/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/110930.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 30, 2011, Vol. 15, No. 271 Headlines 56 WALKER: Case Filed Pro Se; Petition May Be Dismissed AFFINITY GROUP: Expands Exec. Team With New CFO, EVP for HR AGE REFINING: Court OKs Integra Realty as Panel's Appraiser AIRPLAY DIRECT: Wants Involuntary Chapter 11 Case Dismissed ALEXANDER GALLO: Wants to Hire KPMG LLP as Auditor AMFIN FINANCIAL: Solicitation Ballots on Chap. 11 Plan due Oct. 17 AMR CORP: American Plans to Offer $725MM of Class A Certificates AMR CORP: S&P Assigns 'A-(sf)' Rating to Class A Certificates AMT LLC: Solicitation Ballots on Chap. 11 Plan Due Oct. 17 APPLIANCE DIRECT: Former Drivers Awarded $90T in Labor Suit ATMAN HOSPITALITY: Bankruptcy Filing Postpones Hotel Auction AURA SYSTEMS: Completes $3.5-Mil. Senior Secured Notes Offering AURASOUND INC: Robert Pearson Resigns as Director BANKATLANTIC BANCORP: To Effect a 1-for-5 Reverse Stock Split BERNARD L. MADOFF: Defers Today's $272MM Payoff After Mets Ruling BERNARD L MADOFF: Mets Victory Could Pave Way for Similar Rulings BERNARD L. MADOFF: Trustee Trims $245MM Clawback Suit vs. Plaza BIOZONE PHARMACEUTICALS: Issues $500,000 Convert. Promissory Note BLUEKNIGHT ENERGY: Files Supplement to Rights Offering BPP TEXAS: Court Approves New Chapter 11 Plan After Creditor Deal BROADSTRIPE LLC: Sets Oct. 20 for Sale Under Plan BROWNSTONE LOFTS: Voluntary Chapter 11 Case Summary CFRI/GREENLAW DYER: Has Until Nov. 18 to Propose Chapter 11 Plan CHINA RENEWABLE: Shareholders OK Increase of Board Members to 7 CMP SUSQUEHANNA: S&P Removes 'B' Corporate From CreditWatch COMMUNITY TOWERS: Case Summary & 20 Largest Unsecured Creditors CRYOPORT INC: Stockholders Approve 2011 Stock Incentive Plan CUMULUS MEDIA: S. Schwarzman Owns 2.8% of Class A Common Shares CUMULUS MEDIA: S&P Affirms 'B' Corporate Credit Ratings DARLING INT'L: Moody's Raises CFR to 'Ba2'; Outlook Positive DEL MONTE: S&P Lowers Corp. Credit Rating to 'B'; Outlook Stable DYNEGY INC: Hit With Another Bondholder Suit Over Restructuring EASTMAN KODAK: Moody's Lowers CFR to 'Caa2'; Outlook Negative EASTMAN KODAK: Fitch Downgrades Issuer Default Rating to 'CC' ELITE PHARMACEUTICALS: Launches Lodrane D Allergy Product ENER1 INC: Appoints C. Cowger as New Chief Executive Officer ENTELOS INC: Simulations Bid for All Assets Not Selected EVOLUTION ACADEMY: S&P Lowers Rating on Revenue Bonds to 'BB+' FALLS AT TOWNE: Lift Stay, Dismissal Deferred to Oct. 31 Hearing FERTINITRO FINANCE: Fitch Affirms 'CCC' Rating on $250MM Bonds FIRST MARINER: Amends Securities Purchase Pact with Priam FIRSTPLUS FIN'L: Ch. 11 Trustee Amends Liquidating Plan FRIENDLY ICE CREAM: May File for Chapter 11 as Soon as Next Week GARNEAU INC: Shareholders to Vote on Liquidation and Dissolution GLAZIER GROUP: Plan Confirmation Hearing Set for Oct. 13 GRACEWAY PHARMACEUTICALS: Plans Bankruptcy, Sale to Galderma GRACEWAY PHARMACEUTICALS: Reaches Deal to Sell Assets to Galderma HARRIS INTERACTIVE: Receives Waiver of Non-Compliance Under Loan HARRISBURG, PA: House Backs Harrisburg Receivership Bill HCA HOLDINGS: To Offer $500 Million of 8% Senior Notes HCA INC: Moody's Assigns 'B3' Rating to Senior Unsecured Notes HCA INC: S&P Assigns 'B-' Rating to $500-Mil. Sr. Unsec. Notes HD SUPPLY: Moody's Affirms 'Caa2' Corporate Family Rating HEALTHSPRING INC: S&P Raises Counterparty Credit Rating to 'BB-' HELLER EHRMAN: 8 Firms Agree to Pay $2.3MM Over Atty. Transfers HORIZON LINES: Amends Docs for $330MM Notes Exchange Offer HORIZON LINES: Extends Notes Exchange Offer to Oct. 3 HOTEL NEVADA: Joint-Client Privilege Not Applicable to Trustee INNKEEPERS USA: Offers New Theory Forcing Cerberus to Buy JELD-WEN INC: Moody's Assigns B3 Rating to $450MM Secured Notes JELD-WEN INC: S&P Raises Prelim. Corp. Credit Rating to 'B' KOREA TECHNOLOGY: Proposes Durham Jones as Counsel KOREA TECHNOLOGY: Has Deal on Sale of Mining Property L-3 COMMS: Fitch Affirm Rating on Sr. Subordinated Debt at 'BB+' LACKAWANNA COUNTY: Moody's Cuts General Obligation Rating to Ba3 LEHMAN BROTHERS: Former Exces Look to Settle California Lawsuit LIBBEY INC: Won't Renew Exec. Officers' Employment Agreements LOS ANGELES DODGERS: Fox Files Lawsuit to Block TV Rights Sale LOS ANGELES DODGERS: Asks for Delay on MLB Plea vs. Exclusivity LOWER BUCKS: Amends Plan, Bondholders to Recover 35% of Claims M3 ENERGY: North American Resumes Operations at Gem #2 Mine M WAIKIKI: Marriott Supports Panel's Cash Collateral Objection MANISTIQUE PAPERS: Court Approves Tilly Virchow as Accountant MANISTIQUE PAPERS: Committee Taps Ashby & Geddes as Del. Counsel MANISTIQUE PAPERS: Court Okays Vector Consulting as Fin'l Advisor MANISTIQUE PAPERS: Seeks Permission to Access $5-Mil. DIP Loan MANISTIQUE PAPERS: Has Authority to Use Cash Collateral MICROSEMI CORP: Moody's Lowers CFR to 'Ba2'; Outlook Stable NEBRASKA BOOK: Hires Deloitte Tax as Tax Services Providers NEUROLOGIX INC: Extends M. During Consulting Pact to 2012 NEWFIELD EXPLORATION: Moody's Assigns Ba1 Rating to Senior Notes NEWFIELD EXPLORATION: S&P Assigns Rating to Sr. Unsecured Notes NEWLEAD HOLDINGS: Engages in Constructive Dialogue With Lenders NORTHCORE TECHNOLOGIES: Launches 'Discount This' Platform PALM HARBOR: Plan Set for Nov. 17 Confirmation PAT & OSCAR'S: Declining Sale Cues Chapter 7 Bankruptcy Filing PERKINS & MARIE: Court Approves Causes of Action Motion POINT BLANK: Gores Group Cuts Offer for Body-Armor Business POINT BLANK: Proposes to Sell Non-Bullet Proof Fabric QUIGLEY CO: Asbestos Plaintiffs Pursue Pfizer for $10 Million QWEST CORP: S&P Keeps 'BB' Corp. Credit Rating; Outlook Stable R&G FINANCIAL: Court Approves Disclosure Statement REDDY ICE: Receives Non-Compliance Notice from NYSE SEA TRAIL: Files for Chapter 11 Bankruptcy Protection SEAHAWK DRILLING: Wins Approval of Full-Payment Chapter 11 Plan SEALY CORP: Reports $6.6 Million Net Income in Aug. 28 Quarter SEARCHMEDIA HOLDINGS: To Offer 3MM Shares Under Incentive Plan SEQUOIA PARTNERS: Court Approves Mark Schmitz as Capital Broker SHILO INN: Court Approves Dismissal of Killeen's Chapter 11 Case SILVERSUN TECHNOLOGIES: Signs Stock Purchase Agreement with CEO SOLYNDRA INC: Judge Rejects Committee's Request to Extend Sale SOLYNDRA LLC: To Auction Non-Core Assets on Nov. 2 SOLYNDRA LLC: Imperial Capital Approved as Financial Advisor SOLYNDRA LLC: DOE Loan Guarantee Program the Problem, CAGW Says SOLYNDRA LLC: Section 341(a) Meeting Scheduled for Oct. 18 SPANISH INN: Palm Springs Resort for Celebs in Chapter 11 SPECTRAWATT INC: Court Approves Heritage, et al., as Sale Agent STIRLING ENERGY: Another Solar Company Bites the Dust TALON THERAPEUTICS: NDA for Marqibo Accepted for Filing by FDA TAO-SAHI LP: Use of S2 Acquisition's Cash Collateral Expires Today TAVERN ON THE GREEN: Sells Trademark for International Use TELEFONICA FINANCE: Fitch Lowers Rating on Pref. Shares to 'BB+' TEKNI-PLEX INC: Moody's Lowers CFR to Caa1; Outlook to Negative TRAVELPORT HOLDINGS: Voting Deadline for Restructuring Expires TUBO DE PASTEJE: Reorganization Plan Took Effect Sept. 9 TWIN CITY: Case Summary & 16 Largest Unsecured Creditors WASHINGTON LOOP: U.S. Trustee & Creditor Wants Ch. 7 Liquidation WASHINGTON LOOP: Court OKs Shumaker as Ch. 11 Trustee's Counsel WASHINGTON LOOP: Disclosure Statement Hearing on Oct. 20 WESTLAKE CHEMICAL: Moody's Raises Ratings to 'Baa3' From 'Ba1' XL GROUP: Moody's Affirms Ba1(hyb) Preferred Stock Rating YRC WORLDWIDE: Jeffrey Altman Discloses 17.4% Equity Stake * Only $5 Billion of Junk Debt Remains to Mature This Year * Junk Defaults Predicted to Rise Only Fractionally * Moody's Says Poor Market Conditions May Hit Lower-Rated Firms * Deepening Insolvency Claim Survives in Appeals Court * Anchorage Capital Defends CDO Liquidation Plan Ahead of Hearing * Hedge Fund Rivals Scout Paulson Assets as Fortunes Turn * Restructuring Opportunities for Some, A Wait for Others * Electra Partners, Palamon Capital Sell SAV Credit * BOOK REVIEW: Learning Leadership ********* 56 WALKER: Case Filed Pro Se; Petition May Be Dismissed ------------------------------------------------------- 56 Walker LLC, the owner of a building at 56 Walker Street in Manhattan, filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 11-14480) on Sept. 23, 2011. Bill Rochelle, the bankruptcy columnist for Bloomberg News, notes that the petition was filled out in longhand and signed by an individual identifying himself as the sole member of the company that owns the property. No lawyer signed the petition. According to the report, U.S. Bankruptcy Judge Allan Gropper immediately scheduled an Oct. 3 hearing where he will dismiss the case unless the building by then has a lawyer. Mr. Rochelle notes that although an individual can go through bankruptcy without a lawyer, corporations or partnerships must have a lawyer or the case will be dismissed. The petition says the property is worth $11 million while secured debt is $15.2 million. AFFINITY GROUP: Expands Exec. Team With New CFO, EVP for HR ----------------------------------------------------------- Camping World, Inc., and Good Sam Enterprises, LLC, fka Affinity Group Inc., announced the expansion of the executive team through the appointments of Jim DeBruzzi as Chief Financial Officer and Zrinka Allen as EVP of Human Resources, Social Responsibility and Communication. Prior to joining the Company, DeBruzzi was the Chief Financial Officer for Kerasotes Showplace Theatres, one of America's largest movie theatre chains. He was responsible for the Company's accounting, finance, treasury, risk management, reporting and compliance, M & A, human resources and IT. Additionally, Jim was the key liaison with the Company's private equity partner, senior and institutional lenders, investment bank, legal counsel, audit and tax counsel and the rating agencies. Zrinka Allen comes to Camping World and Good Sam with over 20 years of experience in Human Resources and most recently was the Director of HR for Wolters Kluwer where she led the development and implementation of key business strategies focused on Talent Acquisition and Development; Compliance; Diversity/Inclusion and Social Responsibility. As EVP of Human Resources, she will focus on streamlining the Company's employee management systems as well as talent procurement. In her additional role of overseeing social responsibility for the Company, she will develop and promote local level initiatives that keep the Company and associates focused on giving back consistent with the charter of the Good Sam Club in 1966 "people helping people." "Good Sam and Camping World have always attracted talent of the highest caliber, but this is a whole new level. We are focused on growing the Company through precision and experience. As we evolve to the next level we must continue seeking out individuals with proven track records. I am confident Zrinka and Jim will be tremendous assets as we continue to build our Company with a focus on profitability and social responsibility," said Marcus Lemonis, Chairman & CEO of Camping World & Good Sam. The two companies also announced several key promotions, Tom Wolfe to Executive Vice President of Operations for Good Sam, Tamara Ward to Chief Marketing Officer of Camping World & Good Sam and Mike Siemens to President of Good Sam Club, the largest RV Club in the world with over 1.3 million members. Tom has recently served as the CFO for Good Sam Enterprises. In his new position, Tom's primary focus will be on the media business as well as rapidly growing the products and services venture group. Tom brings a great deal of experience both as an RV Industry veteran and his understanding of Good Sam's historical operations. Additionally, he will be tasked with working with Good Sam business leaders to streamline processes, improve operating margins through best practices and SG&A reduction, as well as assisting the business leaders with a clear understanding of revenue and profit objectives. As Chief Marketing officer, Tamara Ward's core focus will be advancing Camping World & Good Sam's marketing efforts, including expanding its brands, ensuring that the brand promise is clear and executed and assisting the various business leaders in achieving their stated revenue and profit objectives. Ward has been with the company over 22 years. In his new role, Mike Siemens will be the clear leader with the Good Sam Club. His task is to improve the overall experience of the members, bring new benefits to the club and improve the retention and acquisition of RV'ers nationwide. He brings over 25 years experience with the company. "Marcus and I are thrilled to add new members to our team and announce these well deserved promotions. Over the last year we have worked hard to shed our non-core business and are poised for dramatic growth. It's paramount to have the right people in the right positions and we have clearly achieved that," replied Brent Moody, Chief Administrative and Legal Officer of Camping World & Good Sam. 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, a privately-owned corporation. The Company is a member- based direct marketing organization targeting North American recreational vehicle 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. AGE REFINING: Court OKs Integra Realty as Panel's Appraiser ----------------------------------------------------------- The Official Committee of Unsecured Creditors of Age Refining, Inc., sought and obtained permission from the U.S. Bankruptcy Court for the Western District of Texas to retain Integra Realty Resources - San Antonio as its appraiser, valuation consultant, and expert. The Creditors Committee requires appraisal and valuation consulting services, including related expert testimony, in connection with a dispute over a claim asserted by Chase Capital Corporation. Chase Capital filed a proof of claim, dated March 11, 2010, for $40,212,084 over money loaned to the Debtor. The claim asserts secured status, with any unsecured amount indicated as "unknown." The outstanding balance owed on the Chase Claim on the Petition Date consisted of $30,062,495 on the first lien prepetition claim and $10,149,589 consisting of the second lien prepetition claim. After the sale of the Debtor's refinery unit, Chase Capital was paid $36,000,000, applied against the Chase Claim, resulting in a net remaining balance on the claim of $4,212,084, plus any interest, cost, fees or expenses to the extent authorized under Sections 506(a) and (b) of the Bankruptcy Code, up to the value of the collateral securing the prepetition liens of Chase Capital. Included within the Debtor's assets made part of the Refinery Sale and sold to NuStar were certain assets that were not subject to the Chase Claim. The Unencumbered Assets include the Elmendorff Tank Farm, the rolling stock of AGE, and real property adjacent to the refinery. Chase Capital has filed a motion to compel payment of principal, interest, and other charges pursuant to Sections 506(a) and (b). Both Chase Capital and the Creditors' Committee seek a determination of the value of the secured claim under Section 506. Intrinsic within both motions is the value of collateral sold to NuStar as part of the Refinery Sale. According to the Creditors Committee, the Refinery Sale process did not provide an allocation of the sale proceeds or provide a specific purchase price for any of the Unencumbered Assets. The Committee also seeks to ascertain the fair market value of the Unencumbered Assets. The Committee's Valuation Services Appraisal Agreement with Integra Realty provides for testimony and expert witness services in connection with Integra Realty's appraisals, at a rate of $350 per hour, in addition to reimbursement of Integra Realty's actual, out-of-pocket expenses. The Creditors' Committee believes that Integra Realty does not hold or represent any interest adverse to the Debtor's estate and that it is a disinterested person as the term is defined in Section 101(14) of the Bankruptcy Code. About Age Refining Age Refining, Inc. owns a refinery in San Antonio, Texas. It manufactures, refines and markets jet fuels, diesel products, solvents and other highly specialized fuels. The Company filed for Chapter 11 bankruptcy protection (Bankr. W.D. Texas Case No. 10-50501) on Feb. 8, 2010. Aaron Michael Kaufman, Esq., and Mark E. Andrews, Esq., at Cox Smith Matthews Incorporated, in Dallas, represent the Chapter 11 debtor. The Company estimated $10 million to $50 million in assets and $100 million to $500 million in liabilities in its bankruptcy petition. Eric Moeller has been named chapter 11 trustee to take management of the Debtor from CEO Glen Gonzalez. In November 2010, the trustee filed suit against Mr. Gonzalez, alleging he breached his fiduciary duty by dipping into Company coffers for his personal use while paying himself an excessive salary and stock distributions. David S. Gragg, Esq., Steven R. Brook, Esq., Natalie F. Wilson, Esq., and Allen M. DeBard, Esq., at Langley & Banack, Inc., in San Antonio, Tex., serve as general counsel to the Chapter 11 Trustee. AIRPLAY DIRECT: Wants Involuntary Chapter 11 Case Dismissed ----------------------------------------------------------- AirPlay Direct, LLC, asks the U.S. Bankruptcy Court for the Middle District of Tennessee to (i) dismiss an involuntary Chapter 11 petition filed against it, (ii) award its attorneys' fees and costs, and (iii) award punitive damage against the petitioning creditors. The Alleged Debtor answered the involuntary Chapter 11 petition filed by Clif Doyal, Scott Welch, Raleigh Squires and Sussman & Associates, P.C., and their motion for the appointment of Chapter 11 trustee, or in the alternative, examiner. The Alleged Debtor explains that, among other things: -- Messrs. Doyal, Squires, and Welch are not entitled to the amount of compensation they list on the petition. The Alleged Debtor denies that any rent is owed to Mr. Welch because the Alleged Debtor is not aware of any lease or other written agreement existing between the parties for any real property. The Alleged Debtor, Robert Weingartz, the Alleged Debtor's founder and largest shareholder, Messrs. Welch and Doyal attempted to negotiate employment contracts to set forth potential salaries and compensation, but were unable to come to terms. -- it has not received an invoice that includes a detailed hourly billing with an itemized list of tasks accomplished for the $27,721 claim by Sussman. Because the Alleged Debtor is unable to determine whether this claim is proper, it must deny that this amount is accurate. The Alleged Debtor is willing to begin good faith payments in an effort to bring Sussman current once a satisfactory detailed accounting is provided. The Alleged Debtor asserts that it has substantially reduced its debts unrelated to the Petitioning Creditors over the past three months. The Alleged Debtor is paying all of its current expenses as they become due, and has been addressing past due debts by entering into payment plans with its creditors. About AirPlay Based in Old Hickory, Tenn., AirPlay Direct, LLC, owns and operates a subscription music promotion service, run primarily through a Web site. Artists, radio programmers, and record labels are all subscribers to the service, which works to connect creative artists with potential outlets for distribution of their music. AirPlay's primary value is the subscriber list and the software platform utilized in connecting subscribers. AirPlay has 30,000 subscribers to the Web site, who pay a monthly fee to use the services. Its web platform is currently at or near its capacity in light of the number of subscribers. Clif Doyal, Scott Welch, Raleigh Squires, and Sussman & Associates, P.C., claiming they are owed $218,476 in the aggregate, filed an involuntary Chapter 11 petition against AirPlay (Bankr. M.D. Tenn. Case No. 11-08916) on Sept. 6, 2011. Mr. Welch served as president and member of advisory board. Mr. Doyal served as executive vice president and editor of AirPlay's promotional magazine, Direct Buzz. Mr. Squires acted as operations manager. They resigned prepetition. Sussman & Associates provided accounting services. Judge George C. Paine II presides over the case. Robert J. Welhoelter, Esq. -- rjwelho@gmail.com -- in Nashville, represents the Petitioning Creditors. ALEXANDER GALLO: Wants to Hire KPMG LLP as Auditor -------------------------------------------------- Alexander Gallo Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ KPMG LLP as their auditors to provide auditing, tax compliance and tax consulting services. The firm agrees to audit the Debtors' consolidated balance sheet as of Dec. 31, 2011, and 2010. The Debtors will pay a fixed fee of $330,000 to the firm, for which the firm bills the Debtors on a monthly basis in six equal installments of $55,000 for the audit services. The Debtors assure the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Alexander Gallo Holdings Marietta, Georgia-based Alexander Gallo Holdings LLC -- http://www.alexandergalloholdings.com-- is the largest full service, IT-enabled court reporting and litigation support services company in the United States. AGH offers court reporting, litigation support, trial software and other similar services and has the only true national footprint in its market, with roughly 55 offices located throughout the United States, and a preferred provider network which serves as an extension of Alexander Gallo's geographic reach. Founded in 1999 by Alexander J. Gallo, a former court reporter, AGH has made 18 acquisitions since 2003. Mr. Gallo has remained as CEO. AGH, along with affiliates, filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-14220) on Sept. 7, 2011. Alexander Gallo will sell the business via 11 U.S.C. Sec. 363 to Bayside Capital Inc., which had acquired $22 million in second- lien debt. The price wasn't disclosed. Alexander Gallo disclosed assets of $208 million and debt totaling $258 million as of June 30, 2011. Liabilities include $47 million on a first-lien revolving credit and term loan where Wells Fargo Bank NA is agent. In addition to the second-lien debt held by Bayside, there is $33 million in junior unsecured subordinated notes owing to Harvest Equity Partners LLC plus another $148 million in junior unsecured subordinated notes owing to insider Gallo Holdings LLC. Bayside is providing $20 million in financing for the Chapter 11 effort. The new loan will have a first priority lien on unencumbered assets and a lien behind the first-lien debt. Bankruptcy Judge Allan J. Gropper presides over the case. Thomas R. Califano, Esq., Jeremy R. Johnson, Esq., Esq., and Daniel G. Egan, Esq., at DLA Piper LLP (US), in New York, serve as the Debtors' general counsel. Squire, Sanders & Demsey (US) LLP serves as the Debtor's corporate counsel. The Debtors' financial advisor is Gordian Group, LLC. Kurtzman Carson Consultants LLC serves as the Debtor's claims agent. AMFIN FINANCIAL: Solicitation Ballots on Chap. 11 Plan due Oct. 17 ------------------------------------------------------------------ All persons and entities to vote on Amfin Financial Corporation and its debtor affiliates' plan of reorganization must deliver their ballots by mail, hand delivery or overnight courier no later than 5:00 PM Pacific Time on Oct. 17, 2011 to the Balloting Agent at: AmFin Ballot Processing Center c/o Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90245 The Debtors received approval of the disclosure statement explaining their Plan giving way for the Debtors to commence solicitation on their plan. The hearing on confirmation of the Plan is scheduled for Oct. 25, 2011, at 8:30 a.m. Eastern Time, before the Honorable Pat E. Morgenstern-Clarren of the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division. Any objection to confirmation of the Plan must be filed no later than Oct. 17. The Debtors are seeking acceptances of the AmFin Plan from holders of Allowed Claims classified in Class 4 (FDIC Capital Claims), Class 6 (Unsecured Bondholder Claims) and Class 8 (Other Unsecured Claims) under the AmFin Plan, which are the only Classes impaired under the AmFin Plan and therefore entitled to vote on the AmFin Plan. A redlined version of the Amended Disclosure Statement, dated Sept. 6, is available for free at: http://ResearchArchives.com/t/s?770d About AmTrust Financial AmTrust Financial Corp (PINK: AFNL) was the owner of the AmTrust Bank. AmTrust was the seventh-largest holder of deposits in South Florida, with $4.7 billion in deposits and 21 branches. In November 2008, the Office of Thrift Supervision issued a cease and desist order requiring AmTrust to improve its capital ratios. AmTrust Financial, together with affiliates that include AmTrust Management Inc., filed for Chapter 11 bankruptcy protection (Bankr. N.D. Ohio Case No. 09-21323) on Nov. 30, 2009. The debtor subsidiaries include AmFin Real Estate Investments, Inc., formerly AmTrust Real Estate Investments, Inc. (Case No. 09-21328). G. Christopher Meyer, Esq., Christine M. Piepont, Esq., and Sherri L. Dahl, Esq., at Squire Sanders & Dempsey (US) LLP, in Cleveland, Ohio; and Stephen D. Lerner, Esq., at Squire Sanders & Dempsey (US) LLP, in Cincinnati, Ohio, serve as counsel to the Debtors. Kurtzman Carson Consultants serves as claims and notice agent. Attorneys at Hahn Loeser & Parks LLP serve as counsel to the Official Committee of Unsecured Creditors. AmTrust Management estimated $100 million to $500 million in assets and liabilities in its Chapter 11 petition. AmTrust Bank was not part of the Chapter 11 filings. On Dec. 4, 2009, AmTrust Bank was closed by regulators and the Federal Deposit Insurance Corporation was named receiver. New York Community Bank, in Westbury, New York, assumed all of the deposits of AmTrust Bank pursuant to a deal with the FDIC. AMR CORP: American Plans to Offer $725MM of Class A Certificates ---------------------------------------------------------------- American Airlines, Inc., is offering $725,694,000 of Class A Pass Through Certificates, Series 2011-2. The Certificates will have the benefit of a security interest in 43 aircraft that are owned and operated by American: -- 4 currently unencumbered B737-823 aircraft, originally delivered to American from 1999-2001; -- 37 aircraft originally delivered to American from 1999-2001 and 2 aircraft originally delivered to American in 2009, currently encumbered in American's 2001-2 EETC and certain private mortgages. Joint Structuring Agents & Bookrunners are Morgan Stanley and Deutsche Bank. Additional Bookrunners are Goldman Sachs, Credit Suisse and Citigroup. A full-text copy of the free writing prospectus is available for free at http://is.gd/yR43Ah 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. AMR CORP: S&P Assigns 'A-(sf)' Rating to Class A Certificates ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'A- (sf)' rating to American Airlines Inc.'s (American) series 2011-2 class A pass-through certificates with an expected maturity of Oct. 15, 2021. The final legal maturity will be 18 months after the expected maturity. The issue is a drawdown under a Rule 415 shelf registration. "We will assign the final rating upon the conclusion of a legal review of the documentation," S&P related. The preliminary 'A- (sf)' rating is based on American's credit quality and substantial collateral coverage provided by a combination of mostly desirable, legal and structural protections available to the pass-through certificates. The company will use proceeds of the offering to refinance aircraft it already owns: 16 Boeing B737-800s, 14 B757-200s, and 13 B777-200ERs. All except two B737-800s are 10-12 years old (the others are two years old). Each aircraft's secured notes are cross-collateralized and cross-defaulted--a provision we believe increases the likelihood that American would affirm the notes (and, thus, continue to pay on the certificates) in bankruptcy. The pass-through certificates are a form of enhanced equipment trust certificates (EETC) and benefit from legal protections afforded under Section 1110 of the federal bankruptcy code and by liquidity facilities provided by Morgan Stanley Bank N.A. The liquidity facilities are intended to cover up to three semiannual interest payments, a period during which collateral could be repossessed and remarketed by certificateholders following any default by the airline, or to maintain continuity of interest payments as certificateholders negotiate with American in a bankruptcy with regard to certificates. The preliminary rating applies to a unit consisting of certificates representing the trust property and escrow receipts, initially representing interests in deposits (the proceeds of the offerings). The escrow deposits are held by a depositary bank, The Bank of New York Mellon, pending delivery of the aircraft that American will refinance with proceeds from the certificates. Amounts deposited under the escrow agreements are not the property of American and are not entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code, and any default arising under an indenture solely by reason of the cross-default in the indenture may not be of a type required to be cured under Section 1110. Any cash collateral held as a result of the cross-collateralization of the equipment notes also would not be entitled to the benefits of Section 1110. Neither the certificates nor the escrow receipts may be separately assigned or transferred. "We believe that American views these planes as important and would, given the cross-collateralization and cross-default provisions, likely affirm the aircraft notes in a bankruptcy scenario. In contrast to most EETCs issued before 2009, the cross default would take effect immediately in a bankruptcy if American rejected any of the aircraft notes. This should prevent American from selectively affirming some aircraft notes and rejecting others ('cherry-picking'), which often harms the interests of certificateholders in a bankruptcy," S&P stated. "We consider the collateral pool overall to be of mostly good quality. The largest proportion of initial appraised value (about 56%) is made up of B777-200ERs. The B777-200ER (extended range) is a successful midsize, long-range widebody plane. The larger versions of Boeing Co.'s new B787 and, in particular, Airbus SAS' A350 will eventually provide alternatives, which we expect will occur before these certificates are fully repaid. We believe this could place long-term value pressure on the B777-200ER. In our analysis, we judged these planes to be slightly less liquid in the re-sale market than recently delivered B777-200ER's would be. Most of the B777 aircraft that Boeing is delivering currently are the larger B777-300ER," S&P noted. "The second largest proportion of collateral value is represented by B737-800s. This is Boeing's most popular aircraft, a midsize narrowbody plane that more than 100 airlines worldwide operate. Given the modern technology incorporated in the plane, its wide user base, and expected demand in excess of supply over the next couple of years, we consider it to be the best aircraft collateral currently available. Boeing recently launched a successor model, the B737 MAX, a re-engined version intended to compete with Airbus' new A320 NEO family. American recently ordered both B737 MAX and A320 NEO planes (as well as current technology versions of both the B737 and A320 families) in a large order split between the two manufacturers. Although the introduction of successor planes will eventually place pressure on values of existing B737-800s, the new MAX model will not be available for at least five years, and large numbers will not be delivered for years after that. Still, as for the B777-200ERs, we judged that the re sale liquidity of the B737-800s that are 10-12 years old are somewhat less favorable than for new models," S&P related. The balance of value, about 19%, comprises B757-200s, large narrowbody aircraft introduced in the 1980s and widely used, especially by U.S. airlines. All of these are, or will soon be, capable of transoceanic international service (used by American on trans-Atlantic flights). Although the B757-200 incorporates somewhat dated technology, there is no successor aircraft from either Boeing or Airbus of this relatively small size that can fly across the Atlantic, which is useful on routes more lightly travelled than those served by widebody aircraft. "We incorporate this factor into our assessment of these B757-200s' technological risk and liquidity," S&P said. The initial and maximum loan-to-value (LTV) of the class A certificates is 45.3%, using the appraised base values and depreciation assumptions in the offering memorandum. "However, we focused on more-conservative, maintenance-adjusted base values for the B737-800s and maintenance-adjusted current market values for the B777-200ERs and B757-200s, resulting in an initial value that is about 11% lower than the value shown in the offering memo. We also use more-conservative depreciation assumptions for all of the planes than those in the prospectus. We assumed that, absent cyclical fluctuations, values of the B737-800s would decline by 5% of the preceding year's value per year, and the B777-200ERs and B757-200s, 7%," S&P stated. Using these values and assumptions, the class A certificates' initial LTV is higher, at 51.2%. "Our analysis also considered that a full draw of the liquidity facility, plus interest on the draws, represents a claim senior to the certificates. This amount is somewhat above levels typical of an EETC, equal to 9% to 10% of collateral value. We factored that added priority claim in our deliberations. However, we note that the transaction is structured so that American could later issue class B certificates. If those certificates had a liquidity facility, draws on that facility would rank senior to repayment of the class A principal and interest, effectively raising the total LTV. We would review our rating on the class A certificates in such an event. In the past, airlines have structured follow-on certificates on this kind in such a way as to not affect the rating of the outstanding senior certificates," S&P stated. Ratings List American Airlines Inc. Corporate credit rating B-/Negative/-- New Rating American Airlines Inc. Ser 2011-2 cl A pass-thru certs due 2021 A- (sf)(prelim) AMT LLC: Solicitation Ballots on Chap. 11 Plan Due Oct. 17 ---------------------------------------------------------- Judge William S. Shulman of the U.S. Bankruptcy Court for the Northern District of Florida, Pensacola Division, conditionally approved the disclosure statement explaining AMT, LLC's plan of reorganization. The Court fixed Oct. 17, 2011 as the last day for filing written acceptances or rejections of the Plan. Any party who has an objection to the Disclosure Statement must file that objection in writing on or before Oct. 17. The Hearing on confirmation of the Plan and on any objections to the Disclosure Statement will be held via Telephonic Conference call on Oct. 24, 2011 at 2:30 p.m. CDT. Conference call telephone number is 1-888-363-4749, access code: 1729588#, security code: 8818#. As reported by The Troubled Company Reporter on Sept. 19, 2011, the Plan will be funded primarily by the proceeds of the $14.1 million loan obtained from Omega Commercial Finance. The loan is secured by the Debtor's 11.77 acre of undeveloped land located on the waterfront on Destin pass. The Debtor says that if the Plan is not confirmed and its case is converted to Chapter 7 liquidation, a Chapter 7 Trustee would take possession of the Debtor's assets and would determine whether the assets have equity over and above amounts owed to secured creditors. If there is equity in the Debtor's assets, the trustee will attempt to sell those assets and use the equity to distribute to creditors. If there is no equity in the assets, the trustee would surrender secured assets to the secured creditor. The Plan provides for this classification of claims: Class 1 Administrative Expenses Class 2 Secured claim of Jefferson Bank and Trust Company Class 3 Priority claim of Okaloosa County Tax Collector Class 4 General Unsecured Claims Class 5 Claim of U.S. Trustee Class 6 Claim of ZTF Family, LP At the behest of the Debtor, the Court will set a combined hearing on the approval of the Disclosure Statement and confirmation of the Plan. About AMT LLC AMT, LLC, in Destin, Florida, filed for Chapter 11 bankruptcy (Bankr. N.D. Fla. Case No. 11-30933) on May 27, 2011. The Debtor's major asset consisted of 11.77 acres of waterfront property located in Destin Pass in Destin, Florida. Judge William S. Shulman presides over the case. J. Steven Ford, Esq., at Wilson, Harrell, Farrington, Ford, Wilson, Spain, & Parsons, P.A., in Pensacola, Fla., serves as the Debtor's counsel. In its schedules, the Debtor disclosed $30,679,648 in assets and $5,060,823 in liabilities. APPLIANCE DIRECT: Former Drivers Awarded $90T in Labor Suit ----------------------------------------------------------- A jury found Sei Pak, CEO of Appliance Direct Inc., liable for retaliating against three former company drivers. The jury awarded the drivers $90,000 for their losses. In February 2008, the three drivers filed an overtime lawsuit against Appliance Direct and Mr. Pak, Case No. 6:08-cv-317-Orl 19DAB. The drivers prevailed on their overtime claims and were awarded a Judgment for their unpaid overtime in April 2009. While the drivers were awaiting the Court to enter Judgment, Mr. Pak terminated the drivers. The Drivers were sure that Mr. Pak fired them because of their overtime lawsuit, and filed a new lawsuit against Appliance Direct and Mr. Pak, Case No. 6:09-cv-00224-GJK. After more than two and a half years of litigation, including overturning the Judge at the 11th Circuit Court of Appeals, the Plaintiffs prevailed when the Jury awarded the drivers $90,000 for their loses. The lawsuit was filed under a law known as the Fair Labor Standards Act, 29 U.S.C. 215(a)(3). The law states that an employer is not permitted to retaliate against an employee who has asserted their right to be paid correctly pursuant to the overtime laws. In addition to the judgments entered, there are currently pending motions filed by the drivers for liquidated damages and attorney fees against Mr. Pak which could subject Mr. Pak to hundreds of thousands of dollars in additional liability. The Plaintiffs were represented by Maurice Arcadier, from Arcadier and Associates, P.A. Mr. Arcadier is a Board Certified attorney in Labor and Employment law and has sued and recovered multiple judgments against Mr. Pak and Appliance Direct, Inc. during the past five years. Mr. Arcadier states that he has been litigating against Appliance Direct and Sei Pak since 2006 and has been successful in achieving multiple judgments against them including Judgments for Sexual Harassment, Retaliation, and Overtime claims. Mr. Arcadier further stated, "It's a shame that Appliance Direct and Mr. Pak have taken an unreasonable approach to litigation. I have had to go through Jury Verdicts, Appeals at both the Federal and State level, and fight Appliance Direct in Bankruptcy Court, but Appliance Direct and Mr. Pak continue to be unreasonable. There is a time for defending yourself in Court and a time to step up to the plate and pay for the mistakes you have made. No one is above the law and our jurisprudence system of justice will ultimately prevail; eventually, after the litigation process is moved through fruition, Mr. Pak and Appliance Direct will have to pay on the Judgments." Appliance Direct, Inc., is undergoing Chapter 11 bankruptcy proceedings (Bankr. M.D. Fla. Case No. 10-9695) and trying to reorganize its debts, including judgments against it for sexual harassment lawsuits, and overtime claims. Appliance Direct has legally changed its name from Appliance Direct, Inc. to GROJ of the West, Inc. ATMAN HOSPITALITY: Bankruptcy Filing Postpones Hotel Auction ------------------------------------------------------------ David Benda at Record Searchlight reports that a foreclosure auction of the Gaia in Anderson, California, was postponed on Sept. 27, 2011, one day after the green hotel's parent company filed for Chapter 11 bankruptcy protection. The public sale was rescheduled for Thursday Sept. 29, 2011, in front of the Shasta County Courthouse in Redding. Mr. Benda notes the Atman Hospitality Group of Sunnyvale claimed bankruptcy in an attempt to reorganize and restructure its debt -- including the $11.2 million owed to Far East National Bank in Los Angeles. Atman filed an incomplete petition, which included the 20 largest unsecured creditors, estimates of its assets and debts. "It's not uncommon to file a skeleton petition just to stop a legal action like a foreclosure or lawsuit," the report quotes Redding bankruptcy attorney Dennis Cowan, Esq., as saying. Wen Chang, president of Atman Hospitality Group, has said the economic downturn has affected the Gaia since it opened in 2008. The report, citing court records, says most of Atman's unsecured debts are loans from shareholders -- including $73,000 from Chang -- that add up to roughly $1.5 million. The 4215 Riverside Place property and the hotel are valued at $6.5 million, but balance due on Atman Hospitality's loan from Far East National Bank is $11.2 million, according to court filings. Based in Sunnyvale, California, Atman Hospitality Group Inc. dba Gaia Shasta Hotel filed for Chapter 11 protection on Sept. 19, 2011 (Bankr. E.D. Calif. Case No. 11-42576). Judge Thomas Holman presides over the case. G. Michael Williams, Esq., at Ganzer & Williams, represents the Debtor. The Debtor estimated assets of between $1 million and $10 million, and debts of between $10 million and $50 million. AURA SYSTEMS: Completes $3.5-Mil. Senior Secured Notes Offering --------------------------------------------------------------- Aura Systems, Inc., completed a private placement with accredited investors of senior secured convertible notes in the aggregate original principal amount of $3,675,000 and warrants to purchase up to 4,900,000 shares of the Company's common stock, which will result in gross proceeds to the Company of $3,500,000. MDB Capital Group, LLC, of Santa Monica, California served as the sole placement agent for this private placement. The notes do not carry any interest, but includes original issue discount equal to 5% and are convertible at any time into shares of common stock of the Company at a conversion price of $0.75 per share. In addition, the warrants have an exercise price of $1.00 per share and an exercise period of 5 years. The notes are secured by all of the Company's assets, other than, the Company's Patents and all other intellectual property. The notes have an 18-month term and full ratchet anti-dilution protection, repayment to be made in 12 equal monthly payments beginning in March 2012. Monthly payments can be made in cash and, under certain conditions; the payments can be made in common stock of the Company, or a combination of common stock and cash. In addition, if the Company does not close a firm commitment public offering of more than $15 million of securities within 6 months and certain other conditions are satisfied, the Company has the right to pre-pay in full the then outstanding notes. A full-text copy of the complete Form 8-K disclosure is available for free at http://is.gd/Z2KtE3 About Aura Systems El Segundo, Calif.