/raid1/www/Hosts/bankrupt/TCR_Public/110902.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, September 2, 2011, Vol. 15, No. 243
Headlines
94TH AND SHEA: Creditor Wants Cash Collateral Motion Denied
AFFINITY GROUP: Successfully Exchanged $333-Mil. of Senior Notes
ALABAMA INJURY: Case Summary & 12 Largest Unsecured Creditors
ALLIED IRISH: AIB UK Posts EUR4.8MM Half Year Profit
AMBAC FINANCIAL: Proposes NY Finance Dept. Settlement
AMBAC FINANCIAL: Hearing on IRS $807-Mil. Claim Moved to September
AMBAC FINANCIAL: Seeks to Intervene in BoA Mortgage Suit
AMBE HOTELS: Case Summary & 20 Largest Unsecured Creditors
AMERICAN ACHIEVEMENT: S&P Affirms B Rating on Second-Lien Notes
AMERICAN APPAREL: Files Form S-1; Registers 43.2MM Common Shares
AMERICAN SCIENTIFIC: Inks Securities Exchange Pact with Granite
AMR CORP: Sabre to Continue Providing Travel Agencies to American
ANDRONICO'S MARKETS: Wants Asset Sale to Lender Fast-Tracked
ANDRONICO'S MARKETS: Has Interim OK to Borrow $2.5MM From Buyer
ANDRONICO'S MARKETS: Files Schedules of Assets and Liabilities
ANDRONICO'S MARKETS: Sec. 341 Creditors Meeting Set for Sept. 19
AS AMERICA: S&P Affirms 'B' Corp. Credit Rating; Outlook Neg.
ASARCO LLC: Reimbursement Governed by 503(b), Not 363(b)
B-3 PROPERTIES: Case Summary & 4 Largest Unsecured Creditors
BALTIMORE HOTEL: S&P Lowers Rating on $53.4-Mil. Bonds to 'BB-'
BANK OF AMERICA: Broke Earlier Mortgage Settlement, Nevada Says
BERNARD L. MADOFF: Trustee Trims Maxam Fraudulent Transfer Suit
BERNARD L. MADOFF: Ruling Dooms Customers on False Profit Suits
BORDERS GROUP: Assigns 14 Leases to Books-A-Million for $934K
BORDERS GROUP: U.S. Trustee Objection to Mercer Fees Overruled
BORDERS GROUP: Wins Approval of DCI-Page Termination Pact
BOSTON GENERATING: Judge Signs Plan Confirmation Order
BROWN SHOE: Moody's Affirms 'B2' Corporate; Outlook Now Stable
CABI SMA: Amends Plan Disclosures to Address Creditor Objection
CAMELBACK PLAZA: Case Summary & 14 Largest Unsecured Creditors
CAMTECH PRECISION: Selects Great American to Auction Assets
CARLTON GLOBAL: Has Until Oct. 11 to Show Cause to Retain Case
CASA GRANDE: Seeks to Hire Realtec Commercial as Broker
CASCO HOTEL: Seeks Quick Sale of Legacy Hotel; Has $18MM Offer
CASCO HOTEL: Hiring Stinson Morrison as Bankruptcy Counsel
CCB INVESTORS: Unit Files Schedules of Assets & Liabilities
CDC PROPERTIES: Court OKs Amended Application to Employ Counsel
CIMA LLC: Hiring Berger Singerman as Bankruptcy Counsel
CIMA LLC: Sec. 341 Creditors' Meeting Set for Sept. 23
CITRUS VALLEY: S&P Affirms 'BB+' SPUR on Certs. of Participation
COMPUTER SYSTEMS: Case Reassigned to Hon. Morgenstern-Clarren
CONSTRUCTION INC: Voluntary Chapter 11 Case Summary
CROWN REAL ESTATE: Case Summary & 12 Largest Unsecured Creditors
DIGITILITI INC: Kent Lillemoe Appointed to Board of Directors
DRYSHIPS INC: Ocean Rig to Exchange up to 28.5-Mil. Common Shares
DRYSHIPS INC: Incurs $117.8 Million Second Quarter Net Loss
EL CAMPESINO: Case Summary & 20 Largest Unsecured Creditors
EL RANCHO: Case Summary & 20 Largest Unsecured Creditors
ENERGY FUTURE: Aurelius Seeks ISDA Ruling on Unit's Solvency
EQK BRIDGEVIEW: Plan Confirmation Hearing Set for Sept. 29
EUROCLASS MOTORS: Case Reassigned to Hon. Mildred Caban Flores
FAIRFEX CROSSING: Delays Plan Effective Date to Resolve BB&T Issue
FEDERACION DE MAESTROS: Voluntary Chapter 11 Case Summary
FIRST MERCURY: Moody's Affirms 'Ba1' Long-Term Issuer Rating
FIRST SECURITY: Robert Keller Elected to Board of Directors
FREMONT GENERAL: Appeals Court Revives Claims vs. Ex-Gen. Counsel
GENERAL GROWTH: Seeks Final Decree Closing 120 Ch. 11 Cases
GLC LIMITED: Judge Unlikely to Approve $5.5-Mil. Donnan Settlement
HARRISBURG, PA: Governor Supports Mayor's Fiscal-Recovery Plan
HAWAII MEDICAL: Committee Seeks Dismissal of 2011 Cases
HAWAII MEDICAL: Wins Nod to Tap Cain Brothers as Expert Witness
HILL COUNTRY: Case Summary & 14 Largest Unsecured Creditors
HOSTESS BRAND: Hires Jones Day, Perella for Restructuring Advice
IMUA BLUEHENS: Won Access to Cash Collateral for August
INNKEEPERS USA: Cerberus, Chatham Face October 10 Trial
INNOVIDA HOLDINGS: Osorio Reaches Deal With Chapter 11 Trustee
JCE DELAWARE: Has Interim Access to First State Bank's Cash
KOOSHAREM CORP: Moody's Lowers Corp. Family Rating to 'Caa3'
KOREA TECHNOLOGY: Eyes Sale, Wants Plan Confirmed by Mid-October
KOREA TECHNOLOGY: Sec. 341 Creditors' Meeting Set for Sept. 15
LABELCORP HOLDINGS: Moody's Keeps 'B2' After York Label Deal
LEHMAN BROTHERS: To Seek Plan Confirmation in December
LEHMAN BROTHERS: Ex-CEO Wants Insurance to Pay $90MM Legal Costs
LEHMAN BROTHERS: Asks for Nod of Revised MetLife Deal
LEHMAN BROTHERS: Court OKs Creation of Credit-Worthy Guarantors
LEHMAN BROTHERS: Court OKs State Street's $400MM Settlement
LEHMAN BROTHERS: LBI Trustee Sues RBS for $345.9-Mil.
L.I.F.T. LLC: Involuntary Chapter 11 Case Summary
MAQ MANAGEMENT: Cannot Access Secured Creditors' Cash Collateral
MARY A II: Case Summary & 20 Largest Unsecured Creditors
MCDONALD BROTHERS: Sec. 341 Meeting & Status Hearing Set
MCDONALD BROTHERS: Bankruptcy Administrator to Form Committee
MERCY MEDICAL: Fitch Lowers Rating on $79-Mil. Bonds to 'BB+'
MKM CONCESSIONS: Chrome Lotus in Ch. 11, Aims to Stay Open
MONEYGRAM INT'L: Files Form S-8; Registers 10MM Common Shares
MUELLER WATER: Moody's Lowers Corporate Family Rating to 'B3'
NEWARK GROUP: Moody's Lowers Corporate Family Rating to 'Caa1'
OMEGA NAVIGATION: Can Hire Seward & Kissel as Special Counsel
PARALLEL RESOURCE: Partners Raising Debut Distressed Energy Fund
PETROHAWK ENERGY: S&P Raises Corporate Credit Rating From 'BB-'
PITTSFIELD RESIDENTIAL: Voluntary Chapter 11 Case Summary
POINT BLANK: Court Approves FMS Technologies Term Sheet
PREMIER TRAILER: Court Approves KCC as Claims & Notice Agent
PREMIER TRAILER: To Hire Pachulski Stang & Jones LLP as Counsel
PRIUM SPOKANE: Wants Sterling Cash Collateral Until Sept. 30
PUBLIC MEDIA: Stops Renting DVD & Blu-Ray Movies in California
QUALTEQ INC: Final Hearing on Cash Collateral Access Tuesday
QUALTEQ INC: Sec. 341 Creditors' Meeting Set for Sept. 21
QUALTEQ INC: Taps Fox Rothschild as Bankruptcy Co-Counsel
QUALTEQ INC: Seeks to Employ Phase Eleven as Claims Agent
QUALTEQ INC: Seeks Appointment of Dan Scouler as CRO
RASER TECHNOLOGIES: Wins Approval to Put Ch. 11 Plan Into Action
RENAL LIFE: Case Summary & 3 Largest Unsecured Creditors
RIDGE PARK: Unit Files Schedules of Assets & Liabilities
SBARRO INC: Trustee Objects to Key Employee Incentive Plan
SCIENTIFIC GAMES: Moody's Rates $247MM Sr. Sec. Revolver at Ba1
SIERRA TIMESHARE: Fitch Puts Rating on $30.9 Mil. Notes at 'BBsf'
SOMERSET PROPERTIES: Has 9th Interim Consent Order on Use of Cash
SPANISH BROADCASTING: Attiva Capital Owns 9.3% of Class A Shares
SPANISH POINT: Court OKs Case Dismissal and Cash Collateral Use
SPANISH TRAIL: Expects to Post Operating Profit for the Year
SPECTRAWATT INC: Files Schedules of Assets and Liabilities
SPECTRAWATT INC: Files Statement of Financial Affairs
SPECTRAWATT INC: Employs Brad Walker as CEO and CRO
STATION CASINOS: District to Hear Govt. Appeal on Tax Liability
STATION CASINOS: FTI Says It Has No Conflict of Interest
STATION CASINOS: Brown Rudnick Okayed as GVR Panel Co-Counsel
STATION CASINOS: Downey Brand Okayed as GVR Panel's Nevada Counsel
TAVERN ON THE GREEN: To Sell Trademark for Use Outside NYC
TERRESTAR CORP: Seeks Repayment of $50 Million Loan to TSN
TRIBUNE CO: Proposes 2011 Management Incentive Plan
TRIBUNE CO: Judge Carey Won't Give Self Deadline for Plan Ruling
TRIBUNE CO: Proposes $32-Mil. ESOP Class Suit Settlement
TRIBUNE CO: Wins Interim Nod of Wage Class Suit Settlement
UNIGENE LABORATORIES: Successfully Defends Robust IP Portfolio
VENTO FAMILY: Unsecured Creditors to Get 12% Recovery Under Plan
WASHINGTON MUTUAL: Request for Appointment Dime LTW Holders Denied
WASHINGTON MUTUAL: Panel Wants Retention of Frank Partnoy Denied
WASHINGTON MUTUAL: Files 3rd Modification to 6th Amended Plan
WATER STREET: Unsecured Creditors to be Paid in Full After 1 Year
* Blind Reliance on Computer Brings Sanctions on Lawyer
* Supreme Court to Decide on Hearing Split-Circuit Case
* Student Loan Discharge Complaint OK After Discharge
* New Resident May Use Old State's Homestead Exemption
* Order for Relief Improper After Transferring Venue
* Stax Records Legacy Reborn in Memphis After-School Program
* BOOK REVIEW: Hospital Turnarounds - Lessons in Leadership
*********
94TH AND SHEA: Creditor Wants Cash Collateral Motion Denied
-----------------------------------------------------------
Secured creditor and party-in-interest JPMCC 2007-CIBC19 Shea
Boulevard, LLC, asks U.S. Bankruptcy Court for the District Of
Arizona to deny 94th and Shea, LLC's motion to authorize the
continued use of cash collateral through the upcoming confirmation
hearing.
As reported in the Troubled Company Reporter on Aug. 1, 2011, the
Debtor sought for permission from the Court to use the rents and
other income generated by its property to pay for ordinary and
necessary operating and reorganization expenses for the period
beginning Aug. 1, and ending upon conclusion of the one-day
evidentiary confirmation hearing set to occur on Nov. 9, 2011.
According to JPMCC, the Debtor's request to pay Goodhue and Rosso
and asset management fee has been denied. JPMCC agrees that any
fees to insiders must be suspended unless approved by the Court at
an evidentiary hearing on the matter. The Debtor's request to
retain a consultant to deal with the City of Scottsdale must
similarly be denied absent evidence from the Debtor establishing
the need and benefit from such services. Even if such need can be
established, any fees for a consultant must be limited.
JPMCC relates that it is preparing a motion to: (i) disgorge
funds; (ii) turnover rents; and (iii) determine insider leases are
invalid setting forth the self-dealing by Goodhue and Rosso that
supports a denial of any further management fee. The turnover
motion. JPMCC notes will further seek an order requiring Goodhue
and Rosso to disgorge in excess of $240,000 received from Debtor
and insider tenants from that self-dealing.
JPMCC adds that the Debtor must not be permitted to pay the asset
management or consulting fees requested in the cash collateral
motion until that evidentiary hearing can be held.
JPMMC is represented by:
Robert R. Kinas, Esq.
Jonathan M. Saffer, Esq.
Nathan G. Kanute, Esq.
SNELL & WILMER L.L.P.
One South Church Avenue, Suite 1500
Tucson, AZ 85701-1630
Tel: (520) 882-1200
Fax: (520) 884-1294
E-mails: rkinas@swlaw.com
jmsaffer@swlaw.com
nkanute@swlaw.com
About 94th and Shea
Scottsdale, Arizona-based 94th and Shea, L.L.C., owns and operates
real property known as The Shops And Office at 9400 Shea, located
at 9325, 9343, 9375, and 9397 East Shea Boulevard in Scottsdale,
Arizona. The Property consists of 37,037 square feet of retail
space and 35,238 square feet of office space.
94th and Shea filed for Chapter 11 bankruptcy protection (Bankr.
D. Ariz. Case No. 10-37387) on Nov. 19, 2010. John J. Hebert,
Esq., Mark W. Roth, Esq., and Wesley D. Ray, Esq., at Polsinelli
Shughart, P.C., in Phoenix, Ariz., serve as counsel to the Debtor.
The Debtor disclosed $123,588 plus unknown amount in assets and
$22,870,408 in liabilities as of the Chapter 11 filing.
AFFINITY GROUP: Successfully Exchanged $333-Mil. of Senior Notes
----------------------------------------------------------------
Good Sam Enterprises, LLC, fka Affinity Group Inc., has completed
its exchange offer to exchange up to $333,000,000 aggregate
principal amount of its new 11 1/2% Senior Notes due 2016 and the
related guarantees of its subsidiary guarantors, in each case,
which have been registered under the Securities Act of 1933, as
amended, for a like principal amount of GSE's outstanding,
unregistered 11 1/2% Senior Notes due 2016 issued on Nov. 30,
2010, and the related guarantees.
An aggregate principal amount of $333,000,000, or 100%, of the
Original Notes were exchanged in the Exchange Offer and were
accepted by GSE. The Exchange Offer expired at 5:00 p.m., New
York City time, on Aug. 26, 2011.
GSE made the Exchange Offer to satisfy its obligations under the
registration rights agreement GSE and its subsidiary guarantors
entered into with the initial purchasers of the Original Notes.
The Exchange Offer did not affect GSE's outstanding debt levels,
as the New Notes were issued only upon cancellation of a like
principal amount of the Original Notes. GSE did not receive any
proceeds from the Exchange Offer.
About Affinity Group
Ventura, Calif.-based Affinity Group Holding, Inc. is a holding
company and the direct parent of Affinity Group, Inc. The Company
is an indirect wholly-owned subsidiary of AGI Holding Corp
("AGHC"), a privately-owned corporation. The Company is a member-
based direct marketing organization targeting North American
recreational vehicle ("RV") owners and outdoor enthusiasts. The
Company operates through three principal lines of business,
consisting of (i) club memberships and related products and
services, (ii) subscription magazines and other publications
including directories, and (iii) specialty merchandise sold
primarily through its 78 Camping World retail stores, mail order
catalogs and the Internet.
The Company's balance sheet at Sept. 30, 2010, showed
$226.99 million in total assets, $457.25 million in total
liabilities, and a stockholder's deficit of $230.27 million.
* * *
Affinity Group Inc. carries 'B3' long term corporate family and
probability of default ratings, with 'stable' outlook, from
Moody's Investors Service.
As reported in the Troubled Company Reporter on November 9, 2010,
Standard & Poor's Ratings Services assigned Affinity Group Inc.'s
proposed $325 million senior secured notes due 2016 its
preliminary 'B-' issue-level rating. Following the close of the
proposed transaction, S&P expects to assign a 'B-' corporate
credit rating to Affinity Group Inc., and withdraw S&P's current
'D' corporate credit rating on Affinity Group Holding Inc. A
portion of the proceeds of the new notes will be used, in
conjunction with cash contributions from Holding's parent, to
repay in full $88 million of senior notes that are currently
outstanding at Holding.
S&P said the expected 'B-'corporate credit rating on Affinity
Group reflects S&P's expectation that, following the proposed
refinancing transaction, adjusted debt leverage will be reduced by
about 1x, the company will not have any meaningful near-term debt
maturities, and the company will generate some discretionary cash
flow (albeit minimal). Still, credit measures will remain
relatively weak, as adjusted debt leverage will remain above 6.0x
(S&P's operating lease adjustment adds about a turn to leverage),
and S&P expects interest coverage to remain in the low- to mid-
1.0x area over the intermediate term.
ALABAMA INJURY: Case Summary & 12 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Alabama Injury and Pain Clinic
P.O. Box 16788
Mobile, AL 36617
Bankruptcy Case No.: 11-03453
Chapter 11 Petition Date: August 26, 2011
Court: United States Bankruptcy Court
Southern District of Alabama (Mobile)
Judge: William S. Shulman
Debtor's Counsel: Vanessa Arnold Shoots, Esq.
56 St. Joseph St., Suite 1311
Mobile, AL 36602
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 12 largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/alsb11-03453.pdf
The petition was signed by James O. Gordon, president.
ALLIED IRISH: AIB UK Posts EUR4.8MM Half Year Profit
----------------------------------------------------
Allied Irish Banks, p.l.c., issued the Half Yearly Financial
Report for the half year ended June 30, 2011, for AIB UK 1 LP.
AIB UK reported profit of EUR4.88 million on EUR4.88 million of
net interest income for the half year ended June 30, 2011,
compared with net profit of EUR4.65 million on EUR4.65 million of
net interest income for the same period during the prior year.
AIB UK's balance sheet at June 30, 2011, showed EUR214.42 million
in total assets, EUR0 in total liabilities and EUR214.42 million
in members' capital.
A full-text copy AIB UK's financial results is available for free
at http://bankrupt.com/misc/AIBUKhalfyear.pdf
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.
AMBAC FINANCIAL: Proposes NY Finance Dept. Settlement
-----------------------------------------------------
Ambac Financial Group, Inc., asks the Bankruptcy Court to approve
a settlement agreement resolving the $116.8 million claim filed
by City of New York Finance Department.
In December 2010, the City filed Claim No. 4 asserting that the
Debtor owes it $116,817,949, comprised of $77,940,995 in
principal for general corporation tax and $38,876,954 in interest
thereon for the tax years commencing on January 1, 2000, and
ending on December 31, 2010.
The Debtor disputes that it is liable for the taxes and interest
giving rise to the Tax Claim. The Debtor, however, recognizes
that the failure to settle the Tax Claim may severely prejudice
its ability to confirm its plan of reorganization.
"By settling the Tax Claim, the Debtor can avoid the expense of
litigation, the associated delay to its plan confirmation
schedule and the risk that the Tax Claim may be allowed in full
and given priority status and thus impose an impediment to a
successful restructuring," Peter A. Ivanick, Esq., at Dewey &
LeBoeuf LLP, in New York, tells the Court.
Pursuant to the Settlement Agreement, the Tax Claim would be
allowed as an unsecured priority claim under Section 507(a)(8) of
the Bankruptcy Code for $3,233,611. The Debtor would immediately
remit $2,000,000 in cash and surrender $1,233,611 in overpayment
carry forward tax credits in full and final satisfaction of the
Tax Claim.
The Settlement Agreement fully, finally, and forever resolves,
discharges and settles any and all general corporation tax
liabilities of the Debtor and certain of its direct and indirect
subsidiaries for the period January 1, 2000, to December 31,
2010.
A full-text copy of the Settlement Agreement is available for
free at http://bankrupt.com/misc/Ambac_NYClaimSettlement.pdf
Mr. Ivanick notes that if the Debtor was forced to liquidate
despite the resolution of the Tax Claim, the pre-confirmation
payment of the Tax Claim would result in the best possible
outcome for the Debtor because settling the Tax Claim at a
substantial discount would eliminate a significant claim against
the Debtor's estate, thereby maximizing the proceeds available to
the Debtor's creditors upon liquidation.
The Debtor and the Official Committee of Unsecured Creditors,
according to Mr. Ivanick, considered the risk and impact of a
conversion to Chapter 7 and determined that it still made sense
to enter into the Settlement Agreement and make the immediate
payment of the Cash Consideration.
The Debtor and the Committee negotiated a significant discount of
approximately $113 million for the Tax Claim. Among the City's
conditions for accepting a substantial discount of its claim was
the immediate payment of the Settlement Consideration. "While
the immediate payment of a prepetition claim deviates from normal
bankruptcy procedure, immediate payment of the Settlement
Consideration is warranted to effectuate the prompt settlement of
one of the largest claims against the Debtor's estate, thereby
removing one of the primary obstacles to the confirmation of a
plan of reorganization of the Debtor at relatively nominal cost,"
Mr. Ivanick emphasizes.
Accordingly, the Debtor asks the Court to authorize the immediate
payment of the Tax Claim.
The Court will consider the Debtor's request on September 21,
2011. Objections are due no later than September 14.
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 US$30.05 billion in total assets,
US$31.47 billion in total liabilities, and a US$1.42 billion
stockholders' deficit, at June 30, 2010.
On an unconsolidated basis, Ambac said in a court filing that
it has assets of (US$394.5 million) and total liabilities of
US$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 US$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.
Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Ambac Financial Group and the restructuring proceedings of
Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMBAC FINANCIAL: Hearing on IRS $807-Mil. Claim Moved to September
------------------------------------------------------------------
Judge Shelley C. Chapman adjourned the hearing to consider Ambac
Financial Group, Inc.'s objection to the U.S. Internal Revenue
Service's $1.65 billion claims from September 8, 2011, to
October 5, 2011.
The IRS's deadline to respond to the Objection is further
extended from August 24, 2011, to September 28, 2011.
The hearing has been adjourned a number of times.
At the hearing, Ambac Financial will ask the bankruptcy judge to
disallow the U.S. Department of the Treasury - Internal Revenue
Service Claim Nos. 3694 and 3699 because the Claims are
substantially duplicative of one another, each asserting a
priority claim against the Debtor for $807,243,827.
From 1999 through 2008, Ambac Credit Products LLC, a wholly owned
subsidiary of Ambac Assurance Corporation, sold credit protection
to buyers in the form of credit default swap contracts. AAC
insured ACP's performance under the CDS Contracts. Because ACP
is disregarded for federal income tax purposes, AAC was treated
as the party to the CDS Contracts. Almost all of the CDS
Contracts that ACP entered into from 1999 through 2004 were
substantially similar. Likewise, substantially all of the CDS
Contracts that ACP entered into from 2005 through 2008 were
substantially similar.
AAC treated the Pre-2005 CDS Contracts as "put options" subject
to the "wait and see" method of accounting for federal income tax
purposes. Pursuant to this method, AAC did not realize income or
expense until it disposed of a bond received from the exercise of
a credit protection buyer's physical settlement right or the
contract expired unexercised. AAC also continued applying the
"wait and see" method of accounting with respect to its income
from the payments it received with respect to the Post-2004 CDS
Contracts and thus did not recognize income in either 2005 or
2006 because the contracts neither expired nor terminated.
In 2007, AAC suffered significant losses in its CDS Contract
portfolio for financial and statutory accounting purposes
beginning in 2007. In preparing its 2007 consolidated federal
income tax return, the Debtor, in consultation with its
accountant KPMG LLP, determined that based upon the differences
between the Pre-2005 CDS Contracts and the Post-2004 CDS
Contracts, the Post-2004 CDS Contract should have been treated as
notional principal contracts or NPCs rather than as put options
subject to the "wait and see" method of accounting.
The proposed regulations promulgated in 2004 by the Treasury
Department concerning NPCs (i) require that a taxpayer use either
of two methods to account for "contingent nonperiodic payments,"
as payments made to credit protection buyers with respect to CDS
Contracts upon the occurrence of a credit event - the
"noncontingent swap" method or the "mark-to-market" method; and
(ii) specify that these two methods apply to NPCs entered into on
or after 30 days after the proposed regulations are finalized.
Because the 2004 Proposed Regulations have not been finalized in
2007 and until now, the Debtor applied the "impairment" method of
accounting to these losses. The Preamble to the 2004 Proposed
Regulations also provides that taxpayers that have not adopted an
accounting method for NPCs providing for contingent nonperiodic
payments must adopt a method that takes those payments into
account over the life of the contract under a "reasonable
amortization method."
In April 2008, the Debtor filed with the IRS an application for
change in accounting method. The application was supplemented by
a letter dated September 2, 2008, that clarified that AAC had not
adopted an accounting method with respect to losses incurred with
respect to the Post-2004 CDS Contracts, and that AAC would adopt
the impairment method of accounting with respect to any losses.
The IRS has yet to formally rule on the Accounting Method
Application.
As a result of the application of the impairment method of
accounting with respect to the losses incurred under the Post-
2004 CDS Contracts, the Debtor reported an approximately
$33 million taxable loss for 2007 and $3.2 billion taxable loss
for 2008. On Sept. 23, 2008, August 11, 2009, and Dec. 21, 2009,
the Debtor filed claims for tentative carryback adjustments as a
result of the carryback to prior taxable years of the net
operating losses reflected on its 2007 and 2008 consolidated
federal income tax returns.
Based on these claims, in December 2008, September 2009, and
February 2010, the IRS refunded to the Debtor $11,470,930,
$252,704,185, and $443,940,722 in Tax Refunds, totaling
$708,115,837. Pursuant to a tax sharing agreement dated July 19,
1991, among the Debtor and its subsidiaries in its consolidated
tax group, as amended, the Debtor distributed the Tax Refunds to
AAC.
On May 5, 2011, the IRS filed its claims, which list taxes
allegedly due and interest and penalties from those taxes but do
not explain the basis for the claims.
The IRS Claims are premised on the assumption that $708,115,837
in tax refunds paid to the Debtor between December 2008 and
February 2010 on account of carrying back losses that resulted
from its credit default swap contracts were erroneously paid to
the Debtor. However, the Tax Refunds were not erroneously paid
to the Debtor, Peter A. Ivanick, Esq., at Dewey & LeBoeuf LLP, in
New York, argues.
Mr. Ivanick contends that the Debtor is entitled to the Tax
Refunds, and the IRS should not be entitled to assert claims in
respect of those refunds, because AAC's use of the impairment
method beginning in 2007 with respect to the contingent non-
periodic payments under the Post-2004 CDS Contracts was the
initial adoption of a proper method of accounting.
"Even if AAC's use of the impairment method could somehow be
considered an impermissible change in accounting method, the
IRS's withholding of consent from AAC to use the impairment
method should be deemed an abuse of discretion, given that the
Preamble expressly disavowed the 'wait and see' method of
accounting for NPCs with contingent nonperiodic payments, which
AAC had been utilizing up until 2007, and the impairment method
conforms with the Preamble and the IRS's prior guidance," Mr.
Ivanick points out.
In the alternative, even if AAC's use of the impairment method
could somehow be considered improper, the IRS should be equitably
estopped from challenging AAC's use of that method given the fact
that the IRS never formally ruled on the Debtor's Accounting
Method Application and the Debtor's 2007 consolidated federal
income tax return put the IRS on notice of AAC's use of the
impairment method, Mr. Ivanick maintains.
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 US$30.05 billion in total assets,
US$31.47 billion in total liabilities, and a US$1.42 billion
stockholders' deficit, at June 30, 2010.
On an unconsolidated basis, Ambac said in a court filing that
it has assets of (US$394.5 million) and total liabilities of
US$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 US$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.
Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Ambac Financial Group and the restructuring proceedings of
Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMBAC FINANCIAL: Seeks to Intervene in BoA Mortgage Suit
--------------------------------------------------------
Ambac Financial Group, Inc., and several bond insurers seek
permission to intervene in a case where an $8.5 billion
settlement reached by Bank of America Corp. and investors in
mortgage-backed securities is pending, David Benoit of Dow Jones
Newswires reported.
The settlement was reached in late June between BofA and a group
of investors, including BlackRock Inc. and other household
institutional investor names, Mr. Benoit disclosed. The
settlement intends to compensate investors that purchased
mortgage-backed securities that eventually soured at high rates,
according to the report. Indeed, BofA is facing millions in
claims from injured investors, the report said.
Fannie Mae and Freddie Mac sought a federal court in New York's
permission to have a voice in the massive settlement, stating
that they require more information about the settlement, Mr.
Benoit relayed. Indeed, the settlement has faced harsh
questioning by some investors, including American International
Group Inc. and the New York attorney general, the report
disclosed. A group of investors has even sought to move the case
to a federal court where Fannie and Freddie filed their request,
the report noted. A federal judge will rule on where the case
will be held, the report added.
The Federal Home Loan Banks and a host of bond insurance
companies were among those that filed motions to intervene in the
case pursuant to an August 30, 2011 deadline, Dow Jones Newswires
added.
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 US$30.05 billion in total assets,
US$31.47 billion in total liabilities, and a US$1.42 billion
stockholders' deficit, at June 30, 2010.
On an unconsolidated basis, Ambac said in a court filing that
it has assets of (US$394.5 million) and total liabilities of
US$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 US$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.
Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Ambac Financial Group and the restructuring proceedings of
Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMBE HOTELS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: AMBE Hotels, LLC
fdba Holiday Inn Express Hotel & Suites Florida Mall
Orlando-Florida
fdba AMBE Hotels, Inc
fdba AMBE Hotels & Investments, Inc
7276 International Drive
Orlando, FL 32819
Bankruptcy Case No.: 11-13002
Chapter 11 Petition Date: August 26, 2011
Court: United States Bankruptcy Court
Middle District of Florida (Orlando)
Debtor's Counsel: R Scott Shuker, Esq.
Jason H Klein
LATHAM SHUKER EDEN & BEAUDINE LLP
Post Office Box 3353
Orlando, FL 32802
Tel: (407) 481-5800
Fax: (407) 481-5801
E-mail: bankruptcynotice@lseblaw.com
bknotice@lseblaw.com
Estimated Assets: $1,000,001 to $10,000,000
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/flmb11-13002.pdf
The petition was signed by Jagdish Singh, managing member.
Affiliate that filed separate Chapter 11 petition:
Petition
Debtor Case No. Date
------ -------- ----
Global Hotels Group, LLC 11-12999 8/26/11
AMERICAN ACHIEVEMENT: S&P Affirms B Rating on Second-Lien Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Austin, Texas-based American Achievement Corp. to negative. "We
also affirmed the existing issue-level rating on the company's
senior secured second-lien notes due 2016 at 'B'. The recovery
rating remains a '4', indicating our expectation of average (30%
to 50%) recovery for noteholders in the event of a payment
default," S&P stated.
"The outlook revision and the 'B' corporate credit rating reflect
our expectation that American Achievement's ongoing unfavorable
revenue and EBITDA trends will continue to cause the company's
debt leverage to remain high and could further weaken its interest
coverage and discretionary cash flow over the next several
quarters," said Standard & Poor's credit analyst Chris Valentine.
American Achievement is a major manufacturer and supplier of
yearbooks, class rings, graduation products -- together known as
school-affinity products -- and recognition products. The school
affinity-related product market is a mature business with
relatively high barriers to entry. American Achievement is one
of three main players in this niche business because of its
existing relationships with customers and strong product
offerings. It is substantially smaller than the market leader,
Visant Corp. Typically because of students' strong emotional ties
with their schools and with fellow students, purchase rates by
students are fairly stable. "Nevertheless, we believe the
company's operations are vulnerable to weakness in the economy and
historically high gold prices, causing a shift by consumers to
lower-priced metals for jewelry and affinity products. A major
portion of the company's revenues and EBITDA are seasonal and tied
to the U.S. academic year, and could face increased volatility if
economic conditions weaken," S&P stated.
"The negative outlook on American Achievement reflects our
expectation of continued pressure on revenue and profitability
over the near-to-intermediate term, as well as our concern that
the interest coverage could weaken further to the low-1x area. We
could lower the rating if escalating pressures from rising gold
prices and a flagging economy lead to EBITDA declines, depleting
the company's liquidity and resulting in negative discretionary
cash flow, especially if we conclude that EBITDA coverage of
interest is likely to dip below 1.1x without an immediate prospect
of turnaround. More specifically, this could occur if revenue
declines more than 5%, causing EBITDA to decline nearly 15% from
current levels. Alternatively, we could revise the outlook to
stable if operating trends reverse with an easing of economic
pressures, resulting in revenue growth, and if we become convinced
that the company will generate positive discretionary cash flow
over the intermediate term," S&P added.
AMERICAN APPAREL: Files Form S-1; Registers 43.2MM Common Shares
----------------------------------------------------------------
American Apparel, Inc., filed with the U.S. Securities and
Exchange Commission a Form S-1 registration statement relating to
the resale by Dynamic Power Hedge Fund, Anson Investments Master
Fund LP, and Delavaco Capital Inc., et al., of a total of up to
43,219,679 shares of common stock of American Apparel, Inc., or
the common stock. These shares include 24,182,669 shares of
common stock issued to the selling stockholders pursuant to a
Purchase and Investment Agreement, dated as of April 26, 2011, or
the Investor Purchase Agreement, among American Apparel, Inc., and
the selling stockholders, and up to 19,037,010 additional shares
of common stock issuable to the selling stockholders upon exercise
of the purchase rights granted to the selling stockholders under
the Investor Purchase Agreement. The Company is required to file
this registration statement pursuant to the Investor Purchase
Agreement.
The Company will not receive any proceeds from the sale of the
shares of common stock by the selling stockholders. The Company
does not know when or in what amount the selling stockholders may
offer the shares for sale.
The Company has agreed to pay certain expenses in connection with
this registration statement and to indemnify the selling
stockholders against certain liabilities. The selling
stockholders will pay all underwriting discounts and selling
commissions, if any, in connection with the sale of the shares of
common stock.
The common stock is traded on the NYSE Amex under the symbol
"APP." The last reported sale price of the common stock on the
NYSE Amex on Aug. 29, 2011, was $0.93 per share.
A full-text copy of the Form S-1 is available for free at:
http://is.gd/3dmBMo
About American Apparel
Los Angeles, Calif.-based American Apparel, Inc. (NYSE Amex: APP)
-- http://www.americanapparel.com/-- is a vertically integrated
manufacturer, distributor, and retailer of branded fashion basic
apparel. As of September 2010, American Apparel employed over
10,000 people and operated 278 retail stores in 20 countries,
including the United States, Canada, Mexico, Brazil, United
Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the
Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan,
South Korea and China.
American Apparel reported a net loss of $86.31 million on
$532.99 million of net sales for the year ended Dec. 31, 2010,
compared with net income of $1.11 million on $558.77 million of
net sales during the prior year.
The Company's balance sheet at June 30, 2011, showed
$331.66 million in total assets, $279.41 million in total
liabilities, and $52.25 million in total stockholders' equity.
The Wall Street Journal reports that Skadden, Arps, Slate, Meagher
& Flom has been advising the company on its recent restructuring
efforts alongside investment bank Rothschild Inc.
In April 2011, American Apparel said it raised $14.9 million in
rescue financing from a group of investors led by Canadian
financier Michael Serruya and private equity firm Delavaco Capital
Corp., allowing the casual clothing retailer to meet obligations
to its lenders for the time being.
Going Concern Doubt
Marcum LLP, in New York, in its audit report on American Apparel's
financial statements for the year ended Dec. 31, 2010, expressed
substantial doubt about the Company's ability to continue as a
going concern.
As of April 30, 2011, the Company had approximately $8,000,000 of
cash, approximately $8,900,000 of availability for additional
borrowings and $46,100,000 outstanding on the credit facility
under the BofA Credit Agreement and $1,400,000 of availability for
additional borrowings and $4,000,000 outstanding on the credit
facility under the Bank of Montreal Credit Agreement. As May 10,
2011, the Company had approximately $5,941,000 available for
borrowing under the BofA Credit Agreement and $1,481,000 available
under the Bank of Montreal Credit Agreement.
The Company incurred a loss from operations of $13,091,000 for the
three months ended March 31, 2011, compared to a loss from
operations of $21,556,000 for the three months ended March 31,
2010. The current operating plan indicates that losses from
operations may be incurred for all of fiscal 2011.
"If we are not able to timely, successfully or efficiently
implement the strategies that we are pursuing to improve our
operating performance and financial position, obtain alternative
sources of capital or otherwise meet our liquidity needs, we may
need to voluntarily seek protection under Chapter 11 of the U.S.
Bankruptcy Code," the Company said following its first quarter
results.
AMERICAN SCIENTIFIC: Inks Securities Exchange Pact with Granite
---------------------------------------------------------------
American Scientific Resources, Incorporated, on Aug. 25, 2011,
entered into a securities exchange agreement with Granite
Financial Group, LLC.
Pursuant to the terms of the Agreement, the Company exchanged (i)
a 12% secured promissory note issued in favor of Granite on
Oct. 12, 2010, in the principal amount of $100,000 and (ii) a 12%
secured promissory note issued in favor of Granite on Nov. 5,
2010, in the principal amount of $60,000, in exchange for a 12%
convertible debenture.
The Debenture matures on Dec. 26, 2012, and is in the principal
amount of $174,900, which is equal to the principal balance of the
Notes plus accrued interest. The Company will pay interest on the
Debenture at the rate of 12% per annum, and such interest will
accrue daily commencing on Aug. 25, 2011, until payment in full of
the outstanding principal, together with all accrued and unpaid
interest, liquidated damages and other amounts which may become
due thereunder, has been made. Further, the Company may prepay
any portion of the principal amount of the Debenture without prior
written consent of Granite.
At any time after the Debenture's issuance until the date on which
the Debenture is no longer outstanding, the Debenture may be
converted, at Granite's option, in whole or in part, into shares
of the Company's common stock, par value $0.0001 per share, by
delivering a conversion notice to the Company. The conversion
price of the Debenture is $0.02, subject to certain adjustments
set forth in the Debenture.
About American Scientific
Weston, Fla.-bases American Scientific Resources, Inc., provides
healthcare and medical products. The Company develops,
manufactures and distributes healthcare and medical products
primarily to retail drug chains, retail stores specializing in
sales of products for babies and medical supply dealers. The
Company does sub-component assembly and packaging for the
Disintegrator product line. All of the Company's other products
are manufactured by third parties. The Company was comprised of
three subsidiaries: (i) Kidz-Med, Inc., (ii) HeartSmart, Inc., and
(iii) Ulster Scientific, Inc., of which only Kidz-Med was active
until Dec. 31, 2010. All subsidiaries are currently inactive.
The Company's balance sheet at June 30, 2011, showed $1.38 million
in total assets, $9.28 million in total liabilities, and a
$7.90 million total shareholders' deficit.
Rosenberg Rich Baker Berman & Company, in Somerset, New Jersey,
expressed substantial doubt about American Scientific Resources'
ability to continue as a going concern, following the Company's
2010 results. The independent auditors noted that the Company has
suffered recurring losses, its current liabilities exceed its
current assets and it is in default with certain of its
obligations.
AMR CORP: Sabre to Continue Providing Travel Agencies to American
-----------------------------------------------------------------
American Airlines, Inc., announced that it has reached an
agreement with Sabre to continue providing travel agencies with
access to the same full fare and schedule content that they
currently receive from American via the Sabre Global Distribution
System. The agreement is effective immediately and remains in
effect until 14 days after American's antitrust claims now pending
against Sabre in Texas state court have been resolved. No trial
date in that lawsuit has yet been set, but American expects that
those legal proceedings could last well into 2012. In addition,
American intends to continue to work with Sabre to define the
basis of their future relationship.
About AMR Corporation
Headquartered in Fort Worth, Texas, AMR Corporation (NYSE:
AMR) operates with its principal subsidiary, American Airlines
Inc. -- http://www.aa.com/-- a worldwide scheduled passenger
airline. As of Dec. 31, 2009, American provided scheduled jet
service to approximately 160 destinations throughout North
America, the Caribbean, Latin America, Europe and Asia.
Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two
regional airlines, American Eagle Airlines Inc. and Executive
Airlines Inc., and does business as "American Eagle." American
Beacon Advisors Inc., a wholly owned subsidiary of AMR, is
responsible for the investment and oversight of assets of AMR's
U.S. employee benefit plans, as well as AMR's short-term
investments.
AMR recorded a net loss of $471 million in the year 2010, a net
loss of $1.5 billion in 2009, and a net loss of $2.1 billion in
2008. The Company also reported a net loss of $722 million for
the six months ended June 30, 2011.
The Company's balance sheet at June 30, 2011, showed
$25.78 billion in total assets, $30.29 billion in total
liabilities, and a $4.51 billion stockholders' deficit.
* * *
AMR carries a 'CCC' issuer default rating from Fitch Ratings,
'Caa1' corporate family and probability of default ratings from
Moody's, and a 'B-' corporate credit rating from Standard &
Poor's.
In November 2010, Standard & Poor's Ratings Services revised its
outlook on AMR Corp. and its major operating subsidiary, American
Airlines Inc., to stable from negative, based on AMR's improved
operating performance, which has bolstered credit quality. S&P
also affirmed its 'B-' corporate credit rating and most issue
ratings on the two companies and lowered selected ratings on
American's enhanced equipment trust certificates.
ANDRONICO'S MARKETS: Wants Asset Sale to Lender Fast-Tracked
------------------------------------------------------------
Andronico's Markets Inc., asks the Bankruptcy Court to approve
sale procedures in connection with the proposed sale of
substantially all of the Debtor's assets to Renwood Andronico
Lending 1, LLC, an entity formed by Renovo Capital, LLC.
Renwood Andronico Lending 1 is the Debtor's senior secured
creditor with a lien on substantially all of the Debtor's assets
holding a claim of roughly $29 million. The Debtor and the Buyer
anticipate that the Purchase Agreement will be finalized on or
before Sept. 2, 2011, as required by a DIP Credit Agreement also
entered into by the Debtor and the Buyer.
Pursuant to the Purchase Agreement, the Buyer will pay roughly $20
million in a combination of cash and a credit bid against the
Debtor's obligations to the Buyer under the DIP Facility or the
Prepetition Debt. The Buyer will have the sole discretion to
determine whether its credit bid is on account of Prepetition Debt
or amounts owed under the DIP Facility.
The Purchase Agreement will exclude, among other things, cash up
to a specified amount, certain avoidance claims and causes of
action. The Purchase Agreement further provides for the
assumption and assignment of certain specified executory contracts
and unexpired leases of the Debtor. The sale of the Purchased
Assets will be free and clear of all liens, claims, encumbrances
and other interests to the fullest extent allowed by law except as
provided by the Purchase Agreement.
In connection with the Purchase Agreement and the Sale, and
pursuant to the DIP Credit Agreement, the Debtor proposes to use
cash collateral and borrow up to $5 million from the Buyer to
provide ongoing working capital to fund the Debtor's operations
and certain Chapter 11 administrative expenses pending the sale.
The Debtor is required to meet certain milestones to avoid a
default under the DIP facility. Among these milestones is that the
Court enter an order approving the Bid Procedures on or before
Aug. 31, 2011, and that the Court enter orders granting the Sale
Motion and related motion to assume and assign executory contracts
and unexpired leases by Sept. 30. Finally, the Sale must close on
or before Oct. 7, 2011.
The Debtor intends to file a motion requesting permission to sell
the assets and to assume contracts as soon as paracticable after
entry of the Bid Procedures Order, but in any event, no later than
Sept. 6, 2011.
The Debtor asks the Court to schedule a sale hearing by Sept. 29.
The Debtor proposes to pay a breakup fee of 3% of the Purchase
Price, or $600,000 in the event a sale closes to another
purchaser.
The Debtor said closing the deal as soon as possible in October is
critical to the Buyer, and is anticipated to be critical to other
bidders, because of the seasonal nature of the business (November
and December being the busiest months for the business). The
Debtor's access to cash collateral and DIP Financing also
terminates if the required orders approving the Sale are not
entered by Sept. 30. Without access to cash collateral or DIP
Financing, the Company will not have adequate financing or
resources to sustain operations. The Debtor believes that an
expedited sale process is in the best long-term interest of the
Debtor's customers, vendors and employees.
