/raid1/www/Hosts/bankrupt/TCR_Public/120613.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, June 13, 2012, Vol. 16, No. 163
Headlines
205 EAST: Taps Klestadt & Winters as Bankruptcy Counsel
205 EAST: Wants to Hire Marcus & Pollack as Property Tax Attorneys
205 EAST: Debtors File Schedules of Assets and Liabilities
38 STUDIOS: Video-Game Maker Files to Liquidate
4KIDS ENTERTAINMENT: Price Rises at Bankruptcy Auction
AEROFLEX INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg
ALLIED NEVADA: S&P Gives 'B' Corp. Credit Rating; Outlook Stable
ALLIED SYSTEMS: Consents to Being in Chapter 11
AMBASSADORS INT'L: Former Execs Get Defense Coverage in DOJ Fight
AMERICAN AIRLINES: Collateral for 7.5% Sr. Notes Pegged at $2.6BB
AMERICAN AIRLINES: Trial on Suit vs. Sabre to Start Oct. 3
AMERICAN AIRLINES: To Add Boeing 777 Planes to Fleet in December
AMERICAN REALTY: Marquis Aurbach Approved as Bankruptcy Counsel
ARCAPITA BANK: Wants Control of Case Through January
ARCAPITA BANK: Falcon Gas Sues Enterprise Over Damaged Plane
ASCEND LEARNING: Moody's Affirms 'B2' CFR; Outlook Negative
ASTORIA CAPITAL: Fitch Affirms Rating on Preferred Stock at 'B+'
ATLANTIS OF JACKSONVILLE: CenterState Bank to Be Paid in 7 Years
AUTOS VEGA: Euroclass Motors' Plan of Reorganization Confirmed
BEAR STEARNS: SAMI Investors' Suit Junked Due to False Ratings
BEAR STEARNS: Investment Firm Sues JPMorgan Over Wind Down
BEEBE MEDICAL: S&P Hikes Rating on $39.8MM Revenue Bonds to 'B+'
BERNARD L. MADOFF: Trustee Argues to Stop Stanley Chais Suits
BERNARD L. MADOFF: Trial on Extraterritoriality in September
BEXAR COUNTY: Moody's Cuts Rating on Housing Revenue Bonds to B2
BICENT HOLDINGS: To Seek Plan Confirmation on July 30
CAGLE'S INC: Creditors See Full-Payment Plan With Interest
CAMTECH PRECISION: Genovese Joblove to Pursue Avoidance Actions
CBS I LLC: Summerlin Building Owner Files for Chapter 11
CHARLES STREET: Church Intends to Subordinate Bank Claim
CITIZENS CORP: Case Trustee Can Hire Harwell Howard as Counsel
CLIFFS CLUB: Asks for Plan Exclusivity Until Oct. 1
CONNAUGHT GROUP: Files Plan That Offers to Pay at Least 55%
CONTINENTAL AIRLINES: S&P Raises Rating on Class B Certs. to 'BB+'
DEWEY & LEBOEUF: Committee Against Having Bank Liens on Lawsuits
DIPPIN' DOTS: Assets Sold, Case Converted to Chapter 7 Liquidation
DUKE REALTY: Fitch Assigns 'BB' Rating on Preferred Stock
DZ.EYE.N STUDIOS: Involuntary Chapter 11 Case Summary
EASTMAN KODAK: Files Bid Procedures for KISS Patent Portfolios
EASTMAN KODAK: Rejects Patent Claims by Apple, FlashPoint
EASTMAN KODAK: ITC Holds Patent Claim vs. Apple, RIM Invalid
EASTMAN KODAK: G. Alston Joins Retiree Committee
ECLIPSE AVIATION: Lack of Notice Bars Payment of Damages
ELLIPSO INC: Court Won't Refund $176 Filing Fee
ENERGY CONVERSION: Court Rejects Committee's Bid to File Own Plan
ENERGY CONVERSION: Debtors' 50% Plan Set for July 18 Approval
ENERGY CONVERSION: Court Approves Deloitte Tax as Tax Advisors
ENERGY CONVERSION: Plea Vacating Clark Hill Retention Denied
ENERGY CONVERSION: Schafer and Weiner OK'd as Conflicts Counsel
ENERGY CONVERSION: Hilco Streambank Tapped to Market IP Assets
EVERGREEN SOLAR: Wants Plan Filing Period Extended to Aug. 13
EXELON CORP: Moody's Reviews Ratings for Possible Downgrade
FILENE'S BASEMENT: Resorts to Mediation to Exit Bankruptcy
FILENE'S BASEMENT: Syms Committee Disagrees on Deal With Landlord
FLEETWOOD ENTERPRISES: DIP Lenders Can Keep $2.4MM Commitment Fee
FOOT LOCKER: Moody's Upgrades CFR/PDR to 'Ba2'; Outlook Stable
FRANKLIN CREDIT: Non-Debtor Unit to Pay for Lawyers' Fees
FREEDOM COMMUNICATIONS: Sells OC Register, Others to 2100 Trust
GALLANT ACQUISITIONS: Rogers & Anderson OK'd as Bankruptcy Counsel
GARLOCK SEALING: Asbestos Panel Taps Motley, Waters for Estimation
GLOBAL AVIATION: Imperial Capital to Provide Financial Valuation
GLOBALSTAR INC: Warns EUR53-Mil. Judgment May Force Bankruptcy
H&M OIL & GAS: Fends Off Lender's Request for Trustee
HEALTHWAYS INC: Moody's Withdraws 'Ba3' Corporate Family Rating
HOLOGIC INC: Moody's Assigns 'B1' CFR/PDR; Outlook Stable
HOUGHTON MIFFLIN: Objects to U.S. Trustee's Bid to Move Case
HUSSEY COPPER: Taps W&W Actuarial to Provide Actuarial Services
ICG REAL ESTATE: Has Until Aug. 7 to Propose Chapter 11 Plan
ICG REAL ESTATE: Nathan Zousmer Approved as Bankruptcy Counsel
ICG REAL ESTATE: David Warren OK'd to Handle Wayne County Suits
ICG REAL ESTATE: Douglas D. Hampton Ok'd as Litigation Counsel
INSIGHT GLOBAL: Moody's Affirms 'B1' CFR; Outlook Positive
INTELLIGRATED INC: Moody's Says Permira Buyout Plan Credit Neg.
IRON MOUNTAIN: S&P Puts 'BB-' Corporate Credit Rating on Watch Neg
JEFFERSON COUNTY, AL: No Creditors Committee Formed Yet
LANDSLIDE HOLDINGS: S&P Assigns 'B' Corporate Credit Rating
LEGAL HELPERS: Gets Suit Over Fees Sent to Arbitration
LEHMAN BROTHERS: Dist. Court Rules Against Trustee in $2BB Dispute
LEHMAN BROTHERS: Closes Purchase of Remaining Archstone Stake
LEHMAN BROTHERS: Stipulation Signed Dismissing BTSX Lawsuit
LEHMAN BROTHERS: Stipulation Signed Dismissing eClerx Suit
LIGHTSQUARED INC: Has Commitment From US Bancorp Unit for DIP Loan
LIL' BIT OF CHICAGO: M.D. Pa. Court Dismisses Suit v. BB&T
LSP BATESVILLE: S&P Withdraws 'D' Ratings on $326MM Sr. Bonds
LSP MADISON: Moody's Rates $750MM Sr. Secured Term Loan at 'Ba2'
M WAIKIKI: Marriott Claim Now Pegged at $20.6 Million
MERIT GROUP: National Patent Has Green Light to Withdraw Claim
NAVISTAR INTERNATIONAL: S&P Cuts Corporate Credit Rating to 'B+'
NEWELL RUBBERMAID: Moody's Affirms Ba1 Subordinated Debt Rating
NIFTUS LLC: Files for Chapter 11 in Roanoke, Va.
NIFTUS LLC: Voluntary Chapter 11 Case Summary
ODYSSEY IX: Stichter Riedel Approved as Bankruptcy Counsel
OMAR BOTERO-PARAMO: BoNY Loses Subrogation Case in 4th Circuit
PERPETUAL ENERGY: S&P Cuts Corporate Credit Rating to 'B-'
PHILADELPHIA ORCHESTRA: Judge Frank Sets June 28 Plan Hearing
PILGRIM'S PRIDE: Texas Appeals Court Remands Henderson Ruling
POLYPORE INTERNATIONAL: S&P Rates $450MM Senior Debt 'BB'
PRM REALTY: Has OK to Hire NHB Advisors as Financial Advisor
QUALTEQ INC: Can Use Amalgamated Bank Cash Collateral
QUALTEQ INC: Can Enter Into $38MM Bayside Vmark Exit Financing
RALPH ROBERTS: Court Won't Reschedule Sec. 341 Meeting
RIDGE MOUNTAIN: Hiring Harris Beach as Bankruptcy Counsel
RIDGE MOUNTAIN: Sec. 341 Creditors' Meeting Set for July 5
RIVERS PITTSBURGH: Moody's Upgrades CFR to 'B3'; Outlook Stable
RLD INC: Mikel Bryan OK'd to Handle General Business Matters
R.E. LOANS: Files Modified Fourth Amended Reorganization Plan
ROOMSTORE INC: To Sell Assets; Auction Set for June 25
RYAN INTERNATIONAL: Hardin County Wants Turnover, Cash Restoration
RYAN INTERNATIONAL: Deal Resolving Objection to Cash Use OK'd
SALANDER-O'REILLY: Wells Fargo Barred From Pursuing Estate Claim
SANTANDER BANCORP: Fitch Affirms 'BB+' Viability Rating
SANTANDER CAPITAL: Fitch Lowers Rating on Preferred Stock to 'BB-'
SDA INC: Strauss Auto to Sell Leases for Scarce Repair Bays
SEJWAD HOTELS: Hearing on Liquidating Plan Outline on July 26
SEDONA DEVELOPMENT: Specialty Mortgage Amends Plan Outline
SOLAR TRUST: Has Buyer for Desert Center Project
ST. JOHNSBURY: Moody's Upgrades Rating on G.O. Bonds From 'Ba1'
T-L BRYWOOD: Has Interim Okay to Use Cash Collateral
TANK HOLDING: Moody's Assigns 'B2' CFR/PDR; Outlook Stable
TCIM SERVICES: Meeting to Form Creditors' Panel on June 14
TEXASBANC CAPITAL: Fitch Cuts Rating on Preferred Stock to 'BB-'
THINES LLC: M&T Bank's Response Deadline Moved to June 22
TOUSA INC: Lenders Seek Rehearing on Fraudulent Transfer
TRIBUNE CO: Minor Claims in FitzSimons Suit Dropped
TRIDENT MICROSYSTEMS: Court Schedules July 13 as Claims Bar Date
TRONOX INC: Trial Costing Anadarko $2 Billion in Market Cap
VANGUARD NATURAL: S&P Affirms 'B' Corporate Credit Rating
WASHINGTON MUTUAL: Unsecured Creditors Now Recovering 100%
WESCHE JEWELERS: Files for Chapter 11 Bankruptcy in Orlando
ZAYO GROUP: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable
* Moody's Says Offtakers' Default Can Drag PPP Projects' Ratings
* S&P's Global Default Tally Hikes to 33 After PBG Woes
* Higher Default Rate Owing on Mortgage Debt
* No Rise in Bankruptcy on the Horizon, Statistics Show
* Four Failed Banks Bring Year's Total to 28
* Law Firms Sued for $2.3M Over Dumped Lease in Merger
* Morgan Joseph's Quarterly Report Comments on M&A Activity
* Erich Eisenegger Joins McDermott's N.Y. Office as Partner
* Shaw Pittman Restructuring Attorneys Join Katten Muchin
* Upcoming Meetings, Conferences and Seminars
*********
205 EAST: Taps Klestadt & Winters as Bankruptcy Counsel
-------------------------------------------------------
205 East 45 LLC and EALC, LLC, seek authorization from the U.S.
Bankruptcy Court for the Southern District of New York to employ
Klestadt & Winters, LLP, as bankruptcy counsel, nunc pro tunc to
May 21, 2012.
K&W will, among other things, prepare on behalf of the Debtors,
motions, applications, answers, orders, reports, and papers
necessary to the administration of the estates, for these hourly
rates:
Tracy L. Klestadt $625
Brendan M. Scott $375
Partners $375-$625
Associates $195-$225
Paralegals $150
Mr. Klestadt attests to the Court that K&W is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About 205 East 45 LLC and EALC LLC
205 East 45 LLC, owner of the Alex Hotel, and EALC LLC, owner of
Flatotel in Manhattan, filed Chapter 11 petitions (Bankr. S.D.N.Y.
Case Nos. 12-12208 and 12-2209) on May 21, 2012, to complete a
transfer of ownership to secured lenders. The Debtors filed a
Chapter 11 plan of reorganization together with the petitions. A
copy of the disclosure statement explaining the Plan is available
for free at http://bankrupt.com/misc/205_East_Ch11_Plan.pdf
The Alex, at 205 East 45th Street in Manhattan, has 203 luxury
hotel rooms and suites and $123 million in mortgage debt. The
Flatotel, at 135 West 52nd Street in mid-town Manhattan, is a
46-story boutique luxury hotel. The Flatotel has 290 rooms and
$245.2 million in mortgages. The hotels defaulted on mortgage
debt in January 2009.
Foreclosure for the Alex Hotel and Flatotel began in July and
August 2010, respectively. In October, a receiver, Neal
Fellenbaum, of Zegen and Fellenbaum, was appointed.
The proposed Chapter 11 plan will carry out a settlement
negotiated in the foreclosure proceeding where the state court
ruled this year that the lenders were entitled to foreclose.
The salient terms of the Plan are:
* Holders of $100.3 million of secured debt against 205 East
and $192.5 million of secured debt against EALC will receive
100% of the ownership of the reorganized Debtors plus a new
note. 205 East's secured lender will have a 70.29% recovery
while EALC's secured creditor will have a 40.49% recovery.
* Holders of general unsecured claims totaling under $1 million
will receive the lesser of the pro rata share of the general
unsecured claims distribution or cash in the amount of 20%.
* the owners who include Simon Elias and Iazk Senbahar will
receive releases from guarantees to lenders and will receive
$2.5 million cash.
The lenders are Rockport Group LLC, Atlas Capital Group LLC and
Procaccianti Group. They purchased the debt from the original
lender Anglo Irish Bank Corp. Ltd.
Alex Hotel is also home to Riingo, the restaurant under the
direction of Executive Chef Jose Diaz, and serves unique organic
American cuisine. The Debtor intends to reject the lease with
Riingo.
Bankruptcy Judge Allan L. Gropper oversees the Chapter 11 cases.
205 East and EALC LLC each estimated assets of $50 million to
$100 million and debts of $100 million to $500 million. The
petitions were signed by Steven A. Carlson, chief restructuring
officer.
The receiver is represented by Andre Cizmarik, Esq., at Edwards
Wildman Palmer LLP.
ARL Hotel Management LLC, ARL Manhattan West Management LLC and
ARL Manhattan East Management LLC are represented by Douglas B.
Rosner, Esq., at Goulston & Storrs.
Secured lenders RPAP Hotel Debt (Flatotel), L.L.C and RPAP Hotel
Debt (Alex), L.L.C are represented by Jeffrey R. Gleit, Esq., at
Kasowitz, Benson, Torres & Friedman LLP.
205 EAST: Wants to Hire Marcus & Pollack as Property Tax Attorneys
------------------------------------------------------------------
205 East 45 LLC and EALC, LLC, seek permission from the U.S.
Bankruptcy Court for the Southern District of New York to employ
Marcus & Pollack, LLP, as property tax attorneys, nunc pro tunc to
May 21, 2012.
M&P will represent the Debtors in certain tax certiorari
proceedings. M&P will negotiate with the City of New York on
behalf of the Debtors and prepare, serve and file necessary papers
and documentation, including applications for review of
assessments to the New York City Tax Commission and petitions to
review assessments in New York State Supreme Court and legal
proceedings.
The Debtors and M&P have agreed to a contingency fee structure in
consideration for the services to be rendered by M&P to the
Debtors. In the event that a tax savings results from the
negotiations with the City of New York and hearings before the Tax
Commission of the City of New York or from a trial or a settlement
resulting in a judgment or a decree of a court, which reduce
either the tentative or final assessments placed upon the
Properties for any tax year, the Debtors shall be billed, upon
Court approval, at the rate of 15% of the Tax Savings effectuated
for such tax year. Tax Savings shall be calculated by multiplying
the amount of the actual assessment reduction applied that year by
the applicable tax rate. To the extent the Tax Savings are
transitionalized over a five-year period, the fee shall likewise
be payable over a five-year period, commencing in the year
receiving the actual assessment reduction.
To the best of the Debtors' knowledge, M&P is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About 205 East 45 LLC and EALC LLC
205 East 45 LLC, owner of the Alex Hotel, and EALC LLC, owner of
Flatotel in Manhattan, filed Chapter 11 petitions (Bankr. S.D.N.Y.
Case Nos. 12-12208 and 12-2209) on May 21, 2012, to complete a
transfer of ownership to secured lenders. The Debtors filed a
Chapter 11 plan of reorganization together with the petitions. A
copy of the disclosure statement explaining the Plan is available
for free at http://bankrupt.com/misc/205_East_Ch11_Plan.pdf
The Alex, at 205 East 45th Street in Manhattan, has 203 luxury
hotel rooms and suites and $123 million in mortgage debt. The
Flatotel, at 135 West 52nd Street in mid-town Manhattan, is a
46-story boutique luxury hotel. The Flatotel has 290 rooms and
$245.2 million in mortgages. The hotels defaulted on mortgage
debt in January 2009.
Foreclosure for the Alex Hotel and Flatotel began in July and
August 2010, respectively. In October, a receiver, Neal
Fellenbaum, of Zegen and Fellenbaum, was appointed.
The proposed Chapter 11 plan will carry out a settlement
negotiated in the foreclosure proceeding where the state court
ruled this year that the lenders were entitled to foreclose.
The salient terms of the Plan are:
* Holders of $100.3 million of secured debt against 205 East
and $192.5 million of secured debt against EALC will receive
100% of the ownership of the reorganized Debtors plus a new
note. 205 East's secured lender will have a 70.29% recovery
while EALC's secured creditor will have a 40.49% recovery.
* Holders of general unsecured claims totaling under $1 million
will receive the lesser of the pro rata share of the general
unsecured claims distribution or cash in the amount of 20%.
* the owners who include Simon Elias and Iazk Senbahar will
receive releases from guarantees to lenders and will receive
$2.5 million cash.
The lenders are Rockport Group LLC, Atlas Capital Group LLC and
Procaccianti Group. They purchased the debt from the original
lender Anglo Irish Bank Corp. Ltd.
Alex Hotel is also home to Riingo, the restaurant under the
direction of Executive Chef Jose Diaz, and serves unique organic
American cuisine. The Debtor intends to reject the lease with
Riingo.
Bankruptcy Judge Allan L. Gropper oversees the Chapter 11 cases.
205 East and EALC LLC each estimated assets of $50 million to
$100 million and debts of $100 million to $500 million. The
petitions were signed by Steven A. Carlson, chief restructuring
officer.
The receiver is represented by Andre Cizmarik, Esq., at Edwards
Wildman Palmer LLP.
ARL Hotel Management LLC, ARL Manhattan West Management LLC and
ARL Manhattan East Management LLC are represented by Douglas B.
Rosner, Esq., at Goulston & Storrs.
Secured lenders RPAP Hotel Debt (Flatotel), L.L.C and RPAP Hotel
Debt (Alex), L.L.C are represented by Jeffrey R. Gleit, Esq., at
Kasowitz, Benson, Torres & Friedman LLP.
205 EAST: Debtors File Schedules of Assets and Liabilities
----------------------------------------------------------
EALC LLC, filed with the U.S. Bankruptcy Court for the Southern
District of New York its schedules of assets and liabilities,
disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $100,000,000
B. Personal Property $1,083,642
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $246,180,237
E. Creditors Holding
Unsecured Priority
Claims $0
F. Creditors Holding
Unsecured Non-priority
Claims $825,286
----------- -----------
TOTAL $101,083,642 $247,005,523
Affiliate 205 East 45 LLC also filed its schedules, disclosing
$87,993,139 in assets and 123,455,395 in liabilities.
Full-text copies of the schedules are available for free at:
http://bankrupt.com/misc/205_EAST_EALC_sal.pdf
http://bankrupt.com/misc/205_EAST_sal.pdf
About 205 East 45 LLC and EALC LLC
205 East 45 LLC, owner of the Alex Hotel, and EALC LLC, owner of
Flatotel in Manhattan, filed Chapter 11 petitions (Bankr. S.D.N.Y.
Case Nos. 12-12208 and 12-2209) on May 21, 2012, to complete a
transfer of ownership to secured lenders. The Debtors filed a
Chapter 11 plan of reorganization together with the petition. A
copy of the disclosure statement explaining the Plan is available
for free at http://bankrupt.com/misc/205_East_Ch11_Plan.pdf
The Alex, at 205 East 45th Street in Manhattan, has 203 luxury
hotel rooms and suites and $123 million in mortgage debt. The
Flatotel, at 135 West 52nd Street in mid-town Manhattan, is a
46-story boutique luxury hotel. The Flatotel has 290 rooms and
$245.2 million in mortgages. The hotels defaulted on mortgage
debt in January 2009.
Foreclosure for the Alex Hotel and Flatotel began in July and
August 2010, respectively. In October, a receiver, Neal
Fellenbaum -- nfellenbaum@zfny.com -- of Zegen and Fellenbaum, was
appointed.
The proposed Chapter 11 plan will carry out a settlement
negotiated in the foreclosure proceeding where the state court
ruled this year that the lenders were entitled to foreclose.
The salient terms of the Plan are:
* Holders of $100.3 million of secured debt against 205 East
and $192.5 million of secured debt against EALC will receive
100% of the ownership of the reorganized Debtors plus a new
note. 205 East's secured lender will have a 70.29% recovery
while EALC's secured creditor will have a 40.49% recovery.
* Holders of general unsecured claims totaling under $1 million
will receive the lesser of the pro rata share of the general
unsecured claims distribution or cash in the amount of 20%.
* the owners who include Simon Elias and Iazk Senbahar will
receive releases from guarantees to lenders and will receive
$2.5 million cash.
The lenders are Rockport Group LLC, Atlas Capital Group LLC and
Procaccianti Group. They purchased the debt from the original
lender Anglo Irish Bank Corp. Ltd.
Alex Hotel is also home to Riingo, the restaurant under the
direction of Executive Chef Jose Diaz, and serves unique organic
American cuisine. The Debtor intends to reject the lease with
Riingo.
Bankruptcy Judge Allan L. Gropper oversees the Chapter 11 cases.
Brendan M. Scott, Esq., at Klestadt & Winters, LLP, represents the
Debtors.
205 East and EALC LLC each estimated assets of $50 million to $100
million and debts of $100 million to $500 million. The petitions
were signed by Steven A. Carlson, chief restructuring officer.
The receiver is represented by Andre Cizmarik, Esq., at Edwards
Wildman Palmer LLP.
ARL Hotel Management LLC, ARL Manhattan West Management LLC and
ARL Manhattan East Management LLC are represented by Douglas B.
Rosner, Esq., at Goulston & Storrs.
Secured lenders RPAP Hotel Debt (Flatotel), L.L.C and RPAP Hotel
Debt (Alex), L.L.C are represented by Jeffrey R. Gleit, Esq., at
Kasowitz, Benson, Torres & Friedman LLP.
38 STUDIOS: Video-Game Maker Files to Liquidate
-----------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that 38 Studios LLC, a video-game developer founded by
former Boston Red Sox pitcher Curt Schilling, filed for
liquidation last week without attempting to reorganize. Although
based in Providence, Rhode Island, the company filed the Chapter 7
petition in Delaware (Case No. 12-11743).
According to the report, the company's financing included a $62.3
million secured loan from the Rhode Island Economic Development
Corp. The company moved to Rhode Island from Massachusetts after
gaining state financing. Rhode Island cut off additional financing
in May, leading to the bankruptcy filing June 7. The petition
listed assets of $21.7 million and liabilities totaling $150.7
million, including $115.9 million in secured debt.
4KIDS ENTERTAINMENT: Price Rises at Bankruptcy Auction
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that 4Kids Entertainment Inc. received a competing bid for
the assets at an auction that began June 5. The new offer came
from an affiliate of Tokyo-based Konami Corp., 4Kids said in a
statement. After several rounds of bidding, the auctioned was
adjourned, allowing Konami to hold talks with Kidsco Media Venture
LLC, the prospective buyer that made the first bid at auction.
The last offers by Kidsco and Konami remain binding should the two
not come to eventual agreement to share the assets between them.
4Kids said that a joint bid would result in a higher sale price
than either of the last offers. Kidsco, which is affiliated with
Saban Capital Group Inc., opened the auction with an offer valued
at $10 million to buy licenses for the Yu-Gi-Oh! animated
television programs. The Kidsco bid includes debt assumption
worth another $3.5 million, according to a court filing. Konami
is a developer of video-game software and arcade games.
About 4Kids Entertainment
New York-based 4Kids Entertainment, Inc., dba 4Kids, is an
entertainment and media company specializing in the youth oriented
market, with operations in these business segments: (i) licensing,
(ii) advertising and media broadcast, and (iii) television and
film production/distribution. The parent entity, 4Kids
Entertainment, was organized as a New York corporation in 1970.