-based Aura Systems, Inc., designs, assembles, tests and sells its proprietary and patented Axial Flux induction machine ("AF") known as the AuraGen(R) for industrial and commercial applications and VIPER for military applications. Kabani & Company, Inc., in Los Angeles, Calif., expressed substantial doubt about Aura Systems' ability to continue as a going concern, following the Company's results for the fiscal year ended Feb. 28, 2011. The independent auditors noted that the Company has historically incurred substantial losses from operations and may not have sufficient working capital or outside financing available to meet its planned operating activities over the next twelve months. The Company's balance sheet at May 31, 2011, showed $5.21 million in total assets, $16.55 million in total liabilities, and a $11.34 million total stockholders' deficit. AURASOUND INC: Robert Pearson Resigns as Director ------------------------------------------------- Robert Pearson resigned from his position as a director of AuraSound, Inc., effective as of Sept. 22, 2011. Mr. Pearson resigned for personal reasons and not as a result of any disagreement with the Company with regard to any of the Company's policies, operations or practices. About AuraSound, Inc. Santa Ana, Calif-based AuraSound, Inc. (OTC BB: ARUZE) -- http://www.aurasound.com/-- develops, manufactures, and markets audio products. AuraSound's products include TV soundbars, high- drivers for TVs and laptops, subwoofers, and tactile transducers. The Company's balance sheet at March 31, 2011, showed $34.09 million in total assets, $27.73 million in total liabilities, all current, and $6.36 million in total stockholders' equity. Going Concern Kabani & Company, Inc., in Los Angeles, expressed substantial doubt about the Company's ability to continue as a going concern following the fiscal 2010 results. The independent auditors noted that during the year ended June 30, 2010, the Company incurred a net loss of $2.2 million, and had negative cash flow from operating activities of $202,383. As of Dec. 31, 2010, the Company has an accumulated deficit of $36,937,503, negative working capital of $4,716,502 and has reported significant losses over the past several years. During the six-month period ended Dec. 31, 2010 the Company recorded a net income of $1,014,895 and had net cash provided by operating activities of $627,713. According to the Form 10-Q for the quarter ended Dec. 31, 2010, "The move to profitability and positive cash flow is a directly result of the execution of new management's post acquisition business plan to cut costs on all business lines, hold and spread overhead costs against a larger revenue base and to continue to move toward sustained profitability. However, there can be no assurance that the Company can sustain profitability or positive cash flows from operations. As such, if the Company is unable to generate positive net income and unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether." BANKATLANTIC BANCORP: To Effect a 1-for-5 Reverse Stock Split ------------------------------------------------------------- BankAtlantic Bancorp, Inc., intends to effect a one-for-five reverse split of its Class A Common Stock and Class B Common Stock. BankAtlantic Bancorp anticipates the reverse stock split will be effective after the close of trading on Friday, Oct. 14, 2011, and that its Class A Common Stock will begin trading on a split adjusted basis on the New York Stock Exchange (NYSE) at the opening of trading on Monday, Oct. 17, 2011. When the reverse stock split becomes effective, each five shares of BankAtlantic Bancorp's Class A Common Stock outstanding will automatically convert into one share of Class A Common Stock, and each five shares of BankAtlantic Bancorp's Class B Common Stock outstanding will automatically convert into one share of Class B Common Stock. No fractional shares will be issued in connection with the reverse stock split. Instead, any fractional share resulting from the reverse stock split will be rounded up to the next largest whole share. BankAtlantic Bancorp's Class A Common Stock will continue trading on the NYSE under its ticker symbol "BBX". About BankAtlantic Bancorp BankAtlantic Bancorp (NYSE: BBX) -- http://www.BankAtlanticBancorp.com/-- is a bank holding company and the parent company of BankAtlantic. BankAtlantic -- "Florida's Most Convenient Bank" with a Web presence at http://www.BankAtlantic.com/-- has nearly $6.0 billion in assets and more than 100 stores, and is one of the largest financial institutions headquartered junior in Florida. BankAtlantic has been serving communities throughout Florida since 1952 and currently operates more than 250 conveniently located ATMs. The Company reported a net loss of $143.25 million on $176.31 million of total interest income for the year ended Dec. 31, 2010, compared with a net loss of $185.82 million on $223.59 million of total interest income during the prior year. The Company's balance sheet at June 30, 2011, showed $3.86 billion in total assets, $3.83 billion in total liabilities, and $26.23 million in total equity. * * * As reported by the TCR on March 1, 2011, Fitch has affirmed its current Issuer Default Ratings for BankAtlantic Bancorp and its main subsidiary, BankAtlantic FSB at 'CC'/'C' following the announcement regarding the regulatory order with the Office of Thrift Supervision. BankAtlantic has announced that it has entered into a Cease and Desist Order with the OTS at both the bank and holding company level. The regulatory order includes increased regulatory capital requirements, limits to the size of the balance sheet, no new commercial real estate lending and improvements to its credit risk and administration areas. Further, the holding company must also submit a capital plan to maintain and enhance its capital position. BERNARD L. MADOFF: Defers Today's $272MM Payoff After Mets Ruling ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports the Bernard L. Madoff Investment Securities Inc. opinion written this week by U.S. District Judge Jed Rakoff is costing Madoff customers significant amounts of money, now and in the future, the Madoff trustee said after a court hearing Wednesday. The trustee also said he will soon appeal Judge Rakoff's ruling. According to the report, in court Sept. 28, David Sheehan, Esq., a lawyer for the Madoff trustee, said that a $272 million distribution scheduled to be made to customers today, Sept. 30, will be held up given uncertainty generated by Judge Rakoff's Sept. 27 opinion. The opinion this week in substance limited the trustee to recovering false profits and principal taken out of Mr. Madoff's firm within two years before bankruptcy in December 2008. Until Judge Rakoff dismissed the largest part of claims against owners of the New York Mets, the trustee was suing to take back fictitious profits going back six years. Talking to reporters after the hearing, Mr. Sheehan, the report discloses, said that limiting recoveries to two years roughly cuts potential recoveries in half from the approximately 1,000 pending lawsuits, sometimes referred to as clawback actions. Where the trustee sought $6 billion for distribution to customers, the maximum recovery under Judge Rakoff's ruling would be about $3 billion, Mr. Sheehan said. Mr. Rochelle notes that for Mets owner Fred Wilpon along with his friends, family and associates, Judge Rakoff's opinion dramatically reduces their exposure in the suit. Originally, the trustee was seeking to take back $300 million in false profits and $700 million in principal taken out within six years of bankruptcy. Mr. Sheehan said that limiting the lawsuit to two years means the maximum recovery is about $386 million for profits and principal combined. The fictitious profits, which are easier for the trustee to recover, amount to about $85 million of the total, Mr. Sheehan said. Mr. Rochelle discloses that the Madoff trustee is attempting to level the playing field among customers who were fortunate in taking money out of the Madoff firm and those who weren't. Were his lawsuits to succeed, money the trustee recovers would be redistributed to all customers, thus placing everyone in much the same position. By limiting recoveries to two years, Judge Rakoff's ruling has the effect of decreasing the eventual recoveries by customers who left money with Judge Madoff until the bitter end. Mr. Sheehan said the trustee decided not to make the scheduled $272 million distribution to customers today because it was predicated on several settlements where customers gave back money beyond Judge Rakoff's two-year cutoff. The Madoff trustee, Mr. Rochelle relates, is considering whether he can make the distribution without fear that the underlying calculations were inaccurate. Mr. Sheehan said the trustee would likely decide next week when and whether to make the distribution. In court, Mr. Sheehan said the trustee would file papers with Judge Rakoff by Oct. 11 requesting permission to appeal. Because Judge Rakoff's opinion wasn't the final ruling in the case, there is no automatic right to appeal. The Wilpon suit in district court is Picard v. Katz, 11-03605, U.S. District Court, Southern District New York. 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: Mets Victory Could Pave Way for Similar Rulings ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that New York Mets owner Fred Wilpon failed to win dismissal of the entire $1 billion lawsuit filed against him by the trustee liquidating Bernard L. Madoff Investment Securities Inc. The 18-page opinion entered Sept. 27 by U.S. District Judge Jed Rakoff, if upheld on appeal, means that the trustee will suffer dismissal of the better part of hundreds of lawsuits against other customers seeking recovery of fictitious profits taken out more than two years before the fraud surfaced. Mr. Picard sued Mr. Wilpon and his friends, family and associates to recover about $300 million for fictitious profits and $700 million of principal repayments received within six years before the Madoff firm's bankruptcy in December 2008. Mr. Rochelle recounts Judge Rakoff dismissed all of the trustee's claim except for actual fraud on the receipt of principal and profits for two years before bankruptcy under the fraudulent transfer law contained in the U.S. Bankruptcy Code. Judge Rakoff, according to Mr. Rochelle, dismissed all of the trustee's claims under New York state fraudulent transfer law, where the look-back period for recovery would have been six years. Rakoff dismissed the state and federal law claims for constructive fraudulent transfer in view of the provision in bankruptcy law known as the safe harbor. The provision prevents a trustee from recovering transfers made by a stockbroker. Judge Rakoff, Mr. Rochelle discloses, said in a footnote the trustee "might well prevail on summary judgment seeking recovery of the profits." With little in the way of explanation, Judge Rakoff said in the same footnote that the trustee might be able to recover profits going back six years, even though elsewhere in the opinion he said recovery would be limited to two years. Mr. Rochelle notes it is unclear from the opinion exactly what the trustee's maximum recovery might be. In an e-mailed statement Tuesday night, the Wilpon group stated their view that the recovery is limited to money taken out within two years. The Sept. 27 ruling also upheld the trustee's effort to subordinate the Wilpon group's claims. According to Judge Rakoff, the claims could be subordinated if the trustee proves investments were made with "reckless disregard" of fraud. The opinion theoretically allows the recovery of principal repayments if the trustee can show the Wilpon group wasn't acting in good faith. Because the case involves securities law, where there is generally a higher standard for showing knowledge, Judge Rakoff established a low standard for the Wilpons to meet in demonstrating their good faith. Judge Rakoff said it wasn't sufficient for the trustee to show that the Wilpons had seen enough indications of suspicious activity to cause them to investigate further. Because a customer has no inherent duty to investigate a broker, the trustee must prove "willful blindness," which means having seen enough "red flags" to "suggest a high probability of fraud," Judge Rakoff said. Simply being "confronted with suspicious circumstances" isn't enough, he said. Judge Rakoff is yet to decide another case involving a customer named Greiff who is being sued for recovery of false profits. The Greiff suit, like hundreds of others, is based partly on constructive fraud. The Wilpon opinion dismissed all state and federal constructive-fraud claims, indicating that the Greiff suit and others like it will be dismissed on that ground, thus limiting the trustee's recovery to two years at best. Judge Rakoff's opinion appears to mean that perpetrators of brokerage Ponzi schemes can manipulate the system to profit customers while making them immune from being required to disgorge some false profits. The Wilpon suit in district court is Picard v. Katz, 11-03605, U.S. District Court, Southern District New York. ��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: Trustee Trims $245MM Clawback Suit vs. Plaza --------------------------------------------------------------- Mandi Woodruff at Bankruptcy Law360 reports that the trustee leading bankruptcy recovery efforts for victims of Bernard Madoff's $65 billion Ponzi scheme dropped some claims Monday in his $245 million clawback suit against feeder fund Plaza Investments International Ltd., saying he will only pursue claims filed on behalf of Madoff's estate. In a joint stipulation of dismissal filed in New York federal court, Irving H. Picard agreed to drop common law claims for conversion and unjust enrichment against co-defendants Plaza Investments and its asset manager, Notz Stucki Bermuda, according to Law360. Separately, Bankruptcy Law360 reports that the New York federal judge handling Mr. Picard's suit against the owners of the New York Mets said Wednesday that the most the trustee can hope to recover from his action is about $386 million. "It may be a lot less than that," U.S. District Judge Jed S. Rakoff said at a scheduling hearing in the case, clarifying the effect of a dismissal order issued Tuesday. 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. BIOZONE PHARMACEUTICALS: Issues $500,000 Convert. Promissory Note ----------------------------------------------------------------- Biozone Pharmaceuticals, Inc., on Sept. 22, 2011, issued a 10% convertible promissory note with a principal amount of $500,000, due on March 22, 2012, and a warrant to purchase certain securities of the Company in the PIPE Offering, pursuant to a Securities Purchase Agreement entered into on that date. The Note and Warrant were issued to an accredited investor in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended and Rule 506 promulgated by the Securities and Exchange Commission thereunder. As set forth in the Securities Purchase Agreement, the Company intends to close a private placement of its common stock, par value $0.001 per share, or other securities yielding gross proceeds to the Company of at least $8,000,000; within 120 days from the issuance date of the Note. Convertible Promissory Note The Note is unsecured, has a principal amount of $500,000 and matures on the earlier of March 22, 2012, or the closing date of the PIPE Offering. The Note bears interest at the rate of 10% per annum. The entire principal amount and all accrued and unpaid interest is due and payable on the earlier of the Maturity Date and the occurrence of an Event of Default. The principal and interest may not be prepaid except in connection with the consummation of the PIPE Offering, in which case the holder may elect either to convert all of the principal and accrued and unpaid interest then outstanding into the securities offered in the PIPE Offering at a price per share or unit, as the case may be, equal to 70% of the price at which such securities are sold or require the Company to repay the principal amount then outstanding and any accrued and unpaid interest in cash. Warrant The Warrant is immediately exercisable and expires five years after the date of issue. The Warrant has an initial exercise price of the lower of $1.80 and 120% of the PIPE Share Price. The Warrant entitles the Buyer to purchase the number of shares of Common Stock or other securities, including units of securities, sold in the PIPE Offering equal to the principal amount of the Note issued pursuant to the Securities Purchase Agreement, divided by the lower of $1.50 and the PIPE Share Price. The Warrant is exercisable in cash or, while a registration statement covering the shares of Common Stock or other securities issuable upon exercise of the Warrant, or an exemption from registration, is not available, by way of a "cashless exercise". The exercise price of the Warrant is subject to a "ratchet" anti-dilution adjustment for a period of one year from the issue date of the Warrant. This adjustment provides that, in the event that the Company issues certain securities at a price lower than the then applicable exercise price, the exercise price of the Warrant shall be immediately reduced to equal the price at which the Company issued the securities. About Biozone Biozone Pharmaceuticals, Inc. (formerly, International Surf resorts, Inc.) was incorporated under the laws of the State of Nevada on Dec. 4, 2006, to operate as an internet-based provider of international surf resorts, camps and guided surf tours. The Company proposed to engage in the business of vacation real estate and rentals related to its surf business and it owns the website isurfresorts.com. During late February 2011, the Company began to explore alternatives to its original business plan. On Feb. 22, 2011, the prior officers and directors resigned from their positions and the Company appointed a new President, Director, principal accounting officer and treasurer and began to pursue opportunities in medical and pharmaceutical technologies and products. On March 1, 2011, the Company changed its name to Biozone Pharmaceuticals, Inc. Since March 2011, the Company has been engaged primarily in seeking opportunities related to its intention to engage in medical and pharmaceutical businesses. On May 16, 2011, the Company acquired substantially all of the assets and assumed all of the liabilities of Aero Pharmaceuticals, Inc., pursuant to an Asset Purchase Agreement dated as of that date. Aero manufactures markets and distributes a line of dermatological products under the trade name of Baker Cummins Dermatologicals. On June 30, 2011, the Company acquired the Biozone Labs Group which operates as a developer, manufacturer, and marketer of over- the-counter drugs and preparations, cosmetics, and nutritional supplements on behalf of health care product marketing companies and national retailers. The Company's balance sheet at June 30, 2011, showed $11.1 million in total assets, $10.7 million in total liabilities, and stockholders' equity of $366,000. BLUEKNIGHT ENERGY: Files Supplement to Rights Offering ------------------------------------------------------ Blueknight Energy Partners, L.P., filed a prospectus supplement in connection with the Partnership's rights offering with the Securities Exchange Commission. Additional exhibits are filed in connection with the Rights Offering under the Partnership's Registration Statement on Form S-3 previously filed with the SEC. A full-text copy of the Subscription Agent Agreement with American Stock Transfer & Trust Company, LLC, is available at no charge at: http://is.gd/qHeXt1 A full-text copy of the Transferable Subscription Rights Certificate is available for free at http://is.gd/HcPgGu A full-text copy of the Certificate Evidencing Series A Preferred Units is available for free at http://is.gd/AAEuTm About Blueknight Energy Blueknight Energy Partners, L.P. (Pink Sheets: BKEP) -- http://www.bkep.com/-- provides integrated terminalling, storage, processing, gathering and transportation services for companies engaged in the production, distribution and marketing of crude oil and asphalt product. It provides services for the customers, and its only inventory consists of pipeline linefill and tank bottoms necessary to operate the assets. It has three operating segments: crude oil terminalling and storage services, crude oil gathering and transportation services, and asphalt services. The Company reported a net loss of $23.79 million on $152.62 million of total revenue for the year ended Dec. 31, 2010, compared with a net loss of $16.50 million on $156.77 million of total revenue during the prior year. The Company's balance sheet at June 30, 2011, showed $327.44 million in total assets, $372.97 million in total liabilities, and a $45.52 million total partners' deficit. BPP TEXAS: Court Approves New Chapter 11 Plan After Creditor Deal ----------------------------------------------------------------- Roxanne Palmer at Bankruptcy Law360 reports that a Texas bankruptcy court approved BPP LLC's second reorganization plan on Wednesday after the Company reached a consensus with Citizens Bank of Pennsylvania, which had objected to the first Chapter 11 plan. "Although we were confident in our legal position, we reached a resolution acceptable to both sides that we think produced an excellent result for our clients," Joseph Wielebinski of Munsch Hardt Kopf & Harr PC, one of BPP's attorneys, told Law360 on Wednesday. As reported in the Troubled Company Reporter on Aug. 4, 2011, Citizens Bank of Pennsylvania, a creditor of BPP Texas, LLC, et al., asked the bankruptcy court deny confirmation of the Debtors' Second Amended Joint Consolidated Plan Of Reorganization dated June 14. In a document filed July 19, Citizens Bank told the Court that the Debtors fail to carry their burden of proving that the Plan meets all the requirements of Section 1129 of title 11 of the U.S. Code (as amended). The Plan, according to the creditor, fails to meet the Code's requirements, among other things: 1. The Plan violates the absolute priority rule and is otherwise not "fair and equitable." 2. If the Debtors do have assets of a value sufficient to now distribute to Citizens about $70.8 million on the Effective Date (and another $2,000,000 or so to distribute on the Effective Date to the other holders of claims and administrative expenses), Citizens is entitled to pendency interest and its reasonable fees, costs and other charges, here totaling more than $5.0 million. The Plan fails to provide for that sum in any way. 3. Even if, by some calculation, the Debtors' delivery to Citizens on the Effective Date of a new cram-down note secured by assets worth at most $55 million is deemed to constitute the delivery of $70.8 million of value on the Effective Date, the interest rate paid on the deferred payments called for by that note does not fairly compensate Citizens for the time value of money plus the risk of default. 4. The Debtors admittedly need to generate about $74 million of sales proceeds to make the required Plan payments, but allow their insiders to buy the Properties (together, or one by one) for release prices equal to a fraction of that. 5. The Plan discriminates against Citizens' deficiency claim. 6. The Plan fails to make clear whether the many other customary covenants and other provisions that protect Citizens's credit and collateral will be retained, stripped away or somehow modified. The Plan is therefore not fair and equitable in this additional respect. About BPP Texas Pittsburgh, Pennsylvania-based BPP Texas, LLC, along with BPP Illinois, LLC, BPP Iowa, LLC, BPP Michigan, LLC, BPP Minnesota, LLC, and BPP Wisconsin, LLC, own and operate 22 hotels located in Texas, Illinois, Iowa, Michigan, Minnesota, and Wisconsin. BPP Texas and several affiliates filed for Chapter 11 bankruptcy protection (Bankr. E.D. Tex. Lead Case No. 10-44378) on Dec. 21, 2010. Davor Rukavina, Esq., and Jonathan Lindley Howell, Esq., at Munsch Hardt Kopf & Harr, P.C., serve as the Debtors' bankruptcy counsel. In its schedules, BPP Texas disclosed $3,731,144 in assets and $65,892,831 in liabilities as of the petition date. Affiliates BPP Illinois, BPP Iowa, BPP Michigan, BPP Minnesota, and BPP Wisconsin filed separate Chapter 11 bankruptcy petitions. BPP Wisconsin estimated its assets at $10 million to $50 million and debts at $50 million to $100 million. BROADSTRIPE LLC: Sets Oct. 20 for Sale Under Plan ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Broadstripe LLC scheduled an Oct. 20 auction where the business will be offered for sale to test if a $95 million bid from a consortium of buyers is the best price to underlay a liquidating Chapter 11 plan. Mr. Rochelle relates that the disclosure statement explaining the plan, as revised, comes to the bankruptcy court in Delaware for approval at an Oct. 26 hearing. The sale will be completed as part of the process of implementing a confirmed plan. According to Mr. Rochelle, one of the buyers is WaveDivision Holdings LLC. The first-lien secured lenders have consented to the sale even though it pays less than half their debt and financing for the Chapter 11 case, a court filing says. The bankruptcy court in December approved a settlement with first- and second-lien lenders. The settlement is to be implemented in the plan. The first-lien debt is $181 million while second-lien debt now owed to Highland Capital Management LP is $91.9 million. There is another $10.3 million of second-lien debt owed to other creditors. Highland is to receive nothing on its portion of the second-lien debt. General unsecured claims amount to about $54.4 million. Should Highland choose, the settlement allows it to use its secured debt to bid at the auction. ��About Broadstripe LLC Headquartered in Chesterfield, Missouri, Broadstripe LLC -- http://www.broadstripe.com/�--provides videos and telephone services to consumers and business in Maryland, Michigan, Washington and Oregon.��The Company and five of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Case No. 09-10006) on Jan. 2, 2009.��Attorneys at Ashby & Geddes, and Gardere Wynne Sewell LLP represent the Debtors in their restructuring efforts. The Debtors tapped FTI Consulting Inc. as their restructuring consultant, and Epiq Bankruptcy Consultants LLC as their claims agent.��In its petition, Broadstripe estimated assets and debts between $100 million and $500 million. An Official Committee of Unsecured Creditors has been appointed in the case. Broadstripe has been in Chapter 11 more than 18 months thus any creditor can file a plan. BROWNSTONE LOFTS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Brownstone Lofts, LLC 911 N. Amphlett Boulevard San Mateo, CA 94401 Bankruptcy Case No.: 11-33495 Chapter 11 Petition Date: September 26, 2011 Court: U.S. Bankruptcy Court Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: Gregory A. Rougeau, Esq. LAW OFFICES OF MANASIAN AND ROUGEAU 400 Montgomery Street, #1000 San Francisco, CA 94104 Tel: (415) 291-8425 E-mail: rougeau@mrlawsf.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Monica Hujazi, managing member. CFRI/GREENLAW DYER: Has Until Nov. 18 to Propose Chapter 11 Plan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California extended CFRI/Greenlaw Dyer Road, L.L.C.'s exclusive periods to file and solicit acceptances for the proposed chapter 11 plan until Nov. 18, 2011, and Jan. 20, 2012, respectively. The Court also ordered that by Nov. 18, the Debtor will serve notice to prepetition creditors advising of the bar date. The date by which prepetition creditors will file claims against the estate will be 60 days after the date Debtor's counsel serves notice to creditors advising of the bar date. About CFRI/Greenlaw Dyer Road, LLC Santa Ana, California-based CFRI/Greenlaw Dyer Road, LLC, is a Delaware limited liability company that was formed on June 25, 2007. Its principal asset is a commercial building located at 2001 East Dyer Road, Santa Ana, CA 92705, which consists of approximately 366,471 square feet of industrial space, including office and data center uses, located on 19.1 acres of land. CFRI/Greenlaw filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 10-19345) on July 8, 2010. Howard J. Weg, Esq., David B. Shemano, Esq., and Lorie Ball, Esq., at Peitzman, Weg & Kempinsky LLP, in Los Angeles, serve as the Debtor's bankruptcy counsel. The Debtor disclosed $30,101,904 in total assets and $33,610,022 in total liabilities. CHINA RENEWABLE: Shareholders OK Increase of Board Members to 7 --------------------------------------------------------------- The shareholders of China Renewable Energy Holdings, Inc., approved the expansion of the Board of Directors from four members to seven members pursuant to Article II, Section 2 of the Company's Bylaws. As a result, the Board, pursuant to Article II, Section 3 of the Company's Bylaws, authorized, effective as of Sept. 26, 2011, the appointment of Don Mitchell, George Livingston and Geoff Hampson as directors to fill the vacancies created by the increase in the size of the Board. At this time, neither of Messrs. Mitchell, Livingston nor Hampson have been appointed to any committee of the Board. Mr. Mitchell will not receive any remuneration for serving on the Board. Mr. Mitchell is eligible to participate in the Company's 2007 Stock Option and Stock Award Plan and may receive equity awards in the future. Mr. Livingston will not receive any remuneration for serving on the Board. Mr. Livingston is eligible to participate in the Company's 2007 Stock Option and Stock Aware Plan and may receive equity awards in the future. Mr. Hampson will not receive any remuneration for serving on the Board. Mr. Hampson is eligible to participate in the Company's 2007 Stock Option and Stock Award Plan and may receive equity awards in the future There have been no transactions since the beginning of the Company's last fiscal year, or any currently proposed transaction, or series of similar transactions, to which the Company was or is to be a party, in which the amount involved exceeds $120,000 and in which Messrs. Mitchell, Livingston and Hampson had or will have a direct or indirect material interest. There are no family relationships between Messrs. Mitchell, Livingston and Hampson and any other officer or director of the Company. As of Sept. 27, 2011, Messrs. Mitchell, Livingston and Hampson are considered to be independent directors as defined by NASDAQ rules. There are no arrangements or understandings between Messrs. Mitchell, Livingston and Hampson and any other person, pursuant to which Messrs. Mitchell, Livingston and Hampson were selected as directors. On Sept. 26, 2011, the Company filed an Articles of Amendment to the Articles of Incorporation of the Company to change the Company's name to "Green Global Investments, Inc." About China Renewable Based in Wanchai, Hong Kong, China Renewable Energy Holdings, Inc., was incorporated under the laws of the State of Florida on Dec. 17, 1999. The Company was originally organized to provide business services and financing to emerging growth entities, and later redirected its business focus to market and to distribute energy-efficient products in China. De Leon & Company, P.A., in Pembroke Pines, Fla., expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has suffered recurring losses from operations, net capital deficiencies, and negative cash flows from operations. The Company's balance sheet at June 30, 2011, showed $954,496 in total assets, $1.43 million in total liabilities and a $474,600 total stockholders' deficit. CMP SUSQUEHANNA: S&P Removes 'B' Corporate From CreditWatch ----------------------------------------------------------- Standard & Poor's Ratings Services removed the 'B' corporate credit rating on Atlanta-based CMP Susquehanna Radio Holding Corp. from CreditWatch, and withdrew all ratings, including its recovery ratings on the company's debt issues. "We withdrew the ratings after the company repaid its rated debt," S&P said. COMMUNITY TOWERS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Community Towers I, LLC 111 W. Saint John Street, Suite 705 San Jose, CA 95113 Bankruptcy Case No.: 11-58944 Affiliates that simultaneously filed for Chapter 11 protection: Entity Case No. ------ -------- Community Towers II, LLC 11-58945 Community Towers III, LLC 11-58948 Community Towers IV, LLC 11-58949 Chapter 11 Petition Date: September 26, 2011 Court: U.S. Bankruptcy Court Northern District of California (San Jose) Judge: Stephen L. Johnson Debtors' Counsel: John Walshe Murray, Esq. LAW OFFICES OF MURRAY AND MURRAY 19400 Stevens Creek Boulevard, #200 Cupertino, CA 95014-2548 Tel: (650) 852-9000 E-mail: jwmurray@murraylaw.com Community Towers I's Estimated Assets: $10,000,001 to $50,000,000 Community Towers I's Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by John Feece, president. Community Towers I's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Dependency Advocacy Center Deposit/Prepaid Rent $68,309 111 W. Saint John Street, Suite 333 San Jose, CA 95113 Talesun Solar USA Ltd Deposit/Prepaid Rent $65,468 111 W. Saint John Street, Suite 900 San Jose, CA 95113 Child Development, Inc. Deposit $28,150 4340 Stevens Creek Boulevard, Suite 260 San Jose, CA 95129 Law Offices of Eric Mogensen Trade $25,747 James Jeffrey and Sons Painting Trade $21,950 Manriquez Construction, Inc. Trade $20,488 ACFN Franchised, Inc. Deposit $18,000 VirtualPBX.com Deposit $16,509 RBF Consulting Deposit/Prepaid Rent $15,596 SunWize Technologies, Inc. Deposit $14,781 Keiro Technologies, Inc. Deposit $13,549 Lautze and Lautze Deposit $13,214 Law Offices of BJ Fadem Deposit $9,749 Opportunity Fund Deposit $9,415 Habitec Deposit $9,002 Havey Crumb Deposit/Prepaid Rent $8,713 Rockwell Automation Prepaid Rent $8,347 Exit Certified Deposit $7,941 Anatomage, Inc. Deposit $7,264 Ryzen Solutions Deposit $6,647 CRYOPORT INC: Stockholders Approve 2011 Stock Incentive Plan ------------------------------------------------------------ At the 2011 Annual Meeting of Stockholders of CryoPort, Inc., the Company's stockholders adopted and approved the CryoPort, Inc., 2011 Stock Incentive Plan, which previously had been approved by the Compensation Committee of the Company's Board of Directors on July 19, 2011, subject to stockholder approval. The 2011 Incentive Plan provides for the grant of incentive stock options, nonqualified stock options and stock grant awards to employees, officers, non-employee directors and consultants of the Company. The Company's Compensation Committee has the authority to determine the type of Award as well as the amount, terms and conditions of each Award under the 2011 Incentive Plan, subject to the limitations and other provisions of the 2011 Incentive Plan. A total of 2,300,000 shares of the Company's common stock are authorized for the granting of Awards under the 2011 Incentive Plan. The number of shares available for Awards, as well as the terms of outstanding Awards, is subject to adjustment as provided in the 2011 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events. Awards may be granted under the 2011 Incentive Plan until Sept. 21, 2021, or until all shares available for Awards under the 2011 Incentive Plan have been purchased or acquired unless the stockholders of the Company vote to approve an extension of the 2011 Incentive Plan prior to such expiration date. About CryoPort Inc. Headquartered in Lake Forest, Calif., CryoPort, Inc. (OTC BB: CYRXD) -- http://www.cryoport.com/-- provides innovative cold chain frozen shipping system dedicated to providing superior, affordable cryogenic shipping solutions that ensure the safety, status and temperature of high value, temperature sensitive materials. The Company has developed a line of cost-effective reusable cryogenic transport containers capable of transporting biological, environmental and other temperature sensitive materials at temperatures below 0-degree Celsius. The Company's balance sheet at June 30, 2011, showed $8.68 million in total assets, $4.59 million in total liabilities, and $4.08 million in total stockholders' equity. KMJ Corbin & Company LLP expressed substantial doubt about CryoPort's ability to continue as a going concern, following the Company's fiscal 2009 results. The firm noted that the Company has incurred recurring losses and negative cash flows from operations since inception. CUMULUS MEDIA: S. Schwarzman Owns 2.8% of Class A Common Shares --------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Stephen A. Schwarzman and his affiliates disclosed that they beneficially own 3,315,238 shares of Class A common stock of Cumulus Media Inc. representing 2.8% of the shares outstanding. A full-text copy of the filing is available for free at http://is.gd/d0NjcH About Cumulus Media Based in Atlanta, Georgia, Cumulus Media Inc. (NASDAQ: CMLS) -- http://www.cumulus.com/-- is the second largest radio broadcaster in the United States based on station count, controlling 350 radio stations in 68 U.S. media markets. In combination with its affiliate, Cumulus Media Partners, LLC, the Company believes it is the fourth largest radio broadcast company in the United States when based on net revenues. The Company's balance sheet at June 30, 2011, showed $367.20 million in total assets, $689.67 million in total liabilities, and a $322.47 million total stockholders' deficit. * * * Standard & Poor's Ratings Services said April it raised its corporate credit rating on Atlanta-based Cumulus Media Inc. to 'B' from 'B-'. "The rating remains on CreditWatch, where we placed it with positive implications Feb. 18, 2011," S&P stated. Moody's Investors Service in April upgraded Cumulus Media's Corporate Family Rating to 'B1' from 'Caa1' due to the company's pending acquisition of CMP Susquehanna Corp. in the second quarter of 2011 followed by the announced $2.4 billion acquisition of Citadel Broadcasting Corporation later this year. CUMULUS MEDIA: S&P Affirms 'B' Corporate Credit Ratings ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit ratings on Cumulus Media Inc. and subsidiary Cumulus Media Holdings Inc. "We analyze Cumulus Media Holdings on a consolidated basis with Cumulus Media," S&P said. "At the same time, we assigned a 'BB-' issue-level rating to Cumulus' $1.625 billion first-lien credit facilities, with a recovery rating of '1', indicating our expectation of very high (90% to 100%) recovery for lenders in the event of a payment default. The facilities consist of a $1.325 billion first-lien term loan B due 2018 and a $300 million revolver due 2016. We assigned a 'CCC+' issue-level rating to Cumulus' $790 million second-lien term loan, with a recovery rating of '6', indicating our expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default," S&P said. "We affirmed all existing ratings and removed them from CreditWatch, where they were placed with positive implications on Feb. 18, 2011. The outlook is positive," S&P said. "The ratings reflect continued economic weakness and higher post acquisition leverage than we initially expected," said Standard & Poor's credit analyst Jeanne Shoesmith. "They also reflect the combined company's sizable presence in both large and midsize markets throughout the U.S." "The combination will create a new company with pro forma revenues (assuming no major divestitures) of roughly $1.2 billion as of June 30, 2011, which we believe is moderately less than revenues of the second-largest U.S. radio broadcaster, CBS Corp. Our assessment of Cumulus' business risk profile as weak stems from the industry's exposure to competition from alternative media, risks to ad rate integrity, and obstacles to significant growth in digital contribution, which currently only accounts for 4% of total industry revenue. The consolidated company's good geographic diversity and competitive position in midsize and large markets, as well as its high EBITDA margin, do not offset these risks," S&P noted. "Under our base case scenario, we expect revenue could be flat to down in the low-single-digit area over the next 12 months, depending on the state of the economy. However, we expect EBITDA could increase at a low-double-digit percent rate over the coming year as the combined company begins to realize synergies. As a result, we expect the EBITDA margin to expand by up to 500 basis points, to the high-20% to low-30% area, better than most peers. Longer term, we see further risks to radio advertising from tradition and nontraditional media, which could put downward pressure on ad rates and margins," S&P stated. "The rating outlook is positive, reflecting Cumulus' adequate liquidity, despite risks surrounding longer-term secular trends in radio. We expect Cumulus will reduce and then maintain adjusted debt leverage in the high-6x area over the next couple of years," S&P added. DARLING INT'L: Moody's Raises CFR to 'Ba2'; Outlook Positive ------------------------------------------------------------ Moody's Investors Service upgraded Darling International Inc.'s Corporate Family and Probability of Default ratings to Ba2, upgraded the senior secured bank credit facilities to Ba1 from Ba2; the senior unsecured notes to Ba3 from B2, and assigned a positive rating outlook. This action was based on the significant improvement in the company's debt capital structure, and the attractive operating environment for most of Darling's products. The upgrade also reflects Moody's recognition that the relatively smooth integration of the Griffin Industries acquisition has led to a stronger market position for the company and good efficiencies. The positive outlook reflects Moody's view regarding the likely sustainability of Darling's improved credit metrics, including modest debt-to-EBITDA leverage, which should permit the company to absorb small debt financed acquisitions in the future and/or volatility in the company's core business. In addition, Moody's affirmed Darling's SGL-1 Speculative Grade Liquidity rating acknowledging the company's very good liquidity. Ratings Upgraded: Darling International Inc. Corporate Family rating to Ba2 from Ba3 Probability of Default rating to Ba2 from Ba3 $415 million revolving credit facility expiring 2015 to Ba1 (LGD 2, 29%) from Ba2; $60 million senior secured term loan B due 2016 to Ba1 (LGD 2, 29%) from Ba2; $250 million senior unsecured notes due 2018 to Ba3 (LGD 5, 80%) from B2; Rating Affirmed: SGL-1 Speculative Grade Liquidity Rating The outlook is positive. RATINGS RATIONALE The Ba2 Corporate Family Rating reflects Darling's attractive profitability and cash flow operating performance despite volatility from commodity prices and fluctuations in raw materials; significant scale in rendering and recycling for the food industry, and its critical role in the waste handling process. End products are in mostly mature markets (pet food, animal feed, and fertilizer) thus only modest growth is expected. Opportunities for growth will be greater in bio-fuels, a small portion of Darling's revenues but an area of new capital investment. The acquisition of Griffin Industries about doubled Darling's revenues and EBITDA and improved the company's scale and raw material diversification. Synergies include better route efficiency and some higher margin products. The integration is nearly complete and has resulted in better than expected margin improvement. In addition, the company's use of equity proceeds to repay debt has meaningfully improved debt-to EBITDA leverage (about 1.5 times as of June 30, 2011 and per Moody's adjustments) and reflects a more conservative financial policy than considered at the time of the debt financed acquisition of Griffin in December 2010. The Ba2 rating also incorporates risks associated with the extraordinary volatility in related commodities, changes in raw material volumes, as well as the price of finished products. Notably, flexible pricing mechanisms offset some of the company's commodity exposure (over 50% of the company's raw material volumes are subject to fixed margin contracts). However, Darling's business can be adversely impacted by several factors outside its control including animal disease, weather, regulation, and trade disputes. Importantly, Moody's anticipates a conservative financial policy from the company, including modest leverage, albeit as the company positions itself for future acquisition opportunities and investments. Moody's could upgrade Darling's Corporate Family rating if the company establishes a track record of operating with its current relatively strong credit profile. Moody's anticipates modest acquisitions and the potential for some dividend or share repurchases given the company's capacity for significant free cash flow relative to its total debt. Darling's ratings could be lowered if changes in the commodity markets challenge Darling's cash flow stability or liquidity. Moody's could also review the ratings for downgrade if dividends or a large acquisition lead to credit metrics with debt-to-EBITDA leverage approaching 3 times. Darling's SGL-1 Speculative Grade Liquidity rating reflects the company's sizable cash balance, anticipated positive free cash over the next 12 months, availability under its revolving credit facility, and the absence of covenant pressure. The principal methodology used in rating Darling International, Inc. was the Global Food - Protein and Agriculture Industry Methodology, published September 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published June 2009. Darling International, Inc. is a leading provider of rendering, recycling and recovery solutions to the US food industry. Finished products, sold to producers of livestock, feed, oleo-chemicals, bio-fuels, soaps and pet foods, include meat and bone meal, bleachable fancy tallow, cookie meal, and yellow grease. Pro forma revenues for the combined company for the twelve months ended June 30, 2011 were $1.3 billion. The company is listed on the NYSE, symbol DAR. DEL MONTE: S&P Lowers Corp. Credit Rating to 'B'; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on San Francisco-based Del Monte Corp. to 'B' from 'B+'. At the same time, Standard & Poor's lowered the issue-level rating on Del Monte's senior secured term loan B to 'B' from 'B+'. "The recovery rating remains '3', which indicates our expectation of meaningful (50% to 70%) recovery for debtholders in the event of payment default. We also lowered the issue-level rating on Del Monte's senior unsecured notes to 'CCC+' from 'B-'. The recovery rating remains '6', which indicates our expectation of negligible (0% to 10%) recovery for debtholders in the event of payment default. The outlook is stable. As of July 31, 2011, Del Monte had about $4 billion of debt outstanding," S&P stated. "The downgrade reflects weaker-than-expected financial results in Del Monte's first fiscal quarter, ended July 31, 2011," said Standard & Poor's credit analyst Alison Sullivan. "We believe near-term improvement is limited by input cost inflation, competitive promotional activity, and weak consumer sentiment." "In the first fiscal quarter, Standard & Poor's estimates adjusted EBITDA (excluding LBO-related costs) declined about 33% from lower sales, higher costs, and a time lag to implement price increases. As a result, we estimate credit measures remain weak, with about 7x leverage and an 8% ratio of funds from operations (FFO) to total debt for the 12 months ended July 31, 2011. We believe the company will not meet our prior expectations for fiscal year-end 2012, including reducing leverage to 6x or below," S&P said. "Our rating outlook on Del Monte is stable, and we expect credit measures will remain near current levels for the remainder of the fiscal year. Although unlikely in the near term, we could consider an upgrade if leverage improves to 6x or below and financial policies are consistent with a higher rating. We estimate this could occur in a scenario of low-single-digit sales growth, a 100 basis point EBITDA margin expansion relative to the 12 months ending July 31, 2011, and if adjusted debt is reduced by 10%. We could consider a downgrade if the company's financial policies become more aggressive, leverage increases to near 8.5x, and/or if liquidity becomes constrained," S&P added. DYNEGY INC: Hit With Another Bondholder Suit Over Restructuring --------------------------------------------------------------- Daily Bankruptcy Review reports that bondholders have filed a second legal challenge to Dynegy Inc.'s restructuring, accusing big shareholder Carl Icahn of engineering deals that took "hundreds of millions of dollars" out of their pockets and putting it into the pockets of shareholders. ��About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE:DYN) --�http://www.dynegy.com/�--produces and sells electric energy, capacity and ancillary services in key U.S. markets.