Following an ill-fated expansion strategy in the early 2000s when
Andronico's opened three new locations, the Company closed all
three of the new stores in 2006 after investing nearly $44 million
into the projects. During the most recent economic downturn
triggered by the financial meltdown in 2008, Andronico's suffered
from a decline in sales, erosion of margins, and a hindered
balance sheet. These challenges led the Company in 2010 to
recruit and hire a new executive team, comprised of experienced
industry veterans who previously held leadership positions at
Whole Foods Market and Safeway, and who were attracted to
Andronico's significant brand equity and potential. Unfortunately,
the new leadership was unable to turn around the Company and
embark on a growth strategy which precipitated additional changes
and a down-sizing of the management team. The team presently
consists of chief executive officer William J. Andronico, a 35-
year Company veteran, and Justin Jackson, executive vice-president
of operations.
After substantial declines in sales during fiscal years 2008 and
2009, annual sales have stabilized over the past two fiscal years
in the $115 million to $120 million range with gross margins in
the range of 38% to 42%.
About Andronico's
Andronico's Markets Inc., aka Andronico's Community Markets, is an
independent, specialty supermarket operator in the San Francisco
Bay Area. Founded in 1929, the Company operates seven stores in
prime upscale urban and suburban locations in Berkeley (four
stores), San Francisco, Los Altos, and San Anselmo. Andronico's
is a California C-corporation, owned by Solano Enterprises LLC.
The ownership of Solano Enterprises LLC is divided among various
Andronico family members.
Andronico's filed for Chapter 11 bankruptcy (Bankr. N.D. Calif.
Case No. 11-48963) on Aug. 22, 2011. Judge Edward D. Jellen
oversees the case. Lawyers at Murray & Murray represent the
Debtor. Bailey, Elizondo & Brinkman LLC serves as its financial
and restructuring advisor.
The Debtor scheduled $18,520,090 in assets and $67,094,619 in
liabilities.
ANDRONICO'S MARKETS: Has Interim OK to Borrow $2.5MM From Buyer
---------------------------------------------------------------
Andronico's Markets Inc. received an interim order authorizing it
to obtain postpetition financing and use cash collateral as it
pursues a sale of all of its assets.
Renwood Andronico Lending 1, LLC, is providing up to $5 million in
DIP financing. The Interim Order permits the Debtor to use up to
$2.5 million of the total availability, pending a final hearing.
The DIP loan will accrue interest at the rate of 10%. There is a
commitment fee of $50,000. The maturity date is the first to occur
of (a) October 31, 2011, (b) the effective date of a plan of
reorganization or liquidation for Debtor, (c) the date that is 30
days after entry of the Interim Financing Order if the Final
Financing Order has not been entered by that date, (d) the sale of
a material portion of the Debtor's assets in one or more
transactions under Section 363 of the Bankruptcy Code, or (e) the
occurrence of an event of default.
As of the Petition Date, the Debtor owed the DIP Lender
$29,945,493.70, consisting of principal of $27,721,315.55,
contingent liability for issued letters of credit of $345,000.00,
accrued interest of $1,682,781.70, and attorney fees and expense
reimbursement of $197,000. The DIP Lender acquired interest on
the debt on Aug. 19. The Debtor incurred the Prepetition
Obligations pursuant to (i) the Credit Agreement dated Feb. 14,
2007, with Bank of the West, and (ii) the Second Lien Credit
Agreement dated as of Feb. 14, 2007, with Special Situations
Investing, Inc., a wholly owned subsidiary of JPMorgan Chase & Co.
As collateral for the Prepetition Obligations, the DIP Lender has
a first priority security interest in and lien upon all of the
assets of the Debtor, subject only to certain liens with priority
over the Prepetition Liens.
Renwood Andronico Lending 1 is owned by Renwood Opportunities Fund
1 LLC and Renovo-Andronico's LLC.
Other than the Renwood claim, the Debtor anticipates claims under
the Perishable Agricultural Commodities Act of $581,070, and
Section 503(b)(9) claims of $1,905,352. The Company is also a
party to seven non-residential real property leases and numerous
equipment leases. The Company's unsecured debt as of the Petition
Date is estimated at $11.7 million, however this amount may change
based upon the final bankruptcy schedules.
A Final Hearing on the DIP financing will be held on Sept. 8,
2011. Objections are due Sept. 6.
About Andronico's
Andronico's Markets Inc., aka Andronico's Community Markets, is an
independent, specialty supermarket operator in the San Francisco
Bay Area. Founded in 1929, the Company operates seven stores in
prime upscale urban and suburban locations in Berkeley (four
stores), San Francisco, Los Altos, and San Anselmo. Andronico's
is a California C-corporation, owned by Solano Enterprises LLC.
The ownership of Solano Enterprises LLC is divided among various
Andronico family members.
Andronico's filed for Chapter 11 bankruptcy (Bankr. N.D. Calif.
Case No. 11-48963) on Aug. 22, 2011. Judge Edward D. Jellen
oversees the case. Lawyers at Murray & Murray represent the
Debtor. Bailey, Elizondo & Brinkman LLC serves as its financial
and restructuring advisor.
Andronico's is seeking to sell substantially all of its assets to
Renwood Andronico Lending 1, LLC, an entity formed by Renovo
Capital, LLC, in a $20 million deal, subject to higher and better
offers. Renwood Andronico Lending 1 is also providing $5 million
in DIP financing. The purchase price is a combination of cash and
credit bid. Counsel for Renwood Andronico are:
Jeanette L. Thomas, Esq.
George Fogg, Esq.
PERKINS COIE LLP
1120 NW Couch Street, 10th Floor
Portland, OR 97209
Facsimile: (503) 346-2075
E-mail: jthomas@perkinscoie.com
The Debtor scheduled $18,520,090 in assets and $67,094,619 in
liabilities.
ANDRONICO'S MARKETS: Files Schedules of Assets and Liabilities
--------------------------------------------------------------
Andronico's Markets, Inc., filed with the Bankruptcy Court its
schedules of assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A - Real Property $0
B - Personal Property $18,520,090
C - Property Claimed
as Exempt
D - Creditors Holding
Secured Claims $56,746,934
E - Creditors Holding Unsecured
Priority Claims $1,174,776
F - Creditors Holding Unsecured
Nonpriority Claims $9,172,908
------ -----------
$18,520,090 $67,094,619
About Andronico's
Andronico's Markets Inc., aka Andronico's Community Markets, is an
independent, specialty supermarket operator in the San Francisco
Bay Area. Founded in 1929, the Company operates seven stores in
prime upscale urban and suburban locations in Berkeley (four
stores), San Francisco, Los Altos, and San Anselmo. Andronico's
is a California C-corporation, owned by Solano Enterprises LLC.
The ownership of Solano Enterprises LLC is divided among various
Andronico family members.
Andronico's filed for Chapter 11 bankruptcy (Bankr. N.D. Calif.
Case No. 11-48963) on Aug. 22, 2011. Judge Edward D. Jellen
oversees the case. Lawyers at Murray & Murray represent the
Debtor. Bailey, Elizondo & Brinkman LLC serves as its financial
and restructuring advisor.
Andronico's is seeking to sell substantially all of its assets to
Renwood Andronico Lending 1, LLC, an entity formed by Renovo
Capital, LLC, in a $20 million deal, subject to higher and better
offers. Renwood Andronico Lending 1 is also providing $5 million
in DIP financing. The purchase price is a combination of cash and
credit bid. Counsel for Renwood Andronico are Jeanette L. Thomas,
Esq., and George Fogg, Esq., at Perkins Coie LLP.
ANDRONICO'S MARKETS: Sec. 341 Creditors Meeting Set for Sept. 19
----------------------------------------------------------------
The United States Trustee for the Northern District of California,
in Oakland, will convene a Meeting of Creditors pursuant to 11
U.S.C. Sec. 341(a) in the bankruptcy case of Andronico's Markets
Inc., on Sept. 19, at 2:00 p.m. at Oakland U.S. Trustee's Office.
The debtor's representative must be present at the meeting to be
questioned under oath by the trustee and by creditors. Creditors
are welcome to attend, but are not required to do so. The meeting
may be continued and concluded at a later date without further
notice. The court, after notice and a hearing, may order that the
United States trustee not convene the meeting if the debtor has
filed a plan for which the debtor solicited acceptances before
filing the case.
About Andronico's
Andronico's Markets Inc., aka Andronico's Community Markets, is an
independent, specialty supermarket operator in the San Francisco
Bay Area. Founded in 1929, the Company operates seven stores in
prime upscale urban and suburban locations in Berkeley (four
stores), San Francisco, Los Altos, and San Anselmo. Andronico's
is a California C-corporation, owned by Solano Enterprises LLC.
The ownership of Solano Enterprises LLC is divided among various
Andronico family members.
Andronico's filed for Chapter 11 bankruptcy (Bankr. N.D. Calif.
Case No. 11-48963) on Aug. 22, 2011. Judge Edward D. Jellen
oversees the case. Lawyers at Murray & Murray represent the
Debtor. Bailey, Elizondo & Brinkman LLC serves as its financial
and restructuring advisor.
Andronico's is seeking to sell substantially all of its assets to
Renwood Andronico Lending 1, LLC, an entity formed by Renovo
Capital, LLC, in a $20 million deal, subject to higher and better
offers. Renwood Andronico Lending 1 is also providing $5 million
in DIP financing. The purchase price is a combination of cash and
credit bid. Counsel for Renwood Andronico are Jeanette L. Thomas,
Esq., and George Fogg, Esq., at Perkins Coie LLP.
The Debtor scheduled $18,520,090 in assets and $67,094,619 in
liabilities.
AS AMERICA: S&P Affirms 'B' Corp. Credit Rating; Outlook Neg.
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Piscataway, N.J.-based AS America Inc. to negative from stable.
"At the same time, we affirmed our ratings on the company,
including the 'B' corporate credit rating," S&P stated.
"The rating outlook revision reflects our view that recent
operating performance for AS America Inc. has been weaker than we
expected, and is likely to continue to underperform given a slower
recovery in new construction and lower levels of repair and
remodeling spending than we had previously anticipated," said
Standard & Poor's credit analyst Megan Johnston. "Standard &
Poor's economists have revised their housing starts forecast to
610,000 in 2011 and 700,000 in 2012, down from their estimates
earlier this year of 670,000 and 1 million. Moreover, repair and
remodeling spending in 2011 will likely be flat to slightly down
over 2010 levels. Previously, we had expected spending growth of
3% to 5%. As a result, AS America's operating results in 2011 and
into 2012 will likely be weaker than we had previously expected."
"The 'B' corporate credit rating on AS America reflects the
combination of what we consider to be the company's weak business
risk profile and highly leveraged financial risk profile. The weak
business risk profile reflects AS America's dependence on the
challenging residential and nonresidential construction end
markets, high customer concentrations, thin operating profit
margins and competitive markets, partially offset by the company's
leading positions in the chinaware and baths categories, and a
competitive position in faucets. We view the financial risk
profile as highly leveraged, given total adjusted leverage
(including adjustments for pensions and operating leases) of
about 10x as of June 30, 2011," S&P stated.
The rating outlook is negative. Because of the poor operating
environment, Standard & Poor's believes operating conditions for
AS America will remain challenged over the next several quarters,
resulting in weak credit measures for the rating. "We project that
adjusted debt/EBITDA could exceed 6x over the next two years and
that interest coverage may be below 2x," S&P related.
"We could lower the ratings on AS America if operating conditions
remain weak in 2012 because of prolonged minimal construction
activity and low levels of repair and remodeling spending.
Downward rating pressure could also occur if a decline in EBITDA
caused the company to use cash to fund operating losses, resulting
in a drop in liquidity materially below the $55 million of current
cash on hand and revolver availability," S&P stated.
"We could revise the outlook to stable if construction and markets
begin to recover, and consumer confidence improves that will lead
to increased repair and remodeling spending, such that credit
measures improve to be more in line with a 'B' rating. We could
revise the outlook to stable if adjusted leverage improves to
below 5x and interest coverage improves to above 2x. This could
occur if sales grow in the mid-single digits and margins improve
approximately 300 basis points over current levels," S&P stated.
AS America Inc. is a manufacturer and distributor of fixtures,
faucets, and fittings for the North American bathroom and kitchen
markets, and operates under the American Standard, Crane Plumbing,
and Eljer brand names, among others.
ASARCO LLC: Reimbursement Governed by 503(b), Not 363(b)
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that whether a bankruptcy judge erred in approving expense
reimbursement for potential bidders is governed by the more
flexible business judgment test under Section 363(b) of the
Bankruptcy Code, rather than the higher "benefit to the estate"
test for administrative expenses under Section 503(b), the U.S.
Court of Appeals in New Orleans ruled on Aug. 16.
The opinion by Circuit Judge Carl E. Stewart distinguished cases
where a challenge was mounted to so-called breakup fees kicking in
when the initial purchaser is outbid at auction, according to
Mr. Rochelle.
Expense reimbursement was designed to stimulate bidding where a
breakup fee sometimes is alleged to have a chilling effect on
bidding, Judge Stewart said, according to Mr. Rochelle. For
expense reimbursement, Section 363(b) is the proper standard,
Judge Stewart said, because it was approved beforehand.
Mr. Rochelle notes that Judge Stewart declined to resolve the
difference of opinion between the Fifth Circuit in New Orleans and
the Second Circuit in Manhattan over what is or isn't an
interlocutory appeal.
Judge Stewart stuck by the more flexible standard in the Fifth
Circuit.
The case is Asarco Inc. v. Elliott Management, 10-40930, U.S.
Court of Appeals for the Fifth Circuit (New Orleans).
About Asarco LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
ASARCO LLC filed for Chapter 11 protection (Bankr. S.D. Tex. Case
No. 05-21207) on Aug. 9, 2005. Attorneys at Baker Botts
L.L.P., and Jordan, Hyden, Womble & Culbreth, P.C., represented
the Debtor in its restructuring efforts.
On Dec. 9, 2009, Asarco Incorporated and Americas Mining
Corporation's Seventh Amended Plan of Reorganization for the
Debtors became effective and the ASARCO Asbestos Personal Injury
Settlement Trust was created and funded with nearly $1 billion in
assets, including more than $650 million in cash plus a $280
million secured note from Reorganized ASARCO. The Plan, which was
confirmed both by the bankruptcy and district courts, reintegrated
ASARCO LLC back to parent Grupo Mexico concluding the four-year
Chapter 11 proceeding.
B-3 PROPERTIES: Case Summary & 4 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: B-3 Properties, LLC
1270 Stoney Brook Court
Crown Point, IN 46307
Bankruptcy Case No.: 11-23350
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
Northern District of Indiana (Hammond Division)
Judge: J. Philip Klingeberger
Debtor's Counsel: Catherine Molnar-Boncela, Esq.
GORDON E. GOUVEIA & ASSOCIATES
433 West 84th Drive
Merrillville, IN 46410
Tel: (219) 736-6020
E-mail: geglaw@gouveia.comcastbiz.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 four largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/innb11-23350.pdf
The petition was signed by Robert Stiglich, member.
BALTIMORE HOTEL: S&P Lowers Rating on $53.4-Mil. Bonds to 'BB-'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on Baltimore
Hotel Corp.'s $53.4 million second-lien revenue bonds, series
2006B bonds to 'BB-' from 'BB'. "At the same time, we affirmed the
'BB+' rating on the $247.5 million senior secured revenue bonds
series 2006 A bonds. The outlook on both series is stable," S&P
related.
The 757-room hotel is located at the Baltimore Convention Center
and operated by Hilton Hotels Corp. It opened on Aug. 22, 2008.
Bond proceeds funded the hotel construction. The hotel's net
revenues and city revenues secure the bonds. The city revenues
include a $7 million annual guarantee funded through a second lien
on the citywide hotel occupancy tax revenue. It also includes a
pledge of site-specific hotel occupancy tax revenue, which will
vary based on the project's occupancy levels, and the tax
increment payment, which is equal to the hotel's property tax
payment.
The credit concerns limit the ratings:
Dependence on the cyclical and competitive convention center
and lodging market, which is driven by discretionary meeting,
business, and entertainment travel. "The recession affected
the Baltimore hospitality market and we believe this
cyclicality will continue throughout the debt's term," S&P
stated.
Uncertainties regarding the hotel's long-term market and
operating performance until the hotel reaches stabilization.
"The hotel remains in the ramp-up stage, now expected to be
extended two years beyond ownership's original expectations to
2013. We believe the stabilized occupancy and operating
margins will be lower than ownership originally forecast," S&P
stated.
The need for the Baltimore Convention Center to continue to
attract events and maintain or increase attendance has grown
little since the center expanded in 1998. The convention
center sector is cyclical and highly competitive and moves
with economic cycles. It is a major demand driver for the
hotel, given the hotel's size, its proximity to the convention
center and its designation as the headquarters hotel for the
convention center. It competes with other similar-sized cities
in the U.S. for national and regional conventions and, to a
lesser degree, some larger cities as the sector continues to
discount fees to attract business. About one-half of the 2010
room-nights were generated from groups using the Baltimore
Convention Center," S&P stated.
The long, 30-year bond term exposes lenders to increasing
competition and the facility's deteriorating physical
condition.
The ratings also reflect these credit strengths:
Support from the City of Baltimore. The $7 million annual
guarantee of the citywide hotel occupancy tax revenue
represents about 25% of maximum annual senior and subordinate
debt service. In addition, under an aggressive ownership base
case, the site-specific hotel revenues represent about 23% of
annual debt service.
Hotel management by Hilton brings considerable experience and
a strong marketing program and reservation system. Hilton has
also contributed a $25 million senior debt-service guarantee,
which is available during the ramp-up period.
BANK OF AMERICA: Broke Earlier Mortgage Settlement, Nevada Says
---------------------------------------------------------------
American Bankruptcy Institute reports that Nevada Attorney General
Catherine Cortez Masto is accusing Bank of America of repeatedly
violating a broad loan modification agreement it struck with state
officials in October 2008 and is seeking to rip up the deal so
that the state can proceed with a suit against the bank over
allegations of deceptive lending, marketing and loan servicing
practices.
About Bank of America
Based in Charlotte, North Carolina, Bank of America --
http://www.bankofamerica.com/-- is one of the world's largest
financial institutions. The Company serves more than 59 million
consumer and small business relationships with more than 6,100
retail banking offices, nearly 18,700 ATMs and online banking with
nearly 29 million active users. Following the acquisition of
Merrill Lynch in January 2009, BofA is among the world's leading
wealth management companies and is a global leader in corporate
and investment banking and trading across a broad range of asset
classes serving corporations, governments, institutions and
individuals around the world. Bank of America offers support to
more than 4 million small business owners. The Company serves
clients in more than 150 countries. Bank of America Corporation
stock is a component of the Dow Jones Industrial Average and is
listed on the New York Stock Exchange.
BofA sought government backing in completing its acquisition of
Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/--
is a wealth management, capital markets and advisory companies
with offices in 40 countries and territories.
During the economic collapse in 2008, BofA received US$45 billion
in government bailout.
On June 17, 2011, 34 individuals sought to place Bank of America
N.A. in bankruptcy by filing an involuntary Chapter 11 petition
(Bankr. D. Colo. Case No. 11-24503). The petitioners claimed to
be owed roughly $60 million in the aggregate. The petitioners
identified themselves in the signature pages of the Chapter 11
petition as members of either the "Independent Rights Political
Party" or the "Independent Rights Party." The petition was
dismissed later that month.
BERNARD L. MADOFF: Trustee Trims Maxam Fraudulent Transfer Suit
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee liquidating Bernard L. Madoff Investment
Securities Inc. agreed to what may or may not be the temporary
dismissal of some claims in the $100 million lawsuit he filed in
December against Sandra Manzke, family members, and her Maxam
Capital Management LLC. Separately, the Maxam defendants are
objecting to the limited release of confidential financial
information proposed by the Madoff trustee. The Maxam defendants
had the lawsuit removed to the courtroom of U.S. District Judge
Jed Rakoff, the same judge who dismissed the trustee's common-law
claims in the $9 billion lawsuit against HSBC Holdings Plc.
Maxam filed papers this week in bankruptcy court objecting to
parts of procedures proposed by the trustee for dealing with the
document-production nightmare created by the 900 lawsuits he filed
against almost 5,000 defendants. Maxam and two other groups of
defendants object to how the arrangement would unilaterally
abrogate confidentiality agreements under which they gave the
trustee confidential personal financial information. The
arrangements, according to Maxam, would allow 5,000 other
defendants to have access to their financial information.
The issue is scheduled for hearing before the bankruptcy judge
on Sept. 7.
The Maxam case in the district court is Picard v. Maxam, 11-03261,
U.S. District Court, Southern District (Manhattan). The HSBC suit
in U.S. District Court is Picard v. HSBC Bank Plc, 11-763, U.S.
District Court, Southern District of New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On 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 July 15, 2011, a total of US$6.88 billion in claims by
investors has been allowed, with US$794.9 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: Ruling Dooms Customers on False Profit Suits
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that claims of former customers of Bernard L. Madoff
Investment Securities Inc. will be measured by the amount of cash
put in less the amount taken out, as the result of the Aug. 16
opinion by three circuit judges on U.S. Court of Appeals for the
Second Circuit in Manhattan. Indirectly, the ruling means that
customers may be left with no defenses against lawsuits by the
Madoff trustee to recover so-called fictitious profits.
Mr. Rochelle says the opinion appears to have few if any
implications with regard to the outcome of other lawsuits where
the trustee is attempting to recover repayments of principal from
customers the trustee contends had reason to know Madoff was
conducting a fraud. Customers were appealing a ruling from March
2010 where U.S. Bankruptcy Judge Burton R. Lifland concluded that
account statements showing customers' stock holdings had to be
ignored because they were wholly fictitious. Judge Lifland
authorized an appeal directly to the Court of Appeals, which heard
argument in early March 2011.
The 34-page opinion by Chief Circuit Judge Dennis Jacobs upheld
Judge Lifland's logic. Judge Jacobs said that Judge Lifland's
ruling was "legally sound" given the "statutory language" and the
"extraordinary facts of this case," since there was "no trading
activity whatsoever" in the customers' accounts, Mr. Rochelle
notes.
Mr. Rochelle relates that Judge Jacobs noted that the bankruptcy
judge is yet to rule on whether long-time customers are entitled
to an increase in their claims based on the time-value of money,
Mr. Rochelle posts. In that regard, he said that the opinion was
part of an interlocutory appeal. As such, customers on the losing
side may not be in a position as yet to ask for review by the U.S.
Supreme Court, Mr. Rochelle notes.
According to Mr. Rochelle, the method of calculating claims has a
major effect on the total value of claims. At oral argument in
March, the lawyer for the Securities Investor Protection Corp.
said that Judge Lifland's method meant that claims would total
some $20 billion, Mr. Rochelle recalls. If account statements
governed, claims would have totaled $64 billion, the SIPC lawyer
said, Mr. Rochelle relays.
Other judges on the panel were Circuit Judges Reena Raggi and
Pierre N. Leval.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On 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 July 15, 2011, a total of US$6.88 billion in claims by
investors has been allowed, with US$794.9 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.
BORDERS GROUP: Assigns 14 Leases to Books-A-Million for $934K
-------------------------------------------------------------
Borders Group, Inc. and its debtor affiliates sought and
permission from Judge Martin Glenn of the U.S. Bankruptcy Court
for the Southern District of New York to assume and assign 14
unexpired non-residential real property leases to Books-A-Million,
Inc., for $934,000.
On August 24, 2011, the Debtors and BAM entered into a letter
agreement for BAM's acquisition of 14 unexpired non-residential
real estate leases of the Debtors' large format stores and
specialty stores. In addition, BAM would assume the real estate
leases for the Purchased Stores and consent to entering into an
assumption and assignment agreement.
The BAM Leases subject to assumption and assignment are:
Store
No. Center Name City State
----- ----------- ---- -----
89 Columbia Crossing Columbia Maryland
125 Bangor Mall Bangor Maine
133 Maine Mall South Portland Maine
136 The Strip Canton Ohio
138 Oak Point Plaza Eau Claire Wisconsin
168 Grand Traverse Crossing Traverse City Michigan
193 Wrangleboro Road Mays Landing New Jersey
292 Northridge Shopping Center Davenport Iowa
334 Edwardsville Crossing Edwardsville Illinois
340 Fort Eddy Plaza Concord New Hampshire
369 Haines Avenue Rapid City South Dakota
394 Valley Square Center West Lebanon New Hampshire
442 Viewmont Mall Scranton Pennsylvania
524 Waterford Commons Waterford Connecticut
The salient terms of the Letter Agreement are:
(1) BAM will acquire all of the Debtors' right, title, and
interest in the Purchased Leases; provided that BAM will
not assume any obligations under any Purchased Leases
arising prior to turnover, including, without limitation,
any rent, back-charges, CAM, tax, lease, or other
obligations for any periods prior to the Turnover, which
amounts will be paid by the Debtor at or prior to closing.
(2) In consideration for the Debtors' assignment of the BAM
Leases to BAM, BAM will pay to the Debtors $934,209
comprised of (i) $184,209, which is the amount necessary to
pay the cure costs to the landlords and (ii) $750,000.
(3) BAM will pay at closing the cure costs, which are the
maximum amounts that BAM is obligated to pay for Cure Costs
for each of the Purchased Leases, unless BAM agrees
otherwise in accordance with the Letter Agreement. A
schedule of the Cure Costs is available for free at:
http://bankrupt.com/misc/Borders_CureCostsSched.pdf
(4) All the Purchased Leases will be acquired by BAM pursuant
to the Letter Agreement, provided the Debtors, in
consultation with the Official Committee of Unsecured
Creditors, may remove any Lease from the BAM Transaction if
the Cure Cost exceeds the cap set forth in the Letter
Agreement, and BAM does not consent to pay the increased
amount.
A full-text copy of the Letter Agreement is available for free
at: http://bankrupt.com/misc/Borders_BAMLetterPact.pdf
In an accompanying declaration, Borders Senior Vice President for
Restructuring Holly Felder Etlin disclosed that each of the BAM
Leases has been marketed by the Debtors' real estate advisors,
DJM Realty. Based on those marketing efforts, the Debtors, after
consulting with the Creditors' Committee, believe that the BAM
Transaction is the highest and best offer for the BAM Leases.
David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman
LLP, in New York, asserts that there is sufficient business
justification to assume and assign the BAM Leases to BAM. By
entering into the BAM Transaction, the Debtors will receive the
Consideration, he says. BAM's obligation under the Letter
Agreement to pay all the Cure Claims in connection with the BAM
Leases, he cites, will not only benefit the Debtors by decreasing
the Debtors' prepetition claims but will also eliminate any
potential termination damage claims that would result in the
rejection of the BAM Leases if the Debtors were unsuccessful in
their marketing efforts.
Moreover, assuming and assigning the BAM Leases will relieve the
Debtors' estates of the burden and risks of further marketing of
the BAM Leases, Mr. Friedman relates. "This will allow the
Debtors to devote more estate resources to winding down their
business and marketing their other leases that are not subject to
the Bidding Procedures Order and remove the uncertainty of a
continuation of the auction process as to the BAM Leases," he
maintains.
Upon the request of BAM and as a condition for closing the BAM
Transaction, the Debtors sought and obtained an order shortening
notice of the BAM Assignment Motion so that a hearing on the
request has been set for August 29, 2011. Objections are also
due on or before August 29.
About Borders Group
Borders Group operates 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. 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.
Lowenstein Sandler represents 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 is closing 399 stores. Borders selected proposals
by Hilco and Gordon Brothers to conduct going out of business
sales for all stores after no going concern offers of higher value
were submitted by the deadline.
BORDERS GROUP: U.S. Trustee Objection to Mercer Fees Overruled
--------------------------------------------------------------
Judge Martin Glenn overruled the objection of Tracy Hope Davis,
the U.S. Trustee for Region 2, to Mercer (US) Inc.'s first interim
fee application for the period from February 16, 2011, to
April 30, 2011 in Borders Group's Chapter 11 case.
Mercer's First Interim Fee Application sought $97,226 in fees and
$17,402 in expense reimbursement. The expenses sought by Mercer
include $16,496 in fees of its outside counsel, Freeborn &
Peters, LLP. The U.S. Trustee objected to reimbursement of the
legal expenses arguing that Mercer may not receive expense
reimbursement to pay an attorney not retained under Section 327
of the Bankruptcy Code.
Judge Glenn held that Mercer's outside legal counsel did not have
to be retained pursuant to Section 327(a) for Mercer to receive
expense reimbursement for certain work performed for Mercer where
the retention order approved an engagement letter providing for
expense reimbursement of counsel fees. "There is nothing
inherently wrong with non-lawyer professionals retaining their
own counsel to assist in preparing fee applications, and
receiving expense reimbursement (within appropriate limits) for
the cost of doing so, if their engagement letters and retention
orders permit it," the bankruptcy judge opined. But Mercer or
any retained professional is not entitled to reimbursement for
legal fees for time spent by outside lawyers on tasks relating to
the engagement for which the professional has been retained,
Judge Glenn clarified.
Judge Glenn explained that work done on behalf of the Debtors'
estate is compensable only if the professional performing the
work is retained pursuant to Section 327. Here, he noted, Mercer
was retained to develop employee compensation programs. All of
F&P's March and the bulk of the April legal fees were for
required work representing Mercer, not work for the Debtors,
Judge Glenn found. Requiring Mercer, a non-attorney
professional, to "absorb the cost of representation itself is
fundamentally unfair . . . especially in light of the engagement
agreement which specifically provided for reimbursement of such
fees by [the debtor]," Judge Glenn stated quoting decision In Re
Geneva Steel Co., 258 B.R. 799 (Bankr. D. Utah 2001).
Mercer's Engagement Letter and Retention Order permit
reimbursement of those expenses to the extent allowed in this
opinion, Judge Glenn held. The U.S. Trustee's objection -- that
no reimbursement can be awarded because F&P was not retained
pursuant to Section 327 -- is overruled, Judge Glenn ordered.
Accordingly, the Court approved Mercer's request for expense
reimbursement for F&P's fees of $11,909 on retention matters, and
of $3,338 for reviewing and preparing Mercer's Application. In
the aggregate, the Court allows expense reimbursement of $15,247.
Judge Glenn clarified that Mercer is not entitled to
reimbursement for F&P's time spent reviewing time records, the
Debtors' implementation of an employee compensation plan, the
proof of claim and bar date notice, or setting up the telephonic
hearing with the Court. The total amount of fees sought for
those categories, he stated, is minimal -- $343 and $250 -- but
it must be disallowed.
A full-text copy of Judge Glenn's decision dated August 23, 2011,
is available for free at:
http://bankrupt.com/misc/Borders_Aug23Opinion.pdf
About Borders Group
Borders Group operates 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. 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.
Lowenstein Sandler represents 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 is closing 399 stores. Borders selected proposals
by Hilco and Gordon Brothers to conduct going out of business
sales for all stores after no going concern offers of higher value
were submitted by the deadline.
BORDERS GROUP: Wins Approval of DCI-Page Termination Pact
---------------------------------------------------------
Borders Group Inc. and its affiliates sought and obtained the
Court's permission to enter into a lease termination agreement
with DCI-Page Two, LLC, as landlord, for Store 185 (Sand City) and
a related termination payment agreement with Orosco Development
No. 15, LLC, for the store.
In December 1998, the Debtors and the Landlord entered into a
lease covering retail space located at 2080 California Avenue, in
the shopping center commonly known as the Edgewood Shopping
Center, located in the City of Sand City, County of Monterey,
California, identified as Store No. 185.
In August 2011, the Debtors and the Landlord entered a Lease
Termination Agreement pursuant to which the Debtors and the
Landlord agreed to terminate the Store 185 Lease effective as of
the day after the date that the liquidating agent for the Store
Closing Sales vacates Store 185. A full-text copy of the Lease
Termination Agreement is available for free at:
http://bankrupt.com/misc/Borders_DCITerminationAgr.pdf
The Landlord has agreed to sell to Orosco the real property which
is the site of the premises under the Store 185 Lease pursuant to
a purchase and sale agreement. In connection with this, the
Debtors and Orosco entered into a Termination Payment Agreement,
whereby Orosco agreed to pay to the Debtors, the amount of
$100,000, in consideration for the Debtors' agreement to
terminate the Store 185 Lease, subject to the terms and
conditions of the Termination Payment Agreement. A full-text
copy of the Termination Payment Agreement is available for free
at: http://bankrupt.com/misc/Borders_OroscoTermPaymentAgr.pdf
Andrew K. Glenn, Esq., at Kasowitz, Benson, Torres & Friedman
LLP, in New York, states that the termination transaction ensures
that the Debtors receive financial benefits from the disposition
of the Store 185 Lease as opposed to an unknown outcome if the
Lease was to remain in the Debtors' lease auction process. On
the other hand, he notes, rejecting the Store 185 Lease would
create a claim for termination damages that could create
substantial general unsecured claims.
In a supporting declaration, Patrick W. Orosco, managing member
of Orosco Development No. 15, LLC, clarified that his company
does not have an agreement with any person or entity with respect
to the Lease Termination Agreement. Likewise, Orosco does not
have any understanding or agreement with any potential bidder for
the Lease that is intended to affect the price paid for the Lease
by Orosco or any other party, he added.
Before the entry of the Court's ruling, Wells Fargo Northwest,
N.A., objected to the Lease Termination Agreement asserting that
the Landlord cannot, among other things, terminate the Lease
without the consent of Wells Fargo as collateral trustee or
transfer any rights under the Lease to a potential assignee.
The Store 185 Lease will be deemed terminated on the Termination
Date as defined in the Lease Termination Agreement, provided that
Orosco pays the Termination Payment, the Court ruled. The
Termination Date will not be any earlier than the date after the
Liquidating Agent vacates Store 185, but, in any event, will not
be later than November 15, 2011, unless extended by written
agreement of the Liquidating Agent. Effective as of the
Termination Date, the Debtors and the Landlord are released from
claims of the Lease Termination Agreement.
After entry of the Court's order and the payment of the
Termination Payment, the Store 185 Lease will no longer be
subject to the Debtors' lease auction process.
About Borders Group
Borders Group operates 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. 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.
Lowenstein Sandler represents 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 is closing 399 stores. Borders selected proposals
by Hilco and Gordon Brothers to conduct going out of business
sales for all stores after no going concern offers of higher value
were submitted by the deadline.
BOSTON GENERATING: Judge Signs Plan Confirmation Order
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Boston Generating LLC has an approved liquidating
Chapter 11 plan, although it only gives unsecured creditors with
$820 million in claims what are known as hope certificates. The
bankruptcy judge signed the formal plan confirmation order on
Aug. 31.
Mr. Rochelle relates that there were no objections to
confirmation. All creditor classes entitled to vote were in favor
of the plan. BosGen sold its five Boston-area power plants in
January to Constellation Energy Group Inc. From the sale and
other payments, first-lien secured lenders with $1.142 billion in
claims will have received a 98.4% recovery, according to the
disclosure statement approved by the bankruptcy judge in New York
in July.
According to the report, unsecured creditors' recoveries depend on
success in a lawsuit initiated by the official committee
contending that a refinancing in late 2006 included fraudulent
transfers that can be voided in bankruptcy. The disclosure
statement says the eventual recovery by unsecured creditors is
"unknown." Unsecured creditors have the right to opt out and
pursue claims on their own.
The Plan, Mr. Rochelle notes, calls for substantive consolidation
among the various BosGen companies. Consequently, unsecured
creditors will receive the same percentage recovery, if any,
without regard for the particular company that owed the debt. The
bankruptcy judge said in confirming the plan that no creditor was
disadvantaged by consolidation given how it would be difficult to
apportion lawsuit recoveries among the BosGen companies.
In addition to the first-lien debt where an affiliate of Credit
Suisse Group AG is agent, BosGen's debt included $350 million on a
second lien, a $423 million mezzanine debt liability, and less
than $10 million owing to trade suppliers.
About Boston Generating
New York-based Boston Generating, LLC, owns nearly 3,000 megawatts
of mostly modern natural gas-fired power plants in the Boston
area. Privately held Boston Generating is an indirect subsidiary
of US Power Generating Co., and considers itself as the third-
largest fleet of plants in New England.
Boston Generating filed for Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 10-14419) on Aug. 18, 2010. Boston Generating estimated
its assets and debts at more than $1 billion as of the Petition
Date.
EBG Holdings LLC; Fore River Development, LLC; Mystic, LLC; Mystic
Development, LLC; BG New England Power Services, Inc.; and BG
Boston Services, LLC, filed separate Chapter 11 petitions.
D. J. Baker, Esq., at Latham & Watkins LLP, serves as bankruptcy
counsel for the Debtors. JPMorgan Securities is the Debtors'
investment banker. Perella Weinberg Partners, LP, is the Debtors'
financial advisor. Brown Rudnick LLP is the Debtors' regulatory
counsel. FTI Consulting, Inc., is the Debtors' restructuring
consultant. Anderson Kill & Olick, P.C., is the Debtors'
conflicts counsel. The Garden City Group, Inc., is the Debtors'
claims agent.
The Official Committee of Unsecured Creditors tapped the law firm
of Jager Smith P.C. as its counsel.
BROWN SHOE: Moody's Affirms 'B2' Corporate; Outlook Now Stable
--------------------------------------------------------------
Moody's Investors Service revised Brown Shoe Company, Inc.'s
outlook to stable from positive. Concurrently, Moody's affirmed
all existing ratings including the B2 Corporate Family Rating, the
B2 Probability of Default Rating, the B3 Senior Unsecured Notes
rating, and the Speculative Grade Liquidity rating of SGL-2.
The revision of the outlook to stable from positive reflects the
Moody's opinion that an upgrade in the near to intermediate term
has become less likely due to lower than expected earnings
performance as a consequence of weak consumer spending. As Brown
Shoe anniversaries the ASG acquisition, Moody's expects
debt/EBITDA will approach mid-5 times, a level not consistent with
a higher rating.
The stable outlook reflects Moody's expectations that sales and
earnings growth in the Famous Footwear stores and the legacy
wholesale brands will be somewhat muted and most of the revenue
and earnings growth will be coming from the recently acquired ASG
brands. The outlook also incorporates Moody's belief that the
company will maintain good liquidity.
These ratings have been affirmed and LGD estimate revised:
Brown Shoe Company, Inc.
-- Corporate Family Rating at B2
-- Probability of Default Rating at B2
-- Senior Unsecured Notes rating at B3 (LGD5, 77%)
-- Speculative Grade Liquidity Rating of SGL-2
RATINGS RATIONALE
Brown Shoe's B2 corporate family rating continues to reflect its
weak credit metrics and significant fashion risk as a specialty
apparel retailer. Brown Shoe's exposure to toning shoes caused the
company to lower its guidance significantly for fiscal 2011 as the
fad waned, highlighting the fashion risk of the apparel retail
industry. The company's high leverage poses challenges for
managing a business sensitive to shifts in consumer spending and
product preference. Furthermore, Brown Shoe's EBITA margin has
consistently lagged that of its peers. The company's credible
market position with a national footprint, enhanced by its
wholesale business which expands its distribution channels and
coverage, supports the rating.
An upgrade in the near term is unlikely given slower than expected
operating performance improvements and the revision of the outlook
to stable from positive. Moody's would consider an upgrade with
expectations for debt-to-EBITDA sustained at around 5 times while
maintaining good liquidity and balanced financial policies.
Conversely, the ratings could be downgraded should the company's
liquidity profile deteriorate, should its financial policies favor
shareholder returns over debt holders, should it become likely
that leverage will be sustained above the mid-5 times range, or
should the company face challenges integrating ASG.
The principal methodology used in rating Brown Shoe Company, Inc.
was the Global Retail Industry Methodology published in June 2011.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Headquartered in St. Louis, Missouri, Brown Shoe's Retail division
operates Famous Footwear ($1.5 billion in sales), a family branded
footwear destination with over 1,100 stores nationwide and an e-
commerce site. In addition, the company operates approximately 250
specialty retail stores in the U.S., Canada, and China primarily
under the Naturalizer brand name. Through its wholesale divisions,
Brown Shoe designs and markets footwear brands including
Naturalizer, Dr. Scholl's, LifeStride, Sam Edelman, Via Spiga,
Vera Wang Lavender, Avia and ryka brands. Revenues are about $2.6
billion.
CABI SMA: Amends Plan Disclosures to Address Creditor Objection
---------------------------------------------------------------
Cabi SMA Tower I, LLP, amended the disclosure statement explaining
its Chapter 11 plan of reorganization after Judge A. Jay Cristol
of the U.S. Bankruptcy Court for the Southern District of Florida
directed the Debtor to submit an amended version.
Judge Cristol denied the Disclosure Statement filed April 27 and
sustained the objection raised by Brickell Central, LLC.
Brickell Central has sought from the Court relief from the
automatic stay, or in the alternative, terminate the Debtor's
exclusivity. Brickell is owed in excess of $29 million on account
of outstanding obligations under the first lien debt, secured by a
first mortgage lien on the real property owned by the Debtor.
According to Brickell, the Debtor has made no progress towards the
formulation of a plan that would be acceptable to Brickell, and
any attempt to confirm a plan over Brickell's rejection would be
futile, value-wasting exercise.
The Amended Disclosure Statement, filed August 19, explains the
Plan premised on the funding of (i) up to $4,870,000 on the
Effective Date in order to consummate the Plan and (ii)
shortfalls, if any, from additional equity contributions by a
newly formed limited liability company, Teca Group Investments
LLC, or development financing by Newco.
Holders of allowed general unsecured claims, which the Debtor
estimates to amount to $453,404, will receive Cash in an amount
equal to 15% of the Allowed Claim.
The Plan is also premised on the Reorganized Debtor's issuance of
New Brickell Central Note or modification of the Mortgage, which
will secure the New Brickell Note or the New Senior Note, as
applicable. The Debtor maintains that payment in full to Brickell
Central of the principal amount and accrued interest under the New
Senior Note will enable Brickell Central to receive deferred cash
payments with a value of at least the allowed amount of Brickell
Central's secured claim.
A full-text copy of the Aug. 19 Disclosure Statement is available
for free at http://ResearchArchives.com/t/s?76ca
About Cabi SMA Tower I
Based in Miami, Florida Cabi SMA Tower I, LLLP -- fka Cabi SMA
Retail 1, LLC; Cabi SMA, LLLP; Cabi SMA Tower 2, LLC; Cabi SMA
Tower 2, LLLP; Capital at Brickell; Cabi SMA Retail 2, LLLP; Cabi
SMA Retail 2, LLC; Cabi SMA Tower 1, LLC; and Cabi SMA Retail I,
LLLP -- owns multiple vacant parcels around South Miami Avenue and
S.W. 14th Street in Miami, Florida. It acquired the parcels to
develop residential, hotel, and retail space, including a
condominium development. The parcels are being managed by Cabi
Developers, LLC pursuant to a management agreement.
Cabi SMA Tower I filed for Chapter 11 bankruptcy protection
(Bankr. S.D. Fla. Case No. 10-49009) on Dec. 28, 2010. Mindy A.
Mora, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, serves
as the Debtor's bankruptcy counsel. The Debtor estimated its
assets and debts at $10 million to $50 million.
Affiliates Cabi Downtown, LLC (Bankr. S.D. Fla. Case No. 09-27168)
and Cabi New River, LLC (Bankr. S.D. Fla. Case No. 10-49013) filed
separate Chapter 11 petitions.
CAMELBACK PLAZA: Case Summary & 14 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Camelback Plaza West, LLC
3507 N. Central Avenue, Suite 500
Phoenix, AZ 85012
Bankruptcy Case No.: 11-24589
Chapter 11 Petition Date: August 26, 2011
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Charles G. Case II
Debtor's Counsel: Lawrence D. Hirsch, Esq.
DeCONCINI McDONALD YETWIN & LACY, PC
7310 N 16th St. #330
Phoenix, AZ 85020
Tel: (602) 282-0472
Fax: (602) 282-0520
E-mail: lhirsch@dmylphx.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 14 largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/azb11-24589.pdf
The petition was signed by Joan Clancy.
CAMTECH PRECISION: Selects Great American to Auction Assets
-----------------------------------------------------------
Great American Group, Inc. has been selected to conduct an on-line
and on-site auction for Camtech Precision Manufacturing, Inc. --
an aerospace company based in Euless, Texas.
The auction, currently scheduled to be held in October, is already
garnering attention from potential buyers internationally,
according to Sandy Feldman, a senior vice president with Great
American Group.