4Kids filed for bankruptcy protection under Chapter 11 of the
Bankruptcy Code to protect its most valuable asset -- its rights
under an exclusive license relating to the popular Yu-Gi-Oh!
series of animated television programs -- from efforts by the
licensor, a consortium of Japanese companies, to terminate
the license and force 4Kids out of business.
4Kids and affiliates filed Chapter 11 petitions (Bankr. S.D.N.Y.
Lead Case No. 11-11607) on April 6, 2011. Kaye Scholer LLP is the
Debtors' restructuring counsel. Epiq Bankruptcy Solutions, LLC,
is the Debtors' claims and notice agent. BDO Capital Advisors,
LLC, is the financial advisor and investment banker. EisnerAmper
LLP fka Eisner LLP serves as auditor and tax advisor. 4Kids
Entertainment disclosed $78,397,971 in assets and $86,515,395 in
liabilities as of the Chapter 11 filing.
Hahn & Hessen LLP serves as counsel to the Official Committee of
Unsecured Creditors. Epiq Bankruptcy Solutions LLC is the
information agent for the Committee.
The Consortium consists of TV Tokyo Corporation, which owns and
operates a television station in Japan; ASATSU-DK Inc., a Japanese
advertising company; and Nihon Ad Systems, ADK's wholly owned
subsidiary. The Consortium is represented by Kyle C. Bisceglie,
Esq., Michael S. Fox, Esq., Ellen V. Holloman, Esq., and Mason
Barney, Esq., at Olshan Grundman Frome Rosenzweig & Wolosky LLP,
in New York.
In January 2012, the bankruptcy judge ruled in favor of 4Kids,
deciding that the Yu-Gi-Oh! property license agreement between the
Debtor and the licensor was not effectively terminated prior to
the bankruptcy filing. Following the ruling, 4Kids entered into a
settlement where it would receive $8 million to end the dispute
over its valuable Yu-Gi-Oh! Property.
AEROFLEX INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on
Aeroflex Inc., including the 'B+' corporate credit rating. "At the
same time, we removed the ratings from CreditWatch, where they
were placed with negative implications on May 14, 2012. The
outlook is negative," S&P said.
"We also affirmed our 'BB-' issue ratings on the company's $800
million senior secured credit facilities, including its $725
million term loan B and $75 million revolving credit facility. The
'2' recovery rating on the secured debt remains unchanged and
indicates expectations for substantial (70%-90%) recovery for
lenders in the event of payment default," S&P said.
"The rating reflects Aeroflex's deteriorating operating
performance and credit measures in recent quarters," explained
Standard & Poor's credit analyst Andrew Chang. "We expect the
company's revenues and margins to remain under pressure and
adjusted leverage to temporarily rise near the mid-5x area over
the near term, primarily reflecting material deterioration in
Aeroflex's test division's (ATS) wireless testing segment. We view
the company's business risk profile as 'weak' and its financial
risk profile is 'aggressive,' as defined in our criteria."
"The negative outlook reflects our expectation that operating
performance will likely be pressured over the next few quarters
and that adjusted leverage will remain in the low- to mid-5x range
without further debt reduction over this period. If Aeroflex can
attain and is positioned to sustain about 5x adjusted leverage
within the next 12 months, either through operating improvements
or debt reduction, we would consider revising the outlook to
stable," S&P said.
"Alternatively, we would consider a lower rating if weak operating
performance persists, leading to reduced EBITDA generation and
adjusted leverage above 5x on a sustained basis, which would not
be supportive of the aggressive financial risk profile," S&P said.
ALLIED NEVADA: S&P Gives 'B' Corp. Credit Rating; Outlook Stable
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to U.S.-based mining company, Allied Nevada Gold
Corp. The outlook is stable. "At the same time, we assigned our
'B' issue-level rating and a '3' recovery rating to the company's
C$400 million senior unsecured notes due 2019. The '3' recovery
rating indicates our expectation for meaningful (50% to 70%)
recovery in the event of a payment default," S&P said.
Allied Nevada will use proceeds from the proposed notes to fund a
portion of the company's $1.2 billion mine expansion program.
"Our corporate credit rating on Allied Nevada reflects our view of
the company's business risk as 'vulnerable' and its financial risk
as 'aggressive'," said Standard & Poor's credit analyst James
Fielding. "Weaknesses include the company's reliance on a single
operating mine, exposure to volatile precious metals prices, and
very high capital needs related to the company's aggressive mine
expansion plans."
"In our view, currently favorable prices for gold and silver as
well as Allied Nevada's significant proven and probable reserves
somewhat offset these risks," S&P said.
"Our stable outlook reflects our view that note proceeds and
projected operating cash flow will provide adequate liquidity,
based on our expectation for gold prices of $1,400 to $1,500
through 2013," S&P said.
"An upgrade is unlikely over the next 12 months, given the
company's substantial capital needs and the potential risks
associated with a mine expansion program that we view to be
aggressive. However, we could raise our rating in the next two or
three years if gold prices remain favorable and if it appears that
it will complete its mine expansion plans on time and on budget,"
S&P said.
"We would lower our rating if the mine expansion projects
experience substantial delays or cost overruns. We would also
lower our rating if our baseline assumptions are incorrect and
gold prices drop below $1,400, particularly if the company did not
take actions to preserve its adequate liquidity. These actions
could include accessing additional debt or equity capital or
delaying its aggressive capital spending program to offset weaker-
than-currently-anticipated cash flows," S&P said.
ALLIED SYSTEMS: Consents to Being in Chapter 11
-----------------------------------------------
Auto hauler Allied Systems Holdings Inc. formally put itself and
18 subsidiaries into bankruptcy reorganization June 10 after
lenders filed an involuntary Chapter 11 petition the month before.
Allied said in a statement that the decision to seek Chapter 11
protection is "the final phase of its financial restructuring with
a goal to eliminate debt and strengthen the Company's balance
sheet while continuing normal operations and serving customers."
The Company is being advised by the law firms of Troutman Sanders,
Gowling Lafleur Henderson, and Richards Layton & Finger.
The bankruptcy court process does not include captive insurance
company Haul Insurance Limited or any of the Company's Mexican or
Bermudan subsidiaries. The Company also announced that it intends
to seek foreign recognition of its Chapter 11 cases in Canada.
"We believe the financial restructuring will strengthen Allied's
balance sheet and position the Company for a long and profitable
future," said Mark J. Gendregske, the Company's President and
Chief Executive Officer. "All of our customers can be sure that
the filing will have no impact on our ability to maintain our best
in class service levels. We understand the trust our customers
place in us and we are committed to serving them without
interruption."
All operations are expected to continue as normal throughout the
restructuring process.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the Debtor has $20 million of financing from an
affiliate of Los Angeles-based Yucaipa Cos. The new loan, with $10
million to be available on an interim basis, will come in ahead of
existing debt.
Economic Crisis
Allied previously filed for Chapter 11 protection in July 2005.
Since emerging in May 2007, the Company's sales have been
adversely impacted by the reduction in vehicle production and
sales due to the global economic crisis that began in 2008.
Additionally, the Company and its majority lender Yucaipa have
been in litigation with certain minority lenders since 2009. Two
of those lenders filed involuntary Chapter 11 proceedings against
Allied on May 17, 2012.
Bloomberg News notes that where Allied once counted all of the Big
Three domestic automakers among its customers, only Ford Motor Co.
among the large U.S. manufacturers currently uses Allied's
services.
"After exploring all of our options with respect to the Company's
current financial position and the involuntary petitions, it
became clear that implementing the financial restructuring through
a Court proceeding presents the most effective means to improve
our balance sheet," Mr. Gendregske said. "Chapter 11 allows us to
move forward with our planned improvements in operations and
systems and allows us to achieve our restructuring objectives in a
controlled, orderly and timely manner."
Business as Usual
Allied said that while it completes its restructuring, the
Company's terminals and locations will continue to operate as
usual. The Company's employees will continue to be paid without
interruption, and it will continue to pay vendors for products and
services provided after the June 10, 2012 filing date in the
ordinary course of business. The Company said it is also seeking
Court approval to pay key providers in the normal course for
services provided on or prior to the June 10, 2012 filing to
ensure uninterrupted delivery on all routes.
"With the support of our customers, vendors and the hard work of
our employees, we will be able to create a stronger, more
competitive company," Mr. Gendregske stated. "The $20 million
financing package we have arranged is more than sufficient to
support our ongoing operations. It also continues to demonstrate
the commitment the majority of our lenders have to the Company and
our plans for Allied's future."
Mr. Gendregske noted a number of key elements of the Company's
restructuring activities, including:
* Elimination of debt;
* Completion of the closure of terminals and locations already
started; and
* Increasing operating efficiencies by reducing overhead and
improving margins and profitability.
About Allied Systems
BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and
Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary
petitions for Allied Systems Holdings Inc. and Allied Systems Ltd.
(Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012.
The signatories of the involuntary petitions assert claims of at
least $52.8 million for loan defaults by the two companies.
Allied Systems, through its subsidiaries, provides logistics,
distribution, and transportation services for the automotive
industry in North America.
Allied Holdings Inc. previously filed for chapter 11 protection
(Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31,
2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP,
represented the Debtors in the 2005 case. Allied won confirmation
of a reorganization plan and emerged from bankruptcy in May 2007
with $265 million in first-lien debt and $50 million in second-
lien debt.
The petitioning creditors said Allied has defaulted on payments of
$57.4 million on the first lien debt and $9.6 million on the
second. They hold $47.9 million, or about 20% of the first-lien
debt, and about $5 million, or 17%, of the second-lien obligation.
They are represented by Adam G. Landis, Esq., and Kerri K.
Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris,
Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP.
AMBASSADORS INT'L: Former Execs Get Defense Coverage in DOJ Fight
-----------------------------------------------------------------
Juan Carlos Rodriguez at Bankruptcy Law360 reports that a federal
judge on Friday allowed the former directors and officers of
Ambassadors International Inc. to receive legal costs incurred
through a fight with the U.S. Department of Justice from National
Union Fire Insurance Co. of Pittsburgh, Pa.
National Union was authorized by U.S. Bankruptcy Judge Kevin Gross
to pay the DOJ about $676,000 to settle personal liability claims
related to actions from a 2009 suit brought against the company by
the U.S. Maritime Administration, according to Law360.
About Ambassadors International
Headquarters in Seattle, Washington, Ambassadors International,
Inc. (NASDAQ: AMIE) -- http://www.ambassadors.com/-- operated
Windstar Cruises, a three-ship fleet of luxury yachts that explore
the hidden harbors and secluded coves of the world's most sought-
after destinations. Carrying 148 to 312 guests, the luxurious
ships of Windstar cruise to nearly 50 nations, calling at 100
ports throughout Europe, the Caribbean and the Americas.
Ambassadors International Inc. and 11 affiliates sought Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-11002) on
April 1, 2011.
Kristopher M. Hansen, Esq.; Sayan Bhattacharyya, Esq.; Marianne
Mortimer, Esq.; and Matthew G. Garofalo, Esq., at Stroock &
Stroock & Lavan LLP, serve as the Debtors' bankruptcy counsel.
Imperial Capital, LLC, is the Debtors' financial advisor. Phase
Eleven Consultants, LLC, is the Debtors' claims and notice agent.
The Debtors tapped Bifferato Gentilotti LLC as Delaware counsel,
and Richards, Layton & Finger as bankruptcy co-counsel.
The Official Committee of Unsecured Creditors tapped Kelley Drye &
Warren LLP as its counsel, and Lowenstein Sandler PC as its
co-counsel.
The Debtors disclosed $86.4 million in total assets and
$87.3 million in total debts as of Dec. 31, 2010.
Under a court-approved sale, Windstar's three luxury sailing
yachts were sold to Anschutz Corp. for $35 million in cash.
AMERICAN AIRLINES: Collateral for 7.5% Sr. Notes Pegged at $2.6BB
-----------------------------------------------------------------
American Airlines, Inc., AMR Corporation, U.S. Bank National
Association, as trustee and Wilmington Trust Company, as
collateral trustee, entered into an Indenture dated March 15, 2011
for American's 7.50% Senior Secured Notes due 2016. Pursuant to
the Indenture, American is required to deliver to the trustee and
the collateral trustee periodic appraisals establishing the
appraised value of the collateral for the Notes, and American is
required to furnish a summary of each such appraisal to the
trustee, which summary is required to be made publicly available.
Accordingly, AMR provided a copy of the summary of the appraisal
most recently furnished to the trustee, with the U.S. Securities
and Exchange Commission on June 1, 2012. In sum, the Appraisal,
dated May 31, 2012, using a discount rate of 11.5% and a
perpetuity growth rate of 1.5% lists the Appraised Value of the
Collateral as $2,649,196,000.
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.
AMR'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: Trial on Suit vs. Sabre to Start Oct. 3
----------------------------------------------------------
Texas State District Court Judge Don Cosby granted Sabre a 60-day
extension in the Texas antitrust lawsuit filed by American
Airlines last year. The trial is now set to begin Oct. 3, 2012.
"AA's claims are without merit. We continue to believe that our
shared stakeholders would be better served by negotiations, rather
than litigation, between the companies. To that end, we hope that
AA will end this wasteful process. However, since AA continues
its litigious course, we will continue to mount a vigorous
defense," said Nancy St. Pierre, Sabre spokesperson.
Sabre travel agency, corporate and consumer customers will have
continued access to AA content through the Sabre global
distribution system throughout the duration of the airline's Texas
state lawsuit against Sabre.
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.
AMR'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: To Add Boeing 777 Planes to Fleet in December
----------------------------------------------------------------
American Airlines unveiled the flight numbers and markets for its
first group of Boeing 777-300ERs that will enter the airline's
fleet starting this December. On Dec. 13, the Dallas/Fort Worth
to Sao Paulo, Brazil, route will be the first to feature the
newest addition to American's fleet. In February, the aircraft
will fly to London Heathrow from both Dallas/Fort Worth and New
York JFK.
American is the first U.S. airline to order and take delivery of
the Boeing 777-300ER. The 777-300ERs will complement American's
fleet by offering additional network flexibility in the future, as
well as providing increased efficiency due to better seat mile
economics and performance characteristics.
"American is proud to be among the first in the industry to offer
a combination of fully lie-flat seats with all-aisle access,
international Wi-Fi, and top-of-the-line in-seat entertainment,"
said Virasb Vahidi, American's Chief Commercial Officer. "On Dec.
13, our customers can experience these firsts on flights between
Dallas/Fort Worth and Sao Paulo."
As part of its international widebody strategy, American
anticipates taking delivery of 10 Boeing 777-300ERs beginning in
December 2012. The 777-300ERs will be configured as three-class
aircraft and will include fully lie-flat First and Business Class
seats, Main Cabin Extra, and Wi-Fi capability to keep customers
connected while traveling internationally.
The three-class cabin configuration in the new 777-300ER will
provide American with more customers and cargo capacity than
any other aircraft in its fleet today. Customers will be
welcomed into the aircraft by unique mood lighting. American
will be the first airline to use a dramatic archway and ceiling
treatment on the 777-300 to create a feeling of spaciousness. A
walk-up bar in the premium cabin stocked with snacks and
refreshments will be a first for any U.S. airline and adds
another unique element of luxury to the 777-300. Entertainment
options include up to 120 movies, more than 150 TV programs and
more than 350 audio selections that will be offered throughout
the aircraft. Also, every seat will feature individual 110-volt
AC power outlets and USB jacks for charging personal electronic
devices. On the Net: http://www.AA.com/Fly777
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.
AMR'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: Marquis Aurbach Approved as Bankruptcy Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nevada, according to
American Realty Trust, Inc.'s case docket, authorized the Debtor
to employ Marquis Aurbach Coffing as counsel effective as of
March 9, 2012.
As reported in the Troubled Company Reporter on May 17, 2012, the
MAC is expected to, 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 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 at 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.
ARCAPITA BANK: Wants Control of Case Through January
----------------------------------------------------
Arcapita Bank B.S.C.(c) and its debtor-affiliates, including
Falcon Gas Storage Company, Inc., ask the Bankruptcy Court to
extend the periods within which they have the exclusive right to
file and solicit acceptances of a chapter 11 plan. Specifically,
the Debtors request an extension of the Exclusive Filing Periods
pursuant to section 1121(d) of the Bankruptcy Code through and
including Nov. 14, 2012, and the Exclusive Solicitation Periods
through and including Jan. 14, 2013.
The Debtors admitted their chapter 11 cases were filed on an
emergency basis to prevent precipitous action threatened by hedge
funds owning a small percentage of Arcapita's outstanding debt. As
a result, the Debtors did not plan for the filing by working with
their constituencies regarding their proposed reorganization.
Those activities were initiated after the chapter 11 cases were
filed and in an atmosphere of some distrust resulting from the
unplanned filing.
The Debtors said they do not seek an extension of the Exclusive
Periods as a negotiation tactic. Rather, the extension would
afford the Debtors with a reasonable amount of time to focus on
preserving and enhancing the value of their estates while they
develop a sustainable cost structure and a plan to emerge from
chapter 11. Once the Debtors develop a plan of reorganization,
the Debtors intend to negotiate with the Creditors Committee and
other constituencies.
The Debtors also noted religious observations will limit the
parties' availability with the upcoming observance of Ramadan,
which is anticipated to take place from roughly July 20, 2012
until Aug. 18, 2012. During that time, much of the Debtors'
relatively small staff will have religious obligations that may
prevent them from dedicating their full attention to the
development of a plan.
About Arcapita Bank
Arcapita Bank B.S.C., also known as First Islamic Investment Bank
B.S.C., along with affiliates, filed for Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19,
2012. The Debtors said they do not have the liquidity necessary
to repay a US$1.1 billion syndicated unsecured facility when it
comes due on March 28, 2012.
Falcon Gas Storage Company, Inc., later filed a Chapter 11
petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012.
Falcon Gas is an indirect wholly owned subsidiary of Arcapita that
previously owned the natural gas storage business NorTex Gas
Storage Company LLC. In early 2010, Alinda Natural Gas Storage I,
L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas
Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.)
acquired the stock of NorTex from Falcon Gas for $515 million.
Arcapita guaranteed certain of Falcon Gas' obligations under the
NorTex Purchase Agreement.
The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy
counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP
as international counsel on Bahrain matters, Hatim S Zu'bi &
Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild
Inc. and financial advisor, and GCG Inc. as notice and claims
agent.
Milbank, Tweed, Hadley & McCloy LLP represents the Official
Committee of Unsecured Creditors.
Founded in 1996, Arcapita is a global manager of Shari'ah-
compliant alternative investments and operates as an investment
bank. Arcapita is not a domestic bank licensed in the United
States. Arcapita is headquartered in Bahrain and is regulated
under an Islamic wholesale banking license issued by the Central
Bank of Bahrain. The Arcapita Group employs 268 people and has
offices in Atlanta, London, Hong Kong and Singapore in addition
to its Bahrain headquarters. The Arcapita Group's principal
activities include investing on its own account and providing
investment opportunities to third-party investors in conformity
with Islamic Shari'ah rules and principles.
The Arcapita Group has roughly US$7 billion in assets under
management. On a consolidated basis, the Arcapita Group owns
assets valued at roughly US$3.06 billion and has liabilities of
roughly US$2.55 billion. The Debtors owe US$96.7 million under
two secured facilities made available by Standard Chartered Bank.
Arcapita explored out-of-court restructuring scenarios but was
unable to achieve 100% lender consent required to effectuate the
terms of an out-of-court restructuring.
Subsequent to the Chapter 11 filing, Arcapita Investment Holdings
Limited, a wholly owned Debtor subsidiary of Arcapita in the
Cayman Islands, issued a summons seeking ancillary relief from
the Grand Court of the Cayman Islands with a view to facilitating
the Chapter 11 cases. AIHL sought the appointment of Zolfo
Cooper as provisional liquidator.
ARCAPITA BANK: Falcon Gas Sues Enterprise Over Damaged Plane
------------------------------------------------------------
Debtor Falcon Gas Storage Company, Inc., has filed a lawsuit
against Enterprise Jet Center, Inc., seeking damages for breach of
contract.
On Oct. 20, 2006, Falcon leased a Beechcraft B300 King Air 350,
tail no. N86GA, from CFS Air, LLC. Falcon contracted with
Enterprise for Enterprise to provide various services and support
related to the Plane, including the care and safe keeping of the
Plane in Enterprise's hangars or at Enterprise's facilities at
Hobby Airport in Houston.
Through February 2012, Enterprise was "fixed base operator"
certified by the Federal Aviation Association located at Hobby
Airport, and provides fuel, catering, aircraft cleaning and
maintenance, repair, and overhaul services for private aircraft
generally and, in particular, specializes in the servicing and
maintenance of Beechcraft King Air aircraft, among other high
performance turbine powered aircraft.
On Nov. 27, 2010, while the Plane was under the care and control
of Enterprise and specifically while agents or employees of
Enterprise were towing the Plane using a motorized tug, the tow
bar became disconnected and the Plane's uncontrolled momentum
caused it to impact the tug in two places. The accident caused
significant damage to the Plane's right fuselage and right engine
nacelle rendering the Plane unsafe for flight and no longer
airworthy as required by Title 14 of the Code of Federal
Regulations.
As a result of Enterprise's negligence and breach of contract in
transporting and caring for the Plane, Falcon said it suffered
significant damages, including damage to the Plane and the costs
of repair, lost value, lost use, rental fees, expenses related to
hangaring and servicing the Plane, insurance costs, consulting
fees necessary to ensure proper repair, and attorney's fees in
seeking reimbursement from Enterprise's insurer.
About Arcapita Bank
Arcapita Bank B.S.C., also known as First Islamic Investment Bank
B.S.C., along with affiliates, filed for Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 12-11076) in Manhattan on March 19,
2012. The Debtors said they do not have the liquidity necessary
to repay a US$1.1 billion syndicated unsecured facility when it
comes due on March 28, 2012.
Falcon Gas Storage Company, Inc., later filed a Chapter 11
petition (Bankr. S.D.N.Y. Case No. 12-11790) on April 30, 2012.
Falcon Gas is an indirect wholly owned subsidiary of Arcapita that
previously owned the natural gas storage business NorTex Gas
Storage Company LLC. In early 2010, Alinda Natural Gas Storage I,
L.P. (n/k/a Tide Natural Gas Storage I, L.P.), Alinda Natural Gas
Storage II, L.P. (n/k/a Tide Natural Gas Storage II, L.P.)
acquired the stock of NorTex from Falcon Gas for $515 million.
Arcapita guaranteed certain of Falcon Gas' obligations under the
NorTex Purchase Agreement.
The Debtors tapped Gibson, Dunn & Crutcher LLP as bankruptcy
counsel, Linklaters LLP as corporate counsel, Towers & Hamlins LLP
as international counsel on Bahrain matters, Hatim S Zu'bi &
Partners as Bahrain counsel, KPMG LLP as accountants, Rothschild
Inc. and financial advisor, and GCG Inc. as notice and claims
agent.
Milbank, Tweed, Hadley & McCloy LLP represents the Official
Committee of Unsecured Creditors.
Founded in 1996, Arcapita is a global manager of Shari'ah-
compliant alternative investments and operates as an investment
bank. Arcapita is not a domestic bank licensed in the United
States. Arcapita is headquartered in Bahrain and is regulated
under an Islamic wholesale banking license issued by the Central
Bank of Bahrain. The Arcapita Group employs 268 people and has
offices in Atlanta, London, Hong Kong and Singapore in addition
to its Bahrain headquarters. The Arcapita Group's principal
activities include investing on its own account and providing
investment opportunities to third-party investors in conformity
with Islamic Shari'ah rules and principles.
The Arcapita Group has roughly US$7 billion in assets under
management. On a consolidated basis, the Arcapita Group owns
assets valued at roughly US$3.06 billion and has liabilities of
roughly US$2.55 billion. The Debtors owe US$96.7 million under
two secured facilities made available by Standard Chartered Bank.
Arcapita explored out-of-court restructuring scenarios but was
unable to achieve 100% lender consent required to effectuate the
terms of an out-of-court restructuring.
Subsequent to the Chapter 11 filing, Arcapita Investment Holdings
Limited, a wholly owned Debtor subsidiary of Arcapita in the
Cayman Islands, issued a summons seeking ancillary relief from
the Grand Court of the Cayman Islands with a view to facilitating
the Chapter 11 cases. AIHL sought the appointment of Zolfo
Cooper as provisional liquidator.
ASCEND LEARNING: Moody's Affirms 'B2' CFR; Outlook Negative
-----------------------------------------------------------
Moody's Investors Service affirmed Ascend Learning, LLC's B2
corporate family and probability of default ratings. Moody's also
assigned a B1 rating to the amended/extended senior secured term
loan due 2017. Concurrently, Moody's affirmed the ratings on the
existing first lien revolving credit facility and the second lien
term loan. The ratings outlook remains negative.
The company recently completed an amendment to the credit
agreement that extended the maturity of the term loan to 2017 from
2016 and reduced interest rates. The ratings affirmation reflects
Moody's view that the transaction does not materially change the
company's credit profile.
Rating assigned:
$328.3 million first lien senior secured term loan due 2017 at B1
(LGD3, 40%)
Ratings affirmed:
Corporate family rating at B2
Probability of default rating at B2
$40 million first lien senior secured revolving credit facility
due 2015 at B1 (LGD3, 40%). Point estimate revised from (LGD3,
39%).
