $6.18 million in total assets, $5.64 million in total liabilities, and stockholders' equity of $537,485. A copy of the Form 10-K is available at http://is.gd/IoZ3MJ Louisville, Colorado-based Eldorado Artesian Springs, Inc., bottles, markets and distributes natural spring water under the Eldorado Artesian Spring Water brand. The Company also markets and distributes organic vitamin charged spring water under the Eldorado Artesian Spring Water brand. ELEPHANT & CASTLE: Files for Bankruptcy to Pursue Asset Sale ------------------------------------------------------------ Massachusetts Elephant & Castle Group and its affiliates sought Chapter 11 protection (Bankr. D. Mass. Lead Case No. 11-16155) on June 28. Boston-based Elephant & Castle said in a court filing it has plans to find a buyer. The company said that due diligence is ongoing with several potential purchasers and expressions of interest have been received. Elephant & Castle operates 21 British-style restaurant pubs in the U.S. and Canada. The chain, with 10 locations in the U.S., generated revenue of $47.5 million in 2010, throwing off $3.9 million of earnings before interest, taxes, depreciation, amortization, and foreign exchange gains or losses. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Chapter 11 filing in the U.S. and the filing in Canada under the Companies' Creditors Arrangement Act was precipitated by court proceedings in Canada by the secured lender GE Canada Equipment Financing GP for the appointment of a receiver. GE Canada is owed $18.8 million. According to Dow Jones' DBR Small Caps, Elephant & Castle said it couldn't continue to make debt-service payments to GE Canada and defaulted on a loan but that the pair reached a forbearance agreement on April 18. Elephant & Castle blamed its inability to service its debt on falling sales resulting from the economic slump. According to DBR, Elephant & Castle said it owed $18.8 million to lender GE Canada Equipment Financing, which is part of General Electric Co., and $3.5 million to Lender Fifth Street Finance Corp is also owed $3.5 million. ELITE PHARMACEUTICALS: Significant Losses Cue Going Concern Doubt ----------------------------------------------------------------- Elite Pharmaceuticals Inc., filed on June 29, 2011, its annual report on Form 10-K for the fiscal year ended March 31, 2011. Demetrius & Company, L.L.C., in Wayne, New Jersey, expressed substantial doubt about Elite Pharmaceuticals' ability to continue as a going concern. The independent auditors noted that the Company has experienced significant losses resulting in a working capital deficiency and shareholders' deficit. The Company reported a net loss of $13.6 million on $4.3 million of revenues for the fiscal year ended March 31, 2011, compared with a net loss of $8.1 million on $3.3 million of revenues for the fiscal year ended March 31, 2010. The Company's balance sheet at March 31, 2011, showed $11.8 million in total assets, $29.7 million in total liabilities, and a stockholders' deficit of $17.9 million. A copy of the Form 10-K is available at http://is.gd/pmHCl8 Northvale, New Jersey-based Elite Pharmaceuticals, Inc., is a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled-release products, using proprietary technology and the development and manufacture of generic pharmaceuticals. The Company has one product, Phentermine 37.5mg tablets, currently being sold commercially. EMBLEMHEALTH, INC: A.M. Best Affirms 'B' Fin'l Strength Rating -------------------------------------------------------------- A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating (FSR) of B (Fair) and issuer credit ratings (ICR) of "bb+" of Health Insurance Plan of Greater New York (HIP), HIP Insurance Company of New York and ConnectiCare, Inc. (Farmington, CT). A.M. Best also has upgraded the ICR to "ccc+" from "ccc" and affirmed the FSR of C (Weak) of Group Health Incorporated (GHI) and GHI HMO Select, Inc. The outlook for these ratings has been revised to stable from negative. All companies are subsidiaries of EmblemHealth Inc. and are domiciled in New York, NY, unless otherwise specified. The revised outlook for HIP, HIP Insurance Company of New York and ConnectiCare, Inc. reflect the improved earnings of the main entity and intermediate parent of HIP Insurance Company of New York and ConnectiCare, Inc. at HIP. The upgrading of the ICR of GHI and GHI HMO Select, Inc. recognizes the structural changes within the EmblemHealth Inc. organization, under which GHI is now a direct subsidiary of HIP. Additionally during 2010, HIP issued a total of $115 million of surplus notes in order to improve GHI's capitalization. The ratings for HIP acknowledge its enrollment losses, capital pressure from its financially weaker subsidiary, GHI, and the continuous delays in the process of conversion to a for-profit status. Offsetting rating factors include HIP's improved operating results and stable capital levels. The ratings for GHI reflect continuing operating losses and a low level of capital. GHI continues to experience significant operating losses in its commercial exclusive provider organization and preferred provider organization product lines. Although pricing actions have been taken, the losses are not showing moderation through the first quarter of 2011. The company's capitalization has been negatively impacted by the continued operating losses and remains below state required minimums. Offsetting rating factors include GHI's strong name recognition in the New York City market, as well as the support and strength of HIP. EMISPHERE TECHNOLOGIES: Mark Rachesky Holds 44.4% Equity Stake -------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Mark H. Rachesky, M.D., and his affiliates disclosed that they beneficially own 30,264,159 shares of common stock of Emisphere Technologies, Inc., representing 44.4% of the shares outstanding. A full-text copy of the filing is available for free at http://is.gd/5VePhC About Emisphere Technologies Based in Cedar Knolls, New Jersey, Emisphere Technologies, Inc. (OTC BB: EMIS) -- http://www.emisphere.com/-- is a biopharmaceutical company that focuses on a unique and improved delivery of pharmaceutical compounds and nutritional supplements using its Eligen(R) Technology. The Eligen(R) Technology can be applied to the oral route of administration as well other delivery pathways, such as buccal, rectal, inhalation, intra-vaginal or transdermal. Since its inception in 1986, Emisphere has generated significant losses from operations. Emisphere anticipates it will continue to generate significant losses from operations for the foreseeable future, and that its business will require substantial additional investment that it has not yet secured. The Company reported a net loss of $56.91 million on $100,000 of revenue for the year ended Dec. 31, 2010, compared with a net loss of $16.82 million on $92,000 of revenue during the prior year. ENCOMPASS GROUP: Posts $2.4 Million Net Loss in Dec. 31 Quarter --------------------------------------------------------------- Encompass Group Affiliates, Inc., recently reported a net loss of $2.4 million on $20.5 million of sales for the three months ended Dec. 31, 2010, compared with a net loss of $1.4 million on $21.4 million of sales for the three months ended Dec. 31, 2009. For the six months ended Dec. 31, 2010, the net loss was $7.0 million on $43.3 million of sales, compared with a net loss of $2.8 million on $44.4 million of sales for the six months ended Dec. 31, 2009. The Company's balance sheet at Dec. 31, 2010, showed $41.6 million in total assets, $50.8 million in total liabilities, $8.0 million of Series E preferred stock, and a stockholders' deficit of $17.2 million. A copy of the Form 10-Q for the three months ended Dec. 31, 2010, is available at http://is.gd/btq1a1 The Company reported a net loss of $4.6 million on $22.8 million of sales for the three months ended Sept. 30, 2010, compared with a net loss of $1.4 million on $23.0 million of sales for the three months ended Sept. 30, 2009. A copy of the Form 10-Q for the three months ended Sept. 30, 2010, is available at http://is.gd/jHRM3U As reported in the TCR on June 24, 2011, J.H. Cohn LLP, in New York City, expressed substantial doubt about Encompass Group Affiliates' 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 incurred an operating loss of $16.9 million and a net loss of $28.8 million for the year ended June 30, 2010, and the Company's consolidated balance sheet reflects a stockholders' deficiency of $10.2 million. About Encompass Group Lawrenceville, Ga.-based Encompass Group Affiliates, Inc., is a public company specializing in the technology aftermarket service and supply chain known as reverse logistics. ENRON CORP: Redemption of Commercial Paper Immune From Recovery ------------------------------------------------------------- Enron Creditors Recovery Corp. failed in its quest to recover approximately $1.1 billion paid by its parent, Enron Corp., to retire some of its unsecured commercial paper before the company collapsed in 2001 after the U.S. Court of Appeals for the Second Circuit denied Enron's appeal. Voting 2-1, the Second Circuit affirmed the decision of Judge Colleen McMahon of the U.S. District Court for the Southern District of New York reversing an order of Judge Arthur Gonzalez of the United States Bankruptcy Court for the Southern District of New York and remanded with instructions to enter summary judgment in favor of Appellees Alfa, S.A.B. de C.V., ING VP Balanced Portfolio, Inc., and ING VP Bond Portfolio, Inc. Enron Creditors Recovery Corp. challenged the district court's conclusion that Section 546(e) of the Bankruptcy Code protects from avoidance prepetition payments Enron Corp. made to redeem, prior to maturity, commercial paper it had issued. It argued that Enron Corp.'s payments did not constitute "settlement payments" within the meaning of Section 546(e)'s safe harbor both because they were repayments of debt and because they were not common in the securities industry. The issue raised to the Second Circuit was whether the Section 546(e) "safe harbor" . . . extends to transactions in which commercial paper is redeemed by the issuer prior to maturity, using the customary mechanism of the Depository Trust Company . . . for trading in commercial paper . . ., without regard to extrinsic facts about the nature of the [transactions], the motive behind the [transactions], or the circumstances under which the payments were made. After the company filed for Chapter 11 protection, Enron sued Alfa and 98 other defendants on November 6, 2003, asserting that the settlement payments to J.P. Morgan Securities of Texas, Inc., to pay commercial paper holders for their transfer of Enron commercial paper, constitute preferential or fraudulent transfers. Thus, Enron claims that Alfa is liable for the $5.6 million Enron paid to JPMorgan for the purchase of Alfa's commercial paper. In addition, Enron sued 200 former noteholders to recover the payments. Most noteholders entered into settlement with Enron and only Alfa and ING remain. Alfa argued that it bought and sold the commercial paper through a broker and never dealt with the company directly, thus Alfa is protected by Section 546(e) of the Bankruptcy Code. Enron argued back that the payments are excluded from Section 546(e)'s protection. The U.S. Bankruptcy Court for the Southern District of New York held that the payments constitute preferential or fraudulent transfers and not protected by Section 546(e) because Alfa and ING had not demonstrated that Enron's payments were settlement payments as defined in Section 741(8) of the Bankruptcy Code, because they had failed to establish that the payments were made to acquire title to the commercial paper rather than to retire debt. Alfa and ING appealed the Bankruptcy Court's decision to the U.S. District Court for the Southern District of New York. The District Court reversed the Bankruptcy Court's ruling and directed entry of summary judgment in favor of Alfa and ING. The U.S. Securities and Exchange Commission and the Securities Industry and Financial Markets Association, a trade group representing the interests of securities firms, banks, and asset managers, have filed amicus briefs in support of Alfa and ING's interpretation of the statute. Enron appealed the District Court's ruling to the U.S. Court of Appeals for the Second Circuit. According to Circuit Judge John M. Walker, the appeal raises an issue of first impression in the court of appeals. He noted that no circuit has yet addressed the safe harbor's application to an issuer's early redemption of commercial paper. In its ruling, the Second Circuit Court of Appeals ruled that the funds used in buying the commercial paper are shielded by "safe harbor" provisions in the bankruptcy code, which prevents its purchase from being categorized as fraudulent or preferential transfers. Specifically, the Court held that Section 546(e) extends to the payments made by Enron to redeem its commercial paper before maturity. Section 741(8), which Section 546(e) incorporates, defines "settlement payment" as "a preliminary settlement payment, a partial settlement payment, an interim settlement payment, a settlement payment on account, a final settlement payment, or any other similar payment commonly used in the securities trade." The Appeals Court noted that although the Second Circuit has not yet addressed the scope of Section 741(8)'s definition, other circuits have held it to be "extremely broad." It further noted that several circuits have rejected limitations on the definition that would exclude transactions in privately held securities or transactions that do not involve financial intermediaries that take title to the securities during the course of the transaction; however, no circuit has yet addressed the safe harbor's application to an issuer's early redemption of commercial paper. Enron proposed three limitations on the definition of settlement payment in Section 741(8), each of which, it argued, would exclude the redemption payments: * Enron contended that the final phrase of Section 741(8) -- "commonly used in the securities trade" -- excludes all payments that are not common in the securities industry, including, Enron argued, Enron's redemption. * Enron argued that the definition includes only transactions in which title to the securities changes hands. Because, Enron argued, the redemption payments were made to retire debt and not to acquire title to the commercial paper, they are not settlement payments within the meaning of Section 741(8). * Enron argued that the redemption payments are not settlement payments because they did not involve a financial intermediary that took title to the transacted securities and thus did not implicate the risks that prompted Congress to enact the safe harbor. The Appeals Court said that since it did not find anything in the Bankruptcy Code or the relevant caselaw that supports Enron's proposed limitations on the definition of settlement payment in Section 741(8), it rejected them. The Second Circuit held that Enron's redemption payments fall within the plain language of Section 741(8) and are thus protected from avoidance under Section 546(e). The Second Circuit disagreed with Enron's argument that Section 741(8) supports a purchase or sale requirement. The Second Circuit, looking into decisions by other circuit courts, held that in the context of the securities industry a "'settlement' refers to the 'completion of a securities transaction.'" Judge Walker agreed that Enron is correct that the DTC acted as a conduit and recordkeeper rather than a clearing agency that takes title to the securities during the course of the transaction. Nevertheless, he ruled that the absence of a financial intermediary that takes title to the transacted securities during the course of the transaction is a proper basis on which to deny safe-harbor protection. The Third, Sixth, and Eighth Circuits rejected similar arguments in affirming application of the safe harbor to leveraged buyouts of private companies that involved financial intermediaries who served only as conduits, he pointed out. Accordingly, for the reasons stated, the Second Circuit affirmed the District Court's decision. Judge John G. Koeltl of the United States District Court for the Southern District of New York, sitting by designation, issued a dissenting opinion holding substantially that the Second Circuit's holding is not required by the opaque definition of "settlement payment" in the Bankruptcy Code and is inconsistent with the legislative history of the "safe-harbor" provision under Section 546(e). The breadth of the Second Circuit's definition threatens routine avoidance proceedings in bankruptcy courts, Judge Koeltl said. He agreed with the Bankruptcy Court's conclusion that the definition of "settlement payment" should include a requirement that there be a purchase or sale of a security to trigger a "settlement payment." The redemption of commercial paper, he said, indisputably is not the purchase or sale of that commercial paper but he disagreed with the Second Circuit's conclusion eliminating that requirement. "We see no reason to think that undoing Enron's redemption payments, which involved over a billion dollars and approximately two hundred noteholders, would not also have a substantial and similarly negative effect on the financial markets," Judge Walker said. A full-text copy of the Appeals Court's decision is available for free at http://bankrupt.com/misc/EnronApplDec630.pdf Michael Cook, Esq., a partner at Schulte Roth & Zabel who represented Alfa, said he expects Enron will appeal, Reuters said. Enron representatives could not be reached for comment, the news agency added. About Enron Corp. Based in Houston, Texas, Enron Corporation filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 01-16033) on Dec. 2, 2001, following controversy over accounting procedures that caused its stock price and credit rating to drop sharply. Enron hired lawyers at Togut Segal & Segal LLP; Weil, Gotshal & Manges LLP; Venable; Cadwalader, Wickersham & Taft, LLP for its bankruptcy case. The Official Committee of Unsecured Creditors in the case tapped lawyers at Milbank, Tweed, Hadley & McCloy LLP. The Debtors won confirmation of their Plan in July 2004, and the Plan was declared effective on Nov. 17, 2004. After approval of the Plan, the new board of directors decided to change the name of Enron Corp. to Enron Creditors Recovery Corp. to reflect the current corporate purpose. ECRC's sole mission is to reorganize and liquidate certain of the operations and assets of the "pre- bankruptcy" Enron for the benefit of creditors. ECRC has been involved in the MegaClaims Litigation, an action against 11 major banks and financial institutions that ECRC believes contributed to Enron's collapse; the Commercial Paper Litigation, an action involving the recovery of payments made to commercial paper dealers; and the Equity Transactions Litigation, which ECRC filed against Lehman Brothers Holdings, Inc., UBS AG, Credit Suisse and Bear Stearns to recover payments made to the four banks on transactions involving Enron's stock while the company was insolvent. ENTRAVISION COMMUNICATIONS: S&P Affirms 'B' CCR; Outlook Stable --------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Santa Monica, Calif.-based Spanish-language media company Entravision Communications Corp. to stable from positive. "We affirmed all the ratings on the company, including the 'B' corporate credit rating," S&P said. "The outlook revision on Entravision Communications Corp. reflects our expectation of a longer term path to an upgrade, due to a slow, uneven recovery in core ad spending and ad rates over the intermediate term, despite continued positive trends in Hispanic population growth," said Standard & Poor's credit analyst Michael Altberg. "We expect that leverage will remain above our 6.0x threshold for consideration of an upgrade due to a slow recovery in core advertising, which will be insufficient to offset difficult revenue comparisons in 2011 with 2010's World Cup advertising, census advertising, and political revenue. These non- recurring items generated roughly $16 million of revenue in 2010, or just under 8% of total revenue. Despite these difficult revenue comparisons, the 'B' rating and stable outlook reflects our expectation of adequate liquidity and financial flexibility supplemented by healthy cash balances." "Entravision is a diversified Spanish-language TV (66% of 2010 revenue) and radio (34%) broadcaster, and is the largest TV station affiliate of Univision Communications Inc., which in our opinion has benefited the company's audience ratings, programming costs, and retransmission consent revenues. As a result of its affiliation agreements, Entravision has incurred limited cash costs of network programming or syndicated programming on its Univision and Telefutura affiliated stations. Despite secular pressures in the radio business, we believe Hispanic radio broadcasters are slightly more insulated than English language peers because of favorable population trends and lower broadband penetration among this demographic. The stable rating outlook reflects our expectation that Entravision will be able to maintain adequate liquidity and generate positive discretionary cash flow through the political and World Cup advertising cycles. We could raise the rating if we become convinced that the company will reduce its lease-adjusted debt to EBITDA to the low-6x area on a sustained basis, through either EBITDA growth or debt repayment, while maintaining an adequate cushion under its financial covenants. An upgrade scenario would likely involve the company increasing and maintaining EBITDA by about 18% from trailing 12 month levels as of March 31, 2011, which given our assumption of modest cost growth in 2011, could be achieved if revenue grows by 10% to 12%. A downgrade, which we view as less likely over the near term, would involve consumption of cash balances and EBITDA declines that prevent the company from borrowing under its revolving credit facility. We believe a downgrade scenario would reflect unfavorable structural shifts at the radio segment or a worsening of the economy that causes a further fall-off in advertising demand for Spanish media," according to S&P. EVEREADY INSURANCE: A.M. Best Downgrades FSR to 'C++' ----------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to C++ (Marginal) from B (Fair) and issuer credit rating to "b" from "bb" of Eveready Insurance Company. The outlook for both ratings is negative. The rating reflects Eveready's accelerated premium growth, elevated underwriting leverage and comparatively high expense structure, which has resulted in a marginal risk-adjusted capital position. These negative rating factors are partially offset by Eveready's favorable loss ratio and management's local market knowledge. The outlook reflects the company's high underwriting leverage and continued unprofitable underwriting performance, which continues to pressure its risk-adjusted capital position for its rating level. EXIDE TECHNOLOGIES: Claims Objection Deadline Extended to July 31 ----------------------------------------------------------------- Exide Technologies obtained from the U.S. Bankruptcy Court for the District of Delaware a further extension of its its deadline for filing objections to claims to July 31, 2011. This is the 21st claims objection extension motion filed by Exide. The proposed extension will give Exide enough time to review and resolve the 51 remaining claims, according to James O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. More than 6,100 proofs of claim aggregating $4.4 billion had been filed against Exide. These do not include about 1,100 proofs of claim that were filed as unliquidated claims. As of April 27, 2011, approximately 6,063 claims had been resolved, reducing the total amount of outstanding claims by more than $3.4 billion. Exide has already completed 24 quarterly distributions to creditors under its confirmed Joint Plan of Reorganization, consisting of distributions on approximately 2,621 claims for about $1.67 billion. Since July 28, 2010, Exide has not filed any omnibus objections to claims but only individual objections, has reached a number of settlement agreements and has made considerable advancements with respect to the remaining, more complex claims, according to Mr. O'Neill. The Court will hold a hearing on May 25, 2011, to consider approval of the proposed extension. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The Company filed for Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. The Court confirmed Exide's Amended Joint Chapter 11 Plan on April 20, 2004. The plan took effect on May 5, 2004. While it has emerged from Bankruptcy, reorganized Exide is still resolving claims filed against it in the Bankruptcy Court. * * * Reorganized Exide carries 'B' issuer credit ratings from Standard & Poor's. "The ratings on Exide Technologies reflect what we consider to be the Company's aggressive financial risk profile, which incorporates S&P's expectation that sales and profitability will improve gradually as demand increases," said Standard & Poor's credit analyst Nancy Messer. Exide has 'B3' corporate family and probability of default ratings from Moody's Investors Service. In July 2008, Moody's upgraded the rating to 'B3' from 'Caa1'. Exide's B3 Corporate Family Rating continues to incorporate the company's leveraged profile, cyclical industry characteristics, and raw material pricing pressure, Moody's said in January 2011. EXIDE TECHNOLOGIES: Wins Approval of Pacific Dunlop Settlement -------------------------------------------------------------- Exide Technologies sought and obtained court approval of a settlement which calls for payment of $2.7 million to a group of companies led by Pacific Dunlop Holdings (USA) Inc. The deal requires Exide to pay $2.7 million to settle a consolidated lawsuit as well as the claims filed by the group against the company and its affiliates. The lawsuit stemmed from the acquisition by Exide of the group's stake in the Pacific Dunlop GNB Corporation in 2000. The lawsuit alleges breach of contract and unjust enrichment, and is pending in the U.S. Bankruptcy Court for the District of Delaware. Under the deal, Exide is required to pay $1,412,276 to Pacific Dunlop Holdings immediately after approval of the settlement. Upon payment, the insurance proceeds held by Pacific Dunlop Investments Inc. will be deemed a property of PDI. PDI is holding $1,287,724 in insurance proceeds paid on account of the damage caused by fire that broke out in a facility in Farmers Branch in Texas. Pacific Dunlop Holdings previously asserted that the insurance payment is a setoff of its claims against Exide, which the latter disputed. Exide also opposed PDI's entitlement to retain the insurance proceeds. The settlement also calls for the dismissal of the lawsuit and the withdrawal of Claim Nos. 3230, 3231, 3232, 3233, and 3234 filed by the group in Exide's bankruptcy case. The parties also agreed under the deal to release each other from all claims. The deal is formalized in an agreement, a copy of which is available for free at: http://bankrupt.com/misc/Exide_DunlopSettlement.pdf About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The Company filed for Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. The Court confirmed Exide's Amended Joint Chapter 11 Plan on April 20, 2004. The plan took effect on May 5, 2004. While it has emerged from Bankruptcy, reorganized Exide is still resolving claims filed against it in the Bankruptcy Court. * * * Reorganized Exide carries 'B' issuer credit ratings from Standard & Poor's. "The ratings on Exide Technologies reflect what we consider to be the Company's aggressive financial risk profile, which incorporates S&P's expectation that sales and profitability will improve gradually as demand increases," said Standard & Poor's credit analyst Nancy Messer. Exide has 'B3' corporate family and probability of default ratings from Moody's Investors Service. In July 2008, Moody's upgraded the rating to 'B3' from 'Caa1'. Exide's B3 Corporate Family Rating continues to incorporate the company's leveraged profile, cyclical industry characteristics, and raw material pricing pressure, Moody's said in January 2011. EXIDE TECHNOLOGIES: Settles $800-Mil. EPA Claim for $68-Mil. ------------------------------------------------------------ Bankruptcy Judge Kevin Carey approved an agreement to settle an $800 million claim against Exide Technologies. The agreement provides, among other things, for an allowed $67,599,678 general unsecured, non-priority, Class P4-A claim, which will be distributed in stock and warrants pursuant to Exide's Joint Plan of Reorganization. For distribution purposes, the allowed claim will be bifurcated into a $61,448,278 claim on behalf of The Environmental Protection Agency, and a $6,151,400 claim on behalf of the National Oceanic and Atmospheric Administration. EPA and NOAA filed Claim Nos. 3446, 6256, 6257 and 6432 to seek payment for damages resulting from the contamination that broke out at the NL Industries Inc. Superfund Site in Pedricktown, and at the Custom Distribution Services Site in New Jersey. The agencies also sought reimbursement for the costs incurred and will be incurred to contain any contamination at 21 other sites. Government lawyer, Donna Duer, Esq., said the settlement is "fair, reasonable and consistent" with the Comprehensive Environmental Response, Compensation and Liability Act. "The negotiations with [Exide] were conducted at arms-length between the clearly adversarial interests of the United States and [Exide]," Ms. Duer said in a statement filed with the Court. She pointed out that no one, including a group led by Tonolli Superfund Site Steering Committee, challenged the fairness of the negotiations. The statement came after the Tonolli group criticized certain provisions in the settlement agreement, calling them as "overly broad," more favorable to Exide and not in the public's interest. Ms. Duer further said that the settlement provides an "appropriate level of certainty and protection" to the agencies and Exide. "[It] is consistent with the statutory purposes of encouraging prompt and effective cleanup and reducing inefficient expenditure of public funds on lengthy litigation," she said. About Exide Technologies Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The Company filed for Chapter 11 protection (Bankr. Del. Case No. 02-11125) on April 14, 2002. Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, and James E. O'Neill, Esq., at Pachulski Stang Ziehl & Jones LLP represented the Debtors in their successful restructuring. The Court confirmed Exide's Amended Joint Chapter 11 Plan on April 20, 2004. The plan took effect on May 5, 2004. While it has emerged from Bankruptcy, reorganized Exide is still resolving claims filed against it in the Bankruptcy Court. * * * Reorganized Exide carries 'B' issuer credit ratings from Standard & Poor's. "The ratings on Exide Technologies reflect what we consider to be the Company's aggressive financial risk profile, which incorporates S&P's expectation that sales and profitability will improve gradually as demand increases," said Standard & Poor's credit analyst Nancy Messer. Exide has 'B3' corporate family and probability of default ratings from Moody's Investors Service. In July 2008, Moody's upgraded the rating to 'B3' from 'Caa1'. Exide's B3 Corporate Family Rating continues to incorporate the company's leveraged profile, cyclical industry characteristics, and raw material pricing pressure, Moody's said in January 2011. FIRST MARINER: Tontine Partners No Longer Owns Shares ----------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Tontine Partners, L.P., and its affiliates disclosed that they do not beneficially own any shares of common stock of First Mariner Bancorp. A full-text copy of the filing is available for free at http://is.gd/uhaRkm About First Mariner Headquartered in Baltimore, Maryland, First Mariner Bancorp -- http://www.1stmarinerbancorp.com/-- is a bank holding company whose business is conducted primarily through its wholly owned operating subsidiary, First Mariner Bank, which is engaged in the general general commercial banking business. First Mariner was established in 1995 and has total assets in excess of $1.3 billion as of Dec. 31, 2010. The Company's balance sheet at March 31, 2011, showed $1.266 billion in total assets, $1.269 billion in total liabilities, and a stockholders' deficit of $3.3 million. "Quantitative measures established by regulation to ensure capital adequacy require the [First Mariner] Bank to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average quarterly assets," the Company said in the filing. "As of March 31, 2011, the Bank was "under-capitalized" under the regulatory framework for prompt corrective action." As reported in the TCR on April 4, 2011, Stegman & Company, in Baltimore, expressed substantial doubt about First Mariner Bancorp's ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has suffered recurring losses and has a limited capital base. FIRST SECURITY: Director Marler Resigns to Spend Time With Family ----------------------------------------------------------------- Director D. Ray Marler resigned from the Board of First Security, effective June 28, 2011. In his resignation letter, Mr. Marler indicated that he was leaving the Board in order to devote additional time to his other business interests and his family. Mr. Marler's letter does not indicate any disagreements with First Security's operations, policies or practices. The Board thanks Mr. Marler for his service to the Company. No successor to Mr. Marler has been elected at this time, although First Security currently anticipates filling the vacancy on the Board of Directors caused by Mr. Marler's resignation in the future. About First Security Group First Security Group, Inc., is a bank holding company headquartered in Chattanooga, Tennessee, with $1.2 billion in assets as of Sept. 30, 2010. Founded in 1999, First Security's community bank subsidiary, FSGBank, N.A., has 37 full- service banking offices, including the headquarters, along the interstate corridors of eastern and middle Tennessee and northern Georgia and 325 full-time equivalent employees. In Dalton, Georgia, FSGBank operates under the name of Dalton Whitfield Bank; along the Interstate 40 corridor in Tennessee, FSGBank operates under the name of Jackson Bank & Trust. On Sept. 7, 2010, the Company entered into a Written Agreement with the Federal Reserve Bank of Atlanta, the Company's primary regulator, which prohibits the Company from declaring or paying dividends without prior written consent of the Federal Reserve. The Company is also prohibited from taking dividends, or any other form of payment representing a reduction of capital, from the Bank without prior written consent. The Company is also required, within 60 days of the Agreement, to submit to the Federal Reserve a written plan designed to maintain sufficient capital at the Company and the Bank. On April 28, 2010, FSGBank, the Company's wholly-owned subsidiary, consented and agreed to the issuance of a Consent Order by the Office of the Comptroller of the Currency (OCC). Pursuant to that Consent Order, within 120 days of the effective date of the Order, the Bank is required to achieve and thereafter maintain total capital at least equal to 13% of risk-weighted assets and Tier 1 capital at least equal to 9% of adjusted total assets. As of Sept. 30, 2010, the first financial reporting period subsequent to the 120 day requirement, the Bank's total capital to risk-weighted assets was 12.93% and the Tier 1 capital to adjusted total assets was 7.43%. The Bank has notified the OCC of the non-compliance. The Company reported a net loss of $44.34 million on $54.91 million of total interest income for the year ended Dec. 31, 2010, compared with a net loss of $33.45 million on $64.00 million of total interest income during the prior year. The Company's balance sheet at March 31, 2011, showed $1.11 billion in total assets, $1.02 billion in total liabilities and $90.14 million in total stockholders' equity. Joseph Decosimo and Company, PLLC, in Chattanooga, Tennessee, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred losses from operations for the past two years. The Company is also operating under formal supervisory agreements with the Federal Reserve Bank of Atlanta and the Office of the Comptroller of the Currency and is not in compliance with all provisions of the Agreements. Failure to achieve all of the Agreements' requirements may lead to additional regulatory actions. FULTON HOMES: Bankruptcy Court Confirms Plan of Reorganization -------------------------------------------------------------- After two-and-a-half years, Fulton Homes Corporation will soon emerge from Chapter 11 bankruptcy, doubling its market share and opening new communities. "Fulton Homes Corporation will repay all our creditors in full and has money in the bank," said CEO Douglas Fulton. "Our projections reflect that we will be able to self-finance our cash needs over the next four years and will not need any new bank financing." In addition, Fulton noted the company would operate as normal and continue developing new communities in the Valley. According to Steve Walters, Fulton Homes' CFO, the banks will immediately receive $57.5 million dollars. "Fulton Homes is coming out of the reorganization completely solvent and will operate without outside financial assistance," said Walters. "We are exceeding the projected sales and cash flows provided to the banks in our restructuring proposal." Fulton Homes Sales Corporation, which oversees and manages all sales and marketing functions, including customer care and home warranties did not file for protection. Fulton Homes Corporation handles land and acquisition duties for the homebuilder. Since filing in 2009, Fulton Homes Corporation has doubled its market share and has added several new communities, according to the RL Brown Report, the agency that measures home building activity. Currently, Fulton Homes is adding five communities in Chandler and Queen Creek within the next year. In fact, Monterey Bay, their most recent community, is 90% sold out after being on the market for only four months. According to Fulton, the company will remain committed to its philanthropic causes. "We will continue our public service campaigns, making the Valley a safer place for families and helping better the area's education system," he said. About Fulton Homes Fulton Homes Corporation -- http://www.fultonhomes.com/-- is a Tempe, Arizona-based homebuilder. The Company filed for Chapter 11 protection (Bankr. D. Ariz. Case No. 09-01298) on Jan. 27, 2009. Mark W. Roth, Esq., at Shughart Thomson & Kilroy PC, represents the Debtor in its restructuring efforts. The Debtor estimated assets and debts between $100 million and $500 million in its Chapter 11 petition. GENERAL GROWTH: Court Closes 67 Affiliates' Chapter 11 Cases ------------------------------------------------------------ Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York entered on June 24, 2011, a final decree closing the Chapter 11 cases of 67 debtor affiliates of GGP, Inc. The 67 Reorganized Debtors referred to as "Group 1 Reorganized Debtors" with closed Chapter 11 cases are: Closing Debtor Case No. -------------- -------- 10190 Covington Cross, LLC 09-12041 Bay Shore Mall II L.L.C. 09-12065 Burlington Town Center II LLC 09-12477 Chico Mall L.L.C. 09-12084 Deerbrook Mall, LLC 09-12094 Fallen Timbers Shops, LLC 09-12106 Fashion Place Anchor Acquisition, LLC 09-12110 Gateway Crossing L.L.C. 09-12116 Gateway Overlook Business Trust 09-12117 GGP Acquisition, L.L.C. 09-12119 GGP Ivanhoe II, Inc. 09-12125 GGP Knollwood Mall, LP 09-12128 GGP Village at Jordan Creek L.L.C. 09-12029 GGP/Homart Services, Inc. 09-12132 GGP-Canal Shoppes L.L.C. 09-12136 GGP-Grandville Land L.L.C. 09-12140 GGP-Lansing Mall, Inc. 09-12143 GGP-Maine Mall Holding L.L.C. 09-12145 GGP-Maine Mall L.L.C. 09-12144 GGP-Maine Mall Land L.L.C. 09-12146 GGP-North Point Land L.L.C. 09-12016 GGP-Pecanland II, L.P. 09-11991 GGP-Pecanland, Inc. 09-12151 GGP-Steeplegate, Inc. 09-12154 Grand Traverse Mall Holding, Inc. 09-12483 Harborplace Borrower, LLC 09-12162 Kalamazoo Mall, Inc. 09-12485 Lakeside Mall Holding, LLC 09-12181 Mall of Louisiana Land, LP 09-12192 Mall of the Bluffs, LLC 09-12194 Mall St. Matthews Company, LLC 09-12195 Natick Retail, LLC 09-12202 NewPark Mall L.L.C. 09-12204 North Plains Mall, LLC 09-12205 North Star Anchor Acquisition, LLC 09-12206 Parcit-IIP Lancaster Venture 09-12486 Parcity L.L.C. 09-12487 Parcity Trust 09-12488 Park City Holding, Inc. 09-12489 PC Lancaster Trust 09-12491 PDC-Red Cliffs Mall L.L.C. 09-12222 Phase II Mall Subsidiary, LLC 09-12032 Piedmont Mall, LLC 09-12225 Providence Place Holdings, LLC 09-12233 River Falls Mall, LLC 09-12239 River Hills Land, LLC 09-12240 River Hills Mall, LLC 09-12241 Rouse-Oakwood Shopping Center, LLC 09-12259 Rouse-Phoenix Theatre Limited Partnership 09-12011 Rouse-Portland, LLC 09-12264 Running Brook Business Trust 09-12475 Silver Lake Mall, LLC 09-12271 St. Cloud Mall Holding L.L.C. 09-12281 Stonestown Shopping Center Holding L.L.C. 09-12479 Stonestown Shopping Center L.L.C. 09-12282 Summerlin Corporation 09-12285 The Hughes Corporation 09-12177 The Rouse Company at Owings Mills, LLC 09-12244 The Rouse Company BT, LLC 09-12036 The Rouse Company of Florida, LLC 09-12245 Two Arizona Center, LLC 09-12295 Valley Hills Mall, Inc. 09-12299 Ward Gateway-Industrial-Village, LLC 09-12312 White Marsh Mall Associates 09-12001 White Marsh Mall, LLC 09-12317 White Marsh Phase II Associates 09-12002 White Mountain Mall, LLC 09-12318 Judge Gropper will retain jurisdiction as is provided in the Project Debtors' Joint Plan of Reorganization and GGP TopCo's Third Amended Joint Plan of Reorganization. On or before July 8, 2011, the Reorganized Debtors will file with the Court a final list identifying any of 69 Reorganized Debtors -- Group 2 Reorganized Debtors -- whose Chapter 11 cases were fully administered on or prior to June 30, 2011. Following the submission of the list, the Chapter 11 cases of the Reorganized Debtors identified on the Final List will be deemed closed, nunc pro tunc to June 30, 2011. The Court will retain jurisdiction as is provided in the Chapter 11 Plans. From and after June 30, 2011, the Reorganized Debtors will not be obligated to pay quarterly fees to the U.S. Trustee for Region 2 in accordance with Section 1930(a)(6) of the U.S. Judiciary and Judicial Procedures Code with respect to the Chapter 11 cases of the (i) Group 1 Reorganized Debtors or the (ii) Group 2 Reorganized Debtors in the Final List. For ease of administration, the Reorganized Debtors may annex a copy of this final decree to the Final List. The Chapter 11 case of any Reorganized Debtor that is not a (i) Group 1 Reorganized Debtor or a (ii) Group 2 Reorganized Debtor identified on the Final List will remain open pending further order of the Court, Judge Gropper ruled. Judge Gropper clarified that entry of the final decree is without prejudice to the rights of any party to seek to reopen the cases of the Group 1 Reorganized Debtor or a Group 2 Reorganized Debtor identified on the Final List for cause. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 protection on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, serve as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of Dec. 31, 2008. General Growth Properties on Nov. 9, 2010, successfully completed the final steps of its financial restructuring and emerged from Chapter 11. GGP successfully restructured approximately $15 billion of project-level debt Recapitalized with $6.8 billion in new equity capital Paid all creditor claims in full achieved substantial recovery for equity holders. As part of its plan of reorganization, GGP has split itself into two separate and independent publicly traded corporations. GGP shareholders as of the record date of Nov. 1, 2010, received common stock in both companies. The new GGP, which will commence trading Nov. 10 on The New York Stock Exchange under the ticker symbol "GGP," is the second-largest shopping mall owner and operator in the country, with more than 183 regional malls in 43 states. The spin-off company, The Howard Hughes Corporation, consists of GGP's portfolio of master planned communities and other strategic real estate development opportunities. This company will trade under the ticker symbol "HHC" on The New York Stock Exchange. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GFI GROUP: Moody's Assigns 'Ba2' Issuer Rating ---------------------------------------------- Moody's Investors Service assigned a first time Issuer rating of Ba2 to GFI Group Inc. The outlook is stable. RATINGS RATIONALE The Ba2 rating reflects GFI's solid franchise in inter-dealer brokerage, which is based on lower risk matched-principal and agency business. GFI's business model results in a simple, liquid balance sheet where the principal risk is short-term counterparty risk. At the same time, inter-dealer brokerage is intensely competitive, requiring constant technological investment to maintain electronic brokerage capabilities and expensive packages to recruit and retain voice brokers. Moreover revenues are cyclical and fluctuate with capital markets activity. These two factors -- investment demands and revenue cyclicity -- can result in periods of weak profitability and reduced cash flow coverage. Expectations of such periods are incorporated into the Ba2 rating. GFI's primary source of revenues is from commissions and fees brokering trades between financial institutions on a "name give- up" and matched principal basis (anonymous). GFI has developed proprietary technology that should facilitate a transition toward more electronic trading execution particularly for more commoditized asset classes that should improve operating efficiency. Furthermore, GFI has a well diversified customer base. In addition, the company's Trayport and GFI Fenics divisions provide reoccurring revenue diversification by providing software, market data, and analytical services. Another important credit strength is GFI's limited use of balance sheet to generate commission and fees compared to some of its IBD peers. Additionally, the counterparty risk that it does take is well controlled by a seasoned management team. GFI, however, has several credit challenges as well that are reflected in the company's Ba2 Issuer rating. The majority of the firm's revenues are tied to inherently volatile trading volumes, and though the company has sustained profitability, its margins have been subject to compression. In addition, the company has embarked upon fairly aggressive growth of its broker personnel and recent results have not yet reflected anticipated growth in revenue and earnings -- also affecting the firm's margins. GFI's cash flow leverage ratio (as measured by Debt/EBITDA) is also higher than its peers, and the company has had a history of strategic acquisition which has increased leverage over time, adding to bondholder risk. Regarding what could change the rating, Moody's Senior Analyst Al Bush said, "Improvement in the company's pre-tax margins and profitability could lead to an upgrade." Conversely, an increase in cash flow leverage to above 4x could lead to a downgrade. This is the first instance in which Moody's has assigned an Issuer rating to GFI Group Inc. The principal methodology used in this rating was the Global Securities Industry Methodology published in December 2006. Recent Results: For fiscal year ending December 31, 2010 GFI reported GAAP net income of $25.6 million on net revenues of $794.5 million. GFI Group Inc. is headquartered in New York, New York. GEORGE-MARSHALL: Dominion Realty Buys 1.8 Acres for $2.05MM ----------------------------------------------------------- Michael Schwartz at Richmond BizSense reports that Manchester Place LLC, managed by Dominion Realty Partners, has received approval from the bankruptcy court to buy for $2.05 million a 1.8- acre parcel from an entity tied to a prominent local family that is working its way through bankruptcy. According to the report, the property is owned by three entities, one of which is George-Marshall Corp., a bankrupt local real estate holding company tied to Allen Meade Ferguson and his wife, Mary Rutherfoord Mercer Ferguson. The couple, known locally for Mr. Ferguson's ties to an old-Richmond investment bank and for their philanthropic efforts, filed Chapter 11 bankruptcy, their family's wealth apparently diminished by the recession. BizSense notes that although still a viable businesses, George- Marshall Corp., along with Mercer Rug Cleansing Inc., declared Chapter 11 bankruptcy because they were used as collateral on loans tied to the personal finances of the prominent Richmond family. Grubb & Ellis/Harrison & Bates worked as the broker on the deal. Allen Ferguson, along with his wife, filed a Chapter 11 bankruptcy petition (Bankr. E.D. Va. Case No. 11-32141) on March 31, 2011. Mr. Ferguson signed a Chapter 11 petition for Mercer Rug Cleansing, Inc. (Bankr. E.D. Va. Case No. 11-32775) and George Marshall Corp. on April 26, 2011. David K. Spiro, Esq., at Hirschler Fleischer, in Richmond, represents the Debtors. Mercer is estimated to have $1 million to $10 million in assets and debts in its Chapter 11 petition. GP WEST: Taps Bufete Law Firm as Bankruptcy Counsel --------------------------------------------------- GP West, Inc., said it is not sufficiently familiar with the law to be able to plan and conduct the Chapter 11 proceedings without competent legal counsel. In this regard, the Debtor seeks to hire Bufete Roberto Corretjer Piquer as its bankruptcy lawyers. The Debtor has provided BRCP a $50,000 retainer, against which the law firm will bill on the basis of $175.00 per hour, plus expenses, for work performed or to be performed by Roberto Corretjer Piquer, Eduardo J. Corretjer Reyes, and any associates and $75.00 for paralegals. BRCP served as pre-bankruptcy outside general counsel for GP West, its affiliate Swiss Chalet Inc., GP West's shareholder, Camape S.E., and GP West's director, Pedro Feliciano Benitez. Eduardo J. Corretjer Reyes, Esq., an associate at BRCP, attests that his firm is a disinterested person as defined in 11 U.S.C. Sec. 101(14). About GP West GP West, Inc., based in San Juan, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-04954) on June 9, 2011. CPA Luis R. Carrasquillo & Co., P.S.C., serves as financial consultant. In its schedules, the Debtor disclosed $13,384,251 in assets and $132,825,590 in debts. The petition was signed by Jose Teixidor Mendez, president. GP WEST: Hires Carrasquillo as Financial Consultant --------------------------------------------------- GP West, Inc., said it needs of a financial consultant to assist its management in the financial restructuring of its affairs by providing advice in strategic planning and the preparation of a plan of reorganization, disclosure statement and business plan, determination of its assets, and participating in its negotiations with creditors and parties in interest. In this regard, GP West seeks Court approval to hire CPA Luis R. Carrasquillo & Co., P.S.C. The Debtor has paid Carrasquillo a $10,000 advance. Mr. Luis R. Carrasquillo, CPA, the firm's partner, charges $150 per hour. Senior CPA Marcelo Gutierrez bills $125 an hour, while Senior CPA Myris Acosta bills $100 an hour. Carrasquillo has been appointed as financial consultant in the Chapter 11 case of Swiss Chalet, Inc., GP West's affiliate. The Debtor said Carrasquillo and the members of the firm are disinterested persons as defined in 11 U.S.C. Sec. 101(14). The firm may be reached at: CPA LUIS R. CARRASQULLO RUIZ 28Th Street, # TI-26 Turabo Gardens Ave. Caguas, P.R. 00725 Tel: (787) 746-4555 (787) 746-4556 Fax: (787) 746-4564 E-mail: luis@cpacarrasquillo.com About GP West GP West, Inc., based in San Juan, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-04954) on June 9, 2011. Eduardo J. Corretjer Reyes, Esq., at Bufete Roberto Corretjer Piquer, serves as the Debtor's counsel. In its schedules, the Debtor disclosed $13,384,251 in assets and $132,825,590 in debts. The petition was signed by Jose Teixidor Mendez, president. GREAT ATLANTIC: Has Deals Extending Lease Decision Deadline ----------------------------------------------------------- Pursuant to the Court approved procedures with respect to the assumption or rejection of unexpired leases of nonresidential property, The Great Atlantic & Pacific Tea Company, Inc., filed with the Bankruptcy Court on June 29, 2011, a schedule of consensual agreements to extend the 11 U.S.C. Section 365(d)(4) deadline between the Debtors and the applicable Lessor. The Extension Schedule identifies for each consensual agreement to extend the 365(d)(4) Deadline: (a) the applicable store; (b) the store address; (c) the Lessor; and (d) the proposed extension of the 365(d)(4) Deadline. A copy of the Extension Schedule is available at: http://bankrupt.com/misc/a&p.365(d)(4)extensionschedule.pdf Any party wishing to object to any extension of the 365(d)(4) Deadline identified on the aforesaid Extension Schedule must file a written objection with the Bankruptcy Court on or before July 7, 2011. A second schedule was filed with the Bankruptcy Court on June 30, 2011, a copy of which is available at: http://bankrupt.com/misc/a&p.365(d)(4)2ndextensionschedule.pdf Any party wishing to object to any extension of the 365(d)(4) Deadline identified on the Second Extension Schedule must file a written objection with the Bankruptcy Court on or before July 7, 2011. About Great Atlantic & Pacific Founded in 1859, Montvale, New Jersey-based Great Atlantic & Pacific is a leading supermarket retailer, operating under a variety of well-known trade names, or "banners" across the mid- Atlantic and Northeastern United States. It operates 395 supermarkets, combination food and drug stores, beer, wine, and liquor stores, and limited assortment food stores in Connecticut, Delaware, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, Virginia, and the District of Columbia. "Banners" include A&P (101 stores), Food Basics (12 stores), Pathmark (128 stores), Super Fresh (57 stores), The Food Emporium (16 stores), and Waldbaum's (59 stores). A&P employs roughly 41,000 employees, including roughly 28,000 part-time employees. Roughly 95% of the workforce are covered by collective bargaining agreements. A&P and its affiliates filed Chapter 11 petitions (Bankr. S.D.N.Y. Case No. 10-24549) on Dec. 12, 2010 in White Plains, New York. In its petition, A&P reported total assets of $2.5 billion and liabilities of $3.2 billion as of Sept. 11, 2010. Paul M. Basta, Esq., James H.M. Sprayregen, Esq., and Ray C. Schrock, Esq., at Kirkland & Ellis, LLP, in New York, and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. Lazard Freres & Co. LLC is the financial advisor. Huron Consulting Group is the management consultant. Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Abhilash M. Raval, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represent the Official Committee of Unsecured Creditors. HARRISBURG, PA: Legislature Takes Bankruptcy Off the Table ---------------------------------------------------------- American Bankruptcy Institute reports that a voluntary bankruptcy is apparently off the table for Harrisburg as the state House and Senate both passed a fiscal code bill on June 30 containing a watered-down version of state Sen. Jeffrey Piccola's 11th-hour bid to turn Harrisburg's proposed Act 47 fiscal recovery plan into a mandate. About Harrisburg, PA The city of Harrisburg is coping with debt related to a failed revamp of an incinerator. The outstanding principal on the Incinerator debt is $288 million. Total principal and interest on this debt would amount to approximately $458 million. Debt service payments on the total incinerator debt are $20 million per year. Of this total, Dauphin County, Pennsylvania, is responsible for roughly $10 million and Harrisburg is responsible for the other $10 million. The city is guarantor on 100% of the $288 million Incinerator debt. The City Council of Harrisburg, Pennsylvania, voted 5-2 on September 28 to seek professional advice on bankruptcy or state oversight. Harrisburg needed state aid to avoid default on $3.3 million of bond payments this month. The city has missed about $8 million in debt-service payments this year on bonds issued in connection with a trash-to-energy incinerator. The city owes another $40 million by the end of the year, and was sued by its home county Dauphin County; bond insurer Assured Guaranty Municipal Corp., a unit of Assured Guaranty Ltd.; and bond trustees TD Bank and M&T Bank Corp. over $19 million in skipped bond payments. HEARUSA INC: Posts $46.9 Million Net Loss in Q1 Ended April 2 ------------------------------------------------------------- HearUSA, Inc., filed its quarterly report, reporting a net loss of $46.9 million on $21.3 million of revenues for the three months ended April 2, 2011, compared with a net loss of $2.5 million on $19.6 million of revenues for the three months ended March 27, 2010. The Company recorded an estimated $51.9 million non-cash impairment charge to write down the goodwill associated with the center and network reporting units. As part of the impairment, the Company recorded a deferred income tax benefit of approximately $6.0 million related to the impairment loss of goodwill. The Company's balance sheet at April 2, 2011, showed $25.8 million in total assets, $51.5 million in total liabilities, and a stockholders' deficit of $25.7 million. A copy of the Form 10-Q is available at http://is.gd/i2cMsY About HearUSA HearUSA, Inc., which sells hearing aids in 10 states, filed for Chapter 11 bankruptcy protection (Bankr. S.D. Fla. Case No. 11-23341) on May 16, 2011, to sell the business for $80 million to William Demant Holdings A/S. The Debtor said that assets are $65.6 million against debt of $64.7 million as of March 31, 2010. HearUSA owes $31.3 million to Siemens Hearing Instruments Inc., the principal supplier and primary secured lender. As of April 2, 2011, the Debtor had a network of 172 company-owned hearing care centers in eleven states, including HEARx West centers in California. Judge Erik P. Kimball presides over the case. Brian K. Gart, Esq., Paul Steven Singerman, Esq., and Debi Evans Galler, Esq., at Berger Singerman, P.A., represent the Debtor. The Debtor has tapped Bryan Cave LLP as special counsel; Sonenshine Partners LLC, investment banker; Development Specialist Inc., restructuring advisor ans Joseph J. Luzinski as chief restructuring officer; and AlixPartners LLC, as communications consultant. Trustee Services, Inc., serves as claims and notice agent. The Official Committee of Unsecured Creditors was appointed on May 25, 2011. Robert Paul Charbonneau and the law firm of Ehrenstein Charbonneau Calderin represents the Committee. HILL DAIRY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Hill Dairy, LLC 1290 N. Shoop Avenue, Suite 140 Wauseon, OH 43567 Bankruptcy Case No.: 11-12469 Chapter 11 Petition Date: June 27, 2011 Court: U.S. Bankruptcy Court Northern District of Indiana (Fort Wayne Division) Judge: Robert E. Grant Debtor's Counsel: Daniel J. Skekloff, Esq. SKEKLOFF, ADELSPERGER & KLEVEN, LLP 927 South Harrison Street Fort Wayne, IN 46802 Tel: (260) 407-7000 Fax: (260) 407-7137 E-mail: djs@sak-law.com - and - Sarah Mustard Heil, Esq. SKEKLOFF, ADELSPERGER & KLEVEN, LLP 927 S. Harrison Street Fort Wayne, IN 46802 Tel: (260) 407-7000 E-mail: sheil@sak-law.com - and - Scot T. Skekloff, Esq. SKEKLOFF, ADELSPERGER & KLEVEN, LLP 927 South Harrison Street Fort Wayne, IN 46802 Tel: (260) 407-7000 Fax: (260) 407-7137 E-mail: sts@sak-law.com Estimated Assets: $50,001 to $100,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at: http://bankrupt.com/misc/innb11-12469.pdf The petition was signed by W. H. M. van Bakel, interim manager. Debtor-affiliate filing separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Four-Leaf Clover Dairy, LLC 10-13574 08/11/10 HOVNANIAN ENTERPRISES: S&P Cuts CCR to 'CCC'; Outlook Negative -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Hovnanian Enterprises Inc. and its K. Hovnanian Enterprises Inc. subsidiary to 'CCC' from 'CCC+'. "We also lowered our ratings on the companies' rated senior debt. We downgraded the first-lien senior secured notes to 'CCC' from 'CCC+' and downgraded the senior unsecured and senior subordinated notes to 'CC' from 'CCC-'. The '3' recovery rating on the first-lien notes and the '6' recovery rating on the senior unsecured and senior subordinated notes is unchanged. We affirmed our 'C' rating on the preferred securities and we withdrew our ratings on the second- and third-lien senior secured notes because the company repaid these notes," S&P related. "The downgrade was driven by Hovnanian's declining cash position as the company invests in land and new communities as a way to bolster gross profits," said credit analyst George Skoufis. "We also believe the housing recovery will be weaker and more protracted than we previously expected. As a result, the company will be challenged to ultimately address its highly leveraged balance sheet if it does not begin to improve profitability." "The negative outlook reflects the company's constrained liquidity and our view that Hovnanian's cash position will diminish if the company continues investing in new land while demand remains low and the company continues generating losses. We will lower our ratings further if housing operations continue to burn cash and the company cannot raise additional capital or we believe another distressed debt exchange is likely. We would consider raising our ratings on Hovnanian if housing demand strengthens such that volume levels grow to support the company moving toward profitability, which would better position Hovnanian to ultimately recapitalize its balance sheet," S&P stated. JACKSON GREEN: Returns to Ch. 11; Lender Wants Case Dismissed ------------------------------------------------------------- Jackson Green LLC, the Minocqua, Wisconsin-based owner of a commercial building and parking lot in Chicago, has filed for Chapter 11 protection (Bankr. W.D. Wisc. Case No. 11-14038) in Eau Claire, Wisconsin, on June 23, 2011. Wells Fargo Bank NA immediately filed a motion to dismiss the new reorganization, just a day after the Chapter 11 filing. Jackson Green first sought Chapter 11 protection in 2009 and emerged from bankruptcy in May the next year. The prior plan essentially reinstated almost $20 million in debt owing to Wells Fargo Bank, as agent for the secured lender in a securitization. The bank, in its motion to dismiss the new case, said the reorganized debt was in default and the owner filed bankruptcy again one day before a hearing in state court to appoint a receiver to take over the property pending foreclosure. Wells Fargo cited the prior Chapter 11 plan, which said the bank could foreclose were there another default on the debt. A hearing date hasn't been set as yet for the bank's dismissal motion. JCK HOTELS: Files Schedules of Assets and Liabilities ----------------------------------------------------- JCK Hotels, LLC, filed with the U.S. Bankruptcy Court for the Southern District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $18,000,000 B. Personal Property $1,611,552 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $14,590,918 E. Creditors Holding Unsecured Priority Claims $44,119 F. Creditors Holding Unsecured Non-priority Claims $339,042 ----------- ----------- TOTAL $19,611,552 $14,974,079 JCK Hotels, LLC, fka Mira Mesa Hotels, LLC, operates the Holiday Inn Express Mira Mesa Hotel and the Comfort Suites Mira Mesa Hotel in San Diego, California. The Hotels are operated under licensing and franchise agreements with Holiday Inn Express and Comfort Suites. JCK Hotels filed for Chapter 11 bankruptcy (Bankr. S.D. Calif. Case No. 11-09428) on June 3, 2011. Judge Louise DeCarl Adler presides over the case. William M. Rathbone, Esq., at Gordon & Rees LLP, serves as bankruptcy counsel. While no formal appraisal has been done recently, the Debtor believes the fair market value of both Hotels exceeds $18 million. The petition was signed by Charles Jung, managing member. JER INVESTORS: May Have to File for Ch. 7 or Ch. 11 Bankruptcy -------------------------------------------------------------- Jonathan O'Connell at the Washington Post Capital Business reports that JER Investors Trust, its stock already trading at less than a dime, said in a company update and review of its business in 2010 that it may have to file for bankruptcy protection. According to the report, JER Investors Trust is managed by an affiliate of JER Partners, the private commercial real estate Mr. investment management company founded by Joseph E. Robert Jr. Robert, who built a fortune in Washington real estate in the early 1990s, is executive chairman of JER Partners and chief executive and chairman of the board at JER Investors Trust. The report says, if JER Investors Trust remains unable to make payments, the statement read, "the company may have to negotiate a settlement with such creditors, recapitalize, refinance its obligations, sell some or all of its assets at prices below current estimated fair value or seek to reorganize under Chapter 11 or liquidate under Chapter 7 of the United States Bankruptcy Code." Mr. O'Connell says the problems stem from being short on cash and defaulting on loan payments related to bets on commercial real estate, including defaults on a number of debts related to complex financial instruments and commercial mortgage-backed securities, such as interest rate swap obligations and collateralized debt obligations. The firm's unrestricted cash balance dwindled from $1.7 million at the end of 2010 to $1.4 million on May 31 of this year and the company's stock, which traded at over $200 a share through 2007, closed June 30 trading at $0.07, notes Mr. O'Connell. JER Investors is a publicly traded firm founded in McLean in 2004. JOHNSON COUNTY: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Johnson County Gas Company, Inc. P.O. Box 339 Harold, KY 41635 Bankruptcy Case No.: 11-70410 Chapter 11 Petition Date: June 27, 2011 Court: U.S. Bankruptcy Court Eastern District of Kentucky (Pikeville) Judge: Joseph M. Scott Jr. Debtor's Counsel: W. Thomas Bunch, II, Esq. BUNCH & BROCK, ATTORNEYS-AT-LAW 271 West Short Street, Suite 805 P.O. Box 2086 Lexington, KY 40588-2086 Tel: (859) 254-5522 E-mail: tom@bunchlaw.com Scheduled Assets: $207,112 Scheduled Debts: $2,450,685 A list of the Company's six largest unsecured creditors filed together with the petition is available for free at: http://bankrupt.com/misc/kyeb11-70410.pdf The petition was signed by Bud Rife, president. KB HOME: S&P Affirms 'B+' Corp. Credit Rating; Outlook Negative --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Los Angeles-based KB Home to negative from stable. "We affirmed our 'B+' corporate credit rating and our 'B+' ratings on roughly $1.6 billion of senior unsecured notes. The recovery rating is unchanged at '4'," S&P said. "The outlook revision to negative reflects the risk that the cash settlement, a pending maturity, and working capital needs could constrain the homebuilder's financial flexibility," said credit analyst James Fielding. "Our ratings on KB Home reflect large accumulated losses in recent years that eroded shareholder equity and contributed to the homebuilder's current highly leveraged financial profile. Our fair business risk assessment reflects our view that KB Home's solid market position in certain key metropolitan areas and its well- designed entry level homes are long-term competitive advantages over other homebuilders. However, we expect that the company's narrow focus on the currently credit-constrained first-time homebuyer will temper sales growth in the near term-despite its aggressive drive to open new communities." Outlook "Our negative outlook reflects the risk that the South Edge LLC joint venture cash settlement, the August 2011 debt maturity, and working capital needs including community opening costs could constrain the homebuilder's financial flexibility. We would lower our rating on KB Home by one notch if the company is unable to access additional liquidity sources or if it uses cash for community expansions such that it ends the fiscal year with less than $500 million of unrestricted cash," S&P said. KIK CUSTOM: Moody's Affirms 'Caa1' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service affirmed KIK Custom Products, Inc.'s Caa1 Corporate Family Rating and Probability of Default Rating and assigned a B2 rating on the company's $80 million senior secured first lien term loan add-on due 2014. Proceeds of the upsized credit facility will be used to fund the company's acquisition of Chem Lab Products, Inc., a manufacturer of branded and private label swimming pool chemical and cleaning products and accessories under the Kem Tek brand name. The outlook remains stable. The affirmation of the company's Caa1 rating reflects its still high levels of debt and slow pace of deleveraging. While the acquisition of Chem Lab provides some critical, higher margined product diversification, the company's operating performance and credit metrics are likely to be challenged in the near term due to escalating raw material costs and the uncertainty surrounding pricing flexibility given a formidable branded competitor and price conscious consumer. Although earnings improvements from a series of company-wide restructuring initiatives and better product mix under its Custom division could partially offset the effects of input cost inflation, Moody's anticipates that credit metrics will likely deteriorate in the next twelve months. RATINGS RATIONALE KIK's Caa1 rating is driven by its high leverage of over 7.7 times (for the LTM period ending April 2, 2011), its participation in the highly competitive bleach segment, and its relatively weak pricing flexibility due to the presence of a significantly larger, better resourced branded competitor. Despite the less discretionary nature of many of its products, revenue growth may be more challenging and profit margins will likely decline as raw material costs remain high and U.S. economy remains challenged. Moreover, restructuring costs from efficiency initiatives and the closing of facilities could materially affect profitability in the short term. Notwithstanding these concerns, the rating is supported by the company's approximately 30% share of the domestic retail bleach market, its position as the largest contract manufacturer for major consumer product companies, a diverse customer base, the vertical integration of its bleach manufacturing facilities, the relative stability of its end markets, and significant barriers to entry, enhanced by a non- compete agreement with private-label competitors. "We believe that the acquisition is reasonably priced, fits well with KIK's existing product portfolio and represents an opportunity to expand Chem Lab's product distribution nationwide," says Moody's Vice President and Senior Credit Officer Janice Hofferber. With operating margins well above KIK's core business at approximately 15%, Moody's does not expect the acquisition to add to company's already high leverage. "Despite the benefits provided by the acquisition, cost pressure and slower revenue growth in KIK's core bleach business will materially impact credit metrics such that leverage will likely approach 9.0 times in the next twelve months," adds Ms. Hofferber. A significant deterioration in operating performance, demonstrated by volume declines and margin contraction such that debt-to-EBITDA approaches 10 times or free cash flow turns negative, could lead to a downgrade. A materially negative change in the company's liquidity profile, including reduced financial covenant cushion, could also lead to a downgrade. An upgrade for KIK could be merited once the company proves its ability to generate sustainable positive free cash flow and reduce leverage well below 9.0 times, signifying a sustainable capital structure. These ratings were assigned: -- $80 million senior secured first lien term loan add-on due May 2014 at B2 (LGD3, 32%) These ratings of KIK were affirmed/LGD assessments revised: -- Corporate Family Rating of Caa1; -- Probability of Default Rating of Caa1; -- $55 million senior secured revolving credit facility due May 2013 at B2 (LGD3, 32%); -- $396 million first lien senior secured term loan due May 2014 at B2 (LGD3, 32%); and -- $235 million second lien senior secured term loan due November 2014 at Caa2 (LGD5, 79%). The principal methodology used in rating KIK Custom Products, Inc. was the Global Packaged Goods Industry Methodology, published July 2009. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. Headquartered in Ontario, Canada, KIK Custom Products Inc. manufactures a variety of household cleaning, personal care, over- the-counter and prescription drug product lines. The private label bleach business manufactures retail-branded bleach and other household liquid cleaners for a wide variety of supermarket companies and other mass merchandisers, while the contract manufacturing business primarily produces aerosol and liquid products for leading branded consumer product companies. The company established operations in 1991 as a supplier of retailer branded bleach to large retailers including Wal-Mart, but expanded through acquisitions. The 2005 acquisitions of CCL Custom Manufacturing and APG Group were platforms for expansion into contract manufacturing. KIK is wholly-owned by entities controlled by Caxton-Iseman, L.P. and Caxton-Iseman II, L.P. The company reported sales of approximately $1.2 billion for the twelve month period ended April 2, 2011. LAS VEGAS MONORAIL: Heading for Sept. 14 Confirmation ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Bankruptcy Court for the District of Nevada will convene a hearing Sept. 14 to consider confirmation of the Chapter 11 plan of Las Vegas Monorail Co. The confirmation hearing will continue Sept. 16 and 19, if needed. At the June 29 hearing, the bankruptcy judge in Las Vegas said he would approve the disclosure statement when changes are made, according to the report. The Plan provides for these terms: * Unsecured creditors, with claims totaling as much as $175,000, are to be paid, in installments over a year, the lesser of (i) 100% of their allowed claims or (ii) pro rata share of $175,000. * Holders of $500 million in first-lien bonds would receive (i) $15 million in new 10% first-lien notes to mature in June 2019 (under which Monorail can elect to pay interest with more notes through 2014); and (ii) $19.5 million in second-lien notes to mature in June 2019. For their unsecured deficiency claim, the first-lien bondholders are in a separate class that would receive $10 million in third-lien notes that likewise pay interest with more debt. * Holders of $158.7 million in second-tier bonds and $48.5 million in third-tier bonds receive nothing in the plan. A full-text copy of the proposed Disclosure Statement accompanying the Third Amended Plan filed prior to the June 29 hearing is available for free at: http://ResearchArchives.com/t/s?7654 About Las Vegas Monorail Las Vegas, Nevada-based Las Vegas Monorail Company, organized by the State of Nevada in 2000 as a nonprofit corporation, owns and manages the Las Vegas Monorail. The Monorail is a seven-stop, elevated train system that travels along a 3.9-mile route near the Las Vegas Strip. LVMC has contracted with Bombardier Transit Corporation to operate the Monorail. Though it benefits from its tax-exempt status due to being a nonprofit entity, LVMC claims to be the first privately-owned public transportation system in the nation to be funded solely by fares and advertising. LVMC says it receives no governmental financial support or subsidies. The Company filed for Chapter 11 bankruptcy protection (Bankr. D. Nev. Case No. 10-10464) on Jan. 13, 2010. Gerald M. Gordon, Esq., at Gordon Silver, assists the Company in its restructuring effort. Alvarez & Marsal North America, LLC, is the Debtor's financial advisor. Stradling Yocca Carlson & Rauth is the Debtor's special bond counsel. Jones Vargas is the Debtor's special corporate counsel. The Company disclosed $395,959,764 in assets and $769,515,450 in liabilities as of the Petition Date. In May 2010, Ambac Assurance Corp. lost its bid to stay the bankruptcy case while a district court considers whether the bankruptcy court wrongly rejected Ambac's argument that Monorail was a municipality and thus ineligible to be a Chapter 11 debtor. LEHMAN BROTHERS: Proposes to Implement Claim Determination Process ------------------------------------------------------------------ Lehman Brothers Holdings Inc. seeks court approval anew to implement a process to determine the allowed amount of more than 21,000 proofs of claim for the purpose of voting and distribution under its new Chapter 11 plan. The claims totaling $55 billion are all based on structured securities either issued or guaranteed by LBHI. A list of these claims is available for free at: http://bankrupt.com/misc/LBHI_SSClaims.pdf Prior to its bankruptcy, LBHI and its foreign affiliates issued about 5,000 securities with a notional amount of more than $40 billion to investors. Many of these securities were reportedly complex structured notes which provide that the return to the investors at maturity or the payment of periodic interest is linked to the performance of an underlying asset or group of assets. Because the structured securities generally do not have indenture trustees, it is the record holders and beneficial holders who are responsible for filing proofs of claim based on those securities. LBHI's lawyer, Alfredo Perez, Esq., at Weil Gotshal & Manges LLP, in Houston, Texas, says the proposed process would ease the administration of the proofs of claim without affecting the rights of any claimant to dispute the company's proposed allowed claim amounts. Mr. Perez further says that the approval of the proposed process is a central component of the settlement contemplated in LBHI's new Chapter 11 plan and is a condition to its confirmation. A full-text copy of the proposed order detailing the securities claim determination process is available without charge at: http://bankrupt.com/misc/LBHI_ClaimsProcess.pdf The Court will hold a hearing on July 20, 2011, to consider approval of the proposed procedures. The deadline for filing objections is July 13, 2011. 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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 Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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: To Terminate U.S. Bank Derivative Contracts ------------------------------------------------------------ Lehman Brothers Holdings Inc. seeks court approval to terminate or reject its derivatives contracts with special purpose vehicles and trusts administered by U.S. Bank National Association. LBHI proposed to terminate or reject the contracts to fix the amount owed by the company and Lehman Brothers Special Financing Inc. under those contracts and limit any increase in damages that could be claimed by the trusts, according to its lawyer, Robert Lemons, Esq., at Weil Gotshal & Manges LLP, in New York. Mr. Lemons further says the derivatives contracts with the trusts "can never move in-the-money" to the Lehman units and some of them have "extremely long maturities." A list of the derivatives contracts is available for free at: http://bankrupt.com/misc/LBHI_TerminatedDC.pdf http://bankrupt.com/misc/LBHI_RejectedDC.pdf LBHI also asks Judge James Peck to authorize the company to settle the amounts due under those derivatives contracts that will be terminated and to issue an order allowing the claim for damages under the rejected contract. The amounts to be settled under the terminated contracts have reportedly been reviewed and agreed to by the Official Committee of Unsecured Creditors. Meanwhile, the amount of claim for damages has been reviewed and determined to be fair to the trust by an independent third party valuation agent hired by U.S. Bank, according to Robert Hershan, managing director at Alvarez & Marsal North America LLC. The Court will hold a hearing on July 20, 2011, to consider approval of the request. The deadline for filing objections is July 13, 2011. 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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 Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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 Seeks Confirmation on TBA Claims ------------------------------------------------------------- James W. Giddens, as trustee for the liquidation of the business of Lehman Brothers Inc. under the Securities Investor Protection Act of 1970, asks the Court to confirm his determination that claims related to unperformed forward contracts for the future purchase or sale of "to be announced" U.S. agency debt obligations are not customer claims under SIPA. TBA Contracts are agreements in which parties promise to buy or sell at a future date "to be announced" debt obligations of the three U.S. government-sponsored agencies that issue or guarantee mortgage-backed securities. TBA Contracts are not traded on any securities or commodities exchange or registered with the U.S. Securities and Exchange Commission. Rather, they are bilateral agreements between arms-length counterparties, frequently memorialized in an industry-standard contract, the Master Securities Forward Transaction Agreement. The Trustee denied customer treatment under SIPA and reclassified as general creditor all damage claims arising from LBI's breach of open TBA Contracts, James B. Kobak, Jr., Esq., at Hughes Hubbard & Reed LLP, in New York, tells the Court. Mr. Kobak asserts that the Trustee's determinations should be confirmed for these reasons: (1) The TBA Claimants did not "entrust" cash or securities to LBI but merely exchanged promises to purchase or sell in the future; because no securities were "received, acquired or held" by LBI and no cash was deposited for the purchase of securities, the TBA Claimants lack essential elements of customer status under SIPA; (2) SIPA's legislative history shows that Congress considered and rejected a proposal to bring claims based on executor contracts, like the TBA Contracts in issue, within SIPA's definition of customer claims; (3) Even if SIPA's customer definition were met, established Second Circuit law holds that customer status must be denied where indicia of a fiduciary relationship did not exist; -- the relationship of the parties was contractual in nature and lacked the "usual fiduciary relationship" between a broker and its public customer; indeed, where applicable, the MSFTA actually disclaims any fiduciary relationship and contains other features that have been identified by the Second Circuit as inconsistent with SIPA customer status; (4) The Rule 15c3-3 of the Securities and Exchange Act -- Customer Protection Rule -- mandates segregated custody of customer securities and special cash reserves for LBI's customer obligations, but does not require that any property be set aside for obligations under open TBA Contracts, and no property was in fact set aside by LBI to cover those obligations; -- accordingly, if the TBA Claims are deemed customer claims, property set aside for actual fiduciary customers of LBI under SEC rules will go instead to pay damages arising from LBI's breach of TBA Contracts; -- this outcome would be inequitable and unjust, and would defeat the purposes of SIPA and the SEC's Customer Protection Rule. Objections to the Trustee's TBA claim determinations form the most numerous category of disputed customer claims, representing more than 649 claiming entities and thousands of contracts, according to Mr. Kobak. The Motion, he says, presents a factual record based on four TBA Claims asserted by three prominent asset management firms that are representative of this large group and provide a sound basis to address the Trustee's legal determination that claims based on open TBA Contracts are not customer claims under SIPA. These three asset management firms, acting as agent for their account holders, assert the Representative Claims as well as 241 of the other disputed TBA Claims. A full-text copy of the Motion with the schedule of affected claims is available for free at: http://ResearchArchives.com/t/s?765e Four professionals filed declarations in support of the LBI Trustee's Motion for Determination: * Daniel T. McIsaac, a director with KPMG LLP, said the Customer Protection Rule did not required LBI to set aside any reserves or segregate any securities corresponding to LBI obligations under open Contracts prior to their Settlement Date. * William Burke, a consultant to the LBI Trustee, related that it was not the practice of LBI to reserve any cash or to maintain possession or control of securities corresponding to LBI's obligations under open TBA Contracts for purposes of the Customer Protection Rule. He said that, as of Sept. 19, 2008, no cash was reserved and no securities were held under Rule 15c3-e by LBI with respect to obligations under open TBA Contracts. * Tracy Smith, a consultant to LBI Trustee, explained the relevant LBI information systems and research into LBI books and records relating to the Representative Claimants' TBA Contracts and accounts. * Anson B. Frelinghuysen, an attorney at Hughes Hubbard & Reed LLP, whose declaration included documents relevant to the Determination Motion. The LBI Trustee sought permission from the Court to file under seal certain exhibits in the Smith and Frelinghuysen Declarations. 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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 Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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: Seeks Changes to Asset Disposal Process -------------------------------------------------------- Lehman Brothers Holdings Inc. seeks a court order approving changes to the process governing the company's various transactions in connection with its real estate investments. To recall, the U.S. Bankruptcy Court for the Southern District of New York authorized the company and its affiliated debtors on June 17, 2010, to follow certain procedures in disposing their real estate assets and in making new or additional debt and equity investments. LBHI specifically asks for approval to expend funds in connection with any real estate investments without the need to provide notice to any party or get court approval for these purposes: (i) ordinary course expenses required for the operation and management of a property or loan including real estate taxes and insurance premium payments; and (ii) protective advances to cure a superior loan default in an amount up to and including $5 million, and for non- discretionary or emergency property related purposes. The proposed changes, if approved, will not require the company to get court approval for new investments of more than $5 million but less than or equal to $25 million in connection with real estate investments of more than $100 million. Instead, those new investments will be subject to the approval and objection rights of the Official Committee of Unsecured Creditors in accordance with the procedures. LBHI will also continue to file a quarterly report of all new investments. However, instead of identifying the value of the real estate investment underlying each new investment, the company will provide a range of values corresponding to the thresholds in the procedures under which the value of the real estate investment falls. Jacqueline Marcus, Esq., at Weil Gotshal & Manges LLP, in New York, says that contrary to what the ad hoc group of Lehman Brothers creditors asserts, the proposed changes to the reporting requirements won't reduce the disclosures required of the company. She points out that they will merely replace one informational metric with an alternative measure. The ad hoc group opposes the proposed changes out of concern that the disclosures to be made will be reduced as LBHI will no longer be required to identify the value of the real estate investment. Ms. Marcus also says the changes to the reporting requirements are limited and maintain the same level of transparency as those approved by the Court in its prior order. The Creditors' Committee supports the approval of the proposed changes to the procedures, saying it will "better preserve the value of the real estate investments." 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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 Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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: Wins Approval for Urbanism Sharing Agreement ------------------------------------------------------------- On November 17, 2005, Lehman Brothers Holdings Inc. and Gables Marquis, L.L.C., entered into a construction loan agreement, pursuant to which LBHI agreed to make a loan to Gables Marquis for the construction of a condominium project. Gables defaulted on the Gables Loan, and LBHI has declared the full amount remaining due under the Gables Loan due and payable. In February 2008, Urbanism-Coral Way, LLC, the initial seller of the land to Gables Marquis, filed a lawsuit against Gables Marquis and LBHI in the Florida State Court alleging that, among other things, Gables Marquis owes Urbanism a payment of $1 million as deferred purchase price for the land. Urbanism sought to establish and foreclose upon a priority equitable lien, in the amount of $1 million, against certain condominium units in the Gables Project. Soon thereafter, LBHI filed a separate action against Gables Marquis, Urbanism and other parties-in-interest in the Florida State Court seeking to foreclose on its mortgage against the Gables Project. The Foreclosure Action currently is pending. Prior to the Petition Date, LBHI and Urbanism resolved their issues by executing a settlement agreement. LBHI agreed to pay Urbanism $150,000, and Urbanism agreed to withdraw the Urbanism Litigation with prejudice and consent to the Foreclosure Action. As part of the Settlement Agreement, the Parties agreed to enter into a sharing agreement to share the net proceeds of sales of certain condominium units to the extent the buyers of the units were procured by Urbanism. Before the Petition Date, LBHI made the Settlement Payment, Urbanism withdrew the Urbanism Litigation with prejudice, and Urbanism filed a notice of consent to the Foreclosure Action. Although the Parties had finalized the terms of an initial sharing agreement, they did not execute the Initial Sharing Agreement prepetition. Since the Petition Date, LBHI has continued to prosecute the Foreclosure Action. Urbanism has alleged that LBHI has defaulted on the Settlement Agreement by failing to execute the Initial Sharing Agreement and has sought to withdraw its consent to the Foreclosure Action. Urbanism has also filed a motion in the Foreclosure Action to impose an equitable lien, for $150,000, based on an alleged failure of LBHI to close a sale of a condominium unit to a potential purchaser procured by Urbanism. LBHI has challenged the merits of these filings. LBHI and Urbanism have agreed to a settlement of their dispute, which is to be effected primarily through LBHI's assumption of the Settlement Agreement. To cure the default under the Settlement Agreement, LBHI proposes to enter into a revised version of the Initial Sharing Agreement with Urbanism. Consistent with its approach to dealing with foreclosures, LBHI proposes to assign its interests in the Agreements as well as the expected foreclosure judgment to FL 3232 Coral Way LLC, a non- debtor special purpose entity wholly owned indirectly by LBHI. Urbanism has alleged that the Gables Project is encroaching on land owned by Urbanism. The Alleged Encroachment dispute is currently between Urbanism and the Gables Receiver. If Coral Way takes title to the Gables Project, however, it may need to resolve the Alleged Encroachment. Accordingly, sought and obtained authority to: (a) assume the Settlement Agreement and assign its interests therein to Coral Way; and (b) enter into the Sharing Agreement with Urbanism. LBHI also seeks authority, if necessary, for LBHI or Coral Way, as applicable, to resolve the Alleged Encroachment, provided that any payment by LBHI or Coral Way to resolve the Alleged Encroachment will be subject to approval from the Official Committee of Unsecured Creditors, upon reasonable notice, if the payment has not been authorized by any other order of the Court. Given the expense, delay and risks attendant to litigating these matters, LBHI believes that its proposed transactions represent its best opportunity to maximize recoveries from its interests in the Gables Property for its bankruptcy estate and creditors. Proposed Transactions Jacqueline Marcus, Esq., at Weil Gotshal & Manges LLP, in New York, contends that the Proposed Transactions will (i) enable LBHI to benefit from the terms of the Settlement Agreement, (ii) resolve the Urbanism Equitable Liens, and (iii) permit LBHI to proceed with the Foreclosure Action. The salient terms of the Proposed Transactions are: -- Assumption of the Settlement Agreement; -- Entry into the Sharing Agreement; -- Transfer of Foreclosure Judgment to Coral Way; and -- Assignment of the Agreements to Coral Way. LBHI will assign all of its rights and interests in the Agreements to Coral Way. Upon the assignments, LBHI will be released of any and all obligations under the Agreements. 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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 Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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) LEVEL 3: John Griffin Discloses 4.88% Equity Stake -------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, John A. Griffin and his affiliates disclosed that they beneficially own 83,164,130 shares of common stock of Level 3 Communications, Inc., representing 4.88% of the shares outstanding. A full-text copy of the filing is available for free at http://is.gd/V5IJq7 About Level 3 Communications Headquartered in Broomfield, Colorado, Level 3 Communications, Inc., is a publicly traded international communications company with one of the world's largest communications and Internet backbones. Level 3 Communications carries a 'Caa1' corporate family rating, and 'Caa2' probability of default rating, with negative outlook from Moody's, a 'B-' issuer default rating from Fitch, and 'B-' long term issuer credit ratings from Standard & Poor's. The Company's balance sheet at March 31, 2011, showed $8.80 billion in total assets, $9.06 billion in total liabilities, and a $265 million total stockholders' deficit. LOS ANGELES DODGERS: Organizational Meeting on July 13 ------------------------------------------------------ Roberta DeAngelis, United States Trustee for Region 3, held an organizational meeting on July 11, 2011, at 1:00 p.m. in the bankruptcy case of Los Angeles Dodgers LLC., et al. The meeting will be held at: DoubleTree Hotel Wilmington 700 N. King Street Wilmington, DE 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 the Los Angeles Dodgers Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a professional Major League Baseball club in the Los Angeles metropolitan area. Frank McCourt, a Boston real-estate developer who unsuccessfully bid for the Boston Red Sox, bought the Dodgers from Rupert Murdoch's Fox Entertainment Group, Inc. in 2004 for $330 million. Mr. McCourt also bought the Dodgers Stadium from Fox for $100 million. Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB Commissioner Bud Selig rejected a television deal with News Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for June 30 and July 1. Fox Sports has exclusive cable television rights for Dodgers games until the end of 2013 baseball season. Chapter 11 filings were also made for LA Real Estate LLC, an affiliated entity which owns Dodger Stadium, and three other related holding companies. The petition estimates assets of up to $500 million and debts of up to $1 billion. According to Forbes, the team is worth about $800 million, making it the third most valuable baseball team after the New York Yankees and the Boston Red Sox. Judge Kevin Gross presides over the case. lawyers at Young, Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the Debtors' bankruptcy counsel. The LA Dodgers is the 12th sports team in North America to have sought bankruptcy protection, according to The Wall Street Journal. LOS ANGELES DODGERS: MLB Takeover Inevitable, Attorneys Say ----------------------------------------------------------- Evan Weinberger at Bankruptcy Law360 reports that the Los Angeles Dodgers' bankruptcy filing is widely seen as a desperate move to keep Major League Baseball from taking over the team, but attorneys said the ploy will simply delay the inevitable once the team exits bankruptcy protection. "While the Dodgers are in bankruptcy, MLB's powers are going to be circumscribed," Law360 quotes Douglas Furth, a bankruptcy partner at Golenbock Eiseman Assor Bell & Peskoe LLP, as saying. "But the Dodgers can't stay in bankruptcy forever." About the Los Angeles Dodgers Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a professional Major League Baseball club in the Los Angeles metropolitan area. Frank McCourt, a Boston real-estate developer who unsuccessfully bid for the Boston Red Sox, bought the Dodgers from Rupert Murdoch's Fox Entertainment Group, Inc. in 2004 for $330 million. Mr. McCourt also bought the Dodgers Stadium from Fox for $100 million. Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB Commissioner Bud Selig rejected a television deal with News Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for June 30 and July 1. Fox Sports has exclusive cable television rights for Dodgers games until the end of 2013 baseball season. Chapter 11 filings were also made for LA Real Estate LLC, an affiliated entity which owns Dodger Stadium, and three other related holding companies. The petition estimates assets of up to $500 million and debts of up to $1 billion. According to Forbes, the team is worth about $800 million, making it the third most valuable baseball team after the New York Yankees and the Boston Red Sox. Judge Kevin Gross presides over the case. lawyers at Young, Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the Debtors' bankruptcy counsel. The LA Dodgers is the 12th sports team in North America to have sought bankruptcy protection, according to The Wall Street Journal. LOS ANGELES DODGERS: Warns Monitor Not to Interfere With Team ------------------------------------------------------------- The Los Angeles Dodgers professional baseball club wrote a letter to the monitor appointed by Major League Baseball warning that interference with operations of the team would constitute a violation of a portion of bankruptcy law known as the automatic stay, Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported, citing a person familiar with the document. The MLB commissioner appointed the monitor before the team's bankruptcy to manage business affairs. The commissioner has already said in a court paper that filing for bankruptcy was a violation of the monitor's management rights. Mr. Rochelle notes that the automatic stay under Section 362 of the Bankruptcy Code prohibits interference with a business in bankruptcy. Another provision, Section 543, requires a "custodian" to give up control of property after bankruptcy. In response, MLB, according to Mr. Rochelle, can point to another provision in Section 543 which permits a custodian to retain property if the interests of creditors and the team's owner "would be better served" by allowing the custodian to continue. About the Los Angeles Dodgers Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a professional Major League Baseball club in the Los Angeles metropolitan area. Frank McCourt, a Boston real-estate developer who unsuccessfully bid for the Boston Red Sox, bought the Dodgers from Rupert Murdoch's Fox Entertainment Group, Inc. in 2004 for $330 million. Mr. McCourt also bought the Dodgers Stadium from Fox for $100 million. Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB Commissioner Bud Selig rejected a television deal with News Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for June 30 and July 1. Fox Sports has exclusive cable television rights for Dodgers games until the end of 2013 baseball season. Chapter 11 filings were also made for LA Real Estate LLC, an affiliated entity which owns Dodger Stadium, and three other related holding companies. The petition estimates assets of up to $500 million and debts of up to $1 billion. According to Forbes, the team is worth about $800 million, making it the third most valuable baseball team after the New York Yankees and the Boston Red Sox. Judge Kevin Gross presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the Debtors' bankruptcy counsel. The LA Dodgers is the 12th sports team in North America to have sought bankruptcy protection, according to The Wall Street Journal. LOS ANGELES DODGERS: MLB Settlement Paved Way for $60-Mil. Loan OK ------------------------------------------------------------------ The Los Angeles Dodgers won interim approval to borrow $60 million. The loan will cover $40 million in payments the team needs to make on June 30 and July 1. Major League Baseball withdrew its opposition to the loan after changes were made. The entire loan package of $150 million will return to court for approval in July. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that before the settlement was negotiated outside the courtroom, the team was proposing a loan from Highbridge Principal Strategies LLC that carried a 10% interest rate and a $4.5 million up-front fee. The commissioner offered the same loan, with no fee and a rate 3 percentage points lower. In the settlement, a potential $4.5 million fee to the lender was reduced to $250,000, and a requirement that television rights be sold within six months was deleted. According to the report, before settling their disputes on the loan, the team and Baseball Commissioner Bud Selig laid out their opposing positions on issues that may arise in coming weeks. Where the team says Mr. Selig has a "deep-seated animus" against the owner Frank McCourt, MLB alleges that Mr. McCourt "siphoned off well over $100 million" and intends on using bankruptcy to take out "millions more to be misappropriated for his personal use." Mr. Rochelle also discloses that while the team says Mr. Selig "is eager to force a change of ownership," MLB says Mr. McCourt wants to sell "valuable future broadcast rights to pay current expenses and make significant proceeds available for personal use." By refusing before bankruptcy to approve a sale of television rights and cutting "off the debtors' financing options," the team argues that Mr. Selig gave the Dodgers "a stark choice: a distressed sale of the team to a buyer approved by the Commissioner or a bankruptcy filing." Mr. Selig signaled he may file a motion to have the Chapter 11 case dismissed. About the Los Angeles Dodgers Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a professional Major League Baseball club in the Los Angeles metropolitan area. Frank McCourt, a Boston real-estate developer who unsuccessfully bid for the Boston Red Sox, bought the Dodgers from Rupert Murdoch's Fox Entertainment Group, Inc. in 2004 for $330 million. Mr. McCourt also bought the Dodgers Stadium from Fox for $100 million. Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB Commissioner Bud Selig rejected a television deal with News Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for June 30 and July 1. Fox Sports has exclusive cable television rights for Dodgers games until the end of 2013 baseball season. Chapter 11 filings were also made for LA Real Estate LLC, an affiliated entity which owns Dodger Stadium, and three other related holding companies. The petition estimates assets of up to $500 million and debts of up to $1 billion. According to Forbes, the team is worth about $800 million, making it the third most valuable baseball team after the New York Yankees and the Boston Red Sox. Judge Kevin Gross presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the Debtors' bankruptcy counsel. The LA Dodgers is the 12th sports team in North America to have sought bankruptcy protection, according to The Wall Street Journal. LOUISVILLE SYMPHONY: Set for Aug. 15 Plan Confirmation ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Louisville Symphony Orchestra scheduled an Aug. 15 confirmation hearing for approval of the reorganization plan after a hearing on June 28 where the bankruptcy judge gave tentative approval for the explanatory disclosure statement. The revised disclosure statement is to be filed by July 15. Mr. Rochelle relates that the plan resulted from talks where the two principal lenders, JPMorgan Chase Bank NA and Fifth Third Bank, agreed to restructure the obligations owning them. New York-based JPMorgan will be paid $175,000 in satisfaction of a $270,000 claim. Unsecured creditors are to be paid 50 percent over a year. According to Dow Jones' DBR Small Caps, the Plan provides for these creditor recoveries: -- Unsecured creditors would be paid about 50 cents of every dollar they're owed over a three-year period; -- The nearly $43,500 the orchestra owes in contributions to its musicians' pension plan would be paid in full; -- Lender Chase Bank will forgive half of its $350,000 secured claim and will receive cash for the rest; -- Lender Fifth Third Bank will essentially donate funds that will be used to pay back most of its $155,000 claim; -- The Kentucky Center, whose stage the Louisville orchestra graces, will receive $2,000 a month for a year to cover lease payments. About Louisville Orchestra Based in Louisville, Kentucky, Louisville Orchestra, Inc. filed for Chapter 11 bankruptcy protection on Dec. 3, 2010 (Bankr. W.D. Ky. Case No. 10-36321). Judge David T. Stosberg presides over the case. Daniel T. Albers, Jr., Esq., Mark A. Robinson, Esq., and Robert Wagner, Esq., at Valenti Hanley & Robinson PLLC, represent the Debtor. In its schedules, Louisville Orchestra disclosed it had $412,000 in assets and $1.4 million in liabilities. LUBBOCK HOUSING: Moody's Lifts Rating on Refunding Bonds to Ba2 --------------------------------------------------------------- Moody's Investors Service has upgraded to Ba2 from Ba3 ratings on the Lubbock Housing Finance Corporation Multi-family Revenue Refunding Bonds (Las Colinas, Quail Creek and Parkridge Place Apartment projects), Series 2002 A&B and to Ba3 from B1 rating on Subordinate Series 2002C bonds. Approximately $11.22 million of aggregate debt affected. This rating action reflects continued sufficient rental revenue and strengthened debt service coverage. The stable outlook reflects Moody's expectation that the operating performance will continue to remain at the current level in the near term. All of the properties were built in 1983 and are located approximately six miles southwest of the Lubbock central business district. The neighborhood is largely residential, with development along the South Loop 289 thoroughfare. Texas Tech University is located within one to two miles of the submarket. LEGAL SECURITY: The bonds are limited obligations payable solely from the revenues, receipts and security pledged in the Trust Indenture. STRENGTHS -- Continued sufficient operating performance at the property -- Substantial excess contributions made by the owner to the reserve and replacement fund CHALLENGES -- Continued low occupancy, albeit improved from the prior year, at one of the properties -- Volatile financial performance over the past few years DETAILED CREDIT DISCUSSION The operating performance of the three properties is stabilizing based on the improved debt service coverage in FY2010. The average occupancy in 2010 at the Quail Creek and Las Colinas continues to remain high at 97% and 96%, respectively, while the occupancy at Parkridge was substantially weaker at 88%. The debt service coverage ratio (DSCR) derived from 2010 audited financial statements reflects debt service coverage of 1.62x and 1.51x for senior and subordinate debt, respectively. The increase in coverage levels is primarily attributed to an increase in revenues and a decrease in 2010 operating expenses. While the debt service coverage improved in 2010 compared with the prior year, the volatility in the operating performance of the three projects remains. The owner has been making substantial contributions to the reserve and replacement fund in excess of the Indenture requirement. Moody's considers the owner's investment in the property a strength as it improves the property's attractiveness. Moody's also recognizes this is not a requirement and the contributions cannot be counted on in the future. Outlook The revised stable outlook reflects Moody's expectation of continued adequate operating performance at the properties over the near term. What could change the rating - UP -- Continued increase in debt service coverage and stabilization of the projects. -- Improved occupancy at the Parkridge project. What could change the rating - DOWN -- Decline in the operating performance of the properties, resulting in deterioration of the debt service coverage on the bonds. The principal methodology used in this rating was Global Housing Projects, published in July 2010. MARKETING WORLDWIDE: Receives $250,000 from Sale of Debenture ------------------------------------------------------------- Marketing Worldwide Corporation entered a Securities Purchase Agreement with an accredited investor. The Company received $250,000 in gross proceeds from the sale of a $250,000 face amount Senior Convertible Debenture due July 1, 2012, and Common Stock Purchase Warrant for 6,250,000 shares. The Debenture is subject to a 16% annual interest rate, payable quarterly in arrears, with the first interest payment due on Jan. 1, 2012, and each quarter thereafter until maturity. The Company will use the proceeds for working capital. The conversion price for the Debenture is $.04 per share, subject to adjustment upon certain events. The exercise price for the Warrant is $.04 per share, subject to adjustment upon certain events. A full-text copy of the Securities Purchase Agreement is available for free at http://is.gd/UzasbZ About Marketing Worldwide Based in Howell, Michigan, Marketing Worldwide Corporation operates through the holding company structure and conducts its business operations through its wholly owned subsidiaries Colortek, Inc., and Marketing Worldwide, LLC. Marketing Worldwide, LLC, is a complete design, manufacturer and fulfillment business providing accessories for the customization of vehicles and delivers its products to large global automobile manufacturers and certain Vehicle Processing Centers primarily in North America. MWW operates in a 23,000 square foot leased building in Howell Michigan. Colortek, Inc., is a Class A Original Equipment painting facility and operates in a 46,000 square foot owned building in Baroda, which is in South Western Michigan. MWW invested approximately $2 million into this paint facility and expects the majority of its future growth to come from this business. The Company's balance sheet as of March 31, 2011, showed $1.64 million in total assets, $4.89 million in total liabilities, $3.50 million in Series A convertible preferred stock, and a stockholders' deficit of $6.75 million. As reported in the Troubled Company Reporter on Jan. 24, 2011, Marcum LLP, in New York, expressed substantial doubt about Marketing Worldwide's ability to continue as a going concern, following the Company's results for the fiscal year ended Sept. 30, 2010. The independent auditors noted that the Company has a working capital deficiency and has suffered substantial recurring losses from operations. MAYHEW CREEK: Case Summary & 5 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Mayhew Creek Development LLC 26 North Sixth Avenue, Suite 390 St Cloud, MN 56301 Bankruptcy Case No.: 11-44363 Chapter 11 Petition Date: June 27, 2011 Court: U.S. Bankruptcy Court District of Minnesota (Minneapolis) Debtor's Counsel: Sam Calvert, Esq. SAM V. CALVERT ATTORNEY AT LAW 1011 2nd Street North, Suite 107 St. Cloud, MN 56303 Tel: (320) 252-4473 Fax: (320) 229-2190 E-mail: calcloud@gmail.com Scheduled Assets: $802,000 Scheduled Debts: $1,321,341 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at: http://bankrupt.com/misc/mnb11-44363.pdf The petition was signed by Kevin Schmitz, chief manager. MERIT GROUP: Court Approves July 20 Auction for All Assets ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of South Carolina authorized The Merit Group Inc., to sell substantially all of its assets in an auction led by MG Distribution, LLC. The Debtors scheduled a July 20, auction for the assets at the the offices of McNair Law Firm, P.A., 1221 Main Street, Columbia, South Carolina. Competing bids were due July 15, at 5:00 p.m. (Eastern Time). Pursuant to a stalking horse agreement, MG Distribution agreed to purchase the Debtor's assets for approximately $46,000,000 plus other assumed liabilities plus cure amounts for leases and executory contracts to be assumed by the Debtors and assigned to the buyer (at closing or on or before Dec. 13, as to certain unexpired leases of non-residential real property). The Court authorized secured creditor Stonehenge Opportunity Fund II, L.P., to credit bid at the auction. In the Debtor's schedules, it indicated that Stonehenge's claim is $12,276,642 secured by all property of the Debtor. The Court will consider the sale of the assets to MG Distribution or the winning bidder at a hearing on July 21, at 10:00 a.m. The agreement also provides that the successful bidder is required to consummate the purchase of the assets by 11:59 p.m., on Aug. 12. If the successful bidder fails to timely consummate the purchase of the assets, the Debtors, after consultation with the Creditors' Committee and lender, Regions Bank, may designate the next highest or otherwise best qualified bid (if any), as the successful bid and the Debtors will be authorized, but not required, to consummate the sale of the assets to the qualified bidder that submitted the back-up bid by 11:59 p.m. on Sept. 1. In the event of any competing bids for the assets, resulting in MG Distribution not being the successful buyer, it will receive a breakup fee of $500,000 and expense reimbursement in the amount of up to $750,000 for reasonable documented fees, costs and expenses, to be paid at the time of the closing of the sale with such third party buyer. Morgan Joseph assisted the Debtor in marketing its assets. About Merit Group Based in Spartanburg, South Carolina, The Merit Group Inc., formerly Lancaster Distributing Company, serves as one of the leading paint sundries distributors in the United States. Its markets also include Mexico, the Caribbean Islands, Central America and South America. Merit Group filed for Chapter 11 bankruptcy protection (Bankr. D. S.C. Lead Case No. 11-03216) on May 17, 2011. Judge Helen E. Burris presides over the case. Michael M. Beal, Esq., McNair Law Firm PA, represents the Debtors. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent; and Morgan Joseph TriArtisan LLC, investment banker, and Alvarez & Marsal North America, LLC, as financial advisors. Merit Group disclosed 7,004,048 in assets and $66,609,946 in liabilities as of the Chapter 11 filing. DIP Lender Regions Bank is represented by lawyers at Nexsen Pruet Jacobs & Pollard and Parker, Hudson, Rainer & Dobbs, LLP. The U.S. Trustee has named seven members to the Official Committee of Unsecured Creditors. The Committee is represented by Cole, Schotz, Meisel, Forman & Leonard, P.A. The Committee tapped McCarthy Law Firm LLC as co-counsel, J.H. Cohn LLP as its financial advisor. MERRITT AND WALDING: Can Access Bryant Bank Cash Collateral ----------------------------------------------------------- On June 28, 2011, the U.S. Bankruptcy Court for the Southern District of Alabama granted Merritt and Walding Properties, LLP permission to use cash collateral of secured creditor Bryant Bank. Bryant Bank is owed approximately $1,267,335.25, comprised of a principal balance of $1,249,805.74, accrued interest of $16,279.51 and late charges of $1,250.00, as of the Petition Date, secured by, among other things, certain of the Debtor's personal property, and a first priority mortgage lien in the Debtor's properties located in Mobile, Alabama, and Prichard, Alabama, including all leases, rents, cash and accounts receivable, subject to Bryant's security interest (the "Collateral"). The obligations are also unconditionally guaranteed by Merritt Oil Co., Inc., Fred Raymond Walding and Richard T. Merritt. Bryant Bank's Objection In its motion to prohibit use of cash collateral, Bryant Bank told the Court that Debtor is not entitled to the use of cash collateral because: 1) the Rents are not property of the Debtor's estate under Section 541 of the Bankruptcy Code pursuant to Bryant's prepetition termination of the Debtor's revocable license to collect the Rents; and 2) the Collateral constitutes Bryant's "cash collateral" under Section 363 of the Bankruptcy Code, entitling Bryant to adequate protection under Section 361 of the Bankruptcy Code. Bryant Bank explains that under Alabama law it validly obtained title to the Rents arising out of or related to the real properties prior to the Petition Date, and therefore, such Rents are not "property of the estate", but are the property of Bryant. Bryant also contends that Debtor has failed to establish that its use of the Collateral is necessary for its continued operations or reorganization; thus, it is not permitted to use any of the Collateral unless: 1) the Court, after notice and a hearing, authorizes the Debtor to do so; and 2) Bryant is provided with adequate protection under Sections 361 and 363 of the Bankruptcy Code. The Debtor disputes these allegations, citing that: 1) if the notification of termination constitutes perfection of Bryant Bank's lien on the Rents, then the same is a preferential transfer voidable under Section 547 of the Bankruptcy Code, and 2) Bryant Bank has failed to perfect its lien against the rents. The final hearing on the motion is scheduled for July 26, 2011, at 8:30 a.m. In its motion to use cash collateral, Debtor said it needs to use cash collateral to continue its operations, to pay adequate protection payments, and to accumulate funds to fund its future plan of reorganization. Debtor proposes to to provide the following as adequate protection of Bryant Bank's lien position: a. Bryant Bank will have a perfected lien position on the postpetition rentals derived by Debtor from the Property to secure payment of the indebtedness owed it. b. Debtor will pay as adequate protection payments, the amount of $9,000.00 per month, which shall include payment toward all required escrow payments, if any. c. Debtor will comply with all of the other terms and conditions of the note, mortgage, and assignment of rents with respect to the Property. About Merritt and Walding Properties Merritt and Walding Properties, LLP, in Pt. Clear, Alabama, filed for Chapter 11 bankruptcy (Bankr. S.D. Ala. Case No. 11-02322) on June 10, 2011. Irvin Grodsky, P.C., serves as the Debtor's bankruptcy counsel. In its petition, the Debtor estimated assets and debts of $10 million to $50 million. The petition was signed by Richard T. Merritt and R. Fred Walding, as general partners. An affiliate of the debtor, Richard T. Merritt (Bankr. S.D. Ala. Case No. 11-00380) filed for bankruptcy on Feb. 1, 2011. An Official Committee of Unsecured Creditors has not been appointed. Bryant Bank is represented by: Jayna Partain Lamar, Esq. J. Leland Murphree, Esq. Guy C. Oswalt, III, Esq. MAYNARD, COOPER & GALE, P.C. 3 South Royal Street, 3rd Floor Mobile, AL 36602 MERUELO MADDUX: Shareholders' Competing Plan Approved ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Meruelo Maddux Properties Inc. is being taken over under a Chapter 11 plan originally proposed by shareholders Charlestown Capital Advisors LLC and Hartland Asset Management Corp. Mr. Rochelle relates that in approving the shareholder plan in a confirmation order last week, the bankruptcy judge in Woodland Hills, California, rebuffed the company's own reorganization plan. A plan proposed by lenders Legendary Investors Group No. 1 LLC and East West Bank was withdrawn. In the fight for control, where creditors had the ability to vote on three plans, Meruelo Maddux said it had incurred $17 million in professional costs. The confirmation hearings began in January after the court allowed the filing of competing plan in May 2010. About Meruelo Maddux Meruelo Maddux and its affiliates filed for Chapter 11 protection (Bankr. C.D. Calif. Lead Case No. 09-13356) on March 26, 2009. John N. Tedford, IV, Esq., and Enid M. Colson, Esq., at Danning Gill, Diamond & Kollitz, LLP, in Los Angeles, represent the Debtors in their restructuring effort. The Debtors' financial condition as of Dec. 31, 2008, showed $681,769,000 in assets and $342,022,000 of debts. FTI Consulting, Inc., serves as the Debtors' financial advisors, Ernst & Young as independent auditors and tax advisors, DLA Piper LLP (US) as special securities and litigation counsel, and Waldron & Associates, Inc. as real estate appraiser. The U.S. Trustee has appointed an official committee of unsecured creditors and a separate official shareholders' committee in the case. SulmeyerKupetz, APC, serves as the Creditors Committee's counsel and Kibel Green, Inc., as its financial advisor. The equity committee has sought to retain Ron Orr & Professionals, Inc., Rodiger Law Office, and Jenner & Block as counsel, and Kibel Green, Inc. as its financial advisor. The Debtors; Legendary Investors Group No. 1, LLC, and East West Bank; and Charlestown Capital Advisors, LLC and Hartland Asset Management Corporation have proposed rival reorganization plans in the case. In mid-January 2011, the Debtors struck a deal with the Legendary Group to drop the group's competing plan. The Debtors have hired Kurtzman Carson Consultants as solicitation and balloting agent. Legendary Investors Group No. 1, LLC, is represented in the case by Jeremy V. Richards, Esq., and Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP; and Surjit P. Soni, Esq., at The Soni Law Firm. East West Bank is represented by Curtis C. Jung, Esq., and Monica H. Lin, Esq., at Jung & Yuen, LLP, and Elmer Dean Martin III, Esq. Charlestown Capital Advisors, LLC and Hartland Asset Management Corporation are represented in the case by Christopher E. Prince, Esq., Matthew A. Lesnick, Esq., and Andrew R. Cahill, Esq., at Lesnick Prince LLP. MGM RESORTS: Board to Amend Incentive Awards to Exec. Officers -------------------------------------------------------------- The Compensation Committee of the Board of Directors of MGM Resorts International determined to amend and clarify certain terms of the following awards to reflect the Company's intent with respect to the treatment of those awards upon certain events: (i) Oct. 5, 2009, restricted stock unit grant to Robert H. Baldwin, (ii) Oct. 13, 2008, Oct. 5, 2009, and Oct. 4, 2010, restricted stock unit grants to Daniel J. D'Arrigo, (iii) Oct. 6, 2008, restricted stock unit grant to Corey Sanders and (iv) Oct. 6, 2008, and the Oct. 13, 2008, restricted stock unit grants to William J. Hornbuckle, in each case, under the Company's Amended and Restated 2005 Omnibus Incentive Plan. The amended terms provide: Baldwin October 2009 RSU Award. Upon termination of Mr. Baldwin's active employment due to death or disability (which also meets the definition of disability under Section 409A of the Internal Revenue Code of 1986, as amended), outstanding and unvested restricted stock units will immediately vest and will be paid, in accordance with the existing terms of such award, within 30 days following the vesting date. Upon termination of Mr. Baldwin's active employment during the specified term, as defined in Mr. Baldwin's employment agreement in effect at the date of determination, without employer's good cause or for employee's good cause, restricted stock units will continue to vest during the remaining period of the specified term, if Mr. Baldwin remains on inactive status for such period, and will be paid, in accordance with the existing terms of such award, within 30 days following the applicable vesting date. Restricted stock units that vest immediately upon a change of control will be paid, in accordance with the existing terms of such award, within 30 days following the vesting date. D'Arrigo RSU Awards. Upon termination of Mr. D'Arrigo's active employment during the specified term, as defined in Mr. D'Arrigo's employment agreement in effect at the date of determination, without employer's good cause, restricted stock units will continue to vest for the shorter of 12 months from the date that Mr. D'Arrigo is placed on inactive status or the remaining period of the specified term, if Mr. D'Arrigo remains on inactive status for such period, and will be paid, in accordance with the existing terms of such award, within 30 days following the applicable vesting dates. Restricted stock units that vest immediately upon a change of control will be paid, in accordance with the existing terms of such award, within 30 days following the vesting date. Sanders October 2008 RSU Award. Upon termination of Mr. Sanders' active employment during the specified term, as defined in Mr. Sanders' employment agreement in effect at the date of determination, without employer's good cause, restricted stock units will continue to vest for the shorter of 12 months from the date that Mr. Sanders is placed on inactive status or the remaining period of the specified term, if Mr. Sanders remains on inactive status for such period, and will be paid, in accordance with the existing terms of such award, within 30 days following the applicable vesting dates. Upon termination of Mr. Sanders' active employment, on or prior to the first anniversary of a change of control, without employer's good cause, for employee's good cause, or on account of death or disability, restricted stock units which would have vested during the shorter of 12 months after the date of termination or the remainder of the specified term will immediately vest and will be paid, in accordance with the existing terms of such award, within 30 days following the vesting date. Hornbuckle 2008 RSU Awards. Upon termination of Mr. Hornbuckle's active employment during the specified term, as defined in Mr. Hornbuckle's employment agreement in effect at the date of determination, without employer's good cause, restricted stock units will continue to vest for the shorter of 12 months from the date that Mr. Hornbuckle is placed on inactive status or the remaining period of the specified term, if Mr. Hornbuckle remains on inactive status for such period, and will be paid, in accordance with the existing terms of such award, within 30 days following the applicable vesting dates. Upon termination of Mr. Hornbuckle's active employment, on or prior to the first anniversary of a change of control (which also meets the definition of a change in control event under Section 409A of the Code), without employer's good cause, for employee's good cause, or on account of death or disability, restricted stock units that would have vested during the shorter of 12 months after the date of termination or the remainder of the specified term will immediately vest and will be paid, in accordance with the existing terms of such award, within 30 days following the vesting date. 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. The Company's balance sheet at March 31, 2011, showed $18.76 billion in total assets, $15.84 billion in total liabilities and $2.92 billion in total stockholders' equity. The Company reported a net loss of $1.44 billion on $6.01 billion of revenue for the year ended Dec. 31, 2010, compared with a net loss of $1.29 billion on $5.97 billion of revenue during the prior year. * * * As reported by the Troubled Company Reporter on Oct. 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. As reported by the TCR on March 4, 2011, Moody's upgraded MGM Resorts International's Corporate Family rating to B3 and its Probability of Default rating to Caa1. The upgrade reflects signs of modest improvement in demand trends in Las Vegas, debt repayment during 2010 from the proceeds of equity issuances, and completion of a new multi-year financing package for CityCenter (MGM's 50% owned project on the Las Vegas Strip.) MILLENNIUM GLOBAL: Chapter 15 Case Summary ------------------------------------------ Chapter 15 Petitioner: Michael W. Morrison Joint Liquidator Chapter 15 Debtor: Millennium Global Emerging Credit Master Fund Limited c/o KPMG Advisory Limited Crown House, Par-la-Ville Road Hamilton HM08, Bermuda Chapter 15 Case No.: 11-13171 Chapter 15 Petition Date: June 30, 2011 Court: U.S. Bankruptcy Court Southern District of New York (Manhattan) Judge: Allan L. Gropper Debtor's Counsel: Susheel Kirpalani, Esq. Quinn Emanuel Urquhart & Sullivan LLP 51 Madison Avenue, 22nd Floor New York, NY 10010 Tel: (212) 849-7000 Fax: (212) 849-7100 E-mail: susheelkirpalani@quinnemanuel.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $100,000,001 to $500,000,000 Affiliated that filed Chapter 15 petition: Debtor Case No. ------ -------- Millennium Global Emerging Credit Fund Ltd. 11-13173 Assets: $10,000,001 to $50,000,000 Debts: $10,000,001 to $50,000,000 MP-TECH: Court OKs Employment of Finley Colmer as Fin'l Advisor --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District Of Alabama has approved MP-Tech America, LLC's application to to employ Finley Colmer and Company, as financial advisor/broker for the debtor. Finley Colmer will, among other things: -- market all of the Debtor's operating assets; and -- complete the marketing within four to five weeks from the date of the engagement. The marketing effort is designed to determine if there are any other qualified bidders to purchase the Debtor's operating assets as a going concern within the shortest reasonable time. Finley Colmer will be paid a fee based on its hourly rate which are reduced hourly rates for this engagement. To the best of the Debtor's knowledge, Finley Colmer is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About MP-Tech America Cusseta, Alabama-based MP-Tech America, LLC, is the maker of parts for Kia Motors Corp. and Hyundai Motor Co. at their plants in Georgia and Alabama. It filed a Chapter 11 petition (Bankr. M.D. Ala. Case No. 11-30895) on April 8, 2011. The Debtor estimated assets and debts of $10 million to $50 million as of the Chapter 11 filing. The Debtor has a $15 million secured debt to Korea Development Bank. The Debtor is represented by Michael A. Fritz, Sr., Esq., at Fritz Hughes & Hill, LLC, in Montgomery, Alabama, and Joseph J. Burton, Jr., Esq., at Burton & Armstrong, LLP, in Atlanta, Georgia. EXIM Bank, Venture Express, Woori Bank, Sunkyoung, ICS & M, Inc., and Midsouth Employee Services Corp. were appointed members to the Official Committee of Unsecured Creditors. The Committee is represented by Clark R. Hammond, Esq., and Lindan J. Hill, Esq., at Johnston Barton Proctor & Rose LLP, in Birmingham, Alabama. MSR RESORT: Court Maintains Plan Filing Exclusivity --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that at a hearing last week, the bankruptcy judge rebuffed a request by the Government of Singapore Investment Corp. for authority to propose a reorganization plan. The sovereign-wealth fund holds $360 million in mezzanine debt. Instead, the judge allowed the resorts to maintain the exclusive right to propose a reorganization. Early in the case, the sovereign fund made an unsuccessful offer to provide financing. At the time, the fund said it would buy the resorts for $1.475 billion. About MSR Resort MSR Hotels & Resorts, formerly known as CNL Hotels & Resorts Inc., owns a portfolio of eight luxury hotels with over 5,500 guest rooms, including the Arizona Biltmore Resort & Spa in Phoenix, the Ritz-Carlton in Orlando, Fla., and Hawaii's Grand Wailea Resort Hotel & Spa in Maui. On Jan. 28, 2011, CNL-AB LLC acquired the equity interests in the portfolio through a foreclosure proceeding. CNL-AB LLC is a joint venture consisting of affiliates of Paulson & Co. Inc., a joint venture affiliated with Winthrop Realty Trust, and affiliates of Capital Trust, Inc. Morgan Stanley's CNL Hotels & Resorts Inc. owned the resorts before the Jan. 28 foreclosure. Following the acquisition, five of the resorts with mortgage debt scheduled to mature on Feb. 1, 2011, were sent to Chapter 11 by the Paulson and Winthrop joint venture affiliates. MSR Resort Golf Course LLC and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-10372) in Manhattan on Feb. 1. The resorts subject to the filings are Grand Wailea Resort and Spa, Arizona Biltmore Resort and Spa, La Quinta Resort and Club and PGA West, Doral Golf Resort and Spa, and Claremont Resort and Spa. James H.M. Sprayregen, P.C., Esq., Paul M. Basta, Esq., Edward O. Sassower, Esq., and Chad J. Husnick, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' bankruptcy counsel. Houlihan Lokey Capital, Inc., is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The five resorts had $2.2 billion in assets and $1.9 billion in debt as of Nov. 30, 2010, according to court filings. In its schedules, debtor MSR Resort disclosed $59,399,666 in total assets and $1,013,213,968 in total liabilities. NAT'L RETAIL PROPERTIES: Fitch Rates Preferred Stock at 'BB+' ------------------------------------------------------------- Fitch Ratings assigns a 'BBB' rating to the $300 million 5.5% coupon rate senior unsecured notes due July 15, 2021 issued by National Retail Properties, Inc. The notes were issued at 98.577% of par to yield 5.688% to maturity or 265 basis points over the benchmark treasury rate. NNN expects to use the net proceeds to repay borrowings on the company's unsecured revolving credit facility, fund future property acquisitions and for general corporate purposes. Fitch currently rates National Retail Properties, Inc: -- Issuer Default Rating 'BBB'; -- Unsecured Revolving Credit Facility 'BBB'; -- Senior Unsecured Notes 'BBB'; -- Senior Unsecured Convertible Notes 'BBB'; -- Preferred Stock 'BB+'. The Rating Outlook is Stable. NNN is a fully-integrated real estate investment trust formed in 1984. NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term triple-net leases and primarily held for investment. As of March 31, 2011, NNN owned 1,223 investment properties, located in 46 states with a gross leasable area of approximately 13.3 million square feet. As of March 31, 2011, NNN also owned 16 inventory properties representing direct and indirect interests in real estate assets acquired or developed primarily for the purpose of selling the real estate. NBC ACQUISITION: Expects to Report $98.3MM Net Loss in Fiscal 2011 ------------------------------------------------------------------ In a regulatory filing Thursday, NBC Acquisition disclosed that the filing of its annual report on Form 10-K for the fiscal year ended March 31, 2011, will be delayed. The Company said that it has been required to devote a substantial portion of its personnel and administrative resources, including the personnel and resources of its accounting and financial reporting organization, to matters relating to the the Company and Nebraska Book Company's June 27, 2011 Chapter 11 bankruptcy filings. Based on the Company's unaudited, preliminary results, the Company expects to report a net loss of $98.3 million and revenues of $598.4 million for fiscal 2011. Revenue decreased by $7.0 million, or 1.2%, from $605.5 million to $598.4 million, primarily due to a decrease in same-store sales in the Bookstore Division and lower unit sales in the Textbook Division. Operating expenses increased $101.8 million, or 56.2%, from $181.2 million to $283.0 million, primarily due to an $89.0 million goodwill impairment charge and a $14.9 million increase in selling, general and administrative expenses. The impairment is primarily due to lower operating results. No impairment charge was recorded for fiscal 2010. The financial results and financial position for fiscal 2011 are unaudited and subject to change based on the completion of the preparation of the Form 10-K. About Nebraska Book Company Lincoln, Nebraska-based Nebraska Book Company, Inc., is one of the leading providers of new and used textbooks for college students in the United States. Nebraska Book and seven affiliates filed separate Chapter 11 petitions (Bankr. D. Del. Case Nos. 11-12002 to 11-12009) on June 27, 2011. Hon. Peter J. Walsh presides over the case. lawyers at Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones LLP, serve as the Debtors' bankruptcy counsel. The Debtors; restructuring advisors are AlixPartners LLC; the investment bankers are Rothschild, Inc.; the auditors are Deloitte & Touche LLP; and the claims agent is Kurtzman Carson Consultants LLC. As of the petition date, the Debtors had consolidated assets of $657,215,757 and debts of $563,973,688. JPMorgan Chase Bank N.A., as administrative agent for the DIP lenders, is represented by lawyers at Richards, Layton & Finger, P.A., and Simpson Thacher & Bartlett LLP. J.P. Morgan Investment Management Inc., the DIP arranger, is represented by lawyers at Bayard, P.A., and Willkie Farr & Gallagher LLP. An ad hoc committee of holders of more than 50% of the Debtors' Second Lien Notes is represented by lawyers at Brown Rudnick. An ad hoc committee of holders of the Debtors' 8.625% unsecured notes are represented by Milbank, Tweed, Hadley & McCloy LLP. NEOMEDIA TECHNOLOGIES: To Sell $1.05-Mil. Debenture to YA Global ---------------------------------------------------------------- NeoMedia Technologies, Inc., entered into an agreement to issue and sell to YA Global Investments, L.P., three secured convertible debentures that, combined, will have an aggregate principal amount of $1,050,000 upon their issuance. Regarding each of the individual Debentures, the Company agreed to issue and sell: (i) a secured convertible debenture in the amount of $250,000 which the Buyer purchased and the Company issued on June 28, 2011; (ii) a secured convertible debenture in the amount of $450,000 which the Company agreed to issue, subject to the Buyer's sole discretion to purchase and subject to the satisfaction of certain closing conditions, on or before July 15, 2011; and (iii) a secured convertible debenture in the amount of $350,000 which the Company agreed to issue, subject to the Buyer's sole discretion to purchase and subject to the satisfaction of certain closing conditions, on or before Aug. 15, 2011. A full-text copy of the Debenture Agreement is available at no charge at http://is.gd/kVVqXo Pursuant to the Agreement, also on June 28, 2011, the Company issued a warrant to the Buyer to purchase 3,000,000 shares of the Company's common stock, par value $0.001 per share, for an exercise price of $0.15 per share, a copy of which is available for free at http://is.gd/WzemUm The June Debenture will mature on July 29, 2012, and will accrue interest at a rate equal to 14% per annum and that interest will be paid on the Maturity Date in cash or, provided that certain equity conditions are satisfied, in shares of Common Stock at the applicable Conversion Price. In connection with the Agreement, the Company also entered into those certain Irrevocable Transfer Agent Instructions with the Buyer, an escrow agent and WorldWide Stock Transfer, LLC, the Company's transfer agent, a copy of which is available at no charge at http://is.gd/WRcUCz 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 reported a net income of $35.09 million on $1.52 million of revenue for the year ended Dec. 31, 2010, compared with a net loss of $67.38 million on $1.66 million of revenue during the prior year. The Company's balance sheet at March 31, 2011, showed $8.26 million in total assets, $79.42 million in total liabilities, all current, $7.52 million in Series C convertible preferred stock, $2.50 million in Series D convertible preferred stock, and a $81.18 million total shareholders' deficit. Kingery & Crouse, P.A, in Tampa, Fla., expressed substantial doubt about the Company's ability to continue as a going concern. The accounting firm noted that the Company has suffered recurring losses from operations and has ongoing requirements for additional capital investment. NET ELEMENT: TGR Capital Approves 2011 Equity Incentive Plan ------------------------------------------------------------ The majority stockholder of Net Element, Inc., TGR Capital, LLC, signed a written consent approving the 2011 Equity Incentive Plan of the Company. A total of 150 million shares of common stock of the Company may be issued under the Plan to directors, officers, consultants, advisors or employees pursuant to incentive stock options, nonqualified stock options or restricted stock grants made in accordance with the terms and conditions of the Plan. 401,263,749 shares of common stock of the Company held by TGR Capital, LLC, were voted for approval of the Plan pursuant to the written consent. In accordance with Rule 14c-2 under the Securities Exchange Act of 1934, as amended, the approval of the Plan will become effective no earlier than 20 calendar days after an information statement is sent or given to the holders of record of the Company's common stock as of the record date for the mailing. About Net Element Miami, Fla.-based Net Element, Inc. (formerly TOT Energy, Inc.) currently operates several online media websites in the film, auto racing and emerging music talent markets. Daszkal Bolton LLP, in Fort Lauderdale, Fla., expressed substantial doubt about Net Element's ability to continue as a going concern. The independent auditors noted that the Company has experienced recurring losses and has an accumulated deficit and stockholders' deficiency at Dec. 31, 2010. The Company reported a net loss of $3.1 million on $242 of sales for the nine-month period ended Dec. 31, 2010. The Company had a net loss of $6.6 million on $0 revenue for the twelve months ended March 31, 2010. The Company's balance sheet at March 31, 2011, showed $1.75 million in total assets, $2.63 million in total liabilities, and a $880,376 total stockholders' deficit. NET TALK.COM: Amends Security Purchase Agreements with Investors ---------------------------------------------------------------- Net Talk.com, Inc., entered into a Second Amended and Restated Security Agreement with an accredited institutional investor on June 30, 2011. Pursuant to the agreement the Company has amended the existing Amended and Restated Security Agreement. On June 30, 2011, the Company entered into a Second Amended and Restated Registration Rights Agreement with an accredited institutional investor. Pursuant to the agreement, the Company have amended the existing Registration Rights Agreement previously reported. On June 30, 2011, the Company entered into a $5,266,130 Security Purchase Agreement with an accredited institutional investor. Pursuant to the agreement, the Company executed a $5,266,130 Senior Debenture, thereby encompassing and cancelling our existing demand notes and accrued interest with said investor. The Series D1 through D4 Common Stock Purchase Warrants have been amended to remove the cash redemption upon certain fundamental transactions clause and to remove the full ratchet anti-dilution contained within. The Amended and Restated Security Agreement was also amended to exclude the warrants as being secured by the assets of the Company. The Series E1 and E2 Common Stock Purchase Warrants certifies that, for value received, Vicis Capital Master Fund, is entitled to subscribe for and purchase from NetTalk.com, Inc., up to 21,064,520 and 1,000,000 shares, respectively of Common Stock, par value $.001 per share, of the Company's common stock. The holders of the convertible debentures, issued on Feb. 24, 2010, totalling $4,998,773 have elected to convert those debentures into 19,995,092 shares of common stock pursuant to the terms thereof. A full-text copy of the Second Amended and Restated Security Agreement is available for free at http://is.gd/6kRl1f A full-text copy of the Second Amended and Restated Registration Rights Agreement is available for free at http://is.gd/13Rsl3 A full-text copy of the Securities Purchase Agreement is available at no charge at http://is.gd/bmVXvl A full-text copy of the Amended and Restated Series D1 through D4 Common Stock Purchase Warrant is available at no charge at: http://is.gd/eIHD09 A full-text copy of the Series E1 Common Stock Purchase Warrant Agreement is available for free at http://is.gd/OLTG5Q A full-text copy of the Series E2 Common Stock Purchase Warrant Agreement is available for free at http://is.gd/bELtYy A full-text copy of the 12% Senior Secured Debenture is available at no charge at http://is.gd/wYhHtZ About Net Talk.com Based in Miami, Fla., Net Talk.com, Inc., is a telephone company, who provides, sells and supplies commercial and residential telecommunication services, including services utilizing voice over internet protocol ("VoIP") technology, session initiation protocol ("SIP") technology, wireless fidelity technology, wireless maximum technology, marine satellite services technology and other similar type technologies. The Company's balance sheet at March 31, 2011, showed $4.74 million in total assets, $38.27 million in total liabilities, all current, $2.55 million in redeemable preferred stock $0.001 par value, and a $36.09 million total stockholders' deficit. Net Talk.com reported a net loss of $6.31 million on $737,498 of revenues for the fiscal year ended Sept. 30, 2010, compared with a net loss of $2.74 million on $115,571 of revenues in fiscal 2009. NORTEL NETWORKS: Cassidy Turley OK'd as Santa Clara Asset Broker ---------------------------------------------------------------- The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware authorized Nortel Networks, Inc., at el., to employ Cassidy Turley CPS as broker in connection with the negotiation of the sublease of certain real property located in Santa Clara, California. Cassidy Turley will be compensated for fees and reimbursed for expenses in accordance with the Bankruptcy Code. For avoidance, the rate on a monthly sublease will be 50% of the first full month of the base month of the base monthly rental payment and not to exceed $6,000. As reported in the Troubled Company Reporter on June 15, 2011, the Debtors will pay Cassidy Turley a 3% commission rate for listing agent and a 6% commission rate for procuring agent. 