"This is one of the nicest offerings of this type of equipment
that has come around in a long time," Ms. Feldman said. "Many of
the machines up for auction are not widely available and also take
a great deal of time for delivery once ordered from the
manufacturer. We're already receiving inquiries from interested
parties in India, Turkey, Japan and China, in addition to the
United States and other countries."
Founded in 1989, Camtech manufactured precision parts for
aerospace and defense customers in the United States and
internationally. Some of the items being auctioned include 2009
models of both 6- and 5-Axis CNC Machining Centers and Profilers,
3- and 5-Axis CNC Aerospace Gantry Profilers -- along with many
other large-capacity precision aerospace machining, metal
fabrication and assembly equipment.
In addition to the manufacturing equipment, Great American Group
is working in cooperation with The Weitzman Group, a commercial
real estate brokerage firm, to sell more than five acres of
property -- along with two industrial buildings -- previously
owned and operated by the aerospace company. Located in Euless,
Texas in Tarrant County between Dallas and Fort Worth, and within
minutes from Dallas Fort Worth International Airport and major
interstates, the primary site represents 5.275 acres -- and 5.478
acres if excess land is considered. The East and West Building
sites offer 42,473 square feet and 70,000 square feet,
respectively, and both contain a mix of office and manufacturing
space.
"Given the distinctive items that are part of the auction, along
with the facilities and land itself, this is really a one-of-a-
kind sale in many respects," Ms. Feldman said.
For a complete list of auction items, visit
http://www.greatamerican.com
For additional details regarding the Camtech auction, contact
Sandy Feldman at 847-444-1400 or e-mail sfeldman@greatamerican.com
For information about the property and buildings available,
contact Larry Denisoff of The Weitzman Group at 214-954-0600 or
e-mail denisoff@weitzmangroup.com or contact Matthew Bordwin from
GA Keen Realty Advisors, a division of Great American Group, at
646-381-9222 or e-mail mbordwin@greatamerican.com
About Great American Group
Great American Group, LLC -- http://www.greatamerican.com-- is a
provider of asset disposition solutions and valuation and
appraisal services to a wide range of retail, wholesale and
industrial clients, as well as lenders, capital providers, private
equity investors and professional service firms. Great American
Group has offices in Atlanta, Boston, Chicago, Dallas, London, Los
Angeles, New York and San Francisco.
About Camtech Precision
Avstar, founded in 2007, designs, manufactures and overhauls
carburetors and fuel injection systems for aviation industry.
Avstar is the holder of Federal Aviation Administration Parts
Manufacturer Approvals for general aviation fuel systems. Avstar
generates sales primarily from new product sales and overhauls of
carburetors and servos for the general aviation industry.
Jupiter, Florida-based Camtech Precision Manufacturing, Inc.,
Avstar Fuel Systems, Inc., and R & J National Enterprises, Inc.,
filed for Chapter 11 bankruptcy protection (Bankr. S.D. Fla. Case
Nos. 10-22760, 10-22762 and 10-22762) on May 10, 2010. Bradley S.
Shraiberg, Esq., who has an office in Boca Raton, Florida, serve
as counsel to the Debtors. Carlos E. Sardi, Esq., and Glenn D.
Moses, Esq., who have an office in Miami, Florida, represent the
Official Committee of Unsecured Creditors. In its schedules,
Camtech disclosed assets of $10,977,673 and debts of $14,625,066.
CARLTON GLOBAL: Has Until Oct. 11 to Show Cause to Retain Case
--------------------------------------------------------------
The Honorable Scott C. Clarkson will conduct a hearing on Oct. 25,
2011, at 1:30 p.m., to determine whether there is any reason why
the Chapter 11 case of Carlton Global Resources, LLC should not be
dismissed for failure to appear and why a $150 sanction should not
be imposed on Debtor's counsel for failure to file a written
status report.
Debtor's counsel has until Oct. 11, 2011, at 5:00 p.m., to respond
to the Court's Order to Show Cause.
A Chapter 11 status conference was held before the Court on Aug.
9, 2011, and the Debtor's counsel failed to appear at the hearing
or file a written status report, as previously ordered by the
Court.
The status conference hearing will be continued to Oct. 25.
The Debtor's counsel is ordered to physically appear during the
hearing.
Henderson, Nevada-based Carlton Global Resources, LLC, filed for
Chapter 11 banrkuptcy protection (Bankr. C.D. Calif. Case No. 10-
48739) on Dec. 1, 2010. The case was reassigned from Judge Thomas
B. Donovan to Judge Scott C. Clarkson. The Debtor has tapped
Stephen R. Wade, Esq., and W. Derek May, Esq., at Law Offices of
Stephen R. Wade, P.C., as counsel.
CASA GRANDE: Seeks to Hire Realtec Commercial as Broker
-------------------------------------------------------
Casa Grande Capital Group, L.L.C., seeks authority from the U.S.
Bankruptcy Court for the District of Arizona to employ Realtec
Commercial Real Estate Services, Inc., to act as its exclusive
sales agent and broker to negotiate and consummate a sale of
certain property.
The Debtor owns and operates the Class-A office building located
at 2950 E. Harmony Road, Fort Collins, Colorado, generally known
as the Harmony Corporate Center. The Property contains 177,512
square feet of rentable office space. There are currently 11
tenants occupying roughly 132,881 square feet of space.
The listing price for the Property will be $35,500,000.
Pursuant to the contract between the parties, Realtec Commercial
will, among other things, procure a buyer for the Property, show
the Property, and present offers and counteroffers.
Realtec Commercial will receive a commission of 2% if an outside
broker is involved, and 1.25% if sold by the listing agent.
Because the Broker will be working on a single task on behalf of
the estate and will be paid a specific commission for its
services, the Debtor requests that the requirement of task-based
billing be waived in this instance.
The Debtor believes that Realtec Commercial represents no interest
adverse to the Debtor or its estate.
About Casa Grande
Casa Grande Capital Group, LLC, owns and operates a Class-A office
building located at 2950 E. Harmony Road, in Fort Collins,
Colorado, known generally as the Harmony Corporate Center. The
building is managed by Sierra Properties, Inc.
Casa Grande filed for Chapter 11 bankruptcy protection (Bankr. D.
Ariz. Case No. 11-19376) on July 6, 2011. Judge Redfield T. Baum
Sr. presides over the case. The Debtor estimated its assets and
debts at $10 million to $50 million as of Chapter 11 filing.
John J. Hebert, Esq., at Polsinelli Shughart, P.C., in Phoenix,
Arizona, serves as bankruptcy counsel to the Debtor.
CASCO HOTEL: Seeks Quick Sale of Legacy Hotel; Has $18MM Offer
--------------------------------------------------------------
Casco Hotel Group, LLC, and Congressional Hotel Corporation ask
the Bankruptcy Court to approve a quick sale of the Legacy Hotel
for $18 million to an entity called 1775 Rockville Pike LLC.
The Debtors will use the proceeds to repay secured debt owed to
Citizens Bank of Pennsylvania under a 2007 construction loan.
Citizens has filed a secured claim for $14,053,752. Citizens
asserts a perfected first priority security interest in and on the
Property. The remainder of the proceeds will be used to pay
general unsecured claims.
The Debtors won't subject the deal to further bidding and auction.
The Debtors do not believe that further marketing efforts will
yield a higher and better offer.
Beginning in January 2011, and as part of CHC's bankruptcy
commenced in 2009, CHC began extensive marketing efforts of the
Property. As part of those efforts, on Jan. 13, 2011, CHC
retained Molinaro Koger as Exclusive Listing Broker to market and
solicit offers for the Property. Molinaro Koger contacted 132
potential buyers and distributed a confidential information
memorandum to 36 of those parties, receiving preliminary letters
of intent from six potential buyers. The highest and best offer
obtained for the Property through CHC's marketing efforts was
$17 million.
Subsequent to the dismissal of the 2009 CHC Bankruptcy Case, the
Debtors continued their marketing efforts. Those efforts resulted
in the Debtors obtaining an enhanced offer from the purchaser.
The Debtors commenced their cases to preserve the Agreement of
Sale with the purchaser.
As part of the sale, the Debtors will assume a Lease Agreement
dated July 6, 2004, by and among CHC, as landlord, and Mervis
Diamond Corporation, as tenant, and assign it to the purchaser.
CHC also has $6,389,146 of unsecured debt, which includes the
unsecured claim of Mervis in the original amount of $3,957,615,
which results from a judgment entered in the Circuit Court for
Montgomery County, Maryland on May 1, 2010, in the matter of
Mervis Diamond Corporation v. Congressional Hotel Corporation,
Case No. 259919-V.
The Agreement of Sale provides for, inter alia, a 45-day
Inspection Period followed by a period of 30 days after expiration
of the Inspection Period to close. The Inspection Period begins
upon the provision of certain materials to the Purchaser. Upon
expiration of the Inspection Period satisfactory to the Purchaser,
Bankruptcy Court approval is required as a condition of closing.
The Purchaser will not assume any of the Seller's debts,
liabilities and other obligations.
The Purchaser is not an insider of the Debtors.
Although the Debtors will not conduct an auction, the Agreement of
Sale still includes certain protections for the Purchaser. If the
Debtors accept a competing offer, the Purchaser is entitled to
receive a $540,000 break-up fee, which represents compensation for
the Purchaser's reasonable and actual expenses.
Objections to the proposed sale are due by Sept. 19, 2011. a
hearing on the sale is scheduled for Oct. 17, 2011.
A Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) is set
for Sept. 26, at 9:00 a.m. at 341 meeting room 6th Floor at 6305
Ivy Ln., Greenbelt. Proofs of claim are due Dec. 27.
About Congressional Hotel and CASCO Hotel Group
Casco Hotel Group, LLC, owns the Legacy Hotel in Rockville,
Maryland. Congressional Hotel Corporation is a holdover tenant on
the Property and manages the Property on behalf of CASCO. The
hotel was previously known as Ramada Inn.
Congressional Hotel filed for Chapter 11 relief (Bankr. D. Md.
Case No. 11-26732) on Aug. 15, 2011. CASCO filed for Chapter 11
relief (Bankr. D. Md. Case No. 11-26880) two days later.
CASCO is a single-asset real estate company. It declared assets
and liabilities each in the range of $10 million to $50 million.
Congressional Hotel scheduled $709,121 in assets and $19,883,667
in debts. James Greenan, Esq., at McNamee Hosea, represents
Congressional Hotel.
Congressional Hotel previously filed for Chapter 11 on May 3, 2009
(Bankr. D. Md. Case No. 09-17901). James Greenan, Esq., at
McNamee Hosea represented the Debtor in its restructuring efforts.
The 2009 petition estimated the Debtor's assets and debts from
$10 million to $50 million. The case was dismissed on May 18,
2011, at the request of creditor Mervis Diamond Corp. But a
resolution couldn't be confirmed with Mervis Diamond and other
creditors, prompting Congressional Hotel to seek Chapter 11
protection again.
CASCO HOTEL: Hiring Stinson Morrison as Bankruptcy Counsel
----------------------------------------------------------
CASCO Hotel Group, LLC, seeks the Bankruptcy Court's authority to
employ the team of Janet M. Nesse, Esq., Darrell W. Clark, Esq.,
Lawrence P. Block, Esq., Marc E. Albert, Esq., Katherine M.
Sutcliffe Becker, Esq., Tracey M. Ohm, Esq., and Phyllicia M.
Hoffman, Esq., at the law firm of Stinson Morrison Hecker LLP as
its legal counsel.
The firm may be reached at:
Lawrence P. Block, Esq.
Janet M. Nesse, Esq.
STINSON MORRISON HECKER LLP
1150 18th Street, N.W., Suite 800
Washington, DC 20036
Tel: (202) 785-9100
Fax: (202) 785-9163
E-mail: lblock@stinson.com
jnesse@stinson.com
The firm will be paid according to its current hourly billing
rates. Partner rates range from $335/hr. to $535/hr. Associate
rates range from $240/hr. to $295/hr.
SMH has received a retainer of $25,000, paid by the Debtor.
The firm attests that none of its attorneys has any connection
with the Debtor, creditors, any other party in interest, their
respective attorneys and accountants, the United States Trustee or
any person employed in the Office of the United States Trustee.
About Congressional Hotel and CASCO Hotel Group
Casco Hotel Group, LLC, owns the Legacy Hotel in Rockville,
Maryland. Congressional Hotel Corporation is a holdover tenant on
the Property and manages the Property on behalf of CASCO. The
hotel was previously known as Ramada Inn.
Congressional Hotel filed for Chapter 11 relief (Bankr. D. Md.
Case No. 11-26732) on Aug. 15, 2011. CASCO filed for Chapter 11
relief (Bankr. D. Md. Case No. 11-26880) two days later.
CASCO is a single-asset real estate company. It declared assets
and liabilities each in the range of $10 million to $50 million.
Congressional Hotel scheduled $709,121 in assets and $19,883,667
in debts. James Greenan, Esq., at McNamee Hosea, represents
Congressional Hotel.
Congressional Hotel previously filed for Chapter 11 on May 3, 2009
(Bankr. D. Md. Case No. 09-17901). James Greenan, Esq., at
McNamee Hosea represented the Debtor in its restructuring efforts.
The 2009 petition estimated the Debtor's assets and debts from
$10 million to $50 million. The case was dismissed on May 18,
2011, at the request of creditor Mervis Diamond Corp. But a
resolution couldn't be confirmed with Mervis Diamond and other
creditors, prompting Congressional Hotel to seek Chapter 11
protection again.
CCB INVESTORS: Unit Files Schedules of Assets & Liabilities
-----------------------------------------------------------
CCB Investors Assets Management, LLC, filed with the U.S.
Bankruptcy Court for the Southern District of Florida, its
schedules of assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ------ -----------
A. Real Property $16,200,000
B. Personal Property $27,164
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $5,462,500
E. Creditors Holding
Unsecured Priority
Claims $13,000
F. Creditors Holding
Unsecured Non-priority
Claims $1,369,825
----------- ----------
TOTAL $16,227,164 $6,845,325
Jupiter, Florida-based CCB Investors Assets Management, LLC, filed
for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No. 11-32534) on
Aug. 11, 2011. Judge Erik P. Kimball presides over the case.
Susan D. Lasky, P.A., serves as the Debtor's counsel. In its
petition, the Debtor estimated $10 million to $50 million in
assets and $1 million to $10 million in debts. The petition was
signed by Chris Baker, manager.
Secured lender Second Equities Corp. is represented in the case by
L. Louis Mrachek, Esq., at Page, Mrachek, Fitzgerald & Rose, P.A.
CDC PROPERTIES: Court OKs Amended Application to Employ Counsel
---------------------------------------------------------------
The U.S. bankruptcy Court for the Western District of Washington
has approved CDC Properties I, LLC's amended application to employ
Mark D. Northrup as counsel.
Tacoma, Washington-based CDC Properties I, LLC, owns 10 commercial
buildings in Washington. Most of the space in its buildings is
leased to the State of Washington and occupied by various of its
agencies. CDC Properties filed for Chapter 11 bankruptcy
protection (Bankr. W.D. Wash. Case No. 11-41010) on Feb. 10, 2011.
Timothy W. Dore, Esq., at Ryan Swanson & Cleveland PLLC, serves as
the Debtor's general counsel. The Debtor disclosed $47,304,590 in
total assets, and $75,714,502 in total liabilities as of the
Chapter 11 filing.
CIMA LLC: Hiring Berger Singerman as Bankruptcy Counsel
-------------------------------------------------------
CIMA L.L.C. seeks permission from the Bankruptcy Court to employ
Berger Singerman P.A. as its bankruptcy counsel.
On July 15, 2011, the Debtor retained Berger Singerman to act as
its legal counsel in connection with insolvency and restructuring
matters. Since that date, Berger Singerman has provided
prepetition services to the Debtor.
On July 15, 2011, Berger Singerman received an initial retainer
from third party, Randell Wilson Curtson, in the amount of
$10,000, which was deposited into the trust account of Berger
Singerman. In addition, on Aug. 19, 2011, Berger Singerman
received a second retainer in the amount of $65,000 from Randell
Wilson Curtson that was deposited into the trust account of
Berger Singerman.
On Aug. 18, 2011, Berger Singerman applied the initial retainer of
$10,000, toward payment of prepetition fees and expenses incurred
by Berger Singerman on behalf of the Debtor. In addition, on Aug.
19, 2011, Berger Singerman applied the sum of $3,506.95 from the
$65,000 retainer received toward payment in full of all
prepetition fees and expenses incurred on behalf of the Debtor.
Berger Singerman is not owed any money for prepetition services.
As of the filing of this Chapter 11 case, Berger Singerman is
holding the sum of $61,493.05 in trust, which serves as a security
retainer for the fees and expenses Berger Singerman will incur in
the Chapter 11 case on behalf of the Debtor.
Berger Singerman is not a creditor of, and asserts no prepetition
claim against the Debtor.
The current hourly rates for the attorneys at Berger Singerman
range from $225 to $625. Leslie Gern Cloyd, Esq., a shareholder
at the firm, will lead the engagement. Mrs. Cloyd's hourly rate
for 2011 is $555. The current hourly rates for the associate
attorneys who will work on these cases range from $225 to $385.
The current hourly rates for the legal assistants and paralegals
at Berger Singerman range from $75 to $195.
Ms. Cloyd disclosed that the firm is engaged in matters that
involve creditors of the Debtor; those matters are unrelated to
the bankruptcy case. Berger Singerman has represented a number of
clients who are adverse to Horizon Bank in that they have incurred
a debt to Horizon Bank in matters wholly unrelated to the Debtor's
bankruptcy case. Bank of the Ozarks, a creditor of the Debtor,
acquired Horizon Bank in 2010. In addition, Berger Singerman has
represented a number of clients who are adverse to Beard Equipment
Company, another creditor of the Debtor, in that they have
incurred a debt to Beard Equipment Company in matters wholly
unrelated to the Debtor's bankruptcy case.
Notwithstanding, Ms. Cloyd attests that her firm does not
represent any interest adverse to the Debtor, and that the firm is
a "disinterested person" within the scope and meaning of Section
101(14) of the Bankruptcy Code.
About CIMA L.L.C.
Based in Ft. Lauderdale, Florida, CIMA, L.L.C., is the developer
and current owner of a 200-acre parcel of land located in Mobile,
Alabama, with frontage on Interstate 10, a major thoroughfare.
The parcel has been subdivided into parcels, and some
infrastructure work has been done. CIMA is finalizing plans with
one or more investor groups for further development of this
parcel.
CIMA filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No.
11-33279) on Aug. 22, 2011. Judge Raymond B. Ray presides over
the case. In its petition, the Debtor estimated $10 million to
$50 million in assets and $1 million to $10 million in debts. The
petition was signed by J. Marion Uter, manager.
The Debtor's bankruptcy counsel may be reached at:
Leslie Gern Cloyd, Esq.
BERGER SINGERMAN, P.A.
350 E. Las Olas Boulevard, #1000
Ft. Lauderdale, FL 33301
Tel: (954) 525-9900
Fax: (954) 523-2872
E-mail: lcloyd@bergersingerman.com
CIMA LLC: Sec. 341 Creditors' Meeting Set for Sept. 23
------------------------------------------------------
The United States Trustee for the Southern District of Florida in
Miami will convene a Meeting of Creditors pursuant to Section
341(a) of the Bankruptcy Code in the chapter 11 case of CIMA,
L.L.C. on Sept. 23, 2011, at 11:00 a.m. at 299 E Broward Blvd Room
411, Fort Lauderdale.
The debtor's representative must be present at the meeting to be
questioned under oath by the trustee and by creditors. Creditors
are welcome to attend, but are not required to do so. The meeting
may be continued and concluded at a later date without further
notice. The court, after notice and a hearing, may order that the
United States trustee not convene the meeting if the debtor has
filed a plan for which the debtor solicited acceptances before
filing the case.
Proofs of Claim are due by Dec. 22, 2011.
About CIMA L.L.C.
Based in Ft. Lauderdale, Florida, CIMA, L.L.C., is the developer
and current owner of a 200-acre parcel of land located in Mobile,
Alabama, with frontage on Interstate 10, a major thoroughfare.
The parcel has been subdivided into parcels, and some
infrastructure work has been done. CIMA is finalizing plans with
one or more investor groups for further development of this
parcel.
CIMA filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case No.
11-33279) on Aug. 22, 2011. Judge Raymond B. Ray presides over
the case. Leslie Gern Cloyd, Esq., at Berger Singerman, P.A.,
serves as bankruptcy counsel. In its petition, the Debtor
estimated $10 million to $50 million in assets and $1 million to
$10 million in debts. The petition was signed by J. Marion Uter,
manager.
CITRUS VALLEY: S&P Affirms 'BB+' SPUR on Certs. of Participation
----------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook to
stable from negative on the California Statewide Communities
Development Authority's certificates of participation (COPs),
issued for Citrus Valley Health Partners (CVHP). Standard & Poor's
also affirmed its 'BB+' underlying rating (SPUR) on the COPs.
"The outlook revision reflects our view of an improvement in
CVHP's liquidity metrics driven by an influx of cash from
California's Hospital Fee Program," said Standard & Poor's credit
analyst Kenneth Gacka.
"The program has strengthened the organization's liquidity since
the time of our last review, and the organization plans for no
major capital spending, leading us to believe that the
speculative-grade rating will be stable in the one- to two-year
outlook time frame. However, we believe that CVHP still faces
significant capital needs to address aging facilities and seismic
issues, which could pressure the rating beyond the outlook
period," S&P related.
The 'BB+' SPUR reflects S&P's view of:
CVHP's aging facilities, with a high average age of plant
equal to 18.6 years, implying future need for capital
investment to keep pace with competition; and
Uncertainty regarding the future of the California Hospital
Fee Program, which has contributed a substantial amount of
funds to CVHP (without the net benefit of the program, CVHP
would have posted operating losses through the first six
months of fiscal 2011 and audited fiscal 2010).
COMPUTER SYSTEMS: Case Reassigned to Hon. Morgenstern-Clarren
-------------------------------------------------------------
Effective Aug. 16, 2011, the Chapter 11 case of Computer Systems
Company, Inc. d/b/a The CSC Group will be transferred to the
Honorable Pat E. Morgenstern-Clarren.
The case was previously handled by the Honorable Randolph Baxter.
Strongsville, Ohio-based Computer Systems Co., also known as CSC
Group, is a provider of information management software for
health-care providers. The Company and its subsidiary, R4, LLC,
filed for Chapter 11 bankruptcy on November 13, 2009 (Bankr. N.D.
Ohio Case No. 09-20802). Computer Systems said that its assets
were $49.1 million and debt was $33.9 million at September 30,
2009.
CONSTRUCTION INC: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Construction, Inc.
14 Saw Mill Brook Road
Woburn, MA 01801
Bankruptcy Case No.: 11-18180
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
District of Massachusetts (Boston)
Judge: William C. Hillman
Debtor's Counsel: Nina M. Parker, Esq.
PARKER & ASSOCIATES
10 Converse Place
Winchester, MA 01890
Tel: (781) 729-0005
Fax: (781) 729-0187
E-mail: nparker@ninaparker.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of its largest unsecured creditors
together with its petition.
The petition was signed by Richard P. Murray, president.
CROWN REAL ESTATE: Case Summary & 12 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Crown Real Estate Services LLC
10621 Sepulveda Blvd.
Mission Hills, CA 91345
Bankruptcy Case No.: 11-20309
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
Central District Of California (San Fernando Valley)
Judge: Maureen Tighe
Debtor's Counsel: Michael S. Kogan, Esq.
ERVIN COHEN & JESSUP LLP
9401 Wilshire Blvd 9th Fl
Beverly Hills, CA 90212-2974
Tel: (310) 273-6333
Fax: (310) 859-2325
E-mail: mkogan@ecjlaw.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $10,000,001 to $50,000,000
The petition was signed by Michael A. Kahn, managing member.
Debtor's List of 12 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
City of Los Angeles Tax $326,749
Transient Occupancy Tax
P.O. Box 53233
Los Angeles, CA 90053
Idearc Media Trade $14,726
P.O. Box 619810
DFW Airport
Texas 75261
Allnet Security Trade $11,686
9836 White Oak
Ave. 209
Northridge, CA 91325
HD Supply Trade $8,657
Los Angeles County Tax Sales Tax $7,198
Catalyst Communications Trade $5,000
Staples Trade $1,619
Six Flags California Trade $957
American Hotel Register Trade $941
KA Service Plus Trade $600
Hodges and Irvine Trade $200
Secion Trade $132
Affiliate that filed separate Chapter 11 petition:
Petition
Debtor Case No. Date
------ -------- ----
Superior Property of
10621 Sepulveda 11-20305 08/29/11
DIGITILITI INC: Kent Lillemoe Appointed to Board of Directors
-------------------------------------------------------------
Digitiliti, Inc., announced that on Aug. 24, 2011, Kent Lillemoe
was appointed to the Company's board of directors. He replaces
Benno Sand, who resigned from the Board to focus on other
significant responsibilities.
The departing Mr. Sand was appointed to the Board in 2009. Mr.
Lillemoe, who will chair Digitiliti's audit committee, has
extensive senior level executive experience, serving from January
2006 through April 2009 as chief financial officer of
MinuteClinic, Inc., a "retail healthcare" company that integrates
affordable healthcare solutions into consumer lifestyles.
Previously, he served as chief financial officer of Envoy Medical
Corporation, a start-up medical technology company focused on
developing a fully-implantable device for the hearing impaired.
Earlier (June 2000 through Jan. 2003), he served as founder,
director and chief operating officer of Avante Optics Corporation,
a start-up technology company focused on developing high-speed
processes and equipment for manufacturing optical components. Mr.
Lillemoe currently serves on corporate boards of directors,
including Exos Corporation, Mobi, LLC, and Wireless Ronin
Technologies, Inc. He also serves as an advisor to Vast
Enterprises and Finnegans, Inc.
"Digitiliti thanks Mr. Sand for the guidance he has provided the
company during his tenure on our board," said Digitiliti president
and CEO Jack B. Scheetz.
Digitiliti's Universal Archive Platform is the world's first and
only unified way to archive information in a single architecture
for organizing, storing, and accessing diverse and massive amounts
of data residing in content located throughout an organization.
The platform is comprised of data storage, active archiving,
information life cycle management and policy-based control of
data.
About Digitiliti, Inc.
St. Paul, Minnesota-based Digitiliti, Inc.'s business is
developing and delivering storage technologies and methodologies
enabling its customers to manage, control, protect and access
their information and data with ease. The Company's core business
is providing a cost effective on-line data protection solution to
the small to medium business ("SMB") and small to medium
enterprise ("SME") markets through its DigiBAK service. This on-
line data protection solution helps organizations properly manage
and protect their entire network from one centralized location.
The Company reported a net loss of $6.41 million on $2.14 million
of revenue for the year ended Dec. 31, 2010, compared with a net
loss of $5.17 million on $3.19 million of revenue during the prior
year.
The Company's balance sheet at June 30, 2011, showed $1.45 million
in total assets, $3.36 million in total liabilities and a $1.90
million total stockholders' deficit.
As reported by the TCR on April 18, 2011, MaloneBailey, LLP, in
Houston, Texas, expressed substantial doubt about the Company's
ability to continue as a going concern, following the 2010
financial results. The independent auditors noted that the
Company has suffered losses from operations and has a working
capital deficit.
DRYSHIPS INC: Ocean Rig to Exchange up to 28.5-Mil. Common Shares
-----------------------------------------------------------------
DryShips Inc. announced the commencement of an offer by its
majority-owned subsidiary, Ocean Rig UDW, to exchange up to
28,571,428 new shares of Ocean Rig common stock that have been
registered under the U.S. Securities Act of 1933, as amended for
an equivalent number of common shares of Ocean Rig previously sold
in a private offering in December 2010. The exchange offer is
being conducted upon the terms and subject to the conditions set
forth in the prospectus dated Aug. 26, 2011, and the related
letter of transmittal. The Exchange Shares are identical to the
Original Shares, except that the Exchange Shares have been
registered under the Securities Act and, therefore, will not bear
legends restricting their transfer.
The exchange offer will expire at 5:00 p.m., New York City time,
11:00 p.m., Oslo time, on Sept. 27, 2011, unless extended by the
Company. Tenders of the Original Shares must be properly made
before the exchange offer expires and may be withdrawn at any time
before the expiration of the exchange offer.
About DryShips Inc.
Based in Greece, DryShips Inc. -- http://www.dryships.com/--
-- owns and operates drybulk carriers and offshore oil
deep water drilling units that operate worldwide. As of Sept. 10,
2010, DryShips owns a fleet of 40 drybulk carriers (including
newbuildings), comprising 7 Capesize, 31 Panamax and 2 Supramax,
with a combined deadweight tonnage of over 3.6 million tons and
6 offshore oil deep water drilling units, comprising of 2 ultra
deep water semisubmersible drilling rigs and 4 ultra deep water
newbuilding drillships.
DryShips's common stock is listed on the NASDAQ Global Select
Market where it trades under the symbol "DRYS".
On Nov. 25, 2010, DryShips Inc. entered into a waiver letter
for its US$230.0 million credit facility dated Sept. 10, 2007,
as amended, extending the waiver of certain covenants through
Dec. 31, 2010.
In its audit report on the Company's financial statements for the
year ended Dec. 31, 2010, Deloitte, Hadjipavlou Sofianos &
Cambanis S.A., noted that the Company's inability to comply with
financial covenants under its original loan agreements as of Dec.
31, 2009, its negative working capital position and other matters
raise substantial doubt about its ability to continue as a going
concern.
The Company's balance sheet at June 30, 2011, showed US$7.86
billion in total assets, US$4.03 billion in total liabilities, and
US$3.83 billion in total equity.
DRYSHIPS INC: Incurs $117.8 Million Second Quarter Net Loss
-----------------------------------------------------------
Dryships Inc. reported a net loss of US$117.81 million on
US$224.01 million of revenue for the three months ended June 30,
2011, compared with net income of US$19.46 million on US$224.23
million of revenue for the same period a year ago.
The Company also reported a net loss of US$85.81 million on
US$431.43 million of revenue for the six months ended June 30,
2011, compared with net income of US$32.74 million on US$418.39
million of revenue for the same period during the prior year.
The Company's balance sheet at June 30, 2011, showed US$7.86
billion in total assets, US$4.03 billion in total liabilities and
US$3.83 billion in total equity.
"We are pleased to report on the progress made on initiatives that
have been underway for several months. One of the most
significant milestones was the commencement by Ocean Rig UDW on
August 26, 2011, of its offer to exchange shares that have been
registered with the US SEC for shares that were issued in a
private Norwegian offering in 2010. On August 4, 2011, we also
announced the partial spin off of Ocean Rig UDW by way of a
dividend to our shareholders, this dividend is the first step in
delivering value to our shareholders from our investment in the
offshore deep water drilling sector. By mid-September we expect
these shares will be tradable on a "when issued" basis on the
Nasdaq Global Select Market and to begin "regular-way" trading in
October under the symbol "ORIG".
A full-text copy of the press release announcing the financial
results is available for free at http://is.gd/8YfZBG
About DryShips Inc.
Based in Greece, DryShips Inc. -- http://www.dryships.com/--
-- owns and operates drybulk carriers and offshore oil
deep water drilling units that operate worldwide. As of Sept. 10,
2010, DryShips owns a fleet of 40 drybulk carriers (including
newbuildings), comprising 7 Capesize, 31 Panamax and 2 Supramax,
with a combined deadweight tonnage of over 3.6 million tons and
6 offshore oil deep water drilling units, comprising of 2 ultra
deep water semisubmersible drilling rigs and 4 ultra deep water
newbuilding drillships.
DryShips's common stock is listed on the NASDAQ Global Select
Market where it trades under the symbol "DRYS".
On Nov. 25, 2010, DryShips Inc. entered into a waiver letter
for its US$230.0 million credit facility dated Sept. 10, 2007,
as amended, extending the waiver of certain covenants through
Dec. 31, 2010.
In its audit report on the Company's financial statements for the
year ended Dec. 31, 2010, Deloitte, Hadjipavlou Sofianos &
Cambanis S.A., noted that the Company's inability to comply with
financial covenants under its original loan agreements as of Dec.
31, 2009, its negative working capital position and other matters
raise substantial doubt about its ability to continue as a going
concern.
EL CAMPESINO: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: El Campesino Farmers Market, Inc.
458 East Railway Avenue
Paterson, NJ 07503
Bankruptcy Case No.: 11-35582
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
District of New Jersey (Newark)
Judge: Donald H. Steckroth
Debtor's Counsel: David L. Stevens, Esq.
SCURA, MEALEY, WIGFIELD & HEYER LLP
1599 Hamburg Turnpike
Wayne, NJ 07470
Tel: (973) 696-8391
E-mail: dstevens@scuramealey.com
Scheduled Assets: $282,860
Scheduled Debts: $1,337,903
A list of the Company's 20 largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/njb11-35582.pdf
The petition was signed by Pedro Perez, president.
EL RANCHO: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: El Rancho International Food Market
295 E. Railway Ave.
Paterson, NJ 07503
Bankruptcy Case No.: 11-35581
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
District of New Jersey (Newark)
Judge: Rosemary Gambardella
Debtor's Counsel: David L. Stevens, Esq.
SCURA, MEALEY, WIGFIELD & HEYER LLP
1599 Hamburg Turnpike
Wayne, NJ 07470
Tel: (973) 696-8391
E-mail: dstevens@scuramealey.com
Scheduled Assets: $243,950
Scheduled Debts: $1,337,039
A list of the Company's 20 largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/njb11-35581.pdf
The petition was signed by Pedro Perez, president.
ENERGY FUTURE: Aurelius Seeks ISDA Ruling on Unit's Solvency
------------------------------------------------------------
FINalternatives reports that Aurelius Capital Management has taken
its fight with Energy Future Holdings to the International Swaps
and Derivatives Association.
FINalternatives relates that the hedge fund, which sought a
default holding against EFH's Texas Competitive Electric Holdings
in February, has asked ISDA to rule that the company is insolvent.
Such a holding could trigger $1.2 billion in credit default swaps
on the company's debt, the report notes.
Texas Competitive earlier this month said that its outstanding
debt exceeds its enterprise value, FINalternatives recalls.
Aurelius called that a "flat-out admission" that the company is
insolvent.
"Simply put, there is overwhelming evidence that TCEH is
insolvent," Aurelius wrote to ISDA, FINalternatives reports.
In April, EFH was able to evade Aurelius' allegations that it had
defaulted on its debt by borrowing from Texas Competitive,
according to FINalternatives.
About Energy Future
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a portfolio
of competitive and regulated energy businesses in Texas. Oncor,
an 80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas. The Company
delivers electricity to roughly three million delivery points in
and around Dallas-Fort Worth.
EFH Corp. was created in October 2007 in a $45 billion leveraged
buyout of Texas power company TXU in a deal led by private-equity
companies Kohlberg Kravis Roberts & Co. and TPG Inc.
* * *
As reported in the Troubled Company Reporter on Aug. 30, 2011,
Fitch Ratings affirmed TCEH's Issuer Default Rating (IDR) at
'CCC'. Due to inter-company linkages, Fitch has also affirmed the
IDRs of Energy Future Holdings Corp (EFH), Energy Future
Intermediate Holding Company LLC (EFIH) and Energy Future
Competitive Holdings Company (EFCH) at 'CCC'.
EQK BRIDGEVIEW: Plan Confirmation Hearing Set for Sept. 29
----------------------------------------------------------
Judge Stacey G. Jernigan of the U.S. Bankruptcy Court for the
Northern District of Texas approved the disclosure statement
explaining EQK Bridgeview Plaza, Inc.'s Third Amended Plan of
Reorganization after determining that the explanatory documents
contain "adequate information" as defined under Section 1125 of
the Bankruptcy Code.
A hearing on the confirmation of the Plan will be held on
September 29, 2011, at 2:30 p.m., Central time. Objections to the
confirmation are due September 26.
The Plan provides for the Debtor to continue to manage and operate
the Bridgeview Plaza shopping center located at 2420 Rose Street
in La Crosse, Wisconsin, and the approximately 2,928.441 acres of
undeveloped land in Kaufman County, Texas, and for the Debtor to
either sell the Dunes Plaza shopping center located at 104
Franklin Street in Michigan City, Indiana, pursuant to a pending
sale agreement or deed the Dunes Plaza Property to Grand Pacific
Finance Corp.
Under the Plan, the Debtor will use the Net Operating Income of
the Properties, funds currently on hand, funds to be contributed
by the Reorganized Debtor's equity holder, and proceeds from sales
of the Properties to enable the Debtor to meet operating expense
and to pay creditors. Until and unless the Properties are sold or
refinanced, or until operating revenues are increased to a
sufficient level, Transcontinental Realty Investors, Inc., the
entity or its designee acquiring the equity of the Debtor, will
need to contribute funds to fund the initial payments to be made
under the Plan and to enable the Debtor to meet its obligations
under the Plan with respect to the Windmill Farms Property, and
TCI has agreed to contribute those funds.
The perfected liens and security interests held by the Prepetition
Lenders will be continued, preserved and retained to secure the
unpaid balance of their respective Allowed Secured Claims. TCI or
its designee will receive 100% of the equity interests in the
Reorganized Debtor on account of its contributions and the new
value it is providing in funding the Plan.
A full-text copy of the approved Disclosure Statement is available
for free at http://ResearchArchives.com/t/s?76cb
About EQK Bridgeview
Based in Dallas, Tex., EQK Bridgeview Plaza, Inc., sought chapter
11 protection (Bankr. N.D. Tex. Case No. 10-37054) on Oct. 4,
2010, and is represented by Melissa S. Hayward, Esq. --
MHayward@FSLHlaw.com -- at Franklin Skierski Lovall Hayward LLP in
Dallas, Tex. The Debtor owns four parcels of real estate that it
values at $74 million.
In its schedules, the Debtor disclosed total assets of $76,458,815
and total liabilities of $74,763,048.
EUROCLASS MOTORS: Case Reassigned to Hon. Mildred Caban Flores
--------------------------------------------------------------
The Chapter 11 case of Euroclass Motors, Inc. has been reassigned
to the Honorable Mildred Caban Flores of the U.S. Bankruptcy Court
for the District of Puerto Rico.
San Juan, Puerto Rico-based Euroclass Motors, Inc. filed for
Chapter 11 protection (Bankr. D. P.R. Case No. 11-05772) on Jul.
6, 2011. Ramon Vega Diaz, president of the Debtor, filed the
petition.
The Debtor estimated assets between $1 million and $10 million
and estimated debts between $10 million and $50 million.
Antonio A. Arias-Larcada, Esq., at McConnel Valdes represents the
Debtor in this case.
FAIRFEX CROSSING: Delays Plan Effective Date to Resolve BB&T Issue
------------------------------------------------------------------
Fairfax Crossing LLC and Fairfax Crossing II LLC sought and
obtained approval from Judge Patrick M. Flatley of the U.S.
Bankruptcy Court for the Northern District of West Virginia,
Martinsburg Division, of their motion to alter or amend their
Modified Second Amended Plan of Reorganization and the order
confirming the Plan to provide that the definition of the term
"Effective Date" in the Plan is replaced with the following:
"Effective Date" means, and shall occur on, the First Business
Day after the Confirmation Date on which either: (a) the
successor to "Freemont," as that term is defined in the
Subordination Agreement recorded with the Clerk of the County
Commission of Jefferson County, West Virginia in Deed Book 1030
at page 200, has consented in writing to the pledge of the
Freeman Note to BB&T in accordance with the Plan; or (b) a
Final Order has been entered after notice to the successor to
Freemont and an opportunity for a hearing authorizing the
pledge of the Freeman Note to BB&T in accordance with the Plan.
As previously reported by the Aug. 10, 2011 edition of The
Troubled Company Reporter, Fairfax Crossing filed a motion seek to
delay the date on which the Effective Date occurs under the Plan
so that the Debtors and BB&T have the opportunity to determine how
best to address the note pledge issue in a manner that best
carries out the purpose of the Plan. The Debtors said they are
working diligently on resolving the issue, and a solution may
require some further modification to the Plan or the Confirmation
Order prior to the Effective Date. Some modification of the Plan
is necessary before the Effective Date occurs to prevent the
Debtors from being in default under the Plan.
About Fairfax Crossing
Based in Charles Town, West Virginia, Fairfax Crossing LLC filed
for Chapter 11 Bankruptcy Protection on June 29, 2010 (Bankr. N.D.
W.V. Case No. 10-01362). Judge Patrick M. Flatley presides over
the Debtor's case. The Debtor estimated both assets and debts of
between $1 million and $10 million.
Debtor-affiliate Charles Town, West Virginia-based Fairfax
Crossing II LLC filed a separate petition for Chapter 11
bankruptcy protection on June 29, 2010 (Bankr. N.D.
W.V. Case No. 10-01368). Fairfax Crossing II disclosed
$24,270,748 in assets and $5,589,190 in liabilities as of the
petition date.
Richard G. Gay, Esq., at the Law Office of Richard G. Gay, L.C.,
in Berkeley Springs, W. Va., and Lawrence J. Yumkas, Esq, at
Vidmar & Sweeney, LLC, in Annapolis, Md., represent the Debtors as
counsel. The cases are jointly consolidated under Case No.
10-01362.
Fairfax is the developer of Lakeland Place at Fairfax Crossing, a
community comprised of single family residences and townhomes in
Ranson, West Virginia. Fairfax II is a real estate development
company that holds title to a 19.1139 acre residential and
commercial parcel in Fairfax Crossing and also holds title to an
adjoining 31.13 acre parcel which Fairfax plans to develop into a
residential community called Lloyd's Landing.
Judge Flatley confirmed on July 18, 2011, the Debtors' Modified
Second Amended Plan of Reorganization, which provides for the
substantial consolidation of the two debtors into one reorganized
company. ADDITIONAL INFO
FEDERACION DE MAESTROS: Voluntary Chapter 11 Case Summary
---------------------------------------------------------
Debtor: Federacion De Maestros De Puerto Rico, Inc.
Urb. Caribe
1252 Ave Ponce De Leon
San Juan, PR 00926
Bankruptcy Case No.: 11-07143
Chapter 11 Petition Date: August 26, 2011
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Judge: Brian K. Tester
Debtor's Counsel: Charles Alfred Cuprill, Esq.
CHARLES A CURPILL, PSC LAW OFFICE
356 Calle Fortaleza
Second Floor
San Juan, PR 00901
Tel: (787) 977-0515
E-mail: cacuprill@cuprill.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
The Debtor did not file a list of its largest unsecured creditors
together with its petition.
The petition was signed by Rafael Feliciano Hernandez, president.
FIRST MERCURY: Moody's Affirms 'Ba1' Long-Term Issuer Rating
------------------------------------------------------------
Moody's Investors Service has upgraded the insurance financial
strength (IFS) rating of First Mercury Insurance Company to Baa1
from Baa2 and the long-term issuer rating of its holding company
First Mercury Financial Corporation to Ba1 from Ba2 following
their acquisition by Crum & Forster Holdings Corp (Crum &
Forster). Crum & Forster and First Mercury are wholly-owned
subsidiaries of Fairfax Financial Holdings (Fairfax, TSX: FFH,
senior unsecured debt Baa3/stable outlook). The outlooks of First
Mercury's IFS rating and its holding company's long-term issuer
rating, which had been positive, are now stable after the
upgrades. Moody's will withdraw the two ratings for its own
business reasons.
In conjunction with this rating action, Moody's also affirmed the
Baa1 IFS ratings of Crum & Forster's main operating companies
(United States Fire Insurance Company and The North River
Insurance Company) with a stable outlook.
Moody's has affirmed and withdrawn the Ba1 senior unsecured debt
rating of Crum & Forster Holdings Corp. for its own business
reasons. In the second quarter of 2011, the total outstanding
amount of Crum & Forster's senior notes was nearly paid off in
full by proceeds raised from Fairfax's debt issuance.
RATINGS RATIONALE
The upgrade of First Mercury's IFS rating to Baa1 from Baa2 was
driven by its ownership and integration with Crum & Forster.
Moody's analyst Enrico Leo stated: "In addition to the management
and business integration with Crum & Forster, First Mercury
receives strong explicit support through a 100% quota share
reinsurance agreement between First Mercury and United States Fire
Insurance Company. As a result of the ownership and support,
Moody's has aligned the IFS rating of First Mercury with that of
Crum & Foster's operating subsidiaries." The upgrade of the Ba1
long-term issuer rating of First Mercury's holding company
reflects Moody's typical insurance notching between an operating
company's IFS rating and its holding company's senior debt rating
(or long-term issuer rating), and aligns it with Crum & Forster's
Ba1 senior debt rating (before the withdrawal of both ratings).