$75 million second lien senior secured term loan due 2017 at
Caa1 (LGD6, 90%)
Rating Withdrawn:
First lien senior secured senior loan due 2016 at B1
Ratings Rationale
The ratings affirmation continues to reflect Ascend's aggressive
financial policy given the expanded pace of acquisitions in recent
periods. Debt to EBITDA, based on Moody's standard adjustments,
was over 7.0 times for the twelve months ended March 31, 2012
(based on Moody's standard adjustments and not including the pro
forma contribution from acquisitions). In addition, EBITDA
decreased for the March 2012 quarter despite a double-digit
increase in revenues over the same period. However, the rating
reflects Moody's expectation that organic growth and the
contribution from acquisitions will lead to leverage declining to
the 6.0 to 6.5 times range over the next 12 to 18 months. Moody's
expects the bulk of these improvements to occur later in the year,
as higher operating costs will likely constrain short-term
operating performance.
The negative outlook reflects Moody's concern over the company's
rising debt levels and its ability to sustain significant levels
of revenue/earnings growth such that credit metrics are restored
to levels that are more consistent with the B2 ratings category.
The ratings could be downgraded if Ascend fails to reduce debt to
EBITDA to below 6.5 times or improve EBITDA less capex coverage of
interest expense to above 1.2 times near-term. Further
dividend/acquisition activity that increase financial leverage
could also pressure the ratings. A weakening of the company's
liquidity profile, including reduced cushion under financial
covenants, could also result in a ratings downgrade.
Moody's could revise the ratings outlook to stable if Ascend
generates strong earnings growth such that debt to EBITDA is
sustainably reduced below 6.5 times. The ratings could be upgraded
if the company organically grows its scale and earnings such that
debt to EBITDA is sustained below 4.5 times and EBITDA less capex
coverage of interest expense above 2.0 times while generating free
cash flow to debt in the high single digits.
Additional information can be found in the Ascend Credit Opinion
published on Moodys.com.
The principal methodology used in rating Ascend 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.
Headquartered in Sudbury, Massachusetts, Ascend Learning, LLC
provides technology-based learning solutions and educational
content for healthcare and other vocational fields.
ASTORIA CAPITAL: Fitch Affirms Rating on Preferred Stock at 'B+'
----------------------------------------------------------------
Fitch Ratings has affirmed Astoria Financial Corporation's (AF)
Long- and Short-term Issuer Default Ratings (IDRs) at 'BBB-' and
'F3', respectively. Concurrently, the long- and short-term IDRs
of Astoria Federal Savings & Loan Association (AFSLA) were
downgraded to 'BBB-' and 'F3' from 'BBB' and 'F2', respectively.
The Ratings Outlook has been revised to Stable from Negative for
both the holding company and bank subsidiary. A full list of
ratings and Fitch actions follows at the end of this release.
Fitch has also assigned an expected rating of 'BBB-' to AF's
proposed unsecured issuance.
The affirmation of AF's ratings and Outlook revision are primarily
driven by the expected refinancing of the upcoming debt maturity.
Refinancing risk was the main reason why the ratings were placed
on Negative Outlook in Nov. 2011. Fitch believes that continued
improvement in capitalization and stable asset quality measures
support AF's ratings at the current level. Furthermore, the
recent reduction to the common dividends will potentially benefit
the liquidity position at the holding company.
The ratings of AFSLA have been downgraded by one notch and
equalized with the holding company. The equalization of the
ratings represents Fitch's general methodology to rating bank
holding companies. AF's ratings were previously one notch lower
that its bank subsidiary because of constrained liquidity, which
has improved with the announced debt refinancing and recent
dividend reduction.
Furthermore, the downgrade of AFSLA's ratings reflects weak
financial performance as well as continued uncertainty regarding
its 1 - 4 family business. Fitch expects core earnings to remain
weak in the near term due to thin net interest margins and high
overhead expenses relative to total assets. On a risk-adjusted
basis, operating performance looks more in line with 'BBB-' peers.
AF's recent reentry into the multifamily business may start to
offset some of the margin compression in the 1 - 4 family
portfolio later this year.
The Stable Outlook reflects AF's historically favorable charge-off
experience, continued reduction in NPAs and modest improvement in
capital ratios. Fitch believes the ratings are well situated at
the current level for the foreseeable future.
Conversely, negative pressure on the ratings and/or Outlook could
result from an increase in credit losses or NPAs, lack of
profitability, declines in capital ratios or excessive loan growth
in the multi-family business.
Fitch has affirmed the following ratings:
Astoria Financial Corp.
-- Long-Term IDR at 'BBB-'; Outlook revised to Stable from
Negative;
-- Short-Term IDR at 'F3';
-- Viability rating at 'bbb-';
-- Senior unsecured at 'BBB-';
-- Support at '5';
-- Support Floor at 'NF'.
Astoria Federal Savings & Loan
-- Short-Term Deposits at 'F2';
-- Support at '5';
-- Support Floor at 'NF'.
Astoria Capital Trust I
-- Preferred stock at 'B+'.
Fitch has downgraded the following ratings:
Astoria Federal Savings & Loan
-- Long-Term IDR to 'BBB-' from 'BBB'; Outlook revised to Stable
from Negative;
-- Long-term Deposits to 'BBB' from 'BBB+';
-- Short-Term IDR to 'F3' from 'F2';
-- Viability rating to 'bbb-' from 'bbb'.
Fitch has assigned the following expected rating:
Astoria Financial Corp.
-- Proposed new senior unsecured issuance 'BBB-(exp)'.
ATLANTIS OF JACKSONVILLE: CenterState Bank to Be Paid in 7 Years
----------------------------------------------------------------
The Atlantis of Jacksonville Beach, Inc., filed a disclosure
statement in support of its plan of reorganization dated April 17,
2012. The plan will be funded from rent collected from property
owned by the Debtor.
The classification and treatment of claims under the plan are:
A. Unclassified claims will be paid in full on the effective
date of the Plan. Estimated amount of administrative
claims are $8,500.
B. Class 1 (Secured Claim of CenterState Bank) will be paid
interest only of $21,864.96 for a term of 24 months;
followed by Principal and Interest payment of $31,316 for
a period of 60 months. After the expiration of 84 months
from June 1, 2012, the loan will balloon and be payable in
full to the creditor. The total amount of allowed claim
of CenterState Bank is $6,559,487.07.
C. Class 3 (Secured claim of the Tax Collector of Duval
County) will be paid $9,128.61 per month for 60 months.
The total amount of the secured claim is $359,487.07.
D. Class 4 (Unsecured Claims) will be paid a pro rata
distribution of $551.71 per month for 60 months until
unsecured claims paid 100% of allowed claims. The total
amount of unsecured claims is $33,102.50.
E. Class 5 (Equity Interests) will receive no distribution
until all of the classes of claims are paid in full.
The disclosure statement hearing is set for June 14, 2012, at
9:30 a.m.
About Atlantis of Jacksonville Beach
The Atlantis of Jacksonville Beach, Inc., based in Atlantic Beach,
Florida, filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case
No. 12-01553) on March 9, 2012.
Judge Paul M. Glenn oversees the case. The Law Offices of Mickler
& Mickler serves as the Debtor's counsel.
Atlantis of Jacksonville Beach scheduled $10,000,000 in assets and
$6,592,590 in liabilities. The petition was signed by Chris
Hionides, president.
Affiliate Shoppes of Lakeside Inc. filed for Chapter 11 (Bankr.
M.D. Fla. Case. No. 10-05199) on June 15, 2010. Neptune Beach,
Florida-based Shoppes of Lakeside holds title to and generates
income from residential and commercial buildings and unimproved
land in Duval County. The Debtor owns 45 commercial properties
and 10 residential properties. The Law Offices of Mickler &
Mickler represents the Debtor as counsel. The Company disclosed
$39,894,050 in assets and $37,748,101 in liabilities.
AUTOS VEGA: Euroclass Motors' Plan of Reorganization Confirmed
--------------------------------------------------------------
Judge Mildred Caban Flores of the U.S. Bankruptcy Court for the
District of Puerto Rico confirmed the Chapter 11 plan of Euroclass
Motors, Inc.
The Chapter 11 Plan dated Jan. 30, 2012, provides for the full
payment of the secured claim of the Debtor's lender, Reliable
Finance Holding Company, estimated at US$1.67 million. Holders of
general unsecured claims, estimated at US$1.49 million, are
expected to have a 13% recovery. Equity interests in the Debtor
will be retained.
Holders of administrative expense claims, estimated at
US$114,500, and allowed priority tax claims, estimated at
US$16,000, are unimpaired under the Plan.
A full-text copy of the Disclosure Statement is available for
free at http://bankrupt.com/misc/EUROCLASS_DSJan30.PDF
About Autos Vega
Autos Vega, Inc., is a car dealership engaged in the sales of new
and used cars and trucks car parts, accessories and providing
vehicle repair and maintenance, based in San Juan, Puerto Rico.
The Company filed for Chapter 11 bankruptcy protection (Bankr. D.
P.R. Case No. 11-05773) on July 6, 2011. The Debtor disclosed
US$22,959,296 in assets and US$34,224,323 in liabilities.
The Charles A. Curpill, PSC Law Office, in San Juan, Puerto Rico,
serves as counsel to the Debtor. Luis R. Carrasquillo Ruiz, CPA,
is the Debtor's accountant.
Affiliate Euroclass Motors, Inc. filed for Chapter 11 protection
(Bankr. D. P.R. Case No. 11-05772) on July 6, 2011.
BEAR STEARNS: SAMI Investors' Suit Junked Due to False Ratings
--------------------------------------------------------------
Plaintiffs in the case captioned In re Bear Stearns Mortgage
Pass-Through Certificates Litigation filed a third amended
complaint asserting claims on behalf of a putative class of
investors against various Bear Stearns entities, Structured Asset
Mortgage Investments II, Inc., and several individuals for
violations of Sections 11, 12(a)(2), and 15 of the Securities Act
of 1933, Sections 77k, 771(a)(2), 77o of Title 15 of the U.S.
Code, in connection with the sale of mortgage-backed security
pass-through certificates that were offered for sale by means of
documents that allegedly contained untrue statements and
materials omissions. Defendants have moved to dismiss the TAC
for failure to state a claim.
In a March 30, 2012 opinion, Judge Laura Taylor Swain of the U.S.
District Court for the Southern District of New York granted the
Defendants' motion in part without prejudice insofar as
Plaintiffs' claims are premised on the alleged unreliability of
the Standard & Poor and Moody's ratings of securities included in
the investment pools. The Court granted the Plaintiffs leave to
file a fourth amended complaint alleging facts sufficient to
state a claim or claims based on the securities ratings.
Judge Swain pointed out that the S&P and Moody's ratings that
accompanied the securities' documents were premised on false
representations that the originators had complied with the
underwriting guidelines. The judge also pointed out that rating
agency executives have since admitted that the ratings were based
on inaccurate data and relied on deficient statistical models.
The case IN RE BEAR STEARNS MORTGAGE PASS-THROUGH CERTIFICATES
LITIGATION, Master File No. 08 Civ. 8093 (LTS)(KNF)(S.D.N.Y.). A
copy of Judge Swain's Decision is available at
http://is.gd/KHOT9xfrom Leagle.com
Plaintiffs and the Proposed Class are represented by:
Joel P. Laitman, Esq.
COHEN MILSTEIN SELLERS & TOLL PLLC
88 Pine Street, 14th Floor
New York, NY 10005
Tel: (212) 838-7797
E-mail: jlaitman@cohenmilstein.com
- and -
David R. Stickney, Esq.
BERNSTEIN LITOWITZ BERGER & GROSSMAN LLP
12481 High Bluff Drive, Suite 300
San Diego, CA
Tel: (858) 720-3182
Fax: (858) 793-0323
E-mail: davids@blbglaw.com
Plaintiff the Police and Fire Retirement System of the City of
Detroit is represented by:
Joseph C. Kohn, Esq.
KOHN, SWIFT & GRAF, P.C.
One South Broad Street, Suite 2100
Philadelphia, PA
Tel: (215) 238-1700
Fax: (215) 238-1968
E-Mail: info@kohnswift.com
Defendants Bear, Stearns & Co. Inc., J.P. Morgan Securities,
Inc., EMC Mortgage Corporation, Structured Asset Mortgage
Investments II Inc., Bear Stearns Asset Backed Securities I, LLC
and Josepth T. Jurkowski are represented by:
Kenneth I. Schacter, Esq.
Theo J. Robins, Esq.
BINGHAM MCCUTCHEN LLP
399 Park Avenue
New York, NY
Tel: (212) 705-7487
Fax: (212) 702-3622
E-mail: kenneth.schacter@bingham.com
theo.robins@bingham.com
Defendant Samuel L. Molinaro, Jr., is represented by:
Michael J. Chepiga, Esq.
William T. Russell, Jr., Esq.
SIMPSON THACHER & BARTLETT LLP
425 Lexington Avenue
New York, NY
Tel: (212) 455-2598
Fax: (212) 455-2502
E-mail: mchepiga@stblaw.com
wrussell@stblaw.com
- and -
Joel C. Haims, Esq.
Ruti Smithline, Esq.
MORRISON & FOERSTER LLP
1290 Avenue of the Americas
New York, NY
Tel: (212) 468-8238
E-mail: jhaims@mofo.com
rsmithline@mofo.com
Defendant Jeffrey Mayer is represented by:
Richard A. Edlin, Esq.
Ronald D. Lefton, Esq.
Candace Camarata, Esq.
GREENBERG TRAURIG, LLP
200 Park Avenue
New York, NY
Tel: (212) 801-9200
Fax: (212) 801-6400
E-mail: edlinr@gtlaw.com
leftonr@gtlaw.com
camaratac@gtlaw.com
About Bear Stearns
New York City-based The Bear Stearns Companies Inc. (NYSE: BSC)
-- http://www.bearstearns.com/-- was a financial services firm
serving governments, corporations, institutions and individuals
worldwide. The investment bank collapsed in 2008 and was sold in
a distressed sale to JPMorgan Chase in a transaction backed by the
U.S. government.
Grand Cayman, Cayman Islands-based Bear Stearns High-Grade
Structured Credit Strategies Enhanced Leverage Master Fund Ltd.
and Bear Stearns High-Grade Structured Credit Strategies Master
Fund Ltd. were open-ended investment companies, which sought high
income and capital appreciation relative to the London Interbank
Offered Rate, and designed for long-term investors. On July 30,
2007, the Funds filed winding up petitions under the Companies Law
of the Cayman Islands. Simon Lovell Clayton Whicker and Kristen
Beighton at KPMG were appointed joint liquidators. The joint
liquidators filed for Chapter 15 petitions before the U.S.
Bankruptcy Court for the Southern District of New York the next
day. On Aug. 30, 2007, the Honorable Burton R. Lifland denied the
Funds protection under Chapter 15 of the Bankruptcy Code.
BEAR STEARNS: Investment Firm Sues JPMorgan Over Wind Down
----------------------------------------------------------
Saad Investments Co. Ltd. and three individuals appointed in 2009
to unwind Bear Stearns Cos. Inc. accused JPMorgan Chase Bank N.A.
of wrongly liquidating $180 million in assets formerly held by
Bear Stearns to pay down the firm's debt under a $2.8 billion
credit facility, challenging the bank's reasoning that its merger
with Bear Stearns gave it control of the funds, Kelly Rizzetta of
BankruptcyLaw360 reported on May 30. Saad Investments, et al.,
filed suit against JPMorgan in New York state court.
About Bear Stearns
New York City-based The Bear Stearns Companies Inc. (NYSE: BSC)
-- http://www.bearstearns.com/-- was a financial services firm
serving governments, corporations, institutions and individuals
worldwide. The investment bank collapsed in 2008 and was sold in
a distressed sale to JPMorgan Chase in a transaction backed by the
U.S. government.
Grand Cayman, Cayman Islands-based Bear Stearns High-Grade
Structured Credit Strategies Enhanced Leverage Master Fund Ltd.
and Bear Stearns High-Grade Structured Credit Strategies Master
Fund Ltd. were open-ended investment companies, which sought high
income and capital appreciation relative to the London Interbank
Offered Rate, and designed for long-term investors. On July 30,
2007, the Funds filed winding up petitions under the Companies Law
of the Cayman Islands. Simon Lovell Clayton Whicker and Kristen
Beighton at KPMG were appointed joint liquidators. The joint
liquidators filed for Chapter 15 petitions before the U.S.
Bankruptcy Court for the Southern District of New York the next
day. On Aug. 30, 2007, the Honorable Burton R. Lifland denied the
Funds protection under Chapter 15 of the Bankruptcy Code.
BEEBE MEDICAL: S&P Hikes Rating on $39.8MM Revenue Bonds to 'B+'
----------------------------------------------------------------
Standard & Poor's Ratings Services raised to 'B+' from 'B-' its
rating on Delaware Health Facilities Authority's $39.8 million
series 2004 and 2005A hospital revenue bonds, issued for Beebe
Medical Center (Beebe). The outlook is developing.
"The upgrade reflects our view of progress made in resolving major
litigation against the hospital and Beebe's improved financial
metrics," said Standard & Poor's credit analyst Liz Sweeney. "We
believe that the prospects for a settlement, while still
uncertain, have improved in the last year, while the risk of a
bankruptcy filing has diminished. However, major uncertainty still
exists regarding the outcome of settlement negotiations."
"There is significant uncertainty regarding the amount of
potential damages and Beebe's ability to secure insurance coverage
from its carriers successfully. However, we believe that
certification of litigation against Beebe as a class action suit
and the current negotiation process increases the likelihood of an
orderly resolution of the claims that could potentially be
resolved within a year. The rating remains in the 'B' category due
to our view of the significant though somewhat diminished risk
related to the size of Beebe's monetary exposure in the settlement
process. The developing outlook reflects the possibility that we
could raise the rating if Beebe experiences positive developments,
including what we view as an affordable claims settlement and
preclusion of future related lawsuits outside of the class action.
Alternatively, we could lower the rating if Beebe files for
bankruptcy or experiences declining financial results that we
believe could jeopardize debt service payments," S&P said.
"Currently, Beebe faces numerous lawsuits filed against the
hospital stemming from the December 2009 arrest of physician Dr.
Earl Bradley, a former member of Beebe's medical staff, for sexual
abuse of patients in his private pediatric practice in Lewes, Del.
The lawsuits allege Beebe admitted a sociopathic physician to the
staff and failed to conduct sufficient oversight of Dr. Bradley,
and numerous other related complaints. In March 2011, the judge in
the case certified the lawsuits as a class action, and the parties
are in the midst of a court-ordered mediation process," S&P said.
BERNARD L. MADOFF: Trustee Argues to Stop Stanley Chais Suits
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the trustee liquidating Bernard L. Madoff Investment
Securities Inc. filed additional papers this week in support of
his lawsuit trying to stop California Attorney General Kamala
Harris from suing the estate of Stanley Chais. In the same
lawsuit, Madoff trustee Irving Picard is asking the bankruptcy
judge in Manhattan to halt four other suits by private plaintiffs.
According to the report, U.S. Bankruptcy Judge Burton Lifland
asked both sides to submit more papers commenting on the relevance
of three recent appellate cases on the question of when a
bankruptcy judge can stop lawsuits against third parties.
Mr. Picard contends all three support his theory that the
bankruptcy court can halt lawsuits by creditors based on factual
allegations identical to those underlying the trustee's suit
against Chais. The three cases on which Judge Lifland wants
comment involve Quigley Co., Nortel Networks Inc. and a Madoff
case in district court decided by U.S. District Judge Paul Oetken.
Ms. Harris and the other plaintiffs will file their additional
papers on June 20. Judge Lifland will hold a hearing on July 18
to decide whether he should stop the suits. If Mr. Picard wins,
he will have the only lawsuit against Chais.
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.
BERNARD L. MADOFF: Trial on Extraterritoriality in September
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that U.S. District Judge Jed Rakoff will decide by the end
of September whether the trustee liquidating Bernard L. Madoff
Investment Securities Inc. may know by the end of September
whether he's barred from suing defendants who received transfers
of stolen property abroad.
Irving Picard, the Madoff trustee, filed at least 60 lawsuits to
recover fictitious profits paid to defendants abroad. Defendants
in six lawsuits persuaded Judge Rakoff to rule in May that he and
not the bankruptcy judge should decide in the first instance
whether U.S. law allows a bankruptcy trustee to sue for recovery
of fraudulent transfer received by someone outside the U.S.
Mr. Picard claims the payments abroad were fictitious profits
representing money stolen from other customers.
Mr. Rochelle notes that Judge Rakoff's ruling, which could come as
early as late September, will have importance for Mr. Picard and
bankruptcy cases generally. For Mr. Picard, a loss will mean yet
another defeat limiting how much he can recover and thus
depressing the amount customers will receive who weren't lucky
enough to take money out before bankruptcy. For bankruptcy
generally, a ruling against Mr. Picard would mean that foreign
institutions could structure transactions with U.S. entities to
insulate themselves from the possibility of being sued for a
fraudulent transfer.
Institutions to be affected by Rakoff's ruling include affiliates
of ABN Amro Bank NV, HSBC Bank Plc, Banco Bilbao Vizcaya
Argentaria SA, Barclays Bank Plc and BNP Paribas SA.
The report relates, last week, Judge Rakoff took a total of 60
lawsuits out of bankruptcy court to decide on the extraterritorial
effect of fraudulent transfer law. The defendants are to file
their papers by July 13. Mr. Picard will file his by Aug. 17, so
the defendants can file replies by Aug. 31. Judge Rakoff will
hold oral argument in his court on Sept. 21. Previously, Judge
Rakoff limited Mr. Picard's suits to recovery of fictitious
profits paid out within two years of bankruptcy rather than six.
He also erected a high barrier to suits for recovery of principal.
Judge Rakoff ruled in Mr. Picard's favor by saying that U.S.
customers sued for recovery of fictitious profits have few if any
defenses to fend off a fraudulent transfer judgment for payments
within two years of bankruptcy.
The case involving the question of extraterritoriality is part of
Securities Investor Protection Corp. v. Bernard L. Madoff
Investment Securities LLC, 12-mc-00115, U.S. District Court,
Southern District of New York (Manhattan).
BEXAR COUNTY: Moody's Cuts Rating on Housing Revenue Bonds to B2
----------------------------------------------------------------
Moody's Investors Service has downgraded to B2 from B1 the rating
on the Bexar County (TX) Housing Finance Corporation Multifamily
Housing Revenue Bonds (American Opportunity for Housing-Dublin,
Kingswood, and Waterford Apartments Project) Senior Series 2001A
and downgraded to Caa2 from B3 the rating on the Subordinate
Series 2001B.
The outlook on the rating remains negative. The Junior Subordinate
Series C bonds are not rated. The rating for the senior and
subordinate bonds have been downgraded due to a deterioration of
the debt service coverage levels.
Rating Rationale
The rating action is based on declining financial performance and
the increasing reliance on contributions to cover operating
deficiencies.
Strengths
* Fully funded debt service reserve funds for the Series A
bonds.
* Bonds are secured by the revenues from all three properties,
instead of relying on revenues from one property to cover debt
service on the bonds. Moody's views this diversification of
revenues as a credit strength.
* Occupancy is improving and demonstrating strong demand.
Challenges
* Tapping of the subordinate debt service reserve funds.
* The projects have been relying on owner contributions in order
to cover operating deficiencies.
What could change the rating- UP
- Improvement in physical and economic occupancy rates, leading
to increased rental revenue and growth in debt service
coverage.
- Replenishment of the subordinate debt service reserve fund.
What could change the rating- DOWN
- Material deterioration in debt service coverage.
The principal methodology used in this rating was Global Housing
Projects published in July 2010.
BICENT HOLDINGS: To Seek Plan Confirmation on July 30
-----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Bicent Holdings LLC will ask the bankruptcy court in
Delaware to approve its Chapter 11 at a confirmation hearing on
July 30.
Under the plan, the Debtor will transfer ownership of its two
power plants in California to secured lenders The plan,
negotiated before the Chapter 11 filing on April 23, exchanges
ownership for secured debt. It is supported by holders of more
than two-thirds of the first- and second-lien debt, according to
the disclosure statement.
According to the disclosure statement, which was approved last
week, first lien lenders, with Barclays Bank Plc as agent, are
owed $178.9 million. They are to receive 95% of the new
stock, for a recovery estimated between 38.3% and 60.4
percent. Second-lien lenders, where U.S. Bank NA is agent for
$128.5 million in debt, are to have warrants for 12.5% of the new
stock plus $1.5 million cash, for an estimated recovery of
4.4%. Holders of mezzanine debt owed $65.2 million are to receive
nothing. Likewise, general unsecured creditors with $25.4
million in claims are to have no recovery.
About Bicent Power
Bicent Holdings LLC and 12 of its affiliates sought bankruptcy
protection under Chapter 11 (Bankr. D. Del. Lead Case No.
12-11304) on April 23, 2012. Bicent, based in Lafayette,
Colorado, owns and operates two generating facilities: Hardin, a
120-megawatt coal-fired plant about 40 miles southeast of
Billings, Montana, and San Joaquin, a 48-megawatt natural gas-
fired facility about 70 miles east of San Francisco in Lathrop,
California.
Bicent Holdings is owned by non-debtor Bicent Prime Holdings,
which is 87.1%-owned by Natural Gas Partners VIII LP, Natural Gas
Partners IX LP and NGP IX Offshore Holdings LP and 12.9%-
owned by Beowulf (Bicent) LLC.