��The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. ��Failed Sale The Troubled Company Reporter has chronicled Dynegy's attempts to sell itself.��In August 2010, Dynegy struck a deal to be acquired by an affiliate of The Blackstone Group at $4.50 a share or roughly $4.7 billion.��That offer was raised to $5.00 a share in November.��Through Carl Icahn and investment fund Seneca's efforts, shareholders thumbed down both offers. In December 2010, an affiliate of Icahn commenced a tender offer to purchase all of the outstanding shares of Dynegy common stock for $5.50 per share in cash, or roughly $665 million in the aggregate.��In February 2011, Icahn Enterprises L.P. terminated the proposed merger agreement with the Company after it failed to garner the required number of shareholder votes. Goldman, Sachs & Co. and Greenhill & Co., LLC, served as financial advisors and Sullivan & Cromwell LLP served as legal counsel to Dynegy on the sale efforts. ��Bankruptcy Warning Dynegy warned shareholders in March it might be forced into bankruptcy if it is unable to renegotiate the terms of its existing debt. The Company's balance sheet at March 31, 2011, showed $9.82 billion in total assets, $7.15 billion in total liabilities and $2.67 billion in total stockholders' equity. Ernst & Young LLP, in Houston, said Dynegy projects that it is likely that it will not be able to comply with certain debt covenants throughout 2011.��"This condition and its impact on Dynegy Inc.'s liquidity raises substantial doubt about Dynegy Inc.'s ability to continue as a going concern." ��*��*��* In July 2011, Moody's downgraded Dynegy Holdings' probability of default rating to 'Ca' from 'Caa3'.��"The downgrade of DHI's PDR and senior unsecured notes to Ca reflects the increased likelihood of a distressed debt exchange transaction occurring within the next several months following announcement of a corporate reorganization that seeks to modify asset ownership within DHI through the formation of several wholly-owned subsidiaries", said A.J. Sabatelle, Senior Vice President of Moody's. "Separate financing arrangements being established at these subsidiaries will have annual limits placed on the amount of cash flow that can be paid to their indirect parent, which Moody's believes raises default prospects for DHI's senior unsecured notes and the company's lease", added Mr. Sabatelle. EASTMAN KODAK: Moody's Lowers CFR to 'Caa2'; Outlook Negative ------------------------------------------------------------- Moody's Investors Service lowered all ratings of Eastman Kodak Company, including: the corporate family and probability of default to Caa2 from Caa1, the senior unsecured to Caa3 from Caa2, the senior secured to B3 from B1 and the Speculative Grade Liquidity rating to SGL-3 frm SGL-2. The outlook remains negative. The rating downgrade reflects Moody's expectations that "ongoing weakness in the company's core business operations in addition to a softening demand environment will pressure operating performance and liquidity over the foreseeable future," said Moody's senior vice president, Richard Lane. Kodak's decision on September 23, 2011 to draw down $160 million from its $400 million secured revolving credit facility signals weaker cash flow prospects, as the draw was just prior to what is usually Kodak's strongest cash flow quarter (the 4th quarter). Although Kodak had $957 million of cash balances at June 30, 2011 and no material debt maturities until November 2013, "we anticipate that Kodak will consume cash over the next year, thus weakening its liquidity profile," said Lane. RATINGS RATIONALE The Caa2 corporate family rating reflects the company's weak financial performance and the challenges Kodak faces in achieving sustained profitability and positive cash flow over the intermediate term. There is intense competitive pressures in its broad digital portfolio and secular decline in its traditional film business. Moody's expects that Kodak will continue to operate at a loss over the intermediate term. The negative outlook reflects the likely weakening in Kodak's liquidity position over the intermediate term. Kodak continues to rely on intellectual property (IP) licensing income to fund the company's transformation from legacy, analog technology products to a digital portfolio. The timing or amount, if any, of cash received from IP licensing negotiations, litigation (notably with Apple and Research in Motion), or outright sales (the company is currently looking to sell 10% of its digital patent portfolio) is speculative to predict or quantify. Absent material IP licensing income and the successful execution of non-strategic assets sales "we believe Kodak could see its cash balance decline to below $700 million during 2012", said Lane (management estimated asset sales to approximate $300 million to $400 million for the 2011). Moody's has previously noted that the company's rating could come under pressure if its businesses were to deteriorate such that loses would be expected on a sustained basis or if quarterly cash balances are expected to fall below $800 million over the next year. Rating lowered include: Corporate family rating to Caa2 from Caa1; Probability of default to Caa2 from Caa1; $500 million Senior Secured Notes due 2018, to B3 from B1; LGD2, 27%; $2500 million Senior Secured Notes due 2019, to B3 from B1; LGD2, 27%; $3 million Senior Unsecured Notes due 2018, to Caa3 from Caa2; LGD5, 73%; $10 million Senior Unsecured Notes due 2021, to Caa3 from Caa2; LGD5, 73%; $250 million Senior Unsecured Global Notes due 2013, to Caa3 from Caa2; LGD5, 73%; Speculative Grade Liquidity Rating, to SGL-3 from SGL-2 Eastman Kodak Company, headquartered in Rochester, N.Y., provides imaging technology products and services to the photographic, graphic arts commercial printing, consumer digital, and entertainment imaging market. Kodak reported $6.6 billion in revenue for the twelve months ended June 2011. EASTMAN KODAK: Fitch Downgrades Issuer Default Rating to 'CC' ------------------------------------------------------------ Fitch Ratings has downgraded Eastman Kodak Company's ratings as follows: -- Issuer Default Rating (IDR) to 'CC' from 'CCC'; -- Senior secured revolving credit facility (RCF) to 'B/RR1' from 'B+/RR1'; -- Senior secured second priority debt to 'B-/RR1' from 'B+/RR1'; -- Senior unsecured debt to 'C/RR5' from 'CC/RR5'. The Rating Outlook is Negative. Fitch's actions affect approximately $1.5 billion in total debt. The rating downgrades and Negative Outlook reflect the company's recent draw on its credit facility which likely signifies weaker than expected cash flow in the second-half of 2011. Fitch believes a weak macro-environment, insufficient scale in the company's key growth initiatives, continued secular decline in traditional film and moderating, but still elevated component costs, will adversely affect the company's seasonally strong second-half, resulting in cash flows below historical levels. A 'CC' rating signifies that default of some kind appears probable. Fitch believes potential proceeds from the sale of a portion of the company's patent portfolio in the absence of an improvement in free cash flow will not materially improve the company's credit profile. Fitch believes that Kodak has existing licensing agreements with the majority of leading mobile handset makers other than the pending lawsuits against Apple Inc. and Research in Motion Limited. This reduces the number of potential licensees and related intellectual property (IP) income derived from these patents in the future. Furthermore, Fitch believes Kodak has limited liquidity to withstand continued extensions of these IP lawsuits due to its material annual free cash flow usage, which gives potential buyers greater leverage in negotiating the value of the IP. The Recovery Ratings (RR) reflect Fitch's belief that Kodak's enterprise value would be maximized in liquidation, rather than a going-concern scenario. In estimating a liquidation value, Fitch applies advance rates of 80%, 20%, and 10% to Kodak's accounts receivables, inventories, and property, plant, and equipment balances, respectively. As is standard with Fitch's recovery analysis, the revolving credit facility is assumed to be fully drawn (up to its borrowing base) and cash balances fully depleted to reflect a stress event. Fitch arrives at an adjusted reorganization value of $1.4 billion after subtracting administrative claims. Based upon these assumptions, the 'RR1' for Kodak's secured bank facility and senior secured second-lien debt reflects Fitch's belief that 100% recovery is realistic. Fitch has lowered the ratings of the senior secured second-lien notes by one notch to further differentiate the second lien security package from the first lien secured credit facility. As a result of Kodak's guarantee of $830 million of aggregate payments remaining to its United Kingdom defined benefit pension fund through 2022, Fitch includes this liability in the total senior unsecured claims. Therefore, Fitch estimates that the senior unsecured claims would recover approximately 18% in the event of default, supporting the 'RR5' (11% - 30% recovery) for the senior unsecured debt. Total debt was approximately $1.5 billion as of June 30, 2011, consisting principally of: -- $250 million of senior notes due 2013; -- $400 million of senior unsecured convertible notes due 2017; -- $500 million of senior secured second-lien notes due 2018; -- $250 million of senior secured second-lien notes due 2019; -- Approximately $150 million of various term notes with maturities from 2010 - 2013. ELITE PHARMACEUTICALS: Launches Lodrane D Allergy Product --------------------------------------------------------- Elite Pharmaceutical, Inc.'s and ECR Pharmaceuticals, a wholly owned subsidiary of Hi-Tech Pharmacal (Hi-Tech) announced the launch of Lodrane D. Lodrane D is an immediate release formulation of brompheniramine maleate and pseudoephedrine HCl, an effective, low-sedating antihistamine combined with a decongestant. Lodrane D will be promoted and distributed in the US by ECR, Hi Tech's branded division. The product will be available over-the counter but will also have physician promotion. Lodrane D is one of the only adult brompheniramine containing products available to the consumer. Elite will manufacture the product for ECR and will receive revenues for the manufacturing, packaging, and laboratory stability study services for this product, as well as royalties on sales. The current U.S. allergy market exceeds $3.5 billion. "ECR and Elite have continued to work diligently to provide a Lodrane product to US consumers. With this launch, we have accomplished this and look forward, in conjunction with our partner ECR, to rebuilding this important allergy-relief franchise," said Jerry Treppel, Chairman and CEO at Elite. "We also look to continue to build and leverage Elite's technologies through our product pipeline, partnerships and ventures as we continue to systematically meet the milestones we have set for ourselves." About Elite Pharmaceuticals Northvale, New Jersey-based Elite Pharmaceuticals, Inc., is a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled-release products, using proprietary technology and the development and manufacture of generic pharmaceuticals. The Company has one product, Phentermine 37.5mg tablets, currently being sold commercially. Demetrius & Company, L.L.C., in Wayne, New Jersey, expressed substantial doubt about Elite Pharmaceuticals' ability to continue as a going concern. The independent auditors noted that the Company has experienced significant losses resulting in a working capital deficiency and shareholders' deficit. The Company reported a net loss of $13.6 million on $4.3 million of revenues for the fiscal year ended March 31, 2011, compared with a net loss of $8.1 million on $3.3 million of revenues for the fiscal year ended March 31, 2010. The Company's balance sheet at June 30, 2011, showed $11.49 million in total assets, $50.33 million in total liabilities, and a $38.84 million total stockholders' deficit. ENER1 INC: Appoints C. Cowger as New Chief Executive Officer ------------------------------------------------------------ The Board of Directors of Ener1, Inc., on Sept. 26, 2011, terminated Charles Gassenheimer's employment as Chief Executive Officer and Chairman of Ener1, Inc., effective immediately. Under Mr. Gassenheimer's Employment Agreement with the Company dated as of June 22, 2010, he is obligated to offer to resign from the Board within thirty days of Sept. 27, 2011. In addition, on Sept. 26, 2011, the Board appointed Thomas J. Snyder as non-executive Chairman of the Board, effective immediately. Mr. Snyder has served as a director of Ener1 since July 2007. On Sept. 26, 2011, the Board appointed Christopher L. Cowger as Chief Executive Officer of Ener1, effective immediately. The Board concluded that a change in leadership would enhance the Company's ability to execute its business and financial plans in the current economic environment. The Board believes that the Company's newly appointed Chief Executive Officer is in the best possible position to do so. Mr. Cowger, age 40, has served as President of the Company and Chief Executive Officer of EnerDel, Inc., a subsidiary of the Company, since March 2011. From January 2009 until joining the Company, Mr. Cowger served as Corporate Vice President and General Manager, Americas Mega-Region with Advanced Micro Devices. At AMD, Mr. Cowger was responsible for AMD's $2 billion business and oversaw the executive management in numerous areas, including Consumer Relations, Components, Public Sales and Marketing, Field Engineering and Business Management across North, Central and South America. Prior to working at AMD, Mr. Cowger worked at Dell, Inc., for over ten years. From June 2008 through December 2008, Mr. Cowger served as Vice President and General Manager of the Global Consumer Software and Peripherals Division of Dell, where Mr. Cowger oversaw Dell's $1 billion Software and Peripheral Business within Dell's Global Consumer Group. From March 2007 through December 2008, Mr. Cowger was Vice President of Planning and Operations for Dell's Global Consumer Group, where he was responsible for all pricing, short and long term financial forecasting/planning, demand/supply management, new product introduction, divisional infrastructure and investment planning. From February 2006 through March 2007, Mr. Cowger was Vice President of the Americas Transactional Marketing division of Dell, where he was responsible for all pricing, forecasting, demand/supply management and product line management for the Dimension/XPS desktop and Inspiron/XPS notebook lines of business in the Americas region. From October 2004 through February 2006, Mr. Cowger was General Manager of the Consumer Division for Dell's Japanese business. Mr. Cowger holds a Bachelor of Science degree in Electrical Engineering from Duke University and a Master of Business Administration and Master of Science in Electrical Engineering from Massachusetts Institute of Technology. Mr. Cowger will continue to serve as Chief Executive Officer of EnerDel, Inc. There are no family relationships between Mr. Cowger and any director or executive officer of the Company. As of Sept. 27, 2011, no new compensatory arrangements have been entered into with Mr. Cowger in connection with his appointment as Chief Executive Officer of the Company. On Sept. 26, 2011, the Board voted to increase the number of directors of the Board from nine to ten and to fill the vacancy created by such increase by appointing Mr. Cowger as a director. As of Sept. 27, 2011, any committees of the Board to which Mr. Cowger will be named are not known. About Ener1 Ener1 Inc. (OTCBB: ENEI) -- http://www.ener1.com/-- has three business lines, which the company conducts through three operating subsidiaries. EnerDel, an 80.5% owned subsidiary, which is 19.5% owned by Delphi, develops Li-ion batteries, battery packs and components such as Li-ion battery electrodes and lithium electronic controllers for lithium battery packs. EnerFuel develops fuel cell products and services. NanoEner develops technologies, materials and equipment for nanomanufacturing. On Aug. 15, 2011, Ener1 disclosed that the Company's financial statements for the year ended December 31, 2010 and for the quarterly period ended March 31, 2011 should no longer be relied upon and should be restated.��The determination was made following an assessment of certain accounting matters related to the loans receivable owed to Ener1 by Think Holdings and accounts receivable owed to Ener1 by Think Global held by the Company, and the timing of the recognition of the impairment charge related to the Company's investment in Think Holdings originally recorded during the quarter ended March 31, 2011. Ener1 in September 2011 announced that it has entered into an agreement to restructure its 8.25% Senior Amortizing Notes with Goldman Sachs Asset Management, L.P., and other holders of the Notes.��Ener1 also announced that its primary shareholder, BzinFin S.A., has extended the maturity of its $15-million line of credit from November 2011 to July 2013. The Company and Bzinfin S.A., on Sept. 12, 2011, entered into an amendment to the Line of Credit Agreement dated June 29, 2011. Under the LOC Agreement, Bzinfin established a line of credit for the Company in the aggregate principal amount of $15,000,000, of which approximately $11,241,000 has been borrowed by the Company. Under the terms of the Amendment, the maturity date for the repayment of all advances under the LOC Agreement and all unpaid accrued interest thereon was extended to July 2, 2013, and the interest rate at which all outstanding advances will bear interest from and after Sept. 12, 2011, was increased to 15% per year. ENTELOS INC: Simulations Bid for All Assets Not Selected -------------------------------------------------------- Simulations Plus, Inc. that its bid to purchase substantially all of the assets of Entelos, Inc., in an auction supervised by and in accordance with certain bidding procedures approved by the United States Bankruptcy Court for the District of Delaware and pursuant to the provisions of Section 363 of the U.S. Bankruptcy Code was not selected as the winning bid. Walt Woltosz, chairman and chief executive officer of Simulations Plus, said, "Although we believed we would be able to secure the bid at a price Simulations Plus could afford, it became clear at the auction in Delaware on September 21 that we would have had to far exceed any amount the board of directors had approved as our maximum bid. We were not prepared to risk substantially all of our cash to complete this acquisition." About Simulations Plus Simulations Plus, Inc. -- http://www.simulations-plus.com/-- is a premier developer of groundbreaking drug discovery and development simulation software, which is licensed to and used in the conduct of drug research by major pharmaceutical and biotechnology companies worldwide. Our wholly owned subsidiary, Words+, Inc., provides assistive technologies to persons with disabilities, including the computerized communication system used by world famous theoretical astrophysicist Professor Stephen Hawking. About Entelos Inc. Entelos Inc., a developer of software for computer simulation of clinical trials for new drugs, filed for Chapter 11 protection (Bankr. D. Del. Case No. 11-12329) on July 25, 2011, the same day the landlord of the head office was going to court in California seeking eviction. Timothy P. Reiley, Esq., at Reed Smith LLP, in Wilmington, Delaware, serves as counsel to the Debtor. The Debtor estimated assets of up to $10 million and debts of $10 million to $50 million. EVOLUTION ACADEMY: S&P Lowers Rating on Revenue Bonds to 'BB+' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to 'BB+' from 'BBB-' on Texas Public Finance Authority Charter School Finance Corporation's series 2010A and 2010B education revenue bonds and series 2010Q taxable education revenue bonds (qualified school construction bonds, or QSCBs -- direct pay), all issued for Evolution Academy Charter School. The outlook is stable. "Bond proceeds were exhausted before the buildout of the new campus was completed, thus necessitating the use of internal resources to complete the buildout, resulting in significantly weakened balance sheet metrics," said Standard & Poor's credit analyst Robert Dobbins. The rating reflects S&P's view of the credit risks associated with Evolution Academy: Weak maximum annual debt service coverage of 0.8x as of fiscal 2010, with further deterioration expected based on unaudited fiscal 2011 results; Decreasing operational performance resulting from delays in opening the new campus and one-time, internally financed expenses required to complete the buildout of the new campus; High student turnover; and The general credit risk of charter revocation or nonrenewal associated with all charter schools that are subject to charter renewal. Partially mitigating the preceding credit factors is S&P's view of Evolution Academy's: Good liquidity, with 67 days' cash on hand for fiscal 2010; Growing demand, as evidenced by a growing waitlist; Successful renewal of the charter for 10 years to July 31, 2019. As of Aug. 31, 2011, Evolution Academy had $6.0 million in debt outstanding. FALLS AT TOWNE: Lift Stay, Dismissal Deferred to Oct. 31 Hearing ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota has approved the stipulation with respect to the July 27, 2011 motions of Broadstone Towne Crossing Property Owner LLC for (i) relief from the automatic stay and (ii) to dismiss The Falls at Towne Crossing, LLC's Chapter 11 case. At the Aug. 17, 2011 hearing concerning the motions, the Lender and the Debtor agreed to continue the hearing on the motions, which agreement was read into the record at the hearing. On Aug. 30, 2011, the parties reduced the agreement to writing pursuant to this stipulation. As ordered, the hearing on the motions is continued to Oct. 31, 2011, at 1:30 p.m., which hearing will be an evidentiary hearing. On or before 5:00 p.m. Central Standard Time on Oct. 17, 2011, the Debtor will file with the Bankruptcy Court and serve upon counsel to the Lender a fully executed and complete copy of an agreement for the sale of the Property, which agreement will include terms and conditions that are customary for agreements governing the sale of commercial real property of similar use and type as the Property. The Debtor will provide the Lender with a written status report describing its efforts to sell the Property. The status report will include a description of (a) the identity of each potential third party bidder contacted by the Debtor, its advisors and/or sales brokers, (b) which bidder(s) are conducting and/or have completed due diligence concerning the Property, (c) which bidder(s) have submitted bids for the purchase of the Property and the amount of such bids, and (d) any material contingencies included in the bids, including financing and due diligence contingencies. If the Debtor does not file the APA on or before the APA Deadline, the automatic stay governed by Section 362(a) of title 11 of the Bankruptcy Code will, without further order of this Court, be lifted at 5:00 p.m. Central Standard Time on the date that is one day after the filing of an affidavit by counsel to the Lender, which affidavit will be served contemporaneously upon counsel to the Debtor, stating that the APA was not filed on or before the APA Deadline, and the Lender will thereafter be permitted to exercise all rights and remedies under the Loan Documents and applicable law with respect to the Debtor and the Collateral. As adequate protection for the interests of the Lender in the Collateral, the Lender is permitted to sweep all rents and any other income generated by the Property in excess of amounts necessary to pay (a) ordinary operating expenses of the Property (to the extent the Manager is authorized to pay those expenses pursuant to the Lockbox Agreement and the Management Agreement) in accordance with the Lockbox Agreement, plus (b) any statutory fees payable to the U.S. Trustee pursuant to 28 U.S.C. Section 1930(a (6), and to hold or apply the rents and any other income in reduction of all indebtedness, obligations and other amounts owing by the Debtor from time to time pursuant to the Note and the other Loan Documents, including, without limitation, regular interest, default interest, and/or tax and insurance impound amounts (the "Adequate Protection Payments"). In addition, the Debtor reserves all rights with respect to the manner in which the Adequate Protection Payments are applied to the indebtedness. A copy of the stipulation is available for free at: Counsel for the Lender may be reached at: Steven H. Mayer, Esq. OPPENHEIMER WOLFF & DONNELLY LLP Plaza VII, Suite 3300 Minneapolis, MN 55402 Tel: (612) 607-7411 Fax: (662) 607-7100 E-mail: smeyer@oppenheimer.com - and - Brian W. Harvey, Esq. GOODWIN PROCTER LLP The New York Times Building 620 Eighth Avenue New York, NY 10018 Tel: (212) 813-8800 Fax: (212) 355-3333 E-mail: bharvey@goodwinprocter.com About The Falls at Towne Crossing and Geneva Multi-Family Exchange XIV Geneva Multi-Family Exchange XIV, LLC, owns the 336-unit Falls at Towne Crossing apartment project in Mansfield, Texas. Geneva Multi-Family Exchange XIV and affiliate The Falls at Towne Crossing, LLC, c/o Exchange Realty Inc., based in Minneapolis, Minnesota, filed separate Chapter 11 bankruptcy petitions (Bankr. D. Minn. Case Nos. 11-44562 and 11-44563) on July 5, 2011. Judge Dennis D. O'Brien presides over the case. Geneva Multi-Family Exchange XIV LLC disclosed $25.5 million in assets and $24.3 million in debts in its petition. The Falls at Towne Crossing estimated assets and debts of $10 million to $50 million. The petitions were signed by Duane H. Lund, chief manager. Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath Nauman & Tansey, at Minneapolis, Minnesota, represents the Debtor as counsel. As reported in the TCR on Sept. 14, 2011, the U.S. Bankruptcy Court for the District of Minnesota dismissed on Aug. 22, 2011, the Chapter 11 case of Geneva Multi-Family Exchange XIV, LLC. Any proof of claim filed in the Debtor's case will be deemed filed in the case of The Falls at Towne Crossing, LLC, Case No. 11-44563 without further action by the claim holder. FERTINITRO FINANCE: Fitch Affirms 'CCC' Rating on $250MM Bonds -------------------------------------------------------------- Fitch Ratings affirms FertiNitro Finance Inc.'s US$250 million 8.29% secured bonds due 2020 at 'CCC'. The anticipated timely payment of $44.7 million due Oct. 1 prevents further decline to the rating. Removal of the Rating Watch Negative reflects that the Venezuelan government's expropriation of the project's assets last October thus far has not interfered with timely debt payment. Reduced debt burden: Total annual debt service will decline from $91 million to $35 million in 2012 rising to a high of $50 million before the bonds mature in 2020. Revenue Volatility: Both urea and ammonia prices are higher than 2009 and 2010 levels but are lower than highs reached in 2008. Fitch believes that consistently high operating performance is key to mitigating the impact of lower-price periods. Improving but unstable operating performance: The below-budget capacity factor for the urea plant does not raise an immediate credit concern for debt payment in 2011. However, the rating is constrained by Fitch's concern about the potential for insufficient cashflow to support debt obligations in the years in which extended planned outages would occur due to lower capacity factors. Continued sovereign and regulatory risks: The project has demonstrated an ability and willingness to meet debt obligations, although nationalization of the FertiNitro assets remains a concern. Requirements to sell fertilizer domestically at a fraction of global prices have not had an adverse impact to cash flow due to the low volume of local sales. What could trigger a rating change -- Continued and sustained improvement in plant production levels and minimization of forced outages; -- Replenishment of the debt service reserve fund to equal six months of debt service; -- Domestic sales remain an insignificant portion of total sales; -- Changes to the offtake agreements; and -- Any further adverse impacts of government intervention. Security: Offshore accounts, project agreements, some real property and some real shares in FertiNitro. Credit Update FertiNitro's reduced debt burden provides needed financial relief given the project's exposure to volatile fertilizer prices, operating challenges, and government interventions. Product Prices: Average annual ammonia and urea prices have varied substantially since 2006, underscoring the importance of mitigating this risk with stable operating performance. Ammonia prices have ranged from $216/Metric Ton (MT) to $506/MT (averaging $348/MT) with annual variations ranging from 75% to -57%. Urea prices show a similar pattern of volatility ranging from $223/MT to $416/MT (averaging $306/MT) with annual variations of 49% to -46%. Operating Performance: Management has dedicated 2011 to investing resources to improve plant operating performance, after substantially reducing capital expenditures in 2010 to support debt obligations. FertiNitro reports it has invested in routine maintenance, overhaul activities, and acquisition of spare parts to reduce the duration of forced outages. Favorably, the capacity factor for the ammonia plant through July remains high at 90%, higher than the 77% average for the prior three years. The capacity factor for the urea plant is below the 79% budget level at 76%, but slightly higher than the 74% factored into Fitch's financial analysis. Fitch will look for progress toward higher and more stable capacity factors to support stable operations for both the urea and ammonia plants. Nationalization: Fitch is concerned that subject to lenders' approval, long-term offtake contracts, with affiliates of Koch and Pequiven can be renegotiated or terminated prior to the expiration date if sponsor ownership interest is reduced to less than the 20% minimum. FertiNitro has previously reported no change to the existing offtake agreements. FertiNitro, located in the Jose Petrochemical Complex in Venezuela, ranks as one of the world's largest nitrogen-based fertilizer plants, with nameplate daily production capacity of 1.2 million MT of ammonia and 1.5 million MT of urea. Of total revenues, 80% are derived from urea sales and the remainder from ammonia. FertiNitro was structured as 35% owned by a Koch Industries, Inc. subsidiary, 35% by Pequiven, 20% by a Snamprogetti S.p. subsidiary, and 10% by a Cerveceria Polar, C.A. subsidiary. FIRST MARINER: Amends Securities Purchase Pact with Priam --------------------------------------------------------- 1st Mariner Bancorp entered into an agreement with Priam Capital Fund I, LP, to amend the terms of their existing Securities Purchase Agreement dated April 19, 2011. As part of the amendment, the parties have agreed to extend the date on which termination rights become available until Nov. 30, 2011. The amendment does not change the amount of the investment by Priam Capital Fund I, LP, which would invest approximately $36.4 million in the Company as part of its Securities Purchase Agreement with 1st Mariner Bancorp, subject to the Company raising another $123.6 million from other investors and the satisfaction of the other conditions contained in such agreement. Edwin F. Hale, Sr., chairman and chief executive officer, said, "We are continuing to work with Priam Capital and our advisors to complete our recapitalization efforts. Extending our agreement was a necessary step in that process." Howard Feinglass, Managing Partner of Priam Capital, said, "We remain fully committed to the transaction." About First Mariner Headquartered in Baltimore, Maryland, First Mariner Bancorp -- http://www.1stmarinerbancorp.com/-- is a bank holding company whose business is conducted primarily through its wholly owned operating subsidiary, First Mariner Bank, which is engaged in the general general commercial banking business. First Mariner was established in 1995 and has total assets in excess of $1.3 billion as of Dec. 31, 2010. "Quantitative measures established by regulation to ensure capital adequacy require the [First Mariner] Bank to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average quarterly assets," the Company said in the filing. "As of March 31, 2011, the Bank was "under-capitalized" under the regulatory framework for prompt corrective action." The Company's balance sheet at June 30, 2011, showed $1.16 billion in total assets, $1.17 billion in total liabilities, and a $13.42 million total stockholders' deficit. As reported in the TCR on April 4, 2011, Stegman & Company, in Baltimore, expressed substantial doubt about First Mariner Bancorp's ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has suffered recurring losses and has a limited capital base. Bankruptcy Warning As of June 30, 2011, First Mariner Bank's and the Company's capital levels were not sufficient to achieve compliance with the higher capital requirements they were required to meet by June 30, 2010. The failure to maintain these capital requirements could result in further action by their regulators. On Sept. 18, 2009, the Bank entered into an Agreement with the Federal Deposit Insurance Corporation and the Commissioner of Financial Regulation for the state of Maryland, pursuant to which it consented to the entry of an Order to Cease and Desist, which directs the Bank to (i) increase its capitalization, (ii) improve earnings, (iii) reduce nonperforming loans, (iv) strengthen management policies and practices, and (v) reduce reliance on noncore funding. The September Order required the Bank to adopt a plan to achieve and maintain a Tier I leverage capital ratio of at least 7.5% and a total risk-based capital ratio of at least 11% by June 30, 2010. We did not meet the requirements at June 30, 2010, December 31, 2010, or June 30, 2011. The failure to achieve these capital requirements could result in further action by its regulators. First Mariner currently does not have any capital available to invest in the Bank and any further increases to the Company's allowance for loan losses and operating losses would negatively impact the Company's capital levels and make it more difficult to achieve the capital levels directed by the FDIC and the Commissioner. Because the Company has not met all of the capital requirements set forth in the September Order within the prescribed timeframes, if the Company's revised capital plan is not approved or if the Company is not granted a waiver of those requirements, the FDIC and the Commissioner could take additional enforcement action against the Company, including the imposition of monetary penalties, as well as further operating restrictions. The FDIC or the Commissioner could direct the Company to seek a merger partner or possibly place the Bank in receivership. If the Bank is placed into receivership, the Company would cease operations and liquidate or seek bankruptcy protection. If the Company were to liquidate or seek bankruptcy protection, the Company does not believe that there would be assets available to holders of the capital stock of the Company. FIRSTPLUS FIN'L: Ch. 11 Trustee Amends Liquidating Plan ------------------------------------------------------- Matthew D. Orwig, as the Chapter 11 Trustee of FirstPlus Financial Group, Inc., filed a disclosure statement for the Chapter 11 Trustee's first amended plan of liquidation on Sept. 8, 2011. On the Effective Date, the liquidating trust assets, expressly including the litigation and all other causes of action, will be deemed to have been transferred by the Debtor or the Chapter 11 Trustee to the Liquidating Trust, free and clear of all liens, claims, and encumbrances, but subject to any obligations imposed by the Plan. On or after the Effective Date, the Liquidating Trust will remit to the respective holders of all remaining and unpaid allowed administrative expense claims, allowed priority claims, an amount in cash equal to 100% of the amount of the allowed claim. On and after the Effective Date, the Liquidating Trust will make payments to the holders of all allowed Class 3 and 4 claims in the time and manner, and to the extent, set forth in the Plan. After the Effective Date, all remaining allowed administrative claims (including professional fee claims), and any and all allowed priority claims against the Debtor that were not paid in full on the Effective Date will be paid by the Liquidating Trust pursuant to the terms of the Plan. The treatment of certain classes of claims under the Liquidating Plan are: A. Administrative Claims and Priority Tax Claims - Each holder of an Allowed Administrative Claim and Priority Tax Claim will be paid by the Liquidating Trustee in full in cash by the later of (i) within 7 days the Effective Date or (ii) the date that is 15 days after the date upon which the claim becomes an Allowed Administrative Claim. B. Class 1 (Priority Non-Tax Claims) - Each holder of an Allowed Priority Claim will receive in exchange for and in full satisfaction of the Claim: (a) the amount of Allowed Priority Claim, in cash, on the latest of (i) 7 days after the Effective Date, or (ii) the date that is 15 days after the Claim becomes an Allowed Priority Claim; or (b) the time as may be agreed upon in writing by the holder of the Claim and the Chapter 11 Trustee or the Liquidating Trustee. C. Class 2 (Secured Claims) - Each holder will receive the amount of Allowed Secured Claim, in cash, on the later of (i) 7 days after the Effective Date, or (ii) 15 days after the Claim becomes an Allowed Secured Claim, but only to the extent allowed as a Secured Claim; or all collateral securing the allowed secured claim; or other treatment as may be agreed upon in writing by the holder of the Claim and the Chapter 11 Trustee or the Liquidating Trustee. D. Class 3a (Unsecured Claims) - Each holder will receive in full satisfaction, settlement, and release of the allowed claim, the holder's Pro Rata Share of cash distributed by the Liquidating Trust in the time and manner as set forth in the Plan and the Liquidating Trust Agreement. E. Class 3b (Unsecured Claims of Shareholders) - The Chapter 11 Trustee is proposing and seeking approval of a settlement with certain shareholders, who the Chapter 11 Trustee believes constitute the majority of these claimants. F. Class 4 (Subordinated Claims) - The holders of subordinated claims will most likely not receive or retain any Property. H. Class 5 (Equity Interests) - Upon the Effective Date, all Equity Interests in the Debtor will be cancelled, voided and of no further force or effect whatsoever. No distributions will be made on account of any Equity Interest in the Debtor. A copy of the Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?770c About FirstPlus Financial Based in Beaumont, Texas, FirstPlus Financial Group, Inc. -- http://www.firstplusgroup.com/-- (Pink Sheets: FPFX) is a diversified company that provides commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. The Company has three direct subsidiaries, Rutgers Investment Group, Inc., FirstPlus Development Company and FirstPlus Enterprises, Inc. In turn, FirstPlus Enterprises, Inc., has three of its own direct subsidiaries, FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and The Premier Group, LLC. FirstPlus Restoration and FirstPlus Facility jointly own FirstPlus Restoration & Facility Services Company. Additionally, FirstPlus Development has one direct subsidiary FirstPlus Acquisitions-1, Inc. A subsidiary of FirstPlus Financial Group -- FirstPlus Financial Inc. -- filed for Chapter 11 bankruptcy in March 1999 before the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, amid turmoil in the asset-backed securitization markets and the lack of a reliable, committed secondary take-out source for high LTV loans. A modified third amended plan of reorganization was confirmed in that case in April 2000. The Company filed for Chapter 11 protection (Bankr. N.D. Tex. Case No. 09-33918) on June 23, 2009. Aaron Michael Kaufman, Esq., and George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, serves as counsel. The Debtor has total assets of $15,503,125 and total debts of $4,539,063 as of June 30, 2008. FirstPLUS Financial Group disclosed $1,264,637 in assets and $10,347,448 in liabilities as of the Chapter 11 filing. Matthew D. Orwig is appointed as the Chapter 11 trustee in the Debtors cases. The trustee is represented by Peter A. Franklin, Esq., and Erin K. Lovall, Esq., at Franklin Skierski Lovall Hayward LLP. * * * The Trustee notified the Court that Peter Franklin and the law firm of Franklin Skierski Lovall Hayward, LLP, which firm presently represents the Trustee as local counsel, will be substituted as lead counsel for the Trustee in the stead of Jo Christine Reed and SNR Denton US, LLP, due to the maternity leave of Ms. Reed. The firm may be reached at: Peter Franklin, Esq. FRANKLIN SKIERSKI LOVALL HAYWARD LLP 10501 N. Central Expy., Suite 106 Dallas Texas 75231 Tel: 972-755-7100 Fax: 972-755-7110 E-mail: pfranklin@fslhlaw.com FRIENDLY ICE CREAM: May File for Chapter 11 as Soon as Next Week ---------------------------------------------------------------- The Wall Street Journal's Mike Spector reports that people familiar with the matter said Friendly Ice Cream Corp. -- which employs roughly 10,000 people and operates more than 500 Friendly's restaurants known for sundaes and hamburgers -- could seek bankruptcy protection from creditors as soon as next week. The sources said the Wilbraham, Mass.-based company would then try to sell itself through a bankruptcy auction. The sources told the Journal Friendly's hired law firm Kirkland & Ellis and Zolfo Cooper, a turnaround advisory firm, to negotiate with creditors and prepare its bankruptcy filing. The Journal's sources said the company is in talks with Wells Fargo & Co. for about $70 million in DIP financing. The DIP financing would consist of about $25 million in new funds and other existing debt that would "roll up" into the new loan. The sources also said Sun Capital Partners Inc., which acquired the Company in 2007, could put in a "credit bid" by forgiving debt in exchange for retaining ownership. Boca Raton, Fla.