Moody's said the affirmation of the Baa1 IFS ratings of Crum &
Forster's operating subsidiaries is based on the group's increased
focus and experience in certain niche commercial specialty classes
of business (particularly with its recent acquisition of First
Mercury), good position in the commercial middle market sector,
and diversified revenue streams by geography and product.
Offsetting these strengths are challenges in underwriting
profitability due to an ongoing soft pricing environment and
intense competition in commercial middle markets from which the
company still sources a sizeable portion of its revenue, large
common stock investment portfolio (although current hedges
mitigate the exposure), and exposure both to asbestos and
environmental claims and to natural and man-made catastrophes.
Crum & Forster has repositioned itself recently to focus more on
specialty business. According to Leo: "With the addition of First
Mercury, about 75%, on a 2011 pro-forma basis, of the company's
premiums is in specialty business, which tends to be less
susceptible to significant market competition compared to standard
commercial lines. Moody's expects that a considerable amount of
First Mercury's business will be aligned with and integrated
within Crum & Forster's existing specialty insurance platform."
Additionally, effective July 1, 2011, a quota share reinsurance
agreement was put in place where 100% of First Mercury Insurance's
premiums and liabilities (past and future liabilities) will be
reinsured by United States Fire Insurance Company (a wholly-owned
Crum & Forster insurance subsidiary).
The outlook for Crum & Forster's rating is stable. The rating
agency said the following could lead to an upgrade of the Baa1
IFS: 1) consistently strong underwriting results (combined ratios
less than 100%) and consistently positive operating earnings
(excluding realized gains); 2) improvement in risk-adjusted
capitalization (with gross underwriting leverage consistently less
than 3x); 3) improvement in its loss reserve position, with an
asbestos and environmental funding ratio above 8x; and 4)
reduction in reinsurance recoverables to equity ratio to below
50%.
Conversely, the following could lead to a downgrade of the IFS
rating: 1) deterioration in combined ratios (greater than 110%);
2) adverse development in excess of 5% of beginning year reserves;
3) material increase in gross and net catastrophe exposure; and 4)
Fairfax's financial flexibility deteriorates such that holding
company liquidity drops below $750 million (or less than 3x total
fixed charges) or adjusted financial leverage rises above 35% and
earnings coverage (excluding realized gains) drops below 2x.
These ratings were upgraded and will be withdrawn:
First Mercury Insurance Company -- insurance financial strength to
Baa1 from Baa2;
First Mercury Financial Corporation -- long-term issuer rating to
Ba1 from Ba2;
The following rating was affirmed and withdrawn:
Crum & Forster Holdings Corp. -- senior unsecured debt rating at
Ba1;
These ratings were affirmed with a stable outlook:
United States Fire Insurance Company -- insurance financial
strength rating at Baa1;
The North River Insurance Company -- insurance financial strength
rating at Baa1.
Crum & Forster primarily underwrites property and casualty
insurance in the United States. Its main lines of business include
general liability, specialty property and liability, workers'
compensation, property, and commercial automobile insurance. As of
June 30, 2011, policyholders' surplus was approximately $1.3
billion.
The principal methodology used in rating First Mercury and Crum
and Forster is "Moody's Global Rating Methodology for Property and
Casualty Insurers" published in May 2010.
Moody's insurance financial strength ratings are opinions about
the ability of insurance companies to punctually pay senior
policyholder claims and obligations.
FIRST SECURITY: Robert Keller Elected to Board of Directors
-----------------------------------------------------------
The Board of Directors of First Security Group, Inc., increased
the size of its Board of Directors to six and elected Robert P.
Keller to join the Board.
Mr. Keller, age 73, is a Managing Director of Triumph Investment
Managers, LLC. Mr. Keller serves in leadership board positions
with two financial institutions, as follows: Chairman of Security
Business Bancorp, a bank holding company, and its wholly-owned
subsidiary, Security Business Bank of San Diego, both based in San
Diego, California, and Chairman of First State Bank, a community
bank based in Cranford, New Jersey. Mr. Keller also serves as a
Director and Chairman of the Audit Committee for Pennichuck Corp,
a publicly traded water utility holding company in Nashua, New
Hampshire. Prior to co-founding Triumph, Mr. Keller served as the
President and Chief Executive Officer of three financial
institutions, all of which were in excess of $1 billion in assets
prior to their sale.
Mr. Keller was selected to serve as a director pursuant to the
terms of First Security Group's engagement agreement with Triumph,
dated April 28, 2011. Pursuant to the terms of that agreement,
Mr. Keller will not be entitled to any additional compensation for
his service as a director of First Security.
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 June 30, 2011, showed $1.10 billion
in total assets, $1.02 billion in total liabilities, and
$84.78 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.
According to the Company, its ability to continue as a going
concern is contingent upon its ability to devise and successfully
execute a management plan to develop profitable operations,
satisfy the requirements of the regulatory actions detailed below,
and lower the level of problem assets to an acceptable level.
FREMONT GENERAL: Appeals Court Revives Claims vs. Ex-Gen. Counsel
-----------------------------------------------------------------
Lance Duroni at Bankruptcy Law360 reports that a California state
appeals court on Tuesday revived claims Fremont Reorganizing Co.
brought against its former general counsel for allegedly breaching
his fiduciary and ethical duties by alerting authorities that the
company planned to auction artwork belonging to an insolvent
subsidiary.
In a 31-page opinion penned by Justice H. Walter Croskey, the
appeals court resurrected FRC's claims against Alan Faigin for
breach of fiduciary duty and breach of confidence, saying the
attorney likely revealed confidential information in his report to
the California Insurance Commissioner, according to Law360.
About Fremont General
Based in Santa Monica, California, Fremont General Corp. (OTC:
FMNTQ) -- http://www.fremontgeneral.com/-- was a financial
services holding company with $8.8 billion in total assets at
Sept. 30, 2007. Fremont General ceased being a financial services
holding company on July 25, 2008, when its wholly owned bank
subsidiary, Fremont Reorganizing Corporation (f/k/a Fremont
Investment & Loan) completed the sale of its assets, including all
of its 22 branches, and 100% of its $5.2 billion of deposits to
CapitalSource Bank.
Fremont General filed for Chapter 11 protection on June 18, 2008,
(Bankr. C.D. Calif. Case No. 08-13421). Robert W. Jones, Esq.,
and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore
Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq., at
Stutman Treister & Glatt, represent the Debtor as counsel.
Kurtzman Carson Consultants LLC is the Debtor's noticing agent and
claims processor. Lee R. Bogdanoff, Esq., Jonathan S. Shenson,
Esq., and Brian M. Metcalf, at Klee, Tuchin, Bogdanoff & Stern
LLP, represent the Official Committee of Unsecured Creditors as
counsel. Fremont's formal schedules showed $330,036,435 in total
assets and $326,560,878 in total debts.
Fremont General Corporation emerged from bankruptcy and filed
Amended and Restated Articles of Incorporation with the Secretary
of State of Nevada on June 11, 2010, which, among other things,
changed the Debtor's name to Signature Group Holdings, Inc.
Signature's plan of reorganization became effective on June 11,
2010. As of that date Fremont General changed its name to
Signature Group Holdings, Inc.
GENERAL GROWTH: Seeks Final Decree Closing 120 Ch. 11 Cases
-----------------------------------------------------------
Pursuant to Section 350 of the Bankruptcy Code and Rule 3022 of
the Federal Rules of Bankruptcy Procedure, General Growth
Properties, Inc. and its debtor affiliates ask Judge Allan L.
Gropper of the U.S. Bankruptcy Court for the Southern District of
New York to enter a final decree closing the Chapter 11 cases of
120 Reorganized Debtors.
A. Group 1 Reorganized Debtors
GGP proposes to close the Chapter 11 cases of 110 Reorganized
Debtors -- Group 1 Reorganized Debtors -- effective on or prior
September 30, 2011:
Closing Debtors Case No.
--------------- --------
10000 Covington Cross, LLC 09-12324
10000 West Charleston Boulevard LLC 09-12040
1120/1140 Town Center Drive, LLC 09-12042
1160/1180 Town Center Drive, LLC 09-12043
1201-1281 Town Center Drive, LLC 09-12044
1450 Center Crossing Drive, LLC 09-12046
1635 Village Centre Circle, LLC 09-12049
1645 Village Center Circle, LLC 09-12050
20 CCC Business Trust 09-12458
30 CCC Business Trust 09-12459
9901-9921 Covington Cross, LLC 09-12051
9950-9980 Covington Cross, LLC 09-12052
Alameda Mall Associates 09-11986
Augusta Mall, LLC 09-12024
Bakersfield Mall LLC 09-12062
Bay Shore Mall Partners 09-11987
Beachwood Place Mall, LLC 09-12068
Birchwood Mall, LLC 09-12070
Boise Mall, LLC 09-12071
Cache Valley, LLC 09-12079
Caledonian Holding Company, Inc. 09-11981
Century Plaza L.L.C. 09-12008
Champaign Market Place L.L.C. 09-12081
Chico Mall, L.P. 09-11988
Collin Creek Mall, LLC 09-12087
Colony Square Mall L.L.C. 09-12088
Coronado Center L.L.C. 09-12090
Eagle Ridge Mall, L.P. 09-12097
Eden Prairie Mall L.L.C. 09-12101
Fallbrook Square Partners Limited Partnership 09-12104
Fox River Shopping Center, LLC 09-12113
GGP American Properties Inc. 09-11980
GGP Holding II, Inc. 09-12123
GGP Holding, Inc. 09-12035
GGP Ivanhoe IV Services, Inc. 09-12126
GGP Natick Residence LLC 09-12129
GGP/Homart, Inc. 09-12131
GGP-Brass Mill, Inc. 09-12134
GGP-Columbiana Trust 09-12464
GGP-Foothills L.L.C. 09-12137
GGP-Four Seasons L.L.C. 09-12030
GGP-Glenbrook Holding L.L.C. 09-12139
GGP-Mall of Louisiana, L.P. 09-12018
GGP-NewPark L.L.C. 09-12004
GGP-Pecanland, L.P. 09-11990
GGP-Redlands Mall, L.P. 09-11973
GP-Tucson Mall L.L.C. 09-12155
Grand Traverse Mall Partners, LP 09-12469
Greenwood Mall L.L.C. 09-12471
Ho Retail Properties II Limited Partnership 09-12165
Hocker Oxmoor, LLC 09-12166
Howard Hughes Canyon Pointe Q4, LLC 09-12168
Howard Hughes Properties IV, LLC 09-12172
Hulen Mall, LLC 09-12176
Kalamazoo Mall L.L.C. 09-12472
La Place Shopping, L.P. 09-11974
Lakeside Mall Property, LLC 09-12182
Landmark Mall L.L.C. 09-12188
Lansing Mall Limited Partnership 09-11989
Lincolnshire Commons, LLC 09-12031
Lynnhaven Mall L.L.C. 09-12190
Mall St. Vincent, L.P. 09-12197
Mayfair Mall, LLC 09-12198
Mondawmin Business Trust 09-12474
MSM Property L.L.C. 09-12201
New Orleans Riverwalk Associates 09-11998
North Star Mall, LLC 09-12207
Oakwood Hills Mall, LLC 09-12211
Oakwood Shopping Center Limited Partnership 09-11985
Oglethorpe Mall L.L.C. 09-12212
Owings Mills Limited Partnership 09-12217
Parke West, LLC 09-12003
Parkside Limited Partnership 09-12021
Peachtree Mall L.L.C. 09-12223
Pierre Bossier Mall, LLC 09-12226
Pines Mall Partners 09-11970
Price Development Company, Limited Partnership 09-12010
Rio West L.L.C. 09-12238
Rouse LLC 09-11979
Rouse Providence LLC 09-12252
Rouse SI Shopping Center, LLC 09-12023
Rouse-Arizona Center, LLC 09-12256
Rouse-Orlando, LLC 09-12260
Rouse-Phoenix Master Limited Partnership 09-12013
RS Properties Inc. 09-12265
Saint Louis Galleria L.L.C. 09-12266
Seaport Marketplace Theatre, LLC 09-11965
Seaport Marketplace, LLC 09-11964
Sooner Fashion Mall L.L.C. 09-12273
South Shore Partners, L.P. 09-11993
Southlake Mall L.L.C. 09-12274
Southland Center, LLC 09-12015
Southland Mall, L.P. 09-11992
Spring Hill Mall L.L.C. 09-12279
Stonestown Shopping Center, L.P. 09-12283
Summerlin Centre, LLC 09-12284
The Howard Hughes Corporation 09-12169
The Rouse Company LP 09-11983
The Rouse Company Operating Partnership LP 09-12037
The Woodlands Mall Associates, LLC 09-12323
Town Center East Business Trust 09-12476
Town East Mall, LLC 09-12288
Tracy Mall Partners, L.P. 09-12290
U.K.-American Properties, Inc. 09-12298
Valley Hills Mall L.L.C. 09-12034
Visalia Mall, L.P. 09-12309
Vista Commons, LLC 09-12308
Westwood Mall, LLC 09-12316
Willowbrook Mall, LLC 09-12321
Woodbridge Center Property, LLC 09-12322
B. Group 2 Reorganized Debtors
GGP also asks Judge Gropper to close the Chapter 11 cases of any
of 10 Reorganized Debtors -- Group 2 Reorganized Debtors -- that
settles, disallows or otherwise resolves any remaining open
claims in its Chapter 11 case on or prior to September 30, 2011,
so that no claims would remain active in its Chapter 11 case as
of September 30, 2011:
Closing Debtors Case No.
--------------- --------
Bay City Mall Associates L.L.C. 09-12064
Boulevard Associates 09-12074
Eastridge Shopping Center L.L.C. 09-12098
Elk Grove Town Center, L.P. 09-12005
GGP-Mint Hill L.L.C. 09-11969
Grand Canal Shops II, LLC 09-12157
Howard Hughes Properties, Inc. 09-12170
Howard Hughes Properties, Limited Partnership 09-12171
South Street Seaport Limited Partnership 09-11963
Victoria Ward Center L.L.C. 09-12302
Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New
York, tells Judge Gropper that the Chapter 11 cases of Boulevard
Associates and Howard Hughes Properties, Limited Partnership,
were inadvertently included in the List of Additional Reorganized
Debtors whose cases were fully administered on or before June 30,
2011 filed on July 8, 2011 and deemed closed, nunc pro tunc to
June 30, 2011, pursuant to the July 27, 2011 Second Final Decree
Order. Accordingly, the Reorganized Debtors will submit a
proposed order to amend the Second Final Decree Order to remove
those two Chapter 11 cases.
As of August 29, 2011, approximately 120 Reorganized Debtors'
Chapter 11 cases remain open. In conjunction, the claims
asserted against the 110 Reorganized Debtors had been settled,
resolved, disallowed or expunged so that no additional
administration is necessary in those Reorganized Debtors' cases,
Ms. Goldstein says. In addition, General Growth expects to
finally administer the claims asserted against approximately 10
additional Reorganized Debtors on or before September 30, 2011.
Because the identity of the full list of Group 2 Reorganized
Debtors will not be known until September 30, 2011, GGP proposes
to file, on or before October 7, 2011, the final list of Group 2
Reorganized Debtors whose Chapter 11 cases were fully
administered on or before September 30, 2011. GGP anticipates
that only two of the Reorganized Debtors' Chapter 11 cases will
remain open as of September 30, 2011 -- General Growth
Properties, Inc. (Case No. 08-11977) and GGP Limited Partnership
(Case No. 09-11978).
Ms. Goldstein insists that the Group 1 Reorganized Debtors'
Chapter 11 cases and the Group 2 Reorganized Debtors' Chapter 11
cases have been "fully administered" or will have been fully
administered on or prior to September 30, 2011 within the meaning
of Section 350 of the Bankruptcy Code, and the Project Debtor's
Joint Plan of Reorganization and TopCo's Third Amended Joint Plan
of Reorganization have been substantially consummated within the
meaning of Section 1101(2) of the Bankruptcy Code, making it
appropriate for the Court to enter a final decree closing those
cases. She contends that ample justification exists for entry of
a final decree closing the Group 1 Reorganized Debtors'
Chapter 11 cases and the Group 2 Reorganized Debtors' Chapter 11
cases because, among other things:
* the confirmation orders entered with respect to the
Confirmed Plans have become final and non-appealable;
* the Reorganized Debtors have emerged from Chapter 11 as
reorganized entities;
* all property proposed to be transferred pursuant to the
Confirmed Plans has been transferred;
* the Reorganized Debtors have assumed the business and
management of the property dealt with by the Confirmed
Plans; and
* allowed and undisputed payments required under the Project
Debtor Plan are completed or substantially underway with
respect to the TopCo Plan.
Because GGP seeks an order closing only those Chapter 11 cases
that will have been fully administered on or prior to
September 30, 2011, the relief sought is warranted, Ms. Goldstein
points out. Indeed, the Reorganized Debtors will leave open the
chapter 11 cases of any Remaining Reorganized Debtor whose case
is not fully administered on or before September 30, 2011,
subject to seeking additional relief from the Court, she adds.
The Court will consider the Reorganized Debtors' request on
September 22, 2011. Objections are due no later than
September 15.
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)
GLC LIMITED: Judge Unlikely to Approve $5.5-Mil. Donnan Settlement
------------------------------------------------------------------
The Associated Press reports that U.S. Bankruptcy Judge James
Smith has raised concerns about a proposed deal by former
University of Georgia football coach Jim Donnan to settle claims
by the new operators of a bankrupt company that he improperly
profited from a Ponzi scheme involving the firm.
Judge Smith said he was unlikely to approve the $5.5 million
settlement Donnan brokered with West Virginia-based liquidation
company GLC Ltd. because he said it gave short-shrift to other
parties who filed claims against the ex-coach.
"I'm not sure I can bless this," the report quotes Judge Smith as
saying. He didn't issue a formal ruling on Monday. Judge Smith
set another hearing date for Oct. 4 to give attorneys involved in
the case more time to hash out their arguments, the AP says.
As reported in the Troubled Company Reporter on Aug. 12, 2011, the
Atlanta Journal-Constitution said Jim Donnan has agreed to settle
a lawsuit filed by an Ohio-based company alleging the former
University of Georgia football coach played a principal role in
orchestrating a "far-reaching Ponzi scheme." Mr. Donnan and his
wife, Mary, who was also named in the suit, will transfer liquid
assets totaling roughly $5.5 million to GLC Limited, pursuant to
the settlement. According to the AJC, the deal, subject to
approval by a federal judge, would seem about as favorable as the
Donnans could have expected. In late July their attorney, Ed
Tolley, said he was "optimistic" of reaching a negotiated
settlement between $5 million and $8.25 million with GLC's
bankruptcy estate and creditors.
The AJC said the assets to be transferred by the Donnans to a
GLC trust include properties, stocks and insurance policies. Among
the items excluded from the trust: football memorabilia, a fur
coat, Rolex watches, golf clubs, a shotgun and the couple's Athens
residence.
About James Donnan
James "Jim" Donnan, III is a former University of Georgia football
coach and ex-ESPN college football analyst. Donan and his wife,
Mary, filed a Chapter 11 petition (Bankr. M.D. Ga. Case No. 11-
31083) on July 1, 2011.
The filing came after Jim Donnan offered to pay back creditors
roughly $5 million. The creditors wanted $8.25 million from the
Donnans.
About GLC Limited
Proctorville, Ohio-based GLC Limited is a retail liquidation
company in the wholesale/retail distribution industry. It offers
large selections of name brand products in many categories. It
distributes its goods through a network of wholesale distributors,
retail chains and discount and surplus centers. It owns four
warehouses for its goods which are located in Proctorville and
Columbus, Ohio and Huntington, West Virginia.
GLC filed for Chapter 11 bankruptcy protection (Bankr. S.D. Ohio
Case No. 11-11090) on Feb. 28, 2011. James R. Burritt, chief
restructuring officer, signed the Chapter 11 petition. The Debtor
disclosed $18,231,434 in assets and $28,095,356 in liabilities as
of the Chapter 11 filing.
Ronald E. Gold, Esq., and Joseph B. Wells, Esq., at Frost Brown
Todd LLC, serve as the Debtor's bankruptcy counsel. James R.
Burritt is the Chief Restructuring Officer and Leon C. Ebbert, PC,
CPA, has been tapped as accountants. The Official Committee of
Unsecured Creditors in GLC Limited's Chapter 11 bankruptcy case
has tapped Morris, Manning & Martin, LLP, as counsel.
HARRISBURG, PA: Governor Supports Mayor's Fiscal-Recovery Plan
--------------------------------------------------------------
Michael Bathon at Bloomberg News reports that a statement revealed
Pennsylvania Governor Tom Corbett supports Harrisburg Mayor Linda
Thompson's fiscal-recovery plan that calls for selling some of the
capital city's assets and potentially taxing commuters, according
to the mayor's office. Mr. Corbett would consider it
"irresponsible" for the City Council to reject the road map,
scheduled for a vote Aug. 31, according to a statement.
Bloomberg relates that Ms. Thompson's blueprint follows most
recommendations made by state-appointed consultants, whose
proposal was rejected by the council on July 19.
If turned down this time, Mr. Corbett "would support legislative
action which will result in the city losing control of its ability
to make such decisions," according to the Aug. 26 statement
distributed by Robert Philbin, a spokesman for the mayor,
according to Bloomberg.
Bloomberg notes that the consultants urged the city to sell assets
and negotiate union concessions to deal with a debt burden from
overhauling and expanding an incinerator that has brought the
community to the brink of insolvency. Bloomberg relates that
Ms. Thompson has said she would add a commuter tax if the debt
wasn't fully retired.
The Pennsylvania Senate approved legislation to set up a three-
member board appointed by the governor and Harrisburg's host,
Dauphin County, to apply the consultants' advice.
The bill was tabled in the House on the last day of its session,
June 30.
Bloomberg notes that the Senate reconvenes Sept. 19 and the House,
Sept. 26.
Bloomberg relates that Pennsylvania would provide an $8 million
grant for improvements to the incinerator, as well as a
$5.66 million loan for the city's sewer system, if the council
approves Ms. Thompson's proposal, the statement said.
Harrisburg would also receive $2.5 million a year, up from
$500,000, to support fire protection, which was already in the
mayor's plan, Bloomberg notes.
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 Harrisburg City Council voted 5-2 on Sept. 28, 2010 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.
HAWAII MEDICAL: Committee Seeks Dismissal of 2011 Cases
-------------------------------------------------------
Pursuant to Section 1127(b) of the Bankruptcy Code, the Official
Committee of Unsecured Creditors of Hawaii Medical Center, Hawaii
Medical Center East, and Hawaii Medical Center West seeks an order
from the U.S. Bankruptcy Court for the District of Hawaii to
dismiss the Debtors' 2011 Chapter 11 cases.
The Creditors' Committee contends that the 2011 Cases are improper
attempts to modify the substantially consummated First Amended
Joint Plan of Reorganization for Hawaii Medical Center, LLC,
Hawaii Medical Center East, LLC, Hawaii Medical Center West, LLC -
- the 2010 Plan.
Pursuant to the terms of the 2010 Plan, the 2008 Debtors converted
to new Hawaii non-profit corporations -- Hawaii Medical Center, a
Hawaii non-profit corporation; Hawaii Medical Center East, a
Hawaii non-profit corporation; and Hawaii Medical Center West, a
Hawaii nonprofit corporation. All of the assets of the 2008
Debtors vested in the 2010 Reorganized Debtors. On Jun. 21, 2011,
each of the 2010 Reorganized Debtors filed voluntary Chapter 11
petitions. On the Second Petition Date, the 2010 Reorganized
Debtors also filed a Plan of Reorganization.
The 2011 Plan proposes, in part, to transfer all of the real
property owned by the 2010 Reorganized Debtors to St. Francis
Healthcare System of Hawaii and to merge the 2010 Reorganized
Debtors into subsidiaries of St. Francis. The 2011 Plan provides
no recovery to holders of general unsecured claims, intercompany
claims, and interests.
The 2010 Plan has been substantially consummated and cannot be
modified per Section 1127(b). Although some courts have permitted
serial Chapter 11 filings, these cases are uncommon and are not
allowed in circumstances such as this one, where the 2010
Reorganized Debtors are trying to "circumvent the binding terms of
the confirmed 2010 Plan," Chuck C. Choi, Esq., at Wagner Choi &
Verbrugge, in Honolulu, Hawaii, asserts.
The 2011 Proposed Plan modifies a number of provisions of the
confirmed 2010 Plan, according to Mr. Choi. Most importantly for
the Creditors' Committee, the 2011 Plan proposes to pay general
unsecured creditors nothing despite that the 2010 Plan promised to
pay general unsecured creditors in full, he relates.
The 2010 Reorganized Debtors would not have proposed the 2011 Plan
less than one year following the 2010 Plan Effective Date unless
they intended to materially modify the 2010 Plan, Mr. Choi argues.
Moreover, the 2010 Reorganized Debtors have failed to meet their
affirmative duty to demonstrate that unanticipated changes in
circumstances warrant the filing of the 2011 Cases, Mr. Choi says.
The causes identified by the Debtors for their breach of the 2010
Plan "were foreseen and expected when the 2010 Plan was
confirmed," Mr. Choi tells the Court. The revenue goals, budget
reductions, and loss of physicians in fact were deliberately
included in the 2010 Plan, and the audit by the Centers for
Medicare & Medicaid Services was fully disclosed before plan
confirmation, he points out.
The 2011 Cases should be dismissed because they were not filed in
good faith, Mr. Choi adds.
About Hawaii Medical Center
The Hawaii Medical Center, along with its affiliates, filed for
Chapter 11 bankruptcy (Bankr. D. Hawaii Lead Case No. 11-01746) on
June 21, 2011, just a year after exiting court protection. Hawaii
Medical Center owns two hospital campuses -- HMC East in North
Honolulu and HMC West in Ewa Beach. The two hospitals have 342
licensed beds and have a total of more than 1,000 employees. The
hospitals were known as St. Francis Medical Center before Hawaii
Medical purchased the hospitals in 2007.
Judge Robert J. Faris presides over the 2011 case. Lawyers at
Moseley Biehl Tsugawa Lau & Muzzi, in Honolulu, Hawaii, and
McDonald Hopkins LLC, in Cleveland, Ohio, serve as the Debtors'
counsel. The Debtor's professionals include: Scouler & Company
LLC as financial advisors; Krieg DeVault LLP as special
compliance counsel.
Hawaii Medical Center disclosed $74,713,475 in assets and
$91,112,280 in liabilities as of the Chapter 11 filing. The
petitions were signed by Kenneth J. Silva, member of the board of
directors.
Tiffany L. Carroll, Acting U.S. Trustee for Region 15, appointed
five members to the Official Committee of Unsecured Creditors in
the Debtors' cases. Attorneys at Wagner Choi & Verbrugge, in
Honolulu, Hawaii, and Pachulski Stang Ziehl & Jones LLP, in Los
Angeles, represent the Official Committee of Unsecured Creditors
as counsel.
The Debtors' prepetition debt structure is comprised of (i) the
Prepetition Revolving Loan with MidCap Financial, LLC, and the
Prepetition Term Loan with St. Francis Healthcare Systems of
Hawaii. As of the petition Dte, the aggregate outstanding
principal on the Prepetion MidCap Revolving Loan and the
Prepetition St. Francis Term Loan is approximately $46,851,772.
The principal balance of the Prepetion MidCap Revolving Loan is
approximately $7,676,495. The amount owed under the Prepetition
St. Francis Term Loan is approximately $39,175,277, secured by St.
Francis's first priority lien on, among other things, all real
property of the Debtors.
Through this Chapter 11 filing, the Debtors plan to return the
hospitals to the control of St. Francis.
In the prior case, HMC and its affiliated debtors were converted
to new, Hawaii non-profit corporations. CHA Hawaii, one of HMC's
affiliated debtors and a subsidiary of Cardiovascular Hospitals of
America, LLC, discontinued management of the reorganized Debtors.
Wichita, Kansas-based CHA Hawaii LLC, and its affiliates --
including Hawaii Medical Center LLC -- filed for Chapter 11
protection on Aug. 29, 2008 (Bankr. D. Del. Case No. 08-12027).
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP
represented the Debtors in their restructuring efforts. CHA
Hawaii estimated assets of up to $10 million and debts between
$50 million and $100 million when it filed for bankruptcy. The
Debtors obtained confirmation of their Chapter 11 plan in May 2010
and emerged from bankruptcy in August 2010.
HAWAII MEDICAL: Wins Nod to Tap Cain Brothers as Expert Witness
---------------------------------------------------------------
The Honorable Robert J. Faris has authorized Hawaii Medical
Center, a Hawaii non-profit corporation; Hawaii Medical Center
East, a Hawaii non-profit corporation; and Hawaii Medical Center
West, a Hawaii non-profit corporation to employ Cain Brothers &
Company, LLC as expert witness for the Debtors.
The flat fee to be paid to Cain Brothers pursuant to the terms of
the parties' engagement letter will be subject to the standard of
review provided in Section 328(a) and not subject to any other
standard of review under Section 330 of the Bankruptcy Code. All
payments will be subject to the terms and conditions set forth in
the Final DIP Orders.
The Court has also modified certain language relating to the
indemnification provisions of the Engagement Letter.
Curtis B. Ching, assistant U.S. Trustee, also approved the
employment.
About Hawaii Medical Center
The Hawaii Medical Center, along with its affiliates, filed for
Chapter 11 bankruptcy (Bankr. D. Hawaii Lead Case No. 11-01746) on
June 21, 2011, just a year after exiting court protection. Hawaii
Medical Center owns two hospital campuses -- HMC East in North
Honolulu and HMC West in Ewa Beach. The two hospitals have 342
licensed beds and have a total of more than 1,000 employees. The
hospitals were known as St. Francis Medical Center before Hawaii
Medical purchased the hospitals in 2007.
Judge Robert J. Faris presides over the 2011 case. Lawyers at
Moseley Biehl Tsugawa Lau & Muzzi, in Honolulu, Hawaii, and
McDonald Hopkins LLC, in Cleveland, Ohio, serve as the Debtors'
counsel. The Debtor's professionals include: Scouler & Company
LLC as financial advisors; Krieg DeVault LLP as special
compliance counsel.
Hawaii Medical Center disclosed $74,713,475 in assets and
$91,112,280 in liabilities as of the Chapter 11 filing. The
petitions were signed by Kenneth J. Silva, member of the board of
directors.
Tiffany L. Carroll, Acting U.S. Trustee for Region 15, appointed
five members to the Official Committee of Unsecured Creditors in
the Debtors' cases. Attorneys at Wagner Choi & Verbrugge, in
Honolulu, Hawaii, and Pachulski Stang Ziehl & Jones LLP, in Los
Angeles, represent the Official Committee of Unsecured Creditors
as counsel.
The Debtors' prepetition debt structure is comprised of (i) the
Prepetition Revolving Loan with MidCap Financial, LLC, and the
Prepetition Term Loan with St. Francis Healthcare Systems of
Hawaii. As of the petition Dte, the aggregate outstanding
principal on the Prepetion MidCap Revolving Loan and the
Prepetition St. Francis Term Loan is approximately $46,851,772.
The principal balance of the Prepetion MidCap Revolving Loan is
approximately $7,676,495. The amount owed under the Prepetition
St. Francis Term Loan is approximately $39,175,277, secured by St.
Francis's first priority lien on, among other things, all real
property of the Debtors.
Through this Chapter 11 filing, the Debtors plan to return the
hospitals to the control of St. Francis.
In the prior case, HMC and its affiliated debtors were converted
to new, Hawaii non-profit corporations. CHA Hawaii, one of HMC's
affiliated debtors and a subsidiary of Cardiovascular Hospitals of
America, LLC, discontinued management of the reorganized Debtors.
Wichita, Kansas-based CHA Hawaii LLC, and its affiliates --
including Hawaii Medical Center LLC -- filed for Chapter 11
protection on Aug. 29, 2008 (Bankr. D. Del. Case No. 08-12027).
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP
represented the Debtors in their restructuring efforts. CHA
Hawaii estimated assets of up to $10 million and debts between
$50 million and $100 million when it filed for bankruptcy. The
Debtors obtained confirmation of their Chapter 11 plan in May 2010
and emerged from bankruptcy in August 2010.
HILL COUNTRY: Case Summary & 14 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Hill Country MRI Partners I Ltd.
128 W. Bandera, Suite 4
Boerne, TX 78006
Bankruptcy Case No.: 11-52946
Chapter 11 Petition Date:
Court: United States Bankruptcy Court
Western District of Texas (San Antonio)
Judge: Ronald B. King
Debtor's Counsel: J. Todd Malaise, Esq.
MALAISE LAW FIRM
909 NE Loop 410, Suite 300
San Antonio, TX 78209
Tel: (210) 732-6699
Fax: (210) 732-5826
E-mail: notices@malaiselawfirm.com
Scheduled Assets: $87,654
Scheduled Debts: $1,091,955
A list of the Company's 14 largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/txwb11-52946.pdf
The petition was signed by Terry Riely, CFO.
HOSTESS BRAND: Hires Jones Day, Perella for Restructuring Advice
----------------------------------------------------------------
Mike Spector, writing for The Wall Street Journal, reports that
people familiar with the matter said the maker of Twinkies and
Wonder Bread has once again hired restructuring advisers amid
continued struggles. The sources said Hostess Brands Inc.,
formerly Interstate Bakeries, tapped law firm Jones Day and
financial-services firm Perella Weinberg Partners to negotiate
with creditors and attempt to rework the company's finances.
The sources told the Journal that Jones Day has been advising
Hostess for several months, while Perella was hired within the
last month.
The sources said among Hostess's advisers is Corinne Ball, the
Jones Day lawyer who represented Chrysler Group LLC during its
historic bankruptcy case. Ms. Ball has advised auto-supplier Dana
Corp. and others on renegotiating union contracts during
bankruptcy reorganizations.
The sources told the Journal that no restructuring is imminent for
Hostess, and detailed discussions haven't been held with
creditors. The sources told the Journal that Hostess has adequate
cash to operate in the near term.
The Journal relates Hostess's creditors include General Electric
Co.'s finance arm and hedge funds Silver Point Capital and Monarch
Alternative Capital. Silver Point and Monarch also own equity.
The Journal's sources also noted that Silver Point, Monarch and
others loaned Hostess $20 million in the past two weeks. They
also said Ripplewood Holdings, the company's private-equity owner,
loaned Hostess $30 million in March and invested another $10
million in equity in June to give the firm a cushion.
The Journal says spokespeople for Ripplewood and Hostess declined
to comment.
The sources also noted that Hostess has made contingency plans for
a Chapter 11 bankruptcy filing, though that doesn't necessarily
mean Hostess will seek bankruptcy protection.
The sources also said Hostess is trying to renegotiate hundreds of
separate labor contracts to lower costs and could end up seeking
bankruptcy protection to do so if unable to reach agreements with
unionized workers outside of court. One person close to the
situation said Hostess, if it decided to file, would try for a so-
called prepackaged bankruptcy that had advanced support from
creditors and limited the company's stay in court.
About Hostess Brands
Hostess Brands Inc., formerly Interstate Bakeries Corporation, is
a wholesale baker and distributor of fresh-baked bread and sweet
goods, under various national brand names, including Wonder(R),
Baker's Inn(R), Merita(R), Hostess(R) and Drake's(R).
Interstate Bakeries and eight of its subsidiaries and affiliates
filed for chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo.
Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory,
Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors first filed their Chapter 11 Plan and Disclosure
Statement on Nov. 5, 2007. On Jan. 30, 2008, the Debtors received
court approval of the disclosure statement explaining their first
amended plan. IBC did not receive any qualifying alternative
proposals for funding its plan in accordance with the court-
approved alternative proposal procedures.
The Debtors, on Oct. 4, 2008, filed another Plan, which
contemplates IBC's emergence from Chapter 11 as a stand-alone
company. The filing of the Plan was made in connection with the
plan funding commitments, on Sept. 12, 2008, from an affiliate of
Ripplewood Holdings L.L.C. and from Silver Point Finance, LLC, and
Monarch Master Funding Ltd.
On Dec. 5, 2008, the Bankruptcy Court confirmed IBC's Amended
New Joint Plan of Reorganization. The plan was filed Oct. 31,
2008. The exit financings that form the basis for the Plan are
reflected in corresponding debt and equity commitments.
Interstate Bakeries emerged from Chapter 11 on Feb. 3, 2009.
Upon emergence, the Company moved its headquarters from Kansas
City, Missouri, to Dallas, Texas. A Creditors Trust was
established under terms of the Debtors' confirmed Chapter 11 Plan.
U.S. Bank National Association was appointed as Trustee.
IMUA BLUEHENS: Won Access to Cash Collateral for August
-------------------------------------------------------
On Aug. 10, 2011, the U.S. Bankruptcy Bankruptcy Court for the
District of Hawaii entered a second interim order granting Imua
Bluhens, LLC, authorization to use cash collateral of GCCF 2007-
GG11 Ka Uka Boulevard, LLC and the Department of Taxation, State
of Hawaii, until the earliest of (i) the close of business on Aug.
29, 2011, or (ii) the conclusion of the next continued hearing on
cash collateral or final hearing, subject to the termination
provisions of this second interim order.
As of the Petition Date, the Debtor is indebted to Noteholder in
the original loan amount of $10,250,000, including accrued and
unaccrued interest, costs and fees, secured by a first priority
mortgage and an assignment of rents and leases against the
Debtor's property located at 94-1201 Ka Uka Boulevard, Waipahu,
Hawaii, being a shopping center commonly known as Laniakea Plaza.
The Department claims a junior statutory liens against all of the
Debtor's property, pursuant to a Certificate of Tax Lien at the
Bureau of Conveyances, State of Hawaii dated Dec. 14, 2010.
The Debtor is authorized to use cash collateral only for payment
of items set forth in a budget, with a permitted variance of 20%
aggregate (and not line-item) on a rolling forward, cumulative
basis. The Debtor is prohibited from paying any professional
fees, including attorneys fees from cash collateral.
As adequate protection, the Noteholder and the Department are
granted:
(a) Debtor will pay the Noteholder the amount of $30,000 per month
from post-petition rents, until further of the Court.
(b) The Noteholder and the Department are granted Replacement
Liens in all of the Debtor's accounts created from and after the
Petition Date and all of the Debtor's right, title and interest
under the Pre-Petititon Collateral.
(c) Subject only to a carve-out, if any, the Secured Loan
Obligastions are granted and entitled to status as an
administrative expense claim pursuant to Section 507(b) of the
Bankruptcy Code.
The Final Hearing or alternatively the Third Interim Hearing on
the Cash Collateral Motion is schedules for Aug. 29, 2011, at 9:30
a.m.
About Imua Bluehen
Honolulu, Hawaii-based Imua Bluehens, LLC, owns the Laniakea
Plaza, a commercial retail operation. Imua Bluehens filed for
Chapter 11 bankruptcy (Bankr. D. Hawaii Case No. 11-01721) on June
17, 2011. Judge Robert J. Faris presides over the case. The
petition was signed by James K. Kai, manager. Jerrold K. Guben,
Esq., and Jeffery S. Flores, Esq., at O'Connor Playdon & Guben
LLP, in Honolulu, Hawaii, represent the Debtor as counsel. In its
amended schedules, the Debtor disclosed $12,169,600 in assets and
$16,864,405 in liabilities.
No official committee of unsecured creditors or other statutory
committee has been formed.
INNKEEPERS USA: Cerberus, Chatham Face October 10 Trial
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Innkeepers USA Trust can have a trial on Oct. 10 to
decide if Cerberus Capital Management LP and Chatham Lodging Trust
had the right to terminate an agreement to buy 64 hotels in a
$1.12 billion acquisition. If Innkeepers can't force the buyers
to complete the sale, the Chapter 11 plan confirmed on June 29
could unravel.
Cerberus Sale Collapses
In June 2011, the Bankruptcy Court confirmed Innkeepers' chapter
11 plan of reorganization. The Plan is premised on the sale of
the Company's hotel portfolio.
A joint venture between the private-equity firm Cerberus Capital
Management, L.P. and the real estate investment trust Chatham
Lodging agreed to purchase for roughly $1.12 billion the equity in
entities that own and operate 65 of the Company's hotels.
Cerberus and Chatham agreed to pay $400.5 million cash and assume
about $723.8 million mortgage debt for the hotels. Chatham
Lodging also agreed to purchase for $195 million, five of the
Company's hotels that serve as collateral for loan trusts serviced
by LNR Partners LLC. The deal for the five hotels closed in July
2011.
Cerberus and Chatham on Aug. 19 terminated a deal to acquire a
portfolio of Innkeepers USA Trust's hotels. In a statement,
Cerberus and Chatham said they had abandoned the deal "as a result
of the occurrence of a condition, change or development that could
reasonably be expected to have a material adverse effect" on
Innkeepers' business, operations or financial condition, among
other things.
The deal had a Sept. 15, 2011 deadline to close. Cerberus and
Chatham are required to pay a $20 million termination fee under
the bankruptcy court-approved asset purchase agreement.
Innkeepers insists that no changes have occurred to the hotel
owner's business that would trigger the "material adverse effect"
clause in the buyout's contract.
The Debtors have filed a complaint against Cerberus, Chatham
Lodging Trust and other related defendants for breach of contract
and other claims for reneging on their commitment to acquire 64
hotels from Innkeepers. The lawsuit is Innkeepers USA Trust v.
Cerberus Four Holdings LLC (In re Innkeepers USA Trust), 11-02557,
U.S. Bankruptcy Court, Southern District New York (Manhattan).
About Innkeepers USA Trust
Innkeepers USA Trust is a self-administered Maryland real estate
investment trust with a primary business focus on acquiring
premium-branded upscale extended-stay, mid-priced limited service,
and select-service hotels.
Innkeepers, through its indirect subsidiaries, owns and operates
an expansive portfolio of 72 upscale and mid-priced extended-stay
and select-service hotels, consisting of approximately 10,000
rooms, located in 20 states across the United States.
Apollo Investment Corporation acquired Innkeepers in June 2007.
Innkeepers USA Trust and 91 affiliates filed for Chapter 11
protection (Bankr. S.D.N.Y. Case No. 10-13800) on July 19, 2010.
The Company's consolidated assets for 2009 totaled approximately
$1.5 billion. As of July 19, 2010, the Company and its affiliates
have incurred $1.29 billion of secured debt.
Paul M. Basta, Esq., at Kirkland & Ellis LLP, in New York; Anup
Sathy, P.C., Esq., Marc J. Carmel, Esq., at Kirkland & Ellis in
Chicago; and Daniel T. Donovan, Esq., at Kirkland & Ellis in
Washington, D.C., serve as counsel to the Debtors. AlixPartners
is the restructuring advisor and Marc A. Beilinson is the chief
restructuring officer. Moelis & Company is the financial advisor.
Omni Management Group, LLC, is the claims and notice agent.
Attorneys at Morrison & Foerster, LLP, represent the Official
Committee of Unsecured Creditors.
INNOVIDA HOLDINGS: Osorio Reaches Deal With Chapter 11 Trustee
--------------------------------------------------------------
The South Florida Business Journal reports that Claudio Osorio
reached an undisclosed agreement with the bankruptcy court trustee
overseeing his former company, InnoVida.
According to the report, Mr. Osorio and his attorneys met with the
Chapter 11 trustee, Mark Meland, for two hours in the hallways of
the bankruptcy court in Miami after U.S. Bankruptcy Judge Robert
Mark told them they had to reach an agreement that day.
The report says the agreement includes promises that Mr. Osorio
will launch some kind of new company, but the nature of that
company has not been disclosed. InnoVida manufactured
construction panels from fiber composite material, mostly for low-
income housing. But many of its assets, machinery and patents
were sold to a subsidiary of Brazilian conglomerate Inepar.
The journal says Mr. Osorio has faced many deadlines in investor
lawsuits and in his bankruptcy to either prove he has money in the
bank or that he can start a new business. In March, Miami Dade
Circuit Judge Valerie Manno Schurr stripped Osorio of control over
InnoVida after he failed repeatedly to meet certain deadlines.
That case was a lawsuit filed by investor and Miami Beach
businessman Chris Korge.
The report notes, if an agreement was not reached on Tuesday, the
InnoVida bankruptcy and Osorio's personal bankruptcy would have
been converted to Chapter 7 liquidations, which would have
stripped Osorio of control over his remaining assets, including
his $10 million home on Star Island.
Mr. Meland's attorney, Michael Budwick, said Osorio had signed a
term sheet outlining a deal, but the final details wouldn't be
disclosed until a bankruptcy reorganization plan is filed with the
court on September 15.
"The trustee's support for the terms is based on input from the
creditor's committee," Business Journal quotes Mr. Budwig as
saying. He added that Osorio didn't "want the terms publicly
discussed."