In their petitions, Bicent Holdings estimated under $50,000 in
assets and $50 million to $100 million in debts. Bicent Power
estimated $100,000 to $500,000 in assets and $500 million to
$1 billion in debts. The petitions were signed by Christopher L.
Ryan, chief financial officer.
Judge Kevin Gross oversees the case. The Debtors have tapped
Young Conaway Stargatt & Taylor, LLP as bankruptcy counsel; Moelis
& Company LLC, as financial advisor, and Paul, Weiss, Rikfind,
Wharton & Garrison LLP as corporate counsel. Epiq Bankruptcy
Solutions LLC serves as claims and notice agent.
The plan is supported by holders of more than two-thirds of the
first- and second-lien debt, according to the disclosure
statement. Under the Plan, among other things: holders of
mezzanine debt owed $65.2 million are to receive nothing.
Likewise, general unsecured creditors are slated for no recovery.
CAGLE'S INC: Creditors See Full-Payment Plan With Interest
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the official committee of unsecured creditors of
Cagle's Inc. said in a court filing that the Debtor is selling the
business this week for enough to pay all claims in full, with
interest, leaving an excess for distribution to the owners. The
committee made the statements in supporting Cagle's request for an
extension until Aug. 14 of the exclusive right to propose a
liquidating Chapter 11 plan. The committee says the upcoming
expansion of exclusivity ought to be the last and that a plan
should be filed before the new deadline expires.
About Cagle's
Cagle's Farms (NYSE: CGL.A) -- http://www.cagles.net/-- engages
in the production, marketing, and distribution of fresh and frozen
poultry products in the United States.
Cagle's Inc. and its wholly owned subsidiary Cagle's Farms filed
on Oct. 19, 2011, voluntary petitions for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 11-80202 and
11-80203). Paul K. Ferdinands, Esq., at King & Spalding, in
Atlanta, Georgia, serves as counsel. FTI Consulting, Inc., serves
as the Debtors' financial advisors. Kurtzman Carson LLC serves as
their claims, noticing, and balloting agent.
In its schedules, Cagle's Inc. disclosed $82.0 million in assets
and $55.3 million in liabilities as of the Petition Date.
The Official Committee of Unsecured Creditors is represented by
McKenna Long & Aldridge LLP and Lowenstein Sandler as counsel.
J.H. Cohn LLP serves as its financial advisors.
The bankruptcy court approved the sale of the business for not
less than $69.5 million to an affiliate of Koch Foods Inc., a
chicken processor based in Park Ridge, Illinois. Cagle's expects
the sale to be completed by June 15. The price rose about $12
million at the auction.
CAMTECH PRECISION: Genovese Joblove to Pursue Avoidance Actions
---------------------------------------------------------------
The Hon. Paul G. Hyman of the U.S. Bankruptcy Court for the
Southern District of Florida authorized the Official Committee of
Unsecured Creditors in the Chapter 11 cases of Camtech Precision
Manufacturing, Inc., et al., to modify the retention terms of its
counsel, Genovese, Joblove & Battista, P.A.
The Court ordered that the terms retention order dated July 1,
2010, is modified to reflect that Genovese Joblove will handle the
prosecution of avoidance litigation claims on a contingency basis,
and will be compensated 33.33% from all funds actually recovered
from the avoidance actions plus reimbursement of out of pocket
costs in connection therewith.
About Camtech Precision Manufacturing, Inc.
Jupiter, Florida-based Camtech Precision Manufacturing, Inc.,
Avstar Fuel Systems, Inc., and R & J National Enterprises Inc.
filed for Chapter 11 bankruptcy protection (Bankr. S.D. Fla. Case
Nos. 10-22760, 10-22762 and 10-22762) on May 10, 2010.
Avstar, founded in 2007, designs, manufactures and overhauls
carburetors and fuel injection systems for the aviation industry.
Avstar is the holder of Federal Aviation Administration Parts
Manufacturer Approvals for general aviation fuel systems. Avstar
generates sales primarily from new product sales and overhauls of
carburetors and servos for the general aviation industry.
Bradley S. Shraiberg, Esq., at Shraiberg, Ferrara & Landau, P.A.,
in Boca Raton, Florida, serves as counsel to the Debtors. Carlos
E. Sardi, Esq., and Glenn D. Moses, Esq., at Genovese Joblove
Battista P.A., in Miami, Florida, represent the Official Committee
of Unsecured Creditors. In its schedules, Camtech disclosed
assets of $10.98 million and debts of $14.63 million.
CBS I LLC: Summerlin Building Owner Files for Chapter 11
--------------------------------------------------------
Steve Green at Vegas Inc. reports that CBS I LLC, owner of the
Summerlin building in Las Vegas, filed for Chapter 11 bankruptcy
reorganization, listing $19.4 million in both assets and
liabilities.
The Summerlin building is a 71,546-square-foot office building in
Howard Hughes Plaza at 10100 West Charleston Blvd., just west of
Hualapai Way.
The report notes the bankruptcy filing came after U.S. Bank,
trustee for holders of the $16.4 million mortgage against the
property, initiated foreclosure proceedings and filed a lawsuit
May 24 in Clark County District Court asking that a receiver be
appointed to take control of the building.
"The income from the property is insufficient to satisfy
borrower's obligations to (debt) holder, and borrower is in
default of its monetary obligations to (debt) holder," the report
says, citing the lawsuit charged. It says CBS has failed to make
payments on the mortgage since November and that missed payments
and interest through March 26 totaled about $831,000, according to
the report.
The report adds CBS hasn't responded to the lawsuit. Its
bankruptcy filing will likely at least temporarily block efforts
by U.S. Bank to install a receiver and foreclose on the property.
CHARLES STREET: Church Intends to Subordinate Bank Claim
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Charles Street African Methodist Episcopal Church of
Boston received tentative approval last week of a disclosure
statement explaining a plan setting up a battle with the secured
lender OneUnited Bank, owed about $4 million.
OneUnited describes itself as the only African American-owned bank
in Massachusetts. The plan is based on the notion that the church
will win a lawsuit in bankruptcy court to subordinate the bank's
claim on account of what the church describes as "wrongful conduct
and subsequent intransigence." If the church wins, the recovery
otherwise going to the bank will be earmarked for unsecured
creditors.
The judge directed the bank to file its papers for equitable
subordination by June 22.
Charles Street African Methodist Episcopal Church --
http://www.csrrc.org/-- is located in Roxbury, Massachusetts.
The Church is to advocate for the needs of community residents and
to strengthen individuals, families, and the community by
providing social, educational, economic, and cultural services.
The Church filed for Chapter 11 protection (Bankr. D. Mass. Case
No. 12-12292) on March 20, 2012, to prevent its lenders, OneUnited
Bank, from foreclosing on a $1.1 million loan and auctioning off
the church. Judge Frank J. Bailey presides over the case.
Jonathan Lackow, Esq., at Ropes & Gray LLP, represents the Debtor.
The Debtor estimated both assets and debts of between $1 million
and $10 million.
CITIZENS CORP: Case Trustee Can Hire Harwell Howard as Counsel
--------------------------------------------------------------
The Hon. Marian F. Harrison of the U.S. Bankruptcy Court for the
Middle District of Tennessee authorized Gary M. Murphey, the
trustee in the Chapter 11 case of Citizens Corporation, to employ
Harwell, Howard, Hyne, Gabbert & Manner, P.C. (H3GM), as his legal
counsel, effective as of March 19, 2012.
H3GM, among other things, will provide the Trustee legal advice
with respect to his powers and duties, on these hourly rates:
Principals $300-$550
Senior Associates
(4-6 years' experience) $250-$295
Junior Associates
(0 - 4 years' experience) $190-$225
Paralegals $140-$185
To the best of the Trustee's knowledge, H3GM is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
MGLAW Witdhraws
Judge Harrison authorized MGLAW, PLLC, to withdraw as counsel for
Citizens.
As a result of the Chapter 11 Trustee appointment, MGLAW submits
that there is good cause for it to withdraw as counsel for Debtor.
The Debtor has been informed of MGLAW's intent to withdraw as
counsel.
As reported in the Troubled Company Reporter on Jan. 27, 2012,
Citizens Corporation previously obtained permission from the
Bankruptcy Court to employ MGLAW as its counsel. The firm's
current hourly rates are $395 for members, $175 to $265 for
associates and $125 for paralegal. The Debtor would reimburse the
firm for its expenses consistent with the firm's normal
practices. On Nov. 28, 2011, the Debtor delivered to the firm an
initial retainer of $84,991. Pursuant to the application, MGLAW
said it was a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code.
About Citizens Corp.
Franklin, Tennessee-based Citizens Corp. operates a mortgage
brokerage business. Citizens Corp. filed for Chapter 11
bankruptcy (Bankr. M.D. Tenn. Case No. 11-11792) on Nov. 28, 2011.
Judge George C. Paine, II, presides over the case. The Debtor
employed Robert J. Mendes, Esq., at MGLAW, PLLC, as its counsel.
Marion Ed Lowery, a former owner of Peoples State Bank of Commerce
of Nolensville and various other entities, serves as chairman of
the company. He signed the Chapter 11 petition.
Lenders Tennessee Commerce Bank is represented by David W.
Houston, IV, Esq., at Burr & Forman LLP.
Citizens listed assets and liabilities showing property worth
$40.1 million and debt of $17.8 million.
Citizens filed a reorganization plan offering to pay all
creditors in full over time, including Tennessee Commerce Bank and
other secured lenders owed $17.3 million. Unsecured creditors,
owed a combined $81,000, would be paid off in equal installments
over five years.
On Feb. 27, 2012, the Court granted the request of lender Legends
Bank for appointment of a Chapter 11 trustee. The Court held that
an independent person must review many of the transactions
involving CEO Ed Lowery, and its wholly owned subsidiary,
Financial Data Technology Corporation.
CLIFFS CLUB: Asks for Plan Exclusivity Until Oct. 1
---------------------------------------------------
The Cliffs Club & Hospitality Group, Inc., et al., ask the U.S.
Bankruptcy Court for the District of South Carolina to extend
their exclusive solicitation period until Oct. 1, 2012.
Out of abundance of caution, the Debtors requested for an
extension because they might require additional time to negotiate
with creditors and parties-in-interest with respect to the
solicitation of acceptances of the Plan. The Debtors' exclusive
solicitation period is set to expire on Aug. 26, 2012.
As reported in the May 25, 2012 edition of the TCR, Cliffs Club &
Hospitality Group Inc. filed a proposed reorganization plan this
week to carry out a sale of the business. According to Bill
Rochelle, the bankruptcy columnist for Bloomberg News, competing
bidders dropped out before the auction where Carlile Development
Group was already under contract to buy the projects through
confirmation of a Chapter 11 reorganization plan. Carlile
will be joined in buying the projects by SunTx Urbana GP I LLP and
Arendale Holdings Corp.
The report relates that according to the explanatory disclosure
statement, the plan calls for paying a total of $64 million spread
over 20 years without interest to holders of $73.5 million notes.
The lenders will receive the greater of $1 million a year or half
of cash flow. The outstanding balance will be paid at maturity.
Unsecured creditors with an estimated $3.9 million in claims are
predicted to have a 75% recovery. Mechanics lienholders with $1.5
million in claims will be paid in full without interest.
Members would be invited to join the newly reorganized club.
About Cliffs Club
Units of The Cliffs Communities, led by The Cliffs Club &
Hospitality Group, Inc., doing business as The Cliffs Golf &
Country Club, along with 10 affiliates, sought Chapter 11
protection (Bankr. D. S.C. Lead Case No. 12-01220) on Feb. 28,
2012.
The Cliffs has eight premier, private master-planned residential
communities, each to have its own world-class golf course.
Approximately 3,734 lots have been sold. There are currently
1,385 finished homes, with 63 under construction. The properties
for sale are owned by non-debtor DevCo entities.
The Feb. 28 Debtors operate the exclusive membership clubs for
golf, tennis, wellness and social activities at The Cliffs'
communities in North and South Carolina. The clubs have 2,280
members, and there are 766 resigned members with refundable
deposits totaling $37 million. The Debtors do not own the golf
courses -- they only own or lease all the "core amenities" for the
operation of the golf courses.
Another affiliate, Keowee Falls Investment Group, LLC, filed a
Chapter 11 petition (Bankr. D. S.C. Case No. 12-01399) in
Spartanburg, South Carolina, on March 2, 2012. Travelers Rest-
based Keowee Falls estimated at least $100 million in assets and
liabilities of up to $50 million.
Judge John E. Waites presides over the Debtors' cases. Lawyers
at McKenna Long & Aldridge LLP serve as the Debtors' lead counsel.
Dana Elizabeth Wilkinson, Esq., serves as local counsel. Grisanti
Galef & Goldress serves as restructuring advisors and Katie S.
Goodman of GGG serves as CRO. BMC Group Inc. serves as the
Debtors' claims and noticing agent.
According to papers filed in Court, the Debtors' total assets had
a $175 million book value at Dec. 31, 2011. The Debtors' total
liabilities had a $333 million book value at Dec. 31, 2011. The
petition was signed by Timothy P. Cherry, authorized officer.
Wells Fargo, as Indenture Trustee, is represented in the case by
Daniel S. Bleck, Esq., at Mintz Levin Cohn Ferris Glovsky and
Popeo P.C.; and Elizabeth J. Philp, Esq., and Michael Beal, Esq.,
at McNair Law Firm P.A.
The Official Committee of Unsecured Creditors is represented in
the case by John B. Butler, III, P.A., and Jonathan B. Alter,
Esq., at Bingham McCutchen LLP.
CONNAUGHT GROUP: Files Plan That Offers to Pay at Least 55%
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Connaught Group Ltd., which sold its assets in April,
filed a Chapter 11 plan last week that could pay unsecured
creditors 55% or more. The disclosure statement, up for approval
at a July 17 hearing, states that the recovery for unsecured
creditors will range between 21% and 55%. The recovery could be
higher still if lawsuits are victorious. Unsecured claims range
from $17.5 million to $20 million, according to the disclosure
statement.
In April, the Debtor obtained approval to sell the business to a
joint venture between Royal Spirit Group and Tom James Co. for
$20 million cash. The buyers also took over the lease for the
headquarters on West 55th Street in Manhattan. Royal Spirit, a
non-insider with the largest claim, waived a $5.4 million claim.
Secured claims were paid from the sale.
About Connaught Group
The Connaught Group, Ltd. and four of its affiliates, Limited
Editions for Her of Nevada LLC; Limited Editions for Her of
Branson LLC; Limited Editions for Her LLC; and WDR Retail Corp.
filed separate Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y.
Lead Case No. 12-10512) on Feb. 9, 2012.
New York-based Connaught Group designs and has manufactured high-
end women's wear and then sells the finished clothing through an
innovative sales system outside the normal retail chain originally
created in 1981 by the Debtors' founder and iconic designer,
William D. Rondina. The Company's sales are made primarily
through independent contractors who sell the clothing to their own
clients in private showings. Through the Wardrobe Consultants,
the Debtors are able to offer the personalized service and
attention to detail absent from the conventional shopping
experience. As of the Petition Date, the Debtors are affiliated
with more than 1,300 Wardrobe Consultants. The Debtors also
operate 10 outlet stores throughout the country, but the Debtors
primarily only sell last season's clothing and other merchandise
to be liquidated at these stores.
A non-debtor Canadian subsidiary, The Connaught Group ULC, sells
the Debtors' clothing in eight outlet stores in Canada. Three of
the Canadian stores are leased by The Connaught Group, Ltd.
Judge Stuart M. Bernstein presides over the case. David L.
Barrack, Esq., Paul Jacobs, Esq., and Warren J. Nimetz, Esq., at
Fulbright & Jaworski L.L.P., serve as the Debtors' counsel. Maury
Satin at Zygote Associates serves as the CRO. Richter Consulting
acts as financial advisor and Consensus Advisory Services and
Consensus Securities LLC serve as financial advisors, consultants
and investment bankers. Kurtzman Carson Consultants LLC serves as
administrative agent, and claims and noticing agent.
JPMorgan Chase is represented in the case by Andrew C. Gold, Esq.,
at Herrick, Feinstein LL. Citibank is represented by Boris I.
Mankovetskiy, Esq., at Sills Cummis & Gross P.C.
The Official Committee of Unsecured Creditors is represented by
Lowenstein Sandler, PC.
CONTINENTAL AIRLINES: S&P Raises Rating on Class B Certs. to 'BB+'
------------------------------------------------------------------
Standard & Poor's Ratings Services has taken various rating
actions on selected enhanced equipment trust certificates (EETCs)
of Continental Airlines Inc., a subsidiary of United Continental
Holdings Inc. (both rated 'B/Stable'). "We raised our rating on
the 1997-4 Class B pass-through certificates to 'BB+' (sf) from
'BB' (sf). We lowered our ratings on the 1998-3 Class A1 pass-
through certificates to 'BBB' (sf) from 'BBB+' (sf), on the 2003-
ERJ1 Class A pass-through certificates to 'B-' (sf) from 'B' (sf),
and on the 2007-1 Class A pass-through certificates to 'BBB+' (sf)
from 'A-' (sf)," S&P said.
"The rating changes are based on our analysis of changes in
collateral protection for these certificates. The 1997-4 Class B
certificates are secured, along with the senior Class A
certificates (the 'BBB+' rating on which is not affected), by
current technology aircraft--B737-700s, B737-800s, and B777-
200ERs--that Continental acquired in 1998. We estimate the loan-
to-value using current market values to be in the mid-60% area,
and we believe that loan-to-value will decline (improve) over
time," S&P said.
"Our downgrade of the 1998-3 Class A certificates is based on our
expectation that their loan-to-value will increase from the
current level of less than 60% (using current market values) to
close to 70% by 2013, when two B737-700s drop out of the
collateral package and Continental repays associated debt.
Thereafter, collateral will consist only of one B757-200 and one
B777-200ER," S&P said.
"Our downgrade of the 2003-ERJ1 class A certificates is based on
continuing declines in value of 50-seat regional jets (the
certificates are secured indirectly by Embraer 50-seat regional
jets). We estimate the loan-to-value at more than 90%, using
current market values. Accordingly, we now rate these at the same
level as Continental's senior unsecured debt," S&P said.
"Lastly, our downgrade of the 2007-1 Class A certificates reflects
a higher-than-expected loan-to-value, which we don't expect to
improve over the medium term. Using base values (which we use for
these relatively new B737-800 and B737-900ER aircraft that
indirectly collateralize the certificates), the estimated loan-to-
value is more than 60%. We note that this is the last of
Continental's EETCs before introduction of cross-collateralization
and immediate cross default of aircraft notes--structural features
that are favorable to creditor interests, in our view," S&P said.
RATINGS LIST
Continental Airlines Inc.
Corporate credit rating B/Stable/--
Rating Raised
To From
Equipment trust certificates
1997-4 Class B pass-thru cert BB+ (sf) BB (sf)
Ratings Lowered
To From
Equipment trust certificates
1998-3 Class A1 pass-thru cert BBB (sf) BBB+ (sf)
2003-ERJ1 Class A pass-thru cert B- (sf) B (sf)
2007-1 Class A pass-thru cert BBB+ (sf) A- (sf)
DEWEY & LEBOEUF: Committee Against Having Bank Liens on Lawsuits
----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that both official committees for Dewey & LeBoeuf LLP are
objecting to the terms on which the defunct law firm can use
incoming cash to pay expenses of the liquidation that began
May 28. The bankruptcy judge will rule on the issue today,
June 13.
According to the report, Dewey owes $255 million to bank lenders
counting on $255 million in accounts receivable to be the largest
chunk of their collateral. To allow Dewey the use of incoming
cash to pay for the liquidation, the banks want their collateral
to include lawsuits.
The report relates that the committee of unsecured creditors and
the committee of former partners oppose the idea of giving up
liens on lawsuits, which they see as otherwise the biggest asset
for unsecured creditors. They also see a $30,000 weekly budget
for their lawyers as inadequate.
"There is almost no market right now for unsecured claims" against
Dewey, according to Joe Sarachek, Managing Director of Special
Situations at CRT Capital Group LLC. Buyers are bidding 1% this
month, compared with 5% last month, Sarachek said.
The creditors' committee is hoping for a global settlement with
the lenders in the next six weeks, so Dewey doesn't "follow the
path of other law firm bankruptcies that only yielded years and
years of costly litigation."
The committees also want a larger budget and more time to
investigate whether the lenders received more collateral in the
weeks before bankruptcy that can be voided as preferences.
About Dewey & LeBoeuf
New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11
bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the
wind-down of its operations. The firm had struggled with high
debt and partner defections. Dewey disclosed debt of $245 million
and assets of $193 million in its chapter 11 filing late evening
on May 29, 2012.
Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine
LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey
employed about 2,000 people with 1,300 lawyers in 25 offices
across the globe. When it filed for bankruptcy, only 150
employees were left to complete the wind-down of the business.
Dewey's offices in Hong Kong and Beijing are being wound down.
The partners of the separate partnership in England are in process
of winding down the business in London and Paris, and
administration proceedings in England were commenced May 28. All
lawyers in the Madrid and Brussels offices have departed. Nearly
all of the lawyers and staff of the Frankfurt office have
departed, and the remaining personnel are preparing for the
closure. The firm's office in Sao Paulo, Brazil, is being
prepared for closure and the liquidation of the firm's local
affiliate. The partners of the firm in the Johannesburg office,
South Africa, are planning to wind down the practice.
The firm's ownership interest in its practice in Warsaw, Poland,
was sold to the firm of Greenberg Traurig PA on May 11 for $6
million. The Pension benefit Guaranty Corp. took $2 million of
the proceeds as part of a settlement.
Judge Martin Glenn oversees the case. Albert Togut, Esq., at
Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy
Solutions LLC serves as claims and notice agent. The petition was
signed by Jonathan A. Mitchell, chief restructuring officer.
JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the
lenders under the Revolver Agreement, hired Kramer Levin Naftalis
& Frankel LLP. JPMorgan, as Collateral Agent for the Revolver
Lenders and the Noteholders, hired FTI Consulting and Gulf
Atlantic Capital, as financial advisors. The Noteholders hired
Bingham McCutchen LLP as counsel.
The U.S. Trustee formed two committees -- one to represent
unsecured creditors and the second to represent former Dewey
partners. The creditors committee hired Brown Rudnick LLP led by
Edward S. Weisfelner, Esq., as counsel.
DIPPIN' DOTS: Assets Sold, Case Converted to Chapter 7 Liquidation
------------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that after Dippin' Dots Inc. was sold to Fischer
Enterprises LLC for $12.67 million, the bankruptcy judge converted
the Chapter 11 reorganization for the ice cream maker to a
liquidation in Chapter 7. Regions Bank, the secured lender owed
$10.8 million when the bankruptcy began, will receive net proceeds
from the sale. The bank agreed to carve our $250,000 from the
sale for use by the trustee. The carveout is in addition to money
the bank previously set aside for payment of professional fees.
Substitute Counsel
The U.S. Bankruptcy Court for Western District of Kentucky,
according to Dippin' Dots, Inc.'s case docket, authorized the
Debtor to employ Frost Brown Todd LLC as counsel.
On March 30, 2012, the Court approved the motion of Todd A. Farmer
and Samuel J. Wright of Farmer & Wright, PLLC, to withdraw as
attorneys of record for the Debtor, and allow Frost Brown to
substitute as counsel for the Debtor.
In its motion, Farmer & Wright related that Gregory Charles,
former chief restructuring officer advised Farmer & Wright that
certain courses of action that he may direct on behalf of the
Debtor could place the firm in a conflict of interest, and has
requested new counsel to represent the Debtor.
The Debtor has provided Frost Brown Todd LLC with a retainer of
$25,000. In addition, Frost Brown will receive a carve-out (and
cap) under the DIP order and cash collateral budget of $20,000 per
week, which will be cumulative, and a one-time $7,500 payment
for case expenses such as notices and mailings.
As of the Petition Date, Frost Brown Todd LLC had no accrued or
unpaid fees or expenses owing by the Debtor.
To the best of the Debtor's knowledge, Frost Brown is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Dippin' Dots
Founded in 1988 by microbiologist Curt Jones, Dippin' Dots Inc.
manufactures quirky and colorful ice cream beads, which are flash
frozen using liquid nitrogen. It owns a 120,000-square-foot plant
in Kentucky that can produce more than 25,000 gallons of frozen
dots a day. It has about 140 Dippin' Dots retail locations, which
are mostly controlled by franchisees, and agreements with 9,952
small vendors who sell the ice cream at fairs, festivals and
sports games. Dippin' Dots isn't sold in grocery stores because
of its extreme cooling requirements.
Dippin' Dots filed a Chapter 11 petition (Bankr. W. D. Ky Case No.
11-51077) on Nov. 3, 2011 in Paducah, Kentucky. Judge Thomas H.
Fulton presides over the case. Farmer & Wright, PLLC, represents
the Debtor as Chapter 11 counsel. The Debtor disclosed
$20,233,130 in assets and up to $20,233,130 in debts. The
petition was signed by Curt Jones, president.
Regions Bank, the Debtor's secured lender, is represented by Brian
H. Meldrum, Esq., at Stites & Harbison PLLC.
In February 2012, Regions Bank filed a motion seeking appointment
of a Chapter 11 trustee. After talks with the Debtor, Regions
consented to having a chief restructuring officer. Regions wanted
a trustee in part based on allegations that the company's chief
executive fraudulently transferred his ownership of a franchising
affiliate to prevent the bank from attaching the affiliate in
satisfaction of debt on a guarantee.
