/raid1/www/Hosts/bankrupt/TCR_Public/120517.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, May 17, 2012, Vol. 16, No. 136
Headlines
261 EAST 78: Can Use MB Financial Cash Collateral Thru June 30
261 EAST: Hires Newhouse & Shey as Real Estate Counsel
261 EAST: Hires Corcoran Group as Leasing Agent
3900 BISCAYNE: Can Use BB&T Cash Collateral Through May 21
AERCAP AVIATION: S&P Rates New Notes Due 2017 'BB+'
AEROFLEX INC: S&P Puts 'B+' Corp. Credit Rating on Watch Negative
AES EASTERN: Accuses Utility for Protesting $240M Power Plant Sale
AGS LLC: Moody's Revises PDR to 'Caa3'/LD, Cuts CFR to 'Caa3'
ALIX MERGER: Moody's Assigns 'B1' Corp. Family Rating
ALLIED IRISH: Issues 3.6 Billion Ordinary Shares to NPRFC
AMERICAN AIRLINES: Wants to Walk Away From Aircraft Leases
AMERICAN AIRLINES: Can Pursue Costs in DiFiore Action
AMERICAN AIRLINES: Parties Seek Stay Relief to Pursue PI Claims
AMERICAN AIRLINES: Removes Five Senior Leadership Positions
AMERICAN REALTY: Wants Plan Filing Extension Until Sept. 24
AMERICAN REALTY: Creditors Want Case Dismissed on Bad Faith Filing
AMERICAN REALTY: Taps Marquis Aurbach as Bankruptcy Counsel
ANGARAKA LIMITED: Modified Plan Declared Effective
ALQUILERES M BARRIO: Case Summary & 12 Largest Unsec. Creditors
ASCEND LEARNING: S&P Rates $370MM Credit Facilities at 'B'
BAKERS FOOTWEAR: Awards Restricted Stock Units to Executives
BANKUNITED FINANCIAL: RSUI Looks to Sink Execs' D&O Policy Claims
BERNARD L. MADOFF: 26 Suits Lawsuits Removed From Bankr. Court
BIOPACK ENVIRONMENTAL: Rockland Now Owns Majority of Voting Rights
BMF INC: Has OK to Hire Carmen D. Conde Torres as Bankr. Lawyer
BMF INC: Gets Court's Nod to Hire Jimenez Vazquez as Accountant
BROADSIGN INT'L: Court Approves Sale to JEDFam Group
CAPITOL INFRASTRUCTURE: To Remain in Operation During Bankruptcy
CERIDIAN CORP: S&P Assigns Prelim 'B-' Rating on $500MM Sr. Notes
CHESAPEAKE ENERGY: S&P Cuts Corporate Credit Rating to 'BB-'
CHRISTIAN BROTHERS: Can Hire Re/Max to Sell Burbank Property
CHRISTIAN BROTHERS: Can Hire Newmark to Sell Stratton Road Lot
CHRISTIAN BROTHERS: Committee Can Employ Wall as Consultant
CIRCLE ENTERTAINMENT: Incurs $1.4 Million Net Loss in Q1
COMPASS MINERALS: S&P Affirms 'BB+' Corporate Credit Rating
COMPOSITE TECHNOLOGY: Court OKs Landau to Pursue Insider Claims
CONSOLIDATED COMMUNICATIONS: S&P Rates $350MM Unsecured Notes 'B-'
CONTRACT RESEARCH: Freeport Financial Preparing to Take Over
CROW PARTNERS: Wants Case Dismissed After Settling With Lenders
DC DEVELOPMENT: Can Hire Wisp Resort Dev't. as Real Estate Broker
DC DEVELOPMENT: Can Continue Using Cash Collateral Through July 15
DEAN FOODS: Fitch Upgrades Rating on Sr. Unsecured Debt to 'B'
DELPHI FINANCIAL: Fitch Raises Subordinated Notes Rating From 'BB'
DEWEY & LEBOEUF: Lawyers May Never Be Paid in MF Global Case
DIALOGIC INC: Annual Meeting of Stockholders Set for Aug. 8
E-DEBIT GLOBAL: Incurs $308,000 Net Loss in First Quarter
EASTMAN KODAK: Plan Filing Exclusivity Extended to Oct. 15
EASTMAN KODAK: Lease Decision Deadline Moved to Aug. 16
EASTMAN KODAK: Wins Nod to Pay $13.5-Mil. Bonuses for Employees
EASTMAN KODAK: Wins Nod to Sell Photo Services Biz to Shutterfly
ENERGY CONVERSION: Wants Sept. 11 Deadline to Decide on Leases
ENERGY CONVERSION: Taps Schafer and Weiner as Conflicts Counsel
ENERTECH ENVIRONMENTAL: S&P Withdraws 'D' Rating on $130MM Bonds
FERROMET CORP: Files for Chapter 11 Bankruptcy Protection
FLINT ENERGY: S&P Raises Corp. Credit Rating From 'BB-'; Off Watch
FNBH BANCORP: Agrees to Sell 8,000 Units for $12 Million
GENERAL MARITIME: Incurs $46.9 Million Net Loss in First Quarter
GREEN ENDEAVORS: Delays Q1 Form 10-Q Due to CFO Departure
HARLAND CLARKE: S&P Assigns 'B+' Rating on $295MM Secured Notes
HARRISBURG, PA: 3rd Cir. Rejects Bankruptcy Appeal
HARTFORD FINANCIAL: Fitch Hikes Jr Subordinated Debt Rating to BB+
HAWKER BEECHCRAFT: Taps Alvarez & Marsal as Restructuring Advisors
HAWKER BEECHCRAFT: Has Green Light to Pay Employees and Vendors
HEARTLAND MEMORIAL: DLA Piper Fees Suit to Stay in Bankr. Court
HERITAGE HIGHGATE: Cornerstone Investors Lose 3rd Cir. Appeal
HOSTESS BRANDS: Judge Denies Motion to Reject Teamster Contracts
HOSTESS BRANDS: Two Firms Make Formal Offer to Buy Assets
HOUGHTON MIFFLIN: Fitch's Junk Rating Affects $3.1 Million in Debt
HUDBAY MINERALS: S&P Gives 'B' Corp. Credit Rating; Outlook Stable
INDALEX INC: Sues Kirkland & Ellis, Alleges Investment Conflicts
IMPERIAL PETROLEUM: Settles with Investors for 18.1-Mil. Shares
IMPLANT SCIENCES: Appoints D. Jones as VP of Sales and Marketing
INFUSYSTEM HOLDINGS: Delays Q1 Form 10-Q for Executives' Exodus
ISAACSON STEEL: Can Sell Berlin, N.H. Properties for $2.4-Mil
J.W. KENNEDY: June 21 Auction of Food Facility Set
KAISER ALUMINUM: S&P Assigns 'BB-' Corporate Credit Rating
KMART CORP: Bankruptcy Court Won't Hear Pre-BAPCPA Tax Issue
KODIAK OIL: S&P Affirms 'B-' Rating on $750-Mil. Unsecured Notes
LAUREL HIGHLANDS: Voluntary Chapter 11 Case Summary
LE-NATURE'S INC: Malpractice Suit Against K&L Gates Revived
LEVI STRAUSS: Repurchases CNY5.1BB Eurobonds for $56.4 Million
LIBBEY INC: S&P Assigns 'B+' Rating on $450-Mil. Sr. Secured Notes
LIGHTSQUARED INC: Fails to Win Approval to Use Cash Collateral
LPATH INC: Swings to $645,900 Net Income in First Quarter
LRL ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
MARIANA RETIREMENT FUND: Govt. Asks Judge to Toss Ch. 11 Case
MILAGRO OIL: Moody's Downgrades CFR to 'Caa3'; Outlook Negative
MOLYCORP INC: S&P Assigns Preliminary 'B' Corp. Credit Rating
MONTANA ELECTRIC: Yellowstone's Bid to Exit Coop Hits Snag
MOORE SORRENTO: Exclusivity Periods Extended to June 1
MOORE SORRENTO: Wells Fargo Reserves Rights Under Amended Plan
MOTORS LIQUIDATION: IRS Rules New GM Securities as Taxable
NEONODE INC: Incurs $1.5 Million Net Loss in First Quarter
NES RENTALS: S&P Assigns 'CCC+' Rating to $83MM 2nd Lien Term Loan
NEWLAND INTERNATIONAL: In Talks With Bondholders, Skips Payment
NGPL PIPECO: Moody's Assigns Ba3 Sr. Sec. Ratings; Outlook Neg.
NGPL PIPECO: Fitch Rates Proposed $550-Mil. Senior Notes 'BB-'
NOBILITY HOMES: NASDAQ Panel Grants Continued Listing
NORTHERN CALIFORNIA BANCORP: Terminates Common Stock Registration
NV ENERGY: Fitch Affirms 'BB' Long-term Issuer Default Rating
OILSANDS QUEST: Obtains CCAA Protection Extension Until June 29
PACER MANAGEMENT: Files Schedules of Assets and Liabilities
PATRIOT COAL: Moody's Downgrades CFR to 'Caa1'; Outlook Stable
PEABODY ENERGY: Fitch Affirms Issuer Default Rating at 'BB+'
PETTERS GROUP: Supreme Court Won't Review Founder's Conviction
PETROSTAR PETROLEUM: 2011 Annual Financial Audit in Progress
PHYSICAL PROPERTY: Incurs HK$97,000 Net Loss in First Quarter
PINNACLE AIRLINES: Delays Q1 Form 10-Q Due to Bankruptcy Filing
PRINCETON REVIEW: Suspending Filing of Reports with SEC
PROTEONOMIX INC: Hires Demetrius & Company as New Accountants
PROVIDENT COMMUNITY: Incurs $202,000 Net Loss in First Quarter
PSS WORLD: S&P Revises Outlook to Negative on Divestiture
QUALITY PROPERTIES: Pine Apple's Lien Subordinate to Bank's
QUALITY PROPERTIES: Bankr. Court Recognizes Sherwin-Williams' Lien
QUALITY PROPERTIES: Shelby Concrete Lien Has Priority Over Bank's
QUALITY PROPERTIES: Bankr. Court Recognizes Doormaker's Lien
QUALITY PROPERTIES: Court to Remand Construction Materials' Claims
R.R. DONNELLEY: Fitch Affirms Issuer Default Rating at 'BB+'
RAHAXI INC: Suspending Filing of Reports with SEC
RESIDENTIAL CAPITAL: Has Interim Approval of $1.45-Bil. DIP Loan
RESIDENTIAL CAPITAL: Has $150-Mil. of DIP Financing From Ally
RESIDENTIAL CAPITAL: Proposes to Use Citibank Cash Collateral
RESIDENTIAL CAPITAL: Has Fortress, Ally-Led Back-Up Sale Process
RESIDENTIAL CAPITAL: Wants Schedules Filing Deadline Extended
RESIDENTIAL CAPITAL: Fitch Lowers IDR to 'D' on Bankruptcy Filing
RIVIERA HOLDINGS: Swings to $4 Million Net Loss in First Quarter
ROBERT LUPO: Murphy & King Wins $30,000 in Legal Fees
ROOFING SUPPLY: S&P Lowers Corporate Credit Rating to 'B'
ROTECH HEALTHCARE: Moody's Says Billing Errors Credit Negative
RUBICON FINANCIAL: Court Reinstates AMIN Securities Lawsuit
RUDEN MCCLOSKY: Says It Already Paid $4.6MM Wells Fargo Debt
SAGE PHYSICIAN: Case Summary & 20 Largest Unsecured Creditors
SALLY HOLDINGS: Moody's Rates $700MM Sr. Unsecured Notes 'Ba3'
SHINER CHEMICALS: Wants Involuntary Petition Dismissed
SOMERSET MEADOWS: U.S. Trustee Unable to Form Committee
SPECTRE PERFORMANCE: Files for Chapter 11 in Riverside, Calif.
SPECTRE PERFORMANCE: Case Summary & 15 Largest Unsecured Creditors
SPEEDY CASH: S&P Affirms 'B' Issuer Credit Rating; Outlook Stable
STOCKTON, CA: Still Lacks Solution to Financial Problems
STONER AND COMPANY: U.S. Trustee Seeks Case Dismissal
TELETOUCH COMMUNICATIONS: Maturity of EWB Loan Extended to Aug. 3
TOUSA INC: 11th Cir. Says Lenders Liable for Fraudulent Transfer
TOUSA INC: 11th Circ. Backs Broad Fraudulent-Transfer Liability
TRM HOLDINGS: S&P Assigns Preliminary 'B' Corp. Credit Rating
TRONOX INC: Trial Between Trust, Parent Opens in NY Court
TTC PLAZA: Thompson & Knight Partner Named as Chapter 7 Trustee
UNI-PIXEL INC: Incurs $2.04-Mil. Net Loss in First Quarter
UNIVAR INC: Moody's Rates New Term Loan 'B2', Affirms 'B2' CFR
UNIVERSITY GENERAL: Swings to $489,000 Net Income in Fist Quarter
USEC INC: Fails to Comply with NYSE's $1 Apiece Bid Price Rule
VALHI INC: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable
VELATEL GLOBAL: Delays First Quarter Form 10-Q for Review
VERSO PAPER: Moody's Cuts Rating on 2nd Lien Notes to 'Caa1'
VERSO PAPER: S&P Raises Corporate Credit Rating to 'B' from 'SD'
VITRO SAB: Has a 'Cockamamie' Bankruptcy, Professor Says
VWR FUNDING: S&P Assigns 'B+' Rating on Senior Secured Debt
WASH CONCEPTS: Case Summary & 20 Largest Unsecured Creditors
WAVE SYSTEMS: Incurs $8.3 Million Net Loss in First Quarter
WESTBURY COMMUNITY: Case Summary & 20 Largest Unsecured Creditors
WOLVERINE HEALTHCARE: Moody's Assigns 'B2' CFR; Outlook Stable
WOODCREST COUNTY CLUB: Files for Chapter 11 Bankruptcy
WORLD SURVEILLANCE: Swings to $1.4-Mil. Net Loss in First Quarter
WVSV HOLDINGS: Buckeye, Ariz. Landowner Files for Chapter 11
WVSV HOLDINGS: Case Summary & 6 Largest Unsecured Creditors
XTREME GREEN: Incurs $635,000 Net Loss in First Quarter
ZHONG WEN: Reports $34,000 Net Income in First Quarter
ZOO ENTERTAINMENT: David Smith Discloses 73.7% Equity Stake
* 3rd Circ. Says Ch. 11 Collateral Value Can't Be Hypothetical
* Section 523(a)(14) on Taxes Given Narrow Reading
* Sanctions Imposed for Saying Jesuits Infiltrate Court
* Moody's Says US Retail Sector to Face Fiscal Policy Risks
* Moody's Says US Supermarkets Can Withstand Pension Shortfall
* Greenberg Traurig Opens in Warsaw With Former Dewey Lawyers
* Recent Small-Dollar & Individual Chapter 11 Filings
*********
261 EAST 78: Can Use MB Financial Cash Collateral Thru June 30
--------------------------------------------------------------
The U.S. Bankruptcy Court approved a Cash Collateral Stipulation
and Order giving 261 East 78 Realty Corp. authority to use cash
collateral in order to run the day-to-day operations of its
business, including without limitation, paying utility charges,
management fees, repairs, security needs and other customary and
necessary expenses.
The Debtor may use cash collateral through the earlier to occur of
June 30, 2012 or such later date upon which the Court fixes the
Termination Date or upon further Court order.
The Debtor has submitted a budget for the period from April 1,
2012 through June 30, 2012. The Debtors expect to incur $52,500
in total disbursements during the period and end the period with
$130,838 in cash.
The Secured Creditor, MB Financial Bank, N.A., is granted valid,
perfected, and enforceable liens upon and security interests in
all of the types of property coming into existence after the
Petition Date, but excluding any cause of action under Sections
544, 547, 548 or 550 of the Bankruptcy Code and related proceeds.
The Debtor disputes that, as of the Petition date, it owed MB
Financial $17,674,827. However, for purposes of the Cash
Collateral Stipulation and pending a decision on the parties'
adversary proceeding, the Debtor acknowledges and admits that, as
of the Petition date, it owed MB Financial that amount.
As reported by the Troubled Company Reporter on April 11, 2012,
the Debtor asked the Bankruptcy Court to expunge MB Financial's
lien and proof of claim and determine that MB Financial has failed
to establish a valid lien on its premises located at 261 East 78th
Street, New York. On Feb. 2, 2012, MB Financial a filed proof of
claim for $17.67 million. MB Financial claims to be a secured
creditor of the Debtor having perfected its claims through
"recorded mortgages and related documents". Chris Georgoulis,
Esq., at Georgoulis & Associates PLLC, in New York, attorney for
the Debtor, assert that MB Financial does not have standing to
assert its claim because it does not have the original mortgage
notes. Without proper documentation, MB Financial's claim must be
expunged because there is proof to establish its lien or claim, he
adds.
According to the Debtor, there are three relevant mortgage loan
notes that MB Financial must have in its possession to have
standing to foreclose, namely:
(1) the original acquisition note of $5.58 million;
(2) a consolidated, amended and restated building loan note of
$6.68 million; and
(3) a consolidated, amended and restated project loan note of
$205,000.
The Debtor made a mortgage loan with Broadway Bank, Chicago,
Illinois, a bank that is no longer in business, in April 2007. At
that time executed an acquisition loan note, a building loan note
and a project loan note in favor of Broadway, as well as related
mortgages and other loan documents. Two of these loans were
subsequently extended in September 2009, at which time the Debtor
executed a gap building loan note, a consolidated building loan
note, a gap project loan note and a consolidated project loan note
in favor of Broadway.
On April 23, 2010, the FDIC took over Broadway Bank and MB
Financial agreed to purchase certain of Broadway's assets through
the execution of a purchase and assumption agreement with FDIC.
About 261 East
261 East 78 Realty Corp. owns real property located at 261 East
78th Street, in New York. The premises consist of seven
commercial units, three of which are currently occupied. 261 East
78 Realty filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case
No. 11-15624) on Dec. 6, 2011. The case was assigned to Judge
Robert E. Gerber. The Chapter 11 filing was precipitated by the
commencement of foreclosure proceedings on the premises. The
Debtor scheduled $20.2 million in assets and $18.8 million in
liabilities. The petition was signed by Lee Moncho, president.
261 EAST: Hires Newhouse & Shey as Real Estate Counsel
------------------------------------------------------
261 East 78 Realty Corp. asks permission from the U.S. Bankruptcy
Court to employ Newhouse & Shey LLP as special real estate
counsel.
The Debtor seeks to employ N&S for the purpose of the leasing of
its premises, the completion of the construction, and the
negotiation with the current tenants occupying the premises
regarding the payment of rent by tenants and other related
matters.
N&S will coordinate with Shaked & Posner, the Debtor's bankruptcy
counsel.
John Newhouse, Esq., attests that N&S, is a "disinterested person"
as the term is defined in Section 101(14) of the Bankruptcy Code.
N&S will be paid according to its normal hourly rates of $400 per
hour for partners and $225 to $300 per hour for associates.
About 261 East
261 East 78 Realty Corp. owns real property located at 261 East
78th Street, in New York. The premises consist of seven
commercial units, three of which are currently occupied. 261 East
78 Realty filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case
No. 11-15624) on Dec. 6, 2011. The case was assigned to Judge
Robert E. Gerber. The Chapter 11 filing was precipitated by the
commencement of foreclosure proceedings on the premises. The
Debtor scheduled $20.2 million in assets and $18.8 million in
liabilities. The petition was signed by Lee Moncho, president.
261 EAST: Hires Corcoran Group as Leasing Agent
-----------------------------------------------
261 East 78 Realty Corp. asks the U.S. Bankruptcy Court for
permission to employ NRT NY LLC, dba The Corcoran Group, as
leasing agent.
Corcoran will "attempt to obtain satisfactory tenants to lease
portion(s) of the Premises on terms to be approved by [the
Debtor]," the Debtor said in court papers.
The Debtor will pay Corcoran a commission equivalent the rates in
a rate schedule annexed to the parties' Exclusive Right To Lease
Agreement. Payment will be deemed earned and payable upon
execution of a lease agreement by both parties, and Corcoran will
be paid as a priority professional expense.
The Debtor believes the firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
About 261 East
261 East 78 Realty Corp. owns real property located at 261 East
78th Street, in New York. The premises consist of seven
commercial units, three of which are currently occupied. 261 East
78 Realty filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case
No. 11-15624) on Dec. 6, 2011. The case was assigned to Judge
Robert E. Gerber. The Chapter 11 filing was precipitated by the
commencement of foreclosure proceedings on the premises. The
Debtor scheduled $20.2 million in assets and $18.8 million in
liabilities. The petition was signed by Lee Moncho, president.
3900 BISCAYNE: Can Use BB&T Cash Collateral Through May 21
----------------------------------------------------------
The Hon. A. Jay Cristol of the U.S. Bankruptcy Court for the
Southern District of Florida authorized, on an interim basis, 3900
Biscayne LLC to use the cash collateral of Branch Banking and
Trust Company through May 21, 2012, in accordance with a budget.
Judge Cristol orders that the Debtor will not make any payments
for the line item titled "Phase II Tenant Build-Out ($55,000 in
total)" without prior notice and written approval by or on behalf
of BB&T. Moreover, no payments will exceed the line items on the
budget by an amount exceeding 5% of each such line item.
As adequate protection for any diminution in value of the
collateral, the Debtor will grant BB&T replacement liens against
all of the Debtor's assets, to the same priority, validity and
extent that BB&T held prepetition.
As additional adequate protection, the Debtor will make monthly
payments to BB&T of interest only on the A Note principal of
$10,800,000 at the annual rate of 2.7%.
A further hearing on the motion is set for May 17, 2012, at 3:00
p.m.
A copy of the Cash Collateral Order and budget is available
for free at:
http://bankrupt.com/misc/3900BISCAYNE_cashcoll_intorder.pdf
About 3900 Biscayne
3900 Biscayne, LLC, is a Florida limited liability company which
owns real property located at 3900 Biscayne, in Miami, currently
leased to Miami Arts, Inc., a tuition-free public charter school
offering college-preparatory academic curriculum and conservatory-
style training in the visual and performing arts. The Company
filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 11-22948)
on May 12, 2011, in Miami. Judge A. Jay Cristol presides over the
case. James C. Moon, Esq., and Peter D. Russin, Esq., at Meland
Russin & Budwick, P.A., in Miami, represent the Debtor in its
Chapter 11 effort. The Debtor disclosed $14,857,484 in total
assets and $13,691,533 in total liabilities as of the Chapter 11
filing. To date, the U.S. Trustee has not appointed an official
committee of unsecured creditors in the Debtor's case.
AERCAP AVIATION: S&P Rates New Notes Due 2017 'BB+'
---------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' issue rating
to AerCap Aviation Solutions B.V.'s notes maturing in 2017, a rule
144A offering with registration rights. AerCap Aviation Solution's
parent, AerCap Holdings N.V. (BBB-/Stable/--), guarantees the
notes. The company will use proceeds to invest in aircraft and
repay debt. The issue rating is one notch below the 'BBB-'
corporate credit rating because of the large percentage of secured
debt in AerCap's capital structure--secured debt and
securitizations equal about two-thirds of its total assets.
"The rating on AerCap Holdings N.V. reflects its position as a
major provider of aircraft operating leases, ownership of new-
technology aircraft with relatively stable asset values, and our
expectation that the company will maintain a relatively consistent
financial profile through 2013, despite the addition of 38
aircraft over that period. We expect funds from operations (FFO)
to debt to remain about 10%, acceptable for an aircraft leasing
company. Inherent risks of cyclical demand and lease rates for
aircraft, as well as a substantial percentage of encumbered
assets, limit the credit rating. We characterize AerCap's business
risk profile as 'satisfactory,' its financial risk profile as
'significant,' and its liquidity as 'adequate' under our
criteria," S&P said.
"The outlook is stable. We expect AerCap's financial profile to
remain relatively consistent through 2013, despite incremental
debt to fund the addition of a substantial number of committed
aircraft deliveries over that period, with potential further
acquisitions through sale/leasebacks. We could raise ratings if
aircraft lease rates improved significantly from current levels
because of stronger demand, resulting in FFO to debt increasing to
the mid-teens percent area for a sustained period. We could lower
ratings if lease rates deteriorated, causing FFO to debt to
decline to the high-single-digit percent area for a sustained
period, or if the company's access to capital became constrained
(which could occur if Europe's sovereign debt problems expand into
a global financial crisis)," S&P said.
RATINGS LIST
AerCap Holdings N.V.
Corporate credit rating BBB-/Stable/--
Rating Assigned
AerCap Aviation Solutions B.V.
New notes due 2017 BB+
AEROFLEX INC: S&P Puts 'B+' Corp. Credit Rating on Watch Negative
-----------------------------------------------------------------
Standard & Poor's Rating Services placed its 'B+' corporate credit
rating for Plainsview, N.Y.-based Aeroflex Inc., along with its
'BB-' issue-level rating on the company's senior secured credit
facilities, on CreditWatch with negative implications.
"The CreditWatch placement reflects Aeroflex's diminished EBITDA
cushion on its financial covenant, as well as deteriorating credit
measures in recent quarters," said Standard & Poor's credit
analyst Andrew Chang. "The cushion under the company's leverage
covenant was about 5% as of the quarter ending March 2012, and we
believe it will remain thin over the near term given scheduled
step-downs later in 2012. Aeroflex is currently seeking an
amendment to its credit facility in order to improve headroom and
maintain compliance," added Mr. Chang.
"We will monitor developments in Aeroflex's negotiation with its
lenders. If Aeroflex is able to amend its covenants to restore the
headroom to near the 20% range, we will revise our view of
liquidity to 'adequate' and affirm the rating with a negative
outlook. The negative outlook would reflect weak operating
performance and the uncertain near term earnings prospects. If
Aeroflex is unable to amend its credit agreement over the coming
month, then it would be at risk of a technical default on the
existing bank agreement covenant, depending on near term
performance," S&P said.
AES EASTERN: Accuses Utility for Protesting $240M Power Plant Sale
------------------------------------------------------------------
Lance Duroni at Bankruptcy Law360 reports that AES Eastern Energy
LP accused New York State Electric & Gas Corp. on Monday of
improperly taking a contract dispute with the company to
regulators weighing approval of the $240 million sale of AES' two
operating power plants.
About AES Eastern
Ithaca, New York-based AES Eastern Energy, L.P., either directly
or indirectly, control six coal-fired electric generating plants
located in New York State. Currently, the Debtors actively
operate two of the six power plants and sell the electricity
generated by those plants into the New York wholesale power market
to utilities and other intermediaries under short-term agreements
or directly in the spot market.
AES Eastern Energy and 13 affiliates filed for Chapter 11
bankruptcy (Bankr. D. Del. Case Nos. 11-14138 through 11-14151) on
Dec. 30, 2011. Lawyers at Weil, Gotshal & Manges LLP and
Richards, Layton & Finger, P.A., are legal counsel to AES Eastern
Energy and affiliates. Barclays Capital is serving as investment
banker and financial advisor. Kurtzman Carson Consultants is the
claims and noticing agent. AES Eastern Energy estimated
$100 million to $500 million in assets and $500 million to
$1 billion in debts. The petition was signed by Peter Norgeot,
general manager.
Gregory A. Horowith, Esq., and Robert T. Schmidt, Esq., at Kramer,
Levin, Naftalis & Frankel LLP; and William T. Bowden, Esq.,
Benjamin W. Keenan, Esq., and Karen B. Skomorucha, Esq., at Ashby
& Geddes, P.A., serve as counsel to the Creditors Committee. FTI
Consulting Inc. is the financial advisor.
AES Eastern Energy prevailed over opposition and obtained
authorization to hold a March 26 auction for the two operating
power plants. Under a deal reached prepetition, the Debtor would
turn the two operating facilities over to debt holders in exchange
for debt, absent higher and better offers.
AGS LLC: Moody's Revises PDR to 'Caa3'/LD, Cuts CFR to 'Caa3'
-------------------------------------------------------------
Moody's Investors Service revised AGS, LLC's Probability of
Default (PD) rating to Caa3/LD (Limited Default) from Caa3
reflecting the occurrence of a distressed exchange of
approximately $7.9 million senior notes (unrated, "Holdco debt")
issued by AGS's parent company -- AGS Holdings, LLC. The Holdco
debt had an original maturity date of May 14, 2012 and was
extended by 10 days to May 24, 2012 on May 11, 2012. Moody's views
the extension was executed in order to avoid a payment default and
considers this extension a distressed exchange. In approximately
three business days, Moody's will remove the LD designation from
the PD rating. In the same rating action, Moody's affirmed the
Caa2 rating of the existing senior secured term loan facilities
due May 2013 and withdrew the rating of the revolving credit
facility since it matured on May 14, 2012 and was fully repaid.
The Corporate Family Rating (CFR) was revised to Caa3 from Caa2,
driven by a change of family recovery assumption to 50% from 65%
due to debt structure shift to a bond/bank loan structure per
Moody's loss given default methodology.
Separately, all ratings assigned on April 18, 2012 to AGS's
refinancing debt to be issued by AGS Holdings, including the Caa1
CFR and negative outlook, were unaffected by the action. Moody's
will monitor the company's progress in its refinancing effort;
however, Moody's will withdraw the ratings if the refinancing is
not consummated in the next few weeks.
AGS announced that its owners have infused approximately $40
million cash to fund the following: 1) repayment of all the
outstanding balance on the revolver; 2) a buyout of a key game
development agreement; and 3) extra liquidity needed for corporate
purpose.
The rating actions are as follows:
AGS, LLC
Probability of Default Rating -- revised to Caa3/LD from Caa3
Corporate Family Rating -- lowered to Caa3 from Caa2
Senior secured Delayed Draw Term loan -- affirmed at Caa2, LGD
3, 33%
Senior secured term loan - affirmed at Caa2, LGD 3, 33%
Senior secured revolving credit facility -- withdrawn upon
maturity
AGS Holdings, LLC -- all ratings remain unchanged
Corporate Family rating at Caa1
Probability of Default rating at Caa1
$150 million Secured second lien notes at Caa1 LGD 4, 50%
Rating Rationale
The Caa3 CFR reflects the heightened near term default risk due to
rising uncertainty in completing the refinancing, concerns on the
company's on-going liquidity given tight financial covenants and
lack of revolver. Additionally, ratings consider the company's
very small scale, significant geographic and customer revenue
concentration and heavy reliance on a few key managers for game
development.
The negative outlook reflects the potential need to cure covenant
breach, or reliance on equity cure rights to avoid covenant
default.
Rating upgrade is unlikely in the near term. Ratings could be
downgraded if AGS defaults on entire debt structure including the
scenarios of a distressed debt exchange or a payment default.
AGS LLC designs, manufactures, and distributes gaming machines
mainly for the Native American casino market.
The principal methodology used in rating AGS, LLC was the Moody's
Global Business & Consumer Service Industry Methodology published
in October 2010. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
ALIX MERGER: Moody's Assigns 'B1' Corp. Family Rating
-----------------------------------------------------
Moody's Investors Service assigned a B1 corporate family rating
and probability of default rating to Alix Merger Sub, LLP, a new
entity formed by funds advised and/or managed by CVC Capital
Partners ("the sponsor") that will merge into AlixPartners, LLP
("AlixPartners" - the surviving entity) at transaction closing.
Moody's also assigned Ba3 ratings to Alix Merger Sub, LLP's
proposed first lien senior secured credit facility, consisting of
a $75 million revolving credit facility due 2017 and a $600
million term loan due 2019. Moody's assigned a B3 rating to the
proposed $220 million second lien senior secured term loan due
2019. The ratings outlook is stable.
The B1 rating reflects AlixPartners' high pro forma leverage of
6.1 times as of the fiscal-year ended December 31, 2011 (adjusted
for the transaction and including Moody's standard adjustments).
However, the rating is supported by Moody's expectation that
strength in the Enterprise Improvement and International
businesses will translate into higher profitability levels such
that leverage will decline to 5.5 times over the next 12 to 18
months.
Ratings assigned:
Alix Merger Sub, LLP
Corporate family rating at B1
Probability of default rating at B1
Proposed $75 million first lien senior secured revolving credit
facility due 2017 at Ba3 (LGD3, 35%)
Proposed $600 million first lien senior secured term loan due 2019
at Ba3 (LGD3, 35%).
Proposed $220 million second lien senior secured term loan due
2019 at B3 (LGD5, 88%)
Ratings affirmed and to be withdrawn at transaction closing:
AlixPartners, LLP (old entity)
Corporate family rating at Ba3
Probability of default rating at B1
Senior secured revolving credit facility due 2012 at Ba3 (LGD3,
32%)
Senior secured term loan due 2013 at Ba3 (LGD3, 32%)
Ratings Rationale
Proceeds from the proposed bank debt combined with approximately
$494 million of cash and rolled equity will be used to fund the
acquisition of AlixPartners and repay existing debt. The
transaction is expected to close in June.
AlixPartners' B1 corporate family rating reflects its high
leverage, expectations for modest free cash flow generation, and
relatively small scale. The rating is also constrained by
continued softness in the North American Turnaround &
Restructuring ("TRS") business and ongoing risks associated with
employee retention, particularly as the business transitions to
new ownership. The rating is supported by the company's broad
portfolio of diversified consulting services that helps to
mitigate exposure to economic cycles, a recent recovery in
revenues and earnings, and the relative stability of operating
margins owing to a high proportion of variable expenses. The
rating also derives support from the company's good pro forma
liquidity profile and coverage with EBITDA less capex to interest
in excess of 2.0 times.
The stable outlook reflects Moody's expectation that AlixPartners'
will grow the top line and earnings despite continued softness in
North American TRS, and apply free cash flow to debt reduction
such that leverage will improve from initial pro forma levels.
The rating could be downgraded if profitability contracts such
that debt to EBITDA remains above 6.0 times or EBITDA less capex
to interest falls below 2.0 times. Greater than anticipated
working capital usage that result in negative free cash flow or a
material weakening of the liquidity profile could also pressure
the ratings. Debt financed acquisitions and dividends could also
result in a ratings downgrade.
The ratings could be upgraded if debt to EBITDA is sustained below
4.0 times and EBITDA less capex to interest exceeds 3.5 times. An
upgrade would also require that the company sustain conservative
financial policies.
The ratings are subject to the conclusion of the transactions, as
proposed, and Moody's review of final documentation.
The principal methodology used in rating AlixPartners LLP was the
Global Business & Consumer Service Industry Rating Methodology
published in October 2010. Other methodologies used include Loss
Given Default for Speculative-Grade Non-Financial Companies in the
U.S., Canada and EMEA published in June 2009.
Founded in 1981, AlixPartners LLP is a global provider of a broad
range of consulting services, including financial advisory,
enterprise improvement, turnaround and restructuring, and
information management. The company is being acquired by funds
advised and/or managed by CVC Capital Partners.
ALLIED IRISH: Issues 3.6 Billion Ordinary Shares to NPRFC
---------------------------------------------------------
Allied Irish Banks, p.l.c., has issued and allotted 3,623,969,972
ordinary shares to the National Pensions Reserve Fund Commission
(NPRFC) by way of bonus issue. This number of shares is equal to
the aggregate cash amount of the annual dividend of EUR280 million
on the NPRFC's holding of EUR3.5 billion 2009 Non Cumulative
Preference Shares, divided by the average price per share in the
30 trading days prior to May 13, 2012.
Application will be made in due course for the listing of these
new shares. The total number of AIB ordinary shares in issue post
this bonus issue is 517,117,096,249. The Irish State, through the
NPRFC, owns 99.8% of the ordinary shares of AIB.
About Allied Irish Banks
Allied Irish Banks, p.l.c. -- http://www.aibgroup.com/-- is a
major commercial bank based in Ireland. It has an extensive
branch network across the country, a head office in Dublin and a
capital markets operation based in the International Financial
Services Centre in Dublin. AIB also has retail and corporate
businesses in the UK, offices in Europe and a subsidiary company
in the Isle of Man and Jersey (Channel Islands).
Since the onset of the global and Irish financial crisis, AIB's
relationship with the Irish Government has changed significantly.
As at Dec. 31, 2010, the Government, through the National Pension
Reserve Fund Commission ("NPRFC"), held 49.9% of the ordinary
shares of the Company (the share of the voting rights at
shareholders' general meetings), 10,489,899,564 convertible non-
voting ("CNV") shares and 3.5 billion 2009 Preference Shares. On
April 8, 2011, the NPRFC converted the total outstanding amount of
CNV shares into 10,489,899,564 ordinary shares of AIB, thereby
increasing its holding to 92.8% of the ordinary share capital.
In addition to its shareholders' interests, the Government's
relationship with AIB is reflected through formal and informal
oversight by the Minister and the Department of Finance and the
Central Bank of Ireland, representation on the Board of Directors
(three non-executive directors are Government nominees),
participation in NAMA, and otherwise.
The Company reported a loss of EUR2.29 billion in 2011, a loss of
EUR10.16 billion in 2010, and a loss of EUR2.33 billion in 2009.
Allied Irish's consolidated statement of financial position for
the year ended Dec. 31, 2011, showed EUR136.65 billion in total
assets, EUR122.18 billion in total liabilities and EUR14.46
billion in shareholders' equity.
AMERICAN AIRLINES: Wants to Walk Away From Aircraft Leases
----------------------------------------------------------
In separate filings, AMR Corp. and its affiliates seek the
bankruptcy court's permission to reject certain leases for
aircraft or engines:
A) Effective as of February 29, 2012, nine aircraft leases, a
schedule of which is available for free at:
http://bankrupt.com/misc/AmAir_AircraftRejListFeb10.pdf
U.S. Bank National Association filed a protective objection,
reserving all rights and remedies, including those in
connection with the Debtors' bankruptcy and the proposed
return of USB aircraft equipment. In response to the
objection, the Debtors maintain that the terms of the
proposed order are consistent with various parties, including
U.S. Bank in connection with the Debtors' previous omnibus
rejection motions.
B) Effective as of February 29, 2012, two leases, a schedule of
which is available for free at:
http://bankrupt.com/misc/AmAir_AircraftRejListFeb15.pdf
Judge Lane authorized the Debtors to reject the two leases.
C) Effective as of April 11, 2012, seven leases, a schedule of
which is available for free at:
http://bankrupt.com/misc/AmAir_AircraftRejListApr11.pdf
Dallas/Fort Worth Agreements
The Debtors previously sought permission to reject facilities
agreements relating to revenue bonds issued in connection with the
financing of the costs of acquisition, construction, equipment,
and improvement by American Airlines of certain airport facilities
located at the Dallas/Fort Worth International Airport and the
Alliance Airport.
The Dallas/Fort Worth International Airport Board; the
Dallas/Fort Worth International Airport Facility Improvement
Corporation; the City of Dallas; and the City of Fort Worth and
AllianceAirport Authority, Inc., each filed a reservation of
rights with respect to the Debtor's request.
Manufacturers and Traders Trust Company, as indenture trustee,
alleges that the Debtors seek to disassemble a series of complex,
integrated transactions which were structured to provide both the
funding necessary for the acquisition, construction, improvement,
and equipping of the Debtors' airport facilities at Dallas/Fort
Worth International Airport and maintenance facilities at
Alliance Airport in Fort Worth, Texas, and payment by American
Airlines, Inc. for use and occupancy of certain equipment and
improvements at each facility. Clearly, this manipulation is an
attempt to dissect components of an integrated transaction and do
what section 365 of the Bankruptcy Code abhors most: "cherry
pick" the favorable portions of a transaction and discard the
rest, M&T insists.
M&T is represented by:
Kristin K. Going, Esq.
Robert K. Malone, Esq.
DRINKER BIDDLE & REATH LLP
1177 Avenue of the Americas, 41st Floor
New York, NY 10036-2714
Telephone: (212) 248-3140
Facsimile: (212) 248-3141
E-mail: Kristin.Going@dbr.com
Robert.Malone@dbr.com
According to Marathon Asset Management, LP, the Debtors state, in
no uncertain terms, that the Facilities Agreements are not
executory contracts subject to rejection. If that is the case, no
authorization to reject is required or appropriate, and no relief
should be granted on the Rejection Motion, Marathon argues.
Marathon is represented by:
Philip D. Anker, Esq.
George W. Shuster, Jr., Esq.
WILMER CUTLER PICKERING HALE AND DORR LLP
399 Park Avenue
New York, NY 10022
Telephone: 212-937-7232
Facsimile: 212-230-8888
E-mail: philip.anker@wilmerhale.com
george.shuster@wilmerhale.com
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on
$18.02 billion of total operating revenues for the nine months
ended Sept. 30, 2011. 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's balance sheet at Sept. 30, 2011, showed
$24.72 billion in total assets, $29.55 billion in total
liabilities, and a $4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Can Pursue Costs in DiFiore Action
-----------------------------------------------------
Judge Sean Lane modified the automatic stay to allow AMR Corp. and
its affiliates to proceed with a lawsuit captioned DiFiore v.
American Airlines, Inc., No. CA 06-05311-6 (Mass. Sup. Ct. filed
Dec. 20, 2006), for the limited purpose of seeking costs and fees
to be added to the judgment granted in the DiFiore Action
including, without limitation:
(i) allowing the U.S. District Court for the District of
Massachusetts to rule on American's Motion to Amend and
amend the judgment in the DiFiore Action; and
(ii) allowing the Debtors to collect on any such costs and fees
that are added to the judgment in the DiFiore Action.
In 2006, 10 American skycaps sued American Airlines, Inc., for
instituting a $2 charge for curbside baggage check-in, alleging
that this policy diverted their tip revenue in violation of
Massachusetts law. The case is captioned DiFiore v. American
Airlines, Inc., No. CA 06-05311-6 (Mass. Sup. Ct. filed Dec. 20,
2006). American removed the action to federal court and the U.S.
District Court for the District of Massachusetts ultimately
entered a judgment in favor of American. On January 12, 2012,
American filed a motion to amend the judgment to include the
costs and fees it incurred in connection with defending the
DiFiore Action.
Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, in New
York, states that although all that remains in the DiFiore Action
is American's affirmative motion, because the DiFiore Action was
originally commenced by the Plaintiffs, the Motion to Amend may
be subject to the automatic stay. Moreover, he relates, the
Plaintiffs have opposed American's Motion to Amend on the ground
that it is stayed.
Mr. Youngman asserts that allowing American to proceed with the
Motion to Amend will not interfere with the bankruptcy case. The
Debtors, he points out, are not being asked to put forth
additional funds; instead, they are asking to be able to proceed
with a motion to recoup costs they have previously expended.
Should the Motion to Amend be decided in American's favor,
American's creditors will benefit from the award of costs and
fees that the estate will receive, he adds.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on
$18.02 billion of total operating revenues for the nine months
ended Sept. 30, 2011. 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's balance sheet at Sept. 30, 2011, showed
$24.72 billion in total assets, $29.55 billion in total
liabilities, and a $4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Parties Seek Stay Relief to Pursue PI Claims
---------------------------------------------------------------
Several individuals filed with the U.S. Bankruptcy Court for the
Southern District of New York requests to lift the automatic stay
to allow them to continue their personal injury actions against
American Airlines. The individuals and their corresponding
actions are:
* Raquel and Sandra Cortes, In re Raquel Cortes and Sandra
Cortes as the Co-Personal Representative of the Estate of
Orthon Cortes v. American Airlines and Sky Chefs, Inc.
(Case No 1:11-cv-24244), before the U.S. District Court for
the Southern District of Florida;
* Renee Rios-O'Donnell In re Renee Rios-O'Donnell v. American
Airlines, Inc., And Association Of Professional Flight
Attendants, Case No. 10-cv-06219, before the U.S. District
Court for the Northern District of Illinois;
* William Franklin In re Franklin v. American Airlines, Inc.; et
al., Case No. BC473765, before the Los Angeles County Superior
Court, Central District;
* Andrea S. Jones seeks to prosecute a prepetition action
against AMR and American, which is pending in the U.S.
District Court for the Eastern District of New York;
* Pamela Eileen Prince seeks to prosecute a prepetition action
against AMR and American, which is pending in the U.S.
District Court for the Southern District of New York, Case No.
10-cv-8792;
* Arthur Saenz seeks to continue to mediate a prepetition
dispute relating to an airline ticket funding;
* Michael Robinson and Barbara Robinson in a lawsuit pending in
the U.S. District Court, Middle District of Tennessee,
Nashville Division over breach of contract and tort claims
against American Airlines; and
* Augustine Hawkins In re Augustine Hawkins v. The Port
Authority of NY and NJ and American Airlines, Supreme Court,
County o Queens, Index No. 700027/2012.
The Corteses and Ms. Hawkins subsequently withdrew their lift stay
requests.
The Debtors objected to the lift stay requests filed by Ms. Jones,
Prince and O'Donnell, and Messrs. Saenz, Hawkins, Franklin. The
Debtors complained that the claimants provided no cause or legal
basis as to why the relief sought should be granted. Instead,
continuation of the Actions would prejudice the Debtors because,
among other things, the Debtors would bear all costs associated
with defending the Actions and would be responsible for any final
judgment or settlement awarded to the claimants in their Actions,
the Debtors maintain.
As to Mr. Hawkins' request, American objects to continuation of
the Action, which was filed postpetition in violation of the
automatic stay, without assurances that (i) American will be
granted sufficient time following any modification of the
automatic stay to timely file an answer or other responsive
pleading in the Action, and (ii) all such rights to file such
pleadings will be reserved. The Official Committee of Unsecured
Creditors joined in the Debtors' objections to Ms. O'Donnell's and
Mr. Franklin's lift stay requests.
On behalf of Ms. O'Donnell, Nathan Davidovich, Esq., at Davidovich
Law Firm, LLC, in Denver, Colorado, wrote to the Bankruptcy Code,
disclosing that he has contacted John West, Esq., counsel to the
APFA, to discuss the indemnity provision of the APFA's collective
bargaining agreement. Mr. West said he will not discuss the
interpretation of that provision with his client nor will he call
Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in New
York, counsel to the Debtors, to discuss the matter. Mr. West
further advised that it is in the interest of his client to make
any agreements regarding indemnification that are not a part of
the CBA, nor interpret nor seek his client's advice to interpret
that provision in the CBA. Against this backdrop, Ms. Davidovich
believes that the matter is now in the Bankruptcy Court's hands
for a ruling.
* * *
In separate orders, Judge Lane denied the lift stay requests of
Ms. Jones, Ms. Prince and Messrs. Saenz and Franklin for the
reasons stated at the hearing.
The Debtors said they will continue to evaluate whether there are
steps in the ordinary course of operations that can be taken to
address Mr. Saenz's request for a refund.
Parties Agree to Stay Modification
The Debtors entered into separate stipulations with several
claimants to modify the automatic stay to allow the claimants to
prosecute his/her injury and damage claims, or cross-claims based
on indemnification claims, solely to the extent of available and
collectible coverage.
The stipulating claimants are:
* Rogelio Montalvo In re Rogelio Montalvo v. American Airlines,
Inc. et al., docketed as May Term, 2010, No: 01416, pending
before the Court of Common Pleas, Philadelphia County
* Maria Gutierrez In re Maria Gladys Gutierrez v. American
Airlines, Inc., docketed as 1:10-cv-0390 (LJM) (TAB), pending
before the United States District Court for the Southern
District of Indiana;
* The Port Authority of New York and New Jersey as co-defendant
in Milagros Ponce v. The Port Authority of New York and New
Jersey, Laro Service Systems, Inc. and American Airlines,
Inc., docketed as Case No. 302027/07, pending before the
Supreme Court of New York, Bronx County;
* Vance Callender, et al. In re Callender, et al. v. American
Airlines, Inc., docketed as Case No. 3:11-cv-02382;
* Michael C. Tandy In re Michael C. Tandy v. American Airlines,
Inc. and American Eagle Airlines, Inc., docketed as No.04-CI-
00283, pending before the Kentucky Court of Justice, Jefferson
Circuit Court Division Eleven;
* Bernice and Charles Browning In re Bernice and Charles
Browning v. American Airlines Inc. and Prospect Airport
Services, Inc., docketed as No. 153-254250-11, pending before
the 153rd Judicial Court, Tarrant County, Texas;
* Josefina Figueroa In re Josefina Figueroa v. City of Los
Angeles, et al., docketed as YC063824, and consolidated with
case number SC110535, pending before the Superior Court for
the State of California, Country of Los Angeles, West
District, Santa Monica;
* Dulce Maria Fraga In re Fraga v. American Airlines, Inc.,
docketed as 11-cv-23254, pending before the United States
District Court for the Southern District of Florida;
* Muriel Warren In re Warren v. American Airlines, Inc.,
docketed as 11-CA-000313, pending before the Lee County
Circuit Court, Florida;
* Linda Mitchell In re Linda Mitchell v. Lee County, Florida and
American Airlines, Inc., docketed as No. 11-CA-000843, pending
before the Circuit Court of the Twentieth Judicial Circuit in
and for Lee County, Florida;
* Samantha Hochman In re Samantha Hochman v. American Airlines,
Inc., docketed as 10-cv-23446, pending before the United
States District Court for the Southern District of Florida;
* Debbie Levesque, James Leveseque and Jewel Thomas In re Thomas
and Levesque v. American Airlines Inc. and The Boeing Company,
docketed as No. 2:10-cv-01411-JCC, pending before the United
States District Court for the Western District of Washington;
* Raquel Cortes and Sandra Cortes In re Raquel Cortes and Sandra
Cortes v. American Airlines, Inc., and Sky Chefs, Inc.,
docketed as 1:11-cv-24244, pending in the United States
District Court for the Southern District of Florida;
* Olivia Navarette In re Olivia Navarette v. American Airlines,
Inc., docketed as No. 14123/10, pending before the Kings
County Supreme Court;
* Hermila Casas In re Hermila Casas v. American Airlines, Inc.,
docketed as BC430834, pending before the Superior Court of the
State of California, Country of Los Angeles;
* Estela Martinez In re Martinez v. American Airlines, Inc.,
docketed as 1:11-cv-11345 (RGS), pending before the United
States District Court for the District of Massachusetts;
* Miami-Dade County as co-defendant of the Debtors in these
actions: (1) Austin Michael Walls v. American Airlines, Inc.
and Miami-Dade County, docketed as Case No. 04-10925, pending
before the Miami-Dade County Circuit Court; and (ii) Bonnie
Greenberg v. Miami-Dade County v. American Airlines, Inc.,
docketed as Case No. 04-10848 CA 20, pending before the
Circuit Court of the Eleventh Judicial Circuit of Florida;
* Oneal and Janice In re Sandidge Oneal Sandidge and Janice
Sandidge v. American Airlines, Inc. and AMR Corporation,
docketed as No. 017-256695-11, pending before the 17th
Judicial District Court, Tarrant County, Texas;
* Marta M. Velasquez In re Marta M. Velasquez v. American
Airlines, American Eagle, ABC & XYZ, docketed as 2010-0090,
pending in the United States District Court for the Virgin
Islands;
* Elizabeth Lavine In re Elizabeth Lavine and Ivan Lavine v.
American Airlines, Inc., docketed as No. CV-11-437321, pending
before the Ontario Superior Court of Justice;
* Natalie and Sergio Scotti In re Natalie Scotti and Sergio
Scotti v. American Airlines, docketed as 10-CV-02843, pending
before the United States District Court for the Northern
District of Illinois;
* Margie Woodson In re Margie Woodson v. American Airlines,
Inc., docketed as 10-0392-CO, pending before the County Court
of Warren Country, Mississippi;
* Roni Henderson In re Roni Henderson v. American Airlines and
the Port Authority of New York and New Jersey, docketed as No.
116867/07, pending before the Supreme Court of New York, New
York County;
* Katherine Labefrij In re Labefrij v. American Airlines,
docketed as No. 1838/2011, pending before the Supreme Court
of Kings County, New York;
* Penny Parker In re Penny Parker v. American Airlines, Inc.,
docketed as 11-20301-CIV, pending before the United States
District Court for the Southern District of Florida;
* Michael and Barbara In re Robinson Michael Robinson and
Barbara Robinson v. American Airlines, Inc., Case No. 3-11-
1196, pending in the United States District Court for the
Middle District of Tennessee;
* Eileen Strzalka Eileen Strzalka v. American Airlines, Inc.,
docketed as No. 11L6332, pending before the Circuit Court of
Cook County, Illinois;
* Terry Wayne Dockery In re Dockery v. American Airlines Inc.,
et al, docketed as 10-SL-CC03987, pending in the Twenty-First
Judicial Circuit of the County of St Louis, State of Missouri;
* Rana Foroughi and Shoaollah In re Farhadi Foroughi et al v.
American Airlines Inc., docket as 1:11-cv-04883 (KBF), pending
in the United States District Court the Southern District of
New York;
* Nora and Anthony Farace In re Farace v. American Airlines,
docketed as 2:10-cv-007245 (KJD)(LRL), pending in the United
States District Court for the District of Nevada;
* Stephanie Perez and Salvador Murguia In re Stephanie Perez and
Salvador Murguia v. American Airlines, Inc. et al., docketed
as No. 2011L011560, pending before the Circuit Court of Cook
County, Illinois;
* Justine Williams In re Justine Williams v. American Airlines,
Inc., before the United States District Court for the Northern
District of Texas Dallas Division;
* Stewart & Stevenson Tug, LLC, Stewart & Stevenson Services,
Inc., and Stevenson Technical Services, Inc., In re Vito and
Annemarie Saladino v. Stewart & Stevenson Services, Inc.,
Stewart & Stevenson Technical Services, Inc. and Stewart and
Stevenson Tug, LLC v. American Airlines, Inc., docketed as 11-
754-cv (L), 11-0907-cv (CON), 11-1330-cv (XAP), pending
before the United Stated Court of Appeals for the Second
Circuit; and
* Miriam Santiago In re Miriam Santiago v. American Airlines,
Inc., docketed as 10-67377, pending before the Regional Trial
Court for the National Capital Region, Republic of the
Philippines.
Judge Lane approved the stipulation entered with Ms. Justine
Williams.
Moreover, the Debtors and each of Naoko Ide; Marilyn K. Holloman;
Bruce Bush; Iryna Frokolva, Warren K. Osborn and Matthew Tunmire
entered into a stipulation to modify the automatic stay to allow
them to collect settlement payments to the extent of the available
or collectible insurance.
In separate stipulations, the Debtors and several parties agree to
lift the automatic stay to allow them to each commence an action
against the Debtors.
The stipulating claimants are Sandi Sloat; Suzanne West on behalf
of JS (Minor); Jean Charles Leon; Ed Collins, Jr.; Cheryl Travis-
Crawford; Veronica Parker; Gerald Yaritz; Cathleen Lane; Marjorie
Novak; Enrico Alonzo; William West; Ernst Espindola; James and
Vicki Cilley; Lisette Leyva; Jill Pollack; Willy E. Gutman;
Clairmont Boston; Venus Joseph; Marion Laurie and Darren Drake;
and Lynnette Lopez-Morales.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on
$18.02 billion of total operating revenues for the nine months
ended Sept. 30, 2011. 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's balance sheet at Sept. 30, 2011, showed
$24.72 billion in total assets, $29.55 billion in total
liabilities, and a $4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN AIRLINES: Removes Five Senior Leadership Positions
-----------------------------------------------------------
American Airlines said on May 1, 2012, it is eliminating five
officer positions, representing 20% reduction in the company's
most senior leadership positions.
An AMR spokesperson disclosed that eight or nine management jobs
had been cut so far, according to a Reuters report. The report
noted that David Brooks, American's President-Cargo, and Susan
Garcia, American's Vice President-Information Technology, are
among the five departing executives.
American also said the human resources function will be
transitioned from Jeff Brundage to Denise Lynn, who will become
Senior Vice President - People.
Robert Mann, an airline consultant and former AMR executive,
commented that Mr. Brundage's departure is ironic in light of the
ongoing labor clash between AMR and its management, Reuters
relayed.
"We are on the threshold of an extraordinary opportunity to be
America's flag carrier, delivering world-class service to
customers around the globe. To achieve this, we must get leaner
and more streamlined - with an intense focus on our customers,"
said Tom Horton, AMR Chairman and Chief Executive Officer. "Our
organization redesign purposefully began at the top, and the
changes will further advance the company's restructuring
objectives and bring us one step closer to ensuring American has
the leanest, most capable and effective leadership team in the
industry."
"This management redesign demonstrates how American is rethinking
every aspect of its business - painting a clear picture of the
company's team for the new American, designed to work together
differently, with greater efficiently, and with an innovative and
relentless focus on the customer," Mr. Horton said.
The announcement marks the completion of the third step in the
company's organization redesign, which began with the transition
to Tom Horton as Chairman and Chief Executive Officer, and
continued with the redesign of the company's Leadership Team.
This redesign represents management's contribution to the overall
restructuring goal in which all employee groups are reducing costs
by 20%, and will continue throughout the summer.
About American Airlines
AMR Corp. and its subsidiaries including American Airlines, the
third largest airline in the United States, filed for bankruptcy
protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan
on Nov. 29, 2011, after failing to secure cost-cutting labor
agreements.
AMR, previously the world's largest airline prior to mergers by
other airlines, is the last of the so-called U.S. legacy airlines
to seek court protection from creditors.
American Airlines, American Eagle and the AmericanConnection
carrier serve 260 airports in more than 50 countries and
territories with, on average, more than 3,300 daily flights. The
combined network fleet numbers more than 900 aircraft.
The Company reported a net loss of $884 million on
$18.02 billion of total operating revenues for the nine months
ended Sept. 30, 2011. 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's balance sheet at Sept. 30, 2011, showed
$24.72 billion in total assets, $29.55 billion in total
liabilities, and a $4.83 billion stockholders' deficit.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law
Group, Chartered, are on board as special counsel. Rothschild
Inc., is the financial advisor. Garden City Group Inc. is the
claims and notice agent.
Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and
Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP
serve as counsel to the Official Committee of Unsecured Creditors
in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the
co-counsel for conflicts and other matters; Moelis & Company LLC
is the investment banker, and Mesirow Financial Consulting, LLC,
is the financial advisor.
Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by AMR Corp. and its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN REALTY: Wants Plan Filing Extension Until Sept. 24
-----------------------------------------------------------
American Realty Trust, Inc., asks the U.S. Bankruptcy Court for
the District of Nevada to extend until Sept. 24, 2012, the periods
during which the Debtor has the exclusive right to file Chapter 11
plan of reorganization and to solicit acceptances of the plan.
The Debtor seeks extensions (a) to avoid premature formulation of
a chapter 11 plan and (b) to ensure that the plan that is
eventually formulated will take into account all the interests of
the Debtor and their creditors.
Key components of the Debtors progress since the Petition Date
include, inter alia:
i. preparing schedules and statements of financial affairs;
ii. beginning to document and negotiate with the lenders
concerning new mortgages;
iii. retaining the various professionals that will assist the
Debtor in developing a reorganization plan;
iv. stabilizing cash management system; and
v. developing an overall reorganization strategy for the
Debtor's properties.
About American Realty Trust
Las Vegas, Nevada-based American Realty Trust, Inc., filed for
Chapter 11 (Bankr. D. Nev. Case No. 12-10883) on Jan. 26, 2012,
estimating assets and debts of $10 million to $50 million. The
Debtor is a Single Asset Real Estate as defined in 11 U.S.C. Sec.
101 (51B). Bankruptcy Judge Mike K. Nakagawa presides over the
case. Santoro, Driggs, Walch, Kearney, Holley & Thompson
represents the Debtor in its restructuring effort. The
petition was signed by Steven A. Shelley, vice president.
AMERICAN REALTY: Creditors Want Case Dismissed on Bad Faith Filing
------------------------------------------------------------------
Creditors David M. Clapper, Atlantic XIII, LLC, and Atlantic
Midwest, LLC, ask the U.S. Bankruptcy Court for the District of
Nevada to dismiss American Realty Trust, Inc.'s Chapter 11
bankruptcy case, claiming that the Debtor's case is a bad-faith
filing.
The Creditors claim that, among other things: (a) the Debtor has
been stripped of assets prepetition, (b) its schedules and
statement of financial affairs contain gross omissions which were
intended to seriously mislead the Court, creditors and parties-in-
interest, and (c) its ownership structure changed 10 days before
the Petition Date in an admitted effort to avoid disclosures to
the Securities and Exchange Commission.
According to the Creditors, the Debtor is a formerly-publicly
traded real estate enterprise that has been stripped of assets and
rendered uncollectible in an effort to avoid paying the Atlantic
Parties the amounts due to them. The Debtor is not a Nevada
corporation, owns no property in Nevada and conducts no operations
out of Nevada, but is a Georgia corporation whose headquarters
(along with the headquarters of its numerous insider real estate
affiliates) are in Dallas, Texas, the Creditors claim.
The Creditors say that the Debtor has attempted to find venue in
Nevada to evade judgment entered by federal courts in Dallas.
"The Debtor anchors itself to Nevada through a company called ART
Midwest, Inc., which filed a bankruptcy in Nevada after this
present case was filed," the Creditors state. According to the
Creditors, the Debtor's strained effort to secure venue in Nevada
is unavailing because (a) AMI's bankruptcy case was not pending at
the time Debtor filed, (b) ART is not an affiliate of the Debtor,
and (c) AMI's subsequently-filed case is likely to be dismissed as
a bad faith filing.
"The instant bankruptcy case is part of a long-running two-party
dispute that has been resolved in favor of the Atlantic Parties
and against the Debtor and its cohorts. This case is not a bona
fide attempt to reorganize or to act in the best interest of the
Debtor's estate. Instead, it is merely another in a series of
bad-faith litigation tactics, intended to render the Atlantic
Parties' judgment worthless and to shield and protect at least two
publically-traded insiders, American Realty Investors, Inc., and
Transcontinental Realty Advisors, Inc.," the Creditors say.
The Atlantic Parties were adverse to the Debtor in the District
Court Litigation. The Atlantic Parties asserted that the Debtor
and ART Midwest owed them substantially more than $10 million on a
variety of causes of action, all of which derived from the ART
Parties' breach of a series of contracts related to the sale of
certain real estate from the Atlantic Parties to the ART Parties.
After an initial judgment in favor of the ART Parties was reversed
by the Fifth Circuit, a second jury trial led to the entry of
Oct. 11, 2011, of a final judgment in favor of the Atlantic
Parties and against Debtor and ART Midwest. The Final Judgment
awarded the Atlantic Parties substantial monetary amounts. Post-
judgment, the ART Parties filed an appeal on Nov. 30, 2011. At
the same time, the ART Parties filed an emergency motion to stay
enforcement of judgment pending appeal. The emergency motion
sought a stay without posting a bond. The District Court denied
the emergency motion on Dec. 14, 2011.
The Clapper parties filed a motion to set aside transfers as
fraudulent conveyances and to turn over assets thereafter. The
ART Parties requested a one-week adjournment of the turnover
motion which was granted. The ART Parties used that one week to
file this case in Nevada.
The Debtor's Schedules disclose ownership of several small parcels
of real estate of only minimal value, equity interests in real
estate entities that are either shells or hold assets of only
limited value and the claim against Andrews Kurth LLP. "In
reality, this Debtor has no meaningful disclosed assets," the
Creditors claim.
The Debtor has no ongoing business, according to the Creditors.
At the 341 meeting in this case, the Debtor's chosen
representative confirmed that the Debtor doesn't have any
employees. Its officers are employed by Pillar Asset Management,
a company that controls the Debtor, ART Midwest, Transcontinental,
OneRealCo, EQK Holdings and a number of the other parties to this
and the ART Midwest bankruptcy case.
According to the Statement of Financial Affairs, the Debtor has no
revenue, and has not had revenue for several years (despite
transferring a majority ownership interest in Transcontinental and
allegedly receiving more than $5,000,000 in exchange for stock
sold to EQK Holdings). Its remaining acknowledged assets are de
minimus and do not provide the Debtor with any cash flow. Until
the commencement of the bankruptcy case, the Debtor didn't have a
bank account.
The Creditors are represented by:
Siciliano Mychalowych & Van Dusen, PLC
Meghan W. Cassidy
E-mail: mcassidy@smv-Iaw.com
Andrew W. Mychalowych, Esq.
E-mail: amychalowych@smvf-law.com
37000 Grand River Avenue, Suite 350
Farmington Hills, Michigan
Tel: (248) 442-0510
and
Butzel Long, A Professional Corporation
Max Newman, Esq.
41000 Woodward Avenue
Bloomfield Hills, MI 48304
Tel: (248) 258 2907
Fax: (248) 258 1439
E-mail: newman@butzel.com
and
Kupperlin Law Group, LLC
Robert E. Atkinson, Esq.
Kupperlin Law
10120 S. Eastern Avenue, Suite 202
Henderson, Nevada
E-mail: r.atkinson@kupperlin.com
About American Realty Trust
Las Vegas, Nevada-based American Realty Trust, Inc., filed for
Chapter 11 (Bankr. D. Nev. Case No. 12-10883) on Jan. 26, 2012,
estimating assets and debts of $10 million to $50 million. The
Debtor is a Single Asset Real Estate as defined in 11 U.S.C. Sec.