The report says At least one creditor is opposed to Osorio's
bankruptcy plan. Korge's attorney told Mark Tuesday that a
businessman facing investor fraud allegations should not be
allowed to reorganize under Chapter 11. Korge sued Osorio after
losing more than $4 million in InnoVida investments.
Attorneys also told Judge Mark that Osorio has agreed to have his
home auctioned and to provide some of the proceeds for launch of
the new company. One issue still to be resolved: Osorio has been
fighting Meland's requests to turn over emails to his former
attorney, Robert Zarco, regarding the Korge lawsuit.
About InnoVida and Osorio
Receiver Mark S. Meland, at Meland Russin & Budwick, PA, filed a
Chapter 11 petition for InnoVida Holdings, LLC, fdba COEG, LLC
(Bankr. S.D. Fla. Case No. 11-17702) on March 24, 2011. Separate
Chapter 11 petitions were also filed for these affiliates:
InnoVida MRD, LLC (Case No. 11-17704), InnoVida Services, Inc.
(Case No. 11-17705), and InnoVida Southeast, LLC (Case No. 11-
17706). Peter D. Russin, Esq., at Meland Russin & Budwick, P.A.,
serves as bankruptcy counsel. InnoVida Holdings has under $50,000
in assets and $10 million to $50 million in debts, according to
the petition.
Founder Claudio Eleazar and Amarilis Osorio filed a separate
Chapter 11 petition (Bankr. S.D. Fla. Case No. 11-17075) on
March 17, 2011. Mr. Osorios is being accused of fraud and
mismanagement.
Bankruptcy Judge Robert A. Mark in Miami authorized the
appointment of Mark S. Meland as trustee for InnoVida.
Mr. Meland, who had been serving as a receiver for the business in
the wake of the allegations against Mr. Osorio, was the one who
ushered InnoVida into bankruptcy.
According to DBR, the ruling paved the way for the federal
bankruptcy watchdog assigned to the case to place Mark S. Meland
in the role. Mr. Meland, who had been serving as a receiver for
the business in the wake of the allegations against Mr. Osorio,
was the one who ushered InnoVida into bankruptcy on March 24.
JCE DELAWARE: Has Interim Access to First State Bank's Cash
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Texas
authorized, on an interim basis, JCE Delaware, Inc., et al., to
use the cash collateral and obtain debtor-in-possession financing.
The Debtors sought permission to use funds generated from their
business of operations to complete existing construction contracts
and operate the 700 acre quarry in Williamson County and
approximately 28 acres in and around the Debtors' operating
facility in Leander, Texas, Williamson County. The Debtors will
use the $5 million from the Bonding Company to pay any shortfalls
in the costs of completing the existing construction projects and
operating the Debtors.
The Debtors requested that the Court authorize the extension of
cash collateral use until Oct. 15, 2011, and provides protections
to First State Bank of Central Texas.
In return, the Debtors will provide these protections:
a) Cash Collateral Adequate Assurance: Postpetition replacement
liens on the accounts receivables generated from
postpetition collections of receivables, and continuation of
prepetition liens with the same effect, priority and
security as existed prepetition.
b) DIP Financing Loan: (i) Superpriority administrative claim
for amount of DIP loan advances; (ii) lien on unencumbered
assets and junior lien on all other assets; (iii) lien on
real estate assets as to which the Bank has a first lien, on
a pari passu basis with the Bank.
Objection
Secured creditor First State Bank Central Texas asks that the
Court reconsider interim order granting the Debtors' motion for
cash collateral use and obtain financing because: (1) the Debtors
offered insufficient evidence to satisfy the elements required to
obtain relief; and/or (2) the Court erroneously applied the
elements of section 364(d) of the Bankruptcy Code to the evidence
presented.
The bank holds a first lien on most of the Debtors' assets
including, without limitation, real estate, equipment, inventory,
and accounts receivable (excluding accounts receivable related to
bonded construction projects upon which the Bank would have a
second lien behind the bonding company).
The bank, in a separate motion, also requested that the Court
require the Debtors to provide information and adequate
protection.
In consideration of the Court granting the Debtors relief, the
Bank requested these adequate protection:
1) the Debtors must be required to provide the Bank written
notice of the amount of any advance made by the postpetition
lender to the Debtors within one business day after such
advance is made;
2) that a procedure be established to provide that the Debtors
will repay any advances made by the post-petition lender
from postpetition receivables; and
3) adequate protection payments by the Debtors to the Bank in
the amount of the interest accruing on the bank's debt.
The bank is represented by:
HALEY & OLSON, P.C.
Shad Robinson, Esq.
Blake Rasner, Esq.
510 North Valley Mills Drive, Suite 600
Waco, Texas 76710
Tel: (254) 776-3336
Fax: (254) 776-6823
E-mail: srobinson@haleyolson.com
brasner@haleyolson.com
About J.C. Evans Construction
With roots stretching back over 55 years, J.C. Evans is a heavy
equipment construction company based in Leander, Texas. Through
J.C. Evans Construction Co., L.P., a Texas limited partnership
d/b/a/ American Aggregates, the Company owns and operates a
construction company specializing in heavy site preparation on
commercial, pipeline, utility and highway projects, including
excavating, trenching, site preparation and construction. Through
Adkins Land Development, L.P., a Texas limited partnership, the
Company owns a 700-acre quarry, which produces aggregate for use
in road construction.
J.C. Evans Construction Holdings is the holding company that owns
directly or indirectly each of the other entities. In turn,
Holdings is owned by a trust for the benefit of the current and
former employees of J.C. Evans through an Employee Stock Ownership
Plan.
Six affiliated companies filed for Chapter 11 (Bankr. W.D. Tex.
Case Nos. 11-11926 to 11-11931) on Aug. 1, 2011. These are JCE
Delaware Inc., J.C. Evans Construction Holdings, J.C. Evans
Nevada, LLC, EQUUS Development Inc., J.C. Evans Construction and
Adkins Land Development. The cases are jointly administered
before Judge Craig A. Gargotta. George H. Tarpley, Esq., and
Mark E. Andrews, Esq., at Cox Smith Matthews Incorporated, serve
as bankruptcy counsel. In its petition, JCE Delaware estimated
$50 million to $100 million in both assets and debts.
KOOSHAREM CORP: Moody's Lowers Corp. Family Rating to 'Caa3'
------------------------------------------------------------
Moody's Investors Service downgraded Koosharem Corporation's (dba
Select Staffing, "Select") corporate family rating to Caa3 from
Caa2 and the probability of default rating to Ca from Caa3.
Moody's also downgraded the rating on the company's first lien
senior secured credit facilities to Caa2 from Caa1, but affirmed
the rating on the second lien term loan at Ca. The ratings outlook
remains negative.
Ratings downgraded and to be withdrawn:
Corporate Family Rating to Caa3 from Caa2;
Probability-of-Default Rating to Ca from Caa3;
Senior secured first lien revolving credit facility to Caa2 (LGD2,
21%) from Caa1 (LGD2, 23%);
Senior secured first lien term loan to Caa2 (LGD2, 21%) from Caa1
(LGD2, 23%).
Rating affirmed and to be withdrawn:
Senior secured second lien term loan at Ca (LGD5, 70%). Point
estimate revised from (LGD5, 72%).
RATINGS RATIONALE
The downgrade of Select's corporate family and probability-of-
default ratings reflects the very high risk of a debt
restructuring due to the company's high leverage, substantial
interest burden, and weak liquidity that is only supported by a
modest cash balance. Select's cash balance would not be sufficient
to cover its debt obligations in the event that lenders
accelerated repayment. Since December 2010, the company has been
in technical default of its first and second lien credit
agreements due to its failure to deliver audited financials for
2009.
Koosharem Corporation, headquartered in Santa Barbara, California,
is a privately-held staffing services business.
Moody's will withdraw the ratings because it believes it has
insufficient or otherwise inadequate information to support the
maintenance of the rating.
KOREA TECHNOLOGY: Eyes Sale, Wants Plan Confirmed by Mid-October
----------------------------------------------------------------
Korea Technology Industry America, Inc., Uintah Basin Resources,
LLC, and Crown Asphalt Ridge, L.L.C., said in court filings they
intend to seek confirmation of a plan of reorganization by mid-
October 2011 to facilitate a favorable sale of the Debtors'
assets. They said this timetable will require expedited filing
and Court consideration of a plan of reorganization and a
disclosure statement.
To accommodate this schedule, the Debtors are asking the Court for
a shorter deadline for creditors to file proofs of claim. The
Debtors propose a claims bar date that is 30 days after the first
date set for the meeting of creditors under section 341 of the
Bankruptcy Code.
The United States Trustee in Salt Lake City has called for a Sec.
341(a) meeting on Sept. 15. The notice of the meeting states that
proofs of claim are due by Oct. 15 and government proofs of claim
are due by Feb. 18, 2012.
The Debtors do not believe that there will be large claims by
governmental units and that the later bar date for governmental
units will not affect consideration or confirmation of a plan.
The Debtors' court papers indicate that total debt is in excess of
$31 million principal amount, but over $27 million of this debt is
held by 10 creditors. Most of the large creditors in the Debtors'
cases have been actively involved in discussions regarding the
resolution of the matters involving the Debtors' assets and
business and an ad hoc committee consisting of many of these
substantial creditors has functioned.
About KTIA, UBR and CAR
Korea Technology Industry America, Inc., is a subsidiary of Seoul-
based Korea Technology Industry Co. that tried to squeeze crude
oil from Utah's sandy ridges. Korea Technology Industry America,
Uintah Basin Resources LLC, and Crown Asphalt Ridge L.L.C., filed
separate Chapter 11 bankruptcy petitions (Bankr. D. Utah Case Nos.
11-32259, 11-32261, and 11-32264) on Aug. 22, 2011. The cases are
jointly administered under KTIA's case. Steven J. McCardell,
Esq., and Kenneth L. Cannon II, Esq., at Durham Jones & Pinegar,
in Salt Lake City, serve as the Debtors' counsel. Each of the
Debtors estimated assets and debts of $10 million to $50 million.
KOREA TECHNOLOGY: Sec. 341 Creditors' Meeting Set for Sept. 15
--------------------------------------------------------------
The United States Trustee for the District of Utah in Salt Lake
City will convene a Meeting of Creditors pursuant to Sec. 341(a)
of the Bankruptcy Code in the Chapter 11 cases of Korea Technology
Industry America, Inc., Uintah Basin Resources, LLC, and Crown
Asphalt Ridge, L.L.C., on Sept. 15, 2011, at 405 South Main.
The debtor's representative must be present at the meeting to be
questioned under oath by the trustee and by creditors. Creditors
are welcome to attend, but are not required to do so. The meeting
may be continued and concluded at a later date without further
notice. The court, after notice and a hearing, may order that the
United States trustee not convene the meeting if the debtor has
filed a plan for which the debtor solicited acceptances before
filing the case.
About KTIA, UBR and CAR
Korea Technology Industry America, Inc., is a subsidiary of Seoul-
based Korea Technology Industry Co. that tried to squeeze crude
oil from Utah's sandy ridges. Korea Technology Industry America,
Uintah Basin Resources LLC, and Crown Asphalt Ridge L.L.C., filed
separate Chapter 11 bankruptcy petitions (Bankr. D. Utah Case Nos.
11-32259, 11-32261, and 11-32264) on Aug. 22, 2011. The cases are
jointly administered under KTIA's case. Steven J. McCardell,
Esq., and Kenneth L. Cannon II, Esq., at Durham Jones & Pinegar,
in Salt Lake City, serve as the Debtors' counsel. Each of the
Debtors estimated assets and debts of $10 million to $50 million.
LABELCORP HOLDINGS: Moody's Keeps 'B2' After York Label Deal
------------------------------------------------------------
Moody's Investors Service commented that the B2 corporate family
rating of LabelCorp Holdings, Inc.'s remains unchanged following
the announcement that Multi-Color Corporation has agreed to
acquire York Label for $356 million, which is roughly 1.7x sales.
For more information, please refer to Moodys.com.
The principal methodology used in rating LabelCorp Holdings, Inc.
was the Global Heavy Manufacturing Rating Methodology published in
November 2009. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Headquartered in Omaha, Nebraska, LabelCorp Holdings, Inc.
manufactures prime, pressure sensitive labels for the food &
beverage, consumer products, wine & spirits and healthcare
industries located in North and South America. York has been a
portfolio company of Diamond Castle Holdings, LLC since August
2008. Revenue for the twelve months ended March 31, 2011 was
approximately $209 million.
LEHMAN BROTHERS: To Seek Plan Confirmation in December
------------------------------------------------------
Lehman Brothers Holdings Inc. and its affiliated debtors are now
a step closer to emerging from bankruptcy protection after
getting court approval of an outline of their Chapter 11 plan.
Judge James Peck of the U.S. Bankruptcy Court for the Southern
District of New York approved the disclosure statement,
which outlines the major provisions of Lehman's $65 billion
liquidation plan.
In a 23-page order dated August 30, 2011, Judge Peck held that
the disclosure statement contains "adequate information" for
creditors to decide on whether to support the proposed plan.
The bankruptcy judge overruled all objections to the disclosure
statement that have not been withdrawn or settled, and those that
will be considered at the hearing on the confirmation of the plan
scheduled for December 6, 2011.
LBHI was also given the go-signal to begin the solicitation of
votes from creditors on September 23, 2011. The company needs to
obtain a majority of votes accepting the plan and a court order
confirming the plan to finally emerge from bankruptcy protection.
Creditors entitled to vote have until November 4, 2011, to cast
their ballots. They are required to follow a process governing
the solicitation of votes, which Judge Peck also approved in his
August 30 order.
The effective date for emergence from bankruptcy protection and
beginning distributions to creditors will take place following
confirmation of the plan.
To date, more than 45 creditors of Lehman asserting claims in
excess of $130 billion have executed so-called plan support
agreements. These include two new agreements announced yesterday
in court with affiliates in Singapore and the Netherlands,
according to a statement issued by the company.
"Our goal from the start of this case has been to move
expeditiously toward an economic compromise that would allow for
prompt distributions to creditors," LBHI's Chief Executive
Officer Bryan Marsal said in the statement. "The approval of the
disclosure statement by Judge Peck is a major milestone as we
move toward that objective."
Judge Peck said Lehman's success in getting to this stage in the
case "borders on the miraculous. Heroic efforts have achieved a
very important transition point in the case," Bloomberg News
quoted him as saying.
A full-text copy of the Disclosure Statement Order is available
for free at http://bankrupt.com/misc/LBHI_DSApprovalOrder.pdf
The proposed plan would enable LBHI and its affiliated debtors to
pay an estimated $65 billion to their creditors.
Under the plan, LBHI's senior unsecured creditors which have an
estimated $83.724 billion in claims would recover 21.1% of their
claims, down from 21.4% in the previous proposal filed by the
company early this year. Meanwhile, the company's general
unsecured creditors, which have an estimated $11.39 billion in
claims, would recover 19.9% of their claims, up from 19.8% in the
prior proposal.
Debtor Addressed Disclosures Objection
Creditors and the U.S. Trustee, a Justice Department agency that
oversees bankruptcy cases, complained over the lack of information
contained in the disclosure statement, which provides description
of the company's proposed Chapter 11 plan.
LBHI answered each of the objections point-by-point. Among those
addressed by the company are the 23 deficiencies cited by the U.S.
Trustee including the lack of information on how the Lehman plan
differs from the two rival plans proposed by creditors and
shortage of detail on plans to LAMCO LLC, the entity created to
manage Lehman assets.
In court papers, Harvey Miller, Esq., at Weil Gotshal & Manges
LLP, in New York, asked Judge Peck to overrule the U.S. Trustee's
objection that the disclosure statement does not include
information about the competing plans.
Citing Section 1125 of the Bankruptcy Code, Mr. Miller argued
that the provision does not require the inclusion of information
as to other possible or alternative plans in a disclosure
statement.
With respect to LAMCO, Mr. Miller said that its functions and
compensation will be determined by the boards of directors of
entities that may tap its services.
LBHI also added language to the disclosure statement, clarifying
that any assets of the company that will be transferred to so-
called collateralized loan obligation (CLO) issuers will no
longer be managed by LAMCO, according to the Lehman lawyer.
Earlier, Judge Peck gave the company a go-signal to enter into an
asset management agreement with WCAS/Fraser Sullivan Investment
Management LLC, which anticipates the transfer of some of its
assets to CLO issuers.
A summary of LBHI's responses to the objections is available for
free at http://bankrupt.com/misc/LBHI_SummaryRespDSObjections.pdf
LBHI also made revisions to the disclosure statement to resolve
objections from Wilmington Trust Company, Bundesverband deutscher
Banken e.V., Deutsche Bundesbank, Sumitomo Mitsui Banking Corp.,
Anchorage Capital Group LLC, Monarch Alternative Capital LP,
Danske Bank A/S London Branch, and a group of pension trusts and
funds led by the Alameda County Employees' Retirement
Association.
Full-text copies of the revised Lehman plan and disclosure
statement are available without charge at:
http://bankrupt.com/misc/LBHI_Revised2ndAmPlan082411.pdf
http://bankrupt.com/misc/LBHI_RevisedDS082411.pdf
Plan Confirmation Objections
Mr. Miller noted that many of the objections were directed to the
confirmability of the Lehman plan and not to the adequacy of
information in the disclosure statement.
The objections, including those filed by Wells Fargo Bank
Northwest N.A. and OMX Timber Finance Investments II LLC
recently, questioned the Bankruptcy Court's lack of authority to
implement the compromises proposed under the plan and the
inadequate justification for the compromises.
Mr. Miller proposed that those objections be considered at the
hearing on the confirmation of the plan and not at the hearing to
consider approval of the disclosure statement, which is scheduled
for August 30, 2011.
Meanwhile, the ad hoc group of Lehman Brothers creditors, one of
the proponents of the competing plans, asked the bankruptcy judge
to overrule objections from creditors who questioned the lack of
information about the proposed settlement of claims between the
company and its affiliates.
Lehman Draws Support from Committee, et al.
The Official Committee of Unsecured Creditors expressed its
support for court approval of the disclosure statement, saying it
contains adequate information as required by Section 1125 of the
Bankruptcy Code.
"The disclosure statement, as amended in response to the
objections and updated to reflect recent developments, provides a
sufficient basis for a creditor to make an informed decision to
vote on the plan," the panel said in court papers.
The Creditors Committee proposed that the objections which
question the validity and fairness of the plan's provisions be
addressed at the confirmation hearing and not at the August 30
hearing.
LBHI also garnered support from creditors that have executed so-
called plan support agreements with the company. Among them are
Davidson Kempner Capital Management LLC, King Street Capital
Management LP, Morgan Stanley & Co. International plc, Morgan
Stanley Capital Services LLC and Morgan Stanley Capital Group
Inc.
Meanwhile, lawyers for LBHI's U.K.-based affiliates including
Lehman Brothers International Europe, have filed court papers to
reserve their rights to object to the confirmation of the plan.
Canary Wharf Won't Vote Against Plan
Canary Wharf Group Plc withdrew a threat to vote against the
plan, and cut its claims against LBHI after the company agreed to
reserve money to pay the obligations, according to an August 23,
2011 report by Bloomberg News.
Canary Wharf will reduce its claims to $780 million from $4.5
billion. In exchange, LBHI will put aside enough money to pay
"the maximum allowed amount" of the claims, the report said.
Lehman, once Canary Wharf's largest tenant, occupied more than
93,000 square meters of office space at London's 20-25 Bank
Street in 2003 on a 30-year lease. Canary Wharf Group filed
three claims in 2009, including one for $4.3 billion in rent and
charges for units on Heron Quays. The Heron Quays claim was
reduced to $770 million, Bloomberg News reported.
D.E. Shaw, et al., Support Plan Approval
In a related development, a group of creditors led by D.E. Shaw
Composite Portfolios LLC expressed support for the approval of
the disclosure statement.
The D.E. Shaw creditors are among those Lehman creditors that
entered into a plan support agreement with LBHI. Under the PSA,
they are required to file a statement in support of the approval
of the disclosure statement.
Meanwhile, PricewaterhouseCoopers AG, the liquidator of Lehman
Brothers Finance AG, dropped its objection to approval of the
disclosure statement.
The move came after LBHI agreed to insert additional language
into the disclosure statement and to notify LBF before
September 16, 2011, if the company has an objection to its claims
in connection with voting on the plan.
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: Ex-CEO Wants Insurance to Pay $90MM Legal Costs
----------------------------------------------------------------
Richard Fuld Jr. and 13 other former and current officials of
Lehman Brothers Holdings Inc. seek court ruling authorizing seven
insurance firms to pay $90 million to settle a shareholder
lawsuit in New York.
The insurance firms are ACE Bermuda Insurance Ltd., St. Paul
Mercury Insurance Company, Axis Reinsurance Company, Liberty
Mutual Insurance Company, Arch Insurance Company, Allied World
Assurance Company, and Endurance Specialty Insurance Ltd. The
firms are Lehman's excess insurers under its 2007-2008 directors'
and officers' liability insurance program, according to court
filings.
Earlier Mr. Fuld, former Lehman chief executive officer, and the
other officials reached an agreement with a group of investors to
settle the lawsuit, styled In re Lehman Brothers Equity/Debt
Securities Litigation.
The lawsuit alleged that the Lehman officials including former
executives Erin Callan, Christopher O'Meara and Ian Lowitt,
misled the investors about the company's financial condition
before its bankruptcy.
If the request is approved, the Lehman officials will not
personally bear any expense in resolving the case. They would
also neither admit nor deny wrongdoing, according to an
August 25, 2011 report by The New York Times.
The settlement, which is the biggest investor lawsuit to date
against Lehman's top officials, would not affect the status of
any ongoing government investigations of the company and its
management, the report said.
The U.S. Securities and Exchange Commission and the justice
department are investigating Lehman's disclosures and its use of
an accounting technique known as Repo 105 that moved as much as
$50 billion in assets off its balance sheet, according to an
August 25, 2011 report by Financial Times.
The SEC may not file any charges against the former Lehman
executives if it determines the company did not violate U.S.
accounting standards and may opt instead to issue a public report
discussing their behavior, Financial Times reported.
In another motion, Mr. Fuld and his co-defendants in a lawsuit
filed by the state of New Jersey ask Judge James Peck to allow
ACE Bermuda and St. Paul Mercury to pay $8.25 million to settle
the lawsuit.
Lawyers say it is common for insurance proceeds to cover
corporate directors and officers in shareholders' lawsuits.
"It is unusual for individual executives to pay out of their own
pockets," The New York Times quoted Kevin Lacroix, a lawyer and
author of the D&O Diary blog as saying. "Companies buy insurance
for exactly a situation like this where it is insolvent and
cannot indemnify their directors and officers."
Judge Peck will hold a hearing on September 14, 2011, to consider
approval of the requests. The deadline for filing objections is
September 7, 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: Asks for Nod of Revised MetLife Deal
-----------------------------------------------------
Lehman Brothers Holdings Inc. and Lehman Commercial Paper Inc.
seek court approval to revise the terms of the settlement it
entered into with Metropolitan Life Insurance Company.
To recall, LCPI and MetLife entered into the deal to settle their
dispute by amending the note purchase agreements and other
documents MetLife executed with Variable Funding Trust 2007-1 and
Variable Funding Trust 2008-1.
The note purchase agreements required both securitization trusts
to issue notes to MetLife in return for up to $500 million loan
to each trust. Repayment of the notes is guaranteed by Lehman
Brothers Holdings Inc., and is secured by collateral in the form
of mortgage loans and participations in corporate loans that LCPI
sold and assigned to VFT 2007 and VFT 2008, respectively.
The Lehman units proposed under the revised deal to change the
allocation of proceeds from the liquidation of the collateral.
Under the deal, LCPI would receive the first $471 million of
proceeds from the liquidation of the collateral as reimbursement
for the payments it made for the notes. LBHI would then receive
the next $221 million of proceeds as payment for the claims held
by the company against the trusts on account of the cash
collateral it posted.
Finally, LCPI would be entitled to receive residual proceeds
above the $692 million of aggregate proceeds on account of its
ownership of certificates issued by the trusts.
LCPI expects that there will be more than $692 million of
proceeds from the liquidation of the collateral, and therefore,
it will receive some distribution with respect to its residual
interest in the trusts, according to court filings.
The Court will hold a hearing on September 14, 2011, to consider
approval of the revised deal. The deadline for filings
objections is September 7, 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: Court OKs Creation of Credit-Worthy Guarantors
----------------------------------------------------------------
Lehman Brothers Holdings Inc. obtained a court order granting its
motion to create two "auditable credit-worthy" guarantors and
provide $50 million in cash to each guarantor.
Earlier, the Official Committee of Unsecured Creditors expressed
its support for the approval of the motion, saying there is a
need to create new guarantors since the company does not have a
subsidiary qualified to issue guarantees.
The Creditors' Committee further said that appropriate
arrangements have also been made with respect to the corporate
governance of the new Lehman subsidiaries, the allocation of the
benefits of the guarantees and the dissolution and return of the
capital invested in those subsidiaries.
Gregory Chastain, senior director at Alvarez & Marsal Real Estate
Advisory Services LLC, also expressed support for the approval of
the motion.
Currently, there are two real estate-related projects that are in
need of a credit-worthy guarantor. LBHI estimates that
approximately 19 real estate-related projects could need a
credit-worthy guarantor in order for the company to recover its
stake in those projects.
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: Court OKs State Street's $400MM Settlement
-----------------------------------------------------------
Judge James Peck approved an agreement to settle State Street
Bank and Trust Company's claims against Lehman Brothers Holdings
Inc. and Lehman Commercial Paper Inc.
The deal settles State Street Bank's $425 million claim against
each of the Lehman units, which stemmed from their 2007
repurchase agreement. Each claim will be reduced to $400 million
and will be allowed as general, unsecured, non-priority claim.
The deal also requires State Street Bank to drop the lawsuit it
brought against the Lehman units in connection with its claims
and calls for the mutual release of all claims arising under the
repurchase agreement.
Earlier, Gregory Chastain, a senior director with Alvarez &
Marsal Real Estate Advisory Services, LLC, filed a declaration in
support of the settlement.
Mr. Chastain said the Lehman units' entry into the settlement
agreement is in their best interests. He asserted that the
Lehman units may have substantial liabilities arising out of
State Street's deficiency claims, and the settlement agreement
obviates costly and protracted litigation with State Street,
which would require significant expenditures of both time and
resources by the Lehman units and their professionals.
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 Sues RBS for $345.9-Mil.
-----------------------------------------------------
James Giddens, the trustee appointed to liquidate Lehman Brothers
Holdings Inc.'s brokerage, sued The Royal Bank of Scotland Group
N.V., formerly known as ABN AMRO Bank N.V., for $345.9 million
over a 1998 swap agreement that was terminated early.
The swap agreement was terminated by ABN Amro Bank, now owned by
RBS, a week before Lehman filed for bankruptcy protection,
according to a complaint filed by the trustee with the U.S.
Bankruptcy Court in Manhattan.
The $345.9 million relates to 247 foreign currency transactions
that were outstanding when the deal was terminated. RBS
allegedly refused to pay because it claims a right to set that
amount off against amounts owed it by the brokerage and various
affiliates, Reuters reported.
Mr. Giddens said "the parties have reached an impasse" in talks
to resolve the dispute, according to the report.
Pre-trial conference on the adversary proceeding is set for
October 19, 2011, at 2:00 p.m. Answer is due by September 22.
The case is Giddens v. Royal Bank of Scotland NV, U.S. Bankruptcy
Court, Southern District of New York, No. 11-ap-02548.
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)
L.I.F.T. LLC: Involuntary Chapter 11 Case Summary
-------------------------------------------------
Alleged Debtor: L.I.F.T. (Louisiana Institute of
Film Technology), LLC
1924 Rue Burgundy
New Orleans, LA 70116
Case Number: 11-12806
Involuntary Chapter 11 Petition Date: August 26, 2011
Court: Eastern District of Louisiana (New Orleans)
Judge: Jerry A. Brown
Queen L.I.F.T. LLC's petitioner:
Petitioner Nature of Claim Claim Amount
---------- --------------- ------------
Malcolm Petal Loan $1,218,500
c/o Ruth Petal
3000 St. Charles Ave., #307
New Orleans, LA 70115
MAQ MANAGEMENT: Cannot Access Secured Creditors' Cash Collateral
----------------------------------------------------------------
The Hon. Erik P. Kimball of the U.S. Bankruptcy Court for the
Southern District of Florida granted, on a conditional basis,
Wauchula State Bank and 1st National Bank of South Florida's
request. The Court ruled that MAQ Management, Inc., et al., and
Super Stop Petroleum, Inc.:
-- are prohibited from using of any secured creditor's cash
collateral;
-- will segregate all cash collateral into separate debtor-in-
possession accounts; one for each creditor that has rents
included as part of their collateral;
-- will timely perform all obligations as debtors-in-possession
as required under the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure and the orders of this Court.
Secured creditor WSB asked the Court to, among other things:
i) prohibit the Debtors to use any of its cash collateral;
ii) require the Debtors to segregate all cash collateral in its
possession;
iii) require the Debtors to provide WSB with an accounting of
cash collateral receipts and disbursements since the filing
of the case (as to both the SSE lease and Lakeland Oil
lease; and
iv) require the Debtors to make payments of adequate protection.
WSB has a first priority mortgage on the Debtor Super Stop's
property located at 3510 Cleveland Heights Boulevard, Lakeland,
Florida.
As of the Petition Date, Super Stop owes WSB $366,870 on the 2003
loan documents and 2010 loan documents, both as consolidated and
modified, exclusive of attorney's fees, additional interest, late
charge and other charges.
WSB related that on Aug. 4, 2011, the Court entered the cash
collateral segregation order which provided that Super Stop will
segregate all cash collateral into separate debtor-in-possession
accounts.
Additionally, Super Stop, despite discussions of adequate
protection, has failed to tender any adequate protection payments
to WSB. WSB said that due to the apparent mismanagement of the
property, Super Stop's failure to provide postpetition budget for
the $5,000 monthly rent received and to be received, Super Stop's
failure to collect rents ad inconsistencies with the leases, its
is necessary for WSB to receive adequate protection payments.
In a separate motion, 1st National Bank of South Florida, sought
for relief from the automatic stay, or alternatively, for adequate
protection.
1st National is the owner and holder of two loans with Super Stop,
both of which are secured by first mortgages on four parcels of
real property owned by the Debtor.
As of the Petition Date, Super Stop owes WSB $546,290 on the 2002
Loan and $2,869,205 on the 2009 Loan, plus interest, court costs
and reasonable attorneys' fees.
According to 1st National, cause exits for granting relief from
the automatic stay to proceed with foreclosure actions. 1st
National noted that, among other things: (i) Super Stop's gross
mismanagement and business incompetence; (ii) Super Stop has
allowed various liens for code and environmental violations to be
recorded against 1st National's collateral; (iii) Super Stop has
entered into drastically below-market, long term leases with
suspiciously familiar entities on terms insufficient to permit the
servicing of 1st National's debt.
About MAQ Management
Based in Boca Raton, Florida, MAQ Management, Inc., and three
other affiliates serve as commercial landlords to convenience
stores and gas stations in primarily in South Florida. They filed
for Chapter 11 bankruptcy (Bankr. S.D. Fla. Cases No. 11-26571 to
11-26574) on June 15, 2011. Affiliates that sought Chapter 11
protection are Super Stop Petroleum, Inc., Super Stop Petroleum I,
Inc., and Super Stop Petroleum IV, Inc. Judge Erik P. Kimball
presides over the case. Lawyers at Talarchyk Merrill, LLC, serve
as the Debtors' counsel. MAQ Management estimated assets and
debts of $1 million to $10 million. Super Stop estimated assets
and debts of $10 million to $50 million. The petitions were
signed by Mahammad A. Qureshi, CEO.
The U.S. Trustee announced that until further notice, it will not
appoint a committee of creditors for the Debtors' cases.
MARY A II: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: The Mary A II, LLC
226 North Duval Street
Tallahassee, FL 32301
Bankruptcy Case No.: 11-40693
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
Northern District of Florida (Tallahassee)
Debtor's Counsel: Brian G. Rich, Esq.
BERGER SINGERMAN PA
125 S. Gadsden Street, Suite 300
Tallahassee, FL 32301
Tel: (850) 561-3010
Fax: (850) 561-3013
E-mail: brich@bergersingerman.com
Scheduled Assets: $26,083,816
Scheduled Debts: $7,380,600
The petition was signed by James M. Rudnick, managing member.
Debtor's List of 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
SC Advisors 7, LLC Noteholder A $200,000
Mike Stone
223 East Blvd.
Charlotte, NC 28203
SC Advisors 7, LLC Noteholder A $150,000
Mike Stone
223 East Blvd.
Charlotte, NC 28203
Mac, Surendrapal Noteholder B $100,000
MAC 1 FLP
816 North Third St.
Albemarle, NC 28001
High Performance Noteholder B $100,000
Investments, Inc.
Calhoun, David E. & Noteholder B $100,000
Claudia D.
Weaver, Linford Noteholder A $100,000
SC Advisors 7, LLC Noteholder A $100,000
Pierre, George & Noteholder A $100,000
Edith
Pierre, George & Noteholder A $100,000
Edith
Mac, Baldeep, MAC1 FLP Noteholder A $100,000
High Performance Noteholder A $100,000
Investments, Inc.
Pierre, Alan Noteholder B $75,000
Snyder, Keith Noteholder B $50,000
Risser, R. Eugene Noteholder B $50,000
Price, Linda Noteholder B $50,000
Malik Enterprises Noteholder B $50,000
Hurst, Chad Noteholder B $50,000
Hershey, Mark Noteholder B $50,000
Bradley, Robin R. Noteholder B $50,000
Bice, Ed Noteholder B $50,000
MCDONALD BROTHERS: Sec. 341 Meeting & Status Hearing Set
--------------------------------------------------------
The U.S. Bankruptcy Administrator for the Middle District of North
Carolina will convene a Meeting of Creditors pursuant to Sec.
341(a) of the Bankruptcy Code in the Chapter 11 case of McDonald
Brothers, Inc., on Sept. 27, 2011, at 10:30 a.m. at Creditors Mtg
Room, in Durham.
Proofs of claim are due in the case by Dec. 26, 2011.
The Bankruptcy Administrator also has requested that a status
hearing be held in the case on Oct. 13, 2011 at 10:00 a.m. at
Courtroom, in Durham.
About McDonald Brothers
McDonald Brothers, Inc., in Southern Pines, North Carolina, is a
building materials and services supplier that has been a family-
owned and operated business since 1885. It has three business
operations in North Carolina located in the towns of Southern
Pines, Siler City, and West End. It sells its products and
services throughout the south-central region of North Carolina and
northeastern South Carolina. Over the past few years, its
business has declined as a result of the depressed real estate
market and the recession.
McDonald Brothers filed for Chapter 11 bankruptcy (Bankr. M.D.N.C.
Case No. 11-81363) on Aug. 22, 2011. John A. Northen, Esq., and
Stephanie Osborne-Rodgers, Esq., at Northen Blue, LLP, serve as
the Debtor's counsel. The Debtor scheduled $10,540,708 in assets
and $10,132,635 in debts. The petition was signed by Angus A.
McDonald, Jr., president.
MCDONALD BROTHERS: Bankruptcy Administrator to Form Committee
-------------------------------------------------------------
The U.S. Bankruptcy Administrator for the Middle District of North
Carolina is calling on 10 creditors holding the largest unsecured
claims in the Chapter 11 case of McDonald Brothers, Inc., for
those interested in serving on the Official Committee of Unsecured
Creditors. The creditors contacted by the Bankruptcy
Administrator are:
1. Colonial Materials
Box 681627
Charlotte NC 28216
Amount of claim: $94,593.08
2. Com Tech
PO BOX 890675
Charlotte, NC 28289
Amount of claim: $167,732.69
3. Cox Industries, Inc.
PO BOX 1124
Orangeburg, SC 29116
Amount of claim: $274,439.5
4. Diamond Hill Plywood Company
PO BOX 601905
Charlotte, NC 28260
Amount of claim: $88,835.70
5. Fay Block Materials
PO DRAWER 1867
Fayetteville, NC 28302
Amount of claim: $86,158.11
6. House Hasson Hardware
DEPT 888080
Knoxville, TN 37995
Amount of claim: $105,157.88
7. IBSA
Box 2310
Smithfield NC 27577
Amount of claim: $334,869.10
8. Interior Distributors, Inc.
Box 14126
Raleigh, NC 27620
Amount of claim: $86,564.58
9. Longleaf Truss Company
Box 225
West End NC 27376
Amount of claim: $111,731.2
10. Weyerhauser NR Company
Box 640160
Pittsburgh PA 15264
Amount of claim: $94,334.48
Section 1102 of the Bankruptcy Code requires the Court, as soon as
practical, to appoint a committee of creditors holding unsecured
claims. Such a committee provides a means for the unsecured
creditors to be represented and have a voice during a Chapter 11
case and to have input regarding the kind of treatment that is
provided for the unsecured creditors in the plan of reorganization
in the case. The Bankruptcy Code expressly provides that the
Unsecured Creditors Committee may employ a lawyer to represent and
advise the Committee at the expense of the bankruptcy estate, not
the individual members of the Committee. Service on a Committee
is neither unduly burdensome nor time consuming. The Committee's
lawyer can handle representation of the Committee at most court
hearings without the necessity for individual committee members to
be present. Meetings of the Committee frequently are conducted by
telephonic means without the Committee members having to travel.
To the extent that Committee members are called upon to attend
hearings or meetings of the Committee, the Bankruptcy Code
provides for the Committee members to be reimbursed for reasonable
expenses incurred in attending hearings or Committee meetings.
The committee ordinarily consists of the persons who are willing
to serve and who hold the seven largest claims against the debtor.
If no reply is received by Sept. 2, the creditor will not be
appointed to the committee. An organizational meeting will be
scheduled after the committee is appointed.
The Bankruptcy Administrator may be reached at:
Michael D. West
U.S. Bankruptcy Administrator
Attn: Ms. Gattis
PO Box 1828, Greensboro, N.C. 27402
Facsimile: 336-358-4185
E-mail: susan_gattis@ncmba.uscourts.gov
About McDonald Brothers
McDonald Brothers, Inc., in Southern Pines, North Carolina, is a
building materials and services supplier that has been a family-
owned and operated business since 1885. It has three business
operations in North Carolina located in the towns of Southern
Pines, Siler City, and West End. It sells its products and
services throughout the south-central region of North Carolina and
northeastern South Carolina. Over the past few years, its
business has declined as a result of the depressed real estate
market and the recession.
McDonald Brothers filed for Chapter 11 bankruptcy (Bankr. M.D.N.C.
Case No. 11-81363) on Aug. 22, 2011. John A. Northen, Esq., and
Stephanie Osborne-Rodgers, Esq., at Northen Blue, LLP, serve as
the Debtor's counsel. The Debtor scheduled $10,540,708 in assets
and $10,132,635 in debts. The petition was signed by Angus A.
McDonald, Jr., president.
MERCY MEDICAL: Fitch Lowers Rating on $79-Mil. Bonds to 'BB+'
-------------------------------------------------------------
As part of its continuance surveillance effort, Fitch Ratings has
downgraded to 'BB+' from 'BBB' the following rating:
-- Approximately $79,987,000 Cuyahoga County, OH, hospital
facilities revenue bonds, series 2000 (CSAHS/UHHS - Canton,
Inc. nka Mercy Medical Center).
The Rating Outlook is Negative.
Severely Weakened Profitability: The downgrade and Negative
Outlook reflects Mercy Medical Center's (MMC) substantial
operating loss ($17.4 million loss from operations; negative 6.6%
operating margin) in 2010 which has continued through the seven
month interim period ended July 31, 2011 ($13.1 million operating
loss; negative 8.5% operating margin).
Declining Liquidity Metrics: Through the seven month interim
period, MMC's liquidity position has deteriorated significantly
from fiscal year end. At July 31, 2011, the hospital had $57.7
million of unrestricted cash and investments which calculates to
81.4 days of cash on hand (DCOH), a 7.4 times (x) cushion ratio
and 76.8% of cash to debt.
Declining Debt Service Coverage: As per the Master Trust Indenture
(MTI), MMC generated a very thin 1.1x coverage of maximum annual
debt service in 2010. Further deterioration in operations could
result in a rate covenant violation in fiscal year 2011.
Support of Sponsor: In January 2010, Sisters of Charity of St.
Augustine Health System (CSAHS) (revenue bonds rated 'A' by Fitch)
became the sole corporate member of MMC. Although it is not
obligated to repay the debt of MMC, Fitch views the solid
financial resources of and the strong operational support from
CSAHS as a positive credit factor.
Declining Historical Inpatient Utilization: MMC's admissions
declined approximately 7.1% between 2009 and 2010. However,
utilization trends are beginning to show modest signs of
stabilization through the interim period.
The bonds are secured by a pledge of the gross revenues of the
obligated group, consisting of MMC only, and a first lien mortgage
of hospital property.
What would trigger a downgrade?
-- Failure to meet the rate covenant for fiscal year 2011;
-- Evidence of continued financial deterioration including
increased operating losses and/or declining liquidity ratios.
Credit profile
The downgrade reflects MMC's failure to generate sufficient cash
flow from operations to support the rating at the current rating
level due to large operating losses, declining liquidity metrics
and weak debt service coverage. A further downgrade is precluded
at this time because of the solid financial resources and the
strong operational support provided to the hospital by its parent,
CSAHS.
CSAHS has been the owner of MMC since the hospital's inception.
In January 2010, the ownership was restructured and CSAHS became
the sole corporate parent of MMC. Although CSAHS is not legally
obligated for MMC's outstanding debt, the system has been deeply
involved in hospital operations and recently engaged Price
Waterhouse Cooper to initiate an operational improvement plan.
CSAHS (revenue bonds rated 'A' by Fitch) has a solid balance sheet
with strong liquidity metrics. At March 31, 2011, the system had
$470 million of unrestricted cash and investments which equates to
248.1 DCOH, a 38.6x cushion ratio and 206.02% cash to long-term
debt (including MMC's series 2000 bonds).
MMC has budgeted a $13.5 million operating loss for fiscal year
(FY) 2011 which Fitch feels is very optimistic given the
hospital's current financial position; for the seven months ending
July 31, 2011, MMC has posted a $13.1 million loss from operations
(negative 8.5% operating margin) which follows a $17.4 million
operating loss in FY 2010 (negative 6.6% operating margin). In
2010, the hospital's weak financial performance was attributed to
volume declines. While volumes are beginning to recover in FY
2011, major items contributing to the hospital's operating loss
year to date include a $5.5 million increase in malpractice
insurance reserve (including a one-time $3.8 million settlement)
and a $2.6 million increase in management fees. Management
expects to begin to reduce operating expenses in the second half
of fiscal 2011 to limit further operating losses. Fitch believes
that continuation of the poor operating performance would result
in a rate covenant violation which may then trigger further
negative rating action.
MMC's liquidity profile has also deteriorated from its year end
results. At year end 2010, fiscal year end Dec.31, MMC had $73.5
million in unrestricted cash and investments calculating to 106.6
DCOH, a 9.5x cushion ratio and 95.3% of cash to debt ratio. At
July 31, 2011, the hospital had $57.7 million of unrestricted cash
and investments which calculates to 81.4 DCOH, a 7.4x cushion
ratio and 76.8% of cash to debt.
MMC has a solid secondary market position in its service area
compared to the market leader, Aultman Health. Over the past
three years, MMC's total market share has been stable at 33% while
Aultman's market share has decreased to 50% from 53% over the same
period.
MMC's utilization trends show modest signs of recovery after
two years of declines. For the period ending July 31, 2011,
admissions, emergency room visits and outpatient visits have
increased 1.9%, 3.5% and 4.5%, respectively, year over year. MMC
has a challenging payor mix with 14% of revenues stemming from
Medicaid. The hospital received $4.4 million in UPL, DSH and
HCAPS net reimbursement in FY 2010 and is expecting approximately
$4.2 million in net reimbursement for FY 2011.
MMC's debt profile is conservative and debt burden metrics are
lower than the medians for Fitch's below 'BBB' category. MMC's
debt to capitalization ratio is 44% versus the median of 75% and
MADS as a percentage of revenues is 2.9% through July 31, 2011
versus the median of 3.5%. All of MMC's outstanding long-term
debt is in fixed rate mode. The hospital does not employ swaps as
part of its debt portfolio and has no plans to issue any
additional long term debt over the near term. In FY 2010, MMC
entered into a $13 million line of credit agreement with PNC Bank
with a due date of April 2011. In FY 2011, MMC reduced the line
of credit to $8 million with the due date extended to 2012. The
funds were used primarily to fund certain capital expenditures and
support operations.