DUKE REALTY: Fitch Assigns 'BB' Rating on Preferred Stock
---------------------------------------------------------
Fitch Ratings assigns a 'BBB-' credit rating to the $300 million
aggregate principal amount of 4.375% senior unsecured notes due
June 15, 2022 issued by Duke Realty Limited Partnership, a
subsidiary of Duke Realty Corp. (NYSE: DRE). The notes were
issued at 99.271% of principal value to yield 4.466% to maturity.
Net proceeds from the offering are expected to be used to repay
outstanding debt with near-term maturities, including balances on
the revolving credit facility, and for general corporate purposes.
Fitch currently rates DRE and its operating partnership as
follows:
Duke Realty Corp.
-- Issuer Default Rating (IDR) 'BBB-';
-- Preferred stock 'BB'.
Duke Realty Limited Partnership
-- IDR 'BBB-';
-- Senior unsecured notes 'BBB-';
-- Senior unsecured exchangeable notes 'BBB-';
-- Unsecured revolving credit facility 'BBB-'.
The Rating Outlook is Stable.
Fitch anticipates that the company's credit profile will remain
consistent with a 'BBB-' rating in the near-to-medium term.
Leverage is appropriate for the rating category. The rating also
takes into account the company's large pool of diversified
industrial, office, and medical office building (MOB) properties,
solid unencumbered asset coverage of unsecured debt, and adequate
liquidity position. The ratings are balanced by a fixed-charge
coverage ratio that is low for the rating category and continued
challenging suburban office fundamentals, even as DRE continues to
shift its portfolio away from suburban office to a higher
percentage of industrial properties and MOBs.
The company has a diversified portfolio of 747 bulk distribution,
suburban office, MOB, and retail properties located across 18
markets, which Fitch views favorably from a property segment and
geographical diversification standpoint.
The company's portfolio also benefits from a highly diversified
tenant base and well-staggered lease expiration schedule, limiting
tenant credit risk and lease rollover risk. DRE's largest 20
tenants represented just 17.2% of annual base rents at March 31,
2012. Lease expirations are less than 13% of the total annual
base rent in any given year, with just 4.9% expiring for the
remainder of 2012, indicating long-term recurring cash flow across
the portfolio.
DRE continues to execute on its strategic plan, which entails
increasing the exposure to industrial and MOB assets while
reducing the exposure to suburban office. Fitch has a Negative
Outlook on suburban office fundamentals, and a Stable Outlook on
industrial and healthcare fundamentals, and as such, views the
company's repositioning strategy favorably. However, there is
potential for near-term EBITDA dilution from asset purchases and
sales as the company continues to shift the composition of the
portfolio.
The company's leverage, defined as net debt to recurring operating
EBITDA, was approximately 7.0 times (x) at March 31, 2012,
compared with 7.0x at Dec. 31, 2011 and 7.2x at Dec. 31, 2010.
Fitch expects leverage to trend toward the mid 6.0x range, which
is solid for the 'BBB-' rating.
The company has moderately increased its development pipeline
recently. In-process development (including joint ventures)
represented 4.3% of undepreciated book assets as of March 31,
2012, compared with 2.6%, 1.3% and 1.4% as of Dec. 31, 2011, Dec.
31, 2010 and Dec. 31, 2009, respectively. Remaining cost to be
spent was 3.3% of total undepreciated assets as of March 31, 2012.
Notably, the majority of the developments are build-to-suit
projects and MOBs, thus minimizing lease-up risk, which Fitch
views positively.
DRE has adequate liquidity and financial flexibility. As of March
31, 2012, the company had 429 unencumbered properties (excluding
seven wholly owned properties under development) with a gross book
value of $4.9 billion. Unencumbered asset coverage of unsecured
debt based on applying an 8.5% cap rate to unencumbered annualized
stabilized NOI was adequate for the 'BBB-' IDR at 2.0x as of March
31, 2012. The average cap rate for asset purchases and sales over
the past two years has been approximately 8%.
Pro forma the notes issuance, sources of liquidity (unrestricted
cash, availability under the unsecured revolving credit facility,
and projected retained cash flow from operating activities after
dividends) divided by uses of liquidity (pro rata debt maturities,
expected recurring capital expenditures, and remaining
nondiscretionary development costs) was 1.0x for the April 1, 2012
- Dec. 31, 2013 period, or 1.3x, assuming DRE is able to refinance
mortgage debt at 80% of the maturing amount during this period.
DRE's fixed-charge coverage ratio is low for the rating. Fixed-
charge coverage (defined as recurring operating EBITDA, less
recurring capital expenditures and straight-line rent adjustments,
divided by total interest incurred and preferred dividends) was
1.5x for the 12 months ended March 31, 2012, up slightly from 1.4x
in 2011 and 1.4x in 2010. Coverage has remained in the 1.4x to
1.6x range since 2008, and Fitch anticipates that fixed-charge
coverage will improve moderately through 2014 to 1.8x, driven by
moderate NOI growth and reduced preferred dividends due to recent
preferred redemptions. In addition, the company has $178 million
of 8.375% series O preferreds that become redeemable in 2013,
which DRE may redeem to further improve coverage.
Suburban office fundamentals remain weak, as evidenced by an
occupancy decline to 85.5% at March 31, 2012 from 86.2% at March
31, 2011 for DRE's stabilized office portfolio. In addition, net
effective rental rates on new leases remain weak and were $12.89
per square foot (psf) in first-quarter 2012, compared to $12.05
psf in 2011, $12.56 psf in 2010 and $13.03 in 2009. Fitch
anticipates that DRE's suburban office portfolio will continue to
face headwinds in the near term, driven by continued weak rental
rate growth and high leasing costs.
The Stable Rating Outlook is based on Fitch's expectation that
leverage will stabilize in the 7.0x range in the near term and
then trend lower to the mid 6.0x range in 2014, that coverage will
improve moderately to 1.7x in 2013 and 1.8x in 2014, and that the
company will maintain adequate liquidity.
The two-notch differential between DRE's IDR and preferred stock
rating is consistent with Fitch's criteria for corporate entities
with a 'BBB-' IDR. Based on 'Treatment and Notching of Hybrids in
Nonfinancial Corporate and REIT Credit Analysis,' these preferred
securities are deeply subordinated and have loss absorption
elements that would likely result in poor recoveries in the event
of a corporate default.
The following factors may have a positive impact on the ratings
and Rating Outlook:
-- Net debt to recurring operating EBITDA sustaining below 6.0x
(as of March 31, 2012, leverage was approximately 7.0x);
-- Fixed-charge coverage sustaining above 2.0x (latest 12-month
coverage was 1.5x as of March 31, 2012).
The following factors may have a negative impact on the ratings
and Rating Outlook:
-- Fixed-charge coverage sustaining below 1.3x;
-- Net debt to recurring operating EBITDA sustaining above 8.0x;
-- AFFO (adjusted funds from operations) payout ratio sustaining
above 100%.
DZ.EYE.N STUDIOS: Involuntary Chapter 11 Case Summary
-----------------------------------------------------
Alleged Debtor: DZ.EYE.N Studios, LLC
dba Boss Creative
aka Boss Creative
18402 US Highway 281 N, Suite 201
San Antonio, TX 78259-7614
Bankruptcy Case No.: 12-51861
Involuntary Chapter 11 Petition Date: June 8, 2012
Court: U.S. Bankruptcy Court
Western District of Texas (San Antonio)
Petitioner's Counsel: Eric Terry, Esq.
HAYNES & BOONE, LLP
112 E. Pecan Street, Suite 1200
San Antonio, TX 78205
Tel: (210) 978-7424
Fax: (210) 554-0430
E-mail: terrye@haynesboone.com
Creditor who signed the Chapter 11 petition:
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
Angel Staffing Incorporated Unpaid Loan $425,000
1202 E. Sonterra, Suite 501
San Antonio, TX 78258
Tel: (210) 616-9526
EASTMAN KODAK: Files Bid Procedures for KISS Patent Portfolios
--------------------------------------------------------------
Eastman Kodak Company filed a motion seeking approval of bidding
procedures for the prompt bankruptcy auction of its Digital
Capture and Kodak Imaging Systems and Services (KISS) Patent
Portfolios, comprising more than 1,100 patents that are integral
to the capture, manipulation, and sharing of digital images.
Kodak's motion outlines a sale process that is open to all
qualified bidders subject to the rules of the bidding procedures.
No disclosure of the unsuccessful bidders will be made to other
bidders or the public. Only the winning bidder and the amount of
the successful bid will be announced publicly at the end of the
auction.
"The proposed structure of the auction is tailored to the special
nature of the assets," said Timothy M. Lynch, Kodak Vice President
and Chief Intellectual Property Officer. "The bidding procedures
are designed to allow bidders to give us their best offers without
fear of showing their cards to competitors. In filing these
proposed procedures in advance of the June 30 deadline in our
lending agreement, we are moving ahead as quickly as possible with
the process of monetizing our digital imaging patent portfolio."
Over the past 12 months, Kodak's financial advisor, Lazard, has
conducted an extensive marketing process for these assets. To
date, 20 parties have signed confidentiality agreements and have
been provided access to an electronic data room.
Lynch noted that the two portfolios being sold have different
characteristics and may interest different buyers. The Digital
Capture Portfolio includes over 700 patents, covering key aspects
of image capture, processing, and transmission technologies that
are crucial to the design and operation of digital cameras and
multi-function devices, including camera-enabled smartphones and
tablets. The KISS Portfolio includes over 400 patents that cover
technologies including image analysis, manipulation and tagging,
and network-based services, including image storage, access, and
fulfillment. Since 2001, Kodak has generated more than $3 billion
from licensing its digital imaging portfolio to industry leaders,
including Samsung, LG, Motorola, and Nokia, and is currently
pursuing patent litigation against infringers that include Apple,
RIM, and HTC.
Kodak expects the motion to approve bidding procedures to be heard
by the Court on July 2, the auction to be held in early August,
and the winning bidder to be announced by August 13.
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: Rejects Patent Claims by Apple, FlashPoint
---------------------------------------------------------
Eastman Kodak Co. and its debtor affiliates ask Judge Allan
Gropper of the U.S. Bankruptcy Court for the Southern District of
New York to issue a ruling against Apple Inc. and FlashPoint
Technology Inc. over the ownership of some of the company's
patents.
Both Apple and Flashpoint assert ownership claims on a digital
imaging patent identified as U.S. Patent No. 6,292,218. The
iPhone maker also claims that it owns nine other Kodak patents.
Apple bases its patent claims on its digital camera collaboration
with Eastman Kodak in the early 1990s.
In a court filing, Eastman Kodak's lawyer, Andrew Dietderich,
Esq., at Sullivan & Cromwell LLP, in New York, asked Judge Allan
Gropper to reject the patent claims, saying both Apple and
Flashpoint have "waited far too long" to assert their claims.
Apple reportedly did not claim ownership of U.S. Patent No.
6,292,218 until Eastman Kodak filed a patent infringement suit
before the International Trade Commission in 2010. It also did
not contest Eastman Kodak's ownership of the nine other patents
until March of this year.
Meanwhile, Flashpoint allegedly refused to provide Eastman Kodak
with evidence to support its patent claim, according to the
lawyer.
Mr. Dietderich also said the patent claims are an attempt to foil
Eastman Kodak's plan to sell the digital imaging portfolio
considered to be the "centerpiece" of its restructuring efforts.
Eastman Kodak is planning to sell its digital imaging portfolio
that could fetch $2.2 to $2.6 billion. The money generated from
the sale would be used to pay the company's $950 million
bankruptcy loan from Citigroup Inc.
The company is set to file a motion by June 30 to approve a bid
process in connection with the sale.
Meanwhile, a group of debt holders represented by New York-based
Akin Gump Strauss Hauer & Feld LLP expressed support for the
rejection of the patent claims, saying it is the only way to
ensure that the sale is completed expeditiously.
A court hearing on Eastman Kodak's request is scheduled for
June 13, 2012.
Apple, FTI Want Fight Out of Bankruptcy Court
Apple is blocking efforts of Eastman Kodak to have their dispute
resolved by the bankruptcy court.
The iPhone maker wants to keep their fight out of bankruptcy
court, saying the matter should be decided by a district court
where it should rightly be heard.
Apple said Eastman Kodak is attempting to use its bankruptcy to
avoid a fair hearing of their dispute over the patents, and is
trying to strip the iPhone maker of its rights under federal
patent law.
Eastman Kodak's attempt to have the dispute resolved quickly by
the bankruptcy court also drew flak from Flashpoint, a company
formed as spin-off of Apple's digital camera business.
In a related development, the U.S. District Court for the
Southern District of New York opened Civil Case No. 1:12-cv-04444
to address Apple's motion to withdraw the reference with respect
to Eastman Kodak's request. District Court Judge Thomas Griesa
and Magistrate Judge Andrew Peck have been assigned to the
matter.
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: ITC Holds Patent Claim vs. Apple, RIM Invalid
------------------------------------------------------------
An Administrative Law Judge of the International Trade Commission
issued an initial determination on May 21, 2012, in Eastman Kodak
Company's patent infringement action against Apple Inc. and
Research in Motion. The ALJ found that all RIM and certain Apple
accused devices infringe Kodak's patent relating to technology
for previewing images on a digital camera-enabled device. The
ALJ's ID recommends a finding of invalidity with respect to the
applicable claim of Kodak's patent.
The patent at issue -- US Patent No. 6,292,218 -- relates to a
technology invented by Kodak for previewing images on a digital
camera-enabled device that is fundamental to how those devices
take pictures. In the face of two separate challenges, the U.S.
Patent and Trademark Office analyzed this particular Kodak patent
and confirmed its validity in December 2010, Kodak related in a
press statement. The final decision of the ITC, based on the
deliberation of the full Commission, is expected by September 21,
2012.
According to Dow Jones, the ALJ declared the digital-imaging
patent held by Kodak invalid because of "obviousness." Were the
patent valid, the law judge said there would have been an
infringement of the patent, Bill Rochelle of Bloomberg News
related.
"We are pleased the ALJ has concluded that Kodak's patent is
infringed by Apple and RIM. We expect to appeal to the full
Commission his recommendation on validity. The ALJ's
recommendation represents a preliminary step in a process that we
are confident will conclude in Kodak's favor," said Timothy
Lynch, Kodak Vice President and Chief Intellectual Property
Officer. "In a previous ITC investigation, a different ALJ found
this same Kodak patent to be valid and infringed by Samsung,
whose products are similar to those offered by Apple and RIM.
Kodak has invested billions of dollars to develop its pioneering
digital imaging technology, and we intend to protect these
valuable assets."
The '218 patent at issue in this case is one of 1,100 digital
imaging patents in Kodak's industry-leading patent portfolio,
according to the Company. Kodak licenses its technology to
numerous leading technology companies, including LG, Motorola,
Nokia, and Samsung, the Company added.
Bloomberg noted that the May 21 ruling resulted in 35% decline in
price for Kodak's $400 million in 7% convertible notes due 2017.
The notes traded at 3:07 p.m. on May 20 for 16 cents on the
dollar, Bloomberg said, citing Trace, the bond-price reporting
system of the Financial Industry Regulatory Authority. On May
18, before announcement of the law judge's ruling, the notes
traded for 24.625 cents.
The 7% convertible notes continued trading for as low as 12 cents
on May 22 for a cumulative loss of 51% since the ruling was
announced, Bloomberg said. The law judge's ruling had a similar
effect on the price of claims, Bloomberg pointed out. Before the
opinion, buyers were bidding between 18 cents and 22 cents for
Kodak unsecured claims, according to Joe Sarachek, Managing
Director of Special Situations at CRT Capital Group LLC. Now
that the news has soaked in, Mr. Sarachek said buyers are only
willing to pay 10 cents to 12 cents, Bloomberg noted.
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: G. Alston Joins Retiree Committee
------------------------------------------------
Tracy Hope Davis, the U.S. Trustee for Region 2, appointed Gladys
Alston as member of the official committee of retired employees
in the Chapter 11 cases of Eastman Kodak Co. and its affiliated
debtors.
Ms. Alston will fill in the position vacated by Norman Beck who
was appointed by the U.S. Trustee on May 3, 2012.
Mr. Beck is part of an independent group of retirees who retained
legal counsel to fight Eastman Kodak when it proposed doing away
with the Medicare Advantage plan it provides retirees.
The current members of the retirees committee are:
(1) William G. Strickland
240 N. Plum Street
Pinebluff, North Carolina 28373
(2) Gladys D. Alston
427 Slate Drive
Boiling Springs, South Carolina 29316
(3) Jeannine Vogel
11210 Ponderosa Trail
Windsor, Colorado 80550
(4) David Beck
165 Parkwood Avenue
Rochester, New York 14620
(5) Robert Volpe
987 East Avenue, Apt. No. 1
Rochester, New York 14607
(6) Calvin A. Graziano
28 Brickston Drive
Pittsford, New York 14534
(7) Andrew L. Sperr
261 Straub Road
Rochester, New York 14626
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 ).
ECLIPSE AVIATION: Lack of Notice Bars Payment of Damages
--------------------------------------------------------
The Hon. Karen B. Molzen, Magistrate Judge of the U.S. District
Court for the District of New Mexico, held that the default
judgment entered in favor of Old Republic Insurance Co. and
Phoenix Aviation Managers, Inc., against Eclipse Aviation
Corporation in New Mexico State District Court was entered without
notice to Certain Underwriters of Lloyd's London, Subscribing to
Policy Number B030111789A08, a Foreign insurer, or opportunity for
Lloyd's to be heard; and by the terms of the insurance policy
issued to Eclipse Aviation, Lloyd's therefore owes no duty to Old
Republic and Phoenix to pay damages pursuant to the default
judgment entered by the New Mexico State District Court.
Old Republic and Phoenix insure two airplanes damaged on July 22,
2008, allegedly while in the custody of Eclipse Aviation.
The case is CERTAIN UNDERWRITERS OF LLOYD'S, LONDON SUBSCRIBING TO
POLICY NUMBER B030111789A08, Plaintiff, v. OLD REPUBLIC INSURANCE
CO. and PHOENIX AVIATION MANAGERS, INC., Defendants, CIV 11-0432
KBM/Act (D. N.M.). A copy of the Court's June 4, 2012 Memorandum
Opinion and Order is available at http://is.gd/Eb968ufrom
Leagle.com.
About Eclipse Aviation
Albuquerque, New Mexico-based Eclipse Aviation Corporation --
http://www.eclipseaviation.com/-- manufactured six-passenger
planes powered by two Pratt & Whitney turbofan engines. The
Company and Eclipse IRB Sunport, LLC sought chapter 11 protection
(Bankr. D. Del. Case No. 08-13031) on Nov. 25, 2008, represented
by lawyers at Allen & Overy LLP, and estimating assets of less
than $500 million and debts of more than $1 billion.
The Debtor sought to sell all of its assets pursuant to proposed
bid procedures. On Jan. 23, 2009, the Court entered an order
authorizing the sale of substantially all of the Debtor's assets
to EclipseJet Aviation International, Inc., finding it had
presented the highest and best offer. Despite approval, the sale
to EclipseJet was never consummated.
On March 5, 2009, the case was converted to a chapter 7
liquidation proceeding and Jeoffrey L. Burtch was appointed
trustee. The Trustee renewed efforts to sell the Debtor's assets.
On Aug. 28, 2009, the Court authorized the Trustee to sell the
Debtor's assets to Eclipse Aerospace, Inc., for $20 million in
cash and a $20 million note. The sale to Eclipse Aerospace,
Inc., closed on Sept. 4, 2009. Following the sale, the Debtor
changed its name to AE Liquidation, Inc.
ELLIPSO INC: Court Won't Refund $176 Filing Fee
-----------------------------------------------
Bankruptcy Judge S. Martin Teel, Jr., denied John Page's request
for a refund of a $176 filing fee deposited on June 3, 2012, with
respect to his Motion to Withdraw the Reference to Motion to
Revoke Confirmation of the Joint Plan of Reorganization filed in
the bankruptcy case of Ellipso Inc., and for the court to apply
the $176 refund to his later motion to withdraw the reference
filed in an adversary proceeding. The court noted the only basis
for a refund advanced by Mr. Page is that he withdrew the motion
to withdraw the reference that he had filed in the bankruptcy
case, but this argument fails because the withdrawal of a motion
does not trigger an entitlement to a waiver or refund. According
to Judge Teel, Paragraph 19 of the Bankruptcy Court Miscellaneous
Fee Schedule, which governs the fees for filing a motion to
withdraw the reference, includes no provision for waiver or refund
of the fee upon withdrawal of such a motion. A copy of the
Court's June 8, 2012 Memorandum Decision and Order is available at
http://is.gd/8aOrkgfrom Leagle.com.
About Ellipso Inc.
Ellipso, Inc. is a privately held communications satellite system
design company, now in bankruptcy. Ellipso's subsidiaries include
Mobile Communications Holdings, Inc., ESBH, Inc., and Virtual
Geosatellite, LLC. Through these subsidiaries, Ellipso has
compiled this portfolio of intellectual property for various
communications satellite systems and high performance technology.
Utilizing unique and patented elliptical orbits, the systems were
intended to provide low cost voice, data, facsimile, paging and
geolocational services to subscribers around the world at prices
lower than competing systems.
Ellipso Inc. filed for Chapter 11 bankruptcy (Bankr. D. D.C.
Case No. 09-00148) on Feb. 25, 2009. Kermit A. Rosenberg, Esq.,
at Tighe Patton Armstrong Teasdale, PLLC -- now Butzel, Long,
Tighe, Patton -- in Washington, DC, served as the Debtor's
counsel. In its petition, the Debtor estimated under $50,000 in
assets and $1 million to $10 million in debts.
On Jan. 19, 2010, the Court granted the United States Trustee's
motion and directed the appointment of a chapter 11 trustee.
ENERGY CONVERSION: Court Rejects Committee's Bid to File Own Plan
-----------------------------------------------------------------
Bankruptcy Judge Thomas J. Tucker denied the requests of the
Official Committee of Unsecured Creditors of Energy Conversion
Devices, Inc., and United Solar Ovonic LLC:
-- for a limited adjournment of the solicitation of votes
on the Debtors' First Amended Joint Plan of Liquidation;
and
-- to terminate the Debtors' exclusivity periods.
A June 7, 2012 Opinion available at http://is.gd/uJ9mGefrom
Leagle.com outlines the Court's reasons for rejecting the
Committee's requests.
On May 31, 2012, the Debtors filed a combined plan and disclosure
statement. That same day, the Court entered an order granting
preliminary approval of the Debtors' Disclosure Statement.
Later that day, the Committee filed its Motions. The Committee
seeks a termination of the Debtors' exclusivity period so it may
file a competing liquidation plan that is not premised on the
substantial consolidation of the two Debtors' estates, as the
Debtors' liquidation plan does. The Committee wants to present
its competing Plan to creditors for voting, and to the Court for
consideration, at the same time Debtors' Second Amended Plan is
presented. And whether the Court grants or denies the Committee's
motion on exclusivity, the Committee also seeks a delay in
Debtors' right to solicit votes regarding its Second Amended Plan,
to give the Committee more time to decide whether to recommend
that its creditor constituents accept or reject the Debtors'
Second Amended Plan, and to communicate any such recommendation to
the creditors before they vote.
The Committee's Motions are opposed by (1) the Debtors; (2) the Ad
Hoc Consortium of Noteholders; and (3) the Official ECD Creditors
Sub-Committee.
The Court held the Committee has not met its burden of
demonstrating "cause" to terminate Debtors' exclusivity. The
Court also said the delay sought by the Committee is unlikely to
make a meaningful difference for the Committee's stated purpose.
Under the Debtors' proposed schedule, the deadline to return
ballots on the Debtors' Second Amended Plan is July 13. The
confirmation hearing on the Debtors' Second Amended Plan would
begin July 18. The Committee wanted those dates extended by a
week.
As previously reported by the Troubled Company Reporter, the
Debtors filed a liquidating Chapter 11 plan along with a
disclosure statement telling unsecured creditors with as much as
$337 million claims that they can expect to recover from 50.1% to
59.3%. Bill Rochelle, the bankruptcy columnist for Bloomberg
News, said the large recovery by unsecured creditors is possible
because ECD entered Chapter 11 with $145 million in unrestricted
cash and short-term investments. The plan will create a trust to
sell the assets to be distributed in the order of priority laid
out in bankruptcy law. Bloomberg said a liquidation analysis
attached to the disclosure statement shows cash of $139.5 million.
When other assets are liquidated, the company projects total
proceeds will be $182 million to $196 million. When expenses and
claims of higher priority are paid, the disclosure statements show
$168.7 million to $182.2 million remaining for unsecured
creditors.
About Energy Conversion
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.
ECD filed for Chapter 11 protection (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: Debtors' 50% Plan Set for July 18 Approval
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Energy Conversion Devices Inc. and operating
subsidiary United Solar Ovonic LLC persuaded the bankruptcy judge
last week to schedule a confirmation hearing on July 18 for
approval of a liquidating Chapter 11 plan telling unsecured
creditors with as much as $337 million claims how they can expect
to recover between 50.1% and 59.3%.
The report relates that the company canceled an auction and fired
most of the employees because no buyer would offer an acceptable
price. A handsome recovery for unsecured creditors was
nonetheless possible because ECD entered Chapter 11 with $145
million in unrestricted cash and short-term investments. The plan
will create a trust to sell the assets to be distributed in the
order of priority laid out in bankruptcy law.