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 (Bankr. D. Del. Case No. 09-10138) on Jan. 14, 2009. 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. So far, Nortel has raised $3.2 billion by selling its operations as it prepares to wind up a two-year liquidation due to insolvency. 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. In June 2011, Nortel will auction off its remaining patent portfolio. Google Inc. is the lead bidder with a $900 million offer. NORTEL NETWORKS: Gets Dec. 14 Extension of Stay Period Under CCAA ----------------------------------------------------------------- Nortel Networks Corporation's principal operating subsidiary Nortel Networks Limited and its other Canadian subsidiaries that filed for creditor protection under the Companies' Creditors Arrangement Act (CCAA) have obtained an order from the Ontario Superior Court of Justice (Canadian Court) further extending, to December 14, 2011, the stay of proceedings that was previously granted by the Canadian Court. The purpose of the stay of proceedings is to provide stability to the Nortel companies to continue with their divestiture and other restructuring efforts and to continue to work toward the development of a plan of arrangement under CCAA. 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 (Bankr. D. Del. Case No. 09-10138) on Jan. 14, 2009. 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 Dec. 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 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. Marites O. Claro NORTHERN BERKSHIRE: Court OKs Claims Agent Hiring ------------------------------------------------- Northern Berkshire Healthcare, Inc., and its debtor-affiliates sought and obtained Bankruptcy Court permission to employ GCG, Inc., aka The Garden City Group, as their claims, noticing, and balloting agent. GCG received a $40,000 retainer from the Debtors prior to the Petition Date. GCG's resume includes serving as claims and noticing agent in the bankruptcy cases of Motors Liquidation Company (formerly known as the General Motors Company), Bearingpoint, Inc., Fortunoff Holdings, LLC, Start Tribune Holdings Corporation, Lenox Sales, Inc., Oscient Pharmaceuticals Corporation, and many others. Northern Berkshire Healthcare said retaining GCG will ease a significant administrative burden of both the Debtors as well as the Clerk of Court The Debtors have hundreds of creditors; if GCG is not retained, the Clerk will spend significant time receiving, organizing, and filing countless proofs of claim. Retaining GCG will also reduce a burden on the Debtors, which would otherwise have to spend valuable time and resources sending notices to its creditors on a regular and timely basis. GCG may be reached at: Jeffrey S. Stein GCG INC. 1985 Marcus Ave Lake Success, NY 11042 Tel: 631-470-5000 E-mail: jeff.stein@gcginc.com About Northern Berkshire Healthcare Northern Berkshire Healthcare, Inc. is a non-profit healthcare corporation in northern Berkshire County, Massachusetts. Together with its affiliates, Northern Berkshire Healthcare operates the North Adams Regional Hospital and a visiting nurse association and hospice in North Adams, Massachusetts. Northern Berkshire Healthcare, Inc., North Adams Regional Hospital, Inc., Visiting Nurse Association & Hospice of Northern Berkshire, Inc., Northern Berkshire Healthcare Physicians Group, Inc., and Northern Berkshire Realty, Inc., filed for Chapter 11 bankruptcy (Bankr. D. Mass. Case No. 11-31114) on June 13, 2011, to address their overleveraged balance sheet and effect a reorganization of their operations. On the same day, Northern Berkshire Community Services, Inc., filed a petition for Chapter 7 relief also in the District of Massachusetts bankruptcy court. Judge Henry J. Boroff presides over the Debtors' cases. James Addison Wright, III, Esq., and Steven T. Hoort, Esq., at Ropes & Gray LLP, serve as the Debtors' bankruptcy counsel. The Debtors' Financial Advisors are Carl Marks Advisory Group LLC. Northern Berkshire estimated $1 million to $10 million in assets, and $50 million to $100 million in debts. North Adams estimated $10 million to $50 million in assets, and $50 million to $100 million in debts. The petition was signed by William F. Frado, Jr., president. An official unsecured creditors' committee has been named in the case. NORTHERN BERKSHIRE: U.S. Trustee Names 5-Member Creditors Panel --------------------------------------------------------------- William K. Harrington, the United States Trustee for Region 1, appointed five members to the official unsecured creditors' committee in the bankruptcy cases of Northern Berkshire Healthcare, Inc.: (1) McKesson Drug Co. c/o Paul Federico 280 Dividend Road Rocky Hill, CT 060067 Tel: 860-258-7232 Fax: 860-258-7217 E-mail: paul.federico@mckesson.com (2) Williamstown Medical Associates, PC c/o Anthony Smeglin, MD, President 197 Adams Road Williamstown, MA 01267 Tel: 413-458-8182 Fax: 413-664-5772 E-mail: asmeglin@wmamed.com (3) Sodexo USA f/k/a Sodexho USA c/o Brad Hamman 283 Cranes Roost Blvd., Suite 260 Altamonte Springs, FL 32701 Tel: 407-339-3230 Fax: 407-260-2305 E-mail: brad.hamman@sodexo.com (4) 1199 SEIU United Healthcare Workers East MA Division c/o Tyrek Lee, Sr., Vice President 150 Mount Vernon Street, Suite 300 Dorchester, MA 02125 Tel: 617-284-1199 Fax: 617-474-7150 E-mail: tyrek.lee@1199.org (5) National Wound Care & Hyperbaric Services, Inc. c/o Rodger Hochman, Secretary & General Counsel 4850 T-Rex Avenue, Suite 300 Boca Raton, FL 33431 Tel: 561-994-1174 Fax: 561-994-0182 E-mail: rodger.hochman@nationalhealing.com The U.S. Trustee held an organizational meeting to form a creditors' committee on June 20 in Springfield. The U.S. Trustee is represented by: Richard T. King, Esq. Assistant U.S. Trustee United States Department of Justice Office of the United States Trustee 446 Main Street, 14th Floor Worcester, MA 01608 Telephone: (508) 793-0555 Facsimile: (508) 793-0558 E-mail: richard.t.king@usdoj.gov About Northern Berkshire Healthcare Northern Berkshire Healthcare, Inc. is a non-profit healthcare corporation in northern Berkshire County, Massachusetts. Together with its affiliates, Northern Berkshire Healthcare operates the North Adams Regional Hospital and a visiting nurse association and hospice in North Adams, Massachusetts. Northern Berkshire Healthcare, Inc., North Adams Regional Hospital, Inc., Visiting Nurse Association & Hospice of Northern Berkshire, Inc., Northern Berkshire Healthcare Physicians Group, Inc., and Northern Berkshire Realty, Inc., filed for Chapter 11 bankruptcy (Bankr. D. Mass. Case No. 11-31114) on June 13, 2011, to address their overleveraged balance sheet and effect a reorganization of their operations. On the same day, Northern Berkshire Community Services, Inc., filed a petition for Chapter 7 relief also in the District of Massachusetts bankruptcy court. Judge Henry J. Boroff presides over the Debtors' cases. James Addison Wright, III, Esq., and Steven T. Hoort, Esq., at Ropes & Gray LLP, serve as the Debtors' bankruptcy counsel. The Debtors' Financial Advisors are Carl Marks Advisory Group LLC. GCG Inc. serves as claims and noticing agent. Northern Berkshire estimated $1 million to $10 million in assets, and $50 million to $100 million in debts. North Adams estimated $10 million to $50 million in assets, and $50 million to $100 million in debts. The petition was signed by William F. Frado, Jr., president. NORTHERN BERKSHIRE: Final Cash Collateral Hearing on Thursday ------------------------------------------------------------- Northern Berkshire Healthcare, Inc., will return to the Bankruptcy Court on July 7, 2011, at 2:30 p.m. to seek final approval of its request to use cash collateral securing obligations to its prepetition lenders. One day after filing for bankruptcy, the Debtors won interim authority to use cash collateral for a limited period to fund their Chapter 11 case. As reported by the Troubled Company Reporter on June 17, the Debtors' CFO Christopher L. Hickey said, "The Debtors have been under increasing financial distress for many years. The primary factors causing this distress are the Debtors' over-leveraged balance sheet, combined with losses associated with the [Sweet Brook Transitional Care & Living Centers, a 184-bed skilled nursing facility, and Sweetwood Continuing Care Retirement Community] prior to their sale, and the decline in the Debtors' revenues due to national and local economic factors beyond their control. These financial pressures have resulted in operational losses which have, over time, significantly eroded the Debtors' available working capital." For fiscal year 2010, the Debtors recorded, on a consolidated basis, revenues of approximately $68.5 million versus operating expenses of $74.8 million. The Debtors recorded a net loss of approximately $14.2 million in fiscal year 2010 and $15.1 million in fiscal year 2009, and net gains of $1.7 million and $767,000 in fiscal years 2008 and 2007 respectively. NARH has a defined benefit pension plan, the North Adams Regional Hospital Retirement Income Plan, which the Debtors estimate is underfunded by approximately $20.1 million as of Sept. 30, 2010. The Debtors have determined that a distressed termination of the Defined Benefit Plan, which has 696 participants, is necessary, along with a significant reduction in the Debtors' long-term secured debt obligations, for the Debtors to reorganize successfully. The Debtors negotiated terms of a Chapter 11 plan with Nuveen Investments and certain of its affiliates, which hold majority of the Debtors' bonds, and ACA Financial Guaranty Corporation, which insures those bonds. However, the parties did not come to terms. Specifically, on June 9, 2011, the Debtors received a formal term sheet proposal for a restructuring from Nuveen and ACA. The term sheet provided for a reorganization in bankruptcy through a plan process. Once again, the term sheet pressed an approach in which the full amount of the Bonds would be reinstated, with debt service forgiveness being provided for a period of time. The term sheet also provided for a CRO that would have full authority over the chapter 11 plan and budgeting and expenditure issues. The term sheet also provided for unsecured creditors to receive a five-year note in an amount to be negotiated. However, the Debtors say the terms proposed were unworkable. The Debtors said they commenced the Chapter 11 cases to "start the process of moving forward to a resolution (whether consensual or not) and to involve other necessary parties in the discussion, such as the PBGC." In papers filed on the petition date, the Debtors said they currently have $4,592,365 in cash, which represents 16 days cash on hand, a critical level for an operating hospital. The majority of the Debtors' assets are subject to liens, many of which are under-secured, and the Debtors do not anticipate they will be able to secure debtor in possession financing. The Debtors sought immediate use of cash collateral to maintain their medical operations. "Absent the use of cash collateral, the Debtors will be forced to cease operations, destroying the Debtors' going-concern value to the detriment of the Debtors, their estates, and their creditors," Mr. Hickey said. According to the Debtors, Wells Fargo & Company, in its capacity as Master Trustee under a 1999 Master Trust Indenture, as amended and restated, has consented to the use of cash collateral under the conditions set forth in the Master Indenture. Wells Fargo's interest in the Cash Collateral arises from the collateral pledges made by the Debtors under the Master Indenture for the benefit of certain tax-advantaged bonds. One series of bonds was issued by the Massachusetts Development Finance Agency in 1999 -- MDFA Bonds -- and The Bank of New York acted as the bond trustee. As of May 31, 2011, $13,585,000 in principal and $280,802.65 in interest was outstanding under the MDFA Bonds. The other three series of bonds were issued by the Massachusetts Health and Educational Facilities Authority in 1996 and 2004 -- MHEFA Bonds -- and U.S. Bank National Association acted as the bond trustee. As of May 31, 2011, $29,680,000 in principal and $789,321.20 in interest was outstanding under the MHEFA Bonds. BONY holds Master Note No. 1 issued under the Master Indenture, and U.S. Bank holds Master Note No. 3. The Master Notes are secured by gross revenues of the Debtors. The Master Notes are also secured by a pledge pursuant to the Mortgage and Security Agreement to the Master Trustee that purports to cover substantially all of NARH's personal property and two parcels of real estate. ACA insures the MDFA Bonds. U.S. Bank also holds certain accounts, established for the benefit of the MHEFA Bonds, which accounts hold various debt service, reserve, and other funds. NARH has a residual interest in the funds held by U.S. Bank. The amounts held in each of these funds as of May 31, 2011 was: (i) $5.77 in the Debt Service Fund, (ii) $3,122,501.11 in the Debt Service Reserve Fund, (iii) $0 in the Expense Fund, (iv) $6,095.12 in the Redemption Fund, and (v) $51,005.35 in the Rebate Fund, for a total of $3,174,172.30. Nuveen Investments is represented by: George N. Panagakis, Esq. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 155 N. Wacker Drive Chicago, IL 60606 Tel: 312-407-0638 E-mail: george.panagakis@skadden.com - and - Eben P. Colby, Esq. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP One Beacon Street Boston, MA 02108 E-mail: ecolby@skadden.com Counsel to Wells Fargo are: Rick L. Frimmer, Esq. Karen V. Newbury, Esq. SCHIFF HARDIN LLP 233 South Wacker Drive, Suite 6600 Chicago, IL 60606 Tel: 312-258-5511 E-mail: rfrimmer@schiffhardin.com knewbury@schiffhardin.com Counsel for ACA are: Richard S. Miller, Esq. 599 Lexington Avenue New York, NY 10022-6030 Tel: (212) 536-3922 Fax: (212) 536-3901 E-mail: richard.miller@klgates.com - and - Mackenzie Shea, Esq. K&L GATES LLP State Street Financial Center One Lincoln Street Boston, MA 02111 Tel: (617) 261-3250 Fax: (617) 261-3175 E-mail: mackenzie.shea@klgates.com U.S. Bank is represented by: Richard C. Pedone, Esq. Ann E. Chernicoff, Esq. NIXON PEABODY LLP 100 Summer Street Boston, MA 02110 Tel: 617-345-1305 Fax: 866-947-1890 E-mail: rpedone@nixonpeabody.com achernicoff@nixonpeabody.com About Northern Berkshire Healthcare Northern Berkshire Healthcare, Inc. is a non-profit healthcare corporation in northern Berkshire County, Massachusetts. Together with its affiliates, Northern Berkshire Healthcare operates the North Adams Regional Hospital and a visiting nurse association and hospice in North Adams, Massachusetts. Northern Berkshire Healthcare, Inc., North Adams Regional Hospital, Inc., Visiting Nurse Association & Hospice of Northern Berkshire, Inc., Northern Berkshire Healthcare Physicians Group, Inc., and Northern Berkshire Realty, Inc., filed for Chapter 11 bankruptcy (Bankr. D. Mass. Case No. 11-31114) on June 13, 2011, to address their overleveraged balance sheet and effect a reorganization of their operations. On the same day, Northern Berkshire Community Services, Inc., filed a petition for Chapter 7 relief also in the District of Massachusetts bankruptcy court. Judge Henry J. Boroff presides over the Debtors' cases. James Addison Wright, III, Esq., and Steven T. Hoort, Esq., at Ropes & Gray LLP, serve as the Debtors' bankruptcy counsel. The Debtors' Financial Advisors are Carl Marks Advisory Group LLC. GCG Inc. serves as claims and noticing agent. Northern Berkshire estimated $1 million to $10 million in assets, and $50 million to $100 million in debts. North Adams estimated $10 million to $50 million in assets, and $50 million to $100 million in debts. The petition was signed by William F. Frado, Jr., president. An official committee of unsecured creditors has been appointed in the case. NORTHERN BERKSHIRE: Sec. 341 Creditors Meeting on July 22 --------------------------------------------------------- William K. Harrington, the United States Trustee for Region 1, will hold a Meeting of Creditors pursuant to 11 U.S.C. 341(a) in the bankruptcy cases of Northern Berkshire Healthcare, Inc., on July 22, 2011, at 10:00 a.m. at 1350 Main Street, Suite 1112, in Springfield, Massachusetts. About Northern Berkshire Healthcare Northern Berkshire Healthcare, Inc. is a non-profit healthcare corporation in northern Berkshire County, Massachusetts. Together with its affiliates, Northern Berkshire Healthcare operates the North Adams Regional Hospital and a visiting nurse association and hospice in North Adams, Massachusetts. Northern Berkshire Healthcare, Inc., North Adams Regional Hospital, Inc., Visiting Nurse Association & Hospice of Northern Berkshire, Inc., Northern Berkshire Healthcare Physicians Group, Inc., and Northern Berkshire Realty, Inc., filed for Chapter 11 bankruptcy (Bankr. D. Mass. Case No. 11-31114) on June 13, 2011, to address their overleveraged balance sheet and effect a reorganization of their operations. On the same day, Northern Berkshire Community Services, Inc., filed a petition for Chapter 7 relief also in the District of Massachusetts bankruptcy court. Judge Henry J. Boroff presides over the Debtors' cases. James Addison Wright, III, Esq., and Steven T. Hoort, Esq., at Ropes & Gray LLP, serve as the Debtors' bankruptcy counsel. The Debtors' Financial Advisors are Carl Marks Advisory Group LLC. GCG Inc. serves as claims and noticing agent. Northern Berkshire estimated $1 million to $10 million in assets, and $50 million to $100 million in debts. North Adams estimated $10 million to $50 million in assets, and $50 million to $100 million in debts. The petition was signed by William F. Frado, Jr., president. An official committee of unsecured creditors has been appointed in the case. ONEBEACON INSURANCE: Moody's Assigns '(P)Ba1' Pref. Stock Rating ---------------------------------------------------------------- Moody's Investors Service has assigned provisional ratings (senior at (P)Baa2) to OneBeacon U.S. Holdings, Inc.'s new $1.0 billion multi-seniority shelf registration filed by the company on June 30, 2011. OneBeacon U.S. is an indirect wholly-owned subsidiary of OneBeacon Insurance Group, Ltd. The new shelf registration statement replaces the company's previous registration statement filed on July 2, 2008. The outlook for the ratings is stable. According to Moody's, OneBeacon U.S.'s ratings reflect the group's strong underwriting expertise and good profitability in a number of niche specialty property-casualty insurance segments, strong producer relationships, good profitability and capitalization. Factors offsetting these strengths include meaningful, though reduced, financial leverage, potential adverse development on run- off casualty business including A&E reserves, and an ongoing soft pricing environment. The stable outlook reflects Moody's expectation that the company will continue to manage its risk profile prudently consistent with its current capital structure. Moody's expects the company will maintain financial leverage less than 25%, earnings coverage above 5x, and gross underwriting leverage below 4.5x. Although the company's historical specialty business results have been profitable, Moody's expects the company to continue to manage its underwriting portfolio appropriately given soft market conditions. These provisional ratings have been assigned with a stable outlook: OneBeacon U.S. Holdings, Inc. -- provisional senior unsecured debt at (P)Baa2; provisional subordinated debt at (P)Baa3; provisional junior subordinated debt at (P)Baa3; provisional preferred stock at (P)Ba1. OneBeacon U.S. Holdings Trust I, II, III -- provisional trust preferred securities at (P)Baa3. Moody's will withdraw the provisional ratings previously assigned to OneBeacon U.S.'s shelf registration that has been replaced by the new shelf. The principal methodology used in this rating was Moody's Global Rating Methodology for Property and Casualty Insurers, published in May 2010. OneBeacon Insurance Group, Ltd. (NYSE: OB) is a Bermuda-domiciled insurance holding company whose property and casualty insurance subsidiaries provide a range of specialty insurance products in the U.S. One Beacon is a 76% owned subsidiary of White Mountains Insurance Group, Ltd. (NYSE: WTM), with the remaining 24% of shares publicly owned. For 2010, OneBeacon reported total premiums earned of approximately $1.5 billion and net income of approximately $120 million. GAAP common shareholders' equity was $1.3 billion as of March 31, 2011. ORCHARD SUPPLY: Moody's Lowers Corporate Family Rating to 'B3' -------------------------------------------------------------- Moody's Investors Service lowered Orchard Supply Hardware Stores Corporation's Corporate Family Rating to B3 from B2. Other rating actions are detailed below. Ratings were also placed on review for a further possible downgrade. RATINGS RATIONALE The downgrade of the company's Corporate Family Rating primarily reflects the company's continued weak operating results, evidenced in first quarter results which shown a decline in EBITDA in excess of 40%. Debt/EBITDA for the LTM period ending 4/30/11 is around 6.3 times. Moody's expects leverage will remain above 6 times over the course of 2011. The review for further possible downgrade primarily reflects the likelihood of a further downgrade if the proposed spin-off of OSH by Sears Holdings ("Sears"- Ba2/review for possible downgrade) of its 80.1% shareholding in OSH is concluded. In the event the spin- off occurs, it is anticipated that OSH will incur higher costs, primarily related to expected stand-alone public company costs as well as the loss of purchasing leverage OSH currently enjoys as part of Sears. OSH estimates these costs would be in the range of $5-8 million. In addition, OSH will enter into amended agreements with subsidiaries of Sears related to the sale of certain branded products (including Craftsman and Kenmore) which will the company anticipates will have an adverse impact on profitability. As a result if the spin-off were to take place, Moody's would expect further negative pressure on earnings. These negative impacts on operating earnings will place additional pressure on the company's ability to comply with its financial covenants, noting that cushion has moderated due to recent weak operating performance. In addition, the company will begin to need to address its significant debt maturities, as substantially all debt currently matures in the last four months of calendar 2013. Moody's review will focus on the completion of the spin-off of OSH by Sears Holdings, its expected stand-alone operating performance as well as its ongoing liquidity following the spin-off transaction. Ratings are unlikely to be upgraded in the near term in view of recent weak operating performance and the sizable 2013 debt maturities. Ratings could be confirmed at their current levels if following the proposed spin-off OSH was expected to maintain debt/EBITDA in the low six times range while also maintaining adequate liquidity and covenant headroom. Ratings could be lowered further if Moody's assessment of the position of OSH following the proposed spin-off indicates that debt/EBITDA is likely to be sustained above 6.5 times or if the company's liquidity position were to be constrained. These ratings were lowered, and placed on review for further possible downgrade: -- Corporate Family Rating to B3 from B2 -- Probability of Default Rating to B3 from B2 -- $173.5 million senior secured term loan due December 2013 to B3 (LGD 4, 54%) from B2 (LGD 4, 57%) The principal methodology used in rating Orchard Supply Corporation was the Global Retail Industry Methodology, published December 2006. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Orchard Supply Hardware Stores Corporation, which is owned 80.1% by Sears, Roebuck and Co. and 19.9% by Ares Management, currently operates 89 home and garden stores in California. OVERLAND STORAGE: Board OKs Retention Grants to Exec. Officers -------------------------------------------------------------- The Compensation Committee of the Board of Directors of Overland Storage, Inc., approved retention grants of restricted stock units to each of the Company's executive officers under the Company's 2009 Equity Incentive Plan. These grants have been designed to continue to incentivize the Company's management team to execute on the Company's business over the next three years. The number of units granted to each executive is as follows: No. of Units Executive Officer and Title Granted --------------------------- ------------ Eric L. Kelly President and Chief Executive Officer 1,573,385 Kurt L. Kalbfleisch Vice President of Finance, CFO 627,160 Jillian Mansolf Vice President of Worldwide Sales & Marketing 539,420 Geoff S. Barrall CTO and Vice President of Engineering 528,075 Subject to the executive's continued employment or service with the Company, the restricted stock units will generally vest in six semi-annual installments over the three-year period following the date of grant. The units will vest in full in the event of the executive's death or disability. If the executive's employment is terminated by the Company without cause or by the executive for good reason, the units subject to the award will vest pro-rata based on the number of months of the executive's employment through the date of termination. If, however, a change in control of the Company occurs and the executive's employment is terminated by the Company without cause or by the executive for good reason within 60 days before or two years after the change in control, the units will fully vest. The units that become vested will be paid, on a one-for-one basis, in shares of the Company's common stock. On June 29, 2011, the Company's Board of Directors approved a grant of 679,043 restricted stock units to Scott McClendon, the Company's Chairman of the Board. This grant is subject to substantially the same terms as described above. About Overland Storage San Diego, Calif.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of unified data management and data protection solutions designed to enable small and medium enterprises (SMEs), corporate departments and small and medium businesses (SMBs) to anticipate and respond to change. As reported in the Troubled Company Reporter on Sept. 28, 2010, Moss Adams LLP, in San Diego, Calif., expressed substantial doubt about Overland Storage'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. The Company's balance sheet at March 31, 2011, showed $48.50 million in total assets, $35.89 million in total liabilities and $12.61 million in total shareholders' equity. PBJT935927 2008: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: PBJT935927 2008 Investments LLC 7621 Reynolds Cir Hungtington Beach, CA 92647 Bankruptcy Case No.: 11-19234 Chapter 11 Petition Date: June 29, 2011 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: David G. Epstein, Esq. THE DAVID EPSTEIN LAW FIRM P.O. Box 4858 Laguna Beach, CA 92652-4858 Tel: (949) 715-1500 Fax: (949) 715-2570 E-mail: david@epsteinlitigation.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 three largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb11-19234.pdf The petition was signed by Paul C. Bissin, managing member. PCS EDVENTURES!.COM: Reocurring Losses Prompt Going Concern Doubt ----------------------------------------------------------------- PCS Edventures!.com, Inc., filed on June 29, 2011, its annual report on Form 10-K for the fiscal year ended March 31, 2011. M&K CPAS, PLLC, IN Houston, expressed substantial doubt about ability to continue as a going concern. The independent auditors noted that the Company has suffered reoccurring losses and negative cash flow from operations. The Company reported a net loss of $1.90 million on $1.84 million of revenues for the fiscal year ended March 31, 2011, compared with a net loss of $1.87 million on $2.39 million of revenues for the fiscal year ended March 31, 2010. The Company's balance sheet at March 31, 2011, showed $1.26 million in total assets, $749,483 in total liabilities, and stockholders' equity of $515,322. A copy of the Form 10-K is available at http://is.gd/C2SmMk Boise, Idaho-based PCS Edventures!.com, Inc., is engaged in the business of developing, marketing, and distributing educational products and services for the PreK-16 market which includes professional development, proprietary hardware and software, curriculum, and comprehensive learning labs bundled with related technologies and programs. PEGASUS RURAL: Seeks Extension of Schedules Filing to July 18 ------------------------------------------------------------- Pegasus Rural Broadband, LLC, et al., ask the U.S. District Court for the District of Delaware to extend the time by which they must filed schedules of assets and liabilities, schedules of executory contracts and unexpired leases, and statements of financial affairs through and including July 18, 2011. The Debtors' schedules are currently due on July 11, 2011. The Debtors reason that based on the circumstances of their cases, they have not had sufficient time to collect and assembly all of the requisite financial data and other information and to prepare all of the Schedules and Statements. The Debtors assert that parties-in-interest will not be prejudiced by the extension of time sought, since the narratives and data incorporated in their Chapter 11 petitions and other pleadings and papers filed on the Petition Date provide creditors and other parties-in-interest with a substantial amount of information of them and their financial affairs. About Pegasus Rural Broadband Pegasus Rural Broadband, LLC, and its affiliates, including Xanadoo Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11772) on June 10, 2011. The Debtors are subsidiaries of Xanadoo Company, a 4G wireless Internet provider. Xanadoo Co. was not among the Chapter 11 filers. The subsidiaries sought Chapter 11 protection after they were unable to restructure $52 million in 12.5% senior secured promissory notes that matured in May. The notes are owing to Beach Point Capital Management LP. Xanadoo Holdings, through Xanadoo LLC -- XLC -- offers wireless high-speed broadband service, including digital phone services, under the Xanadoo brand utilizing licensed frequencies in the 2.5 GHz frequency band. As of May 31, 2011, XLC served 12,000 subscribers in Texas, Oklahoma and Illinois. In the summer of 2010, the Debtors closed all of their retail stores and kiosks in its six operating markets and severed all fulltime sales personnel. Since the closings, the Debtors relied one key retailer in each market to serve as local point of presence to market customer transactions. Judge Peter J. Walsh presides over the case. Jonathan M. Stemerman, Esq., Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., Shelley A. Kinsella, Esq., at Elliott Greenleaf, in Wilmington, Delaware, serve as counsel to the Debtor. Epiq Systems, Inc., is the claims and notice agent. Xanadoo Holdings, Pegasus Guard Band and Xanadoo Spectrum each estimated assets of $100 million to $500 million and debts of $50 million to $100 million. PILGRIM'S PRIDE: Moody's Downgrades CFR to B2; Outlook Stable ------------------------------------------------------------- Moody's Investors Service downgraded Pilgrim's Pride Corporation's Corporate Family and Probability of Default ratings to B2 from B1 and senior unsecured note rating to Caa1 from B3 given the lack of improvement in chicken prices and its consequent impact on Pilgrim's Pride's financial performance, including expectations for modest EBITDA at best for 2011. Moody's concern is somewhat mitigated by the covenant relief provided by Pilgrim's lenders and the cash advance of $50 million from JBS USA (a PIK subordinated loan provided by a sister company). The SGL-3 speculative grade liquidity rating was affirmed. The outlook is stable. These ratings were downgraded: -- Corporate Family Rating to B2 from B1; -- Probability of Default Rating to B2 from B1; -- $500 million senior unsecured notes to Caa1 (LGD5, 88%) from B3 (LGD5, 88%); -- Speculative Grade Liquidity Rating at SGL-3; The outlook is stable. RATINGS RATIONALE The downgrade reflects Moody's view that the company will face challenges this year that will limit Pilgrim's Pride ability to delever and reinforces Moody's concern that the chicken industry production remains undisciplined. Since the summer of 2010, global chicken prices have deteriorated, particularly breast meat and wings, and have yet to recover. Moreover, while chicken pricing remains weak, grain prices have remained high and volatile. Moody's continues to believe that pricing should improve over the course of the year but the improvement looks likely to take longer than Moody's initially expected. Strong pricing in beef and pork should ultimately help chicken producers. Pilgrim's B2 corporate family rating is supported by the benefits associated with its majority ownership by JBS S.A. (B1 CFR, positive outlook). However, the rating reflects Pilgrim's concentration in one highly competitive, global commodity, poultry, which despite sizable concentration among large players continues to experience periods of oversupply. In addition, cash flow volatility is exacerbated by feed costs which consume about one third of the company's expenses. The company is vulnerable to the longstanding risks endemic to the industry including animal disease, weather patterns, trade disputes and regulation. Given the ongoing cyclicality within the commodity chicken market, the B2 rating incorporates a wider range of operating performance. At the top of the cycle, Moody's expects modest leverage relative to the rating category, and, at the bottom, the converse would not necessarily prompt a downgrade. Importantly, when leverage is precipitously high, it should be balanced by adequate access to capital. The rating would likely be lowered if the dynamics of the industry did not improve and Moody's became concerned that leverage was likely to be sustained above 5 times or if access to liquidity became a concern. An upgrade could be considered should the company de-lever to about 3 times debt-to-EBITDA (including Moody's standard adjustments). Moody's would also expect an upgrade to reflect a capital structure that supported leverage that remained closer to 4 times debt-to-EBITDA over any protein cycle. In addition, Moody's would require a solid liquidity profile. Higher ratings at JBS SA could also have a positive impact on Pilgrim's ratings. The principal methodology used in rating Pilgrim's Pride Corporation was the Global Food - Protein and Agriculture Industry Methodology, published September 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Headquartered in Greeley, Colorado, Pilgrim's Pride Corporation is the second largest chicken producer in the world, with operations in the United States, Mexico and Puerto Rico. The company produces, processes, markets and distributes chicken to food service, distributors and retail operators worldwide. For the twelve months ended March 31, 2011, revenues for the company were approximately $7.1 billion. JBS, S.A. has a 67% ownership stake in Pilgrim's Pride. PITTSBURGH CORNING: Asks Court to Reconsider Chapter 11 Plan ------------------------------------------------------------ Carolina Bolado at Bankruptcy Law360 reports that Pittsburgh Corning Corp. asked a Pennsylvania bankruptcy court on Thursday to reconsider its rejection of the company's reorganization plan, claiming confirmation would not adversely affect insurers or improperly insulate the company from asbestos claims. In a motion filed in Pennsylvania bankruptcy court, Pittsburgh Corning, its corporate parent PPG Industries and the Asbestos Claimants Committee urged U.S. Bankruptcy Judge Judith K. Fitzgerald to reconsider her conclusions that the proposed Chapter 11 plan is not insurance neutral and allows too many protections from asbestos claims for the debtors, Law360 says. As reported in the Troubled Company Reporter on June 20, 2011, the United States Bankruptcy Court for the Western District of Pennsylvania issued a decision denying confirmation of the most recent amended plan of reorganization, filed on Jan. 29, 2009, for Pittsburgh Corning Corp. after normal business hours. Although denying confirmation, the decision viewed favorably many features of the plan. PPG Industries PPG +0.76% is studying the bankruptcy court's decision and is encouraged that the bankruptcy court has scheduled a status conference for July 20, 2011, to consider additional steps to be taken in the case, including potential modifications to the plan in accordance with the bankruptcy court's opinion. PPG has owned 50 percent of Pittsburgh Corning since 1937. Pittsburgh Corning Corporation filed for Chapter 11 bankruptcy protection in 2000 (Bankr. W.D. Pa. Case No. 00-22876). The Hon. Judith K. Fitzgerald presides over the case. The Bankruptcy Court authorized the retention of Reed Smith LLP as counsel for the Debtor under a general retainer, and the retention of Deloitte & Touche LLP as accountants for the Debtor. The United States Trustee appointed a Committee of Unsecured Trade Creditors on April 28, 2000. The Bankruptcy Court authorized the retention of Leech, Tishman, Fuscaldo & Lampl, LLC, as counsel to the Committee of Unsecured Trade Creditors, and Pascarella & Wiker, LLP, as financial advisor. The United States Trustee appointed a Committee of Asbestos Creditors on April 28, 2000. The Bankruptcy Court authorized the retention of these professionals by the Committee of Asbestos Creditors: (i) Caplin & Drysdale, Chartered as Committee Counsel; (ii) Campbell & Levine as local counsel; (iii) Anderson Kill & Olick, P.C. as special insurance counsel; (iv) Legal Analysis Systems, Inc., as Asbestos-Related Bodily Injury Consultant; (v) L. Tersigni Consulting, P.C. as financial advisor, and (vi) Professor Elizabeth Warren, as a consultant to Caplin & Drysdale, Chartered. On Feb. 16, 2001, the Court approved the appointment of Lawrence Fitzpatrick as the Future Claimants' Representative. The Bankruptcy Court authorized the retention of Meyer, Unkovic & Scott LLP as his counsel, Young Conaway Stargatt & Taylor, LLP as his special counsel, and Analysis, Research and Planning Corporation as his claims consultant. In December 2006, the Bankruptcy Court denied confirmation of an earlier version of the plan, citing that the plan was too broad in addressing independent asbestos claims that were not associated with the Debtor. POINT BLANK: Debtor & Committees Have Exclusivity Until October --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Point Blank Solutions Inc. hasn't been able to proceed with a reorganization given disputes with the official equity holders' committee. In the meantime, Point Blank's share of the exclusive right to propose a Chapter 11 plan was extended this week until Oct. 14. Aside from the company, only the official committees are permitted to propose a reorganization. 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 (Bankr. D. Del. Case No. 10-11255) on April 14, 2010. Laura Davis Jones, Esq., Alan J. Kornfeld, Esq., David M. Bertenthal, 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. Ian Connor Bifferato, Esq., and Thomas F. Driscoll III, Esq., at Bifferato LLC; and Carmen H. Lonstein, Esq., Andrew P.R. McDermott, Esq., and Lawrence P. Vonckx, Esq., at Baker & McKenzie LLP, serve as counsel for the Official Committee of Equity Security Holders. Robert M. Hirsh, Esq., and George P. Angelich, Esq., at Arent Fox LLP, serve as counsel to the Creditors Committee, and Frederick B. Rosner, Esq., and Brian L. Arban, Esq., at the Rosner Law Group LLC, serve as co-counsel. PRE-PAID LEGAL: Moody's Affirms 'B1' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service affirmed the B1 Corporate Family Rating of Pre-Paid Legal Services, Inc. and assigned Ba2 ratings to its proposed $250 million first-out secured term loan and $30 million first-out revolver and a B3 rating to its proposed $150 million last-out secured term loan. The $250 million first-out term loan, $30 million first-out revolver and $150 million last-out term loan are expected to replace a proposed $400 million term loan B and $30 million secured revolver, which were rated B1 on May 12, 2011. Moody's concurrently withdrew the B1 ratings on the $400 million term loan B and $30 million revolving credit facility. The rating outlook is stable. On January 30, 2011, Pre-Paid Legal announced that it entered into a definitive merger agreement with two newly formed subsidiaries of MidOcean Partners (MidOcean), a private equity firm. The merger agreement provides that MidOcean will acquire all of the shares of Pre-Paid Legal for an aggregate equity purchase price of approximately $650 million. The closing of the transaction is subject to customary conditions including shareholder and regulatory approval. The transaction is expected to be funded with $400 million of secured term loans, $143 million of common equity, $75 million of preferred equity and existing cash of the company. Moody's took these rating actions (LGD assessments revised): -- Assigned $250 million senior secured first-out term loan due 2016, Ba2 (LGD 2, 29%) -- Assigned $30 million senior secured first-out revolver due 2016, Ba2 (LGD 2, 29%) -- Assigned $150 million senior secured last-out term loan due 2016, B3 (LGD 5, 84%) -- Affirmed Corporate Family Rating, B1 -- Affirmed Probability of Default Rating, B1 -- Withdrew $30 million senior secured revolver, B1 (LGD 4, 50%) -- Withdrew $400 million senior secured term loan B, B1 (LGD 4, 50%) RATINGS RATIONALE The B1 Corporate Family Rating reflects Moody's expectation of modestly declining revenues and earnings in the year ahead given significant customer and associate attrition rates and declines in memberships over the last two years. Ratings also reflect potential legal and regulatory risks associated with the multilevel marketing business model and a moderately small revenue base of approximately $450 million. The ratings are supported by a predictable revenue stream from a large member base, moderate leverage, steady free cash flow and stable financial performance during the recent economic downturn. Though interest expense is expected to be significantly higher than Moody's previous expectation, Moody's expects key credit metrics to remain in line with the B1 rating category. The stable outlook reflects Moody's expectation of a modest decline in revenues, EBITDA and the member base in 2011. Moody's expects the new management team to focus on marketing and retention strategies to drive the recruitment of more committed associates and to improve customer retention. The ratings could be downgraded if revenue and memberships materially decline or financial strength metrics materially weaken from pro forma levels. Profitability levels and cash flow tend to increase in periods of lower recruitment of new members because a significant percentage of anticipated first year membership fees are advanced to associates and these advances are charged to expense in the first month of membership. Therefore a material erosion of the member base -- even if accompanied by an improvement in financial strength metrics -- could pressure the ratings. Moody's considers the size of the member base an important determinant of the health of the business. Legal or regulatory developments that have a material adverse affect on the company's business model or financial position could also pressure the ratings. The ratings could be upgraded if (i) revenue and memberships grow solidly over a period of 2 to 3 years; (ii) financial strength metrics materially improve and (iii) legal and regulatory risks remain manageable in Moody's assessment. Specifically, if Moody's comes to expect debt to EBITDA and free cash flow to debt to be sustained at less than 3 times and over 12%, respectively, an upgrade is possible. The principal methodology used in rating Pre-Paid Legal was the Global Business & Consumer Service Industry Methodology, published October 2010. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. Pre-Paid Legal, headquartered in Ada, Oklahoma, designs, underwrites and markets legal expense plans to families and small businesses in the United States and Canada. The company sells the majority of its membership plans through a multi-level marketing program through a base of over 400,000 sales associates. The company also provides identity theft protection and restoration services through a partnership with Kroll Background America., Inc. Reported revenues for twelve months ended March 31, 2011 were approximately $447 million. PRE-PAID LEGAL: S&P Affirms 'B' CCR on Financing Modification ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its preliminary 'B' corporate credit rating on Ada, Okla.-based Pre-Paid Legal Services Inc. (PPD) following the announcement that the financing terms of the transaction were recently modified. The outlook is stable. "At the same time, we affirmed our preliminary 'BB-' issue rating on the company's five-year $30 million revolving credit facility. The preliminary recovery rating is '1', indicating our expectation of very high (90% to 100%) recovery for revolving credit facility lenders in the event of a payment default," S&P stated. "We also affirmed our preliminary 'BB-' issue rating on the company's 5.5-year $250 million first-lien first-out term loan. The preliminary recovery rating is '1', indicating our expectation of very high (90% to 100%) recovery for first-out term loan lenders in the event of a payment default," S&P said. "We also raised our preliminary issue rating on the company's 5.5- year $150 million last-out term loan to 'B' from 'B-'. We revised the preliminary recovery rating to '4' from '5', indicating our expectation of average (30% to 50%) recovery for last-out term loan lenders in the event of a payment default," S&P related. "Our ratings are subject to review of final documentation. Upon review of final documentation we will issue our final ratings, which may change from our preliminary ratings. We estimate PPD will have about $400 million in reported debt outstanding following the transaction," S&P noted. "The ratings reflect our analysis that PPD has a narrow product focus and participates in a small niche segment of the legal service plan industry, as well as our belief that the gradual decline in the membership base since 2006 will be difficult to reverse over the near term," said Standard & Poor's credit analyst Rick Joy. "Our rating outlook on PPD is stable, reflecting our assessment that membership growth and retention is unlikely to improve, which will result in credit measures remaining weak and in line with 'B' rating category medians. At the same time, we expect liquidity to remain adequate and covenant cushion to remain sufficient," S&P stated. QUEPASA CORP: Files Form S-8; Registers 2 Million Common Shares --------------------------------------------------------------- Quepasa Corporation filed with the U.S. Securities and Exchange Commission a Form S-8 relating to the registration of additional shares of common stock issuable under the Company's 2006 Stock Incentive Plan. The Plan has been amended to increase the number of shares available by 2,000,000 shares. A full-text copy of the Form S-8 is available for free at: http://is.gd/IfaCQp About Quepasa Corporation West Palm Beach, Fla.