101 (51B). Bankruptcy Judge Mike K. Nakagawa presides over the
case. Santoro, Driggs, Walch, Kearney, Holley & Thompson
represents the Debtor in its restructuring effort. The
petition was signed by Steven A. Shelley, vice president.
AMERICAN REALTY: Taps Marquis Aurbach as Bankruptcy Counsel
-----------------------------------------------------------
American Realty Trust, Inc., asks for permission from the U.S.
Bankruptcy Court for the District of Nevada to employ Marquis
Aurbach Coffing as attorneys for the Debtor, effective March 9,
2012.
On Feb. 7, 2012, the Debtor filed an application to employ
Santoro, Driggs Walch Kearney Holley & Thompson as general
bankruptcy counsel, nunc pro tunc to Jan. 26, 2012. The Court
approved Santoro Driggs' employment on March 16, 2012. On
March 29, 2012, the Debtor filed a substitution of attorney adding
Zachariah Larson, Esq., of the law firm of MAC as its attorney of
record. On March 15, 2012, the Court issued an order approving
the substitution.
The Debtor seeks to employ MAC as its counsel to represent and
assist the Debtor in carrying out the Debtor's duties under Title
11, United States Code. MAC will, among other things, assist the
Debtor in formulating a plan of reorganization and disclosure
statements and to obtain approval and confirmation of the plan. A
$25,000 retainer was collected post-petition and remains in the
retainer account. Of the initial retainer, $13,954.32 was
transferred from Santoro Driggs' retainer account and $11,045.68
was provided from American Realty Investors, Inc. American Realty
Investors is the parent of the former equity owner of the Debtor.
Pillar Income Asset Management, Inc., a company that manages the
Debtor, paid the initial retainer to Santoro Driggs.
MAC will charge the Debtor these hourly rates:
Attorney Up to $450
Law Clerk/Paralegal Up to $175
Legal Assistants Up to $70
To the best of the Debtor's knowledge, MAC is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About American Realty Trust
Las Vegas, Nevada-based American Realty Trust, Inc., filed for
Chapter 11 (Bankr. D. Nev. Case No. 12-10883) on Jan. 26, 2012,
estimating assets and debts of $10 million to $50 million. The
Debtor is a Single Asset Real Estate as defined in 11 U.S.C. Sec.
101 (51B). Bankruptcy Judge Mike K. Nakagawa presides over the
case. The petition was signed by Steven A. Shelley, vice
president.
ANGARAKA LIMITED: Modified Plan Declared Effective
--------------------------------------------------
Angaraka Limited Partnership has filed a notice with the U.S.
Bankruptcy Court for the Northern District of Texas that the
Effective Date of the Modified Plan occurred on March 13, 2012.
As reported in the Troubled Company Reporter, Judge Stacey G.
Jernigan of the U.S. Bankruptcy Court for the Northern District of
Texas confirmed the modified plan of reorganization filed by
Angakara on Sept. 28, 2010. The Modified Plan and each of its
provisions are approved and confirmed under Section 1129 of the
Bankruptcy Code.
About Angaraka Limited Partnership
Newport Beach, California-based Angaraka Limited Partnership, in
November 2005, acquired and assumed indebtedness secured by, among
other things, a Deed of Trust on four, Class B/C, garden-apartment
properties located in the Dallas/Fort-Worth Metroplex. The
Properties -- Woodchase, Clarendon, Keller Oaks, and Sycamore
Hills -- total 750 units and range in date of construction from
1979 to 1983. The Company filed for Chapter 11 bankruptcy
protection (Bankr. N.D. Tex. Case No. 10-33868) on May 31, 2010.
Vincent P. Slusher, Esq., and J. Seth Moore, Esq., at DLA Piper
LLP US, in Dallas, Texas, assist the Debtor in its restructuring
effort. The Debtor estimated assets and debts at $10 million
to $50 million.
ALQUILERES M BARRIO: Case Summary & 12 Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: Alquileres M Barrio Inc.
P.O. Box 7306
Ponce, PR 00732
Bankruptcy Case No.: 12-03704
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
District of Puerto Rico (Ponce)
Debtor's Counsel: Modesto Bigas Mendez, Esq.
BIGAS & BIGAS
P.O. Box 7462
Ponce, PR 00732
Tel: (787) 844-1444
Fax: (787) 842-4090
E-mail: modestobigas@yahoo.com
Scheduled Assets: $1,424,834
Scheduled Liabilities: $870,567
A copy of the Company's list of its 12 largest unsecured creditors
filed with the petition is available for free at:
http://bankrupt.com/misc/prb12-03704.pdf
The petition was signed by Manuel Barrio Huerta, president.
ASCEND LEARNING: S&P Rates $370MM Credit Facilities at 'B'
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' rating (the
same as the corporate credit rating) to Ascend Learning LLC's $370
million first-lien senior secured credit facilities, consisting of
a $330 million term loan B due 2017 and a $40 million revolving
credit facility due 2015. "We assigned a recovery rating of '3' to
the debt, indicating our expectation of meaningful (50% to 70%)
recovery for lenders in the event of a payment default," S&P said.
"At the same time, we affirmed our ratings on Ascend Learning,
including the 'B' corporate credit rating, but revising the
outlook to negative from stable as first-quarter operating
performance has been weaker than we expected," S&P said.
"Our ratings on Ascend Learning reflect our expectation that
EBITDA will grow at a moderate pace given solid end-market demand,
notwithstanding high product development spending," said Standard
& Poor's credit analyst Hal Diamond, "but leverage will remain
elevated, reflecting the company's acquisition-driven growth and
shareholder-return focused strategy. We consider the company's
business risk profile as 'weak' (based on our criteria),
reflecting its lack of critical mass, niche focus, and
concentration in health care and related fields, which are highly
fragmented and competitive. Ascend Learning has a 'highly
leveraged' financial risk profile, in our view, because of its
debt financing of high-priced acquisitions, our expectation of
ongoing debt-funded acquisitions, a high debt to EBITDA ratio, and
a history of special dividends," S&P said.
"Ascend Learning is a provider of educational products with a
focus on health care-related disciplines and professional training
and testing. Our assessment of Ascend Learning's business risk
profile as weak stems from the company's limited scale of
operations, small size, and competitive threats. The company's
peers are larger and better capitalized and--like Ascend--offer
test preparation divisions for the nursing licensing exam. We
currently expect both increased federal government regulation of
for-profit educational institutions and a potential reduction in
federal funding of student loans to have a minor effect on the
company, as roughly 14% of its revenues derive from for-profit
nursing institutions," S&P said.
"Still," added Mr. Diamond, "we expect the company's revenues to
maintain a healthy growth trend because of low turnover in the
company's nursing schools and favorable nursing employment
opportunities."
"The negative outlook reflects the company's need to grow EBITDA
at a mid- to high-teen percent rate over the next two to three
years to maintain an adequate margin of compliance with the net
debt leverage covenant as a result of the aggressive step-down
schedule. We could lower the rating if the recent drop in EBITDA
becomes prolonged, if revenue growth slows, or if the current
refinancing is not consummated, which would result in a thin
margin of compliance with the interest coverage covenant.
Specifically, this could occur if competition or a resurgence of
economic pressures, which could result in flat revenues and an
even decline of greater than 5% over the next 12 months," S&P
said.
"We regard a revision of the outlook to stable as a less likely
scenario, involving consistent improvement in overall
profitability, sustainable positive discretionary cash flow, and
financial policies that support progress in reducing leverage and
restoring a healthy margin of compliance with financial
covenants," S&P said.
BAKERS FOOTWEAR: Awards Restricted Stock Units to Executives
------------------------------------------------------------
Bakers Footwear Group, Inc., on May 14, 2012, awarded restricted
stock units to its directors and named executive officers pursuant
to the Company's 2012 Incentive Compensation.
Also on May 14, 2012, the Company issued letters regarding cash
bonus arrangements with its executive officers, which set forth
the potential bonus levels for each officer for the fiscal months
of February 2012 through January 2013. The Bonus Letters were
approved by the Company's Board of Directors on terms generally
consistent with the Company's Cash Bonus Plan. The Bonus Letters
outline each officer's potential cash bonus based on pre-tax
profit for the Company during the Bonus Period.
For any such bonus to be paid, pre-tax profit must be at least $1.
Maximum bonuses are payable if pre-tax profit is $4,000,000 or
more. The size of the potential bonuses depends on the level of
pre-tax profit, and ranges between 35.00% and 99.17% of cumulative
salary in the case of Mr. Edison, and between 35.00% and 75.00% of
cumulative salary in the case of the other officers.
Maximum Bonus as %
Name of Executive Officer of Cumulative Salary
------------------------- --------------------
Peter A. Edison
Chairman of the Board, CEO and President 91.17%
Stanley K. Tusman
EVP and CPO 75.00%
Joseph R. VanderPluym
EVP and COO 75.00%
Mark D. Ianni
EVP and CMO 75.00%
Charles R. Daniel, III
EVP, CFO, Controller, Treasurer, Secretary 75.00%
The Bonus Letters also provide for an additional discretionary
bonus equal to 12.5% of each officer's cumulative salary payable
if (i) the officer achieves certain qualitative and other criteria
relating to that officer's duties, as communicated separately to
each officer, and (ii) the Company earns a pre-tax profit of at
least $1.
About Bakers Footwear
St. Louis, Mo.-based Bakers Footwear Group, Inc. (OTC BB: BKRS.OB)
is a national, mall-based, specialty retailer of distinctive
footwear and accessories for young women. The Company's
merchandise includes private label and national brand dress,
casual and sport shoes, boots, sandals and accessories. The
Company currently operates 231 stores nationwide. Bakers' stores
focus on women between the ages of 16 and 35. Wild Pair stores
offer fashion-forward footwear to both women and men between the
ages of 17 and 29.
The Company reported a net loss of $10.95 million for the
year ended Jan. 28, 2012, a net loss of $9.29 million for the year
ended Jan. 29, 2011, and a net loss of $9.08 million for the year
ended Jan. 30, 2010.
After auditing the Company's financial results for fiscal 2012,
Ernst & Young LLP, in St. Louis, Missouri, expressed substantial
doubt about the Company's ability to continue as a going concern.
The independent auditors noted that the Company has incurred
substantial losses from operations in recent years and has a
significant working capital deficiency.
The Company reported a net loss of $10.95 million on
$185.09 million of net sales for the 52 weeks ended Jan. 28, 2012,
compared with a net loss of $9.29 million on $185.62 million of
net sales for the 52 weeks ended Jan. 29, 2011.
The Company's balance sheet at Jan. 28, 2012, showed
$41.71 million in total asset, $58.32 million in total liabilities
and a $16.61 million shareholders' deficit.
Bankruptcy Warning
The Company said in the Form 10-K for the year ended Jan. 28,
2012, that if it does not achieve its updated business plan and
its margin improvement and cost reduction plan, or if the Company
were to incur significant unplanned cash outlays, it would become
necessary for the Company to quickly seek additional sources of
liquidity, or to find additional cost cutting measures. Any
future financing would be subject to the Company's financial
results, market conditions and the consent of the Company's
lenders. The Company may not be able to obtain additional
financing or it may only be able to obtain such financing on terms
that are substantially dilutive to the Company's current
shareholders and that may further restrict the Company's business
activities. If the Company cannot obtain needed financing, its
operations may be materially negatively impacted and the Company
may be forced into bankruptcy or to cease operations.
BANKUNITED FINANCIAL: RSUI Looks to Sink Execs' D&O Policy Claims
-----------------------------------------------------------------
Jamie Santo at Bankruptcy Law360 reports that RSUI Indemnity Co.
told a Florida bankruptcy judge Thursday it is not liable for the
defense costs of directors and officers of now-reorganized
BankUnited Financial Corp. related to an investor class action and
several investigations, saying their alleged misdeeds predated the
$10 million policy's coverage period.
Law360 relates that RSUI provided the $10 million in excess D&O
liability coverage to BankUnited and subsidiary BankUnited FSB for
a one-year period beginning in 2007.
About BankUnited Financial
BankUnited Financial Corp. (OTC Ticker Symbol: BKUNQ) --
http://www.bankunited.com/-- was the holding company for
BankUnited FSB, the largest banking institution headquartered in
Coral Gables, Florida. On May 21, 2009, BankUnited FSB was closed
by regulators and the Federal Deposit Insurance Corporation
facilitated a sale of the bank to a management team headed by John
Kanas, a veteran of the banking industry and former head of North
Fork Bank, and a group of investors that include W.L. Ross & Co.,
Blackstone Group, Carlyle and Centerbridge. The new owners
installed Mr. Kanas as CEO and he sought to revamp BankUnited as a
commercial lender in south Florida.
BankUnited Financial and its affiliates filed for Chapter 11
protection (Bankr. S.D. Fla. Lead Case No. 09-19940) on May 22,
2009. Stephen P. Drobny, Esq., and Peter Levitt, Esq., at Shutts
& Bowen LLP; Mark D. Bloom, Esq., and Scott M. Grossman, Esq., at
Greenberg Traurig, LLP; and Michael C. Sontag, at Camner, Lipsitz,
P.A., represent the Debtors as counsel. Corali Lopez-Castro,
Esq., David Samole, Esq., at Kozyak Tropin & Throckmorton, P.A.;
and Todd C. Meyers, Esq., at Kilpatrick Stockton LLP, serve as
counsel to the official committee of unsecured creditors.
The banking unit had assets of $12.8 billion and deposits of $8.6
billion as of May 2, 2009. The holding company, in its bankruptcy
petition, disclosed $37,729,520 in assets against $559,740,185 in
debts. Aside from those assets, BankUnited said a "valuable"
asset is its $3.6 billion net operating loss carryforward.
Wilmington Trust Co., U.S. Bank, N.A., and the Bank of New York
were listed among the company's largest unsecured creditors in
their roles as trustees for security issues. BankUnited estimated
the Bank of New York claim tied to convertible securities at
$184 million. U.S. Bank and Wilmington Trust are owed
$120 million and $118.171 million on account of senior notes.
The Fourth Amended Joint Plan of Liquidation proposed by the
Official Committee of Unsecured Creditors of BankUnited Financial
became effective on March 9, 2012.
BERNARD L. MADOFF: 26 Suits Lawsuits Removed From Bankr. Court
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that another group of lawsuits by the trustee for Bernard
L. Madoff Investment Securities LLC were snatched away from the
bankruptcy court by U.S. District Judge Jed Rakoff May 15. In
some of the cases, Judge Rakoff summarily ruled in favor of Irving
Picard, the Madoff trustee.
According to the report, on May 15 Judge Rakoff took 26 lawsuits
out of bankruptcy court to decide whether the Internal Revenue
Code protects customers from being sued to give back profits taken
out of Madoff accounts. The customers argued the trustee's suits
are precluded by the IRS Code because it imposes penalties on
people over age 70 who don't take some of their money out of
retirement accounts each year. In the same ruling Tuesday where
he took the cases away from the bankruptcy judge, Judge Rakoff
stuck by his May 1 opinion in another case and ruled that the
customers weren't entitled to raise the IRS Code as a defense.
The report adds that in a separate 11-page opinion Tuesday, Judge
Rakoff took out of bankruptcy court six lawsuits that Mr. Picard
filed against banks and hedge funds. For the first time, Judge
Rakoff decided it was incumbent on him, as a district judge, to
rule initially whether U.S. law has applicability outside the
country and whether Picard may sue to recover transfers that took
place abroad. Likewise, Judge Rakoff will decide whether a
participant in a swap transaction has protection under the so-
called safe harbor in bankruptcy law. He said he must also decide
the factual question of whether the transaction at issue is indeed
a protected swap. Judge Rakoff said that the question of
extraterritorial reach of U.S. law raises only legal issues. He
told the parties to arrange one argument to cover all the cases.
ABN Amro Bank NA is among the banks and hedge funds covered by the
May 15 ruling.
Mr. Rochelle notes that in some of Tuesday's actions, Judge Rakoff
appears on track to make rulings identical to those he previously
handed down in other lawsuits removed from bankruptcy court.
Judge Rakoff said he will decide whether banks and hedge fund have
a good faith defense. In similar cases, Rakoff already ruled
against customers, such as Mets owner Fred Wilpon. Judge Rakoff
similarly will decide whether the defendants are protected by the
so-called safe harbor, where he previously ruled that Picard's
suits can go back only two years, not six.
In some cases Tuesday, he took suits away from the bankruptcy
court to decide if the amounts shown on account statements
constitute "antecedent debt" and therefore represent defenses
knocking out all of Picard's fraudulent transfer suits. In that
respect also, Judge Rakoff already ruled against customers.
The new rulings were made in Securities Investor Protection
Corp. v. Bernard L. Madoff Investment Securities LLC, 12-
mc-00115, U.S. District Court, Southern District New York
(Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.)
The SIPA Trustee has said that as of March 31, 2012, through
prepetition litigation and other settlements, he has successfully
recovered, or reached agreements to recover, more than $9 billion
-- over 50% of the principal lost in the Ponzi scheme by those who
filed claims -- for the benefit of all customers of BLMIS.
The liquidation has so far has cost the Securities Investor
Protection Corp. $1.3 billion, including $791 million to pay a
portion of customers' claims.
Mr. Picard has so far made only one distribution in October of
$325 million for 1,232 customer accounts. Uncertainty created by
the appeals has limited Mr. Picard's ability to distribute
recovered funds. Outstanding appeals include the $5 billion
Picower settlement and the $1.025 billion settlement.
BIOPACK ENVIRONMENTAL: Rockland Now Owns Majority of Voting Rights
------------------------------------------------------------------
The holders of Biopack Environmental Solutions, Inc., preferred
stock, which account for the voting control of the company,
entered into a Agreement for the Purchase of Preferred Stock with
Rockland Group, LLC, under which Rockland purchased 620,000 shares
of Biopack Environmental Solutions, Inc., Series A Convertible
Preferred Stock, 1,000,000 shares of Biopack Environmental
Solutions, Inc., Series B Convertible Preferred Stock and 710,000
shares of Biopack Environmental Solutions, Inc., Series C
Convertible Preferred Stock. These shares represent approximately
63% of the Company's outstanding votes on all matters brought
before the holders of the Company's common stock for approval.
The transaction closed on April 27, 2012. The Company is a party
to the Agreement for the purpose of acknowledging certain
representations and warranties about the company in the Agreement.
Under the Agreement, the holders of the Company's preferred stock
sold the Shares, which represent approximately 63% of the
Company's outstanding votes on all matters brought before the
holders of the Company's common stock for approval, to Rockland.
This transaction resulted in a change of control as Rockland now
owns a majority of the Company's outstanding voting securities.
Pursuant to the Agreement, Mr. Gerald Lau King Chung resigned from
his positions as the Company's President and Chief Executive
Officer effective at the close of the transaction, April 27, 2012,
and Mr. Sean Webster resigned from his position as the Company's
Chief Financial Officer and Secretary also effective at the close
of the transaction. Mr. Webster also resigned as a member of the
Company's Board of Directors, effective at the close of the
transaction.
In conjunction with the close of the transaction, the following
additions to the Company's Board of Directors and executive
management team occurred:
Mr. Harry Pond, the Managing Director of Rockland Group, LLC,
a holder of approximately 63% of the Company's outstanding
voting rights, replaced Mr. Lau as the Company's Chief
Executive Officer and was appointed to serve on the Company's
Board of Directors. From 2005 to present, Mr. Pond has
served as Managing Director of Rockland Group, LLC, which is
a real estate development company active in the Houston,
Texas, real estate market. From 2008 to present, Mr. Pond
has served as a senior business executive for Rockland
Insurance Agency, Inc. In this position he is actively
involved with the management of loss prevention, marketing,
and recruiting to ensure the Company's profitability and
productivity. From 1979 to present, Mr. Pond has owned and
operated The Harry Pond Insurance Agency, a company that he
is currently in the process of merging with Rockland
Insurance Agency, Inc. Mr. Pond received his BS in
mathematics and education from Texas State University. Mr.
Pond serves on the Board of Directors of Heartland Bridge
Capital, Inc., a public company listed on The OTC Bulletin
Board.
Mr. Frederick Larcombe replaced Mr. Webster as the Company's
Chief Financial Officer and Secretary. From early 2008 to
the present, Mr. Larcombe, as a principal with Crimson
Partners, a group of seasoned financial professionals, serves
a number of clients primarily in the life sciences. In this
connection and since November 2010, Mr. Larcombe has served
as the Chief Financial Officer and Secretary for Heartland
Bridge Capital, Inc., a company focused on investments and
acquisition opportunities primarily in the energy sector.
From 2005 to 2007, he was simultaneously the Chief Financial
Officer of Xenomics Inc., and FermaVir Pharmaceuticals, Inc.
From 2004 to 2005, he was a consultant with Kroll Zolfo
Cooper, a professional services firm providing interim
management and turn-around services, and from 2000 to 2004,
he was Chief Financial Officer of MicroDose Therapeutics.
Prior to 2000, Mr. Larcombe held various positions with
ProTeam.com, Cambrex, and PriceWaterhouseCoopers. Mr.
Larcombe's received his BS in Accounting from Seton Hall
University, was designated a Certified Public Accountant in
New Jersey, and is an alumnus of the Management Development
Program at Harvard Business School.
All of the Company's officers and other personnel are independent
contractors and will continue to be until the Company has
sufficient time and resources to hire them as employees. The
Company does not currently have any written agreements with any of
the Company's officers or directors.
About Biopack Environmental
Kowloon, Hong Kong-based Biopack Environmental Solutions Inc.
develops, manufactures, distributes and markets bio-degradable
food containers and disposable industrial packaging for consumer
products. The Company supplies its biodegradable food containers
and industrial packaging products to multinational corporations,
supermarket chains and restaurants located across North America,
Europe and Asia.
The Company has a factory in Jiangmen City in the People's
Republic of China.
The Company reported a net loss $472,596 on $3,594 of revenue for
the three months ended March 31, 2011, compared with net profit of
$28,966 on $68,639 of revenue for the same period during the prior
year.
The Company's balance sheet at March 31, 2011, showed $959,834 in
total assets, $3.45 million in total liabilities and a
$2.49 million total stockholders' deficit.
Going Concern
As reported by the TCR on April 26, 2011, Wong Lam Leung & Kwok
C.P.A. Limited, in Hong Kong, expressed substantial doubt about
Biopack Environmental's ability to continue as a going concern.
The independent auditors noted that the Company incurred a net
loss of $2.4 million for the year ended Dec. 31, 2010, and had an
accumulated deficit of $7.3 million and a working capital deficit
of $2.2 million as of Dec. 31, 2010.
In the Form 10-Q, the Company noted that it had a loss for the
three month period ended March 31, 2011, of $472,596 and, on March
31, 2011, it had an accumulated deficit of $7,749,519 and a
working capital deficit of $2,287,474. These conditions raise
substantial doubt as to the Company's ability to continue as a
going concern, according to the quarterly report.
The Company said that its future is dependent upon its attaining
profitable operations and raising the capital it will require in
order to achieve profitable operations through the issuance of
equity securities, borrowings or a combination thereof.
BMF INC: Has OK to Hire Carmen D. Conde Torres as Bankr. Lawyer
---------------------------------------------------------------
BMF Inc. obtained permission from the U.S. Bankruptcy Court for
the District of Puerto Rico to employ the Law Firm of Carmen D.
Conde Torres, Esq., as its attorney.
Ms. Conde Torres, Esq., as senior attorney, will be paid $300 per
hour plus costs and expenses. Her associate charges $275 an hour.
The firm's junior attorney charges $250 per hour and paralegals
bill $150 an hour. The firm has received a $250,000 non-
refundable retainer.
BMF Inc. filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No.
12-00658) on Jan. 31, 2012. Judge Enrique S. Lamoutte Inclan
presides over the case. BMF, a water bottler and distributor
based in Caguas, Puerto Rico, disclosed $12.3 million in assets
and $8.9 million in liabilities.
BMF INC: Gets Court's Nod to Hire Jimenez Vazquez as Accountant
---------------------------------------------------------------
BMF Inc. sought and obtained authorization from the U.S.
Bankruptcy Court for the District of Puerto Rico to employ Jose
Victor Jimenez, CPA, of Jimenez Vazquez & Associates, PSC, as
accountant.
Mr. Jimenez will, among other things:
a. assist the Debtor in gathering and compiling the
necessary information required to file the Chapter
11 petition and court-required information and
schedules;
b. provide consulting services and assist the Debtor
and its attorney in documenting the reorganization
plan to be filed in the case; and
c. prepare monthly operating reports.
Mr. Jimenez will be paid $125 per hour for his services. A
retainer in the amount of $7,000 has been required in this case
and will be paid.
Mr. Jimenez, principal of Jimenez Vazquez, attested to the Court
that the firm is a "disinterested person" as that term is defined
in Section 101(14) of the Bankruptcy Code.
BMF Inc. filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No.
12-00658) on Jan. 31, 2012. Judge Enrique S. Lamoutte Inclan
presides over the case. BMF, a water bottler and distributor
based in Caguas, Puerto Rico, disclosed $12.3 million in assets
and $8.9 million in liabilities.
BROADSIGN INT'L: Court Approves Sale to JEDFam Group
----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that BroadSign International Inc. received approval from
the bankruptcy court this week to sell the business to JEDFam
Group LLC in exchange for $5.5 million in secured debt plus the
amount needed to cure defaults on contracts going along with the
sale. There were no competing bids, so the auction was canceled.
About BroadSign International
BroadSign International Inc., a Boise, Idaho-based developer of
software for digital signs, filed a Chapter 11 petition (Bankr.
D. Del. Case No. 12-10789), estimating assets of less than
$10 million and debts of up to $50 million.
Kevin Scott Mann, Esq., at Cross & Simon, LLC, serves as
bankruptcy counsel to the Debtor, SSG Capital Advisors, LLC, is
the investment banker, and Walker, Truesdell, Roth & Associates,
is the provider of staffing services.
CAPITOL INFRASTRUCTURE: To Remain in Operation During Bankruptcy
----------------------------------------------------------------
Nellene Plouffe at Laguna Woods Globe reports that Lloyd Foster,
president of the Golden Rain Foundation, said Connexion
Technologies services will remain in operation during its
reorganization process. The report notes Mr. Foster read the
announcement on May 8, at the United Board of Directors meeting,
and said that GRF was notified of the situation May 3.
According to the report, Heather Rasmussen, public relations
specialist for PCM, wrote in an email that The Golden Rain
Foundation "declined to comment further at this time" about
specific issues related to digital phone service, how the
reorganization might affect residents, and how GRF would help
rectify the situation.
Capitol Infrastructure
About Capitol Infrastructure
Cary, North Carolina-based Capitol Infrastructure, LLC, builds and
manages telecommunication networks for residential communities
nationwide. Capitol Infrastructure, which operates as Connexion
Technologies, filed a Chapter 11 petition (Bankr. D. Del. Case No.
12-11362) on April 26, 2012. David M. Fournier, Esq., at Pepper
Hamilton LLP, serves as counsel to the Debtor.
Prior to the financial crisis that precipitated the Chapter 11
filing, the Debtors served communities with operations in 48
states and had 102,460 video customers, 14,034 voice customers and
47,993 data customers. During the year ended Dec. 31, 2011, the
Debtors had 570 full time employees and had annual revenues from
its service provider business of $69.2 million.
The Debtor estimated up to $10 million in assets and up to
$100 million in debts.
Capitol concluded earlier in 2012 that its "deteriorating
relationship with DirecTV and their overall corporate complexity
made it highly unlikely the debtors would be able to obtain
adequate financing in a timely fashion," according to its CEO.
Capitol is owned by Capitol Broadband LLC, which isn't in
bankruptcy.
CERIDIAN CORP: S&P Assigns Prelim 'B-' Rating on $500MM Sr. Notes
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B-'
issue-level rating and preliminary '3' recovery rating to
Minneapolis-based Ceridian Corp.'s proposed $500 million senior
notes due 2019 and to its extended term loan B. "The preliminary
'3' recovery rating indicates our expectation of meaningful
(50%-70%) recovery in the event of a payment default by the
borrower," S&P said.
The company is issuing the notes in conjunction with an amend-and-
extend transaction of part of the company's currently outstanding
bank debt.
"We also affirmed our existing corporate credit ratings and issue-
level ratings. The outlook is stable," S&P said.
"The issue-level rating on Ceridian's senior secured debt is 'B-'
(the same as the corporate credit rating) and the recovery rating
is '3', indicating the expectation for meaningful (50%-70%)
recovery in the event of a payment default. The rating on the
company's unsecured debt issue is 'CCC' (two notches lower than
the corporate credit rating) and the recovery rating is '6',
indicating the expectation for negligible (0%-10%) recovery in the
event of a payment default," S&P said.
"The ratings on Ceridian reflect a very aggressive capital
structure with an unfavorable maturity schedule, as well as the
effects of a weak economy on the company's revenue and operating
earnings," said Standard & Poor's credit analyst Jacob Schlanger.
The proposed transactions will ease the impact of the nearer term
maturities as well as provide some covenant relief. In addition,
significant recurring revenue streams and defensible market
positions partially offset the broader economic factors. With
annual revenues of about $1.5 billion, Ceridian is an information
services company that serves the human resources (HRS), stored
value cards and solutions (SVS), and--through its Comdata Network
Inc. subsidiary--transportation industries. Barriers to entry in
Ceridian's markets are high, the result of developed niche market
positions, economies of scale, and long-term customer
relationships," S&P said.
"Our stable rating outlook reflects Ceridian's modest near-term
debt maturities with minimal amounts due before 2014 and the eased
leverage covenant providing sufficient headroom over the near
term, as well as the significant base of recurring revenues. We
expect revenue to slowly grow in conjunction with the economic
recovery, introduction of new offerings, and expansion into new
markets. Liquidity is ample enough to handle near-term maturities.
However, the highly leveraged capital structure limits a possible
upgrade," S&P said.
"We could lower our ratings as the company approaches the 2014
maturity wall and there are no plans in place to restructure or
repay the remaining debt, or if covenant headroom drops to less
than 10%," S&P said.
CHESAPEAKE ENERGY: S&P Cuts Corporate Credit Rating to 'BB-'
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Oklahoma
City-based Chesapeake Energy Corp., including the corporate credit
rating, to 'BB-' from 'BB' and lowered ratings on two related
entities--Chesapeake Oilfield Operating LLC and Chesapeake
Midstream Partners L.P. "We removed the ratings from CreditWatch,
where they were placed on April 26, 2012, with negative
implications. The rating outlook is negative," S&P said.
"Our issue-level rating on Chesapeake's senior unsecured notes is
'BB-' (the same as the corporate credit rating on the company).
The recovery rating is '3', which indicates our expectation for
meaningful (50% to 70%) recovery in the event of a payment
default," S&P said.
"The downgrade reflects mounting turmoil stemming from revelations
that underscore shortcomings in Chesapeake's corporate governance
practices, covenant concerns, and the likelihood Chesapeake will
face an even wider gap between its operating cash flow and planned
capital expenditures than we had previously anticipated," said
Standard & Poor's credit analyst Scott Sprinzen.
"Chesapeake's financial performance during the quarter ended March
31, 2012, was very weak, hurt by not only depressed natural gas
prices but also lower natural gas liquids prices and wider market
price discounts in certain regions. Moreover, in conjunction with
its first-quarter earnings announcement, Chesapeake lowered its
guidance for liquids production during 2012-2013 to reflect the
impact of various asset monetization transactions on production.
At the same time, the company increased its guidance for capital
spending in 2012 to $11.6 billion to $13.1 billion from the
previously indicated $10.9 billion to $12.4 billion, although it
has lowered its spending plans for 2013 to a still-daunting $9
billion to $10 billion. (This guidance encompasses well costs on
proved and unproved properties, acquisition of unproved
properties, and investment in oilfield services and midstream
assets.) Based on our estimates and price deck assumptions
(including natural gas price of $2.00 per British Thermal Unit in
2012, $2.75 in 2013, and $3.50 thereafter), we expect Chesapeake's
negative free cash flow to total over $16 billion during 2012 and
2013," S&P said.
"Moreover, since April 26, 2012, when Standard & Poor's lowered
the ratings on Chesapeake to 'BB' from 'BB+' and placed the
ratings on CreditWatch with negative implications, there has been
a series of additional revelations about personal transactions
undertaken by Chesapeake's CEO, Aubrey McClendon, that pose
potential conflicts of interest. For example, it has been reported
in the media that Mr. McClendon co-headed a hedge fund that
operated during 2004 to 2008 and took positions in commodities
produced by Chesapeake," S&P said.
"On April 26, the company announced that its board of directors is
reviewing financing arrangements between Mr. McClendon and any
third party that has had a relationship with the company in any
capacity -- reversing its prior stance that the board was not
responsible for reviewing personal transactions of Mr. McClendon.
However, the willingness of the board to act independently of
management is still unclear. Although the board and Mr. McClendon
announced on May 1 an agreement to terminate the controversial and
unusual Founder Well Participation Program (FWPP), the termination
is not effective until June 30, 2014. Under the FWPP, Mr.
McClendon can, before the beginning of each year, elect to take a
working interest (up to 2.5%, subject to certain restrictions) in
all of the wells Chesapeake drills during that year. Recent press
reports have revealed that Mr. McClendon has obtained loans to
fund his investments under the FWPP from third parties (such as
EIG Global Energy Partners LLC) who, at the same time, were also
significant participants in financing transactions with
Chesapeake," S&P said.
"Turmoil resulting from these developments -- and from potential
revelations resulting from the board review -- could hamper
Chesapeake's ability to meet the massive external funding
requirements stemming from its currently weak operating cash flow
and aggressive ongoing capital spending. Chesapeake's production
is heavily skewed toward natural gas, and natural gas prices are
severely depressed. Chesapeake is in the midst of an extensive
repositioning of its business mix, placing more emphasis on
production of crude oil and natural gas liquids (collectively,
liquids). The company's excellent drilling record and large
acreage positions in the most promising North American liquids-
rich basins afford confidence about its ability to make this
transition," S&P said.
"To help fund its planned investment, Chesapeake has stated that
it is targeting sales of proved and unproved properties and
monetization of oilfield services, midstream, and other assets
totaling $11.5 billion to $14.0 billion in 2012, and $5.5 billion
to $6.5 billion in 2013. Chesapeake is asset rich, and it has been
adept at structuring varied and innovative transactions to
generate funds, including outright asset sales, formation of joint
ventures (JVs), issuance of securities by a royalty trust and by
newly formed subsidiaries, and issuances of volumetric production
payment (VPP) obligations. However, Chesapeake's ability to
continue executing such transactions on favorable terms depends
largely on capital market receptivity. From our analytical
perspective, some of the company's actions to raise funds dilute
the benefit of debt reduction, which it is also pursuing. Based on
our price deck, we anticipate that coverage metrics over the next
two years will be weak even for the revised rating--with adjusted
debt to EBITDA approaching 6x in 2012 and remaining above 5X in
2013 --before Chesapeake's liquids production increases
sufficiently to offset the effect of persisting depressed natural
gas prices," S&P said.
"The ratings on Chesapeake Oilfield Operating LLC and Chesapeake
Midstream Partners L.P. are constrained by our ratings on
Chesapeake, given the extent of Chesapeake's ownership control
over these entities and the close business ties between Chesapeake
and these entities. Over time, we could raise the ratings on
Chesapeake Midstream Partners L.P. above those on Chesapeake
Energy if it achieves greater customer diversity and remains
committed to conservative financial policies. However, given the
large list of future drop-down candidates from Chesapeake, we do
not anticipate any ratings separation in the near term," S&P said.
"Maintenance of the rating depends on the success of the company's
efforts to lessen its reliance on natural gas while completing
asset monetization transactions sufficient to fund the portion of
capital expenditures not covered by internal cash flow and while
containing any increase in financial leverage. We assume that
Chesapeake will eventually benefit from a significant further
increase in its liquids output, enabling adjusted debt to EBITDA
to decline to 5.0x or lower in 2014. We could downgrade the
company if we foresee that leverage is unlikely to be 5.0x or
lower in 2014. On the other hand, we could stabilize the rating on
Chesapeake if the company adopted a more conservative growth
strategy and financial policies, reduced leverage to less than
4.5X, and took actions to address shortcomings in its corporate
governance practices that were sufficient to satisfy its various
stakeholders," S&P said.
CHRISTIAN BROTHERS: Can Hire Re/Max to Sell Burbank Property
------------------------------------------------------------
The Bankruptcy Court for the Northern District of Illinois
authorized The Christian Brothers' Institute and The Christian
Brothers of Ireland to employ Re/Max "10" as real estate broker to
market and sell a real estate property located at 8554 Lavergne
Avenue in Burbank, Illinois.
About Christian Brothers' Institute
The Christian Brothers' Institute in New Rochelle, New York, is a
domestic not-for-profit 501(c)(3) corporation organized under Sec.
102(a)(5) of the New York Not-for-Profit Corporation Law. CBI was
formed to establish, conduct and support Catholic elementary and
secondary schools principally throughout New York State.
The Christian Brothers of Ireland, Inc., in Chicago, Illinois, is
a domestic not-for-profit 501(c)(3) corporation organized under
the Not-for-Profit Corporation Law of the State of Illinois. CBOI
was formed to establish, conduct and support Catholic elementary
and secondary schools principally throughout the State of
Illinois, as well as other spiritual and temporal affairs of the
former Brother Rice Province of the Congregation of Christian
Brothers.
CBI and CBOI depend upon grants and donations to fund a portion of
their operating expenses.
The Christian Brothers' Institute and The Christian Brothers of
Ireland filed for Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case Nos. 11-22820 and 11-22821) on April 28, 2011.
Scott S. Markowitz, Esq., at Tarter Krinsky & Drogin LLP, serves
as the Debtors' bankruptcy counsel. The Christian Brothers'
Institute disclosed assets of $63,418,267 and $8,484,853 in
liabilities. CBOI estimated its assets at $500,000 to $1 million
and debts at $1 million to $10 million.
CHRISTIAN BROTHERS: Can Hire Newmark to Sell Stratton Road Lot
--------------------------------------------------------------
The Bankruptcy Court authorized the Christian Brothers' Institute
to retain Newmark & Company Real Estate, Inc. d/b/a Newmark Knight
Frank as its real estate broker with respect to the marketing and
sale of a certain piece of real property located at 173 Stratton
Road, New Rochelle, New York, as well as a certain vacant parcel
of land across the property.
The 173 Property is currently occupied by Iona Grammar School and
consists of approximately six acres and various improvements. The
Vacant Property, which is across from the 173 Property, consists
of approximately five acres and is currently being used as a
recreational field in connection with the operation of Iona
Grammar.
The Debtor currently has a stalking horse offer to purchase the
property received from Iona Preparatory School. Although CBI
believes the terms of the Purchase Agreement are fair and
reasonable and reflect the highest and best value for the
property, it desires to place the Purchase Agreement to the test
of the broader public marketplace in the hope that higher and
better offers are generated for the Property.
The Debtors assured the Court that the firm is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
About Christian Brothers' Institute
The Christian Brothers' Institute in New Rochelle, New York, is a
domestic not-for-profit 501(c)(3) corporation organized under Sec.
102(a)(5) of the New York Not-for-Profit Corporation Law. CBI was
formed to establish, conduct and support Catholic elementary and
secondary schools principally throughout New York State.
The Christian Brothers of Ireland, Inc., in Chicago, Illinois, is
a domestic not-for-profit 501(c)(3) corporation organized under
the Not-for-Profit Corporation Law of the State of Illinois. CBOI
was formed to establish, conduct and support Catholic elementary
and secondary schools principally throughout the State of
Illinois, as well as other spiritual and temporal affairs of the
former Brother Rice Province of the Congregation of Christian
Brothers.
CBI and CBOI depend upon grants and donations to fund a portion of
their operating expenses.
The Christian Brothers' Institute and The Christian Brothers of
Ireland filed for Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case Nos. 11-22820 and 11-22821) on April 28, 2011.
Scott S. Markowitz, Esq., at Tarter Krinsky & Drogin LLP, serves
as the Debtors' bankruptcy counsel. The Christian Brothers'
Institute disclosed assets of $63,418,267 and $8,484,853 in
liabilities. CBOI estimated its assets at $500,000 to $1 million
and debts at $1 million to $10 million.
CHRISTIAN BROTHERS: Committee Can Employ Wall as Consultant
-----------------------------------------------------------
The Bankruptcy Court has authorized the Official Committee of
Unsecured Creditors to employ Wall Enterprises as consultant nunc
pro tunc to Jan. 13, 2012.
Certain of the Debtors' documents and documents related to the
Debtors' prepetition financial condition appear to be in the
possession of the Edward Rice Christian Brothers-North American
Province (NAP) of the Congregation of Christian Brother, including
in the archives of the NAP. The Committee has issued subpoenas
pursuant to Bankruptcy Rule 2004 to, among others, the NAP and
each of the Debtors. After meeting and conferring with the
Debtors regarding the subpoenas, the Debtors agreed to permit the
Committee's professionals to review the NAP's archives and
identify documents that the Debtors should produce to the
committee. The Debtors have represented to the Committee that the
NAP's archives are in three locations: New Rochelle, New York;
Chicago, Illinois; and St. Johns, Newfoundland. Mr. Wall, the
principal of Wall Enterprises, is a former Catholic priest and
archivist.
Mr. Wall has expertise in canon law and can assist the Committee
in addressing issues of canon law which may arise during these
Cases. Mr. Wall has advised counsel to survivors of sex abuse in
non-bankruptcy cases. He is well-qualified to review archives and
other documents maintained by a religious order and its related
civil entities, as well as advise the Committee on matters related
to understanding of these documents and the orders requirements to
maintain records under canon law.
The professional services that Wall Enterprises will render to the
Committee in its capacity as consultant include advising the
Committee regarding these issues:
a. Review and anaysis of the NAP's archives and the Debtors'
books and records;
b. Review and analysis of the documents produced to the
Committee in these Cases;
c. Issues related to canon law including the Congregations,
the Debtors' or the NAP's obligations thereunder; and
d. Issues related to the organization and operation of
Catholic entities, including religious orders such as
the Congregation.
Compensation will be payable to the Wall Enterprises on an hourly
basis, plus reimbursement of Wall Enterprises' actual, necessary
expenses and other charges it incurs. Mr. Wall's current standard
hourly rate is $250.
The Debtors assured the Court that the firm is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
About Christian Brothers' Institute
The Christian Brothers' Institute in New Rochelle, New York, is a
domestic not-for-profit 501(c)(3) corporation organized under Sec.
102(a)(5) of the New York Not-for-Profit Corporation Law. CBI was
formed to establish, conduct and support Catholic elementary and
secondary schools principally throughout New York State.
The Christian Brothers of Ireland, Inc., in Chicago, Illinois, is
a domestic not-for-profit 501(c)(3) corporation organized under
the Not-for-Profit Corporation Law of the State of Illinois. CBOI
was formed to establish, conduct and support Catholic elementary
and secondary schools principally throughout the State of
Illinois, as well as other spiritual and temporal affairs of the
former Brother Rice Province of the Congregation of Christian
Brothers.
CBI and CBOI depend upon grants and donations to fund a portion of
their operating expenses.
The Christian Brothers' Institute and The Christian Brothers of
Ireland filed for Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case Nos. 11-22820 and 11-22821) on April 28, 2011.
Scott S. Markowitz, Esq., at Tarter Krinsky & Drogin LLP, serves
as the Debtors' bankruptcy counsel. The Christian Brothers'
Institute disclosed assets of $63,418,267 and $8,484,853 in
liabilities. CBOI estimated its assets at $500,000 to $1 million
and debts at $1 million to $10 million.
CIRCLE ENTERTAINMENT: Incurs $1.4 Million Net Loss in Q1
--------------------------------------------------------
Circle Entertainment Inc. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $1.36 million on $0 of revenue for the three months
ended March 31, 2012, compared with a net loss of $1.76 million on
$0 of revenue for the same period a year ago.
The Company's balance sheet at March 31, 2012, showed
$6.48 million in total assets, $13.72 million in total
liabilities, and a $7.23 million total stockholders' deficit.
L.L. Bradford & Company, LLC, in Las Vegas, Nevada, expressed
substantial doubt about the Company's ability to continue as a
going concern following the 2011 financial results. The
independent auditors noted that the Company has limited available
cash, has a working capital deficiency and will need to secure new
financing or additional capital in order to pay its obligations.
A copy of the Form 10-Q is available for free at:
http://is.gd/O8lHOk
About Circle Entertainment
Circle Entertainment Inc. (CEXE.PK), formerly FX Real Estate and
Entertainment Inc., owns 17.72 contiguous acres of land located at
the southeast corner of Las Vegas Boulevard and Harmon Avenue in
Las Vegas, Nevada. The Las Vegas Property is currently occupied
by a motel and several commercial and retail tenants with a mix of
short and long-term leases. On June 23, 2009, as a result of the
default under the first mortgage loan, the first lien lenders had
a receiver appointed to take control of the property. The Company
is headquartered in New York City.
The Company's Las Vegas subsidiary filed for Chapter 11 bankruptcy
on April 21, 2010, and a plan of liquidation or reorganization
will eventually be implemented under which the Company will
surrender ownership of the Las Vegas Property. Under such a plan,
it is extremely unlikely the Company will receive any material
interest or benefit.
COMPASS MINERALS: S&P Affirms 'BB+' Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Rating Services affirmed its 'BB+' corporate
credit rating on Overland Park, Kan.-based Compass Minerals
International. The rating outlook is stable.
"At the same time, we assigned our 'BBB' issue-level rating (two
notches above the corporate credit rating) to the proposed $384
million term loan (plus estimated fees). The recovery rating is
'1', indicating our expectation for very high (90% to 100%)
recovery in the event of a payment default. We expect the company
to use proceeds to repay its outstanding term loans due in 2012
and 2016," S&P said.
"The ratings affirmation reflects our opinion that the company's
2012 earnings will support credit metrics in line with the 'BB+'
rating, despite operating difficulties pressuring performance in
both segments," said Standard & Poor's credit analyst Gayle
Bowerman. "Compass Minerals continues to struggle with weather-
related setbacks in 2012 as demand for the highway deicing salt
products declined 24% below historical averages during the
October-March winter season following unseasonably warm weather in
the company's regional end markets, which include the Great Lakes
region and Ohio Valley. In addition, the company is also
experiencing higher costs due to a weaker-than-expected sulfate of
potash (SOP) harvest as a result of wet weather in 2011 and
tornado damage at its Goderich, Ontario, salt mine and evaporation
plant. Still, Compass' strong market position in both businesses
continues to support the rating."
"Overland Park, Kan.-based Compass Minerals International is the
largest producer of deicing rock salt and specialty fertilizer
products in North America. The rating reflects our assessment of
the company's 'fair' business risk and 'significant' financial
risk. A few attributes we consider to be strengths, including the
company's strong market position and that its product segments are
uncorrelated, partially offsetting the risk factors. Compass is
the largest North American producer of deicing salt and low-
potassium potash, operates the world's largest rock salt mine, and
has access to the only naturally occurring source of SOP in the
region via the Great Salt Lake. This market position enhances its
cost position and profitability. We expect the company's 2012
EBITDA margins to be about 24%, slightly below the historical
five-year average of 27%. We expect margins to meet or exceed
historical averages over the medium term. Our stable rating
outlook reflects the expectation that the company will maintain
good credit metrics for the rating, with leverage below 2.5x and
FFO to debt above 35%. Specifically, we expect adjusted EBITDA in
a range from $250 million and $270 million for 2012, largely
because of our expectation that growth in the potash segment will
offset volume and pricing declines in the salt segment following
unusually warm winter weather in the company's end markets," S&P
said.
"We could take a negative rating action if Compass's overall
financial risk profile weakened significantly or if adjusted
leverage were to rise above 3.5x and remain at this level. This
could occur as a result of the combination of a substantial
decline in volumes, a large debt-financed acquisition, or
shareholder friendly initiative, such as a share repurchase," S&P
said.
"A positive rating action seems less likely in the near term given
our view of the company's fair business risk profile as evidenced
by the seasonality of its salt-production business, its high mine
concentration, and the inherent cyclicality of its fertilizer
business. However, a higher rating could occur over time if the
company were able to further diversify its earnings stream away
from dependence on seasonal salt sales and a single mine, while at
the same time maintaining a financial risk profile in-line with an
investment-grade rating," S&P said.
COMPOSITE TECHNOLOGY: Court OKs Landau to Pursue Insider Claims
---------------------------------------------------------------
Composite Technology Corporation and its affiliates and the
official Committee of Unsecured Creditors of CTC Cable jointly
sought and obtained permission from the U.S. Bankruptcy Court for
the Central District of California to employ Landau Gottfried &
Berger LLP as special litigation counsel.
The Debtors and the CTC Committee have identified potential claims
against certain officers and directors of the Debtors based on,
among other things, breaches of fiduciary duty, dissipation of
corporate assets, self-dealing and the avoidance and recovery of
transfers made to or for the benefit of the insiders, which claims
may result in the estates' recovery of millions of dollars
available for distribution to creditors.
The Debtors and the Committee say employing LG&B to prosecute the
Insider Claims is in the best interests of the Debtors' estates
and their creditors.
LG&B will be paid on a contingent fee basis and will be entitled
to seek compensation only if a recovery is obtained for the
Debtors' estates. The fee to be paid to LG&B will be a percentage
of the Litigation Recoveries, depending on the state at which
recovery is obtained.
LG&B's fee will be calculated as:
(a) 33% of Litigation Recoveries obtained prior to the original
discovery cutoff date;
(b) 37% of Litigation Recoveries obtained after the original
discovery cutoff date and prior to the original scheduled
trial date; and
(c) 40% of Litigation Recoveries on or after the original
scheduled trial date.
LG&B will also be reimbursed for reasonable costs and expenses.
Michael J. Gottfied, Esq., a partner at LG&B, says the firm is a
"disinterested person" as that term is defined by the Bankruptcy
Code, has no interest adverse to the Debtors and their creditors,
and is not related to either the bankruptcy judges in the district
or the United States Trustee.
LG&B has no prepetition claims against the Debtors.
Separately, Composite Technology sought and obtained permission to
amend terms of employment and compensation of Winthrop Couchot
Professional Corporation. The Debtor also sought and obtained
permission to amend the terms of employment and compromise of
Michael D. McIntosh, the McIntosh Group, and Technology Management
Advisors, Inc.
About Composite Technology
Headquartered in Irvine, California, Composite Technology
Corporation (CTC) -- http://www.compositetechcorp.com/-- is a
publicly traded company that owns all of the common stock of CTC
Cable Corporation and Stribog, Inc. CTC Cable manufactured and
marketed innovative energy efficient renewable energy products for
the electrical utility industry. Stribog operated a wind turbine
products business that was sold to Daewoo Shipbuilding and Marine
Engineering ("DSME") on Sept. 4, 2009, for $32.2 million in cash.
CTC Renewables is a dormant company.
Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D.
Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S.
Wallace presiding over the case. The Debtor's bankruptcy case was
reassigned to Judge Scott C. Clarkson on April 13, 2011. BCC
Advisory Services LLC, BCC Ho1dco LLC's FINRA registered
Broker/Dealer, serves as investment banker to provide exclusive
equity financing services and debt financing services. Composite
Technology disclosed $5,855,670 in assets and $12,395,916 in
liabilities as of the Chapter 11 filing.
CTC Cable Corporation also filed for Chapter 11 (Bankr. C.D.
Calif. Case No. 11-15059) on April 10, 2011. Stribog, Inc.
(Bankr. C.D. Calif. Case No. 11-15065) filed for Chapter 11
protection on April 11, 2011. CTC Renewables Corp., a dormant
company (Bankr. C.D. Calif. Case No. 11-15130) filed for Chapter
11 protection on April 12, 2011.
The cases are jointly administered, with Composite Technology as
the lead case. Garrick A. Hollander, Esq., Paul J. Couchot, Esq.,
and Richard H. Golubow, Esq., at Winthrop Couchot PC, in Newport
Beach, Calif.; and Sean A. Okeefe, at Okeefe & Associates Law
Corporation, in Newport Beach, Calif., serve as the Debtors'
bankruptcy counsel.
Peter C. Anderson, the U.S. Trustee for Region 16, appointed five
members to the official committee of unsecured creditors in the
Debtor's cases. Katherine C. Piper, Esq., at Steptoe & Johnson
LLP, in Los Angeles, Calif., represents the Committee.
CONSOLIDATED COMMUNICATIONS: S&P Rates $350MM Unsecured Notes 'B-'
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' issue-level
rating and '6' recovery rating to rural local exchange carrier
(RLEC) Consolidated Communications Inc.'s proposed $350 million of
senior unsecured notes due 2020. The '6' recovery rating indicates
expectations for negligible (0%-10%) recovery in the event of
payment default.
"We also raised the issue-level rating on the company's senior
secured credit facility, which consists of a $50 million revolving
credit facility due 2016, a $409.1 million term loan due 2017, and
a $470.9 million term loan due in 2014, to 'BB-' from 'B+' and
revised the recovery rating to '2' from '3'. The '2' recovery
rating indicates expectations for substantial (70%-90%) recovery.
The higher recovery rating on the secured credit facility, which
includes an aggregate of $880 million in term loans and a $50
million revolving credit, is due to the addition of the SureWest
business as collateral," S&P said.
"At the same time, we affirmed our 'B+' corporate credit rating on
Mattoon, Ill.-based parent company Consolidated Communications
Holdings Inc. The outlook is stable," S&P said.
"The rating affirmation reflects our belief that the acquisition
of overbuilder and incumbent cable-TV operator SureWest (unrated)
will not materially change Consolidated's 'weak' business risk
profile," said Standard & Poor's credit analyst Catherine
Cosentino, "which includes our expectations for relatively flat
overall revenue levels due to pro forma voice access-line
declines of about 6% in 2012, coupled with modest growth in video
and data revenues. Likewise, we expect its 'aggressive' financial
risk profile to remain largely unaltered."
"Consolidated Communications is a midsized RLEC providing a wide
range of communications services to residential and business
customers in Illinois, Texas, and Pennsylvania. It is acquiring
SureWest, which serves markets in California and Kansas in a
transaction requiring about $170 million of cash, plus refinancing
of $200 million of SureWest debt. The combined company will serve
about 100,000 video subscribers, around 426,000 voice access
lines, and 213,000 data customers," S&P said.
"The outlook is stable. The relative predictability of the
company's overall base of business provides stability for the
rating at least through mid-2013, and the purchase of SureWest
provides some good growth potential in the video services market.
However, if the combined company's line losses materially
accelerate from current levels, we could lower the rating,
particularly if this results in leverage rising above the low-5x
area. In addition, lower dividend distributions from the wireless
partnerships could lead to leverage exceeding the low-5x area,
which could result in a downgrade. These factors could also impair
the company's ability to meet its leverage covenant," S&P said.
"While unlikely in the near term, if Consolidated's IPTV efforts,
including deployments in the SureWest markets, contribute to
significantly lower access-line losses despite economic pressures,
we could raise the rating, especially if this contributes to
improvement in leverage to the 3x area," S&P said.
CONTRACT RESEARCH: Freeport Financial Preparing to Take Over
------------------------------------------------------------
Peg Brickley at Dow Jones' DBR Small Cap reports that Freeport
Financial LLC is preparing to take over Cetero Research and guide
the drug-investigation operation out of Chapter 11, leaving behind
a pile of unpaid debts.
The bankruptcy court will convene a sale hearing on May 17.
Absent higher and better offers, Cetero will sell the business to
lenders in exchange for a credit bid of $50 million of secured
debt, and the assumption of $30 million in liabilities.
About Cetero
Contract Research Solutions Inc., doing business as Cetero, a
provider of early-phase clinical research services for
pharmaceutical and biotechnology firms, filed a Chapter 11
petition (Bankr. D. Del. Case No. 12-11004) March 26, 2012.
Cetero's 19 affiliates also sought bankruptcy protection (Bankr.
D. Del. Case Nos. 12-11005 to 12-11023).
Cetero plans to sell the business, including their rights to
pursue avoidance actions, to first-lien secured lenders in
exchange for $50 million in debt, absent higher and better offers.
Cetero has filed a motion seeking approval of procedures that will
govern the bidding and auction. The first-lien lenders have
formed entities that will acquire the business -- CSRI Holdings
LLC, as U.S. Purchaser, and 0935867 B.C. Ltd and 0935870 B.C. Ltd,
as Canadian Purchasers. Together, they will serve as stalking
horse bidders and have offered to exchange $50 million in secured
debt and assume $30 million in liabilities to buy the assets.
First lien lenders are also providing a $15 million loan to
finance the Chapter 11 effort. The procedures require that the
bidding protocol be approved by April 12 and an auction be held
between April 30 and May 5. Competing bids are due three days
prior to the auction date. The hearing for approval of the sale
must take place prior to May 10.
Assets are $205 million, with debt total $248 million. There is
$185 million in debt for borrowed money, including $116 million on
a first-lien term loan and revolving credit. The second-lien loan
is $25 million. Second-lien lenders have agreed to the sale.
Freeport Financial LLC serves as the sole lead arranger and
bookrunner, and as U.S. administrative agent and collateral agent
under the first lien facility. Bank of Montreal serves as the
Canadian agent. Freeport is also the agent under the second lien
facility.
Judge Kevin Gross oversees the case. Lawyers at Young Conaway
Stargatt & Taylor, LLP, and Paul Hastings LLP serve as the
Debtors' counsel. Stikeman Elliott LLP serves as Canadian
counsel. Carl Marks Advisory Group LLC serves as restructuring
advisor. Epiq Bankruptcy Solutions serves as claims and notice
agent. The petitions were signed by Michael T. Murren, CFO.
The first lien lenders and the stalking horse buyers are
represented by Peter Knight, Esq., at Latham & Watkings, LLP; and
Wael Rostom, Esq., at McMillan LLP.
CROW PARTNERS: Wants Case Dismissed After Settling With Lenders
---------------------------------------------------------------
Crow Partners LLC and Central Building LLC request entry of an
order dismissing the Chapter 11 case.
Alisa C. Lacey, Esq., at Stinson Morrison Hecker LLP, tells the
Court that the filing of the bankruptcy was largely precipitated
by the Debtors' inability to resolve disputes with certain of
their creditors, including Chase Bank. Those disputes have now
been resolved.
The Debtors believe they no longer require reorganization and the
assistance of the Bankruptcy Court. The Debtors have had multiple
discussions with the remaining secured creditor, KeyBank, who
similarly believes that it makes sense for the Debtors' Chapter 11
cases to be dismissed. Any remaining issues the Debtors have with
their creditors will be best resolved outside of Chapter 11. All
monthly operating reports have been filed through January 2012,
and all quarterly fees have been paid.
Ms. Lacey relates none of the unsecured creditors would be
prejudiced by dismissal. Aside from Chase Bank and KeyBank, no
other creditor has made a significant appearance in this case.
About Central Building
Orinda, California-based Central Building LLC filed for Chapter 11
bankruptcy (Bankr. D. Ariz. Case No. 11-27970) on Oct. 3, 2011.
Its wholly owned subsidiary, Crow Partners LLC, filed a separate
petition (Bankr. D. Ariz. Case No. 11-27946), listing under
$1 million in assets and debts. The case is jointly administered
with Crow Partners.
Central Building does business in Arizona under the name Central
Building Camelback LLC. The Debtors own the County Square
Shopping Center in California and the Camelback Place at Dysart in
Arizona. The Debtors' sole members are Neal Smither and his
spouse, Patricia Smither. The equity interests are subject to a
Voting Trust Agreement of which G. Neil Elsey, a principal of
Avion Holdings, LLC, is the voting trustee. Avion has also been
retained as Restructuring Agent to manage and operate the Debtors
during their restructuring. Central Building disclosed
$22,913,866 in assets and $19,372,542 in liabilities.
Judge George B. Nielsen, Jr. presides over the case. Lawyers at
Stinson Morrison Hecker LLP in Phoenix, Arizona, serve as the
Debtors' counsel. The petition was signed by Neal Smither,
member.
DC DEVELOPMENT: Can Hire Wisp Resort Dev't. as Real Estate Broker
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland granted
D.C. Development, LLC, permission to employ Wisp Resort
Development, Inc., a debtor-affiliate, as broker to sell 120
Lodestone Way Property, nunc pro tunc to the Petition Date, and to
disburse sales commission.
As reported in the Troubled Company Reporter on Jan. 24, 2012,
Wisp Resort developed the lot and borrowed funds from Branch
Banking and Trust Company to do so. SWR LLC borrowed funds from
Clear Mountain Bank to construct a single-family home on the
lot. The lot and home constitute the "Property".
The Debtor has determined that it is in the best interests of its
estate to sell the Property and the Court has authorized the sale
for $430,000. However, the Court ordered that the 7% sales
commission be held in escrow pending application to and further
order of the Court.
Wisp Resort, along with its real estate agents and real estate
broker, is the entity responsible for the listing, marketing and
sale of the Property.
The Debtor intends to disburse to Wisp Resort the commission equal
to seven percent of the purchase price of the Property, in the
amount of $30,100. According to the Debtor, the 7% sales
commission is customary rate in the Deep Creek Lake and Wisp
Resort real estate market. The Debtor asserts that preventing it
from disbursing these commissions will have a chilling effect on
itself to sell property in the future and will thwart its ability
to reorganize.
The Debtor attests that WRD and its professionals do not have
connections with other creditors or any other party-in-interest
and the Debtor attests that WRD is a "disinterested person" as
that term is defined in Section 101(14) of the Bankruptcy Code.
About Wisp Resort
Recreational Industries, Inc., D.C. Development, LLC, Wisp Resort
Development, Inc., and The Clubs at Wisp, LLC, operate a ski
resort and real estate development companies located in Garrett
County, Maryland generally known as Wisp Resort. The Wisp Resort
comprises approximately 2,200 acres of master planned and fully
entitled land, 32 ski trails covering 132 acres of skiable terrain
with 12 lifts and two highly-rated golf courses.
Financial problems were caused by a guarantee given to Branch
Banking & Trust Co. to secure a $29.6 million judgment the bank
obtained on a real estate development within the property.
Recreational Industries, D.C. Development, Wisp Resort Development
and The Clubs at Wisp filed for Chapter 11 bankruptcy (Bankr. D.
Md. Lead Case No. 11-30548) on Oct. 15, 2011. D.C. Development
disclosed $91,155,814 in assets and $46,141,245 in liabilities as
of the Chapter 111 filing.
The Debtors engaged Logan, Yumkas, Vidmar & Sweeney LLC as counsel
and tapped Invotex Group as financial restructuring consultant.
SSG Capital Advisors, LLC, serves as exclusive investment banker
to the Debtors. The Official Committee of Unsecured Creditors has
tapped Cole, Schotz, Meisel, Forman & Leonard, P.A. as counsel.
DC DEVELOPMENT: Can Continue Using Cash Collateral Through July 15
------------------------------------------------------------------
Judge Wendelin I. Lipp of the Bankruptcy Court for the District of
Maryland authorized Recreational Industries, Inc. to continue the
use of cash collateral through July 15, 2012, over the objections
of two secured creditors.
The use of Cash Collateral is limited to cash generated by the
Debtor and allegedly by D.C. Development LLC relating to North
Camp from the use of its assets.
The Bankruptcy Court directed the Debtor to make the monthly
interest payment of $3,800 in connection with the Debtor's line of
credit with First United.
First United Bank and Trust opposed the Debtor's cash collateral
motion. According to Joel Sher, Esq., representing First United
Bank, the Debtors' operations were severely impacted by the recent
warm winter and, to date, the Debtors have only been able to
survive by deferring many of their scheduled operating expenses.
Against this backdrop, Mr. Sher said, the Debtor requests the use
of cash collateral based upon a budget that projects further
losses and a net cash flow deficit of approximately $1.8 million.
The proposed budget will leave the Debtors with almost no
operating funds at the end of the 90-day period covered by the
request. Compounding this problem is the fact that the proposed
budget includes the payment of approximately $859,000 in
professional fees. Furthermore, the proposed cash collateral
budget does not provide any adequate protection to First United
for the $1.8 million in diminution of its interest in the Debtors'
cash collateral, and seeks to improperly surcharge First United's
collateral for the payment of professional fees without First
United's consent.
First United Bank is represented by Joel I. Sher, Esq., and Carrie
C. Boyd, Esq., at Shapiro Sher Guinot & Sandler in Baltimore.
Branch Banking and Trust Company, a secured creditor and
potentially the largest unsecured creditor of Recreational
Industries Inc., also objected to the Debtor's request to the
extent that it seeks authority to carve out $779,054 for
professional fees. This carve out is inappropriate considering
the Debtor's financial condition and the condition the Debtor will
find itself in by July 15, 2012, if the request is granted.
Branch Banking and Trust Company is represented by:
Joshua D. Bradley, Esq.
Louis J. Ebert, Esq.