-based Sun Capital paid $130.81 million in cash for all of Friendly's stock and is also a creditor. According to the Journal's sources, declining sales have triggered a condition in a Wells Fargo credit line that prevents Friendly's from borrowing as much as it would like. Friendly's has about $3.5 million in available cash between its borrowing abilities and cash on hand, one of these people said. That is enough for Friendly's to operate in the near term, this person said. The Journal relates Friendly's already owes another $30 million or so to Wells Fargo. Separately, it also carries roughly $225 million in secured bond debt owed to Sun Capital. The Journal notes Wells Fargo declined to comment. A Friendly's spokeswoman didn't provide a comment. Sun Capital didn't respond to requests for comment. GARNEAU INC: Shareholders to Vote on Liquidation and Dissolution ---------------------------------------------------------------- Garneau Inc. announced on Sept. 28, 2011, that a special meeting of shareholders of the Corporation will be held on Nov. 7, 2011, to consider and, if thought advisable, pass, a resolution which would approve: (i) the liquidation of the Corporation; (ii) the distribution of the remaining assets of the Corporation, which is expected to be a small amount of cash; and (iii) the dissolution of the Corporation, all in accordance with the requirements of the Business Corporations Act (Alberta) and pursuant to a plan of liquidation and dissolution. The Resolution must be approved by two-thirds of the votes cast at the Meeting. Completion of the transactions to be approved at the Meeting also remains subject to stock exchange and other applicable regulatory approvals. Garneau has ceased its active business operations. The decision to put the Resolution to the shareholders of Garneau at the Meeting resulted from a review of the alternatives available to the Corporation by the board of directors of the Corporation in its continuing efforts to preserve shareholder value in the context of no business prospects and a small remaining amount of cash that will continue to be depleted with the stock exchange and reporting issuer compliance requirements that Garneau is bound by. In this context and considering the fact that the implementation of the Plan presents the possibility that the shareholders may receive a liquidating distribution of cash, the board of directors of Garneau unanimously recommends that shareholders vote in favor of the Resolution. Garneau anticipates that a proxy and information circular for the Meeting, which will provide greater detail on the transactions referenced in this press release, will be mailed to shareholders very shortly and will be available at http://www.sedar.com GLAZIER GROUP: Plan Confirmation Hearing Set for Oct. 13 -------------------------------------------------------- Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York approved the disclosure statement explaining the Chapter 11 plan of reorganization of The Glazier Group, Inc. The Court will hold a hearing to consider confirmation of the Plan on Oct. 13, 2011 at 11:00 a.m. Objections are due Oct. 1. The Plan provides for the reorganization and recapitalization of the Debtor. Under the Plan, the Debtor will be reorganized and emerge from Chapter 11 with a de-levered capital structure. The Debtor believes that the Plan will enable it to emerge from Chapter 11 as a viable business in concert with the remaining restaurant affiliates. General Electric Credit Corporation's allowed secured claim will be paid in full in cash from the proceeds of the sale agreement entered entered into between Striphouse Restaurants, LLC, as buyer, and T-Bone Restaurant LLC, Big Bones Limited Partnership, Big Bones Liquor, Inc., and Strip House Las Vegas, LLC, as sellers. Holders of Joint Legacy Claims will be paid in accordance with the terms set forth in the respective stipulations settling such Claims entered into by and between the Debtor and/or Restaurant Affiliates and each holder of a Joint Legacy Claim. Holders of Allowed Unsecured Claims will receive a cash distribution equal to 20% of the amount of those Claims, payable in two equal installments commencing on the Effective Date, and the final payment to be made within 30 days of the end of calendar year 2011. This recovery is a significantly greater recovery than such creditors would receive if the Debtor was liquidated under Chapter 7 of the Bankruptcy Code (where it is projected that Allowed Unsecured Claims would receive a 0% recovery on account of their Claims). Allowed Administrative Claims, Priority Tax Claims and Non-Tax Priority Tax Claims will be paid in full as required by the Bankruptcy Code, unless otherwise agreed to by the holders of such Claims. Old Equity Interests in the Debtor will be cancelled, and holders of Equity Interests will receive no Distributions on account of their Equity Interests under the Plan. On the Effective Date, the Equity Holders, as holders of 100% of the membership interests in the Restaurant Affiliates, shall transfer all membership interests to the reorganized Debtor, Glazier Holdings, LLC. In consideration thereof, and in further consideration of the waiver of distributions on account of claims held by the Restaurant Affiliates, the Equity Holders will receive new equity interests comprising 100% of the Equity Interests in Glazier Holdings, LLC. A full-text copy of the Modified First Amended Disclosure Statement, dated Sept. 8, is available for free at: http://ResearchArchives.com/t/s?7714 About The Glazier Group New York-based The Glazier Group, Inc., filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 10-16099) on Nov. 15, 2010. Frederick E. Schmidt, Esq., Joshua Joseph Angel, Esq., and Seth F. Kornbluth, Esq., at Herrick, Feinstein LLP, represent the Debtor in its restructuring effort. John Dunne of Renewal Ventures, LLC, is the Debtor's Chief Restructuring Officer. The Company disclosed assets of $15.2 million and liabilities of $26.8 million as of the Petition Date. Ronald J. Friedman, Esq., Katina Brountzas, Esq., and Sheryl P. Busell, Esq., at SilvermanAcampora LLP, in Jericho, New York, represent the Official Committee of Unsecured Creditors. FTI Consulting, Inc., serves as the Official Committee of Unsecured Creditors' financial advisor. GRACEWAY PHARMACEUTICALS: Plans Bankruptcy, Sale to Galderma ------------------------------------------------------------ On Sept. 29, 2011, Graceway Pharmaceuticals, LLC, and several of its affiliated companies, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. Graceway intends to sell essentially all of its assets through an asset sale under Section 363 of the Bankruptcy Code. Galderma has been selected as a stalking horse bidder, but the final buyer will be determined through an auction process and, ultimately, by the Bankruptcy Court over the course of the next few months. Graceway is generally prohibited by the Bankruptcy Code from making payments on account of claims arising prior to the bankruptcy filing except in connection with a plan of reorganization. During the pendency of the bankruptcy proceeding, however, Graceway is authorized by the Bankruptcy Code to continue its normal operations and has ample cash on hand to pay its post bankruptcy filing obligations when due and in the ordinary course of business. Dow Jones' DBR Small Cap earlier reported on Graceway Pharmaceuticals' plans to seek bankruptcy protection and sell its assets to Galderma S.A., subject to higher bids at auction. Dermatological drugmaker Galderma Pharma SA reached a deal Wednesday to buy almost all the U.S. and Canadian assets of Graceway Pharmaceuticals LLC, including intellectual property rights and vendor contracts, in a bankruptcy-assisted sale, according to Alex Ortolani at Bankruptcy Law360. Graceway did not disclose the price of the deal, Law360 notes. Based in Bristol, Tennessee, Graceway Pharmaceuticals, LLC engages in pharmaceutical development. The company offers dermatology, respiratory, and women's health products. Its Zyclara Cream is used for the treatment of external genital and perianal warts (EGW) in patients 12 years of age and older. The company offers products for the treatment of dermatology conditions, such as actinic keratosis, superficial basal cell carcinoma, external genital warts, atopic dermatitis, and acne; and respiratory conditions, such as asthma. GRACEWAY PHARMACEUTICALS: Reaches Deal to Sell Assets to Galderma ----------------------------------------------------------------- Graceway Pharmaceuticals, LLC and Galderma S.A have entered into a definitive agreement for Galderma to acquire substantially all of Graceway's U.S. and Canadian assets. Under the terms of the agreement, Galderma will acquire substantially all of Graceway's assets including inventory and intellectual property rights and will assume the majority of Graceway's contract manufacturing, contract research and other vendor contracts related to the acquired assets. To implement the transaction, Graceway will seek authority to sell its assets under Section 363 of the United States Bankruptcy Code and through a concurrent receivership proceeding in Canada. Other parties will have an opportunity to submit higher and better offers to purchase the Company's assets under this Court-supervised process and Graceway anticipates the sale transaction will be completed by the end of January with minimal disruption to the business. Lazard is acting as financial advisor to Graceway, Latham & Watkins LLP is serving as legal advisor and Alvarez & Marsal North America, LLC is serving as restructuring advisor. Credit Suisse is acting as financial advisor and Debevoise & Plimpton is acting as legal advisor to Galderma. About Graceway Pharmaceuticals Headquartered in Bristol, TN, Graceway Pharmaceuticals, LLC -- http://www.gracewaypharma.com/-- is a pharmaceutical company focused on acquiring, in-licensing, and developing branded prescription pharmaceutical products. Current prescription products marketed by Graceway include Zyclara(R) (imiquimod) Cream, 3.75%, Aldara(R) (imiquimod) Cream, 5%, Maxair(R) Autohaler(R) (pirbuterol acetate inhalation aerosol), Atopiclair(R) Nonsteroidal Cream, and Estrasorb(R) (estradiol topical emulsion). Zyclara(R), Aldara(R), Maxair(R) Autohaler(R), Atopiclair(R), and Estrasorb(R) are trademarks owned by or licensed to Graceway. HARRIS INTERACTIVE: Receives Waiver of Non-Compliance Under Loan ---------------------------------------------------------------- Harris Interactive Inc. said that as of June 30, 2011, it was not in compliance with certain financial covenants under its credit agreement. On Sept. 27, 2011, Harris Interactive amended its credit agreement and received a permanent waiver of such non compliance. For additional information regarding the waiver and amended credit agreement see the Form 8-K filed with the Securities and Exchange Commission. Al Angrisani, Interim Chief Executive Officer of Harris Interactive commented, "It has been approximately 100 days since I assumed the role of Interim CEO and initiated a turnaround program. The financial results below are the product of a previous turnaround effort that was not successful. Putting this disappointing fiscal 2011 behind us, we are now focused on remedying the major challenges that face the Company as we attempt to restore the Company's business model back to viability and begin the process of creating shareholder value. Unfortunately, this is not going to be a quick or easy fix." The Company reported a net loss of $8.5 million on $165.3 million of revenue for 12 months ended June 30, 2011, compared with a net loss of $2.2 million on $168.4 million of revenue in 2010. The Company's balance sheet at June 30, 2011, showed $71.85 million in total assets, $60.4 million in liabilities, and $11.5 million of stockholders' deficit. A full text copy of the Company's fourth quarter and full year fiscal 2011 results is available free at: http://ResearchArchives.com/t/s?770f ��About Harris Interactive Based in Rochester, New York, Harris Interactive (NASDAQ:HPOL) -- http://www.harrisinteractive.com/�--provides custom market research.��Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. This concludes the Troubled Company Reporter's coverage of Harris Interactive until facts and circumstances, if any, emerge that demonstrate financial or operational strain or difficulty at a level sufficient to warrant renewed coverage. HARRISBURG, PA: House Backs Harrisburg Receivership Bill -------------------------------------------------------- Evan Weinberger at Bankruptcy Law360 reports that the Pennsylvania House of Representatives on Wednesday overwhelmingly approved a scheme that could put Harrisburg, on the brink of bankruptcy, under a state-appointed receiver's control if its city council doesn't approve a plan to handle a $300 million debt crisis. According to Law360, the lower house of the Pennsylvania General Assembly voted 185-9 to approve the course of action, which gives the state capital's city leaders one month to approve their own debt crisis plan after the failure of several previous efforts. 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. HCA HOLDINGS: To Offer $500 Million of 8% Senior Notes ------------------------------------------------------ HCA Inc. filed with the U.S. Securities and Exchange Commission a free writing prospectus regarding the issue of $500,000,000 of 8% senior notes due 2018. The Notes have maturity date of Oct. 1, 2018. Joint Book-Running Managers of the Offering are Barclays Capital Inc., Deutsche Bank Securities Inc., Goldman, Sachs & Co. Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, and Wells Fargo Securities, LLC. The Company estimates that the net proceeds from the Offering, after deducting underwriter discounts and commissions and estimated offering expenses, will be approximately $492,000,000. The Company intends to use the net proceeds from the notes for general corporate purposes, which may include funding a portion of the acquisition of the remaining ownership interest in our HCA HealthONE LLC joint venture currently owned by the Colorado Health Foundation and to pay related fees and expenses. A full-text copy of the FWP is available for free at: http://is.gd/xDLmmW About HCA Inc. Headquartered in Nashville, Tennessee, HCA is the nation's largest acute care hospital company with 162 hospitals and 104 freestanding surgery centers (including eight hospitals and eight freestanding surgery centers that are accounted for using the equity method) as of Sept. 30, 2010. For the 12 months ended Sept. 30, 2010, the company recognized revenue in excess of $30 billion. The Company's balance sheet at June 30, 2011, showed $23.87 billion in total assets, $31.41 billion in total liabilities, and a $7.53 billion stockholders' deficit. * * * In May 2011, Moody's Investors Service upgraded the Corporate Family and Probability of Default Ratings of HCA Inc. (HCA) to B1 from B2. "The upgrade of HCA's rating reflects the considerable progress the company has made in improving financial metrics and managing the company's maturity profile since the November 2006 LBO," said Dean Diaz, a Moody's Senior Credit Officer. "While the funding of distributions to shareholders at the end of 2010 increased debt levels, the growth in EBITDA and debt repayment since the LBO have improved leverage metrics considerably from the high levels seen just after the company went private," continued Diaz. As reported by the Troubled Company Reporter on March 14, 2011, Moody's Investors Service commented that the completion of the IPO by HCA Holdings, Inc., has no immediate impact on the company's B2 Corporate Family Rating. The outlook for the ratings remains positive. While Moody's believes that the completion of the IPO is a credit positive since proceeds are expected to be used to repay outstanding debt, the estimated $2.6 billion of proceeds to the company won't meaningfully reduce HCA's $28.2 billion debt load. In the March 16, 2011, edition of the TCR, Fitch Ratings has upgraded its ratings for HCA Inc. and HCA Holdings Inc., including the companies' Issuer Default Ratings which were upgraded to 'B+' from 'B'. The Rating Outlook is revised to Stable from Positive. The ratings apply to approximately $28.2 billion in debt outstanding at Dec. 31, 2010. Fitch noted that HCA has made significant progress in reducing debt leverage since it was taken private in 2006 in a LBO which added $17 billion to the company's debt balance; at Dec. 31, 2006, immediately post the LBO, debt-to- EBITDA was 6.7x. Most of the reduction in debt leverage over the past four years was accomplished through growth in EBITDA, which Fitch calculates has expanded by $1.7 billion or 40% to $5.9 billion for 2010 versus $4.2 billion in 2006. Although the company did not undertake a significant organizational restructuring post the LBO, management has nevertheless been successful in growing EBITDA and significantly expanding discretionary free cash flow (FCF). Fitch believes this was accomplished through various operational initiatives, including expansion of profitable service lines and the divestiture of some under performing hospitals, as well as the generally resilient operating trend of the for-profit hospital industry during the recent economic recession despite the pressure of increased levels of uncompensated care and generally weak organic patient volume trends. HCA INC: Moody's Assigns 'B3' Rating to Senior Unsecured Notes ------------------------------------------------------------- Moody's Investors Service assigned a B3 (LGD 5, 85%) rating to HCA Inc.'s (HCA) offering of senior unsecured notes due 2018. Moody's understands that proceeds from the offering will be used for general corporate purposes, which may include funding a portion of the previously announced acquisition of the remaining ownership interest in the company's HCA-HealthOne LLC joint venture. Moody's also believes the proceeds could be used to repay amounts drawn under the company's revolving credit facilities to fund the recent repurchase of equity shares from Bank of America. Therefore, while the acquisition and share repurchase results in a modest increase in leverage, HCA's note issuance is in line with Moody's expectations around the funding of these transactions. HCA's B1 Corporate Family and Probability of Default Ratings remain unchanged. The outlook for the ratings is stable. Ratings assigned: Senior unsecured notes due 2018, B3 (LGD 5, 85%) Ratings unchanged: Corporate Family Rating, B1 Probability of Default Rating, B1 ABL revolver expiring 2012, Ba1 (LGD 1, 1%) Revolving credit facility expiring 2015, Ba3 (LGD 3, 32%) Senior secured term loan A-1 due 2012, Ba3 (LGD 3, 32%) Senior secured term loan A-2 due 2016, Ba3 (LGD 3, 32%) Senior secured term loan B-1 due 2013, Ba3 (LGD 3, 32%) Senior secured term loan B-2 due 2017, Ba3 (LGD 3, 32%) Senior secured term loan B-3 due 2018, Ba3 (LGD 3, 32%) Euro term loan due 2013, Ba3 (LGD 3, 32%) $1,500 million first lien secured notes due 2019, Ba3 (LGD 3, 32%) $1,250 million first lien secured notes due 2020, Ba3 (LGD 3, 32%) $1,400 million first lien secured notes due 2020, Ba3 (LGD 3, 32%) $3,000 million first lien secured notes due 2020, Ba3 (LGD 3, 32%) $201.5 million second lien notes due 2017, B2 (LGD 4, 67%) Senior unsecured notes (various), B3 (LGD 5, 85%) Senior unsecured HoldCo notes due 2021, B3 (LGD 6, 95%) Speculative Grade Liquidity Rating, SGL-2 First lien senior secured shelf, (P)Ba3 Senior unsecured shelf, (P)B3 RATINGS RATIONALE HCA's B1 Corporate Family Rating reflects Moody's expectation that the company will continue to operate with significant leverage. Furthermore, HCA has large debt maturities in future periods, although the company has continued to make progress to push those maturities out. The rating also reflects Moody's consideration of HCA's scale and position as the largest for-profit hospital operator, which should aid in providing access to resources needed in adapting to changes in the sector brought on by healthcare reform legislation and aid in the company's ability to weather industry pressures. Finally, the rating incorporates Moody's expectation that the company will take a more conservative approach to the use of additional debt for shareholder initiatives and continue to improve credit metrics through both EBITDA growth and debt repayment. Given the continuing private equity sponsorship of HCA, Moody's would have to become more comfortable that the company will maintain a conservative financial profile, consistent with that expected of the Ba3 rating, prior to it considering an upgrade of the rating to that level. Additionally, Moody's would have to expect a continuation of positive operating trends such that the company is able to grow earnings or repay debt so that free cash flow to debt reaches a sustainable level above 5% and debt/EBITDA is maintained below 4.5 times. If the company experiences a deterioration of operating trends, for example, negative trends in same-facility adjusted admissions or same-facility revenue per adjusted admission, Moody's could downgrade the rating. Additionally, Moody's could downgrade the ratings if the company were to incur additional debt to fund shareholder distributions or acquisitions so that it expects adjusted debt/EBITDA to be sustained at or above 5.0 times. Moody's previously noted that the funding of the recent share repurchase and expected closing of the HCA-HealthOne transaction will temporarily push leverage above 5.0 times and, therefore, diminishes the company's ability to absorb further negative developments at the current rating level. The principal methodology used in rating HCA was the Global For Profit Hospital Industry Methodology, published September 2008. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. Headquartered in Nashville, Tennessee, HCA is the nation's largest acute care hospital company with 164 hospitals and 111 freestanding surgery centers (including seven hospitals and 13 freestanding surgery centers that are accounted for using the equity method) as of June 30, 2011. For the twelve months ended June 30, 2011, the company recognized revenue in excess of $31 billion. HCA INC: S&P Assigns 'B-' Rating to $500-Mil. Sr. Unsec. Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned Nashville-based HCA Inc.'s proposed $500 million senior unsecured notes due 2018 its 'B-' issue-level rating (two notches lower than the 'B+' corporate credit rating on the company). "We also assigned the notes a recovery rating of '6', indicating our expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default. The company plans to use the proceeds for general corporate purposes," S&P stated. The corporate credit rating on HCA is 'B+' and the rating outlook is stable. The rating reflects the company's uncertain prospects for third-party reimbursement, its highly leveraged financial risk profile, and its historically aggressive financial policies. It also reflects recent weakness in earnings, influenced by an adverse shift in service mix to less acute medical cases. Still, the company's relatively diversified portfolio of 164 hospitals and 111 ambulatory surgery centers, generally favorable positions in its competitive markets, and experienced management team partially mitigate these risks and contribute to our assessment that HCA has a "fair" business risk profile. These factors help protect the company from conditions that confront several of its far smaller peers. (For the latest complete corporate credit rating rationale, see Standard & Poor's research report on HCA published May 25, 2011.) Ratings List HCA Inc. Corporate Credit Rating B+/Stable/-- New Ratings HCA Inc. Senior Unsecured $500 mil notes due 2018 B- Recovery Rating 6 HD SUPPLY: Moody's Affirms 'Caa2' Corporate Family Rating --------------------------------------------------------- Moody's Investors Service upgraded HD Supply's Senior Secured Term Loan to A3 from Baa1, since Moody's recently upgraded the senior unsecured rating of The Home Depot, the guarantor of HD Supply's Term Loan, to A3 from Baa1. In a related rating action, Moody's affirmed HDS' Corporate Family and Probability of Default Ratings at Caa2. The rating outlook is negative. These ratings/assessments were affected by this action: Corporate Family Rating affirmed at Caa2; Probability Default Rating affirmed at Caa2; $73 million Senior Secured Term Loan due 2012 upgraded to A3 from Baa1, reflecting the guarantee provided by The Home Depot, Inc.; $860 million Senior Secured Term Loan due 2014 upgraded to A3 from Baa1, reflecting the guarantee provided by The Home Depot, Inc.; $304 million Asset-Based Senior Secured Revolving Credit Facility due 2012 affirmed at B1 (LGD1, 6%); $1.8 billion Asset-Based Senior Secured Revolving Credit Facility due 2014 affirmed at B1 (LGD1, 6%); $200 million Senior Secured Revolving Credit Facility due 2013 affirmed at B3 (LGD2, 24%); $2.5 billion Senior Unsecured Notes due 2014 affirmed at Caa2 (LGD4, 59%); and $1.7 billion Senior Subordinated PIK Notes due 2015 affirmed at Ca (LGD6, 90%) The company's speculative grade liquidity rating remains SGL-3. RATINGS RATIONALE The upgrade of HDS' Senior Secured Term Loan due 2012 and Senior Secured Term Loan due 2014 to A3 from Baa1 results from Moody's recent rating action upgrading the Senior Unsecured Rating of The Home Depot to A3 from Baa1. The Home Depot guarantees each of the term loans. Moody's views the risk of loss associated with each of the term loans to be compatible to the credit worthiness of The Home Depot. HDS' Caa2 Corporate Family Rating reflects the company's highly leveraged capital structure. Its debt-to-EBITDA was 10.7 times at 2Q11 (July 31, 2011) and EBITA-to-interest expense was 0.6 times through the twelve months ended July 31, 2011 (all ratios incorporate Moody's adjustments). Although HDS' operating performance improved in its second quarter due to higher volumes, improving operating efficiencies and ongoing cost reductions (sales in 2Q11 increased by 10% compared to 2Q10 and adjusted EBITA margin was 7.1% for 2Q11 versus 5.6% for 2Q10), the company will still have difficulty in generating significant levels of earnings and free cash flow relative to its debt. The construction industry, a key driver of HDS' revenues, is facing anemic growth prospects. Additionally, the company's ability to build cash and to reduce refinancing risks in 2014 is hindered by its Senior Subordinated Notes due 2015 converting to cash pay from PIK beginning March 1, 2012, thereby reducing free cash flow by about $245 million based on the projected outstanding balance. Moody's believes that HDS will not internally generate sufficient free cash flow to address its looming maturities, resulting in an untenable capital structure with about $5 billion of committed credit facilities maturing in 2014. Developments that could lead to a downgrade include any erosion in the company's financial performance due to continued weakness in its end markets. Also, indications that the company is not benefiting from its restructuring programs, or deterioration in its liquidity profile could pressure the rating. Additionally, further stress on the ratings, including the speculative grade liquidity rating, could result if HDS is unable to substantially improve its funds from operations so that it can fund its internal operations and pay its entire interest expense once the company's subordinated PIK notes go cash-pay. Redemption of debt at deep discounts or conversion of debt for equity could negatively impact the ratings, as well. A stabilization of the ratings is unlikely to occur until HDS addresses its capital structure or demonstrates a significant improvement in operations, which is unlikely considering the current state of the domestic construction industry. The principal methodology used in rating HD Supply, Inc. was the Global Manufacturing Industry Methodology published in December 2007. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. HD Supply, Inc., headquartered in Atlanta, Georgia, is one of the largest North American wholesale distributors supporting residential and non-residential construction and to a lesser extent electrical consumption and repair and remodeling. HDS also provides maintenance, repair and operations ("MRO") services. Its businesses are organized around three segments: Infrastructure and Energy; Maintenance, Repair & Improvement; and, Specialty Construction. HDS operates throughout the U.S. and Canada serving contractors, government entities, maintenance professionals, home builders and professional businesses. The Carlyle Group, Bain Capital, and Clayton, Dubilier & Rice, through their respective affiliates, are the primary owners of HDS. The Home Depot, Inc. retains a 12.5% minority ownership in HDS. Revenues for twelve months through July 30, 2011 totaled approximately $7.8 billion. HEALTHSPRING INC: S&P Raises Counterparty Credit Rating to 'BB-' --------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term counterparty credit rating on HealthSpring Inc. by one notch to 'BB-' from 'B+'. The outlook is stable. "The upgrade reflects our view that HealthSpring's credit profile has steadily strengthened as a result of strong business growth driven by organic growth and acquisitions, earnings that have consistently met or exceeded our expectations, and credit metrics that have improved as a result of debt repayment," said Standard & Poor's credit analyst James Sung. "We believe the company is well positioned for the post-reform Medicare environment because of key competitive competencies such as its focused coordinated-care plan strategy, good physician-engagement capabilities (facilitated by its management of independent physician associations), and an expanding clinical footprint. The upgrade also reflects our view that the company has managed its Bravo integration fairly well so far, and we do not foresee any operational disruptions at this time." Long-term rating upside will continue to be constrained by the company's concentration in government-funded business. The company has managed its business well through various legislative and economic cycles affecting the private Medicare market, but it still faces significant Medicare-related risks including: the unpredictable Medicare Advantage (MA) rate reimbursement environment, the planned implementation of a Medicare-specific medical loss ratio minimum in 2014, the still uncertain outcome of the Centers of Medicare and Medicaid Services' risk-adjustment data validation audits, and a bipartisan deficit commission that could look to make significant changes to the Medicare program. In addition, given the consolidating nature of the private Medicare market, HealthSpring will be challenged to maintain growth and compete for acquisition targets as it increasingly competes against larger, better-capitalized peers. Several execution risks with the Bravo integration remain, including the gradual integration of physician-engagement practices and the consolidation of claims systems and drug formularies. "The stable outlook reflects our expectation that HealthSpring will continue to manage its growth initiatives prudently and maintain its solid earnings profile. In the long term, we expect further credit strengthening if the company is successful in expanding its business scale and diversity. However, we believe that one of the company's key challenges is whether it can replicate its coordinated-care and physician-engagement model more broadly to new geographies and product lines (such as Medicaid and potentially the commercial space)," S&P stated. "Although unlikely based on results through June 2011, we could lower the ratings if the company's 2011 or 2012 operating results fall below expectations, or if key credit ratios deteriorate significantly. This would mean, outside of qualitative factors, a deterioration of the company's credit ratios to beyond what would be appropriate for the current rating. For example, our 'BB' rating category incorporates baseline target ranges of debt-to capital of 45%-65% and EBITDA interest coverage of at least 2x 3x," S&P said. HELLER EHRMAN: 8 Firms Agree to Pay $2.3MM Over Atty. Transfers --------------------------------------------------------------- Carolina Bolado at Bankruptcy Law360 reports that eight law firms agreed Tuesday to pay Heller Ehrman LLP $2.3 million to settle allegations that they benefited from improper business transfers when they snapped up attorneys from the defunct firm, which is currently in the process of liquidation in California bankruptcy court. Arnold & Porter LLP, Cooley LLP, Pillsbury Winthrop Shaw Pittman LLP, Proskauer Rose LLP, Hogan Lovells, WilmerHale, Patton Boggs LLP and Hafetz Necheles & Rocco agreed to pay a combined $2.26 million to resolve adversary actions that accused them of fraudulent transfer, according to Law360. About Heller Ehrman Headquartered in San Francisco, California, Heller Ehrman, LLP -- http://www.hewm.com/-- was an international law firm of more than 730 attorneys in 15 offices in the United States, Europe, and Asia. Heller Ehrman filed a voluntary Chapter 11 petition (Bankr. N.D. Calif., Case No. 08-32514) on Dec. 28, 2008. Members of the firm's dissolution committee led by Peter J. Benvenutti approved a plan dated Sept. 26, 2008, to dissolve the firm. The Hon. Dennis Montali presides over the case. Pachulski Stang Ziehl & Jones LLP assisted the Debtor in its restructuring effort. The Official Committee of Unsecured Creditors is represented by Felderstein Fitzgerald Willoughby & Pascuzzi LLP. The firm estimated assets and debts at $50 million to $100 million as of the Petition Date. According to reports, the firm had roughly $63 million in assets and 54 employees at the time of its filing. The Court confirmed Heller Ehrman's Plan of Liquidation in September 2010. HORIZON LINES: Amends Docs for $330MM Notes Exchange Offer ---------------------------------------------------------- Horizon Lines, Inc., filed on Sept. 26, 2011, an amendment to its Registration Statement on Form S-4 and an amendment to Schedule TO relating to its previously announced exchange offer and consent solicitation for its $330.0 million of existing unsecured 4.25% convertible senior notes. The exchange offer documents were revised in response to comments received by the Securities and Exchange Commission to (i) further clarify what exchange consideration holders of the 2012 convertible notes who are non U.S. citizens will receive and (ii) make other updating and conforming changes. The SEC is continuing to review the Company's Registration Statement on Form S-4 relating to the exchange offer and consent solicitation and has not yet declared the Registration Statement effective, which is a condition of the exchange offer, among others. As part of the exchange offer, the Company is also seeking consents from all holders of the 2012 convertible notes to remove substantially all of the restrictive covenants and certain events of default from the indenture governing the 2012 convertible notes. The Company and its advisors continue to work with the financial and legal advisors to the informal committee of noteholders to finalize the documentation and terms of the recapitalization plan, of which the exchange offer and consent solicitation are an integral part. The Company intends to complete the exchange offer of the existing 2012 convertible notes by the end of September, at which time it expects to close the entire refinancing. As discussed in the exchange offer documents, each participating holder in the exchange offer must state their U.S. citizenship by completing a questionnaire and certifying whether such holder is a U.S. citizen prior to the company accepting such holder's tender and consent of its 2012 convertible notes in the exchange offer. Each holder must provide the DTC Account Number of its custodian, the principal amount of notes tendered and the VOI number that relates to its tendering instructions. A holder can obtain the VOI number from its custodian. The completed questionnaire and any additional information, correspondence or requests for reconsideration of citizenship determination may be sent to the attention of Michael F. Zendan II, Senior Vice President, General Counsel and Secretary of Horizon Lines, Inc., who may be contacted by telephone at 704-973-7029, by fax at 704-973-7010, or by e-mail at MZendan@HorizonLines.com. The information and exchange agent for the exchange offer and consent solicitation is Global Bondholder Services Corporation. About Horizon Lines Charlotte, N.C.-based Horizon Lines, Inc. (NYSE: HRZ) is the nation's leading domestic ocean shipping and integrated logistics company. The Company owns or leases a fleet of 20 U.S.-flag containerships and operates five port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. The Company provides express trans-Pacific service between the U.S. West Coast and the ports of Ningbo and Shanghai in China, manages a domestic and overseas service partner network and provides integrated, reliable and cost competitive logistics solutions. The Company's balance sheet at June 26, 2011, showed $794.96 million in total assets, $793.45 million in total liabilities, and a stockholders' deficit of $1.51 million. The Company expects to experience a covenant breach under the Senior Credit Facility in connection with the amended financial covenants upon the close of the third fiscal quarter of 2011. As reported in the TCR on March 30, 2011, Ernst & Young LLP, in Charlotte, North Carolina, expressed substantial doubt Horizon Lines' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 26, 2010. The independent auditors noted that there is uncertainty that Horizon Lines will remain in compliance with certain debt covenants throughout 2011 and will be able to cure the acceleration clause contained in the convertible notes. * * * As reported by the TCR on Aug. 26, 2011, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Horizon Lines Inc. to 'SD' from 'CCC'. The rating action on Horizon Lines follow the company's decision to defer the interest payment on its $330 million senior convertible notes due August 2012, exercising the 30-day grace period. "Under our criteria, we view failure to make an interest payment within five business days after the due date for payment a default, regardless of the length of the grace period contained in an indenture," said Standard & Poor's credit analyst Funmi Afonja. HORIZON LINES: Extends Notes Exchange Offer to Oct. 3 ----------------------------------------------------- Horizon Lines, Inc., extended the expiration date for its previously announced exchange offer and consent solicitation until 5:00 p.m., New York City time, on Oct. 3, 2011. The offer is being extended in order to allow sufficient time to address certain important administrative matters. Additional time is needed for the company to verify the completed U.S. citizenship questionnaires it has received and to assist noteholders that have tendered their respective notes in fully completing the required U.S. citizenship questionnaires. The company intends to complete the exchange offer of the existing 4.25% Convertible Senior Notes due 2012 on or before Oct. 6, 2011, at which time it expects to close the entire refinancing. The exchange offer and consent solicitation had been scheduled to expire at 5:00 p.m., New York City time, on Sept. 27, 2011. As of the prior expiration date on Sept. 27, 2011, 99.3% of the $330.0 million aggregate principal amount of the 2012 convertible notes had been tendered into the exchange offer and consent solicitation. As part of the exchange offer, the company is also seeking consents from all holders of the existing 2012 convertible notes to remove substantially all of the restrictive covenants and certain events of default from the indenture governing the 2012 convertible notes. The company and its advisors continue to work with the financial and legal advisors to the informal committee of noteholders to finalize the documentation and terms of the recapitalization plan, of which the exchange offer and consent solicitation are an integral part. About Horizon Lines Charlotte, N.C.-based Horizon Lines, Inc. (NYSE: HRZ) is the nation's leading domestic ocean shipping and integrated logistics company. The Company owns or leases a fleet of 20 U.S.-flag containerships and operates five port terminals linking the continental United States with Alaska, Hawaii, Guam, Micronesia and Puerto Rico. The Company provides express trans-Pacific service between the U.S. West Coast and the ports of Ningbo and Shanghai in China, manages a domestic and overseas service partner network and provides integrated, reliable and cost competitive logistics solutions. The Company's balance sheet at June 26, 2011, showed $794.96 million in total assets, $793.45 million in total liabilities, and a stockholders' deficit of $1.51 million. The Company expects to experience a covenant breach under the Senior Credit Facility in connection with the amended financial covenants upon the close of the third fiscal quarter of 2011. As reported in the TCR on March 30, 2011, Ernst & Young LLP, in Charlotte, North Carolina, expressed substantial doubt Horizon Lines' ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 26, 2010. The independent auditors noted that there is uncertainty that Horizon Lines will remain in compliance with certain debt covenants throughout 2011 and will be able to cure the acceleration clause contained in the convertible notes. * * * As reported by the TCR on Aug. 26, 2011, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Horizon Lines Inc. to 'SD' from 'CCC'. The rating action on Horizon Lines follow the company's decision to defer the interest payment on its $330 million senior convertible notes due August 2012, exercising the 30-day grace period. "Under our criteria, we view failure to make an interest payment within five business days after the due date for payment a default, regardless of the length of the grace period contained in an indenture," said Standard & Poor's credit analyst Funmi Afonja. HOTEL NEVADA: Joint-Client Privilege Not Applicable to Trustee -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a lawyer who represented a company that went bankrupt and its non-bankrupt affiliates was compelled to turn over communications with the company's non-bankrupt principal. U.S. Bankruptcy Judge Bruce A. Markell from Las Vegas wrote a 24-page opinion this month in the Chapter 7 liquidation of Hotels Nevada LLC. Mr. Rochelle recounts that a year ago, Judge Markell cut the bankruptcy lawyers' fees by 95%, concluding that the bankruptcy lawyers' services primarily benefited non-bankrupt affiliates. The report relates that in the new case, the law firm that represented the company prior to bankruptcy refused to turn over communications with the bankrupt company, contending that the joint-client privilege precluded disclosure. In compelling the law firm to turn over communications with the non-bankrupt principal, Judge Markell said that the privilege didn't "override the responsibilities owed by the attorney to each client." Even if the trustee didn't succeed to the rights of the company itself to obtain communications with the lawyers, Judge Markell, according to the report, also ruled that the adversary exception applied, also requiring turnover. Judge Markell said that "when there is a contest between the parties who jointly received the communication, there is no confidentiality." About Hotels Nevada Hotels Nevada LLC sought Chapter 11 protection in 2009 (Bankr. D. Nev. Case No. 09-31131) after the company and a controlling officer were hit with a $141 million arbitration award.��Quarles & Brady prepared the Chapter 11 petition. Less than four months after the filing, the judge switched the case to Chapter 7.��In the course of converting the case, Judge Bruce Markell concluded that the Chapter 11 petition had not been filed in good faith. INNKEEPERS USA: Offers New Theory Forcing Cerberus to Buy --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Innkeepers USA Trust isn't giving up on the hope it can persuade the bankruptcy judge in New York to compel Cerberus Capital Management LP and Chatham Lodging Trust to complete a $1.12 billion acquisition of 64 hotels. If the sale isn't finished, Innkeeper's Chapter 11 reorganization plan may unravel, even though it was approved in a June confirmation order. Mr. Rochelle relates that Innkeepers sued at the end of August, asking the bankruptcy judge to compel the buyers to purchase the 64 hotels. In addition to contending they have an escape clause in the contract, Cerberus and Chatham point to a so-called liquidated damages clause, which they believe makes them liable for nothing beyond the loss of their $20 million deposit. From the outset of the lawsuit, Innkeepers has contended the judge can either compel the buyers to complete the sale or assess damages in excess of $20 million. In a revised complaint filed Wednesday, Innkeepers argued that the judge has the right to compel compliance with a confirmation order and thus may force the buyers to finish the acquisition. Absent settlement, a trial is set to be held Oct. 10 through 12. ��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). The two sides and Judge Shelley C. Chapman have agreed that a trial of the lawsuit could start on Oct. 10, which would necessitate the opening of the courthouse during the Columbus Day holiday. Innkeepers USA has won an extension until Nov. 10 of its exclusivity periods to file a plan free from the threat of a rival proposal.