-based Quepasa Corporation (OTC BB: QPSA) through its Web site -- http://www.Quepasa.com/-- operates as an online social community for young Hispanics. Quepasa reported a consolidated net loss of $6.65 million on $6.05 million of revenue for the fiscal year ended Dec. 31, 2010, compared with a net loss of $10.58 million on $536,000 of revenue during the prior year. The Company's balance sheet at March 31, 2011, showed $21.01 million in total assets, $7.73 million in total liabilities and $13.28 million in total stockholders' equity. Salberg & Company, P.A., in Boca Raton, Florida, independent report following the 2010 results did not contain a going concern qualification for Quepasa Corp. As reported in the Troubled Company Reporter on March 9, 2010, Salberg & Company, P.A. expressed substantial doubt about the Company's ability to continue as a going concern following the 2009 results. The independent auditors noted of the Company's net loss and net cash used in operating activities in 2009 of $10.58 million and $3.88 million, respectively, and a stockholders' deficit and an accumulated deficit of $3.90 million and $159.33 million, respectively, at Dec. 31, 2009. QUINCY MEDICAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Quincy Medical Center, Inc. dba Quincy Hospital QMC 114 Whitwell Street Quincy, MA 02169 Bankruptcy Case No.: 11-16394 Chapter 11 Petition Date: July 1, 2011 Court: U.S. Bankruptcy Court District of Massachusetts (Boston) Judge: Melvin S. Hoffman Debtor's Counsel: John T. Morrier, Esq. CASNER & EDWARDS, LLP 303 Congress Street Boston, MA 02210 Tel: (617) 426-5900 Fax: (617) 426-8810 E-mail: morrier@casneredwards.com Estimated Assets: $50,000,001 to $100,000,000 Estimated Debts: $50,000,001 to $100,000,000 The petition was signed by Mark O'Neill, senior vice president of finance and chief financial officer. Affiliates that simultaneously sought Chapter 11 protection: Debtor Case No. ------ -------- QMC ED Physicians, Inc. 11-16395 Quincy Physician Corporation 11-16396 Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Healthplans, Inc. Insurance $1,337,335 1500 West Park Drive, Suite 330 Westborough, MA 01581 Promutual Insurance $558,879 101 Arch Street, 4th Floor Boston, MA 02110 Boston University Trade Debt $505,818 Psychiatric Associate, Inc. 715 Albany Street, M-8th Floor Boston, MA 02118 City of Quincy Utilities $392,260 Quincy City Hall 1305 Hancock Street Quincy, MA 02169 Claflin Trade Debt $376,054 455 Warwick Industrial Drive Warwick, RI 02886 Cardinal Health Boston Division Trade Debt $245,631 Sodexho Inc. & Affiliates Trade Debt $241,102 Biomet Inc. Trade Debt $230,926 Commonwealth of Massachusetts Insurance $223,738 Per-Se Technologies Inc. Trade Debt $191,376 Direct Energy Services, LLC Utilities $189,456 Roche Diagnostics Corporation Trade Debt $139,936 National Grid Utilities $119,720 Linc Health Inc. Trade Debt $110,565 U.S. Foodservice Inc. Trade Debt $109,054 Sprague Energy Corp Utilities $102,886 Delta Dental of MA Insurance $102,637 Johnson & Johnson Health Care Sys. Trade Debt $95,686 American Red Cross Blood Services Trade Debt $86,003 Favorite Healthcare Staffing Trade Debt $83,952 RADIENT PHARMACEUTICALS: Settles Alpha Capital Securities Suit -------------------------------------------------------------- Alpha Capital Anstalt and Whalehaven Capital Fund Ltd., on Dec. 10, 2010, filed a complaint against Radient Pharmaceuticals Corporation regarding the number of warrants they received in the Registered Direct Offering that the Company completed in November 2009 and the shareholder vote obtained at the Company's Dec. 3, 2010, annual shareholder meeting. The Plaintiffs alleged that the effective price of the notes the Company issued pursuant to the private financing the Company completed in March and April 2010, and of the shares the Company later issued to two such note holders in settlement of a lawsuit with same, is lower than what the Company claims it to be and that such alleged effective price requires a greater reset to the exercise price of the warrants they received in the RDO. Additionally, they allege that the Company solicited votes against one of the proposals related to the RDO that was proposed at the Dec. 3, 2010, annual shareholder meeting. The Plaintiffs sought relief from the court involving additional shares issuable pursuant to the exercise of the warrants they received in the RDO and cash damages. As reported in the Company's Form 8-K dated May 17, 2011, on May 10, 2011, the Company entered into a Settlement Agreement with the Plaintiffs pursuant to which the Company agreed to issue that number of shares of the Company's common stock equal in value to $10,912,055 at the time of issuance. On May 24, 2011, the Company received court approval to issue those shares pursuant to the provisions of Section 3(a)(10) of the Securities Act of 1933, as amended. Under the terms of the court approved settlement, the parties filed a Stipulation of Discontinuance of the lawsuit with the relevant court. As part of the Settlement Agreement, Alpha Capital and Whalehaven Capital retained all of the warrants the Plaintiffs received in the RDO and in the private financing the Company closed in March and April 2010. The Company is obligated to issue to Alpha Capital and Whalehaven Capital as many shares of the Company's common stock as possible to reach the Settlement Amount that the NYSE Amex has previously approved for issuance to the Plaintiffs. On June 29, 2011, the Company agreed to issue 11,603,000 of the Company's shares to Alpha Capital and 8,897,000 shares to Whalehaven Capital. In addition, and in order to account for the time it may take to receive shareholder approval to authorize sufficient additional shares that are issuable to them, the Plaintiffs agreed to accept a promissory note for the monetary value of that number of additional shares that would be required to be issued to achieve the Settlement Amount upon Court Approval based on a pre- determined formula set forth in the Notes. The notes bear 8% interest and mature four months after issuance. The Company maintains the right to pay the note back in cash or shares of common stock based upon a pre-determined formula set forth in the notes. Upon the occurrence of an event of default, the note will become immediately due and payable. Under the Settlement Agreement, Plaintiffs are entitled to entry of judgment in the amount of principal outstanding, if any, on the maturity date. The Settlement Agreement also contemplates the issuance of additional shares to Plaintiffs or the return of shares to the Company based upon variances in the market price of the Company's common stock between the date the Company receives Court Approval and sixty days following the maturity date of the notes. Based on the market price of the Company's outstanding shares as of June 29, 2011, including the 20,500,000 shares the Company issued upon partial conversion of their notes, after full conversion of such promissory notes, the Company would be obligated to issue a total of 27,539,373 shares of common stock to Alpha Capital and 21,116,763 shares of common stock to Whalehaven Capital. In addition, Alpha Capital and Whalehaven Capital hold warrants to purchase an additional 207,668 and 188,777 shares of common stock, respectively. About Radient Pharmaceuticals Headquartered in Tustin, Calif., Radient Pharmaceuticals Corporation -- http://www.Radient-Pharma.com/-- is engaged in the research, development, manufacturing, sale and marketing of its ONKO-SURE(TM) a proprietary IVD Cancer Test in the United States, Canada, China, Chile, Europe, India, Korea, Taiwan, Vietnam and other markets throughout the world. Radient said in October 2010 it incurred a trigger event on the 12% Convertible Notes issued in first and second quarter of 2010 due to its failure to have the related registration statement declared effective by June 1, 2010. The Company filed on Sept. 7, 2010, an Event of Default under those same notes occurred since it did not hold the related shareholder meeting by Aug. 31, 2010. The Company reported a net loss of $85.71 million on $231,662 of net revenues for the year ended Dec. 31, 2010, compared with a net loss of $16.62 million on $8.62 million of net revenues during the prior year. The Company's balance sheet at March 31, 2011, showed $5.56 million in total assets, $19.04 million in total liabilities, all current, and a $13.48 million total stockholders' deficit. RPC's Form 10-K for the fiscal year ended Dec. 31, 2010, included an audit opinion with a "going concern" explanatory paragraph. As reported by the TCR on May 31, 2011, KMJ Corbin & Company LLP, in Costa Mesa, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses, had negative cash flows from operations in 2010 and 2009, and has a working capital deficit of approximately $53 million at Dec. 31, 2010. RADIENT PHARMACEUTICALS: Enters Into Noteholders Exchange Pact -------------------------------------------------------------- Radient Pharmaceuticals Corporation disclosed in May that it was in default to each of Iroquois Master Fund Ltd., Cranshire Capital, L.P., Freestone Advantage Partners, L.P., Bristol Investment Fund, Ltd., and Kingsbrook Opportunities Master Fund LP, the holders of the Company's convertible notes due Dec. 1, 2011, in the original principal amount of $8,437,500. As a result of those defaults, the Company's total liabilities to the 2011 Noteholders aggregated $22,301,761. The Company entered into an exchange agreement on June 29, 2011, with each of the 2011 Noteholders in order to settle the Company's obligations to each of the 2011 Noteholders. Pursuant to the terms of the Exchange Agreement, each 2011 Noteholder agreed to exchange its claims against the Company, its subsidiaries and certain of their respective current and former officers, directors and representatives for (i) the Company's 4% convertible notes ($4,950,000 original principal amount in the aggregate), (ii) shares of 4% Series A Convertible Preferred Stock of the Company (with an aggregate stated value of $6,701,000) under a Certificate of Designations of Series A Convertible Preferred Stock, and (iii) a warrant, expiring 5 years from the date of the receipt of Stockholder Approval, to purchase additional shares of the Company's common stock (94,468,113 shares of common stock in the aggregate under all the warrants. Under the Exchange Agreement, each of the 2011 Noteholders and their affiliated and related persons and entities also received a mutual full release from the Company. Following a fairness hearing held on June 30, 2011, in the Supreme Court of the State of New York, the Court entered an order approving (i) the fairness of the terms and conditions of the proposed exchange and the transactions contemplated by the Exchange Agreement, (ii) the terms and conditions of the proposed exchange and the transactions contemplated by the Exchange Agreement and (iii) the issuance of the Notes, the shares of Preferred Stock and the Warrants pursuant to the exemption from registration under Section 3(a)(10) of the Securities Act of 1933, as amended. Under the Exchange Agreement, the Company is also obligated to (i) file an amended preliminary proxy statement with the SEC by July 5, 2011, to seek shareholder approval of an increased amount of authorized shares to 750,000,000 shares of common stock, (ii) fix a date for the shareholders meeting no later than 20 days after receipt of final SEC comments relating to such proxy statement and (iii) obtain shareholder approval for the above proposal by no later than Aug. 31, 2011. If the Company fails to comply with any of the foregoing, it will constitute an event of default under the Notes and a triggering event with respect to the Preferred Stock. If an event of default occurs under the Notes or the terms of the Certificate of Designation, the Company must redeem in cash any Notes and shares of Preferred Stock submitted to us for redemption at 125% of the greater of (i) the amount submitted for redemption unconverted principal amount and (ii) the greatest equity value of the shares of common stock underlying the Note or shares of Preferred Stock submitted for redemption from the date immediately preceding the default until the date so submitted for redemption. The consummation of the proposed exchange and transactions consummated by the Exchange Agreement will occur on July 1, 2011. About Radient Pharmaceuticals Headquartered in Tustin, Calif., Radient Pharmaceuticals Corporation -- http://www.Radient-Pharma.com/-- is engaged in the research, development, manufacturing, sale and marketing of its ONKO-SURE(TM) a proprietary IVD Cancer Test in the United States, Canada, China, Chile, Europe, India, Korea, Taiwan, Vietnam and other markets throughout the world. Radient said in October 2010 it incurred a trigger event on the 12% Convertible Notes issued in first and second quarter of 2010 due to its failure to have the related registration statement declared effective by June 1, 2010. The Company filed on Sept. 7, 2010, an Event of Default under those same notes occurred since it did not hold the related shareholder meeting by Aug. 31, 2010. The Company reported a net loss of $85.71 million on $231,662 of net revenues for the year ended Dec. 31, 2010, compared with a net loss of $16.62 million on $8.62 million of net revenues during the prior year. The Company's balance sheet at March 31, 2011, showed $5.56 million in total assets, $19.04 million in total liabilities, all current, and a $13.48 million total stockholders' deficit. RPC's Form 10-K for the fiscal year ended Dec. 31, 2010, included an audit opinion with a "going concern" explanatory paragraph. As reported by the TCR on May 31, 2011, KMJ Corbin & Company LLP, in Costa Mesa, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses, had negative cash flows from operations in 2010 and 2009, and has a working capital deficit of approximately $53 million at Dec. 31, 2010. RAINBOWVISION SANTA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: RainbowVision Santa Fe, LLC 500 Rodeo Road Santa Fe, NM 87505 Bankruptcy Case No.: 11-12971 Chapter 11 Petition Date: June 29, 2011 Court: United States Bankruptcy Court New Mexico (Albuquerque) Judge: James S. Starzynski Debtor's Counsel: George D. Giddens, Jr., Esq. LAW OFFICE OF GEORGE "DAVE" GIDDENS 10400 Academy Rd NE Ste 350 Albuquerque, NM 87111-1229 Tel: (505) 271-1053 Fax: (505) 271-4848 E-mail: dave@giddenslaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $10,000,001 to $50,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nmb11-12971.pdf The petition was signed by Joy Silver, president and CEO of Rainbow Vision Properties, Inc. RENT-A-CENTER INC: Moody's Affirms 'Ba2' Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service revised Rent-A-Center Inc.'s ratings outlook to positive from stable and affirmed all other ratings. The change in outlook reflects the consistent improvement in the company's credit metrics attributable to both earnings growth and debt reduction over the past two years. "Rent-A-Center has maintained solid credit metrics over the past two years despite the challenging economic environment," stated Mike Zuccaro, Analyst at Moody's Investors Service. "The company's EBITA margins remain solid at over 14%, interest coverage has been maintained above 3.5 times, and leverage has declined to below 4.0 times as a result of earnings growth and debt reduction." Rent-A-Center announced on June 21, 2011 its intention to refinance its existing senior secured debt by entering into a new $750 million secured credit facility that will consist of a $250 million term loan and $500 million revolving credit facility (the facilities will not be rated by Moody's). The company intends to repay its existing secured term debt, currently about $358 million outstanding, using proceeds from the new term loan and drawing approximately $108 million on the revolving credit facility. This transaction is intended to lower the company's cost of capital and extend its debt maturities. Upon closing of the transaction, the ratings on the existing credit facilities will be withdrawn. Ratings affirmed are: -- Corporate Family Rating at Ba2 -- Probability of Default Rating at Ba2 -- $300 million guaranteed senior unsecured notes due 2020 at Ba3 (LGD 5, 79%) Ratings affirmed, to be withdrawn upon completion of the refinancing transaction: -- Senior secured revolver, due 9/30/2013, rated Ba1 (LGD 2, 25%) -- Senior secured term loan A, due 9/30/2013, rated Ba1 (LGD 2, 25%) -- Senior secured term loan B, due 6/30/2012, rated Ba1 (LGD 2, 25%) -- Senior secured term loan B, due 3/31/2015, rated Ba1 (LGD 2, 25%) RATINGS RATIONALE Rent-A-Center's Ba2 Corporate Family Rating reflects its relatively strong debt protection measures, leading position in the consumer rent-to-own industry, moderate business risk, balanced financial policy, and good liquidity. The rating also reflects potential challenges inherent with planned significant growth of RAC Acceptance units in the US, expansion of its rent- to-own stores in international markets (Canada and Mexico), and potential impact from new government legislation that may occur from time-to-time. The positive outlook reflects Moody's belief that the combination of profitable unit growth and same store sales should enable the company to continue improving, or at least maintaining, its solid credit metrics in the near-to-intermediate-term. Rent-A-Center's ratings could be upgraded if the company sustains profitable new unit growth and positive same store sales while maintaining credit metrics at or close to current levels. Other considerations include continued good liquidity, balanced financial policies, and a stable regulatory environment. Specifically, debt/EBITDA would need to be no higher than 4.0 times and EBITA/Interest should be no lower than 3.5 times. Given the company's relatively stable metrics and the positive ratings outlook, a ratings downgrade is unlikely in the near term. However, the outlook could return to stable if the company's same store sales or profitability were to materially decline. Debt- funded shareholder returns or acquisitions could also lead to downward pressure. Specific credit metrics include debt/EBITDA rising materially above 4.0 times or EBITA/interest falling below 3.5 times on a sustained basis. The principal methodology used in rating Rent-A-Center, Inc. was the Global Retail Industry Methodology, published December 2006. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history. Rent-A-Center, Inc, with headquarters in Plano, Texas operates the largest chain of consumer rent-to-own stores in the U.S. with 3,503 company operated stores and kiosks located in the U.S., Canada, Mexico and Puerto Rico. Rent-A-Center also franchises 206 rent-to-own stores that operate under the "ColorTyme" and "Rent-A- Center" banners. Annual revenues exceed $2.7 billion. RIVIERA HOLDINGS: S&P Assigns 'CCC+' Corporate; Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' corporate credit rating to Riviera Holdings Corp. The rating outlook is stable. "The 'CCC+' corporate credit rating reflects the company's high debt leverage and vulnerable business position. Riviera operates two properties (located in Blackhawk, Colo. and Las Vegas, Nev.) with second-tier market positions in the highly competitive markets," said Standard & Poor's credit analyst Michael Halchak. "The rating also factors in the company's excess cash, which we believe would support the company in the event of a moderate decline in operating performance." "We expect consolidated EBITDA to be flat to slightly up in 2011, compared to 2010 consolidated EBITDA of about $7 million. We expect our measure of leverage, as measured by debt to EBITDA, will track in the high-9x area at the end of 2011. The company derives the vast majority of its EBITDA from its Blackhawk property, which we expect to generate relatively stable net revenue and EBITDA, as the company should maintain its current market share in that slightly growing gaming market. At the Las Vegas property, we foresee flat net revenue and EBITDA, as the company continues to face competitive pressures from other gaming operators," S&P said. The Riviera Black Hawk opened in February 2000 and benefits from being the first casino passed on the main access route from Denver. Competition in the Blackhawk market has increased in the past several years, as competitors such as Ameristar Casinos Inc. and Isle of Capri Casinos Inc. have invested significant sums in their properties, resulting in upgraded and expanded facilities. "These competitive effects have already affected market share dynamics. However, we believe the market's competitive dynamics have stabilized, and, in the near term, Riviera will maintain its current market share," S&P noted. ROBERT J SAUSA: Lawyer Fees Denied for Lack of Hiring Approval -------------------------------------------------------------- Bankruptcy Judge Walter Shapero denied requests of David I. Goldstein, Esq., for (i) approval of his employment as Chapter 11 counsel to Robert J. Sausa and Eileen K. Sausa, nunc pro tunc, and (ii) payment of attorney fees in the case. Mr. Goldstein is seeking approval of fees of $5,962.50, including a retainer of $3,500 which the lawyer has received, leaving a balance owed of $2,462.50. The U.S. Trustee objected to the application on two grounds: (1) Mr. Goldstein's failure to have been appointed in the first place; and (2) the application's non-compliance with the detailed fee application requirements of E.D. Mich. LBR 2016-1(a). Mr. Goldstein essentially indicated that he had no particular excuse for failing to file the required Application for Appointment, other than just overlooking the requirement to do so. The lawyer stated that he and the Debtors had initially discussed filing a Chapter 13 case, but investigation proved that they could not do so because of the amount and nature of their debts. According to Judge Shapero, it is possible that Mr. Goldstein, having contemplated the filing of a Chapter 13, had its procedures uppermost in mind when he filed the Chapter 11 case. "That very circumstance, however, should reasonably require an active bankruptcy attorney such as [Mr. Goldstein] to take particular note of the Chapter 11 filing requirements, particularly where those requirements might affect his right to compensation, and even more particularly when venturing into possibly less than familiar legal territory," Judge Shapero said. "Notwithstanding the fact that the services were performed in good faith and with appropriate results, the indicated reasoning requires the indicated result, i.e.: denial of the motion for nunc pro tunc approval and, thus, also denial of the application for approval of the fees sought. This conclusion would logically also require the return of the retainer paid to [Mr. Goldstein]." A copy of Judge Shapero's June 24, 2011 Opinion is available at http://is.gd/nCXPOefrom Leagle.com. About the Sausas Robert J. Sausa and Eileen K. Sausa, in Milford, Michigan, filed for bankruptcy (Bankr. E.D. Mich. Case No. 10-55640) on May 11, 2010. David I. Goldstein, Esq. -- dstinger2684@sbcglobal.net -- serves as the Debtors' counsel. The Sausas scheduled assets of $1,011,862 and debts of $1,344,107 in their petition. The United States Trustee filed -- but later withdraw -- a motion seeking conversion of the case to Chapter 7 liquidation. An order was entered April 5, 2011, confirming the Debtors' Plan of Reorganization. ROPER INDUSTRIES: Moody's Raises Sr. Unsecured Rating From 'Ba1' ---------------------------------------------------------------- Moody's Investors Service upgraded Roper Industries Inc.'s senior unsecured rating to Baa2 from Baa3, upgraded its senior subordinate rating to Baa3 from Ba1, and changed the ratings outlook to stable from positive. RATINGS RATIONALE "The upgrade of Roper's senior unsecured rating reflects the continued improvement in its financial results following the relatively large acquisition of iTradeNetworks in mid 2010", said Darren Kirk, vice president and senior analyst with Moody's. "The associated increase in financial leverage incurred to fund this acquisition has quickly been reduced through Roper's strong earnings growth and significant free cash flow generation", added Kirk. Roper's Baa2 rating is supported by the company's portfolio of diverse businesses that typically have leading market positions and are focused on end-markets that have attractive growth characteristics. In addition, Roper's businesses collectively have limited exposure to any one customer, product or end-market and generate meaningful amounts of recurring revenues from consumables and subscription-based services. These attributes are reflected in Roper's relatively strong organic revenue growth, high margins and solid free cash flow, which Moody's expects the company will continue to match with conservative levels of leverage and ample liquidity. Roper's rating remains constrained by its acquisition- oriented growth strategy, which has the potential to periodically elevate leverage levels. The stable ratings outlook signals that Roper's rating is unlikely to change within the next 12 to 18 months as debt capacity created by earnings growth and free cash flow is expected to be consumed by ongoing acquisition activity. Longer term, an upgrade would occur should Moody's expects Roper to sustain its adjusted debt- to-EBITDA towards 2x and funds from operations to debt above 40% through future acquisition activity. A downgrade would occur should debt-financed acquisitions result in adjusted debt-to- EBITDA sustained towards 3x, or funds from operations to debt towards 25%. These ratings have been upgraded to Baa2 from Baa3: -- $750 million senior unsecured bank facility, due 2013 -- $500 million senior unsecured notes, due 2013 -- $500 million senior unsecured notes, due 2019 The following rating has been upgraded to Baa3 from Ba1: -- $80 million senior subordinate The principal methodology used in rating Roper is the Global Manufacturing Industry, published in December 2010. Roper Industries Inc., headquartered in Sarasota, Florida, is a highly diversified company that designs, manufactures and distributes engineered products for industrial, medical and energy end markets. The company also provides software solutions and services for applications that include electronic tolling, freight matching and food services. Revenues for the twelve months ending March 31, 2011 were $2.5 billion. ROUND TABLE: Frank Rimerman Approved to Prepare Financial Reports ----------------------------------------------------------------- The Hon. Roger L. Efremsky of the U.S. Bankruptcy Court for the Northern District of California authorized Round Table Pizza, Inc., et al., to employ Frank, Rimerman & Co. as an ordinary course of business professional. As reported in the Troubled Company Reporter on June 6, 2011, Frank Rimerman is preparing audited financial reports required by applicable Franchise Laws, ESOP laws and Round Table's credit facility with GECC/Prudential. Frank Rimerman is also filing tax returns with State and Federal governments. The Debtors will not disburse any compensation or expense reimbursement to Frank Rimerman absent a separate Order of the Court authorizing the disbursement. To the best of the Debtors' knowledge, Frank Rimerman is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Round Table Based in Concord, California, Round Table Pizza, Inc. -- http://www.roundtablepizza.com/-- is a private, 100% employee- owned company with corporate offices based in Concord, California. Round Table is largely owned by an Employee Stock Ownership Plan, with 3,190 participants. The ESOP is designed and intended to provide a source of retirement income to Round Table's loyal, long-term employees. Round Table filed for Chapter 11 bankruptcy protection (Bankr. N.D. Calif. Case No. 11-41431) on Feb. 9, 2011. Judge Roger L. Efremsky presides over the case. Scott H. McNutt, Esq., at McNutt Law Group serves as the Debtor's bankruptcy counsel. The Debtors also tapped Frank, Rimerman & Co. as its auditor and accountant, Farella Braun + Martel LLP as counsel for the special purpose of providing non-bankruptcy corporate law and general litigation services, Littler Mendelson P.C. to advice on employment law matters, Huntley, Mullaney, Spargo & Sullivan Inc. as its real estate consultant, Snell & Wilmer, LLP to advise and represent the Debtor in matters related to franchise law, and Hinman & Carmichael LLP as Beverage Law counsel. Round Table disclosed $1,066,524 in assets and $35,625,649 in liabilities as of the Chapter 11 filing. The case is jointly administered with affiliates -- The Round Table Franchise Corporation, Round Table Development Company, and Round Table Pizza Nevada LLC. On Feb. 22, 2011, the Acting U.S. Trustee appointed an official committee of unsecured creditors. The committee has tapped Brownstein Hyatt Farber Schreck, LLP as counsel. The Debtor also tapped First Bankers Trust Services, Inc. as discretionary, independent, and institutional ESOP Trustee, and Johanson Berenson LLP as an ESOP counsel. ROUND TABLE: Court Approves Davis Wright to Handle Tax Law ---------------------------------------------------------- The Roger L. Efremsky of the the U.S. Bankruptcy Court for the Northern District of California authorized Round Table Pizza, Inc., et al., to employ Davis Wright Tremaine LLP as counsel for providing advice and representation regarding tax law and intellectual property law. The Debtor will not disburse any compensation or expense reimbursement to Davis Wright absent a separate order of the Court authorizing the disbursement. To the best of the Debtors' knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Round Table Based in Concord, California, Round Table Pizza, Inc. -- http://www.roundtablepizza.com/-- is a private, 100% employee- owned company with corporate offices based in Concord, California. Round Table is largely owned by an Employee Stock Ownership Plan, with 3,190 participants. The ESOP is designed and intended to provide a source of retirement income to Round Table's loyal, long-term employees. Round Table filed for Chapter 11 bankruptcy protection (Bankr. N.D. Calif. Case No. 11-41431) on Feb. 9, 2011. Judge Roger L. Efremsky presides over the case. Scott H. McNutt, Esq., at McNutt Law Group serves as the Debtor's bankruptcy counsel. The Debtors also tapped Frank, Rimerman & Co. as its auditor and accountant, Farella Braun + Martel LLP as counsel for the special purpose of providing non-bankruptcy corporate law and general litigation services, Littler Mendelson P.C. to advice on employment law matters, Huntley, Mullaney, Spargo & Sullivan Inc. as its real estate consultant, Snell & Wilmer, LLP to advise and represent the Debtor in matters related to franchise law, and Hinman & Carmichael LLP as Beverage Law counsel. Round Table disclosed $1,066,524 in assets and $35,625,649 in liabilities as of the Chapter 11 filing. The case is jointly administered with affiliates -- The Round Table Franchise Corporation, Round Table Development Company, and Round Table Pizza Nevada LLC. On Feb. 22, 2011, the Acting U.S. Trustee appointed an official committee of unsecured creditors. The committee has tapped Brownstein Hyatt Farber Schreck, LLP as counsel. The Debtor also tapped First Bankers Trust Services, Inc. as discretionary, independent, and institutional ESOP Trustee, and Johanson Berenson LLP as an ESOP counsel. ROUND TABLE: Farella Braun OK'd on Non-Bankruptcy Corporate Law --------------------------------------------------------------- The Hon. Roger L. Efremsky of the U.S. Bankruptcy Court for the Northern District of California authorized Round Table Pizza, Inc., et al., to employ Farella Braun + Martel LLP as a counsel for providing non-bankruptcy corporate law and general litigation services. The Debtor will not disburse any compensation or expense reimbursement to Farella Braun absent a separate Order of the Court authorizing the disbursement. To the best of the Debtors' knowledge, the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Round Table Based in Concord, California, Round Table Pizza, Inc. -- http://www.roundtablepizza.com/-- is a private, 100% employee- owned company with corporate offices based in Concord, California. Round Table is largely owned by an Employee Stock Ownership Plan, with 3,190 participants. The ESOP is designed and intended to provide a source of retirement income to Round Table's loyal, long-term employees. Round Table filed for Chapter 11 bankruptcy protection (Bankr. N.D. Calif. Case No. 11-41431) on Feb. 9, 2011. Judge Roger L. Efremsky presides over the case. Scott H. McNutt, Esq., at McNutt Law Group serves as the Debtor's bankruptcy counsel. The Debtors also tapped Frank, Rimerman & Co. as its auditor and accountant, Farella Braun + Martel LLP as counsel for the special purpose of providing non-bankruptcy corporate law and general litigation services, Littler Mendelson P.C. to advice on employment law matters, Huntley, Mullaney, Spargo & Sullivan Inc. as its real estate consultant, Snell & Wilmer, LLP to advise and represent the Debtor in matters related to franchise law, and Hinman & Carmichael LLP as Beverage Law counsel. Round Table disclosed $1,066,524 in assets and $35,625,649 in liabilities as of the Chapter 11 filing. The case is jointly administered with affiliates -- The Round Table Franchise Corporation, Round Table Development Company, and Round Table Pizza Nevada LLC. On Feb. 22, 2011, the Acting U.S. Trustee appointed an official committee of unsecured creditors. The committee has tapped Brownstein Hyatt Farber Schreck, LLP as counsel. The Debtor also tapped First Bankers Trust Services, Inc. as discretionary, independent, and institutional ESOP Trustee, and Johanson Berenson LLP as an ESOP counsel. SAGITTARIUS RESTAURANTS: Moody's Affirms 'Caa1' Corporate Rating ---------------------------------------------------------------- Moody's Investors Service revised the rating outlook of Sagittarius Restaurant LLC's to positive from stable. The company's Caa1 Corporate Family and Probability of Default Ratings were affirmed along with its B1 rating on the senior secured credit facilities. Ratings affirmed and LGD assessments revised: -- Corporate Family rating at Caa1 -- Probability of Default rating at Caa1 -- $199 million senior secured credit facilities due 2015 -- to B1 (LGD2, 17%) from B1 (LGD2, 20%) Ratings outlook -- positive The outlook revision to positive largely reflects Moody's more favorable view on Sagittarius's ability to reduce and sustain debt/EBITDA below 6.0 times (incorporating Moody's analytical adjustments), the target leverage required for a one-notch rating upgrade. "Given Moody's current expected level of free cash flow generation for 2011 and 2012, Sagittarius' debt/EBITDA will likely decline below 6.0x by the end of FY 2012 if it can sustain or improve its operating performance," stated John Zhao, an analyst at Moody's. "However, Sagittarius would also need to continue to make debt payment beyond mandatory amortization in order to achieve a B3 Corporate Family Rating in Moody's opinion." The positive outlook also gains support from the company's demonstrated ability to maintain relatively stable EBITDA by controlling costs and driving positive traffic at its Del Taco quick service restaurant chain, amidst challenging economy, especially in California where Del Taco restaurants are concentrated. The affirmation of Caa1 CFR continues to reflect high leverage in the capital structure. In the first quarter 2011, Sagittarius' debt/EBITDA was approximately 6.2 times. Moody's believes that the high interest rate on the subordinated notes at both its operating and holding companies, which is currently paid-in-kind at 13.0% could offset modest debt reductions and would prevent significant deleveraging. The Caa1 also considers the still weak economic conditions particularly in Sagittarius' home state -- California, the consistently elevated level of promotional activities and the potential margin pressure due to commodity price volatility. Positively, the rating considers Sagittarius' good liquidity profile and brand recognition. The principal methodology used in rating Sagittarius Restaurants LLC was the Global Restaurant Industry Methodology, published June 2008. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Sagittarius Restaurants LLC, headquartered in Lake Forest, California, operates and franchises Mexican QSRs under the Del Taco brand name. The company had 525 units in 17 states and generated revenues of approximately $350 million at the end of March 27, 2011. Sagittarius is owned by a consortium of private equity firms. SHEARER'S FOODS: Moody's Confirms CFR at B2; Outlook Negative ------------------------------------------------------------- Moody's confirmed the ratings of Shearer's Foods, Inc., including its B2 corporate family rating, probability of default ratings at B2 and its term loan B facilities at B1. The outlook is negative. These actions conclude the review for possible downgrade that Moody's initiated on May 17, 2011. These ratings were confirmed: -- Corporate Family Rating at B2, -- Senior secured Revolver at B1 (LGD 3, 39%), -- Senior secured Term loan B at B1 (LGD 3, 39%), -- Probability of Default rating at B2. RATINGS RATIONALE The confirmation follows from Shearer's announcement that it has secured equity funding ($14.3 million in net proceeds) and completed an amendment to its credit agreement. The amendment provides for improved financial covenant headroom, alleviating short-term liquidity concerns. The negative outlook primarily reflects Moody's concerns that Shearer's is still facing operational challenges as it executes its expansion plans in the midst of a difficult commodity cost environment over the next year. Moody's had originally expected leverage to remain at or below 4 times when Moody's initiated rating coverage last March, but leverage has exceeded 4.5 times in each of the last three quarters and is likely to rise to above 5 times by the end of fiscal 2011. Similarly, Shearer's EBITA margin is expected to be significantly lower than originally anticipated, in the 6% - 7% range near term, due to operating challenges, higher than expected integration costs, delays in recognizing benefits from expansion and exposure to rising commodity costs. Moody's recognizes that the need for expansion is due to higher demand from important customers, which could be a long-term credit positive. The ratings reflect company's solid position in private label, co- pack and branded snack foods following the acquisition of Snack Alliance last year, a transaction which provided greater geographic, product and customer diversity to Shearer's. However the rating also reflects the company's relatively small scale, narrow focus on the salty snack sector, and its increasing leverage as a result of expansion plans that have yet to generate improved cash flows. While the company enjoys growing diversity in its product offerings, it is less diversified both geographically and in terms of product categories than larger packaged food companies with which it competes. It is the largest producer of kettle chips in the country and one of the largest producers of private label potato chips. Although Shearer's has many opportunities for growth, Moody's believes that the company has been challenged to build capacity to accommodate these opportunities while still integrating the recent acquisition and facing a tough commodity environment. Shearer's outlook could be brought back to stable if the company builds its covenant cushion above 20%, business regains momentum and EBITDA grows such that leverage is trending lower. The company's ratings could be upgraded if EBITA margins were approaching 10% and leverage was sustained under 4 times (using Moody's standard analytic adjustments) and solid business momentum is sustained. Shearer's ratings could be downgraded if the company fails to maintain comfortable covenant cushion under the amended credit agreement, margins come under further pressure, debt to EBITDA approaches 6 times (using Moody's adjustments),or if Shearer's is unable to improve its operating performance on the back of the recent expansion. The principal methodology used in rating Shearer's Foods, Inc. was the Global Packaged Goods Industry Methodology, published July 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Shearer's, headquartered in Brewster, Ohio, is a leading producer of high quality, co-pack, private label and branded food products, with LTM sales as of March 2011 of approximately $370 million. SHILO INN: Case Summary & 17 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Shilo Inn, Casper, LLC dba Shilo Inn an Oregon Limited Liability Company 11600 SW Shilo Lane Portland, OR 97225 Bankruptcy Case No.: 11-20720 Chapter 11 Petition Date: June 29, 2011 Court: United States Bankruptcy Court District of Wyoming (Cheyenne) Debtor's Counsel: Mark E. Macy, Esq. MACY LAW OFFICE, P.C. 217 West 18th Street Cheyenne, WY 82001 Tel: (307) 632-4100 Fax: (307) 632-8100 E-mail: mark@macylaw.net 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/wyb11-20720.pdf The petition was signed by Christopher Campbell, secretary SIRIUS XM: S&P Affirms 'BB-' Corporate Credit Rating ---------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Sirius XM Radio Inc. to positive from stable, reflecting the company's improving operating performance, declining debt leverage, and prospects for continued strengthening in credit measures for 2011. "We also affirmed the ratings on the company and its XM Satellite Radio Inc. subsidiary, including the 'BB-' corporate credit rating," S&P related. Sirius XM had total debt outstanding of $3.1 billion as of March 31, 2011. The 'BB-' rating on Sirius XM reflects Standard & Poor's expectation that revenue and EBITDA will increase in 2011, resulting in debt leverage in the low-4x range and interest coverage in the low- to mid-2x range. "Sirius XM is the only U.S. satellite radio operator, but it faces significant hurdles to maintaining consistent, long-term growth, including the need to broaden subscriber demand and reduce churn in line with other satellite entertainment providers," said Standard & Poor's credit analyst Hal Diamond. Sirius XM derives almost all of its revenue from subscription fees. Revenue growth is largely a function of new subscriber additions, which is heavily dependent on new auto sales and, to a lesser extent, selective price increases that may aggravate churn. Further long-term risks relate to maintaining subscriber growth during a period of increasing competition from online audio services, and delivering a compelling program lineup at reasonable cost. Standard & Poor's rating outlook is positive, reflecting its view that a continued recovery in auto sales will support growth and strengthen credit measures over the near to intermediate term. SOURCEGAS LLC: Moody's Reviews 'Ba2' CFR for Possible Upgrade ------------------------------------------------------------- Moody's Investors Service placed under review for possible upgrade SourceGas LLC's Ba2 Corporate Family Rating and Ba1 senior unsecured debt rating. The rating review is largely driven by the relatively credit supportive outcome of the recent rate cases in Wyoming and Colorado as well as the Nebraska appeal that was more favorable to the company's financial performance since it allowed for an additional $3 million rate increase over the $1.8 million initially allowed by the commission. "The allowed rate hikes that became effective during the first quarter of 2011 enhance SourceGas' cash flow visibility and are expected to contribute to the continued improvement in the company's key financial metrics" said Moody's analyst Natividad Martel. The rating action acknowledges SourceGas' improving credit metrics; specifically, at year-end 2010, Source Gas' CFO pre-W/C interest coverage and CFO pre-WC to debt were 3.3x and 12.4%, respectively. Moody's expects SourceGas to report similar credit metrics over the medium term such that these are well positioned within the lower range of the Baa3 rating category. That being said, the material consolidated leverage (including Holdings' debt) still constrains the consolidated credit metrics as during 2010 it reported consolidated CFO pre-W/C to debt and CFO pre W/C interest coverage of around 9% and 2.7x times, respectively, while the debt to total capitalization ratio exceeded 65%. Nevertheless, further positive factors supporting a possible upgrade include the company's improving business risk profile given management's current focus on pursuing organic growth initiatives within its regulated operations. These initiatives are mainly associated with conversions from propane and other fuel types amid the slow recovery of the housing sector within its service territories. In addition, management's target for SourceGas' debt (excluding the $150 million term loan at Holding) to total book capitalization ratio is not to exceed 53%. A key factor in the determination of a possible upgrade will be the renewal of SourceGas' revolving credit facility expiring in May 2012 given its relevance for the company's liquidity profile, and the refinancing of Holdings' term loan also due in May 2012. Moody's will further assess whether SourceGas' CFO pre-W/C to debt and CFO pre-W/C interest coverage can continue to exceed 10% and 2.5x, respectively, on a sustainable basis. Nevertheless, Moody's believes at this point that the outcome of the rating review is likely to be limited to no more than a one notch change in the corporate family rating, and the senior unsecured rating. Moody's most recent rating action on SourceGas was on June 28, 2010, when the outlook was changed to positive. The principal methodologies used in rating SourceGas is Moody's Regulated Electric and Gas Utilities methodology published in August 2009, and Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Lakewood, Colorado, SourceGas is an intermediate holding company, whose operating subsidiaries provide retail natural gas distribution services, and operate intrastate transmission pipelines as well as storage facilities in Arkansas, Colorado, Nebraska and Wyoming. Furthermore, SourceGas's wholly owned subsidiary Rocky Mountain Natural Gas LLC offers regulated wholesale natural gas services mainly to affiliate SourceGas Distribution LLC, and natural gas liquid sales processed through two natural gas processing plants. RMNG owns 40% of one of the processing plants, while the second one is wholly owned by SourceGas Energy Services, another SourceGas subsidiary. SGES comprises the group's non-regulated operations (about 8% of the consolidated gross margin) that consist mainly of unbundled natural gas (under the Choice Program) to retail customers in Wyoming and Nebraska. SPECIALTY TRUST: Exits Chapter 11 Under Northlight -------------------------------------------------- American Bankruptcy Institute reports that Specialty Trust Inc. has exited from bankruptcy, according to the REIT's debtor counsel. Northlight Financial LLC, a manager of private equity debt investments and real estate assets, completed a $28.5 million exit financing to Specialty Trust Inc. The exit financing was provided by funds managed by Northlight. "Property value drivers will be the execution of our disciplined resolution plan and targeted application of fresh capital." In December 2010, the Court approved Northlight's Debtor-in- Possession financing and on June 3, 2011, the Court approved the Plan of Reorganization. Pursuant to the Plan, Northlight's real estate group was designated replacement manager and loan servicer. The Specialty Trust portfolio includes more than 30 REO and mortgage assets. Core assets include loans on properties in Sedona Arizona, La Quinta California and Las Vegas Nevada. "We see substantial value in the assets of Specialty Trust and the loan we made on behalf of our investors," said Ben Gerig, Chief Investment Officer of Northlight's real estate group. Mr. Gerig went on to say, "Property value drivers will be the execution of our disciplined resolution plan and targeted application of fresh capital." About Northlight Northlight is an established corporate lender and asset-based investor that currently manages over $500 million in corporate loans, real estate loans and related assets. Mr. Gerig and his real estate team manage the firm's real estate group which currently manages over $300 million in commercial real estate loans and real estate assets with the addition of the Specialty Trust portfolio. Northlight was founded in November 2002 by Michael Jahrmarkt, Robert Woods and Mark Hirschhorn and has been a Registered Investment Advisor since 2006. Senior professionals at Northlight have originated or acquired more than $7 billion of credit-related assets over their careers and the Northlight founders have partnered since 1985 as primary management of significant business units at GE Capital, Heller Financial and Gilman Investment Company. About Specialty Trust Specialty Trust Inc. is a privately held Maryland corporation that acquires and holds, in a tax-advantaged real estate investment trust structure, mortgage loans and mezzanine loans secured by real property located primarily in Nevada, Arizona and California, and interests in entities owning real estate that was acquired through foreclosure of mortgage loans made by ST and mezzanine loans. Reno, Nevada-based Specialty Trust filed for Chapter 11 bankruptcy protection (Bankr. D. Nev. Case No. 10-51432) 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 Chapter 11 petitions. Sallie B. Armstrong, Esq., and Michelle N. Kazmar, Esq., at Downey Brand LLP, in Reno, Nevada; and Ira D. Kharasch, Esq., Scotta E. McFarland, 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 Sept. 2, 2010, the Court appointed Grant Lyon as chief restructuring officer of the Debtors. In its schedules, Specialty Trust disclosed assets of $201,452,048 and liabilities of $109,022,194 as of the petition date. 