ROSENBERG MARTIN GREENBERG, LLP
25 South Charles Street, Suite 2115
Baltimore, Maryland 21201
Tel: (410) 727-6600
Fax: (410) 727-1115
Email: lebert@rosenbergmartin.com
A copy of the cash collateral order and the cash flow forecast is
available for free at:
http://bankrupt.com/misc/DCDEVELOPMENT_cashcollorder.pdf
About Wisp Resort
Recreational Industries, Inc., D.C. Development, LLC, Wisp Resort
Development, Inc., and The Clubs at Wisp, LLC, operate a ski
resort and real estate development companies located in Garrett
County, Maryland generally known as Wisp Resort. The Wisp Resort
comprises approximately 2,200 acres of master planned and fully
entitled land, 32 ski trails covering 132 acres of skiable terrain
with 12 lifts and two highly-rated golf courses.
Financial problems were caused by a guarantee given to Branch
Banking & Trust Co. to secure a $29.6 million judgment the bank
obtained on a real estate development within the property.
Recreational Industries, D.C. Development, Wisp Resort Development
and The Clubs at Wisp filed for Chapter 11 bankruptcy (Bankr. D.
Md. Lead Case No. 11-30548) on Oct. 15, 2011. D.C. Development
disclosed $91,155,814 in assets and $46,141,245 in liabilities as
of the Chapter 111 filing.
The Debtors engaged Logan, Yumkas, Vidmar & Sweeney LLC as counsel
and tapped Invotex Group as financial restructuring consultant.
SSG Capital Advisors, LLC, serves as exclusive investment banker
to the Debtors. The Official Committee of Unsecured Creditors has
tapped Cole, Schotz, Meisel, Forman & Leonard, P.A. as counsel.
DEAN FOODS: Fitch Upgrades Rating on Sr. Unsecured Debt to 'B'
--------------------------------------------------------------
Fitch Ratings has upgraded the secured bank credit facility and
senior unsecured debt ratings of Dean Foods Company (Dean; NYSE:
DF) and the senior unsecured debt rating of Dean Holding Company.
Fitch has also affirmed each entity's Issuer Default Rating (IDR).
The ratings are as follows:
Dean Foods Company (Parent)
-- Issuer Default Rating (IDR) at 'B';
-- Secured Bank credit facility to 'BB/RR1' from 'BB-/RR2';
-- Senior unsecured debt to 'B-/RR5' from 'CCC/RR6'.
Dean Holding Company (Operating Subsidiary)
-- IDR at 'B';
-- Senior unsecured debt to 'B-/RR5' from 'CCC/RR6'.
The Rating Outlook has been revised to Positive from Stable.
At March 31, 2012, Dean had $3.8 billion of total debt.
Rating Rationale:
The upgrades are due to improved recovery prospects on Dean's debt
obligations following two quarters of significant operating income
growth and management's commitment to conservative financial
policies. Furthermore, Fitch views recent EBITDA margin
improvement for Dean's Fresh Dairy Direct (FDD) segment as
sustainable in the near term. Moderately lower raw milk prices,
higher retailer margins on milk that alleviates the need to
discount in order to drive foot traffic, and an improving U.S.
economy have provided Dean increased operating visibility for
2012.
The 'BB/RR1' rating on Dean's secured debt reflects Fitch's view
that recovery prospects for these obligations would be outstanding
at 91% - 100% if the firm filed for bankruptcy. The debt is
secured by a perfected interest in substantially all of Dean's
assets. The 'B-/RR5' unsecured rating is due to Fitch's opinion
that bondholder recovery would be below average at 11% - 30% in a
distressed situation. This is due mainly to the high mix of
secured priority debt in Dean's capital structure and Fitch's
assumptions regarding the going-concern enterprise value of the
firm in a distressed situation.
Fitch continues to view excess milk processing capacity and the
slow gradual decline in industry volumes as a longer term
challenge for processors such as Dean. In the near term, however,
risks pertaining to wholesale price concessions and retail
discounting of private label milk appear to have subsided.
Moreover, growth of non-traditional higher margin dairy products
produced at the firm's WhiteWave-Alpro (WhiteWave) and Morningstar
segments remains strong. WhiteWave and Morningstar represented
16% and 10% of Dean's consolidated sales and 31% and 15% of
operating income excluding corporate expenses, respectively, in
2011. The remaining 74% of sales and 54% of operating income was
from FDD, which as mentioned above, is experiencing more favorable
operating conditions.
Dean's ratings reflect its high level of financial leverage given
the low margin volatile nature of the traditional dairy industry.
This is partially mitigated by management's focus on debt
reduction and the strong growth profile of WhiteWave and
Morningstar. Fitch views Dean's leading market share and national
distribution capabilities as a competitive advantage and expects
continued elimination of fixed costs to better position the firm
for future industry downturns. Dean believes it can realize
roughly $100 million of cost reductions annually, after garnering
$300 million under its multi-year productivity initiative
implemented in 2009.
Positive Outlook and Rating Triggers:
The Positive Rating Outlook is due to faster than anticipated
improvement in Dean's credit statistics and the company's strategy
of utilizing free cash flow (FCF), which is currently being
enhanced by a meaningful pullback in capital expenditures (CAPEX),
for debt reduction. Dean plans to reduce 2012 CAPEX to the $260
million - $275 million range from $325 million in 2011. Fitch
expects Dean to generate roughly $150 million of FCF in 2012 and
reduce total debt-to-operating EBITDA to near 4.0 times (x) by
year end.
An upgrade of Dean's IDR could occur if total debt-to-operating
EBITDA is sustained at the low 4.0x due to continued debt
reduction and stable to improving operating performance.
Conversely, a downgrade could occur if reduced profitability or a
change in financial strategy result in leverage rising above 5.0x.
For the latest 12 months (LTM) period ended March 31, 2012, total
debt-to-operating EBITDA was 4.75x, operating EBITDA-to-gross
interest expense was 3.2x, funds from operations (FFO) fixed
charge coverage was 2.2x, and FCF was $85.7 million. LTM FCF,
which includes approximately $90 million of cash litigation
payments, should increase as the year progresses and these large
extra-ordinary cash costs are cycled.
At March 31, 2012, Dean's balance sheet included $73 million of
long-term liabilities related to litigation settlements to be paid
over the next four years. Fitch views the preliminary approval of
the settlement for the Tennessee Dairy Farmers case and dismissal
of the Tennessee Retailer Action earlier this year positively.
Scheduled maturities of long-term debt at March 31, 2012 were $196
million in 2012, $511 million in 2013, and $1.1 billion in 2014.
Fitch believes Dean could refinance a portion of these obligations
as early as late 2012 because good operating results and a
disciplined financial strategy are improving the firm's financial
flexibility.
Liquidity and Financial Covenants:
Fitch views Dean's liquidity as adequate. At March 31, 2012, Dean
had $1.35 billion available under its secured revolver, $75
million under its receivables-backed facility, and $130.3 million
of cash. The firm's revolver has two tranches for which $225
million expired on April 2, 2012. The remaining $1.3 billion
expires April 2, 2014. Dean's $600 million on-balance sheet
receivables-backed facility matures on Sept. 25, 2013.
Financial maintenance covenants include maximum total and senior
secured leverage ratios. The calculation excludes up to $100
million of unrestricted cash and adjusts for charges and non-
recurring items therefore bank leverage ratios are modestly lower
than those calculated by Fitch. The total leverage covenant is
currently 5.5x, stepping down to 5.25x on March 31, 2013 and 4.5x
on Sept. 30, 2013. The senior secured leverage restriction of
3.75x, steps down to 3.5x on March 31, 2013. Dean is also bound
by a minimum interest coverage requirement of 2.75x which steps up
to 3.0x on March 31, 2013.
As Fitch anticipated, EBITDA headroom under Dean's financial
maintenance covenants has improved over the past year due to debt
reduction and operating income growth. At Dec. 30, 2010, Dean had
less than 10% headroom under its leverage covenants. However, at
March 31, 2012, Dean had approximately 20% cushion under its total
leverage covenant, 15% under its senior secured leverage
requirement, and 24% under its interest coverage requirement.
Operating Performance and 2012 Outlook:
Dean revised its 2012 consolidated operating income growth
guidance to a range of the high-teens to 20% due to better than
expected first quarter results. Previously, the company had
forecast high single-digit to low double-digit growth due to
moderately lower raw milk costs, new business at FDD, cost
reductions, and continued growth at WhiteWave and Morningstar. On
a segment level, Dean expects full year operating income growth to
be in the low-teens for FDD, high-teens for WhiteWave, and mid-
teens at Morningstar. Fitch's outlook reflects growth at the low-
end of management's guidance.
FDD experienced 11% operating income growth in the fourth quarter
of 2011 and 18% growth in the first quarter ended March 31, 2012,
breaking a string of double-digit declines experienced for eight
straight quarters beginning in the fourth quarter of 2009. Given
recent performance and historical growth rates, the outlook for
WhiteWave and Morningstar are also viewed as achievable.
WhiteWave, which includes the Horizon Organic, Silk, Alpro, and
International Delight brands, is benefiting from increased brand
marketing and innovation while Morningstar is growing with
expanded specialty beverage offerings in the quick-service
restaurant industry.
DELPHI FINANCIAL: Fitch Raises Subordinated Notes Rating From 'BB'
------------------------------------------------------------------
Fitch Ratings has upgraded the ratings of Delphi Financial Group,
Inc. (DFG) and its insurance subsidiaries following completion of
the acquisition of DFG by Tokio Marine Holdings, Inc. (TMHD) and
its subsidiary Tokio Marine & Nichido Fire (TMNF). The ratings
are removed from Rating Watch Positive and assigned a Stable
Outlook.
TMNF is the largest property/casualty insurer in Japan and is the
main operating subsidiary of TMHD. TMNF's Insurer Financial
Strength (IFS) is rated 'AA-' by Fitch, and the company operates
in the U.S. through a branch office and a subsidiary, the
Philadelphia Insurance Companies.
The ratings upgrade for DFG is based on expectations that current
capital levels at DFG's insurance subsidiaries will be maintained,
and financial support to DFG from a strong and large parent will
be available. Fitch considers DFG's strategic fit within the TMHD
enterprise, to be 'Very Important' under Fitch's 'Insurance Rating
Methodology', dated Sept. 22, 2011.
The strategic category Fitch has assigned to DFG may migrate to
'Core' over time as the role of DFG within TMHD and its
international growth strategic becomes more defined. This could
lead to a rating change that would align DFG with TMNF's group
rating.
TMNF paid approximately $2.7 billion in cash for DFG, which is
about 11% of its shareholders equity and represents a sizeable
premium over DFG's March 31, 2012 book value of $1.9 billion.
DFG's common stock had been trading at a discount to book value
before the acquisition was announced.
DFG is expected to remain intact and operate autonomously after
the acquisition but will be exploring cooperative synergies
between itself and the other U.S. operations of TMHD. DFG shares a
common target customer as Philadelphia Insurance, but there is
minimal to no overlap in products offered by the companies.
First-quarter 2012 net income for DFG fell 34% to $33 million due
to acquisition expenses, but operating earnings were within
expectations with an 11% increase compared with first-quarter
2011. Fitch expects operating earnings for DFG to continue on
this pace in 2012. DFG expects to pay a legal settlement to its
former Class A stockholders and option holders of approximately
$49 million later in 2012, if the settlement is finalized and
approved by the Delaware courts.
DFG's investment profile also improved at March 31, 2012, as gross
unrealized losses and other-than-temporary impairments for MBS
were $35 million, or 0.5% of total fixed maturity securities,
while total bond net unrealized gains improved to $359 million
compared with $66 million and $215 million for year-end 2010 and
2011, respectively. Financial leverage (excluding FAS 115)
decreased to 24% at March 31, 2012 from approximately 25% at year-
end 2011.
Key rating triggers for DFG that could lead to an upgrade include:
-- A change in strategic category to 'Core' within the TMHD
enterprise.
The remaining upgrade triggers relate to a reassessment of DFG's
standalone ratings:
-- Excess capital at the operating subsidiary level measured by
operating leverage, NAIC risk-based capital, or Fitch's
proprietary model;
-- Prolonged trend in operating results (measured by pretax
return on assets, combined ratio, and operating ratio
relative to Fitch's median guidelines) above historical
averages and consistent with higher rated companies.
Key rating triggers for DFG that could lead to a downgrade
include:
-- A multi-notch change in the ratings of TMNF.
The remaining downgrade triggers relate to a reassessment of DFG's
standalone ratings:
-- Deterioration in capital at the operating subsidiary level
measured by operating leverage, NAIC risk-based capital, or
Fitch's proprietary model;
-- An increase in debt to total capital above 30%;
-- Deterioration in operating results (measured by pretax return
on assets, combined ratio, and operating ratio relative to
Fitch's median guidelines) that is inconsistent with industry
averages or driven by ill-advised growth;
-- Earnings coverage of interest expense below the 4x level.
Fitch has upgraded the following ratings:
Delphi Financial Group, Inc.
-- Issuer Default Rating to 'A-' from 'BBB';
-- Senior notes due 2020 to 'BBB+' from 'BBB-';
-- 7.376% junior subordinated notes due 2067 to 'BBB-' from
'BB'.
Reliance Standard Life Insurance Co.
First Reliance Standard Life Insurance Co.
Safety National Casualty Corp.
-- IFS to 'A+' from 'A-'.
The Rating Watch Positive has been removed and a Stable Outlook
assigned.
DEWEY & LEBOEUF: Lawyers May Never Be Paid in MF Global Case
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that lawyers from Dewey & LeBoeuf LLP representing the MF
Global Holdings Ltd. creditors' committee admitted this month that
the law firm may never be paid. The prospects for receiving more
than $4 million comes at an inopportune time as Dewey attorneys
leave the foundering firm, including the bankruptcy lawyers
representing the MF Global parent's creditors.
The report recounts that the creditors selected Dewey as counsel a
few days after MF Global's bankruptcy began in late October. In
papers filed in U.S. Bankruptcy Court in Manhattan on May 11,
Dewey laid out details of more than $4 million in services and
expenses it provided in the ensuing six months. The MF Global
case is "unique" in that "there is currently insufficient cash
available in the debtors' estates to compensate professionals,"
Dewey said in the filing. "There is no clear timeline before it
becomes apparent whether there will be cash to compensate
professionals."
According to the report, since the Dewey bankruptcy lawyers filed
their fee statement, they decamped for Proskauer Rose LLP, another
New York-based firm. The filing of the fee statement followed
edicts that Dewey partners should bill their clients.
About MF Global
New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/
-- was one of the world's leading brokers of commodities and
listed derivatives. MF Global provided access to more than 70
exchanges around the world. The firm also was one of 22 primary
dealers authorized to trade U.S. government securities with the
Federal Reserve Bank of New York. MF Global's roots go back
nearly 230 years to a sugar brokerage on the banks of the Thames
River in London.
MF Global Holdings Ltd. and MF Global Finance USA Inc. filed
voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos.
11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to
Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF
Global had $41,046,594,000 in total assets and $39,683,915,000 in
total liabilities. It was the largest bankruptcy filing in 2011.
MFGH's subsidiaries MF Global Capital LLC, MF Global FX
Clear LLC and MF Global Market Services, LLC filed for bankruptcy
protection on Dec. 19, 2011.
MF Global Holdings USA Inc., doing business as Farr Whitlock Dixon
& Co. Inc., and Man Group USA Inc., filed a Chapter 11 petition on
March 2, 2012. Holdings USA provided administrative services to
MF Ltd. and its domestic subsidiaries.
Judge Honorable Martin Glenn presides over the Chapter 11 case.
J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric
Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve
as bankruptcy counsel. The Garden City Group, Inc., serves as
claims and noticing agent. The petition was signed by Bradley I.
Abelow, Executive Vice President and Chief Executive Officer of
MF Global Finance USA Inc.
Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy
cases of MF Global Holdings Ltd. and its affiliates. The Trustee
tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel;
(ii) FTI Consulting Inc., as restructuring advisors; (iii)
Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper
Hamilton as special counsel; and (h) authorizing the Committee to
retain and employ (i) Dewey & LeBoeuf LLP, as the Committee's
counsel; and (ii) Capstone Advisory Group LLC as financial
advisor.
The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers. James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act. He is a partner at Hughes
Hubbard & Reed LLP in New York.
Jon Corzine, the former New Jersey governor and co-CEO of
Goldman Sachs Group Inc., stepped down as chairman and chief
executive officer of MF Global just days after the bankruptcy
filing. Seven directors of MF Global Holdings resigned from their
posts on Nov. 28, 2011.
U.S. regulators are investigating about $633 million missing from
MF Global customer accounts, a person briefed on the matter said
Nov. 3, according to Bloomberg News.
The New York Stock Exchange has removed MFGI securities from
listing.
Bankruptcy Creditors' Service, Inc., publishes MF GLOBAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by MF Global Holdings and other insolvency and
bankruptcy proceedings undertaken by its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
DIALOGIC INC: Annual Meeting of Stockholders Set for Aug. 8
-----------------------------------------------------------
Dialogic Inc. entered into letter agreements with certain of the
Company's principal stockholders to amend:
(a) the Securities Purchase Agreement, dated as of April 11,
2012, to extend the date by which the Company is
required to call a special or annual meeting of the
Company's stockholders from June 30, 2012, to Aug. 15,
2012; and
(b) the convertible promissory notes issued pursuant to the
Securities Purchase Agreement to extend the maturity date
from June 30, 2012 to Aug. 15, 2012.
In addition through the letter agreements or amendments the
Company has also amended the voting agreements it previously
entered into with those Specified Stockholders who were party to
voting agreements to extend the termination date of such voting
agreements from June 30, 2012, to Aug. 15, 2012, and amended the
subscription agreements of such Specified Shareholders who were
party to subscription agreements to extend the date at which the
Company was required to call a special or annual meeting of the
Company's stockholders from June 30, 2012 to Aug. 15, 2012.
Reduces Workforce by 15%
On April 18, 2012, the Company and its affiliates executed upon a
restructuring plan and notified affected employees of a workforce
reduction of approximately 120 full-time positions, or
approximately 15% of the Company and its affiliates' combined
workforce. The notice periods for employees varied by country.
Affected employees are eligible to receive severance payments
totaling approximately $2 million to $3 million, in exchange for a
customary release of claims against the Company or its affiliate
in those countries where the severance amounts exceed what is
required under applicable law. The Company is undertaking this
workforce reduction to reduce its operating costs and focus its
resources on a restructured business model.
The Company expects to record a pre-tax charge of approximately
$2.5 million to $4 million in the second quarter of 2012 related
to the restructuring program. The estimate of cash expenditures
that the Company expects to incur and the pre-tax charge related
thereto in connection with the workforce reduction is subject to a
number of assumptions, and actual results may differ. The Company
may also incur other charges not currently contemplated due to
events that may occur as a result of, or associated with, the
workforce reduction.
Annual Meeting
On May 9, 2012, the Board of Directors of the Company set the date
for its 2012 Annual Meeting of Stockholders as Aug. 8, 2012.
Stockholders wishing to submit a proposal to be considered for
inclusion in this year's proxy materials must do so in writing not
later than the close of business on May 18, 2012, to Corporate
Secretary, 1504 McCarthy Boulevard, Milpitas, California 95035.
Stockholders wishing to submit a proposal that is not to be
included in this year's proxy materials or to nominate a director
must also provide proper notice thereof not later than the close
of business on May 21, 2012.
Compliance with NASDAQ Rule
On Feb. 28, 2012, the Company received a deficiency letter from
the Listing Qualifications Department of The NASDAQ Stock Market,
notifying the Company that its common shares had failed to
maintain a minimum market value of publicly held shares of
$15,000,000 over the previous 30 consecutive business days as
required by The Nasdaq Global Select Market set forth in Listing
Rule 5450(b)(3)(C). On May 7, 2012, the Staff notified the
Company that it has determined that for a minimum of the last 10
consecutive business days, from April 20, 2012, to May 4, 2012,
the Company's MVPHS has been $15,000,000 or greater. Accordingly,
the Company has regained compliance with the Rule and this matter
is now closed.
About Dialogic
Milpitas, Calif.-based Dialogic Inc. provides communications
platforms and technology that enable developers and service
providers to build and deploy innovative applications without
concern for the complexities of the communication medium or
network.
The Company reported a net loss of $54.81 million in 2011,
compared with a net loss of $46.71 million in 2010.
The Company's balance sheet at Dec. 31, 2011, showed $163.34
million in total assets, $178.77 million in total liabilities and
a $15.43 million total stockholders' deficit.
Bankruptcy Warning
The Company said in its 2011 annual report that in the event of an
acceleration of the Company's obligations under the Term Loan
Agreement or Revolving Credit Agreement and its failure to pay the
amounts that would then become due, the Revolving Credit Lender or
Term Lenders could seek to foreclose on the Company's assets. As
a result of this, or if the Company's stockholders do not approve
the Private Placement and the Notes become due and payable, the
Company would likely need to seek protection under the provisions
of the U.S. Bankruptcy Code or the Company's affiliates might be
required to seek protection under the provisions of applicable
bankruptcy codes. In that event, the Company could seek to
reorganize its business, or the Company or a trustee appointed by
the court could be required to liquidate the Company's assets.
E-DEBIT GLOBAL: Incurs $308,000 Net Loss in First Quarter
---------------------------------------------------------
E-Debit Global Corporation filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $308,076 on $608,823 of total revenue for the three
months ended March 31, 2012, compared with a net loss of $229,051
on $824,456 of total revenue for the same period a year ago.
The Company reported a net loss of $1.09 million in 2011, compared
with a net loss of $1.15 million in 2010.
The Company's balance sheet at March 31, 2012, showed
$1.84 million in total assets, $3.51 million in total liabilities,
and a $1.66 million total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/oQEb4p
About E-Debit Global Corporation
E-Debit Global Corporation (WSHE) is a financial holding company
in Canada at the forefront of debit, credit and online computer
banking. Currently, the Company has established a strong presence
in the privately owned Canadian banking sector including Automated
Banking Machines (ABM), Point of Sale Machines (POS), Online
Computer Banking (OCB) and E-Commerce Transaction security and
payment. E-Debit maintains and services a national ABM network
across Canada and is a full participating member of the Canadian
INTERAC Banking System.
Following the 2011 results, Schumacher & Associates, Inc., in
Littleton, Colorado, noted that the Company has incurred net
losses for the years ended Dec. 31, 2011, and 2010, and had a
working capital deficit and a stockholders' deficit at Dec. 31,
2011, and 2010, which raise substantial doubt about its ability to
continue as a going concern.
EASTMAN KODAK: Plan Filing Exclusivity Extended to Oct. 15
----------------------------------------------------------
The U.S. Bankruptcy Court in Manhattan extended Eastman Kodak
Co.'s deadline for filing Chapter 11 plan of reorganization to
October 15, 2012, and for soliciting votes from its creditors to
December 14, 2012.
As reported by Kodak Bankruptcy News, Kodak sought an extension of
the plan filing deadline to Nov. 14, 2012, and the solicitation of
votes from creditors to Jan. 13, 2013.
The Debtors' counsel, Andrew Dietderich, Esq., at Sullivan &
Cromwell LLP, in New York, said the company needs additional time
to review the claims of its creditors and to resolve certain
issues.
"The value of the debtors' estates, which must be evaluated and
determined in order to propose a chapter 11 plan, will depend on
the resolution of legacy liabilities, the anticipated
monetization of intellectual property and certain other non-core
assets," Mr. Dietderich said in court papers.
"It would be premature for the debtors or any other party in
interest to propose a plan of reorganization at this time," he
said.
About Eastman Kodak
Rochester, New York-based Eastman Kodak Company and its U.S.
subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11
petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan.
Subsidiaries outside of the U.S. were not included in the filing
and are expected to continue to operate as usual.
Kodak, founded in 1880 by George Eastman, was once the world's
leading producer of film and cameras. Kodak sought bankruptcy
protection amid near-term liquidity issues brought about by
steeper-than-expected declines in Kodak's historically profitable
traditional businesses, and cash flow from the licensing and sale
of intellectual property being delayed due to litigation tactics
employed by a small number of infringing technology companies with
strong balance sheets and an awareness of Kodak's liquidity
challenges.
In recent years, Kodak has been working to transform itself from a
business primarily based on film and consumer photography to a
smaller business with a digital growth strategy focused on the
commercialization of proprietary digital imaging and printing
technologies. Kodak has 8,900 patent and trademark registrations
and applications in the United States, as well as 13,100 foreign
patents and trademark registrations or pending registration in
roughly 160 countries.
Kodak disclosed $5.10 billion in assets and $6.75 billion in
liabilities as of Sept. 30, 2011. The net book value of all
assets located outside the United States as of Dec. 31, 2011 is
$13.5 million.
Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt &
Taylor, LLP, serve as counsel to the Debtors. FTI Consulting,
Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is
the investment banker. Kurtzman Carson Consultants LLC is the
claims agent. A group of second lien lenders are represented by
Akin Gump Strauss Hauer & Feld LLP.
The Official Committee of Unsecured Creditors has tapped
Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes EASTMAN KODAK
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Eastman Kodak and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000).
EASTMAN KODAK: Lease Decision Deadline Moved to Aug. 16
-------------------------------------------------------
The U.S. Bankruptcy Court in Manhattan extended the deadline for
Eastman Kodak Co. and its affiliated debtors to decide whether to
assume or reject their unexpired leases to August 16, 2012.
"The debtors are continuing their strategic review of their lease
portfolio in connection with their efforts to preserve and
maximize value through these Chapter 11 cases," said the
company's lawyer, Pauline Morgan, Esq., at Young Conaway Stargatt
& Taylor LLP, in New York.
"Given the number of unexpired leases and the size and complexity
of these Chapter 11 cases, the debtors need more time to complete
this strategic review process," Ms. Morgan said in the court
filing.
About Eastman Kodak
Rochester, New York-based Eastman Kodak Company and its U.S.
subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11
petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan.
Subsidiaries outside of the U.S. were not included in the filing
and are expected to continue to operate as usual.
Kodak, founded in 1880 by George Eastman, was once the world's
leading producer of film and cameras. Kodak sought bankruptcy
protection amid near-term liquidity issues brought about by
steeper-than-expected declines in Kodak's historically profitable
traditional businesses, and cash flow from the licensing and sale
of intellectual property being delayed due to litigation tactics
employed by a small number of infringing technology companies with
strong balance sheets and an awareness of Kodak's liquidity
challenges.
In recent years, Kodak has been working to transform itself from a
business primarily based on film and consumer photography to a
smaller business with a digital growth strategy focused on the
commercialization of proprietary digital imaging and printing
technologies. Kodak has 8,900 patent and trademark registrations
and applications in the United States, as well as 13,100 foreign
patents and trademark registrations or pending registration in
roughly 160 countries.
Kodak disclosed $5.10 billion in assets and $6.75 billion in
liabilities as of Sept. 30, 2011. The net book value of all
assets located outside the United States as of Dec. 31, 2011 is
$13.5 million.
Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt &
Taylor, LLP, serve as counsel to the Debtors. FTI Consulting,
Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is
the investment banker. Kurtzman Carson Consultants LLC is the
claims agent. A group of second lien lenders are represented by
Akin Gump Strauss Hauer & Feld LLP.
The Official Committee of Unsecured Creditors has tapped
Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes EASTMAN KODAK
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Eastman Kodak and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000).
EASTMAN KODAK: Wins Nod to Pay $13.5-Mil. Bonuses for Employees
---------------------------------------------------------------
Eastman Kodak Co. obtained approval from the U.S. Bankruptcy
Court in Manhattan to pay bonuses to executives and other
employees it hopes to retain as it restructures under Chapter 11
protection.
Prior to the approval, the U.S. Trustee, a Justice Department
agency overseeing bankruptcy cases, opposed the implementation of
the bonus plan. The agency complained that the company did not
provide enough information to establish that insiders are not
included in the bonus plan.
Eastman Kodak also drew flak from an employee and a retiree who
argued that the cost of the plan is too high, and that the
bonuses should be considered until the company is profitable and
suppliers receive fair compensation for their goods and services.
In response to the U.S. Trustee's objection, Eastman Kodak argued
that the agency did not raise any particular concern that the
bonus plan includes officer insiders but only complained about
the "insufficient information" provided by the company.
Eastman Kodak pointed out that it has publicly identified a group
of employees who will be treated as insiders since it filed for
bankruptcy protection. The company also said that, within one
day of the request of the U.S. Trustee, it provided an
organizational chart detailing the officers and the next layer of
management as well as job descriptions for all of those officers.
Eastman Kodak also emphasized the need to implement the bonus
plan, saying it would help the company avoid further losses of
key personnel who have knowledge and skills critical to help the
company restructure.
About Eastman Kodak
Rochester, New York-based Eastman Kodak Company and its U.S.
subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11
petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan.
Subsidiaries outside of the U.S. were not included in the filing
and are expected to continue to operate as usual.
Kodak, founded in 1880 by George Eastman, was once the world's
leading producer of film and cameras. Kodak sought bankruptcy
protection amid near-term liquidity issues brought about by
steeper-than-expected declines in Kodak's historically profitable
traditional businesses, and cash flow from the licensing and sale
of intellectual property being delayed due to litigation tactics
employed by a small number of infringing technology companies with
strong balance sheets and an awareness of Kodak's liquidity
challenges.
In recent years, Kodak has been working to transform itself from a
business primarily based on film and consumer photography to a
smaller business with a digital growth strategy focused on the
commercialization of proprietary digital imaging and printing
technologies. Kodak has 8,900 patent and trademark registrations
and applications in the United States, as well as 13,100 foreign
patents and trademark registrations or pending registration in
roughly 160 countries.
Kodak disclosed $5.10 billion in assets and $6.75 billion in
liabilities as of Sept. 30, 2011. The net book value of all
assets located outside the United States as of Dec. 31, 2011 is
$13.5 million.
Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt &
Taylor, LLP, serve as counsel to the Debtors. FTI Consulting,
Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is
the investment banker. Kurtzman Carson Consultants LLC is the
claims agent. A group of second lien lenders are represented by
Akin Gump Strauss Hauer & Feld LLP.
The Official Committee of Unsecured Creditors has tapped
Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes EASTMAN KODAK
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Eastman Kodak and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000).
EASTMAN KODAK: Wins Nod to Sell Photo Services Biz to Shutterfly
----------------------------------------------------------------
The U.S. Bankruptcy Court in Manhattan approved an agreement to
sell Eastman Kodak Co.'s online photo services business to
Shutterfly Inc. The approval came after no other bidders came
forward with a better offer for the KODAK Gallery online photo
service.
Shutterfly Inc., an Internet-based social expression and personal
publishing service, will acquire the assets for $23.8 million.
The assets include customer accounts and images in the U.S. and
Canada.
Kodak Gallery is one of many assets that Eastman Kodak failed to
turn into a hit. At its peak, Kodak Gallery generated $150
million in revenue for the company but it was never profitable.
Traffic to Kodak Gallery's Web site tapered off in recent years
as it faced competition from Shutterfly and other companies. In
March, it had 971,000 unique visitors to its Web site, a 29%
decline from a year earlier.
About Eastman Kodak
Rochester, New York-based Eastman Kodak Company and its U.S.
subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11
petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan.
Subsidiaries outside of the U.S. were not included in the filing
and are expected to continue to operate as usual.
Kodak, founded in 1880 by George Eastman, was once the world's
leading producer of film and cameras. Kodak sought bankruptcy
protection amid near-term liquidity issues brought about by
steeper-than-expected declines in Kodak's historically profitable
traditional businesses, and cash flow from the licensing and sale
of intellectual property being delayed due to litigation tactics
employed by a small number of infringing technology companies with
strong balance sheets and an awareness of Kodak's liquidity
challenges.
In recent years, Kodak has been working to transform itself from a
business primarily based on film and consumer photography to a
smaller business with a digital growth strategy focused on the
commercialization of proprietary digital imaging and printing
technologies. Kodak has 8,900 patent and trademark registrations
and applications in the United States, as well as 13,100 foreign
patents and trademark registrations or pending registration in
roughly 160 countries.
Kodak disclosed $5.10 billion in assets and $6.75 billion in
liabilities as of Sept. 30, 2011. The net book value of all
assets located outside the United States as of Dec. 31, 2011 is
$13.5 million.
Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt &
Taylor, LLP, serve as counsel to the Debtors. FTI Consulting,
Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is
the investment banker. Kurtzman Carson Consultants LLC is the
claims agent. A group of second lien lenders are represented by
Akin Gump Strauss Hauer & Feld LLP.
The Official Committee of Unsecured Creditors has tapped
Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes EASTMAN KODAK
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Eastman Kodak and its affiliates
(http://bankrupt.com/newsstand/or 215/945-7000).
ENERGY CONVERSION: Wants Sept. 11 Deadline to Decide on Leases
--------------------------------------------------------------
Energy Conversion Devices, Inc., et al., ask the U.S. Bankruptcy
Court for the Eastern District of Michigan to extend until
Sept. 11, 2012, their time to assume or reject the unexpired
leases, subleases, or other agreements relating to nonresidential
real property.
A copy of the leases is available for free at:
http://bankrupt.com/misc/ENERGY_CONVERSION_leases.pdf
The Debtors are continuing to liquidate their assets and wind-down
their affairs and are contemplating an equipment auction in late
June or July 2012. The Debtors have continuing use for the leases
through the process of liquidating their assets and winding down
their affairs.
Anticipated use of each property subject to a lease during the
extended assumption period:
Property Description Use
-------------------- ---
3800 Lapeer Road, The Debtors' headquarters and
Auburn Hills, MI manufacturing equipment to be
liquidated is located at this
address.
2983 Waterview Property subject to a sublease for
Rochester Hills, MI which the Debtors will incur
substantial damages if the lease is
prematurely rejected.
1100 and 1104 W. Maple Government funded research and
Troy, MI development is continuing at
this address.
The Debtors have, at all times postpetition, paid the rent due
under the Leases, and will continue to perform all of their
undisputed obligations arising from and after the Petition
Date in a timely fashion. The lessors won't suffer any additional
harm or prejudice if the period to assume or reject is extended,
the Debtors said.
About Energy Conversion Devices
Energy Conversion Devices -- http://energyconversiondevices.com/
-- has a renowned 51 year history since its formation in Detroit,
Michigan and has been a pioneer in materials science and renewable
energy technology development. The company has been awarded over
500 U.S. patents and international counterparts for its
achievements. ECD's United Solar wholly owned subsidiary has been
a global leader in building-integrated and rooftop photovoltaics
for over 25 years. The company manufactures, sells and installs
thin-film solar laminates that convert sunlight to clean,
renewable energy using proprietary technology.
Energy Conversion Devices filed for Chapter 11 relief (Bankr. E.D.
Mich. Case No. 12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker
presides over the case. Aaron M. Silver, Esq., Judy B. Calton,
Esq., and Robert B. Weiss, Esq., at Honigman Miller Schwartz &
Cohn LLP, in Detroit, Michigan, represent the Debtor as counsel.
The Debtor estimated assets and debts of between $100 million and
$500 million as of the petition date.
The petition was signed by William Christopher Andrews, chief
financial officer and executive vice president. Affiliate United
Solar Ovonic LLC filed a separate Chapter 11 petition on the same
day (Bankr. E.D. Mich. Case No. 12-43167). Affiliate Solar
Integrated Technologies, Inc., filed a petition for relief under
Chapter 7 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 12-
43169.
ENERGY CONVERSION: Taps Schafer and Weiner as Conflicts Counsel
---------------------------------------------------------------
Energy Conversion Devices, Inc., and United Solar Ovonic LLC seek
permission from the U.S. Bankruptcy Court for the Eastern District
of Michigan to employ Schafer and Weiner, PLLC, as conflicts
counsel for USO, nunc pro tunc to March 18, 2012.
On the Petition Date, the Debtors asked for court authorization to
employ Honigman Miller Schwartz and Cohn LLP as counsel for the
Debtors. The Honigman retention application acknowledged possible
conflicts that may arise in connection with the representation of
both Debtors by Honigman Miller Schwartz and Cohn LLP,
specifically relating to (i) the characterization of the
approximately $780 million advances made by ECD to USO (ii)
characterization on March 19, 2012, the Debtors and the U.S.
Trustee agreed to of the pre-petition $5 million secured loan
facility advanced by ECD to USO, and (iii) the priority of funding
made by ECD to USO pursuant to the interim court order approving
Debtors' cash management system, including approval of use of cash
collateral and intercompany transfers on an administrative expense
basis.
On March 19, 2012, the Debtors and the U.S. Trustee agreed to
address the intercompany issues in accordance with an agreed
proposed order and filed their stipulation regarding application
to retain Honigman Miller Schwartz and Cohn as counsel for the
Debtors. Also on March 19, 2012, after the filing of the Honigman
employment stipulation, the Court entered an order authorizing
employment of Honigman Miller Schwartz and Cohn LLP as attorneys
for the Debtors, consistent with the Honigman Employment
stipulation.
Among other things, the Honigman employment order requires that
each Debtor retain conflicts counsel exclusively for these
purposes: (i) in connection with the interim order approving
Debtors' cash management system, including approval of use of cash
collateral and intercompany transfers on an administrative expense
basis (a) to advise each Debtors' respective directors and
management as to the priority of the funding made by ECD to
USO under the cash management order, and (b) in the event the
Official Committee of Unsecured Creditors objects to the cash
management order becoming a final order, then conflict counsel
representing USO will continue to advise the directors and
management of USO regarding the cash management order and will
litigate any objection to the cash management order on behalf of
USO; and (ii) in the event a plan of reorganization that resolves
the Intercompany Issues is not confirmed or if any party initiates
an adversary proceeding or contested matter relating to the
intercompany issues, (a) to advise each Debtor's respective
directors and management as to the impact of the Intercompany
Issues on each Debtor, and (b) to the extent there is a
disagreement between the Debtors regarding the Intercompany
Issues, to represent each respective Debtor in litigating the
conflicts.
Schafer and Weiner will be paid these hourly rates:
Daniel J. Weiner $395
Michael E. Baum $390
Howard Borin $340
Ryan Heilman $335
Joseph K. Grekin $290
Michael Wernette $290
Brendan Best $335
Leon Mayer $250
Kim Hillary $240
Tracey Porter $220
John Stockdale $245
Legal Assistant $120
Daniel J. Weiner, Esq., a principal at Schafer and Weiner, attests
to the Court that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
About Energy Conversion Devices
Energy Conversion Devices -- http://energyconversiondevices.com/
-- has a renowned 51 year history since its formation in Detroit,
Michigan and has been a pioneer in materials science and renewable
energy technology development. The company has been awarded over
500 U.S. patents and international counterparts for its
achievements. ECD's United Solar wholly owned subsidiary has been
a global leader in building-integrated and rooftop photovoltaics
for over 25 years. The company manufactures, sells and installs
thin-film solar laminates that convert sunlight to clean,
renewable energy using proprietary technology.
Energy Conversion Devices filed for Chapter 11 relief (Bankr. E.D.
Mich. Case No. 12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker
presides over the case. Aaron M. Silver, Esq., Judy B. Calton,
Esq., and Robert B. Weiss, Esq., at Honigman Miller Schwartz &
Cohn LLP, in Detroit, Michigan, represent the Debtor as counsel.
The Debtor estimated assets and debts of between $100 million and
$500 million as of the petition date.
The petition was signed by William Christopher Andrews, chief
financial officer and executive vice president. Affiliate United
Solar Ovonic LLC filed a separate Chapter 11 petition on the same
day (Bankr. E.D. Mich. Case No. 12-43167). Affiliate Solar
Integrated Technologies, Inc., filed a petition for relief under
Chapter 7 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 12-
43169.
ENERTECH ENVIRONMENTAL: S&P Withdraws 'D' Rating on $130MM Bonds
----------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'D' rating and '6'
recovery rating on EnerTech Environmental California LLC's
$130.125 million senior tax-exempt revenue bonds and its
$9.005 million senior taxable revenue bonds.
"Although the debt has not been accelerated, we are withdrawing
the rating because we believe the project will be subject to
continued distressed exchanges and the increasing possibility that
it will not operate as a going concern," said Standard & Poor's
credit analyst Grace Drinker. "For Standard & Poor's to reinstate
the rating, the project would most likely require a refinancing;
should the project refinance, Standard & Poor's would analyze the
project as if it were a new issue. Thus, the rating on the
existing issue is no longer of use," Ms. Drinker added.
"On Sept. 22, 2011, we lowered the ratings to 'SD' from 'CCC+',
and to 'D' on Jan. 12, 2012, following adverse amendments to the
loan agreements and nonpayment of principal and interest."
FERROMET CORP: Files for Chapter 11 Bankruptcy Protection
---------------------------------------------------------
Ferromet Corporation filed for Chapter 11 protection (Bankr. W.D.
Pa. Case No. 12-22477) on May 8, 2012. Summary of schedules of
assets and liabilities, statement of financial affairs, balance
sheet, cash flow statement, employee income record, and list of
equity security holders must be filed by May 22, 2012. The
Company is required to file its plan and disclosure statement by
Sept. 9, 2012. All government proofs of claim are due Nov. 5,
2012.
Judge Jeffery A. Deller presides over the case.
The Company's counsel is:
Robert O. Lampl, Esq.
960 Penn Avenue, Suite 1200
Pittsburgh, PA 15222
Tel: 412-392-0330
Fax: 412-392-0335
Email: rol@lampllaw.com
Ferromet Corporation -- http://www.ferromet.net-- is a metal
service center that specializes in smelting, refining and alloying
of non-ferrous metals.
FLINT ENERGY: S&P Raises Corp. Credit Rating From 'BB-'; Off Watch
------------------------------------------------------------------
Standard & Poor's Rating Services raised its long-term corporate
credit and senior unsecured debt ratings on Flint Energy Services
Ltd. to 'BBB-' from 'BB-', following the completion of URS Corp.'s
(BBB-/Stable/--) acquisition of Flint. Standard & Poor's also
removed the ratings from CreditWatch with positive implications,
where they were placed Feb. 21, 2012. The outlook is stable.
Standard & Poor's also withdrew its '3' recovery rating on the
company's senior unsecured debt.
Following the CreditWatch resolution, Standard & Poor's then
withdrew its corporate credit rating on Flint.
"We are withdrawing that rating because the company will now
operate as a wholly owned subsidiary of URS. As a new subsidiary,
Flint will benefit from full and unconditional guarantees from its
parent," said Standard & Poor's credit analyst Michelle Dathorne.
"We now attribute an investment-grade rating to the company, so
its rated debt no longer warrants a recovery rating. Based on URS'
guarantees, Standard & Poor's believes Flint's debt now ranks pari
passu with that of URS," S&P said.
"The ratings on Flint reflect Standard & Poor's assessment of the
company's position within URS, and the financial support implied
by the parent's guarantees for Flint's financial obligations
outstanding. With the addition of URS' engineering capability to
Flint's construction services, we believe the company should be
able to improve its competitive position in the growing oil sands
sector," S&P said.
FNBH BANCORP: Agrees to Sell 8,000 Units for $12 Million
--------------------------------------------------------
FNBH Bancorp, Inc., entered into a series of subscription
agreements with accredited investors, pursuant to which the
Company agreed to sell, subject to the satisfaction of certain
conditions, an aggregate of approximately 8,000 units for a
purchase price of $1,500 per Unit, with each Unit consisting of
715 shares of the Company's common stock and $1,000 principal
amount of 10% subordinated debentures to be issued by the Company.
The per Unit price reflects a price of $0.70 per share of Common
Stock. The aggregate purchase price of the Units subject to the
Subscription Agreements is approximately $12 million.
The Company has instructed each subscriber to pay their
subscription funds into an escrow account maintained by an
unaffiliated financial institution. Subscription funds will be
held in such escrow account until the closing of the sale of the
Units. It is possible the Company may not receive all
subscription funds required to be paid pursuant to the
Subscription Agreements or that the Private Placement may not
otherwise close as a result of the failure of certain conditions.
In connection with the Private Placement, the Company engaged a
broker-dealer, which is a member of the Financial Industry
Regulatory Authority, to act as placement agent. Based on the
approximate $12 million subscribed pursuant to the Subscription
Agreements, the Agent will receive approximately $340,000 in
commissions upon the closing of the Private Placement.
The Company intends to contribute substantially all of the
proceeds to First National Bank in Howell, the Company's wholly-
owned bank subsidiary, in order to improve the Bank's capital
levels.
A copy of the Form 8-K is available for free at:
http://is.gd/7212ps
About FNBH Bancorp
Howell, Michigan-based FNBH Bancorp, Inc., is a one-bank holding
company, which owns all of the outstanding capital stock of First
National Bank in Howell. The Bank was originally organized in
1934 as a national banking association. As of Dec. 31, 2011, the
Bank had approximately 85 full-time and part-time employees. The
Bank serves primarily five communities, Howell, Brighton, Green
Oak Township, Hartland, and Fowlerville, all of which are located
in Livingston County.
For the year ended Dec. 31, 2011, BDO USA, LLP, in Grand Rapids,
Michigan, expressed substantial doubt about FNBH Bancorp's ability
to continue as a going concern. The independent auditors noted
that Corporation's subsidiary bank is significantly
undercapitalized under regulatory capital guidelines and, during
2009, the Bank entered into a consent order regulatory enforcement
action with its primary regulator, the Office of the Comptroller
of the Currency. "The consent order requires management to take a
number of actions, including, among other things, increasing and
maintaining its capital levels at amounts in excess of the Bank's
current capital levels. The Bank has not yet met the higher
capital requirements and is therefore not in compliance with the
consent order."
The Company reported a net loss of $3.57 million on $11.12 million
of net interest income (before provision for loan losses) for
2011, compared with a net loss of $3.89 million on $11.73 million
of net interest income (before provision for loan losses) for
2010.
The Company's balance sheet at Dec. 31, 2011, showed
$292.08 million in total assets, $285.47 million in total
liabilities, and stockholders' equity of $6.61 million.
GENERAL MARITIME: Incurs $46.9 Million Net Loss in First Quarter
----------------------------------------------------------------
General Maritime Corporation filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $46.91 million on $86.91 million of voyage revenues
for the three months ended March 31, 2012, compared with a net
loss of $31.54 million on $102.93 million of voyage revenues for
the same period during the prior year.
The Company's balance sheet at March 31, 2012, showed $1.67
billion in total assets, $1.46 billion in total liabilities and
$206.10 million in total shareholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/PNLkvH
About General Maritime
New York-based General Maritime Corporation, through its
subsidiaries, provides international transportation services of
seaborne crude oil and petroleum products. The Company's fleet is
comprised of VLCC, Suezmax, Aframax, Panamax and product carrier
vessels. The fleet consisted of 30 owned vessels and three
chartered vessels. The company generates substantially all of its
revenues by chartering its fleet to third-party customers. The
largest customers include major international oil companies, oil
producers, and oil traders such as BP, Chevron Corporation, CITGO
Petroleum Corp., ConocoPhillips, Exxon Mobil Corporation, Hess
Corporation, Lukoil Oil Company, Stena AB, and Trafigura.
General Maritime and 56 subsidiaries filed for Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 11-15285) on Nov. 17,
2011. Douglas Mannal, Esq., and Adam C. Rogoff, Esq., at Kramer
Levin Naftalis & Frankel LLP, in New York, serve as counsel to the
Debtors. Moelis & Company is the financial advisor. Garden City
Group Inc. is the claims and notice agent.
Prepetition, General Maritime reached agreements with its key
senior lenders, including its bank group, led by Nordea Bank
Finland plc, New York Branch as administrative agent, as well as
affiliates of Oaktree Capital Management, L.P., on the terms of a
restructuring. Under terms of the agreements, Oaktree will
provide a $175 million new equity investment in General Maritime
and convert its prepetition secured debt to equity.
In conjunction with the filing, General Maritime has received a
commitment for up to $100 million in new DIP financing from a
group of lenders led by Nordea as administrative agent.
Counsel for Nordea, as the DIP Agent and the Senior Agent, are
Thomas E. Lauria, Esq., and Scott Greissman, Esq., at White & Case
LLP. Counsel for Oaktree Capital Management, the Junior Agent,
are Edward Sassower, Esq., and Brian Schartz, Esq., at Kirkland &
Ellis, LLP.
The Official Committee of Unsecured Creditors appointed in the
case has retained lawyers at Jones Day as Chapter 11 counsel.
Jones Day previously represented an ad hoc group of holders of the
12% Senior Notes due 2017 issued by General Maritime Corp. This
representation began Sept. 20, 2011, and concluded Nov. 29, 2011,
with the agreement of all members of the Noteholders Committee.
The Creditors Committee also tapped Lowenstein Sandler PC as
special conflicts counsel.
The Noteholders Committee consisted of Capital Research and
Management Company, J.P. Morgan Investment Management, Inc., J.P.
Morgan Securities LLC, Stone Harbor Investment Partners LP and
Third Avenue Focused Credit Fund.
The Creditors Committee is comprised of Bank of New York Mellon
Corporate Trust, Stone Harbor Investment Partners, Delos
Investment Management, and Ultramar Agencia Maritima Ltda.
As reported by the TCR on May 7, 2012, General Maritime won
confirmation of its second amended joint plan of reorganization.
GREEN ENDEAVORS: Delays Q1 Form 10-Q Due to CFO Departure
---------------------------------------------------------
Green Endeavors, Inc., was unable to timely complete the
preparation of the quarterly report for the period ended March 31,
2012, as a result of the resignation of its Chief Financial
Officer during the fourth quarter of 2011, the subsequent failure
of a computer system in February of 2012 that delayed the
gathering of final financial reports necessary to the compilation
of the financial records for the year 2011 and that delayed the
preparation of the first quarter information.
About Green Endeavors
Salt Lake City, Utah-based Green Endeavors, Inc., runs two hair
care salons that feature Aveda(TM) products for retail sale.
The Company reported a net loss of $264,000 in 2011, compared with
net income of $13,900 in 2010.
The Company's balance sheet at Dec. 31, 2011, showed $1.03 million
in total assets, $7.39 million in total liabilities, and a
$6.35 million total stockholders' deficit.
Following the 2011 results, Madsen & Associates CPA's, Inc., in
Salt Lake City, Utah, expressed substantial doubt about the
Company's ability to continue as a going concern. The independent
auditors noted that the Company will need additional working
capital for its planned activity and to service its debt.
HARLAND CLARKE: S&P Assigns 'B+' Rating on $295MM Secured Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned issue-level and
recovery ratings to Harland Clarke Holdings Corp.'s proposed $295
million senior secured notes due 2019. "We assigned the debt an
issue-level rating of 'B+' (the same as the corporate credit
rating on Harland Clarke) and a recovery rating of '3', indicating
our expectation of meaningful (50%-70%) recovery in the event of a
payment default," S&P said.
The company intends to use the proceeds of the new notes, net of
fees and expenses, to repay a portion of the extended term loan
due 2017.
"The 'B+' corporate credit rating on Harland Clarke and the stable
rating outlook remain unchanged. The 'B+' rating reflects our
expectation that leverage will not meaningfully increase but will
remain high, that check printing will remain in long-term decline,
and that the financial policy of the company's parent, private-
equity investor M&F Worldwide Corp. (MFW), will remain aggressive.
The financial policy of the company and its parent and the
company's high leverage are the principal reasons we consider
HCHC's financial risk profile 'aggressive'. The company's exposure
to a secular shift from printed check usage to alternative forms
of payment underpins our assessment of the business risk profile
as 'weak'. We believe these dynamics will result in the company's
organic revenue declining at a low-single-digit percent pace," S&P
said.
RATINGS LIST
Harland Clarke Holdings Corp.
Corporate credit rating B+/Stable/--
Rating Assigned
Harland Clarke Holdings Corp.
$295 mil senior secured notes due 2019 B+
Recovery rating 3
HARRISBURG, PA: 3rd Cir. Rejects Bankruptcy Appeal
--------------------------------------------------
The Third Circuit has denied the latest attempt by the city
council of Harrisburg, Pennsylvania, to revive the state capital's
original Chapter 9 filing.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that on Tuesday, the U.S. Court of Appeals in Philadelphia
summarily dismissed an attempted appeal from dismissal of the
city's municipal bankruptcy. The appeals court gave no reason for
its ruling.
The report recounts that the bankruptcy judge threw out the
bankruptcy, saying it wasn't permitted under Pennsylvania law. The
lawyer for city council members seeking bankruptcy filed an appeal
after the deadline. A federal district judge upheld dismissal of
the appeal as untimely. The attempt at resurrecting the appeal in
the appeals court was equally unsuccessful. The appeals court
denied motions to impose sanctions for taking a frivolous appeal.
The appeal in the circuit court is In re City of Harrisburg, 12-
1541, U.S. Court of Appeals for the Third Circuit (Philadelphia).
About Harrisburg, Pennsylvania
The city of Harrisburg, in Pennsylvania, is coping with debt
related to a failed revamp of an incinerator. The city is
$65 million in default on $242 million owing on bonds sold to
finance an incinerator that converts trash to energy.
The Harrisburg city council voted 4-3 on Oct. 11, 2011, to
authorize the filing of a Chapter 9 municipal bankruptcy (Bankr.
M.D. Pa. Case No. 11-06938). The city claims to be insolvent,
unable to pay its debt and in imminent danger of having
tax revenue seized by holders of defaulted bonds.
Judge Mary D. France presided over the Chapter 9 case. Mark D.
Schwartz, Esq. and David A. Gradwohl, Esq., served as Harrisburg's
counsel. The petition estimated $100 million to $500 million in
assets and debts. Susan Wilson, the city's chairperson on Budget
and Finance, signed the petition.
Harrisburg said in court papers it is in imminent jeopardy through
six pending legal actions by creditors with respect to a number of
outstanding bond issues relating to the Harrisburg Materials,
Energy, Recycling and Recovery Facilities, which processes waste
into steam and electrical energy. The owner and operator of the
incinerator is The Harrisburg Authority, which is unable to pay
the bond issues. The city is the primary guarantor under each
bond issue. The lawsuits were filed by Dauphin County, where
Harrisburg is located, Joseph and Jacalyn Lahr, TD Bank N.A., and
Covanta Harrisburg Inc.
The Commonwealth of Pennsylvania, the County of Dauphin, and
Harrisburg city mayor Linda D. Thompson and other creditors and
interested parties objected to the Chapter 9 petition. The state
later adopted a new law allowing the governor to appoint a
receiver.
Kenneth W. Lee, Esq., Christopher E. Fisher, Esq., Beverly Weiss
Manne, Esq., and Michael A. Shiner, Esq., at Tucker Arensberg,
P.C., represented Mayor Thompson in the Chapter 9 case. Counsel to
the Commonwealth of Pennsylvania was Neal D. Colton, Esq., Jeffrey
G. Weil, Esq., Eric L. Scherling, Esq., at Cozen O'Connor.
In November 2011, the Bankruptcy Judge dismissed the Chapter 9
case because (1) the City Council did not have the authority under
the Optional Third Class City Charter Law and the Third Class City
Code to commence a bankruptcy case on behalf of Harrisburg and (2)
the City was not specifically authorized under state law to be a
debtor under Chapter 9 as required by 11 U.S.C. Sec. 109(c)(2).
Dismissal of the Chapter 9 petition was upheld in a U.S. District
Court.
That same month, the state governor appointed David Unkovic as
receiver for Harrisburg. Mr. Unkovic is represented by the
Municipal Recovery & Restructuring group of McKenna Long &
Aldridge LLP, led by Keith Mason, Esq., co-chair of the group.
Mr. Unkovic resigned as receiver March 30, 2012.
HARTFORD FINANCIAL: Fitch Hikes Jr Subordinated Debt Rating to BB+
------------------------------------------------------------------
Fitch Ratings has upgraded the debt ratings of Hartford Financial
Services Group, Inc. (HFSG) as follows:
-- Long Term Issuer Default Rating (IDR) to 'BBB+' from 'BBB';
-- Senior debt to 'BBB' from 'BBB-';
-- Junior subordinated debentures to 'BB+' from 'BB'.
Fitch Ratings has also affirmed all Insurer Financial Strength
(IFS) ratings for HFSG's primary life and property/casualty
insurance subsidiaries. The Rating Outlook is Stable. The rating
action follows Fitch's normal periodic review.
Fitch's rationale for the upgrade of HFSG's long-term debt ratings
recognizes the company's generally more favorable financial
position since more conservative notching was implemented in
February 2009 to reflect HFSG's heightened exposure to the
volatile credit and investment market conditions at that time. As
such, the one-notch upgrade reflects an improvement in notching
between insurance company ratings and holding company ratings.
Fitch's ratings of HFSG continue to reflect the company's overall
profitable results, reasonable financial leverage and sizable
levels of holding company cash and financial resources. The
ratings also consider HFSG's lower level of recent investment
related impairments and exposure to credit and investment risks.
Furthermore, the rating actions take into consideration execution
risk associated with HFSG's strategic plan to focus on its
property/casualty, group benefits, and mutual funds businesses,
with the company placing U.S. individual annuity into run-off, in
addition to Japan annuity which has already been placed in run-
off, and seeking to divest of its individual life, retirement
plans and Woodbury Financial Services businesses.
While the strategic plan has the potential to impact the business
position and franchise value of HFSG's ongoing businesses as the
company manages its legacy units, Fitch considers these risks to
be manageable. Favorably, a successful execution of HFSG's
strategy should improve the company's financial flexibility, with
sales proceeds increasing holding company cash that could
potentially be used to reduce debt.
HFSG's overall profitability thus far in 2012 and in full-year
2011 and 2010 is viewed favorably by Fitch. However,
intermediate-term growth in earnings will be challenged by low
margins and increased hedging costs in its run-off annuity and
non-core life insurance businesses, and continued elevated loss
ratios in the group benefits operation. Fitch also views
positively HFSG's enhanced level of hedging its closed block of
Japan variable annuity (VA) business with income and death benefit
guarantees. HFSG's run-rate property/casualty underwriting
results, while favorable compared to the industry, are likely to
deteriorate in the near term, given the continued competitive
market pricing environment across most lines.
HFSG's equity credit adjusted financial leverage ratio (excluding
accumulated other comprehensive income on fixed maturities)
remains reasonable at 24.2% at March 31, 2012 compared to 23.8% at
Dec. 31, 2011 (including an approximately $1.4 billion writedown
of deferred acquisition costs following the retrospective adoption
on Jan. 1, 2012 of the new FASB standard). Fitch expects that
taking into account the recent refinancing of the Allianz SE
investment, remaining stock repurchase program, and successful
execution of the company's strategic initiatives, HFSG's equity
credit-adjusted financial leverage will remain materially
unchanged.
HFSG's operating earnings-based interest and preferred dividend
coverage has been reduced in recent years, averaging a low 3.4x
from 2008 to 2011. This reflects both constrained operating
earnings and increased interest expense, and preferred dividends
paid on capital over the last several years, including the
recently redeemed 10% junior subordinated debentures investment by
Allianz SE. Fitch expects that the company's run-rate operating
earnings-based interest and preferred dividend coverage will
improve to at least 5.0x.
HFSG maintains financial flexibility with approximately $1.5
billion in holding company cash, fixed maturities, and short-term
investments at March 31, 2012, which provides flexibility for
funding potential capital requirements in adverse markets. In
addition, the company has a $1.75 billion revolving credit
facility and a $500 million contingent capital facility.
Fitch expects that HFSG will continue to support its insurance
subsidiaries and in the intermediate term maintain insurance
company capitalization that is consistent with the current
ratings, with HFSG not expected to sell any insurance operating
companies as part of any divestiture of businesses. The ratings
for Hartford Life's operations reflect an adequate U.S.
consolidated statutory capital position. While capital generation
is expected to remain flat through 2012, Fitch expects
consolidated U.S. life insurance to remain above the company's
325% RBC targets for its life operations and 125% for its VA
captive operations.
Fitch considers the primary life insurance subsidiaries to be non-
core as the life businesses are not considered to be a material
strategic focus of the company. As such, the life insurance
subsidiaries continue to receive an IFS rating of 'A-', reflecting
their own combined financial profile. Fitch designates the
strategic category of Hartford Life & Accident Insurance Co. (HLA)
and Hartford Life Insurance Co. (HLIC) as Important, as these
companies write the majority of the ongoing life business (mainly
group benefits) as well as businesses that the company is
continuing to write, but is pursuing divestiture options. The
strategic category for Hartford Life & Annuity Insurance Co.
(HLAIC) is Limited Importance as the majority of its business is
run-off variable annuity business.
The key rating triggers that could result in an upgrade to HFSG's
debt ratings include a financial leverage ratio maintained near
20%, maintenance of at least $1 billion of holding company cash
and interest and preferred dividend coverage of at least 6x.
Fitch considers a rating upgrade to be unlikely in the near term
for HFSG's life and property/casualty insurance subsidiaries.
Over the long term, Fitch could consider an upgrade to the extent
that the operating subsidiaries demonstrate favorable
profitability and capitalization metrics following a successful
execution of the company's strategic plan.
The key rating triggers that could result in a downgrade include
significant investment or operating losses that materially impact
GAAP shareholders' equity or statutory capital within the
insurance subsidiaries, particularly as they relate to any major
negative surprises in the run-off VA business; financial leverage
ratio maintained above 25%; a sizable drop in holding company
cash; failure to improve interest and preferred dividend coverage;
and an inability to execute on the company's strategic plan.
Fitch upgrades the following ratings with a Stable Outlook:
Hartford Financial Services Group, Inc.
-- Long-term IDR to 'BBB+' from 'BBB';
-- $320 million 4.625% notes due 2013 to 'BBB' from 'BBB-';
-- $200 million 4.75% notes due 2014 to 'BBB' from 'BBB-';
-- $300 million 4.0% senior notes due 2015 to 'BBB' from 'BBB-';
-- $200 million 7.3% notes due 2015 to 'BBB' from 'BBB-';
-- $300 million 5.5% notes due 2016 to 'BBB' from 'BBB-';
-- $499 million 5.375% notes due 2017 to 'BBB' from 'BBB-';
-- $325 million 4.0% senior notes due 2017 to 'BBB' from 'BBB-';
-- $500 million 6.3% notes due 2018 to 'BBB' from 'BBB-';
-- $500 million 6% notes due 2019 to 'BBB' from 'BBB-';
-- $499 million 5.5% senior notes due 2020 to 'BBB' from 'BBB-';
-- $800 million 5.125% senior notes due 2022 to 'BBB' from
'BBB-';
-- $298 million 5.95% notes due 2036 to 'BBB' from 'BBB-';
-- $299 million 6.625% senior notes due 2040 to 'BBB' from
'BBB-';
-- $325 million 6.1% notes due 2041 to 'BBB' from 'BBB-';
-- $425 million 6.625% senior notes due 2042 to 'BBB' from
'BBB-';
-- $600 million 7.875% junior subordinated debentures due 2042
to 'BB+' from 'BB';
-- $500 million 8.125% junior subordinated debentures due 2068
to 'BB+' from 'BB';
-- $556 million 7.25% mandatory convertible preferred stock,
series F to 'BB+' from 'BB'.
Fitch affirms the following ratings with a Stable Outlook:
Hartford Financial Services Group, Inc.
-- Short-term IDR at 'F2';
-- Commercial paper at 'F2'.
Hartford Life, Inc.
-- Long-term IDR at 'BBB';
-- $149 million 7.65% notes due 2027 at 'BBB-';
-- $92 million 7.375% notes due 2031 at 'BBB-'.
Hartford Life Global Funding
-- Secured notes program at 'A-'.
Hartford Life Institutional Funding
-- Secured notes program at 'A-'.
Hartford Life and Accident Insurance Company
-- IFS at 'A-'.
Hartford Life Insurance Company
-- IFS at 'A-';
-- Medium-term note program at 'BBB+'.
Hartford Life and Annuity Insurance Company
-- IFS at 'A-'.
Members of the Hartford Fire Insurance Intercompany Pool:
Hartford Fire Insurance Company
Nutmeg Insurance Company
Hartford Accident & Indemnity Company
Hartford Casualty Insurance Company
Twin City Fire Insurance Company
Pacific Insurance Company, Limited
Property and Casualty Insurance Company of Hartford
Sentinel Insurance Company, Ltd.
Hartford Insurance Company of Illinois
Hartford Insurance Company of the Midwest
Hartford Underwriters Insurance Company
Hartford Insurance Company of the Southeast
Hartford Lloyd's Insurance Company
Trumbull Insurance Company
-- IFS at 'A+'.
Fitch has withdrawn the following rating as it is no longer
considered analytically meaningful as the commercial paper program
was terminated in January 2007:
Hartford Life, Inc.
-- Short-term IDR at 'F2'.
HAWKER BEECHCRAFT: Taps Alvarez & Marsal as Restructuring Advisors
------------------------------------------------------------------
Hawker Beechcraft Inc. and its debtor-affiliates filed formal
application with the Bankruptcy Court to employ Alvarez & Marsal
North America, LLC, as restructuring advisors effective nunc pro
tunc to the bankruptcy filing date.
Beginning March 24, 2012, the Debtors engaged A&M to provide
restructuring advisory services in preparation for the chapter 11
cases. The Debtors said they need A&M to, among other things,
assist in evaluation of the Company's current business plan and in
preparation of a revised operating plan and cash flow forecast and
presentation of the plan and forecast to the Company's Board of
Directors and creditors; and in the discussions with and provision
of information to potential investors, secured lenders, official
committees, and the Office of the United States Trustee for the
Southern District of New York.
The Debtors will pay A&M at its hourly rates:
Managing Director $650 - $850 per hour
Directors $450 - $650 per hour
Associates/Analysts $250 - $450 per hour
The Debtors will also provide indemnification to A&M personnel
working in the case.