��Originally, Innkeepers was going to ask for an extension until Jan. 12 to file a plan and March 19 to solicit credit or votes on the proposal, but a lawyer said the company had scaled the request back to Nov. 10 and would come to court just before that if it needs more time. The lawsuit is INNKEEPERS USA TRUST, et al., v. CERBERUS SERIES FOUR HOLDINGS, LLC, CHATHAM LODGING TRUST, INK ACQUISITION LLC, AND INK ACQUISITION II LLC, Adv. Proc. No. Case No. 11-02557 (Bankr. S.D.N.Y.). Cerberus is represented by attorneys at Schulte Roth & Zabel LLP, in New York. Chatham is represented by Wachtell, Lipton, Rosen & Katz, in New York. ��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. JELD-WEN INC: Moody's Assigns B3 Rating to $450MM Secured Notes -------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to the proposed $450 million secured note offering of JELD-WEN, Inc., proceeds of which will be used to refinance existing debt. The B3 rating on these notes, which have been downsized from a previously proposed $575 million, will replace the previous B3 rating assigned to the company's earlier-proposed note offering. Moody's also affirmed the company's B3 corporate family rating. The rating outlook is stable. These rating actions were taken: B3 corporate family rating affirmed B3 probability of default rating affirmed B3 (LGD3, 47%) on the $450 million, second-lien senior secured notes due 2017 assigned B3 (LGD3, 45%) rating on previously announced second-lien senior secured notes due 2018 withdrawn RATINGS RATIONALE The B3 corporate family rating reflects JELD-WEN's weak end markets, elevated debt leverage, exposure to volatile raw materials' costs, and uncertainty with regard to its divestiture of non-core assets. At the same time, JELD-WEN's ratings acknowledge the company's strong worldwide market positions in doors and windows, its renewed focus on core operations, equity infusion from Onex Corporation, and extended maturity schedule. The stable rating outlook considers that end markets will probably bounce along the bottom rather than deteriorate, debt leverage will gradually be worked down, and that a successful divestiture of non-core assets will occur within the next one to two years, thereby freeing up management time and expense. The rating and/or outlook could come under pressure if end markets weaken further, liquidity becomes constrained, adjusted debt leverage and EBITA interest coverage remain over 7.0x and below 1.0x, respectively, for an extended period of time, and/or non core assets remain on the books for longer than two years. The rating and/or outlook could benefit if the company delevers rapidly, getting adjusted debt leverage below 5.0x and EBITA interest coverage above 2.0x; non-core asset disposition occurs rapidly and proceeds (before debt payment) exceed $200 million; and/or end markets begin to strengthen significantly. The senior secured notes due in 2016 are rated B3, the same as the corporate family rating. The notes will be fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by JELD-WEN Holdings, inc. (the company's parent) and by the company's existing and future domestic wholly owned restricted subsidiaries that guarantee the company's obligations under its new revolving credit facility. The guarantees of JW International Holdings, Inc. and JW Real Estate, Inc., and any future domestic subsidiaries that are holding companies of the company's foreign subsidiaries, will be limited to 65.0% of their assets. As at July 2, 2011, the company's nonguarantor subsidiaries accounted for approximately 61% of consolidated net sales and for approximately 61% of consolidated assets. The notes will also be secured by a second priority lien on substantially all of the assets of the company and its guarantor subsidiaries (other than non-core assets). In addition, the notes benefit from loss absorption provided by the company's junior capital, principally its $189 million bridge facility and its $700 million convertible preferred shares, funding for which comes from Onex Partners III LP, the proposed new equity investor in JELD-WEN. The notes are, however, junior to the new $300 million revolving credit facility, which Moody's does not rate, and to the debt and obligations of the company's nonguarantor subsidiaries. The principal methodology used in rating JELD-WEN 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. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies. JELD-WEN INC: S&P Raises Prelim. Corp. Credit Rating to 'B' ----------------------------------------------------------- Standard & Poor's Ratings Services upgraded Klamath Falls, Ore. based JELD-WEN Inc. to preliminary 'B' from preliminary 'B-'. The rating outlook is stable. "At the same time, we assigned a preliminary 'B-' issue-level rating (one notch below the corporate credit rating) to JELD-WEN's proposed $450 million senior secured notes due 2017, based on preliminary terms and conditions. The recovery rating is preliminary '5', indicating our expectation for modest (10% to 30%) recovery for lenders in the event of a payment default. At the same time we withdrew our preliminary ratings on JELD-WEN's previously proposed $575 million of senior secured notes," S&P related. The company intends to use the proceeds of the proposed notes to partially refinance its existing debts. In conjunction with this transaction, private equity firm Onex Corp. plans to invest $700 million in convertible preferred stock and $189 million in an 18 month bridge loan (also convertible into preferred convertible stock if not repaid before maturity) to complete the refinancing of existing debt of approximately $1.2 billion. "The rating and outlook incorporates our expectation that demand for JELD-WEN's window and door products, which the company sells primarily to residential end markets and account for approximately 90% of sales, will continue to face difficulties over the next several quarters as housing and remodeling markets remain near cyclically low levels," said Standard & Poor's credit analyst Thomas Nadramia. "We believe repair and replacement markets, which account for about 47% of JELD-WEN's sales, will be flat for the remainder of 2011. Weak housing markets in both the U.S. and Europe will likely continue to affect new residential construction, which accounts for 41% of JELD-WEN's worldwide sales." In the U.S., Standard & Poor's economists expect approximately 590,000 total housing starts for 2011, roughly the same as 2010 and still well below historical averages. The weakness in U.S. markets will be partially offset by better market conditions in Canada, Europe, and Australia, where JELD-WEN derives over 50% of its revenues. "We expect sales of the company's products related to commercial end markets in Europe, which represent about 12% of recent sales, to remain flat for the remainder of 2011 and into 2012," S&P stated. "Given these assumptions, we believe net sales could modestly increase in the low- to mid�single-digit area from the $3.1 billion realized for the year ended Dec. 31, 2010. We are forecasting adjusted EBITDA for 2011 will total about $150 million compared with adjusted EBITDA of about $170 million in 2010. Assuming some very modest recovery in housing starts, and achievement of cost cutting measures, we think EBITDA could increase to $175 million in 2012. Based on our 2012 forecast and assuming JELD-WEN completes it asset sales to retire the Asset Sale Bridge loan, leverage (including the convertible preferred stock) could be reduced to about 8x by 2013 while senior leverage could be reduced to about 4x or less. For this to occur, market conditions, particularly housing starts in the U.S., will need to improve well above current levels," S&P related. Since 2007 JELD-WEN's operating margins have been less than 5%, while free operating cash flow has been modest relative to sales levels. In response to the difficult operating conditions, JELD WEN has undertaken significant restructuring efforts to reduce costs and improve profitability, including reducing headcount by 25% and closing 21 facilities over the past three years. "The stable rating outlook reflects our expectation that JELD WEN's operating performance during the next several quarters will likely be flat to showing modest improvement, primarily thanks to internal cost saving measures, as we expect market conditions to remain weak. As a result, we expect credit measures to remain in line with the ratings given the company's weak business risk profile. We expect adjusted leverage to be about 10x over the next year based on adjusted EBITDA of about $150 million and cash interest coverage of about 2x. The stable rating outlook also reflects our expectation that liquidity will be adequate to meet all of the company's obligations over the next year, given the expected $50 million in pro forma cash as well as nearly full availability under its proposed $300 million revolving credit facility," S&P related. KOREA TECHNOLOGY: Proposes Durham Jones as Counsel -------------------------------------------------- Korea Technology Industry America Inc. and its debtor-affiliates ask the Hon. R. Kimball Mosier of the U.S. Bankruptcy Court for the District of Utah for permission to employ Durham Jones & Pinegar as their counsel. Steven J. McCardell, Esq., and Kenneth L. Cannon II, Esq., will each bill $360 per hour for this engagement. The Debtors assure the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. 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. The Debtors listed US$35,246,360 in assets and US$38,751,528 in debts. Proofs of claim are due by Oct. 15 and government proofs of claim are due by Feb. 18, 2012. KOREA TECHNOLOGY: Has Deal on Sale of Mining Property ----------------------------------------------------- Korea Technology Industry America, Inc. et al., ask the U.S. Bankruptcy Court for the District of Utah to approve a stipulation regarding the turnover of certain property; approval of DIP financing and sale of the "mining property." The stipulation was entered among the Debtors, Tar Sands Holdings, LLC, Western Energy Partners, LLC, and Elgin Services Company, Inc., which provides for, among other things: -- sale of the Mining Property, and other property of the Debtors to Rutter and Wilbanks Corporation, with the intent that the sale close not later than June 30, 2012, subject to force majeure; -- an observation committee will be established in cooperation with Rutter and Wilbanks Corporation, including representatives of R&W and creditors, to observe and review the ongoing status of work by R&W on the Mining Property; -- the parties will submit to the Court a motion seeking the appointment of an examiner selected by TSH, with fees and costs of the examiner approved by the Court to be advanced by Western and Elgin, and directing the examiner to file with the Court a report not later than 60 days from the date of the examiner's appointment; -- TSH will file with the Court and the U.S. Trustee, and submit to the examiner, a complete list of receipts and disbursements made by TSH at any time; -- the Debtors will submit to the Court a motion for the sale of the sale property, on notice to parties-in-interest seeking approval of the sale of property of the Debtors by the closing date; -- as part of its due diligence and as a condition to closing any sale, R&W intends to advance funds in the amount of approximately $5 million for the completion and commissioning of the Debtors' facility on the Mining Property; In the event the turnover motion has not been mooted by reconveyance by TSH, the Parties request that the Court hear the turnover motion on Sept. 29, at 2:00 p.m. The Parties further request that the Court schedule the DIP Financing Motion for immediately after conclusion of the hearing on the turnover motion. A full-text copy of the stipulation is available for free at: http://bankrupt.com/misc/KOREATECHNOLOGY_stipulation.pdf Tar Sands Holdings, LLC and Western Energy Partners, LLC are represented by: Robert S. Prince, Esq. KIRTON & McCONKIE 60 E. South Temple, Suite 1800 Salt Lake City, UT 84111 Tel: (801) 328-3600 Fax: (801) 321-4893 E-mail: rprince@kmclaw.com Tar Sands Holdings, LLC and Elgin Services Company, Inc. are represented by: Darwin H. Bingham, Esq. SCALLEY READING BATES HANSEN & RASMUSSEN 15 West South Temple, Suite 600 Salt Lake City, Utah 84101 Tel: (801) 531-7870 Fax: (801) 326-4669 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 disclosed $35,246,360 in assets and $38,751,528 in liabilities as of the Chapter 11 filing. Proofs of claim are due by Oct. 15 and government proofs of claim are due by Feb. 18, 2012. L-3 COMMS: Fitch Affirm Rating on Sr. Subordinated Debt at 'BB+' ---------------------------------------------------------------- Fitch Ratings has affirmed the 'BBB-' Issuer Default Ratings (IDR) and debt ratings for L-3 Communications Holdings, Inc. (L-3) and L-3 Communications Corporation. The Rating Outlook is Stable. Approximately $4.1 billion of outstanding debt is covered by these ratings. The senior subordinated ratings remain one notch below L-3's IDR and senior unsecured debt due to contractual subordination. Key factors that support the ratings include L-3's solid credit metrics, liquidity position, and Fitch's expectation of steady operating margins and substantial free cash flow (FCF; cash from operations less capital expenditures and dividends) which totaled $1 billion for the last 12 months (LTM) ended July 1, 2011. Other positive factors include high levels of defense spending; L-3's diverse portfolio of products and services that are in line with the Department of Defense (DoD) requirements; and a balanced contract mix. Fitch's concerns include L-3's cash deployment strategy, which includes a focus on acquisitions and share repurchases; Fitch's expectation that L-3's credit metrics will slightly deteriorate following the completion of the previously announced spin-off of a part of its Government Services businesses; and U.S. government budget deficits and the potential impact on defense spending after fiscal year (FY) 2012. Fitch's other concerns include the underfunded pension position totaling $780 million (67% funded status) as of Dec. 31, 2010, most of which will stay with L-3 after the spin-off. The longer-term outlook for supplemental DoD budgets related to operations in Iraq and Afghanistan remain a modest concern, but will lessen because of the amount of related revenues that will be a part of the spin-off. Future Rating Actions: Fitch may consider a positive rating action should L-3 improve its credit profile by moderating its acquisition and shareholder friendly cash deployment strategies in the form of share repurchases and dividends. A negative rating action may be considered if L-3 completes a large debt-funded acquisition which results in weakening of L-3's credit profile. A negative action is also possible should there be a dramatic change in U.S. defense spending policies. Announced Spin-off: On July 28, 2011, L-3 announced plans to spin-off a part of its Government Services segment. Fitch believes the spin-off will be neutral to L-3's ratings despite a modest deterioration in the pro forma credit metrics. L-3 could receive a sizable dividend from the transaction, and some concerns about exposure to declining DoD supplemental budgets will be lessened. The spin-off, to be named Engility, represents approximately $2 billion of estimated 2011 revenues or approximately 55% of the Government Services segment, and the transaction should be completed in the first half of 2012. Engility's business is expected to account for less than 13% of L 3's revenues and approximately 9%-11% of EBITDA and FCF in 2011. Although Fitch expects a slight deterioration of L-3's credit metrics after the spin-off, the company's credit profile will still be solid for the existing 'BBB-' rating, with leverage (gross debt to EBITDA) estimated to be in the range of 2.1 times (x) - 2.3x compared to leverage of approximately 1.9x as of July 1, 2010. The deterioration in leverage is expected to be offset by an increase in liquidity as L-3 will receive a cash distribution which the company initially estimates could be in the $500 million to $650 million range. Liquidity: The company's liquidity as of July 1, 2011 was $1.5 billion, consisting of $989 million of credit facility availability (expiring in October 2012) and $548 million in cash and short-term investments. The company has no debt maturities from 2011 to 2014. The next material debt maturity is $1 billion in 2015. Leverage: L-3's leverage for the LTM at the end of the first half 2011 was approximately 1.9x. As of Dec. 31, 2010, L-3's leverage was 1.9x compared to 2.0x and 2.3x in 2009 and 2008, respectively. Interest coverage increased from 7.5x in 2009 to 8.2x in 2010 due to 5.7% growth in EBITDA as EBITDA margins rose in 2010 to 14.1% from 13.4% in 2009. Fitch expects leverage to slightly increase in 2012, following the spin-off of Engility, however, the company's credit metrics will remain solid for the ratings. Cash Flows: L-3 has generated strong FCF through strong operating performance, working capital management, and acquisitions. In the LTM, ending in the second quarter of 2011, the company generated $1 billion of FCF. L-3 also reported $1.1 billion FCF in both 2010 and 2009. L 3's FCF benefits from low capital expenditures as a percentage of sales; it has averaged 1.3% of sales between 2006 and 2010. Fitch expects 2011 FCF after dividends to be approximately $1.1 billion. Cash Deployment: Historically, the company has directed cash to acquisitions, share repurchases and dividends. Fitch's rating and Outlook incorporate Fitch's expectations of small- to medium-sized acquisitions and meaningful cash deployment toward shareholders which totaled approximately $541 million in the first half of 2011 with $15 million utilized for acquisitions, $429 million for share repurchases and $97 million in dividend payments. Fitch expects to see a total of $800 million and $190 million spent on share repurchases and dividends in 2011, respectively. Over the past three years, L-3 contributed $415 million to its pension plans, with $186 million contributed in 2010. The company expects to contribute approximately $185 million to its pension plans in 2011. Fitch does not expect to see debt reduction become a priority for L-3, although the company has indicated it is committed to maintaining its investment grade credit rating. Pension Analysis: At the end of 2010, L-3's pension plan was 67% funded, or $780 million underfunded. Its other post-employment benefit (OPEB) plan is small (only $203 million benefit obligation) and was underfunded by $164 million. Fitch considers future pension contributions to be manageable due to strong FCF. Defense Spending: L-3 generated 83.4% of its revenues in 2010 from the U.S. Government including 76.1% from the DoD, and the company is highly exposed to the DoD budget. High levels of defense spending currently support L-3's ratings, however, the DoD budget is highly uncertain after FY2012 because of large U.S. government budget deficits and their potential impact on defense spending. The FY2012 DOD budget request earlier this year showed continued growth in the base budget (excluding war spending), but there are recent indications that the actual budget enacted could be flat compared to FY2011. There have been several deficit reduction plans proposed this year for spending beyond FY2012, most of which include $350 billion -$400 billion of reduced DoD growth over 10 11 years. The potential for up to $600 billion of additional automatic cuts to security expenditures as part of the recent Budget Control Act of 2011 adds to the spending uncertainty. Fitch estimates that $350 billion-$400 billion of reductions over 10-11 years would reduce DoD base spending by several percentage points on an inflation-adjusted basis, a level Fitch believes would not affect L-3's credit quality unless its cash deployment policies became more aggressive. Additional cuts well beyond the $350 billion-$400 billion level could affect L-3's credit profile, but the actual impact would depend on the timing and magnitude of the cuts, as well as the amount of growth realized in non-US markets. If cuts were spread out or weighted toward the end of the period, L-3 would likely have time to adjust its cost base to the lower revenue levels. In addition, L-3 is well positioned to reduce its debt and pension obligations if necessary to maintain its investment grade credit rating. Fitch affirms L-3's ratings as follows: L-3 Communications Holdings, Inc. -- Issuer Default Rating (IDR) at 'BBB-'; -- Contingent convertible subordinated notes at 'BB+'. L-3 Communications Corporation -- IDR 'BBB-'; -- Senior unsecured notes at 'BBB-'; -- Senior unsecured revolving credit facility at 'BBB-'; -- Senior subordinated debt at 'BB+'. LACKAWANNA COUNTY: Moody's Cuts General Obligation Rating to Ba3 --------------------------------------------------------------- Moody's Investors Service has downgraded to Ba3 from Baa1 the rating on Lackawanna County's (PA) $202.7 million of outstanding general obligation bonds. The rating remains under review for downgrade or withdrawal. The county's outstanding general obligation bonds are secured by an unlimited property tax pledge. SUMMARY RATING RATIONALE The downgrade to Ba3 from Baa1 reflects significant and rapid deterioration in the county's financial position, resulting in growing fiscal distress that will require deficit financing to cure a steeply growing negative General Fund balance following several years of persistent operating deficits. The county faces additional risk in its ability to refinance outstanding general obligation tax and revenue anticipation notes (TRANs) maturing in December 2011 requiring market access to secure deficit financing necessary for repayment of the TRANs. Moody's ongoing review will focus on the viability of the county's deficit recovery plan, the sizeable near-term deficit finance borrowing, as well as management's success in attaining revenue increases and expenditure cuts. The review will also focus on the county's ability to manage counterparty and liquidity risks related to its single remaining series of variable rate demand bonds and associated basis swap. Moody's is also reviewing the county's rating for possible withdrawal due to insufficient information, given a history of delayed financial reporting and inaccurate estimates, including severe negative discrepancies between county unaudited reporting of its fiscal 2009 results and audited financial statements released in late July 2011. The county expects to release its fiscal 2010 audited financial statements in October; further delay in the audited results, or inability of the county to verify cash balances as the TRAN repayment date rapidly approaches, is likely to result in Moody's withdrawal of the rating due to lack of information. STRENGTHS: - Large and diverse $8.7 billion tax base - Wealth levels that approximate the national averages CHALLENGES: - Strained financial condition reflected in negative General Fund balance - Persistent, multi-year trend of structural imbalance - Weak near-term liquidity position - Above-average debt burden and debt servicing costs - Execution challenges of deficit recovery plan and near-term note maturity WHAT COULD MOVE THE RATING - UP (Unlikely given the review for possible downgrade): - Stabilization of the county's financial position and achievement of structural balance - Steady and sustained improvement in the county's reserve and liquidity position - Ending reliance on one-time revenue sources and improved financial reporting WHAT COULD MOVE THE RATING -- DOWN: - Inability to secure deficit funding necessary to repay cash flow borrowing - Failure to stabilize the county's financial position and achieve structural balance - Failure to mitigate significant expenditure pressures and generate higher recurring revenues The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. LEHMAN BROTHERS: Former Exces Look to Settle California Lawsuit --------------------------------------------------------------- Daily Bankruptcy Review reports that Former Chief Executive Dick Fuld and other ex-Lehman Brothers Holdings Inc. executives struck a deal to settle securities fraud lawsuit brought by six California municipalities who pumped $35 million into the investment bank in the two years leading up to its failure. 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) LIBBEY INC: Won't Renew Exec. Officers' Employment Agreements ------------------------------------------------------------- Pursuant to the terms of the Amended and Restated Employment Agreements, dated as of Dec. 31, 2008, between Libbey Inc. and certain individuals, including Gregory T. Geswein, Daniel P. Ibele, Richard I. Reynolds and Roberto B. Rubio, the Company provided notice of non-renewal of the Employment Agreements, and, consequently, the term of the Employment Agreements will expire on Dec. 31, 2011. In addition, on Sept. 22, 2011, pursuant to the terms of the amended and restated change in control agreements, dated as of Dec. 31, 2008, between the Company and certain individuals, including the Named Executive Officers, the Company provided notice of non-renewal of the Change in Control Agreements, and, consequently, the term of the Change in Control Agreements will expire on Dec. 31, 2011. The Company intends to enter into a new form of employment agreement, which will include change in control provisions, with those officers of the Company who are currently parties to the Employment Agreements, including the Named Executive Officers, and a new form of change in control agreement with those individuals who are currently parties to the Change in Control Agreements, but are not parties to the Employment Agreements. The new employment agreements and change in control agreements will be effective Jan. 1, 2012. About Libbey Inc. Based in Toledo, Ohio, since 1888, Libbey, Inc., operates glass tableware manufacturing plants in the United States in Louisiana and Ohio, as well as in Mexico, China, Portugal and the Netherlands. Libbey supplies tabletop products to foodservice, retail, industrial and business-to-business customers in over 100 countries. The Company's balance sheet at June 30, 2011, showed $815.25 million in total assets, $767.39 million in total liabilities and $47.85 million in total shareholders' equity. * * * On Oct. 28, 2009, Libbey restructured a portion of its debt by exchanging the old 16% Senior Subordinated Secured Payment-in- Kind Notes due December 2011 of subsidiary Libbey Glass Inc., having an outstanding principal amount as of October 28, 2009, of $160.9 million for (i) $80.4 million principal amount of new Senior Subordinated Secured Payment-in-Kind Notes due 2021 of Libbey Glass, and (ii) 933,145 shares of common stock and warrants exercisable for 3,466,856 shares of common stock of Libbey Inc. On Feb. 8, 2010, Libbey used the proceeds of a $400.0 million debt offering of 10.0% Senior Secured Notes due 2015 of Libbey Glass Inc., as well as cash on hand, to (i) repurchase the $306.0 million then outstanding Floating Rate Senior Secured Notes due 2011 of Libbey Glass, (ii) repay the $80.4 million New PIK Notes and (iii) pay related fees and expenses. Concurrent with the closing of the offering of the Senior Secured Notes, Libbey entered into an amended and restated $110 million Asset Based Loan facility which, among other terms, extended the maturity date to 2014. As reported by the TCR on Aug. 9, 2011, Standard & Poor's Ratings Services raised its corporate and senior secured debt ratings on Toledo, Ohio-based Libbey Inc. to 'B+' from 'B'. The rating outlook is stable. "The upgrade and stable outlook reflect our belief that Libbey will sustain its improved profitability and credit measures and maintain its adequate liquidity position," said Standard & Poor's credit analyst Rick Joy. LOS ANGELES DODGERS: Fox Files Lawsuit to Block TV Rights Sale -------------------------------------------------------------- Fox Sports moved to upend the Los Angeles Dodgers' plan to sell the team's future broadcast rights to pay off creditors. Fox Sports Net West 2 LLC, which operates as FSN Prime Ticket, launched an adversary proceeding against the Major League Baseball team seeking an injunction under the terms of a 2001 telecast rights agreement, According to Bankruptcy Law360. The Dodgers also asked a Delaware bankruptcy judge to postpone a hearing on a motion by Major League Baseball aimed at forcing a sale of the team, Randall Chase at The Associated Press reports. In asking for an Oct. 12 hearing on their motion to end the Debtors' exclusive rights to propose a plan, MLB league attorneys said Mr. McCourt was driving the team to destruction and using the Chapter 11 case to try to resolve his own personal financial problems. They simultaneously filed court papers seeking to disqualify the Dodgers' bankruptcy attorneys, saying they have been working to advance the interests of McCourt instead of the interests of the team, the report relates. The report says attorneys for the Dodgers fired back, accusing the league of engaging in "heavy handed" and "abusive" litigation tactics to try to cripple the team's reorganization efforts, which center on an auction of the television rights to future games. The Dodgers' attorneys asked the judge to hold a telephone conference Sept. 28, 2011, on their request to postpone a hearing on the league's motion to force a sale. They argued that the hearing should be delayed until after the judge hears arguments on MLB's motion to disqualify the Dodgers attorneys and after the team gets the information it needs from the league to challenge the arguments MLB is making in trying to force a sale. The report says Bruce Bennett, Esq., an attorney for the Dodgers, said the team has been trying to work cooperatively with the league, including in filing its motion for approval of a media rights sale process. That motion is also scheduled to be heard at the Oct. 12 hearing. TV Rights Sale Bud Selig, the commissioner of Major League Baseball, filed a request to disqualify Dodgers' two law firms -- Dewey & LeBoeuf LLP and Young Conaway Stargatt & Taylor LLP -- due to conflict of interest. In addition, he wants the right to file a Chapter 11 plan and sell the team out from underneath the current owner, Frank McCourt, whom he characterizes as "cash strapped."��Both requests are scheduled for hearing on Oct. 12, the same day the team has a motion on the bankruptcy court's calendar to sell broadcast rights for the 2014 season and beyond. The Los Angeles Dodgers baseball club announced mid-September that the team is abandoning the pre-bankruptcy agreement for a 14 year extension of the existing television rights contract with Fox Entertainment Group Inc.��The Debtors are asking permission from the court to auction rights to broadcast 150 games beginning with the 2014 season. Mr. Selig is asking the bankruptcy court to force Los Angeles Dodgers Inc. owner Frank McCourt to sell the team, saying Mr. McCourt's plan to keep the team and raise money by auctioning television rights would harm all MLB clubs. About Los Angeles Dodgers Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a professional Major League Baseball club in the Los Angeles metropolitan area. Frank McCourt, a Boston real-estate developer who unsuccessfully bid for the Boston Red Sox, bought the Dodgers from Rupert Murdoch's Fox Entertainment Group, Inc. in 2004 for $330 million. Mr. McCourt also bought the Dodgers Stadium from Fox for $100 million. Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB Commissioner Bud Selig rejected a television deal with News Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for June 30 and July 1. Fox Sports has exclusive cable television rights for Dodgers games until the end of 2013 baseball season. Chapter 11 filings were also made for LA Real Estate LLC, an affiliated entity which owns Dodger Stadium, and three other related holding companies. The petition estimates assets of up to $500 million and debts of up to $1 billion. In its schedules, the LA Dodgers baseball club listed $77,963,734 in assets and $4,695,702 in liabilities. LA Real Estate LLC listed $161,761,883 in assets and $0 in liabilities. According to Forbes, the team is worth about $800 million, making it the third most valuable baseball team after the New York Yankees and the Boston Red Sox. Judge Kevin Gross presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the Debtors' bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Public relations specialist Kekst and Company has been hired for crisis support. Covington & Burling LLP serves as special counsel. Deloitte & Touche LLP serve as independent auditors. An official committee of unsecured creditors has been appointed in the case. The panel has tapped Lazard Freres & Co. as financial adviser and investment banker, and Morrison & Foerster LLP and Pinckney, Harris & Weidinger, LLC as counsel. Ticket holders are seeking the appointment of their own committee. The LA Dodgers is the 12th sports team in North America to have sought bankruptcy protection, according to The Wall Street Journal. The reorganization is being financed with a $150 million unsecured loan from the Commissioner of Major League Baseball. The loan gives the Commissioner few of the controls lenders often demanded from bankrupt companies. LOS ANGELES DODGERS: Asks for Delay on MLB Plea vs. Exclusivity --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Los Angeles Dodgers baseball club is asking the bankruptcy judge to delay a hearing on the motion by Major League Baseball Commissioner Bud Selig for permission to file a Chapter 11 plan so the team could be sold out from underneath the current owner, Frank McCourt. Mr. Selig filed two motions on Sept. 23, the first to end the team's exclusive right to file a plan and the second to disqualify the two law firms representing the Dodgers. The report relates that on Sept. 27, the team responded with a request to delay the exclusivity motion until 60 days after he rules on whether the laws firms should be disqualified. Currently, the commissioner's motions are both on the bankruptcy court calendar for hearing on Oct. 12. The team says they need time to perform an investigation into the commissioner's grounds for attempting to end the Dodgers' plan-filing exclusivity. According to the report, turning the tables on the commissioner, the team intends on investigating whether Mr. Selig was in good faith when he says he would disapprove any sale of television broadcasting rights beginning with the 2014 season. Similarly, the Dodgers intend to investigate whether the commissioner violated the team's rights when he nixed an extension of the television agreement before the Chapter 11 filing. The Dodgers, the report discloses, also want time to investigate whether the commissioner is correct in contending that the existing franchise with Major League Baseball is incapable of being assumed on account of breaches that allegedly can't be cured. In mid-September the team filed papers designed to set up an auction and sale procedure for telecasting rights beginning in 2014. The hearing on the sale-procedure motion is set for Oct. 12, the same day when the commissioner has his motions on the calendar to end exclusivity and disqualify the team's two law firms, Dewey & LeBoeuf LLP and Young Conaway Stargatt & Taylor LLP. ��About the Los Angeles Dodgers Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a professional Major League Baseball club in the Los Angeles metropolitan area.��Frank McCourt, a Boston real-estate developer who unsuccessfully bid for the Boston Red Sox, bought the Dodgers from Rupert Murdoch's Fox Entertainment Group, Inc. in 2004 for $330 million.��Mr. McCourt also bought the Dodgers Stadium from Fox for $100 million. Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB Commissioner Bud Selig rejected a television deal with News Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for June 30 and July 1.��Fox Sports has exclusive cable television rights for Dodgers games until the end of 2013 baseball season. Chapter 11 filings were also made for LA Real Estate LLC, an affiliated entity which owns Dodger Stadium, and three other related holding companies. The petition estimates assets of up to $500 million and debts of up to $1 billion.��In its schedules, the LA Dodgers baseball club listed $77,963,734 in assets and $4,695,702 in liabilities.��LA Real Estate LLC listed $161,761,883 in assets and $0 in liabilities. According to Forbes, the team is worth about $800 million, making it the third most valuable baseball team after the New York Yankees and the Boston Red Sox. Judge Kevin Gross presides over the case.��Lawyers at Young, Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the Debtors' bankruptcy counsel.��Epiq Bankruptcy Solutions LLC is the claims and notice agent.��Public relations specialist Kekst and Company has been hired for crisis support.��Covington & Burling LLP serves as special counsel. An official committee of unsecured creditors has been appointed in the case.��The panel has tapped Lazard Freres & Co. as financial adviser and investment banker, and Morrison & Foerster LLP and Pinckney, Harris & Weidinger, LLC as counsel. Ticket holders are seeking the appointment of their own committee. The LA Dodgers is the 12th sports team in North America to have sought bankruptcy protection, according to The Wall Street Journal. The reorganization is being financed with a $150 million unsecured loan from the Commissioner of Major League Baseball.��The loan gives the Commissioner few of the controls lenders often demanded from bankrupt companies. LOWER BUCKS: Amends Plan, Bondholders to Recover 35% of Claims -------------------------------------------------------------- Lower Bucks Hospital and Lower Bucks Health Enterprises, Inc., filed with the U.S. Bankruptcy Court for the Eastern District of Pennsylvania a first amended plan of reorganization and an accompanying disclosure statement on Sept. 27. The Plan is centered around a settlement of the litigation between LBH and The Bank of New York Mellon Trust Company, N.A, as Bond Trustee, regarding several issues, including whether the Bond Trustee, on behalf of the holders of bonds, holds a secured claim against LBH, as opposed to a claim that is secured. According to the Debtors, the settlement gives bondholders a significantly greater recovery than the recovery that will be realized under the Plan by other creditors. Whereas General Unsecured Creditors are expected to realize an approximately 18.5% recovery, bondholders will receive a recovery of approximately 35%. The Plan also provides for payment in full of all Allowed Priority Claims, Secured Claims and Administrative Claims, and provides Allowed General Unsecured Claims a distribution that includes certain Guaranteed Cash and a Creditor Note to be issued under the Plan. The funds required for the initial distributions under the Plan are to come from a monetization of LBH's table gaming grants, through the issuance of the 2011 bonds, a mortgage loan secured by Enterprises, and certain cash contributions from the Debtors. The Plan also contemplates the issuance of a creditor note, and other post-confirmation payments to creditors. A full-text copy of the First Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?7711 About Lower Bucks Hospital Bristol, Pennsylvania-based Lower Bucks Hospital is a non-profit hospital based in Bristol, Pennsylvania. The Hospital is currently licensed to operate 183 beds. Together with affiliates Advanced Primary Care Physicians and Lower Bucks Health Enterprises, Inc., Lower Bucks owns a 36-acre campus with several medical facilities. The Hospital's emergency room serves approximately 30,000 patients annually. For the fiscal year ending June 30, 2009, Lower Bucks had $114 million in consolidated revenues. The Hospital filed for Chapter 11 bankruptcy protection (Bankr. E.D. Pa. Case No. 10-10239) on Jan. 13, 2010. The Hospital's affiliates -- Lower Bucks Health Enterprises, Inc, and Advanced Primary Care Physicians also filed Chapter 11 petitions. Jeffrey C. Hampton, Esq., and Adam H. Isenberg, at Saul Ewing LLP, assist the Hospital in its restructuring effort. Donlin, Recano & Company, Inc., is the Hospital's claims and notice agent. The Debtors tapped Zelenkofske Axelrod LLC for the provision of tax preparation services. The Hospital estimated assets and liabilities at $50 million to $100 million. M3 ENERGY: North American Resumes Operations at Gem #2 Mine ----------------------------------------------------------- North American Gem Inc. reports that it has resumed mining operations at the North American Gem #2 Mine. Reclamation and production equipment is currently being mobilized to the mine site. Under an Agreed Order with the U.S. Bankruptcy Court, NAG has recently been granted relief to replace M3 Energy Resources, LLC, who were listed as operators at the North American Gem #2 Mine in December 2010. "We are pleased to finally be able to move past the operating complications that were inhibiting production at the North American Gem #2 Mine," stated Charles Desjardins, President of North American Gem Inc. "We are looking forward to concentrating on maximizing the Company's assets in Kentucky." North American Gem Inc. is a Junior Exploration Company based in Western Canada. The Company's primary goal is to explore for Coal in North America, currently the focus is in Kentucky, Saskatchewan, and West Virginia. In addition to Coal exploration, the Company also has interests in Uranium, Copper, Gold, Molybdenum and other base metals in Canada. M3 Energy Resources LLC filed for Chapter 11 protection (Bankr. E.D. Ky. Case No. 11-60480) on March 31, 2011, in London, Kentucky. M3, based in San Diego, produces coal near Manchester, Kentucky. It was formed in July through asset acquisitions from four sellers. M WAIKIKI: Marriott Supports Panel's Cash Collateral Objection -------------------------------------------------------------- Marriott Hotel Services, Inc., a creditor of M Waikiki LLC notifies the U.S. Bankruptcy Court for the District of Hawaii that it joins in the Official Committee of Unsecured Creditors' objection to Debtor's emergency motion for authorization to obtain postpetition secured indebtedness. As reported in the Troubled Company Reporter on Sept. 28, 2011, the Official Committee of Unsecured Creditors opposed the Debtor's motion for postpetition financing. The Committee said, among others, that the Debtor's unsecured creditors will benefit little if at all, and "face the daunting prospect of being primed by an ever increasing DIP Facility that will undoubtedly be required to finance this case even for the short term." A copy of the Committee's opposition to the Debtor's motion is available for free at: http://bankrupt.com/misc/mwaikiki.dktno.103.pdf Marriot relates that the Debtor, in its DIP Motion, failed to make the requisite evidentiary showing under Section 364 of the Bankruptcy Code that, among other things, it was unable to obtain alternative sources of postpetition financing on more favorable terms. Marriott also seeks clarification with respect to the replacement liens, the Debtor seeks to grant to the Indenture trustee and the subordinated lender in connection with Debtor's proposed use of cash collateral. Marriott requests that the Court continue the final hearing so that Marriott and other creditors will have an opportunity to conduct discovery with respect to the issues disputed herein, or, in the alternative, condition the approval of the DIP Motion. According to the minutes of hearing held on Sept. 26, 2011: -- the Court, at Marriott's request and agreed to by the Debtor's counsel, moved the Oct. 3 hearing to Oct. 5, with briefing schedule to move with the new hearing date; and -- the hearing on the Debtor's request for authority to pay prepetition GE taxes and transient accommodation taxes is continued until Oct. 13, at 2:00 p.m., pursuant to an agreement. About M Waikiki M Waikiki owns the Modern Honolulu, a world-class, luxury hotel property located close to Waikiki Beach in Hawaii. The hotel is being managed by Modern Management Services LLC, an affiliate of Aqua Hotels and Resorts. M Waikiki is a Hawaii limited liability company with its principal place of business located in San Diego, California. It is a special purpose entity, having roughly 75 indirect investors, which was formed to acquire the Hotel. The Company filed for Chapter 11 protection (Bankr. D. Hawaii Case No. 11-02371) on Aug. 31, 2011. Judge Robert J. Faris presides over the case. Patrick J. Neligan, Esq., and James P. Muenker, Esq., at Neligan Foley, LLP, in Dallas; and Simon Klevansky, Esq., Alika L. Piper, Esq., and Nicole D. Stucki, Esq., at Klevansky Piper, LLP, in Honolulu, Hawaii, represent the Debtor. The Debtor estimated $100 million to $500 million in both assets and debts. Modern Management is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC. Marriott Hotel Services, which used to provide management services, is represented by Susan Tius, Esq., at Rush Moore LLP LLP, and Carren B. Shulman, Esq., at Sheppard Mullin Richter & Hampton LLP. The Official Committee of Unsecured Creditors retained Wagner Choi & Verbrugge as its counsel. MANISTIQUE PAPERS: Court Approves Tilly Virchow as Accountant ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Manistique Papers Inc. to employ Baker Tilly Virchow Krause, LLC, as its accountant. As reported in the Troubled Company Reporter on Sept. 21, 2011, the Debtor needs Baker Till to: -- work with the Debtor on preparation of tax returns and related materials; -- assist the Debtor in connection with any audits; -- advise the Debtor in connection with valuation of its assets; and -- take all necessary steps and provide consulting services appropriate to the Debtor's efforts to maximize the value of its assets and estate. The Debtor disclosed that it last paid Baker Tilly $1,500 in connection with its work. The Debtor says it is not indebted to Baker Tilly for any prepetition work; however, Baker Tilly has performed $6,596 of work which remains in progress and will come due in the course of the Debtor's bankruptcy case. Baker Tilly will charge the Debtor for its consulting services on an hourly basis in accordance with its ordinary and customary hourly rates in effect on the date that the services are rendered. Baker Tilly employees bill their services at rates currently ranging from $125 to $310 per hour. The hourly rate of Chad O'Brien and William Wong, who will serve as the principals on this engagement, is $310. In addition, the Debtor asks that approval to reimburse Baker Tilly for its out-of-pocket expenses for rendering its services. The Debtor asserted that Baker Tilly is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Manistique Papers Manistique Papers Inc. operates a landfill in Manistique, Michigan, whereby residuals resulting from paper production are deposited. Manistique Papers filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-12562) on Aug. 12, 2011. Daniel B. Butz, Esq., and Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, serves as the Debtor's bankruptcy counsel. Manistique Papers estimated assets of $10 million to $50 million and debts of $50 million to $100 million in its Chapter 11 petition. MANISTIQUE PAPERS: Committee Taps Ashby & Geddes as Del. Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Manistique Papers Inc. asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Ashby & Geddes P.A. as its Delaware counsel. The firm will charge the Debtor's estates based on the hourly rates of its professionals: Professional Position Hourly Rate ------------ -------- ----------- William P. Bowden Member $620 Amanda M. Winfree Associate $375 Leigh-Anne M. Raport Associate $290 Cathie McCloskey Paralegal $180 The Committee assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Manistique Papers Manistique Papers Inc. operates a landfill in Manistique, Michigan, whereby residuals resulting from paper production are deposited. Manistique Papers filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-12562) on Aug. 12, 2011. Daniel B. Butz, Esq., and Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, serves as the Debtor's bankruptcy counsel. Manistique Papers estimated assets of $10 million to $50 million and debts of $50 million to $100 million in its Chapter 11 petition. MANISTIQUE PAPERS: Court Okays Vector Consulting as Fin'l Advisor ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Manistique Papers Inc. to employ Vector Consulting, L.L.C., as its financial advisor. As the Debtor's financial advisor, Vector Consulting will: (a) assist the Debtor in preparation of cash flow and financial projections; (b) advise the Debtor in connection with any disposition of its assets; (c) advise the Debtor with respect to its financial relationship with creditors; and (d) take all necessary steps and provide consulting services appropriate to the Debtor's efforts to maximize the value of its assets and estate. The Debtor will pay Michael Baratta, who will serve as the principal on this engagement, his hourly rate of $285. The Debtor will also reimburse Vector Consulting for expenses incurred. The Debtor disclosed that it paid Vector Consulting a prepetition retainer of $18,000 for consulting services in connection with the Chapter 11 case. In August 2011, Vector Consulting returned $13,317 of the advance after an invoice totaling $4,682 for payment of services rendered and expenses incurred up to the Petition Date. The Debtor has also paid Vector Consulting after the Petition Date $13,317. Mr. Baratta insisted that Vector Consulting is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. About Manistique Papers Manistique Papers Inc. operates a landfill in Manistique, Michigan, whereby residuals resulting from paper production are deposited. Manistique Papers filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-12562) on Aug. 12, 2011. Daniel B. Butz, Esq., and Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, serves as the Debtor's bankruptcy counsel. Manistique Papers estimated assets of $10 million to $50 million and debts of $50 million to $100 million in its Chapter 11 petition. MANISTIQUE PAPERS: Seeks Permission to Access $5-Mil. DIP Loan -------------------------------------------------------------- Manistique Papers, Inc., seeks permission from the U.S. Bankruptcy Court for the District of Delaware to enter into a first priority senior secured multiple draw term credit facility in an aggregate principal amount of $5 million, bearing an interest rate of The Wall Street Journal Prime Rate, plus 1.00%. The DIP loan will be provided by mBank, with participation by the State of Michigan's Michigan Strategic Fund. Upon interim authority from the Court, the Debtor is entitled to draw up to $2 million under the DIP Facility and the remaining amounts available upon final authority from the Court. The DIP Lender will be granted postpetition first priority liens on unencumbered assets of the Debtor, priming liens on collateral securing the Debtor's $1.1 million Prepetition Loan from RBS Citizens National Association, and superpriority administrative expense claims. The Debtor tells the Court that it needs the DIP financing to prevent the conversion of its bankruptcy case to Chapter 7, and to fund a restart of its manufacturing operations. Without the DIP Facility, the Debtor does not have access to sufficient capital to operate. About Manistique Papers Manistique Papers Inc. operates a landfill in Manistique, Michigan, whereby residuals resulting from paper production are deposited. Manistique Papers filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-12562) on Aug. 12, 2011. Daniel B. Butz, Esq., and Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Timothy F. Nixon, Esq., and Carla O. Andres, Esq., at Godfrey & Kahn, S.C., serve as the Debtor's bankruptcy counsel. Manistique Papers estimated assets of $10 million to $50 million and debts of $50 million to $100 million in its Chapter 11 petition. MANISTIQUE PAPERS: Has Authority to Use Cash Collateral ------------------------------------------------------- Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware authorized Manistique Papers, Inc., to use cash collateral securing its prepetition indebtedness. The Debtor will make interest payments calculated at the highest stated Wall Street Journal prime rate plus 1% (with a floor of 4.25%) calculated based on actual/360-day year. A full-text copy of the Cash Collateral Order is available for free at http://ResearchArchives.com/t/s?7712 About Manistique Papers Manistique Papers Inc. operates a landfill in Manistique, Michigan, whereby residuals resulting from paper production are deposited. Manistique Papers filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-12562) on Aug. 12, 2011. Daniel B. Butz, Esq., and Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Timothy F. Nixon, Esq., and Carla O. Andres, Esq., at Godfrey & Kahn, S.C., serve as the Debtor's bankruptcy counsel. Manistique Papers estimated assets of $10 million to $50 million and debts of $50 million to $100 million in its Chapter 11 petition. MICROSEMI CORP: Moody's Lowers CFR to 'Ba2'; Outlook Stable ----------------------------------------------------------- Moody's Investors Service downgraded Microsemi Corporation's Corporate Family (CFR) and existing senior secured credit facilities ratings to Ba2 from Ba1, the Probability of Default Rating (PDR) to Ba3 from Ba2 and the Speculative Grade Liquidity Rating to SGL-2 from SGL-1. The rating outlook is stable. RATINGS RATIONALE The rating revision to Ba2 primarily reflects Microsemi's more aggressive use of debt to pursue a comparatively large-sized acquisition. Microsemi's financial risk profile has increased, reflected by the company's willingness to aggressively use debt to acquire all of the outstanding shares of Zarlink Semiconductor Inc. ("Zarlink") for approximately $617 million (includes Zarlink's cash of about $107 million). Microsemi will fund the $617 million purchase price ($510 million, net of Zarlink's cash) by upsizing its existing term loan to $800 million (from $375 million) and using about half of its cash. Moody's estimates Microsemi's pro forma total debt to EBITDA (Moody's adjusted) will increase to roughly 4.2x (from 2.5x as of July 3, 2011), which should then decline to the 3.5x level by the end of fiscal 2012 from expansion in Microsemi's EBITDA. Zarlink's products are complementary to Micorsemi's portfolio and diversify its product offering in timing and synchronization semiconductors for wireless communication networks as well as wireless medical devices. Nonetheless, Microsemi is adding $425 million of debt to finance the Zarlink purchase, very shortly after incurring $375 million of debt to purchase Actel last November. The company seems to have effectively met its financial targets for the Actel acquisition and the integration appears to be progressing on plan. However, Zarlink occupies different end markets and is somewhat larger, which could make its integration more complex. Moody's believes Microsemi could seek other sizable targets to expand into higher growth semiconductor end markets, which may result in future debt funded acquisitions and increased integration risk. Prior to Zarlink and Actel (which together will more than double Microsemi's revenue base), most of Microsemi's acquisitions were relatively small and funded entirely with cash, which facilitated a debt-free balance sheet. The Ba2 rating level reflects Microsemi's revised acquisition and financing strategy, along with the competitive challenges and volatility associated with the semiconductor business. Microsemi's Ba2 CFR takes into account the company's strong market position across its high-performance analog (HPA) and mixed-signal portfolio, plus its high-margin business model and robust cash flow generation from its mostly fabless operating model. Microsemi focuses on long product life-cycle HPA semiconductors, and has well-diversified IC portfolio in which the company is the only (or principal) supplier. The stable rating outlook reflects Microsemi's increasing end market diversification, and Moody's expectation that the company will continue to move up the value chain by increasing board-level and system-level IC content in its customers' electronic system platforms. The revision of the Speculative Grade Liquidity Rating to SGL-2 is driven by a relatively modest amount of committed bank revolver, a $50 million revolving credit facility maturing 2015. The revolver is small relative to potential seasonal working capital needs given the company's increasing size. The SGL-2 is supported by Moody's expectation of free cash flow generation in the range of $80 to $100 million over the next twelve months and cash balances of at least $150 million. It is unlikely Microsemi's ratings could be upgraded over the near-to-intermediate term given the company's increasingly aggressive financial posture. However, longer-term an upgrade could occur if Microsemi exhibited more prudent financial policies (i.e., avoided debt-funded acquisitions) combined with free cash flow to debt (Moody's adjusted) of at least 20% and adjusted total debt to EBITDA below 2.5x on a sustained basis. Ratings could be downgraded if Microsemi experienced market share erosion, revenue contraction or average selling price pressure as a result of loss of technological leadership, integration challenges from acquisitions, as well as reduced profitability resulting in adjusted EBITDA margins below 20% on a sustained basis. Adjusted free cash flow to debt below 10% or adjusted total debt to EBITDA above 4x for an extended episode could also result in negative ratings pressure. Rating Actions: Corporate Family Rating to Ba2 from Ba1 Probability of Default Rating to Ba3 from Ba2 $50 Million Senior Secured Revolver due November 2015 to Ba2 (LGD 3, 34%) from Ba1 (LGD-3, 32%) $800 Million Senior Secured Term Loan B due February 2018 to Ba2 (LGD-3, 34%) from Ba1 (LGD-3, 32%) Speculative Grade Liquidity Rating to SGL-2 from SGL-1 Microsemi upsized its term loan to $800 million (from $375 million) and extended the maturity three months to February 2018 (from November 2017). Term loan proceeds will be used to finance the purchase of Canadian-based Zarlink for $617 million. With LTM 6/30/2011 revenues and EBITDA of $227 million and $38 million, respectively, Zarlink supplies chips to the wireless communications network and medical markets. The assigned ratings are subject to review of final documentation and no material change in the terms and conditions of the transaction as advised to Moody's. The principal methodology used in rating Microsemi Corporation was the Global Semiconductor Industry 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 (and/or) the Government-Related Issuers methodology published in July 2010. Microsemi, headquartered in Aliso Viejo, CA, is a global supplier of high-performance analog (HPA) and mixed signal integrated circuits as well as high-reliability discrete semiconductors targeted to the defense & security, aerospace, enterprise & communication and industrial & alternative energy end markets. Revenues and EBITDA (Moody's adjusted) for the twelve months ended July 3, 2011 were $760 million and $167 million, respectively. NEBRASKA BOOK: Hires Deloitte Tax as Tax Services Providers ----------------------------------------------------------- Nebraska Book Company Inc. asks permission from the U.S. Bankruptcy Court for the District of Delaware to employ Deloitte Tax LLP as tax service providers. The Debtors have agreed to pay Deloitte Tax an estimated $102,360 plus reasonable expenses, consistent with the terms of the parties' Engagement Letter. Additional state tax returns may be prepared at a rate of approximately $420 to $630 per return. Additional fees may be incurred in connection with consulting services to be performed. The firm's rates are: Personnel Rates --------- ----- Partner, Principal, or Director/Specialist $365-$ 515/hour Partner $365/hour Director $330/hour Senior Manager $275/hour Manager $245/hour Senior $210/hour Associate $195/hour Christopher Kopiasz, tax director at Deloitte, attests that (a) Deloitte Tax is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy Code and does not hold or represent an interest adverse to the Debtors' estates; and (b) Deloitte Tax has no connection to the Debtors, their creditors, or other significant parties as were identified by the Debtors and whose names were provided to Deloitte Tax. About Nebraska Book Company Lincoln, Nebraska-based Nebraska Book Company, Inc., is one of the leading providers of new and used textbooks for college students in the United States. Nebraska Book and seven affiliates filed separate Chapter 11 petitions (Bankr. D. Del. Case Nos. 11-12002 to 11-12009) on June 27, 2011. Hon. Peter J. Walsh presides over the case. Lawyers at Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones LLP, serve as the Debtors' bankruptcy counsel. The Debtors; restructuring advisors are AlixPartners LLC; the investment bankers are Rothschild, Inc.; the auditors are Deloitte & Touche LLP; and the claims agent is Kurtzman Carson Consultants LLC. As of the Petition Date, the Debtors had consolidated assets of $657,215,757 and debts of $563,973,688. JPMorgan Chase Bank N.A., as administrative agent for the DIP lenders, is represented by lawyers at Richards, Layton & Finger, P.A., and Simpson Thacher & Bartlett LLP. J.P. Morgan Investment Management Inc., the DIP arranger, is represented by lawyers at Bayard, P.A., and Willkie Farr & Gallagher LLP. An ad hoc committee of holders of more than 50% of the Debtors' Second Lien Notes is represented by lawyers at Brown Rudnick. An ad hoc committee of holders of the Debtors' 8.625% unsecured notes are represented by Milbank, Tweed, Hadley & McCloy LLP. The Official Committee of Unsecured Creditors selected Lowenstein Sandler LLP and Stevens & Lee, P.C., as lawyers and Mesirow Financial Inc. as financial advisers. Nebraska Book prepared a pre-packaged Chapter 11 plan that would swap some of the existing debt for new debt, cash and the new stock. NEUROLOGIX INC: Extends M. During Consulting Pact to 2012 --------------------------------------------------------- Neurologix, Inc., on Sept. 26, 2011, entered into a letter agreement with Matthew J. During, M.D., D.Sc. The Letter Agreement amends that certain Consulting Agreement, dated as of Oct. 1, 1999, by and between the Company and During, as amended. The Letter Agreement extends the term of the Consulting Agreement from Sept. 30, 2011, to Sept. 30, 2012. Dr. During is one of the Company's scientific co-founders and a member of its Scientific Advisory Board. A copy of the Letter Agreement is available for free at: http://is.gd/ZG4ARL About Neurologix, Inc. Fort Lee, N.J.-based Neurologix, Inc. (OTC Bulletin Board: NRGX) -- http://www.neurologix.net/-- is a clinical-stage biotechnology company dedicated to the discovery, development, and commercialization of gene transfer therapies for serious disorders of the brain and the central nervous system. The Company's current programs address such conditions as Parkinson's disease, epilepsy, depression and Huntington's disease, all of which are large markets not adequately served by current therapeutic options. The Company reported a net loss of $10.16 million on $0 of revenue for the year ended Dec. 31, 2010, compared with a net loss of $13.46 million on $0 of revenue during the prior year. The Company's balance sheet at June 30, 2011, showed $4.96 million in total assets, $13.62 million in total liabilities, and a $8.66 million total stockholders' deficit. BDO USA, LLP, in New York, raised substantial doubt about the Company's ability to continue as a going concern. BDO noted that the Company has suffered recurring losses from operations, expects to incur future losses for the foreseeable future and has deficiencies in working capital and capital. NEWFIELD EXPLORATION: Moody's Assigns Ba1 Rating to Senior Notes --------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to the $500 million of senior notes being offered by Newfield Exploration Company (Newfield). The proceeds of the note offering are expected to be used to initially pay down a portion of the debt outstanding under the company's senior unsecured credit agreement. In addition, Moody's affirmed the Corporate Family Rating of Ba1, the Probability of Default Rating of Ba1, and the senior subordinated note rating of Ba2. A Speculative Grade Liquidity Rating of SGL-2 was assigned. The rating outlook remains stable. RATING RATIONALE Newfield's credit fundamentals remain unchanged after the senior note offering. The company has a good mix of producing properties, low-risk development locations, and exploration potential. The company is positioned for sustained organic growth supported by a diverse portfolio of investment opportunities. The transition to becoming a more oily company appears to be on track although cost inflation in 2011 has contributed to weaker operating margins than what was originally anticipated. In addition, debt financed investments have out-paced production increases in the first half of 2011, which has led to an increase in debt to proved developed reserves and debt to average daily production. As of June 30, 2011, the ratio of debt to proved developed reserves stood at $8.40 per BOE and debt to average daily production totaled $23,100 per BOE. However, Moody's expects this increase in leverage to be temporary and should reverse once the drilling results for 2011 begin to get reflected in Newfield's reported production and in reserve bookings. "Overall, we believe Newfield's credit position continues to improve," said Stuart Miller, Moody's Vice President - Senior Analyst. "However, a material increase in scale, or a meaningful reduction in leverage is necessary before we believe Newfield merits a rating upgrade from its current level." While Newfield's credit is on an improving trend, Moody's stable outlook reflects an expectation that its leverage and scale will likely not improve sufficiently to warrant a rating upgrade in the next 12 to 18 months. Given the scale of Newfield, a positive rating action would require leverage below $6 per BOE of proved developed reserves and debt to average daily production under $17,000 per BOE. A negative rating action is possible if debt to average daily production approaches $30,000 per BOE or debt to proved developed reserves increases to $11 per BOE. To arrive at the Ba1 rating for the new notes, Moody's elected to override Moody's Loss Given Default Methodology which would assign a Baa3 rating to the senior notes driven by the credit support provided by the company's existing senior subordinated notes. However, over time Moody's believes that Newfield will refinance the senior subordinated notes with senior notes eliminating this credit support. Therefore, looking forward, Moody's believes it is more appropriate to assign a Ba1 rating to the senior notes, a level that is consistent with Newfield's Corporate Family Rating. Newfield has good liquidity, and therefore Moody's has assigned a Speculative Grade Liquidity Rating of SGL-2. Moody's expects Newfield to fund most, if not all, of its capital expenditures out of internally generated cash flow through mid-2012. Asset sales and availability under a $1.25 billion unsecured revolving credit facility, estimated to be at least $675 million after the senior note offering, could be used to cover any shortfall. The principal methodology used in rating Newfield Exploration was the Independent Exploration and Production (E&P) Industry Methodology published in December 2008 and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Newfield Exploration Company is based in The Woodlands, Texas. NEWFIELD EXPLORATION: S&P Assigns Rating to Sr. Unsecured Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' issue-level rating (same as the corporate credit rating) to Newfield Exploration Co.'s proposed $500 million senior unsecured notes due 2022. The notes will be senior to the company's existing senior subordinated notes, but will be structurally subordinated to all obligations at the subsidiary level. "Newfield's subsidiaries currently carry no debt, and we do not believe their priority liabilities (primarily trade receivables) create a material disadvantage for the issuer," S&P stated. Newfield plans to use proceeds from the proposed notes offering to partially repay outstanding balances under its revolving credit facility. As of June 30, 2011, the company had $720 million drawn on its revolver. The 'BBB-' corporate credit rating and stable outlook on Houston based crude oil and natural gas exploration and production company Newfield reflect the company's intermediate financial profile and satisfactory business profile. "The ratings also reflect our view that natural gas prices will remain weak over the next six to 12 months because of the significant growth in supply combined with flat demand. For the complete corporate credit rating rationale, see our full analysis on Newfield published June 30, 2011," S&P stated. Ratings List Newfield Exploration Co. Corporate Credit Rating BBB-/Stable/-- Subordinated BB+ New Rating $500 mil sr unsecd nts due 2022 BBB- NEWLEAD HOLDINGS: Engages in Constructive Dialogue With Lenders --------------------------------------------------------------- Given the "going concern" considerations, NewLead Holdings Ltd. has commenced efforts to restructure our debt and capital structure. NewLead is engaged in a constructive dialogue with its lenders aimed at developing a plan to improve the Company's liquidity and operating flexibility while developing a sustainable capital structure in view of the prolonged challenging market conditions. The Company appointed Moelis & Company and Fried, Frank, Harris, Shriver & Jacobson LLP as its advisors to assist in this restructuring process. The Company is seeking waivers from its lenders to various restrictive covenants and an agreement that they will forbear from exercising remedies under their respective debt arrangements. The Company is optimistic that it will reach an agreement with its lenders on the waivers of defaults and on the terms of the restructuring of the Company's indebtedness, but no assurances can be provided that these agreements will be successfully concluded or at all. A full text copy of the company's financial results is available free at: http://ResearchArchives.com/t/s?7710 About NewLead Holdings NewLead Holdings Ltd. -- http://www.newleadholdings.com-- is an international, vertically integrated shipping company that owns and manages product tankers and dry bulk vessels. NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels of which two are newbuildings. N ewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. NORTHCORE TECHNOLOGIES: Launches 'Discount This' Platform --------------------------------------------------------- Northcore Technologies Inc. and Discount This Holdings Inc. announced the launch of the Discount This social commerce platform. The debut of the Discount This group buying platform marks Northcore's initial entry into the burgeoning social commerce arena. It also represents a significant new deployment of the proprietary and patent protected Dutch Auction process and associated technology. In a market segment pioneered by companies like Groupon and Living Social and crowded with a series of "me too" offerings, this launch signifies an important evolution of the model. Participants become members who are rewarded for "socializing the deal" and will ultimately increase the value proposition for all purchasers. Subscribers are also able to take part in exciting Dutch Auction events where prices descend as the deal time expires. "We are excited about the launch of the Discount This platform," said Amit Monga, CEO of Northcore Technologies. "We consider this a key milestone in our thrust to solidify our position as a leading provider of social commerce environments." Companies interested in exploring opportunities in social commerce should contact Northcore at 416-640-0400 or 1-888-287-7467, extension 395 or via email at GoSocial@northcore.com. About Northcore Toronto, Ontario-based Northcore Technologies Inc. (TSX: NTI; OTC BB: NTLNF) -- http://www.northcore.com/-- provides a Working Capital Engine(TM) that helps organizations source, manage, appraise and sell their capital equipment. Northcore offers its software solutions and support services to a growing number of customers in a variety of sectors including financial services, manufacturing, oil and gas and government. Northcore owns 50% of GE Asset Manager, LLC, a joint business venture with GE. Together, the companies work with leading organizations around the world to help them liberate more capital value from their assets. Northcore reported a net loss for the first quarter of C$574,000. This compares with a net loss of C$677,000 in the fourth quarter of 2010. In the first quarter of 2010, Northcore reported a net loss of $713,000. Northcore reported consolidated revenues of C$183,000 for the first quarter, an increase of 4% over the C$176,000 reported in the fourth quarter of 2010. In the same period of 2010, Northcore reported consolidated revenues of C$150,000. Certain adverse conditions and events cast substantial doubt upon the ability of the Company to continue as a going concern, the Company said in the filing. "The Company has not yet realized profitable operations and has relied on non-operational sources of financing to fund operations." The Company's balance sheet at June 30, 2011, showed C$1.39 million in total assets, C$1.33 million in total liabilities and C$61,000 in total shareholders' equity. PALM HARBOR: Plan Set for Nov. 17 Confirmation ---------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Palm Harbor Homes Inc. sold the assets to Fleetwood Enterprises Inc. in April for $83.9 million and scheduled a Nov. 17 confirmation hearing to approve a Chapter 11 plan. The bankruptcy court in Delaware approved the explanatory disclosure statement on Sept. 27. The disclosure statement projects that holders of 3.25% convertible senior notes will recognize a recovery between 16.7% and 21% on their $54.8 million in claims. General unsecured creditors with $36.4 million to $47.3 million in claims will receive an identical recovery. BankruptcyData.com reports that Palm Harbor Homes filed with the U.S. Bankruptcy Court a Second Amended Disclosure Statement related to its Chapter 11 Plan of Liquidation, filed Aug. 5, 2011. According to the Disclosure Statement, "Because substantially all of the Debtors' assets were sold as part of the Sale Transaction to the Purchaser, the Plan provides for the formation of the Post Consummation Trust that will administer the Post-Consummation Trust Assets in accordance with the terms of the Plan. The Proponents believe that the Plan provides the best recoveries possible for Holders of Allowed Claims and strongly recommend that, if such Holders are entitled to vote, they vote to accept the Plan." ��About Palm Harbor Homes Addison, Texas-based Palm Harbor Homes, Inc. -- http://www.palmharbor.com/�--manufactured and marketed factory- built homes.��The Company marketed nationwide through vertically integrated operations, encompassing manufactured and modular housing, financing and insurance. Palm Harbor, along with affiliates, filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 10-13850) on Nov. 29, 2010.��It disclosed $321,263,000 in total assets and $280,343,000 in total debts. Brian Cejka at Alvarez & Marsal is the Debtors' chief restructuring officer.��Raymond James and Associates, Inc., is the Debtors' investment banker.��Alvarez & Marshal North America, LLC, is the Debtors' financial advisor.��BMC Group, Inc., is the Debtors' claims agent.��Pachulski Stang Ziehl & Jones LLP serves as counsel to the Official Committee of Unsecured Creditors. Following a court-approved sale process, Palm Harbor in March 2011 sold its business for $85.25 million to Fleetwood Enterprises Inc., a venture between Cavco Industries Inc. and a fund advised by Third Avenue Management LLC.��Fleetwood is providing up to $55 million in secured financing for Palm Harbor's reorganization. PAT & OSCAR'S: Declining Sale Cues Chapter 7 Bankruptcy Filing -------------------------------------------------------------- Nation Restaurant News reports that Pat & Oscar's filed for Chapter 7 bankruptcy, closing the three remaining corporate locations on Friday. According to the report, the San Diego area-based fast-casual chain has struggled with declining sales for several years, despite attempts to revive the brand, including the debut of a new prototype location last year. Company officials stated that management has been working very hard to streamline operations in recent months in an attempt to return to profitability. "However, we discovered that, while these efforts were important and necessary, they were not going to be sufficient to save our parent company," the Company said. The report notes that the Sept. 21 filing comes only two years after Pat & Oscar's was acquired in a management buyout lead by industry veterans John Kaufman and Tim Foley in 2009. Pat & Oscar's -- http://www.breadstick.com/-- operates chain of restaurants in Southern California. PERKINS & MARIE: Court Approves Causes of Action Motion ------------------------------------------------------- BankruptcyData.com reports that the U.S. Bankruptcy Court approved Perkins & Marie Callender's official committee of unsecured creditors' motion for an order authorizing the committee to initiate, prosecute and settle any claims or causes of action on behalf of and for the benefit of the Debtors' estates against certain parties who hold claims against the Debtors. The Company had previously filed with the Court a response to the motion: "Accordingly, the Debtors have no objection to the relief requested by the Committee, and believe that it is in the best interests of the Debtors, their creditors and estates, and within the equitable powers of this Court, that this Court permit the committee the relieve requested in the UCC Motion." About Perkins & Marie Callender's Based in Memphis, Tennessee, Perkins & Marie Callender's Inc., fka The Restaurant Company, is the owner or franchiser of nearly 600 family-dining restaurants, the Perkins Restaurants and Marie Callender's. Perkins & Marie and several affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 11-11795) on June 13, 2011. Perkins & Marie disclosed $290 million in assets and $441 million in debt as of the Chapter 11 filing. Judge Kevin Gross presides over the case. Robert S. Brady, Esq., and Robert F. Poppiti, Jr., Esq., at Young, Conaway, Stargatt & Taylor, LLP; and Mitchel H. Perkiel, Esq., Hollace T. Cohen, Esq., and Brett D. Goodman, Esq., at Troutman Sanders, LLP, serve as bankruptcy counsel. The Debtors' financial advisors are Whitby, Santarlasci & Company. Their claims agent is Omni Management Group, LLC. Deloitte Tax LLPserves as tax services provider. DIP lender Wells Fargo is represented by lawyers at Paul, Hastings, Janofsky & Walker LLP. Roberta A. Deangelis, U.S. Trustee for Region 3, appointed seven unsecured creditors to serve on the Official Committee of Unsecured Creditors in the Debtors' cases. Ropes & Gray LLP represents the Committee. POINT BLANK: Gores Group Cuts Offer for Body-Armor Business ----------------------------------------------------------- The lead bidder for Point Blank Solutions Inc.'s assets is dropping its offer by one-third after taking a closer look at the body-armor business. BankruptcyData.com reports that Point Blank filed with the U.S. Bankruptcy Court an amended motion for an order approving bid procedures for the sale of substantially all of the Debtors' assets related to the operation of their bullet, fragmentation and stab resistant apparel manufacturing business. The Debtor has a deal to sell the business to Gores' Barrier Acquisition, absent higher and better bids at an auction. According to BankruptcyData, the material changes to the terms in the original agreement are a reduction in the amount of the purchase price (before working capital adjustments) from $30 million to $20 million, a reduction of the benchmark for the working capital adjustment from $30 million to $25 million, a decrease in the amount of the break-up fee from $750,000 to $500,000 and the amount of the expense reimbursement from $350,000 to $250,000 and the elimination of the requirement that the sale order be a final order as a condition to closing of the proposed sale. 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. POINT BLANK: Proposes to Sell Non-Bullet Proof Fabric ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Point Blank Solutions Inc. is selling 155,000 pounds of Zylon, a fiber used to make bullet-proof vests that didn't stop bullets. If the bankruptcy judge in Delaware goes along with the idea at an Oct. 12 hearing, company will sell the material to whomever makes an acceptable offer, assuming the creditors' committee doesn't object. Point Blank is selling the material "without representations or warranties of any kind." Mr. Rochelle relates that the Company is stuck in Chapter 11 given an inability to reach agreement with the official equity committee on a plan. To break the log jam, Point Blank filed papers in August for authority to sell the business for $30 million, subject to adjustment for working capital, assuming no better offer turns up at auction. The so-called stalking horse buyer is an affiliate of the Gores Group LLC from Boulder, Colorado. The bankruptcy court originally scheduled a hearing in mid September to consider approving bidding procedures. The hearing has been pushed back and is currently on the calendar for Oct. 5. 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. QUIGLEY CO: Asbestos Plaintiffs Pursue Pfizer for $10 Million ------------------------------------------------------------- Richard Vanderford at Bankruptcy Law360 reports that a law firm for people suffering asbestos-related injuries on Wednesday asked the Second Circuit to let them pursue about $10 million in claims against Pfizer Inc., whose bankrupt subsidiary Quigley Co. made asbestos-laden insulation. Attorney Jeffrey Jonas, who represents the firm Law Offices of Peter G. Angelos, told the appeals panel that Pfizer can be held liable for Quigley's wrongdoing under a Pennsylvania tort law called Section 400 that says plaintiffs can bring product liability suits against any company that places its logo on a defective product, Law360 relates. About Quigley Co. Quigley Co. was acquired by Pfizer in 1968 and sold small amounts of products containing asbestos until the early 1970s. In September 2004, Pfizer and Quigley took steps that were intended to resolve all pending and future claims against the Company and Quigley in which the claimants allege personal injury from exposure to Quigley products containing asbestos, silica or mixed dust. Quigley filed for bankruptcy in 2004 and has a Chapter 11 plan and a settlement with Chrysler. Quigley filed for Chapter 11 bankruptcy protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it disclosed $155,187,000 in total assets and $141,933,000 in total debts. QWEST CORP: S&P Keeps 'BB' Corp. Credit Rating; Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' issue-level rating and '1' recovery rating to Qwest Corp.'s $950 million of senior notes due 2021. "The '1' recovery rating indicates our expectation for very high (90% to 100%) recovery in the event of payment default. The company intends to use proceeds from the notes, along with net proceeds of $557 million from its recent issuance of notes due 2051, to redeem the $1.5 billion of notes due 2012. Qwest Corp. is a subsidiary of Monroe, La.-based telecommunications carrier CenturyLink Inc.," S&P said. The long-term corporate credit rating on CenturyLink is unchanged at 'BB' and the rating outlook remains stable. The rating reflects significant competition in its core consumer wireline phone business from cable telephony and wireless substitution; Standard & Poor's expectation for continued revenue declines because of ongoing access-line losses, which were about 7.4% annually during the second quarter of 2011, pro forma for the Qwest acquisition; integration risk related to the Qwest and Savvis acquisitions; and an aggressive shareholder-oriented financial policy with a substantial dividend payout, which limits debt reduction. Tempering factors include a favorable market position as the third-largest incumbent wireline carrier in the U.S., solid operating margins and free cash flow generation, modest growth in high-speed data services, which helps mitigate revenue declines from access-line losses, and geographic diversity. "We consider the financial risk profile significant, with pro forma adjusted leverage of about 3x as of June 30, 2011. Our leverage calculation includes the pending acquisition of Savvis and other adjustments, including the present value of operating leases and unfunded postretirement obligations. (For the complete corporate credit rating rationale, see the research update on CenturyLink, published June 9, 2011, on RatingsDirect on the Global Credit Portal.)," S&P said Ratings List CenturyLink Inc. Corporate Credit Rating BB/Stable/-- New Ratings Qwest Corp. Senior Secured $950 mil. nts due 2021 BBB- Recovery Rating 1 R&G FINANCIAL: Court Approves Disclosure Statement -------------------------------------------------- Judge Enrique S. Lamoutte Inclan of the U.S. Bankruptcy Court for the U.S. Bankruptcy Court for the District of Puerto Rico approved the disclosure statement explaining R&G Financial Corporation's Chapter 11 plan of liquidation. The Plan provides that all of the Debtor's assets will be transferred to, and vest in, Liquidating RGFC. The Plan provides for the appointment of Clifford Zucker, CPA, as the plan administrator and Wilmington Trust Company as the plan consultant to oversee the activities of liquidating RGFC. Under the Plan, holders of general unsecured claims, which claims are estimated to range between $10.9 and $15.4 million, will recover 0.30% to 2.3% of their allowed claim. Holders of Subordinated note claims, which claims are estimated at approximately $385 million, will also recover 0.30% to 2.3% of their allowed claim. Secured claims and priority claims not filed by the Federal Deposit Insurance Corporation will get 100% of their total allowed amount. Non-FDIC Priority Claims are estimated to range between $350,000 and $900,000. A full-text copy of the Disclosure Statement, dated Sept. 6, is available for free at http://ResearchArchives.com/t/s?770e About R&G Financial San Juan, Puerto Rico-based R&G Financial Corporation was the direct parent of R-G Premier Bank of Puerto Rico, a state- chartered nonmember bank, through which RGFC primarily conducted its business. The Company filed for Chapter 11 bankruptcy protection (Bankr. D. P.R. Case No. 10-04124) on May 14, 2010. Brent R. McIlwain, Esq., Robert W. Jones, Esq., Esq., at Patton Boggs LLP, in Dallas; and Jorge I. Peirats, Esq., at Pietrantoni, Mendez & Alvarez, in Hato Rey, P.R., serve as the Debtor's bankruptcy counsel. The Debtor disclosed US$40,213,356 in assets and US$420,687,694 in debts as of the Petition Date. REDDY ICE: Receives Non-Compliance Notice from NYSE --------------------------------------------------- Reddy Ice Holdings, Inc., had been notified by NYSE Regulations, Inc., that it is not in compliance with one of the continued listing standards of the New York Stock Exchange. Reddy Ice is considered below the continued listing criteria established by the NYSE because the Company's total market capitalization has been less than $50 million over a consecutive 30 trading-day period and its last reported shareholders' equity was less than $50 million. In accordance with NYSE procedures, Reddy Ice has 45 days from the receipt of the notice to submit a plan to the NYSE demonstrating how it intends to comply with the NYSE's continued listing standards within 18 months. Upon receipt of the Company's plan, the NYSE will review and determine whether the Company has made a reasonable demonstration of its ability to come into conformity with the relevant standards within the 18 month period. The NYSE will either accept the plan, at which time the Company will be subject to ongoing monitoring for compliance with this plan, or the NYSE will not accept the plan and the Company will be subject to suspension and delisting proceedings. As required by the NYSE's rules, the Company plans to notify the NYSE within 10 days of receipt of the non-compliance notice of the Company's intent to submit a plan to remedy its non-compliance. The Company's common stock remains listed on the NYSE under the symbol "FRZ," but will be assigned a ".BC" indicator by the NYSE to signify that the Company is not currently in compliance with the NYSE's continued listing standards. The Company is required to maintain compliance with other applicable NYSE continued listing requirements, including the minimum global market capitalization standard, which requires the Company to maintain an average global market capitalization of at least $15 million over a consecutive 30 trading-day period. Failure to maintain compliance with this requirement would result in the NYSE promptly initiating suspension and delisting procedures. On Sept. 26, 2011, Reddy Ice's common stock had a closing price of $1.63 per share, equating to a market capitalization of approximately $38.1 million. About Reddy Ice Reddy Ice Holdings, Inc. -- http://www.reddyice.com/-- manufactures and distributes packaged ice in the United States. The company serves variety of customers in 31 states and the District of Columbia under the Reddy Ice brand name. Reddy Ice reported a net loss of $32.50 million on $315.45 million of revenue for the year ended Dec. 31, 2010, compared with net income of $14.30 million on $312.33 million of revenue during the prior year. The Company's balance sheet at June 30, 2011, showed $476.62 million in total assets, $546.36 million in total liabilities and a $69.73 million total stockholders' deficit. * * * Reddy Ice carries 'B-' issuer credit ratings, with "negative" outlook, from Standard & Poor's. As reported by the Troubled Company Reporter on Aug. 17, 2010, Moody's Investors Service lowered Reddy Ice Holdings' corporate family and probability-of-default ratings to B3 from B2, and its $12 million senior discount notes due 2012 to Caa2 from Caa1. Moody's also lowered the rating on Reddy Ice Corporations' $300 million first lien senior secured notes due 2015 to B2 from B1 and the $139 million second lien notes due 2015 to Caa2 from Caa1. The ratings outlook remains negative. The speculative grade liquidity rating was affirmed at SGL-3. The ratings downgrade was prompted by Reddy Ice's elevated financial leverage through the first half of 2010 due to weaker than expected operating performance and the expectation that leverage will remain elevated. The B3 corporate family rating considers ongoing operational risks related to weather as well as increasing acquisition activity. SEA TRAIL: Files for Chapter 11 Bankruptcy Protection ----------------------------------------------------- Wayne Faulkner at StarNews Online reports that Sea Trail Corp. filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for Eastern North Carolina on Sept. 27, 2011. The Brunswick County resort will continue to operate its golf, resort and convention business while it seeks to reorganize its debts, the report quotes attorney Trawick Stubbs, Esq., of Stubbs & Perdue in New Bern, as saying. The Company listed assets of more than $34 million -- most of that in real property. The company owns parcels within the Sea Trail community. It listed debts of more than $22 million, including a total of nearly $15.5 million to Waccamaw Bank. Also among the debts are more than $461,000 in unpaid property taxes to Brunswick County. Mr. Stubbs blamed Sea Trail's problems on a decline in discretionary spending by consumers, particularly in the golf and resort markets. The company "has been attempting to work out a plan to restructure its debts with Waccamaw Bank, its primary secured creditor," he said. But the sides could not agree, which prompted the Chapter 11 filing. Resort manager Charlestowne Hotels is leaving Sea Trail at the end of this month, the report quotes Michael Tall, vice president of the company, based in Mt. Pleasant, S.C., as saying. It was not known whether Charlestowne's exit was related to Sea Trail's financial problems. Sea Trail Corp. owns the Sea Trail Golf Resort and Convention Center in Sunset Beach. SEAHAWK DRILLING: Wins Approval of Full-Payment Chapter 11 Plan --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Seahawk Drilling Inc. sold its 20 shallow-water jackup rigs for $155 million, resolved objections to the Chapter 11 plan, and received a commitment from the U.S. Bankruptcy Judge in Corpus Christi, Texas, to sign a confirmation order this week approving the plan, court records say. Mr. Rochelle reports that Hercules Offshore Inc. bought the business in April for $25 million cash plus 22.3 million of its shares. Based on the closing price for the stock at the time, the total came to $155 million. Unsecured creditors with claims up to $18 million will be paid in full with pre- and post-bankruptcy interest. Litigation claimants, with claims up to $4.5 million, will likewise be paid in full, the disclosure statement said. Mr. Rochelle relates that the excess after creditors are paid will go to shareholders. Because they will receive a distribution, shareholders voted on the plan. The stock closed Sept. 28 at $2.77, down 7 cents a share in over-the-counter trading. ��About Seahawk Drilling Houston, Texas-based Seahawk Drilling, Inc., engages in a jackup rig business in the United States, Gulf of Mexico, and offshore Mexico.