A liquidation analysis attached to the disclosure statement shows
cash of $139.5 million. When other assets are liquidated, the
company projects total proceeds will be $182 million to $196
million. After expenses and claims of higher priority are paid,
the disclosure statement shows $168.7 million to $182.2 million
remaining for unsecured creditors.
About Energy Conversion
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.
ECD filed for Chapter 11 protection (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).
Surplus equipment was sold at auction, generating $717,000.
ENERGY CONVERSION: Court Approves Deloitte Tax as Tax Advisors
--------------------------------------------------------------
Energy Conversion Devices, Inc. and United Solar Ovonic LLC, in an
amended motion, ask the U.S. Bankruptcy Court for the Eastern
District of Michigan for permission to employ Deloitte Tax
LLP as tax service providers and tax advisors.
The Debtors are seeking authority to retain Deloitte Tax to render
the Tax Services as provided in the Engagement Letters. The
salient terms of the Engagement Letters are:
a. Preparation of Tax Returns. Deloitte Tax will prepare the
Debtors' 2010-2012 federal and state income tax returns; assist in
calculating the amounts of extension payments and preparing the
extension requests for 2011 and 2012 federal, state and local
income tax returns; assist in calculating 2011 and 2012 quarterly
estimated tax payments, as needed; and assist in the electronic
filing of federal and certain state tax returns.
b. Tax Advisory Services. Deloitte Tax will provide tax
advisory services in connection with federal, foreign, state and
local tax matters on an as needed basis. It is anticipated these
tax matters will include analysis of tax aspects associated with
transactional events that occur during the restructuring or
disposition of the Debtors' businesses.
c. Global Employment Services. Deloitte Tax will also provide
a variety of global employer tax and tax administration services
to the Debtors and their employees on international assignment for
the 2011-2013 tax years, including global employer tax compliance
services and administration co-sourcing services and general tax
advisory consulting services.
Deloitte Tax fees and expenses for the preparation of the tax
returns, including preparation of extension requests and quarterly
estimates, other than for services related to assessing the
applicability of the reportable transaction provisions and
preparation of Schedule UTP, are estimated to be approximately
$75,000 for the 2010 tax returns plus reasonable out-of-pocket
expenses. Deloitte Tax estimates the fees will be approximately
the same for the subsequent tax years as for 2010, subject to an
annual rate increase applied in the ordinary course of Deloitte
Tax's business.
Prior to the Petition Date, the Debtors paid approximately $37,500
as a retainer for the 2010 tax returns, which was subsequently
replenished for a total retainer of $80,000. Deloitte Tax will
seek the Court's authorization to offset any unapplied retainer
against the amounts sought in its fee application.
For services rendered under the Tax Advisory Letter, Deloitte Tax
will be compensated based on time incurred at the hourly rates,
plus reasonable out-of-pocket expenses. Prior to the Petition
Date, approximately $104,000 was paid to Deloitte Tax to serve as
a retainer. Pursuant to the Tax Advisory Letter, Deloitte Tax
will seek the Court's authorization to offset any unapplied
retainer against the amounts sought in its Fee Application.
For services rendered under the Tax GES Letter, Deloitte Tax will
be compensated based on time incurred at the hourly rates, plus
reasonable out-of-pocket expenses, consistent with the terms and
conditions of the Tax GES Letter.
Tax Advisory and Tax GES Hourly Rates
-------------------------------------
Partner/Principal $450
Senior Manager $390
Manager $325
Senior Staff/Senior Consultant $220
Consultant (Tax GES letter only) $180
To the best of the Debtors' knowledge, Deloitte Tax is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Energy Conversion
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.
ECD filed for Chapter 11 protection (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: Plea Vacating Clark Hill Retention Denied
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
denied the motion of Ad Hoc Noteholder Consortium requesting that
the Court vacate the order approving employment of Clark Hill PLC
as counsel to the Official ECD Creditors Sub-Committee of the
Official Committee of Unsecured Creditors in the Chapter 11 cases
of Energy Conversion Devices, Inc., and United Solar Ovonic LLC.
As reported in the Troubled Company Reporter on May 23, 2012,
according to the Noteholder Consortium, the order dated April 20,
(i) authorized the retention of Foley Lardner LLP as counsel to
the Committee, and (ii) provided that the "ECD Creditors Sub-
Committee will have the right to retain independent special
conflicts counsel and other professionals to evaluate the conflict
and take any required action in the Chapter 11 cases, subject to
the usual retention requirements under the Bankruptcy Code.
The Noteholder Consortium noted that the order contemplated that
the special conflicts procedures will be enacted only in the
circumstance that a potential conflict between creditors of the
two Debtors has ripened into an actual conflict.
Notwithstanding the fact that no actual conflict has yet arisen,
the Committee elected to form the ECD Creditors Sub-Committee
stating that "the Committee has decided to form the ECD Creditors
Sub-Committee at this time, so that it will be in place and ready
to act as and when Actual Conflicts arise".
About Energy Conversion
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.
ECD filed for Chapter 11 protection (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: Schafer and Weiner OK'd as Conflicts Counsel
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized Energy Conversion Devices, Inc., and United Solar
Ovonic LLC, to employ Schafer and Weiner, PLLC, as conflicts
counsel for USO, nunc pro tunc to March 18, 2012.
As reported in the Troubled Company Reporter on May 17, 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 at 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
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.
ECD filed for Chapter 11 protection (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: Hilco Streambank Tapped to Market IP Assets
--------------------------------------------------------------
Energy Conversion Devices, Inc., and United Solar Ovonic LLC, ask
the U.S. Bankruptcy Court for the Eastern District of Michigan for
permission to employ Hilco IP Services LLC doing business as Hilco
Streambank as their exclusive agent for purposes of monetizing the
Debtors' intangible and intellectual property assets.
Hilco Streambank will:
a. work with the Debtors' management and advisors to collect
and secure all of the available information and data
concerning the IP Assets;
b. prepare marketing materials designed to advertise the
availability of the IP Assets for sale, assignment, license,
or other disposition;
c. develop and execute a sales and marketing program designed
to elicit proposals to acquire the IP Assets from qualified
acquirers with a view toward completing one or more sales,
assignments, licenses, or other dispositions of the IP
assets within the next four to six months;
d. assist the Debtors in connection with the transfer of the IP
assets to the acquirer(s) who offer the highest or otherwise
best consideration for the IP Assets; and
e. be responsible for all execution of all marketing and sales
activities related to the marks.
For purposes of clarification, the IP Sale Services will not be
duplicative of:
-- the investment banking and consulting services for which the
Debtors have retained Quarton Partners, LLC as investment
banker to the Debtors. Further, no Success Fee is payable
to Hilco Streambank if a success fee is also payable to
Quarton.
-- the marketing and sales services for which the Debtors have
retained Heritage Global Partners, Inc.; Hilco Industrial,
LLC; Maynards Industries (1991) Inc.; Counsel RB Capital,
LLC; and Van Acker Associates (the auctioneers). Further,
no Success Fee is payable to Hilco Streambank if a
transaction fee is also payable to the auctioneers.
Hilco Streambank will be paid:
a. a management fee of $20,000 per month commencing on May 1,
2012.
b. a success fee upon the completed sale or sales of
some or all of the IP Assets.
In addition, the Debtors will reimburse Hilco Streambank's
reasonable and customary expenses incurred in connection with the
performance of the services required under the IP Sale Agreement,
including, but not limited to, reasonable expenses of marketing,
advertising, economy travel and transportation; long distance
telephone charges; postage and courier/overnight express fees
To the best of the Debtor's knowledge, Hilco Streambank is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Energy Conversion
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.
ECD filed for Chapter 11 protection (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).
EVERGREEN SOLAR: Wants Plan Filing Period Extended to Aug. 13
-------------------------------------------------------------
BankruptcyData.com reports that Evergreen Solar filed with the
U.S. Bankruptcy Court a third motion to extend the exclusive
period during which the Company can file a Chapter 11 plan and
solicit acceptances for its Chapter 11 plan through and including
August 13, 2012 and October 12, 2012, respectively.
BankruptcyData.com relates that the motion explains, "The
requested additional time will permit the Debtor to solicit
acceptance of the Plan and seek confirmation of the Plan at the
July 13 confirmation hearing. In light of the approved Disclosure
Statement, the pending solicitation of the Plan, and the upcoming
confirmation hearing on July 13, the Debtor believes it is
appropriate to continue exclusivity for the additional period to
allow the Debtor sufficient time to seek confirmation of the
Plan."
The Court scheduled a July 13, 2012 hearing on the matter.
About Evergreen Solar
Evergreen Solar, Inc. -- http://www.evergreensolar.com/--
developed, manufactured and marketed String Ribbon solar power
products using its proprietary, low-cost silicon wafer technology.
The Marlboro, Mass.-based Company filed for Chapter 11 bankruptcy
(Bankr. D. Del. Case No. 11-12590) on Aug. 15, 2011, before Judge
Mary F. Walrath. The Company's balance sheet at April 2, 2011,
showed $373,972,000 in assets, $455,506,000 in total liabilities,
and a stockholders' deficit of $81,534,000.
Ronald J. Silverman, Esq., and Scott K. Seamon, Esq., at Bingham
McCutchen LLP, serve as general bankruptcy counsel to the Debtor.
Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, serve as co-counsel. Hilco Industrial
LLC serves as exclusive marketing and sales agent. Klehr Harrison
Harvey Branzburg serves as special conflicts counsel. Zolfo
Cooper LLC is the financial advisor. UBS Securities, LLC, serves
as investment banker. Epiq Bankruptcy Solutions has been tapped
as claims agent.
In conjunction with the Chapter 11 filing, the Company entered
into a restructuring support agreement with certain holders of
more than 70% of the outstanding principal amount of the Company's
13% convertible senior secured notes. As part of the bankruptcy
process the Company will undertake a marketing process and will
permit all parties to bid on its assets, as a whole or in groups
pursuant to 11 U.S.C. Sec. 363. An entity formed by the
supporting noteholders, ES Purchaser, LLC, entered into an asset
purchase agreement with the Company to serve as a 'stalking-horse"
and provide a "credit-bid" pursuant to the Bankruptcy Code for
assets being sold.
The supporting noteholders are represented by Michael S. Stainer,
Esq., and Natalie E. Levine, Esq., at Akin Gump Strauss Hauer &
Feld LLP, in New York.
An official committee of unsecured creditors has retained Pepper
Hamilton and Kramer Levin Naftalis & Frankel as counsel. The
Committee tapped Garden City Group as communications services
agent.
Evergreen Solar is at least the fourth solar company to seek court
protection from creditors since August 2011. Other solar firms
are start-up Spectrawatt Inc., which also filed in August,
Solyndra Inc., which filed early in September, and Stirling Energy
Systems Inc., which filed for Chapter 7 bankruptcy late in
September.
Evergreen sold the assets piecemeal in three auctions. Max Era
Properties Ltd. from Hong Kong paid $6 million cash and
$3.2 million in stock of China Private Equity Investment Holdings
Ltd. for the company name, intellectual property, and wafermaking
assets. Kimball Holdings LLC paid $3.8 million for solar panel
inventory while the secured lenders exchanged $21.5 million of
their $165 million claim for a $171 million claim against Lehman
Brothers Holdings Inc. Max Era Properties Limited and Sovello AG
bought equipment and machinery located at the Debtor's Devens,
Massachusetts facility for $8.9 million.
EXELON CORP: Moody's Reviews Ratings for Possible Downgrade
-----------------------------------------------------------
Moody's Investors Service placed the ratings of Exelon Corporation
(Exelon: Baa2 senior unsecured) under review for possible
downgrade along with the long-term ratings of its primary
subsidiary, Exelon Generation Company, LLC (ExGen: Baa1 senior
unsecured). Exelon's Prime-2 short-term rating for commercial
paper is also under review for possible downgrade; however,
ExGen's short-term rating for commercial paper is not under review
and affirmed at Prime-2.
"The rating action follows our assessment and concerns with
Exelon's financing plan outlined last week which contemplates debt
financing 100% of the expected negative free cash flow over the
next few years caused by weakened operating cash flow, a sizeable
dividend, and a substantial capital investment program," said A.
J. Sabatelle, Senior Vice President at Moody's. "Over the next
three years, we estimate that debt at ExGen /Exelon could increase
by more than $3 billion, a nearly 40% increase from the March 31,
2012 level of about $8.3 billion. An increase in debt of this
magnitude would, most likely, permanently weaken key financial
metrics and credit quality at ExGen and Exelon."
Ratings Rationale
The rating review reflects Moody's analysis and concerns over the
company's financing plan for the next three years which includes
primarily debt financing the expected negative free cash flow of
Exelon's unregulated businesses caused by weakened operating
margins and funding a large capital investment program and a
common dividend. While weak market fundamentals are negatively
affecting the entire unregulated power space, Exelon remains
unique relative to its peers, given its high reliance on the
unregulated power business for earnings and cash flow. Negative
free cash flow will persist at Exelon over the intermediate term
based upon the funding requirements for its nuclear up-rate
program, committed solar and wind projects, and the continuing
payment of the common dividend. In light of sizable capital
requirements anticipated at regulated subsidiary Commonwealth
Edison Company (ComEd: Baa2 senior unsecured) and the existence of
dividend restrictions at regulated subsidiary Baltimore Gas &
Electric Company (BG&E: Baa1 senior unsecured), the majority of
the company's $1.8 billion common dividend requirements will be
borne by ExGen while it also funds its strategically important,
multi-year nuclear up-rate investment program. Exelon's current
plan does not include the issuance of new common equity during
this timeframe leading to deteriorating credit metrics at both
ExGen and at Exelon.
Moody's believes that Exelon remains firmly committed to
maintaining an investment grade rating at Exelon and ExGen, and
Moody's opines that the company's current plans, as Moody's
understands them, will enable Exelon and ExGen to maintain
investment grade ratings during this down commodity cycle. To that
end, should the outcome of the rating review result in a rating
downgrade at Exelon and ExGen, the downgrade would be limited to
one notch enabling both entities to maintain an investment grade
rating.
The review will examine the company's near-term and intermediate
term financing plans in greater detail, including the merger
requirement to sell its Maryland based fossil fuel generation
assets. The review will also access the announced plans to grow
the company's retail business, the likelihood of the company
reaching its revised merger saving targets, and the feasibility of
achieving anticipated reductions in liquidity levels across the
commodity platform.
The ratings and stable rating outlook for Exelon's regulated
utilities, ComEd, BG&E, and PECO Energy Company (A3: Issuer
Rating) are unaffected by the rating action at Exelon and ExGen
reflecting an expectation for strong credit metrics for the
respective rating categories at these utilities, the existence of
dividend restrictions at BG&E and a view that the boards of ComEd
and PECO will continue to follow a responsible dividend policy
that first considers the capital and infrastructure needs of each
utility.
On Review for Possible Downgrade:
Issuer: Constellation Energy Group, Inc.
Junior Subordinated Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently Baa3
Senior Unsecured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently Baa2
Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently Baa2
Issuer: Exelon Capital Trust I
Pref. Stock Shelf, Placed on Review for Possible Downgrade,
currently (P)Baa3
Issuer: Exelon Capital Trust II
Pref. Stock Shelf, Placed on Review for Possible Downgrade,
currently (P)Baa3
Issuer: Exelon Capital Trust III
Pref. Stock Shelf, Placed on Review for Possible Downgrade,
currently (P)Baa3
Issuer: Exelon Corporation
Issuer Rating, Placed on Review for Possible Downgrade,
currently Baa2
Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently a range of (P)Ba1 to (P)Baa2
Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently a range of (P)Ba1 to (P)Baa2
Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently a range of (P)Ba1 to (P)Baa2
Senior Unsecured Commercial Paper, Placed on Review for
Possible Downgrade, currently P-2
Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently Baa2
Senior Unsecured Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa2
Issuer: Exelon Generation Company, LLC
Issuer Rating, Placed on Review for Possible Downgrade,
currently Baa1
Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa3, (P)Baa1
Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently (P)Baa3, (P)Baa1
Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently Baa1
Issuer: Pennsylvania Economic Dev. Fin. Auth.
Senior Unsecured Revenue Bonds, Placed on Review for Possible
Downgrade, currently Baa1
Outlook Actions:
Issuer: Constellation Energy Group, Inc.
Outlook, Changed To Rating Under Review From No Outlook
Issuer: Exelon Capital Trust I
Outlook, Changed To Rating Under Review From Negative
Issuer: Exelon Capital Trust II
Outlook, Changed To Rating Under Review From Negative
Issuer: Exelon Capital Trust III
Outlook, Changed To Rating Under Review From Negative
Issuer: Exelon Corporation
Outlook, Changed To Rating Under Review From Negative
Issuer: Exelon Generation Company, LLC
Outlook, Changed To Rating Under Review From Negative
Headquartered in Chicago, IL, Exelon is the holding company for
non-regulated subsidiary, ExGen and for regulated subsidiaries,
ComEd, PECO, and BG&E. At 03/31/2012, Exelon had total assets of
$77.6 billion.
The principal methodology used in this rating was Unregulated
Utilities and Power Companies published in August 2009.
FILENE'S BASEMENT: Resorts to Mediation to Exit Bankruptcy
----------------------------------------------------------
Lance Duroni at Bankruptcy Law360 reports that with negotiations
on its liquidation plan deadlocked, Syms Corp. has turned to
mediation with warring shareholders and creditors to find a path
out of bankruptcy, the Company told a judge on Monday.
Syms attorney Jay Goffman of Skadden Arps Slate Meagher & Flom LLP
said during a telephone hearing in Delaware bankruptcy court that
the company's last stab at resolving unsecured creditors'
objections to the shareholder-backed plan left the parties even
further apart, Bankruptcy Law360 relates.
About Syms Corp.
Massachusetts-based Filene's Basement, also called The Basement,
is the oldest off-price retailer in the United States. The
Basement focuses on high-end goods and is known for its
distinctive, low-technology automatic markdown system.
Filene's Basement first filed for Chapter 11 bankruptcy protection
in August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures, Inc., the following year. Retail Ventures in
April 2009 transferred the unit to Buxbaum.
Filene's Basement, Inc. and its affiliates filed for Chapter 22
(Bankr. D. Del. Case No. 09-11525) on May 4, 2009, represented by
lawyers at Pachulski Stang Ziehl & Jones LLP. Epiq Bankruptcy
Solutions serves as claims and notice agent. The Debtors
estimated $50 million to $100 million in assets and $100 million
to $500 million in debts.
The 2009 Debtor was formally renamed FB Liquidating Estate,
following the sale of all of its assets to Syms Corp. in June
2009.
Pursuant to the Liquidating Plan confirmed in January 2010,
secured creditors in the Chapter 11 case have been paid in full,
and holders of priority, administrative and convenience class
claims have received 100% of their allowed claims. As reported by
the Troubled Company Reporter on Dec. 20, 2010, Alan Cohen,
Chairman of Abacus Advisors LLC and Chief Restructuring Officer
for FB Liquidating Estate disclosed that a second distribution of
dividend checks to Filene's unsecured creditors amounting to 12.5%
of approved claims has been made, bringing the cumulative
distributions on unsecured claims to 62.5%.
On Nov. 2, 2011, Syms Corp. placed itself, Filene's Basement and
two other units in Chapter 11 bankruptcy (Bankr. D. Del. Case Nos.
11-13511 to 11-13514) after a failed bid to sell the business.
The two units are Syms Clothing Inc. and Syms Advertising Inc.
Judge Kevin J. Carey presides over the case. Lawyers at Skadden
Arps Slate Meagher & Flom LLP serve as the Debtors' counsel. The
Debtors tapped Rothschild Inc. as investment banker and Cushman
and Wakefield Securities, Inc., as real estate financial advisors.
Syms shuttered its namesake and Filene's Basement outlets upon the
bankruptcy filing and tapped a joint venture of Gordon Brothers
Retail Partners LLC and Hilco Merchant Resources LLC to run the
going-out-of-business sales. The sale may continue until Jan. 31,
2012.
Filene's Basement estimated $1 million to $10 million in assets
and $50 million to $100 million in debts. The petitions were
signed by Gary Binkoski, authorized representative of Filene's
Basement.
The official committee of unsecured creditors appointed in the
2011 case has retained Hahn & Hessen LLP as legal counsel.
Holders of equity in Syms Corp. pushed for an official
shareholders' committee and separation of the Syms and Filene's
Basement bankruptcy estates.
FILENE'S BASEMENT: Syms Committee Disagrees on Deal With Landlord
-----------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the creditors' committee for retailers Syms Corp. and
Filene's Basement LLC is opposing a settlement with a landlord
after missing a deadline for renewing a below-market lease.
The committee contends Syms hasn't shown how the settlement
makes economic sense. There is no appraisal to show whether the
new lease is worth more or less than $5 million, the committee
says. Syms contends that missing the deadline didn't forfeit the
right to renew the lease for another 25 years.
According to the report, the dispute involves a store in
Fairfield, Connecticut where the rent was about $2,300 a month.
Syms also paid taxes. To renew the lease that was to expire in
November 2011, Syms was supposed to give notice by May 2011. Syms
didn't give notice until October 2011. The landlord contends that
the lease expired and Syms has no right to renewal. To settle the
disputes, Syms and the landlord worked out an agreement that comes
to bankruptcy court for approval on July 5. The landlord has the
option of buying out the lease for $5 million by Aug. 1.
Otherwise, Syms will enter into a new lease with rent about three
times more than the expired lease.
About Syms Corp.
Massachusetts-based Filene's Basement, also called The Basement,
is the oldest off-price retailer in the United States. The
Basement focuses on high-end goods and is known for its
distinctive, low-technology automatic markdown system.
Filene's Basement first filed for Chapter 11 bankruptcy protection
in August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures, Inc., the following year. Retail Ventures in
April 2009 transferred the unit to Buxbaum.
Filene's Basement, Inc. and its affiliates filed for Chapter 22
(Bankr. D. Del. Case No. 09-11525) on May 4, 2009, represented by
lawyers at Pachulski Stang Ziehl & Jones LLP. Epiq Bankruptcy
Solutions serves as claims and notice agent. The Debtors
estimated $50 million to $100 million in assets and $100 million
to $500 million in debts.
The 2009 Debtor was formally renamed FB Liquidating Estate,
following the sale of all of its assets to Syms Corp. in June
2009.
Pursuant to the Liquidating Plan confirmed in January 2010,
secured creditors in the Chapter 11 case have been paid in full,
and holders of priority, administrative and convenience class
claims have received 100% of their allowed claims. As reported by
the Troubled Company Reporter on Dec. 20, 2010, Alan Cohen,
Chairman of Abacus Advisors LLC and Chief Restructuring Officer
for FB Liquidating Estate disclosed that a second distribution of
dividend checks to Filene's unsecured creditors amounting to 12.5%
of approved claims has been made, bringing the cumulative
distributions on unsecured claims to 62.5%.
On Nov. 2, 2011, Syms Corp. placed itself, Filene's Basement and
two other units in Chapter 11 bankruptcy (Bankr. D. Del. Case Nos.
11-13511 to 11-13514) after a failed bid to sell the business.
The two units are Syms Clothing Inc. and Syms Advertising Inc.
Judge Kevin J. Carey presides over the case. Lawyers at Skadden
Arps Slate Meagher & Flom LLP serve as the Debtors' counsel. The
Debtors tapped Rothschild Inc. as investment banker and Cushman
and Wakefield Securities, Inc., as real estate financial advisors.
Syms shuttered its namesake and Filene's Basement outlets upon the
bankruptcy filing and tapped a joint venture of Gordon Brothers
Retail Partners LLC and Hilco Merchant Resources LLC to run the
going-out-of-business sales. The sale may continue until Jan. 31,
2012.
Filene's Basement estimated $1 million to $10 million in assets
and $50 million to $100 million in debts. The petitions were
signed by Gary Binkoski, authorized representative of Filene's
Basement.
The official committee of unsecured creditors appointed in the
2011 case has retained Hahn & Hessen LLP as legal counsel.
Holders of equity in Syms Corp. pushed for an official
shareholders' committee and separation of the Syms and Filene's
Basement bankruptcy estates.
FLEETWOOD ENTERPRISES: DIP Lenders Can Keep $2.4MM Commitment Fee
-----------------------------------------------------------------
The U.S. Bankruptcy Appellate Panel for the Ninth Circuit affirmed
a bankruptcy court ruling that denied the request of the Official
Committee of Unsecured Creditors of Fleetwood Enterprises, Inc.,
for turnover of a commitment fee paid to Bank of America, N.A.,
administrative agent for the lenders, in connection with a
postpetition financing agreement.
Prior to filing bankruptcy, Fleetwood and certain direct or
indirect subsidiaries were parties to a prepetition secured credit
facility with a syndicate of lenders led by BofA. As of the
petition date, the outstanding amount of the prepetition facility
was approximately $60 million, which (a) consisted entirely of the
Lenders' contingent liability on issued and outstanding letters of
credit, and (b) was secured by prepetition collateral with an
aggregate value of $156 million that consisted of cash collateral,
accounts receivable, real estate, and other collateral.
As part of the bankruptcy, the Debtors sought bankruptcy court
approval to enter into a secured credit agreement with the
Lenders, which committed to provide up to $80 million, including a
$65 million sub-limit for existing letters of credit. Under the
DIP Credit Agreement, the Debtors paid a $2.4 million commitment
fee to the Lenders.
The Debtors were eventually able to finance their post-bankruptcy
operations with cash collateral, and did not need the credit
extended by BofA.