Prior to the Petition Date, the Debtors remitted a $500,000
retainer to A&M. Several weeks later, the Debtors remitted an
additional $500,000 retainer.
According to the firm's books and records, during the 90 days
before the commencement of the chapter 11 cases, A&M received
roughly $3 million for professional services performed and
expenses incurred. The portion of the retainer that remains
unused as of the Petition Date, estimated to be $800,000, will not
be segregated by A&M in a separate account and will be held until
the end of the chapter 11 cases and applied to A&M's finally
approved fees.
Jeffery J. Stegenga, a Managing Director of A&M, attests that the
firm (a) has no connection with the Debtors, their creditors,
other parties in interest, or the attorneys or accountants of any
of the foregoing, or the United States Trustee or any person
employed in the Office of the United States Trustee; (b) does not
hold any interest adverse to the Debtors' estates; and (c) is a
"disinterested person" as defined by section 101(14) of the
Bankruptcy Code.
About Hawker Beechcraft
Hawker Beechcraft Inc., a designer and manufacturer of light and
medium-sized jet, turboprop and piston aircraft, filed for Chapter
11 reorganization together with 17 affiliates (Bankr. S.D.N.Y.
Lead Case No. 12-11873) on May 3, 2012, having already negotiated
a plan that eliminates $2.5 billion in debt and $125 million of
annual cash interest expense.
The plan, to be filed by June 30, will give 81.9% of the new stock
to holders of $1.83 billion of secured debt, while 18.9% of the
new shares are for unsecured creditors. The proposal has support
from 68% of secured creditors and holders of 72.5% of the senior
unsecured notes.
Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and
49%-owned by Onex Corp. The Company's balance sheet at Dec. 31,
2011, showed $2.77 billion in total assets, $3.73 billion in total
liabilities and a $956.90 million total deficit. Other claims
include pensions underfunded by $493 million.
Hawker's legal representative is Kirkland & Ellis LLP, its
financial advisor is Perella Weinberg Partners LP and its
restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy
Solutions LLC is the claims and notice agent.
Sidley Austin LLP serves as legal counsel and Houlihan Lokey
Howard & Zukin Capital Inc. serves as financial advisor to the DIP
Agent and the Prepetition Agent.
Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of
senior secured prepetition lenders holding 70% of the loans.
Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee
of holders of the 8.500% Senior Fixed Rate Notes due 2015 and
8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker
Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes
Company. The members of the Ad Hoc Committee -- GSO Capital
Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims
or manage accounts that hold claims against the Debtors' estates
arising from the purchase of the Senior Notes. Deutsche Bank
National Trust Company, the indenture trustee for senior fixed
rate notes and the senior PIK-election notes, is represented by
Foley & Lardner LLP.
An Official Committee of Unsecured Creditors appointed in the case
has selected Daniel H. Golden, Esq., and the law firm of Akin Gump
Strauss Hauer & Feld LLP as legal counsel.
HAWKER BEECHCRAFT: Has Green Light to Pay Employees and Vendors
---------------------------------------------------------------
ReiforncedPlastics.com reports that Hawker Beechcraft received
bankruptcy approval of various requests filed together with its
Chapter 11 petition. Approval of the so-called First Day motions
will enable Hawker Beechcraft to continue to operate during the
reorganization process.
The report says, among the first-day motions granted, Hawker
Beechcraft received permission to continue paying employees, and
all vendors and suppliers in the ordinary course for goods and
services delivered after the commencement of the Chapter 11 case.
The company will utilize a commitment for US$400 million in
Debtor-in-Possession financing, negotiated as part of the
prearranged restructuring, to meet these obligations.
About Hawker Beechcraft
Hawker Beechcraft Inc., a designer and manufacturer of light and
medium-sized jet, turboprop and piston aircraft, filed for Chapter
11 reorganization together with 17 affiliates (Bankr. S.D.N.Y.
Lead Case No. 12-11873) on May 3, 2012, having already negotiated
a plan that eliminates $2.5 billion in debt and $125 million of
annual cash interest expense.
The plan, to be filed by June 30, will give 81.9% of the new stock
to holders of $1.83 billion of secured debt, while 18.9% of the
new shares are for unsecured creditors. The proposal has support
from 68% of secured creditors and holders of 72.5% of the senior
unsecured notes.
Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and
49%-owned by Onex Corp. The Company's balance sheet at Dec. 31,
2011, showed $2.77 billion in total assets, $3.73 billion in total
liabilities and a $956.90 million total deficit. Other claims
include pensions underfunded by $493 million.
Hawker's legal representative is Kirkland & Ellis LLP, its
financial advisor is Perella Weinberg Partners LP and its
restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy
Solutions LLC is the claims and notice agent.
The Pension Benefit Guaranty Corp. is represented by Kelley Drye &
Warren LLP. An ad hoc committee of senior secured lenders is
represented by Wachtell, Lipton, Rosen & Katz. An ad hoc
committee of Senior Note holders is represented by Milbank, Tweed,
Hadley & McCloy LLP. Deutsche Bank National Trust Company, the
indenture trustee for senior fixed rate notes and the senior PIK-
election notes, is represented by Foley & Lardner LLP.
HEARTLAND MEMORIAL: DLA Piper Fees Suit to Stay in Bankr. Court
---------------------------------------------------------------
Lance Duroni at Bankruptcy Law360 reports that U.S. District Judge
Theresa L. Springman on Tuesday refused to take on a case from
bankruptcy court seeking to claw back $1.3 million in fees that
DLA Piper LLP earned advising on a 2006 leveraged buyout that
allegedly left Heartland Memorial Hospital LLC insolvent.
Law360 says Judge Springman denied DLA Piper's motion to withdraw
reference in the adversary suit, which was filed by Heartland's
liquidating trustee in order to avoid payments to the firm and to
disallow its claim in the hospital's bankruptcy.
Heartland Memorial Hospital filed for Chapter 11 bankruptcy in the
U.S. Bankruptcy Court for the Northern District of Indiana. On
Nov. 19, 2008, the Bankruptcy Court confirmed a plan of
liquidation for Heartland. David Abrams was appointed as Plan
Trustee.
HERITAGE HIGHGATE: Cornerstone Investors Lose 3rd Cir. Appeal
-------------------------------------------------------------
The U.S. Court of Appeals for the Third Circuit shot down an
appeal by a group of creditors known as the Cornerstone Investors,
claim that the Bankruptcy Court erred by valuing their secured
claims against Heritage Highgate, Inc. and Heritage Twin Ponds,
L.P., at zero based on an appraisal of the Debtors' real estate
offered by the Official Committee of Unsecured Creditors. The
Third Circuit ruled the Bankruptcy Court did not err in its
valuation of the real estate, and that it properly determined that
the Cornerstone Investors held only unsecured claims.
Heritage Highgate, Inc. and Heritage-Twin Ponds II, L.P. embarked
upon the development of a residential subdivision in Lehigh
County, Pennsylvania, in August 2005. The Project was to consist
of townhouses and single-family detached homes. The Debtors
entered into a series of construction loan agreements, first
borrowing from a group of banks led by Wachovia. Pursuant to
their agreement, the Bank Lenders retained a lien on substantially
all of the Debtors' assets as collateral for the loan. The
Debtors subsequently borrowed from several individuals and
entities, known collectively as the Cornerstone Investors.
Pursuant to those agreements, the Cornerstone Investors similarly
received liens, of equal priority with the Bank Lenders and each
other, on substantially all of Debtors' assets. The Cornerstone
Investors, however, later agreed to subordinate their secured
claims to the secured claim of the Bank Lenders in a set of
intercreditor agreements.
After building and selling approximately a quarter of the planned
units, Heritage Highgate and Heritage-Twin Ponds II filed separate
Chapter 11 bankruptcy petitions (Bankr. D. N.J. Case Nos. 09-11197
and 09-11198) on Jan. 20, 2009. On June 9, 2009, the Debtors
filed a joint proposed plan of reorganization, which provided that
they would complete development of the subdivision and make
distributions to their creditors according to a set of
projections.
In the initial proposed plan, the Debtors projected that they
would first pay the secured claim of the Bank Lenders in full,
then pay the secured claims of the Cornerstone Investors in full,
and thereafter pay all unsecured claims at a rate of approximately
20% each, from the funds earned through lot sales.
In connection with a contested cash collateral hearing, the
Debtors offered an appraisal of the Project prepared by an
experienced real estate appraisal company, Reaves C. Lukens, in
February 2009 to demonstrate the worth of their collateral. The
140-page appraisal set forth in detail the company's estimation of
the real estate development's fair market value pursuant to two
well-accepted appraisal methodologies, the sales comparison
approach and the income capitalization approach.
The Bankruptcy Court accepted the appraiser's calculation of the
Project's fair market value as approximately $15 million, which
was then sufficient to cover the entirety of the secured debt.
On Sept. 4, 2009, the Official Committee of Unsecured Creditors
filed a motion to value the secured claims of the Cornerstone
Investors pursuant to 11 U.S.C. Sec. 506(a) and Federal Rule of
Bankruptcy Procedure 3012. The Committee claimed that the
Bankruptcy Court should value the secured claims at zero because
the collateral securing the Cornerstone Investors' liens, the
Project, was worth less than the Bank Lenders' senior secured
claim.
As proof of the collateral's worth, the Committee submitted the
February 2009 appraisal previously accepted by the Bankruptcy
Court as evidence of the Project's fair market value at the
contested cash collateral hearing. However, when reduced by
interim sales, the fair market value was $9.54 million. The
Committee urged that, because this amount was insufficient to pay
the Bank Lenders in full, the secured claims of the Cornerstone
Investors were valueless.
The Cornerstone Investors argued that their claims should be
deemed wholly secured because projections that accompanied the
plan filed by Debtors estimated that Debtors would derive revenue
from the Project sufficient to pay their claims in full. The
parties agreed to postpone consideration of the motion until after
confirmation of the reorganization plan.
On March 2, 2010, the Debtors submitted their final plan of
reorganization. The plan specified that claims of the Cornerstone
Investors would be secured to the extent determined by the
Bankruptcy Court in ruling on the Committee's motion. The final
plan included a projected budget that anticipated full payment of
both the Bank Lenders' senior secured debt and the Cornerstone
Investors' junior secured debt through the development and sale of
lots with completed townhouses and single-family homes over the
course of 47 months. According to the budget, unsecured claimants
would receive distributions amounting to approximately 45% of
their claims. No interested party, including the Cornerstone
Investors, objected to Debtors' final plan of reorganization.
On April 1, 2010, the Bankruptcy Court entered an order confirming
the plan. The Bankruptcy Court concluded, as required by 11
U.S.C. Sec. 1129(a)(11), that the plan was feasible, i.e., that
further liquidation or reorganization beyond the plan's provisions
would be unlikely.
With the plan confirmed, the Bankruptcy Court took up the
Committee's motion to value the Cornerstone Investors' secured
claims. On April 14, 2010, the parties filed joint stipulations
of fact to assist the Bankruptcy Court in ruling on the motion.
They agreed that the Bank Lenders were then owed $12 million,
while the Cornerstone Investors were owed $1.4 million.
The Debtors and the Cornerstone Investors stipulated that the
appraised value of the Project should be reduced due to the
Debtors' sale of lots since the appraisal's completion on Feb. 21,
2009, and that, "[b]ased on the Appraisal, the total fair market
value of the Project as of the Confirmation Date [wa]s
$9,543,396.23." Additional assets held by Debtors raised the
total value of the collateral securing liens to $11,165,477.
On May 3, 2010, the Bankruptcy Court held a hearing on the
Committee's motion. While they agreed that the appraisal depicted
the Project's fair market value, the Cornerstone Investors
contended that it did not control because Sec. 506(a) requires
that the value of property "be determined in light of [its]
proposed disposition or use" and the plan budget demonstrated that
the Debtors would be able to pay their claims in full over time as
more homes were sold. They also urged the court to adjudge their
claims fully secured, arguing that to deprive them of Project
revenue to be generated over and above the appraisal value would
constitute impermissible lien stripping.
The Bankruptcy Court agreed with the Committee. It determined
that the proper method of valuing the Cornerstone Investors'
secured claims was the fair market value of the Project as of the
plan's confirmation date. The Cornerstone Investors did not
dispute the accuracy of the fair market value set forth in the
appraisal, choosing instead to rely upon the plan budget. The
Bankruptcy Court accepted the appraisal as a proper basis for the
valuation. Because the amount remaining due on the Debtors'
obligation to the Bank Lenders exceeded the sum of the Project's
fair market value and the value of other assets held by the
Debtors, no collateral remained to secure the Cornerstone
Investors' claims. Therefore, the Bankruptcy Court ruled, the
Cornerstone Investors would be treated as unsecured creditors.
The Cornerstone Investors appealed the Bankruptcy Court's ruling
to the District Court for the District of New Jersey. The
District Court affirmed the Bankruptcy Court's ruling. Relying
upon the Supreme Court's decision in Associates Commercial Corp.
v. Rash, 520 U.S. 953 (1997), it considered the Project's fair
market value controlling and found the appraisal to have
accurately measured that value. The District Court rejected the
Cornerstone Investors' suggestion that the plan budget constituted
the appropriate basis for valuing their secured claims because
they knew that the amount of their secured claims would be
determined pursuant to the Committee's motion, as the plan
specifically so stated. The plan budget, the District Court
stated, merely constituted projections meant to demonstrate the
plan's feasibility, not the Project's present value. The District
Court noted that, while the Supreme Court has prohibited lien
stripping in liquidation cases, Dewsnup v. Timm, 502 U.S. 410
(1992), nothing prohibited lien stripping in the reorganization
context.
Cornerstone Investors went to the Third Circuit. They make two
interrelated arguments: The Cornerstone Investors contend that the
Project's discounted present value, as reflected in the appraisal,
cannot control the extent to which their claims are secured
because the plan calls for the Debtors to develop and sell homes
in the subdivision over time. The Bankruptcy Court, the argument
proceeds, could only have valued the Project in a manner
respectful of its "proposed disposition or use" by awaiting the
results of the planned build-out. The Cornerstone Investors also
contend that, by pinning a value to the Project prior to the
plan's completion in violation of Sec. 506(a)'s dictates, the
Bankruptcy Court denied them revenue that would ultimately be
realized from the Project in excess of its appraisal value. They
urge that depriving them of any increase in the worth of their
collateral beyond its judicially determined value violates
restrictions on lien stripping imposed by the Supreme Court in
Dewsnup.
The appellate case is Charles Scagliotti IRA, Frank Cortese IRA,
Gerald Bowes IRA, Gary Cortese IRA, George Mee Marital Trust,
TomParks IRA, Pollock Family L.P., Robert Preston IRA, John
Rogers, Lynne Summers Marital Trust, John R. Yaissle IRA, Yee III
Trust Highgate and Robert Preston (collectively "Cornerstone
Investors"), Appellants, No. 11-1889 (3rd Cir.).
Circuit Judges Marjorie Rendell, D. Michael Fisher and Micahel
Chagares comprise the Third Circuit panel. Judge Rendell wrote
the opinion.
A copy of the Third Circuit's Opinion dated May 14, 2012, is
available at http://is.gd/607Scwfrom Leagle.com.
Albert A. Ciardi, III, Esq., and Nicole M. Nigrelli, Esq., at
Ciardi Ciardi & Astin, argued for the Debtors.
The Cornerstone Investors are represented by:
Joseph S. D'Amico, Jr., Esq.
Douglas J. Smillie, Esq.
FITZPATRICK, LENTZ & BUBBA
4001 Schoolhouse Lane
Stabler Corporate Center
P.O. Box 219
Center Valley, PA 18034
E-mail: jsdamico@flblaw.com
dsmillie@flblaw.com
The Unsecured Creditors Committee is represented by:
Samuel H. Israel, Esq.
Joshua T. Klein, Esq.
Michael G. Menkowitz, Esq.
FOX ROTHSCHILD
2000 Market Street, 20th Floor
Philadelphia, PA 19103
E-mail: sisrael@foxrothschild.com
jklein@foxrothschild.com
mmenkowitz@foxrothschild.com
- and -
Michael J. Viscount, Jr., Esq.
FOX ROTHSCHILD
1301 Atlantic Avenue, Suite 400
Midtown Building
Atlantic City, NJ 08401
E-mail: mviscount@foxrothschild.com
HOSTESS BRANDS: Judge Denies Motion to Reject Teamster Contracts
----------------------------------------------------------------
In a victory for Hostess workers, U.S. Bankruptcy Judge Robert
Drain issued an oral decision Monday night denying Hostess Brands
Inc's motion to reject all Teamster labor contracts, meaning that
all contracts with Teamster local unions remain in effect.
"We told our Hostess members all along that we would vigorously
oppose the imposition of unjust working conditions since Hostess
first filed bankruptcy and we have done just that," said Teamsters
General Secretary-Treasurer Ken Hall. "It's a rare day when a
bankruptcy judge denies a company's request to reject its union
contracts, and I attribute it to the resolve of our members and
the team we assembled to fight the company's 1113 motion.
"The judge specifically noted that the union and its advisers had
accurately identified the company's operational and business
issues and were highly knowledgeable about the company.
"While we agree with most of Judge Drain's ruling, we recognize
that it doesn't solve Hostess' problems. Unfortunately we've been
bogged down in this legal process instead of trying to reach a
resolution that all parties could support. We remain committed to
finding a solution and urge the company and its lenders to do the
same."
Founded in 1903, the International Brotherhood of Teamsters
represents 1.4 million hardworking men and women throughout the
United States, Canada and Puerto Rico, including more than 7,500
delivery drivers and merchandisers at Hostess.
About Hostess Brands
Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known
for iconic brands such as Butternut, Ding Dongs, Dolly Madison,
Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride,
Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution
centers and 570 outlets in 49 states.
Hostess filed for Chapter 11 bankruptcy protection early morning
on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through
12-22056) in White Plains, New York. Debtor-affiliates that filed
separate Chapter 11 petition are IBC Sales Corporation, IBC
Trucking LLC, IBC Services LLC, Interstate Brands Corporation, and
MCF Legacy Inc. Hostess Brands disclosed assets of $982 million
and liabilities of $1.43 billion as of Dec. 10, 2011. Debt
includes $860 million on four loan agreements. Trade suppliers
are owed as much as $60 million.
The bankruptcy filing was made two years after predecessors
Interstate Bakeries Corp. and its affiliates emerged from
bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). Ripplewood
Holding LLC, after providing $130 million to finance the plan,
obtained control of IBC's business following the prior
reorganization. Hostess Brands is privately held. The new owners
pursued new Chapter 11 cases to escape from what they called
"uncompetitive and unsustainable" union contracts, pension plans,
and health benefit programs.
In 2011, Hostess retained Houlihan Lokey to explore sales of its
smaller assets and individual brands. Houlihan Lokey oversaw the
sale of Mrs. Cubbison's to Sugar Foods Corporation for
$12 million, but was unable to sell any of Hostess' core assets.
Judge Robert D. Drain oversees the case. Hostess has hired Jones
Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general
corporate counsel and conflicts counsel; Perella Weinberg Partners
LP as investment bankers, FTI Consulting, Inc. to provide an
interim treasurer and additional personnel for the Debtors, and
Kurtzman Carson Consultants LLC as administrative agent.
Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry
Wilson, the head of turnaround and restructuring firm MAEVA
Advisors, are representing the Teamsters union.
Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain
Millers International Union and Bakery & Confectionery Union &
Industry International Pension Fund are Jeffrey R. Freund, Esq.,
at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David
A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright &
Jaworski L.L.P.
An official committee of unsecured creditors has been appointed in
the case. The committee selected New York law firm Kramer Levin
Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein
head the legal team for the committee.
Hostess in April concluded the trial seeking authorization to
terminate contracts with the Teamsters and bakery workers, the two
largest unions. The trial to reject contracts with other unions
is scheduled to begin May 21. The company says costs must be
reduced to attract new capital required to exit bankruptcy.
HOSTESS BRANDS: Two Firms Make Formal Offer to Buy Assets
---------------------------------------------------------
The Inquisitr reports that private-equity firm KPS Capital
Partners and at least one other bidder made formal offers by the
May 9 deadline to buy Hostess Brands, offering a potential
lifeline to the maker of the iconic snack cakes. According to the
report, a source said the bids likely ranged between $500 million
and $600 million for Hostess Brands.
About Hostess Brands
Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known
for iconic brands such as Butternut, Ding Dongs, Dolly Madison,
Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride,
Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution
centers and 570 outlets in 49 states.
Hostess filed for Chapter 11 bankruptcy protection early morning
on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through
12-22056) in White Plains, New York. Debtor-affiliates that filed
separate Chapter 11 petition are IBC Sales Corporation, IBC
Trucking LLC, IBC Services LLC, Interstate Brands Corporation, and
MCF Legacy Inc. Hostess Brands disclosed assets of $982 million
and liabilities of $1.43 billion as of Dec. 10, 2011. Debt
includes $860 million on four loan agreements. Trade suppliers
are owed as much as $60 million.
The bankruptcy filing was made two years after predecessors
Interstate Bakeries Corp. and its affiliates emerged from
bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). Ripplewood
Holding LLC, after providing $130 million to finance the plan,
obtained control of IBC's business following the prior
reorganization. Hostess Brands is privately held. The new owners
pursued new Chapter 11 cases to escape from what they called
"uncompetitive and unsustainable" union contracts, pension plans,
and health benefit programs.
In 2011, Hostess retained Houlihan Lokey to explore sales of its
smaller assets and individual brands. Houlihan Lokey oversaw the
sale of Mrs. Cubbison's to Sugar Foods Corporation for
$12 million, but was unable to sell any of Hostess' core assets.
Judge Robert D. Drain oversees the case. Hostess has hired Jones
Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general
corporate counsel and conflicts counsel; Perella Weinberg Partners
LP as investment bankers, FTI Consulting, Inc. to provide an
interim treasurer and additional personnel for the Debtors, and
Kurtzman Carson Consultants LLC as administrative agent.
Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry
Wilson, the head of turnaround and restructuring firm MAEVA
Advisors, are representing the Teamsters union.
Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain
Millers International Union and Bakery & Confectionery Union &
Industry International Pension Fund are Jeffrey R. Freund, Esq.,
at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David
A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright &
Jaworski L.L.P.
An official committee of unsecured creditors has been appointed in
the case. The committee selected New York law firm Kramer Levin
Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein
head the legal team for the committee.
HOUGHTON MIFFLIN: Fitch's Junk Rating Affects $3.1 Million in Debt
------------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating (IDR) of
Houghton Mifflin Harcourt Publishers Inc. (HMH) and its
subsidiaries to 'C' from 'CC'. There is no assigned Rating
Outlook. The downgrade impacts $3.1 billion in debt.
The downgrade reflects HMH's announcement of its restructuring
plan to swap its $3.1 billion in debt for equity. The company has
obtained support from approximately 70% of the lending group
(secured bank facilities and secured notes). In addition, HMH has
obtained a $500 million financing commitment, which will provide
sufficient liquidity to support seasonal working capital swings.
As proposed, the current equity holders will receive warrants
excisable for up to 5% of the company's equity.
Upon filing of the prepackaged bankruptcy, Fitch will downgrade
the IDR to 'D'.
The restructuring will materially reduce leverage and cash
interest burdens. This will provide HMH with additional
flexibility to invest in its operations.
HMH continues to be a leader in the K-12 educational material and
services sector, capturing 41% of 2011 market share (adoption and
open territory market [excluding Advanced Placement Sales] - based
on Association of American Publishers (AAP) and company data).
Fitch believes investments made into digital products and services
will position HMH to take a meaningful share of the rebound in the
K-12 educational market. Fitch's expects HMH will be able to, at
a minimum, defend its market share.
Fitch expects revenues to continue to decline in the low to mid
single digits in 2012. The education business is in a cyclical
trough, and Fitch believes that HMH and its peers will benefit
from the adoption of common core standards in 2014/2015 which will
fuel revenue growth.
HMH Publishers' Recovery Ratings reflect Fitch's expectation that
the enterprise value of the company, and hence recovery rates for
its creditors, will be maximized in a restructuring scenario
(going-concern) rather than liquidation. Fitch estimates an
adjusted, distressed enterprise valuation of $1.4 billion using a
6 times (x) multiple. The 'RR4' Recovery Ratings for the secured
debt issues represent an expected recovery in the range of Fitch's
31% to 50% range.
Fitch has downgraded the following ratings:
HMH Publishers
-- IDR to 'C' from 'CC';
-- Secured first lien credit facility to 'C'/RR4 from 'CC'/RR4;
-- Senior secured first lien notes to 'C'/RR4 from 'CC/RR4'.
Houghton Mifflin Harcourt Publishing Company
-- IDR to 'C' from 'CC'.
HMH Publishers LLC
-- IDR to 'C' from 'CC'.
HUDBAY MINERALS: S&P Gives 'B' Corp. Credit Rating; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
corporate credit rating to Toronto-based copper producer HudBay
Minerals Inc. The outlook is stable.
Standard & Poor's also assigned its 'B' issue-level rating, and
'3' recovery rating, to HudBay's proposed US$400 million senior
unsecured notes. A '3' recovery rating indicates our expectations
of meaningful (50%-70%) recovery in the event of default," S&P
said.
"We understand the proceeds from the issuance will be used to fund
general corporate purposes including outlays for several of the
company's larger development projects," S&P said.
"The ratings on HudBay reflect what we consider the company's
'vulnerable' business risk profile and 'aggressive' financial risk
profile," S&P said.
"The ratings incorporate HudBay's very limited operating diversity
and heavy reliance on volatile metals prices during a period of
considerable growth-oriented capital expenditures," said Standard
& Poor's credit analyst Donald Marleau. "These weaknesses are
offset somewhat by the company's relatively stable operating
profile that features an attractive first-quartile cost position,
consistent earnings generation, and producing assets located in
a low-risk mining jurisdiction," Mr. Marleau added.
HudBay operates several mines in the Flin Flon Greenstone belt in
the province of Manitoba, including its flagship producing asset,
the 777 mine. The company is developing several projects including
Lalor in Manitoba and Constancia in Peru.
"The stable outlook reflects our view that HudBay's low-cost
mining operations, at our base case scenario metals prices, should
support fairly stable earnings and funds from operations (FFO)
generation. We estimate that under our base case scenario
assumptions, the company's stable operating profile should
reinforce its liquidity position alongside an adjusted debt-to-
EBITDA ratio in the 3x-4x range and adjusted FFO to debt of about
15%-20% in the next 12 months," S&P said.
"Conversely, we would expect the rating to come under pressure if
HudBay's adjusted debt-to-EBITDA ratio reaches 4.5x. In our
opinion, such a scenario would require copper prices to fall below
US$3.00 per pound or costs to materially increase from operational
challenges at the 777 mine, both of which we view as unlikely this
year," S&P said.
"Given the company's capital spending requirements, we believe
that a positive rating action is unlikely in the near term," S&P
said.
INDALEX INC: Sues Kirkland & Ellis, Alleges Investment Conflicts
----------------------------------------------------------------
Stephanie Gleason at Dow Jones' DBR Small Cap reports that the
trustee liquidating Indalex Inc., an aluminum alloy producer that
was purchased by Sun Capital Partners Inc. in 2006 in a highly
leveraged buyout, is suing Kirkland & Ellis LLP, saying the law
firm didn't disclose that it had investments in Sun Capital during
the time of its Indalex representation.
About Indalex Inc.
Indalex filed for Chapter 11 protection in the U.S. Bankruptcy
Court in Wilmington, Del., because of financial difficulties
brought on by the global economic slowdown, which spurred a drop
in demand, earnings, and liquidity. On July 2, 2009, the
company's sale to Sapa holdings AB, a Swedish aluminum products
maker, was approved. The transaction included 10 active plants in
North America.
Workers and retirees with questions may consult the PBGC Web site,
http://www.pbgc.gov/or call toll-free at 1-800-400-7242. For
TTY/TDD users, call the federal relay service toll-free at
1-800-877-8339 and ask for 800-400-7242.
Indalex retirees who draw a benefit from the PBGC may be eligible
for the federal Health Coverage Tax Credit. Further information
may be found on the PBGC Web site at http://www.pbgc.gov/workers-
retirees/benefits-information/content/page13692.html
Assumption of the plan's unfunded liabilities will increase the
PBGC's claims by $47.1 million and was not previously included in
the agency's fiscal year 2009 financial statements.
The PBGC is a federal corporation created under the Employee
Retirement Income Security Act of 1974. It currently guarantees
payment of basic pension benefits earned by 44 million American
workers and retirees participating in over 29,000 private-sector
defined benefit pension plans. The agency receives no funds from
general tax revenues. Operations are financed largely by insurance
premiums paid by companies that sponsor pension plans and by
investment returns.
IMPERIAL PETROLEUM: Settles with Investors for 18.1-Mil. Shares
---------------------------------------------------------------
Imperial Petroleum, Inc., on May 8, 2012, completed a series of
Settlement and Release Agreements effective April 30, 2012, with
accredited investors from the Company's Private Placement
previously completed on Sept. 21, 2011. The Purchasers had
alleged various claims against the Company in connection with the
Securities Purchase Agreement executed in connection with the
Private Placement, including breach of the agreement, the right to
rescind their investment and failure to file the required
Registration Statement in connection with the issuance of the
shares. As a result of the failure of the Company to file the
Registration Statement, the Purchasers were entitled to monetary
damages payable in cash of up to 8% of their initial investment as
well as the continuing right to rescind their investment and
receive a return of those funds. As a result of the execution of
the confidential Settlement and Release Agreements, the Company:
(i) issued a total of 18,158,950 shares of its restricted
common stock in full settlement of all claims from those
Purchasers;
(ii) amended the warrant exercise price to $0.14/share for
warrants previously issued to the Purchasers; and
(iii) amended the Securities Purchase Agreement to remove any
requirements to register any of the Purchasers' shares,
except as a "piggyback" registration and eliminated any
future rights previously granted to the Purchasers to
participate in subsequent equity or debt financings of the
Company. Twenty of the twenty two Purchasers executed the
Settlement and Release Agreements to date representing all
but $175,000 of the original $3,117,501 investment. If
the remaining two Purchasers execute the Settlement and
Release Agreements, the Company will issue an additional
1,058,390 shares. All of the shares issued in connection
with the Settlement and Release Agreements are restricted
and are subject to the holding period requirements and
sales volume limitations under Rule 144 of the Securities
Act of 1934 as amended.
On May 8, 2012, Mr. Sam Wernli, the former President of the
Imperial Chemical Company, was appointed to the Board of Directors
of the Company and as Executive Vice President of Imperial
Chemical Company. Mr. Wernli has extensive business experience
and in particular was involved in the development of the SANDKLENE
950 product under exclusive license to Imperial Chemical Company
for use in its oil sands operations. Mr. Wernli will serve until
the next regularly scheduled shareholders' meeting.
On May 10, 2012, the Company received service of a lawsuit filed
in Marion Superior Court, Marion, Indiana by First Merchants Bank,
N.A. with respect to the debts owed by e-Biofuels LLC (Cause No.
49D141204PL017213). The lawsuit alleges, among other things,
breach of the Guaranty Agreement and seeks $7.5 million plus
interest and attorney's fees and other unspecified amounts. The
lawsuit includes the co-guarantors of the e-Biofuels, LLC, debt
with Frist Merchants, Craig Ducey, Chad Ducey, Brian Carmichael,
Bruce Carmichael and Werks Management. The Company intends to
vigorously defend itself in this lawsuit.
About Imperial Petroleum
Headquartered in Evansville, Ind., Imperial Petroleum Inc.
(OTC BB: IPMN) operates as a diversified energy and mineral mining
company in the United States. Its oil and natural gas properties
include the Coquille Bay field located in Plaqumines Parish,
Louisiana; the Haynesville field located in Claiborne and Webster
Parishes in north Louisiana; the Bastian Bay field located in
Plaquemines parish, Louisiana; LulingField located in Guadalupe
county, Texas; and the Shrewsbury field in Grayson County and the
Claymour field in Todd County, western Kentucky.
As reported by the TCR on June 24, 2011, the Company anticipates
its current working capital will not be sufficient to meet its
required capital expenditures and that the Company will be
required to either access additional borrowings from its lender or
access outside capital. Currently the Company projects it will
require non-discretionary capital expenditures of approximately
US$500,000 in the next fiscal year to re-establish and maintain
economic levels of production at Coquille Bay. Without access to
such capital for non-discretionary projects, the Company's
production may be significantly curtailed or shut in and
jeopardize its leases.
Weaver Martin & Samyn, LLC, in Kansas City Missouri, expressed
substantial doubt about the Company's ability to continue as a
going concern. The independent auditors noted that the Company
has suffered recurring losses from operations and is dependent
upon obtaining debt financing for funds to meet its cash
requirements.
The Company's balance sheet at Oct. 31, 2011, showed
$20.64 million in total assets, $20.02 million in total
liabilities and $617,446 in total stockholders' equity.
IMPLANT SCIENCES: Appoints D. Jones as VP of Sales and Marketing
----------------------------------------------------------------
Implant Sciences Corporation appointed Dr. Darryl Jones as Vice
President of Sales and Marketing. Dr. Jones has led significant
sales growth at some of the largest firms in the security industry
including GE Security and Safran's Morpho Detection.
Dr. Jones stated, "Implant Sciences represents the next generation
in explosives and narcotics trace detection. I see tremendous
potential for further global and domestic market penetration for
the Company's current products, and its underlying technologies
hold greater promise for a larger product portfolio that can be
rolled out to its global distribution network. I am excited to
contribute to and lead the Company?s sales momentum."
Dr. Jones was most recently Vice President of Global Product
Management at Safran's Morpho Detection, where he managed one of
the largest ETD and EDS product portfolios in the industry, and
helped launch the X-ray and Raman spectroscopy product lines.
Prior to GE Security's sale to Safran, Dr. Jones was General
Manager of Global Security Sales at GE Security, where he
recruited and developed a global sales team focused on six key
markets and achieved year-over-year top line growth. During his
three year tenure as sales leader, Darryl nearly tripled revenue
in the non-aviation markets. Previously, he was Global Business
Manager at GE Healthcare, and a Senior Product Manager at Corning,
Inc./Photonic Technologies. Dr. Jones has been issued a patent,
authored six papers in scientific publications, and delivered nine
conference presentations. He received his PhD in Optical Science
and Engineering from the University of Alabama, a Masters of Arts
in Physics and Bachelor of Arts from Fisk University.
"Darryl is a recognized industry leader who uniquely combines his
deep technical knowledge with his innate skills in sales,
marketing, management, and product portfolio development: stated
Implant Sciences' President and CEO Glenn D. Bolduc. "The fact
that he is joining us at this time points to the excitement around
Implant Sciences' products, technologies, and our position of
growth in the security industry. We are very pleased to welcome
him to our growing team of management talent."
On May 7, 2012, the Company entered into a three-year employment
agreement with Dr. Jones pursuant to which Dr. Jones will receive
a base annual salary of $235,000 per year, commencing on May 7,
2012.
The agreement provides for Dr. Jones to be eligible to receive
incentive compensation in an amount of up to $17,384 and $117,500,
for the fiscal years ended June 30, 2012, and June 30, 2013,
respectively, upon the achievement of certain performance
milestones to be established by the Board of Directors.
About Implant Sciences
Implant Sciences Corporation (OBB: IMSC.OB) --
http://www.implantsciences.com/-- develops, manufactures and
sells sensors and systems for the security, safety and defense
(SS&D) industries.
The Company reported a net loss of $15.55 million for the year
ended June 30, 2011, compared with a net loss of $15.52 million
during the prior year.
The Company reported a net loss of $6.36 million on $2.16 million
of revenue for the six months ended Dec. 31, 2011, compared with a
net loss of $10.03 million on $4.15 million of revenue for the
same period during the prior year.
The Company's balance sheet at Dec. 31, 2011, showed $7 million in
total assets, $33.03 million in total liabilities and a $26.03
million in total stockholders' deficit.
Marcum LLP, in Boston, Massachusetts, expressed substantial doubt
about the Company's ability to continue as a going concern. The
independent auditors noted that the Company has had recurring net
losses and continues to experience negative cash flows from
operations. As of Sept. 30, 2011, the Company's principal
obligation to its primary lender was approximately $23,115,000
with accrued interest of approximately $1,705,000.
Bankruptcy Warning
The Company's ability to comply with its debt covenants in the
future depends on its ability to generate sufficient sales and to
control expenses, and will require the Company to seek additional
capital through private financing sources. In addition, the
Company will require substantial funds for further research and
development, regulatory approvals, and the marketing of its
explosives detection products. The Company's capital requirements
depend on numerous factors, including but not limited to the
progress of the Company's research and development programs; the
cost of filing, prosecuting, defending and enforcing any
intellectual property rights; competing technological and market
developments; changes in the Company's development of
commercialization activities and arrangements; and the hiring of
additional personnel, and acquiring capital equipment. There can
be no assurances that the Company will achieve its forecasted
financial results or that the Company will be able to raise
additional capital to operate its business.
Any failure to comply with the Company's debt covenants, to
achieve its projections or obtain sufficient capital on acceptable
terms would have a material adverse impact on the Company's
liquidity, financial condition and operations and could force the
Company to curtail or discontinue operations entirely or file for
protection under bankruptcy laws.
INFUSYSTEM HOLDINGS: Delays Q1 Form 10-Q for Executives' Exodus
---------------------------------------------------------------
InfuSystem Holdings, Inc., was unable to timely prepare and
process the quarterly report for the period ended March 31, 2012,
as a result of:
(i) the resignation of Company's Chief Financial Officer during
the first quarter of 2012;
(ii) the appointment of a new Chief Financial Officer during the
first quarter of 2012;
(iii) the resignation of the Company's Chief Executive Officer in
the second quarter of 2012;
(iv) the appointment of a new Interim Chief Executive Officer in
the second quarter of 2012;
(v) the resignation of five members of the Company's Board of
Directors in the second quarter of 2012;
(vi) the appointment of five new members of the Company's Board
of Directors in the second quarter of 2012; and
(vii) the settlement of certain actions brought by a group of
the Company's shareholders in the second quarter of 2012.
About InfuSystem Holdings
InfuSystem Holdings, Inc., operates through operating
subsidiaries, including InfuSystem, Inc., and First Biomedical,
Inc. InfuSystem provides infusion pumps and related services.
InfuSystem provides services to hospitals, oncology practices and
facilities and other alternate site healthcare providers.
Headquartered in Madison Heights, Michigan, InfuSystem delivers
local, field-based customer support, and also operates pump
service and repair Centers of Excellence in Michigan, Kansas,
California, and Ontario, Canada.
The Company reported a net loss of $45.44 million in 2011,
compared with a net loss of $1.85 million in 2010.
The Company's balance sheet at Dec. 31, 2011, showed
$76.26 million in total assets, $36.09 million in total
liabilities, and $40.16 million in total stockholders' equity.
After auditing the Company's 2011 financial statements, Deloitte &
Touche LLP, in Detroit, Michigan, said that the possibility of a
change in the majority representation of the Board and consequent
event of default under the Credit Facility, which would allow the
lenders to cause the debt of $24.0 million to become immediately
due and payable, raises substantial doubt about the Company's
ability to continue as a going concern.
ISAACSON STEEL: Can Sell Berlin, N.H. Properties for $2.4-Mil
-------------------------------------------------------------
Judge J. Michael Deasy of the U.S. Bankruptcy Court for the
District of New Hampshire authorized Isaacson Structural Steel,
Inc., to sell three parcels of real estate property in Berlin, New
Hampshire, to Counsel RB Capital LLC, Myron Bowling Auctioneers
Inc., and Hilco Industrial LLC for $2.4 million.
The Debtor will pay or make reasonable provision for these items
from the Purchase Price:
A) $40,000 Breakup Fee due to GT Sales Inc., as stalking
horse bidder;
B) $175,000 to fund a settlement with Wells Fargo;
C) all real estate taxes and other municipal assessments
accrued and due the City of Berlin as of the Closing Date;
D) $4,200 due to NMHG Financial;
E) a payment of $4,874 to Northway on account of a Hyster
Forklift and JLG Manlift Serial Number 0300050976;
F) $7,600 for the estimated amount by which the quarterly
distribution fees to the United States Trustee will
increase as a result of the Sale;
G) reasonable closing counsel fees and expenses, including
the Debtor's share of any transfer taxes; and
H) $7,500 to be paid to Escrow Agent to be held on a
contingent basis for a period of 30 days and which may be
used to pay miscellaneous secured claims.
Any payments requiring Court approval or other satisfaction of
other conditions prior to payment will be deposited with the
Escrow Agent. The balance of the Purchase Price remaining after
deduction of the amounts will constitute the "Net Sale Proceeds."
About Isaacson Structural Steel
Based in Berlin, New Hampshire, Isaacson Structural Steel, Inc.,
filed for Chapter 11 bankruptcy (Bankr. D. N.H. Case No. 11-12416)
on June 22, 2011. Bankruptcy Judge J. Michael Deasy presides over
the case.
Isaacson Structural Steel estimated both assets and debts of
$10 million to $50 million. The petition was signed by Arnold P.
Hanson, Jr., president.
An official committee of unsecured creditors has been appointed in
Isaacson Structural Steel's case. Nixon Peabody LLP, and Mesirow
Financial Consultants represents the Committee.
A bankruptcy petition was also filed for Isaacson Steel, Inc.
(Bankr. D. N.H. Case No. 11-12415) on June 22, 2011, estimating
assets and debts of $1 million to $10 million. The petition was
signed by Arnold P. Hanson, Jr., president. William S. Gannon,
Esq., also represents Isaacson Steel.
No trustee or examiner has been appointed in this case.
J.W. KENNEDY: June 21 Auction of Food Facility Set
--------------------------------------------------
National Commercial Auctioneers disclosed the bankruptcy auction
of a turn-key food processing facility in Weatherford, Texas, on
Thursday, June 21, 2012, at 10 a.m. local time, according to Brent
Wellings, auctioneer and project manager.
This auction is conducted pursuant to case J.W. Kennedy Inc. (07-
43666-DML-7), US Bankruptcy Court, Northern District of TX, Fort
Worth Division.
"We have an excellent opportunity here to purchase a turn-key food
processing facility in a fast-growing area at auction prices,"
said Wellings.
Located at 1318 Clear Lake Road in Weatherford, the property was
formerly used as a hot bone sausage plant and smoked products
facility. The approximately 7.1 acres of land are improved with a
41,161 square foot processing facility, a 12,168 square foot
warehouse and a 2,220 square foot shop building.
Within the main processing building there are approximately 12,000
square feet of cooler/freezer space and 6,220 square feet of
office space. A live animal holding area, kill floor, processing
floor, and smokers take up the remaining footage. Two industrial
smokers are in place within the facility. The main building is
constructed on a reinforced slab foundation with exterior tilt
walls.
The warehouse building has the potential for multiple tenant use
if desired. There are currently 11 separate spaces with concrete
floors in the building. The warehouse is built on a dock high
concrete slab foundation. The metal shop building on the backside
of the main structure was used to service the original owner's
fleet vehicles.
The property is currently split zoned industrial and commercial.
The north portion of the property is zoned commercial and
encompasses the pecan grove. This is an excellent opportunity to
capitalize on additional land for development. The portion of the
property which holds the processing plant is zoned Industrial.
"Weatherford is one of the fastest growing cities in the country,"
noted Wellings, "and it's only 20 miles from the Dallas / Fort
Worth metroplex."
Broker participation is encouraged. The property may be inspected
during scheduled previews or by appointment. For more details on
how to receive the property information package and complete terms
visit http://www.natcomauctions.com/or call (877) 895-7077.
About Nat'l Commercial Auctioneers
National Commercial Auctioneers is a national commercial property
auction company dedicated to the sale of real estate for lenders,
bankruptcy trustees, private equity funds, and public and private
companies throughout the United States. NCA has the knowledge and
expertise to effectively deliver a market driven auction for every
kind of property.
About J.W. Kennedy
Headquartered in Weatherford, Texas, J.W. Kennedy Inc. aka
Kennedy's Sausage Company and Kennedy Sausage Inc. --
http://www.j2w.net/kennedys/main.htm-- and --
http://kennedyssausage.com/-- supplies private label country-
style sausage, bacon and ham products to many fast food chains.
It filed for chapter 22 bankruptcy protection on Aug. 27, 2007
(Bankr. N.D. Tex. Case No. 07-43666). Julie C. McGrath, Esq. at
Forshey & Prostok, LLP represents the Debtor in its restructuring
efforts. When the Debtor filed for bankruptcy, it estimated
assets and debts between $1 million and $100 million.
The Debtor's principal, Weidon Kennedy, filed for Chapter 11
protection on Oct. 29, 2006 (Bankr. N.D. Tex. Case No. 06-43677).
KAISER ALUMINUM: S&P Assigns 'BB-' Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' corporate
credit rating to Foothill Ranch, Calif.-based Kaiser Aluminum
Corp.
"At the same time, we assigned a 'BB-' (the same as the corporate
credit rating) issue-level rating to Kaiser Aluminum Corp.'s
proposed $200 million senior unsecured notes due 2020. The
recovery rating on the proposed notes is '3', indicating our
expectation of meaningful (50% to 70%) recovery in the event of
payment default," S&P said.
"The company plans to use proceeds from the proposed notes
issuance for general corporate purposes as well as to pay related
fees and expenses," said Standard & Poor's credit analyst Megan
Johnston.
"The corporate credit rating on Kaiser Aluminum Corp. reflects our
view of the company's 'weak' business risk and 'significant'
financial risk," S&P said.
"The stable outlook reflects our expectation that Kaiser's
profitability will improve in 2012 as a result of better end-
market demand, particularly for the aerospace and high strength
segment, as well as due to a gradually improving domestic economy.
We expect Kaiser to generate between $150 million and $200 million
in EBITDA in 2012, resulting in debt to EBITDA of between 2x and
2.5x, and FFO to debt of 40% to 50%. We also expect liquidity to
remain strong to finance organic expansion and any acquisitions
the company may pursue. Although the credit metrics we expect will
be good for our view of its significant financial risk profile,
Kaiser's revenues and profitability are tied to the cyclical
aluminum products industry, and thus, results can be volatile,"
S&P said.
"We would consider a negative rating action if debt to EBITDA
exceeds 4x on a sustained basis as a result of a deterioration in
operating performance over the next several quarters. This could
occur if a global economic recession were to lead to a drop-off in
demand for airplanes and automotives, such that year-over-year
revenues and margins declined 100 basis points over 2011 levels,
given increased levels of debt. We could also take a negative
rating action if Kaiser were to increase leverage to pursue an
acquisition or shareholder-friendly action, such as a special
dividend or share repurchases," S&P said.
"A positive rating action is less likely in the near term, given
our view of the company's weak business risk and its relatively
small size and scope. However, one could occur over time, if the
company were to increase its size and geographic and end-market
diversity to be more in line with a 'fair' business risk
assessment," S&P said.
KMART CORP: Bankruptcy Court Won't Hear Pre-BAPCPA Tax Issue
------------------------------------------------------------
The Bankruptcy Court in Chicago said it lacks jurisdiction to hear
an adversary proceeding commenced by Kmart Corporation in March
2010 seeking a declaration of the effects under 11 U.S.C. Section
346 of Kmart's plan of reorganization on its Illinois state income
tax liability. Kmart and the defendant, the Illinois Department
of Revenue, agree that the version of section 346 in existence
prior to the enactment of the Bankruptcy Abuse Prevention and
Consumer Prevention Act of 2005 applies to the adversary
proceeding.
Bankruptcy Judge Susan Pierson Sonderby said declarations of the
effect under section 346 of a plan on the debtor's state income
tax liability can only be sought via section 1146(b) and are
limited to the pre-confirmation time period at the request of a
plan proponent. Because Kmart's lawsuit was commenced after the
confirmation of the plan, Judge Sonderby said the Bankruptcy Court
does not have jurisdiction and therefore cannot make such a
declaration. "There being no other source of bankruptcy
jurisdiction, the court will enter an order dismissing the
adversary proceeding for lack of subject matter jurisdiction. The
cross-motions for summary judgment will be denied as moot," Judge
Sonderby held.
Both prior to and during bankruptcy, Kmart suffered substantial
operating losses which accumulated for federal and Illinois tax
purposes. Prior to adjustments pursuant to 11 U.S.C. Section 346,
Kmart had a certain amount of "net operating losses" available to
be carried forward to be applied to positive income during
profitable years.
By virtue of the entry of the Confirmation Order, Kmart was
discharged of certain debt. For federal income tax purposes,
Kmart reduced its federal tax attributes and basis in property to
reflect the full discharged amount. Some of the total debt
discharged represented the principal amount of borrowed funds
evidenced by promissory notes, for which Kmart did not claim a
deduction on its Illinois or federal income tax returns. Claims
based on the Borrowed Debt were placed in Class 4 of the Plan.
The holders of allowed Class 4 claims received common shares in
the reorganized Kmart in satisfaction of their Borrowed Debt
claims.
Kmart has a claim against the Illinois Department of Revenue for a
refund of prepetition income taxes. Kmart and the IDR have
reached a consensus on the amount of the refund but cannot agree
on the proper application of the stock for debt treatment in Class
4 to the NOLs that may be applied to income. Specifically, they
disagree on whether the governing version of section 346 requires
that cancelled Borrowed Debt be excluded from total cancelled debt
that is applied to reduce NOLs.
Kmart contends that the cancelled Borrowed Debt should not be
included in the cancelled debt that reduces its NOLs. If Kmart is
correct, more of the NOLs can be used to reduce its income tax
liability to Illinois.
In its cross-motion for summary judgment, the IDR asserts the
opposite: the cancelled Borrowed Debt should be included in the
cancelled debt that reduces the NOLs. If the IDR is correct, the
amount of the NOLs is smaller and consequently Kmart's income tax
liability is greater.
Kmart contends that its position is mandated by the plain language
of section 346. The IDR argues that the statute's language is not
plain, and even if it were, the statute should not be enforced
because to do so would lead to an absurd result.
Since at least 2007, Kmart and the IDR have engaged in a series of
negotiations to resolve this and other tax issues between them. As
part of these discussions, Kmart requested IDR's concurrence in
its accounting method based on its interpretation of section 346
of the Bankruptcy Code for the cancellation of Borrowed Debt upon
confirmation of the Plan. The IDR has not agreed, giving rise to
an actual controversy.
Kmart filed the complaint on March 1, 2010, seeking to resolve the
controversy with the Bankruptcy Court's entry of a judgment
declaring that Kmart's method of accounting for cancellation of
debt income for Illinois income tax purposes is appropriate under
the provisions of Section 346.
The lawsuit is, KMART CORPORATION, v. ILLINOIS DEPARTMENT OF
REVENUE, Adv. Proc. No. 10 A 00293 (Bankr. N.D. Ill.). A copy of
Judge Sonderby's May 15, 2012 Memorandum Decision is available at
http://is.gd/j0mQtDfrom Leagle.com.
About Kmart
Retailer Kmart Corporation and 37 of its U.S. subsidiaries filed
voluntary Chapter 11 petitions (Bankr. N.D. Ill. Lead Case No.
02-02474) on Jan. 22, 2002. Kmart emerged from chapter 11
protection on May 6, 2003, pursuant to the terms of an Amended
Joint Plan of Reorganization. John Wm. "Jack" Butler, Jr., Esq.,
at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the
retailer in its restructuring efforts. The Company's balance
sheet showed $16,287,000,000 in assets and $10,348,000,000 in
debts when it sought chapter 11 protection. Kmart bought Sears,
Roebuck & Co., for $11 billion to create the third-largest U.S.
retailer, behind Wal-Mart and Target, and generate $55 billion in
annual revenues. Kmart completed its merger with Sears on
March 24, 2005.
KODIAK OIL: S&P Affirms 'B-' Rating on $750-Mil. Unsecured Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B-' issue rating
on Denver-based Kodiak Oil & Gas' senior unsecured notes following
the announcement that Kodiak will add on an additional $100
million to its $650 million 8.125% senior notes due 2019, bringing
total unsecured notes to $750 million. "The recovery rating on the
notes remains '5', indicating our expectation of modest (10% to
30%) recovery in the event of a payment default. The 'B' corporate
credit rating on Kodiak and stable outlook are unaffected," S&P
said.
"The exploration and production company intends to use proceeds to
refinance borrowings under its credit facility and for general
purposes. As of March 31, 2012, Kodiak had $650 million in balance
sheet debt," S&P said.
"The ratings on Kodiak Oil & Gas reflect the company's
'vulnerable' business risk, 'aggressive' financial risk, and
'adequate' liquidity assessments. These assessments reflect
Kodiak's relatively small asset base and production levels, lack
of geographical diversification, and high spending levels in
excess of projected operating cash flows. The ratings also reflect
the company's significant exposure to robust crude oil prices, a
favorable cost structure, and solid resource play acreage
position," S&P said.
RATINGS LIST
Kodiak Oil & Gas
Corporate credit rating B/Stable/--
Ratings Affirmed
$750 mil sr unsecd nts due 2019 B-
Recovery rating 5
LAUREL HIGHLANDS: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Laurel Highlands Foundation, Inc.
1000 Jacks Run Road
North Versailles, PA 15137
Bankruptcy Case No.: 12-22558
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
Western District of Pennsylvania (Pittsburgh)
Judge: Carlota M. Bohm
Debtor's Counsel: Michael Kaminski, Esq.
BLUMLING & GUSKY, LLP
1200 Koppers Building
436 Seventh Avenue
Pittsburgh, PA 15219-1425
Tel: (412) 227-2500
Fax: (412) 227-2050
E-mail: mkaminski@blumlinggusky.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Company's list of its largest unsecured creditors filed with
the petition is empty.
The petition was signed by John Gera, president of the board of
directors.
LE-NATURE'S INC: Malpractice Suit Against K&L Gates Revived
-----------------------------------------------------------
The Superior Court of Pennsylvania reversed a lower court ruling
dismissing the lawsuit commenced by Mark Kirschner, in his
capacity as the Liquidation Trustee of the Le-Nature's Liquidation
Trust, against K&L Gates LLP and Sanford Ferguson; and Pascarella
& Wiker, LLP and Carl A. Wiker. The Superior Court remanded the
case for further proceeding.
The Liquidation Trustee sued the K&L Gates and Pascarella entities
for legal malpractice and professional negligence for failing to
uncover throughout their investigation the massive fraud being
perpetrated by Greg Podlucky, the founder of Le-Nature's, Inc.
Mr. Ferguson, a partner at K&L Gates, was hired in 2003 by a
special committee appointed by Le-Nature's Board of Directors to
conduct an investigation into the reasons underlying the
resignations of the Company's senior financial managers. K&L
Gates retained P&W to assist in the investigation.
On Dec. 5, 2003, K&L Gates provided a draft of their report to the
Special Committee, indicating they "found no evidence of fraud or
malfeasance with respect to any of the transactions" subject to
the investigation. Prior to this, K&L and P&W showed the draft
report to Mr. Podlucky, who was not a member of the Special
Committee. Mr. Podlucky provided comments on the draft Report to
K&L Gates.
In Monday's ruling, the Superior Court held, among other things,
that the Liquidation Trustee's allegations are sufficient to
establish that K&L Gates's malpractice was a substantial factor in
causing harm to Le-Nature's in the form of increased liabilities,
decrease in the value of assets, additional looting of the company
and corporate waste, all of which were permitted to continue
because of the malpractice.
The Bankruptcy Court created the Le-Nature's Liquidation Trust and
appointed the Trustee. Under the liquidation plan, all assets and
property of Le-Nature's, including all claims and causes of
action, were conveyed to and retained by the Trust. The Trustee
also uncovered the massive fraud perpetrated by Mr. Podlucky and
other insiders.
The case is MARK KIRSCHNER, in his capacity as the Liquidation
Trustee of the Le-Nature's Liquidation Trust, Appellant, v. K&L
GATES LLP, SANFORD FERGUSON, PASCARELLA & WIKER, LLP, and CARL A.
WIKER, Appellees, No. 154 WDA 2011 (Pa. Super. Ct.). A copy of
the Court's May 14, 2012 opinion is available at
http://is.gd/CTw38Yfrom Leagle.com.
The Superior Court's appellate panel consists of Michael A.
Musmanno, Cheryl Lynn Allen and Sallie Mundy. Justice Musmanno
wrote the opinion.
About Le-Nature's Inc.
Headquartered in Latrobe, Pennsylvania, Le-Nature's Inc. --
http://www.le-natures.com/-- made bottled waters, teas, juices
and nutritional drinks. Its brands included Kettle Brewed Ice
Teas, Dazzler fruit juice drinks and lemonade, and AquaAde
vitamin-enriched water.
On Oct. 27, 2006, the Delaware Chancery Court appointed Kroll
Zolfo Cooper, Inc., as custodian of Le-Nature's, placing it in
charge of management and operations. Within several days, Kroll
uncovered massive fraud at Le-Nature's. On Nov. 1, 2006, Steven
G. Panagos, a Kroll managing director, filed an affidavit with the
Delaware Chancery Court setting forth the evidence of the
financial fraud he had discovered at Le-Nature's.
Four unsecured creditors of Le-Nature's filed an involuntary
Chapter 7 petition against the Company (Bankr. W.D. Pa. Case No.
06-25454) on Nov. 1, 2006. Kroll converted the proceedings from
Chapter 7 to Chapter 11.
On Nov. 6, 2006, two of Le-Nature's subsidiaries, Le-Nature's
Holdings Inc., and Tea Systems International Inc., filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code.
The Debtors' cases were jointly administered. The Debtors'
schedules filed with the Court showed $40 million in total assets
and $450 million in total liabilities.
Douglas Anthony Campbell, Esq., Ronald B. Roteman, Esq., and
Stanley Edward Levine, Esq., at Campbell & Levine, LLC,
represented the Debtors in their restructuring efforts. The Court
appointed R. Todd Neilson as Chapter 11 Trustee. Dean Z. Ziehl,
Esq., Richard M. Pachulski, Esq., Stan Goldich, Esq., Ilan D.
Scharf, Esq., and Debra Grassgreen, Esq., at Pachulski, Stang,
Ziehl, Young, Jones & Weintraub LLP, represented the Chapter 11
Trustee. David K. Rudov, Esq., at Rudov & Stein, and S. Jason
Teele, Esq., and Thomas A. Pitta, Esq., at Lowenstein Sandler PC,
represented the Official Committee of Unsecured Creditors. Edward
S. Weisfelner, Esq., Robert J. Stark, Esq., and Andrew Dash, Esq.,
at Brown Rudnick Berlack Israels LLP, and James G. McLean, Esq.,
at Manion McDonough & Lucas, represented the Ad Hoc Committee of
Secured Lenders. Thomas Moers Mayer, Esq., and Matthew J.
Williams, Esq. at Kramer Levin Naftalis & Frankel LLP, represented
the Ad Hoc Committee of Senior Subordinated Noteholders.
On July 8, 2008, the Bankruptcy Court issued an order confirming
the liquidation plan for Le-Nature's.
LEVI STRAUSS: Repurchases CNY5.1BB Eurobonds for $56.4 Million
--------------------------------------------------------------
Levi Strauss & Co., on May 11, 2012, repurchased CNY5.1 billion
aggregate principal amount of its 4.25% Yen-denominated Eurobonds
due Nov. 22, 2016, for total consideration of $56.4 million,
including accrued interest. Following that purchase, CNY4 billion
aggregate principal amount of those bonds remains outstanding.
About Levi Strauss & Co.
Headquartered in San Francisco, California, Levi Strauss & Co. --
http://www.levistrauss.com/-- is one of the world's leading
branded apparel companies. The Company designs and markets jeans,
casual and dress pants, tops, jackets and related accessories, for
men, women and children under the Levi's(R), Dockers(R) and
Signature by Levi Strauss & Co.(TM). The Company markets its
products in three geographic regions: Americas, Europe, and Asia
Pacific.
The Company's balance sheet at Feb. 26, 2012, showed $3.21 billion
in total assets, $3.30 billion in total liabilities, $6.20 million
in temporary equity, and a $96.49 million total stockholders'
deficit.
* * *
In April 2012, Standard & Poor's Ratings Services assigned its
'B+' rating (same as the corporate credit rating) to San
Francisco-based Levi Strauss & Co.'s proposed $350 million senior
unsecured notes due 2022.
"The ratings on Levi Strauss reflect our view that the company's
financial profile continues to be 'aggressive,' particularly since
the company's balance sheet remains highly leveraged and we expect
cash flow protections measures to continue to be weak. In
addition, we continue to consider Levi Strauss' business risk
profile to be 'weak,' given its continuing participation in the
highly competitive denim and casual pants market, which is subject
to fashion risk and still-weak consumer spending, and our
expectation that the company's business focus will remain narrow.
We believe the company benefits from its strong, well-recognized
Levi's brand, long operating history, and distribution channel
diversity (both by retail customer and geography)," S&P said.
In April 2012, Moody's Investors Service affirmed Levi Strauss &
Co ("LS&Co) B1 Corporate Family and Probability of Default
Ratings. Moody's also assigned a B2 rating to the company's
proposed $350 million senior unsecured notes due 2022 and affirmed
the B2 ratings of the company's other series of unsecured debt.
Levi Strauss' B1 Corporate Family Rating reflects the company's
negative trends in operating margins reflecting inconsistent
execution as well as input cost pressures. The ratings also
reflect the company's still significant debt burden, which has
been increasing due to the company's continued investment in its
own retail stores and its sizable underfunded pension. Debt/EBITDA
(incorporating Moody's standard analytical adjustments) was 5.1
times for the LTM period ending 2/26/2012. The rating take into
consideration the company's significant global scale, with
revenues near $5 billion, its operations in over 110 countries and
the ownership of the iconic Levi's trademark.
LIBBEY INC: S&P Assigns 'B+' Rating on $450-Mil. Sr. Secured Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Toledo, Ohio-based Libbey Inc. The outlook is
stable. "At the same time, we assigned a 'B+' issue-level rating
to Libbey's proposed senior secured notes due 2020. The recovery
rating on the new notes is '3', indicating our expectation of
meaningful (50% to 70%) recovery in the event of a payment
default," S&P said.
"The new notes will be issued at the operating company level
through its Libbey Glass Inc. subsidiary. The company is also
seeking to extend its existing $100 million asset-based lending
(ABL) revolving term loan (unrated) by one year to May 2017. Our
issue-level ratings are subject to review of final documentation.
We understand that Libbey will use the net proceeds to refinance
its existing senior secured notes and reduce its underfunded
pension obligations by about $80 million. The ratings on the
existing 10% senior secured notes due 2015 will be withdrawn after
the notes have been repaid," S&P said.
"Pro forma for the transaction, we estimate that the company will
have about $490 million of reported debt outstanding," S&P said.
"The ratings on reflect our view of the company's 'aggressive'
financial risk profile and 'weak' business risk profile. Our
financial risk profile assessment reflects Libbey's high leverage,
in part due to its unfunded pension and postretirement medical
benefit obligation (these obligations are included in our standard
adjustments to debt calculations)," S&P said.
"Key credit factors considered in our 'weak' business risk
assessment include Libbey's narrow business focus, capital-
intensive operations, and exposure to volatile input costs, yet
significant presence in the U.S. foodservice glassware sector,"
S&P said.
"Libbey has experienced a rebound in profitability to
prerecessionary levels," said Standard & Poor's credit analyst
Stephanie Harter. "We expect the company to maintain its leading
market positions, continue to improve its operating performance,
and gradually strengthen credit measures following an initial
increase in leverage resulting from this refinancing."
LIGHTSQUARED INC: Fails to Win Approval to Use Cash Collateral
--------------------------------------------------------------
A bankruptcy judge approved several measures that will keep
LightSquared Inc. in business in the interim. According to Lisa
Uhlman at Bankruptcy Law360, the judge approved all of
LightSquared Inc.'s first-day motions, enabling the new debtor to
continue to operate during the early days of its bankruptcy
through the use of $15 million in cash.
But Bill Rochelle, the bankruptcy columnist for Bloomberg News,
notes that the reorganization of LightSquared Inc. could be over
by early July unless the company wins agreement or court approval
to use cash representing collateral for secured lenders' claims.
The Bloomberg report points out that at a hearing May 15, the
bankruptcy judge declined to approve the use of cash collateral.
She is only allowing the company to use about $15 million in cash
which the lenders don't count among their collateral.
LightSquared's lawyer said the $15 million will be exhausted by
early July.
According to Mr. Rochelle, the Debtor has two avenues for
obtaining the right to use cash. It can negotiate an agreement
with lenders, or the bankruptcy court has power to grant cash
use over the lenders' objection. Granting cash use over objection
raises what's known as an adequate protection problem. The lenders
can demand protection against diminution in collateral value.
Since LightSquared is in a development stage with a income not yet
commensurate with the amount of debt, the company may encounter
difficulty in providing adequate protection absent investment from
a third party, such as the owners. The lenders may voluntarily
grant authority to use cash, although on the condition they be
allowed to take ownership away from Philip Falcone's Harbinger
Capital Partners LLC, which controls LightSquared. Lenders aiming
to take over include Appaloosa Management LP and Fortress
Investment Group LLC.