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. STANDARD STEEL: S&P Puts 'B' Credit Rating on Watch Positive ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on Pittsburgh-based railcar and locomotive wheel and axle manufacturer Standard Steel LLC, including the 'B' corporate credit rating, on CreditWatch with positive implications. "The rating action follows the company's announcement that its parent company, Steel Wheels Acquisition Corp., has agreed to be sold to Sumitomo Metals Industries Ltd. and Sumitomo Corp. (A/Stable/A-1) for $340 million," said Standard & Poor's credit analyst Robyn Shapiro. Standard Steel expects the transaction to close before year-end, subject to the receipt of regulatory approvals. "We will likely withdraw our ratings on Standard Steel if the rated debt is repaid as part of the transaction," S&P said. STERLING FINANCIAL: Fitch Upgrades Long-Term IDR to 'B' ------------------------------------------------------- Fitch Ratings has upgraded the long-term Issuer Default Ratings of Sterling Financial Corporation and its banking subsidiary, Sterling Savings Bank to 'B' from 'C'. Fitch has also removed the 'F' Individual rating assigned to both entities and assigned a new Individual rating of 'D'. The Rating Outlook is Positive. The upgrade of STSA's IDR reflects the considerable enhancement of its capital position, reduction in problem credits, as well as the company's return to profitability. STSA's $730 million capital raise in August 2010 significantly bolstered its regulatory capital position. With Tier 1 Leverage, Tier 1 risk-based and Total Capital ratios at March 31, 2011 of 10.6%, 16.5% and 17.8%, respectively. Additionally, the bank's Tier 1 Leverage ratio of 10.3% comfortably exceeds the 8% enhanced Tier 1 Leverage ratio required by the Memorandum of Understanding. Fitch views STSA's significantly replenished capital position as a necessity as it seeks to reduce the remaining risk on its balance sheet. STSA has significantly reduced problem assets, with non-performing assets down over 40% from a year ago, and while NPAs as a percentage of gross loans plus other real estate owned remain elevated at 11.02% and commercial real estate remains a significant concentration, the loss content in the portfolio has been materially reduced and was a key driver of the company's return to profitability during 1Q'11. Additionally, the company's construction portfolio which has been the source of an outsized portion of its problems has declined to 7% of loans from its peak of 32% at YE07. This portfolio still accounts for half of non- performing loans. Fitch believes that the company's current capital and reserve base should be sufficient to absorb expected future losses in the portfolio. For ratings to improve further the company needs to reduce problem credits to more manageable levels, as well as demonstrate sustained profitability and maintain an enhanced capital base, a scenario Fitch believes is possible over the next 12 to 18 months. However, if credit problems persist causing the company to incur losses of a magnitude that starts to materially erode its capital position, STSA's ratings could face downward pressure. The removal of the 'F' Individual rating which was assigned to signify a company that has defaulted or in Fitch's opinion would have defaulted if it had not received some form of external support namely the capital infusion and the U.S. Treasury's willingness to convert CPP preferred stock into common shares on a discounted basis to facilitate the recapitalization. The assignment of the 'D' Individual rating is Fitch's assessment of the company at this time. Headquartered in Spokane, WA, STSA operates 178 branches in five states. As of March 31, 2011, STSA had $9.4 billion in assets, $6.7 billion in deposits and $5.3 billion in loans. Fitch has taken these rating actions: Sterling Financial Corporation -- Long-term IDR upgraded to 'B' from 'C'; -- Short-term IDR upgraded to 'B' from 'C'; -- Support affirmed at '5'; -- Support floor affirmed at 'NF'; -- Individual rating of 'D' assigned following removal of 'F'. Sterling Savings Bank -- Long-term IDR upgraded to 'B' from 'C'; -- Long-term deposits upgraded to 'B+/RR3' From 'CC/RR3'; -- Short-term IDR upgraded to 'B' from 'C'; -- Short-term deposits upgraded to 'B' from 'C'; -- Support affirmed at '5'; -- Support floor affirmed at 'NF'; -- Individual rating of 'D' assigned following removal of 'F'. The Rating Outlook is Positive. SUNWEST MANAGEMENT: Thompson & Knight Exits Class Action Suit ------------------------------------------------------------- Hilary Russ at Bankruptcy Law360 reports that Thompson & Knight LLP on Wednesday exited a class action in Oregon accusing the firm of aiding an alleged Ponzi scheme at now-defunct retirement home operator Sunwest Management Inc. Law360 relates that U.S. District Judge Michael R. Hogan granted a motion by the plaintiffs to permanently cut Thompson & Knight from the suit, following a settlement approved in April. Another defendant, Geffen Mesher & Co. PC, remains active in the suit and did not consent to the motion to dismiss its co-defendant. About Sunwest Management Founded in Oregon in 1991, Sunwest Management -- http://www.sunwestmanagement.com/-- was one of the largest private senior living providers in the U.S. In March 2009, U.S. District Judge Michael Hogan appointed Michael Grassmueck -- founder and principal of Portland, Oregon-based Grassmueck Group, a national firm that specializes in fiduciary and insolvency services -- as receiver for the Company after the Securities and Exchange Commission filed suit against Sunwest and former CEO Jon Harder, alleging securities fraud. Sunwest Management placed 10 assisted living centers -- two in Oregon -- into Chapter 11 bankruptcy. Briarwood Retirement and Assisted Living Community LLC, which owns a retirement center in Springfield, and Century Fields Retirement and Assisted Living Community LLC, which owns a center in Lebanon, filed for Chapter 11 protection on August 19, 2008. On Aug. 17, 2008, eight Sunwest-affiliated LLCs filed for Chapter 11 bankruptcy protection from creditors in Tennessee. Sunwest was later renamed Stayton SW Assisted Living. As reported by the Troubled Company Reporter on July 16, 2010, Judge Hogan confirmed the plan of reorganization in the Chapter 11 proceedings of Stayton. The plan provides for the sale of up to 149 senior living facilities to a joint venture formed by Blackstone Real Estate Advisors VI L.P., Emeritus Senior Living and Columbia Pacific Advisors. The Blackstone/Emeritus joint venture acquired the properties in exchange for cash, securities and debt valued at $1.3 billion in cash. Under the Plan, existing Sunwest investors were permitted to receive either cash or securities in the new company, with a choice between Class A preferred interests paying 6%, or up to 49% in common interests in the joint venture. The reorganization plan also provides for the creation of a Trustco entity to hold certain non-senior living assets, such as apartments, office buildings and bare land, and liquidate the assets over time for the benefit of the estate's investors and creditors. The Receiver oversees Trustco. In August 2010, Stayton completed the sale of 132 senior living facilities to the joint venture. The transaction was valued at $1.2 billion. In December 2010, the federal equity receiver in charge of former Oregon-based senior living provider Sunwest Management announced a 40% initial distribution to investors and other claimants in the Sunwest securities violation case and related Chapter 11 bankruptcy proceeding. Resources for the initial distribution total $228 million and derive from a $1.2 billion real estate transaction closed earlier this year, in which a joint venture led by Blackstone Real Estate Advisors VI LP and Emeritus Senior Living acquired 144 Sunwest properties in exchange for cash, securities and assumption of debt. SUPERMEDIA INC: S&P Affirms CCR at 'B-'; Outlook Stable ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its corporate credit rating on U.S. directory advertiser SuperMedia Inc., as well as all issue-level ratings on the company's debt. The rating outlook is stable. "At the same time, we revised our recovery rating on SuperMedia Inc.'s senior secured credit facilities to '4', indicating our expectation of average (30% to 50%) recovery for lenders in the event of a payment default, from '3'," S&P said. "The 'B-' corporate credit rating reflects our view that SuperMedia will remain under pressure, given the ominous outlook for print directory advertising," said Standard & Poor's credit analyst Chris Valentine. "We expect that deterioration in revenue and profitability could lead to EBITDA coverage of interest expense in the mid-1x area over the next two years and a weakening in the company's financial profile, despite a significant reduction in its total indebtedness as a result of the reorganization plan earlier last year. SuperMedia will no longer be permitted to make subpar repurchases of its term debt under the terms of its recently amended credit agreement. Our rating assumptions incorporate our view that print directory advertising will continue to shrink as a component of small business advertising, and decline in absolute terms. Despite our expectation that the company will continue to transition a sizable share of its customers to its online offerings over time, we expect increased competition within the online channel, compared with print." "We continue to assess SuperMedia's business risk profile as vulnerable, principally because of the significant risks of continued secular declines in the print directory sector. We view the financial risk profile as highly leveraged, based on trends of rising leverage associated with the likely steady erosion of cash flow, and refinancing risk in 2015, surrounding the company's credit facility that had $2.2 billion outstanding as of March 31, 2011," S&P related. "Our assessment of SuperMedia's business risk profile as vulnerable reflects the significant risks of continued secular declines in the print directory sector, as well as increased competition, as small business advertising expands across a greater number of marketing communication channels. As more advertising transitions online, the company could face additional pressures because of the fact that while some of its revenues come from the Internet or direct mail, the majority comes from traditional print advertising, which faces a difficult outlook," S&P said. TAYLOR BEAN: Former Chair Farkas Sentenced to 30 Years in Prison ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Lee Farkas, former chairman of Taylor Bean & Whitaker Mortgage Corp., was sentenced last week to 30 years in federal Mr. Rochelle recounts that in April, Mr. Farkas was convicted by a jury in Virginia of 14 counts of conspiracy and bank, wire and securities fraud in what prosecutors said was a $3 billion scheme involving fake mortgage assets. About Taylor Bean Taylor, Bean & Whitaker Mortgage Corp. grew from a small Ocala- based mortgage broker to become one of the largest mortgage bankers in the United States. In 2009, Taylor Bean was the country's third largest direct-endorsement lender of FHA-insured loans of the largest wholesale mortgage lenders and issuer of mortgage backed securities. It also managed a combined mortgage servicing portfolio of approximately $80 billion. The company employed more that 2,000 people in offices located throughout the United States. Taylor Bean sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009. Taylor Bean filed the Chapter 11 petition three weeks after federal investigators searched its offices. The day following the search, the Federal Housing Administration, Ginnie Mae and Freddie Mac prohibited the company from issuing new mortgages and terminated servicing rights. Taylor Bean estimated more than $1 billion in both assets and liabilities in its bankruptcy petition. Jeffrey W. Kelly, Esq., and J. David Dantzler, Jr., Esq., at Troutman Sanders LLP, in Atlanta, Ga., and Russel M. Blain, Esq., and Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, in Tampa, Fla., represent the Debtors. Paul Steven Singerman, Esq., and Arthur J. Spector, Esq., at Berger Singerman PA, in Miami, Fla., represent the Committee. BMC Group, Inc., serves as the claims and noticing agent. TECHDYNE LLC: Has Green Light to Hire Jennings Strouss as Counsel ----------------------------------------------------------------- TechDyne, LLC, won Court permission to employ Jennings, Strouss & Salmon, P.L.C., as its bankruptcy counsel. The professionals who will likely work on the Debtor's case and their hourly rates are: Professional Rate ------------ ---- Bradley J. Stevens, Esq. $375 per hour Todd B. Tuggle, Esq. $325 per hour Todd M. Adkins, Esq. $275 per hour Kerry A. Hodges, Esq. $275 per hour Bradley J. Stevens, Esq., attests that his firm represents no adverse interest to the Debtor and that it is a disinterested party, pursuant to 11 U.S.C. Sections 101(14), 327 and 329. In its statement of financial affairs filed in court, the Debtor disclosed that it paid the firm $10,000 on June 9 and was due to make another $10,000 payment on June 30. The Debtor also disclosed making payments to two of its officers during the one year period before the Petition Date. Benjamin V. Booher, Sr., received $36,000 in aggregate payments from June 2010 to November 2010. He is still owed $293,103. The Debtor paid Charles Josenhaus $1,000 in July 2010. About TechDyne TechDyne, LLC, based in Scottsdale, Arizona, filed for Chapter 11 bankruptcy (Bankr. D. Ariz. Case No. 11-16739) on June 9, 2011. Judge Charles G. Case, II, presides over the case. In its Schedules, the Debtor disclosed $100,000,070 in assets and $701,313 in debts. The petition was signed by Benjamin V. Booher, Sr., managing member. TECHDYNE LLC: Sec. 341 Creditors' Meeting on July 12 ---------------------------------------------------- The United States Trustee for Region 14 will convene a Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) in the bankruptcy case of TechDyne LLC on July 12, 2011, at 10:30 a.m. at US Trustee Meeting Room, 230 N. First Avenue, Suite 102, in Phoenix. The Bankruptcy Court also has scheduled a Chapter 11 Status Conference on the same day, at 11:30 a.m. at 230 N. First Ave., 6th Floor, Courtroom 601, in Phoenix. About TechDyne TechDyne, LLC, based in Scottsdale, Arizona, filed for Chapter 11 bankruptcy (Bankr. D. Ariz. Case No. 11-16739) on June 9, 2011. Judge Charles G. Case, II, presides over the case. In its Schedules, the Debtor disclosed $100,000,070 in assets and $701,313 in debts. The petition was signed by Benjamin V. Booher, Sr., managing member. TEN X: Case Summary & Largest Unsecured Creditor ------------------------------------------------ Debtor: Ten X Capital Partners III, LLC (Series B) P.O. Box 586 Orland Park, IL 60462 Bankruptcy Case No.: 11-27294 Chapter 11 Petition Date: June 30, 2011 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: John H. Squires Debtor's Counsel: Chester H. Foster, Jr., Esq. FOSTER & SMITH 3825 W. 192nd Street Homewood, IL 60430 Tel: (708) 799-6300 Fax: (708) 799-6339 E-mail: chf@fostersmithlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by John W. Branch, manager of RM Advisors, LLC. The list of unsecured creditors filed together with its petition contains only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Colliers Bennett & Kahnweiler Unpaid Commission $56,250 200 S. Wacker Drive, Suite 700 Chicago, IL 60606 THEMEING SOLUTIONS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Themeing Solutions, Inc. 1060 MaryCrest Rd. Henderson, NV 89074 Bankruptcy Case No.: 11-20147 Chapter 11 Petition Date: June 28, 2011 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsel: Timothy P. Thomas, Esq. LAW OFFICES OF TIMOTHY P. THOMAS, LLC 8670 W. Cheyenne Ave. #120 Las Vegas, NV 89129 Tel: (702) 227-0011 Fax: (702) 227-0015 E-mail: TTHOMAS@TTHOMASLAW.COM Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nvb11-20147.pdf The petition was signed by Peter Mensching, president. TRANS ENERGY: Elects Three New Members to Board of Directors ------------------------------------------------------------ Trans Energy, Inc., elected Richard L. Starkey, Stephen P. Lucado, and Dr. Benjamin H. Thomas to the Company's Board of Directors, effective June 29, 2011. All three members will serve and qualify as independent directors. Mr. Starkey has over 33 years of professional legal experience with an emphasis on oil and gas law. A native of southeastern Ohio, he earned a B.A. degree from Ohio University in 1974 and a J.D. degree from the University of Cincinnati School of Law in 1978. Mr. Starkey was Assistant Prosecuting Attorney for Wetzel County, West Virginia from 1979-1981 and was a practicing attorney in Parkersburg, West Virginia from 1981-1985. Mr. Starkey then joined Wiser Oil Company, a New York Stock Exchange listed company headquartered in Dallas, Texas in 1985 as staff attorney, then as assistant secretary in 1986 and then Corporate Secretary and General Counsel from 1987-1994. In 1994, Mr. Starkey returned to Parkersburg, West Virginia and has been active in the practice of law with an emphasis in the practices of oil and gas, real estate and corporate transactions. Mr. Starkey is a member of both the West Virginia and Ohio Bar associations. Mr. Lucado has over 16 years of professional financial experience. A native of Chicago, he earned a B.A. degree from Harvard University in 1994 and an MBA from the University of Chicago Graduate School of Business in 2006. Mr. Lucado's business career includes positions with Citicorp North America, Merrill Lynch & Co., DN Partners LLC and Navigant Capital Advisors LLC. Additionally, at Z Capital Partners, he managed investments in the oil and gas and power industries. Mr. Lucado also previously served as Interim CFO of Texas American Resources Company, where he managed the restructuring of over $175 million in debt. Since 2010, Mr. Lucado has served as Senior Managing Director and Founder of Three Oaks Group, which specializes in financial advisory to companies in the oil and gas industry. Dr. Thomas has over 33 years of professional oil and gas experience. A native of Parkersburg, West Virginia, he earned a Bachelor of Business Administration degree from Kent State University in 1975, a Bachelor of Science in Petroleum Engineering degree from Marietta College in 1981, a Master of Business Administration from Ashland University in 1987, a Master of Science in Petroleum and Natural Gas Engineering from West Virginia University in 1997 and a Doctor of Philosophy in Petroleum and Natural Gas Engineering in 2002. Dr. Thomas worked for Quaker State Oil Refining Corporation from 1979 through 1984 serving in various engineering positions. Dr. Thomas began work in 1984 with MB Operating Company eventually serving as President from 1996 through 1999. MB Operating consisted of approximately 1,800 producing properties and 200,000 net acres. In 1996 Dr. Thomas participated in the formation of Marbel Energy Corporation, a fully integrated natural gas company. Companies owned by Marbel Energy included MB Operating. In addition to being President of MB Operating, Dr. Thomas served as Chief Operating Officer and later President of Marbel Energy Corporation. In 1999 Dr. Thomas participated in the formation of Great Lakes Energy Partners, LLC and served as the Senior Vice President - Production. The company had in excess of 7,500 wells and operated in five states. In 2000 Dr. Thomas returned to academia to complete his doctorate degree. Since 2000 Dr. Thomas has provided consulting services to the oil & gas industry. Commencing in 2004 he has been President of Thomas Consulting, LLC which provides consulting services in the areas of reservoir engineering, drilling and production, operations management, reserve reporting, property acquisitions and divestures and expert testimony. Since 2001 Dr. Thomas has been a faculty member in the Department of Petroleum Engineering & Geology at Marietta College located in Marietta, Ohio where he currently serves as an Associate Professor. John G. Corp, President of Trans Energy, said, "We believe the addition of these three professionals to our board of directors in their respective fields of oil and gas law, oil and gas finance and petroleum engineering brings invaluable assets and real world experience to our Company as we continue to try and build Trans Energy into a industry leading company in the development of the Marcellus shale in northern West Virginia." About Trans Energy West Virginia-based Trans Energy, Inc. -- http://www.transenergyinc.com/-- is an independent exploration and production company focused on exploring, developing and producing oil and natural gas in the Appalachian Basin. The common shares of the Company are listed for trading on the Over The Counter Bulletin Board under the symbol "TENG". According to the Troubled Company Reporter on Nov. 9, 2010, Trans Energy, Inc., and CIT Capital USA Inc. entered into a forbearance letter agreement on Oct. 29, 2010, whereby CIT agreed to forebear from exercising its rights and remedies against the Company and its property until Dec. 31, 2010. The forbearance relates to a senior secured revolving credit facility. The October Forbearance Letter extends the terms and provisions of the parties' earlier forbearance agreement entered into on July 9, 2010, that extended the forbearance period to Oct. 29, 2010. As reported by the TCR on April 18, 2011, Maloney + Novotny, LLC, in Cleveland, Ohio, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has generated significant losses from operations and has a working capital deficit of $19,699,824 at Dec. 31, 2010. TRIBUNE CO: Judge Carey Tells Rival Plan Groups To Continue Talks ----------------------------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware has asked the rival groups in Tribune Co.'s Chapter 11 case to continue their discussions toward a consensual resolution of the bankrupt media company's case, Michael Oneal of Chicago Tribune reported. At a June 28, 2011 hearing, Judge Carey recognized that "sometimes you need a decision from a judge," and promised to work on producing one as quickly as possible, Chicago Tribune related. The bankruptcy judge said that while both sides are far apart, "they sill have good reason to continue their discussions" toward a consensual resolution, the report relayed. Judge Carey also stated that he would spend his time over in July to come up with a decision on which Chapter 11 Plan for Tribune and its debtor affiliates will he confirm, although the bankruptcy judge made no promises when he would deliver, Mr. Oneal said. Judge Carey convened the June 28 hearing to consider Deutsche Bank AG's request for clarification of a state law conveyance fraudulent claims order that will allow Deutsche Bank and other indenture trustees to seek consolidation of lawsuits filed in various states. Chicago Tribune recalled that Tribune and its creditors have spent the last two and a half years trying to settle claims arising from a 2007 leveraged buyout. Judge Carey has repeatedly pushed the warring parties to resolve the disputes consensually with the bankruptcy judge appointing a mediator to help the settlement talks, the report noted. The talks resulted in a settlement between Tribune and its two major creditor constituencies that became the centerpiece of the Second Amended Joint Plan of Reorganization jointly proposed by the Debtors; the Official Committee of Unsecured Creditors; Oaktree Capital Management, L.P.; Angelo Gordon & Co., L.P.; and JPMorgan Chase Bank, N.A. The settlement aims to resolve causes of action arising from the 2007 LBO and to distribute substantial and immediate recoveries to the creditors. Left out of the settlement, Aurelius and junior creditors proposed to pursue litigation against the LBO Lenders pursuant to the Third Amended Joint Plan of Reorganization jointly filed by Aurelius on behalf of its managed entities; Deutsche Bank Trust Company Americas, in its capacity as successor indenture trustee for certain series of senior notes; Law Debenture Trust Company of New York, in its capacity as successor indenture trustee for certain series of senior notes; and Wilmington Trust Company, in its capacity as successor indenture for the PHONES Notes. Last June 27, 2011, Judge Carey heard closing arguments from Tribune and rival group Aurelius Capital Management, LP. in support of confirmation of the Chapter 11 Plans. The bankruptcy judge however did not state which Plan he favored or when he intended to rule on the Plans. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. And Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Wants Removal Period Extended to Oct. 31 ---------------------------------------------------- Tribune Co. asks the Bankruptcy Court to extend to Oct. 31, 2011, their time to file notices of removal of claims and causes of action relating to their Chapter 11 proceedings. The Debtors' deadline to file notices of removal of actions expired on June 30, 2011. Given the expiration of the Debtors' removal period on June 30, 2011, the Debtors ask that the operation of Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedure of the U.S. Bankruptcy Court for the District of Delaware extend the time during which they remove actions from June 30, 2011 expiration until the Debtors' Motion will be heard by the Court, which hearing is scheduled on July 26, 2011. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago Illinois, relates that the Debtors have made significant progress in addressing the prepetition claims asserted against their estates, particularly with regard to prepetition litigation claims. Since the Petition Date, the Debtors have filed 45 omnibus objections to claims, as well as numerous discrete objections to individual prepetition litigation claims, he says. Those actions have collectively resulted in the disallowance or withdrawal of more than 1,800 proofs of claim against the Debtors' estates, he notes. Various other prepetition litigation claims have been the subject of various orders or stipulations concerning relief from the automatic stay and those claims have been addressed accordingly, he states. The Debtors have continued to review their litigation-related proofs of claim and to discuss potential resolutions of the claims reflected therein, or to pursue objections thereto, as the Debtors determine is warranted, he tells the Court. As a result of these tasks and their attendant on the Debtors' personnel and professionals, the Debtors require additional time to review their outstanding litigation matters and evaluate whether those matters should properly be removed pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedure. Absent the proposed extension, the Debtors would lose a potentially key element of their overall ability to manage litigation during these Chapter 11 cases even before that litigation would reasonably have been evaluated, to the detriment of the Debtors, their estates and their creditors, he stresses Mr. Conlan assures the Court that preserving the Debtors' ability to remove actions imposes no delay or unnecessary burden on any counterparties to claims or other causes of action relating to the Debtors' Chapter 11 cases. The Court will consider the Debtors' request on July 26, 2011. Objections are due no later than July 19. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. And Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Stay of Avoidance Suits Extended to Dec. 30 ------------------------------------------------------- At Tribune Co.'s behest, the bankruptcy court extended the "termination date" in the order staying avoidance actions commenced by the Debtors pursuant to Section 546(a) of Bankruptcy Code. On December 14, 2010, the Court entered the Stay Order, which provides for a broad stay of the Avoidance Actions until June 30, 2011. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, stated that many of the claims that are the subject of avoidance actions in these Chapter 11 cases may be eliminated, reduced or modified in the event the DCL Plan is confirmed, because the DCL Plan provides for full payment to general unsecured creditors of the subsidiary Debtors. On June 27, 2011, the Court heard closing arguments in connection with the confirmation proceedings on the Competing Plans. The Court has not yet entered an order confirming any of the Chapter 11 Plans. Even if the DCL Plan or the Noteholder Plan is confirmed prior to June 30, the Debtors anticipate that it may be several months before a plan becomes effective, given the Debtors' emergence from bankruptcy requires the prior consent of the Federal Communications Commission, Mr. Conlan stressed. Alternatively, if neither of the Competing Plans is confirmed, the Debtors believe it is prudent to continue the Stay until it is determined how any future plan proposed for the Debtors will treat the Avoidance Actions, he said. Mr. Conlan insisted that the extension of the Stay appropriately preserves the status quo while the Court considers the Competing Plans and the Debtors take the steps necessary to satisfy the preconditions to a confirmed plan becoming effective, including, but not limited to, obtaining FCC approval. The extension of the Stay of the Avoidance Actions will not prejudice any of the defendants to the Avoidance Actions, who will similarly conserve their resources until a final resolution is reached on the Competing Plans and the Debtors determine the appropriate course of action on the Avoidance Actions based on that resolution, he assured the Court. Except as provided in the extension order, the Stay Order will remain unchanged and enforceable, Judge Carey ruled. The Court granted the Debtors' request after a certificate of no objection was filed. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. And Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Debtor & Noteholders Make Closing Arguments for Plans ----------------------------------------------------------------- Tribune Company and rival Aurelius Capital Management LP made closing arguments in support of confirmation of their separate Chapter 11 Plan of Reorganization for the bankrupt company before Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware on June 27, 2011. After more than five hours of argument, Judge Carey ended the hearing without saying which of the plans will he confirm, Steven Church of Bloomberg News reported. Neither did the bankruptcy judge indicate when he intends to rule on either Plan, Reuters stated in a separate report. "If we get something this summer we should be happy," said a lawyer involved in the matter who was not authorized to speak publicly, according to Michael O'neal of the Los Angeles Times. The Second Amended Joint Plan of Reorganization proposed by the Debtors, the Official Committee of Unsecured Creditors, Oaktree Capital Management, L.P., Angelo Gordon & Co., L.P. and JPMorgan Chase Bank, N.A., incorporates a settlement that will resolve causes of action arising from the 2007 leveraged buyout against two major creditor constituencies -- the Senior Lenders and Bridge Lenders. According to the DCL Plan Proponents, the settlement couples substantial guaranteed immediate distributions with the prospect of potentially significant additional recoveries from defendants other than the settling lenders, including shareholders, officers, directors, Samuel Zell and EGI- TRB LLC, and various professionals. In contrast, Aurelius; on behalf of its managed entities; Deutsche Bank Trust Company Americas, in its capacity as successor indenture trustee for certain series of senior notes; Law Debenture Trust Company of New York, in its capacity as successor indenture trustee for certain series of senior notes; and Wilmington Trust Company, in its capacity as successor indenture for the PHONES Notes propose, in their Third Amended Joint Plan of Reorganization, to pursue litigation against the LBO Lenders. The Noteholders insist that Pre-LBO Noteholders stand a 74% chance of receiving greater recoveries than those proposed by the DCL Plan. The Court also considered at the June 27 hearing, briefs previously filed by the Plan Proponent Groups in furtherance of their Plans. At the June 27 hearing, James Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, bankruptcy counsel to Tribune, told Judge Carey that the company's proposal is "the next best choice to provide a path to exit bankruptcy and a fair one," Reuters relayed. "A consensual resolution would be optimal," the lawyer was quoted as saying by Reuters. After running though a list of defenses against the potential lawsuits noteholders might bring, Tribune lawyer James Bendernagel, Esq., at Sidley Austin LLP, in Chicago, Illinois, summed up the chances of the noteholders knocking out all the buyout loans as "pretty long odds," Reuters noted. "This is a case that you ought to settle," seconded James Sottile, Esq., at Zuckerman Spaeder LLP, in Washington, D.C., counsel for the Official Committee of Unsecured Creditors, Bloomberg related. Mr. Sottile insisted that Tribune's settlement plan is supported by conclusions of a court-appointed examiner, who found only part of the LBO was vulnerable to challenge by noteholders, Bloomberg relayed. "The bottom line is, the examiner looked at all the evidence," the creditors' lawyer pointed out. Counsel to the Noteholders, David M. Zensky, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, stressed that, "the settlement is very very small in relation to the fruits of pursuing litigation," Reuters stated. The Noteholders estimate they could get up to $3 billion by litigating against the lenders who funded the LBO, Reuters noted. Under that scenario, lenders would get less than 40% of what they are owed, Reuters says. Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York -- aqureshi@akingump.com -- lawyer for the Noteholders, urged the bankruptcy judge at the hearing to reject the settlement because there is evidence lenders knew the two-step buyout would fail before arranging the loans used to pay shareholders, Bloomberg relayed. Mr. Qureshi asserted that Tribune's February 2007 projections were outlandish that they were not taken seriously by people involved in the buyout, Bloomberg further related. An official with one of the banks involved in the transaction said in a video deposition played at the hearing that the bank made its own projections, the news agency stated. That was because the company's projections were so unreliable, insisted Mr. Qureshi, Bloomberg said. For the publisher to meet its 2007 financial goal Tribune's six newspapers needed to increase weekly cash flows by 44.5%, Mr. Qureshi stated, according to Bloomberg. At that time, analysts and media executives believed the industry had begun a long-term decline in revenue that would last 10 years, the lawyer averred, Bloomberg noted. "What the evidence does show your honor is that the LBO was doomed from the outset," Mr. Qureshi was quoted as saying by Reuters during the hearing. The bankruptcy judge, however, indicated that he was less interested in the Noteholders' complaint about how the settlement was negotiated than in the deal itself, which would prevent an LBO-related lawsuit against the lenders, Bloomberg relayed. "I am more focused on the question, 'Is this a good deal?'" the bankruptcy judge pointed out during the hearing. The bankruptcy judge could take weeks or even months to consider the evidence and write up a ruling to confirm one of the plans or reject them both, leaving the company in limbo until then, the Los Angeles Times pointed out. In other developments, Tribune and Great Banc Trust, which was the trustee for the employee stock ownership plan at the center of the LBO, may be on the verge of settling a federal court case brought by several former LA Times employees, according to LA Times. Tribune's counsel, Bryan Krakauer, Esq., at Sidley Austin LLP, in Chicago, Illinois, disclosed that the talks have been moving forward but may take several weeks to complete, LA Times adds. Closing Arguments on June 27 Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware rescheduled the hearing to consider closing arguments with respect to confirmation of competing Chapter 11 Plans for Tribune Company and its debtor affiliates to June 27, 2011, according to James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, counsel to the Debtors. A. Debtors' Findings of Fact & Conclusions of Law James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, tells Judge Carey that the consensual resolution of certain objections to the DCL Plan satisfies all applicable requirements of the Bankruptcy Code and the Bankruptcy Rules and supported by evidentiary record. Mr. Conlan tells the Court that the DCL Plan Proponents propose to add language in their proposed confirmation order to resolve the confirmation objections: (1) On the Effective Date, as a result of the inclusion of Section 6.9 in the Plan, all proofs of claim asserted against any of the Debtors by (i) ACE American Insurance Company and its affiliates, (ii) Zurich American Insurance Company, and (iii) The Travelers Indemnity Company & its affiliates will be deemed withdrawn by the relevant claimants without the need for further action by any of the Debtors, the ACE Companies, Zurich or Travelers, and the Debtors' claims agent is authorized to modify the claims register in these cases to remove those claims from the claims register. (2) Notwithstanding anything to the contrary in the Plan or in the Confirmation Order, an Administrative Expense Claim that is an expense under Sections 503(b)(I)(B) or 503(b)(I)(C) of the Bankruptcy Code, including interest due under applicable non-bankruptcy law, will be timely paid in the ordinary course of business without the need of any governmental unit to file a request for payment of the Administrative Expense Claim or any other document, including a Proof of Claim. (3) For the avoidance of doubt, should the Reorganized Debtors elect to satisfy an Allowed Priority Tax Claim in regular installment payments in Cash pursuant to sub-part (b) of Section 2.3 of the DCL Plan, those regular installment payments will be in equal quarterly installments in Cash. (4) If the Debtors fail to cure a default with respect to a tax payment owed to a Taxing Authority that is not the subject of a bona fide dispute within 90 days after service of written notice of default from Taxing Authority, then that Taxing Authority may (a) enforce the entire amount of its undisputed claim, (b) exercise any and all rights and remedies under applicable non-bankruptcy law, and (c) seek relief as may be appropriate in the Court. (5) Federal Communications Commission No provision in the DCL Plan or this confirmation order relieves the Reorganized Debtors from their obligations to comply with the Communications Act of 1934, as amended, and the rules, regulations and orders promulgated thereunder by the Federal Communications Commission. No transfer of control to the Reorganized Debtors of any federal license or authorization issued by the FCC will take place prior to the issuance of FCC regulatory approval for that transfer of control pursuant to applicable FCC regulations. The FCC's rights and powers to take any action pursuant to its regulatory authority over the transfer of control to the Reorganized Debtors, including, but not limited to, imposing any regulatory conditions on that transfer, are fully preserved, and nothing in this order will proscribe or constrain the FCC's exercise of that power or authority to the extent provided by law. (6) Nothing in the DCL Plan or the confirmation order is intended to, or will, confer jurisdiction on the Bankruptcy Court to determine the tax consequences of the DCL Plan or to determine the tax liability of a non-debtor beyond the jurisdiction permitted under applicable law. In addition, notwithstanding any provision to the contrary, nothing in the DCL Plan or this confirmation order will affect the rights of the United States Government, including the Internal Revenue Service (1) from seeking, pursuant to applicable non-bankruptcy law, to assess or collect from any non-debtor person or entity that may be liable directly or indirectly for the Debtors' taxes, including but not limited to liability under Sections 4975 and 6672 of the U.S. Internal Revenue Code; or (2) from assessing or collecting from the Debtor any taxes that the Bankruptcy Code renders non-dischargeable. (7) Notwithstanding anything to the contrary in the Plan, the confirmation order or any implementing Plan document, nothing will affect the rights of the New York State Department of Taxation and Finance to take action against non-debtor third parties who may be responsible for payment of prepetition or postpetition tax liabilities of any of the Debtors, and those rights are expressly reserved. (8) The Debtors and Reorganized Debtors will comply with their statutory obligations under Section 1930 of the U.S. Judiciary and Judicial Procedures Code and file post confirmation reports to the extent required by law and, to the extent applicable, in accordance with any agreements reached between the Debtors and the U.S. Trustee during the Chapter 11 cases with respect to those matters. (9) United States Environmental Protection Agency As to the U.S. Government, its agencies, departments or agents, nothing in this confirmation order or the DCL Plan discharges, releases or precludes: (i) any environmental liability to the U.S. Environmental Protection Agency that is not a Claim; (ii) any environmental Claim of the U.S. Government arising on or after the Confirmation Date; (iii) any environmental liability to the U.S. Government on the part of any entity as the owner or operator of real property owned or operated after the Confirmation Date; or (iv) any environmental liability to the U.S. Government on the part of any Person other than the Debtor or Reorganized Debtors. Nor will anything in this confirmation order or the DCL Plan enjoin or otherwise bar the U.S. Government from asserting or enforcing, outside the Court, any liability described. The Court retains jurisdiction, but not exclusive jurisdiction, to determine whether environmental liabilities asserted by the U.S. Government are discharged or otherwise barred by the confirmation order, the DCL Plan or the Bankruptcy Code. (10) The DCL Plan, the DCL Plan Supplement, any document filed in connection with the DCL Plan or the confirmation thereof, or the DCL Plan Confirmation Order do not purport to affect, impair, or otherwise alter those rights as Warren Beatty may otherwise have in or to certain motion picture, television, and related rights in the Dick Tracy character arising from an August 28, 1985 agreement between Mr. Beatty and Debtor Tribune Media Services, Inc. However, nothing in the DCL Plan and Confirmation Documents purports to in any way modify or alter and will not be deemed to modify or alter these Court orders: (i) Order denying Motion to Dismiss Adversary Proceeding, dated November 9, 2009, Case No. 08- 13141 (KJC) (Bankr. D. Del. 2008) and (ii) Stipulated Order Staying Adversary Proceeding, dated December 23, 2009, Case No. 09-50486 (KJC) (Bankr. D. Del. 2009). All of Mr. Beatty's rights, interests, and remedies in and to the Dick Tracy Rights, if any, are expressly reserved and are not waived, modified, impaired, or otherwise altered by the DCL Plan and Confirmation Documents. More importantly, the DCL Plan implements a good faith settlement of certain LBO-Related Causes of Action, thus providing for substantial distributions to creditors immediately upon the effective date, Mr. Conlan asserts. Indeed, Kenneth Klee, the Court-appointed examiner's analysis strongly supports the reasonableness of the DCL Plan Settlement, Mr. Conlan insists. Mr. Conlan states that in five of the six scenarios analyzed by the Examiner, incremental recoveries to Non-LBO Creditors on account of the LBO-Related Causes of Action range from $0 in the no avoidance scenario to a range of approximately $205 million to $244 million in the scenario involving avoidance of all Senior Loan and Bridge Loan Claims against Tribune and avoidance of all Step Two Senior Loan Claims and Bridge Loan Claims against the Guarantor Subsidiaries. Even at the every high end, those recoveries are less than half of the approximately $535 million in guaranteed Effective Date settlement consideration provided by Senior Lenders ($401 million), Bridge Lenders ($13.3 million), and Settling Step Two Payees ($120 million) and received by non- LBO Creditors pursuant to the DCL Settlement, Mr. Conlan asserts. On the contrary, the Noteholder Plan provides lower guaranteed distributions while delaying distribution of a significant portion of the Debtors' total distributable enterprise value pending litigation of the Noteholder Trust Causes of Action, Mr. Conlan points out. He contends that although both Chapter 11 Plans are reorganization plans, the DCL Plan seeks to successfully reorganize and advance the ongoing operations of the Reorganized Debtors, while the Noteholder Plan is focused primarily on the liquidation of the LBO-Related Causes of Action. The DCL Plan is thus more closely aligned with the policy underlying Section 1129(c), which generally favors the successful rehabilitation of a debtor, he maintains. For those reasons, the DCL Plan complies with the requirements of Section 1129, Mr. Conlan insists. A two-part copy of the DCL Plan Proponents' Plan Findings of Fact is available for free at: http://bankrupt.com/misc/Tribune_DCLPlanFindingsofFact_A.pdf http://bankrupt.com/misc/Tribune_DCLPlanFindingsoFact_B.pdf B. Noteholders' Findings of Fact & Conclusions of Law The Noteholders submitted to Judge Carey proposed findings of fact and conclusions of law in support of confirmation of their Chapter 11 Plan. David M. Zensky, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, argues that under the DCL Plan Settlement, the Debtors' estates are abandoning in excess of $12 billion of claims in exchange for consideration of only $488 million. Moreover, the Noteholders' proffered expert Bruce Beron testified that (i) litigating the LBO Claims have an expected value of $1.51 to $1.83 billion, (ii) these claims have a high chance of producing a recovery far in excess of the consideration offered in the Proposed Settlement, and (iii) thus the Proposed Settlement is not even close to reasonable, Mr. Zensky tells the Court. Mr. Zensky also contends that the process leading to the proposed settlement lacked the type of vigorous arm's-length bargaining among the major stakeholders that sometimes provides reassurance to the court that a proposed compromise is reasonable and in the best interests of the creditors. "While the record reflects some bargaining took place among the DCL Plan Proponents regarding their own parochial interests, the evidence also strongly suggests that no participant in the negotiations adequately represented the interests of the Pre-LBO Noteholders, or was incentivized to maximize the settlement value of the LBO Claims. In the end, the settlement that resulted from the process did not reflect the true value of the LBO Claims," he alleges. In a supplement to the proposed findings of fact, the Noteholders insist that their proposed Plan triggers no rule violations under the Federal Communications Commission or delays because it would not give JPMorgan Chase Bank, N.A., Angelo, Gordon & Co., L.P. or Oaktree Capital Management, L.P., attributable interests in Reorganized Tribune. Accordingly, the Court cannot confirm the DCL Plan because the Proposed Settlement upon which it is premised fails to satisfy Rule 9019 of the Federal Rules of Bankruptcy Procedure and Section 1129(a) of the Bankruptcy Code, Mr. Zensky asserts in the accompanying conclusions of law. He argues that the Proposed Settlement fails to satisfy factors laid out in Myers v. Martin (In re Martin), 91 F.3d 389, 393 (3d Cir. 1996), including that the overwhelmingly evidence shows the LBO Claims against the LBO Lenders have a very strong likelihood of successfully yielding a full recovery for Non-LBO Creditors, or one that is substantially greater than the Proposed Settlement. In conjunction, the true total distributable value of the Debtors is $8.291 billion, Mr. Zensky insists. A higher DEV results in a higher recovery for the Senior Lenders and should also result in the Senior Lenders giving up a greater percentage of their recovery to settle the LBO Claims, he maintains. In an accompanying letter to the Court, Mr. Zensky explains that the Noteholders' Proposed Conclusions of Law are principally directed to those issues at the evidentiary part of the confirmation hearing. Thus, the Proposed Conclusions of Law do not address purely legal arguments addressed in the parties' brief or argued at the April 13 and 14, 2011 hearings, and do not contain the routine findings and conclusions contained in a typical confirmation order, he says. Should the Court require proposed findings of fact or conclusions of law on any additional matters, the Noteholders will submit those additional materials. Full-text copies of the Noteholders' Proposed Findings of Fact and supplement and Conclusions of Law are available for free at: http://bankrupt.com/misc/Tribune_NoteholdersFindingsofFactSupp.pdf http://bankrupt.com/misc/Tribune_NoteholdersPropFindingsofFact.pdf http://bankrupt.com/misc/Tribune_NoteholdersConcofLaw.pdf The Noteholders' Plan Findings of Fact and related supplement were filed under seal with a corresponding motion seeking the Court's permission to file the documents under seal. The Noteholders also submitted to the Court a corrected table of authorities, which was inadvertently filed with the Plan Findings of Fact. The corrected table is also filed under seal. Wilmington Trust Files Plan Findings of Fact "The DCL Plan fails to provide Wilmington Trust Company with due process rights with respect to claims that clearly belong to holders of the PHONES Notes," William D. Sullivan, Esq., at Sullivan Hazeltine Allinson LLC, in Wilmington, Delaware, counsel to Wilmington Trust, tells Judge Carey. In March 2010, Wilmington Trust, as successor indenture trustee for the Exchangeable Subordinated Debentures due 2029 in the aggregate principal amount of $1.2 billion issued in April 1999 by Tribune Company, filed a complaint seeking relief for causes of action, including equitable disallowance, equitable subordination and the imposition of a constructive trust. Mr. Sullivan stresses that the Court adopts the Examiner's findings that the PHONES Complaint contains individual claims that belong to the holders of the PHONES Notes and are not estate claims. Thus, the DCL Plan's failure to address the PHONES Complaint and settle the claims arising thereunder with no direct consideration to the PHONES is without legal basis, he insists. Mr. Sullivan further contends that the DCL Plan's distribution scheme that satisfies claims of and distributes proceeds to the PHONES Complaint Defendants would effectively render futile several causes of action in the PHONES Complaint, including equitable disallowance and equitable subordination. This attempt to "moot" the colorable claims of Wilmington Trust on behalf of the holders of the PHONES Notes should be rejected, he stresses. Though the DCL Plan Proponents have attempted to settle estate claims against the LBO Lenders, this does not entitle them to settle individual claims against the LBO Lenders, including those held by the holders of PHONES Notes, Mr. Sullivan maintains. The PHONES Trustee previously filed with the Court a redacted version of its proposed findings of fact and related motion to file under seal the document. A full-text copy of the redacted document is available for free at: http://bankrupt.com/misc/Tribune_WTCFindingsofFact_Redacted.pdf About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. And Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Court OKs Settlements With Kirkland, AlixPartners ---------------------------------------------------------------- The Honorable Kevin J. Carey grants permission to Tropicana entities known as the Reorganized OpCo Debtors and the Steering Committee of Lenders to enter into the separate settlement agreements they negotiated with Kirkland & Ellis LLP, on the one hand, and AlixPartners, LLP on the other hand. The Settlements allow the resolution of certain disputes related to the firms' final fee applications. All objections to the approval of the Settlements that have not been withdrawn, waived or settled, and all reservations of rights included in the objections, are overruled, the U.S. Bankruptcy Court for the District of Delaware rules. Before the Court entered its ruling, the Reorganized OpCo Debtors objected to the Liquidating LandCo Debtors and Tropicana Las Vegas, Inc.'s proposed addition of "overbroad" language to the proposed orders approving the Settlement Motions. The LandCo Parties previously stated they have no interest in the fee claims settlements made by K&E and AlixPartners, but later "switched gears" and sought to enhance their rights against the Reorganized Debtors and obtain an overbroad reservation of rights by purposefully misreading the language of the Settlement Agreements, Richard J. Corbi, Esq., at Proskauer Rose LLP, in New York, counsel to the Reorganized OpCo Debtors, noted. Mr. Corbi maintained that the Settlement Agreements do not prejudice the rights of any party-in-interest to the Professional Fee Objections, including the LandCo Debtors. Moreover, the LandCo Debtors, he argued, are not parties to the Settlement Agreements and thus, the Settlement Agreements do not -- and are not meant to -- impair the rights of the LandCo Debtors. Nevertheless, the Reorganized OpCo Debtors offered and were willing to insert language in the proposed orders approving the Settlement Motions, to provide that nothing in the order or Settlement Agreements impairs the rights of the Liquidating LandCo Debtors, Mr. Corbi related. But the proposed insertion was refused by the LandCo Debtors, he noted. The Reorganized OpCo Debtors thus sought for the LandCo Limited Objection to be overruled. The Court has ruled that all unresolved objections to the Settlement Motions, including those of the LandCo Parties, are overruled. The Steering Committee withdraws its objections to the final fee applications of K&E and AlixPartners by virtue of the firms' fee claims settlements. The Steering Committee's Fee Objections as to the remaining professionals' final fee applications are not affected. About Tropicana Entertainment Tropicana Entertainment Inc. is a publicly reporting company that, along with its affiliates, owns or operates nine casinos and resorts in Indiana, Louisiana, Mississippi, Nevada and New Jersey. The Company owns approximately 6,000 rooms, 9,000 slot positions and 250 table games. In addition, the Company owns a development property in Aruba. The company is based in Las Vegas, Nevada. Tropicana Entertainment LLC and certain affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08- 10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. The OpCo Debtors, a group of Tropicana entities owning casinos and resorts in Atlantic City, New Jersey and Evansville, Indiana obtained confirmation from the Bankruptcy Court of a reorganization plan. On April 29, 2009, non-debtor units of the OpCo Debtors, designated as the New Jersey Debtors -- Adamar of New Jersey, Inc., and its affiliate, Manchester Mall, Inc. -- filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711) to effectuate a sale of the Atlantic City Resort and Casino to a group of Investors-led by Carl Icahn. Judge Judith H. Wizmur presides over the cases. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. Effective March 8, Tropicana Entertainment successfully emerged from the Chapter 11 reorganization process as an Carl Icahn-owned entity. A group of Tropicana entities, known as the LandCo Debtors, which own Tropicana casino property in Las Vegas, have obtained approval of a separate Chapter 11 plan. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represented the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Debtors Adamar of New Jersey Inc. and Manchester Mall Inc. have merged into Adamar of NJ In Liquidation, LLC. The merger and name change is in accordance with an Amended and Restated Purchase Agreement, which governs the sale and transfer of the operations of the Tropicana Casino and Resort - Atlantic City, including substantially all of the New Jersey Debtors' assets, to Tropicana Entertainment Inc., Tropicana Atlantic City Corp., and Tropicana AC Sub Corp., free and clear of any and all liens, claims and encumbrances. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Tropicana Entertainment Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENT: Fee Allocation Dispute Still Pending in Court ------------------------------------------------------------ The dispute on the proper allocation of professional fees between Tropicana entities known s the Reorganized OpCo Debtors and the Liquidating LandCo Debtors continue to be before the U.S. Bankruptcy Court of Delaware. A hearing was held in May 2011 on the matter, but no final court decision has been entered. Instead, the parties agreed to bifurcate issues relating to the allocation of fees between the LandCo Debtors and the OpCo Debtors. The Reorganized OpCo Debtors have obtained Court approval of settlement agreements on the matter with Kirkland & Ellis LLP and AlixPartners LLP, but the other remaining firms continue to have issues on the fee allocations. The Steering Committee of Lenders to the Reorganized OpCo Debtors have withdrawn their objections to the final fee applications of K&E and AlixPartners, but not as to their objections to the final fee applications of the other remaining firms. Lazard Freres Seeks Leave to File for Summary Judgment Lazard Freres & Co. LLC seeks authority from the Court to file a motion for summary judgment with regard to the fee objection lodged by the Steering Committee. Lazard Freres filed its summary judgment motion pursuant to the Court's Second Amended Scheduling Order for the Final Fee Applications. According to Andrew R. Remming, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, good cause exists to allow Lazard Freres to file its motion for summary judgment because it concerns purely legal issues -- the interpretation of a written agreement and whether Lazard Freres' fees may be analyzed pursuant to Section 330 of the Bankruptcy Code, notwithstanding the fact that the firm was retained pursuant to Section 328 of the Bankruptcy Code. The period for written discovery has lapsed, but the Steering Committee has not produced any of its own documents and has admitted that the only party with relevant knowledge of the contentions in its Fee Objection is its counsel, Mr. Remming notes. Lazard Freres has offered to allow the Steering Committee to take depositions before responding to the firm's motion for summary judgment, Mr. Remming relates. There are no disputed issues of material fact, Mr. Remming asserts. The Court, he argues, can dispose of the Steering Committee's Fee Objection as a matter of law, allowing the Court to avoid a trial, which is unnecessary and results in incremental delay and expense. On May 11, 2011, a hearing on the Fee Objection and the professional fee allocation dispute was held. However, certain parties were clearly "in no rush to move to the next phase of the litigation" where the allowance of Lazard Freres' fees will be at issue, Mr. Remming says. As a result, there is currently no scheduled hearing on the allowance of Lazard Freres' fees and the firm "stands alone" from the other professionals in that it has not been paid the majority of its fees, he emphasizes. Lazard Freres will be prejudiced by any continued delay in the case, Mr. Remming asserts. Lazard Freres notified the Steering Committee's counsel of its belief that the issue of allowance of its fees can be resolved as a matter of law and of its intention to file the motion for summary judgment as well as to discuss a briefing schedule. The Steering Committee, however, refused to agree to any schedule for no reason other than its belief that the scheduling order precludes Lazard Freres from filing its Motion for Summary Judgment, Mr. Remming informs the Court. The Steering Committee did not disagree with Lazard Freres' position that the allowance of the firm's fees can be resolved as a matter of law. Lazard Freres' Proposed Summary Judgment Motion If given leave to file its Summary Judgment Motion, Lazard Freres will seek an order from the Court: (a) Allowing $13,330,645 in fees and $311,937 in expenses against the Debtors; and (b) Subject to inter-Debtor true-up payments made pursuant to the Court's ruling on the Allocation Dispute, directing (i) the OpCo Debtors to pay Lazard Freres $9,658,814, representing 83.8% of the firm's fees and expenses, net of $1,777,690 already paid to date; (ii) the LandCo Debtors to pay Lazard Freres $2,206,077, representing 16.2% of the firm's fees and expenses; and (iii) directing that the OpCo Debtors pay 95%, and that the LandCo Debtors pay 5%, of the Lazard Freres' legal fees in defending against the Fee Objections. A telephonic hearing on Lazard Freres' request for leave to file a motion for summary judgment will be held on June 29, 2011, at 1:30 p.m. Objections must be filed on or before the hearing date and time. About Tropicana Entertainment Tropicana Entertainment Inc. is a publicly reporting company that, along with its affiliates, owns or operates nine casinos and resorts in Indiana, Louisiana, Mississippi, Nevada and New Jersey. The Company owns approximately 6,000 rooms, 9,000 slot positions and 250 table games. In addition, the Company owns a development property in Aruba. The company is based in Las Vegas, Nevada. Tropicana Entertainment LLC and certain affiliates filed for Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No. 08- 10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. The OpCo Debtors, a group of Tropicana entities owning casinos and resorts in Atlantic City, New Jersey and Evansville, Indiana obtained confirmation from the Bankruptcy Court of a reorganization plan. On April 29, 2009, non-debtor units of the OpCo Debtors, designated as the New Jersey Debtors -- Adamar of New Jersey, Inc., and its affiliate, Manchester Mall, Inc. -- filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09- 20711) to effectuate a sale of the Atlantic City Resort and Casino to a group of Investors-led by Carl Icahn. Judge Judith H. Wizmur presides over the cases. Manchester Mall is a wholly owned subsidiary of Adamar that owns and operates certain real property utilized in the New Jersey Debtors' business operations. Effective March 8, Tropicana Entertainment successfully emerged from the Chapter 11 reorganization process as an Carl Icahn-owned entity. A group of Tropicana entities, known as the LandCo Debtors, which own Tropicana casino property in Las Vegas, have obtained approval of a separate Chapter 11 plan. Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, in Hackensack, New Jersey, represented the New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their claims and notice agent. Adamar disclosed $500 million to $1 billion both in total assets and debts in its petition. Manchester Mall disclosed $1 million to $10 million in total assets, and less than $50,000 in total debts in its petition. Debtors Adamar of New Jersey Inc. and Manchester Mall Inc. have merged into Adamar of NJ In Liquidation, LLC. The merger and name change is in accordance with an Amended and Restated Purchase Agreement, which governs the sale and transfer of the operations of the Tropicana Casino and Resort - Atlantic City, including substantially all of the New Jersey Debtors' assets, to Tropicana Entertainment Inc., Tropicana Atlantic City Corp., and Tropicana AC Sub Corp., free and clear of any and all liens, claims and encumbrances. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Tropicana Entertainment Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) UNIFI INC: S&P Affirms 'B' Corp. Credit Rating; Outlook Positive ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Greensboro, N.C.-based Unifi Inc. to positive from stable. "We also affirmed our 'B' corporate credit rating on the company and 'B+' issue-level rating on the company's senior secured notes due 2014," S&P said. "The rating outlook revision on Unifi is based on our view of the company's continued improvement in operating results and credit metrics despite a very competitive operating environment and mild recovery in its end-user markets," said Standard & Poor's credit analyst Stephanie Harter. The company is benefiting from volume growth, increased production in its facilities, and its cost reduction initiatives. Sales for the 12 months ended March 27, 2011, have increased about 19% over the prior year period on volume growth and pricing gains. "We estimate adjusted EBITDA margins have remained near 9.5% over the past four quarters reflecting volume growth, ability to pass through price increases from raw materials inflation, and improved capacity utilization. We estimate the ratio of lease-adjusted debt to EBITDA has improved to 2.9x, for the 12 months ended March 27, 2011, compared with 3.6x a year earlier," S&P related. "We expect to see some further improvement in credit measures over the next year, as the company's business continues to recover and Unifi applies excess cash flow to debt reduction," said Ms. Harter. The outlook is positive. "We would consider an upgrade if Unifi is able to sustain its strengthened credit measures, including leverage below 3x. An upgrade would also depend on Unifi's ability to maintain its adequate liquidity position, continue to improve operating performance, and generate positive free cash flow while reducing working capital levels. We could downgrade the company if demand were to decline causing deterioration in liquidity and credit measures such that leverage approaches 6x. However, we believe this is unlikely in the near term as EBITDA would need to decline by more than 50% for leverage to reach 6x (assuming no changes in current debt levels)," S&P noted. UNITY MUTUAL: A.M. Best Withdraws C++ Financial Strength Rating --------------------------------------------------------------- A.M. Best Co. has withdrawn the financial strength rating of C++ (Marginal) and issuer credit rating of "b+" of Unity Mutual Life Insurance Company, following the legal merger on July 1, 2011, with and into Columbian Mutual Life Insurance Company. Columbian Mutual is the lead life insurer of Columbian Financial Group. The FSR of A- (Excellent) and ICR of "a-" of Columbian Mutual are unaffected by this transaction. UNIVERSAL CITY: Moody's Raises Notes Rating to 'Baa2' From 'B3' -------------------------------------------------------------- Moody's Investors Service upgraded Universal City Development Partners, Ltd.'s senior unsecured and senior subordinated note ratings to Baa2 from B3, concluding the review for upgrade initiated on June 7, 2011. The upgrade follows NBC Universal Media, LLC's (NBCU; Baa2, stable rating outlook) announcement that it intends to launch a consent solicitation and offer to fully and unconditionally guarantee Universal Orlando's notes and the announcement of the closing of its acquisition of the remaining 50% interest in the company from its existing partner, Blackstone Capital Partners for approximately $1 billion. The acquisition closed on July 1, 2011. Upgrades: Issuer: Universal City Development Partners, Ltd. -- Senior Unsecured Regular Bond/Debenture, Upgraded to Baa2 from B3 -- Senior Subordinated Regular Bond/Debenture, Upgraded to Baa2 from B3 Outlook Actions: Issuer: Universal City Development Partners, Ltd. -- Outlook, Changed To Stable From Rating Under Review Withdrawals: Issuer: Universal City Development Partners, Ltd. -- Corporate Family Rating, Withdrawn, previously rated B1 -- Probability of Default Rating, Withdrawn, previously rated B1 -- Senior Secured Revolver, Withdrawn, previously rated Ba2, LGD2 - 21% -- Senior Secured Term Loan, Withdrawn, previously rated Ba2, LGD2 - 21% -- Senior Unsecured Regular Bond/Debenture, Withdrawn, previously rated LGD5-79% (only LGD assessment withdrawn) -- Senior Subordinated Regular Bond/Debenture, Withdrawn, previously rated LGD6-93% (only LGD assessment withdrawn) RATINGS RATIONALE Based on the much stronger credit standing of NBCU, Moody's believes there is a minimal chance that holders of the notes will not accept the proposed guarantee and the accompanying consent solicitation to conform the covenants and events of default to those contained in NBCU's bond indenture. NBCU's offer to guarantee Universal Orlando's notes is conditioned on holders of at least 50% of both of the notes approving the indenture amendments, which is a threshold that Moody's believes will be easily exceeded. Universal Orlando's B1 Corporate Family Rating, B1 Probability of Default Rating, and Ba2 senior secured credit facility ratings were withdrawn. Universal Orlando's credit facility was repaid and terminated in connection with NBCU's buyout of Blackstone. The credit facility termination and upgrade of the Universal Orlando's notes to investment-grade eliminate the need to maintain a CFR and PDR on the company. Universal Orlando's notes will be effectively pari passu with NBCU's outstanding senior unsecured debt securities with respect to NBCU's assets. Universal Orlando's senior notes will still have a contractually senior claim on the assets of Universal Orlando relative to the company's senior subordinated notes. However, Moody's views the NBCU guarantee as being a more significant credit driver and thus rates the senior notes and subordinated notes at the same Baa2 level. In addition, Moody's considers the prospect of a default by Universal Orlando to be minimal over the expected remaining life of the notes. Universal Orlando's notes are redeemable beginning in November 2012 (senior notes) and November 2013 (sub notes) at specified call prices and earlier based on a make-whole premium calculation. Moody's anticipates NBCU will direct Universal Orlando to redeem the notes when they become callable as its borrowing costs are likely to be meaningfully lower. Because Universal Orlando is not providing an upstream guarantee to NBCU, Universal Orlando's notes will have a structurally senior claim on the assets of Universal Orlando relative to NBCU's creditors. Universal Orlando's ratings were assigned by evaluating factors Moody's believes are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Universal Orlando's core industry and Universal Orlando's ratings are believed to be comparable to those of other issuers of similar credit risk. Universal Orlando, headquartered in Orlando Florida, operates the Universal Studios Florida and Universal Islands of Adventure theme parks, and Universal CityWalk Orlando, a dining, retail and entertainment complex. As of July 1, 2011, Universal Orlando is a wholly-owned subsidiary of NBCU. Revenue for the LTM ended March 2011 was approximately $1.3 billion. VISHAY INTERTECHNOLOGY: S&P Hikes CCR to 'BB+' on Higher Profit --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Malvern, Pa.-based Vishay Intertechnology Inc. to 'BB+' from 'BB'. The outlook is stable. "At the same time, we raised our senior unsecured debt rating to 'BB+' from 'BB', (the same as the corporate credit rating) with a recovery rating of '4', indicating the expectation for average (30%-50%) recovery in the event of a payment default," S&P related. "The rating on Vishay reflects the company's improved financial risk profile, which we now view as intermediate, due to improved profitability, lower leverage, and our expectation that shareholder return programs will be curtailed significantly over the near to medium term," said Standard & Poor's credit analyst William Backus. "We also expect that the company will generate positive free operating cash flow through an industry cycle and that debt-funded acquisitions will remain moderate in size. The company's largely commodity semiconductor product portfolio and lower margins relative to its peers partially offset these factors." The stable outlook reflects Standard & Poor's expectation that Vishay's credit measures will remain consistent with an intermediate financial profile over time, including cyclicality and the potential for debt-financed acquisitions and limited shareholder returns. "We also anticipate that the ratio of debt to adjusted EBITDA will be maintained at or below mid-2x through a more typical industry cycle. An upgrade in the near term is unlikely given the company's fair business risk profile and our expectation for leverage over time," said Mr. Backus. "While we don't expect to downgrade the company in the near term, a lower rating would likely be the result of substantially lower profitability or a shift in financial policies that led to large debt-financed acquisitions or shareholder returns and left leverage over mid-2x on a sustained basis." VISUALANT INC: Closes Security Purchase Pact with Ascendiant ------------------------------------------------------------ Visualant, Incorporated, closed a Securities Purchase Agreement with Ascendiant Capital Partners, LLC, dated June 17, 2011, pursuant to which Ascendiant agreed to purchase up to $3,000,000 worth of shares of the Company's common stock from time to time over a 24-month period, provided that certain conditions are met. The financing arrangement entered into by the Company and Ascendiant is commonly referred to as an "equity line of credit" or an "equity drawdown facility." Under the terms of the Securities Purchase Agreement, Ascendiant will not be obligated to purchase shares of the Company's common stock unless and until certain conditions are met, including but not limited to the SEC declaring effective a Registration Statement on Form S-1 and the Company maintaining an Effective Registration Statement which registers Ascendiant's resale of any shares purchased by it under the equity drawdown facility. The customary terms and conditions associated with Ascendiant's registration rights are set forth in a Registration Rights Agreement that was also entered into by the parties on June 17, 2011. Once the registration is declared effective, the Company has the right to sell and issue to Ascendiant, and Ascendiant will be obligated to purchase from the Company, up to $3,000,000 worth of shares of the Company's common stock over a 24-month period beginning on such date. The Company will be entitled to sell those shares from time to time during the Commitment Period by delivering a draw down notice to Ascendiant. In such draw down notices, the Company will be required to specify the dollar amount of shares that it intends to sell to Ascendiant, which will be spread over a five-trading-day pricing period. For each draw, the Company will be required to deliver the shares sold to Ascendiant by the second trading day following the pricing period. Ascendiant is entitled to liquidated damages in connection with certain delays in the delivery of its shares. The Company expects to issue up to 4,285,714 shares of common stock to be sold to Ascendiant under a Securities Purchase Agreement dated June 17, 2011. About Visualant Inc. Seattle, Wash.-based Visualant, Inc., was incorporated under the laws of the State of Nevada on October 8, 1998. The Company develops low-cost, high speed, light-based security and quality control solutions for use in homeland security, anti- counterfeiting, forgery/fraud prevention, brand protection and process control applications. The Company's balance sheet at March 31, 2011, showed $4.63 million in total assets, $6.13 million in total liabilities, a $1.54 million total stockholders' deficit and $47,739 noncontrolling interest. As reported in the Troubled Company Reporter on Jan. 4, 2011, Madsen & Associates CPA's, Inc., Salt Lake City, expressed substantial doubt about Visualant, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended September 30, 2010. The independent auditors noted that the Company will need additional working capital for its planned activity and to service its debt. VISUALANT INC: Intends to Acquire Eagle for $1 Million ------------------------------------------------------ Visualant, Incorporated, on Jan. 24, 2011, signed a letter of intent to Eagle Technologies USA of Brea, California. On June 27, 2011, the Company announced that it signed a new letter of intent to Eagle. Eagle, founded by card industry leaders Greg and Ryan Hawkins and Jeff Fulmer in 2008, has rapidly emerged as the premier provider of blank PVC and polyester composite cards to the identification market. Eagle will provide an immediate additional $1 million in annual revenue to Visualant and is projected to grow to $3 to $4 million in revenues over the next two years as Eagle increases the range and technical sophistication of its product line. With this acquisition, Visualant will continue with its strategic initiative to consolidate relevant security and authentication assets. At the same time, Visualant will provide Eagle and its management the human and capital resources necessary to rapidly accelerate its growth. Upon the closing of this acquisition, the Eagle team will continue to manage Eagle with full profit and loss responsibility. Under the terms of the Letter of Intent, Eagle will be acquired for $1 million, consisting of 1.2 million shares of restricted VSUL common stock valued at $.4167 per share, the price during the period of the negotiations, and a promissory note in the amount of $500,000 payable as follows: (1) $150,000 will be paid in cash to Seller on the earlier of the one-year anniversary of the closing date of the Acquisition or upon the closing of more than Two Million Five Hundred Thousand in financing. (2) $150,000 will be paid in cash to Seller on the earlier of the two-year anniversary of the closing date of the Acquisition or upon the closing of more than Five Million in aggregate financing since closing. (3) $200,000 on the earlier of the third anniversary of closing date of the Acquisition or upon the closing of more than Seven Million Five Hundred Thousand in aggregate financing since closing. The promissory note is collateralized by the stock and assets of Eagle until paid in full. In addition, consideration will be provided post closing to the ownership and senior management in Eagle in form of the creation of a bonus pool. The bonus pool will be comprised of one million shares of VSUL common stock which shall be escrowed at closing and released to Eagle ownership and management if they generate $4 million in cash flow positive gross revenues within two years of closing of this transaction. The shares will be distributed at the sole discretion of the ownership and senior management of Eagle. The letter of intent is subject to (i) approval of the acquisition by the Board of Visualant and Eagle; (ii) completion of due diligence; and (iii) agreement to customary terms and conditions; and resolution of outstanding litigation. The acquisition is expected to close by Aug. 30, 2011. A full-text copy of the Letter of Intent is available at no charge at http://is.gd/KhbY6Q About Visualant Inc. Seattle, Wash.-based Visualant, Inc., was incorporated under the laws of the State of Nevada on October 8, 1998. The Company develops low-cost, high speed, light-based security and quality control solutions for use in homeland security, anti- counterfeiting, forgery/fraud prevention, brand protection and process control applications. The Company's balance sheet at March 31, 2011, showed $4.63 million in total assets, $6.13 million in total liabilities, a $1.54 million total stockholders' deficit and $47,739 noncontrolling interest. As reported in the Troubled Company Reporter on Jan. 4, 2011, Madsen & Associates CPA's, Inc., Salt Lake City, expressed substantial doubt about Visualant, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended September 30, 2010. The independent auditors noted that the Company will need additional working capital for its planned activity and to service its debt. VITRO PACKAGING: Chapter 15 Case Summary ---------------------------------------- Chapter 15 Petitioner: Javier Arechavaleta Santos Chapter 15 Debtor: Vitro Packaging de Mexico S.A. de C.V. fka Inmobiliara Lorna del Toro, S.A. de C.V. Keramos 225 Pte Colonia del Prado Monterrey 64410 Nuevo Leon, Mexico Chapter 15 Case No.: 11-34224 Chapter 15 Petition Date: June 30, 2011 Court: U.S. Bankruptcy Court Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: David M. Bennett, Esq. THOMPSON & KNIGHT LLP 1722 Routh Street, Suite 1500 Dallas, TX 75201-2533 Tel: (214) 969-1486 E-mail: david.bennett@tklaw.com - and - Katharine E. Battaia, Esq. THOMPSON & KNIGHT LLP 1722 Routh Street, Suite 1500 Dallas, TX 75201-2533 Tel: (214) 969-1495 Fax: (214) 969-1751 E-mail: katie.richter@tklaw.com Estimated Assets: $100,000,001 to $500,000,000 Estimated Debts: $100,000,001 to $500,000,000 The Company did not file a list of creditors together with its petition. Affiliates that previously sought, or have pending, Chapter 11 cases: Entity Case No. Petition Date ------ -------- ------------- Vitro America, LLC 11-32602 04/06/11 Super Sky Products, Inc. 11-32604 04/06/11 Super Sky International, Inc. 11-32605 04/06/11 VVP Finance Corporation 11-32611 04/06/11 VVP Funding Corporation 11-33161 05/09/11 VVP Holdings, LLC 11-33564 06/02/11 Vitro Chemicals, Fibers & Mining, LLC 11-32061 -- Troper Services, Inc. 11-32603 -- Amsilco Holdings, Inc. 11-32607 -- B.B.O. Holdings, Inc. 11-32608 -- Binswanger Glass Company 11-32609 -- Crisa Corporation 11-32610 -- VVP Auto Glass, Inc. 11-32612 -- V-MX Holdings, LLC 11-32613 -- Vitro Packaging, LLC 11-32614 -- Vitro, S.A.B. de C.V. 15-33335 04/14/11 VITRO SAB: No Ruling Yet on Involuntaries Against U.S. Units ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that at a June 28 hearing, bondholders were asking U.S. Bankruptcy Judge Harlin Hale to reconsider a ruling from April declining to put several of Vitro SAB's U.S. subsidiaries into Chapter 11 involuntarily. Judge Hale said he would need a "short amount of time" to write his ruling, Allan Brilliant, a lawyer for bondholders, said in an interview. Mr. Brilliant is with the New York office of Dechert LLP. At the same hearing, the company was asking Hale to force the bondholders to disclose details of their trading in Vitro bonds. Mr. Brilliant said the judge likewise would decide soon on that request. Judge Hale didn't say how he would rule on either dispute, Mr. Brilliant said. Mr. Rochelle also discloses that a hearing to grant the Vitro parent's petition for protection in the U.S. under Chapter 15 was scheduled for June 28. Success in Chapter 15 is necessary so the U.S. court could enforce whatever reorganization Vitro works out in a Mexican court. The Chapter 15 hearing was postponed until July 14 in view of the decision last week in which Judge Hale said Vitro couldn't use Chapter 15 to protect subsidiaries not themselves in bankruptcy in the U.S. or 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 sought 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. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 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, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. 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 Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. The judge said Vitro couldn't push through a plan to buy back or swap US$1.2 billion in debt from bondholders based on the vote of US$1.9 billion of intercompany debt when third-party creditors were opposed. Vitro as a result dismissed the first Chapter 15 petition following the ruling by the Mexican court. On April 12, 2011, an appellate court in Mexico reinstated the reorganization. Accordingly, Vitro SAB on April 14 re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11-11754). In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed 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. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group 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 15 other affiliates on Nov. 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). A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. On June 13, 2011, U.S. Bankruptcy Judge Harlin "Cooter" Hale authorized the U.S. Debtors to sell their businesses to an affiliate of Sun Capital Partners Inc. for what the creditor's committee described as a gross price of $64.4 million. VITRO SAB: Court Denies Petitioning Creditors' Lift Stay Motion --------------------------------------------------------------- Knighthead Master Fund, L.P., Brookville Horizons Fund, L.P., Davidson Kempner Distressed Opportunities Fund, LP, and Lord Abbett Bond-Debenture Fund, Inc. asked the U.S. Bankruptcy Court for the Northern District of Texas to lift the automatic stay so that they can serve demand notices on Vitro Asset Corp., et al. The Former Alleged Debtors objected to the motion. After a hearing on June 16, 2011, the Court denied the Petitioning Creditors' request for the reasons set forth on the record. 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 sought 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. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 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, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. 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 Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. The judge said Vitro couldn't push through a plan to buy back or swap US$1.2 billion in debt from bondholders based on the vote of US$1.9 billion of intercompany debt when third-party creditors were opposed. Vitro as a result dismissed the first Chapter 15 petition following the ruling by the Mexican court. On April 12, 2011, an appellate court in Mexico reinstated the reorganization. Accordingly, Vitro SAB on April 14 re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11-11754). In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed 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. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group 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 15 other affiliates on Nov. 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). A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. On June 13, 2011, U.S. Bankruptcy Judge Harlin "Cooter" Hale authorized the U.S. Debtors to sell their businesses to an affiliate of Sun Capital Partners Inc. for what the creditor's committee described as a gross price of $64.4 million. WASHINGTON MUTUAL: Judge Grants FDIC's Bid to Toss Kickback Suit ---------------------------------------------------------------- Allison Grande at Bankruptcy Law360 reports that the government receiver for Washington Mutual Bank NA on Tuesday won the dismissal of a putative class action in Pennsylvania accusing the failed bank of collecting kickbacks in return for referring borrowers to certain private mortgage insurance providers. In granting the Federal Deposit Insurance Corp.'s motion to dismiss, U.S. District Judge Thomas N. O'Neill Jr. concluded that the Financial Institutions Reform, Recovery and Enforcement Act of 1989 "clearly prohibits" the plaintiffs from seeking statutory penalties, including punitive damages, against the FDIC as receiver, according to Law360. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. Washington Mutual Bank was taken over on Sept. 25, 2008, by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns 100% of the equity in WMI Investment. When WaMu filed for protection from its creditors, it disclosed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment estimated assets of $500 million to $1 billion with zero debts. WaMu is represented by Brian Rosen, Esq., at Weil, Gotshal & Manges LLP in New York City; Mark D. Collins, Esq., at Richards, Layton & Finger P.A. in Wilmington, Del.; and Peter Calamari, Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP. The Debtor tapped Valuation Research Corporation as valuation service provider for certain assets. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Fled LLP in New York and David B. Stratton, Esq., at Pepper Hamilton LLP in Wilmington, Del., represent the Official Committee of Unsecured Creditors. Stephen D. Susman, Esq., at Susman Godfrey LLP and William P. Bowden, Esq., at Ashby & Geddes, P.A., represent the Equity Committee. The official committee of equity security holders also tapped BDO USA as its tax advisor. Stacey R. Friedman, Esq., at Sullivan & Cromwell LLP and Adam G. Landis, Esq., at Landis Rath & Cobb LLP in Wilmington, Del., represent JPMorgan Chase, which acquired the WaMu bank unit's assets prior to the Petition Date. On Jan. 7, 2011, the U.S. Bankruptcy Court for the District of Delaware entered a 107-page opinion determining that the global settlement agreement, among certain parties including WMI, the Federal Deposit Insurance Corporation and JPMorgan Chase Bank, N.A., upon which the Plan is premised, and the transactions contemplated therein, are fair, reasonable, and in the best interests of WMI. Additionally, the Opinion and related order denied confirmation, but suggested certain modifications to the Company's Sixth Amended Joint Plan of Affiliated Debtors that, if made, would facilitate confirmation. Washington Mutual has filed with the Bankruptcy Court a Modified Sixth Amended Joint Plan and a related Supplemental Disclosure Statement. The Company believes that the Modified Plan has addressed the Bankruptcy Court's concerns and looks forward to returning to the Bankruptcy Court to seek confirmation of the Modified Plan. WASHINGTON MUTUAL: Preferreds to Share Docs With Equity Panel ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that holders of trust preferred securities issued by Washington Mutual Inc. were given access by the bankruptcy judge to confidential information gathered by the official shareholders' committee regarding allegations that several hedge funds improperly traded in WaMu securities based on non-public information. The preferred and equity holders will uses the information to prepare opposition to approval of WaMu's Chapter 11 plan at the confirmation hearing to begin July 13. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. Washington Mutual Bank was taken over on Sept. 25, 2008, by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns 100% of the equity in WMI Investment. When WaMu filed for protection from its creditors, it disclosed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment estimated assets of $500 million to $1 billion with zero debts. WaMu is represented by Brian Rosen, Esq., at Weil, Gotshal & Manges LLP in New York City; Mark D. Collins, Esq., at Richards, Layton & Finger P.A. in Wilmington, Del.; and Peter Calamari, Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP. The Debtor tapped Valuation Research Corporation as valuation service provider for certain assets. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Fled LLP in New York and David B. Stratton, Esq., at Pepper Hamilton LLP in Wilmington, Del., represent the Official Committee of Unsecured Creditors. Stephen D. Susman, Esq., at Susman Godfrey LLP and William P. Bowden, Esq., at Ashby & Geddes, P.A., represent the Equity Committee. The official committee of equity security holders also tapped BDO USA as its tax advisor. Stacey R. Friedman, Esq., at Sullivan & Cromwell LLP and Adam G. Landis, Esq., at Landis Rath & Cobb LLP in Wilmington, Del., represent JPMorgan Chase, which acquired the WaMu bank unit's assets prior to the Petition Date. On Jan. 7, 2011, the U.S. Bankruptcy Court for the District of Delaware entered a 107-page opinion determining that the global settlement agreement, among certain parties including WMI, the Federal Deposit Insurance Corporation and JPMorgan Chase Bank, N.A., upon which the Plan is premised, and the transactions contemplated therein, are fair, reasonable, and in the best interests of WMI. Additionally, the Opinion and related order denied confirmation, but suggested certain modifications to the Company's Sixth Amended Joint Plan of Affiliated Debtors that, if made, would facilitate confirmation. Washington Mutual has filed with the Bankruptcy Court a Modified Sixth Amended Joint Plan and a related Supplemental Disclosure Statement. The Company believes that the Modified Plan has addressed the Bankruptcy Court's concerns and looks forward to returning to the Bankruptcy Court to seek confirmation of the Modified Plan. WCK, INC: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------ Debtor: WCK, Inc. 23790 Canyon Vista Court Diamond Bar, CA 91765 Bankruptcy Case No.: 11-38324 Chapter 11 Petition Date: June 30, 2011 Court: U.S. Bankruptcy Court Central District of California (Los Angeles) Judge: Thomas B. Donovan Debtor's Counsel: John Eom, Esq. LAW OFFICES OF JOHN EOM 3700 Wilshire Boulevard, #700 Los Angeles, CA 90010 Tel: (213) 387-1300 E-mail: jeom@esqlawcenter.