Mercy Medical Center is a teaching hospital with 337 adult staffed
beds (licensed for 476 beds) located in Canton, OH. For fiscal
year ending 2010, Mercy had $263 million in total revenues. Mercy
covenants to provide annual (within 120 days of the end of the
fiscal year) and quarterly (within 45 days following the end of
each fiscal quarter) financial information including an income
statement, balance sheet, cash flow statement and utilization
statistics, to be filed with the Municipal Securities Rulemaking
Board, through its EMMA website.
MKM CONCESSIONS: Chrome Lotus in Ch. 11, Aims to Stay Open
----------------------------------------------------------
MKM Concessions LLC, doing business as Chrome Lotus, filed a
Chapter 11 petition (Bankr. N.D. Calif. Case No. 11-12981) in
Santa Rosa, California, on Aug. 8, 2011.
The Debtor is represented by:
Allan J. Cory, Esq.
LAW OFFICE OF ALLAN J. CORY
740 4th St.
Santa Rosa, CA 95404
Tel: (707) 527-8810
E-mail: cory@sonic.net
Cathy Bussewitz at the Press Democrat reports that Chrome Lotus,
the downtown Santa Rosa nightclub, intends to stay open and repay
its creditors, said Bill Cutting, who owns Chrome Lotus with
business partner Gianni Messmer. The owners spent more money than
they intended to remodel the club, which opened in February 2010
at the corner of Mendocino Avenue and Seventh Street.
"We were over budget building the place, and time just caught up
to us," Press Democrat quotes Mr. Cutting as saying. "And we
didn't want to walk away from it."
MKM Concessions disclosed about $580,600 in liabilities. Nearly
three quarters of the total debt comes from personal loans. The
club also owes about $108,000 in state and federal taxes.
The Press Democrat says the bankruptcy petition needs approval of
a judge before it's finalized. If it is, Cutting said he is
confident the company will emerge from bankruptcy, but it may take
a couple of years.
MONEYGRAM INT'L: Files Form S-8; Registers 10MM Common Shares
-------------------------------------------------------------
MoneyGram International, Inc., filed with the U.S. Securities and
Exchange Commission a Form S-8 registration statement relating to
10,000,000 shares of its common stock, par value $0.01 per share,
issuable under the MoneyGram International, Inc., 2005 Omnibus
Incentive Plan, as amended Feb. 9, 2009, and May 11, 2011. The
Common Stock registered under this Registration Statement is in
addition to the 7,500,000 shares of Common Stock registered on
MoneyGram's Form S-8 filed on May 20, 2005, and the 39,500,000
shares of Common Stock registered on MoneyGram's Form S-8 filed on
June 3, 2009. A full-text copy of the Form S-8 is available for
free at http://is.gd/ge2YFs
About MoneyGram International
MoneyGram International, Inc. (NYSE: MGI) --
http://www.moneygram.com/-- is a global payment services company.
The Company's major products and services include global money
transfers, money orders and payment processing solutions for
financial institutions and retail customers. MoneyGram is a New
York Stock Exchange-listed company with 203,000 global money
transfer agent locations in 191 countries and territories.
The Company reported net income of $43.80 million on $1.17 billion
of total revenue for the year ended Dec. 31, 2010, compared with a
net loss of $1.91 million on $1.16 billion of total revenue during
the prior year.
The Company's balance sheet at June 30, 2011, showed $5.08 billion
in total assets, $5.20 billion in total liabilities, and a
$125.41 million total stockholders' deficit.
* * *
According to the Troubled Company Reporter on July 1, 2010, Fitch
Ratings has affirmed the Issuer Default Ratings for MoneyGram
International Inc. and MoneyGram Payment Systems Worldwide, Inc.,
at 'B+'. Outlook is stable. Fitch noted that the ratings could
be negatively impacted by further declines in remittance volumes
driven by macro economic factors or decreases in migrant labor
populations worldwide.
MUELLER WATER: Moody's Lowers Corporate Family Rating to 'B3'
-------------------------------------------------------------
Moody's Investors Service lowered the corporate family and
probability of default ratings of Mueller Water Products, Inc. to
B3 from B2. In a related action, Moody's downgraded the senior
unsecured notes to B2 from B1 and also downgraded the senior
subordinated notes to Caa2 from B3. The outlook remains stable.
These rating actions were taken:
- Corporate Family Rating downgraded to B3 from B2
- Probability of Default Rating downgraded to B3 from B2
- $225 million senior unsecured notes downgraded to B2 (LGD3, 43%)
from B1 (LGD3, 40%)
- $420 million senior subordinated notes downgraded to Caa2 (LGD5,
83%) from B3 (LGD5, 77%)
RATINGS RATIONALE
The B3 corporate family rating reflects Moody's expectation that
Mueller's credit metrics will remain weak through 2012 due to
prolonged weakness in construction markets, coupled with the
reduction in water infrastructure spending by municipalities in
the absence of stimulus money to finance such projects. In
addition, given the recent turmoil in global financial markets,
fears of a double-dip recession are heightened, which will
continue to hamper growth in Mueller's key end markets.
Mueller's debt leverage remains elevated and is not expected to
improve due to the preponderance of public notes in the capital
structure with bullet maturities and limited amortizing
possibilities. Operating margins also remain thin despite the
company's having implemented price increases and facility closures
in an effort to counter the effects of rising raw material costs
and declining sales volume.
However, the ratings acknowledge Mueller's strong market position,
its substantial installed base of diverse products that can lead
to a high percentage of recurring revenues, and the growing and
inevitable need to repair and/or replace aging water
infrastructure systems to comply with EPA regulations.
Furthermore, Mueller's sizeable asset-based revolving credit
facility, its ability to generate positive, albeit weak, free cash
flow, and the absence of near-term debt maturities strengthen the
company's liquidity position.
Mueller's stable outlook reflects Moody's expectation that
although the company's principal end markets will remain weak for
the foreseeable future, activity in the U.S. housing market is not
expected to deteriorate beyond levels experienced in 2009, 2010,
and thus far in 2011, barring a double dip downturn. In addition,
while municipalities may delay major water infrastructure
projects, the need for minor repairs and replacements will
continue to generate revenue.
Mueller's outlook may be revised to positive if operating
performance improves such that adjusted debt to EBITDA falls to
below 5.0x on a sustained basis and interest coverage improves
such that adjusted EBITA to interest expense is sustained above
1.5x.
Mueller's ratings and/or outlook could face downward pressure if
free cash flow turns negative on a trailing twelve-month basis or
if the company's dividends, share repurchases, pension
contributions, and/or any potential debt-financed transactions are
in excess of Moody's expectations.
The principal methodology used in rating Mueller Water Products,
Inc. was the Global Manufacturing Industry Methodology published
in December 2010. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
Headquartered in Atlanta, Georgia, Mueller Water Products, Inc. is
a North American manufacturer and supplier of water infrastructure
and flow control products for use in water distribution networks,
water and wastewater treatment facilities, and gas distribution
and piping systems.
NEWARK GROUP: Moody's Lowers Corporate Family Rating to 'Caa1'
--------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of The Newark Group to Caa1 from B3. Moody's also downgraded the
probability of default rating and the rating on the $110 million
term loan facility ($102 million outstanding) to Caa1 from B3. All
ratings were also placed on review for possible further downgrade.
Moody's took the following rating actions:
- Downgraded CFR to Caa1 from B3
- Downgraded PDR to Caa1 from B3
- Downgraded $110 million term loan due 2013 to Caa1 (LGD 4 -58%)
from B3 (LGD 4 -- 54%)
- Placed all ratings on review for possible downgrade
RATINGS RATIONALE
The downgrade reflects significant deterioration in operating
performance due to high raw material costs, operational
inefficiencies and continuing economic weakness in Europe. The
rating action also reflects uncertainty about the company's
liquidity and its ability to continue operating as a going
concern.
The company is working to improve its liquidity position, and is
also undertaking operational restructuring initiatives to exit or
downsize inefficient operations and to focus on its core
businesses. The company has been in the process of reorganizing
its operations since it emerged from bankruptcy in July 2010.
The review will focus on the company's liquidity position, its
performance under its lending agreements, and its ability to
successfully restructure its operations to achieve better earnings
and cash flows. The review will also include structural
considerations that factor in the notching of the company's term
loan facility (currently assigned the same rating as the corporate
family rating). Further downgrade is likely if the company fails
to improve its liquidity or if operating performance deteriorates
further.
A confirmation will be considered if Newark demonstrates ability
to sustain improved liquidity and operating performance, and if
its metrics allow it sufficient headroom under its credit
agreement's financial covenants.
The principal methodology used in rating Newark was the Global
Paper and Forest Products Industry Methodology published in
September 2009. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
The Newark Group Inc., headquartered in Cranford, NJ, is an
integrated producer of 100% recycled paperboard and paperboard
products in North America and Europe. For the twelve months ended
April 30, 2011, the company generated revenue of approximately
$809 million.
OMEGA NAVIGATION: Can Hire Seward & Kissel as Special Counsel
-------------------------------------------------------------
The Honorable Karen K. Brown approved the application of Baytown
Navigation Inc., Omega Navigation Enterprises, Inc., Galveston
Navigation Inc., Beaumont Navigation Inc., Carrolton Navigation
Inc., Decatur Navigation Inc., Elgin Navigation Inc., Fulton
Navigation Inv., Orange Navigation Inv., and Omega Navigation
(USA) LLC to employ Seward & Kissel LLP as their special corporate
and maritime counsel, effective as of Jul. 8, 2011.
Seward & Kissel will render professional services to the Debtors,
including:
* Matters relating to the preparation of the annual report
for Omega Navigation Enterprises, Inc. for the period
ending Dec. 31, 2010, and Form 20-F to be filed with the
Securities and Exchange Commission;
* Matters relating to Omega's NASDAQ listing, including
necessary procedures and filings relating to the delisting
of Omega's common shares from NASDAQ; and
* General maritime and corporate matters, including matters
relating to Omega's reporting obligations under the
Securities Exchange Act of 1934.
About Omega Navigation
Athens, Greece-based Omega Navigation Enterprises Inc. and
affiliates, owner and operator of tankers carrying refined
petroleum products, filed for Chapter 11 protection (Bankr. S.D.
Tex. Lead Case No. 11-35926) on July 8, 2011, in Houston.
Omega is an international provider of marine transportation
services focusing on seaborne transportation of refined petroleum
products. The Debtors disclosed assets of US$527.6 million and
debt totaling US$359.5 million. Together, the Debtors wholly own
a fleet of eight high-specification product tankers, with each
vessel owned by a separate debtor entity.
Jefferies & Company, Inc., is the financial advisor.
PARALLEL RESOURCE: Partners Raising Debut Distressed Energy Fund
----------------------------------------------------------------
Dow Jones' DBR Small Cap reports that Parallel Resource Partners
has closed on $160 million so far for a debut fund that will make
equity control investments in distressed oil and gas producers,
said a person familiar with the situation.
PETROHAWK ENERGY: S&P Raises Corporate Credit Rating From 'BB-'
---------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Houston-based Petrohawk Energy Corp. to 'BBB+' from 'BB-
'. "At the same time, we raised the company's unsecured ratings to
'BBB+' from 'B+'. We also withdrew the recovery ratings on
Petrohawk's senior unsecured issues. The outlook is stable," S&P
stated.
"The upgrade reflects the improvement in the company's stand-alone
credit profile following the transaction and our assessment of
anticipated parent-level support, said Standard & Poor's credit
analyst Lawrence Wilkinson. "Our standalone credit profile for
Petrohawk is 'bb+' reflecting a material strengthening of the
company's financial profile resulting from the transaction. While
BHP Billiton will not be providing a formal guarantee for
Petrohawk's outstanding debt, BHP has indicated that it will
provide ongoing capital injections to fund Petrohawk's aggressive
capital spending goals. Further, we note the strategic nature of
BHP's ownership of Petrohawk and assess a reasonable expectation
of extraordinary support in the event of financial difficulties,
implying a three-notch benefit to the company's corporate credit
rating relative to its stand-alone credit profile."
The stand-alone credit profile on independent E&P firm Petrohawk
Energy Corp. reflects Standard & Poor's expectations of high
levels of capital spending in excess of organic cash flows in
2011, a weak near-term outlook for natural gas prices, and an
aggressive financial risk profile. The ratings also reflect
constructive trends in production and reserve growth,
significantly hedged production, and expectations of ample
liquidity to fund expected 2011 cash flow deficits.
Petrohawk has materially reshaped its reserve portfolio over the
past several years, amassing favorable acreage positions in
several emerging domestic shale plays and divesting assets in
higher cost regions. Historically, Petrohawk has funded its growth
initiatives through a mix of debt and equity issuances, and at
times through asset sales. As of year-end 2010, Petrohawk had
proved reserves of 3.4 trillion cubic feet equivalents, with 35%
proved developed and 92% natural gas. "We view the company's
business profile (e.g. scale, diversification, cost structure, and
growth prospects) as relatively strong in the context of the
current rating. Petrohawk has several core areas from which
to cull future reserve and production growth. Main areas of
capital focus in 2011 include the Haynesville Shale play in north
Louisiana/east Texas and the Eagle Ford Shale play in south
Texas," S&P related.
The outlook is stable, reflecting our view that Petrohawk will be
able to fund its aggressive growth program without a meaningful
increase in leverage from current levels. "We would consider a
downgrade if leverage materially exceeds 3x for more than a few
quarters. Given our current assessment of the company's business
risk profile, we are unlikely to raise the ratings over the
intermediate term," S&P stated.
PITTSFIELD RESIDENTIAL: Voluntary Chapter 11 Case Summary
---------------------------------------------------------
Debtor: Pittsfield Residential II, LLC
5151 Collins Ave #1727
Miami Beach, Fl 33140
Bankruptcy Case No.: 11-34051
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Judge: Robert A. Mark
Debtor's Counsel: Daniel Morman, Esq.
5055 Collins Ave #6L
Miami Beach, FL 33140
Tel: (305) 807-2136
E-mail: dmorman@bellsouth.net
Scheduled Assets: $9,491,118
Scheduled Debts: $12,535,032
The Debtor did not file a list of its largest unsecured creditors
together with its petition.
The petition was signed by Robert Danial, manager.
POINT BLANK: Court Approves FMS Technologies Term Sheet
-------------------------------------------------------
BankruptcyData.com reports that the U.S. Bankruptcy Court approved
Point Blank Solutions' motion for an order approving a term sheet
between the Company and FMS Technologies for the proposed out-of-
Court liquidation of LifeStone Material, a non-Debtor joint
venture in which the Company has a 50% membership interest.
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.
PREMIER TRAILER: Court Approves KCC as Claims & Notice Agent
------------------------------------------------------------
Premier Trailer Leasing and its affiliates sought and obtained
permission from the U.S. Bankruptcy Court for the District of
Delaware to retain Kurtzman Carson Consultants LLC as noticing,
claims and balloting agent, nunc pro tunc to the Petition Date.
Upon retention, the firm, will among other things:
(a) prepare and serve required notices in the Debtors' cases
as requested by the Debtors;
(b) after the mailing of a particular notice, file with the
Court a certificate or affidavit of service that includes
a copy of the notice involved, a list of persons to whom
the notice was mailed and the date and manner of mailing;
and
(c) receive, examine and maintain copies of all proofs of
claim and proofs of interest filed.
The firm's rates are:
Position Hourly Rate Avg. Rate
-------- ----------- ---------
Clerical $40-$60 $50
Project Specialist $80-$140 $110
Technology/Programming
Consultant $100-200 $150
Consultant $125-200 $162
Senior Consultant $225-$275 $250
Senior Managing
Consultant $295-$295 --
Weekend, holidays
and overtime Waived Waived
About Premier Trailer Leasing
Premier Trailer Leasing -- http://www.premiertrailerleasing.com/-
- was formed in 2005 and is the country's fastest growing semi-
trailer rental and leasing company. Premier has a fleet of
approximately 11,170 trailers, comprised predominantly of flatbeds
and dry vans, 2,061 of which are leased or rented from Stoughton
Trailers Acceptance Company LLC. Premier hope rates out of
nineteen offices in fifteen different states in the United States
and has 65 employees. PTL was formed in 2005 by a joint venture
of Angelo Gordon and Coda Capital Inc., which in turn is 100%
owned by Angelo Gordon and its affiliates.
PTL Holdings LLC and affiliate Premier Trailer Leasing Inc.,
sought bankruptcy protection (Bankr. D. Del. Lead Case No.
11-12676) with a restructuring plan that would give lenders
control of PTL in a debt-for-equity swap.
PREMIER TRAILER: To Hire Pachulski Stang & Jones LLP as Counsel
---------------------------------------------------------------
Premier Trailer Leasing and its affiliates seek permission from
the U.S. Bankruptcy Court for the District of Delaware to employ
Pachulski Stang Ziehl & Jones LLP as counsel for the debtors and
debtors in possession nunc pro tunc to the Petition Date.
Upon retention, the firm, will among other things:
a) provide legal advice with respect to the Debtors' powers and
duties as debtors in possession in the continued operation
of their businesses and management of their property;
b) prepare on behalf of the Debtors any necessary
applications, motions, answers, orders, reports, and other
legal papers; and
C. appear in Court on behalf of the Debtors.
The firm's rates are:
Personnel Rates
--------- -----
Laura Davis Jones $895.00
Henry C. Kevane $795.00
David M. Bertenthal $775.00
James E. O'Neill $650.00
Joshua M. Fried $650.00
Curtis A. Helm $575.00
Timothy P. Cairns $495.00
Monica A. Molitor $255.00
Margaret L. Oberhoizer $245.00
To the best of the Debtors' knowledge, except as otherwise
disclosed in the Jones Affidavit submitted concurrently herewith,
PSZ&J has not represented the Debtors, their creditors, equity
security holders, or any other parties in interest, or their
respective attorneys, in any matter relating to the Debtors or
their estates. Further, to the best of the Debtors' knowledge,
PSZ&J does not hold or represent any interest adverse to the
Debtors' estates, PSZ&J is a "disinterested person" as that phrase
is defined in section 101(14) of the Bankruptcy Code, and PSZ&J's
employment is necessary and in the best interests of the Debtors
and their estates.
About Premier Trailer Leasing
Premier Trailer Leasing -- http://www.premiertrailerleasing.com/-
- was formed in 2005 and is the country's fastest growing semi-
trailer rental and leasing company. Premier has a fleet of
approximately 11,170 trailers, comprised predominantly of flatbeds
and dry vans, 2,061 of which are leased or rented from Stoughton
Trailers Acceptance Company LLC. Premier hoperates out of
nineteen offices in fifteen different states in the United States
and has 65 employees. PTL was formed in 2005 by a joint venture
of Angelo Gordon and Coda Capital Inc., which in turn is 100%
owned by Angelo Gordon and its affiliates.
PTL Holdings LLC and affiliate Premier Trailer Leasing Inc.,
sought bankruptcy protection (Bankr. D. Del. Lead Case No.
11-12676) with a restructuring plan that would give lenders
control of PTL in a debt-for-equity swap.
PRIUM SPOKANE: Wants Sterling Cash Collateral Until Sept. 30
------------------------------------------------------------
Debtor Prium Spokane Buildings, L.L.C., and Sterling Savings Bank,
have filed a joint motion asking the U.S. Bankruptcy Court for the
Eastern District of Washington's authorization for the Debtor to
use cash collateral through Sept. 30, 2011, in accordance with the
terms and conditions outlined in the Stipulation For Order
Authorizing Use Of Cash Collateral of Sterling Savings Bank as
filed with the Court on April 11, 2011 [DE No. 119], and the Order
authorizing and approving the same entered on May 10, 2011 [DE No.
160].
The following entities assert an interest in cash collateral:
(1) Sterling Savings Bank, as the assignee of Intervest-Mortgage
Investment Company; (2) Jeffrey M. Silesky, Francine R. Gaillour,
and Glenn R. Davis; (3) Specialty Construction Systems, Ltd.; and
(4) Yost, Mooney and Pugh Contractors, Inc. The interests of
Specialty Construction and Yost, Mooney and Pugh have since been
compromised and paid with Court authorization.
As reported in the TCR on May 26, 2011, the Hon. Frank L. Kurts
approved a stipulation between the Debtor and Sterling Savings
Bank, authorizing the Debtor to use the cash collateral.
Prium Spokane is the fee owner of certain office condominiums
located within the Wells Fargo Center at 601 West First Avenue,
Spokane, Washington. The Debtor's primary source of revenue is
derived from the leases of its office condominiums within the
property. The leases are subject to the senior lien interest of
Sterling Savings, as the assignee of Intervest-Mortgage Investment
Company, as security for a loan in the original principal amount
of $25,575,000.
The Debtor will use the cash collateral for payment of ordinary
operating expenses, and for payment of administrative expenses.
As adequate protection for any diminution in value of the lenders'
collateral, the Debtors will grant a security interest to each
entity with an interest in Lender Cash Collateral to the extent
provided for under the Pre-Petition Security Agreements or
applicable non-bankruptcy law, to extend to property of Prium
Spokane acquired before the Petition Date and to proceeds,
products, rents, or profits of such property acquired by Prium
Spokane after the Petition Date (the "Existing Collateral").
Prium Spokane will also grant a replacement lien upon all post-
petition collateral in favor of each entity with an interest in
cash collateral of the same priority, nature, and extent as held
pre-petition by that entity, in all proceeds thereof.
Any funds remaining after the payment of items in accordance with
the Cash Collateral Budget will be disbursed to Sterling Savings,
up to a maximum amount that is equal to accrued postpetition
interest under the Intervest Note, at the non-default rate of 5%,
and including interest on the Additional Advance [DE No. 123 and
DE No. 146] at an annual rate of 6.5%.
The Court also approved that the property will remain under the
management of Black Realty Management, Inc. in accordance with a
Management Agreement dated Dec. 21, 2009.
Bellevue, Washington-based Prium Spokane Buildings, L.L.C., filed
for Chapter 11 bankruptcy protection (Bankr. E.D. Wash. Case No.
10-06952) on Dec. 16, 2010. Barry W. Davidson, Esq., at Davidson
Backman Medeiros PLLC, in Spokane, Washington, represents the
Debtor. There was no creditors committee appointed in the case.
According to its schedules, the Debtor disclosed $17,042,743 in
total assets and $34,723,584 in total debts.
PUBLIC MEDIA: Stops Renting DVD & Blu-Ray Movies in California
--------------------------------------------------------------
Pubic Media Works, Inc., ceased renting DVD and Blu-Ray movies at
its 25 kiosks in Riverside County California. The Company also
furloughed all non-officer employees. Officers continue working
in an unpaid capacity. The Company is seeking funding to move the
kiosks into local warehousing and to eventually relocate the
kiosks to a different area and resume operations.
About Public Media Works
Sausalito, Calif.-based Public Media Works, Inc., and its wholly-
owned subsidiary, EntertainmentXpress, Inc., a California
corporation , are engaged in the business of offering self-service
kiosks which deliver DVD movies to consumers.
Public Media Works, Inc., has historically been engaged in the
development, production, marketing and distribution of film, music
and television entertainment titles. The Company has an ownership
interest in several film and television projects, but expects no
revenue from these projects. As of May 4, 2010 with the
acquisition of Entertainment Xpress, Inc., the Company has focused
exclusively on its kiosk business and intends to continue this
focus going forward. In March 2011, the Company installed its
first 25 kiosks under the DBA of "Spot. The difference(TM)".
Anton & Chia, LLP, in Newport Beach, California, expressed
substantial doubt about Pubic Media Works' ability to continue as
a going concern. The independent auditors noted that the Company
has incurred significant recurring net losses and negative cash
flows from operations through Feb. 28, 2011, and it has an
accumulated deficit of $12.83 million as of Feb. 28, 2011.
The Company reported a net loss of $7.68 million on $7,139 of
revenue for the fiscal year ended Feb. 28, 2011, compared with a
net loss of $108,435 on $50,000 of revenue for the fiscal year
ended Feb. 28, 2010.
The Company's balance sheet at May 31, 2011, showed $862,106 in
total assets, $1.17 million in total liabilities and a $307,366 in
total stockholders' deficit.
QUALTEQ INC: Final Hearing on Cash Collateral Access Tuesday
------------------------------------------------------------
In separate interim orders, the U.S. Bankruptcy Court for the
District of Delaware authorized Qualteq Inc. and its debtor-
affiliates to use cash collateral on which:
(a) Oakbrook Financial asserts an interest. The Court
authorized Debtors Creative Automation Company, Unique
Data Services, Inc., and University Subscription Service,
Inc., -- the Oakwood Borrowers -- to use Cash Collateral
pending a final hearing on the Cash Collateral Motion for
the disbursements set forth in the Budgets, up to 15% more
than a particular corresponding "category" in the Budget;
(b) Amalgamated Bank of Chicago, Burr Ridge Bank and Trust and
Inland Bank assert security interests. The Court
authorized Debtors Versatile Card Technology, Inc.,
Fulfillment Xcellence, Inc., Global Card Services, Inc.,
and Unique Data Services, Inc. -- the Cash-Encumbered
Debtors -- to use Cash Collateral, pending a final hearing
on the Cash Collateral Motion, exclusively for
disbursements to the extent and in the amounts set forth
in the Budgets, up to 15% more than a particular
corresponding "category" in the Budget; and
(c) Sterling Bank. The Court authorized Debtor Qualteq Inc.
to use Cash Collateral, pending a final hearing on the
Cash Collateral Motion, exclusively for the disbursements
set forth in the Budget, up to 10% more than a particular
corresponding "category" in the Budget. As further
adequate protection, all of Qualteq's debtor-in-possession
accounts will be kept at Sterling, except for certain
accounts.
In the event the Lenders consent to the use of Cash Collateral in
a manner and amount, which does not conform to the Budgets, the
Debtors/Borrowers will be authorized to expend Cash Collateral for
that Non-Conforming Use with further Court order.
As adequate protection for any diminution in the value of their
collateral, each of the Debtors/Borrowers grants the Lenders
security interests in and liens upon all personal property assets
of the respective Debtors/Borrowers. As and when reflected in the
Budgets, upon entry of final order approving the Cash Collateral
Motion, the Debtors/Borrowers will transfer sufficient cash to
satisfy the professional fees set forth in the Budgets to the K&L
Gates Client Trust Account to be held in escrow in a segregated
account by K&L Gates LLP for the benefit of the Debtors'
professionals.
In their Cash Collateral Motion, the Debtors asserted that the
Debtors/Borrowers have an immediate need to use Cash Collateral in
order to assure the orderly administration of their bankruptcy
estates. Without use of the Lenders' Cash Collateral on a limited
basis, the Debtors/Borrowers will not be able to pay their
employees and other direct operating expenses, Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, in Wilmington, Delaware --
jschlerf@foxrothschild.com -- told Judge Carey.
"Put simply, the [Debtors/Borrowers] cannot continue operations
and cannot continue their restructuring efforts absent use of the
Cash Collateral," Mr. Schlerf pointed out.
Copies of the three Cash Collateral Orders with the Budgets are
available for free at:
* http://bankrupt.com/misc/QUALTEQ_CashColl_IntOrder_A.pdf
* http://bankrupt.com/misc/QUALTEQ_CashColl_IntOrder_B.pdf
* http://bankrupt.com/misc/QUALTEQ_CashColl_IntOrder_C.pdf
A final hearing on the Cash Collateral Motion will be held on
September 6, 2011, at 1:30 p.m.
About QualTeq, Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, serve as local counsel to the
Debtors. K&L Gates LLP is the general bankruptcy counsel.
Scouler & Company is the restructuring advisors. QualTeq
estimated assets of up to $50 million and debts of up to $100
million as of the Chapter 11 filing.
QUALTEQ INC: Sec. 341 Creditors' Meeting Set for Sept. 21
---------------------------------------------------------
The United States Trustee for Region 3 will hold a Meeting of
Creditors pursuant to 11 U.S.C. Sec. 341 in the bankruptcy cases
of Qualteq Inc. and its debtor affiliates on September 21, 2011,
at 1:00 p.m. at the U.S. District Court, 844 King St., Room 2112,
in Wilmington, Delaware.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
The Debtor's representative must be present at the meeting to be
questioned under oath by the trustee and by creditors. Creditors
are welcome to attend, but are not required to do so. The meeting
may be continued and concluded at a later date without further
notice.
About QualTeq, Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, serve as local counsel to the
Debtors. K&L Gates LLP is the general bankruptcy counsel.
Scouler & Company is the restructuring advisors. QualTeq
estimated assets of up to $50 million and debts of up to $100
million as of the Chapter 11 filing.
QUALTEQ INC: Taps Fox Rothschild as Bankruptcy Co-Counsel
---------------------------------------------------------
QualTeq Inc. and its debtor affiliates seek authority from the
U.S. Bankruptcy Court for the District of Delaware to employ Fox
Rothschild LLP as co-counsel for the Debtors, nunc pro tunc to the
Petition Date.
As co-counsel, Fox will:
-- take all necessary actions to protect and preserve the
Debtors' bankruptcy estates, including the prosecution or
defense of actions on the Debtors' behalf;
-- provide legal advice with respect to the Debtors' powers
and duties as debtors in possession in the continued
operation of their businesses and management of their
properties;
-- negotiate, prepare and pursue confirmation of a plan and
approval of a disclosure statement; and
-- assist with any disposition of the Debtors' assets, by sale
or otherwise.
The Debtors will compensate Fox according to its standard hourly
rates:
Partners $305 - $690 per hour
Associates $225 - $495 per hour
Paraprofessionals $100 - $275 per hour
The Debtors will also reimburse Fox of its necessary expenses.
Prior to the Petition Date, Fox received from the Debtors a
retainer totaling $25,000, as payment in advance for services it
performed. For services rendered through the time of the filing
of these cases, Fox invoiced the Debtors $17,928, which reduced
the balance of the Retainer to $7,041. The remaining Retainer
balance will be applied to allowed amounts due and owing pursuant
to interim compensation procedures approved by the Court.
Jeffrey M. Schlerf, Esq., a partner at Fox, assures Judge Carey
that Fox is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code.
About QualTeq, Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. K&L Gates LLP is the general bankruptcy counsel.
Scouler & Company is the restructuring advisors. QualTeq
estimated assets of up to $50 million and debts of up to $100
million as of the Chapter 11 filing.
QUALTEQ INC: Seeks to Employ Phase Eleven as Claims Agent
---------------------------------------------------------
Qualteq Inc. and its debtor affiliates seek permission from the
U.S. Bankruptcy Court for the District of Delaware to employ Phase
Eleven Consultants LLC as their official notice, claims, and
balloting agent, nunc pro tunc to the Petition Date, pursuant to
the parties' engagement agreement.
As Claims Agent, PEC will, among other things:
(a) prepare and serve required notices in the Debtors'
Chapter 11 cases;
(b) receive and record proofs of claim and proofs of interest
filed;
(c) create and maintain official claims registers, and provide
access to the public for examination of copies of the
proofs of claim or interest without charge during regular
business hours;
(d) assist in preparing the Debtors' schedules of assets and
liabilities and statements of financial affairs; and
(e) assist in the preparation, mailing, and tabulation of
ballots for the purpose of voting to accept or reject any
Chapter 11 plan proposed by the Debtors in these cases.
The Debtors propose to retain PEC at the rates set forth in the
Engagement Agreement. The Debtors also propose to pay PEC in the
ordinary course of business after submission of an invoice, which
will be treated as an administrative expense and be paid without
further application to the Court.
The Engagement Agreement also provides that the Debtors will
indemnify and hold harmless PEC and its members under certain
circumstances set forth in the Engagement Agreement.
Claude Wm. Irmis, managing member of PEC, assures the Court that
PEC is a "disinterested person" as that term is defined in Section
101(14) of the Bankruptcy Code.
About QualTeq, Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, serve as local counsel to the
Debtors. K&L Gates LLP is the general bankruptcy counsel.
Scouler & Company is the restructuring advisors. QualTeq
estimated assets of up to $50 million and debts of up to $100
million as of the Chapter 11 filing.
QUALTEQ INC: Seeks Appointment of Dan Scouler as CRO
----------------------------------------------------
QualTeq Inc. and its debtor affiliates ask the U.S. Bankruptcy
Court for the District of Delaware to enter an order (i)
authorizing them to employ Scouler & Company to provide a chief
restructuring officer and additional personnel on an as needed
basis, pursuant to an engagement letter, and (ii) approving the
appointment of Daniel Scouler as the Debtors' CRO.
On behalf of the Debtors, Jeffrey M. Schlerf, Esq., at Fox
Rothschild LLP, in Wilmington, Delaware, tells the Court that Mr.
Scouler has already taken an active role in spearheading the
Debtors' efforts to prepare for their Chapter 11 filings, obtain
postpetition financing, and communicate with their various
constituencies.
Mr. Scouler and Scouler & Co. will (i) work with the Debtors'
management to perform financial reviews of the Debtors' financial
systems and projected short and long-term cash flows, (ii) develop
possible restructuring plans or other strategic alternatives,
including asset recovery plans, (iii) develop and implement a
strategic plan, and (iv) provide consultation and assistance in
connection with any internal restructuring or subsidiary
realignment or divestitures.
The principal terms of Scouler's engagement are:
(a) Compensation: Prior to the bankruptcy filing, Scouler &
Co. was paid two advance payment retainers, each for
$50,000, which the firm applied and exhausted to
outstanding fees and expenses incurred in connection with
preparing the bankruptcy filing. The Debtors have agreed
to compensate Scouler & Co. at their standard hourly
rates:
* Managing Principal: $695 per hour;
* Consultants: $250 to $450 per hour; and
* Support Staff: $150 per hour.
Scouler & Co. anticipates that these professionals will
work on the Debtors' cases:
* Dan Scouler, managing principal;
* Kern Gillette, consultant, $450 per hour;
* Bob Noyes, consultant, $400 per hour;
* Michael Johnson, consultant, $350 per hour; and
* Christine Hedge, consultant, $250 per hour;
(b) Reimbursement of Expenses: Scouler & Co. will be
reimbursed for out-of pocket expenses; and
(c) Indemnification: The Debtors will indemnify Scouler &
Co., its principals, employees and affiliates in the event
of certain losses, subject to certain limitations.
Mr. Scouler attests that his firm does not have or represent any
interest materially adverse to the interests of the Debtors, or of
any class of creditors or equity security holders of the Debtors.
About QualTeq, Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, serve as local counsel to the
Debtors. K&L Gates LLP is the general bankruptcy counsel.
QualTeq estimated assets of up to $50 million and debts of up to
$100 million as of the Chapter 11 filing.
RASER TECHNOLOGIES: Wins Approval to Put Ch. 11 Plan Into Action
----------------------------------------------------------------
Dow Jones' DBR Small Cap reports that Raser Technologies Inc. won
approval to put into action its bankruptcy-exit plan, which hinges
on a debt-for-equity swap with a trio of lenders.
About Raser Technologies
Raser Technologies Inc. (NYSE: RZ) is a renewable energy company
focusing on geothermal power development. The Company has one
operating plant in Utah and another eight early and development
stage projects in Utah, New Mexico, Nevada and Oregon. The
Company invested $120 million in Thermo No. 1, its sole operating
plant, which is near Beaver, Utah, and has a power generation
capacity of 10 megawatts. The City of Anaheim, California, agreed
in 2008 to buy the generated electricity for 20 years.
Provo, Utah-based Raser Technologies, Inc., also known as Wasatch
Web Advisors, Inc., filed for Chapter 11 protection (Bankr. D.
Del. Case No. 11-11315) on April 29, 2011.
Other Debtor affiliates filed for separate Chapter 11 protection
on April 29, 2011, (Bankr. Case Nos. 11-11319 - 11-11350).
Peter S. Partee, Sr., Esq., and Richard P. Norton, Esq., at Hunton
& Williams LLP represent the Debtors in their restructuring
efforts. The Debtors' local counsel is Bayard, P.A. Sichenzia
Ross Friedman Ference LLP serves as the Debtors' corporate
counsel. The Debtors' financial advisor is Canaccord Genuity.
A three-member official committee of unsecured creditors has been
formed in the Chapter 11 case. Foley & Lardner LLP represents the
Committee. The Committee also tapped Womble Carlyle Sandridge &
Rice, PLLC, as co-counsel, BDO Consulting, a division of BDO USA,
LLP, as its financial advisor and accountant; and BDO Capital
Advisors, LLC its investment banker.
The Company reported a net loss of $101.80 million on
$4.25 million of revenue for the fiscal year ended Dec. 31, 2010,
compared with a net loss of $20.90 million on $2.19 million of
revenue during the prior year.
The Company's balance sheet at Dec. 31, 2010, showed
$41.84 million in total assets, $107.78 million in total
liabilities, $5.00 million of Series A-1 cumulative convertible
preferred stock, and a stockholders' deficit of $70.94 million.
RENAL LIFE: Case Summary & 3 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Renal Life Inc.
Urb Fairview
#679 Calle Francisco Cassans
San Juan, PR 00926
Bankruptcy Case No.: 11-07238
Chapter 11 Petition Date: August 29, 2011
Court: United States Bankruptcy Court
District of Puerto Rico (Old San Juan)
Debtor's Counsel: David A. Carrion Baralt, Esq.
P.O. Box 364463
San Juan, PR 00936
Tel: (787) 724-8166
E-mail: davidcarrionb@aol.com
Scheduled Assets: $3,000,000
Scheduled Debts: $1,351,384
A list of the Company's three largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/prb11-07238.pdf
The petition was signed by Jose Martinez Aviles.
RIDGE PARK: Unit Files Schedules of Assets & Liabilities
--------------------------------------------------------
Ridge Park Office LLC 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 $4,673
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $11,250,000
E. Creditors Holding
Unsecured Priority
Claims $0
F. Creditors Holding
Unsecured Non-priority
Claims $4,887
---------- --------------
TOTAL $4,673 $11,254,887
About Ridge Park Office
Temecula, California-based Ridge Park Office, LLC, filed for
Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-33683) on
July 22, 2011, represented by Krikor J. Meshefejian, Esq., at
Levene, Neale, Bender, Yoo & Brill LLP. In its petition, the
Debtor estimated $10 million to $50 million in both assets and
debts. The petition was signed by Paul Garrett, president of
Redhawk Communities, Inc.
Ridge Park affiliates that have separately filed Chapter 11
petitions are: RCI Regional Grove, LLC (Case No. 11-22055) filed
on April 12, 2011; Diaz Road Properties, LLC (Case No. 11-28473)
and RCI Rio Nedo, LLC (Case No. 11-28470) both filed on June 6,
2011; and Woods Canyon Associates L.P. (Case No. 11-32418) filed
on July 11, 2011. The Ridge Park case was originally assigned to
Judge Catherine E. Bauer but was later moved to Judge Scott C.
Clarkson, who oversees the affiliates' cases.
Prepetition lender CSMC 2006-C5 Better World Limited Partnership
is represented by:
H. Mark Mersel, Esq.
BRYAN CAVE LLP
3161 Michelson Drive, Suite 1500
Irvine, California
E-mail: mark.mersel@bryancave.com
SBARRO INC: Trustee Objects to Key Employee Incentive Plan
----------------------------------------------------------
BankruptcyData.com reports that the U.S. Trustee assigned to the
Sbarro case filed with the U.S. Bankruptcy Court an objection to
the Debtors' motion for approval of a key employee incentive plan.
According to the Trustee, "the Debtors fail to include vital
financial information without which it is impossible for the
Court, creditors or the United States Trustee to determine if the
Bonus Motion is an incentive program, or merely a program that
rewards the participants for remaining employed with the Debtors."
About Sbarro Inc.
The Sbarro family started its business after moving to Brooklyn,
New York, from Naples, Italy, in 1956. Today Sbarro is a leading,
global Italian quick service restaurant concept with approximately
5,170 employees, 1,045 restaurants throughout 42 countries, and
annual revenues in excess of $300 million.
Sbarro Inc. sought bankruptcy protection under Chapter 11 (Bankr.
S.D.N.Y. Lead Case No. 11-11527) to eliminate about $200 million
in debt. The Debtor disclosed $51,537,899 in assets and
$460,975,646 in liabilities as of the Chapter 11 filing.
Sbarro said it has reached an agreement with all of its second-
lien secured lenders and approximately 70% of its senior
noteholders on the terms of a reorganization plan that will
eliminate more than half of the Company's total indebtedness.
Edward Sassower, Esq., and Nicole Greenblatt, Esq., at Kirkland &
Ellis, LLP, serve as the Debtors' general bankruptcy counsel.
Rothschild, Inc., is the Debtors' investment banker and financial
advisor. PriceWaterhouseCoopers LLP is the Debtors' bankruptcy
consultants. Marotta Gund Budd & Dzera, LLC, is the Debtors'
special financial advisor. Curtis, Mallet-Prevost, Colt & Mosle
LLP serves as the Debtors' conflicts counsel. Epiq Bankruptcy
Solutions, LLC, is the Debtors' claims agent. Sard Verbinnen & Co
is the Debtors' communications advisor.
SCIENTIFIC GAMES: Moody's Rates $247MM Sr. Sec. Revolver at Ba1
---------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to Scientific
Games International's $247.0 million senior secured revolver
expiring in 2015 and $555.8 million senior secured term loan due
2015, which represents substantially all of SGI's $250 million
senior secured revolver and $569.2 million senior secured term
loan that comprise SGI's bank facility. At the same time, Moody's
affirmed all of Scientific Game's other ratings, including the Ba3
Corporate Family Rating (CFR) and Probability of Default Rating
(PDR) of SGI's parent company, Scientific Games Corporation (SGC).
The outlook remains stable.
The amendment to the senior secured bank facility extends the
maturity date of substantially all of revolver commitments and
term loans under the facility to June 2015 from June 2013. The
amendment also revises the company's total leverage and senior
leverage ratio and, among other things, amends certain restricted
payment baskets.
"The extension of the maturity of substantially all of commitments
and term loan under the bank facility leaves Scientific Games with
no material debt maturities until 2015", said Peggy Holloway,
Senior Credit Officer at Moody's Investors Service.
Ratings assigned:
Approximately $247.0 million senior secured revolver expiring 2015
at Ba1 (LGD 2, 19%)
$555.8 million senior secured term loan due 2015 at Ba1 (LGD 2,
19%)
Ratings affirmed and LGD assessments revised:
Corporate Family Rating at Ba3
Probability of Default Rating at Ba3
Approximately $3.0 million secured revolver expiring 2013 at Ba1
(LGD 2, 19%)
Approximately $13.4 million senior secured term loan due 2013 at
Ba1 (LGD 2, 19%)
$250 million 8.125% senior subordinated notes due 2018 at B1 (LGD
5, 73% from LGD 5, 78%)
$200 million 7.875% senior subordinated notes due 2016 at B1 (LGD
5, 73% from LGD 5, 78%)
$350 million 9.25% senior subordinated notes due 2019 at B1 (LGD
5, 73% from LGD 5, 78%)
RATING RATIONALE
SGC's Ba3 Corporate Family Rating reflects the recurring nature of
the company's contract-based earnings and cash flow and its
substantial presence in the instant ticket segment of the lottery
industry. SGC supplies instant lottery tickets to 43 of the 44
U.S. jurisdictions that sell instant lottery tickets. Positive
consideration is also given to SGC's historical success of
extending most of its contracts -- and Moody's expectation that
the company will continue to extend or renew most of its lottery
contracts as they come up for renewal -- and good international
growth prospects. Key concerns include Moody's view that the
anemic macro-economic environment may curtail spending on
discretionary purchases such as lottery tickets, and that pricing
on new contracts, re-bids and extensions may decline due to
competitive pressure. Additionally Moody's expects the company's
relatively high debt levels -- debt/EBITDA is currently at about
5.5 times -- to improve only modestly in the near term due to
capital and investment spending.
Pursuant to Moody's Loss Given Default Methodology, SGC's senior
secured debt is rated two notches above the company's CFR given
the level of subordinated lien debt that provides loss absorption
to the senior secured debt holders. The rating of the subordinated
debt is one notch below the CFR reflecting the significant amount
of priority debt in the capital structure.
The stable outlook reflects Moody's expectation that SGC can
continue to extend or renew most of its lottery contracts as they
come up for renewal, and that the operating environment for the
company's core lottery business -- which performed relatively well
during the economic downturn -- will grow further, thereby
enabling SGC to improve credit metrics, albeit modestly.
Ratings could be pressured if the company is not able to retain
profitable contracts as they come up for renewal or extension or
if debt/EBITDA increases much above its current level of 5.5
times. Ratings improvement is possible if the company demonstrates
it can achieve and sustain debt to EBITDA at or below 3.5 times.