About LightSquared
LightSquared Inc. and 19 of its affiliates filed Chapter 11
bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on
May 14, 2012, as the Company seeks to resolve regulatory issues
that have prevented it from building its coast-to-coast integrated
satellite 4G wireless network.
LightSquared had invested more than $4 billion to deploy an
integrated satellite-terrestrial network. In February 2012,
however, the U.S. Federal Communications Commission told
LightSquared the agency would revoke a license to build out the
network as it would interfere with global positioning systems used
by the military and various industries. In March 2012, the
Company's partner, Sprint, canceled a master services agreement.
LightSquared's lenders deemed the termination of the Sprint
agreement would trigger cross-defaults under LightSquared's
prepetition credit agreements.
LightSquared and its prepetition lenders attempted to negotiate a
global restructuring that would provide LightSquared with
liquidity and runway necessary to resolve its issues with the FCC.
Despite working diligently and in good faith, however,
LightSquared and the lenders were not able to consummate a global
restructuring on terms acceptable to all interested parties,
prompting the bankruptcy filing.
As of the Petition Date, the Debtors employed roughly 168 people
in the United States and Canada. As of Feb. 29, 2012, the Debtors
had $4.48 billion in assets (book value) and $2.29 billion in
liabilities.
LightSquared also sought ancillary relief in Canada on behalf of
all of the Debtors, pursuant to the Companies' Creditors
Arrangement Act (Canada) R.S.C. 1985, c. C-36 as amended, in the
Ontario Superior Court of Justice (Commercial List) in Toronto,
Ontario, Canada. The purpose of the ancillary proceedings is to
request the Canadian Court to recognize the Chapter 11 cases as a
"foreign main proceeding" under the applicable provisions of the
CCAA to, among other things, protect the Debtors' assets and
operations in Canada. The Debtors named affiliate LightSquared LP
to act as the "foreign representative" on behalf of the Debtors'
estates.
Judge Shelley C. Chapman presides over the Chapter 11 case.
Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to
the Debtors. Kurtzman Carson Consultants LLC serves as claims and
notice agent.
Counsel to UBS AG as agent under the October 2010 facility is
Melissa S. Alwang, Esq., at Latham & Watkins LLP.
The ad hoc secured group of lenders under the Debtors' October
2010 facility was formed in April 2012 to negotiate an out-of-
court restructuring. The members are Appaloosa Management L.P.;
Capital Research and Management Company; Fortress Investment
Group; Knighthead Capital Management LLC; and Redwood Capital
Management. Counsel to the ad hoc secured group is Thomas E.
Lauria, Esq., at White & Case LLP.
Philip Falcone's Harbinger Capital Partners indirectly owns 96% of
LightSquared's outstanding common stock. Harbinger and certain of
its managed and affiliated funds and wholly owned subsidiaries,
including HGW US Holding Company, L.P., Blue Line DZM Corp., and
Harbinger Capital Partners SP, Inc., are represented in the case
by Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP.
LPATH INC: Swings to $645,900 Net Income in First Quarter
---------------------------------------------------------
LPath, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing net income
of $645,929 on $2.75 million of total revenues for the three
months ended March 31, 2012, compared with a net loss of $1.64
million on $2.77 million of total revenues for the same period a
year ago.
The Company reported a net loss of $3.11 million in 2011, compared
with a net loss of $4.60 million in 2010.
The Company's balance sheet at March 31, 2012, showed $23.28
million in total assets, $16.07 million in total liabilities and
$7.21 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/EnODsz
About Lpath, Inc.
San Diego, Calif.-based Lpath, Inc. is a biotechnology company
focused on the discovery and development of lipidomic-based
therapeutics, an emerging field of medical science whereby
bioactive lipids are targeted to treat human diseases.
LRL ENTERPRISES: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: LRL Enterprises, Inc.
1448 Hasley Way
Carrollton, TX 75007
Bankruptcy Case No.: 12-41306
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
Eastern District of Texas (Sherman)
Debtor's Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS P.C.
12770 Coit Road, Suite 1100
Dallas, TX 75251
Tel: (972) 991-5591
E-mail: eric@ealpc.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A copy of the Company's list of its 20 largest unsecured creditors
filed with the petition is available for free at:
http://bankrupt.com/misc/txeb12-41306.pdf
The petition was signed by Ron Cagle, president.
MARIANA RETIREMENT FUND: Govt. Asks Judge to Toss Ch. 11 Case
-------------------------------------------------------------
Katy Stech at Dow Jones' DBR Small Cap reports that the government
of the Northern Mariana Islands argued Tuesday that the rapidly
depleting $268 million pension fund for its retired employees
doesn't qualify for bankruptcy protection.
As reported in the May 8 edition of the TCR, retirees and the U.S.
Trustee previously have filed papers asserting that the Northern
Mariana Islands Retirement Fund is not eligible to file for
Chapter 11 bankruptcy protection because it is a governmental
unit.
Assistant U.S. Trustee Curtis Ching said the Retirement Fund is an
instrumentality of the Commonwealth of the Northern Mariana
Islands and therefore it cannot be a "person" eligible to file for
Chapter 11 protection pursuant to Section 109 (d). "Since the
debtor is not a 'person,' it is not eligible to be a chapter 11
debtor pursuant to Section 109(d). Therefore, regardless of the
debtor's financial difficulties, this case must be dismissed,"
according to the U.S. Trustee.
About Mariana Retirement Fund
The Northern Mariana Islands Retirement Fund --
http://www.nmiretirement.com/-- is a public corporation of the
Commonwealth of the Northern Mariana Islands that receives and
invests retirement contributions and pays certain benefits to or
on account of certain retirees of the Commonwealth government,
their survivors, and certain disabled persons.
The Fund, through its administrator Richard Villagomez, filed a
Chapter 11 bankruptcy petition in the U.S. District Court for the
Northern District of Mariana Islands in Saipan (Case No. 12-00003)
on April 17, 2012.
The Fund is represented by Brown Rudnick LLP and the Law Office of
Braddock J. Huesman, LLC.
The Fund said in court papers that the Chapter 11 filing was
precipitated by the discrepancy between the Debtor's current
ability to pay benefits to beneficiaries and the Debtor's current
obligations to those same beneficiaries. The Fund said it would
exhaust its cash by July 2014. It has been unable to collect a
$325 million judgment against the islands' government, and the
commonwealth decided to reduce contributions toward workers'
pensions.
As a result of continuous underfunding, which necessitated
withdrawing from its portfolio to cover funding shortfalls, the
value of the Fund's assets has fallen from $353.5 million in 2009
to its current level of $268.5 million, the Debtor's counsel has
said. The counsel also said the Fund is subject to liabilities
(both current and actuarial) totaling about $911 million.
The U.S. Trustee and certain retirees have sought dismissal of the
Chapter 11 case, saying the Fund is not eligible to file one. A
hearing is slated for June 1 on the Motions to Dismiss.
MILAGRO OIL: Moody's Downgrades CFR to 'Caa3'; Outlook Negative
---------------------------------------------------------------
Moody's Investors Service downgraded Milagro Oil & Gas, Inc.'s
Corporate Family Rating (CFR) to Caa3 from Caa1, and lowered the
rating on the senior secured second lien notes to Ca from Caa2.
The outlook remains negative.
Ratings Rationale
"The downgrade reflects the company's weak liquidity position,
resulting from a combination of low capital productivity and high
leverage, with the potential for covenant compliance issues over
the next twelve months," commented Jonathan Kalmanoff, Moody's
Analyst.
The Caa3 CFR reflects high leverage, minimal covenant headroom, a
small amount of cushion available to absorb any future negative
borrowing base redeterminations, low capital productivity, and the
potential for less cash flow support from hedges in 2013 as
compared to 2012. However, the rating also considers the ability
of the financial sponsors to support Milagro's liquidity and
growth initiatives.
Milagro has weak liquidity with $120 million drawn under its first
lien senior secured borrowing base credit facility, and a cash
balance of $5 million at April 27, 2012. The credit facility
borrowing base was reduced to $165 million as of April 25, 2012,
from $180 million prior to that date, and is subject to
redetermination every six months. With a high proportion of the
credit facility drawn, the company has tight covenants and only a
small cushion to absorb any further reductions in the borrowing
base. Financial covenants under the facility are debt / EBITDA of
no more than 4.25x (stepping down to 4.0x for 2013), credit
facility debt / EBITDA of no more than 2.0x, and EBITDA / interest
of at least 2.5x. At March 31, 2012 debt / EBITDA was 4.17x,
credit facility debt / EBITDA was 1.37x, and EBITDA / interest was
2.91x. Although currently in compliance with covenants, the small
amount of covenant headroom relative to the potential volatility
of EBITDA puts the company at risk for a potential covenant
breach.
The Ca senior secured second lien note rating reflects both the
overall probability of default of Milagro, to which Moody's
assigns a PDR of Caa3, and a loss given default of LGD5-72%. The
size of the first lien senior secured revolver's potential
priority claim relative to the second lien senior secured notes
results in the notes being rated one notch beneath the Caa3 CFR
under Moody's Loss Given Default Methodology.
The negative outlook considers the potential for the ratings to be
lowered further if a covenant breach occurs for which the company
is unable to obtain a waiver, if there is a repeated pattern of
waivers, or if the capital structure is altered in a manner that
constitutes a distressed exchange. Moody's could change the
outlook to stable, or upgrade the ratings, if Milagro's liquidity
improves as the result of an equity contribution from the
financial sponsors.
The principal methodology used in rating Milagro Oil and Gas was
the Global Independent Exploration and Production Industry
Methodology published in December 2011. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Milagro Oil and Gas, Inc. is an independent exploration and
production company headquartered in Houston, Texas.
MOLYCORP INC: S&P Assigns Preliminary 'B' Corp. Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B'
corporate credit rating to Colorado-based Molycorp Inc. The rating
outlook is stable.
"At the same time, we assigned a preliminary 'B' issue-level
rating (the same as the corporate credit rating), to the company's
proposed $650 million senior secured notes due 2020. The
preliminary recovery rating on these notes is '3', indicating our
expectation that lenders can expect average (50% to 70%) recovery
in the event of a payment default. The ratings are based on
preliminary terms and conditions. The notes are being sold
pursuant to Rule 144A with registration rights," S&P said.
"Molycorp will use proceeds from the proposed notes to finance a
portion of the acquisition of Neo Materials Inc., a Toronto-based
producer and processor of permanent magnet powders, rare earths,
and other metals and for general corporate purposes. Pending the
completion of the Neo acquisition, the proceeds will be deposited
into an escrow account," S&P said.
"Molycorp is a miner, processor, and producer of rare earth
elements, which are a group of 17 elements generally found
together in the earth's crust that are used in a variety of high
tech applications. The rating and outlook reflect what we consider
to be the combination of its 'vulnerable' business risk profile
and 'aggressive' financial risk profile. 'In our view, the
company's vulnerable business risk stems from exposure to volatile
pricing, the pricing and supply uncertainties resulting from
China's control of most of the supply of global rare earth
elements, the execution risks inherent in starting up a mining
operation and integrating the Neo Materials acquisition, and
reliance on a single mine to drive future performance," said
Standard & Poor's credit analyst Marie Shmaruk. "Our view of the
business risk also takes into consideration the company's
relatively large reserve base and the growing demand for certain
of these elements, which the risk of new entrants and the
potential reengineering of products to lower dependence on rare
earths somewhat offset. In our view, the vulnerable financial risk
profile reflects the company's lack of operating history, high
capital spending needs, what we would consider relatively high
debt levels (considering the start up and integration risks facing
its business), and, in our assessment, the company's 'less than
adequate' liquidity, which could cause the company to slow its
mine development plans, resulting in lower-than-expected cash
flow."
"Molycorp is aggressively pursuing a strategy to become one of the
world's most integrated producers of rare earth products,
including oxides, metals, alloys, and magnets used in high tech,
defense, clean energy, and water treatment technology. It is
reopening the Mountain Pass mine, which had been inactive for a
decade, although the company continued to process ore from
existing stockpiles. This site has a significant reserve base
(more than 20 years at full production) and the potential to
expand reserves on the current site. The mine is slated to resume
production by the end of 2012 at an expected rate of 20,000 metric
tons per year of rare earth oxides (REO) and up to 40,000 metric
tons per year in 2013 when we expect the second phase of its
expansion to be completed. We estimate that the combined company's
capital expenditures will total about $700 million in 2012,
including spending to complete both phases of this project. The
company has the majority of its 2012 output contracted at market-
based prices with average terms of three to five years," S&P said.
"In addition to reopening the mine, the company has made a number
of acquisitions in the past year or so to expand its processing
capabilities, including operations in Estonia and the U.S., and
has recently announced that it is acquiring Toronto-based Neo
Materials, producer and processor of permanent magnet powders,
rare earths, and other metals. The Neo acquisition expands
Molycorp's direct exposure to China, the largest rare earth-
consuming nation. The transaction expands production capabilities
to include Neo's magnet powder portfolio used to produce
neodymium-iron-boron (NdFeB) bonded rare earth magnets, which are
in high demand for use in a variety of applications including hard
disk drives, wind turbines, and drive motors for electric
vehicles. It also expands Molycorp's rare metals portfolio to
include gallium, rhenium, and indium, which are used in advanced
electronics, photovoltaic, aerospace, catalytic converters, and
lighting. In our view, integrating this acquisition--a company
that is larger than Molycorp and whose major operations are in
China--could pose major challenges for management, particularly as
it is simultaneously ramping up the Mountain Pass operation," S&P
said.
"China controls the supply of rare earths; it produces about 95%
and consumes about 70% of rare earths used globally. Beginning in
2010, China began to severely limit exports, partially reflecting
depleting supply and environmental concerns as well as putting
further pressure on users of rare earths to site their operations
in China. These restrictions resulted in skyrocketing prices in
2011, creating a market characterized by speculation and users of
rare earths scrambling to ensure supply. Although prices have
since moderated, they seem to have stabilized at levels
significantly higher than historical levels," S&P said.
"However, in our view, China's control of supply creates pricing
risk, since it could release supply under political duress (the
U.S. filed a recent World Trade Organization case), lowering
speculative demand and easing supply shortages. Moreover, over the
longer term, high prices could encourage new entrants or cause end
users to reengineer products, thus creating oversupply. However,
based on Molycorp's assessment, only one other new entrant has a
mine that is close to production and, in our view, developing,
permitting, and financing a new mine could take several years and-
-for some applications--there are no suitable substitutes. As a
result, we anticipate that pricing will be volatile, based on
perceptions of China's policies, but should on average be high
enough for the company to generate free cash flow once the mine is
complete," S&P said.
"Both Molycorp and Neo Materials lack a history of strong
operating results. The Mountain Pass mine has only recently
resumed production and has been processing ore from prior mining
activities. Given strong prices in 2011, Molycorp posted about
$182 million in EBITDA, which was in stark contrast with EBITDA
losses from 2008 through 2010. Neo Material's results also
improved in 2011, with EBITDA increasing to about $299 million
compared with an average of about $65 million per year during the
prior five years. In light of this lack of operating history, we
feel that the total debt level contemplated, totaling about $865
million, is somewhat aggressive. In addition, the proposed
financing increases fixed cash outflows in a period of heavy
capital spending and operating challenges," S&P said.
"We expect the combined company to generate between $350 million
and $400 million of EBITDA in 2012, which would result in debt to
EBITDA between 2x and 3x and funds from operations (FFO) to total
debt between 25% and 30%, which we would consider strong for the
rating. However, in our view, delays and cost overruns related to
the completion of the Mountain Pass mine or higher-than-expected
costs, lower prices, or difficulties in integrating Neo Materials
could dramatically weaken these ratios," S&P said.
"The outlook is stable. Although market conditions for the
company's products remain relatively strong, which should allow
the company to complete the reopening of its mine and begin to
generate cash flow in 2013, the company is subject to commodity
price fluctuations, execution risks and operating risks inherent
in reopening the mine, and integration risks associated with the
Neo Materials acquisition," S&P said.
"We could raise the ratings if the company completed its growth
platform and gained sufficient operating traction to improve
liquidity and demonstrate the sustainability of its business and
did not add significant leverage to do so," S&P said.
"We could lower the ratings if the company ran into delays, cost
overruns, or operating difficulties in opening and operating the
Mountain Pass operation, causing weak liquidity and deterioration
in credit metrics," S&P said.
MONTANA ELECTRIC: Yellowstone's Bid to Exit Coop Hits Snag
----------------------------------------------------------
Bankruptcy Judge Ralph B. Kirscher denied the request of
Yellowstone Valley Electric Cooperative, Inc., to lift the
automatic stay so it may proceed with litigation filed in the
Montana Thirteenth Judicial District Court for Yellowstone County,
seeking:
-- termination of its membership in Southern Montana Electric
Generation and Transmission Cooperative, Inc.,
-- termination of the parties' Wholesale Power Contract;
-- an accounting and return of all funds it contributed
toward expenses of the Highwood Generating Station and all
deposit and equity contributions to the Debtor, and
-- an order that the Debtor assign to YVEC its contract
with Western Area Power Administration, an agency with
the Department of Energy, and a share of the Bonneville
Power Administration contract and for punitive damages.
The state court case is Yellowstone Valley Electric Coop., Inc. v.
Southern Montana Elec. Generation and Transmission Coop., Inc., et
al., Cause No. DV 08-1797. Litigation has been stayed after SME
filed for bankruptcy.
Judge Kirscher said YVEC has not established any extraordinary
circumstances to justify causing the Debtor and the Chapter 11
Trustee, at this early stage of the Chapter 11 process, to spend
valuable time, funds and effort to defend the state court
litigation which may ultimately be irrelevant and which would
interfere with the Chapter 11 Trustee's efforts to formulate and
achieve a successful Chapter 11 plan of reorganization.
"The Court finds it in the economic interests of both YVEC and the
Debtor that this Chapter 11 case proceed and that the bankruptcy
process not be usurped by YVEC's pending State Court litigation,"
Judge Kirscher said. "If the [Chapter 11] Trustee is unable to
formulate a confirmable plan within a reasonable period of time or
if this case is later converted to Chapter 7, the Court would, as
appropriate, entertain a renewed motion to abstain or lift the
automatic stay."
A copy of Judge Kirscher's May 15, 2012 Memorandum of Decision is
available at http://is.gd/rj0rQvfrom Leagle.com.
About Southern Montana Electric
Based in Billings, Montana, Southern Montana Electric Generation
and Transmission Cooperative, Inc., was formed to serve five
other electric cooperatives. The city of Great Falls later joined
as the sixth member. Including the city, the co-op serves a
population of 122,000. In addition to Great Falls, the service
area includes suburbs of Billings, Montana.
Southern Montana filed for Chapter 11 bankruptcy (Bankr. D.
Mont. Case No. 11-62031) on Oct. 21, 2011. Southern Montana
estimated assets of $100 million to $500 million and estimated
debts of $100 million to $500 million. Timothy Gregori signed the
petition as general manager.
Jon E. Doak, Esq., at Doak & Associates, P.C., in Billings,
Montana, serves as the Debtor's counsel. In December 2011,
Southern Montana also sought permission to employ the Goodrich Law
Firm, P.C., as general co-counsel.
Also in December, Lee A. Freeman was appointed as Chapter 11
trustee. Mr. Freeman retained Horowitz & Burnett, P.C., as his
counsel and Waller & Womack, P.C., as local counsel.
The United States Trustee for Region 18 has appointed an Official
Committee of Unsecured Creditors in the case.
After filing for reorganization in October, the co-op agreed to a
request for appointment of a Chapter 11 trustee. Lee A. Freeman
was appointed as the Chapter 11 trustee and he is represented by
Joseph V. Womack, Esq., at Waller & Womack, and John Cardinal
Parks, Esq., Bart B. Burnett, Esq., Robert M. Horowitz, Esq., and
Kevin S. Neiman, Esq., at Horowitz & Burnett, P.C.
MOORE SORRENTO: Exclusivity Periods Extended to June 1
------------------------------------------------------
The Bankruptcy Court for the Northern District of Texas granted
the second motion of Moore Sorrento, LLC, to extend the
exclusivity periods through June 1, 2012.
Hurst, Texas-based Moore Sorrento, LLC, owns real property located
in Moore, Oklahoma, commonly known as the Shops at Moore, which
the Company operates as a retail shopping center. The center's
current 23 tenants offer various goods and services to retail
customers.
Moore Sorrento filed Chapter 11 bankruptcy protection (Bankr. N.D.
Tex. Case No. 11-44651) on Aug. 17, 2011. J. Robert Forshey,
Esq., and Matthew G. Maben, Esq., at Forshey & Prostok, LLP, in
Fort Worth, Tex., serve as the Debtor's counsel. In its
schedules, Moore Sorrento disclosed assets of $43,259,900 and
liabilities of $42,262,158 as of the Petition Date.
MOORE SORRENTO: Wells Fargo Reserves Rights Under Amended Plan
--------------------------------------------------------------
Secured creditor Wells Fargo Bank, N.A., filed a response to and
reservation of rights regarding the amended plan filed by Moore
Sorrentom, LLC. J. Frasher Murray, Esq., at Winstead P.C.,
representing Wells Fargo, notes the plan objection deadline of
April 18 occurred prior to the May 31 deadline for closing and
funding of an asset purchase agreement. The parties also have not
yet negotiated an agreed form of order for the sale motion or
modified Plan. In the event the Debtor fails to timely perform
its remaining obligations under the Agreement, Wells Fargo
reserves all rights in accordance with the Agreement.
Wells Fargo Bank is represented by:
Joseph G. Epstein, Esq.
J. Frasher Murphy, Esq.
WINSTEAD P.C.
1100 JPMorgan Chase Tower
Houston, Texas 77002
Tel: (713) 650-8400
Fax: (713) 650-2400
About Moore Sorrento
Hurst, Texas-based Moore Sorrento, LLC, owns real property located
in Moore, Oklahoma, commonly known as the Shops at Moore, which
the Company operates as a retail shopping center. The center's
current 23 tenants offer various goods and services to retail
customers.
Moore Sorrento filed Chapter 11 bankruptcy protection (Bankr. N.D.
Tex. Case No. 11-44651) on Aug. 17, 2011. J. Robert Forshey,
Esq., and Matthew G. Maben, Esq., at Forshey & Prostok, LLP, in
Fort Worth, Tex., serve as the Debtor's counsel. In its
schedules, Moore Sorrento disclosed assets of $43,259,900 and
liabilities of $42,262,158 as of the Petition Date.
MOTORS LIQUIDATION: IRS Rules New GM Securities as Taxable
----------------------------------------------------------
The Internal Revenue service, on May 7, 2012, informed
representatives of the Official Committee of Unsecured Creditors
of Motors Liquidation Company that it had made a final adverse
determination with respect to the issuance of a favorable private
letter ruling, and that such Favorable Private Letter Ruling would
not be forthcoming. The Favorable Private Letter Ruling would
have eliminated the potential U.S. federal tax liability of the
GUC Trust associated with any gains in the market value of the New
GM Securities from the Tax Basis to the market value of the New GM
Securities at the time distributed to GUC Trust Beneficiaries.
The GUC Trust was formed on March 30, 2011, pursuant to the Second
Amended Joint Chapter 11 Plan filed by Motors Liquidation Company
and its affiliated debtors. Pursuant to Section 5.2(a) of the
Plan and Sections 2.3(a) and 7.1 of the Motors Liquidation Company
GUC Trust Agreement, all distributions of the common stock and
warrants issued by General Motors Company, made on and prior to
Jan. 13, 2012, to beneficiaries of the GUC Trust were performed by
the GUC Trust as an agent of the Debtors for U.S. federal income
tax purposes.
Pursuant to Section 12.1 of the Plan and Section 7.1 of the GUC
Trust Agreement, the Committee, on behalf of holders of allowed
general unsecured claims, requested the Private Letter Ruling from
the IRS regarding the tax treatment of the GUC Trust with respect
to the New GM Securities distributed by the GUC Trust.
In anticipation of the Adverse Determination, as of March 31,
2012, the GUC Trust withheld New GM Securities in an approximate
amount of $108.6 million from distribution to holders of Units.
The Tax Holdback is intended to be used to cover the maximum
potential Taxes on Distribution measured as of March 31, 2012.
About Motors Liquidation
General Motors Corporation and three of its affiliates filed for
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on
June 1, 2009. The Honorable Robert E. Gerber presides over the
Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin,
Esq.,and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges
LLP, assist the Debtors in their restructuring efforts. Al Koch
at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as
the Chief Executive Officer for Motors Liquidation Company. GM
is also represented by Jenner & Block LLP and Honigman Miller
Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP
is providing legal advice to the GM Board of Directors. GM's
financial advisors are Morgan Stanley, Evercore Partners and the
Blackstone Group LLP. Garden City Group is the claims and notice
agent of the Debtors.
The U.S. Trustee appointed an Official Committee of Unsecured
Creditors and a separate Official Committee of Unsecured
Creditors Holding Asbestos-Related Claims. Lawyers at Kramer
Levin Naftalis & Frankel LLP served as bankruptcy counsel to the
Creditors Committee. Attorneys at Butzel Long served as counsel
on supplier contract matters. FTI Consulting Inc. served as
financial advisors to the Creditors Committee. Elihu Inselbuch,
Esq., at Caplin & Drysdale, Chartered, represented the Asbestos
Committee. Legal Analysis Systems, Inc., served as asbestos
valuation analyst.
The Bankruptcy Court entered an order confirming the Debtors'
Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan
was declared effect on March 31.
NEONODE INC: Incurs $1.5 Million Net Loss in First Quarter
----------------------------------------------------------
Neonode Inc. reported a net loss of $1.58 million on $1.16 millon
of net revenues for the three months ended March 31, 2012,
compared with a net loss of $9.72 million on $539,000 of net
revenues for the same period a year ago.
The Company reported a net loss of $17.14 million in 2011,
compared with a net loss of $31.62 million in 2010.
The Company's balance sheet at March 31, 2012, showed $14.96
million in total assets, $2.80 million in total liabilities and
$12.16 million in total stockholders' equity.
"Our performance for the quarter ended March 31, 2012 is in line
with our expectations, and is reflective of the seasonality for
our customers' production" said Neonode CEO Thomas Eriksson.
"Over the past three years, we have invested heavily in developing
our offerings so that we now have the capacity to incorporate our
high performing multi sensing touch solutions in all types of
products. For example, the Texas Instruments Single Chip
Controller, launched in January 2012, has proven to be a
successful investment, contributing to an encouraging 17 new
design wins and new contracts with prominent global companies in
new markets such as mobile phones, tablets, automotive and office
equipment."
A copy of the press release is available for free at:
http://is.gd/WK4kEN
About Neonode Inc.
Lafayette, Calif.-based Neonode Inc. (OTC BB: NEON)
-- http://www.neonode.com/-- provides optical touch screen
solutions for hand-held and small to midsize devices.
NES RENTALS: S&P Assigns 'CCC+' Rating to $83MM 2nd Lien Term Loan
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC+' issue
rating to Chicago-based NES Rentals Holdings Inc.'s proposed
extended $83 million second-lien term loan. The proposed amendment
extends the maturity to October 2014. The issue rating is two
notches below our corporate credit rating on the company.
"The recovery is '6', indicating our expectation of negligible (0-
10%) recovery in the event of a default scenario. The issue and
recovery ratings are the same as our existing ratings on NES
Rentals' term loan," S&P said.
"The ratings on equipment rental provider NES reflect our
assessment of the company's 'weak' business risk profile and
'highly leveraged' financial risk profile. We expect the company
to maintain adequate liquidity as it purchases equipment in
anticipation of improving conditions in the equipment rental
industry. Although its credit measures are currently weak for the
rating (about 6.3x total debt to EBITDA as of March 31, 2012), we
believe that they will continue to improve in 2012 and that debt
to EBITDA will be less than 6x by the end of the year," S. (For
the complete corporate credit rating rationale,
see our latest summary analysis on NES, on RatingsDirect.)
RATINGS LIST
NES Rentals Holdings Inc.
Corporate credit rating B/Stable/--
Rating Assigned
$83 mil. second-lien term loan due 2014 CCC+
Recovery rating 6
NEWLAND INTERNATIONAL: In Talks With Bondholders, Skips Payment
---------------------------------------------------------------
As part of an effort to provide additional disclosure to investors
regarding recent developments, Newland International will release
an information disclosure package which will include updates on
collections, closings, sales, available inventory, construction
progress, and other topics of interest to bondholders.
As Newland is in ongoing discussions with the Bondholder Steering
Group, no payment will be made on the May 15 coupon date. Newland
entered into default on the Notes on Nov. 15, 2011, when it
completed a full coupon payment but failed to make the scheduled
amortization payment due on that same date. The Company continues
to negotiate the terms of the restructuring with the Steering
Group and is hopeful that it will be able to announce an agreement
in the near future.
About Newland International
Newland is the real estate development company established to
develop the Trump Ocean Club International Hotel & Tower (TOC), a
multi-use luxury tower located on the Punta Pacifica Peninsula in
Panama City, Panama. The TOC building was officially opened to the
public on July 6, 2011.
On Nov. 15, 2011, Newland missed the first scheduled principal
payment of $31.4 million. Soon after this, Newland hired Gapstone
Group LLC (Gapstone) as its financial advisor. Gapstone has been
in discussions with the major noteholders to avoid the
acceleration of the notes and to work on a restructuring plan.
On March 20, 2012, Newland obtained consent of the majority
noteholders authorizing the company to amend the original
indenture (the Second Supplemental Indenture). The main change
pertains to the ability of withdrawing funds from the collection
account in order to pay construction costs for the completion of
the project. The first withdrawal took place on March 30.
NGPL PIPECO: Moody's Assigns Ba3 Sr. Sec. Ratings; Outlook Neg.
---------------------------------------------------------------
Moody's Investors Service assigned Ba3 senior secured ratings to
NGPL PipeCo LLC's approximately $500 million of new notes, a $600
to $800 million term loan, and a $75 million revolver that NGPL
plans to implement in order to retire the $1.25 billion of debt
due in December 2012. Moody's also changed NGPL's Speculative
Grade Liquidity Rating to SGL-2 from SGL-4 as the company's
looming refinancing and liquidity risks are eliminated by these
transactions.
NGPL's Corporate Family Rating and Probability of Default Rating
are unchanged at Ba3, where they have been since April 2 when
Moody's last downgraded the company with a negative outlook. The
company's existing notes also remain at Ba3, but their seniority
will be changed to senior secured from senior unsecured as a
result of this refinancing. The rating outlook remains negative.
These rating actions follow NGPL's announcements that it had
received 97% of the $1.25 billion 2012 notes (roughly 40% of its
debt) in its ongoing cash tender offer, and that it was offering
the notes and the term loan to help finance it.
Ratings Rationale
"The refinancing eliminates near-term liquidity concerns, but
pressure on NGPL's profitability will be acute over the next
twelve months," says Moody's vice president Mihoko Manabe. "In
order to prevent credit metrics from weakening further, the
company will need to renew its transport contracts on sufficient
terms and significantly reduce its operating costs."
Moody's noted that a suite of contracts with Nicor Gas -- NGPL's
biggest customer accounting for about 16% of its revenues -- is
expiring in March 2013 and is expected to be negotiated by end of
this year. Although Moody's believes that Nicor Gas will renew its
contracts with NGPL, the terms of those new agreements may be less
favorable than before and reduce NGPL's profitability over the
next several years.
The negative outlook also reflects uncertainty as to whether NGPL
can sufficiently offset revenue declines in its principal
transport business by reducing operating costs. Much of its
operating costs are relatively inflexible, and Moody's believes it
will be a challenge to reduce costs, such as pipeline integrity
spending, when they will be prone to rising over the next several
years as more stringent safety rules are implemented.
The Ba3 ratings for the new notes and credit facility, as well as
the existing notes due in 2017 and 2037, incorporate the fact that
all of NGPL's corporate debt will be first lien debt and, as such,
should carry the same rating as the company's Corporate Family
Rating. These obligations share a collateral package, which
includes a first priority lien on the pipeline and storage assets
that make up the majority of the company's assets, and pledge of
the stock in its sole material subsidiary, Natural Gas Pipeline
Company of America. The existing notes due in 2017 and 2037 have
been unsecured to-date, but the implementation of the secured
credit facility will trigger a negative pledge clause that will
result in all of these securities becoming equally and ratably
secured with the shared collateral.
The loss given default assessment for the new secured term loan
and revolver (LGD3, 45%) is slightly better than that for the
notes (LGD4, 52%), because the credit facility, in addition to the
above-mentioned collateral, is backed by the pledge of all other
properties including the company's current assets, which are
relatively minor.
The refinancing leaves the amount of debt at the NGPL level
virtually unchanged, but over the next several years, debt will be
reduced under term loan covenants that require mandatory debt
repayments as well as 60% of any excess cash flow to be applied
towards debt reduction. NGPL's ability to comply with these
covenants will be facilitated by the imminent repayment of $600
million of bank and hedging obligations at its 80% owner Myria
Acquisition LLC (not rated), which will relieve dividend pressure.
The speculative-grade liquidity rating of SGL-2 reflects good
liquidity resources after the refinancing, which resolves near-
term liquidity issues regarding the large debt maturity and
potential revolver covenant violations. The refinancing pushes
back the next debt maturity and revolver renewal to 2017. Until
then, the company will have no scheduled debt maturities other
than the mandatory repayments of its term loan. The debt-to-EBITDA
covenant will be raised from its current limit of 6.75 times to
9.75 times through the quarter ending December 31, 2014, allowing
some headroom above the 7 times range, where the company is likely
to remain over the near term.
Moody's referred to NGPL's financial statements for the September
2011, December 2011, and March 2012 quarters as a baseline for its
future performance, as they are the first three quarters which
fully reflect the rate reductions ordered by the Federal Energy
Regulatory Commission that were phased in between July 2010 and
July 2011. After Moody's adjustments, these nine months'
annualized funds flow from operations (FFO) of approximately $165
million was only 5% of Moody's adjusted post-refinancing total
debt of $3,055 million. Adjusted EBITDA for the same period was
roughly $410 million (excluding the $23 million gain from cushion
gas sales), resulting in a debt-to-EBITDA ratio of 7.4 times.
The Ba3 Corporate Family Rating is based on NGPL sustaining FFO-
to-debt in the 4.5% to 6% range. Under the current business
environment and refinancing plan, NGPL is not likely to see any
positive rating momentum for a few years.
As business conditions recover and transport rates increase, NGPL
could eventually be considered for an upgrade to Ba2 if it can
maintain FFO-to-debt back in the 7% range. Conversely, NGPL's
rating could be downgraded if FFO-to-debt stays below 4.5%, due to
a lack of success in renewing contracts under sufficient terms and
reducing operating costs.
The last rating action for NGPL was on April 2, 2012, when its
ratings were downgraded with a negative outlook.
The methodologies used in this rating were Natural Gas Pipeline
published in December 2009, and Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
NGPL PipeCo LLC is a holding company for Natural Gas Pipeline
Company of America and other interstate natural gas pipeline
assets. NGPL is 80% owned by Myria Acquisition LLC and 20% owned
and operated by Kinder Morgan Kansas, Inc., based in Houston
Texas.
NGPL PIPECO: Fitch Rates Proposed $550-Mil. Senior Notes 'BB-'
--------------------------------------------------------------
Fitch Ratings has assigned a 'BB-' rating to NGPL PipeCo LLC's
(NGPL) proposed $550 million senior secured notes due 2019 (the
new notes). NGPL's Rating Outlook is Negative.
New note proceeds along with proceeds from a $700 million NGPL
Term Loan B, cash on hand, and owner equity are expected to be
used to retire its outstanding $1.25 billion 6.154% senior notes
due 2012 (2012 notes) and pay related fees and expenses. On April
16, 2012, NGPL commenced a cash tender offer to purchase its
outstanding 2012 notes. In excess of 97% of the 2012 notes have
been tendered. The closing for the new notes, the Term Loan B and
new $75 million revolving credit facility (together the senior
credit facilities), and the retirement of the 2012 notes are
targeted to close concurrently on or about May 24, 2012.
The new notes, existing senior notes of NGPL, and senior credit
facilities will initially be secured equally and ratably by a
first priority lien on the capital stock of NGPL's two direct
operating subsidiaries, Natural Gas Pipeline Company of America
LLC (NGPCA) and Kinder Morgan Illinois Pipeline LLC (the shared
collateral). The subsidiaries have no indebtedness and at March
31, 2012 had $61.8 million of trade payables and other
liabilities. The lenders under the senior credit facilities will
also have a lien on all other current and future assets of NGPL
not constituting shared collateral. Currently there is no material
non-shared collateral.
Collateral Falls Away: Liens securing the new notes will be
released if and to the extent the lien on any shared collateral
securing existing senior notes is terminated. Under the terms of
the indenture for the existing senior notes, at such time the
senior credit facilities are repaid in full, or the liens for the
shared collateral cease to secure the senior credit facilities,
the liens in the shared collateral granted for the benefit of the
senior notes will terminate.
Should the new notes be rated investment grade, indenture
covenants restricting certain NGPL activities would no longer
apply. Covenants that would be affected include: 'restricted
payments', incurrence of indebtedness, and 'transactions with
affiliates'.
Rating Rationale: NGPL's ratings were downgraded by Fitch on April
19, 2012. The rating downgrade and Negative Outlook reflected
NGPL's weakening credit metrics, which are primarily the result of
2010 Federal Energy Regulatory Commission (FERC) mandated phased-
in decreases in NGPCA's base recourse rates and fuel retention
factors. Current gas market conditions characterized by low
commodity prices, reduced basis spreads, and low volatility will
further negatively impact near-term operating results. Fitch
expects NGPL's calendar 2012 debt/EBITDA to approximate 7.0x but
could approach 6.0x in the 2015-2016 time frame as the Term Loan B
balance is reduced through the senior facilities' debt
amortization and excess cash flow sweep provisions.
Other credit concerns include: the relatively short average term
of NGPCA's transportation contracts of approximately 2.1 years and
related re-contracting risk; the limiting effect the reduced cash
flows have on the company's operating flexibility and strategies;
and the transaction risk associated with retiring the 2012 notes.
Favorable considerations include NGPL's strong Chicago/Midwest
market franchise which accounts for a significant portion of total
EBITDA, its high-quality and reliable utility customer base, a
strong demand for storage services, limited liquidity needs, and
its long record of successfully managing contract rollovers.
Liquidity Adequate: The new $75 million secured revolver is
expected to replace NGPL's current $75 million unsecured revolver
that matures in 2013. The current revolver has a maximum debt to
EBITDA leverage test of 6.75x. It is anticipated that the new
revolver will have a leverage covenant that will allow for
reasonable headroom so that it will not be tripped over under
current operating expectations. NGPCA's regulated pipeline
operations do not require significant liquidity. NGPL had
approximately $112 million of cash on its balance sheet at March
31, 2012.
Catalysts for Future Rating Actions: Possible catalysts for
negative rating actions include the inability of NGPL to
effectively execute its financing and 2012 note retirement
strategies and, longer term, continued weakening in credit metrics
or limited debt reduction through the cash sweep provision of the
senior facilities.
Possible catalysts for positive rating actions include improving
operating results or meaningful debt reduction.
NGPL is 80% owned by Myria Acquisition Inc., a consortium of
investors including Brookfield Infrastructure Partners, SteelRiver
Infrastructure Fund North America, a Canadian pension fund and a
Netherlands pension fund and 20% owned by Kinder Morgan Kansas,
Inc. (IDR rated 'BB+' Rating Watch Negative by Fitch).
NOBILITY HOMES: NASDAQ Panel Grants Continued Listing
-----------------------------------------------------
Nobility Homes, Inc. received notice that the NASDAQ Listing
Qualifications Panel has granted the Company's request for
continued listing on The NASDAQ Stock Market through Sept. 14,
2012, so as to allow the Company time to regain compliance with
NASDAQ Listing Rule 5250(c)(1)(the "filing requirement").
As previously disclosed, in response to notices of non-compliance
based on the fact that the Company is not in compliance with the
filing requirement because the Company could not timely file its
Form 10-Q reports for the periods ended Aug. 6, 2011 and Feb. 4,
2012 and Form 10-K report for the year ended November 5, 2011 with
the Securities and Exchange Commission, the Company requested a
hearing before the Panel.
Pursuant to the NASDAQ Listing Rules, the Sept. 14, 2012 deadline
represents the maximum amount of time that the Panel could grant.
While the Company is diligently working to regain compliance with
the filing requirement and expects to do so by the deadline, there
can be no assurance that it will be able to do so.
NORTHERN CALIFORNIA BANCORP: Terminates Common Stock Registration
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Northern California Bancorp, Inc., filed a Form 15 notifying of
its suspension of its duty under Section 15(d) to file reports
required by Section 13(a) of the Securities Exchange Act of 1934
with respect to its common stock.
Northern California Bancorp is a bank holding company and the
class of securities to which this certification applies is held of
record by fewer than 1,200 persons. The Bank is relying on
Section 12(g)(4) of the Securities Exchange Act of 1934, as
amended by the Jumpstart Our Business Startups Act, to terminate
the registration of its common stock, no par value per share,
under Section 12(g) of the Act. There were only 490 holders of
the common shares as of May 11, 2012.
About Northern California Bancorp
Monterey, Calif.-based Northern California Bancorp owns 100% of
the stock of Monterey County Bank, Monterey, California, The
Corporation, as a bank holding company, engages in commercial
banking through the Bank.
The Bank is subject to a Consent Order that, among other things,
establishes higher minimum capital requirements than those
established under the prompt corrective action framework. As of
Dec. 31, 2011, the most recent notification from the Federal
Deposit Insurance Corporation (FDIC) categorized the Bank as
adequately capitalized under the regulatory framework for prompt
corrective action. Although the Bank's capital ratios meet the
definition of "well capitalized", the FDIC is permitted, by
regulation, to lower an institution's capital adequacy rating by
one level, if it determines the institution has a higher risk
profile. The Bank received such notification from the FDIC during
2010.
The Bank reported a net loss of $13.65 million on net interest
income of $7.15 million for 2011, compared with a net loss of
$706,000 on net interest income of $6.68 million for 2010.
The Company's balance sheet at Dec. 31, 2011, showed
$245.68 million in total assets, $242.08 million in total
liabilities, and stockholders' equity of $3.60 million.
NV ENERGY: Fitch Affirms 'BB' Long-term Issuer Default Rating
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Fitch Ratings has affirmed the 'BB' long-term Issuer Default
Rating (IDR) on NV Energy, Inc. (NVE) and the 'BB+' long-term IDRs
on NVE's utility operating subsidiaries Nevada Power Company (NPC)
and Sierra Pacific Power Company (SPPC).
In addition, Fitch has revised the Rating Outlook on all three
entities to Positive from Stable.
These rating actions affect approximately $4.7 billion of debt.
A ratings upgrade on all three entities could occur if
consolidated financial metrics strengthen and appear sustainable
near the following levels:
-- EBITDA interest coverage approaching 3.5x;
-- Debt-to-EBITDA approaching 4.5x;
-- Funds from operations (FFO)-to-debt greater than 14%.
Fitch expects improved consolidated financial performance this
year, driven primarily by NPC's recent rate increase that took
effect Jan. 1, 2012. In that general rate case (GRC) decision, the
Public Utility Commission of Nevada (PUCN) approved recovery in
rates of the Harry Allen Generating Station, the final part of
NVE's six-year-long generation build-out.
Further strengthening of NVE's financial profile could be realized
from continued economic recovery in Nevada, expected completion of
the ON Line transmission project in the second half of 2013, and
additional debt reduction at the parent company.
Key rating factors:
-- Moderately high debt leverage and relatively weak financial
metrics;
-- Improving financial profile;
-- The completion of a multi-year plan to significantly increase
company-owned generation;
-- A balanced regulatory environment in Nevada;
-- Tough economic conditions in Nevada.
Weak Financial Metrics:
NVE's ratings remain constrained by the company's relatively weak,
but improving, financial metrics. For the year ended Dec. 31,
2011, NVE's EBITDA interest coverage was 2.8x, its debt to EBITDA
was 5.4x, and its FFO to debt was 10.9%. These metrics are below
average when compared to the broader utility sector.
Financial Improvement Expected:
Fitch expects NVE's financial metrics to strengthen in the near
term, supported by the recently implemented rates at NPC and
significantly reduced growth capex. The combination of the two
factors could result in free cash flow and alleviate stress on the
balance sheet.
Current growth capex is limited primarily to the NV Energize Smart
Grid project and the ON Line transmission project. Total capital
spending over 2012-2014 is expected to be approximately $1.4
billion, which is less than the amount spent in 2008 alone at the
height of the utilities' six-year-long capital spending program
that increased company-owned generation by more than 3,800
megawatts (MW).
Benefits From Company-Owned Generation:
The significant increase in company-owned generation since 2005 is
beneficial to credit quality. The utilities' operating
characteristics have been enhanced and set the stage for improved
financial performance in future years. The generating fleet is
much more efficient now than it was at the outset of the expansion
program, and the utilities are able to earn a return on their
investments in rate base.
Constructive Regulatory Environment:
Fuel and purchased power cost pass-through mechanisms allowed by
the PUCN help provide some stability to cash flows during periods
of commodity and power price volatility. The PUCN also pre-
approves planned construction costs for recovery in future GRCs
and has mitigated regulatory lag by permitting use of a hybrid
test-year methodology.
Tough Economic Conditions in Nevada:
Financial performance reflects the tough economic conditions in
Nevada, a state particularly hard hit by the collapse of the
housing market and broader recession. The stubbornly high
unemployment rate and slow economic recovery in Nevada have
constrained power demand and slowed growth at the utilities. As
the economy recovers, Fitch expects NVE to benefit from load
growth and the efficiencies associated with its recent generation
investments.
Adequate Liquidity:
Fitch considers NVE's liquidity position to be adequate. NPC and
SPPC have sufficient availability under their respective $500
million and $250 million revolving credit facilities. These five-
year facilities were recently entered into and do not mature until
March 23, 2017.
Availability under the facilities is reduced by negative mark-to-
market exposure of hedging obligations, but never by more than
$250 million for NPC and $125 million for SPPC. Under the
direction of the PUCN, neither utility has entered into fixed-
price natural gas hedges since 2009. As of March 23, 2012, neither
utility had any negative mark-to-market exposure for hedging
transactions.
Ample availability under the credit facilities and an historical
track record of good access to the capital markets, combined with
moderate capex needs, should give NVE and its utility subsidiaries
sufficient financial flexibility to carry out their capital
spending projects.
Fitch has affirmed the following ratings and revised the Outlook
to Positive from Stable:
NVE
-- Long-term IDR at 'BB';
-- Senior unsecured debt at 'BB'.
NPC
-- Long-term IDR at 'BB+';
-- Senior secured debt at 'BBB';
-- Senior unsecured debt at 'BB+'.
SPPC
-- Long-term IDR at 'BB+';
-- Senior secured debt at 'BBB'.
OILSANDS QUEST: Obtains CCAA Protection Extension Until June 29
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Oilsands Quest Inc. has requested and obtained an extension of the
order from the Alberta Court of Queen's Bench providing creditor
protection under the Companies' Creditors Arrangement Act
(Canada), which was to expire May 18, 2012. Creditor protection
under the CCAA will now expire on June 29, 2012, unless further
extended as required and approved by the Court.
As previously announced, Oilsands Quest is conducting a process to
solicit offers to acquire, restructure or recapitalize the
Company, with the assistance TD Securities Inc. While various
proposals were received from potential investors, none of these
proposals are currently in a form that the Company believes would
result in a sale or investment that would be in the best interests
of Oilsands Quest or its stakeholders. Negotiations are
continuing to determine whether certain of the proposals could be
amended to form the basis of an acceptable transaction to be
brought before stakeholders and the Court for approval.
There can be no assurance that the Solicitation Process will
result in a financing or a sale of the Company or in any other
transaction.
Trading in the common shares of Oilsands Quest remains suspended
while the NYSE Amex determines whether to resume trading or to
delist the Company for failure to meet listing requirements.
About Oilsands Quest
Oilsands Quest Inc. -- http://www.oilsandsquest.com/-- is
exploring and developing oil sands permits and licenses, located
in Saskatchewan and Alberta, and developing Saskatchewan's first
commercial oil sands discovery.
The Company reported a net loss of US$10.3 million for the six
months ended Oct. 31, 2011, compared with a net loss of
US$25.1 million for the six months ended Oct. 31, 2010.
The Company's balance sheet at Oct. 31, 2011, showed
US$156.6 million in total assets, US$33.3 million in total
liabilities, and stockholders' equity of US$123.3 million. As at
Oct. 31, 2011, the Company had a deficit accumulated during the
development phase of US$721.7 million.
On Nov. 29, 2011, the Company and certain of its subsidiaries
voluntarily commenced proceedings under the CCAA obtaining an
Initial Order from the Court of Queen's Bench of Alberta (the
"Court"), in In re Oilsands Quest, Inc., et al., Case No. 1101-
16110.
The CCAA Proceedings were initiated by: Oilsands Quest, Oilsands
Quest Sask Inc., Township Petroleum Corporation, Stripper Energy
Services, Inc., 1291329 Alberta, Ltd., and Oilsands Quest
Technology, Inc.
Under the Initial Order, Ernst & Young, Inc., was appointed by the
Court to monitor the business and affairs of the Oilsands
Entities. Neither of Oilsands' other subsidiaries, 1259882
Alberta, Ltd., and Western Petrochemical Corp., have filed for
creditor protection.
Oilsands Quest obtained a May 18, 2012 extension of the order
providing creditor protection under the Companies' Creditors
Arrangement Act (Canada).
The Company's common shares remain halted from trading until
either a delisting occurs or until the NYSE Amex permits the
resumption of trading.
PACER MANAGEMENT: Files Schedules of Assets and Liabilities
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Pacer Management of Kentucky LLC and Pacer Health Management
Corporation of Kentucky filed with the Bankruptcy Court for the
Eastern District of Kentucky their schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $0
B. Personal Property $13,636,800
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $7,116
E. Creditors Holding
Unsecured Priority
Claims $691,157
F. Creditors Holding
Unsecured Non-priority
Claims $2,341,886
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TOTAL $13,636,800 $3,040,159
A copy of the company's schedules of assets and liabilities is
available free at:
http://bankrupt.com/misc/PACER_MANAGEMENT_sal.pdf
About Pacer Management
Pacer Management of Kentucky, LLC, and Pacer Health Management
Corporation of Kentucky filed voluntary Chapter 11 petitions
(Bankr. E.D. Ky. Case Nos. 12-60410 and 12-60411) on March 27,
2012. Cumberland-Pacer, LLC also filed for Chapter 11 (Bankr.
E.D. Ky. Case No. 12-60412) also filed a separate petition on the
same day. Pacer Management estimated up to $50 million in assets
and debts.
The Debtors lease the assets and real property to operate the
hospital from Knox County, Kentucky and Knox Hospital Corporation.
According to court filings, the lessors in 2009 filed suit against
Pacer Health and others in the Knox Circuit Court alleging a
breach of the Lease Agreement but the suit was later resolved.
Under the deal, CP was substituted as lessee.
CP is a Kentucky limited liability company established by Dr.
Satyabrata Chatterjee and Dr. Ashwini Anand to purchase the stock
of Pacer Holdings of Kentucky, Inc., which owned 100% of the stock
of Pacer Health and 60% of the stock of Pacer Management. CP,
which previously owned 40% of the stock of Pacer Management,
became the sole owner of Pacer Management following the
transaction.
In October 2011, the county notified CP it was in default under
the lease agreement. The parties negotiated numerous extensions
of time to cure the alleged defaults, most recently until 12:01
a.m. on March 29, 2012. Prior to expiration of the most recent
extension, the Lessors again filed suit in the Knox Circuit Court
on March 20, 2012 seeking to have the Lease Agreement terminated
and requesting entry of a restraining order against CP, PHM and
PM, among others.
On March 20, 2012, the Knox Circuit Court issued a restraining
order which precluded the Debtors from spending hospital funds
other than for ordinary operating expenses, among other things.
A March 22, 2012 report by The Associated Press said that county
officials and the hospital board have agreed to terminate the
facility's lease with the Debtors. The group then agreed to sign
with another management company that will keep the hospital open
and prepare it to be sold, according to the report.
The Debtors filed for Chapter 11 protection to retain control of
the Hospital. The Debtors said they seek to continue operating
the Hospital pursuant to the terms of the Lease Agreement and
preserve their option to purchase the Hospital.
Judge Joseph M. Scott, Jr. presides over the case. Lawyers at
DelCotto Law Group PLLC, serve as the Debtors' counsel. Craig
Morgan, the Debtors' CEO, has been appointed by the Court as the
individual responsible for performing the duties of the Company as
a Debtor in possession. Mr. Morgan signed the bankruptcy
petitions.
Knox County, Kentucky, and the Knox County Hospital Board are
represented by Sturgill, Turner, Barker & Maloney, PLLC. Dr.
Satyabrata Chatterjee, one of the DIP lenders, is represented by
Dinsmore & Shohl, LLP. Dr. Ashwini Anand has teamed up with Dr.
Chatterjee to provide the DIP loan.
PATRIOT COAL: Moody's Downgrades CFR to 'Caa1'; Outlook Stable
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Moody's Investors Service downgraded Patriot Coal's (Patriot)
corporate family rating (CFR) and probability of default rating to
Caa1 from B2. At the same time, Moody's downgraded the ratings on
the company's senior unsecured debt to Caa2 from B3, and changed
Speculative Grade Liquidity (SGL) rating to SGL-4 from SGL-3. The
outlook is stable. This concludes the review for downgrade
initiated on May 2, 2012.
Moody's took the following rating actions:
Downgrades:
Issuer: Patriot Coal Corporation
Probability of Default Rating, Downgraded to Caa1 from B2
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from
SGL-3
Corporate Family Rating, Downgraded to Caa1 from B2
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2,
LGD4, 60% from B3, LGD4, 67%
Outlook Actions:
Issuer: Patriot Coal Corporation
Outlook, Changed To Stable From Rating Under Review
Ratings Rationale
The downgrade reflects Moody's expectation that for 2012,
Patriot's credit metrics will contract and liquidity will
deteriorate, due to challenges facing the company's thermal coal
business and the softness in the metallurgical coal market.
Specifically, Moody's anticipates over 10% reduction in sales
volume relative to 2011, primarily due to production cuts and
challenges in selling uncommitted tonnage in the thermal coal
division. Moody's believes that in 2013, Patriot's credit metrics
will recover somewhat as metallurgical coal market rebounds;
however, this upward momentum will be limited as Central
Appalachian thermal business will continue to experience secular
decline and the average realized prices on non-legacy contracts
will decline relative to 2012 levels. Considering the company's
contracted position on Central Appalachian thermal coal, Moody's
expects that low spot prices in 2012 will drive a decline in
delivered prices of coal in 2013. That said, the company's cash
flows will benefit from the expiration of the unprofitable legacy
contracts in 2012 and 2013. Moody's expects that Patriot's EBITDA,
as-adjusted, will fall below $100 million in 2012, driving
adjusted Debt/ EBITDA ratio to well over 7x, which corresponds to
Caa rating under Moody's Global Rating Methodology. Moody's
expects that in 2013, leverage metrics will recover; however could
still approach 6x. Moody's expects negative free cash flows over
the rating horizon.
The company has recently announced that it executed a commitment
letter for a new revolving credit facility and a new term loan
facility in a combined aggregate principal amount of $625 million.
Patriot intends to use the proceeds to refinance existing debt,
including the existing revolving credit facility, which matures in
December 2013, and the $200 million of convertible notes which
mature in April 2013. Although the transaction has not yet closed,
the ratings reflect Moody's expectation that the new facility will
alleviate the near-term liquidity pressures that would arise from
2013 debt maturities.
The revised SGL-4 rating reflects limited liquidity and the
challenges that Patriot is likely to experience in complying with
the covenants under its secured credit facility, given the
challenging market conditions, even though Moody's expects that
the new credit facility will include relaxed covenant
requirements. As of March 31, 2012, Patriot's liquidity position
included $115 million in cash and combined availability of $223
million under the existing $428 million revolver and $125 million
A/R securitization facility (net of $330 million of letters of
credit outstanding). Although Moody's believes that this liquidity
is adequate to meet the company's cash needs for the next twelve
months, Moody's anticipates that the liquidity position will
contract, given Moody's expectation of negative cash flows for
2012 and 2013. Absent a robust recovery in metallurgical and/or
thermal markets by the end of 2013, the company will likely
require additional financing.
The deterioration in Patriot's financial performance is largely
driven by deterioration in market conditions and challenges facing
the US thermal coal industry, particularly in Central Appalachia,
where Patriot's business is concentrated. An unusually warm winter
in the US and low natural gas prices in 2011-2012 led to a
collapse in coal prices across most coal producing regions and
production cuts across the industry, with utilities decreasing
their coal-fired generation in favor of lower-priced gas. For the
longer term, sustained low natural gas prices, combined with
environmental regulations disadvantaging coal, will slowly erode
coal's position as a raw material for electric generation. Higher-
cost Central Appalachian production is most affected by these
market conditions, and will continue to face secular decline as
production costs continue to rise as a result of difficult geology
and tightening safety standards.
Patriot's corporate family rating of Caa1 continues to reflect its
vast reserves and significant exposure to metallurgical coal,
which over the long term should enjoy robust demand, as domestic
and international steel production continues to recover and
supplies remain limited. Challenges for the rating continue to be
high concentration in Central Appalachian thermal coal, modest
margins and significant legacy liabilities.
The stable outlook reflects Moody's expectation of positive
momentum to metallurgical coal prices for the remainder of 2012
and in 2013, and limited potential for further declines in thermal
coal spot prices.
The Caa2 rating on senior unsecured notes reflects their junior
position relative to the secured debt in the event of default.
A further downgrade would be considered if the company experiences
persistent deterioration in liquidity, or if Debt/ EBITDA, as
adjusted is expected to remain above 7x after 2012.
Positive momentum on the ratings is limited at this time, due to
challenging industry conditions; however, an upgrade will be
considered if Debt/ EBITDA, as adjusted, is expected to be
sustained below 5x.
The principal methodology used in rating Patriot Coal was the
Global Mining Industry Methodology published in May 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.
Based in St. Louis, Missouri, Patriot Coal Corporation is one of
the largest coal producers in the eastern U.S. with approximately
30 million tons of annual coal production and $2.4 billion of
revenues generated in 2011.
PEABODY ENERGY: Fitch Affirms Issuer Default Rating at 'BB+'
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Fitch Ratings has affirmed Peabody Energy Corporation's (Peabody,
NYSE: BTU) Issuer Default Rating (IDR) at 'BB+'.
The Rating Outlook is Stable.
Peabody's credit ratings reflect large, well-diversified
operations, good control of low-cost production, strong liquidity
and moderate financial leverage.
Demand for metallurgical coal and steam coal in Asia is expected
to remain stable. In 2011, the Australia Mining Segment accounted
for 46% of segment EBITDA. Steam coal demand in the U.S. is
currently weak and is expected to remain so through 2013.
Regulatory uncertainty about carbon emissions has stalled plans
for many new U.S. coal plant builds, which will cap domestic steam
coal demand in the medium term. Margin expansion in the domestic
steam coal business will be difficult given that cost inflation is
not expected to be offset by productivity gains.
Liquidity at March 31, 2012 was strong with cash on hand of $952.4
million and availability under the company's revolver of $1.5
billion (only $21 million of L/Cs drawn). Total debt with equity
credit/operating EBITDA for the latest 12 months (LTM) ended March
31, 2012, was 3.0 times (x). Peabody has substantial legacy
liabilities and adjusted leverage is 3.8x.
Capital expenditure guidance for 2012 is $1.1 billion-$1.3
billion. Interest expense is expected to be about $400 million
for the year. Fitch expects EBITDA of at least $2.0 billion and
that negative free cash flow could be $140 million for 2012.
Scheduled maturities of debt are $101.1 million in 2012, $121.9
million in 2013, $107.8 million in 2014, $458.5 million in 2015,
and $1.5 billion in 2016. Peabody should remain well within its
credit facility financial covenants of a maximum consolidated
leverage ratio of 4.0x and a minimum interest coverage ratio of
2.5x. Fitch expects that total debt with equity credit/operating
EBITDA could peak at 3.5x in 2012.
The Stable Outlook reflects Fitch's expectations that Peabody will
continue to invest to the extent of its cash flow after scheduled
debt repayment and that total debt with equity credit/operating
EBITDA will remain below 3x on average over the next 18-24 months.
Fitch would consider a negative rating action if leverage remains
above 3.5x and free cash flow generation is negative for more than
12 months. Fitch would consider a positive rating action if there
were a commitment to manage the capital structure to a lower
financial leverage longer-term.
Fitch has affirmed Peabody's ratings as follows:
-- IDR at 'BB+';
-- Senior unsecured notes at 'BB+';
-- Senior unsecured revolving credit and terms loan at 'BB+';
-- Convertible junior subordinated debentures due 2066 at 'BB-'.
PETTERS GROUP: Supreme Court Won't Review Founder's Conviction
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The Associated Press reports the U.S. Supreme Court denied the
request of Minnesota businessman Tom Petters for review of his
2009 conviction on charges he orchestrated a $3.65 billion Ponzi
scheme.
The AP says Mr. Petters' attorney Jon Hopeman says he wasn't
surprised by the court's decision, which marks the end of the
direct appeals process. Mr. Hopeman said Mr. Petters is
optimistic and doesn't give up easily, and he may pursue other
legal remedies.
Mr. Petters is serving a 50-year sentence at a federal prison in
Leavenworth, Kansas. He said he's innocent.
About Petters Group
Based in Minnetonka, Minn., Petters Group Worldwide LLC is a
collection of some 20 companies, most of which make and market
consumer products. It also works with existing brands through
licensing agreements to further extend those brands into new
product lines and markets. Holdings include Fingerhut (consumer
products via its catalog and Web site), SoniqCast (maker of
portable, WiFi MP3 devices), leading instant film and camera
company Polaroid (purchased for $426 million in 2005), Sun Country
Airlines (acquired in 2006), and Enable Holdings (online
marketplace and auction for consumers and manufacturers' overstock
inventory). Founder and chairman Tom Petters formed the company
in 1988.
Petters Company, Inc., is the financing and capital-raising unit
of Petters Group Worldwide.
Thomas Petters, the founder and former CEO of Petters Group, has
been indicted and a criminal proceeding against him is proceeding
in the U.S. District Court for the District of Minnesota.
Petters Company, Petters Group Worldwide and eight other
affiliates filed separate petitions for Chapter 11 protection
(Bankr. D. Minn. Lead Case No. 08-45257) on Oct. 11, 2008. In its
petition, Petters Company estimated its debts at $500 million and
$1 billion. Parent Petters Group Worldwide estimated its debts at
not more than $50,000.
Fruth, Jamison & Elsass, PLLC, represents Douglas Kelley, the duly
appointed Chapter 11 Trustee of Petters Company, Inc., et al.
Petters Aviation, LLC, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed separate petitions for Chapter 11 bankruptcy
protection (Bankr. D. Minn. Case Nos. 08-45136, 08-35197 and
08-35198) on Oct. 6, 2008. Petters Aviation is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings, Sun
Country's parent company.
PETROSTAR PETROLEUM: 2011 Annual Financial Audit in Progress
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Petrostar Petroleum Corp. disclosed that its 2011 Annual Financial
Audit is progressing.
On April 5, 2012, Petrostar applied to the BCSC for a Management
Cease Trade Order and the Company confirms it will comply with the
alternative information guidelines described in sections 4.3 and
4.4 of NP 12-203 as necessary. On April 30, 2012, the BCSC
granted the MCTO. Petrostar must file its 2011 Annual Financials
by June 30, 2012 or a full Cease Trade Order will be issued to the
Company by the BCSC. At present, Petrostar is on the default
list.
The Company has changed its auditor from BDO Canada LLP to A Chan
& Company LLP and has Sedar filed the necessary documentation with
the Commissions and the TSXV Exchange.
Petrostar is securing funding for the 2010 and 2011 audit fees by
way of a private placement financing, announced April 20, 2012,
and plans to meet the June 30, 2012 deadline.
About Petrostar Petroleum
Petrostar Petroleum Corp. is a Tier 2 Canadian-based oil and gas
exploration company trading on the TSX Venture Exchange. The
long-term objective of management is to aggressively seek
properties with high potential that can be advanced with minimum
expenditures. The policy of the Company is to lower shareholders'
risk exposure to various stages of exploration by entering into
joint ventures with third parties or acquiring projects that the
Company can operate as the sole owner-operator.
PHYSICAL PROPERTY: Incurs HK$97,000 Net Loss in First Quarter
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Physical Property Holdings Inc. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss and total comprehensive HK$97,000 on HK$231,000 of total
operating revenues for the three months ended March 31, 2012,
compared with a net loss and comprehensive loss of HK$152,000 on
HK$193,000 of total operating revenues for the same period during
the prior year.
The Company reported a net loss and total comprehensive loss of
HK$524,000 for the year ended Dec. 31, 2011, compared with a
net loss and total comprehensive loss of HK$640,000 during the
prior year.