��It offers rigs and drilling crews on a day rate contractual basis. The Company and several affiliates filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex. Lead Case No. 11-20089) on Feb. 11, 2011.��Berry D. Spears, Esq., and Jonathan C. Bolton, Esq., at Fullbright & Jaworkski L.L.P., in Houston, serve as the Debtors' bankruptcy counsel.��Shelby A. Jordan, Esq., and Nathaniel Peter Holzer, Esq. at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Corpus Christi, Texas, serve as the Debtors' co-counsel.��Alvarez and Marsal North America, LLC, is the Debtors' restructuring advisor.��Simmons & Company International is the Debtors' transaction advisor.��Kurtzman Carson Consultants LLC is the Debtors' claims agent.��Judy A. Robbins, U.S. Trustee for Region 7, appointed three creditors to serve on an Official Committee of Unsecured Creditors of Seahawk Drilling Inc. and its debtor-affiliates.��Heller, Draper, Hayden, Patrick & Horn, L.L.C., represents the creditors committee. In its amended schedules, Seahawk Drilling disclosed $208,190,199 in assets and $438,458,460 in liabilities as of the petition date. Seahawk filed for Chapter 11 protection to complete the sale of all assets to Hercules Offshore, Inc.��As reported by the Troubled Company Reporter on April 11, 2011, the Bankruptcy Court approved an Asset Purchase Agreement between Hercules Offshore and its wholly owned subsidiary, SD Drilling LLC, and Seahawk Drilling, pursuant to which Seahawk agreed to sell to Hercules, and Hercules agreed to acquire from Seahawk, all 20 of Sellers' jackup rigs and related assets, accounts receivable and cash and certain liabilities of Sellers in a transaction pursuant to Section 363 of the U.S. Bankruptcy Code.��The deal was valued at about $176 million when it received court approval. The purchase price for the acquisition will be funded by the issuance of roughly 22.3 million shares of Hercules Offshore common stock and cash consideration of $25 million, which will be used primarily to pay off Seahawk's Debtor-in-Possession loan.��The number of shares of Hercules Offshore common stock to be issued will be proportionally reduced at closing, based on a fixed price of $3.36 per share, if the outstanding amount of the DIP loan exceeds $25 million, with the total cash consideration not to exceed $45 million. The deal closed on April 27, 2011. SEALY CORP: Reports $6.6 Million Net Income in Aug. 28 Quarter -------------------------------------------------------------- Sealy Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q reporting net income of $6.59 million on $334.06 million of net sales for the three months ended Aug. 28, 2011, compared with a net loss of $15.82 million on $320.50 million of net sales for the three months ended Aug. 29, 2010. The Company also reported net income of $5.32 million on $960.89 million of net sales for the nine months ended Aug. 28, 2011, compared with a net loss of $9.26 million on $922.91 million of net sales for the nine months ended Aug. 29, 2010. The Company's balance sheet at Aug. 28, 2011, showed $947.85 million in total assets, $1 billion in total liabilities and a $57.10 million total stockholders' deficit. "We continued to reap the benefits of both our recent Next Generation Posturepedic launch and our new advertising campaign in the third quarter, as we delivered year over year sales growth; sequential gross margin improvement; year over year US gross margin improvement; and year over year Adjusted EBITDA growth," stated Larry Rogers, Sealy's President and Chief Executive Officer. "These results were achieved despite a more challenging macroeconomic environment as well as volatility and increases in the costs of our raw materials." A full-text copy of the Form 10-Q is available for free at: http://is.gd/DXgFgN About Sealy Corp. Trinity, North Carolina-based Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- is the largest bedding manufacturer in the world with sales of $1.5 billion in fiscal 2008. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), including SpringFree(TM), PurEmbrace(TM) and TrueForm(R); Stearns & Foster(R), and Bassett(R) brands. Sealy operates 25 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to approximately 3,000 customers with more than 7,000 retail outlets. The Company reported a net loss of $902,000 on $305.53 million of net sales for the three months ended Feb. 27, 2011, compared with net income of $5.71 million on $311.88 million of net sales for the three months ended Feb. 28, 2010. Sealy carries 'B' local and issuer credit ratings from Standard & Poor's. SEARCHMEDIA HOLDINGS: To Offer 3MM Shares Under Incentive Plan -------------------------------------------------------------- Searchmedia Holdings Limited filed with the U.S. Securities and Exchange Commission a Form S-8 registration statement registering 3 million ordinary shares, $0.0001 par value per share, to be offered under the SearchMedia Holdings Limited Amended and Restated 2008 Share Incentive Plan. The Offering has a proposed maximum aggregate offering price of $3.69 million. A full-text copy of the Form S-8 prospectus is available for free at: http://is.gd/32oQOM About SearchMedia SearchMedia is a leading nationwide multi-platform media company and one of the largest operators of integrated outdoor billboard and in-elevator advertising networks in China. SearchMedia operates a network of high-impact billboards and one of China's largest networks of in-elevator advertisement panels in 50 cities throughout China. Additionally, SearchMedia operates a network of large-format light boxes in concourses of eleven major subway lines in Shanghai. SearchMedia's core outdoor billboard and in- elevator platforms are complemented by its subway advertising platform, which together enable it to provide a multi-platform, "one-stop shop" services for its local, national and international advertising clients. Marcum Bernstein & Pinchuk LLP, in New York, expressed substantial doubt about SearchMedia Holdings' ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring net losses from operations and has a working capital deficiency. The Company reported a net loss of $46.6 million on $49.0 million of revenues for 2010, compared with a net loss of $22.6 million on $37.7 million of revenues for 2009. The Company's balance sheet at Dec. 31, 2010, showed $86.9 million in total assets, $86.4 million in total liabilities, and stockholders' equity of $463,000. SEQUOIA PARTNERS: Court Approves Mark Schmitz as Capital Broker --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon authorized Sequoia Partners LLC to employ Mark Esko Schmitz as capital broker to provide assistance in obtaining financing for its Chapter 11 plan. Mr. Schmitz said he will work with real estate firms, investment professionals and loan and capital investors to ensure the Debtor investigates potential sources of financing to generate replacement capital and new capital funding sufficient for the Debtor to reorganize. The Debtor has agreed to compensate Mr. Schmitz on the basis of his ordinary fee for this type of engagement, which is a total commission/fee of 3.5% of the capital amount obtained through the efforts of Mr. Schmitz in the form of debt, equity infusion or sale of assets or interest in the Debtor in a court-approved transaction, subject to review and approval by the Court. Mr. Schmitz said he charges 2.4% of the capital amount obtained as a commission and an additional 1.1% as a fee for consulting services provided for the total commission/fee of 3.5% for services provided in conjunction with financing ultimately obtained by the debtor and approved by the court. The Debtor assured the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Sequoia Partners, LLC Grants Pass, Oregon-based Sequoia Partners, LLC, filed for Chapter 11 bankruptcy protection (Bankr. D. Ore. Case No. 10-67547) on Dec. 29, 2010. Tara J. Schleicher, Esq., at Farleigh Wada Witt Attorneys, serves as the Debtor's bankruptcy counsel. Beowulf Consulting, LLC, serves as accountant. CPM Real Estate Services, Inc., serves as loan broker. The Debtor estimated assets at $50 million to $100 million and debts at $10 million to $50 million. Robert D. Miller, Jr., U.S. Trustee for Region 18, appointed five members to the official committee of unsecured creditors. The Committee tapped Douglas R. Schultz and Cassie K. Jones and the law firm of Gleaves Swearingen Potter & Scott LLP as its counsel. SHILO INN: Court Approves Dismissal of Killeen's Chapter 11 Case ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California dismissed the Chapter 11 case of Shilo Inn, Killeen, LLC, a debtor affiliate of Shilo Inn, Diamond Bar, LLC. Debtor Killeen's motion sought approval, in part, of a settlement agreement and related transactions. The Debtor Killeen related that it has paid in full all quarterly fees to the U.S. Trustee, in compliance to the Court's directive to pay all quarterly fees as a condition of dismissal of the case. About Shilo Inn Portland, Oregon-based Shilo Inn, Killeen, LLC, filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 10-62057) on Dec. 6, 2010. David B. Golubchik, Esq., and John-Patrick M. Fritz, Esq., at Levene Neale Bender Rankin and Brill LLP, in Los Angeles, served as bankruptcy counsel. The Debtor estimated its assets and debts at $10 million to $50 million. Affiliate Shilo Inn, Diamond Bar, LLC (Bankr. C.D. Calif. Case No. 10-60884) filed separate Chapter 11 petition on Nov. 29, 2010. The case is jointly administered with Shilo Inn Killeen. SILVERSUN TECHNOLOGIES: Signs Stock Purchase Agreement with CEO --------------------------------------------------------------- SilverSun Technologies, Inc., on Sept. 23, 2011, entered into a Series B Preferred Stock Purchase Agreement with the Company's Chief Executive Officer, Mr. Mark Meller, pursuant to which the Series B Holder was issued the only one authorized share of Series B Preferred Stock, par value $0.001 per share. The Series B Holder was issued one share of Series B Preferred Stock as partial consideration for such Series B Holder's agreement to personally guarantee the repayment of two promissory notes, dated April 11, 2011, each in the principal face amount of $275,000, for an aggregate principal sum of $550,000. The Series B Preferred Stock has the rights, privileges, preferences and restrictions set for in the Certificate of Designation filed by the Corporation with the Secretary of State of the State of Delaware on Sept. 23, 2011. Each one share of the Series B Preferred will have voting rights equal to (x) the total issued and outstanding Common Stock eligible to vote at the time of the respective vote divided by (y) forty nine one-hundredths (0.49) minus (z) the total issued and outstanding Common Stock eligible to vote at the time of the respective vote. For the avoidance of doubt, if the total issued and outstanding Common Stock eligible to vote at the time of the respective vote is 5,000,000, the voting rights of the Series B Preferred Stock will be equal to 5,204,082. The Certificate of Incorporation of the Corporation authorizes the issuance of up to 1,000,000 shares of preferred stock and further authorizes the Board of Directors of the Corporation to fix and determine the designation, preferences, conversion rights, or other rights, including voting rights, qualifications, limitations, or restrictions of the preferred stock. However, so long as any shares of Series A Convertible Preferred Stock are outstanding, the Company will not, without first obtaining the unanimous written consent of the holders of Series A Preferred, alter or change the rights, preferences or privileges of the Series A Preferred so as to affect adversely the holders of Series A Preferred Stock. On Sept. 14, 2011, the Board approved by unanimous written consent an amendment to the Corporation's Certificate of Incorporation to designate the rights and preferences of Series B Preferred Stock. On Sept. 14, 2011, the holders of Series A Preferred approved by unanimous written consent an amendment to the Corporation's Certificate of incorporation to designate the rights and preferences of Series B Preferred Stock. On September 23, 2011, the Corporation filed the Certificate of Designation with the Delaware Secretary of State. About SilverSun Technologies Livingston, N.J.-based SilverSun Technologies, Inc., formerly known as Trey Resources, Inc., focuses on the business software and information technology consulting market, and is looking to acquire other companies in this industry. SWK Technologies, Inc., the Company's subsidiary and the surviving company from the acquisition and merger with SWK, Inc., is a New Jersey-based information technology company, value added reseller, and master developer of licensed accounting and financial software published by Sage Software. SWK Technologies also publishes its own proprietary supply-chain software, the Electronic Data Interchange (EDI) solution "MAPADOC." SWK Technologies sells services and products to various end users, manufacturers, wholesalers and distribution industry clients located throughout the United States, along with network services provided by the Company. The Company's balance sheet at June 30, 2011, showed $1.68 million in total assets, $2.47 million in total liabilities, all current, and a stockholders' deficit of $790,392. As reported in the TCR on April 2, 2011, Friedman LLP, in East Hanover, NJ, expressed substantial doubt about Trey Resources, Inc.'s ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has incurred substantial accumulated deficits and operating losses, and at Dec. 31, 2010, has a working capital deficiency of approximately $5.1 million. SOLYNDRA INC: Judge Rejects Committee's Request to Extend Sale -------------------------------------------------------------- The Kansas City Star reports that Delaware bankruptcy judge Mary Walrath has refused to extend the sale timeline for Solyndra LLC. According to the report, Solyndra is now eyeing an Oct. 27 auction of its assets, assuming that more than one potential buyer emerges. But the official committee of Solyndra's unsecured creditors argued that the sale process should be extended at least four weeks to drum up as much interest as possible and maximize the return for creditors. "We are concerned that there is a rush to sale here," the report quotes Bonnie Glantz Fatell, Esq., an attorney for the creditors committee, as saying. Judge Walrath rejected the committee's request to extend the sale, but she ordered Solyndra to send a representative to an international solar energy industry trade show in Dallas next month. She agreed with the creditors committee that the conference could be a good venue for marketing Solyndra's assets. Judge Walrath authorized up to $4 million in debtor-in-possession financing for Solyndra, but the company and its secured lenders, including the Department of Energy, argued that it does not have enough cash to devote four more weeks to lining up potential buyers. Given the political firestorm and headlines surrounding Solyndra, anyone interested in the company already knows it's for sale, they suggested. "The company has been searching for money for a long time. People know about this," said Michael Rosenthal, Esq., an attorney representing private investors including Argonaut Ventures I, which holds a 39 percent stake in Solyndra's parent company and is providing bankruptcy financing for Solyndra. About Solyndra LLC Founded in 2005, Solyndra LLC is a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had approximately 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. In the Chapter 11 cases, the Debtors are pursuing a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors are unable to identify any such potential buyers, an orderly liquidation of the Debtors' assets for the benefit of their creditors. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven unsecured creditors to serve on the Official Committee of Unsecured Creditors of Solyndra LLC. Lawyers at Blank Rome LLP represent the Committee. SOLYNDRA LLC: To Auction Non-Core Assets on Nov. 2 -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Solyndra LLC overcame opposition from the creditors' committee which sought more time for marketing the shuttered business. At a hearing Sept. 27, the bankruptcy judge sided with the maker of solar energy panels and scheduled a sale of the business on Oct. 27. According to the report, the Debtor filed a separate set of papers Sept. 27 aiming to hold an auction on Nov. 2 for what it calls "non-core assets" that wouldn't be needed by anyone who purchases the business a whole. Solyndra says that the non-core asset sale should generate somewhere in the neighborhood of $5 million. The auction would be conducted by Heritage Global Partners, if the bankruptcy judge in Delaware agrees with the proposal at an Oct. 17 hearing. The report relates that having the main auction in late October will allow the successful bidder to pick up additional equipment at the noncore auction. Solyndra is proposing that successful bidders at the noncore auction pay Heritage an additional 15% buyer's premium. Heritage would also receive a 5% commission. ��About Solyndra LLC Founded in 2005, Solyndra LLC is a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications.��The Company had approximately 968 full time employees and 211 temporary employees.��Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011.��Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date.��The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. In the Chapter 11 cases, the Debtors are pursuing a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors are unable to identify any such potential buyers, an orderly liquidation of the Debtors' assets for the benefit of their creditors. Judge Mary F. Walrath presides over the Debtors' cases.��The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser.��AlixPartners LLP serves as noticing claims and balloting agent.��Imperial Capital LLC serves as the company's investment banker and financial adviser.��The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven unsecured creditors to serve on the Official Committee of Unsecured Creditors of Solyndra LLC. SOLYNDRA LLC: Imperial Capital Approved as Financial Advisor ------------------------------------------------------------ The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorized Solyndra LLC, et al., to employ Imperial Capital LLC as financial advisor and investment banker. As reported in the Troubled Company Reporter on Sept. 20, 2011, Imperial Capital is expected to negotiate a sale or financing. The firm would also put values on the Company either in liquidation or through reorganization. The firm would receive a monthly fee of $150,000. In addition there would be $1 million paid if Solyndra confirms a Chapter 11 plan. The fee is cut in half to $500,000 if the plan results from liquidation. If there is a sale, Imperial would earn a fee equal to the greater of $1 million or 2% of the purchase price. Should Solyndra attract new debt or equity capital, there would be a 1% fee for secured debt, 3% of subordinated debt, and 5% of any equity investment. The Court also ordered that after the six month, 50% of the monthly advisory fee will be credited against either the Plan confirmation fee or the sale transaction fee. To the best of the Debtors' knowldege, that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Solyndra LLC Founded in 2005, Solyndra LLC is a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had approximately 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. In the Chapter 11 cases, the Debtors are pursuing a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors are unable to identify any such potential buyers, an orderly liquidation of the Debtors' assets for the benefit of their creditors. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Roberta A. DeAngelis, U.S. Trustee for Region 3 appointed seven unsecured creditors to serve on the Official Committee of Unsecured Creditors of Solyndra LLC. SOLYNDRA LLC: DOE Loan Guarantee Program the Problem, CAGW Says --------------------------------------------------------------- Citizens Against Government Waste (CAGW) issued a call for a full and open investigation of the Energy Department's (DOE) $38.5 billion loan guarantee program (LGP). The program has been the subject of four Government Accountability Office (GAO) reports detailing its management weaknesses, arbitrary selection processes, and vulnerabilities to manipulation and politicization. The scandal surrounding solar panel manufacturer Solyndra, which laid off 1,100 workers and filed for bankruptcy in early September after receiving a $535 million loan guarantee from the DOE serves as a catalyst for a complete audit of this LGP and similar loan programs in other agencies. The GAO practically predicted a Solyndra-like flame out. The LGP was a poorly-crafted program that lacked robust internal management controls, clearly delineated performance benchmarks, transparent eligibility requirements, and operated with little accountability. Nonetheless, it received large amounts of stimulus money in the Recovery Act. The GAO presciently predicted in July, 2008 that the "Risks inherent to the LGP will make it difficult for DOE to estimate subsidy costs, which could lead to financial losses and may introduce biases in the projects that receive guarantees...The likelihood that DOE will misestimate costs, along with the practice of charging fees to cover the estimated costs, may lead to biases in the projects that receive guarantees...To the extent that DOE underestimates the costs and does not collect sufficient fees from borrowers to cover the full costs, taxpayers will ultimately bear the costs of shortfalls." Further, GAO stated that "Expanding the LGP at this juncture, when the program's risks and costs are not well understood, could unnecessarily result in significant financial losses to the government." A September 27, 2011 Los Angeles Times story reports that "At a White House meeting in late October, Lawrence H. Summers, then director of the National Economic Council, and Timothy F. Geithner, the Treasury secretary, expressed concerns that the selection process for federal loan guarantees wasn't rigorous enough and raised the risk that funds could be going to the wrong companies, including ones that didn't need the help." "The federal government operates more than 120 direct or indirect loan programs," said CAGW President Tom Schatz. "The Energy Department's program has now come under the spotlight only because of Solyndra's spectacular implosion. The government's loan guarantee programs must be subject to greater oversight and it is time for a full audit of their activities, their management, and their results. Candidly, it might be time for the federal government to rethink the whole idea of loan programs. The government has a lousy track record of either funding risky ventures and losing taxpayer money or funding companies and industries which are mature and profitable and don't need the money. Transferring taxpayer funds to emerging technologies and industries poses too many financial risk to taxpayers, and those companies should raise money on the capital markets, which are better positioned to take those risks. Conversely, any business project that is mature and financially stable doesn't need taxpayer money anyway," concluded Schatz. Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government. About Solyndra LLC Founded in 2005, Solyndra LLC is a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had approximately 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. In the Chapter 11 cases, the Debtors are pursuing a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors are unable to identify any such potential buyers, an orderly liquidation of the Debtors' assets for the benefit of their creditors. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven unsecured creditors to serve on the Official Committee of Unsecured Creditors of Solyndra LLC. SOLYNDRA LLC: Section 341(a) Meeting Scheduled for Oct. 18 ---------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of creditors of Solyndra LLC on Oct. 18, 2011, at 10:00 a.m. The meeting will be held at J. Caleb Boggs Federal Courthouse, 844 King Street, 21nd Floor, Room 5209, 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. About Solyndra LLC Founded in 2005, Solyndra LLC is a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had approximately 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. In the Chapter 11 cases, the Debtors are pursuing a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors are unable to identify any such potential buyers, an orderly liquidation of the Debtors' assets for the benefit of their creditors. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven unsecured creditors to serve on the Official Committee of Unsecured Creditors of Solyndra LLC. SPANISH INN: Palm Springs Resort for Celebs in Chapter 11 --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Spanish Inn & Villas, a resort in Palm Springs, California, that once catered to movie stars, filed for Chapter 11 protection in Riverside, California. Debt is more than $10 million, while assets are less than $10 million, the petition says. The property, near the Palm Springs airport, has 59 rooms, according to the Web site. Spanish Inn Inc., also known as Spanish Inn & Villas, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 11-39840) on Sept. 22, 2011. B. Kwaku Duren, Esq., at B. Kwaku Duren & Associates, PC, in Los Angeles, California, serves as counsel. SPECTRAWATT INC: Court Approves Heritage, et al., as Sale Agent --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Spectrawatt Inc. to employ Heritage Global Partners, Counsel RB Capital, and Silicon Valley Disposition Inc. as sales agent to conduct a sale of the Debtor's assets. The parties have entered into the sales agent agreement, which governs the relationship between the sales agent and the Debtor. The terms and conditions of the sales agent agreement were carefully negotiated, and reflect the parties' mutual agreement as to the efforts that will be required to liquidate the Debtor's assets at auction. The material terms of the proposed engagement include: -- The Sales Agent will charge a buyer's premium of fifteen percent (15%) of the aggregate gross proceeds for the sale of an Asset, or a lot of Assets, payable by the buyers of the asset or assets. The Debtor's estate is not responsible for any unpaid portion of the Buyer's Premium. -- The Sales Agent is not charging the Debtor any seller's commission. -- The Debtor shall be responsible for maintaining adequate insurance coverage for the Assets. -- The Sales Agent has a right of reimbursement of actually incurred marketing expenses up to $50,000. -- None of HGP, Counsel RB or SVD have any rights of compensation, or reimbursement of expenses from the Debtor's estate, except as stated above. -- Debtor agrees to defend and indemnify sales agent and hold Sales Agent harmless from and against any claim or liability asserted against Sales Agent by any third party based on the alleged existence or breach of any alleged warranties, or from or against any fees or expenses incurred by sales agent in defending against any such claim or liability. The Debtor assured the Court that the firm is a "disinterested person" as defined in 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. SpectraWatt estimated as much as $50 million in both debt and assets as of the Chapter 11 filing. Mark W. Wege, Esq., and Scott Davidson, Esq., at King & Spalding LLP, in Houston, Texas, is the proposed counsel for the Debtor. STIRLING ENERGY: Another Solar Company Bites the Dust ----------------------------------------------------- Dow Jones Newswires' Cassandra Sweet reports that Solar-power equipment manufacturer Stirling Energy Systems Inc. filed for Chapter 11 bankruptcy protection last Friday, after it failed to find a buyer for the company, according to documents filed with the U.S. Bankruptcy Court in Delaware. Scottsdale, Ariz.-based Stirling Energy developed equipment that converts heat from the sun into electricity. Dow Jones relates signs of trouble at Stirling emerged in December, after its largest investor, Dublin-based NTR PLC, said that troubles at Stirling and another of its renewable-energy units led to a EUR148 million ($201 million) write-down. Also in December, NTR unit Tessera Solar lost a key contract with Edison International's southern California utility to sell the output from a 663-megawatt solar-power plant that was designed to use Stirling's technology. Tessera sold that project, called Calico Solar, to developer K Road Power, which redesigned the project to use primarily solar panels to generate electricity, but also included a portion that would use Stirling's technology. An amended license to build the facility was still pending at the California Energy Commission. In February, Tessera sold a second solar-power project designed to use Stirling technology to AES Solar, a joint venture owned by AES Corp. and private equity firm Riverstone Holdings LLC. Sempra Energy's San Diego Gas & Electric utility, which had signed a contract to purchase the output from the facility, transferred the contract to AES. But that project, called Imperial Valley Solar, appeared abandoned after the California Energy Commission terminated its construction license in August and after San Diego Gas & Electric terminated its power-purchase agreement with AES Solar, according to the California Public Utilities Commission. Dow Jones relates telephone calls to Stirling and NTR weren't immediately returned. Stirling is at least the fourth solar company to seek court protection from creditors since August 2011, after Solyndra Inc., which filed early in September, and Evergreen Solar Inc. and start-up Spectrawatt Inc., both of which filed in August. TALON THERAPEUTICS: NDA for Marqibo Accepted for Filing by FDA -------------------------------------------------------------- Talon Therapeutics, Inc., announced its new drug application seeking accelerated approval of Marqibo (vincristine sulfate liposomes injection) has been accepted for filing by the FDA. Marqibo will be reviewed by the FDA under Subpart H - Accelerated Approval of New Drugs for Serious or Life Threatening Illnesses, for the treatment of adult Philadelphia chromosome-negative (Ph-) acute lymphoblastic leukemia (ALL) in second or greater relapse or that has progressed following two or more lines of anti-leukemia therapy. "Two important hurdles have been crossed with the acceptance for filing of the Marqibo NDA and affirmation of the accelerated approval review path. We remain 100% focused on our goal of an FDA approval of Marqibo," stated Steven R. Deitcher, president, chief executive officer and board member of Talon Therapeutics. "The patients we are seeking to treat represent a rare hematologic malignancy and have a grave prognosis. The accelerated approval path has the potential to provide access to a new, well-tolerated, and effective treatment more quickly for these patients. We aim to initiate and commence enrollment in the Phase 3 confirmatory trial, that recently received an SPA, prior to the May PDUFA date," Dr. Deitcher added. In August 2011, Talon received Special Protocol Assessment agreement from the FDA for its proposed Phase 3 confirmatory study, named HALLMARQ, for the treatment of adults ? 60 years old with newly diagnosed ALL. In addition to the Phase 3 adult, front-line ALL study, Talon is developing Marqibo for pediatric cancers (solid tumors and hematologic malignancies) in a Phase 1-2 clinical study conducted by the National Cancer Institute and for newly diagnosed aggressive Non-Hodgkin's Lymphoma to be conducted by the German High Grade Non-Hodgkin's Lymphoma Study Group. About Talon Therapeutics Formerly known as Hana Biosciences, Inc., Talon Therapeutics Inc. (TLON.OB.) -- http://www.talontx.com/-- is a biopharmaceutical company dedicated to developing and commercializing new, differentiated cancer therapies designed to improve and enable current standards of care. The company's lead product candidate, Marqibo, potentially treats acute lymphoblastic leukemia and lymphomas. The Company has additional pipeline opportunities some of which, like Marqibo, improve delivery and enhance the therapeutic benefits of well characterized, proven chemotherapies and enable high potency dosing without increased toxicity. Effective Dec. 1, 2010, Hana Biosciences Inc. changed its name to Talon Therapeutics Inc. The name change was effected by merging Talon Therapeutics, Inc., a wholly-owned subsidiary of the Company, with and into the Company, with the Company as the surviving corporation in the merger. The Company's balance sheet at June 30, 2011, showed $11.58 million in total assets, $38.08 million in total liabilities, $30.64 million in redeemable convertible preferred stock, and a $57.14 million total stockholders' deficit. The Company reported a net loss of $25.98 million for the year ended Dec. 31, 2010, compared with a net loss of $24.14 million during the prior year. The Company does not generate any recurring revenue and will require substantial additional capital before it will generate cash flow from its operating activities, if ever. The Company does not currently have sufficient capital to fund its entire development plan beyond 2011. As reported by the TCR on April 1, 2011, BDO USA, LLP, in San Francisco, Calif., expressed substantial doubt about the Company's ability to continue as a going concern. BDO noted that the Company suffered recurring losses from operations and has a net capital deficiency. TAO-SAHI LP: Use of S2 Acquisition's Cash Collateral Expires Today ------------------------------------------------------------------ The Hon. Ronald B. King of the U.S. Bankruptcy Court for the Western District of Texas authorized, on an interim basis, Tao Sahi, LP, to use the cash collateral of S2 Acquisition LLC until Sept. 30, 2011. Pursuant to an agreed order, S2 Acquisition consented to use of the cash collateral to fund the Debtor's business operations postpetition. As reported in the Troubled Company Reporter on Aug. 30, 2011, S2 Acquisition LLC asserted claims against the Debtor in the amount of approximately $19,554,569 (exclusive of pre- and post-petition attorney fees, costs and expenses, late charges and other costs chargeable under the Loan Documents. The TCR reported on Aug 3, 2011, that as adequate protection, the Debtor will make a monthly payment of $40,170 to S2 Acquisition, and a monthly payment of up to $10,000 of S2 Acquisition's fees and expenses until the effective date of a confirmed plan. S2 Acquisition is also granted a first replacement liens and additional lien on all assets of the Debtor and an allowed superpriority administrative claim. The collateral and superpriority claims is subject to a carve out for professional fees and fees to be paid to the Clerk of the Court and the U.S. Trustee. The Debtor did not disclose is a hearing for continued use of the cash collateral is set. About Tao-Sahi LP Tao-Sahi LP owns the Holiday Inn NW - Seaworld in San Antonio, Texas. Tao-Sahi has no employees. The Hotel is managed under contract with an independent management company. Tao-Sahi filed for Chapter 11 bankruptcy (Bankr. W.D. Tex. Case No. 11-52027) on June 7, 2011, to stay foreclosure of the hotel and restructure its debts. Judge Ronald B. King presides over the case. Marvin E. Sprouse, III, Esq., and Jack Skaggs, Esq., at Jackson Walker LLP, in Austin, Tex., serve as bankruptcy counsel. Bolton Real Estate Consultants, Ltd., serves as the Debtor's appraiser. In its Schedules, the Debtor disclosed $24,735,728 in assets and $20,584,065 in debts. The petition was signed by Clayton Isom, CEO of Tao Development Group, LLC, general partner. S2 Acquisition LLC, an opportunity fund associated with Square Mile Capital Management in New York, acquired the hotel debt from the failed Silverton Bank. S2 Acquisition is represented by Tom Rogers, Esq., and Shari L. Heyan, Esq., at Greenberg Traurig. TAVERN ON THE GREEN: Sells Trademark for International Use ---------------------------------------------------------- Tavern International LLC, a recently formed licensing sales and marketing concern with a philanthropic sensibility, announced today it has acquired the use of the name of arguably the world's most famous independent restaurant brand, Tavern on the Green, valued at $19 million in 2008. The acquisition took the form of a $1.3 million purchase which entitles Tavern International to license the name "Tavern on the Green" for restaurants and products such as food, home furnishings, apparel and accessories. The licenses issued by Tavern International will require some of all sales by the licensees be donated to the National Center for Missing & Exploited Children (NCMEC), the private nonprofit organization which serves as the nation's resource on the issues of missing and sexually exploited children. It is a charity with which New York City's fabled Tavern on the Green had an association from 2008 until it was forced to close on January 1, 2010, having lost its lease with the city despite its status as a globally renowned attraction and one of highest grossing restaurants in the world. Under the terms of the agreement that Tavern International will execute with New York City, Tavern International will be able to license or open Tavern on the Green restaurants, except in the states of New York, New Jersey and Connecticut, as well as parts of Pennsylvania, so long as any Tavern International licensed restaurant uses the Tavern on the Green name with a location or geographical identifier. "The acquisition of the Tavern on the Green name by Tavern International will enable us to recreate the beloved, iconic Manhattan restaurant nationally and internationally and tie it to products people can enjoy at home. Restaurants and products that will also enable diners and consumers to help save one child at a time by the contributions made to the National Center for Missing & Exploited Children," states Lou Bivona, managing member of Tavern International and the founder and chairman of NCMEC's New York Chapter. Bivona is also the owner and managing director of TavernDirect, which produces a line of Tavern on the Green specialty food products sold online and at retail. A portion of the products' sale is donated to NCMEC. TavernDirect's operation came into being under a licensing agreement with Tavern on the Green, negotiated by its former COO, Michael Desiderio -- now the vice president of restaurant licensing for Tavern International, charged with protecting the integrity of a brand with which he worked for 13 years. In fact, his restaurant management career, which has included overseeing three of New York City's most famous restaurants -- The Rainbow Room and Russian Tea Room, in addition to Tavern -- began at Tavern on the Green. "Tavern on the Green as an entity and as a brand has been a big part of my professional life. And I credit much of my success to the mentoring of Warner LeRoy, who made Tavern on the Green such a world renowned, legendary restaurant. So I am thrilled to be part of a team that will realize Warner's vision for the expansion of the brand, while supporting an organization that has become the nation's leading non-profit organization working with law enforcement to help abducted and sexually exploited children," notes Desiderio. Bivona and Desiderio are currently engaged in preliminary discussions with organizations in the United Kingdom, Las Vegas, California and Asia interested in Tavern on the Green licenses. The purchase of the use of the "Tavern on the Green" name was from the bankruptcy trustee for Tavern on the Green and was executed under the terms of a settlement between the trustee and the City of New York with regard to the disputed ownership of the name which had been trademarked by LeRoy Adventures, the operator of Tavern on the Green from 1975 to 2010. 