On Nov. 2, 2009, the Committee sought turnover of the Commitment
Fee the Debtors paid the Lenders under the Interim DIP Order,
arguing that because final financing never materialized, the
Debtors received no discernable benefit in exchange for the $2.4
million paid to the Lenders. Hence, the Committee asserted, the
Commitment Fee was not entitled to administrative expense priority
under 11 U.S.C. Sec. 503(b)(1)(A) because the Lenders could not
establish that it was an actual and necessary expense of Debtors'
estates. The Committee contended that at no time during any of
the interim DIP Motion hearings, or in the Interim DIP Order, did
the court indicate an intention that the Commitment Fee was to be
"earned on receipt" or was otherwise nonrefundable regardless of
whether the DIP Credit Agreement materialized for the benefit of
the Debtors' estates. Further, because the DIP Order was an
interim, rather than a final, order, the bankruptcy court was free
to reexamine and modify it. Alternatively, if the Interim DIP
Order was a final order, the Committee believed it was subject to
reexamination and modification under Fed. R. Civ. Proc. 60(b)(6),
incorporated by Fed. R. Bank. Proc. Rule 9024.
The Lenders opposed the Turnover Motion contending that the
Commitment Fee was thoroughly considered at each of the three
hearings on the DIP Motion, and based on the evidentiary record
presented, which the Committee never challenged, the court found
that it supported payment of the Commitment Fee and entry of the
Interim DIP Order. The Commitment Fee was an express precondition
to the Lenders' agreement to extend financing, and payment of the
earned Commitment Fee as an administrative expense was an explicit
provision of the Interim DIP Order on which the Lenders relied.
The Lenders also contended that the express language in the
Interim DIP Order, in conjunction with the order's good-faith
finding under 11 U.S.C. Sec. 364(e), precluded the Committee's
request for turnover. Finally, the Lenders asserted that the
Interim DIP Order was a final order, and the Committee was
improperly invoking Rule 9024 as a substitute for an untimely
appeal. Contrary to the Committee's contentions, the Lenders
represented that the Commitment Fee was charged against the
Debtors' account on April 1, 2009, and that the Debtors utilized
the funds before they withdrew their DIP Motion.
On April 8, 2010, the bankruptcy court denied the Turnover Motion
concluding that the Interim DIP Order was a final order that was
not timely appealed. It also determined it was precluded from
ordering turnover of the Commitment Fee because of the "safe
harbor" provision of 11 U.S.C. Sec. 364(e) and the protective
language provided in the Interim DIP Order.
In affirming the Bankruptcy Court ruling, Bankruptcy Judge Jim D.
Pappas, one of three judges on the BAP, said "because bankruptcy
judges are not clairvoyant, the Panel must measure a bankruptcy
court's exercise of its discretion based upon the record at the
time of that decision, not based on facts that only later come to
light."
The case is OFFICIAL COMMITTEE OF UNSECURED CREDITORS, Appellant,
v. BANK OF AMERICA, N.A., Appellee, BAP No. CC-10-1137 (9th Cir.
BAP).
A copy of the Ninth Circuit BAP's June 5, 2012 Memorandum is
available at http://is.gd/rKcpDQfrom Leagle.com.
About Fleetwood Enterprises
Based in Riverside, California, Fleetwood Enterprises, Inc., was
the second largest manufactured housing maker in the U.S. and the
largest manufacturer of recreational vehicles over 30 feet in
length.
Fleetwood Enterprises listed assets of $560 million against debt
totaling $624 million in its bankruptcy petition. Fleetwood
Enterprises, together with 19 of affiliates, filed for Chapter 11
protection on March 10, 2009 (Bankr. C.D. Calif. Lead Case No.
09-14254). Craig Millet, Esq., and Solmaz Kraus, Esq., at Gibson,
Dunn & Crutcher LLP, represent the Debtors in their restructuring
efforts. FTI Consulting Inc. is the financial advisor to the
Debtors. The Debtors tapped Greenhill & Co. LLC as its investment
banker.
On Aug. 6, 2010 the Bankruptcy Court entered an order confirming
the Fourth Amended Joint Plan of Liquidation of the Debtors and
the Official Committee of Unsecured Creditors. The Plan became
effective as of Aug. 23, 2010.
FOOT LOCKER: Moody's Upgrades CFR/PDR to 'Ba2'; Outlook Stable
--------------------------------------------------------------
Moody's Investors Service upgraded Foot Locker, Inc.'s Corporate
Family Rating and Probability of Default Rating to Ba2 from Ba3
and its senior unsecured note rating to Ba3 from B1. The
speculative grade liquidity rating of SGL-1 was affirmed. The
outlook is stable.
The upgrade to Ba2 was driven by Foot Locker's success in
generating strong sales and earnings growth and improved credit
metrics over the past couple of years while maintaining strong
liquidity. The company has been reporting solid same store sales
growth and margin improvements largely driven by its US operations
where initiatives to differentiate its brands have resonated with
its core enthusiast customers. According to Moody's analyst Mariko
Semetko, "Foot Locker's European operations remain a concern, but
the company's solid credit metrics and very good liquidity provide
cushion to weather continued modest regional softness in sales and
margins." The company reported $909 million of cash on hand as of
April 28, 2012 compared to about $135 million of balance sheet
debt. Moody's expects the company to maintain full availability
under its $200 million revolving credit facility and continue to
generate free cash flow over the next twelve months.
Ratings Upgraded:
- Corporate Family Rating to Ba2 from Ba3
- Probability of Default Rating to Ba2 from Ba3
- Senior Unsecured Notes rating to Ba3 (LGD4, 65%) from B1
(LGD4, 65%)
Ratings Affirmed:
- Speculative Grade Liquidity Rating of SGL-1
Ratings Rationale
The Ba2 corporate family rating reflects Foot Locker's modest
level of funded debt, which remains well below its excess cash
level, and management's relatively conservative financial
policies. In addition, the rating reflects debt leverage and
interest coverage metrics (including significant lease
adjustments) that are in line with those of other Ba2 rated
industry peers, a well recognized brand name, meaningful scale and
geographic diversification. Constraining the rating are Foot
Locker's exposure to Europe (roughly a fifth of sales) where
macroeconomic concerns persist, its significant fashion risk as a
specialty retailer, and its highly seasonal operations. As a
result of the company's narrow focus on athletic footwear and
apparel, Foot Locker is highly susceptible to changing fashion
trends and its earnings and cash flow from operations are heavily
reliant on the fourth quarter holiday selling season through the
spring basketball season.
The stable outlook reflects Moody's expectation for continued very
good liquidity supported by significant balance sheet cash,
positive free cash flow, and excess revolver availability. The
outlook also assumes that the company's European operations will
remain profitable and that any weaknesses will be offset by
strength in its US operations.
Given the significant operating lease adjustment to the leverage
metric, further deleveraging will be difficult and an upgrade is
not likely in the near term. Over time, ratings could be upgraded
through material and sustained margin improvement, coupled with
positive comparable store sales growth and a stabilization of the
European operations. Specifically, an upgrade will require Moody's
adjusted debt/EBITDA below 4.0 times and EBITA/interest expense
above 3.5 times for a sustained period while maintaining very good
liquidity.
Material negative variances in earnings or the fundamental
operating environment combined with a significant deterioration in
liquidity could lead to a ratings downgrade, as could more
aggressive financial policies such as debt-financed share
repurchases or acquisitions. Specifically, ratings could be
downgraded if debt/EBITDA is sustained above 5.5 times.
The principal methodology used in rating Foot Locker, Inc. was the
Global Retail Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Foot Locker, Inc. is a specialty athletic retailer operating about
3,400 stores in 23 countries in North America, Europe, and
Australia as well as through its direct-to-customer websites and
catalogs. Banners include Foot Locker, Footaction, Lady Foot
Locker, Kids Foot Locker, Champs Sports, CCS and Eastbay. Revenues
for the last twelve months ended April 28, 2012 were approximately
$5.7 billion.
FRANKLIN CREDIT: Non-Debtor Unit to Pay for Lawyers' Fees
---------------------------------------------------------
Franklin Credit Holding Corporation filed a formal application
seeking approval to hire McCarter & English, LLP, as Chapter 11
bankruptcy counsel. McCarter & English commenced performing legal
services for the Debtor in connection with the filing of the
chapter 11 case on or about April 18, 2012. Prior to the Petition
Date, McCarter & English received an advance payment retainer of
$50,000 from Franklin Credit Management Corp., the co-proponent of
the Debtor's Prepackaged Plan of Reorganization, that is 80% owned
by the Debtor and 20% owned by Thomas J. Axon, the Chairman and
President of the Debtor and FCMC.
McCarter & English billed against the Retainer, which was
periodically replenished by FCMC. Fees incurred prior to the
Petition Date in the amount of $175,328.50 and expenses incurred
prior to the Petition Date in the amount of $1,046.51 were
invoiced and paid from the Retainer weekly. On June 4, 2012, a
final invoice in the amount of $37,316.17 was paid from the
Retainer. After the payment of this final invoice, the Retainer
had a balance of $2,224.97. FCMC then replenished the Retainer to
enable McCarter & English, as of the Petition Date, to hold a
Retainer from FCMC of $75,000 in its McCarter & English Trust
Account to apply to its postpetition fees and expenses as allowed
by the Court.
The Debtor has arranged to have its subsidiary, FCMC, pay McCarter
& English's fees and expenses. The Debtor has no revenue-
generating operations and thus no source of funds, other than the
liquidation of its assets and cash on hand in the approximate
amount of $56,000, from which to pay allowed professional fees.
The arrangement, the Debtor said, ensures that priority claims
against the remaining assets of the estate are reduced and that
the maximum amount of funds remain available for creditors from
the liquidation of the Debtor's assets, as proposed under the
Prepackaged Plan.
McCarter & English has never represented FCMC, which is separately
represented in the proceedings, and FCMC has not placed any
conditions on the payment of McCarter & English's fees and
expenses.
In the event that the Court does not approve the arrangement, the
Debtor said McCarter & English will be paid as an administrative
priority creditor from the extremely limited cash on hand and the
remaining assets of the Debtor's estate.
The firm's hourly rates are:
Partners $370 - $825 per hr.
Associates $220 - $450 per hr.
Law Clerks $145 - $190 per hr.
Paralegals $90 - $225 per hr.
Lisa S. Bonsall, Esq., the firm's partner expected to be the most
active in the case, charges $550 per hour. The associates
expected to be most active in the case are Scott H. Bernstein, who
bills $370 per hour, and Christopher Manella, who bills $220 per
hour. The paralegal, Stacy Lipstein, charges $195 per hour.
Ms. Bonsall attests McCarter & English (a) does not hold or
represent an interest adverse to the Debtor's estate, and (b) is a
disinterested person, as that term is defined in section 101(14)
of the Bankruptcy Code (as modified by section 1107(b) of the
Bankruptcy Code), as required by section 327 of the Bankruptcy
Code.
Ms. Bonsall says McCarter & English currently represents M&T Bank,
owner of The Wilmington Trust Company, or certain of its
affiliates and subsidiaries in matters that are unrelated to the
Debtor's case. The Wilmington Trust Company is a counter-party to
an executory contract that is proposed to be rejected under the
Prepackaged Plan. McCarter & English does not and will not
represent M&T or any of its affiliates in connection with the
chapter 11 case. In an abundance of caution, McCarter & English
has obtained a waiver from M&T.
McCarter & English also represents Bank of Scotland or certain of
its affiliates and subsidiaries in matters that are unrelated to
the Debtor's case. BoS is one of the lenders under the so-called
Legacy Credit Agreement. McCarter & English does not and will not
represent BoS or any of its affiliates in connection with the
chapter 11 case.
About Franklin Credit Holding
Franklin Credit Holding Corporation (OTC BB: FCMC)
-- http://www.franklincredit.com/-- is a specialty consumer
finance company primarily engaged in the servicing and resolution
of performing, re-performing and nonperforming residential
mortgage loans, including specialized loan recovery servicing, and
in the analysis, pricing, due diligence and acquisition of
residential mortgage portfolios for third parties. The Company's
executive, administrative and operations offices are located in
Jersey City, N.J.
Franklin Credit Holding Corporation filed a Chapter 11 bankruptcy
petition (Bankr. D. N.J. Case No. 12-24411) in Newark, New Jersey,
on June 4, 2012. Franklin Credit also filed a prepackaged plan.
The Debtor is seeking a combined hearing on the plan and the
explanatory disclosure statement.
Judge Donald H. Steckroth presides over the case. Lawyers at
McCarter & English, LLP, serves as the Debtor's counsel.
In its petition, the Debtor estimated $1 million to $10 million in
assets and $500 million to $1 billion in debts. In a recent
regulatory filing with the U.S. Securities and Exchange
Commission, Franklin Credit Holding's balance sheet at March 31,
2012, showed $29.02 million in total assets, $874.02 million in
total liabilities, and a $845 million total stockholders' deficit.
The petition was signed by Paul Colasono, executive vice president
and chief financial officer.
The Plan provides for the liquidation of its assets -- the
ownership of 80% of the stock in non-debtor Franklin Credit
Mortgage Corp. -- with the proceeds or the fair market value of
the assets being distributed in accordance with the Bankruptcy
Code. The fair market value of FCMC will be distributed through
the payment of $250,000 in cash on the effective date of the Plan
and an aggregate $1.11 million over a period of five years,
evidenced by a promissory note guaranteed by Thomas J. Axon, the
chairman and president of the Debtor and FCMC, and the owner of
20% of the common shares of FCMC, and 45.2% of the common shares
of the Debtor. The payments will be made by FCMC, and will be the
primary source of cash for distributions contemplated by the Plan.
IN exchange for the payment by FCMC, the Debtor's interests in the
stock of FCMC will be distributed, pro-rata, to holders of allowed
interests.
The Plan provides for payment in full of allowed priority non-tax
claims. The secured claims of the legacy lenders totaling
$820.6 million will be unaltered by the Plan. Huntington National
Bank and Huntington Finance LLC will release the Debtor from any
obligations in connection with their secured claims of $4.7
million. Holders of general unsecured claims estimated to total
$1.9 million will receive their pro rata share of the proceeds of
the liquidation of the remaining assets.
A copy of the Disclosure Statement is available for free at:
http://bankrupt.com/misc/Franklin_Credit_Plan_Outline.pdf
FREEDOM COMMUNICATIONS: Sells OC Register, Others to 2100 Trust
---------------------------------------------------------------
Freedom Communications Holdings, Inc., said on Monday it has
agreed to be acquired by 2100 Trust, LLC in a merger with a
subsidiary of 2100 Trust.
At the time the transaction closes, Freedom's businesses will
consist of:
* its flagship Orange County Register,
* the Barstow, CA Desert Dispatch,
* The Gazette in Colorado Springs, CO,
* the Marysville, CA Appeal-Democrat,
* The Porterville Recorder in Porterville, CA,
* the Victorville, CA Daily Press, and
* The Sun in Yuma, AZ, and
* their associated non-daily publications along with
specialty publications and digital properties.
The Company had previously announced sales of its other newspaper
assets and broadcast properties, which sales have closed or are
expected to close within the next few weeks.
It is expected that the transaction, the value of which was not
disclosed, will be completed in about 30 days. All current
Freedom employees at the operating locations will transition to
the new ownership, said Mitchell Stern, Freedom's Chief Executive
officer.
"While providing the value that our shareholders have sought, this
transaction also ensures Freedom's communities that our newspapers
serve will continue to receive the outstanding service that has
been our hallmark," Mr. Stern said. "Our employees will be able to
continue the community journalism at which they so excel."
"The new owners have a long-standing interest in community
journalism and understand the critical role that newspapers,
despite all the changes of recent years, continue to play in
providing the information that people need and can't find anywhere
else," said Mark McEachen, Freedom's Executive Vice President,
Chief Operating Officer and Chief Financial Officer.
R. C. Hoiles founded Freedom after acquiring what was then the
Santa Ana Register in 1935. The company eventually grew to be one
of the largest media companies in the country with 100 daily and
weekly newspapers, numerous news websites and specialty
publications and eight broadcast stations.
"We couldn't be more pleased with the opportunity to lead the
hard-working and talented employees of Freedom Communications in
serving these communities. We believe that newspapers are
essential to the fabric of our lives and are excited to own and
grow these unique institutions," said Aaron Kushner, 2100 Trust's
Chief Executive Officer.
2100 Trust, LLC is a privately held company that believes strongly
in the future of journalism and the newspaper industry. The
company is dedicated to enhancing and enriching the integral
relationship that its newspapers have with their local communities
through a dedication to rich content and quality reporting.
The Boston Globe notes the sale to 2100 Trust represents the last
of six pieces of Freedom that have been sold since it emerged from
Chapter 11 bankruptcy protection in May 2010. The investment
group earlier tried to purchase The Boston Globe.
The Globe also notes Freedom in April sold eight TV stations to
Sinclair Broadcast Group Inc. for $385 million.
On June 1, Freedom announced the sale of its properties in Florida
and North Carolina to Halifax Media Group. The transaction, terms
of which were not disclosed, is expected to close within 30 days.
The properties involved in the transaction include Holmes County
Times-Advertiser, Bonifay, FL; Times-News, Burlington, NC;
Havelock News, Havelock, NC; The Daily News, Jacksonville, NC;
Free Press, Kinston, NC; The Star, Port St. Joe, FL; The Walton
Sun, Santa Rosa Beach, FL; Washington County News, Chipley, FL;
The Crestview News Bulletin, Crestview, FL; The Destin Log,
Destin, FL; Northwest Florida Daily News, Fort Walton Beach, FL;
The Gaston Gazette, Gastonia, NC; Jones Post, Kinston, NC; Santa
Rosa Press Gazette and Santa Rosa Free Press, Milton, FL; Sun
Journal and The Shopper, New Bern, NC; The News Herald, Panama
City, FL; The Star, Shelby, NC; The Times, Apalachicola, FL and
The Topsail Advertiser, Surf City, NC.
Halifax Media Group will offer employment to all existing
employees.
About Freedom Communications
Freedom Communications, headquartered in Irvine, Calif., is a
national privately owned media company operating print
publications, broadcast television stations and interactive
businesses. The company's print portfolio includes approximately
100 daily and weekly publications, plus ancillary magazines and
other specialty publications. The broadcast company's stations --
five CBS, two ABC network affiliates and one CW affiliate -- reach
more than 3 million households across the country. The Company's
news, information and entertainment Web sites complement its print
and broadcast properties.
Freedom Communications filed for Chapter 11 protection (Bankr. D.
Del. Case No. 09-13046) on Sept. 1, 2009. Attorneys at Young
Conaway Stargatt & Taylor, and Latham & Watkins LLP served as
Chapter 11 counsel. Houlihan, Lokey, Howard & Zukin, Inc., served
as financial advisors while AlixPartners LLC served as
restructuring consultants. Logan & Co. served as claims and
notice agent.
Freedom Communications had $757 million in assets against debts of
$1.077 billion as of July 31, 2009.
The Bankruptcy Court confirmed Freedom' Plan of Reorganization on
March 9, 2010. The Plan became effective April 30, 2010. The
Plan, which was supported by the Steering Committee of the
Company's secured lenders and the Official Committee of Unsecured
Creditors, eliminated $450 million of debt from Freedom's balance
sheet. Creditors, led by JPMorgan Chase, agreed to cut the debt
by nearly 60% to $325 million in return for control of the
Company.
GALLANT ACQUISITIONS: Rogers & Anderson OK'd as Bankruptcy Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
according to Gallant Acquisitions Ltd.'s case docket, authorized
the Debtor to employ Rogers & Anderson PLLC as counsel.
Rogers & Anderson, PLLC is a law firm consisting of Barbara M.
Rogers and David W. Anderson.
The Debtor will compensate Rogers & Anderson on an hourly fee
basis. Ms. Rogers hourly rate is $300, and Mr. Anderson's hourly
rate is $275.
To the best of the Debtor's knowledge, the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Gallant Acquisitions
Willis, Texas-based Gallant Acquisitions Ltd. filed a Chapter 11
petition (Bankr. S.D. Tex. Case No. 12-33353) in Houston, Texas on
May 1, 2012. In the petition, the Debtor disclosed total assets
of $10 million and total debts of $9.15 million, all on account of
liquidated secured debt.
The Debtor owns various properties in Texas, including a 130-acre
Land & Golf Course and 32-acre multiuse land on Highway 105, in
Conroe, Texas.
Judge Jeff Bohm oversees the case. Barbara Mincey Rogers, Esq.,
at Rogers & Anderson, PLLC, serves as the Debtor's counsel. The
petition was signed by Warrant Gallant, president of Gallan GP,
LLC, general partner.
GARLOCK SEALING: Asbestos Panel Taps Motley, Waters for Estimation
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The Official Committee of Asbestos Personal Injury Claimants in
the Garlock Sealing Technologies LLC, et al. bankruptcy case seeks
authorization from the U.S. Bankruptcy Court for the Western
District of North Carolina to retain Motley Rice LLC and Waters &
Kraus LLP as special litigation counsel, effective as of June 7,
2012.
The ACC would like to employ the firms for certain purposes
related to the proceeding for the estimation of Debtors' aggregate
liability for asbestos-related claims for personal injury and
wrongful death.
The Committee and the Debtors take different approaches to
estimation of the aggregate asbestos liability of the estates.
Debtors style their approach as "merits-based". As the Court has
succinctly put it, they envisage "an estimation calculated by
projecting the number of claimants based upon occupation groups
and predicting the likelihood of recovery for separate groups to
reach an aggregate damage amount, and then reducing that by other
sources of recovery." The Committee intends to follow the
approach carried out in many previous asbestos bankruptcies to
show what the Debtors would have to pay to resolve all present and
future asbestos claims outside of bankruptcy. Under this
approach, the value of pending claims, the number of future
claims, the rate at which such claims will be resolved by payment,
and the timing and value of such payments will be extrapolated
from Debtors' own claims history, with adjustments based on trends
and developments in the tort system. In effect, the estimation
trial will involve two distinct cases: the one the Debtors will
present and the one to be presented by the Committee and the
Future Claimants' Representative.
Special Litigation Counsel's responsibility would focus on
responding to and rebutting the technical and scientific aspects
of Debtors' approach to estimation, like their contentions
regarding the effects of the "encapsulation" of asbestos in their
products, the differences among asbestos fiber types with respect
to the propensity to cause mesothelioma, the type and extent of
fiber exposures needed to cause mesothelioma, the epidemiology of
asbestos-related diseases, and the contents and meaning of the
relevant scientific studies and literature. If the testimony of
lay witnesses becomes germane to the technical and scientific
issues, Special Litigation Counsel will participate in the
discovery and presentation of such evidence and the making of
related arguments.
The Committee's lead counsel, Caplin & Drysdale, will be in
overall charge of the Committee's efforts with regard to
estimation. Caplin & Drysdale will present the Committee's own
affirmative estimation case through lay witnesses, experts, and
documentary evidence. When it comes to the Debtors' Case-in-
Chief, Caplin & Drysdale's role will be to coordinate, and
integrate into the Committee's overall position the efforts of
Special Litigation Counsel aimed at responding to technical and
scientific aspects of the evidence and arguments to be presented
by Debtors and any parties allied with them. Special Litigation
Counsel will focus primarily on responding to the Debtors' Case-
in-Chief, and more particularly on those aspects of the Debtors'
approach that depend upon Technical Experts, although Special
Litigation Counsel will also handle the same sorts of issues if
they arise in the context of Debtors' opposition to the ACC/FCR's
Case-in-Chief. The main tasks to be carried out by Special
Litigation Counsel will consist of (i) examining upon deposition
and at trial any Technical Experts designated by Debtors or other
parties opposing the Committee, (ii) eliciting reports from
Technical Experts as the Committee may designate, (iii) defending
depositions, and presenting testimony at the estimation trial, and
(iv) making or responding to arguments to the Court, written and
oral, concerning the subject matters implicated by the testimony
of Technical Experts and the foundation for their opinions.
Motley Rice and Waters & Kraus will be paid these hourly rates:
Professional Firm Hourly Rate
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Nathan D. Finch, Esq. Motley Rice $680
James Ledlie, Esq. Motley Rice $500
Kristen Hermiz, Esq. Motley Rice $300
Laura Holcomb, Paralegal Motley Rice $225
Peter A. Kraus, Esq. Waters & Kraus $735
Jonathan A. George, Esq. Waters & Kraus $705
Scott F. Frost, Esq. Waters & Kraus $625
Motley Rice represents Ruth Sossamon, a member of the Committee,
in the affairs of the Committee. Joseph F. Rice of Motley Rice
serves as Co-Chair of the Committee. Waters & Kraus represents
John Koeberle, a member of the Committee, in the affairs of the
Committee.
To the best of ACC's knowledge, Motley Rice and Water & Kraus are
"disinterested persons" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Garlock Sealing
Headquartered in Palmyra, New York, Garlock Sealing Technologies
LLC is a unit of EnPro Industries, Inc. (NYSE: NPO). For more
than a century, Garlock has been helping customers efficiently
seal the toughest process fluids in the most demanding
applications.
On June 5, 2010, Garlock filed a voluntary Chapter 11 petition
(Bankr. W.D. N.C. Case No. 10-31607) in Charlotte, North Carolina,
to establish a trust to resolve all current and future asbestos
claims against Garlock under Section 524(g) of the U.S. Bankruptcy
Code. The Debtor estimated $500 million to $1 billion in assets
and up to $500 million in debts as of the Petition Date.
Affiliates The Anchor Packing Company and Garrison Litigation
Management Group, Ltd., also filed for bankruptcy.