The Company's balance sheet at March 31, 2012, showed HK$10.33
million in total assets, HK$11.44 million in total liabilities,
all current and HK$1.11 million total stockholders' deficit.
For 2011, Mazars CPA Limited, in Hongkong, noted that the Company
had a negative working capital as of Dec. 31, 2011, and incurred
loss for the year then ended, which raised substantial doubt about
its ability to continue as a going concern.
A copy of the Form 10-Q is available for free at:
http://is.gd/YZLdlf
About Physical Property
Physical Property Holdings Inc. (formerly known as Physical Spa &
Fitness Inc.), through its wholly-owned subsidiary Good Partner
Limited, owns five residential apartments located in Hong Kong.
The Company was incorporated on Sept. 21, 1988, under the laws
of the United States of America.
PINNACLE AIRLINES: Delays Q1 Form 10-Q Due to Bankruptcy Filing
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Pinnacle Airlines Corp. notified the U.S. Securities and Exchange
Commission that it will be late in filing its quarterly report on
Form 10-Q for the period ended March 31, 2012.
The Company has determined that it is unable to file its Quarter
Report within the prescribed time period without unreasonable
effort and expense due to the considerable amount of time directed
towards the Company's reorganization efforts under bankruptcy. As
a result, the Company's financial results for the quarter ended
March 31, 2012, have not been finalized.
About Pinnacle Airlines
Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/--
a $1 billion airline holding company with 7,800 employees, is the
parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.;
and Colgan Air, Inc. Flying as Delta Connection, United Express
and US Airways Express, Pinnacle Airlines Corp. operating
subsidiaries operate 199 regional jets and 80 turboprops on more
than 1,540 daily flights to 188 cities and towns in the United
States, Canada, Mexico and Belize. Corporate offices are located
in Memphis, Tenn., and hub operations are located at 11 major U.S.
airports.
Pinnacle Airlines Inc. and its affiliates, including Colgan Air,
Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East
Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr.
S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012.
Judge Robert E. Gerber presides over the case. Lawyers at Davis
Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve
as the Debtors' counsel. Barclays Capital and Seabury Group LLC
serve as the Debtors' financial advisors. Epiq Systems -
Bankruptcy Solutions serves as the claims and noticing agent. The
petition was signed by John Spanjers, executive vice president and
chief operating officer.
Pinnacle Airlines' balance sheet at Sept. 30, 2011, showed $1.53
billion in total assets, $1.42 billion in total liabilities and
$112.31 million in total stockholders' equity.
Delta Air Lines, Inc., the Debtors' major customer and post-
petition lender, is represented by David R. Seligman, Esq., at
Kirkland & Ellis LLP.
A seven-member official committee of unsecured creditors has been
appointed in the case. The Committee selected Goodrich
Corporation as its chairperson. The Committee tapped Morrison &
Foerster LLP as its counsel.
PRINCETON REVIEW: Suspending Filing of Reports with SEC
-------------------------------------------------------
The Princeton Review, Inc., voluntarily filed Form 15 with the
U.S. Securities and Exchange Commission to suspend the Company's
SEC reporting obligations. Upon the filing of the Form 15, the
Company's obligation to file periodic and current reports with the
SEC, including Forms 10-K, 10-Q and 8-K, will be immediately
suspended. The Company is eligible to file Form 15 because its
common shares are held of record by less than 300 persons. There
were only 124 holders of the common shares as of May 11, 2012.
The Company also filed post-effective amendments to its
registration statements to deregister and remove all of the
previously registered securities that remain unissued and unsold
as of May 11, 2012.
About Princeton Review
Framingham, Massachusetts-based The Princeton Review, Inc.,
entered, on March 26, 2012, into an Asset Purchase Agreement with
an affiliate of Charlesbank Capital Partners pursuant to which,
upon the terms and subject to the conditions set forth in the
Agreement, the Company will sell, and Buyer will buy,
substantially all of the assets of the Company's Higher Education
Readiness ("HER") division, including the name and brand of The
Princeton Review. The consideration for the sale of the HER
division will be $33.0 million in cash, plus the assumption of
$12.0 million in net working capital liabilities. The purchase
price will be adjusted to account for any variance from the target
working capital level. The Company expects to use the net
proceeds from the sale to repay obligations outstanding under its
senior credit facilities with General Electric Capital
Corporation. Upon consummation of the transaction, the Company
will serve as a holding company for the Penn Foster division, will
cease to be known as The Princeton Review and will formally adopt
a new, to be determined, corporate name.
The Company's business as it existed on and prior to Dec. 31,
2011, was to provide in-person, online and print education
products and services targeting the high school and post-secondary
markets.
For the year ended Dec. 31, 2011, PricewaterhouseCoopers LLP, in
Boston, Massachusetts, expressed substantial doubt about the
Princeton Review's ability to continue as a going concern. The
independent auditors noted that the Company has suffered recurring
losses from operations and has a net capital deficiency.
The Company reported a net loss of $136.07 million on
$188.75 million of revenues for 2011, compared with a net loss of
$51.74 million on $213.83 million of revenues for 2010.
The Company's balance sheet at Dec. 31, 2011, showed
$228.35 million in total assets, $213.66 million in total
liabilities, Series D preferred stock of $125.43 million, and a
stockholders' deficit of $110.74 million.
PROTEONOMIX INC: Hires Demetrius & Company as New Accountants
-------------------------------------------------------------
Proteonomix, Inc., was notified by KJPDH & Company, on May 8,
2012, that they have resigned as the Company's independent
registered public accounting firm. The resignation of KJPDH &
COMPANY as the Company's independent registered public accounting
firm was accepted by the Company's Board of Directors on May 9,
2012. KJPDH & Company issued no reports on the Company's
financial statements and thus no reports contained an adverse
opinion or disclaimer of opinion, and those reports were not
qualified or modified as to uncertainty, audit scope or accounting
principle.
KJPDH & Company had been retained by the Company on April 25,
2012. The previous independent registered accounting firm, KBL,
LLP, issued financial statements for the years ended Dec. 31,
2011, and 2010, containing explanatory paragraphs which noted that
there was substantial doubt as to the Company's ability to
continue as a going concern as the Company has negative working
capital, and substantial accumulated deficits. These factors
raise substantial doubt about the ability of the Company to
continue as a going concern.
During the period from April 25, 2012, through May 8, 2012, the
Company had not had any disagreements with KJPDH & Company on any
matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if
not resolved to KJPDH & Company's satisfaction, would have caused
them to make reference thereto in their reports on the Company's
financial statements for those periods.
On May 11, 2012, the Company engaged Demetrius & Company, L.L.C.,
as its independent registered public accounting firm. The
decision to engage JPDH as the Company's independent registered
public accounting firm was approved by the Company's Board of
Directors.
During the years ended Dec. 31, 2011, and 2010, and through
May 11, 2012, the Company did not consult Demetrius with respect
to the application of accounting principles to any specified
transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's Financial
Statements, or any other matters or reportable events as defined
in Item 304(a)(2)(i) and (ii) of Regulation S-K.
About Proteonomix
Proteonomix, Inc. (OTC BB: PROT) -- http://www.proteonomix.com/--
is a biotechnology company focused on developing therapeutics
based upon the use of human cells and their derivatives.
The Company reported a net loss applicable to common shares of
$1.38 million in 2011, compared with a net loss applicable to
common shares of $3.47 million in 2010.
The Company's balance sheet at Dec. 31, 2011, showed $3.34 million
in total assets, $7.03 million in total liabilities, and a
$3.69 million total stockholders' deficit.
For the year ended Dec. 31, 2011, KBL, LLP, in New York, expressed
substantial doubt about the Company's ability to continue as a
going concern. The independent auditors noted that the Company
has sustained significant operating losses and is currently in
default of its debt instrument and needs to obtain additional
financing or restructure its current obligations.
PROVIDENT COMMUNITY: Incurs $202,000 Net Loss in First Quarter
--------------------------------------------------------------
Provident Community Bancshares, Inc., filed with the U.S.
Securities and Exchange Commission its quarterly report on Form
10-Q disclosing a net loss to common shareholders of $202,000 on
$3 million of total interest income for the three months ended
March 31, 2012, compared with a net loss to common shareholders of
$6,000 on $3.60 million of total interest income for the same
period a year ago.
The Company's balance sheet at March 31, 2012, showed $375.39
million in total assets, $363.61 million in total liabilities and
$11.78 million in total shareholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/TlQQwV
About Provident Community
Rock Hill, South Carolina-based Provident Community Bancshares,
Inc., is the bank holding company for Provident Community Bank,
N.A. (the "Bank"). Provident Community Bancshares has no material
assets or liabilities other than its investment in the Bank.
Provident Community Bancshares' business activity primarily
consists of directing the activities of the Bank.
The Bank's operations are conducted through its main office in
Rock Hill, South Carolina and seven full-service banking centers,
all of which are located in the upstate area of South Carolina.
The Bank is regulated by the Office of the Comptroller of the
Currency (the "OCC"), is a member of the Federal Home Loan Bank of
Atlanta (the "FHLB") and its deposits are insured up to applicable
limits by the Federal Deposit Insurance Corporation (the "FDIC").
Provident Community Bancshares is subject to regulation by the
Federal Reserve Board (the "FRB").
The Company reported a net loss of $190,000 on net interest income
of $8.5 million for 2011, compared with a net loss of $13.8
million on net interest income of $8.4 million for 2010. Total
non-interest income was $3.3 million for 2011, as compared to $3.5
million for 2010.
Consent Order
On Dec. 21, 2010, Provident Community Bank, N.A. entered into a
stipulation and consent to the issuance of a consent order with
the Office of the Comptroller of the Currency.
At Dec. 31, 2011, the Bank met each of the capital requirements
required by regulations, but was not in compliance with the
capital requirements imposed by the OCC in its Consent order.
The Bank is required by the consent order to maintain Tier 1
capital at least equal to 8% of adjusted total assets and total
capital of at least 12% of risk-weighted assets. However, so long
as the Bank is subject to the enforcement action executed with the
OCC on Dec. 21, 2010, it will not be deemed to be well-capitalized
even if it maintains the minimum capital ratios to be well-
capitalized. At Dec. 31, 2011, the Bank did not meet the higher
capital requirements required by the consent order and is
evaluating alternatives to increase capital.
PSS WORLD: S&P Revises Outlook to Negative on Divestiture
---------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Jacksonville, Fla.-based medical products distributor PSS World
Medical Inc. to negative from stable, on the company's plans to
divest its skilled nursing and specialty dental supply businesses
(about one-quarter of its revenues).
"We affirmed our ratings on the company, including our 'BB+'
corporate credit rating. We also affirmed our 'BB-' rating on the
company's $250 million senior unsecured notes and $230 million
senior unsecured convertible notes. The '6' recovery rating on the
notes, indicating our expectation for negligible (0% to 10%)
recovery in the event of default, remains unchanged. The strategic
shift does not change our view of the company's business risk
profile as 'fair,'" S&P said.
"However, the loss of earnings from divested assets, the timing
and amount of proceeds from their sale, and redeployment of the
funds are variables that increase the possibility that adjusted
debt to EBITDA might be sustained above 3x, which would be beyond
our guideline for an 'intermediate' financial risk profile," S&P
said.
"Our rating on PSS is based on its fair business risk profile and
intermediate financial risk profile," S&P said.
"With a well-established niche position in the relatively stable
medical products distribution industry, and aided by
acquisitions," said Standard & Poor's credit analyst Michael
Kaplan, "PSS' revenues in fiscal 2012 were up about 3%, despite
the still-weak economy and a comparably weak flu season."
"The negative rating outlook on PSS reflects our belief that the
loss of earnings from the divested assets, the realization of the
proceeds from their sale, and interim contribution and funding
requirements of acquisitions could contribute to debt to EBITDA of
about 3x, and FFO/EBITDA of approximately 30%. However, we could
lower the ratings if these credit metrics are weaker than
expected, suggesting a revision in our assessment of the financial
risk profile to 'significant.' This could occur if growth of the
newer activities fails to quickly replace business lost with the
dispositions, or if PSS uses the proceeds for shareholder-friendly
actions such as large share repurchases," S&P said.
"Within the next year, if we are convinced that there is a
reasonably early prospect that PSS can sustain debt to EBITDA of
below 3x, and FFO to debt of at least 30%, we could revise the
outlook to stable. This would likely accompany the sale of assets
at attractive multiples on a timely basis, and the pursuit of
modest-sized acquisitions at a measured pace," S&P said.
QUALITY PROPERTIES: Pine Apple's Lien Subordinate to Bank's
-----------------------------------------------------------
Bankruptcy Judge James J. Robinson ruled on motions for summary
judgment filed by Pine Apple Conveyor Service, Inc., and First
National Bank of Talladega.
Pursuant to a contract dated May 7, 2008, Pine Apple agreed to
construct a Marvin's Building Materials & Home Center Store for
the Debtor on a commercial site owned by the Debtor that is
located in Shelby County, Alabama. The Debtor failed to pay as
agreed under the Contract, and on April 22, 2009, Pine Apple sued
in state court seeking a money judgment against the Debtor for the
amounts due. Pine Apple also claimed a mechanic's lien against
the Property, and asserted its lien should be given priority over
a mortgage the Debtor had made in favor of the Bank.
Immediately after filing its complaint in the State Action, Pine
Apple filed a Motion to Stay and to Sever, in which it asked the
State Court to enforce an arbitration provision applicable to the
Contract, and to stay the State Action with respect to the Bank
until after the conclusion of mandatory arbitration. The Debtor
filed a motion opposing arbitration, and alleged that Pine Apple
had waived its right to have their disputes adjudicated by
arbitration. The State Court denied the Debtor's motion and
placed the State Action on the administrative docket pending
completion of the arbitration. At the conclusion of the
arbitration proceeding, an Award of Arbitration was entered in
favor of Pine Apple and against the Debtor for $1,269,000.
Pine Apple's request for a mechanic's lien against the Project
was, by design or otherwise, not addressed in the Arbitration
Award, and in conclusion the arbitrator stated: "This Award is in
full settlement of all claims and counterclaims submitted to this
arbitration. All claims not expressly granted are hereby, denied."
On July 23, 2010, the State Court signed an order, which was then
docketed on July 28, 2010, denying the Debtor's motion to vacate
the Arbitration Award, and pursuant to Rule 71B(f) of the Alabama
Rules of Civil Procedure, granted Pine Apple's motion to have the
Arbitration Award entered as a final judgment of the State Court,
expressly denied all other relief, and taxed costs against the
Debtor. Like the Arbitration Award, the Final Judgment made no
mention of Pine Apple's demand for a mechanic's lien.
On Aug. 11, 2010, the State Court entered an Order in the State
Action stating that "Unless otherwise ordered by the Court, all
claims against any remaining defendants will be automatically
dismissed in 28 days with costs of Court taxed as paid."
In response, Pine Apple filed a Motion to Amend the "August 11,
2010 Order to allow [Pine Apple's] claims against the [Bank] to
remain pending on the [State] Court's docket, on grounds that such
claims are independent of and substantial -- involving the issue
of priority of [Pine Apple's] mechanics lien with respect to the
Bank's mortgage."
The State Court granted Pine Apple's Motion to Amend, and ordered
that "all claims by [Pine Apple] against defendant First National
Bank of Talladega shall remain on the Court's docket." Having
avoided dismissal of its claim of priority over the Bank's
mortgage, Pine Apple filed a "Motion for Summary Judgment Against
First National Bank of Talladega".
The State Court had not ruled on Pine Apple's State SJ Motion when
the Debtor filed the Chapter 11 case on Oct. 1, 2010. However,
before the Chapter 11 case was filed, the Debtor appealed from the
Final Judgment to the Alabama Supreme Court. The automatic stay
was lifted by the Bankruptcy Court to allow the appeal to proceed,
and on March 9, 2012 the Final Judgment was affirmed without
opinion.
After the Chapter 11 Case was commenced, and the State Action
removed to the Bankruptcy Court, the Debtor filed an adversary
proceeding, naming Pine Apple and the Bank as defendants, and
alleged, inter alia, that (i) Pine Apple did not have a perfected
mechanic's lien against the Property; (ii) numerous subcontractors
claimed mechanic's liens against the Property; and (iii) the Bank
claimed to hold a first mortgage upon the Property. The complaint
asked the Bankruptcy Court to determine the right, title and
interest of the Debtor, Pine Apple, and the Bank in and to the
Property, and in particular, to determine the amount, status, and
priority of the respective interests claimed by the Debtor, Pine
Apple, the Bank, and other lien claimants in and to the Property.
Pine Apple and the Bank each filed motions for summary judgment
with respect to the claims, counterclaims and cross-claims. Pine
Apple argued that the Arbitration Award, Final Judgment, and
Recorded Judgment all prove that a mechanic's lien was established
in its favor against the Property. Pine Apple also sought summary
judgment to enforce its alleged mechanics lien by seeking an order
for sale of the property. If Pine Apple were to prevail on its
argument, it would be entitled to a secured claim in the Chapter
11 case.
On the other hand, the Bank argued that in all respects, the
Arbitration Award, Final Judgment, and Recorded Judgment, are
final -- no longer subject to further adjudication or appeal --
and none mention a mechanic's lien, much less establish such a
lien in favor of Pine Apple. If the Bank is correct, the State
Action, as it pertained to the Debtor, is now final for all
purposes, leaving Pine Apple with no more than a possible simple
money-judgment lien, and certainly not a mechanic's lien. The
Bank continued its argument by asserting that without a mechanic's
lien, Pine Apple's claim of priority over the Bank's mortgage is
moot, and it is too late for Pine Apple to try anew to establish
such a lien.
In a ruling on Monday, Judge Robinson held that Pine Apple has no
mechanic's lien, and may not rekindle its mechanic's lien claim in
any court. The judge denied Pine Apple's motions for summary
judgment and granted the Bank's motion for summary judgment.
To the extent the Recorded Judgment constitutes a lien on the
Property, the judge said the lien is not a mechanic's lien
pursuant to Ala. Code Sec. 35-11-210 (1975), et seq., but rather
is at most a simple money-judgment lien pursuant to Ala. Code Sec.
6-9-211 (1975), and in any event would be subordinate to the
Bank's mortgage.
The case is PINE APPLE CONVEYOR SERVICE, INC., Plaintiff, v.
QUALITY PROPERTIES, LLC, and FIRST NATIONAL BANK OF TALLADEGA,
Defendants, Adv. Proc. No. 10-40124 (consolidated with Adv. Proc.
No. 10-40132) (Bankr. N.D. Ala.). A copy of the Court's May 14,
2012 Opinion and Order is available at http://is.gd/HhsI75from
Leagle.com.
Albertville, Alabama-based Quality Properties, LLC, filed for
Chapter 11 bankruptcy (Bankr. N.D. Ala. Case No. 10-42783) on
Oct. 1, 2010. Harry P. Long, Esq., in Anniston, Alabama,
serves as bankruptcy counsel. It scheduled assets of $6,255,000
and debts of $6,932,388.
QUALITY PROPERTIES: Bankr. Court Recognizes Sherwin-Williams' Lien
------------------------------------------------------------------
At the behest of The Sherwin-Williams Company, Bankruptcy Judge
James J. Robinson ruled that Sherwin holds a perfected and
enforceable materialman's lien against a construction project, and
is entitled to an allowed secured claim in the Chapter 11 case of
Quality Properties LLC; provided, however, the extent of the lien
and claim is subject to a later determination of, inter alia, the
exact amount owing by the general contractor under its subcontract
with Sherwin, the value of the Project, the allowance of other
secured claims, and their status and the status of Sherwin's lien
vis-a-vis a bank's mortgage, and Sherwin's entitlement to attorney
fees and contract interest, and the amount thereof.
Sherwin's claims seeking a monetary judgment against the general
contractor that were asserted in Sherwin's state court complaint
are remanded to the State Court for further adjudication.
The judge also ruled that, to the extent the Bank's Motion For
Summary Judgment claims Sherwin is not entitled to a materialman's
lien, it is denied; provided, however, that the priority of
Sherwin's lien vis-a-vis the Bank's mortgage is reserved for a
later determination.
Pine Apple Conveyor Service, Inc., was the general contractor for
the construction of a Marvin's Building Materials & Home Center
Store located in Calera, Shelby County, Alabama. The Project is
owned by the Debtor and is property of the bankruptcy estate.
Sherwin entered into a subcontract with Pine Apple to provide
goods, services and materials utilized in the construction of the
Project. Sherwin claims it is due $18,489.22 for the goods,
services and materials it provided, plus interest and attorney
fees as agreed in a Commercial Credit Application executed by Pine
Apple.
First National Bank of Talladega made a loan to the Debtor to
finance, at least in part, the construction of the Project. The
loan is secured by a mortgage against the Project; the mortgage
was recorded on August 11, 2008 in the Office of the Judge of
Probate of Shelby County, Alabama.
Sherwin sued the Debtor, Pine Apple and others in state court over
nonpayment. The action was later removed to the Bankruptcy Court.
The case is THE SHERWIN-WILLIAMS COMPANY, Plaintiff, v. PINE APPLE
CONVEYOR SERVICE, INC.; QUALITY PROPERTIES, LLC; and FIRST
NATIONAL BANK OF TALLADEGA, Defendants, Adv. Proc. No. 10-40122
(Bankr. N.D. Ala.). A copy of the Court's May 14, 2012 Opinion
and Order is available at http://is.gd/FFuv9afrom Leagle.com.
Albertville, Alabama-based Quality Properties, LLC, filed for
Chapter 11 bankruptcy (Bankr. N.D. Ala. Case No. 10-42783) on
Oct. 1, 2010. Harry P. Long, Esq., in Anniston, Alabama,
serves as bankruptcy counsel. It scheduled assets of
$6.255 million and liabilities of $6.93 million.
QUALITY PROPERTIES: Shelby Concrete Lien Has Priority Over Bank's
-----------------------------------------------------------------
At the request of Shelby Concrete Company, Inc., Bankruptcy Judge
James J. Robinson ruled that Shelby holds a perfected and
enforceable materialman's lien against a non-residential real
estate property owned by Quality Properties LLC located in the
City of Calera, Alabama. The Court also held that Shelby is
entitled to an allowed secured claim in the Debtor's Chapter 11
case; provided, however, the extent of the lien and claim is
subject to a later determination of, inter alia, the value of the
Property, the allowance of other secured claims and their status
vis-a-vis a bank's mortgage, and Shelby's entitlement to attorney
fees and contract interest. Shelby's materialman's lien and
secured claim are entitled to priority over the Bank's mortgage
and secured claim.
Pursuant to a construction contract dated May 7, 2008, Pine Apple
Conveyor Service, Inc., as general contractor, agreed to construct
a Marvin's Building Materials & Home Center Store for the Debtor
on the Property. At Pine Apple's request, Shelby, as a
subcontractor-supplier, delivered materials to the Property that
were used in the construction.
On Aug. 11, 2008, the First National Bank of Talladega recorded a
mortgage against the Property; the mortgage that was made by the
Debtor to secure a loan used to finance, at least in part,
construction of the Project.
Pine Apple failed to pay for the materials supplied by Shelby,
leaving unpaid the principal sum of $221,382. On Dec. 16, 2008,
Shelby gave timely and sufficient written notice to the Debtor and
the Bank that it claimed a materialman's lien on the Property.
Thereafter, on Dec. 19, 2008, Shelby filed in the Probate Office
of Shelby County a verified statement of its lien. On Jan. 8,
2009, Shelby filed a state court action against the Debtor, the
Bank, and other defendants, to enforce its lien. The lawsuit was
later removed to the Bankruptcy Court following Quality's
bankruptcy filing.
The case is SHELBY CONCRETE COMPANY, INC., Plaintiff, v. PINE
APPLE CONVEYOR SERVICE, INC.; TED L. MONK; AVA B. MONK; QUALITY
PROPERTIES, LLC; and FIRST NATIONAL BANK OF TALLADEGA, Defendants,
Adv. Proc. No. 10-40121 (Bankr. N.D. Ala.).
A copy of the May 14, 2012 Opinion and Order is available at
http://is.gd/HCtc54from Leagle.com.
Albertville, Alabama-based Quality Properties, LLC, filed for
Chapter 11 bankruptcy (Bankr. N.D. Ala. Case No. 10-42783) on
Oct. 1, 2010. Harry P. Long, Esq., in Anniston, Alabama,
serves as bankruptcy counsel. It scheduled assets of
$6.255 million and liabilities of $6.93 million.
QUALITY PROPERTIES: Bankr. Court Recognizes Doormaker's Lien
------------------------------------------------------------
Bankruptcy Judge James J. Robinson granted a motion for summary
judgment filed by Universal Door Systems, Inc., to the extent it
seeks recognition that a state court judgment fixed a valid and
perfected materialman's lien in favor of Universal and against a
construction project in the amount of $30,430. There was no
determination by the State Court regarding the priority of
Universal's lien vis-a-vis the First National Bank of Talladega's
mortgage or the liens of other mechanic's and materialman's lien
claimants. Depending upon the value of the Project and resolution
of the priority issues, the extent of Universal's allowed secured
lien claim in the Chapter 11 case of Quality Properties, LLC,
remains to be determined by the Bankruptcy Court.
Universal commenced an action in the Circuit Court of Shelby
County, Alabama, against Quality Properties and the other
defendants on Jan. 9, 2009. Co-defendant, Pine Apple Conveyor
Service, Inc., was the general contractor for the construction of
a Marvin's Building Materials & Home Center Store located in
Calera, Shelby County, Alabama. The Project is owned by Quality
and is property of Quality's bankruptcy estate. In the State
Action, Universal claimed it entered into a subcontract with Pine
Apple to furnish some of the labor and materials for construction
of the Project, and it had not been paid the agreed-upon sums
owing for such labor and materials. In the State Action,
Universal sought monetary judgments and also asked the State Court
to award it a materialman's lien against the Project to secure the
unpaid balance due on its subcontract with Pine Apple.
Quality removed the State Action to the Bankruptcy Court following
its bankruptcy filing.
The case is UNIVERSAL DOOR SYSTEMS, INC., Plaintiff, v. PINE APPLE
CONVEYOR SERVICE, INC.; QUALITY PROPERTIES, LLC; MARK MONK; and
FIRST NATIONAL BANK OF TALLADEGA, Defendants, Adv. Proc. No. 10-
40119 (Bankr. N.D. Ala.). A copy of the Court's May 14, 2012
Opinion and Order is available at http://is.gd/Atnqfqfrom
Leagle.com.
Albertville, Alabama-based Quality Properties, LLC, filed for
Chapter 11 bankruptcy (Bankr. N.D. Ala. Case No. 10-42783) on
Oct. 1, 2010. Harry P. Long, Esq., in Anniston, Alabama,
serves as bankruptcy counsel. It scheduled assets of
$6.255 million and liabilities of $6.93 million.
QUALITY PROPERTIES: Court to Remand Construction Materials' Claims
------------------------------------------------------------------
Construction Materials, Inc., on Feb. 6, 2009, commenced an action
in the Circuit Court of Shelby County, Alabama, against Quality
Properties, LLC and the other defendants. Quality later removed
the State Action to the Bankruptcy Court following its Chapter 11
filing.
Co-defendant, Pine Apple Conveyor Service, Inc., was the general
contractor for the construction of a Marvin's Building Materials &
Home Center Store located in Calera, Shelby County, Alabama. The
Project is owned by the Debtor and is property of the bankruptcy
estate. In the State Action, Construction Materials claimed it
entered into a subcontract with Pine Apple to provide some of the
material and supplies required for construction of the Project,
and it had not been paid the agreed-upon sums owing under the
subcontract.
In Count One of its complaint, Construction Materials sought a
materialman's lien against the Project pursuant to Ala. Code Sec.
35-11-210, et seq. (1975). Construction Materials "demands
judgment on its lien against [all the named] Defendants" and "for
a judgment granting a lien to Plaintiff upon [the Project]. . . ."
In Count Two (breach of contract) and Court Four (open account),
Construction Materials demanded monetary judgments against Pine
Apple, and Ted and Mark Monk; and in Count Three (unjust
enrichment) a monetary judgment was demanded against only the
Debtor and Marvin's.
Construction Materials filed a Motion for Summary Judgment in the
adversary proceeding, and alleged there were no questions of
material fact with respect to its entitlement to a money judgment
against Pine Apple, and Ted and Mark Monk. Although the complaint
alleges Construction Materials is entitled to a materialman's lien
against the Project and monetary judgments against all the
defendants, no relief was sought in the motion for summary
judgment against the Debtor or its property (including the
Project), or Marvin's.
In a ruling Monday, Bankruptcy Judge James J. Robinson denied
Construction Materials' Motion for Summary Judgment. Pursuant to
the Court's own motion, all claims in Count Three of Construction
Materials' complaint against Marvin's, and all claims in Counts
Two and Four of the complaint against Pine Apple, are remanded to
the State Court.
The Bankruptcy Court, however, added the ruling will not become
final for 14 days from the entry of the Order, and during such 14
days, Construction Materials may file a notice opposing the ruling
along with its materials and authorities supporting its
opposition. If the notice is filed, then all other parties will
have 7 days thereafter during which to file their responsive
materials and authorities, after which the matter shall be taken
under submission by the Court, and the finality of the ruling will
remain suspended until further Court order. If no notice is
timely filed by Construction Materials, the ruling will become
final after the expiration of 14 days without further Court order.
The Bankruptcy Court retains jurisdiction over (x) all the claims
asserted against all defendants (except for the Monk defendants)
in Count One of the Complaint and, (y) to the extent asserted
against the Debtor, the claims asserted in Count Three of the
Complaint.
The case is CONSTRUCTION MATERIALS, INC., Plaintiff, v. PINE APPLE
CONVEYOR SERVICE, INC.; TED L. MONK; MARK MONK; QUALITY
PROPERTIES, LLC; MARVIN'S, INC.; and FIRST NATIONAL BANK OF
TALLADEGA, Defendants, Adv. Proc. No. 10-40123 (Bankr. N.D. Ala.).
A copy of the Court's May 14, 2012 Opinion and Order is available
at http://is.gd/Cyx6iMfrom Leagle.com.
Albertville, Alabama-based Quality Properties, LLC, filed for
Chapter 11 bankruptcy (Bankr. N.D. Ala. Case No. 10-42783) on
Oct. 1, 2010. Harry P. Long, Esq., in Anniston, Alabama,
serves as bankruptcy counsel. It scheduled assets of
$6.255 million and liabilities of $6.93 million.
R.R. DONNELLEY: Fitch Affirms Issuer Default Rating at 'BB+'
------------------------------------------------------------
Fitch Ratings has affirmed R.R. Donnelley & Sons Company's (RRD)
Issuer Default Rating (IDR) at 'BB+'. The Rating Outlook is
Stable.
The ratings reflect the company's intention to reduce absolute
levels of debt. Given RRD's cash flow generation, Fitch believes
that the company can meet its pension funding requirements and
reduce debt balances in order to get closer to the lower end of
RRD's stated leverage target of 2.5 times (x)-3.0x, which Fitch
believes is appropriate for the ratings at this time. As with
ratings on any business facing secular challenges, Fitch may
continue to tighten the targeted leverage metric for a given
rating category as business risk increases.
Fitch believes that debt reduction will need to be a primary use
of free cash flow (FCF) going forward in order to maintain current
ratings. Given the secular challenges facing the company,
deleveraging will primarily be driven through debt level
reductions. There is no tolerance in the ratings for material
share buy backs and/or increases in the current dividend level.
There is limited headroom within the ratings for the company to
under perform Fitch expectations. The company has guided to flat
to slight revenue growth and approximately $300 million in FCF
(after dividends). Fitch believes this is achievable. Revenue
declines in the low to mid single digits over the next two
quarters could result in a Negative Outlook. Fitch believes that
continued revenue declines in the low to mid single digits would
pressure cash flows and slow down absolute debt reduction.
The ratings also reflect:
-- RRD's scale and diverse product offering as the largest
commercial printer in the U.S. and worldwide. The U.S. commercial
printing market size is approximately $150 billion, and RRD has
less than a 5% market share. RRD is one of few well-capitalized
competitors in this highly fragmented and sizeable industry. The
significant addressable market share that RRD could capture from
rivals may provide some offset to secular pressures.
-- In Fitch's view, more than 50% of RRD's revenues face some
degree of secular headwinds (catalogs, magazines, books,
directories, variable, commercial and financial print). Certain
sub-segments may not recover or exhibit positive growth
characteristics going forward. Fitch believes that continued
pricing and volume pressure, will challenge RRD's ability to drive
GDP-level organic revenue growth. Fitch's base case model assumes
that pressures in the Books and Directories segment accelerate and
revenues in this business line declines in the mid teens starting
in 2013.
Rating Drivers:
-- Given the secular challenges facing the company's business,
Fitch does not expect any positive rating momentum in the near
term.
-- Increased share buyback activity or revenue declines in the
low to mid single digits, whether due to secular/cyclical issues,
would pressure the ratings.
Liquidity:
Fitch calculates RRD's FCF (after dividends) for the last 12
months ended March 31, 2012 at $455 million. Fitch expects FCF to
be approximately $300 million in 2012. RRD's pension was $1
billion underfunded at the end of 2011. The company intends to
contribute $215 million to its pension funds in 2012. The 2012
contribution is reflected in Fitch's FCF expectations.
As of March 31, 2012, liquidity was supported by $415 million in
cash ($370 million located outside of the U.S.) and $1.2 billion
available under its $1.75 billion revolver that matures in
December 2013.
As of March 31, 2012, there is approximately $327 million in
revolver debt balance outstanding, reflecting seasonal working
capital balances and borrowing used to fund the January 2012 $160
million maturity. After the revolver balance has been repaid,
Fitch expects the company to continue to reduce debt through
repurchases of notes in the open market or via tender offers.
RRD's next bond maturity is its $258 million 4.95% notes due in
April 2014, $300 million 5.5% notes due in May 2015 and its $347
million 8.6% notes due in August 2016.
Leverage:
As of March 31, 2012, the company had total debt of $3.8 billion.
The company calculates leverage at 3.0x as of March 31, 2012,
excluding restructuring cost. Given the secular issues facing RRD,
Fitch will no longer adjust EBITDA for restructuring charges,
resulting in an unadjusted gross leverage ratio of 3.2x. Fitch
believes restructuring charges will be an ongoing expense. While
current leverage is high for the rating, Fitch expects leverage to
be below 3.0x before year end.
Covenants:
Fitch notes that liens are not permitted under the existing bonds,
unless a pari passu lien is granted to the notes. There is also a
general lien basket that limits liens (and sale-leaseback
transactions) to 15% of net tangible assets (there is a 10% limit
for the notes maturing in 2021, 2029, and 2031).
While the company's credit facility contains a 4.0x maximum
leverage covenant, current bondholders do not benefit from any
material unsecured debt or unsecured subsidiary guarantee
restrictive covenants. Fitch notes that in the event that the
credit facility became guaranteed by the operating subsidiaries of
RRD (noting that the revolver does not expire until Dec. 17,
2013), Fitch would expect to notch down the unsecured notes,
reflecting this subordination.
Fitch has affirmed R.R. Donnelley's ratings as follows:
-- IDR at 'BB+';
-- Senior unsecured revolving credit facility at 'BB+';
-- Senior unsecured notes and debentures at 'BB+'.
Fitch has also withdrawn the following ratings:
-- Short-term IDR, 'B';
-- Commercial paper, 'B'.
RAHAXI INC: Suspending Filing of Reports with SEC
-------------------------------------------------
Rahaxi, Inc., filed a Form 15 notifying of its suspension of its
duty under Section 15(d) to file reports required by Section 13(a)
of the Securities Exchange Act of 1934 with respect to its common
stock, par value $0.001 per share. Pursuant to Rule 12g-4, the
Company is suspending reporting because there are currently less
than 500 holders of record of the common shares. There were only
275 holders of the common shares as of May 10, 2012.
About Rahaxi Inc.
Rahaxi, Inc. (OTC BB: RHXI) is a provider of electronic payment
processing services, including credit and debit card transaction
processing, point-of-sale related software applications and other
value-added services. The Company's principal offices are in
Wicklow, Ireland. The Company also has offices in Helsinki,
Finland and Santo Domingo, the Dominican Republic. While the
Company's offices in Finland and Ireland will primarily focus on
the European market, the Company's office in the Dominican
Republic will continue to pursue opportunities in the Caribbean
and Latin America, including its recently developed electronic PIN
distribution application for point of sale solutions in
association with some of the most important telecommunications
companies in the Dominican Republic and Haiti.
The Company's balance sheet as of March 31, 2010, showed
$2.596 million in assets, $7.52 million of liabilities, for a
stockholders' deficit of $4.93 million.
RBSM LLP, in New York, expressed substantial doubt about the
Company's financial statements for the fiscal year ended June 30,
2009. The independent auditors noted that the Company is
experiencing difficulty in generating sufficient cash flow to meet
it obligations and sustain its operations.
RESIDENTIAL CAPITAL: Has Interim Approval of $1.45-Bil. DIP Loan
----------------------------------------------------------------
Residential Capital LLC and its affiliates won interim Court
approval to borrow $1.45 billion from Barclays Bank PLC to help
fund their operations, Steven Church and Dakin Campbell of
Bloomberg News report.
As reported by Residential Capital Bankruptcy News, of the entire
commitment amount, the DIP Lenders will provide:
(a) revolving loans in an aggregate principal amount of up to
$200,000,000 with an interest rate of LIBOR plus 4.00% per
annum; and
(b) term loans in (i) an aggregate principal amount of up to
$1,050,000,000 with an interest rate of LIBOR plus 4.00%,
and (ii) an aggregate principal amount up to $200,000,000
with an interest rate of LIBOR plus 6.00%, each with a
LIBOR floor of 1.25% per annum.
In order for the Debtor-Borrowers to obtain the assets necessary
to secure the borrowings, the Debtors also seek authorization for
the Borrowers to acquire (i) the right to reimbursement for
certain servicer advances which are currently serving as the
collateral securing the so-called "GSAP Facility"; and (ii)
certain mortgage loans that are currently the subject of the so-
called "BMMZ Repo Facility".
Prepetition GSAP and BMMZ Facilities
The prepetition GSAP Facility (servicing advance facility), with
$662 million as of the Petition Date, is structured as an off-
shore, bankruptcy remote, special purpose financing. Under the
Facility, the Debtors sell the right to collect repayment of
servicing advances.
The prepetition BMMZ Repurchase Facility, with $250 million as of
the Petition Date, is structured as a derivative repurchase
agreement with BMMZ Holdings LLC, an indirect wholly owned
subsidiary of Ally Financial Inc. It is secured by the assets
being sold pursuant to the repurchase agreements.
Other pertinent terms of the Barclays Facility:
Borrowers: GMACM Borrower, wholly owned subsidiary of GMAC
Mortgage LLC
RFC Borrower, wholly owned subsidiary of
Residential Funding Company LLC
Guarantors: Residential Capital, LLC
Other Debtor affiliates of ResCap
Use of
Proceeds: The Debtors intend to use the proceeds of the
Barclays Loans to:
-- refinance the GSAP Facility and the BMMZ Repo
Facility through the purchase of the Initial
Purchased Assets;
-- fund general corporate and working capital
requirements, including the acquisition of the
Additional Purchased Assets;
-- pay interest, fees and expenses payable under
the Barclays DIP Facility; and
-- pay certain costs of administration of the
Chapter 11 Cases in accordance with the DIP
budget.
The Debtors also intend to use the Barclays Loans
to purchase the Purchased Assets from the
existing owners of such assets to the newly
formed Debtor-Borrowers. The Purchase
Transactions will bring substantial assets into
the Debtors' estates.
Financial
Covenants: The Borrowers and Guarantors will be required to
perform against a budget. They shall maintain at
all times minimum liquidity of $50 million in
the aggregate.
The Budget will provide that up to $40 million of
the Term Loan proceeds will be transferred to an
unrestricted account of ResCap to be used for
general corporate purposes.
The Debtors prepared a 20-week cash flow
projection for the Barclays loan proceeds, a copy
of which is available for free at:
http://bankrupt.com/misc/RESCAP_BarclaysDIPBudget.pdf
Carve-Out: Includes (i) all fees and expenses in an
aggregate amount of up to $25,000,000 incurred by
retained professionals in the Chapter 11 Cases
following delivery of notice of an Event of
Default, (ii) allowed unpaid professional fees
and disbursements incurred prior to the delivery
of the notice, (iii) quarterly fees required to
be paid pursuant to 28 U.S.C. Sec. 1930(a)(6) and
any fees payable to the clerk of the Bankruptcy
Court, and (iv) fees and expenses up to $500,000
incurred by a trustee under section 726(b) of the
Bankruptcy Code.
Does not include professional fees and
disbursements incurred in connection with any
challenge to the validity, perfection, priority,
extent or enforceability of the Loans and the
other DIP Obligations under the DIP Facility.
Fees: Unused Line Fees: An amount equal to the product
of (i) 0.75% per annum and (ii) the undrawn
portion of the Revolver during the immediately
preceding month, payable monthly in arrears.
Administrative Agent Fee: $150,000 per annum
Collateral Agency Fee: $250,000 per annum
Other fees: An aggregate amount of approximately
$52 million, net of credits, of which $18.75
million was paid prior to the Petition Date.
Maturity
Date: The earliest of:
-- 18 months from the closing of the DIP Facility
-- 45 days after entry of the Interim Order
-- substantial consummation of a plan or
reorganization for any Debtor
-- the date on which maturity is accelerated and
the commitments are terminated as a result
of an event of default
Collateral
The Debtors propose to grant the DIP Lenders senior security
interests on the collateral that currently secures the GSAP
Facility and the BMMZ Repo Facility, and junior security
interests on the collateral that currently secures the 2009 Ally
Financial Inc. Secured Loan Agreement and the Citibank MSR
(mortgage servicing rights) Facility.
The Debtors also propose to grant the DIP Lenders superpriority
administrative expense claims, subject to the carve-out.
The DIP Lenders will not be taking any liens on the primary
unencumbered assets of the Debtors or liens on causes of action
under Chapter 5 of the Bankruptcy Code or the proceeds of those
causes of action.
A full-text copy of the Debtors' credit agreement with Barclays,
et al. is available for free at:
http://bankrupt.com/misc/RESCAP_BarclaysDIPCreditPct.pdf
Sealed Fee Letters
The Debtors also seek to file under seal fee letters related to
the Barclays Loan. The Debtors explain the Fee Letters contain
closely guarded proprietary and commercial information that is
sensitive to both the Debtors and Barclays. Public disclosure of
information could potentially harm Barclays' business.
Need for Liquidity
Marc D. Puntus, partner and co-head of the restructuring group at
Centerview Partners LLC, investment banker to Residential Capital
LLC, submitted a declaration to the Court asserting that the
terms and conditions of the DIP Facilities are fair, reasonable
and appropriate in the circumstances presented, and were
negotiated by the parties in good faith. "I believe the Debtors'
entry into the DIP Facilities is an exercise of their sound
business judgment," he says.
Interim Approval
Judge James Peck initially criticized the financing motion,
saying he didn't have enough evidence to find that a part of the
loan transaction involved a so-called true sale, Bloomberg
relates. The judge agreed to enter the interim approval after
ResCap agreed to remove the request for the finding from the
original loan motion, the report relayed.
Judge Peck is sitting in for Judge Martin Glenn for the time
being.
The Debtors are set to appear before the Court in 45 days to seek
final approval of the loan request.
About ResCap
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
The ResCap is selling its mortgage origination and servicing
businesses to Nationstar Mortgage LLC, and its legacy portfolio,
consisting mainly of mortgage loans and other residual financial
assets, to Ally Financial. Together, the asset sales are expected
to generate approximately $4 billion in proceeds.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Has $150-Mil. of DIP Financing From Ally
-------------------------------------------------------------
Residential Capital, LLC, and its affiliated debtors appeared
before Judge James Peck in Manhattan Bankruptcy Court Monday
afternoon to seek permission to obtain postpetition financing on
a secured, superpriority basis from parent, Ally Financial Inc.
The Debtors intend to use the AFI DIP loan proceeds to:
-- continue making repurchases of whole loans from
securitization trusts guaranteed by Ginnie Mae in order
to avoid GMAC Mortgage being in violation of delinquency
triggers applicable to it under Chapter 18 of the Ginnie
Mae Guide;
-- effect foreclosures, conveyances or other normal course
loss mitigation activities of the related properties in
connection with the submission of claims to the Secretary
of the U.S. Department of Housing and Urban Development;
and
-- allow for trial modifications under programs implemented
by the Debtors for which the related loans and borrowers
are qualified -- Ginnie Mae Obligations.
GMAC Mortgage, LLC, and Residential Funding Company, LLC, are the
borrowers under the AFI DIP Facility. Residential Capital, LLC,
serves as guarantor.
AFI has committed to provide up to $150 million in financing.
Rescap wants to use no more than $85 million of the funds on an
interim basis.
Pursuant to the DIP credit agreement, the balance of AFI loan
will be available upon the entry of the final order approving the
DIP Facility. However, up to an additional $65 million in
postpetition draws may be made available to the AFI LOC Borrowers
under the AFI LOC if the AFI LOC Borrowers and AFI agree upon
written mutually satisfactory terms for such incremental
$70 million before the Final Hearing, solely to fund certain
repurchases of mortgage loans that were previously sold into the
Ginnie Mae Trusts.
Ginnie Mae is a federal agency that guarantees investors the
timely payment of principal and interest on mortgage-backed
securities backed by federally insured or guaranteed loans,
primarily loans insured by the Federal Housing Administration or
guaranteed by the Department of Veterans Affairs.
According to the Debtors, it is imperative that they obtain
financing to meet their Ginnie Mae Obligations because, pursuant
to the documents related to the sale of mortgage loans to Ginnie
Mae Trusts, if the Ginnie Mae Loans collectively exceed the
delinquency rate specified by Ginnie Mae, the Debtors are
obligated to repurchase a group of Ginnie Mae Loans sufficient to
decrease the delinquency rate below the specified level. Amounts
paid by the Debtors to repurchase Ginnie Mae Loans from the
Ginnie Mae Trusts are in substantial part reimbursable to the
Debtors, as each of these mortgage loans are either partially
insured by the FHA or partially guaranteed by the VA.
As an alternative to submitting a claim to HUD for reimbursement
by the FHA or VA in connection with repurchased Ginnie Mae loans,
the Debtors may also modify the repurchased loan and resell it
into a Ginnie Mae Trust, sell it to a third party, or retain it
in a Debtor-owned portfolio. In 2011, the Debtors were obligated
to, and did in fact, repurchase 4,721 mortgage loans with an
aggregate value of approximately $745 million from Ginnie Mae
securitization trusts in connection with delinquency thresholds,
the majority of which have been subsequently reimbursed by the
FHA and VA.
The Debtors also seek permission to use cash collateral of AFI
and the holders of the 9.625% Junior Secured Notes Due 2015, and
provide them with adequate protection for any diminution in value
of the collateral.
The Debtors intend to use the Cash Collateral of AFI and the
Junior Secured Noteholders to, among other things, fund only the
cash needs related to the operations -- including an allocated
portion of the costs to administer the bankruptcy cases based on
the asset values within each collateral pool -- and assets of
each of the collateral pools.
Each of AFI and the Junior Secured Noteholders has consented to
the use of their Cash Collateral.
As of the Petition Date, the Debtors owe at least:
$749,000,000 to AFI under a prepetition senior secured
credit facility;
$380,000,000 to AFI under letters of credit; and
$2,120,452,000 on account of the Junior Secured Notes.
U.S. Bank National Association serves as trustee for the benefit
of the Junior Secured Noteholders. Counsel to U.S. Bank is:
Eric R. Wilson, Esq.
Benjamin D. Feder, Esq.
KELLEY DRYE & WARREN LLP
101 Park Avenue
New York, NY 10178
E-mail: ewilson@kelleydrye.com
bfeder@kelleydrye.com
Wells Fargo Bank, N.A., serves as collateral agent under the
Junior Secured Note Documents.
An ad hoc group of holders of Junior Secured Notes is represented
by:
Gerard Uzzi, Esq.
Harrison Denman, Esq.
WHITE & CASE LLP
1155 Avenue of the Americas
New York, NY 10036
E-mail: guzzi@whitecase.com
hdenman@whitecase.com
About ResCap
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
The ResCap is selling its mortgage origination and servicing
businesses to Nationstar Mortgage LLC, and its legacy portfolio,
consisting mainly of mortgage loans and other residual financial
assets, to Ally Financial. Together, the asset sales are expected
to generate approximately $4 billion in proceeds.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Proposes to Use Citibank Cash Collateral
-------------------------------------------------------------
Residential Capital LLC and its affiliates seek authority from the
Bankruptcy Court to use the cash collateral of Citibank N.A. under
the Citibank MSR (mortgage servicing rights) Facility.
The Debtors contend it is important for them to have access to
the MSR Cash Collateral within the first week of the cases so
they can continue operating their mortgage loan servicing
business in the ordinary course.
The Debtors' business involve the servicing of over 2.4 million
mortgage loans and thus, their largest cash need, by far, is to
fund the servicing advances required under the servicing
agreements. To that end, the Debtors intend to use the MSR Cash
Collateral to fund only the cash needs related to their
operations -- including funding advances and loan repurchases the
Debtors are obligated to make in accordance with their servicing
agreements with Fannie Mae and Freddie Mac, which servicing
rights secure the Citibank MSR Facility, as well as an allocated
portion of the costs to administer the Bankruptcy Cases based on
the value of Citibank's collateral relative to the value of the
Debtors' other assets -- and assets of the Citibank MSR Facility
collateral pool.
The Debtors propose to segregate the MSR Cash Collateral and
deposit it into a new concentration account at JP Morgan Chase
Bank, N.A.
The Debtors prepared a 20-week cash flow projection for the MSR
Cash Collateral, a copy of which is available for free at:
http://bankrupt.com/misc/RESCAP_MSRCashCollBudget.pdf
Citibank MSR Facility
The Debtors and Citibank are parties to a prepetition revolving
facility. The Debtors own MSRs with a carrying value as of March
31, 2012 of $1.3 billion. GMAC Mortgage LLC is the borrower, and
Residential Capital LLC is the guarantor under the Citibank MSR
Facility.
Until March 30, 2012, the Facility consisted of a $300 million
committed line with an additional $250 million of uncommitted
capacity secured by MSRs for mortgage loans in Fannie Mae and
Freddie Mac securitization pools.
The Citibank MSR Facility, originally scheduled to terminate
March 30, 2012, was extended to the earlier of:
(i) two days prior to the maturity of the prepetition Ally
Financial Inc. Senior Secured Credit Facility and the
prepetition Ally Financial Inc. Secured Loan Agreement;
or
(ii) May 30, 2012.
As part of the extension, the Citibank MSR Facility is no longer
revolving and the Debtors repaid $124 million of the outstanding
principal.
The outstanding principal amount of all loans under the Citibank
MSR Facility as of the Petition Date is $152 million.
Adequate Protection
In exchange for the use of the MSR Cash Collateral, Citibank will
receive:
(i) Adequate Protection Liens on all of the collateral
securing the Citibank MSR Facility, which are senior to
the DIP Liens;
(ii) payment of interest at the non-default rate under the
Citibank MSR Facility and all fees and expenses payable to
Citibank under the Agreement; and
(iii) the Debtors will seek authority under any order approving
the sale of Citibank's collateral to provide for the
repayment of loans under the Citibank MSR Facility with
the proceeds of such collateral from the sale.
To the extent the Adequate Protection Liens are insufficient to
provide adequate protection, Citibank will receive superpriority
administrative expense claims to the extent of any diminution in
value of the collateral, the Debtors propose.
The Debtors further propose that they be allowed to use the MSR
Cash Collateral through (i) 18 months from the closing of the DIP
Facility; (ii) 45 days after entry of the Interim Order; (iii)
the effective date of a Chapter 11 plan for any Debtor with
assets exceeding $10 million; or (iv) the date on which maturity
of the DIP Facility is accelerated pursuant to the DIP Credit
Agreement as a result of an event of default.
About ResCap
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
The ResCap is selling its mortgage origination and servicing
businesses to Nationstar Mortgage LLC, and its legacy portfolio,
consisting mainly of mortgage loans and other residual financial
assets, to Ally Financial. Together, the asset sales are expected
to generate approximately $4 billion in proceeds.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Has Fortress, Ally-Led Back-Up Sale Process
----------------------------------------------------------------
Residential Capital LLC and its affiliates intend to sell their
mortgage origination and servicing businesses to Nationstar
Mortgage LLC, and their legacy portfolio, consisting mainly of
mortgage loans and other residual financial assets, to Ally
Financial Inc.
The Debtors are seeking approval to consummate the sales of their
assets under a Chapter 11 plan that will be filed in 30 days. In
the unlikely event, however, that the Debtors do not obtain
confirmation of the Plan, the Debtors, Ally Financial and other
settlement parties have agreed to the terms of a sale motion that
would allow the Debtors to pursue an alternative course of action
and immediately move forward with the sales under Section 363(b)
of the Bankruptcy Code.
The Debtors began soliciting offers for the assets prepetition.
According to the Debtors, Ally's offer was $200 million higher
than the next highest bid for the legacy portfolio. Nationstar's
offer was the highest bid for the largest portion of the Debtors'
assets and operations.
Majority of Nationstar is owned by investment funds managed by
affiliates of Fortress Investment Group, LLC.
Pursuant to the sale motion, the Debtors seek approval to
commence two sale transactions where Nationstar would be the
stalking horse bidder for the mortgage business, and Ally would
be opening the auction for the legacy portfolio.
The Debtors propose a Sept. 14, 2012 deadline for initial bids, a
Sept. 25 auction, and a sale hearing in October.
The auction will be conducted as a close auction, open only to
qualified bidders, due to the sensitive nature of the assets
being sold. The auction will take place on Sept. 25, 2012 at
10:00 a.m. (prevailing Eastern Time) at the offices of Morrison &
Foerster LLP, 1290 Avenue of the Americas, 39th Floor, New York,
New York 10104.
The purchased assets under the Nationstar Asset Purchase
Agreement also include mortgage servicing rights and servicer
advances belonging to Ginnie Mae. A qualified bidder can elect
to bid on the Ginnie Mae MSRs independently or as part of their
bid for all of the Nationstar Purchased Assets. The purchase
price for the Nationstar Purchased Assets is $2.3 billion, of
which approximately $200 million relates to the Ginnie Mae MSRs.
AFI is the proposed stalking horse bidder for the sale of the
Debtors' legacy portfolio, which consists mainly of mortgage
loans and other residual financial assets. In consideration for
the sale of the Purchased Assets under the AFI APA to BMMZ,
sellers will receive $1.6 billion if the sale is consummated
pursuant to a Chapter 11 plan of the Debtors, subject to
adjustment. If the sale is consummated pursuant to a section 363
sale outside of a Chapter 11 plan, the sellers will receive $1.4
billion, subject to adjustment.
This dual APA structure allows for certain combinations of sale
transactions, ensuring that the Debtors will receive the highest
or best value for the assets. A qualified bidder may bid on the
Nationstar Purchased Assets and/or the AFI Purchased Assets.
Alternatively, a qualified bidder may bid solely on the Ginnie
Mae MSRs, or the Ginnie Mae MSRs and the AFI purchased assets.
The Debtors believe it is imperative to move forward with the
sale process quickly because of the significant funding needed to
maintain the servicing business; their very limited access to
capital; and the ongoing concerns of various federal and state
regulatory authorities. In addition, approval is critical to
compliance with the Debtors' postpetition financing arrangements.
The Debtors say that while Ally Financial is an insider,
extensive measures have been taken to ensure the fairness of the
sale process.
The Debtors intend to deny credit bidding regarding the
Nationstar Purchased Assets. The Debtors says that their capital
structure is highly complex, and the assets are subject to liens
under five of their credit facilities. As a result, allowing a
bidder to credit bid in these circumstances would introduce
needless complexity into any auction process and complicate the
Debtors' ability to assess competing bids.
The Debtors propose bid protections for Nationstar. If the
Nationstar bid is not the successful bid, Nationstar will be
entitled to receive a break-up fee of $72 million (of which 8.44%
is allocable to the Ginnie Mae MSRs), plus reimbursement of
Nationstar's actual, reasonable, out-of-pocket expenses not to
exceed $10 million.
Nationstar is represented by:
SIDLEY AUSTIN LLP
Larry Nyhan, Esq.
Jessica C.K. Boelter
One South Dearborn,
Chicago Illinois 60603
Tel: (312) 853-7000
Fax: (312) 853-7036
E-mail: lnyhan@sidley.com
jboelter@sidley.com
AFI is represented by:
KIRKLAND & ELLIS LLP
Ray C. Schrock, Esq.
601 Lexington Ave
New York, New York 10022
Tel: (212) 446-4800
E-mail: rschrock@kirkland.com
-- and --
MAYER BROWN LLP
Elizabeth A. Raymond, Esq.
71 South Wacker Drive
Chicago, Illinois 60606
E-mail: eraymond@mayerbrown.com
About ResCap
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
The ResCap is selling its mortgage origination and servicing
businesses to Nationstar Mortgage LLC, and its legacy portfolio,
consisting mainly of mortgage loans and other residual financial
assets, to Ally Financial. Together, the asset sales are expected
to generate approximately $4 billion in proceeds.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Wants Schedules Filing Deadline Extended
-------------------------------------------------------------
Residential Capital LLC and its affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to extend the deadline
to file their schedules of assets and liabilities and statements
of financial affairs, through and including June 30, 2012.
Pursuant to Section 521 of the Bankruptcy Code and Rule 1007 of
the Federal Rules of Bankruptcy Procedure, the Debtors are
required within 14 days of the Petition Date, to file with the
Court (a) schedules of assets and liabilities; (b) schedules of
current income and expenditures; (c) statements of financial
affairs; (d) statements of executory contracts and unexpired
leases, and (e) a list of equity security holders. The Debtors'
current deadline to file the Schedules and Statements is
May 28, 2012.
Lauren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New
York, asserts that cause exists to grant the Debtors' additional
time to file the Schedules and Statements. She contends that the
Debtors have tens of thousands of creditors, and hundreds of
billions of dollars in assets and liabilities. Given the size
and complexity of their businesses, the Debtors have a
significant amount of information to prepare in order to file
their Schedules and Statements, she points out.
Moreover, the Debtors' business operations require them to
maintain voluminous books and records and complex accounting
systems, Ms. Nashelsky says. Consequently, collecting the
information necessary to complete the Schedules and Statements
will require substantial time and effort on the part of the
Debtors' employees, she maintains. She thus assures the Court
that the proposed extension will help to ensure that the Debtors'
Schedules and Statements are accurate and avoid the need for the
Debtors to file subsequent amendments.
About ResCap
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
The ResCap is selling its mortgage origination and servicing
businesses to Nationstar Mortgage LLC, and its legacy portfolio,
consisting mainly of mortgage loans and other residual financial
assets, to Ally Financial. Together, the asset sales are expected
to generate approximately $4 billion in proceeds.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
RESIDENTIAL CAPITAL: Fitch Lowers IDR to 'D' on Bankruptcy Filing
-----------------------------------------------------------------
Fitch Ratings has downgraded the Long-term Issuer Default Rating
(IDR) of Residential Capital LLC (ResCap) to 'D' from 'C'
following the company's filing of voluntary petition seeking
relief under Chapter 11 of the U.S. Bankruptcy code. In addition,
Fitch has maintained the Rating Watch Negative on the 'BB-' Long-
term IDR and senior unsecured debt rating of Ally Financial Inc.
and its subsidiaries.
Concurrent with its filing, ResCap announced that it has reached a
settlement agreement with Ally and some of its key creditors on
terms of a pre-arranged Chapter 11 plan. Under the settlement
agreement, Ally has agreed to take certain steps to support ResCap
during the Chapter 11 process, which among other terms include
release of all existing and potential claims between Ally and
ResCap, as well as release of all potential causes for action
against Ally by third parties. This settlement plan is subject to
Bankruptcy court approval.
If Ally is released from existing and potential claims this would
be a positive development, though litigation may continue to be an
overhang as creditors or third parties may challenge such a
release.
To facilitate ResCap's bankruptcy, Ally will be taking a $1.3
billion charge in 2Q12 ($750 million cash contribution to ResCap,
$400 million equity writedown, and $130 million related to
establishment of mortgage repurchase reserve at Ally Bank). Fitch
believes that while this charge is significant, it is manageable
for Ally in the context of its liquidity and the earnings the firm
generates from its auto finance operations.
As of March 31, 2012, Ally had $7.0 billion in liquidity comprised
of cash and marketable securities, with another $12 billion of
committed and unused credit capacity against $11.0 billion in
unsecured debt maturities due in 2012. The North American auto
finance operations have generated approximately $2.0 billion in
pre-tax income for the trailing twelve months ending March 31,
2012. Fitch notes that the above number includes contribution from
Ally's auto finance business in Canada, which along with Ally's
international auto operations are under strategic evaluation to
divest.
In addition, Ally's secured debt exposure of $1.4 billion with
ResCap consisting of $1.0 billion in a secured credit line and
$410 million in a secured letter of credit facility remains
outstanding as of March 31, 2012. Fitch views this as a material
exposure that remains outstanding, but will have recoveries
because they are secured.
Fitch also notes that as a result of Chapter 11 bankruptcy, ResCap
will be deconsolidated from Ally's financial statements. The
deconsolidation will likely lead to a decline in risk weighted
assets for regulatory capital purposes, offsetting some of the
losses incurred by Ally.
In resolving the Rating Watch on Ally, Fitch will focus on the
repayment of the secured debt facility with ResCap, monitor the
court approval process of the proposed settlement agreement with
ResCap and its creditors and assess the overall impact of these
actions on Ally's capital and liquidity position. Fitch will also
continue to monitor Ally's costs and access to funding for its
core auto business.
Fitch downgrades the following ratings:
ResCap
-- Long-term IDR to 'D' from 'C';
-- Short-term IDR to 'D' from 'C';
-- Senior unsecured to 'D' from 'C/RR6';
-- Short-term debt to 'D' from 'C'.
The following ratings remain on Rating Watch Negative:
Ally Financial Inc.
-- Long-term IDR 'BB-';
-- Senior unsecured 'BB-';
-- Viability rating 'bb-';
-- Perpetual preferred securities, series A 'CCC'.
GMAC Capital Trust I
-- Trust preferred securities, series 2 'B-'.
GMAC International Finance B.V.
-- Long-term IDR 'BB-';
-- Senior unsecured 'BB-';
GMAC Bank GmbH
-- Long-term IDR 'BB-';
-- Senior unsecured 'BB-';
Ally Credit Canada Limited
-- Long-term IDR 'BB-';
-- Senior unsecured 'BB-';
GMAC Financial Services NZ Limited
-- Long-term IDR 'BB-';
GMAC Australia LLC
-- Long-term IDR 'BB-'.
RIVIERA HOLDINGS: Swings to $4 Million Net Loss in First Quarter
----------------------------------------------------------------
Riviera Holdings Corporation filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $4.02 million on $20.86 million of net revenues for
the period ended Jan. 1, 2012, through March 31, 2012, compared
with net income of $82.80 million on $20.64 million of net
revenues for the period ended Jan. 1, 2011, through March 31,
2011.
The Company's balance sheet at March 31, 2012, showed $252.61
million in total assets, $113.62 million in total liabilities and
$138.98 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/g1JRhC
About Riviera Holdings
Riviera Holdings Corporation, through its wholly owned subsidiary,
Riviera Operating Corporation, owns and operates the Riviera Hotel
& Casino located in Las Vegas, Nevada, which consists of a hotel
comprised of five towers with 2,075 guest rooms, including 177
suites, and which has traditional Las Vegas-style gaming,
entertainment and other amenities.
In addition, Riviera Holdings, through its wholly-owned
subsidiary, Riviera Black Hawk, Inc., owns and operates the
Riviera Black Hawk Casino, a casino in Black Hawk, Colorado and
has various non-gaming amenities, including parking, buffet-styled
restaurant, delicatessen, a casino bar and a ballroom.
Riviera Holdings together with the two affiliates filed for
Chapter 11 on July 12, 2010 in Las Vegas, Nevada (Bankr. D. Nev.
Case No. 10-22910). Riviera Holdings estimated assets and debts
of $100 million to $500 million in its petition. Thomas H. Fell,
Esq., at Gordon Silver, represents the Debtors in the Chapter 11
cases. XRoads Solutions Group, LLC, is the financial and
restructuring advisor. Garden City Group Inc. is the claims and
notice agent.
Riviera Holdings' Second Amended Joint Plan of Reorganization was
confirmed on Nov. 17, 2010. Under the Plan, nearly $280 million
in debt will be replaced with a $50 million loan. Creditors will
receive new stock relative to what they are owed, and holders of
current stock will receive nothing. A total of $10 million in
working capital will come from the new owners, along with $20
million in loans to cover investments in the Las Vegas hotel.
The Plan of Reorganization became effective on Dec. 1, 2010, but
the Plan of Reorganization cannot be substantially consummated
until various regulatory and third party approvals are obtained.
The Substantial Consummation Date will be the 3rd business day
following the day the last approval is obtained.