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. TELEFONICA FINANCE: Fitch Lowers Rating on Pref. Shares to 'BB+' ---------------------------------------------------------------- Fitch Ratings has downgraded Telefonica SA's (Telefonica) and its subsidiary O2's Long-term Issuer Default Ratings (IDRs) to 'BBB+' from 'A-'. At the same time, the agency has downgraded the senior unsecured rating of the bonds issued by Telefonica Europe BV to 'BBB+' and Telefonica Finance USA LLC's preference shares to 'BB+'. The agency has affirmed Telefonica's Short-term IDR s at 'F2'. The Outlooks on the IDRs are Stable. "The combination of the EUR7.5 billion cash price paid for Vivo, the impact of economic conditions and the public targets set for dividends per share (DPS), suggest that Telefonica's leverage will remain elevated for sometime. Both at end-2010 and at end-H111, leverage adjusted for commitments was 2.5x. Fitch expects it will remain at or close to this level through 2012," says Stuart Reid, a Senior Director in Fitch's European TMT team. "Most 'A-' rated incumbents have unadjusted leverage close to 2.0x. Fitch considers a metric for Telefonica towards the lower end of its public target of 2.0x-2.5x of net debt plus commitments to EBITDA as commensurate with a 'A- 'rating and at a minimum a metric towards the mid-point of this range," Reid continued. Telefonica is unlikely to be able to reduce capex over the coming years. Spectrum acquisition continues to weigh on investment plans - notably the auction in the UK expected in 2012, and in Latin America and Spain in 2011. The company has publicly stated its commitment to network investment in Latin America. In Fitch's view, this is significant, given the competitive environment in markets like Brazil where market growth in both mobile and fixed broadband remains available for those operators with the best network quality. While the company continues to deliver growth in Europe and Latin America, its European businesses are likely to be affected by growing economic uncertainties. The domestic Spanish operations have exhibited material negative growth and are likely to continue to do so given the economic environment and in particular one of the highest rates of unemployment in the euro zone. While pre-dividend free cash flow is expected to remain relatively strong in Fitch's rating case, (FCF margin to revenues close to 15% when excluding spectrum acquisition), the company's tendency to commit to forward-looking DPS targets provides little scope for distributions to be adjusted to suit other pressures in the cash flow statement. Limited scope to adjust either capex budgets or dividend plans, therefore remove two of the principle levers usually available to incumbent operators where cash flow and leverage metrics are otherwise under pressure. The Stable Outlook reflects that Telefonica's financial metrics are more comfortably in line with the 'BBB+' peer group, with unadjusted leverage of 2.4x-2.5x consistent for an incumbent with Telefonica's breadth and business diversification. Free cash flow margin on a pre-dividend, pre-spectrum acquisition basis, approaching 15% is considered relatively strong, while FFO net leverage around 3.0x in line with the 'BBB' category peer group. The three-notch differential between the IDR and the instrument rating of the preference shares remains unchanged and is in line with Fitch's methodology on hybrid instruments. TEKNI-PLEX INC: Moody's Lowers CFR to Caa1; Outlook to Negative -------------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating for Tekni-Plex Inc to Caa1 from B3 and revised the ratings outlook to negative from stable. Moody's also downgraded the rating on senior secured term loan to B3 from B1. The downgrade reflects a decline in operating performance, weak credit metrics and limited cushion under financial covenants that leaves little headroom for negative variance in operating performance. Moody's took these rating actions: - Downgraded CFR to Caa1 from B3 - Downgraded PDR to Caa1 from B3 - Revised outlook to negative from stable - Downgraded $285 million senior secured notes due 2013 to B3 (LGD 3-34%) from B1 (LGD 3-32%) RATINGS RATIONALE The Caa1 Corporate Family Rating and negative outlook reflect lower-than-expected earnings and free cash flow due to weakness in certain business segments and lack of pricing power and long-term contracts with cost pass-through provisions. Tekni-Plex has limited percentage of business under contract with cost pass through provisions, exposing the company to resin and other raw material cost volatility. Any negative variance in unit volumes or operating performance could adversely impact credit metrics and may strain liquidity due to the limited cushion under financial covenants. The rating is supported by the high concentration of sales in the less cyclical food and healthcare markets, completed and ongoing cost-cutting and footprint rationalization initiatives, and long term customer relationships. The company also benefits from some custom pharmaceutical and medical products that increase switching costs for customers. Despite these strengths, significant improvement in credit metrics is uncertain due to the lack of pricing power and limited business under long-term contracts with cost-pass through provision. The ratings could be downgraded further if operating performance and liquidity decline further and credit metrics deteriorate. Specifically, the ratings could be downgraded if free cash flow to debt remains negative, debt to EBITDA increases above 7.0 times, EBIT/Interest fails to improve above 0.8 times and EBIT margin remains below 5%. The outlook could be stabilized or ratings could be upgraded if Tekni-Plex improves credit metrics. An upgrade would also be contingent upon the maintenance of adequate liquidity and stability in the operating and competitive environment. Specifically, the ratings could be upgraded if free cash flow to debt increases above 3%, debt to EBITDA declines to below 6.5 times, the EBIT margin increases to the high single digits, and EBIT/Interest increases to 1.0 time. The principal methodology used in rating Tekni-Plex was the Global Packaged Goods Industry Methodology published in July 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. TRAVELPORT HOLDINGS: Voting Deadline for Restructuring Expires -------------------------------------------------------------- Dow Jones' Daily Bankruptcy Review reports that Travelport Holdings Ltd. Wednesday said it would extend the voting deadline for holders of its unsecured payment-in-kind notes until 5 p.m. Thursday, according to a regulatory filing. About Traveloport Holdings Travelport Holdings is the direct parent of Travelport Limited, is a broad-based business services company and a leading provider of critical transaction processing solutions to companies operating in the global travel industry. With a presence in 160 countries and approximately 3,500 employees, Travelport is comprised of the global distribution system (GDS) business, which includes the Galileo and Worldspan brands and its Airline IT Solutions business, which hosts mission critical applications and provides business and data analysis solutions for major airlines. Travelport also owns approximately 48% of Orbitz Worldwide (NYSE: OWW), a leading global online travel company. Travelport is a private company owned by The Blackstone Group, One Equity Partners, Technology Crossover Ventures, and Travelport management. Travelport Holdings Limited is a holding company with no direct operations. Its principal assets are the direct and indirect equity interests it holds in its subsidiaries, including Travelport Limited. Travelport Limited, a direct subsidiary of Travelport Holdings Limited, reported net income of $283 million on $1.061 billion of of net revenue for the six months ended June 30, 2011, compared with net income of $1 million on $1.056 billion of net revenue for the same period of 2010. Results for the six months ended June 30, 2011, includes gain of $312 million, net of tax, from the sale of sale of the Gullivers Travel Associates ("GTA") business to Kuoni Travel Holdings Limited ("Kuoni"). The sale was completed on May 5, 2011. Loss from continuing operations was $4 million during the six months ended June 30, 2011, compared with a loss of $2 million for the same period of 2010. Travelport Limited's balance sheet at June 30, 2011, showed $3.680 billion in assets, $4.136 billion in total liabilities, and a stockholders' deficit of $456 million. TUBO DE PASTEJE: Reorganization Plan Took Effect Sept. 9 -------------------------------------------------------- Tubo de Pasteje, S.A., de C.V., informed Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware that its plan of reorganization became effective on Sept. 9, 2011. Judge Carey confirmed the plan of reorganization of the Debtor on August 25, 2011, after determining that it complies with the confirmation requirements laid out under Section 1129(a) of the Bankruptcy Code. The Plan provides for restructuring transactions contemplating: (a) the cancellation of the Old 2016 Notes and the ESBDS I Loan and the Series B Eligible Debt; and (b) the issuance of new debt securities, which New Series A Notes will be guaranteed by Tubo and secured by the capital stock of CLH to the holders of the Old 2016 Notes and the ESBDS I Loan and new debt securities, which will be on substantially the same terms as the New Series A Notes but will not be secured by any assets of the Reorganized Debtors, to holders of the Copper Debt and holders of the Commercial Paper who elect to accept the New Series B Notes in exchange for their Series B Eligible Debt. As reported in the Troubled Company Reporter-Latin America on Aug. 29, 2011, Michael Bathon at Bloomberg News says holders of US$200 million in 11.5% notes will get the new Series A notes in the same amount plus interest, which will be secured by the stock of Tubo's U.S. unit, Cambridge-Lee Holdings Inc. Lenders that extended about US$803,000 of credit will share in the Series A notes. Holders of more than US$145 million in so-called "copper debt notes" and holders of US$24.5 million of commercial paper will get unsecured Series B notes in exchange for their claims. The company will reinstate about US$39.8 million in debt owed on a Bank of America Corp. loan, as well as about US$62.3 million owed on a General Electric Capital Corp. loan. A full-text copy of the Confirmation Order is available for free at http://ResearchArchives.com/t/s?76c5 About Tubo de Pasteje Tubo de Pasteje SA and subsidiary Cambridge-Lee Holdings Inc. filed Chapter 11 petitions (Bankr. D. Del. Case No. 09-14353) on Dec. 7, 2009, following a Nov. 15 payment default on US$200 million in 11.5% senior notes due 2016. Tubo and its subsidiary sought bankruptcy protection when the 30-day grace period was nearing its end. Tubo is a subsidiary of Mexico City-based Industrias Unidas SA de CV, a manufacturer of copper and electrical products. The U.S. subsidiary Cambridge-Lee is based in Reading, Pennsylvania. IUSA is the issuer of the notes which were secured by a pledge of Cambridge-Lee stock. TWIN CITY: Case Summary & 16 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Twin City Bagel, Inc. dba National Choice Bakery 130 Hardman Avenue South South St Paul, MN 55075 Bankruptcy Case No.: 11-36042 Chapter 11 Petition Date: September 27, 2011 Court: U.S. Bankruptcy Court District of Minnesota (St Paul) Judge: Dennis D. O'Brien Debtor's Counsel: Michael L. Meyer, Esq. RAVICH MEYER KIRKMAN MCGRATH NAUMAN 4545 IDS Center 80 South Eighth Street Mineapolis, MN 55402 Tel: (612) 317-4745 E-mail: mlmeyer@ravichmeyer.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Shimon Harosh, president. Debtor's List of Its 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Conagra Trade Debt $443,779 P.O. Box 93462 Chicago, IL 60673 Northern Ingredients Co. Trade Debt $180,880 1260 Grey Fox Road Arden Hills, MN 55112 Ristow Trucking Trade Debt $73,517 P.O. Box 67 Hammond, WI 54015 Cargill Incorporated Trade Debt $64,431 Tilsner Carton Trade Debt $40,284 CHP Blenders Trade Debt $34,941 Cereal Ingredients Trade Debt $31,360 Lesaffre Yeast Corporation Trade Debt $27,330 Bemis Trade Debt $27,240 Xcel Energy Trade Debt $23,931 Bakers Element Trade Debt $21,788 Ellington Associates Trade Debt $20,968 AB Mauri Trade Debt $17,975 Ingredients Company Trade Debt $13,197 Grain Millers Trade Debt $12,176 Bearings & Power Trade Debt $10,262 WASHINGTON LOOP: U.S. Trustee & Creditor Wants Ch. 7 Liquidation ---------------------------------------------------------------- Don Walton, the United States Trustee for Region 21, and Charles A. Robinson Living Trust, creditor and interest holder against Washington Loop LLC, filed separate requests to convert the Debtor's Chapter 11 reorganization case to Chapter 7 liquidation. According to the U.S. Trustee, the Debtor failed to comply with the requirements of the Bankruptcy Code and Rules. The U.S. Trustee points out that there is neither an application to employ an accountant nor authorizing the employment of an accountant. Living Trust notes that the Debtor or its affiliates have been unable to pay adequate protection to any of its secured creditors since at least June or July, 2011. About Washington Loop, LLC Punta Gorda, Florida-based Washington Loop, LLC, a Limited Liability Company, filed for Chapter 11 bankruptcy protection on March 31, 2011 (Bankr. M.D. Fla. Case No. 11-06053). Joel S. Treuhaft, Esq., who has an office in Palm Harbor, Florida, serves as the Debtor's bankruptcy counsel. The Debtor disclosed $45,098,259 in assets and $19,703,694 in liabilities as of the Chapter 11 filing. The Debtor was dismissed from a prior Chapter 11 case, (Case No. 9:10-27981) by order of the Court entered on March 17, 2011. In the Debtor's prior Chapter 11 case, the Debtor's Schedule F, as filed under penalty of perjury, listed some 34 general unsecured creditors totaling claims of $1,953,354. In that case, the Debtor, under penalty of perjury listed all Schedule F debts and non-contingent, liquidated, and undisputed. The Debtor now declares, under penalty of perjury, that all Schedule F debts are unliquidated. These schedules were filed no less than two weeks after the dismissal of the prior Chapter 11 case, and only six weeks after the Debtor filed its Schedule F in that case. WASHINGTON LOOP: Court OKs Shumaker as Ch. 11 Trustee's Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized Louis X. Amato, Chapter 11 Trustee for Washington Loop LLC, to employ Shumaker, Loop & Kendrick, LLP as general counsel to give the Chapter 11 Trustee legal advice with respect to its duties and powers. The Chapter 11 Trustee assured the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Washington Loop, LLC Punta Gorda, Florida-based Washington Loop, LLC, a Limited Liability Company, filed for Chapter 11 bankruptcy protection on March 31, 2011 (Bankr. M.D. Fla. Case No. 11-06053). Joel S. Treuhaft, Esq., who has an office in Palm Harbor, Florida, serves as the Debtor's bankruptcy counsel. The Debtor disclosed $45,098,259 in assets and $19,703,694 in liabilities as of the Chapter 11 filing. The Debtor was dismissed from a prior Chapter 11 case, (Case No. 9:10-27981) by order of the Court entered on March 17, 2011. In the Debtor's prior Chapter 11 case, the Debtor's Schedule F, as filed under penalty of perjury, listed some 34 general unsecured creditors totaling claims of $1,953,354. In that case, the Debtor, under penalty of perjury listed all Schedule F debts and non-contingent, liquidated, and undisputed. The Debtor now declares, under penalty of perjury, that all Schedule F debts are unliquidated. These schedules were filed no less than two weeks after the dismissal of the prior Chapter 11 case, and only six weeks after the Debtor filed its Schedule F in that case. WASHINGTON LOOP: Disclosure Statement Hearing on Oct. 20 -------------------------------------------------------- Washington Loop, LLC, filed with the U.S. Bankruptcy Court for the Middle District of Florida an amended disclosure statement in support of its Chapter 11 plan of reorganization on Sept. 8, 2011. The Plan contemplates that post-confirmation, the Reorganized Debtor will continue to be managed by Lovina Lehr, who has been managing the Debtor for the past four years. The Debtor's property located in Charlotte County, Florida, has a current fair market value as a going concern of approximately $41 million to $45 million based on an appraisal which was conducted by Gillott Appraisal Services, Inc. Accordingly, each of the Mortgage Holders is fully secured and will be paid in full on account of their Allowed Secured Claims as provided under the Plan. The Debtor's Plan also proposes payment on account of those claims held by various taxing authorities, creditors whose claims are secured by personal property of the Debtor, creditors whose claims are unsecured, and insiders or affiliates of the Debtor. After the Bankruptcy Court's anticipated approval of a $3.25 million postpetition credit facility, the Debtor will be able to purchase equipment which will enable the Debtor to grow its monthly income from operations from its current level of approximately $51,000 per month to an average of over $400,000 per month in the first quarter of 2012. As a result, the Debtor anticipates that it will be readily able to satisfy its obligations in the Plan. The plan contemplates the following treatment of claims: A. Administrative Claims consisting primarily of professional fees, totaling $200,000, will be paid in full on the effective date of the Plan. B. Class 1 Priority Creditors will be paid in full as of the Effective date of the Plan. C. Class 2 (Secured Claim of Charlotte County Tax Collector and Tax Lien Certificate Holders will be paid consistent with the allowed amount of the claim, or the principal amount as may be reflected on the face of the tax lien certificate, which will constitute its Allowed Claim amount in annual payments to be made over the course of five years from the Effective Date of this Plan along with interest at the rate reflected on the face of the tax lien certificate or at the rate of 8% per annum, whichever is lower, from Estate Assets. D. Class 3 - The Allowed Amount of the Allowed Secured Claims of the Mortgage Holders will each be paid on the basis of a 25-year amortization, with a 7 year balloon payment at an interest rate consisting of the Prime Rate of interest plus 2% interest, subject to an interest rate floor of 3.75%. E. Class 4 (Secured Claims of Personal Property Lien Holders) Those creditors who hold properly perfected liens on personal property of the Debtor will each be paid in full on account of Allowed Amount of their Allowed Secured Claim over a period of 5 years with annual interest to accrue at the Prime Rate of interest plus 2% interest, subject to an interest rate floor of 3.75%. F. Class 5 - Non-Insider Unsecured Creditors will be paid through a series of distributions totaling 75% of their allowed claim, without interest, to be made on a quarterly basis, at a rate of 3.75% of the allowed claim per quarter, beginning on the effective date of the plan and continuing for a period of five years. G. Class 6 - Unsecured Creditors who are insiders or affiliates of the Debtor will be paid through a series of distributions totaling 75% of their allowed amount of their allowed claim, without interest, to be made on a quarterly basis, at a rate of 3.75% of the allowed amount of their allowed claim per quarter, beginning on the effective date of the Plan and continuing for a period of five years only after all Class 1-5 allowed claims have been paid in full. H. Class 7 (Equity Security Holders) - If any of the debt to equity conversions contemplated in the Class 3 and 6 treatment sections are made, all of the Equity Security Holders' allowed interests will be cancelled and they will receive nothing on account of their pre-petition equity security interests. The hearing on the Disclosure Statement is scheduled on Oct. 20, 2011, at 9:00 A.M. A copy of the Disclosure Statement, as amended, is available for free at http://ResearchArchives.com/t/s?770b About Washington Loop, LLC Punta Gorda, Florida-based Washington Loop, LLC, a Limited Liability Company, filed for Chapter 11 bankruptcy protection on March 31, 2011 (Bankr. M.D. Fla. Case No. 11-06053). Joel S. Treuhaft, Esq., who has an office in Palm Harbor, Florida, serves as the Debtor's bankruptcy counsel. The Debtor disclosed $45,098,259 in assets and $19,703,694 in liabilities as of the Chapter 11 filing. The Debtor was dismissed from a prior Chapter 11 case, (Case No. 9:10-27981) by order of the Court entered on March 17, 2011. In the Debtor's prior Chapter 11 case, the Debtor's Schedule F, as filed under penalty of perjury, listed some 34 general unsecured creditors totaling claims of $1,953,354. In that case, the Debtor, under penalty of perjury listed all Schedule F debts and non-contingent, liquidated, and undisputed. The Debtor now declares, under penalty of perjury, that all Schedule F debts are unliquidated. These schedules were filed no less than two weeks after the dismissal of the prior Chapter 11 case, and only six weeks after the Debtor filed its Schedule F in that case. WESTLAKE CHEMICAL: Moody's Raises Ratings to 'Baa3' From 'Ba1' -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Westlake Chemical Corporation to Baa3 from Ba1, concluding the review that was undertaken on August 5, 2011. The upgrade reflects Westlake's continued strong performance, improved profitability, access to advantaged feedstocks, and the likelihood that the company's large cash balance will be sustainable despite a significant increase in capital spending over the next several years. "The review of Westlake's ratings focused primarily on management's plans for future capital spending and the ability to maintain a sizable cash balance over time," stated John Rogers Senior Vice President at Moody's. "The company's cash balance is important as it reduces event risk and can be used to prefund potential larger capital projects that may occur later this decade." RATINGS RATIONALE Westlake's Baa3 senior unsecured rating reflects its strong financial metrics and liquidity profile, disciplined investment policy, vertical integration, and less commoditized downstream plastics portfolio (large percentage of LDPE and more specialized plastics relative to other producers). The ratings are tempered by its exposure to volatile feedstock and selling prices, the large capital requirements necessary to build new ethylene or chlor alkali capacity, limited product diversity, its size relative to other commodity plastics producers, the regional nature of its operations, and the limited number and location of its production facilities. Westlake is constructing a new chlor alkali plant at Geismar, and plans to expand both of its ethylene crackers in Lake Charles. These three projects are expected to be completed by 2014. Westlake may also expand its ethylene cracker in Calvert City if it can access a proposed pipeline that would carry ethane from the Marcellus shale to the Gulf Coast. Moody's believes that after completion of these projects Westlake will still have in excess of $500 million in cash on the balance sheet, which would greatly reduce the risk of a future capital project that would result in a large increase in debt. Moody's also has a more positive view of North American ethylene producers and expects their profitability to remain well above their global competitors outside of the Middle East. Rapid growth of shale gas production with high liquids content and the corresponding expansion of related infrastructure in the US over the next two to three years should allow ethane feedstock prices to remain advantaged relative to other international feedstocks and continue to enable the profitable growth of downstream exports (polyethylene, PVC, etc.). The stable outlook reflects Moody's expectation that Westlake will continue to generate very strong financial metrics over the next two to three years, despite heavy capital spending on new capacity. Moody's is unlikely to examine a further improvement to the company's ratings until the planned capacity expansions are on-line and have demonstrated the projected improvement in Westlake's financial performance, especially its Vinyls operations. Conversely, if the company's cash balance declines below $400 million prior to the completion of these expansions, the company's investment grade rating could come under pressure. Ratings upgraded: Westlake Chemical Corporation Guaranteed Senior Unsecured Debt at Baa3 from Ba2 (LGD4, 66%) Ratings Withdrawn: Corporate Family Rating at Ba1 Probability of Default Rating at Ba1 Outlook: Stable The principal methodology used in rating Westlake Chemical was the Global Chemical Industry Methodology published in December 2009. Westlake Chemical Corporation, headquartered in Houston, TX, is a producer of commodity petrochemicals (ethylene and styrene), plastics (polyvinyl chloride and polyethylene), as well as compounded PVC resins and fabricated PVC products (window and door profiles, siding, etc.). Revenues were $3.4 billion for the LTM ended June 30, 2011. XL GROUP: Moody's Affirms Ba1(hyb) Preferred Stock Rating --------------------------------------------------------- Moody's Investors Service has affirmed the Baa2 senior debt rating of XL Group Ltd. and the A2 insurance financial strength ratings of its operating subsidiaries. Moody's has also assigned provisional ratings to XL Group Ltd. (provisional senior debt at (P)Baa2), a wholly-owned subsidiary of XL Group plc (NYSE: XL -- not rated) and debt issuer under an existing multi-seniority shelf registration statement that was filed by XL Group plc on November 28, 2008, and amended on July 1, 2010 and September 27, 2011. The registration statement includes various classes of debt and preferred stock issuable by XL Group plc and XL Group Ltd. (as well as ordinary shares, warrants and share purchase contracts by XL Group plc). Debt securities issued by XL Group Ltd. will carry a full and unconditional guarantee from XL Group plc. No ratings were assigned to the provisional debt and provisional preferred stock of XL Group plc. Moody's also assigned a Baa2 rating to $400 million of ten year senior notes to be issued by XL Group Ltd. The notes constitute a drawdown on the shelf registration and are fully and unconditionally guaranteed by XL Group plc on a senior unsecured basis. Proceeds from the offering will be used as partial funding for the repayment at maturity of the outstanding $600 million principal amount of senior notes issued by XL Capital Finance (Europe) plc. The outlook for the ratings is stable. RATING RATIONALE According to Moody's, XL Group's ratings reflect the overall good market positions of the group's property and casualty insurance and reinsurance operating units, as well as its diversified earnings streams by geography and line of business. The ratings also reflect the sound liquidity and capitalization of the company's Bermuda operating subsidiaries, its moderating financial leverage, as well as its solid core underwriting performance and moderate catastrophe risk profile. These fundamental strengths are tempered by the intrinsic volatility of XL's reinsurance businesses and certain insurance lines, relatively moderate profitability, exposure to natural and man-made catastrophes, and its moderate coverage of interest and preference and ordinary share dividends. The rating agency noted that XL Group continues to make progress in improving its balance sheet and strengthening its core property & casualty insurance and reinsurance operations. These efforts sustained a temporary setback during the first half of 2011, as the company reported approximately $456 million in year-to-date catastrophe losses, leading to a slight net loss attributable to ordinary shareholders for the first six months of 2011. That said, these catastrophe losses, which equate to approximately 4.5% of XL Group's YE2010 shareholders' equity, compare favorably against most of its peers. Going forward, with pricing appearing to be stabilizing across both commercial lines insurance and reinsurance, Moody's expects XL Group's core underwriting results to gradually improve, though ultimate profitability may continue to face headwinds due to persistent low investment yields. These provisional ratings have been assigned with a stable outlook: XL Group Ltd. - provisional guaranteed senior unsecured debt at (P)Baa2, provisional guaranteed subordinated debt at (P)Baa3. These ratings have been affirmed with a stable outlook: XL Group Ltd. -- senior unsecured debt at Baa2, preferred stock at Ba1(hyb); XL Capital Finance (Europe) plc -- backed senior unsecured debt at Baa2; Stoneheath Re -- preferred stock at Ba1(hyb); XL Insurance (Bermuda) Ltd -- insurance financial strength at A2; XL Re Ltd -- insurance financial strength at A2; XL Insurance Switzerland -- insurance financial strength at A2; XL Insurance Company Limited -- insurance financial strength at A2; XL Reinsurance America Inc. -- insurance financial strength at A2; Greenwich Insurance Company -- insurance financial strength at A2; Indian Harbor Insurance Company -- insurance financial strength at A2; XL Specialty Insurance Company -- insurance financial strength at A2; and XL Insurance Company of New York, Inc. -- insurance financial strength at A2. XL Group plc, domiciled in Ireland with executive offices in Bermuda, is a leading provider of insurance and reinsurance coverages through its operating subsidiaries to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. As of June 30, 2011, XL Group plc reported total cash and invested assets of $36.1 billion and shareholders' equity of $10.6 billion. The last rating action on XL Group occurred on December 23, 2009, when Moody's affirmed the debt and insurance financial strength ratings of XL Group Ltd. and its subsidiaries with the outlook changed to stable from negative. The principal methodology used in this rating was Moody's Global Rating Methodology for Reinsurers published in July 2008. YRC WORLDWIDE: Jeffrey Altman Discloses 17.4% Equity Stake ---------------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, Jeffrey A. Altman and his affiliates disclosed that they beneficially own 75,011,292 shares of common stock, 218,570,388 shares of common stock issuable upon conversion of $13,507,650 in aggregate principal amount of Series B Notes, and 94,284,663 shares of common stock issuable either as Make-Whole Shares or upon conversion of the PIK Notes. The number of shares represents 17.4% of the shares outstanding based upon a total of 1,910,884,994 shares of Common Stock outstanding as of Sept. 19, 2011, as reported by the Company in its Form S-1 filed with the SEC on Sept. 23, 2011. A full-text copy of the filing is available for free at http://is.gd/KibkII About YRC Worldwide Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ: YRCW) -- http://www.yrcw.com/-- is a holding company that through wholly owned operating subsidiaries offers its customers a wide range of transportation services. These services include global, national and regional transportation as well as logistics. KPMG LLP's audit reports on the consolidated financial statements of YRC Worldwide Inc. and subsidiaries for 2009 and 2010 each contain an explanatory paragraph that states that the Company has experienced significant declines in operations, cash flows and liquidity and these conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company's balance sheet at June 30, 2011, showed $2.59 billion in total assets, $2.91 billion in total liabilities and a $328.79 million in shareholders' deficit. * * * In January 2011, Standard & Poor's Ratings Services placed its 'CCC-' corporate credit rating on YRC Worldwide Inc. (YRCW) on CreditWatch developing. At the same time, S&P is withdrawing the existing issue level ratings on Yellow Corp.'s senior unsecured debt, given the negligible amounts outstanding. "The ratings on Overland Park, Kan.-based YRCW reflect its near- term liquidity challenges, meaningful off-balance-sheet contingent obligations related to multiemployer pension plans, as well as its participation in the competitive, capital-intensive, and cyclical trucking industry," said Standard & Poor's credit analyst Anita Ogbara. "YRCW's substantial (albeit deteriorating) market position in the less-than-truckload (LTL) sector, which has high barriers to entry, partially offsets these characteristics. We characterize YRCW's business profile as weak, financial profile as highly leveraged, and liquidity as weak." In the Aug. 2, 2011, edition of the TCR, Moody's Investors Service revised YRC Worldwide Inc.'s Probability of Default Rating ("PDR") to Caa2\LD ("Limited Default") from Caa3 in recognition of the agreed debt restructuring which will result in losses for certain existing debt holders. In a related action Moody's has raised YRCW's Corporate Family Rating to Caa3 from Ca to reflect modest but critical improvements in the company's credit profile that should result from its recently-completed financial restructuring. The positioning of YRCW's PDR at Caa2\LD reflects the completion of an offer to exchange a substantial majority of the company's outstanding credit facility debt for new senior secured credit facilities, convertible unsecured notes, and preferred equity, which was completed on July 22, 2011. As reported by the TCR on May 5, 2011, Fitch Ratings downgraded YRC's Issuer default rating to 'C' from 'CC'; Secured bank credit facility rating downgraded to 'CCC/RR2' from 'B-/RR2'; and Senior unsecured rating affirmed at 'C/RR6'. In addition, Fitch has removed YRCW's ratings from Rating Watch Negative. Fitch said that although it appears increasingly likely that the company will successfully complete the restructuring, until the transactions constituting the restructuring close, which is not anticipated until late July 2011, there exists a potential for the transaction to fail, in which case Fitch expects the company would be forced to file for Chapter 11 bankruptcy protection. * Only $5 Billion of Junk Debt Remains to Mature This Year ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that according to a Sept. 23 report by Moody's Investors Service, junk-rated companies used favorable credit markets in the first half 2011 to reduce debt maturities from 2011 to 2015 by more than 30%. Where $276 billion in junk debt would have matured by 2015, the total has been reduced to $191 billion. In the near term, only $5 billion of junk debt remains to mature this year. Including maturities in 2012, $24 billion in junk remains for refinancing. At the beginning of 2011, junk maturities through 2012 totaled $45 billion, Moody's said. Junk-debt markets dried up midyear. The issuance of $1.6 billion in junk corporate bonds in August represented a 92% decline from the year before and a 90% drop from July, Moody's said in a Sept. 16 report. * Junk Defaults Predicted to Rise Only Fractionally --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the default rate by junk-rated companies should barely rise in the next year, despite the threat of sovereign default in Europe and a double-dip recession in the U.S., Moody's Investors Service said in a Sept. 21 report. Despite the August plunge in junk debt issuance, Moody's predicts that the default rate for speculative-grade companies will only rise from 2.1% at present to 2.2% a year from now. For companies with a B3 or lower rating coupled with negative outlooks, Moody's predicts a 12 percent default rate in the next year. During the peak of the last recession, the default rate among similar companies was 45%. There currently are 170 companies rated B3 or lower, along with a negative outlook. The predicted 2.2% junk default rate a year from now compares with the 14.5% peak in November 2009. The issuance of $1.6 billion in junk corporate bonds in August represented a 92% decline from the year before and a 90% drop from July, Moody's said in a Sept. 16 report. * Moody's Says Poor Market Conditions May Hit Lower-Rated Firms --------------------------------------------------------------- While many speculative-grade companies have taken care of near term maturities, some lower-rated companies could be challenged if poor market conditions persist, according to a new report from Moody's Investors Service. "Since Moody's January 2011 report, US companies have refinanced approximately $141 billion of investment grade ($56 billion) and high-yield ($85 billion) debt due 2011-2015," said Kevin Cassidy, a Moody's Vice President and Senior Credit Officer and one of the authors of the report. "Approximately $191 billion of speculative grade bonds will mature between now and the end of 2015�a 31% reduction from the $276 billion Moody's identified in Moody's annual speculative-grade refunding report published earlier this year." "Investment-grade companies primarily tackled near-term maturities, while speculative-grade companies addressed both near term and long-term maturities," said Tiina Siilaberg, a Moody's analyst and co-author. New bond issuance overall was robust in the first half of the year, outpacing the last four years. "But the high level of activity significantly slowed for speculative-grade companies in July and August as macroeconomic uncertainty increased," Siilaberg said. "However, in that two-month period, investment-grade companies issued even more bonds than last year as investors fled to quality." Speculative-grade companies have been chipping away at the once staggering maturity wall. Over half of the high-yield bonds issued so far this year were used to refinance existing debt, with only 20% deployed for mergers and acquisitions, the report noted. "While refinancing upcoming maturities should still be achievable for most, some lower-rated companies could struggle as the risk of a US double-dip recession increases, labor markets languish and the sovereign-debt crisis in Europe continues," Cassidy warned. "Many of the top 10 speculative-grade issuers with the largest amount of debt rated B3 with a negative outlook or lower will face challenges refinancing their debt and may need to revise their capital structure in some way," he said. Alternatively, if business fundamentals improve for these companies, they may be able to refinance their debt. The report features likely candidates for possible capital structure revisions, including HD Supply Inc. (Caa2 negative), with over $4.1 billion due in 2014-2015, and Texas Competitive Electric Holdings Co. (Caa2 stable), with $3.2 billion due in 2015. * Deepening Insolvency Claim Survives in Appeals Court ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in Philadelphia ruled that a creditors' committee laid out sufficient facts to justify a jury trial on claims against former managers of a bankrupt nursing home for breach of fiduciary duty and deepening insolvency. The Third Circuit appeals court reversed the district court, which had dismissed the lawsuit using the business judgment rule and the in pari delicto defense. The appeals court, in an opinion by Thomas I. Vanaskie, ruled that the business judgment rule wasn't a sufficient defense because the committee produced enough allegations to raise a question of fact as to whether the board had a reasonable basis to believe that the top executives were reliable and competent. The case is Lemington Home for the Aged v. Baldwin, 10-4456, U.S. Court of Appeals for the Third Circuit (Philadelphia). * Anchorage Capital Defends CDO Liquidation Plan Ahead of Hearing ----------------------------------------------------------------- Dow Jones' Daily Bankruptcy Review reports that hedge fund Anchorage Capital Group is defending its liquidation plan for a collateralized debt obligation that would wipe out the holders of junior, or mezzanine, debt. * Hedge Fund Rivals Scout Paulson Assets as Fortunes Turn --------------------------------------------------------- Daily Bankruptcy Review reports that John Paulson already has lots to worry about: turbulence in the stock market, a rocky economy and volatile gold prices. * Restructuring Opportunities for Some, A Wait for Others --------------------------------------------------------- Daily Bankruptcy Review reports that with default rates and bankruptcy filings earnestly sticking near their all-time lows but loads of debt coming due very soon, finding distressed opportunities is a two-pronged game of waiting while still identifying sectors that need help now, three industry veterans. * Electra Partners, Palamon Capital Sell SAV Credit --------------------------------------------------- Daily Bankruptcy Review reports that Electra Partners, Palamon Capital Partners and Morgan Stanley Alternative Investment Partners said they have sold SAV Credit to Varde Partners, a credit, distressed and special situations investor, in a deal worth GBP472 million ($741 million). * BOOK REVIEW: Learning Leadership ---------------------------------- Author: Abraham Zaleznik Publisher: Beard Books Hardcover: 548 pages Listprice: $34.95 Review by Henry Berry The lesson in Learning Leadership -- The Abuse of Power in Organizations is to "use power so that substance leads process." This is done, says the author, by keeping the "content of work at the center of communication." The premise of this intriguing book is that many managers, executives, and other business leaders allow "forms of communication [to become] the center of work." As a result, misguided and counterproductive leadership and management practices have settled into many organizations. A culprit is the popular "how-to" leadership manuals that offer simple, superficial principles that only skim the surface of leadership. Zaleznik argues that the primary way to get work done is to put aside personal agendas and deal directly with those who are involved in the work. With this emphasis on substance over process, the concept of leadership lies not in techniques, but personal qualities. The essential personal qualities of leadership are captured by the "three C's" of competence, character, and compassion. The author then delves more deeply into each of these C's. We learn, for example, that the three C's are not learned skills. Competence entails "building one's power base on talent." Character and compassion are the two other qualities of a leader that must be present before there is any talk about methods of operation, lines of communication, definition of goals, structure of a team, and the like. There is more to character that the common definition of the "quality of the person." Character also embraces, says the author, the "code of ethics that prevents the corruption of power." Compassion is defined as a "commitment to use power for the benefit of others, where greed has no place." This concept of a good leader is not idealized or unrealistic. It takes into account human nature and the troubling behavior of many leaders. Of course, any position of leadership brings with it temptations and the potential to abuse power. Effective leaders are those who "take responsibility for [their] own neurotic proclivities," says the author. They do this out of a sense of the true purpose of leadership, which is communal benefit. The power holder will "avoid the treacheries of an unreasonable sense of guilt, while recognizing the omnipresence of unconscious motivation." Zaleznik's definition of the essentials of leadership comes from his study of notable (and sometime notorious) leaders. Some tales are cautionary. The Fashion Shoe Company illustrates the problems that can occur when a leader allows action to overcome thought. The Brandon Corporation illustrates the opposite leadership failing -- allowing thought to inhibit action. Taken together, the two examples suggest that balance is needed for good leadership. Andrew Carnegie exemplifies the struggle between charisma and guilt that affects some leaders. Frederick Winslow Taylor is seen by the author as an obsessed leader. From his behavior in the Sicilian campaign in World War II, General Patton is characterized as a leader who violated the code binding leaders and those they lead. With his training in psychoanalysis and his experience in the business field, Zaleznik's leadership dissections and discussions are instructive. The reader will find Learning Leadership -- The Abuse of Power in Organizations to be an engaging text on the human qualities and frailties of leaders. Abraham Zaleznik is emeritus Konosuke Matsushita Professor of Leadership at the Harvard Business School. He is also a certified psychoanalyst. ********* 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 ***