The principal methodology used in rating Scientific Games
Corporation was the Global Business & Consumer Service Industry
Rating Methodology published in October 2010. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in June
2009.
Scientific Games Corporation (SGC) is a leading integrated
supplier of instant tickets, systems, and services to lotteries
worldwide. The company also supplies server based gaming machines
and systems, interactive sports betting terminals and systems, and
wagering systems and services to licensed bookmakers and pari-
mutuel operators. The company generates about $900 million of
annual revenues.
SIERRA TIMESHARE: Fitch Puts Rating on $30.9 Mil. Notes at 'BBsf'
-----------------------------------------------------------------
Fitch Ratings assigns ratings to Sierra Timeshare 2011-2
Receivables Funding LLC (Sierra 2011-2). The Rating Outlook is
Stable for all classes of notes.
Fitch's stress and rating sensitivity analysis are discussed in
the presale report titled 'Sierra Timeshare 2011-2 Receivables
Funding LLC,' dated Aug. 22, 2011, which is available on Fitch's
web site.
Fitch has taken the following rating actions:
Sierra Timeshare 2011-2 Receivables Funding LLC:
-- $202,170,000 class A vacation timeshare loan backed notes
'Asf'; Outlook Stable;
-- $66,850,000 class B vacation timeshare loan backed notes
'BBBsf'; Outlook Stable;
-- $30,980,000 class C vacation timeshare loan backed notes
'BBsf'; Outlook Stable.
SOMERSET PROPERTIES: Has 9th Interim Consent Order on Use of Cash
-----------------------------------------------------------------
On July 27, 2011, the U.S. Bankruptcy Court for the Eastern
District of North Carolina entered a ninth interim order granting
Somerset Properties SPE LLC permission to use cash collateral to
make payment of its ordinary and necessary operating expenses
including utilities, payroll, and maintenance, subject to the
limits as set forth in a budget, subject to a 10% line item
variance.
The Debtor is not authorized to use cash collateral for legal fees
and expenses, management fees, or other professional fees of any
kind, absent court approval.
The lenders will immediately cause $246,354 of cash collateral,
consisting of held funds, to be wired to DIP account pursuant to
the Debtor's Instructions.
The Debtor's use of cash collateral will expire or terminate on
the earliest of: (i) the date the Debtor ceases operations of its
business; (ii) the non-compliance or default of the Debtor with
any terms and provisions of this Order; or (iii) another order
concerning Cash Collateral is entered, or (iv) dismissal or
conversion of this chapter 11 case to chapter 7.
To the extent of cash collateral used by the Debtor, Lenders are
granted liens in all of the Debtor's post-petition leases, rents,
royalties, issues, profits, revenue, income, deposits, securities,
and other benefits of the properties to the same extent, priority,
and perfection as they have in said collateral pre-petition.
A copy of the Somerset Corporate Center Operating Budget is
available at:
http://bankrupt.com/misc/somerset.9thinterimconsentorder.pdf
As reported in the TCR on July 15, 2011, CSFB 2001-CP4 Bland Road,
LLC, and CSFB 2001-CP4 Falls of Neuse, LLC, claim to be the
current holders of loans to Somerset, each in the original
principal amount of $15,500,000, and further claim that the Loans
are secured by liens on all of Somerset's assets including but not
limited to the Properties and all rents, royalties, issues,
profits, revenue, income, deposits, securities, and other "cash
collateral" as that term is defined in Section 363(a) of the
Bankruptcy Code.
LNR Partners, LLC is the "Special Servicer" of the Loans, and the
nonowner manager and representative of CSFB 2001-CP4 Bland Road,
LLC, and CSFB 2001-CP4 Falls of Neuse, LLC, in this Chapter 11
case. CSFB 2001-CP4 Bland Road, LLC, CSFB 2001-CP4 Falls of Neuse,
LLC, and LNR are referred collectively and individually as the
"Lenders."
Midland Loan Services, Inc., the "Master Servicer" of the Loans,
asserts that it is not a manager or representative of CSFB 2001-
CP4 Bland Road, LLC, and CSFB 2001-CP4 Falls of Neuse, LLC, in
this case, and asserts no interest in cash collateral.
The Debtor disputes the claims of the Lenders and Midland.
Raleigh, North Carolina-based Somerset Properties SPE, LLC, owns
six office buildings in Raleigh, North Carolina. The Company
filed for Chapter 11 bankruptcy protection (Bankr. E.D.N.C.
Case No. 10-09210). Samantha J. Younker, Esq., and William P.
Janvier, Esq., at Janvier Law Firm, PLLC, in Raleigh, N.C.,
represent the Debtor as bankruptcy counsel. The law firm of
Blanchard, Miller, Lewis & Isley, P.A., in Raleigh, N.C., is the
Debtor's special counsel. The Company disclosed $36,496,015 in
assets and $28,825,521 in liabilities as of the Chapter 11 filing.
SPANISH BROADCASTING: Attiva Capital Owns 9.3% of Class A Shares
----------------------------------------------------------------
In a Schedule 13D filing with the U.S. Securities and Exchange
Commission, Attiva Capital Partners Ltd. and its affiliates
disclosed that they beneficially own 387,691 shares of Spanish
Broadcasting Systems, Inc.'s Class A Common Stock, which is
approximately 9.30% of the total shares of the Company's Class A
Common Stock outstanding. As indicated in the Form 10K/A , filed
by the Company with the SEC as of April 11, 2011, there were
41,669,805 shares of Class A common stock or approximately
4,167,000 shares after the reverse stock split became effective on
July 11, 2011.
A full-text copy of the filing is available for free at:
http://is.gd/3ItDyu
About Spanish Broadcasting
Headquartered in Coconut Grove, Florida, Spanish Broadcasting
System, Inc. -- http://www.spanishbroadcasting.com/-- owns and
operates 21 radio stations targeting the Hispanic audience. The
Company also owns and operates Mega TV, a television operation
with over-the-air, cable and satellite distribution and affiliates
throughout the U.S. and Puerto Rico. Its revenue for the twelve
months ended Sept. 30, 2010, was approximately $140 million.
The Company reported net income of $15.04 million on $136.12
million of net revenue for the year ended Dec. 31, 2010, compared
with a net loss of $13.78 million on $139.39 million of net
revenue during the prior year.
The Company's balance sheet at June 30, 2011, showed $481.77
million in total assets, $434.08 million in total liabilities,
$92.35 million in cummulative exchangeable redeemable preferred
stock and a $44.66 million total stockholders' deficit.
* * *
In November 2010, Moody's Investors Service upgraded the corporate
family and probability of default ratings for Spanish Broadcasting
System, Inc., to 'Caa1' from 'Caa3' based on improved free cash
flow prospects due to better than anticipated cost cutting and the
expiration of an unprofitable interest rate swap agreement.
Moody's said Spanish Broadcasting's 'Caa1' corporate family rating
incorporates its weak capital structure, operational pressure in
the still cyclically weak economic climate, generally narrow
growth prospects (though Spanish language is the strongest growth
prospect) given the maturity and competitive pressures in the
radio industry, and the June 2012 maturity of its term loan
magnify this challenge.
In July 2010, Standard & Poor's Ratings Services raised its
corporate credit rating on Miami, Fla.-based Spanish Broadcasting
System Inc. to 'B-' from 'CCC+', based on continued improvement in
the company's liquidity position. The rating outlook is stable.
"The rating action reflects S&P's expectation that, despite very
high leverage, SBS will have adequate liquidity over the
intermediate term to meet debt maturities, potential swap
settlements, and operating needs until its term loan matures on
June 11, 2012," said Standard & Poor's credit analyst Michael
Altberg.
SPANISH POINT: Court OKs Case Dismissal and Cash Collateral Use
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas has
dismissed the Chapter 11 case of Spanish Point, LP.
To recall, the U.S. Trustee for Region 6 sought the conversion of
the Debtor's case to a Chapter 7 case or the dismissal of the
case. The Court signed the Dismissal Order on June 21, 2011,
noting that the Debtor did not oppose the Trustee's Motion to
Dismiss.
In a separate order, the Court granted Spanish Point, LP's motion
to use cash collateral to pay for professional fees and expenses.
According to the Cash Collateral Order, the Debtor will remit
payment of $18,000 of cash collateral to Coffin & Driver, PLLC for
the payment of necessary and reasonable professional fees and
expenses allowed by Section 363 of the Bankruptcy Code. The
Debtor's remaining cash -- after the operating expenses approved
by the Lender in writing are paid -- will be preserved and paid to
the Lender promptly after foreclosure of the Property.
About Spanish Point
Dallas, Texas-based Spanish Point, LP, consists of TRA SP GenPar,
Inc., its General Partner, and CDB Spanish Point LP, its
Limited Partner. The Debtor is the owner of a 300 unit apartment
community located at 4121 Harvest Hill Road, in Dallas, Texas,
commonly referred to as Spanish Point Apartments. Spanish Point
consists of approximately 60 separate buildings with one to three
bedroom apartments ranging from approximately 600 to 1,500 square
feet. Spanish Point was approximately 94% leased as of the
Petition Date.
Spanish Point filed for Chapter 11 bankruptcy protection (Bankr.
N.D. Tex. Case No. 10-37791) on Nov. 1, 2010. Vickie L. Driver,
Esq., at Coffin & Driver, PLLC, assists the Debtor in its
restructuring effort. The Debtor disclosed $11,185,623 in assets
and $11,109,385 in liabilities as of the Chapter 11 filing.
SPANISH TRAIL: Expects to Post Operating Profit for the Year
------------------------------------------------------------
Tim O'Reiley at Las Vegas Review-Journal reports that Spanish
Trail Country Club expects to post an operating profit for the
balance of the year.
According to its Chapter 11 operating budget approved by U.S.
Bankruptcy Court Judge Bruce Markell, the club expects to net
$58,000 on $1.9 million in revenues over the next 13 weeks, after
which it must return to court for an extension. The club projects
$532,000 in annual earnings, but did not disclose how much the
debt service was supposed to be.
Based in Las Vegas, Nevada, Spanish Trail Country Club Inc. filed
for Chapter 11 bankruptcy Protection (Bankr. D. Nev. Case No. 11-
23466) on Aug. 24, 2011. Judge Bruce A. Markell presides over the
case. Gerald M. Gordon, Esq., at Gordon Silver, represents the
Debtor. The Debtor estimated assets of between $1 million and
$10 million, and debts of between $10 million and $50 million.
SPECTRAWATT INC: Files Schedules of Assets and Liabilities
----------------------------------------------------------
SpectraWatt, Inc. filed with the U.S. Bankruptcy Court for the
Southern District of New York its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property
B. Personal Property $33,908,559
C. Property Claimed as Exempt
D. Creditors Holding
Secured Claims $38,148,777
E. Creditors Holding
Unsecured Priority Claims $188,219
F. Creditors Holding
Unsecured Non-priority
Claims $339,905
----------- -----------
TOTAL $33,908,559 $38,677,902
A full-text copy of the Schedules Assets and Liabilities is
available at:
http://bankrupt.com/misc/SpectraWatt_SkedsOfAssets.pdf
About SpectraWatt
Based in Hopewell Junction, New York, SpectraWatt Inc. was spun
off from Intel in June 2008 and raised $50 million through a sale
of preferred stock to its former parent and other investors
including Goldman Sachs Group Inc.'s Cogentrix Energy LLC, PCG
Clean Energy and Berlin-based solar panel maker Solon SE. The
Company has also issued about $36.7 million in senior secured
convertible notes.
The Company has a manufacturing facility in Hopewell Junction
designed to generate over 200 megawatts of production per year.
The plant began operations in January 2010 with an initial
capacity of only 30 megawatts per year.
The Company began winding down its affairs late last year after
encountering setbacks and shut down the lone manufacturing
facility in March, and fired all its workers.
SpectraWatt filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No.
11-37366) on Aug. 19, 2011, in Poughkeepsie, New York. Mark W.
Wege, Esq., at King & Spalding LLP, serves as counsel to the
Debtor.
SpectraWatt estimated as much as $50 million in both debt and
assets as of the Chapter 11 filing.
SPECTRAWATT INC: Files Statement of Financial Affairs
-----------------------------------------------------
SpectraWatt, Inc., filed with the U.S. Bankruptcy Court for the
Southern District of New York its statement of financial affairs,
disclosing that it earned $9,335,591 from operations in 2010
fiscal year and $3,416,090 from January 1, 2011 to the Petition
Date.
The Debtor also lists debts that are not primarily consumer debts,
as well as payments made to or for the benefit of creditors, who
are or were insiders.
Three lawsuits involving the Debtor are currently pending:
-- Kelly Services Inc. v. SpectraWatt, Inc., Case No.
2011-1935, Supreme Court of the State of New York, County
of Saratoga;
-- Ferro Corporation v. SpectraWatt, Inc., Case No.
CV-11-748782, Cuyahoga County, Ohio Common Pleas Court; and
-- SpectraWatt, Inc. v. 1 Soltech, Inc., Cause No.
DC-11-07652-A, 14th District Court, Dallas County, Texas.
A full-text copy of the Debtor's statement of financial affairs is
available for free at:
http://bankrupt.com/misc/SpectraWatt_SOFA_08242011.pdf
About SpectraWatt
Based in Hopewell Junction, New York, SpectraWatt Inc. was spun
off from Intel in June 2008 and raised $50 million through a sale
of preferred stock to its former parent and other investors
including Goldman Sachs Group Inc.'s Cogentrix Energy LLC, PCG
Clean Energy and Berlin-based solar panel maker Solon SE. The
Company has also issued about $36.7 million in senior secured
convertible notes.
The Company has a manufacturing facility in Hopewell Junction
designed to generate over 200 megawatts of production per year.
The plant began operations in January 2010 with an initial
capacity of only 30 megawatts per year.
The Company began winding down its affairs late last year after
encountering setbacks and shut down the lone manufacturing
facility in March, and fired all its workers.
SpectraWatt filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No.
11-37366) on Aug. 19, 2011, in Poughkeepsie, New York. Mark W.
Wege, Esq., at King & Spalding LLP, serves as counsel to the
Debtor.
SpectraWatt estimated as much as $50 million in both debt and
assets as of the Chapter 11 filing.
SPECTRAWATT INC: Employs Brad Walker as CEO and CRO
---------------------------------------------------
SpectraWatt, Inc., seeks the U.S. Bankruptcy Court for the
Southern District of New York's permission to employ Brad Walker
as the Debtor's chief restructuring officer and chief executive
officer and approval of the terms and conditions of their
engagement agreement under which Mr. Walker has been retained
prepetition and will be retained and compensated postpetition.
In conjunction with retaining Mr. Walker, the Debtor also seeks
authority, pursuant to a Work Authorization that has been made
part of the Engagement Agreement, to retain Daniel Warsowick, who
has been employed by Mr. Walker to assist him in discharging his
duties. Mr. Warsowick will be employed as Mr. Walker's associate
and will assist Mr. Walker with various financial matters arising
in the administration of the case and, in particular, will assist
in preparing schedules, statements, and monthly operating reports.
The Debtor also asks that Mr. Walker not be required to file
monthly fee statements and will only be required to file a final
fee application to seek approval of his success fee. The Debtor
engaged Mr. Walker effective January 17, 2011, to provide the
Debtor with the financial advisory, restructuring and managerial
services of a CRO. As of March 23, 2011, Mr. Walker has also been
employed in the additional role of the Debtor's CEO, and has also
been appointed as a member of the Debtor's board of directors.
As set forth in the Engagement Agreement, the Debtor and Mr.
Walker agreed to these terms of compensation:
(a) Mr. Walker's hourly fee: $250;
(b) Mr. Warsowick's hourly fee: $195;
(c) Bonuses, collectively, the "Success Fee": (i) $25,000
bonus for successful sale of the Debtor's assets or of the
Debtor, in a format approved by the Court, and (ii)
$25,000 bonus for any positive recovery of proceeds for
holders of the Debtor's prepetition secured debt, after
taking into account consideration amounts paid to Roth &
Rau AG pursuant to its purchase-money security interest;
(d) Retainer: $35,000, to be held until completion of the
engagement and then applied to any outstanding balances,
if any;
(e) Expenses: Mr. Walker will be reimbursed for actual
expenses directly relating to any work undertaken pursuant
to the Engagement Agreement; and
(f) Carve Out: The Debtor agrees that Mr. Walker will
participate fully on a pro-rata basis in any
Court-approved "carve-out" of funds from cash collateral
to be utilized for the payment of professional fees and
expenses in the case.
Mr. Walker assures that he is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
About SpectraWatt
Based in Hopewell Junction, New York, SpectraWatt Inc. was spun
off from Intel in June 2008 and raised $50 million through a sale
of preferred stock to its former parent and other investors
including Goldman Sachs Group Inc.'s Cogentrix Energy LLC, PCG
Clean Energy and Berlin-based solar panel maker Solon SE. The
Company has also issued about $36.7 million in senior secured
convertible notes.
The Company has a manufacturing facility in Hopewell Junction
designed to generate over 200 megawatts of production per year.
The plant began operations in January 2010 with an initial
capacity of only 30 megawatts per year.
The Company began winding down its affairs late last year after
encountering setbacks and shut down the lone manufacturing
facility in March, and fired all its workers.
SpectraWatt filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No.
11-37366) on Aug. 19, 2011, in Poughkeepsie, New York. Mark W.
Wege, Esq., at King & Spalding LLP, serves as counsel to the
Debtor.
SpectraWatt estimated as much as $50 million in both debt and
assets as of the Chapter 11 filing.
STATION CASINOS: District to Hear Govt. Appeal on Tax Liability
---------------------------------------------------------------
The United States Government filed an appeal from the March 24,
2011 order entered by the U.S. Bankruptcy Court for the District
of Nevada determining that Station Casinos Inc. and its debtor
affiliates have no federal tax liability arising as a consequence
of the consummation of their confirmed Plan of Reorganization and
the related approved Restructuring Transactions.
The Government elected to have the appeal heard by the U.S.
District Court for the District of Nevada rather than the
Bankruptcy Appellate Panel.
On July 15, 2011, the Bankruptcy Court notified parties-in-
interest that the appeal has been closed.
The U.S. Government wants the U.S. District Court for the
District of Nevada to determine:
1. Whether the U.S. Bankruptcy Court for the District of
Nevada erred in determining that no administrative tax
claims against the Debtors would result from or arise out
of the implementation of the Station Casinos Inc. Plan, the
entry into or the closing of the Stalking Horse Asset
Purchase Agreement or the other Restructuring Transactions
contemplated thereby, and that as a result, neither the
Debtors nor the Plan Administrator are obligated to
establish a tax claims reserve.
2. Whether the Bankruptcy Court erred in determining that the
Government is bound by any determinations contained in the
Disclosure Statement, the Disclosure Supplement, the SCI
Plan, the Plan Findings and Conclusions and the
Confirmation Order, with respect to its ability to assess
or collect any federal tax liability arising against any
party or non-party, including but not limited to:
a. Liabilities arising out of the implementation of the
SCI Plan, the entry into or the closing of the
Stalking Horse APA or the other Restructuring
Transactions contemplated thereby;
b. Whether the Purchaser or any other party will have
successor or transferee liability of any kind or
nature arising from or relating to the transactions
contemplated under the SCI Plan;
c. Liabilities arising under Section 3713 of the Money
and Finance Code or Sections 6012(b)(3) and 6151(a)
of the Internal Revenue Code.
3. Whether the Bankruptcy Court erred in granting relief that
was not sought by the parties and was not fully briefed;
and whether the Bankruptcy Court further erred in not
permitting additional briefing at the government's
suggestion.
4. Whether the Bankruptcy Court erred by effectively
converting a Chapter 11 liquidating plan into a plan whose
primary purpose is to avoid or evade taxes.
5. Whether the Bankruptcy Court erred in finding that the
United States argued, "that the Court cannot make the Tax
Determination or otherwise grant the relief sought in the
Section 505 Motion because any potential tax liabilities
arising from the implementation of the SCI Plan and
related approved Restructuring Transactions arise after the
Effective Date of the SCI Plan and therefore do not relate
to the administration of the estate."
6. Whether the Bankruptcy Court erred in its conclusion of law
that, "Rather, the Section 505 Order determines the amount
of the Debtors' tax liability, as authorized by Bankruptcy
Code section 505."
7. Whether the Bankruptcy Court erred in basing its ruling
regarding the existence of administrative tax claims on
"the uncontested facts submitted in support of the Section
505 Motion," when it did not determine which facts were
uncontested.
8. Whether the Bankruptcy Court erred in determining that its
ruling was not an "advisory opinion."
Bankruptcy Judge Gregg W. Zive had granted the Debtors' motion,
determining that they have no federal tax liability arising as a
consequence of the consummation of their confirmed Plan of
Reorganization and the related approved Restructuring
Transactions. "Based upon the uncontested facts submitted in
support of the Section 505 Motion, the Court concludes that no
administrative tax claim(s) against the Debtors for income tax
will result from or arise out of the implementation of the SCI
Plan, the Stalking Horse APA or the other Restructuring
Transactions contemplated thereby," Judge Zive explained in his
Findings of Facts and Conclusions of Law. Therefore, he said,
neither the Debtors nor the Plan Administrator will be obligated
to establish the Tax Claims Reserve.
About Station Casinos
Station Casinos, Inc., is a gaming and entertainment company that
currently owns and operates nine major hotel/casino properties
(one of which is 50% owned) and eight smaller casino properties
(three of which are 50% owned), in the Las Vegas metropolitan
area, as well as manages a casino for a Native American tribe.
Station Casinos Inc., together with its affiliates, filed for
Chapter 11 protection on July 28, 2009 (Bankr. D. Nev. Case No.
09-52477). Milbank, Tweed, Hadley & McCloy LLP serves as legal
counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck,
LLP, as regulatory counsel; and Lewis and Roca LLP is local
counsel. Lazard Freres & Co. LLC is investment banker and
financial advisor. Kurtzman Carson Consultants LLC is the claims
and noticing agent. Brad E. Scheler, Esq., and Bonnie Steingart,
Esq., at Fried, Frank, Shriver, Harris & Jacobson LLP, in New
York, serve as counsel to the Official Committee of Unsecured
Creditors.
In its bankruptcy petition, Station Casinos said that it had
assets of $5,725,001,325 against debts of $6,482,637,653 as of
June 30, 2009. About 4,378,929,997 of its liabilities constitute
unsecured or subordinated debt securities.
Green Valley Ranch Gaming, LLC and thirty other affiliates of
Station Casinos Inc. sought bankruptcy protection under Chapter 11
protection on April 12, 2011. First to file among the April 12
Debtors was Auburn Development, LLC (Bankr. D. Nev. Case No. 11-
51188). The April 12 Debtors filed a prepackaged plan of
reorganization together with their Chapter 11 petitions to
reorganize debts and consummate the sale of the Green Valley Ranch
Resort, Spa & Casino to a group of buyers led by the Fertitta
family.
Bankruptcy Creditors' Service, Inc., publishes Station Casinos
Bankruptcy News. The newsletter tracks the Chapter 11 proceedings
of Station Casinos Inc. and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)a
STATION CASINOS: FTI Says It Has No Conflict of Interest
--------------------------------------------------------
The Bankruptcy Court previously authorized Station Casinos Inc. to
employ FTI Consulting, Inc., as their financial advisors, nunc pro
tunc to August 11, 2009.
The U.S. Trustee asked the Court to carefully review the
engagement letters and the various applications and supporting
declarations to determine whether FTI Consulting, Inc. has
adequately complied with its duties under Rule 2014(a) of the
Federal Rules of Bankruptcy Procedure. The U.S. Trustee added
that the Court should consider whether FTI has or had a
disqualifying conflict or adverse interest, because of its
multiple engagements with the various Debtors and with the
Administrative Agent to the Senior Lenders.
In response to the U.S. Trustee, FTI Consulting points out that
although it was engaged by both the lenders and the Debtor at
different times, ethical walls were established between the
teams.
"Not only were there no common members between the teams, but the
team members were forbidden to discuss the engagements outside of
their own team, and controls were enacted to limit data access to
the specific team members on each engagement," Samuel A.
Schwartz, Esq., in Las Vegas Nevada, says. He adds that "these
arrangements proved effective during the pendency of this case,
and no information was shared between the two teams."
Accordingly, FTI Consulting asks the Court to approve the April
12 Debtors' application to retain FTI Consulting.
About Station Casinos
Station Casinos, Inc., is a gaming and entertainment company that
currently owns and operates nine major hotel/casino properties
(one of which is 50% owned) and eight smaller casino properties
(three of which are 50% owned), in the Las Vegas metropolitan
area, as well as manages a casino for a Native American tribe.
Station Casinos Inc., together with its affiliates, filed for
Chapter 11 protection on July 28, 2009 (Bankr. D. Nev. Case No.
09-52477). Milbank, Tweed, Hadley & McCloy LLP serves as legal
counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck,
LLP, as regulatory counsel; and Lewis and Roca LLP is local
counsel. Lazard Freres & Co. LLC is investment banker and
financial advisor. Kurtzman Carson Consultants LLC is the claims
and noticing agent. Brad E. Scheler, Esq., and Bonnie Steingart,
Esq., at Fried, Frank, Shriver, Harris & Jacobson LLP, in New
York, serve as counsel to the Official Committee of Unsecured
Creditors.
In its bankruptcy petition, Station Casinos said that it had
assets of $5,725,001,325 against debts of $6,482,637,653 as of
June 30, 2009. About 4,378,929,997 of its liabilities constitute
unsecured or subordinated debt securities.
Green Valley Ranch Gaming, LLC and thirty other affiliates of
Station Casinos Inc. sought bankruptcy protection under Chapter 11
protection on April 12, 2011. First to file among the April 12
Debtors was Auburn Development, LLC (Bankr. D. Nev. Case No. 11-
51188). The April 12 Debtors filed a prepackaged plan of
reorganization together with their Chapter 11 petitions to
reorganize debts and consummate the sale of the Green Valley Ranch
Resort, Spa & Casino to a group of buyers led by the Fertitta
family.
Bankruptcy Creditors' Service, Inc., publishes Station Casinos
Bankruptcy News. The newsletter tracks the Chapter 11 proceedings
of Station Casinos Inc. and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)a
STATION CASINOS: Brown Rudnick Okayed as GVR Panel Co-Counsel
-------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 case of Green Valley Ranch Gaming, LLC, sought and
obtained the Bankruptcy Court's authority to retain Brown Rudnick
LLP as its co-counsel, nunc pro tunc May 2, 2011.
As co-counsel, Brown Rudnick will:
a. assist and advise the Committee in its discussions with GVR
and other parties-in-interest regarding the overall
administration of the case;
b. represent the Committee at hearings to be held before the
Court and communicating with the Committee regarding the
matters heard and the issues raised as well as the
decisions and considerations of the Court;
c. assist and advise the Committee in its examination and
analysis of the conduct of GVR's affairs;
d. review and analyze pleadings, Orders, schedules, and other
documents filed and to be filed with the Court by
interested parties in these cases; advising the Committee
as to the necessity, propriety, and impact of the foregoing
upon this case; and consenting or objecting to pleadings or
Orders on behalf of the Committee, as appropriate;
e. assist the Committee in preparing applications, motions,
memoranda, proposed Orders, and other pleadings as may be
required in support of positions taken by the Committee,
including all trial preparation as may be necessary;
f. confer with the professionals retained by GVR and other
parties-in-interest, as well as with other professionals as
may be selected and employed by the Committee;
g. coordinate the receipt and dissemination of information
prepared by and received from GVR's professionals, as well
as information as may be received from professionals
engaged by the Committee or other parties-in-interest in
these cases;
h. participate in examinations of GVR and other witnesses as
may be necessary in order to analyze and determine, among
other things, GVR's assets and financial condition, whether
GVR has made any avoidable transfers of property, or
whether causes of action exist on behalf of the GVR's
estate; and
i. assist the Official Committee generally in performing other
services as may be desirable or required for the discharge
of the Committee's duties pursuant to Section 1103 of the
Bankruptcy Code.
Brown Rudnick will be paid according to its hourly professional
rates:
Attorney $310 to $995
Paraprofessional $100 to $295
It is anticipated that the lead Brown Rudnick attorneys who will
represent the Committee are:
Robert J. Stark, Esq. $960 per hour
Jeremy B. Coffey, Esq. $740 per hour
Howard S. Steel, Esq. $620 per hour
Brown Rudnick will also be reimbursed of any necessary out-of-
pocket expenses.
Robert J. Stark, Esq., a member at Brown Rudnick LLP, assures the
Court that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Committee.
About Station Casinos
Station Casinos, Inc., is a gaming and entertainment company that
currently owns and operates nine major hotel/casino properties
(one of which is 50% owned) and eight smaller casino properties
(three of which are 50% owned), in the Las Vegas metropolitan
area, as well as manages a casino for a Native American tribe.
Station Casinos Inc., together with its affiliates, filed for
Chapter 11 protection on July 28, 2009 (Bankr. D. Nev. Case No.
09-52477). Milbank, Tweed, Hadley & McCloy LLP serves as legal
counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck,
LLP, as regulatory counsel; and Lewis and Roca LLP is local
counsel. Lazard Freres & Co. LLC is investment banker and
financial advisor. Kurtzman Carson Consultants LLC is the claims
and noticing agent. Brad E. Scheler, Esq., and Bonnie Steingart,
Esq., at Fried, Frank, Shriver, Harris & Jacobson LLP, in New
York, serve as counsel to the Official Committee of Unsecured
Creditors.
In its bankruptcy petition, Station Casinos said that it had
assets of $5,725,001,325 against debts of $6,482,637,653 as of
June 30, 2009. About 4,378,929,997 of its liabilities constitute
unsecured or subordinated debt securities.
Green Valley Ranch Gaming, LLC and thirty other affiliates of
Station Casinos Inc. sought bankruptcy protection under Chapter 11
protection on April 12, 2011. First to file among the April 12
Debtors was Auburn Development, LLC (Bankr. D. Nev. Case No. 11-
51188). The April 12 Debtors filed a prepackaged plan of
reorganization together with their Chapter 11 petitions to
reorganize debts and consummate the sale of the Green Valley Ranch
Resort, Spa & Casino to a group of buyers led by the Fertitta
family.
Bankruptcy Creditors' Service, Inc., publishes Station Casinos
Bankruptcy News. The newsletter tracks the Chapter 11 proceedings
of Station Casinos Inc. and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)a
STATION CASINOS: Downey Brand Okayed as GVR Panel's Nevada Counsel
------------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 case of Green Valley Ranch Gaming, LLC, sought and
obtained the Bankruptcy Court's authority to retain Downey Branch,
LLP, as its local Nevada counsel.
As local counsel, Downey Branch will:
(a) advise the Committee on Nevada law and local practice;
(b) represent the Committee before the U.S. Bankruptcy Court
for the District of Nevada;
(c) assist the Committee with preparation and filing of court
documents; and
(d) perform any other services as directed by the Committee.
The customary hourly rates for each professional initially
assigned to the case are:
Professional Position Rate
------------ -------- ----
Sallie B. Armstrong, Esq. Partner $400
Jamie P. Dreher, Esq. Partner $360
Michelle N. Kazmar, Esq. Associate $255
Associate attorneys bill at rates ranging from $200 to $300 per
hour. Paralegals bill between $140 and $250 per hour.
Downey Brand will also be reimbursed for any necessary out-of-
pocket expenses.
Sallie B. Armstrong, Esq., a partner at Downey Brands, LLP,
assures the Court that her firm is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code,
and does not represent any interest adverse to the Committee.
About Station Casinos
Station Casinos, Inc., is a gaming and entertainment company that
currently owns and operates nine major hotel/casino properties
(one of which is 50% owned) and eight smaller casino properties
(three of which are 50% owned), in the Las Vegas metropolitan
area, as well as manages a casino for a Native American tribe.
Station Casinos Inc., together with its affiliates, filed for
Chapter 11 protection on July 28, 2009 (Bankr. D. Nev. Case No.
09-52477). Milbank, Tweed, Hadley & McCloy LLP serves as legal
counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck,
LLP, as regulatory counsel; and Lewis and Roca LLP is local
counsel. Lazard Freres & Co. LLC is investment banker and
financial advisor. Kurtzman Carson Consultants LLC is the claims
and noticing agent. Brad E. Scheler, Esq., and Bonnie Steingart,
Esq., at Fried, Frank, Shriver, Harris & Jacobson LLP, in New
York, serve as counsel to the Official Committee of Unsecured
Creditors.
In its bankruptcy petition, Station Casinos said that it had
assets of $5,725,001,325 against debts of $6,482,637,653 as of
June 30, 2009. About 4,378,929,997 of its liabilities constitute
unsecured or subordinated debt securities.
Green Valley Ranch Gaming, LLC and thirty other affiliates of
Station Casinos Inc. sought bankruptcy protection under Chapter 11
protection on April 12, 2011. First to file among the April 12
Debtors was Auburn Development, LLC (Bankr. D. Nev. Case No. 11-
51188). The April 12 Debtors filed a prepackaged plan of
reorganization together with their Chapter 11 petitions to
reorganize debts and consummate the sale of the Green Valley Ranch
Resort, Spa & Casino to a group of buyers led by the Fertitta
family.
Bankruptcy Creditors' Service, Inc., publishes Station Casinos
Bankruptcy News. The newsletter tracks the Chapter 11 proceedings
of Station Casinos Inc. and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)a
TAVERN ON THE GREEN: To Sell Trademark for Use Outside NYC
----------------------------------------------------------
Eric Hornbeck at Bankruptcy Law360 reports that Tavern on the
Green LP will auction off the lucrative trademark on the iconic
Central Park restaurant's name for use outside the New York City
area on Sept. 21, its trustee told a New York bankruptcy judge
Wednesday.
Law360 relates that Tavern on the Green's Chapter 7 trustee, Jil
Mazer-Marino of Meyer Suozzi English & Klein PC, told U.S.
Bankruptcy Judge Allan Gropper that the bankrupt restaurant had
received two proposals for the stalking horse bid and chose a $1.3
million bid by a group known as Tavern International.
About Tavern on the Green
Tavern on the Green LP was the operator of the 75-year-old
restaurant in New York's Central Park. Tavern on the Green was
founded in 1934 by New York Parks Commissioner Robert Moses and
the license was bought by restaurateur Warner LeRoy in 1974. The
Company filed for Chapter 11 (Bankr. S.D.N.Y. Case No. 09-15450)
on Sept. 9, 2009, estimating up to $50 million each in assets and
debts. The restaurant closed New Year's Eve 2010.
New York City -- the Tavern's landlord -- and the Debtor both
claimed ownership of the "Tavern on the Green" trademark.
In March 2010, the city of New York City won the right to the
trade name. Following the trademark ruling, the bankruptcy judge
converted the case to Chapter 7. Jil Mazer-Marino, appointed
Chapter 7 trustee, appealed the ruling. The parties put the
appeal on ice while they negotiated settlement.
TERRESTAR CORP: Seeks Repayment of $50 Million Loan to TSN
----------------------------------------------------------
Peg Brickley at Dow Jones' Daily Bankruptcy Review reports that
TerreStar Corp. is pressing its claim to be repaid for a
$50 million loan it made to its satellite network subsidiary over
the protests of creditors who say the funds were an infusion of
equity not to be repaid.
According to the report, creditors say the "loan" came at a time
when operating subsidiary TerreStar Networks Inc. was so troubled
its parent knew the debt could not be repaid. The parent company
says that's not so and warned that a ruling in favor of creditors
would make corporations think twice before trying to bail out
troubled units.
The report says the fight is set for hearing Sept. 19 in the U.S.
Bankruptcy Court in Manhattan, where TerreStar Networks filed for
Chapter 11 protection last year after its plan to build a
satellite smartphone network stalled for lack of cash.
Down Jones says creditors of TerreStar Networks say the parent saw
trouble ahead and labeled the equity infusion as a loan to "assure
itself of higher priority and a larger recovery" in the unit's
bankruptcy. Parent TerreStar Corp. says the $50 million debt was
always treated as a loan to the subsidiary.
The report notes it urged the bankruptcy court to block the
creditors' drive to have the debt recharacterized as equity,
saying their case lacks evidence that the parent company and its
operating unit "intended to do anything but engage in a loan
transaction."
The report relates that the outcome of the fight will affect the
distribution of the roughly $310 million left from the $1.375
billion sale of TerreStar Networks to Dish Network Corp. earlier
this year. Most of the money is being used to pay off secured
creditors.
Creditors outrank shareholders in the bankruptcy payment priority
scheme. If the official committee that represents TerreStart
Networks creditors prevails, TerreStar Networks' publicly traded
parent will itself be treated as a shareholder, with dim prospects
of recovery.
According to the report, Harbinger Capital Partners, Solus
Alternative Asset Management LP and Highland Capital Management LP
are backing the parent company in the fight. They own convertible
preferred stock in the parent company, which will have a better
chance of being worth something if the parent company clings to
its status as a creditor of the networks unit.
Networks' unsecured creditors are expected to be in the range of
10 cents to 15 cents on the dollar. If the parent company wins, it
could see a payoff of $5 million to $7.5 million. Most of that
would wind up in the pockets of preferred shareholders, who have
significant claims against the parent company.
The report adds common shareholders are expected to get nothing
out of the bankruptcy case of the Reston, Va., company.
About TerreStar Corp. and TerreStar Networks
TerreStar Corporation and TerreStar Holdings, Inc., filed
voluntary Chapter 11 petitions with the U.S. Bankruptcy Court for
the Southern District of New York on Feb. 16, 2011.
TSC's Chapter 11 filing joins the bankruptcy proceedings of
TerreStar Networks Inc. and 12 other affiliates, which filed on
Oct. 19, 2010. The October Chapter 11 cases are procedurally
consolidated under TSN's Case No. 10-15446 under Judge Sean H.
Lane.
TSC is the parent company of each of the October Debtors. TSC has
four wholly owned direct subsidiaries: TerreStar Holdings, Inc.,
TerreStar New York Inc., Motient Holdings Inc., and MVH Holdings
Inc.
TSC's case is jointly administered with the cases of seven of the
October Debtors under the caption In re TerreStar Corporation, et
al., Case No. 11-10612 (SHL). The seven Debtor entities who
sought joint administration with TSC are TerreStar New York Inc.,
Motient Communications Inc., Motient Holdings Inc., Motient
License Inc., Motient Services Inc., Motient Ventures Holdings
Inc., and MVH Holdings Inc.
TSC is a Delaware corporation whose main asset is the equity in
non-Debtor TerreStar 1.4 Holdings LLC, which has the right to use
a "1.4 GHz terrestrial spectrum" pursuant to 64 licenses issued by
the Federal Communication Commission. TSC also has an indirect
89.3% ownership interest in TerreStar Network, Inc., which
operates a separate and distinct mobile communications business.
TerreStar Holdings is a Delaware corporation that directly holds
100% of the interests in 1.4 Holdings LLC.
TerreStar Networks -- TSN -- the principal operating entity of
TSC, developed an innovative wireless communications system to
provide mobile coverage throughout the United States and Canada
using satellite-terrestrial smartphones. The system, however,
required an enormous amount of capital expenditures and initially
produced very little in the way of revenue. TSN's available cash
and borrowing capacity were insufficient to cover its funding;
thus, forcing TSN to seek bankruptcy protection in October 2010.
TSC estimated assets and debts of $100 million to $500million in
its Chapter 11 petition.
Ira S. Dizengoff, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP,
in New York, serves as counsel for the TSC and TSN Debtors.
Garden City Group is the claims and notice agent. Blackstone
Advisory Partners LP is the financial advisor.
The Garden City Group, Inc., is the claims and noticing agent in
the Chapter 11 cases. Otterbourg Steindler Houston & Rosen P.C.
is the counsel to the Official Committee of Unsecured Creditors
formed in TSN's Chapter 11 cases. FTI Consulting, Inc., is the
Committee's financial advisor.
TRIBUNE CO: Proposes 2011 Management Incentive Plan
---------------------------------------------------
Tribune Company and its debtor affiliates seek authority from
Judge Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware to continue their self-funding annual cash
Management Incentive Plan for 2011 for approximately 640
management employees, including top executives, with an aggregate
payout opportunity of approximately:
(a) $16.4 million -- representing a 50%-of-target payout -- if
the Company achieves "threshold" performance equal to
approximately 91% of its "planned" 2011 consolidated
operating cash flow goal included in the 2011 operating
plan that was approved by the Company's Board of Directors
on February 2, 2011;
(b) $32.4 million -- representing a 100%-of-target payout --
if the Company achieves "target" performance equal to
approximately 106% of its "planned" 2011 consolidated OCF
goal included in the 2011 operating plan that was approved
by the Board on February 2, 2011; and
(c) $42.5 million -- representing a 130%-of-target payout --
if the Company achieves "maximum" performance equal to
approximately 141% of its "planned" 2011 consolidated OCF
goal included in the 2011 operating plan that was approved
by the Board on February 2, 2011.
A full-text copy of the 2011 Management Incentive Plan is
available for free at:
http://bankrupt.com/misc/Tribune_2011IncentivePlan.pdf
The Debtors seek to continue in the ordinary course for 2011 the
historical MIP that has been a key component of their incentive-
based compensation structure since at least 1997. Like the 2008,
2009 and 2010 MIP programs that were approved by the Court, the
2011 MIP has been reviewed and approved by the Compensation
Committee of the Company's Board and was developed with and
analyzed by Mercer (U.S.), Inc.
The Debtors have shared information regarding the 2011 MIP with
the Official Committee of Unsecured Creditors, JPMorgan Chase
Bank, N.A., Oaktree Capital Management, L.P., Angelo, Gordon &
Co., L.P., and their financial advisors and attorneys. Based on
certain creditor constituency feedback received, the Debtors have
included in the 2011 MIP various enhanced performance
requirements beyond historical MIP programs.
Bryan Krakauer, Esq., at Sidley Austin LLP, in Chicago, Illinois,
asserts that approval of the 2011 MIP continues to be critically
important to maintain proper incentives for the management team
as the Company strives to sustain its strong performance despite
the strains of the Chapter 11 process and the significant
headwinds that the media industry still faces. Meaningful
incentives are also vital given the fact that the Debtors'
management are now in at least their third consecutive year of
below-market compensation, he emphasizes.
Eddy Hartenstein, President and Chief Executive Officer of the
Los Angeles Times, testified at a November 10, 2010 hearing,
"[w]e are already operating, as I think you'll see from some of
the other material here, with folks in [the] industry well below
where I think the median compensation should be and I will attest
to - down to a person on that list that these - this is a group
that is not median or mediocre in any way in their performance
and their capabilities," Mr. Krakauer quotes. "An expeditious
ruling approving the 2011 MIP is vital to providing all
participants with some modicum of stability and predictability
given the current posture of the Chapter 11 proceedings and the
related uncertainties that the participants face," Mr. Krakauer
maintains.
John Dempsey, a partner with Mercer, discloses that the incentive
opportunities provided under the 2011 MIP are reasonable and
appropriate, and result in total cash compensation that is
relatively competitive and total direct compensation that is
still materially below the market median. He says the
anticipated participant level (approximately 640) and aggregate
payout opportunities of the 2011 MIP ($16.4 million at
"threshold" performance, $32.4 million at "target" performance
and $42.5 million at "maximum" performance) are below the
comparable figures for both the Court-approved 2009 and 2010 MIP
programs.
A redacted copy of Mercer's report containing analysis and
conclusions with respect to the 2011 MIP, dated August 26, 2011,
is available for free at:
http://bankrupt.com/misc/Tribune_Aug26MercerReport.pdf
The Debtors also seek the Court's permission to file under seal
the unredacted Mercer Report. Mr. Krakauer states that the
compensation and business information and related analyses are
confidential and warrant protection from public disclosure when
the Incentive Plan. The Debtors further propose that all
responses or objections, if any, to the 2011 MIP Motion that
contain or reflect the confidential information redacted in the
Mercer Report or any other confidential information supplied by
the Debtors to various parties with the 2011 MIP Motion be filed
with the Court under seal.
The Court will consider the Debtors' request on October 4, 2011.
Objections are due no later than September 20.
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 (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8,
2008. 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 Dec. 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: Judge Carey Won't Give Self Deadline for Plan Ruling
----------------------------------------------------------------
Judge Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware had little response to Tribune Company's
chief restructuring officer's question on when the bankruptcy
judge intends to rule on a reorganization plan in the media
owner's bankruptcy case, Lynne Marek of Crain's Chicago Business
reported.
Tribune CRO Donald Liebentritt made an unusual appearance in
Court on August 25, 2011, to inquire about the resolution of
Tribune's Chapter 11 cases, according to the report. Judge Carey
replied that he has found that locking himself into a deadline
never works out well, the report relayed.