* * *
In the April 25, 2012, edition of the TCR, Moody's Investors
Service downgraded Riviera Holdings Corporation's ratings and
placed the company's ratings on review for further possible
downgrade. Riviera's Corporate Family Rating ("CFR") was
downgraded to Caa1 from B3. The downgrade reflects the year over
year approximate $2.5 million EBITDA decline at Riviera Las Vegas'
property between fiscal fourth quarter 2011 and the prior year,
along with the fact that the property reported negative EBITDA of
about $8 million for fiscal 2011.
As reported by the TCR on July 5, 2011, Standard & Poor's Ratings
Services assigned its 'CCC+' corporate credit rating to Riviera
Holdings Corp.
"The 'CCC+' corporate credit rating reflects the company's high
debt leverage and vulnerable business position. Riviera operates
two properties (located in Blackhawk, Colo. and Las Vegas, Nev.)
with second-tier market positions in the highly competitive
markets," said Standard & Poor's credit analyst Michael Halchak.
"The rating also factors in the company's excess cash, which we
believe would support the company in the event of a moderate
decline in operating performance."
ROBERT LUPO: Murphy & King Wins $30,000 in Legal Fees
-----------------------------------------------------
Hanify & King, Professional Corporation, predecessor counsel to
the Debtor, on Dec. 23, 2010, filed an Application for
Compensation and Reimbursement of Expenses, seeking allowance of
fees in the sum of $189,502 and reimbursement of expenses in the
sum of $9,588 for services rendered to Robert N. Lupo from the
commencement of the Debtor's Chapter 11 case through June 29,
2010, when it was permitted to withdraw as counsel to the Debtor.
The Debtor's Chapter 11 case subsequently was converted to a case
under Chapter 7.
The Debtor objected to the Application on a number of grounds,
including counsel's alleged failure to fully explain to the Debtor
the consequences of the filing of a Chapter 11 petition and
counsel's alleged faulty advice to refrain from listing certain
properties of the estate in his bankruptcy schedules. In addition,
the Debtor asserted that counsel's fees were excessive; in a
subsequent submission, he asserted that H & K committed
malpractice.
The Court held an evidentiary hearing with respect to the
Application and the Objection, and determined that the Debtor's
Objection and additional claims for negligence and malpractice
were "without merit."
Pursuant to a Supplemental Application for Compensation and
Reimbursement of Expenses, Murphy & King PC seeks fees in the
amount of $38,677 and reimbursement of expenses in the amount of
$1,359, although it adds that it has agreed to voluntarily reduce
its request for compensation and expense reimbursement to $30,000
in the event it is not required to expend additional time
responding to objections to the Supplemental Application.
The Debtor objected on grounds that M & K should not be
compensated for time spent defending its original Application and,
in the event, the Court were to award M & K any fees, allowed fees
should be limited to 3% to 5% of the amount sought in its original
Application.
Bankruptcy Judge Joan N. Feeney noted that case law is unsettled
as to whether attorneys are entitled to fees for defending, as
opposed to preparing, fee applications. In all circumstances
involving fee applications, the bankruptcy court has an
independent judicial responsibility to review the fees of
professionals, even in the absence of objections.
In a ruling on Monday, Judge Feeney ruled that the Debtor's
objection to the Application was devoid of merit but,
nevertheless, contained potentially damaging allegations. The
judge held that a refusal to allow, or to arbitrarily cap, the
fees incurred by M & K in defense of the Application would reward
the Debtor for proffering an unmeritorious objection, while
penalizing M & K by, in effect, reducing the fees awarded to it
with respect to its Application.
"Having determined that the better reasoned decisions permit M & K
to recover attorneys' fees and expenses incurred in the defense of
the Application, the Court shall enter an order approving the
Supplemental Application. The Court reviewed the itemization of
services rendered and determined that the amount of time spent on
certain tasks was excessive. The Court's assessment of the amount
by which compensation for services rendered should be reduced,
however, did not exceed M & K' voluntary reduction of the
compensation it seeks for services rendered and reimbursement of
expenses," Judge Feeney said.
Accordingly, the Court overruled the Debtor's Objection to the
Supplemental Application and awarded M & K $30,000 for both
services rendered and reimbursement of expenses.
A copy of Judge Feeney's May 14, 2012 Memorandum is available at
http://is.gd/NNqfLCfrom Leagle.com.
Weston, Massachusetts-based Robert N. Lupo filed for Chapter 11
bankruptcy protection on December 10, 2009 (Bankr. D. Mass. Case
No. 09-21945). Andrew G. Lizotte, Esq., at Hanify & King, P. C.,
assists the Debtor in his restructuring effort. The Debtor
estimated $10 million to $50 million in assets and $1 million to
$10 million in liabilities.
The Bankruptcy Court on November 15, 2010, denied Mr. Lupo's
emergency motion to reconsider a prior order converting his case
to Chapter 7 effective September 18, 2010. This was the Debtor's
third attempt to vacate the Court's conversion of the case to
Chapter 7.
ROOFING SUPPLY: S&P Lowers Corporate Credit Rating to 'B'
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Dallas-based Roofing Supply Group LLC (RSG) to 'B' from
'B+'. "At the same time, we removed the ratings from CreditWatch
negative, where they were placed on April 24, 2012. The outlook is
stable," S&P said.
"At the same time, we assigned an issue-level rating of 'B' (the
same as the corporate credit rating) to RSG's proposed $290
million seven-year senior secured bank term loan B. The recovery
rating is '3', indicating our expectation of meaningful (50% to
70%) recovery for lenders in the event of a payment default. We
also assigned an issue-level rating of 'CCC+' (two notches below
the corporate credit rating) to the proposed $200 million of
senior unsecured notes due 2020, with a recovery rating of '6',
indicating our expectation of negligible recovery (0% to 10%)to
noteholders in the event of a default. These securities are being
issued pursuant to Rule 144A of the Securities Act of 1933 without
registration rights," S&P said.
"The company intends to use proceeds of the proposed notes and
term loan, together with cash-on-hand and $210 million of equity
from CD&R to fund the acquisition and to repay outstanding
borrowings, including its $225 million senior secured notes due
2017. Standard & Poor's affirmed its 'B+' rating on these notes
and removed them from CreditWatch. We will withdraw our rating on
these notes upon closing of the new transactions," S&P said.
"The downgrade reflects RSG's significant increase in leverage to
nearly 6x (adjusted for operating leases) due to the largely debt
financed acquisition of the company by private equity firm
Clayton, Dubilier & Rice LLC," said Standard & Poor's credit
analyst Thomas Nadramia. "This results in our assessment of a
highly leveraged financial profile with leverage measures we would
consider inconsistent with the prior rating given our view of the
company's 'weak' business risk profile. Our business risk
assessment incorporates modest but improving operating
profitability as a distributor, geographic diversity limited to
the U.S., a relatively small size and scale of operations, highly
competitive end markets, and exposure to volatile construction
cycles and unpredictable weather patterns," S&P said.
"Under our baseline scenario, we estimate leverage will likely
decline modestly over the next two years, improving to about 5x by
the end of 2013. We expect interest coverage of about 3.0x and
funds from operations (FFO) to total debt between 10% and 15% over
that period. We consider these credit measures to be consistent
with the current rating and our view of its highly leveraged
financial risk profile. Partially offsetting these risks is our
expectation that the company will maintain strong liquidity, due
to a very favorable capital structure (minimum debt and capex
requirements over the next several years), no financial ratio
maintenance requirements, positive cash flow generation and
significant availability under its $175 million asset-based
revolving credit facility," S&P said.
"Our baseline scenario assumes that RSG's roofing supply sales
will be flat to up to 1% to 2% in 2012 despite our economist's
expectation of 740,000 housing starts in 2012, a 21% increase over
2011. This should help boost demand for RSG's roofing products.
Offsetting this increase in sales is the likelihood that in 2012
there will be less demand generated by storm activity in the U.S.,
which was substantially above average in 2011. However, RSG
benefits from relatively stable demand because over 80% of its
current sales come from necessary repairs and replacement, which
are largely non-discretionary," S&P said.
"We are maintaining a positive long-term view of the roofing
industry, given an aging housing stock and high percentage of
replacement business (currently more than 80% for Roofing Supply
Group). We view roof replacement as largely nondiscretionary, with
limited ability on the part of consumers to defer replacement over
the long term. Weather can also play a significant role, as
repairs required after hurricanes and other severe storms often
cause an increase in roofing sales, and stable weather patterns
can result in less demand. Still, the market is highly fragmented
and RSG faces intense competition from both larger, better
capitalized companies and smaller local players," S&P said.
Roofing Supply Group is the fourth largest distributor of roofing
materials and supplies in the U.S., with 59 branches in 24 states
serving a diverse group of roofing contractors, home builders, and
retailers.
"The outlook is stable. We expect end-market demand for RSG's
roofing products to be relatively flat over the next 12 months
because demand caused by the expected improvement in housing
starts will be offset by less storm activity compared with 2011.
As a result, we expect credit metrics to remain in line with a
highly leveraged financial risk profile, with adjusted leverage
improving to about 5x by the end of 2013. In addition, we believe
liquidity, in terms of cash, availability under the revolving
credit facility, and cash flow from operations will be more than
sufficient to meet the company's seasonal working capital needs
and other obligations, including $5 million to $7 million of
estimated capital expenditures and about $30 million of annual
interest expense," S&P said.
"In our view, we could consider raising the ratings if RSG's
operating prospects during the next several quarters exceed our
current expectation due to stronger-than-expected housing starts
and higher roof replacement volumes because of increased consumer
confidence. Under this scenario, the company's adjusted leverage
could improve to 5x or below on a sustained basis," S&P said.
"Although we think a downgrade is unlikely the near term, we could
take a negative rating action during this period if raw material
cost volatility or intense price competition brings operating
margins to below 5%, causing the company's credit measures to
deteriorate below expected levels, or if the company pursued an
aggressive acquisition or dividend policy. Specifically, we could
lower the ratings if leverage exceeded 7x," S&P said.
ROTECH HEALTHCARE: Moody's Says Billing Errors Credit Negative
--------------------------------------------------------------
Moody's Investors Service said that the announcement on May 11,
2012 by Rotech Healthcare, Inc. that an internal review which
uncovered billing errors and would cause it to delaying the filing
of its quarterly form 10-Q for the quarter ended March 31, 2012
was a credit negative, but would have no immediate impact on its
ratings.
The last rating action on Rotech Healthcare, Inc. was a downgrade
of the company's Corporate Family Rating to B3 on January 11,
2012.
The principal methodology used in rating Rotech Healthcare was the
Global Healthcare Service Providers Methodology published in
December 2011. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Rotech Healthcare Inc., headquartered in Orlando, Florida, is one
of the largest providers of home medical equipment and related
products and services in the US, with a comprehensive offering of
respiratory therapy and durable home medical equipment and related
services. Rotech provides equipment and services in 48 states
through approximately 425 operating centers located primarily in
non-urban markets.
RUBICON FINANCIAL: Court Reinstates AMIN Securities Lawsuit
-----------------------------------------------------------
Rubicon Financial Incorporated, on Dec. 7, 2011, was served with a
notice of entry of judgment on sister-state judgment resulting
from a default judgment entered against the Company from the
District Court of Harris County, Texas, 281st Judicial District on
or about Aug. 19, 2011. The Default Judgment was granted to
American International Industries, Inc., against the Company in
the amount of $2,030,114.
On May 1, 2012, the District Court of Harris County, Texas,
granted the Company a final summary judgment on bill of review
against AMIN. The summary judgment set aside and rendered the
Default Judgment without force or effect.
Further, the final summary judgment reinstated the case (Cause No.
2010-14604) styled AMIN v. Rubicon Financial Incorporated. The
Company has filed a special appearance, plea to the jurisdiction
and original answer to the case, which is set to be heard by the
Harris County court on June 1, 2012.
AMIN's suit alleges breach of contract, rescission, fraudulent
inducement, common law fraud and fraud in the sale of securities
relating to a November 2007 Stock Purchase and Investment
Agreement between the Company and AMIN. The agreement with AMIN
was for an aggregate of $2,000,000 through the sale and issuance
of 1,000,000 shares of the Company's restricted common stock for
$2.00 per share. Pursuant to the agreement, the Company issued
1,000,000 shares of its restricted common stock in exchange for
payment by AMIN of $1,000,000 in cash and the issuance of 200,000
shares of AMIN's restricted common stock, valued at $5.00 per
share based on the trading price of AMIN's common stock at the
time.
The Company believes AMIN's claims are totally without merit and
intends to vigorously defend itself from this malicious suit.
However, the Company can provide no assurance as to the ultimate
outcome of this matter.
Irvine, Calif.-based Rubicon Financial Incorporated is a financial
services holding company. The Company operates primarily through
Newport Coast Securities, Inc., a fully-disclosed broker-dealer,
which does business as Newport Coast Asset Management as a
registered investment advisor and dual registrant with the
Securities and Exchange Commission and Newport Coast Securities
insurance general agency.
For 2011, Weaver Martin & Samyn, LLC, in Kansas City, Missouri,
expressed substantial doubt about Rubicon Financial's ability to
continue as a going concern. The independent auditors noted that
the Company has suffered recurring losses and had negative cash
flows from operations.
The Company's balance sheet at Dec. 31, 2011, showed $5.1 million
in total assets, $4.8 million in total liabilities, and
stockholders' equity of $277,377.
Rubicon Financial reported a net loss of $2.0 million
in 2011, compared with a net loss of $1.7 million in 2010.
RUDEN MCCLOSKY: Says It Already Paid $4.6MM Wells Fargo Debt
------------------------------------------------------------
Jamie Santo at Bankruptcy Law360 reports that Ruden McClosky PA on
Monday asked a Florida federal judge to disallow a $4.6 million
claim made by Wells Fargo Bank NA, asserting its debt to the bank
was satisfied in full when the firm and most of its assets were
sold in November.
About Ruden McClosky
Founded in 1959, Ruden McClosky P.A., fdba Ruden, McClosky, Smith,
Schuster & Russell, P.A. -- http://www.ruden.com/-- was a full-
service law firm serving the legal needs of clients throughout
Florida, the U.S., and internationally. It had eight offices in
Florida.
In August 2011, the firm was reportedly in merger talks with
Cleveland, Ohio-based Benesch firm. In September 2011, founder
Donald McClosky died after a long battle with cancer.
Ruden McClosky filed for Chapter 11 protection (Bankr. S.D. Fla.
Case No. 11-40603) on Nov. 1, 2011, in its hometown of Fort
Lauderdale, with a plan to sell a substantial portion of its
assets for $7.6 million to Fort Lauderdale-based Greenspoon
Marder, subject to higher and better offers at an auction.
Judge Raymond B. Ray oversees the case. Leslie Gern Cloyd, Esq.,
and Paul Steven Singerman, Esq. -- lcloyd@bergersingerman.com and
singerman@bergersingerman.com -- at Berger Singerman, P.A., serve
as the Debtor's counsel. Development Specialists, Inc., serves as
the Debtor's restructuring advisors. The Debtor tapped Steven J.
Gutter, P.A., as its special litigation counsel in connection with
collection of accounts receivable, and authorization to settle
accounts receivable claims in the ordinary course of business.
The petition was signed by DSI's Joseph J. Luzinski, who serves as
chief restructuring officer. Kurtzman Carson Consultants LLC
serves as the Debtor's claims and noticing agent. In its
petition, the Debtor estimated $10 million to $50 million in both
assets and debts.
An official committee of unsecured creditors has been appointed in
the case, and is represented by Segall Gordich, P.A. The
Committee tapped Soneet Kapila, CPA, and the firm of Kapila &
Company as its financial advisor.
Counsel to the Debtor's lender, Wells Fargo Bank, N.A., is
Jonathan Helfat, Esq., at Otterbourg, Steindler, Houston & Rosen,
P.C. Counsel to Greenspoon Marder, the proposed purchaser, is R.
Scott Shuker, Esq., at Latham, Shuker, Eden & Beaudine, LLP.
SAGE PHYSICIAN: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Sage Physician Partners, Inc.
dba American Physician Housecalls
5700 Granite Parkway, Suite 200
Plano, TX 75024
Bankruptcy Case No.: 12-41314
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
Eastern District of Texas (Sherman)
Debtor's Counsel: Larry A. Levick, Esq.
SINGER & LEVICK, P.C.
16200 Addison Road, Suite 140
Addison, TX 75001
Tel: (972) 380-5533
Fax: (972)380-5748
E-mail: levick@singerlevick.com
- and ?
Michelle E. Shriro, Esq.
SINGER & LEVICK, P.C.
16200 Addison Road, Suite 140
Addison, TX 75001
Tel: (972) 380-5533
Fax: (972) 380-5748
E-mail: mshriro@singerlevick.com
Estimated Assets: $0 to $50,000
Estimated Debts: $10,000,001 to $50,000,000
A copy of the Company's list of its 20 largest unsecured creditors
filed with the petition is available for free at:
http://bankrupt.com/misc/txeb12-41314.pdf
The petition was signed by Christopher L. McAdam, president.
SALLY HOLDINGS: Moody's Rates $700MM Sr. Unsecured Notes 'Ba3'
--------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Sally Holdings
LLC's proposed $700 million senior unsecured note offering, and
changed the company's ratings outlook to positive from stable.
Sally's Ba3 Corporate Family and Probability of Default ratings,
and its SGL-1 Speculative Grade Liquidity Rating, were all
affirmed.
Proceeds from the proposed note offering will be used to refinance
the company's senior secured term loan due 2013 and to pay a
portion of the amount outstanding under its senior secured
revolving credit facility (not rated by Moody's). The assigned
rating is subject to review of final documentation and closing of
the proposed refinancing transaction.
Moody's took the following actions on Sally Holdings LLC:
Rating assigned:
-- $700 million senior unsecured notes due 2022 at Ba3 (LGD4,
58%)
Ratings affirmed:
-- Corporate Family Rating at Ba3;
-- Probability of Default Rating at Ba3;
-- Speculative Grade Liquidity rating at SGL-1
Rating affirmed and likely to be upgraded to Ba3 upon successful
completion of the refinancing transaction, as per Moody's Loss
Given Default Methodology. The transaction will eliminate a
substantial portion of secured debt ahead of the unsecured debt in
the proposed capital structure.
-- $750 million senior unsecured notes due 2019 at B1 (LGD5,
77%)
Ratings affirmed, to be withdrawn at the completion of the
refinancing transaction:
-- Senior secured term loan-B to Ba2 (LGD2, 29%);
Moody's also took the following actions on Sally Beauty Holdings,
Inc. and Sally Capital, Inc.:
Rating assigned:
-- Senior unsecured shelf of Sally Beauty Holdings, Inc. at
(P)Ba3
-- Senior unsecured shelf of Sally Capital, Inc. at (P)Ba3
Ratings Rationale
"The change in outlook to positive reflects the sustained
improvement in Sally's operating performance and credit metrics,
and its very-good liquidity" stated Moody's analyst, Mike Zuccaro.
"We believe that the company will continue to demonstrate
profitable growth while maintaining a more balanced financial
policy such that leverage is maintained within the company's
targeted range of 2.0 - 2.5x (approximately 3.5 -- 4.0x on a
Moody's lease-adjusted basis)."
Sally's Ba3 Corporate Family Rating is supported by its solid
market position in the professional beauty supply market, steady
performance through economic cycles, geographic diversity, and
improved merchandising focus which Moody's expects will continue
to benefit the company's margins. Sally's liquidity is very good,
supported by the expectation that operating cash flow and ample
revolver availability will be more than sufficient to cover
working capital and capital spending over the next twelve months.
The rating is constrained by the company's high debt load, despite
recent reductions, and continued risk for a more aggressive
financial policy given significant, yet declining, private equity
ownership.
An upgrade of the Corporate Family Rating would require comfort on
Moody's part that Sally's financial policies will remain balanced
with respect to uses of cash, including any potential dividends,
share repurchases or acquisitions. An upgrade will also require
the company to maintain solid liquidity, including the refinancing
of its term loan that matures in November 2013. Quantitatively,
debt/EBITDA sustained below 4.0 times while maintaining
EBITA/Interest above 3.25 times could result in a ratings upgrade.
A downgrade of the Corporate Family Rating could occur if
operating performance were to show signs of deterioration, or use
of cash outside of expectations, particularly if financial
policies were to become aggressive. A lower rating could also stem
from weakened liquidity, particularly if the company cannot
refinance its term loan well ahead of its maturity.
Quantitatively, debt/EBITDA rising above 4.5 times or
EBITA/interest falling below 2.5 times on a sustained basis could
lead to a ratings downgrade.
The principal methodology used in rating Sally Holdings LLC was
the Global Retail Industry Methodology published in June 2011.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Sally Holdings LLC, based in Denton, Texas, is an international
retailer and distributor of beauty supplies. Its two subsidiaries,
Sally Beauty Supply and Beauty Supply Group (BSG), sell and
distribute beauty products to individual retail consumers and
salon professionals. Products are distributed through a network of
over 4,300 stores in 12 countries. Revenues exceeded $3.4 billion
for the twelve month period ended March 31, 2012.
SHINER CHEMICALS: Wants Involuntary Petition Dismissed
------------------------------------------------------
Shiner Chemicals LLC has renewed a request asking the Bankruptcy
Court to dismiss an involuntary bankruptcy petition against it.
Judge George B. Nielsen, Jr., of the Bankruptcy Court for the
District of Arizona entered an order reinstating the involuntary
Chapter 11 case against Shiner Chemicals on March 26, 2012.
However, the Debtor contends that a bona fide dispute exists as to
the claim amount and terms of repayment for the debts alleged by
Peter J. Workum and M&O Holdings.
Shiner Chemicals believes the involuntary petition was filed in
bad faith, and will seek an award of attorneys fees and costs.
The involuntary petition was originally filed by Aaron J.
Valenzuela, Sherri S. Parkin and Peter J. Workum. Mr. Valenzuela
and Ms. Parkin subsequently withdrew as petitioning creditors.
These creditors have joined the involuntary petition: Tianjin Pool
and Spa, Loong Industries and M&O Holdings.
According to James M. McGuire, Esq., at Davis Miles McGuire
Gardner LLC, Tianjin has agreed to withdraw as a petitioning
creditor. Loong also has agreed to withdraw as a petitioning
creditor upon receipt of good faith payment, and a personal
guarantee from Chad Kennedy. Upon receipt of the payment and
guarantee, Loong demanded more money. There is now also a bona
fide dispute as to the repayment terms of the amounts owed to
Loong.
In a prior motion to dismiss, the Debtor admitted borrowing money
from Mr. Workum. However, subsequent correspondence with counsel
for M&O suggests that M&O may in fact have been the lender of
those funds. In any event, Mr. McGuire says the amount of the
claim is subject to a bona fide dispute, and despite ample time to
provide evidence, such as a cancelled check, or bank wire, Mr.
Workum has not met his initial burden to show that there is no
bona fide dispute as to the debt.
Mr. McGuire contends that, even if the burden had been met, the
alleged amount owed is unfounded and arbitrary. The original
amount borrowed was $25,000, to be repaid with $3,000 interest.
These terms were orally agreed to. Later, when Mr. Kennedy
informed Mr. Workum that the payment may be later than
anticipated, Mr. Workum accepted and added no additional terms.
When Mr. Kennedy tried to pay back Mr. Workum the agreed upon
$28,000, Mr. Workum refused. Mr. Workum demanded an additional
$5,000 in interest because the payment was now "late." Now, Mr.
Workum is claiming the amount owed has grown to $40,700. The
reasoning behind this amount is entirely unknown, and the Shiner
Chemicals denies the money is owed. Thus, Mr. Workum's claim is
subject to a bona fide dispute. With respect to M&O, there is
also a genuine dispute as to both amount and liability.
As reported in the Troubled Company Reporter, the involuntary
Chapter 11 case of Shiner Chemicals was dismissed at a hearing
conducted by the U.S. Bankruptcy Court on Jan. 10, 2012. The
petitioning creditors neither filed an objection to the dismissal
motion nor appeared at the hearing.
On Jan. 20, 2012, the original petitioning creditors filed a
motion with the Court to both reinstate the case and add
additional petitioning creditors, complaining that they were not
served with notice of the hearing.
The Court cannot locate a filed certificate of service
establishing that either the movant alleged debtor or the
Bankruptcy Noticing Center provided the petitioning creditors with
notice of the dismissal hearing.
About Shiner Chemicals
Aaron J. Valenzuela, Sherri S. Parkin and Peter J. Workman filed
an involuntary Chapter 11 petition against Shiner Chemicals, LLC
(Bankr. D. Ariz. Case No. 11-27955) on Oct. 3, 2011. Judge George
B. Nielsen, Jr., presides over the case. Chad B. Kennedy and Orlo
D. Ison are the sole members of the Debtor. James M. McGuire,
Esq., at Davis Miles, PPLC, represents the Alleged Debtor as
counsel.
SOMERSET MEADOWS: U.S. Trustee Unable to Form Committee
-------------------------------------------------------
The United States Trustee said an official committee under 11
U.S.C. Sec. 1102 has not been appointed in the bankruptcy case of
Duvall-Watson and Somerset Meadows LLC because an insufficient
number of persons holding unsecured claims against the Debtors
have expressed interest in serving on a committee. The U.S.
Trustee reserves the right to appoint such a committee should
interest developed among the creditors.
The Debtor set the bar date for filing proofs of claim and
administrative expense claims on May 10, 2012.
Duvall-Watson LLC is a real estate development company formed to
develop a residential real estate project in Longmont, Colorado.
The project, including land owned by Duvall-Watson and Somerset
Meadows LLC, contains 18 finished lots and 177 preliminary
approved lots in subdivisions known as Somerset Meadows and The
Highlands at Somerset Meadows.
Duvall-Watson LLC and Somerset Meadows LLC filed for Chapter 11
bankruptcy (Bankr. D. Colo. Case Nos. 11-39586 and 11-39584) on
Dec. 27, 2011. Each Debtor estimated $10 million to $50 million
in assets and debts. Judge Howard R. Tallman presides over the
case.
SPECTRE PERFORMANCE: Files for Chapter 11 in Riverside, Calif.
--------------------------------------------------------------
Spectre Performance, formerly known as Spectre Industries, filed a
Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in
Riverside, California, on May 14, 2012.
Ontario, California-based Spectre Performance disclosed $10.2
million in assets and $17.7 million in liabilities. Secured
claims total $3.7 million. A copy of the schedules attached to
the petition is available for free at
http://bankrupt.com/misc/cacb12-21890.pdf
According to the statement of financial affairs, sales were $8.35
million in January to May 10 2012, $20.5 million for 2011 and
$20.5 million in 2010.
The Debtor expects that funds will be available for distribution
to unsecured creditors.
Amir Rosenbaum founded the company in 1983 by selling hose
covering NylaBraid. Now the company is a manufacturer of
performance racing autoparts. Spectre Performance --
http://www.spectreperformance.com/-- makes air and fuel
accessories, including cold air intake systems to pack cool air to
the engine, fuel lines and hoses for plumbing the engine, and
chrome hardware and valve covers for dressing the bay.
SPECTRE PERFORMANCE: Case Summary & 15 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Spectre Performance
fka Spectre Industries, Inc.
1720 S. Carlos Avenue
Ontario, CA 91761
Bankruptcy Case No.: 12-21890
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
Central District of California (Riverside)
Judge: Mark D. Houle
About the Debtor: According to http://www.spectreperformance.com/,
Amir Rosenbaum founded the company in 1983 by
selling hose covering NylaBraid. Now the
company is a manufacturer of performance racing
autoparts.
Debtor's Counsel: Leonard M. Shulman, Esq.
SHULMAN HODGES & BASTIAN LLP
8105 Irvine Center Drive, Suite 600
Irvine, CA 92618
Tel: (949) 340-3400
Fax: (949) 340-3000
E-mail: lshulman@shbllp.com
Scheduled Assets: $10,236,430
Scheduled Liabilities: $17,666,722
The petition was signed by Amir Rosenbaum, president.
Debtor's List of Its 15 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
K&N Engineering Inc. False Advertising $9,440,086
601 S. Figueroa Street, Suite 3900 Lawsuit
Los Angeles, CA 90017
Polestar/HKR Hardware & Tools Product $1,552,850
Fuzhou Export
Processing Zone
Tingjiang Town, Mawei
Dist, Fuzhou China
Performance Fabrication Vehicle Repair $564,108
1701 Industrial Road and Mod
San Carlos, CA 94070
M2 Studios, LLC Marketing Consultant $23,138
Campbell Auto Restoration Vehicle Repair $21,730
and Mod
Hardware Sales Co Representative $20,871
Flashcraft Inc. (CAD Company) Product $16,320
Kahn Media Public Relations $16,000
YRC Freight $6,710
The Promotion Company Inc. Sponsorship Agreement $6,000
Fedex Freight $4,642
Hirsig-Frazier Company, I Representative $3,816
Tekpro Group Prototype Material $1,711
Avery Anthony and Zina Class Action Lawsuit $0
Philip Moreno Notice Purposes Only $0
SPEEDY CASH: S&P Affirms 'B' Issuer Credit Rating; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' issuer credit
rating on Speedy Cash Holdings Corp. (SC). The outlook remains
stable. Standard & Poor's also said that it affirmed its 'B'
senior secured issue credit rating and '4' recovery rating on the
firm's upsized $325 million senior secured notes.
"The affirmations followed the issuance of an additional $75
million of notes under the same indenture as the existing senior
secured notes and reflect our view that SC's leverage will be in
line with the current ratings," said Standard & Poor's credit
analyst Igor Koyfman. "Concurrently with the new issuance, SC will
exercise an accordion feature that will increase its capacity
under its existing U.S. revolving credit facility by $10 million
to $30 million."
"The ratings are based on the company's exposure to legislative
and regulatory risks, the operational risks associated with the
ongoing integration of Canada-based Cash Money, the moderate
concentration in several U.S. states and in Ontario, and the
negative tangible equity. The company's good cash flows and
profitability metrics, its improved diversification with the
acquisition of Cash Money, and the moderate credit risk associated
with its loan products mitigate the weaknesses," S&P said.
"The stable outlook reflects our expectation that SC will continue
to maintain good cash flow and profitability metrics,' said Mr.
Koyfman. 'We could lower the rating if adverse legislative or
regulatory actions lead to a material decline in earnings.' We
could also consider lowering the rating if EBITDA leverage
(measured as debt to EBITDA) exceeds 5.0x. We could raise the
rating if SC increases its product and geographic diversification
without significantly increasing leverage. However, an increase in
regulatory risk would ultimately worsen the company's business
profile and offset any diversification improvements," S&P said.
STOCKTON, CA: Still Lacks Solution to Financial Problems
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Stockton, California, still doesn't have a solution
to its financial problems, leaving a Chapter 9 municipal
bankruptcy filing as an alternative along with large cuts in
expenses and concessions from creditors.
Ralph Mabey, a former U.S. bankruptcy judge, was selected as
mediator to conduct negotiations between the city and its
creditors.
Stockton, buckling under the weight of retiree health insurance
obligations, large bond sales, big labor contracts, loss of
revenue and poor financial practices, is taking advantage of a new
California law that lets municipalities in financial distress
confidentially mediate with creditors or "interested parties" with
$5 million or more in obligations or debt,
As reported in the Troubled Company Reporter on March 14, 2012,
Stockton was sued by the indenture trustee after failing to make a
payment of about $780,000 due Feb. 25 on $32.8 million in parking
garage revenue bonds. The city council voted in February to
default on about $2 million in bond payments as a prelude under
state law for conducting workout negotiations with bondholders.
STONER AND COMPANY: U.S. Trustee Seeks Case Dismissal
-----------------------------------------------------
The United States Trustee asks the Bankruptcy Court to dismiss the
Chapter 11 case of Stoner and Company.
Cause exists for the dismissal of the case under 11 U.S.C. Sec.
1112(b)(4)(H) because Debtor has disregarded its obligation to
timely file monthly operating reports since the inception of the
case, the U.S. Trustee said. Monthly operating reports are
required by the U.S. Trustee's Operating Guidelines and Reporting
Requirements dated Dec. 16, 2009. The reports must be filed by
the 21st day of each month following the end of the month covered
by the report. The monthly operating reports are critical as they
allow the U.S. Trustee to oversee a debtor's administration of the
bankruptcy case. Moreover, timely filing of the monthly operating
reports allow the U.S. Trustee to properly calculate fees imposed
upon a debtor by 28 U.S.C. Sec. 1930.
The U.S. Trustee also said cause exists for case dismissal under
11 U.S.C. Sec. 1112(b)(4)(A) due to substantial or continuing loss
to or diminution of the estate and the absence of a reasonable
likelihood of rehabilitation.
Stoner and Company, based in Fort Collins, Colorado, filed for
Chapter 11 bankruptcy (Bankr. D. Colo. Case No. 12-10429) on
Jan. 11, 2012. Judge Elizabeth E. Brown presides over the case.
Daniel W. Alexander, Esq., serves as the Debtor's counsel. In its
petition, the Debtor estimated $10 million to $50 million in
assets and $100,001 to $500,000 in debts. The petition was signed
by Jay D. Stoner, president.
TELETOUCH COMMUNICATIONS: Maturity of EWB Loan Extended to Aug. 3
-----------------------------------------------------------------
East West Bank approved an extension on the maturity date of the
loan with Teletouch Communications, Inc., to Aug. 3, 2012, in
consideration of a one-time fee of $5,391. On May 8, 2012,
Jardine Capital Corp. approved a one-time extension of the term of
its loan to the Company to Aug. 3, 2012, in consideration of a
loan commitment fee in the amount of approximately $2,758. The
current balance on the EWB loan is approximately $2,147,105, and
this loan is collateralized by a first lien on a building and land
in Fort Worth, Texas owned by the Company. The current balance on
the Jardine Capital loan is approximately $551,378 and this loan
is collateralized by a second lien on the same property owned by
the Company.
About Teletouch
Teletouch Communications, Inc., offers a comprehensive suite of
wireless telecommunications solutions, including cellular, two-way
radio, GPS-telemetry and wireless messaging. Teletouch is an
authorized provider of AT&T (NYSE: T) products and services
(voice, data and entertainment) to consumers, businesses and
government agencies, as well as an operator of its own two-way
radio network in Texas. Recently, Teletouch entered into national
agency and distribution agreements with Sprint (NYSE: S) and
Clearwire (NASDAQ: CLWR), providers of advanced 4G cellular
network services. Teletouch operates a chain of 26 retail and
agent stores under the "Teletouch" and "Hawk Electronics" brands,
in conjunction with its direct sales force, customer care (call)
centers and various retail eCommerce Web sites including:
http://www.hawkelectronics.com/and http://www.hawkexpress.com/
Through its wholly-owned subsidiary, Progressive Concepts, Inc.,
Teletouch operates a national distribution business, PCI
Wholesale, primarily serving large cellular carrier agents and
rural carriers, as well as auto dealers and smaller consumer
electronics retailers, with product sales and support available
through http://www.pciwholesale.com/and
http://www.pcidropship.com/among other B2B oriented Web sites.
As reported by the TCR on Sept. 1, 2011, BDO USA, LLP, in Houston,
Texas, noted that the Company has increasing working capital
deficits, significant current debt service obligations, a net
capital deficiency along with current and predicted net operating
losses and negative cash flows which raise substantial doubt about
its ability to continue as a going concern.
The Company's balance sheet at Feb. 29, 2012, showed
$18.35 million in total assets, $24.81 million in total
liabilities, and a $6.45 million total shareholders' deficit.
TOUSA INC: 11th Cir. Says Lenders Liable for Fraudulent Transfer
----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that creditors of homebuilder Tousa Inc. won a victory
over bank lenders when the U.S. Court of Appeals for the Eleventh
Circuit in Atlanta reversed the district court and reinstated a
bankruptcy judge's ruling that the banks were liable for a $403
million fraudulent transfer.
The suit involves allegations by creditors about a $500 million
secured loan made six months before bankruptcy. The loan was
taken so Tousa could bail out and refinance a joint venture in a
homebuilder named Transeastern Properties Inc. The banks
succeeded in reversing the bankruptcy judge by convincing the
district court in February 2011 that lenders gave enough indirect
value to avoid a fraudulent transfer by enabling Tousa to avoid
immediate bankruptcy.
But, according to the report, Circuit Judge William H. Pryor Jr.
recited in his 41-page opinion how U.S. Bankruptcy Judge John K.
Olson determined that the benefits from avoiding bankruptcy for
the time being "were not close to being reasonably equivalent in
value to the $403 million of obligations they incurred." Judge
Pryor and the two other judges on the circuit court panel found a
fraudulent transfer because subsidiaries gave liens on their
property to secure payment of a loan made only to the Tousa
parent. Judge Pryor said that Judge Olson's findings of
insufficient value flowing to the subsidiaries wasn't "clearly
erroneous" and thus should be upheld.
Mr. Rochelle notes that the Tousa creditors' didn't attain total
victory. Judge Pryor only ruled that there was liability for a
fraudulent transfer. He sent the case back to the district judge
to rule on whether the bankruptcy court was correct in what he
directed the lenders to give back.
The appeals court ruling is Citicorp North America Inc. v.
Official Committee of Unsecured Creditors (In re Tousa Inc.),
11-11071, U.S. Court of Appeals for the 11th Circuit (Atlanta).
The appellate ruling is 3V Capital Master Fund Ltd. v. Official
Creditors' Committee of Tousa Inc. (In re Tousa Inc.),10-60017,
U.S. District Court, Southern District of Florida (Miami).
A copy of the Eleventh Circuit's May 15 decision is available at
http://is.gd/cbeCEqfrom Leagle.com.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA, Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. As of 2006, TOUSA was the 13th
largest homebuilding enterprise in the country.
The Debtor and its debtor-affiliates filed for separate
Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case
No. 08-10928). Richard M. Cieri, Esq., M. Natasha Labovitz,
Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in
New York, N.Y.; and Paul S. Singerman, Esq., at Berger Singerman,
in Miami, Fla., represent the Debtors in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It estimated assets and
debts of $1 million to $10 million in its Chapter 11 petition.
The official committee of unsecured creditors has filed a proposed
chapter 11 liquidating plan for Tousa. However, the committee
said it would no longer pursue approval of its liquidation plan
because of the pending appeal of its fraudulent transfer case in
the U.S. Court of Appeals for the Eleventh Circuit. A district
court in February 2011 held that the bankruptcy judge was wrong in
ruling that lenders who were paid off received fraudulent
transfers when Tousa gave liens on subsidiaries' properties to
bail out and refinance a joint venture. Daniel H. Golden, Esq.,
and Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld LLP,
in New York, N.Y., represent the creditors committee.
The Tousa committee filed a Chapter 11 plan in July 2010 based on
an assumption it would win the appeal.
TOUSA INC: 11th Circ. Backs Broad Fraudulent-Transfer Liability
---------------------------------------------------------------
A federal appeals court has reversed a lower court decision
involving the bankruptcy of Florida homebuilder Tousa Inc.
Max Stendahl at Bankruptcy Law360 reports that Eleventh Circuit
ruled Tuesday that a bankruptcy court may force a creditor to
disgorge funds it received from a debtor if the funds were
acquired through a fraudulent transfer,
The decision, according to Law360, backed a broad view of
liability while ruling against entities that lent money to
homebuilder Tousa.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA, Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West.
The Debtor and its debtor-affiliates filed for separate
Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case
No. 08-10928). Richard M. Cieri, Esq., M. Natasha Labovitz,
Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in
New York, N.Y.; and Paul S. Singerman, Esq., at Berger Singerman,
in Miami, Fla., represent the Debtors in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It estimated assets and
debts of $1 million to $10 million in its Chapter 11 petition.
The official committee of unsecured creditors has filed a proposed
chapter 11 liquidating plan for Tousa. However, the committee
said it would no longer pursue approval of its liquidation plan
because of the pending appeal of its fraudulent transfer case in
the U.S. Court of Appeals for the Eleventh Circuit. A district
court in February 2011 held that the bankruptcy judge was wrong in
ruling that lenders who were paid off received fraudulent
transfers when Tousa gave liens on subsidiaries' properties to
bail out and refinance a joint venture. Daniel H. Golden, Esq.,
and Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld LLP,
in New York, N.Y., represent the creditors committee.
The Tousa committee filed a Chapter 11 plan in July 2010 based on
an assumption it would win the appeal.
TRM HOLDINGS: S&P Assigns Preliminary 'B' Corp. Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B'
corporate credit rating to Ohio-based TRM Holdings Corp., the
parent of Things Remembered Inc. The outlook is stable.
"At the same time, we assigned our preliminary 'B' issue-level
rating to Things Remembered Inc.'s $147 million senior secured
credit facility, which consists of a $30 million revolver and a
$117 million term loan. The preliminary recovery rating on this
debt is '3', indicating our expectation for meaningful (50%-70%)
recovery of principal in the event of a payment default," S&P
said.
"Private-equity firm Madison Dearborn Partners will use the
proceeds from the proposed debt, along with a $30 million
mezzanine note (unrated) and about $163 million of an equity
contribution to fund the $295 million purchase of Things
Remembered from Bruckmann, Rosser, Sherrill & Co. and GB Merchant
Partners," S&P said.
"The preliminary ratings on Things Remembered reflect our
assessment of the company's financial risk profile as 'aggressive'
and a business risk profile as 'vulnerable.' Pro forma for the
transaction, debt to EBITDA was about 5.2x at Jan. 28, 2012, and
EBITDA coverage of interest is in the low-2x area," S&P said.
"Although we anticipate modest earnings growth to propel modest
improvement of these measures over the near term," said Standard &
Poor's credit analyst Mariola Borysiak, "we believe the company
will remain substantially leveraged, with total debt in the high-
4x area by the end of fiscal 2012."
"The outlook is stable, reflecting our expectations that the
company's niche position in the gift retail industry and improving
profitability to result in credit measures that remain in line
with our assessment of its business and financial risk profiles,"
S&P said.
"We could lower the ratings if operating performance and credit
protection measures deteriorate, leading to leverage increasing to
over 6x or coverage of interest of less than 2x. This would likely
be precipitated by intensified competitive pressures and/or an
weaker-than-expected economic recovery forcing customers to curb
their discretionary spending. This could occur if EBITDA declines
about 13% from fiscal 2011 level and debt remains constant at pro
forma level," S&P said.
"Although not likely in the near term, we could consider a higher
rating if profitability gains, along with modest debt reduction,
lead to leverage decreasing toward 4x. This could occur if
revenues grow at about 5%-6%, gross margin remains relatively
flat, and the company makes modest debt reduction as mandated by
the credit agreement excess cash flow sweep," S&P said.
TRONOX INC: Trial Between Trust, Parent Opens in NY Court
---------------------------------------------------------
Lisa Uhlman at Bankruptcy Law360 reports that the years-in-the-
making trial between a Tronox Inc. litigation trust and former
Tronox parent Kerr-McGee Corp. kicked off Tuesday in New York
bankruptcy court, with attorneys for both sides sparring over
whether a 2006 spinoff of the debtor constituted a fraudulent
transfer.
About Tronox Inc.
Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates
filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-
10156) on Jan. 13, 2009, before Hon. Allan L. Gropper. Richard M.
Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at
Kirkland & Ellis LLP in New York, represented the Debtors. The
Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel;
Rothschild Inc. as investment bankers; Alvarez & Marsal North
America LLC, as restructuring consultants; and Kurtzman Carson
Consultants served as notice and claims agent.
An official committee of unsecured creditors and an official
committee of equity security holders were appointed in the cases.
The Creditors Committee retained Paul, Weiss, Rifkind, Wharton &
Garrison LLP as counsel.
Until Sept. 30, 2008, Tronox was publicly traded on the New
York Stock Exchange under the symbols TRX and TRX.B. Since then,
Tronox has traded on the Over the Counter Bulletin Board under the
symbols TROX.A.PK and TROX.B.PK. As of Dec. 31, 2008, Tronox
had 19,107,367 outstanding shares of class A common stock and
22,889,431 outstanding shares of class B common stock.
On Nov. 17, 2010, the Bankruptcy Court confirmed the Debtors'
First Amended Joint Plan of Reorganization under Chapter 11 of the
Bankruptcy Code, dated Nov. 5, 2010. Under the Plan, Tronox
reorganized around its existing operating businesses, including
its facilities at Oklahoma City, Oklahoma; Hamilton, Mississippi;
Henderson, Nevada; Botlek, The Netherlands and Kwinana, Australia.
TTC PLAZA: Thompson & Knight Partner Named as Chapter 7 Trustee
---------------------------------------------------------------
Jennifer Dawson at Houston Business Journal reports the U.S.
Bankruptcy Court has appointed Randy Williams, a partner at
Thompson & Knight LLP, as Chapter 7 trustee of TTC Plaza Ltd.
The Bankruptcy Court ordered the conversion of the Chapter 11 case
of TTC Plaza to one under Chapter 7.
According to the report, the 8.7-acre restaurant property was
ordered to shut its doors by the end of business on May 10, 2012,
for failure to pay rent. David Wu has been operating the
restaurant on a lease basis since January and owes more than
$150,000 in rent.
The report relates Mr. Wu also is a principal with TTC, the
bankrupt property owner, so in essence, he has not been paying
rent to himself. "I told him he either needed to pay rent or
vacate the premises on (May) 10th," the report quotes Mr. Williams
as saying. "I told him a few weeks ago."
The report notes Mr. Wu was required to turn over the keys to Mr.
Williams the morning of May 11. Otherwise, Mr. Williams said he
plans to start the eviction process.
TTC Plaza L.P. filed for Chapter 11 bankruptcy (Bankr. S.D. Tex.
Case No. 11-38381) on Oct. 3, 2011, before Judge Marvin Isgur.
Jack Nicholas Fuerst, Esq., in Houston, Texas, represents the
Debtor. The Debtor scheduled assets of $12,016,768 and
liabilities of $5,312,263. The petition was signed by William Wu,
managing partner.
UNI-PIXEL INC: Incurs $2.04-Mil. Net Loss in First Quarter
----------------------------------------------------------
Uni-Pixel, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $2.04 million on $3,564 of revenue for the three months ended
March 31, 2012, compared with a net loss of $3.09 million on
$51,588 of revenue for the same period during the prior year.
The Company reported a net loss of $8.57 million in 2011 and a
net loss of $3.82 million in 2010.
The Company's balance sheet at March 31, 2012, showed
$6.97 million in total assets, $101,694 in total liabilities, and
$6.87 million in total shareholders' equity.
"During the first quarter of 2012 we made tremendous strides
towards the worldwide commercialization of our flagship products,
UniBoss and Diamond Guard," said UniPixel president and CEO, Reed
Killion. "We established a working relationship with two major
players in the respective markets for these products and have made
significant advancements upon those relationships."
A copy of the Form 10-Q is available for free at:
http://is.gd/HnW1Bt
About Uni-Pixel Inc.
The Woodlands, Tex.-based Uni-Pixel, Inc. (OTC BB: UNXL)
-- http://www.unipixel.com/-- is a production stage company
delivering its Clearly Superior(TM) Performance Engineered Films
to the Lighting & Display, Solar and Flexible Electronics market
segments.
UNIVAR INC: Moody's Rates New Term Loan 'B2', Affirms 'B2' CFR
--------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Univar Inc.'s
$750 million Incremental Term Loan B and a B3 rating to its new
senior unsecured notes due 2019. Univar's B2 Corporate Family
Rating (CFR) was also affirmed. The proceeds from the term loan
and notes, along with a $225 million draw under its revolver will
be used to refinance $1 billion of existing senior subordinated
notes due 2017-2018 and fund a dividend of approximately $544
million to shareholders. The ratings are subject to final review
of documents associated with the transaction. The outlook is
stable.
The following summarizes the ratings activity:
Univar, Inc.
Ratings assigned
Incremental Senior Secured Term Loan B due 2017 -- B2 (LGD4, 56%)
Senior Unsecured Notes due 2019 -- B3 (LGD5, 72%)
Ratings affirmed
Corporate Family Rating - B2
Probability of Default Rating - B2
Senior Secured Term Loan B due 2017 -- B2 (LGD4, 56%) from B2
(LGD3, 45%)
Outlook is Stable.
Ratings Rationale
Univar expects to increase balance sheet debt by $725 million, but
maintain a flat interest expense burden as its new lower cost debt
repays $1 billion of high coupon subordinated debt with a 12%
coupon. Univar has grown its EBITDA organically and through
acquisitions allowing it to increase debt, while lowering its
leverage ratio. Pro forma for the new debt financing, Univar will
have adjusted debt of $4.5 billion and adjusted net debt of $4.4
billion as of December 31, 2011, and leverage (including Moody's
analytical adjustments) will be 7.2x. Moody's analytical
adjustments add $667 million to debt to account for unfunded
pension liabilities and operating leases. The B2 CFR incorporates
Moody's expectation that Univar will de-lever prior to taking any
action such as additional dividends and or making debt-financed
acquisitions with aggregate purchase prices of greater than $250
million without a commensurate increase in EBITDA.
The B2 CFR reflects Univar's elevated leverage (7.2x as of year-
end 2011, pro forma for the financing transaction). To date, the
company has increased its debt approximately $1.5 billion ($1.8
billion, if you include Moody's analytical adjustments) from year-
end 2007 levels. The elevated debt level positions Univar weakly
in the B2 rating category, however Univar has successfully de-
levered in the past after levering events such as dividends and
acquisitions through growing its profits.
Univar's B2 CFR also reflects its modest operating margins (albeit
typical for a chemicals distributor) that allow for a minimal
cushion in its highly leveraged situation, an underperforming
European business with regional concentration, a product mix
weighted towards commodity chemicals, its history of inconsistent
free cash flow generation (although it did produce $160 million of
free cash flow in 2011) as cash flow has been invested in working
capital to support sales growth, and working capital seasonality
associated with the company's agricultural chemicals distribution
business in Canada. The ratings favorably recognize Univar's
leading market share in North America and large market share in
Europe, economies of scale, long-lived customer and supplier
relationships with minimal concentration, favorable industry
trends in outsourcing to distributors that has resulted in the
distribution business growing faster than overall chemicals sales,
the stable nature of the firm's historical EBITDA generation, and
relatively modest maintenance capital expenditure requirements.
The rating outlook is stable. There is little upward pressure on
the rating given Univar's high leverage weakly positions it in the
B2 rating category and the potential for event risk (e.g., debt-
financed acquisitions and dividends). The ratings could be
pressured if the company is unable to continue to generate
significant EBITDA, improve profitability in its European
operations, maintain adequate liquidity or if leverage increases
further over the intermediate term. Additionally, a large debt
financed acquisition (or combination of acquisitions) that is
greater than $250 million without a commensurate increase in
EBITDA could adversely impact the rating.
Univar Inc. is one of the largest distributors of industrial
chemicals and providers of related services, operating over 260
distribution centers to service a diverse set of end markets in
the US, Canada and Europe. The company was taken private in
October 2007, and is currently majority owned by funds managed by
CVC Capital Partners and Clayton, Dubilier & Rice, LLC. The
company had revenues of $9.7 billion for 2011.
UNIVERSITY GENERAL: Swings to $489,000 Net Income in Fist Quarter
-----------------------------------------------------------------
University General Health System, Inc., reported net income
attributable to the Companyof $489,438 on $19.08 million of total
revenues for the three months ended March 31, 2012, compared with
a net loss attributable to the Company of $439,768 on $15.44
million of total revenues for the same period during the prior
year.
University General reported a net loss of $2.38 million on $72.51
million of revenues for 2011, compared with a net loss of $1.71
million on $56.13 million of revenues for 2010.
The Company's balance sheet at March 31, 2012, showed $113.64
million in total assets, $113.75 million in total liabilities and
a $108,610 total deficit.
"Our 23.6% increase in total revenue this quarter was attributable
to the mid-year acquisitions of TrinityCare Senior Living and
Autimis, higher inpatient occupancy rates at our flagship
University General Hospital, and the continued implementation of
our integrated health delivery model," commented Dr. Hassan
Chahadeh, M.D., Chairman and Chief Executive Officer of University
General Health System, Inc. "We also reported positive net
income, as profitability improved by approximately $929,000
relative to last year's first quarter, reflecting higher revenue
and our ability to control costs while expanding our regional
health care network in the Houston area."
A copy of the press release is available for free at:
http://is.gd/NswjCn
About University General
University General Health System, Inc., located in Houston, Texas,
is a diversified, integrated multi-specialty health care provider
that delivers concierge physician- and patient-oriented services.
UGHS currently operateS one hospital and two ambulatory surgical
centers in the Houston area. It also owns a revenue management
company, a hospitality service provider and facility management
company, three senior living facilities and manages six senior
living facilities.
For the year ended Dec. 31, 2011, Moss, Krusick & Associates, LLC,
in Winter Park, Florida, expressed substantial doubt about
University General's ability to continue as a going concern. The
independent auditors noted that the Company has suffered recurring
losses and negative operating cash flows, and has negative working
capital.
USEC INC: Fails to Comply with NYSE's $1 Apiece Bid Price Rule
--------------------------------------------------------------
USEC Inc. has received a continued listing standards notice from
the New York Stock Exchange because the price of its common stock
has fallen below the NYSE's minimum share price rule. The NYSE
requires the average closing price of a listed Company's common
stock to be at least $1.00 per share over a consecutive 30
trading-day period.
The Company's common stock continues to trade on the NYSE.
Subject to NYSE rules, the Company has six months from receipt of
the notice to regain compliance with the NYSE's price criteria (or
by no later than the Company's next annual meeting of shareholders
if shareholder approval is required, as would be the case to
effectuate a reverse stock split to cure the deficiency). The
Company is currently in compliance with all other NYSE listing
rules.
USEC can regain compliance at any time during the six-month cure
period if on the last trading day of a calendar month during the
cure period, the company has a closing share price of at least
$1.00 and an average closing share price of at least $1.00 over
the 30 trading-day period ending on the last trading-day of that
month or on the last day of the cure period. The Company is
evaluating its options to cure the price deficiency, including a
reverse stock split, which would require shareholder approval at
or prior to the Company's next annual meeting of shareholders.
About USEC Inc.
Headquartered in Bethesda, Maryland, USEC Inc. (NYSE: USU) --
http://www.usec.com/-- supplies enriched uranium fuel for
commercial nuclear power plants.
The Company reported a net loss of $540.70 million in 2011,
compared with net income of $7.50 million in 2010.
The Company's balance sheet at Dec. 31, 2011, showed $3.54 billion
in total assets, $2.79 billion in total liabilities and $752.40
million in total stockholders' equity.
* * *
USEC Inc. carries 'Caa1' corporate and probability of default
ratings, with "developing" outlook, from Moody's, and 'CCC+' long
term foreign issuer credit rating and 'CCC-' long term local
issuer credit rating, with outlook "developing", from Standard &
Poor's.
In May 2010, S&P said that its rating and outlook on USEC Inc. are
not affected by the announcement that Toshiba Corp. and Babcock &
Wilcox Investment Co., an affiliate of The Babcock & Wilcox Co.,
have signed a definitive investment agreement for $200 million
with USEC.
VALHI INC: S&P Raises Corp. Credit Rating to 'BB-'; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
ratings on Dallas-based Valhi Inc. and its subsidiary, Kronos
International Inc., to 'BB-' from 'B+'. "At the same time, we
assigned our 'BB-' corporate credit rating to Kronos Worldwide
Inc. The outlook on all these ratings is stable," S&P said.
"We also assigned our 'BB-' issue-level rating (same as the
corporate credit rating) to Kronos Worldwide's $600 million term
loan facility due 2019. We assigned this facility a recovery
rating of '4', indicating our expectation of average recovery (30%
to 70%) in the event of a payment default. Upon completion of the
financing, the ratings on Kronos' existing senior secured notes
will be withdrawn," S&P said.
"The upgrade reflects our expectation that sustained strength in
the TiO2 market over the next 12 to 24 months will support current
operating results and credit metrics, despite an increase in debt
as a result of this refinancing transaction," said Standard &
Poor's credit analyst Seamus Ryan. "Although we remain cautious in
our view on European demand trends in 2012, we believe that tight
conditions in the TiO2 market will enable Kronos to increase
selling prices to largely offset raw material feedstock price
increases. We also believe that management will be prudent in its
deployment of free cash flows and will not increase debt leverage
to fund growth or shareholder rewards."
"The ratings reflect the company's limited focus on the cyclical,
commodity-based titanium dioxide (TiO2) market and very aggressive
financial policies. We also view the company's concentrated
ownership and complex corporate structure as limiting factors.
However, the ratings also reflect our expectation that favorable
industry conditions will support Valhi's current financial
profile, as well as our belief that the company's growth and
shareholder rewards plans will not increase its debt leverage
beyond our expectations at the current ratings. We characterize
the company's business risk profile as 'weak' and its financial
risk profile as 'significant,'" S&P said.
"Based on our scenario forecasts, we expect Valhi's credit metrics
to remain strong for the current rating, with funds from
operations (FFO) to adjusted debt greater than 45% over the next
two years, compared with the 25% to 30% expected at the current
ratings. We expect that global demand will support double-digit
percentage annual TiO2 selling price increases over this period.
Although, we expect raw material feedstock price increases in a
similar range over this period, we expect TiO2 producers will be
able to maintain EBITDA margins near current levels by passing
through these costs. Our forecast also incorporates our
expectation that the company will return a moderate amount of cash
to shareholders while business conditions remain favorable," S&P
said.
"The stable outlook reflects our expectation that Valhi will
maintain its improved financial profile and adequate liquidity. We
expect favorable industry conditions to support operating results
and financial metrics over the next two years. We also expect that
management will maintain a prudent approach to funding growth and
shareholder rewards," S&P said.
"Based on our scenario forecasts, we expect Valhi to maintain
financial metrics that are strong for the current ratings.
However, the highly cyclical, commodity-based nature of the TiO2
industry and the company's very aggressive financial policies
limit the potential for higher ratings over the next year," S&P
said.
"We could lower the ratings if unexpected business obstacles--such
as a drastic reduction in end-market demand or significantly
higher-than-expected titanium ore price increases--reduce the
company's EBITDA margin to less than 10%. At this point, we expect
FFO to total adjusted debt to decrease to less than 20%. We could
also lower the ratings if the company uses additional debt to fund
growth plans or shareholder rewards without an offsetting
improvement to its business risk profile, or if environmental
liabilities increase meaningfully as a result of additional
accounting disclosure on remediation obligations," S&P said.
VELATEL GLOBAL: Delays First Quarter Form 10-Q for Review
---------------------------------------------------------
VelaTel Global Communications, Inc., formerly known as China Tel
Group Inc., notified the U.S. Securities and Exchange Commission
that it will be late in filing its quarterly report on Form 10-Q
for the period ended March 31, 2012. The Company said it requires
additional time to complete disclosure items and for review by
professional advisors.
About China Tel
Based in San Diego, California, and Shenzhen, China, China Tel
Group, Inc. (OTC BB: CHTL) -- http://www.ChinaTelGroup.com/--
provides high speed wireless broadband and telecommunications
infrastructure engineering and construction services. Through its
controlled subsidiaries, the Company provides fixed telephony,
conventional long distance, high-speed wireless broadband and
telecommunications infrastructure engineering and construction
services. ChinaTel is presently building, operating and deploying
networks in Asia and South America: a 3.5GHz wireless broadband
system in 29 cities across the People's Republic of China with and
for CECT-Chinacomm Communications Co., Ltd., a PRC company that
holds a license to build the high speed wireless broadband system;
and a 2.5GHz wireless broadband system in cities across Peru with
and for Perusat, S.A., a Peruvian company that holds a license to
build high speed wireless broadband systems.
The Company, in the untimely filed Form 10-K, reported a net loss
of $21.79 in 2011, compared with a net loss of $66.62 million in
2010.
The Company's balance sheet at Dec. 31, 2011, showed $12.83
million in total assets, $22.76 million in total liabilities and a
$9.92 million total stockholders' deficiency.
After auditing the 2011 results, Kabani & Company, Inc., in Los
Angeles, California, expressed substantial doubt as to the
Company's ability to continue as a going concern. The independent
auditors noted that the Company has incurred a net loss for the
year ended Dec. 31, 2011, cumulative losses of $253.7 million
since inception, a negative working capital of $16.4 million and
a stockholders' deficiency of $9.93 million.
VERSO PAPER: Moody's Cuts Rating on 2nd Lien Notes to 'Caa1'
------------------------------------------------------------
Moody's Investors Service downgraded Verso Paper Holding's new
11.75% secured notes due 2019 to B2 (LGD3 47%) from B1 (LGD3 40%).
The company's existing $396 million second lien notes due 2019
were downgraded to B3 (LGD5 72%) from B2 (LGD4 57%) and the
company's remaining floating rate second lien notes due 2014 (2014
notes) were downgraded to Caa1 (LGD5 87%) from B2 (LGD4 57%). The
new secured notes were offered in exchange for Verso's existing
$180 million floating rate second lien notes due 2014 and $158
million of Verso's $300 million subordinated notes due 2016. These
rating actions were anticipated (see Moody's Issuer Comment:
"Verso Paper's debt exchange offer may pressure ratings on
proposed notes", dated April 26, 2012) and are based on the
conclusion of the tender offers. Moody's affirmed Verso's B2
corporate family (CFR) and probability of default ratings along
with the company's other ratings. The rating outlook remains
stable.
Issuer: Verso Paper Finance Holdings LLC
Upgrades:
US$85M Senior Unsecured Term Loan, Upgraded to a range of
LGD6, 95 % from a range of LGD6, 96 %
Issuer: Verso Paper Holdings LLC
Downgrades:
US$300M 11.375% Senior Subordinated Regular Bond/Debenture,
Downgraded to a range of LGD6, 92 % from a range of LGD5, 88%
US$50M Senior Secured Bank Credit Facility, Downgraded to a
range of LGD2, 21 % from a range of LGD2, 20 %
11.75% Senior Secured Regular Bond/Debenture, Downgraded to
B2 from B1
US$250M Senior Secured Regular Bond/Debenture, Downgraded to
Caa1 from B2
11.75% Senior Secured Regular Bond/Debenture, Downgraded to a
range of LGD3, 47 % from a range of LGD3, 40 %
US$396M 8.75% Senior Secured Regular Bond/Debenture,
Downgraded to B3 from B2
US$250M Senior Secured Regular Bond/Debenture, Downgraded to
a range of LGD5, 87 % from a range of LGD4, 57 %
US$396M 8.75% Senior Secured Regular Bond/Debenture,
Downgraded to a range of LGD5, 72 % from a range of LGD4,
57 %
US$345M 11.75% Senior Secured Regular Bond/Debenture,
Downgraded to a range of LGD2, 21 % from a range of LGD2,
20 %
Withdrawals:
US$200M Senior Secured Bank Credit Facility, Withdrawn,
previously rated Ba2
US$200M Senior Secured Bank Credit Facility, Withdrawn,
previously rated a range of LGD2, 15 %
Ratings Rationale
Verso's B2 corporate family rating primarily reflects the
company's vertically integrated, relatively low cost asset base
and its scale as the second largest producer of coated papers in
North America. The rating also considers the company's significant
debt load, its narrow product focus and the expectation that the
company will continue to face secular demand declines for its
primary products.
The B2 (LGD3 47%) rating on the new 11.75% secured notes due 2019
is same as the CFR of the company and reflects their priority in
the liability waterfall. As a result of the debt exchange offers,
the company has been able to redistribute its collateral so that
the new 11.75% notes will have a junior security interest in both
the fixed and current assets of the company, and will be
subordinate to the claims of the Ba2 rated (LGD 1 4%) $150 million
Asset-based Revolving Credit Facility (ABL) and Ba2 rated (LGD 2
20%) $50 million senior secured revolving credit facility and $345
million senior secured note due 2019. The holders of the new notes
will rank senior to the existing second lien debt, unsecured debt
and subordinated debt at Verso.
The rating of the existing second lien notes due 2019 has been
downgraded one notch to B3 ( LGD5 72%) since their expected
recovery will be diluted with the higher ranking new 11.75%
secured notes. The rating of the remaining 2014 notes
(approximately $13 million) has been downgraded two notches to
Caa1 (LGD5 87%) pursuant to the requisite consents to release the
liens and security interests in the notes. The rating of the
remaining subordinated notes (approximately $143 million) remains
Caa1, however the LGD has increased to (LGD5 92%) from (LGD5 88%)
due to increase in the debt ranked ahead of these notes.
The outlook on Verso's ratings is stable, reflecting expectations
that the company will be able to refinance its debt obligations on
a timely basis and that industry fundamentals will allow the
company to maintain credit protection measures appropriate for its
current rating. Moody's will consider an upgrade if RCF/TD were to
approach 10%, with (RCF-CapEx)/TD approaching 5%, both metrics on
a normalized and sustainable basis. Downward rating pressure is
likely to develop if Moody's believes that Verso will not be able
to refinance its remaining near-term debt obligations on a timely
basis or if Verso's normalized RCF/TD and (RCF-CapEx)/TD drop
below 5% and 2%, respectively, for a sustained period of time.
The principal methodology used in rating Verso was the Global
Paper and Forest Products Industry Methodology published in
September 2009. Other methodologies used include Loss Given
Default for Speculative-Grade Non-Financial Companies in the U.S.,
Canada and EMEA published in June 2009.