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Willian Chong. Debtor's List of four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ City of Fresno Occupancy Tax $500,000 P.O. Box 45017 Fresno, CA 93718 Fresno County Property Tax $480,000 2281 Tulare Street Fresno, CA 93721 EDD Payroll Tax $360,000 P.O. Box 826880 MIC 83 Sacramento, CA 94280 Service Tec Machinery $23,000 Maintenance WEST END FINANCIAL: Albert Togut Named Examiner ----------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Albert Togut, a bankruptcy lawyer in New York who often serves as conflicts counsel in major Chapter 11 cases, was selected by the U.S. Trustee to be the Chapter 11 examiner for fund adviser West End Financial Advisors LLC. Mr. Rochelle recounts that earlier last month the bankruptcy judge called for an examiner to determine whether West End's law firm, Robinson Brog Leinwand Greene Genovese & Gluck PC, should be required to pay back excessive fees received before the Chapter 11 filing. About West End Financial West End Financial Advisors LLC, Sentinel Investment Management Corp. and a number of affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-11152) in Manhattan on March 15, 2011. New York-based West End estimated its assets and debts at $1 million to $10 million. Arnold Mitchell Greene, Esq., at Robinson Brog Leinwand Greene Genovese & Gluck, P.C., serves as the Debtors' bankruptcy counsel. William Landberg created WEFA in 2000 as an investment and financial management company. Subsequently he purchased Sentinel Investment Management Corp., a boutique investment advisory company. Sentinel and WEFA targeted individual private clients for investments in fixed income funds and alternative investment products. Mr. Landberg's ultimately resigned from all West End related entities effective June 2, 2009, following a probe on misappropriation of funds. Schedules of assets and liabilities for West End and its funds showed assets of $400,000 and debt of $6.7 million, not including $66 million from investors who may or may not be considered creditors. Debt includes $5.5 million in secured claims, according to the schedules. Secured creditors with the largest claims are DZ Bank ($118.1 million), West LB ($41 million), Iberia Bank ($11.3 million), and Suffolk County National Bank ($8.3 million). WEST PENN: Fitch Places Bonds on Rating Watch Evolving ------------------------------------------------------ Fitch Ratings has placed on Rating Watch Evolving the 'BB-' rating on approximately $747.7 million series 2007A health system revenue bonds issued by Allegheny County Hospital Development Authority for the benefit of West Penn Allegheny Health System (WPAHS). The Rating Watch Evolving indicates that the rating may be raised, lowered or affirmed. On June 28, the health insurer Highmark Inc. (Highmark) announced that it intends to enter into an affiliation with WPAHS as a first step leading to a potential acquisition. Both of the not-for-profit boards voted on June 27 to approve the general terms of the transaction. As part of the agreement, Highmark will immediately provide a $50 million grant to WPAHS to support its ongoing operations. Highmark has further committed to provide up to $475 million over the next four years, including $75 million toward medical education for WPAHS affiliated medical schools. It was announced that Dr. Christopher Olivia, the health system's president and CEO, will be leaving his role as of June 28 and will be replaced by Dianne Dismukes, who had been the system's vice president of hospital operations. Fitch believes positive rating movement (or Outlook revision) could occur depending on the specifics of the agreement. Prior to this rating action, WPAHS's bonds had a Negative Outlook. WPAHS continues to amass significant operating losses in the current fiscal year as it implements the downsizing of its system and is facing large pension liabilities. The failure of the transaction to go forward has the potential for further downward rating pressure. Fitch will take further rating action when the details of the definitive agreement are available. WESTFORD SPECIAL: Wins Dismissal of Liquidation Petition -------------------------------------------------------- The British Virgin Islands Court of Appeal has unanimously reversed a lower court ruling and dismissed a petition by McKinsey & Co. to liquidate Westford Special Situations Fund Ltd. McKinsey had filed the petition in an attempt to redeem its investment. McKinsey, which had invested in a feeder fund to Westford Special Situations Master Fund, L.P., attempted to liquidate Westford after the fund suspended redemptions -- even though Westford had made partial payments to McKinsey. In denying McKinsey's motion, the Court upheld Westford's argument that, as a redemption creditor, McKinsey did not have the legal standing to force the appointment of a liquidator. The Westford Special Situations Fund Ltd. and Westford Special Situations Master Fund L.P. are part of the Westford-Epsilon family of funds managed by Steve G. Stevanovich. WESTMINSTER MANOR: Fitch Affirms 'BB+ Rating on Revenue Bonds ------------------------------------------------------------- As part of its on-going surveillance efforts, Fitch Ratings has affirmed the 'BB+' rating on the following Travis County Health Facilities Development Corporation revenue bonds issued on behalf Westminster Manor: -- $64.6 million series 2010. The Rating Outlook is Stable. Rating Rationale: -- The affirmation at 'BB+' reflects the high leverage and development risk associated with WM's campus repositioning which is tempered by strong historical occupancy, excellent pre-sales on the new units and solid liquidity relative to expenses. -- WM's location and reputation in the Austin market has resulted in strong demand for service. Occupancy of the independent living units (ILUs) has exceeded 96% in each year since 2000 while occupancy in the skilled nursing facilities (SNF) has exceeded 90% in each of the last five years. -- As of May 31, 2011, 96% of the 75 new ILUs had been reserved with a 10% deposit collected. Moreover, WM maintains an active wait list for both the existing and new ILUs which had over 100 applicants as of May 31st. -- Development and construction of expansion project is on-time and within budget -- While certain financial metrics reflect the effects of the additional debt incurred to fund the expansion project, WM's level of cash and investments relative to expenses was strong with 562 days cash on hand (DCOH) at May 31st. Key Rating Drivers: -- Risks inherent in any major construction project including construction delays, cost overruns and/or slow fill up of the new ILUs could negatively impact WM's credit profile. -- Expectation that WM will continue to maintain strong occupancy in its existing units as the new units are brought on line. Security: Pledge of gross revenues, a mortgage lien on property and a debt service reserve fund. Credit Summary: The affirmation at 'BB+' reflects the high leverage and development risk associated with WM's campus repositioning which is tempered by strong historical occupancy, excellent pre-sales on the new units and solid liquidity relative to expenses. WM's location and excellent reputation in the Austin market has resulted in strong demand for services. Since 2000, average annual occupancy of ILUs has ranged between 96%-98% while occupancy in the SNF has been above 90% in each of the last five years. As of May 31, 2011, WM had received 10% entrance fee deposits on 96% (72 of 75) of the new ILUs. Moreover, management maintains an active wait list of for both the existing ILUs as well as the 75 new ILUs. At May 31st the wait list had over 100 applicants, of which 28 had paid a $5,000 deposit to indicate their desire to reserve an expansion unit. According to management and the construction monitor the project is 'on-time' and 'on-budget' through May with less than 10% of the owner's contingency being spent. The 64 ILUs which make up Phase I should be available for occupancy in February 2012 while the 11 ILUs in Phase II are expected to be available for occupancy in May 2013 with the project reaching stabilized occupancy by August 2013. Currently, several of WM's financial liquidity and capital related ratios are significantly weaker than Fitch's 'BBB' category medians reflecting the impact of the additional debt incurred to develop the expansion project. However, upon successful completion and stabilization of the new units, Fitch expects leverage and liquidity metrics to moderate and approach investment grade measures. Management's financial forecast projects the first full year of stabilization in 2014 with DCOH of 406, cash to debt of 46% and coverage of maximum annual debt service (MADS) of 1.75 times (x) which are in line with the respective 2010 'BBB' category medians of 372.7, 48.6% and 1.5x. Entrance fee receipts and cash flow are expected to be used to pay down long-term debt to roughly $60.3 million by 2014. Fitch believes strong project oversight from the board and management and a guaranteed maximum price contract (GMP) with provision for liquidated damages helps to limit the construction and development risk associated with the project. The Stable Outlook reflects Fitch's expectation that the board will successfully oversee development of the project and that management will maintain strong occupancy in the existing units and the robust level of pre-sale on the new units. Westminster Manor is a type-A continuing care retirement community (CCRC) located in Austin, TX consisting of 256 ILUs and 90 SNF units. In 2010, WM had total revenues of $19 million. WM disclosure practices are excellent. While WM is required to provide annual audited financial disclosure with 150 days of each fiscal year end and quarterly unaudited financial disclosure within 45 days of each quarter-end, management has been providing detailed disclosure reports monthly as well as hosting quarterly investor calls. WOODEND, LLC: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Woodend, LLC aka Surving entity merger Woodend, LLC Deertrack Investors, LLC P.O. Box 5274 Lake Wylie, SC 29710 Bankruptcy Case No.: 11-31672 Chapter 11 Petition Date: June 27, 2011 Court: U.S. Bankruptcy Court Western District of North Carolina (Charlotte) Judge: George R. Hodges Debtor's Counsel: Richard M. Mitchell, Esq. MITCHELL & CULP, PLLC 1001 Morehead Square Drive, Suite 330 Charlotte, NC 28203 Tel: (704) 333-0630 Fax: (704) 333-4975 E-mail: rmmatty@mitchellculp.com Scheduled Assets: $8,907,881 Scheduled Debts: $7,402,131 A list of the Company's four largest unsecured creditors filed together with the petition is available for free at: http://bankrupt.com/misc/ncwb11-31672.pdf The petition was signed by Jerry H. Pettus, Sr., manager. WPCS INTERNATIONAL: Receives Default Notice from Bank of America ---------------------------------------------------------------- WPCS International Incorporated, and its United Stated based subsidiaries, previously entered into a loan agreement, dated April 10, 2007, as extended, modified and amended, with Bank of America, N.A. On June 28, 2011, the Borrower received a letter dated June 27, 2011, from counsel to the Bank pursuant to which the Bank alleges that certain events of default have occurred under the Loan Agreement, including failures to: (i) provide a compliance certificate; (ii) maintain EBITDA on a quarterly basis of not less than $425,000 for the quarter ending April 30, 2011; (iii) maintain, on a consolidated basis, a Funded Debt to Tangible Net Ratio of not more than 1.0 to 1.00 as of April 30, 2011; (iv) maintain, on a consolidated basis, an Interest Coverage Ratio, on a quarterly basis, of at least 3.0 to 1.0 for the quarter ending April 30, 2011; (v) maintain, on a consolidated basis, a Funded Debt to EBITDA Ratio on a quarterly basis of not more than 21.0 to 1.0 for the quarter ending April 30, 2011; and (vi) maintain, on a consolidated basis, a Basic Fixed Charge Ratio of not less than 1.2 to 1.0 as of the April 30, 2011, quarter end. The Borrower has advised the Bank and its legal counsel that it disputes all of the alleged events of default pursuant to the Notice, however, the Borrower acknowledges that it anticipates it will not achieve the financial covenants. As a result, the Company has determined that the anticipated failure constitutes an event of default under the Loan Agreement. The Bank has advised the Borrower that it is reserving all of its available rights or remedies as a result of the Events of Default, including the right to stop making additional credit available to the Borrowers, but the Bank is evaluating its options and has not decided to take or forebear from taking any action at this time as a result of the Events of Default. Furthermore, the Bank has not declared any and all Obligations to be immediately due and payable, which totaled $7,000,000 as of July 1, 2011. While the Borrower and Bank has commenced discussions concerning the Loan Agreement and the Events of Default, there can be no assurance that the Borrower and Bank will come to any agreement regarding repayment, forbearance, waiver or modification of the Loan Agreement or the Events of Default. About WPCS International Exton, Pennsylvania-based WPCS International Incorporated provides design-build engineering services that focus on the implementation requirements of communications infrastructure. The Company provides its engineering capabilities including wireless communication, specialty construction and electrical power to the public services, healthcare, energy and corporate enterprise markets worldwide. W.R. GRACE: Lan Proceedings Before Judge Buckwalter on June 29 -------------------------------------------------------------- The hearing before the Honorable Ronald L. Buckwalter of the U.S. District Court for the District of Delaware to consider affirming the asbestos trust provisions contained in W.R. Grace & Co.'s Chapter 11 plan and consider the matters raised in the appeals taken from Bankruptcy Court Judge Judith Fitzgerald's confirmation order continued on Wednesday, June 29, 2011. Daniel C. Cohn, Esq., at Murtha Cullina LLP, in Boston, Massachusetts, representing Libby Claimants, reappeared to address Judge Buckwalter's question from yesterday about why his clients couldn't submit evidence to the trust about their claims following the individual claim review process. Mr. Cohn said the reason is because the Trust Distribution Procedures don't adequately articulate the criteria that will be used to evaluate individual claims. As Mr. Cohn describes it, the individual claim review process leads a claimant into a world of unknowns into which they are unwilling to enter. Peter Van N. Lockwood, Esq., at Caplin & Drysdale, Chartered, in Washington, D.C., countered that Section 5 of the Trust Distribution Procedures is very specific, and specifically identifies all of the variables like venue, law firm representation and historical jury verdicts, that will give each claimant an award very close to what they'd expect in the tort system. Garland S. Cassada, Esq., at Robinson Bradshaw & Hinson, P.A., in Charlotte, North Carolina, representing Garlock Sealing Technologies LLC, revisited the fair and equitable argument he advanced on June 28, and told Judge Buckwalter that any attempt on his part to do any type of judicial balancing will lead him into uncharted water. The Plan Proponents' Plan isn't fair, Mr. Cassada said, "because it is leveraged on the backs of co- defendants." Mr. Cassada advised that Garlock's payments on asbestos claims increased from an average of $10,000 to $70,000 following W.R. Grace's Chapter 11 cases. John Donley, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, representing the Debtors, told Judge Buckwalter, that Mr. Cassada and his client are confused about what the phrase "fair and equitable" means. In 11 U.S.C. Sec. 1129, the phrase relates to application of the absolute priority rule. In 11 U.S.C. Sec. 524(g)(2)(B)(ii)(V), that phrase means something entirely different. The United States Supreme Court has made it clear, Mr. Donley said, that the same word used in the same statute don't always have the same meaning, and that's the case here. Mr. Lockwood told Judge Buckwalter that the Libby Claimants seem to perceive that the Trustees have some bias against them, and that's not the case. The Trustees are not plaintiffs' lawyers, and they owe a fiduciary duty to all personal injury claimants. Mr. Lockwood told Judge Buckwalter that he finds Garlock's argument baffling. Garlock says the absolute priority rule must be applied in W.R. Grace's cases because asbestos claimants are collecting less than 100 cents-on-the-dollar and W.R. Grace shareholders are entitled to take nothing from the Chapter 11 estate. But Garlock filed its Chapter 11 case in an effort to contain its asbestos-related liability, resolve it through a Sec. 524(g) trust, and preserve value for EnPro Industries, Inc. - - it's publicly traded shareholder. The ruling Garlock is asking for in W.R. Grace's Chapter 11 case is contrary to its litigation strategy it's outlined in its own bankruptcy case! Michael Brown, Esq., representing Government Employees Insurance Company and Republic Insurance Company, argued that Judge Fitzgerald erred when she ruled that his clients' insurance policies could be assigned to the W.R. Grace Asbestos Trust. Mr. Brown's clients' insurance policies contain anti-assignment provisions and his clients do not consent to their assignment. Mr. Brown told Judge Buckwalter that Judge Fitzgerald approved the assignment of the W.R. Grace policies based on her ruling in Federal-Mogul's Chapter 11 cases -- and that ruling is currently on appeal to the U.S. Court of Appeals for the Third Circuit. Mr. Brown assumes that Judge Fitzgerald made her ruling based on either (x) express preemption under 11 U.S.C. Sec. 1123(a)(5)(b) or (y) implied preemption under 11 U.S.C. Sec. 524(g). Neither basis is correct, Mr. Brown argued. GEICO and Republic want the District Court to invalidate the assignments. Michael A. Shiner, Esq., at Tucker Arensberg, P.C., in Pittsburgh, Pennsylvania -- mshiner@tuckerlaw.com -- representing another insurer, observed that there are four Delaware asbestos-related bankruptcy cases in which non-consensual insurance policy assignments have been approved: Combustion Engineering, Global Industrial, Federal-Mogul and W.R. Grace, all of these decisions were by Judge Fitzgerald, and all are on appeal to the Third Circuit. "A wrong decision on this issue won't be the worst thing, will it?" Judge Buckwalter asked. "Well," Mr. Lockwood responded, "not so long as the assignments are approved." Moses Silverman, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York -- msilverman@paulweiss.com -- representing the Bank Lenders, advised Judge Buckwalter that the difference as of April 30, 2011, in the amount of interest the Lenders claim is owed and the amount of interest the Plan proposes to pay is $140 million. Mr. Silverman advised Judge Buckwalter that the Honorable Allan L. Gropper published an opinion in In re General Growth Properties, Inc., Case No. 09-11977, slip op. http://is.gd/Yod5R1 (Bankr. S.D.N.Y.), on June 16, 2011, supporting the Lenders' contention that they are entitled to the default rate of interest under their prepetition loan agreements rather than something less. "The Debtors can pay and they should pay," Mr. Silverman said. Their ability to pay is proof of solvency, and, Mr. Silverman said, Judge Fitzgerald erred in concluding that the Lenders failed to prove their entitlements. Mr. Silverman told Judge Buckwalter that there's no need to remand this matter to Judge Fitzgerald, and he has the authority to direct the Debtors to pay the additional $140 million to the lenders. Mr. Donley argued that the threshold issue the Lenders -- not the Debtors or anyone else -- must prove is solvency, and they can't. Mr. Donley reminded Judge Buckwalter that the Debtors' asbestos- related liability was estimated by experts at $400 million to $6 billion years ago -- numbers ranging from clear solvency to hopeless insolvency. If this plan, which compromises and settles the Debtors' asbestos- related liability at something manageable, is not confirmed, W.R. Grace will return to the place where the Equity Committee will argue that the liability is $400 million and the Asbestos Claimants' Committee will argue that the liability is $6 billion - - or maybe something greater based on newer information. This isn't where W.R. Grace wants to find itself. W.R. Grace wants the Plan it has crafted, negotiated and prosecuted confirmed. Philip Bentley, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, representing the Official Committee of Equity Security Holders, told Judge Buckwalter that Judge Fitzgerald looked at the case as a whole, from the time solvency was far from certain, to the time the settlement was inked with the asbestos constituencies, and through the confirmation hearing, and concluded that the certainty the settlement gave the Lenders was substantial. The results, Mr. Bentley indicated, is that the Lenders don't get the extra $140 million they want, because the concept that everybody would take a haircut is what underpinned the settlement. Kenneth Pasquale, Esq., at Stroock & Stroock & Lavan LLP, in New York -- kpasquale@stroock.com -- representing the Unsecured Creditors' Committee, directed Judge Buckwalter's attention to very specific question of W.R. Grace's general counsel at the confirmation hearing. He was asked if W.R. Grace knew that the Lenders had not agreed to a reduced interest rate at the time the term sheet around which the Chapter 11 plan is built was signed. He said he did. Mr. Donley made it clear that the Plan Proponents are asking Judge Buckwalter to affirm Judge Fitzgerald's order confirming the Chapter 11 plan and enter the injunctions that will enjoin prosecution of asbestos-related claims against the Debtors and other released parties and channel future asbestos-related claims to the Trusts established under the Plan. Judge Buckwalter thanked all of the lawyers for their stellar briefing and concise oral arguments today and yesterday. Judge Buckwalter made it clear that he won't be issuing a decision in the next week or two. 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 Jan. 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) W.R. GRACE: Plan Proceedings Before Judge Buckwalter on June 28 --------------------------------------------------------------- Matt Higgins, the courtroom deputy of the Honorable Ronald L. Buckwalter of the U.S. District Court for the District of Delaware, welcomed about 50 lawyers to Philadelphia on the morning of June 28 for a hearing in W.R. Grace & Co.'s Chapter 11 cases. Mr. Higgins shared that in his 20 years of working with Judge Buckwalter, this is the third time he's known that Judge Buckwalter took work home and to his New Jersey beach house. Mr. Higgins urged each lawyer intending to participate in oral argument to provide Judge Buckwalter with "bullet points" rather than rehashing what's already been written in briefs previously tendered to the Court. Judge Buckwalter took the bench, and distributed a schedule outlining how many minutes each participant in the June 28 hearing would be allotted to present their oral arguments. To many of the lawyers' surprise, the amount of time was limited to 10 to 60 minutes, and the schedule contemplated two days of oral argument. This was a surprise because many of the lawyers expected the hearing to continue into the evening hours. Judge Buckwalter sends litigants home at 5:00 p.m. each day. Daniel C. Cohn, Esq., at Murtha Cullina LLP, in Boston, Massachusetts -- dcohn@murthalaw.com -- representing Libby Claimants, recited his clients' four arguments: (A) the Trust Distribution Procedures improperly deprive the Libby Claimants of their jury trial rights; (B) the plan is unfair because it discriminates between seriously injured claimants and less-injured claimants, arguing that each of the 1,000 Libby Claimants should receive the $400,000 tort system value of their claim; (C) the Libby Claimants would fare better if W.R. Grace were liquidated under Chapter 7, so Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware goofed when she said the plan complies with the best interests of creditors test; and (D) the 524(g) Injunction is ambiguous because of its attempt to be agnostic with respect to insurers and invites future litigation. The Libby Claimants, John Donley, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, representing the Debtors, told Judge Buckwalter, suffer from a "failure of evidence." While the Libby Claimants have made elaborate arguments throughout the Debtors' Chapter 11 cases, their arguments have not been supported by facts. And in this appellate proceeding, Mr. Donley told Judge Buckwalter, their arguments are not supported by evidence placed on the record in the Bankruptcy Court. The facts and the evidence, Mr. Donley said, are on the record and were extensively quited by Judge Fitzgerald in her report and recommendation to the District Court. Mr. Donley told Judge Buckwalter that Mr. Cohn's argument that his clients would fare better in a chapter 7 liquidation is nonsense. Pamela Zilly, the Debtors' financial expert, testified at the Confirmation Hearing before Judge Fitzgerald that W.R. Grace's enterprise value in a Chapter 7 liquidation might be as low as $2 billion and that a Chapter 7 trustee would have the impossible task of defending 300,000 asbestos personal injury jury trials. Sec. 524 of the Bankruptcy Code directs a trust to value asbestos claims and create matrices for uniform resolution of asbestos claims, Peter Van N. Lockwood, Esq., at Caplin & Drysdale, Chartered, in Washington, D.C., and to continue litigating claims before juries. That's what the Trust Distribution Procedures do. Mr. Lockwood suggested Mr. Cohn's clients don't want to go the trouble of making any showing to the Trust about their claims and want, instead, to recover large amounts under the expedited claims resolution procedures. Judge Buckwalter asked Mr. Cohn if that was the case, but Mr. Cohn had apparently left the courtroom. Roger Frankel, Esq., at Orrick, Herrington & Sutcliffe LLP, in Washington, D.C., representing the Future Personal Injury Claimants' Representative, reminded Judge Buckwalter that the Debtors attempted to value their asbestos-related liability in an estimation proceeding before the Bankruptcy Court, and the valuations ranged from $500 million to $6 billion. That estimation proceeding ended in a compromise and settlement that will fund the Sec. 524 Trust created under the Plan with $3 billion on the Plan's Effective Date. Mr. Frankel reminded Judge Buckwalter that the Plan was accepted by wide margins by every class of impaired creditors. David L. Rosendorf, Esq., at Kozyak Tropin & Throckmorton, P.A., in Coral Gables, Florida -- drosendorf@kttlaw.com -- representing Anderson Memorial, advanced a four-pronged argument: (1) the evidence put before Judge Fitzgerald about the Debtors' good faith was inadequate and Judge Fitzgerald failed to state in her confirmation order that the Plan Proponents negotiated with Anderson Memorial in good faith; (2) Anderson Memorial has been singled out, treated inferiorly, and has been improperly deprived of its right to litigate its claims in South Carolina; (3) the Trust Distribution Procedures don't explain how Anderson Memorial's claim will be resolved; and (4) the Debtors failed to prove the feasibility of their plan because, from what Anderson Memorial understands, there's no more than $2 million available to satisfy its claim and any other unresolved property damage claims. Mr. Rosendorf says that the Debtors' plan isn't confirmable because of these deficiencies. Judge Buckwalter asked Mr. Rosendorf to recall what happened at the Confirmation Hearing when he cross-examined Ms. Zilly feasibility. Mr. Rosendorf recalled that she was unable to answer. Mr. Donley understands that Anderson Memorial is dissatisfied, but says that Anderson Memorial is in a small minority. W.R. Grace have resolved nearly 4,000 asbestos property damage claims to date, and 426 of those claims totaling $147 million, will be paid in full, in cash, on the Plan's Effective Date. Mr. Donley notes that 121 of those claims, settled for $29.5 million, will be paid to Mr. Rosendorf's clients and his co-counsel. Mr. Donley acknowledged that negotiations with the Property Damage Claimants were vigorous. Perhaps, Mr. Donley suggested, Mr. Rosendorf thinks those negotiations were acrimonious. Whatever the perceptions may be, there's no evidence those negotiations weren't in good faith. Linda J. Casey, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware representing BNSF Railway Company, argues that the disparate treatment of creditors in Class 6 under the Debtors' Plan renders the Plan non-confirmable, and that the Trust Distribution Procedures improperly alter non-bankruptcy law for claims for which W.R. Grace and other entities might be responsible. Francis A. Monaco, Jr., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, representing the State of Montana and Her Majesty the Queen in Right of Canada, argued that creditors' requests for contribution and indemnification should not be subject to Section 524(g) based on the plain language of the statute. The Plan Proponents rely on the "this is the way it's always been done" decision in Armstrong, and that's incorrect, Mr. Monaco argued. The right thing for the District Court to do is to look at the statute and its legislative history, which will show that Section 524(g) was put in place to resolve production-related asbestos claims, not the failure to warn claims asserted by the plaintiffs who have sued Mr. Monaco's clients. Mr. Monaco argued that his clients should have been separately classified under the Plan, they would have voted against the plan, and because of their dissent, the absolute priority rule would bar any shareholder recovery. Garland S. Cassada, Esq., at Robinson Bradshaw & Hinson, P.A., in Charlotte, North Carolina -- gcassada@rbh.com -- representing Garlock Sealing Technologies LLC, made no secret about his client's motivation. The W.R. Grace Trust is projected to pay asbestos claimants about 35% of what they are owed. Garlock, potentially, is responsible for the remaining 65% on certain claims. Garlock wants W.R. Grace to pay everything it can to the extent of its enterprise value. Garlock is dismayed that asbestos claimants are receiving 35 cents-on-the-dollar and equity holders are walking away with $3 billion. Mr. Cassada said it is inconceivable that Judge Fitzgerald ruled that Garlock has no standing in W.R. Grace's chapter 11 cases. "It wasn't inconceivable to Judge Fitzgerald," Judge Buckwalter observed. Mr. Cassada told Judge Buckwalter that he believes Judge Fitzgerald erred. While the automatic stay in Garlock's Chapter 11 case prohibits the commencement or continuation of litigation against Garlock, it does not strip Garlock of its rights against W.R. Grace. Someone, Mr. Cassada told Judge Buckwalter -- either the District Court or the Bankruptcy Court on remand -- needs to make findings that the Sec. 524 injunction is fair and equitable, meaning that asbestos claims are paid in full before shareholders recover anything. Tancred Schiavoni, Esq., at O'Melveny & Myers LLP, in New York -- tschiavoni@omm.com -- addressed Judge Buckwalter on behalf of Arrowood Indemnity Company, formerly known as Royal Indemnity Company. Mr. Schiavoni advised the Court that Arrowood issued a series of policies to W.R. Grace, the last of which was issued one month before he was born -- 50 years ago. While certain appellants seem to want the court to think that their settlements with the Debtors were somehow improper or underhanded, they weren't. Moreover, each and every settlement is supported by the record before the District Court. In an attempt to provide Judge Buckwalter with a sense of the scope of the confirmation hearing before Judge Fitzgerald, with thousands of pages briefs, exhibits and transcripts, Mr. Schiavoni related that while he was tied up with matters related to confirmation of W.R. Grace's plan, his wife successfully identified, negotiated a contract for, and closed on the purchase of a vacation home. Judge Buckwalter and the courtroom burst into laughter. Michael S. Giannotto, Esq., at Goodwin Procter LLP, in Washington, D.C. -- mgiannotto@goodwinprocter.com -- representing CNA Companies, advised Judge Buckwalter that his client inked an insurance settlement with W.R. Grace years ago, where CNA wrote an $84 million check to Grace. If the District Court doesn't honor those settlements, Mr. Giannotto said, this will discourage future insurance settlements in Chapter 11 cases. The hearing continued at 10:00 a.m., June 29. 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 Jan. 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) W.R. GRACE: To Release Q2 Financial Results on July 26 ------------------------------------------------------ W. R. Grace & Co. (NYSE: GRA) announced that it will release its second quarter 2011 financial results at 6:00 a.m. EDT on Tuesday, July 26. A company-hosted conference call and webcast will follow at 11:00 a.m. EDT that same day. During the call, Fred Festa, Chairman, President and Chief Executive Officer, and Hudson La Force, Senior Vice President and Chief Financial Officer, will review the second quarter results. A question and answer session will follow the prepared remarks. Access to the live webcast and the accompanying slides will be available through the Investor Information > Investor Presentations section of the company's Web site, http://www.grace.com. Those without Internet access can participate by dialing +1 800.659.2032 (U.S.) or +1 617.614.2712 (International). The conference call passcode is 55991140. Investors are advised to dial into the call at least ten minutes early in order to register. An audio replay will be available at 2:00 p.m. EDT on July 26. The replay will be accessible until August 2 by dialing +1 888.286.8010 (U.S.) or +1 617.801.6888 (International) and entering conference call passcode 55112870. 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 Jan. 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) W.R. GRACE: Proposes to Bid for "Confidential" Acquisition ---------------------------------------------------------- W.R. Grace & Co. and its debtor affiliates seek permission from Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware to participate in a competitive auction, and if selected as the winning bidder thereafter, consummate a proposed acquisition. The Debtors sought and obtained permission from Judge Fitzgerald to file their motion and accompanying information relating to the transaction under seal. The Debtors, however, said they have already shared the materials related to the transaction to the statutory committees and the future claimants' representatives. The materials filed under seal are: -- the Proposed Transaction Motion; -- the form transaction agreement and the associated agreements and other transaction documentation, which will be filed only upon Seller's selection of Grace as the winning bidder in the auction; -- two declarations in support of the Proposed Transaction, which are separately filed with the Court by Jeremy Francis Rohen, a managing director at Seale & Associates, Inc., the Debtors' financial advisor, and John James O'Connell III, managing director of Blackstone Advisory Partners L.P., also the Debtors' financial advisor; and -- any further documentation filed in support of the Proposed Transaction Motion on or before entry of an order authorizing the relief sought in the Proposed Transaction Motion. The heightened need for confidentiality on both the part of the Seller and the Debtors makes it impossible to meaningfully redact confidential portions of the sealed documents without running the risk of inadvertently revealing confidential commercial information, Adam Paul, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Fitzgerald. The Debtors, Mr. Paul says, have nonetheless gone to great lengths to engage and inform important constituencies, like as the Committees and FCRs, in the ongoing transaction process by sharing information with them regarding the Proposed Transaction and putting into place procedures for other parties-in-interest to be given access to the Proposed Transaction Motion pursuant to appropriate confidentiality arrangements and Seller's consent. In May 2011, the Debtors' Board of Directors approved their commencing due diligence regarding the Proposed Transaction, a highly confidential potential strategic transaction with the Seller, Mr. Paul discloses. He notes that the Board determined that the Proposed Transaction would significantly enhance Grace's business plan and growth strategy in coming years. The Seller, Mr. Paul explains, has required this heightened level of confidentiality to protect its confidential business information relating to the Proposed Transaction from the marketplace and Seller's competitors. The Debtors are including additional business information in the Proposed Transaction Motion that they must keep confidential both from the Seller and the broader marketplace, Mr. Paul says. He contends that the confidential business information necessary to form the factual basis for the relief requested in the Proposed Transaction Motion includes a range of highly sensitive subjects that would cause the Debtors great harm if it were disclosed to the Seller or otherwise made public. In the event that a party-in-interest other than the Committees and the FCRs asks to review any of the Proposed Transaction Motion, the Transaction Documentation or the Supplemental Filings, the Court directs: -- the Debtors to identify the party-in-interest to the Seller; -- the Seller to determine whether to consent to the party-in- interest executing an acknowledgment of and becoming bound by a confidentiality agreement. If Seller does not consent, then neither the Debtors, any Committee, the FCRs or any other person or entity that has received the Sealed Documents will disclose any of those materials; -- if Seller does so consent, the Debtors to furnish the party-in-interest with a form of the Confidentiality Agreement redacted of Seller's name and a redacted (if necessary) form of acknowledgment thereof; -- when the party-in-interest agrees to execute the acknowledgment to and to be bound by the Confidentiality Agreement, the Debtors to furnish the unredacted Confidentiality Agreement and a form of acknowledgment thereof; -- the party-in-interest to execute the acknowledgment and furnish it to the Debtors; -- the Debtors then to serve the Sealed Documents on the party-in-interest to the extent that those documents have already been filed. The Debtors also will serve on the party-in-interest all documents that are subsequently filed; and -- that any further information requests from the party-in- interest will be dealt with pursuant to the terms of the Confidentiality Agreement. The Court will convene a hearing on July 25, 2011, to consider the Proposed Transaction Motion. Objections are due on July 8. According to Reuters, Grace declined to elaborate. "If we are successful, we will announce the transaction publicly," Grace spokesman Greg Euston told Reuters. 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 Jan. 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) XL GROUP: Fitch Affirms BB+ Ratings on Preferred Ordinary Shares ---------------------------------------------------------------- Fitch Ratings has affirmed the ratings of XL Group Ltd. and its property/casualty (re)insurance subsidiaries, including the Issuer Default Rating for XL at 'BBB+', and the Insurer Financial Strength rating of its core operating companies at 'A'. Fitch's rationale for the affirmation of XL's ratings reflects the company's solid capitalization, reasonable financial leverage and stable competitive position. The ratings also reflect anticipated challenges in a competitive property/casualty market and soft rate environment, poor underwriting results in the first quarter of 2011 and the potential drag from the remaining run-off life business. Following positive net income posted by XL in 2010 and 2009, the company recorded a net loss of $178 million in the first quarter of 2011 due to sizable catastrophe losses from the Japanese and New Zealand earthquakes and the Australian flooding events. As a result, XL's core property/casualty operations posted a higher GAAP combined ratio of 125.8% for the first three months of 2011 compared to a 100.5% combined ratio for the first three months of 2010. Excluding the impact of catastrophes (30.5 points) and favorable reserve development (5.6 points), XL's combined ratio for the first quarter of 2011 was 100.9%, up 7.8 points from the first quarter of 2010. This deterioration was primarily driven by higher large loss activity in the Insurance segment's energy and property business and a large marine loss in the Reinsurance segment. XL's competitive position remains stable, with total property/casualty net premiums written up 7% in the first quarter of 2011 and 5% for full year 2010, with both XL's Insurance and Reinsurance segments experiencing premium growth. The increases are due to targeted new business growth, particularly in primary casualty, aviation, marine, and middle-market lines, strong mid- to-upper 80% retentions at historical levels across all lines of business and the recapture of some of the previously lost business, partially offset by the continuing competitive market environment and overall flat rate environment. Due to the first quarter 2011 net loss, XL's GAAP shareholders' equity declined 3% to $10.3 billion at March 31, 2011 from $10.6 billion at Dec. 31, 2011. However, XL continues to maintain reasonable financial leverage with an equity-credit adjusted debt- to-total capital ratio (including accumulated other comprehensive income) of 17.1% at March 31, 2011, up slightly from 16.7% at Dec. 31, 2010, which remains within Fitch's targeted range of 20% -- 25%. Key rating drivers that could lead to a downgrade include significant charges for reserves, investments, or runoff business that affect equity and the capitalization of the insurance subsidiaries, debt-to-total capital maintained above 25% and future earnings that are significantly below industry levels. Key rating drivers that could lead to an upgrade include operating earnings that remain in line with higher rated peers, overall flat to favorable loss reserve development, continued improvement in the quality and liquidity of the investment portfolio, debt-to- total capital maintained below 20% and continued improvement in insurance subsidiary capitalization. Fitch affirms these ratings with a Stable Outlook: XL Group Ltd. -- IDR at 'BBB+'; -- $600 million 5.25% senior notes due 2014 at 'BBB'; -- $350 million 6.375% senior notes due 2024 at 'BBB'; -- $325 million 6.25% senior notes due 2027 at 'BBB'; -- $575 million 10.75% equity units at 'BBB'; -- $1,000 million 6.375% series E preferred ordinary shares at 'BB+'; -- $71.15 million 6.102% series C preference ordinary shares at 'BB+'. XL Capital Finance (Europe) PLC -- IDR at 'BBB+'; -- $600 million 6.5% guaranteed senior notes due 2012 at 'BBB'. Stoneheath Re -- IDR at 'BBB+'; -- $350 million non-cumulative perpetual preferred at 'BB+'. Fitch has also affirmed at 'A' the IFS ratings of these XL Group Ltd. (re)insurance subsidiaries with a Stable Rating Outlook: -- XL Insurance (Bermuda) Ltd; -- XL Re Ltd; -- XL Insurance Switzerland; -- XL Re Latin America Ltd; -- XL Insurance Company Limited; -- XL Insurance America, Inc.; -- XL Reinsurance America Inc.; -- XL Re Europe Limited; -- XL Insurance Company of New York, Inc.; -- XL Specialty Insurance Company; -- Indian Harbor Insurance Company; -- Greenwich Insurance Company; -- XL Select Insurance Company. * Remainder Interest in Trust Protected From Creditors ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in Richmond, Virginia, ruled on June 28 that the remainder interest in a spendthrift trust doesn't become property of the bankrupt estate if the beneficiary files in Chapter 7. The case is Levin v. Wachovia Bank (In re Stroehmann), 09-2344, U.S. 4th Circuit Court of Appeals (Richmond, Virginia). * Same-Sex Bankruptcy May Go Directly to Circuit Court ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Trustee filed an appeal of a June 13 opinion by bankruptcy judges in California ruling that the federal Defense of Marriage Act (DOMA) is unconstitutional insofar as it prohibits couples in legal, same-sex marriages from filing joint bankruptcy petitions. The same-sex bankrupts responded by filing a motion yesterday seeking to have the appeal go directly to the 9th U.S. Circuit Court of Appeals in San Francisco, bypassing an intermediate appeal before a U.S. district judge. Mr. Rochelle notes that although the opinion finding DOMA unconstitutional was signed by 20 of the 24 bankruptcy judges in the district, the bankrupts said the U.S. Trustee intends to continue filing motions to dismiss same-sex cases until there is a definitive appellate ruling. The couple is being represented by Klee Tuchin Bogdanoff & Stern LLP from Los Angeles and Law Offices of Peter M. Lively from Culver City, California. The case is In re Balas, 11-17831, U.S. Bankruptcy Court, Central District of California (Los Angeles). * FDIC to Discuss on Agency's New Powers to Liquidate Large Firms ----------------------------------------------------------------- Reuters reports that the Federal Deposit Insurance Corp board will meet this week to consider rules for putting into place the agency's new powers to liquidate large, failing financial firms. The meeting will be the last for Chairman Sheila Bair, who joined the agency in 2006 and is stepping down from her post on July 8, Reuters says. Reuters relates that President Obama has nominated FDIC Vice Chairman Martin Gutenberg to succeed Ms. Bair. The U.S. Senate, Reuters notes, has yet to lay out a schedule for when it will consider his nomination. Ms. Bair has been a major booster of these new so-called resolution authorities, arguing they can help prevent a repeat of massive government bailouts during the 2007-2009 financial crisis, such as the more than $80 billion in taxpayer support for American International Group, and destructive bankruptcies like Lehman Brothers. * Presidential Candidate Ron Paul Suggests Bankruptcy for U.S. -------------------------------------------------------------- Charles Riley, writing for CNNMoney, reports that Texas congressman and Republican presidential candidate Ron Paul thinks the United States should declare bankruptcy. CNNMoney says Mr. Paul was discussing Greece's fiscal trouble with Iowa radio host Jan Mickelson on Monday when he was asked, "If bankruptcy is the cure for Greece, is it also the cure for the United States?" "Absolutely," Mr. Paul replied. According to CNNMoney, Mr. Paul said social programs -- medical care and other benefits -- have pushed Greece to the edge, and the United States should take note. According to CNNMoney, Mr. Paul wants to convert the U.S. monetary system to one based on the gold standard, and held a hearing last week to grill federal officials about his bill to audit and inventory the nation's gold reserves. Mr. Paul suggested Monday the United States should eliminate the Federal Reserve as a way to reduce the deficit. * Hawaii Bankruptcy Filings Down 25.6% in June ---------------------------------------------- Erika Engle at staradvertiser.com reports that Hawaii bankruptcy filings in June were down 25.6% from June of last year, largely in the numbers of Chapter 7 liquidation and Chapter 13 wage-earner cases. Chapter 11 business reorganization filings were up with seven cases filed in June versus two a year ago, staradvertiser.com says. * Dewey & LeBoeuf Corporate Trust Pro Joins Drinker Biddle ---------------------------------------------------------- Hilary Russ at Bankruptcy Law360 reports that Drinker Biddle & Reath LLP said Monday it had added a restructuring partner from Dewey & LeBoeuf LLP specializing in corporate trust and institutional debt issues to its Florham Park, N.J., office. Maria Amelia Dantas joined the firm in its corporate restructuring practice group, Law360 says. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total Holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- PURE INDUSTRIAL AAR-U CN 277.1 (8.6) - ACCO BRANDS CORP ABD US 1,094.2 (77.0) 293.1 ABSOLUTE SOFTWRE ABT CN 116.3 (12.0) (12.6) ALASKA COMM SYS ALSK US 609.8 (27.4) 6.3 AMR CORP AMR US 27,113.0 (3,949.0) (1,028.0) ANOORAQ RESOURCE ARQ SJ 1,024.0 (77.0) 20.9 A&W REV ROYAL-UT AWRRF US 179.2 (147.6) 3.6 A&W REV ROYAL-UT AW-U CN 179.2 (147.6) 3.6 AMER AXLE & MFG AXL US 2,167.8 (415.4) 60.4 AUTOZONE INC AZO US 5,884.9 (1,119.5) (655.3) BLUEKNIGHT ENERG BKEP US 323.5 (35.1) (85.8) BOSTON PIZZA R-U BPF-U CN 148.2 (100.1) 1.3 CINCINNATI BELL CBB US 2,636.2 (650.4) 6.4 COLUMBIA LABORAT CBRX US 27.8 (2.6) 11.5 CC MEDIA-A CCMO US 16,938.6 (7,280.4) 1,644.2 CADIZ INC CDZI US 46.7 (2.1) 2.1 CHOICE HOTELS CHH US 412.4 (49.0) (1.9) TOWN SPORTS INTE CLUB US 460.0 (4.7) (15.4) CLOROX CO CLX US 4,051.0 (82.0) (28.0) CUMULUS MEDIA-A CMLS US 318.9 (324.4) 12.4 CHENIERE ENERGY CQP US 1,776.3 (547.6) 24.4 CABLEVISION SY-A CVC US 8,962.9 (6,462.4) (309.5) CENVEO INC CVO US 1,439.5 (333.5) 208.1 CENTENNIAL COMM CYCL US 1,480.9 (925.9) (52.1) DENNY'S CORP DENN US 296.8 (102.3) (36.9) DISH NETWORK-A DISH US 10,280.6 (502.5) 705.1 DUN & BRADSTREET DNB US 1,825.5 (615.8) (321.8) DOMINO'S PIZZA DPZ US 487.4 (1,167.7) 167.9 DIRECTV-A DTV US 20,593.0 (678.0) 2,813.0 EASTMAN KODAK EK US 5,882.0 (1,274.0) 954.0 DISH NETWORK-A EOT GR 10,280.6 (502.5) 705.1 EPICEPT CORP EPCT SS 12.4 (6.0) 6.0 EXELIXIS INC EXEL US 495.7 (68.7) 126.1 FREESCALE SEMICO FSL US 4,097.0 (5,076.0) 1,468.0 GLG PARTNERS INC GLG US 400.0 (285.6) 156.9 GLG PARTNERS-UTS GLG/U US 400.0 (285.6) 156.9 GRAHAM PACKAGING GRM US 2,943.5 (501.5) 313.1 GENCORP INC GY US 987.3 (161.1) 94.3 HCA HOLDINGS INC HCA US 23,809.0 (7,788.0) 2,719.0 HANDY & HARMAN L HNH US 372.2 (23.9) 13.2 IDENIX PHARM IDIX US 54.9 (40.6) 19.6 INCYTE CORP INCY US 459.6 (104.0) 315.8 IPCS INC IPCS US 559.2 (33.0) 72.1 ISTA PHARMACEUTI ISTA US 131.7 (161.7) 6.6 JUST ENERGY GROU JE CN 1,588.6 (219.4) (303.2) KNOLOGY INC KNOL US 823.7 (4.0) 42.7 US AIRWAYS GROUP LCC US 8,217.0 (30.0) (104.0) LIZ CLAIBORNE LIZ US 1,255.8 (124.5) (26.5) CHENIERE ENERGY LNG US 2,564.4 (509.7) 87.4 LORILLARD INC LO US 3,590.0 (449.0) 1,290.0 MOODY'S CORP MCO US 2,524.4 (223.2) 498.6 MAINSTREET EQUIT MEQ CN 453.0 (10.2) - MORGANS HOTEL GR MHGC US 692.8 (29.2) 205.1 MEAD JOHNSON MJN US 2,465.4 (250.4) 572.3 MANNKIND CORP MNKD US 254.8 (203.5) 26.2 MPG OFFICE TRUST MPG US 2,725.0 (1,082.2) - MERITOR INC MTOR US 2,675.0 (1,006.0) 205.0 NAVISTAR INTL NAV US 9,966.0 (764.0) 1,819.0 NATIONAL CINEMED NCMI US 796.4 (327.0) 74.0 NPS PHARM INC NPSP US 158.3 (159.7) 117.8 NEXSTAR BROADC-A NXST US 582.6 (181.2) 40.0 NYMOX PHARMACEUT NYMX US 10.0 (3.3) 6.8 ODYSSEY MARINE OMEX US 25.7 (8.1) (14.0) OTELCO INC-IDS OTT US 319.2 (7.6) 22.4 OTELCO INC-IDS OTT-U CN 319.2 (7.6) 22.4 PALM INC PALM US 1,007.2 (6.2) 141.7 PDL BIOPHARMA IN PDLI US 248.7 (371.2) (161.6) PLAYBOY ENTERP-B PLA US 165.8 (54.4) (16.9) PLAYBOY ENTERP-A PLA/A US 165.8 (54.4) (16.9) PROTECTION ONE PONE US 562.9 (61.8) (7.6) PRIMEDIA INC PRM US 208.0 (91.7) 3.6 QWEST COMMUNICAT Q US 16,849.0 (1,560.0) (2,828.0) QUALITY DISTRIBU QLTY US 281.4 (124.4) 40.9 QUANTUM CORP QTM US 431.0 (61.1) 97.9 RADNET INC RDNT US 556.6 (81.8) 11.0 REVLON INC-A REV US 1,105.5 (686.5) 132.7 REGAL ENTERTAI-A RGC US 2,323.2 (541.6) (114.5) RENAISSANCE LEA RLRN US 49.9 (31.4) (36.6) RSC HOLDINGS INC RRR US 2,817.4 (62.2) (71.6) RURAL/METRO CORP RURL US 303.7 (92.1) 72.4 SPIRIT AIRLINES SAVE US 545.2 (97.0) 27.6 SINCLAIR BROAD-A SBGI US 1,571.2 (144.6) 60.4 SALLY BEAUTY HOL SBH US 1,707.0 (340.6) 418.5 SINCLAIR BROAD-A SBTA GR 1,571.2 (144.6) 60.4 SMART TECHNOL-A SMA CN 546.2 (43.3) 173.7 SMART TECHNOL-A SMT US 546.2 (43.3) 173.7 SUN COMMUNITIES SUI US 1,160.1 (111.7) - SWIFT TRANSPORTA SWFT US 2,555.7 (9.8) 204.6 TAUBMAN CENTERS TCO US 2,535.6 (512.8) - THERAVANCE THRX US 315.1 (27.8) 266.9 TEAM HEALTH HOLD TMH US 832.2 (25.7) 44.8 LIN TV CORP-CL A TVL US 797.4 (127.9) 38.6 UNISYS CORP UIS US 2,949.3 (692.1) 547.6 UNITED RENTALS URI US 3,692.0 (29.0) 123.0 VONAGE HOLDINGS VG US 251.7 (102.0) (39.2) VECTOR GROUP LTD VGR US 924.6 (61.4) 294.8 VANGUARD HEALTH VHS US 4,162.2 (186.6) 356.5 VIRGIN MOBILE-A VM US 307.4 (244.2) (138.3) VENOCO INC VQ US 815.6 (21.6) 8.1 VERISK ANALYTI-A VRSK US 1,286.4 (109.1) (180.8) WORLD COLOR PRES WC CN 2,641.5 (1,735.9) 479.2 WORLD COLOR PRES WC/U CN 2,641.5 (1,735.9) 479.2 WORLD COLOR PRES WCPSF US 2,641.5 (1,735.9) 479.2 WESTMORELAND COA WLB US 788.0 (173.9) (1.0) WARNER MUSIC GRO WMG US 3,617.0 (254.0) (650.0) WEIGHT WATCHERS WTW US 1,126.0 (636.6) (345.4) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers" public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors" Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. 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 ***