"If there's anything you can provide to me that I might take back
to the rank and file at Tribune Co., that would be appreciated,"
Mr. Liebentritt addressed Judge Carey at the status hearing in
Delaware, Crain's Chicago Business quoted.
Judge Carey acknowledged that he understood that Tribune
employees and business partners would like to know when he might
offer a solution to the stalemate between two creditor groups
with competing Chapter 11 plans, Crain's Chicago Business wrote.
The bankruptcy judge stated that his law clerk is spending 90% of
his time on the case, which also has taken up plenty of his own
time and that of an intern, the report said.
"What you could tell people is that I am working very hard,"
Judge Carey told the CRO at the hearing, Crain's Chicago Business
relayed. "And while you can't see the use of judicial resources
being put to this matter, they are being put to this matter," the
bankruptcy judge added.
Trial Transcript
Tribune Company and its debtor affiliates seek authority from
Judge Kevin J. Carey of the U.S. Bankruptcy Court for the
District of Delaware to implement proposed changes to the
official confirmation trial transcript regarding the Competing
Chapter 11 Plans:
* 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.; and
* the Third Amended Joint Plan of Reorganization filed by
Aurelius Capital Management LP, 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
James F. Conlan, Esq., at Sidley Austin LLP, in Chicago,
Illinois, discloses that since the conclusion of the trial on the
confirmation of a plan of reorganization in the Debtors' Chapter
11 cases, the DCL Plan Proponents and the Noteholders have worked
to complete the record of the confirmation proceedings.
Specifically, on June 21, 2011, the Noteholders provided the DCL
Plan Proponents with extensive proposed corrections to the
official trial transcript. The DCL Plan Proponents reviewed the
proposed changes, most of which were non-controversial, noted
their disagreement with respect to some of the proposed changes,
and identified a small number of additional changes that the DCL
Plan Proponents believed should be made. The parties then
conferred and resolved any differences, and the Debtors have
worked with Diaz Data Services to implement the proposed changes.
The parties prepared an Errata to the Official Confirmation Trial
Transcript that reflects the changes that Diaz determined were
correct and that have been implemented, a full-text copy of which
is available for free at:
http://bankrupt.com/misc/Tribune_ErrataSheettoConfTranscript.pdf
The Court will consider the Debtors' request on September 14,
2011. Objections are due no later than September 7.
Non-Confidential Exhibits
The Debtors ask the Court for authority for the public release of
non-confidential trial exhibits and deposition designations.
James F. Conlan, Esq., at Sidley Austin LLP, in Chicago,
Illinois, says the Debtors have reviewed all of the Trial
Exhibits to determine what could be publicly released. He
explains that this review was undertaken to limit to the maximum
extent possible the number of documents withheld on
confidentiality grounds. He relates that a Trial Exhibit was
deemed confidential only if it contained information pertaining
to one of these categories: (i) recent Company financials; (ii)
TV Food Network information; or (iii) sensitive FCC information.
The Debtors then circulated to the Plan Proponents copies of the
DCL Plan Proponents and the Noteholders Exhibit Lists as well as
lists identifying the documents to be withheld from public
disclosure, available for free at:
* Final DCL Plan Proponents Exhibit List,
http://bankrupt.com/misc/Tribune_FinalDCLPPExhibitList.pdf
* Final Noteholders Exhibit List,
http://bankrupt.com/misc/Tribune_FinalNPPExhibitList.pdf
* Final Noteholders FCC Exhibit List,
http://bankrupt.com/misc/Tribune_FinalNPPFCCExhibtList.pdf
As a result of the canvassing, a small number of additional
documents were identified as containing highly confidential
information, Mr. Conlan discloses. The Debtors prepared lists of
documents to be filed under seal and the bases for asserting
confidentiality, available for free at:
* Confidential DCL Plan Proponents Exhibit List,
http://bankrupt.com/misc/Tribune_ConfidentialDCLExhList.pdf
* Confidential Noteholders Exhibit List,
http://bankrupt.com/misc/Tribune_ConfidentialNPPExhList.pdf
* Confidential Noteholders FCC Exhibits List,
http://bankrupt.com/misc/Tribune_ConfidentialNPPFCCExhs.pdf
As is evident from the lists, the number of documents to be filed
under seal (139 exhibits) is only a small fraction of the total
number of Trial Exhibits (3,485 exhibits), Mr. Conlan says.
The Debtors distributed the lists to all parties having requested
notice as well as all other parties that produced documents
listed as Trial Exhibits by the DCL Plan Proponents or the
Noteholders. The only party to designate additional Trial
Exhibits as confidential is Morgan Stanley, which initially
submitted a list of 79 Trial Exhibits to remain confidential.
Given the number of Trial Exhibits on the list as well as the
fact that some had already been made public, the Debtors asked
Morgan Stanley to reconsider its designations, which it did.
Accordingly, Morgan Stanley prepared a list identifying the Trial
Exhibits which it deems to be confidential, available for free
at: http://bankrupt.com/misc/Tribune_MSConfidentialExhs.pdf
The Debtors have also reviewed all of the deposition designations
that were offered in evidence to determine what, if any, material
needed to be filed under seal. Mr. Conlan states that the
Debtors conducted the review in the same manner as they did in
the trial exhibits. Moreover, all deposed persons were given the
opportunity to comment and to identify additional designations as
confidential, he says. The Debtors thus prepared a list
identifying each designation that has been identified as
confidential and the basis for the confidentiality designation,
available for free at:
http://bankrupt.com/misc/Tribune_ConfidentialDepositionList.pdf
In an abundance of caution, the Debtors are providing all parties
having requested notice pursuant to Rule 2002 of the Federal
Rules of Bankruptcy Procedure and parties that produced documents
that the Plan Proponents listed as exhibits, notice of, and a
final opportunity to review and comment on or object to, the
proposed transcript corrections and the remaining Trial Exhibits
and deposition designations.
Mr. Conlan insists that granting the Debtors' Motion is necessary
and appropriate to permit the 2002 Service Parties a fair
opportunity to address any issues with respect to the (i) the
Errata to the Official Confirmation Trial Transcript; (ii) the
Lists of Confidential Exhibits; or (iii) the List of Confidential
Deposition Designations. Likewise, entry of an order granting
the Debtors' Motion may prevent future disputes regarding the
record of the confirmation proceedings, he stresses. He assures
the Court that that no party will be prejudiced by the relief
sought in the Debtors' Motion.
The Court will consider the Debtors' request on September 14,
2011. Objections are due no later than September 7.
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 (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8,
2008. 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 Dec. 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: Proposes $32-Mil. ESOP Class Suit Settlement
--------------------------------------------------------
Tribune Company and its debtor affiliates seek permission from
the U.S. Bankruptcy Court for the District of Delaware to enter
into a settlement, as embodied in a memorandum of understanding,
resolving a class action lawsuit in connection with the Tribune
Employee Stock Ownership Plan, for $32 million.
Tribune established the ESOP, effective as of January 1, 2007, as
an employee retirement benefit plan in connection with the
Company's efforts to return to private ownership through the
Leveraged ESOP Transactions. On April 1, 2007, Tribune and
GreatBanc Trust Company, as trustee of the ESOP, entered into the
Tribune ESOP Purchase Agreement under which the ESOP obtained
8,928,571 shares of Tribune common stock from Tribune at a price
of $28 per share in exchange for a non-recourse promissory note
in the amount of $250 million. After the ESOP acquired its
shares, Tribune made a tender offer to repurchase 126 million
shares of publicly-traded stock at $34 per share. On
December 20, 2007, a wholly-owned subsidiary of the ESOP merged
with Tribune. Pursuant to the merger terms, the 118 million
shares of common stock remaining after the tender offer that were
not owned by Tribune or by the ESOP were redeemed for cash at a
price of $34 per share.
In September 2008, six current and former employees of Tribune
commenced a class action lawsuit styled Neil, et al. v. Zell, et
al., before the U.S. District Court for the Northern District of
Illinois alleging breach of duties of loyalty and prudence under
the ERISA as a result of the Leveraged ESOP Transactions. The
Neil Plaintiffs also alleged that GreatBanc engaged in a
transaction prohibited by the ERISA when it approved the ESOP's
purchase of unregistered stock from Tribune at an amount less
than "adequate consideration.
In connection with the ESOP, the U.S. Department of Labor filed
an unliquidated proof of claim relating to possible violations of
the ERISA, estimated to be valued up to $250 million. The
Secretary of Labor also filed objections to the DCL Plan.
Moreover, the U.S. Internal Revenue Service filed a proof of
claim relating to tax underpayments aggregating $351,688,793,
$37.5 million of which is asserted as a priority unsecured claim.
The IRS has asserted additional claims related to the ESOP,
including, claims for Unrelated Business Income Tax against the
ESOP and claims against Tribune under Section 409(1) of the
Internal Tax Code.
In May 2011, the Bankruptcy Court appointed the Honorable Kevin
Gross as mediator to conduct a non-binding mediation among the
Debtors, the Neil Plaintiffs, the DOL, the IRS, GreatBanc and the
insurers of the Debtors' 2007 Fiduciary Liability Policies.
As a result of the mediation and subsequent extensive
negotiations between the parties, Tribune, the Neil Plaintiffs,
the DOL, GreatBanc, Samuel Zell, and the Insurers have entered
into a settlement that represents a resolution of all but the
last of the foregoing ERISA-Related Claims, at a fraction of
their face value as to the Tribune Entities.
The salient terms of the ERISA Claim Settlement are:
(A) The claims and causes of action asserted in the Neil Action
are settled as a non-opt-out class action settlement, for a
fixed cash payment of $32 million, funded by the Insurers in
the amount of $26.55 million, Tribune in the amount of $4.45
million, and GreatBanc in the amount of $1 million. Upon
final approval of the settlement, the settlement amount, net
of fees and costs, will be transferred to the ESOP and
allocated to the individual accounts of class members under a
formula that will be approved by the District Court, and
thereafter will be transferred to the class members' 401(k)
accounts.
(B) Any claims that GreatBanc may have against the Tribune
Entities arising from the Neil Action, the DOL Investigation,
or otherwise relating to the ESOP, including any
indemnification, reimbursement, and contribution claims, are
released.
(C) Any other indemnification, reimbursement, and contribution
claims that any other parties may have against the Tribune
Entities arising from either the Neil Action or the DOL
Investigation are waived and released.
(D) Tribune's adversary complaint against the Neil Plaintiffs
captioned Tribune Company v. Neil (In re Tribune Company)
will be dismissed;
(E) The DOL claims are resolved, subject to the granting to the
DOL of an allowed general unsecured claim against Tribune in
the amount of $3.2 million, reduced and offset dollar-for-
dollar by any payment made by or on behalf of Tribune to the
IRS on account of any claims of the IRS under Section 4975 of
the Internal Revenue Code relating to the ESOP.
(F) The DOL Objection will be withdrawn.
(G) The DOL Investigation will be terminated.
(H) The Debtors will cause to be filed an amendment to the DCL
Plan providing for the treatment of the DOL Claims as
disputed claims and reserving the Debtors'and the DOL's
rights with respect to the DOL Objection, and that those
rights will not be mooted, in the event that the settlement
is not consummated.
(I) All parties will provide mutual releases. The Insurers have
required that all of the defendants to the Neil Action,
Tribune, and Tribune's directors and officers, including Mr.
Zell, be released from the ERISA-related claims being settled
as a condition for their participation in the settlement.
(K) the ERISA Claim Settlement will be voidable by Tribune if it
does not reach agreement with the IRS with respect to the
IRS Claim and all other claims by the IRS relating to the
ESOP, on terms acceptable to Tribune, prior to the date the
District Court sets for the final approval hearing with
respect to the ERISA Claim Settlement.
The ERISA Claim Settlement contemplates that the District Court
will adjudicate and approve the ERISA Claim Settlement under Rule
23 of the Federal Rule of Civil Procedure to effectuate the class
settlement in the Neil Action. The ERISA Claim Settlement also
envisions that preliminary approval of the class action
settlement under Rule 23 will be determined by the District Court
within 10 business days after the Bankruptcy Court rules upon the
Debtors' Motion.
A full-text copy of the ERISA Claim Settlement, as embodied in
the MOU, is available for free at:
http://bankrupt.com/misc/Tribune_ERISAClaimSettlement.pdf
Accordingly, the Debtors clarify that they are not asking the
Bankruptcy Court to adjudicate the fairness of the ERISA Claim
Settlement of the Neil Action under Rule 23, but only to approve
the Debtors' contribution to that settlement, the compromise of
the ERISA-Related Claims against the Debtors, and the performance
of the Debtors' other obligations thereunder.
Bryan Krakauer, Esq., at Sidley Austin LLP, in Chicago, Illinois,
relates that the District Court has noted that the potential
liability faced by GreatBanc in the Neil Action could be as much
as $250 million, and GreatBanc in turn has asserted that Tribune
and its subsidiaries are responsible for indemnifying GreatBanc
for any loss incurred in connection with its role as trustee of
the ESOP. Because the amount in dispute greatly exceeds the
available insurance coverage to the Debtors, and represents a
significant potential claim against their estates, the Debtors
believe that payment of $4.45 million is justified, he insists.
Mr. Krakauer stresses that the Debtors' ability to void the ERISA
Claim Settlement if a satisfactory resolution of the IRS Claim is
not reached provides a meaningful and valuable benefit to the
Debtors' estates and creditors in light of the substantial
litigation costs that the Debtors and the DOL have expended to
date on these disputed claims. More importantly, the ERISA Claim
Settlement is a step toward resolution of the IRS Claim, asserted
in the face amount of$37.5 million, which may be entitled to
priority status, and any other potential tax liability of the
Debtors relating to the ESOP, he points out. Essentially,
settlement of the ERISA-Related Claims avoids the significant
costs and distraction of continuing the litigation and contested
proceedings that are currently pending, and avoids the potential
subsequent litigation for indemnification, contribution, or
reimbursement that could result, he maintains.
The Debtors further ask the Bankruptcy Court to modify the
automatic stay to the extent it applies, to permit the Insurers
to contribute amounts toward settlement. Mr. Krakauer reasons
that payment of the ERISA Claim Settlement due from the Insurers
will obviate claims that any defendants could assert against the
estates.
The Debtors also seek a waiver of the 14-day stay provided for in
Bankruptcy Rule 400 1 (a)(3) so that the ERISA Claim Settlement
may become effective as soon as practicable after the entry of an
order approving the ERISA Claim Settlement.
The Bankruptcy Court will consider the Debtors' request on
September 14, 2011. Objections are due no later than
September 7.
In an accompanying letter, Mr. Krakauer reminds the Bankruptcy
Court that if it grants the relief sought in the Debtors' Motion,
the District Court grants preliminary and final approval of the
ERISA Claim Settlement in the Neil Action and the ERISA Claim
Settlement is consummated, the legal issues raised in the DOL
Objection to the DCL Plan would no longer be before the
Bankruptcy Court, and need not be adjudicated by the Bankruptcy
Court in connection with the Bankruptcy Court's ruling on
confirmation of the DCL Plan.
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 (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8,
2008. 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 Dec. 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: Wins Interim Nod of Wage Class Suit Settlement
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
on a preliminary basis a settlement agreement resolving all
claims under a minimum wage class action initiated by James Allen
in the U.S. District Court for the Southern District of New York,
for $325,000.
For settlement purposes only, the settlement class will be
certified pursuant to Rule 7023 of the Federal Rules of
Bankruptcy Procedure and Rule 23(a) of the Federal Rules of Civil
Procedure as "all persons who promoted or distributed the amNew
York newspaper who received an IRS Form 1099 from the Delivery
Defendants for such work during the period from January 1, 2004
through the Petition Date."
Judge Carey also appointed class counsel as Class Representatives
to represent the settlement class. Gilardi & Co., LLC is also
appointed as the Claims Administrator pursuant to the Settlement
Agreement.
The Tribune Defendants are authorized to disclose to the Claims
Administrator the names and last-known addresses of members of
the Settlement Class as necessary to administer the settlement.
The Settlement Class members will have a 60 calendar day
Notice Period after mailing of the Notice Packet to timely
postmark their Claim Forms, objections, or Exclusion Statement,
of which the last day of the Notice Period to timely submit
those forms and objections will be the Settlement Bar Date,
except for a Claim Form for which a deficiency notice was mailed
by the Claims Administrator.
The failure of a member of the Settlement Class to timely submit
a Claim Form by the Settlement Bar Date, or timely submit a
response to any deficiency notice, will invalidate a claim and
will not be considered deficiencies subject to cure, unless
counsel for the parties stipulate to allow cure.
Judge Carey will consider final approval of the Settlement
Agreement on February 15, 2012.
The deadline for Settlement Class members to object to the
Settlement Agreement will be the Settlement Bar Date.
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 (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8,
2008. 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 Dec. 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)
UNIGENE LABORATORIES: Successfully Defends Robust IP Portfolio
--------------------------------------------------------------
Unigene Laboratories, Inc., announced that on Aug. 25, 2011, the
United States Court of Appeals for the Federal Circuit declined to
revive Apotex Inc.'s counterclaims and bid for summary judgment in
Unigene Laboratories Inc.'s suit alleging the generic-drug maker
infringed two patents for Fortical.
The three-judge panel determined that a New York federal court
correctly granted Unigene summary judgment that one of the claims
of Unigene's U.S. Patent Number RE40,812E was not obvious as well
as rejected Apotex's other attempts to invalidate the patent.
Greg Mayes, vice president, corporate development and general
counsel, commented, "This is a very important decision for
Unigene. Not only does this decision finally put the intellectual
property litigation behind us and eliminate the prospect for
further litigation costs and distraction, it clearly validates the
ways in which we protect, prosecute, maintain and ultimately
partner our robust IP portfolio." Mayes, continued, "Oral
delivery partners can expect that our IP is fully enforceable and
like the nasal spray patent, will survive the scrutiny of some of
the highest courts in the land. This successful outcome sends a
strong message of our confidence in and our commitment to
defending the future paths our IP takes."
Dr. Nozer Mehta, vice president, Research and Development, stated,
"Unigene prides itself on developing innovative technologies that
enable the development of peptide pharmaceuticals, and our
technologies and peptide compounds are protected by a strong
patent portfolio. Unigene is a leader in the oral delivery of
peptide drugs, and our patents and patent applications on this
technology will provide protection for ourselves and our partners
until 2028. Similarly, the patents and applications on our
proprietary technology for the efficient, scalable and cost-
effective recombinant production of peptides and proteins will
afford intellectual property protection until 2025."
In November 2002, the Company signed an exclusive U.S. licensing
agreement with Upsher-Smith Laboratories for a value before
royalties of $10,000,000 to market Fortical, the Company's
patented nasal formulation of calcitonin for the treatment of
osteoporosis. Fortical was approved by the FDA and launched by
USL in August 2005. The Company received the $10,000,000 from
2002 through 2005. The Company is responsible for manufacturing
the product and USL packages the product and distributes it
nationwide. Royalty revenue, computed in a range from the
transfer price of product to USL to a royalty rate in the mid-
thirties depending on the circumstances, is earned on net sales of
Fortical by USL and is recognized in the period Fortical is sold
by USL. Pursuant to an amendment effected in 2009, there are no
net sales minimums in the Agreement.
In July 2006, Unigene and its U.S. distribution partner jointly
filed a lawsuit against Apotex for infringement of the Company's
Fortical patent. In September 2009, the U.S. District Court,
Southern District of New York, confirmed the validity of Unigene's
patent on Fortical and issued an order permanently enjoining
Apotex from further infringement of the patent. Apotex appealed
the decision to the United States Appellate Court for the Federal
Circuit. On Aug. 25, 2011, the United States Court of Appeals for
the Federal Circuit affirmed the decision of the U.S. District
Court.
About Unigene
Unigene Laboratories, Inc. OTCBB: UGNE) -- http://www.unigene.com/
-- is a biopharmaceutical company focusing on the oral and nasal
delivery of large-market peptide drugs.
Grant Thornton LLP, in New York, expressed substantial doubt about
Unigene Laboratories' ability to continue as a going concern
following the Company's 2009 results. The firm noted that the
Company has incurred a net loss of $13,400,000 during the year
ended Dec. 31, 2009 and has an accumulated deficit of
approximately $143,000,000 as of Dec. 31, 2009. As of that
date, the Company's current liabilities exceeded its current
assets by $1,251,000 and its total liabilities exceeded total
assets by $30,442,000.
The Company reported a net loss of $27.86 million on $11.34
million of revenue for the year ended Dec. 31, 2010, compared with
a net loss of $13.37 million on $12.79 million of revenue during
the prior year.
The Company's balance sheet at June 30, 2011, showed $21.79
million in total assets, $76.33 million in total liabilities and a
$54.53 million total stockholders' deficit.
VENTO FAMILY: Unsecured Creditors to Get 12% Recovery Under Plan
----------------------------------------------------------------
On Aug. 17, 2011, the Debtor filed a Chapter Plan of
Reorganization and accompanying disclosure statement with the U.S.
Bankruptcy Court for the District of Nevada. The hearing to
consider approval of the adequacy of the disclosure statement is
scheduled for Sept. 29, 2011, at 9:30 a.m.
Vento will implement this Plan through the proceeds of its
business operations. Vento expects to have sufficient income from
business operations to make the payments called for in the Plan.
The Plan designates 8 Classes of Claims and Interests.
Class 1. All Allowed Claims entitled to priority under Section
507 of the Bankruptcy Code (except Administrative Claims and
Priority Tax Claims).
Class 2A. The Allowed Secured Claim of Bank of Las Vegas (645
Carnegie)
Class 2B. The Allowed Secured Claim of Bank of Las Vegas (2940
Durango)
Class 2C. The Allowed Secured Claim of Bank of Las Vegas (Arroyo
Grande Land)
Class 2D. The Allowed Secured Claim of Bank of Las Vegas (6737
Spencer)
Class 3. The Allowed Secured Claim of Bank of North Las Vegas
Class 4A. The Allowed Secured Claim of Bank of Nevada (191 Arroyo
Grande)
Class 4B. The Allowed Secured Claim of Bank of Nevada (2211
Maryland Parkway)
Class 5. The Allowed Secured Claim of Service 1st Bank
Class 6. The Allowed Secured Claim of Giacomo Caragiulo
Class 7. General Unsecured Creditors.
Class 8. Equity Security Holders of the Debtor.
Class 1 is unimpaired by the Plan. Each holder of a Class 1
Priority Claim will be paid in full, in cash.
Class 2A, Class 2B and Class 2D are all impaired by this Plan.
The holders of these claims will receive interest-only payments at
4.5% interest for the first 24 months. Thereafter, the full
amount of each debt will be amortized monthly over 30 years at
4.5% interest.
Class 2C is impaired by this Plan. Beginning on the Effective
Date, the Reorganized Debtor will commence monthly payments of
$688.49, representing the full amount of the debt amortized over
15 years at 4.5% interest.
Class 3 is impaired by this Plan. Beginning on the Effective
Date, the Reorganized Debtor will commence monthly payments of
$483.14, representing the full amount of the debt amortized over
30 years at 5% interest.
Class 4A is impaired by this Plan. Beginning on the Effective
Date, the Reorganized Debtor will pay Bank of Nevada 24 regular
monthly payments of $6,833.33, representing interest-only payments
at 4% interest. Thereafter, the Reorganized Debtor will commence
monthly payments of $9,787.01, representing the full amount of the
debt amortized over 30 years at 4% interest.
Class 4B is impaired by this Plan. Beginning on the Effective
Date, the Reorganized Debtor will commence monthly payments of
$2,189.75, representing the full amount of the debt amortized over
30 years at 5% interest.
Class 5 is impaired by this Plan. Beginning on the Effective
Date, the Reorganized Debtor will commence monthly payments of
$10,503.14, representing the full amount of the debt amortized
over 30 years at 4% interest.
Class 6 is impaired by this Plan. The holder of the Class 6 claim
shall receive the Richmar Land in full satisfaction of his claim.
Class 7 Allowed Unsecured Claim holders will be paid their Pro
Rata share of monthly payments of $4,000.00 for sixty (60) months,
beginning on the Effective Date. The total amount paid to Allowed
Unsecured Claims will total $240,000. The claims in this class
consist primarily of deficiency claims on properties that were
sold at trustees' sale prior to the Petition Date. Many of these
claims are unliquidated, but the Debtor believes that the total
amount of these claims may total up to $2 million. The Debtor
therefore believes that the payments on Allowed Unsecured Claims
will result in at least a 12% distribution to Class 7 Creditors.
Class 8 Allowed Equity Interest holders will retain their interest
in the Debtor and the Reorganized Debtor. The Allowed Equity
Interest holders will make payments from their personal assets
into the plan of $1,000 per month for 24 months beginning 12
months after the Effective Date. Accordingly, Allowed Equity
Interest holders will retain their interest in the remaining
property of the Reorganized Debtor and will receive any remaining
residuary interest after payment is made to all claims pursuant to
the terms of the Plan.
A copy of the disclosure statement is available at:
http://bankrupt.com/misc/ventofamily.DS.pdf
Based in Henderson, Nevada, Vento Family Trust was formed in 1990
for the purpose of holding business related real estate assets of
Carmine and Ann Vento. The Trust filed for Chapter 11 bankruptcy
protection (Bankr. D. Nev. Case No. 10-33909) on Dec. 27, 2010.
Judge Mike K. Nakagawa presides over the case. Jason C.
Farrington, Esq., and Timothy S. Cory, Esq., at Timothy S. Cory &
Associates, in Las Vegas, represents the Debtor. In its amended
schedules, the Debtor disclosed $12,840,000 in assets and
$11,273,400 in liabilities.
WASHINGTON MUTUAL: Request for Appointment Dime LTW Holders Denied
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware denied the
request of certain Dime LTW Holders to appoint an official
committee of Dime LTW Holders in the Chapter 11 cases of
Washington Mutual, Inc., et al.
Jim alderson, Brad Christensen, Austin Hopper, Rodeney McFadden,
Edward Mintz, Richard Squires and Chuck Warltier asked that the
Court appoint a committee.
As reported in the Troubled Company Reporter on July 8, 2011, the
proposed committee will represent their interests as they seek to
recover $337 million in the Debtor's Chapter 11 proceedings.
The Court said that it will retain jurisdiction to hear and
determine all matters arising or related to the implementation,
interpretation, or enforcement of the order.
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: Panel Wants Retention of Frank Partnoy Denied
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Washington Mutual, Inc., et al., asks U.S. Bankruptcy
Court for the District of Delaware deny the Official Committee of
Equity Security Holders' request to retain Frank Partnoy as
securities litigation consultant.
According to the Creditors Committee:
-- the Equity Committee intends that Mr. Partnoy's fees will
not be subject to a reasonableness review, but rather to
modification only if "such terms and conditions prove to
have been improvident in light of developments not capable
of being anticipated at the time of the fixing of such terms
and conditions."
-- the economic terms of the proposed retention are unusual and
perhaps even improvident -- the Equity Committee proposes
that Mr. Partnoy be paid an hourly fee of $850 per hour plus
a retainer of $40,000.
-- the Equity Committee requested that the scope of
Mr. Partnoy's Court-approved employment include continued
consultation and potential testimony if the Equity Committee
is granted standing to pursue claims for equitable
disallowance against Aurelius Capital Management, LP and
Centerbridge Partners, L.P., and certain of their respective
managed funds.
The Creditors Committee is represented by:
PEPPER HAMILTON LLP
David B. Stratton, Esq.
John H. Schanne, II, Esq.
1313 N. Market Street, Suite 5100
Wilmington, DE 19801
Tel: (302) 777-6500
Fax: (302) 421-8390
E-mail: strattond@pepperlaw.com
- and -
AKIN GUMP STRAUSS HAUER & FELD LLP
Fred S. Hodara, Esq.
Robert A. Johnson, Esq.
One Bryant Park
New York, NY 10036-6745
Tel: (212) 872-1000
Fax: (212) 872-1002
E-mail: fhodara@akingump.com
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: Files 3rd Modification to 6th Amended Plan
-------------------------------------------------------------
As reported in the TCR on Aug. 26, 2011, Washington Mutual
Inc. creditors and shareholders made final arguments for and
against the company's $7 billion reorganization plan, disagreeing
over whether hedge funds committed insider trading during the
almost three-year bankruptcy of the defunct bank holding company.
Mr. Bathon at Bloomberg news related that shareholders asked U.S.
Bankruptcy Judge Mary Walrath to reject the reorganization plan,
claiming the insider-trading allegations taint the proposal and a
related settlement worth billions of dollars. The actions of the
four hedge funds "undermine public confidence in the bankruptcy
system," shareholder attorney Parker C. Folse III, Esq., told
Judge Walrath at a hearing Aug. 24 in Wilmington, Delaware.
According to the report, WaMu is allied with the hedge funds,
JPMorgan Chase & Co. and the Federal Deposit Insurance Corp. in
support of the plan and the settlement. Those groups negotiated
the settlement, which splits $4 billion in cash, and billions of
dollars more in tax refunds, and resolves lawsuits over who is to
blame for Seattle-based WaMu's 2008 collapse, the biggest bank
failure in U.S. history.
Shareholders would get nothing under the reorganization plan.
They claim the hedge funds used confidential information they
gained during the negotiations to buy and sell WaMu securities.
Washington Mutual Inc. filed on Aug. 10, 2011, a Third
Modification of its Modified Sixth Amended Joint Plan of
Reorganization.
A copy is available of the Third Modification to the Modified
Sixth Amended Joint Plan is available at:
http://bankrupt.com/misc/wamu.3rdmodificationofmodified6th.pdf
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- was the 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 Bankruptcy Court entered a 107-page opinion
determining that the global settlement agreement, among certain
parties including WMI, the Federal Deposit Insurance Corporation
and JPMorgan, upon which the Plan is premised, and the
transactions contemplated therein, are fair, reasonable, and in
the best interests of WMI. However, 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 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.
Carolyn Cairns was appointed as mediator in the WaMu proceedings.
WATER STREET: Unsecured Creditors to be Paid in Full After 1 Year
-----------------------------------------------------------------
Water Street Development Partners, L.P., filed on Aug. 11, 2011, a
porposed disclosure statement for its Chapter 11 Plan of
Reorganization, dated Aug. 8, 2011.
Pursuant to the Plan, the Debtor will assume the Option Contract,
sell the Mansfield Property, and use the proceeds to pay all
Creditors in full. The Debtor has reached agreement (the "Arcadia
Contract") with Arcadia Realty Corp., a Texas corporation, whereby
Aracadia will purchase the Mansfield Property when the Mansfield
Property has been appropriately re-zoned.
The Plan designates 5 Classes of Claims and Interests:
Class 1. Secured Tax Claims Unimpaired. Deemed to Accept.
Class 2. Priority Tax Claims Unimpaired. Deemed to Accept.
Class 3. Secured Bank Claim Unimpaired. Deemed to Accept.
Class 4. General Unsecured Claims Unimpaired. Deemed to Accept.
Class 5. Equity Interests Impaired. Entitled to Vote to
Accept or Reject the Plan.
Administrative Expense Claims, which are unclassified, will be
paid in full.
Class 1 Secured Tax Claims will retain their liens and have the
right to foreclose their liens.
Class 2 Priority Tax Claims will be paid in full, in cash.
Wachovia Bank's Class 3 Secured Bank Claim in the approximate
amount of $7,873,985.44, secured by a first and paramount deed of
trust on the Mansfield Property, will be paid and fully
discharged.
Class 4 General Unsecured Claims will be paid in full from the
proceeds of the sale of the Mansfield Property. The estimated
date for distribution is one (1) year after the Effective Date.
Class 5 Equity Interests, which consists of the general
partnership and limited partnership interests in the Debtor, will
retain their interests If necessary to achieve confirmation of
the Plan, the equity can be canceled, though the Debtor says there
is no apparent benefit to doing so.
A copy of the disclosure statement is available at:
http://bankrupt.com/misc/waterstreet.DS.pdf
About Water Street Development Partners
Southlake, Texas-based Water Street Development Partners, L.P.,
filed for Chapter 11 bankruptcy (Bankr. N.D. Tex. Case No. 11-
42841) on May 13, 2011. Judge Russell F. Nelms presides over the
case. The Law Office of Mark B. French serves as the Debtor's
bankruptcy counsel.
Robert DeRogatis is a limited partner of the Debtor and holds a
99% equity interest. Water Street Management LLC holds the other
1% stake.
* Blind Reliance on Computer Brings Sanctions on Lawyer
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that bankruptcy lawyers in a high-volume foreclosure
practice run the risk of having sanctions imposed for blindly
utilizing faulty computer-generated information provided by the
bank client, the U.S. Court of Appeals in Philadelphia ruled on
Aug. 24.
Mr. Rochelle says that the circuit court upheld mild sanctions on
a lawyer, the law firm, and the bank, saying that F.R.B.P. Rule
9011 requires "more than a rubber-stamping of the results of an
automated process." The appeals court said that the lawyer filed
papers in bankruptcy court after receiving "clear warning signs"
that computer-generated information about the loan balance was
inaccurate. According to the Third U.S. Circuit in Philadelphia,
a lawyer could not "abdicate her professional duty to a black
box." Rule 9011 requires any court filing be "well-grounded in
law and fact."
Mr. Rochelle relates that the case involved a couple in Chapter 13
bankruptcy who were current on their mortgage payments to the
lender aside from a dispute over whether they were required to pay
$180 a month for flood insurance. The lender was a subsidiary of
HSBC Holdings Plc.
The case is In re Taylor, 10-2154, U.S. Court of Appeals for the
Third Circuit (Philadelphia).
* Supreme Court to Decide on Hearing Split-Circuit Case
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the U.S. Supreme Court is scheduled to decide in late
September whether it will hear a bankruptcy appeal involving auto
loans. The U.S. Courts of Appeal are divided on the issue.
Mr. Rochelle says that the question is whether the negative equity
on a previously-owned auto must be paid in full as a condition to
keeping the newer car after bankruptcy. The U.S. Court of Appeals
in San Francisco, departing from the other eight circuits to
consider the issue, ruled in July 2010 that negative equity is not
part of a purchase money security interest and need not be paid to
retain the newer auto. Over a dissent by four circuit judges, the
entire Court of Appeals for the Ninth U.S. Circuit in San
Francisco decided earlier this year not to rehear the case. The
dissenters argued that the majority on the circuit court
interpreted the Bankruptcy Code "to mean the exact opposite of
what the plain language says."
The lender, who lost in the court of appeals, filed a petition in
May for review by the Supreme Court. The high court often accepts
appeals when the circuit courts are split.
The Supreme Court justices are currently scheduled to hold a
conference on Sept. 26 to decide whether they will hear the
appeal, Mr. Rochelle discloses.
The Supreme Court already accepted a bankruptcy case for the term
beginning in October. The case, called Hall v. U.S., involves the
tax treatment of property sold after bankruptcy by so-called
family farmers in Chapter 12.
The auto-loan case in the Supreme Court is AmeriCredit Financial
Services Inc. v. Penrod (In re Penrod), 10-1443, U.S. Supreme
Court. The Circuit Court's July 2010 opinion is AmeriCredit
Financial Services Inc. v. Penrod (In re Penrod), 08-60037, U.S.
Court of Appeals for the Ninth Circuit (San Francisco).
* Student Loan Discharge Complaint OK After Discharge
-----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that an individual was allowed three years after receiving
a discharge in Chapter 7 to file papers seeking a ruling that
student loans should be dischargeable as an undue hardship, the
U.S. Court of Appeals for the Eighth Circuit in St. Louis ruled on
Aug. 18. The circuit court upheld a ruling by the appellate panel
reported on April 14, 2010.
Mr. Rochelle says that agreeing with the bankruptcy court and the
appellate panel, the three judges on the circuit court concluded
that bankruptcy law does not require filing a complaint to
discharge student loans before the general discharge is granted.
They also ruled that the bankruptcy judge properly considered the
bankrupt's financial condition at the time of the student loan
discharge trial, not at discharge three years earlier, Mr.
Rochelle notes.
The circuit court said it "would make little sense to require the
court to ignore what actually occurred" in the three years after
she received her Chapter 7 discharge and before she filed papers
to wipe out the $300,000 in student loans, Mr. Rochelle relays.
Mr. Rochelle discloses that on the merits, the appellate judges
found that the bankruptcy judge did not commit error in finding
that the student loans were an undue hardship.
Mr. Rochelle says that the woman had been unable to work, largely
because she was caring for two autistic children. Mr. Rochelle
relates she had five children in total.
The circuit court said that the evidence indicated that woman
could not make payments on the student loans and at the same time
maintain a "minimal standard of living," Mr. Rochelle adds.
The case in the Circuit Court is Sallie Mae Servicing Corp.
v. Walker (In re Walker), 10-2032, U.S. Court of Appeals for
the Eighth Circuit (St. Louis). The opinion from the appellate
panel is Educational Credit Management Corp. v. Walker (In re
Walker), 09-06022, bankruptcy appellate panel for the Eighth
* New Resident May Use Old State's Homestead Exemption
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a U.S. district judge in Texas came down on the side
of a majority of courts deciding an exemption question where
federal bankruptcy law is ambiguous.
Mr. Rochelle says that in reversing the bankruptcy court, U.S.
District Judge Kathleen Cardone said the result she reached was
consistent with the intent of Congress.
Bankruptcy law now prohibits using state exemptions without having
lived in the state for two years before bankruptcy. Someone who
moved to the new state less than two years before bankruptcy must
use exemptions provided by the former state of residence.
Mr. Rochelle discloses that the case involved an individual who
moved away from Texas in 2000 to seek employment in Nevada. He
kept his home in Texas, intending it to be his residence. He
returned to Texas in early 2009 and filed bankruptcy in late 2009.
Mr. Rochelle notes that because the bankrupt wasn't eligible for
Texas exemptions, the bankruptcy judge forced him to use federal
exemptions in the process of ruling that Nevada's exemptions could
never be used outside Nevada. Judge Cardone reversed.
Judge Cardone noted that three of four circuit courts and
appellate panels have ruled there is no prohibition against giving
extraterritorial effect to a state's exemptions, Mr. Rochelle
says. Consequently, Mr. Rochelle relates that the bankrupt was
allowed to exempt the entire value of the house under Nevada law,
even though the home was located in Texas.
Judge Cardone said her decision is consistent with a ruling in
January from the U.S. Court of Appeals in New Orleans, which
controls lower courts in Texas, Mr. Rochelle notes.
The case is Fernandez v. Miller (In re Fernandez), 11-123,
U.S. District Court, Western District Texas (El Paso).
* Order for Relief Improper After Transferring Venue
----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the bankruptcy court in Delaware committed error when
it granted an involuntary bankruptcy petition by signing an order
for relief after the same Delaware judge had already transferred
the case to Colorado, the U.S. Court of Appeals in Denver ruled on
Aug. 5. Nonetheless, an appeal to the Bankruptcy Appellate
Panel in Denver was improper, the appeals court ruled, Mr.
Rochelle relates.
Mr. Rochelle notes that when the Delaware bankruptcy judge signed
an order transferring venue of an involuntary case to Colorado,
the judge apparently had forgotten to sign another order granting
the involuntary petition and putting the company into bankruptcy
officially. Mr. Rochelle relates that the Delaware judge later
signed the order for relief after the case was officially in
Delaware.
On appeal, Mr. Rochelle discloses that the appellate panel in the
Tenth Circuit in Denver concluded that it was error for the
bankruptcy judge in Delaware to grant the order for relief when
the case was already transferred. Nevertheless, the appellate
panel dismissed the appeal, Mr. Rochelle notes.
Mr. Rochelle says that Circuit Judge Wade Brorby affirmed for the
court of appeals, concluding that an appeal from the order for
relief could only be taken to the district court in Delaware.
Judge Brorby said that the answer was not evident from the
language of Section 158(a) of the Judiciary Code nor from
legislative history.
Consequently, he looked to similar federal laws for the answer.
The case is Healthtrio Inc. v. Centennial River Corp. (In
re Healthtrio Inc.), 10-1351, U.S. Court of Appeals for the Tenth
Circuit (Denver).
* Stax Records Legacy Reborn in Memphis After-School Program
------------------------------------------------------------
Dow Jones' DBR Small Cap reports that after an eight-hour drive
from Dallas, Eddie Floyd looked remarkably rested as he sat in the
Stax Music Academy's lunchroom here.
According to the report, the sharply dressed former Stax Records
star, who co-wrote and recorded such soul classics as "Knock on
Wood,"634-5789" and "Ninety-Nine and a Half," was at the academy
earlier this month to encourage students starting a new semester.
* BOOK REVIEW: Hospital Turnarounds - Lessons in Leadership
-----------------------------------------------------------
Editors: Terence F. Moore and Earl A. Simendinger
Publisher: Beard Books
Softcover: 244 pages
Price: US$34.95
Review by Henry Berry
Hospital Turnarounds - Lessons in Leadership is a compilation of
twelve essays on the many approaches that have been taken to
resuscitate hospitals in distressed situations. Most of the
essayists are CEOs or presidents of hospitals or healthcare
organizations, and their stories are all different and compelling
in their own way. The hospitals differ in their size,
marketplace, facilities, and services offered. The causes of
their distress vary and the strategies that were used to overcome
them are wide-ranging. All-in-all, it makes for an engaging
collection of success stories.
The authors have extensive experience in the healthcare system,
and nearly all have held top leadership posts in several public
and private hospitals. Most importantly, all have been involved
in successful turnarounds at some time in their careers. Two of
the authors are from the field of marketing, which can play a
significant role in hospital turnarounds.
The number of troubled hospitals rises and falls over time,
depending on many factors, including the state of the U.S.
economy. There are always some hospitals in a distressed
situation or teetering close to it. In spite of the fact that
healthcare is a basic need in U.S. society, hospitals are
constantly vulnerable to financial problems because of
competition, changing medical technology, new approaches to
healthcare from improved drugs and public awareness, and medical
malpractice lawsuits. Any or all of these factors can be
financially crippling and, even if the financial impact is
minimized, a hospital's reputation can be damaged. Like any other
business organization, hospitals can also run into difficulty
because of poor management or labor problems.
The first and last chapters, "Introduction" and "Turnarounds: An
Epilogue," respectively, are written by the co-editors. The
balance of the chapters contain first-hand accounts of hospital
turnarounds, with the authors asked by the co-editors to "document
the role of the various publics." The authors do this, offering
their assessment of the role of the board of directors, medical
staff, management team, volunteers, and other relevant "publics"
in the respective turnarounds. A common thread in this book is
that the import and activities of these publics were different in
every turnaround. Each turnaround had to address its own
grievous, overriding problem or set of problems. Each turnaround
had its own cast of characters who brought different backgrounds
and skills to the turnaround. As a result, each path taken to
overcoming the distressed situation was different.
No matter what the cause or causes of a hospital's distressed
situation, in nearly every case the problems were first realized
when a financial problem became apparent. Thus, turnarounds are
inevitably focused on improving a hospital's financial situation.
As one of the authors notes, "A turnaround is most often the
result of increased revenues and decreased expenses." The
approach taken by some of the authors was to focus on
"[increasing] revenues to improve the operating margins of their
organizations." Many other turnarounds were accomplished by
focusing on reducing expenses. Invariably, however, a combination
of both was needed and working toward these paired objectives
required a new strategic thinking and the development of
operational capabilities that prepared the hospital for long-term
survival in continually changing market conditions. One author's
prescription for success was, "Upward communication, fluidity of
organizational structure, a reduction of unnecessary bureaucratic
rules and policies, and ambitious yet realistic goals and
objectives." These practices are present in healthy companies and
usually missing in distressed companies. Implementation of these
business practices is essential for a hospital to return to a
favorable financial footing.
Another author addressed "organizational burnout," which must be
corrected if a hospital is to survive. Burnout is evident when
"the sum of an organization's actual output is decreasing over
time when compared with its potential output." The challenge
facing hospital executives and turnaround specialists is to reduce
-- and ideally, eliminate -- the gap between actual and potential
output. The smaller the gap, the more efficient, productive, and
healthy the organization.
These are just a few of the observations and lessons provided in
this collection of essays. Through engaging first-person accounts
of rescue stories, the reader learns what a turnaround is all
about, how to diagnose a distressed situation, and how to
formulate a strategy that implements specific corrective actions.
Terence F. Moore has been involved in the Michigan hospital system
as President and CEO of Mid-Michigan Health, Board Member of the
Michigan Hospital Association, and Chair of the East Michigan
Hospital Association. He is also a fellow of the American College
of Healthcare Executives. Earl A. Simendinger is a professor of
management at the College of Business at the University of Tampa
who for 20 years was a hospital administrator. Also a fellow in
the American College of Healthcare Executives, he has written many
books and articles on management and organizational development.
*********
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, 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 ***