Headquartered in Memphis, Tennessee, Verso is the second largest
coated paper producer in North America with a 20% coated
groundwood market share and about 12% coated freesheet market
share. The company operates 9 paper machines at four mills with
total paper production capacity of approximately 1.7 million tons.
VERSO PAPER: S&P Raises Corporate Credit Rating to 'B' from 'SD'
----------------------------------------------------------------
Standard & Poor's Ratings Services, in a May 14, 2012 press
release, raised its corporate credit rating on Memphis, Tenn.-
based coated-paper manufacturer Verso Paper Holdings LLC (Verso
Paper) to 'B' from 'SD'. The rating outlook is stable.
"At the same time, we raised our issue-level rating on the
company's 11.375% senior subordinated notes due 2016 to 'CCC+'
from 'D'. We also assigned our 'BB-' issue-level rating to the
company's $271.6 million 11.75% senior secured notes due 2019. We
assigned a recovery rating of '1' to the notes, indicating our
expectation of very high recovery (90% to 100%) in the event of
default," S&P related in the May 14 statement.
"The rating actions follow Verso Paper's completed exchange offers
for a portion of its senior subordinated notes due 2016 and
floating rate notes due 2014," said Standard & Poor's credit
analyst Tobias Crabtree. "The two exchange offers reduced Verso
Paper's debt level by approximately $53 million and extended the
maturity of a portion of its debt to 2019. The post-exchange
corporate credit rating on Verso Paper reflects Standard & Poor's
view of the combination of its 'highly leveraged' financial risk
and 'weak' business risk. Our ratings incorporate the company's
limited product diversity, substitution risks due to changing
customer preferences for greater electronic content, and
vulnerability to fluctuations in input costs and selling prices.
In addition, despite our expectation that credit measures will
remain somewhat weak over the next year, we expect liquidity to
remain 'adequate,' attributable to its cash position, new credit
facilities, and manageable near-term debt maturity profile
following the completed exchange offers."
"Under our baseline scenario for a gradual economic recovery in
2012, we expect Verso Paper's EBITDA to be $200 million or more,
compared with $193 million generated in 2011," S&P said. Key
assumptions to S&P's EBITDA forecast include:
Real GDP growth of 2.1% in 2012 and 2.5% in 2013;
Capacity closures and low single-digit percentage declines in
coated paper demand result in lower year-over-year coated
paper sales volumes;
Coated paper prices are relatively in-line with 2011 average
levels given S&P's assumption of no material declines in
industry operating rates from current levels; and
Input costs (including chemicals, wood, and energy) are less
of a headwind in 2012 than in 2011.
"Key risks to our forecast include a weak economy or recession
that could accelerate the secular demand decline for coated papers
over the near term. A material increase in raw-material costs that
is unable to be offset by price increases or cost savings
initiatives could also significantly reduce profitability. We
believe that Verso's financial results and credit measures will
fluctuate widely during the course of a cycle because demand
correlates closely to general economic conditions and highly
cyclical advertising spending," S&P said.
"Total adjusted debt was about $1.35 billion on Dec. 31, 2011,
compared with $1.27 billion at year-end 2010. In March 2012, the
company issued $345 million of 11.75% first priority notes due
2019 to fund the cash tender for its $315 million of notes due
2014. The two recently completed exchange offers reduced Verso
Paper's debt level by approximately $53 million. Based on our
EBITDA assumptions, we expect Verso Paper to remain highly
leveraged with debt to EBITDA in excess of 6x, compared with 7x as
of Dec. 31, 2011. In addition, interest coverage is likely to
remain about 1.5x and funds from operations (FFO) to debt less
than 10%, compared with 1.4x and below 5% at year-end 2011," S&P
said.
"Verso is the second-largest coated paper manufacturer in North
America and accounts for about 17% of total production capacity. A
substantial proportion of its sales are to catalogs and magazines
end users, which we believe are susceptible to substitution risks
due to changing customer preferences for greater electronic
content, particularly with increased penetration of e-readers and
tablet computers," S&P said.
"The stable rating outlook reflects our expectation that Verso's
liquidity will remain adequate over the next year, attributable to
its cash position, new credit facilities, and manageable near-term
debt maturity profile following the completed exchange offers. Our
stable rating outlook incorporates our view that the company will
generate positive free cash flow in 2012 based on our EBITDA
expectations and be able to successfully repay or refinance Verso
Paper Finance Holdings LLC's February 2013 term loan maturity,"
S&P said.
"Based on our EBITDA forecast and outlook for continued demand
declines in coated paper end markets, we view a meaningful
improvement in credit measures from recent levels and positive
rating action as unlikely over the next 12 months," S&P said.
"We could take a negative rating action if the secular demand
decline in coated paper were to be worse than expected over the
coming years leading us to lower our assessment of Verso Paper's
business risk to 'vulnerable' from weak. In addition, a downgrade
could occur if Verso Paper's EBITDA generation over the next year
is unlikely to be maintained at more than $165 million, a level
which approximates our estimated cash interest expense of about
$125 million and maintenance capital expenditures of approximately
$40 million. Under this scenario, liquidity would likely weaken
and the company would likely need to rely on borrowings under its
revolving credit facilities to fund operating requirements," S&P
said.
May 11 Rating
Earlier, in a May 11, 2012 press release, S&P lowered its
corporate credit ratings on Verso Paper Holdings LLC and Verso
Paper Finance Holdings LLC to 'SD' from 'CC'. The ratings agency
also lowered (i) its issue-level rating on the company's 11.375%
senior subordinated notes due 2016 to 'D' from 'CC' -- the company
issued $104.7 million of aggregate principal of 11.75% secured
notes due 2019 in exchange for $157.5 million of the subordinated
notes; and (ii) its issue-level rating to 'CCC+' from 'B' and
revised the recovery rating to '6' from '3' on the company's $396
million 8.75% notes due 2019 and the remaining $13 million
floating rate notes due 2014 -- the '6' recovery rating indicates
S&P's expectation of negligible (0% to 10%) recovery in the event
of a payment default. The downgrade follows Verso Paper's
announcement that it completed its exchange offer to issue $104.7
million aggregate principal amount of exchange notes in exchange
for $157.5 million of subordinated notes, said Standard & Poor's
credit analyst Tobias Crabtree. S&P viewed this as 'distressed
exchange' and tantamount to default.
VITRO SAB: Has a 'Cockamamie' Bankruptcy, Professor Says
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Professor Arturo Porzecanski said at a conference
last week in Dallas that the bankruptcy reorganization that
glassmaker Vitro SAB is pushing through courts in Mexico and the
U.S. is a "cockamamie scheme" that's the "equivalent of bankruptcy
murder."
According to the report, Mr. Porzecanski, professor of
international economic policy at American University in
Washington, was referring to the reorganization plan a court in
Mexico approved this year. At the conference last week,
Mr. Porzecanski was asked why he didn't level criticism at the
Mexican court rather than Vitro. He responded by saying that
"Vitro came up with this cockamamie scheme. If they had dealt
with their creditors the way everybody else has dealt with their
creditors we wouldn't be talking about Vitro." Allowing
subsidiaries to vote in a parent's bankruptcy is "widely
accepted," Palacio said. He listed the U.K., Australia and Italy
as countries where insider votes are counted.
The U.S. Bankruptcy Court in Dallas is scheduled to hold a trial
beginning June 4 to decide if the plan will be enforced in the
U.S. A state appellate court in New York ruled this month that
Vitro's Mexican reorganization plan can't relieve Vitro
subsidiaries of their obligations on $1.2 billion in defaulted
bonds because they weren't in bankruptcy in either country.
About Vitro SAB
Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV:
VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases
Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global
glass producer, serving the construction and automotive glass
markets and glass containers needs of the food, beverage, wine,
liquor, cosmetics and pharmaceutical industries.
Vitro is the largest manufacturer of glass containers and flat
glass in Mexico, with consolidated net sales in 2009 of MXN23,991
million (US$1.837 billion).
Vitro defaulted on its debt in 2009, and sought to restructure
around US$1.5 billion in debt, including US$1.2 billion in notes.
Vitro launched an offer to buy back or swap US$1.2 billion in debt
from bondholders. The tender offer would be consummated with a
bankruptcy filing in Mexico and Chapter 15 filing in the United
States. Vitro said noteholders would recover as much as 73% by
exchanging existing debt for cash, new debt or convertible bonds.
Concurso Mercantil & Chapter 15 Proceedings
Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a
pre-packaged Concurso Plan in the Federal District Court for
Civil and Labor Matters for the State of Nuevo Leon, commencing
its voluntary concurso mercantil proceedings -- the Mexican
equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB
also commenced parallel proceedings under Chapter 15 of the U.S.
Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan
on Dec. 13, 2010, to seek U.S. recognition and deference to its
bankruptcy proceedings in Mexico.
Early in January 2011, the Mexican Court dismissed the Concurso
Mercantil proceedings. But an appellate court in Mexico
reinstated the reorganization in April 2011. Following the
reinstatement, Vitro SAB on April 14, 2011, re-filed a petition
for recognition of its Mexican reorganization in U.S. Bankruptcy
Court in Manhattan (Bankr. S.D.N.Y. Case No. 11- 11754).
The Vitro parent received sufficient acceptances of its
reorganization by using the US$1.9 billion in debt owing to
subsidiaries to vote down opposition by bondholders. The holders
of US$1.2 billion in defaulted bonds opposed the Mexican
reorganization plan because shareholders could retain ownership
while bondholders aren't being paid in full.
Vitro announced in March 2012 that it has implemented the
reorganization plan approved by a judge in Monterrey, Mexico.
In the present Chapter 15 case, the Debtor seeks to block any
creditor suits in the U.S. pending the reorganization in Mexico.
Chapter 11 Proceedings
A group of noteholders opposed the exchange -- namely Knighthead
Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc.,
Davidson Kempner Distressed Opportunities Fund LP, and Brookville
Horizons Fund, L.P. Together, they held US$75 million, or
approximately 6% of the outstanding bond debt. The Noteholder
group commenced involuntary bankruptcy cases under Chapter 11 of
the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D.
Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010.
Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation
counsel to analyze the potential rights that Vitro may exercise
in the United States against the ad hoc group of dissident
bondholders and its advisors.
A larger group of noteholders, known as the Ad Hoc Group of Vitro
Noteholders -- comprised of holders, or investment advisors to
holders, which represent approximately US$650 million of the
Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not
among the Chapter 11 petitioners, although the group has
expressed concerns over the exchange offer. The group says the
exchange offer exposes Noteholders who consent to potential
adverse consequences that have not been disclosed by Vitro. The
group is represented by John Cunningham, Esq., and Richard
Kebrdle, Esq. at White & Case LLP.
A bankruptcy judge in Fort Worth, Texas, denied involuntary
Chapter 11 petitions filed against four U.S. subsidiaries. On
April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro
America LLC and three other U.S. subsidiaries -- that were
subject to the involuntary petitions into voluntary Chapter 11.
The Texas Court on April 21 denied involuntary petitions against
the eight U.S. subsidiaries that didn't consent to being in
Chapter 11.
Kurtzman Carson Consultants is the claims and notice agent to
Vitro America, et al. Alvarez & Marsal North America LLC, is the
Debtors' operations and financial advisor.
The official committee of unsecured creditors appointed in the
Chapter 11 cases of Vitro America, et al., has selected Sarah
Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in
Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq.,
and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP,
in New York, as counsel. Blackstone Advisory Partners L.P.
serves as financial advisor to the Committee.
The U.S. Vitro companies sold their assets to American Glass
Enterprises LLC, an affiliate of Sun Capital Partners Inc., for
US$55 million.
U.S. subsidiaries of Vitro SAB are having their cases converted to
liquidations in Chapter 7, court records in January 2012 show. In
December, the U.S. Trustee in Dallas filed a motion to convert the
subsidiaries' cases to liquidations in Chapter 7. The Justice
Department's bankruptcy watchdog said US$5.1 million in bills were
run up in bankruptcy and hadn't been paid.
VWR FUNDING: S&P Assigns 'B+' Rating on Senior Secured Debt
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B+' rating to
Radnor, Pa.-based laboratory products distributor VWR Funding
Inc.'s amended and extended portions of its senior secured
revolver maturing in 2016 and term loan maturing in 2017. "We also
assigned our '2' recovery rating to the debt, indicating our
expectation for substantial (70% to 90%) recovery for senior
secured lenders in the event of a payment default. The 'B+' rating
on the facility is one notch higher than our 'B' corporate credit
rating on the company, in accordance with our notching criteria
for a recovery rating of '2'," S&P said.
"Our 'B+' issue-level and '2' recovery ratings on the unextended
portions of the senior secured revolver and term loan remain
unchanged. All other ratings remain unchanged and the outlook
remains stable," S&P said.
The amount and interest rate on the amended and extended portion
of the credit facilities will be determined by market conditions.
"We expect the transaction to be debt neutral," said Standard &
Poor's credit analyst Jesse Juliano, "and have assumed that any
increase in interest rates will not be significant enough to
negatively alter our view of the company's liquidity or financial
risk profile. The maturity extensions will also alleviate some of
the company's refinancing risk in 2014."
"The ratings on VWR overwhelmingly reflect the company's 'highly
leveraged' financial risk profile because of an exceptionally
heavy leveraged buyout (LBO)-related debt burden, and exposure to
the improving, but still weak, global economy. Madison Dearborn
Partners LLC (MDP) acquired VWR in 2007, markedly increasing debt
and debt-like obligations. Given nearly $3 billion of debt, $120
million of operating lease obligations, and viewing MDP's
preferred investment as debt, adjusted debt is about $5.1 billion.
This level of adjusted debt is unlikely to change over the next
few years, as Standard & Poor's expects accretion of the pay-in-
kind (PIK) preferred stock will offset scheduled bank loan
amortizations. We view the company's business risk profile as
'satisfactory' despite its narrow business focus," S&P said.
"Our rating outlook on VWR is stable, given our view of operating
trends and expectation for very modest improvement in credit
measures. Absent a significant reduction in leverage, we do not
expect to raise the ratings in the foreseeable future. The ratings
assume that VWR will maintain or improve its liquidity over the
next 12 months," S&P said.
"We could lower our ratings on VWR if operating issues weaken
liquidity to a point where a default was more probable within two
years due to cash outflows. We believe that this could be caused
by an unlikely 10% sales decline and a 100-basis-point reduction
in margins," S&P said.
WASH CONCEPTS: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Wash Concepts, Inc.
8 Shepherd Road
Malvern, PA 19355
Bankruptcy Case No.: 12-14746
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Judge: Jean K. FitzSimon
Debtor's Counsel: Eugene A. Steger, Jr., Esq.
EUGENE STEGER & ASSOCIATES, PC
411 Old Baltimore Pike
Chadds Ford, PA 19317
Tel: (610) 388 7737
E-mail: esteger@stegerlaw.net
Scheduled Assets: $2,260,343
Scheduled Liabilities: $2,266,898
A copy of the Company's list of its 20 largest unsecured creditors
filed with the petition is available for free at:
http://bankrupt.com/misc/paeb12-14746.pdf
The petition was signed by David Defusco, president.
WAVE SYSTEMS: Incurs $8.3 Million Net Loss in First Quarter
-----------------------------------------------------------
Wave Systems Corp. reported a net loss of $8.31 million on $6.98
million of total net revenues for the three months ended March 31,
2012, compared with a net loss of $2.25 million on $7.47 million
of total net revenues for the same period during the prior year.
The Company reported a net loss of $10.79 million in 2011, a
net loss of $4.12 million in 2010, and a net loss of $3.34 million
in 2009.
The Company's balance sheet at March 31, 2012, showed $25.57
million in total assets, $18.45 million in total liabilities and
$7.12 million in total stockholders' equity.
"Wave has made significant strides to date in 2012, extending our
reach into exciting new markets like mobile, expanding our channel
partnerships and increasing the number and quality of customer
prospects in our sales pipeline on a global basis," commented Wave
CEO Steven Sprague. "We've long espoused the benefits of trusted
computing and this year, more than ever, we're seeing interest in
the market. The National Institute of Standards and Technology
(NIST) has published standards that call for industry standard
hardware security to help thwart today'?s most serious cyber
threats. Microsoft, too, has stepped up awareness with its new
Windows 8 operating system that builds upon the advanced security
features pioneered by Wave and the Trusted Computing Group."
A copy of the press release is available for free at:
http://is.gd/RVPT5P
About Wave Systems
Lee, Massachusetts-based Wave Systems Corp. (NASDAQ: WAVX) --
http://www.wave.com/-- develops, produces and markets products
for hardware-based digital security, including security
applications and services that are complementary to and work with
the specifications of the Trusted Computing Group, an industry
standards organization comprised of computer and device
manufacturers, software vendors and other computing products
manufacturers.
Going Concern
The Company said in its annual report for the year ended Dec. 31,
2011, that it will be required to sell additional shares of common
stock, preferred stock, obtain debt financing or engage in a
combination of these financing alternatives, to raise additional
capital to continue to fund its operations for the twelve months
ending Dec. 31, 2012. If Wave is not successful in executing its
business plan, it will be required to sell additional shares of
common stock, preferred stock, obtain debt financing or engage in
a combination of these financing alternatives or it could be
forced to reduce expenses which may significantly impede its
ability to meet its sales, marketing and development objectives,
cease operations or merge with another company. No assurance can
be provided that any of these initiatives will be successful. Due
to its current cash position, capital needs over the next year and
beyond, and the uncertainty as to whether it will achieve its
sales forecast for its products and services, substantial doubt
exists with respect to Wave's ability to continue as a going
concern.
WESTBURY COMMUNITY: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Westbury Community Hospital LLC
5556 Gasmer
Houston, TX 77035
Bankruptcy Case No.: 12-33651
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
Southern District of Texas (Houston)
Judge: Marvin Isgur
Debtor's Counsel: Thomas H. Grace, Esq.
SPENCER CRAIN CUBBAGE HEALY & MCNAMARA
1177 West Loop South, Suite 1300
Houston, TX 77027
Tel: (713) 375-2451
Fax: (713) 375-2481
E-mail: hobank@spencercrain.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A copy of the Company's list of its 20 largest unsecured creditors
filed with the petition is available for free at:
http://bankrupt.com/misc/txsb12-33651.pdf
The petition was signed by Bobby G. Rouse, president.
WOLVERINE HEALTHCARE: Moody's Assigns 'B2' CFR; Outlook Stable
--------------------------------------------------------------
Moody's Investors Service assigned Corporate Family and
Probability of Default ratings of B2 to Wolverine Healthcare
Analytics, Inc., the healthcare data and analytics firm formerly
known as Thomson Reuters Healthcare. At the same time, Moody's
assigned a Ba3 (LGD 2, 29%) rating to the company's proposed first
lien senior secured credit facility, including a $525 million term
loan B and a $50 million senior secured first lien revolver.
Moody's also assigned a Caa1 (LGD 5, 84%) rating to the proposed
$325 million of new senior unsecured notes. The proceeds from the
term loan and senior unsecured notes, along with approximately
$460 million of new common equity, will be used to finance Veritas
Capital's ("Veritas") purchase of the healthcare business of
Thomson Reuters, and pay transaction fees and expenses. The
outlook for the ratings is stable.
This is the first time Moody's has publicly rated Wolverine
Healthcare Analytics, Inc., and the rating actions are subject to
the successful conclusion of the transaction, as proposed, and
Moody's review of final documentation.
Ratings assigned:
Corporate Family Rating, B2
Probability of Default Rating, B2
$50 million senior secured first lien revolving credit facility,
rated Ba3 (LGD2, 29%)
$525 million senior secured first lien term loan B, rated Ba3 (LGD
2, 29%)
$325 million senior unsecured notes, rated Caa1 (LGD 5, 84%)
The rating outlook is stable.
Ratings Rationale
"The B2 Corporate Family Rating reflects Wolverine's high
financial leverage, small absolute size based on revenue and
earnings, and modest interest coverage relative to other single-B
rated companies," stated Moody's Analyst, Daniel Gon‡alves.
"However, the company's credit profile benefits from its leading
market presence, its good customer and product diversity, and
largely recurring revenue base due to the multi-year nature of its
contracts with historically high client retention rates,"
continued Gon‡alves.
On a pro forma basis for the LBO transaction as of March 31, 2012,
Moody's estimates pro forma debt to EBITDA of 6.4 times. Going
forward, Moody's expects the company to benefit from favorable
industry fundamentals and regulatory requirements imposed by the
federal and state governments, as well as from an increase in pay-
for performance initiatives on behalf of commercial payors.
Supporting the rating is the recurring nature of the company's
subscription-based contracts (comprising approximately 84% of 2011
revenues), the majority of which are multi-year in nature. In
addition, while the industry has few legal barriers to entry, the
company's leading market presence, excellent reputation, and
databases which are difficult to replicate provide it with a
powerful and defensible position within this niche market segment.
The rating outlook is stable. Given the company's small size and
high adjusted financial leverage above 6.0 times, an upgrade is
unlikely over the near-term. For an upgrade to be considered,
Moody's would need to see adjusted leverage below 5.0 times and
free cash flow coverage of debt in excess of 10%. Conversely,
Moody's could downgrade the ratings if Moody's comes to believe
the company is unlikely to reduce leverage to below 6.0 times by
the end of 2013 on a Moody's adjusted basis. This could occur if
the company experiences slower growth within any of its business
lines, or if the company increases its acquisition activity or
other shareholder initiatives beyond current expectations.
The principal methodology used in rating Wolverine Healthcare
Analytics, Inc. was the Global Business & Consumer Service
Industry published in October 2010. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Headquartered in Ann Arbor, Michigan, Wolverine Healthcare
Analytics, Inc. is a leading provider of data and analytics
solutions and services to healthcare constituents throughout the
United States. The company's services provide its customers with
solutions to identify cost savings, improve outcomes, fight fraud
and abuse and increase operational efficiencies. The company's
primary customer segments include hospitals, employers, health
plans, government agencies, pharmaceutical companies and
clinicians. For the year ended December 31, 2011, the company
generated total revenues of approximately $483 million. On April
23, 2012, Thomson Reuters (NYSE: TRI), a global provider of
intelligence information for businesses and professionals,
announced that it has entered into a definitive agreement to sell
its Thomson Reuters Healthcare business to private equity firm
Veritas Capital for $1.25 billion in cash.
WOODCREST COUNTY CLUB: Files for Chapter 11 Bankruptcy
------------------------------------------------------
CourierPostOnline.com reports that Woodcrest County Club President
Irv Richter sent a letter to members notifying them of the club's
bankruptcy filing. Mr. Richter said he was hoping for another
stay on a sheriff's sale scheduled for May 9, 2012, but the delay
was rejected by an appellate court.
As reported by the Troubled Company Reporter, Woodcrest Country
Club, a member-owned golf club in Cherry Hill, New Jersey, filed
for Chapter 11 protection (Bankr. D.N.J. Case No. 12-22055) on May
9 in Camden.
CourierPostOnline.com reports the Chapter 11 petition cites club
debt at more than $12 million, while the value of the property
subject to lien is put at $4.3 million. Exact figures for both
the debt and the club's assets were unavailable.
The golf course, which opened in the early 1930s, has $10.7
million in secured debt mostly owed on mortgages to Sun National
Bank of Vineland, New Jersey. About $6.37 million of those claims
are unsecured. There is another $1.5 million owing to trade
suppliers.
WORLD SURVEILLANCE: Swings to $1.4-Mil. Net Loss in First Quarter
-----------------------------------------------------------------
World Surveillance Group Inc. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $1.39 million on $146,700 of net sales for the three
months ended March 31, 2012, compared with net income of $2.40
million on $0 of net sales for the same period a year ago.
The Company reported a net loss of $1.12 million in 2011, compared
with a net loss of $9.79 million in 2010.
The Company's balance sheet at March 31, 2012, showed
$2.90 million in total assets, $17.65 million in total liabilities
and a $14.75 million total stockholders' deficit.
The Company incurred a loss from operations of $1.33 million for
the three months ended March 31, 2012, and negative cash flows
from operations of $419,000 for the three months ended March 31,
2012. The Company had a working capital deficit of $16.9 million
and total stockholders' deficit of $14.76 million at March 31,
2012. The Company had an accumulated deficit of $147.0 million at
March 31, 2012. The Company said these factors raise substantial
doubt about the Company's ability to continue as a going concern.
After auditing the 2011 results, Rosen Seymour Shapss Martin &
Company LLP, in New York, expressed substantial doubt about World
Surveillance's ability to continue as a going concern. The
independent auditors noted that the Company has experienced
significant losses and negative cash flows, resulting in decreased
capital and increased accumulated deficits.
Bankruptcy Warning
The Company's indebtedness at March 31, 2012, was $17,350,632. A
portion of those indebtedness reflects judicial judgments against
the Company that could result in liens being placed on the
Company's bank accounts or assets. The Company is reviewing its
ability to reduce this debt level due to the age or settlement of
certain payables but the Company may not be able to do so. This
level of indebtedness could, among other things:
* make it difficult for the Company to make payments on this
debt and other obligations;
* make it difficult for the Company to obtain future financing;
* require the Company to redirect significant amounts of cash
from operations to servicing the debt;
* require the Company to take measures such as the reduction in
scale of its operations that might hurt the Company's future
performance in order to satisfy the Company's debt
obligations; and
* make the Company more vulnerable to bankruptcy or an unwanted
acquisition on terms unsatisfactory to the Company.
A copy of the Form 10-Q is available for free at:
http://is.gd/foXOy5
About World Surveillance
World Surveillance Group Inc. designs, develops, markets and sells
autonomous lighter-than-air (LTA) unmanned aerial vehicles (UAVs)
capable of carrying payloads that provide persistent security
and/or wireless communication from air to ground solutions at low,
mid and high altitudes. The Company's airships, when integrated
with electronics systems and other high technology payloads, are
designed for use by government-related and commercial entities
that require real-time intelligence, surveillance and
reconnaissance or communications support for military, homeland
defense, border control, drug interdiction, natural disaster
relief and maritime missions. The Company is headquartered at the
Kennedy Space Center, in Florida.
WVSV HOLDINGS: Buckeye, Ariz. Landowner Files for Chapter 11
------------------------------------------------------------
W.V.S.V. Holdings LLC, the owner of about 13,000 acres of vacant
land in Buckeye, Arizona, filed a petition for Chapter 11
protection (Bankr. D. Ariz. Case No. 12-10598) on May 14 in
Phoenix.
The Debtor claims that the three tracts of land planned for
"future development" are worth $120 million and secure $57.3
million in debt. A copy of the schedules filed with the petition
is available at
http://bankrupt.com/misc/azb12-10598.pdf
A meeting of creditors under 11 U.S.C. Sec. 341(a) is scheduled
for June 19, 2012 at 9:00 a.m.
West Valley Ventures, LLC, owns 75% of the Debtor, and Breycliffe,
LLC, owns the remaining 25%.
WVSV HOLDINGS: Case Summary & 6 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: WVSV Holdings, LLC
1121 West Warner Road, Suite 109
Tempe, AZ 85284
Bankruptcy Case No.: 12-10598
Chapter 11 Petition Date: May 14, 2012
Court: U.S. Bankruptcy Court
District of Arizona (Phoenix)
Judge: Redfield T. Baum, Sr.
About the Debtor: The Debtor is the owner of about 13,000 acres of
vacant land in Buckeye, Arizona.
Debtor's Counsel: Michael W. Carmel, Esq.
MICHAEL W. CARMEL, LTD.
80 E. Columbus Avenue
Phoenix, AZ 85012-4965
Tel: (602) 264-4965
Fax: (602) 277-0144
E-mail: michael@mcarmellaw.com
Scheduled Assets: $120,043,085
Scheduled Liabilities: $57,351,340
The petition was signed by Lee Allen Johnson, manager of West
Valley Ven., manager.
Debtor's List of Its Six Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bryan Cave, LLP -- $8,390
P.O. Box 503089
Saint Louis, MO 63150
Chalmers & Associates, LLC -- $8,250
616 Park Lane
Billings, MT 59102
Urban Engineering, Inc. -- $5,564
120 N. 44th Street, #150
Phoenix, AZ 85034
Superior Surveying Services -- $5,355
Task Engineering -- $4,750
Erie & Associates, Inc. -- $4,473
XTREME GREEN: Incurs $635,000 Net Loss in First Quarter
-------------------------------------------------------
Xtreme Green Products Inc. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $635,253 on $265,535 of total revenue for the three
months ended March 31, 2012, compared with a net loss of $418,924
on $506,342 of total revenue for the same period during the prior
year.
The Company reported a net loss of $2.16 million in 2011, compared
with a net loss of $2.12 million in 2010.
The Company's balance sheet at March 31, 2012, showed $1.36
million in total assets, $3.15 million in total liabilities and a
$1.78 million total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/i0jUBp
About Xtreme Green
Based in North Las Vegas, Nev., Xtreme Green Products Inc. is an
eco-vehicle company that designs, develops and manufacXtures
revolutionary, green, 100% electric powered products such as
Personal Mobility Vehicles (PMVs), Motorcycles & Scooters, (ATVs)
All Terrain Vehicles, (UTVs) and Utility Terrain Vehicles.
After auditing the 2011 financial statements, Kingery & Crouse PA,
in Tampa, Florida, expressed substantial doubt about the Company's
ability to continue as a going concern. The independent auditors
noted that the Company has incurred significant losses from
operations and has working capital and stockholder deficiencies.
ZHONG WEN: Reports $34,000 Net Income in First Quarter
------------------------------------------------------
Zhong Wen International Holding Co, Ltd, filed with the U.S.
Securities and Exchange Commission its quarterly report on Form
10-Q disclosing net income of $34,278 on $68,894 of revenue for
the three months ended March 31, 2012, compared with net income of
$48,492 on $92,037 of revenue for the same period a year ago.
The Company reported a net loss of $27,200 on $314,000 of revenue
for 2011, compared with a net loss of $130,000 on $54,200 of
revenue for 2010.
The Company's balance sheet at March 31, 2012, showed
$1.46 million in total assets, $1.54 million in total liabilities,
all current, and an $84,500 total stockholders' deficit.
Bankruptcy Warning
The Company estimates that its cash and cash equivalents will fund
its operations through the financial support from the Company's
shareholders. The Company's shareholders have indicated their
continuing support to enable the Company to meet its obligations
to third parties as and when they fall due and to continue as a
going concern. This belief is based on the Company's current cost
structure and the Company's current expectations regarding
operating expenses and anticipated revenues. As of March 31,
2012, the Company had accumulated deficit of $219,545, and working
capital deficit of $84,500. If the Company is unable to obtain
additional funds, it will not be able to sustain its operations
and would be required to cease its operations or seek bankruptcy
protection.
A copy of the Form 10-Q is available for free at:
http://is.gd/5oD6Vb
About Zong Wen
Located in Qingzhou, Shandong, People's Republic of China, Zhong
Wen International Holding Co., Ltd., is in the business of
equipment products procurement for the construction industry, and
project consultation for construction projects.
After auditing results for the year ended Dec. 31, 2011,
Bongiovanni & Associates, CPA's, in Cornelius, North Carolina,
expressed substantial doubt about Zhong Wen's ability to continue
as a going concern. The independent auditors noted that the
Company has suffered losses from operations and has a net capital
deficiency as of Dec. 31, 2011.
ZOO ENTERTAINMENT: David Smith Discloses 73.7% Equity Stake
-----------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, David Smith and his affiliates disclosed
that, as of May 8, 2012, they beneficially own 22,551,448 shares
of common stock of Zoo Entertainment, Inc., representing 73.7% of
the shares outstanding.
Mr. Smith previously reported beneficial ownership of 21,938,659
common shares or a 71.9% equity stake as of March 26, 2012.
A copy of the amended filing is available for free at:
http://is.gd/qHI5pF
About Zoo Entertainment
Cincinnati, Ohio-based Zoo Entertainment, Inc. (NASDAQ CM: ZOOG)
is a developer, publisher and distributor of interactive
entertainment for Internet-connected consoles, handheld gaming
devices, PCs, and mobile devices.
The Company reported a net loss of $25.87 million in 2011,
compared with a net loss of $14.03 million in 2010.
The Company's balance sheet at Dec. 31, 2011, showed $2.06 million
in total assets, $15.24 million in total liabilities and a $13.18
million total stockholders' deficit.
For 2011, EisnerAmper LLP, in Edison, New Jersey, expressed
substantial doubt about the Company's ability to continue as a
going concern. The independent auditors noted that the Company
has both incurred losses and experienced net cash outflows from
operations since inception.
* 3rd Circ. Says Ch. 11 Collateral Value Can't Be Hypothetical
--------------------------------------------------------------
Max Stendahl at Bankruptcy Law360 reports that when valuing a
Chapter 11 debtor's collateral to determine the amount of a
creditor's secured claim, a bankruptcy court should be guided by
the collateral's fair market value as opposed to hypothetical
projections, the Third Circuit said Monday in a precedential
decision.
A three-judge panel resolved an issue at the heart of section
506(a) of the federal bankruptcy code. The section, which states
that a creditor has a secured claim only if the debtor's
collateral has sufficient value, does not address how to determine
such value.
* Section 523(a)(14) on Taxes Given Narrow Reading
--------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a district judge in Green Bay, Wisconsin, gave a
narrow reading to Section 523(a)(14) and (14A) which make debt
nondischargeable if incurred to pay taxes. U.S. District Judge
William C. Griesbach reversed the bankruptcy court, which ruled
that $121,000 wasn't dischargeable out of $885,000 owed to a bank
creditor. The debt of $121,000 arose when the bank on several
occasions covered overdrafts to permit payment of withholding
taxes.
According to the report, Judge Greisbach noted that most of the
cases relied on by the bank involved individuals who used credit
cards to pay taxes, thus converting non-dischargeable tax claims
into dischargeable unsecured claims owing to the credit-card
issuers. The district judge said the individual had no reason to
suspect that the bank later would contend the overdrafts were
non-dischargeable. He said there was no evidence the business
owner incurred the debt to pay taxes. In addition, Judge Greisbach
noted that there was never an application for a loan to pay
taxes.
The case is Van Dyn Hoven v. Bank of Kaukauna, 12-0076, U.S.
District Court, Eastern District of Wisconsin (Green Bay).
* Sanctions Imposed for Saying Jesuits Infiltrate Court
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that sanctions of $5,000 were upheld against a lawyer who
filed papers with a bankruptcy judge saying that the courts were
infiltrated by "the Roman cult and their military arm -- the
Jesuit order."
The report recounts that the bankruptcy judge had ruled that the
lawyer, Rebekah M. Nett, filed papers without first making a
reasonable investigation into the truth of the statements.
The lawyer had claimed that Jesuits were involved with the slave
trade, the French revolution, the American Civil War, Nazi
Germany, the assassination of President Kennedy and the sinking of
the Titanic, according to the court opinion.
According to the report, U.S. District Judge Joan N. Ericksen in
Minneapolis upheld the sanctions in an opinion on May 11. She
said that Ms. Nett "stuck her head in the sand and signed off on
the memorandum drafted by her client." Based upon Ms. Nett's
inability to "provide factual support for such statements," Judge
Ericksen said, the bankruptcy judge didn't abuse her discretion in
imposing sanctions.
The case is Nett v. Manty (In re Yehud-Monosson USA Inc.),
12-00448, U.S. District Court, District of Minnesota
(Minneapolis).
* Moody's Says US Retail Sector to Face Fiscal Policy Risks
-----------------------------------------------------------
The outlook for the US retail sector is stable, and Moody's
expects a modest 3.5% to 4.5% operating-income growth in 2012,
driven partly by inflation, says Moody's Investors Service in its
new industry outlook "2012 Is Off to a Strong Start But Retailers
Face Late-Year Headwinds." Inflation will be 1.9% in 2012 and 2.1%
in 2013, according to Moody's Analytics.
Moody's industry outlooks reflect the rating agency's expectations
for fundamental business conditions in the industry over the next
12 to 18 months.
"Retail industry operating-profit growth will outperform growth in
the overall economy, as consumers release pent-up demand and some
commodity costs ease. Although the slow economy will temper any
improvement," said Margaret Taylor, a Moody's Vice President --
Senior Credit Officer and author of the report.
"Still, the upcoming expiration of Bush-era tax cuts and the
temporary reduction in social security taxes in 2012, coupled with
a debt ceiling peak in early 2013 and election-year political
stagnation are significant risks to consumer spending," added
Taylor.
Luxury retailers, dollar store and auto-parts retailers to
outperform other segments of the US retail industry, with
operating earnings of Neiman Marcus Group (B2 stable) and Saks
Inc. (Ba3 stable) to perform well. The luxury retailers benefit
from customers less sensitive to high gas prices, says Moody's.
The other end of the retail spectrum will benefit too, says
Moody's. Dollar General Corp. (Ba1 positive) and Family Dollar
Stores Inc. (Baa3 stable), which combine very low prices with
convenient locations will continue to appeal to low and middle-
income consumers hard-hit by high gas prices.
The outlook update notes that discounters and warehouse clubs Wal-
Mart Stores Inc. (Aa2 stable), Target Corp. (A2 stable) and Costco
Wholesale Corp. (A1 stable) will also benefit from growing food
businesses that take share from grocers. Investment grade auto-
parts retailers AutoZone Inc. (Baa2, Prime-2, stable), O'Reilly
Automotive Inc. (Baa3 stable), and Advance Auto Parts Inc. (Baa3
stable) will also perform well, says Moody's.
But supermarkets and drugstores will be challenged by
environmental pressures that include increased competition and
reimbursement pressures, says Moody's, while high unemployment
continues to weight on office supply stores.
* Moody's Says US Supermarkets Can Withstand Pension Shortfall
--------------------------------------------------------------
Estimated multi-employer pension-plan funding shortfalls will
weaken the financial leverage metrics of US supermarkets but most
companies have sufficient cushions within their existing ratings
to accommodate the increased pressure, says Moody's Investors
Service in its new special comment "Supermarkets Have Cushion to
Withstand Pressure From Pension-Funding Shortfalls."
Moody's updated in April its underfunding multiples for rated US
companies that it identified as participating in multi-employer
pension plans (MEPPs).
Multi-employer pension plans (MEPPs) cover workers from multiple
employers and are found in industries where it is common for
employees to change employers frequently, such as construction or
supermarket retail.
"Supermarkets will need to redirect an increasingly large share of
cash flow toward funding their multi-employer pension plans,
although we do not expect any sudden or near-term increase in
pension-funding contributions," said Mickey Chadha, a Moody's Vice
President -- Senior Analyst and author of the report. "Funding
obligations are set by law and through the collective bargaining
process and don't change significantly with annual fluctuations in
plan-funding levels."
Moody's says that supermarkets can accommodate the funding
shortfall without impact on ratings at this time, but points to
Safeway Inc. (Baa3 stable) as having the least amount of cushion
as its credit metrics deteriorated on the back of aggressive debt-
financed share repurchases. Kroger Co. (Baa2 stable), SUPERVALU
INC. (B1 stable), and Stater Bros Holdings Inc. (B2 stable) will
see modest increases in leverage from Moody's upward revision to
pension shortfalls.
Moody's also notes that the risk of being the "last man standing"
in a MEPP is low, as unions and employers would likely seek to
prevent pension obligations from crippling companies that
participate in the plan. It's also unlikely that participating
employers would withdraw or become insolvent en masse.
* Greenberg Traurig Opens in Warsaw With Former Dewey Lawyers
-------------------------------------------------------------
The international law firm Greenberg Traurig, LLP has announced
that it opened an office in Warsaw, Poland and strategically
established a presence in Eastern Europe with a 50-plus-lawyer
team formerly with Dewey & LeBoeuf LLP. The firm's 35th office
will operate as Greenberg Traurig Grzesiak in Poland. Jaroslaw
Grzesiak, former managing partner of Dewey's Warsaw office, serves
as the managing partner and Lejb Fogelman as the senior partner.
"Our balanced business model, effective structure and unmatched
U.S. platform allow us to build from strength, ready to move on
top-tier opportunities in key regional locations as they arise.
This approach requires real discipline in an increasingly
undisciplined world, as we focus on the careful selection of
individuals and teams in a sensible manner," said Richard A.
Rosenbaum, Greenberg Traurig's Chief Executive Officer. "This team
has been successful in Poland for two decades, is integral to the
Warsaw business and legal communities, and is exactly such an
opportunity in one of the most important and successful European
markets, where entrepreneurship in the private sector is highly
valued and supported with policies that focus on growth."
At the same time, Frank R. Adams is joining the firm in London and
New York. Adams was a member of Dewey's Executive Committee and
the former global chair of Dewey's corporate finance practice,
most recently focused on its Europe, Middle East and Africa
regions. Last year, he handled the first-ever bond tender and
consent solicitation on the Polish market, as well as a series of
secured convertible notes exchanges that won the Treasury Today
2011 award for Best Corporate Debt Solution. Adams was a key
member of the team selected by Legal Business as the 2012 Finance
Team of the Year for its representation of Spartan Capital
Holdings on the PLN 18.1 billion (US$6.6 billion) LBi of Polkomtel
in June 2011. Relationship partner Grzesiak and Andrzej Wysoki?ski
in Warsaw also handled the transaction, for which The American
Lawyer selected Grzesiak as "Dealmaker of the Week."
Also joining in Warsaw and London is Federico Salinas, a U.S. and
English law qualified partner currently in Dewey's London office.
Salinas is widely experienced in emerging markets and was a
founder of Dewey's Dubai office. He also led Dewey's Turkey
practice and has experience in international capital markets, M&A,
and private equity transactions. Salinas led the team that won the
IFLR "IPO of the Year" Middle Eastern award for 2006 and 2008, and
was a key member of the team that handled one of the first single-
listing GDR offerings to list on the London Stock Exchange.
"Our office was approached by many of the highest quality firms in
Europe and the U.S. We chose Greenberg Traurig because we share
many of the same values - quality, strength, spirit and clarity of
vision. We feel that we have a recipe for success and are excited
about what this venture will bring to our collective clients
worldwide," said Grzesiak.
"Greenberg Traurig is financially stable and its platform,
business strategy, and commitment to delivering quality will
further elevate our team and strengthen the portfolio of services
we can offer to our clients," said Fogelman. "We are working
closely with clients on a seamless transition."
"We are pleased to grow with an exceptional and market-leading
office as part of our European network, as well as with these
individuals who will be immediately additive to our London team,"
said Paul Maher founding shareholder of Greenberg Traurig Maher
LLP in London.
The Warsaw team has advised on many of the key transactions in
Poland over the past 20 years. It is recognized as a premier
provider of legal services in Poland. In December 2011, the team
represented a group consisting of over 20 international and Polish
banks on the successful conclusion of a PLN 2 billion (US$634
million) debt restructuring for a Polish steel company. In April
2011, they completed the biggest M&A deal ever made in Poland and
the largest leveraged buy out this year.
In March 2012, the Warsaw office was named as the Private Equity
Law Firm of the Year in Poland at the 2012 Global Law Experts
Practice Area Awards. In addition, Chambers Europe 2012 ranked the
office as Band 1 in each of Corporate M&A, Private Equity, Capital
Markets Equity and Tax.
The Warsaw office provides legal services in a number of areas key
to important industries in Eastern Europe and beyond. The team
includes highly experienced and widely recognized legal
professionals working with clients across borders and sectors on
mergers and acquisitions, privatizations, capital markets, private
equity, project finance, asset securitization, bankruptcy
proceedings and financial restructurings, tax, litigation and
arbitration across a wide range of sectors including banking,
insurance, energy, telecommunications, real estate, and aviation,
among others.
Greenberg Traurig's first entr‚e into Europe was Amsterdam in 2003
with some of the best lawyers in the Netherlands. In 2009, the
firm opened in London, also with market leaders. The Warsaw office
will be Greenberg Traurig's first office in Eastern Europe and is
expected to enhance its existing European presence, which also
includes Milan via an alliance with highly ranked Studio Santa
Maria.
* Recent Small-Dollar & Individual Chapter 11 Filings
-----------------------------------------------------
In re 7842 E. Nestling, LLC
Bankr. D. Ariz. Case No. 12-08850
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/azb12-08850.pdf
represented by: Chris D. Barski, Esq.
Barski Drake PLC
E-mail: cbarski@barskidrake.com
In re Drilling Services, Inc.
Bankr. D. Ariz. Case No. 12-08873
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/azb12-08873.pdf
represented by: James F. Kahn, Esq.
James F. Kahn, P.C.
E-mail: james.kahn@azbar.org
In re T2 Software Services, Inc.
dba T2 Staffing Services
Bankr. M.D. Fla. Case No. 12-06228
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/flmb12-06228.pdf
represented by: Buddy D. Ford, Esq.
E-mail: Buddy@tampaesq.com
In re Jeff Veasley
Bankr. D. Nev. Case No. 12-50956
Chapter 11 Petition filed April 25, 2012
In re 48 Sayre Drive LLC
Bankr. D. N.J. Case No. 12-20705
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/njb12-20705p.pdf
See http://bankrupt.com/misc/njb12-20705c.pdf
represented by: Richard J. Kwasny, Esq.
Kwasny & Reilly
E-mail: kwasnylaw@aol.com
In re Goarany Developers, Inc.
Bankr. E.D.N.Y. Case No. 12-42992
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/nyeb12-42992.pdf
represented by: David Schachter, Esq.
Law Offices of Schachter, P.C.
E-mail: schachterlawpc@aol.com
In re Turner's Quality Home Care Service
Bankr. E.D.N.C. Case No. 12-03165
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/nceb12-03165.pdf
represented by: Robert Lewis, Jr., Esq.
The Lewis Law Firm, P.A.
E-mail: rlewis@thelewislawfirm.com
In re William Parker
Bankr. E.D.N.C. Case No. 12-03128
Chapter 11 Petition filed April 25, 2012
In re Steven Brown
Linda Brown
Bankr. E.D. Pa. Case No. 12-14058
Chapter 11 Petition filed April 25, 2012
In re B & LTrailer Sales And Service, Inc.
Bankr. W.D. Tenn. Case No. 12-24324
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/tnwb12-24324.pdf
represented by: John E. Dunlap, Esq.
E-mail: jdunlap00@gmail.com
In re Grace Enmon
Bankr. E.D. Tex. Case No. 12-10268
Chapter 11 Petition filed April 25, 2012
In re Jimmy Holder
Bankr. E.D. Tex. Case No. 12-50085
Chapter 11 Petition filed April 25, 2012
In re Tony Gee's Incorporated
Bankr. W.D. Va. Case No. 12-61015
Chapter 11 Petition filed April 25, 2012
See http://bankrupt.com/misc/vawb12-61015.pdf
represented by: Marshall Moore Slayton, Esq.
E-mail: lee.graham@bbrs.net
In re Salvatore Abbate
Bankr. D. Ariz. Case No. 12-09124
Chapter 11 Petition filed April 26, 2012
In re Ismael Diego
Bankr. C.D. Calif. Case No. 12-24693
Chapter 11 Petition filed April 26, 2012
In re Christopher Natale
Bankr. D. Mass. Case No. 12-13532
Chapter 11 Petition filed April 26, 2012
In re Van Peenen's Dairy, Inc.
Bankr. D. N.J. Case No. 12-20820
Chapter 11 Petition filed April 26, 2012
See http://bankrupt.com/misc/njb12-20820.pdf
represented by: Leonard S. Singer, Esq.
Zazella & Singer
E-mail: zandsattys@aol.com
In re Van Peenen Property LLC
Bankr. D. N.J. Case No. 12-20823
Chapter 11 Petition filed April 26, 2012
See http://bankrupt.com/misc/njb12-20823.pdf
represented by: Leonard S. Singer, Esq.
Zazella & Singer
E-mail: zandsattys@aol.com
In re The 20-20 Leadership Foundation
Bankr. D. N.M. Case No. 12-11649
Chapter 11 Petition filed April 26, 2012
See http://bankrupt.com/misc/nmb12-11649.pdf
represented by: Gabe Perez, Esq.
Carlos A. Miranda III & Associates, P.C.
E-mail: gperez@mirandafirm.com
In re Rene Garcia
Bankr. E.D.N.Y. Case No. 12-72592
Chapter 11 Petition filed April 26, 2012
In re William Smith
Bankr. E.D.N.C. Case No. 12-03190
Chapter 11 Petition filed April 26, 2012
In re Ovir Contractors Corp.
Bankr. D.P.R. Case No. 12-03199
Chapter 11 Petition filed April 26, 2012
See http://bankrupt.com/misc/prb12-03199.pdf
represented by: Emily Darice Davila Rivera, Esq.
Law Office William Davila De Pedro
E-mail: davilalawe@prtc.net
In re Ronald Kaufman
Bankr. D. Utah Case No. 12-25415
Chapter 11 Petition filed April 26, 2012
In re Steven Vance
Bankr. W.D. Va. Case No. 12-70803
Chapter 11 Petition filed April 26, 2012
In re Frederick Kriedler
Bankr. W.D. Wash. Case No. 12-14364
Chapter 11 Petition filed April 26, 2012
In re Gratiana Scrob
Bankr. W.D. Wash. Case No. 12-14371
Chapter 11 Petition filed April 26, 2012
In re Gabrielle Shores
Bankr. D. Ariz. Case No. 12-09199
Chapter 11 Petition filed April 27, 2012
In re James Rhead
Bankr. D. Ariz. Case No. 12-09190
Chapter 11 Petition filed April 27, 2012
In re CWES, Inc.
aka California Workforce and Energy Services, Inc.
Bankr. E.D. Calif. Case No. 12-13807
Chapter 11 Petition filed April 27, 2012
filed pro se
See http://bankrupt.com/misc/caeb12-13807.pdf
In re Jeff Brice
Bankr. S.D. Calif. Case No. 12-05992
Chapter 11 Petition filed April 27, 2012
In re Katherine Walden
Bankr. W.D. Mich. Case No. 12-04097
Chapter 11 Petition filed April 27, 2012
In re Havre Aerie #166 Eagles
aka Fraternal Order Of Eagles
Bankr. D. Mont. Case No. 12-60679
Chapter 11 Petition filed April 27, 2012
See http://bankrupt.com/misc/mtb12-60679.pdf
represented by: Steven M. Johnson, Esq.
E-mail: sjohnson@chjw.com
In re Christopher Hunold
Bankr. D. Nev. Case No. 12-14999
Chapter 11 Petition filed April 27, 2012
In re Frances Leonforte
Bankr. D. Nev. Case No. 12-14981
Chapter 11 Petition filed April 27, 2012
In re Liz Thompson
Bankr. D. Nev. Case No. 12-14996
Chapter 11 Petition filed April 27, 2012
In re Martin Schuster Building, LLC
Bankr. D. Nev. Case No. 12-14973
Chapter 11 Petition filed April 27, 2012
See http://bankrupt.com/misc/nvb12-14973.pdf
represented by: David A. Riggi, Esq.
E-mail: darnvbk@gmail.com
In re James Wiggins
Bankr. E.D.N.C. Case No. 12-03214
Chapter 11 Petition filed April 27, 2012
In re Countess Investments, Inc.
Bankr. D. Nev. Case No. 12-15001
Chapter 11 Petition filed April 27, 2012
See http://bankrupt.com/misc/nvb12-15001.pdf
represented by: Jonathan B. Goldsmith, Esq.
Goldsmith & Associates
E-mail: jonathan@vegaslawsite.com
In re Lexington South Homeowners' Association
Bankr. S.D. Ohio Case No. 12-12353
Chapter 11 Petition filed April 27, 2012
See http://bankrupt.com/misc/ohsb12-12353.pdf
represented by: Michael E. Clancey, Esq.
E-mail: clanceylaw@fuse.net
In re Carl Hughes
Bankr. W.D. Okla. Case No. 12-12140
Chapter 11 Petition filed April 27, 2012
In re Mulligan's Clubhouse, Inc.
Bankr. W.D. Pa. Case No. 12-22225
Chapter 11 Petition filed April 27, 2012
See http://bankrupt.com/misc/pawb12-22225.pdf
represented by: Donald R. Calaiaro, Esq.
Calaiaro & Corbett, P.C.
E-mail: dcalaiaro@calaiarocorbett.com
In re Galaxy MRI and Diagnostic Center, Ltd.
Bankr. N.D. Tex. Case No. 12-32648
Chapter 11 Petition filed April 27, 2012
See http://bankrupt.com/misc/txnb12-32648.pdf
represented by: Howard Marc Spector, Esq.
Spector & Johnson, PLLC
E-mail: hspector@spectorjohnson.com
In re Roderick Bell
Bankr. N.D. Tex. Case No. 12-32667
Chapter 11 Petition filed April 27, 2012
In re LAPO, Inc.
Bankr. W.D. Wash. Case No. 12-42942
Chapter 11 Petition filed April 27, 2012
See http://bankrupt.com/misc/wawb12-42942.pdf
represented by: Thomas W. Stilley, Esq.
Sussman Shank LLP
E-mail: tom@sussmanshank.com
In re Monica Shareef
Bankr. N.D. Ga. Case No. 12-60923
Chapter 11 Petition filed April 28, 2012
In re Creek Trail, LLC
whi Kevin Crey
wwi Toni Lynn Crey
Bankr. C.D. Calif. Case No. 12-13969
Chapter 11 Petition filed April 29, 2012
See http://bankrupt.com/misc/cacb12-13969.pdf
represented by: Norberto F. Reyes, Esq.
Reyes Law Group APLC
E-mail: bankruptcy@reyeslawgroup.com
In re George Ifeorah
Bankr. C.D. Calif. Case No. 12-15356
Chapter 11 Petition filed April 29, 2012
In re 15 Engle Street, LLC
Bankr. D. N.J. Case No. 12-21053
Chapter 11 Petition filed April 29, 2012
See http://bankrupt.com/misc/njb12-21053.pdf
represented by: Sangwon D. Sohn, Esq.
E-mail: swdsohn@verizon.net
In re Haviland Estates, LLC
Bankr. S.D.N.Y. Case No. 12-11779
Chapter 11 Petition filed April 29, 2012
See http://bankrupt.com/misc/nysb12-11779.pdf
represented by: Joseph C. Perez, Esq.
E-mail: perbarjoe@aol.com
In re Philip Philips
Bankr. D. Ariz. Case No. 12-09337
Chapter 11 Petition filed April 30, 2012
In re Agustin Soto
Bankr. C.D. Calif. Case No. 12-13974
Chapter 11 Petition filed April 30, 2012
In re Eleanor Lopez
Bankr. C.D. Calif. Case No. 12-25095
Chapter 11 Petition filed April 30, 2012
In re Ruth Delgado
Bankr. C.D. Calif. Case No. 12-25270
Chapter 11 Petition filed April 30, 2012
In re Tito Hernandez
Bankr. C.D. Calif. Case No. 12-11734
Chapter 11 Petition filed April 30, 2012
In re Agostino's, Inc.
dba Agostino's Fine Furniture & Design
Bankr. M.D. Fla. Case No. 12-06768
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/flmb12-06768p.pdf
See http://bankrupt.com/misc/flmb12-06768c.pdf
represented by: Stephen R. Leslie, Esq.
Stichter, Riedel, Blain & Prosser
E-mail: sleslie.ecf@srbp.com
In re Agostino Sciacqua
Bankr. M.D. Fla. Case No. 12-06762
Chapter 11 Petition filed April 30, 2012
In re Babadi & Finkel LLC
dba International Grill
Bankr. M.D. Fla. Case No. 12-02910
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/flmb12-02910.pdf
represented by: William B. McDaniel, Esq.
Bankruptcy Law Firm of Lansing J Roy, PA
E-mail: court@jacksonvillebankruptcy.com
In re Marilyn Hollan
Bankr. M.D. Fla. Case No. 12-02937
Chapter 11 Petition filed April 30, 2012
In re Jay Bass
Bankr. S.D. Fla. Case No. 12-20493
Chapter 11 Petition filed April 30, 2012
In re Jakki Dee
Bankr. N.D. Ga. Case No. 12-61068
Chapter 11 Petition filed April 30, 2012
In re Lillian Young
Bankr. N.D. Ga. Case No. 12-61128
Chapter 11 Petition filed April 30, 2012
In re Matthew McCord
Bankr. N.D. Ga. Case No. 12-11259
Chapter 11 Petition filed April 30, 2012
In re Steven Beck
Bankr. N.D. Ga. Case No. 12-61056
Chapter 11 Petition filed April 30, 2012
In re Vision South Utility Construction, Inc.
Bankr. N.D. Ga. Case No. 12-11245
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/ganb12-11245.pdf
represented by: J. Nevin Smith, Esq.
Smith Conerly LLP
E-mail: cstembridge@smithconerly.com
In re Glade 121, LP, a Texas limited partnership
Bankr. N.D. Ill. Case No. 12-81689
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/ilnb12-81689.pdf
represented by: Thomas E. Laughlin, Esq.
Attorney Thomas E. Laughlin
E-mail: tloff@aol.com
In re Morgen Thruston
Bankr. S.D. Iowa Case No. 12-01395
Chapter 11 Petition filed April 30, 2012
In re Blue Line Trucking, Inc.
Bankr. E.D. Mich. Case No. 12-21480
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/mieb12-21480p.pdf
See http://bankrupt.com/misc/mieb12-21480c.pdf
represented by: Daniel L. Kraft, Esq.
E-mail: kraftd3@sbcglobal.net
In re Manifest Capital Unlimited Inc.
Bankr. D. N.H. Case No. 12-11428
Chapter 11 Petition filed April 30, 2012
filed pro se
See http://bankrupt.com/misc/nhb12-11428.pdf
In re Kristine Ippolito
Bankr. D. N.J. Case No. 12-21347
Chapter 11 Petition filed April 30, 2012
In re Ovation Yachts Corporation
Bankr. D. N.J. Case No. 12-21208
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/njb12-21208.pdf
represented by: Robert M. Hirsh, Esq.
Arent Fox LLP
E-mail: hirsh.robert@arentfox.com
In re Salisbury 10 Acres, L.L.C.
Bankr. D. N.J. Case No. 12-21213
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/njb12-21213.pdf
represented by: Robert M. Hirsh, Esq.
Arent Fox LLP
E-mail: hirsh.robert@arentfox.com
In re Salisbury 20 Acres, L.L.C.
Bankr. D. N.J. Case No. 12-21219
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/njb12-21219.pdf
represented by: Robert M. Hirsh, Esq.
Arent Fox LLP
E-mail: hirsh.robert@arentfox.com
In re Mohamed El-Goarany
Bankr. E.D.N.Y. Case No. 12-43156
Chapter 11 Petition filed April 30, 2012
In re Johnny Hayes
Bankr. E.D.N.C. Case No. 12-03274
Chapter 11 Petition filed April 30, 2012
In re Abnel Crespo Ojeda
Bankr. D.P.R. Case No. 12-03354
Chapter 11 Petition filed April 30, 2012
In re Servicios Medicos De Anasco Inc.
Bankr. D.P.R. Case No. 12-03279
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/prb12-03279.pdf
represented by: Gloria M. Justiniano Irizarry, Esq.
Justiniano's Law Office
E-mail: gloriae55amg@yahoo.com
In re Christ Revival Center Church, a non-profit corporation
Bankr. D. S.C. Case No. 12-02769
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/scb12-02769.pdf
represented by: Elizabeth M. Atkins, Esq.
E-mail: ematkins2000@yahoo.com
In re Cardinal Housing and Land Development, LLC
Bankr. E.D. Tex. Case No. 12-50089
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/txeb12-50089.pdf
represented by: David Ruff, II, Esq.
E-mail: davidvruff@yahoo.com
In re J. Manuel Mares
Maria R. Mares
Bankr. E.D. Tex. Case No. 12-41139
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/txeb12-41139.pdf
represented by: Larry Kent Hercules, Esq.
E-mail: lkhercules@yahoo.com
In re J. Mares
Bankr. E.D. Tex. Case No. 12-41139
Chapter 11 Petition filed April 30, 2012
In re George Martin
Bankr. N.D. Tex. Case No. 12-32739
Chapter 11 Petition filed April 30, 2012
In re McCowan-Johnson Funeral Home, Inc.
Bankr. N.D. Tex. Case No. 12-42496
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/txnb12-42496p.pdf
See http://bankrupt.com/misc/txnb12-42496c.pdf
represented by: Lui O. Akwuruoha, II, Esq.
Akwuruoha Law Firm
In re General Supply and Equipment Co., Inc.
Bankr. S.D. Tex. Case No. 12-33344
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/txsb12-33344.pdf
represented by: Jack Nicholas Fuerst, Esq.
E-mail: jfuerst@sbcglobal.net
In re MFLP Partners, Ltd.
Bankr. S.D. Tex. Case No. 12-33189
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/txsb12-33189.pdf
represented by: Margaret Maxwell McClure, Esq.
E-mail: margaret@mmmcclurelaw.com
In re Ronald Householder
Bankr. S.D. Tex. Case No. 12-33306
Chapter 11 Petition filed April 30, 2012
In re Kids View, Inc.
Bankr. W.D. Texas Case No. 12-30816
Chapter 11 Petition filed April 30, 2012
See http://bankrupt.com/misc/txwb12-30816.pdf
represented by: Sidney J. Diamond, Esq.
E-mail: usbc@sidneydiamond.com
In re Martin Smith
Bankr. N.D. Ala. Case No. 12-81414
Chapter 11 Petition filed May 1, 2012
In re Elias Naman
Bankr. S.D. Ala. Case No. 12-01513
Chapter 11 Petition filed May 1, 2012
In re Donald Campbell
Bankr. C.D. Calif. Case No. 12-14049
Chapter 11 Petition filed May 1, 2012
In re Elvis Mendes
Bankr. C.D. Calif. Case No. 12-25375
Chapter 11 Petition filed May 1, 2012
In re Sonya D. International, Inc.
Bankr. C.D. Calif. Case No. 12-25456
Chapter 11 Petition filed May 1, 2012
See http://bankrupt.com/misc/cacb12-25456.pdf
represented by: Brian L. Davidoff, Esq.
E-mail: bdavidoff@davidoffgold.com
In re David OHanneson
Bankr. N.D. Calif. Case No. 12-53343
Chapter 11 Petition filed May 1, 2012
In re CGO Enterprise LLC
Bankr. D. Colo. Case No. 12-19010
Chapter 11 Petition filed May 1, 2012
See http://bankrupt.com/misc/cob12-19010.pdf
represented by: Gregory Goodman, Esq.
E-mail: greg@goodmanbowles.com
In re Wasfi A. Makar, M.D., P.A.
Bankr. M.D. Fla. Case No. 12-05979
Chapter 11 Petition filed May 1, 2012
See http://bankrupt.com/misc/flmb12-05979.pdf
represented by: David J. Volk, Esq.
Volk Law Offices P.A.
E-mail: dvolk@volklawoffices.com
In re Minkara Group Development, LLC
Bankr. N.D. Ga. Case No. 12-61467
Chapter 11 Petition filed May 1, 2012
filed pro se
In re Jivko Jelev
Bankr. N.D. Ill. Case No. 12-18051
Chapter 11 Petition filed May 1, 2012
In re James Kelly
Bankr. D. Mass. Case No. 12-13794
Chapter 11 Petition filed May 1, 2012
In re Dennis Cedar
Bankr. E.D. Mich. Case No. 12-51059
Chapter 11 Petition filed May 1, 2012
In re Nathan Topol
Bankr. D. Nev. Case No. 12-51014
Chapter 11 Petition filed May 1, 2012
In re Commerce Financial Group, Inc.
Bankr. D. N.J. Case No. 12-21525
Chapter 11 Petition filed May 1, 2012
See http://bankrupt.com/misc/njb12-21525.pdf
represented by: Laurent W. Metzler, Esq.
Metzler & DeSantis, LLP
E-mail: LWM@metzlerdesantis.com
In re Sheepshead Landing LLC
Bankr. E.D.N.Y. Case No. 12-43222
Chapter 11 Petition filed May 1, 2012
See http://bankrupt.com/misc/nyeb12-43222.pdf
represented by: Lawrence Morrison, Esq.
E-mail: morrlaw@aol.com
In re Ianemm, Inc.
dba Water Color Cafe
Bankr. S.D.N.Y. Case No. 12-22847
Chapter 11 Petition filed May 1, 2012
See http://bankrupt.com/misc/nysb12-22847.pdf
represented by: Anne J. Penachio, Esq.
Penachio Malara LLP
E-mail: apenachio@pmlawllp.com
penachio.anne@gmail.com
In re Tony Tosh
Bankr. E.D.N.C. Case No. 12-03300
Chapter 11 Petition filed May 1, 2012
In re Nardi's Inc.
dba Nardi's Fine Dining
Bankr. W.D. Pa. Case No. 12-22301
Chapter 11 Petition filed May 1, 2012
See http://bankrupt.com/misc/pawb12-22301.pdf
represented by: Robert O. Lampl, Esq.
E-mail: rol@lampllaw.com
In re Michael Hulon
Bankr. D. S.C. Case No. 12-02798
Chapter 11 Petition filed May 1, 2012
In re Tarrant Opportunity Fund, Ltd.
Bankr. N.D. Tex. Case No. 12-42658
Chapter 11 Petition filed May 1, 2012
filed pro se
*********
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, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2012. 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 ***