The filing covers only Garlock operations in Palmyra, New York and
Houston, Texas. Garlock Rubber Technologies, Garlock Helicoflex,
Pikotek, Technetics, Garlock Europe and Garlock operations in
Canada, Mexico or Australia are not affected by the filing, nor is
EnPro Industries or any other EnPro operating subsidiary.
Albert F. Durham, Esq., at Rayburn Cooper & Durham, P.A.,
represents the Debtor in its Chapter 11 effort. Garland S.
Cassada, Esq., at Robinson Bradshaw & Hinson, serves as counsel
for asbestos matters.
The Official Committee of Asbestos Personal Injury Claimants in
the Chapter 11 cases is represented by Travis W. Moon, Esq., at
Hamilton Moon Stephens Steele & Martin, PLLC, in Charlotte, NC,
Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, in New
York, and Trevor W. Swett III, Esq., Leslie M. Kelleher, Esq., and
Jeanna Rickards Koski, Esq., in Washington, D.C. 20005.
Joseph W. Grier, III, the Court-appointed legal representative for
future asbestos claimants, has retained A. Cotten Wright, Esq., at
Grier Furr & Crisp, PA, and Richard H. Wyron, Esq., and Jonathan
P. Guy, Esq., at Orrick, Herrington & Sutcliffe LLP, as his co-
counsel.
About 124,000 asbestos claims are pending against Garlock in
stateand federal courts across the country. The Company says
majority of pending asbestos actions against it is stale and
dormant -- almost 110,000 or 88% were filed more than four years
ago and more than 44,000 or 35% were filed more than 10 years ago.
GLOBAL AVIATION: Imperial Capital to Provide Financial Valuation
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The Hon. Carla E. Craig of the U.S. Bankruptcy Court for the
Eastern District of New York, in an amended order, authorized the
Official Committee of Unsecured Creditors in the Chapter 11 cases
of Global Aviation Holdings Inc., et al., to retain (CEC) Imperial
as financial advisor to the Committee pursuant to Sections 328(a),
1103(a), and 1103(b) of the Bankruptcy Code, effective as of
Feb. 14, 2012.
Imperial is authorized to provide these services to the Committee
in connection with the Debtors' Chapter 11 cases:
i) analysis of the Debtors' businesses, operations, properties,
financial condition, competition, forecast, prospects and
management;
ii) financial valuation of the ongoing operations of the
Debtors; and
iii) assistance to the Committee in developing, evaluating,
structuring and negotiating the terms and conditions of a
potential restructuring plan, including a valuation of the
securities, if any, that may be issued under a restructuring
plan.
About Global Aviation Holdings
Global Aviation Holdings Inc., based in Peachtree City, Ga., is
the parent company of North American Airlines and World Airways.
Global is the largest commercial provider of charter air
transportation for the U.S. military, and a major provider of
worldwide commercial global passenger and cargo air transportation
services. North American Airlines, founded in 1989 and based in
Jamaica, N.Y., operates passenger charter flights using B757-200ER
and B767-300ER aircraft. World Airways, founded in 1948 and based
in Peachtree City, Ga., operates cargo and passenger charter
flights using B747-400 and MD-11 aircraft.
Global Aviation, along with affiliates, filed Chapter 11 petitions
(Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012.
Global's lead counsel in connection with the restructuring is
Kirkland & Ellis LLP and its financial advisor is Rothschild.
Kurtzman Carson Consultants LLC is the claims agent.
The Debtors disclosed $589.8 million in assets and $493.2 million
in liabilities as of Dec. 31, 2011. Liabilities include $146.5
million on 14% first-lien secured notes and $98.1 million on a
second-lien term loan. Wells Fargo Bank NA is agent for both.
Global said it will use Chapter 11 to shed 16 of 30 aircraft.
In addition, Global said it will use Chapter 11 to negotiate new
collective bargaining agreements with its unions and deal with
liabilities on multi-employer pension plans.
On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven
member official committee of unsecured creditors in the case. The
Committee tapped Lowenstein Sandler PC as its counsel, and
Imperial Capital, LLC as its financial advisor.
GLOBALSTAR INC: Warns EUR53-Mil. Judgment May Force Bankruptcy
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Globalstar Inc. announced on May 16, 2012, the decision of the
arbitrators in the commercial arbitration concerning its 2009
satellite manufacturing contract with Thales Alenia Space France.
Although the Company and Thales may agree to other terms,
the arbitrators' ruling requires Globalstar to pay Thales
approximately EUR53 million in Phase 3 termination charges by
June 9, 2012. The Company disputes the merits of the Award and is
currently considering its options to oppose, seek to vacate, or
otherwise challenge the Award.
On June 11, Globalstar said it did not make payment of the Award
to Thales on or prior to June 9. As a result, among other things,
the Award has begun to accrue simple interest. The Company
continues to engage in discussions with Thales in an effort to
reach a consensual resolution.
On May 23, 2012, Thales commenced an action in the District Court
for the Southern District of New York by filing a petition to
affirm the Award. The Company is currently in negotiations with
Thales in an effort to reach an amicable resolution of their
disputes. In the event the parties fail to reach such an
agreement, the Company currently intends to move to vacate the
Award.
On the same date that Thales commenced the New York Proceeding,
Thales sent a notice to the agent under the Company's secured bank
facility, pursuant to section 2.3 of a Direct Agreement between
Thales, Globalstar, and the Agent, dated June 5, 2009, notifying
the Agent, among other things, of the Award, that it deems the
failure to pay the Award a default under the Construction
Agreement, and that it is reserving all of its rights under the
Direct Agreement and the Construction Agreement, including the
right to suspend performance under the Direct Agreement, if the
Company's default is not cured within 30 days of receipt of the
Notice.
Pursuant to section 2.3 of the Direct Agreement, Thales must wait
30 days from the date of notice to the Agent before suspending
performance under the Construction Agreement and, if the default
is not cured 30 days after the date of suspension of performance,
Thales may terminate the Construction Agreement in accordance with
its terms. There can be no assurance that Thales will not seek to
terminate the Construction Agreement before the requisite periods
expire. Should Thales seek to terminate the Construction
Agreement prematurely, the Company would pursue all of its rights
and remedies, but there can be no assurance that the Company's
interpretation would prevail.
Globalstar and Thales have initiated post-ruling discussions to
seek mutually agreeable solutions on all aspects of the
Construction Agreement and the Award. No assurance can be given
that the Company will be successful in reaching agreement with
Thales as to the Construction Agreement or the Award.
If the parties are not able to reach a mutually agreeable
resolution, if the Award is confirmed, final, and non-appealable
and thereafter remains unpaid without resolution, or if Thales
terminates the Construction Agreement, there are likely to be
materially negative consequences to Globalstar, including with
respect to its debt agreements, ongoing work with Thales, and
business operations, and Globalstar may be required to consider
strategic alternatives, including, without limitation, seeking
protection under Chapter 11 of the U.S. Bankruptcy Code.
Nonetheless, discussions are ongoing and during the course of
these negotiations, while Thales has asserted that it has
contractually stopped work, it has continued work on construction
of the satellites remaining in the second phase of the
Construction Agreement. Upon completion and launching of these
remaining satellites, the Company will have a full second
generation constellation which should allow it to reestablish its
leadership position in the provision of mobile satellite voice and
data services.
A full-text copy of the agreement is available for free at
http://is.gd/h6juaB
About Globalstar
Covington, Louisiana-based Globalstar Inc. provides mobile
satellite voice and data services. Globalstar offers these
services to commercial and recreational users in more than 120
countries around the world. The Company's products include mobile
and fixed satellite telephones, simplex and duplex satellite data
modems and flexible service packages.
H&M OIL & GAS: Fends Off Lender's Request for Trustee
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Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that H&M Oil & Gas LLC dodged two bullets late last week
when the bankruptcy judge in Dallas denied a secured lender's
request for appointment of a Chapter 11 trustee. The judge also
refused to allow the lender to foreclose. Both rulings were
"without prejudice," meaning the lender can try again if
circumstances change.
Two days after the Debtor's bankruptcy filing, secured lender
Prospect Capital Corp., owed $88.8 million, filed papers to oust
management by appointment of a Chapter 11 trustee. The lender
also sought permission to foreclose, which would have ended the
reorganization effort if allowed.
About H&M Oil
H&M Oil & Gas, LLC, filed a bare-bones Chapter 11 petition
(Bankr. N.D. Tex. Case No. 12-32785) in its hometown Dallas on
April 30, 2012. Another entity, Anglo-American Petroleum Corp.
(Case No. 12-32786) simultaneously filed for Chapter 11.
Each of the Debtors estimated assets and debts of $50 million to
$100 million.
H&M Oil & Gas is an oil and gas production and development
company. H&M, through its operating company, H&M Resources LLC,
is focused on developing its leases in the Permian basin and Texas
panhandle. Dallas, Texas-based Anglo-American Petroleum --
http://www.angloamericanpetroleum.com/-- is the holding
corporation for H&M Oil.
Judge Barbara J. Houser presides over the case. The Debtors are
represented by Keith William Harvey, Esq., at Anderson Tobin PLLC,
in Dallas.
Prospect Capital Corporation, the Debtors' lone secured creditor,
is represented in the case by Timothy A. Davidson II, Esq., and
Joseph P. Rovira, Esq., at Andrews Kurth LLP.
HEALTHWAYS INC: Moody's Withdraws 'Ba3' Corporate Family Rating
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Moody's Investors Service has withdrawn all ratings of Healthways,
Inc. following the repayment of its senior secured credit
facilities due December 2013 with the refinancing proceeds from
new 5-year credit facilities which are not rated by Moody's. The
ratings have been withdrawn given that the issuer has no rated
debt outstanding.
The following ratings and assessments were withdrawn:
Ba3 Corporate Family Rating
B1 Probability of Default Rating
Ba3 (LGD3, 31%) rating on $345 million revolving credit facility
due December 2013
Ba3 (LGD3, 31%) rating on $200 million term loan B due December
2013
SGL-2 Speculative Grade Liquidity Rating
Rating outlook, changed to Withdrawn from Negative
The principal methodology used in rating Healthways was the Global
Business & Consumer Service Industry Methodology, published
October 2010. Other methodologies used include Loss Given Default
for Speculative Grade Issuers in the US, Canada, and EMEA,
published June 2009.
Healthways, Inc., headquartered in Franklin, Tennessee, provides
specialized, comprehensive healthcare support programs and
services, including disease management, high-risk care management
services and outcomes-driven wellness and health improvement
programs to health plans, employers, governments, and hospitals,
predominantly across the U.S. For the twelve months ended March
31, 2012, Healthways' revenues totaled approximately $691 million.
HOLOGIC INC: Moody's Assigns 'B1' CFR/PDR; Outlook Stable
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Moody's Investors Service assigned a Corporate Family Rating and
Probability of Default Rating of B1 to Hologic, Inc. Moody's
assigned a Ba2 rating to the proposed $3.3 billion senior secured
credit facility and a B2 rating to the proposed $500 million
unsecured notes. The proceeds, along with cash on hand, will be
used to fund the $3.7 billion acquisition of Gen-Probe Inc. The
transaction is expected to close late summer 2012. Moody's also
assigned a Speculative Grade Liquidity Rating of SGL-2 (signifying
good liquidity) and a stable outlook.
Rating Assigned:
Corporate Family Rating, B1
Probability of Default Rating, B1
$300 million senior secured revolving credit facility expiring
2017, Ba2 (LGD 2, 27%)
$1 billion senior secured Term Loan A due 2017, Ba2 (LGD 2, 27%)
$2 billion senior secured Term Loan B due 2019, Ba2 (LGD 2, 27%)
$500 million senior unsecured notes due 2019, B2 (LGD4, 68%)
Speculative Grade Liquidity Rating, SGL-2
The outlook is stable.
Ratings Rationale
Hologic's B1 Corporate Family Rating is constrained primarily by
the significant financial leverage resulting from the proposed
acquisition of Gen-Probe as well as the company's history of
making acquisitions, which have had mixed success. The rating is
supported by the large scale of the combined company and leading
market positions in core markets. The rating is also supported by
Moody's expectation for strong free cash flow generation and rapid
debt repayment.
The acquisition of Gen-Probe will reduce reliance on Hologic's
liquid cytology business (ThinPrep) for EBITDA and cash flow which
Moody's believes will decline over the medium to longer-term. The
combined company will also be less vulnerable to a material
slowdown in hospital capital spending due to reduced reliance on
its mammography equipment business for revenue. Despite continued
weakness in doctor visits due to macro-economic factors, as well
as increased competition on the horizon, Moody's believes the
combined company has strong organic growth prospects over the next
two to three years given that both Hologic and Gen-Probe are in
the midst of significant new product launches.
Moody's could upgrade the ratings if new product launches
accelerate growth in revenue and EBITDA and adjusted debt to
EBITDA is expected to be sustained below 4.5 times and free cash
flow to debt above 10%.
Moody's could downgrade the ratings if competitors' product
launches or lack of market uptake of new Hologic and Gen-Probe
products result in materially slower growth and debt to EBITDA
that is expected to remain at or above 5.5 times. Also, if Hologic
fails to maintain adequate liquidity to cover the potential put of
the December 2013 tranche of its convertible notes, Moody's could
downgrade the ratings.
The principal methodology used in rating Hologic, Inc. was the
Global Medical Products & Device Industry Methodology published in
October 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.
Hologic, Inc. is a leading developer, manufacturer and supplier of
diagnostic tests, minimally invasive surgical devices and
mammography systems primarily dedicated to serving the healthcare
needs of women. Hologic is acquiring Gen-Probe Inc., a leading
molecular diagnostics company specializing in testing for sexually
transmitted diseases, for an enterprise value of $3.7 billion. The
combined company will generate annual revenues of roughly $2.5
billion.
HOUGHTON MIFFLIN: Objects to U.S. Trustee's Bid to Move Case
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BankruptcyData.com reports that Houghton Mifflin Harcourt
Publishing filed with the U.S. Bankruptcy Court an objection to
the motion of the U.S. Trustee assigned to the case's motion to
transfer the case to a district where venue is proper.
The Debtors assert, "The Debtors currently have two leaseholds in
New York. The first is for property located at 215 Park Avenue
South, 11th and 12th Floors, New York, New York. This leased
property is one of Houghton Mifflin Harcourt Publishing Company's
sales and editorial offices and where it has 60 full-time
employees. Based upon this office and its investment account
maintained in Manhattan . . ., venue for Houghton Mifflin Harcourt
Publishing Company's chapter 11 case properly lay in this
District. Houghton Mifflin Harcourt Publishing Company initially
was selected by the Debtors as the lead-filing entity and the
lead-captioned entity in the Debtors motion for joint
administration."
BankruptcyData.com says the informal group of lenders under the
first lien credit agreement dated as of Dec. 12, 2007, also filed
an objection to the motion, stating, "Despite the fact that venue
is clearly proper in the Southern District of New York, the U.S.
Trustee has refused to withdraw the Transfer Motion and continues
to insist that these cases should be transferred to another
district just days before this Court is scheduled to hold a
hearing to consider confirmation of the consensual, prepackaged
Plan. Such a result would be improper on the facts and the law,
and the Transfer Motion should be denied."
About Houghton Mifflin
Houghton Mifflin Harcourt Publishers Inc., headquartered in
Boston, Massachusetts, is one of the three largest U.S. education
publishers focusing on the K-12 market with roughly $1.3 billion
of revenue for fiscal year ended December 2011.
Houghton Mifflin Harcourt and its affiliates filed a prepackaged
Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-12171)
on May 21, 2012.
Paul, Weiss, Rifkind, Wharton & Garrison LLP has been tapped as
bankruptcy counsel. Blackstone Advisory Services, LP, is the
financial advisor. Kurtzman Carson Consultants LLC is the claims
and notice agent.
The Debtor disclosed assets of $2.68 billion and debt totaling
$3.535 billion as of the Chapter 11 filing.
HUSSEY COPPER: Taps W&W Actuarial to Provide Actuarial Services
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The Hon. Brendan L. Shannon of the U.S. Bankruptcy Court for the
District of Delaware authorized Hussey Copper Corp., et al., to
employ W&W Actuarial Services, Inc., to provide actuarial and
consulting services to the Debtors.
As of the Petition Date, HCL Liquidation Ltd., was the sponsor of
two benefit plan, one of which covers substantially all hourly
rate employees at the former HCL facilities in Eminence, Kentucky
(the Kentucky Plan), and the other of which covers former
employees of a New Jersey plant that was closed by the Debtors
some year prior to the Petition Date (the Ullrich Plan.)
W&W is expected to, among other things:
-- prepare and submit a detailed actuarial valuation of the
Ullrich Plan;
-- prepare a Form 5500 and related schedules for the Ullrich
Plan;
-- Prepare a PBGC comprehensive premium filing.
The Debtors are authorized to pay W&W (i) an hourly rate of $190
for any services for which W&W cannot appropriately be
compensated, under ERISA, from assets in the Ullrich Plan; and a
$10,000 retainer.
To the best of the Debtor's knowledge, W&W is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Hussey Copper
Hussey Copper Corp., based in Leetsdale, Pennsylvania, is one of
the leading manufacturers of copper products in the United States.
Hussey Copper was founded in Pittsburgh in 1848. The Company and
its affiliates, which operate one manufacturing facility in
Leetsdale and two facilities in Eminence, Kentucky, manufacture "a
wide range of value-added copper products and copper-nickel
products. The Company has more than 500 full-time employees.
Hussey Copper Corp. filed a Chapter 11 petition (Bankr D. Del.
Case No. 11-13010) on Sept. 27, 2011, with a deal to sell
substantially all assets. Five other affiliates also filed
separate petitions (Case Nos. 11-13012 to 11-13016). Hussey
Copper Ltd. estimated $100 million to $500 million in assets and
debts. Hussey Copper Corp. disclosed $80,760,296 in assets and
$72,119,837 in liabilities as of the Chapter 11 filing.
Mark Minuti, Esq., at Saul Ewing LLP, serves as counsel to the
Debtors. Donlin Recano & Company Inc. is the claims and notice
agent. The Debtors tapped Winter Harbor, LLC in substitution for
Huron Consulting Services LLC.
An official creditors' committee has been appointed in the case.
The panel selected Lowenstein Sandler PC as counsel. The panel
selected FTI Consulting, Inc. as restructuring and financial
advisor.
The stalking horse bidder, KHC Acquisitions LLC, a unit of Kataman
Metals LLC, is represented in the case by David D. Watson, Esq.,
and Scott Opincar, Esq., at McDonald Hopkins LLC, in Cleveland.
Counsel to PNC Bank NA, as lender, issuer and agent for the
Debtors' secured lenders, are Lawrence F. Flick II, Esq., Blank
Rome LLP, in New York, and, Regina Stango Kelbon, Esq., at Blank
Rome LLP, in Wilmington.
US private equity firm Patriarch Partners officially acquired
Hussey Copper on Dec. 16, 2011. The buyout firm of distressed
debt mogul Lynn Tilton acquired Hussey Copper for $107.8 million
after a nine-hour, 34-round auction.
Bankruptcy Judge Brendan L. Shannon approved the name change of
Hussey Copper Corp. et al., to HCL Liquidation Ltd.
ICG REAL ESTATE: Has Until Aug. 7 to Propose Chapter 11 Plan
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
entered an order establishing deadlines and procedures in relation
to ICG Real Estate Advisors, LLC's Chapter 11 Plan and explanatory
Disclosure Statement.
The Court set these deadlines:
Combined Plan and Disclosure Statement: Aug. 7, 2012
Ballots Deadline: Sept. 25, 2012
Objections Deadline: Sept. 25, 2012
Objection to Fast Track Order Due: Nov. 2, 2012
Confirmation Hearing: Oct. 2, at 10:30 a.m.
About ICG Real Estate Advisors, LLC
ICG Real Estate Advisors, LLC's business is a holding company for
two entities that manage and own real estate.
The Company filed a Chapter 11 petition (Bankr. E.D. Mich. Case
No. 12-48896) in Detroit on April 9, 2012.
Judge Marci B. McIvor presides over the case. Kenneth A. Nathan,
Esq., at Nathan Zousmer, P.C., in Southfield, Michigan, serves as
counsel to the Debtor.
ICG Real Estate Advisors -- http://icgreit.com-- manages
Inheritance Capital Group, LLC, a private equity commercial real
estate firm founded in 2006 with international capabilities based
in Southfield, Michigan.
ICG Real Estate Advisors claims to be the only minority owned
enterprise in the country certified by the Minority Business
Development Council (MBDC) to buy and sell corporate sale lease
backs. ICG Real Estate Advisors specializes in single tenant net
lease real estate nationwide.
The Debtor disclosed $12,000,066 in assets and $664,503 in
liabilities as of the Chapter 11 filing.
ICG REAL ESTATE: Nathan Zousmer Approved as Bankruptcy Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized ICG Real Estate Advisors, LLC, to employ Nathan
Zousmer, P.C. as counsel.
The Debtor paid the firm a $20,000 prepetition retainer. The
hourly rates of the firm's personnel are:
Kenneth A. Nathan $345
Robert B. Nathan $345
Michael I. Zousmer $345
Thomas R. Nathan $225
To the best of the Debtor's knowledge, the firm is a
'disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About ICG Real Estate Advisors, LLC
ICG Real Estate Advisors, LLC's business is a holding company for
two entities that manage and own real estate.
The Company filed a Chapter 11 petition (Bankr. E.D. Mich. Case
No. 12-48896) in Detroit on April 9, 2012.
Judge Marci B. McIvor presides over the case. Kenneth A. Nathan,
Esq., at Nathan Zousmer, P.C., in Southfield, Michigan, serves as
counsel to the Debtor.
ICG Real Estate Advisors -- http://icgreit.com-- manages
Inheritance Capital Group, LLC, a private equity commercial real
estate firm founded in 2006 with international capabilities based
in Southfield, Michigan.
ICG Real Estate Advisors claims to be the only minority owned
enterprise in the country certified by the Minority Business
Development Council (MBDC) to buy and sell corporate sale lease
backs. ICG Real Estate Advisors specializes in single tenant net
lease real estate nationwide.
The Debtor disclosed $12,000,066 in assets and $664,503 in
liabilities as of the Chapter 11 filing.
ICG REAL ESTATE: David Warren OK'd to Handle Wayne County Suits
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized ICG Real Estate Advisors, LLC, to employ David Warren
and Joelson, Rosenberg, Moss, Cohen, Warren & Drasnin, PLC as
special litigation counsel.
J&R will perform and provide legal assistance in these areas:
-- litigation of Case No. 10-012652-CK in Wayne County Circuit
Court; and
-- litigation of Case No. 10-010491-CK in Wayne County Circuit
Court.
The services of J&R are necessary to enable the Debtor to maximize
the value of his estate and to reorganize successfully.
David Darren is the principal attorney assigned to the matter and
his hourly rate is $300.
To the best of the Debtor's knowledge, J&R is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About ICG Real Estate Advisors, LLC
ICG Real Estate Advisors, LLC's business is a holding company for
two entities that manage and own real estate.
The Company filed a Chapter 11 petition (Bankr. E.D. Mich. Case
No. 12-48896) in Detroit on April 9, 2012.
Judge Marci B. McIvor presides over the case. Kenneth A. Nathan,
Esq., at Nathan Zousmer, P.C., in Southfield, Michigan, serves as
counsel to the Debtor.
ICG Real Estate Advisors -- http://icgreit.com-- manages
Inheritance Capital Group, LLC, a private equity commercial real
estate firm founded in 2006 with international capabilities based
in Southfield, Michigan.
ICG Real Estate Advisors claims to be the only minority owned
enterprise in the country certified by the Minority Business
Development Council (MBDC) to buy and sell corporate sale lease
backs. ICG Real Estate Advisors specializes in single tenant net
lease real estate nationwide.
The Debtor disclosed $12,000,066 in assets and $664,503 in
liabilities as of the Chapter 11 filing.
ICG REAL ESTATE: Douglas D. Hampton Ok'd as Litigation Counsel
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
authorized ICG Real Estate Advisors, LLC, to employ Douglas D.
Hampton and the Law Offices of Douglas D. Hampton, P.C. as special
litigation counsel.
DH will perform and provide legal assistance in the litigation of
case in Wayne County Circuit Court. The services of DH are
necessary to enable the Debtor to maximize the value of his estate
and reorganize successfully.
Douglas D. Hampton is the principal attorney assigned to the
matter and his hourly rate is $250.
To the best of the Debtor's knowledge, DH is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About ICG Real Estate Advisors, LLC
ICG Real Estate Advisors, LLC's business is a holding company for
two entities that manage and own real estate.
The Company filed a Chapter 11 petition (Bankr. E.D. Mich. Case
No. 12-48896) in Detroit on April 9, 2012.
Judge Marci B. McIvor presides over the case. Kenneth A. Nathan,
Esq., at Nathan Zousmer, P.C., in Southfield, Michigan, serves as
counsel to the Debtor.
ICG Real Estate Advisors -- http://icgreit.com-- manages
Inheritance Capital Group, LLC, a private equity commercial real
estate firm founded in 2006 with international capabilities based
in Southfield, Michigan.
ICG Real Estate Advisors claims to be the only minority owned
enterprise in the country certified by the Minority Business
Development Council (MBDC) to buy and sell corporate sale lease
backs. ICG Real Estate Advisors specializes in single tenant net
lease real estate nationwide.
The Debtor disclosed $12,000,066 in assets and $664,503 in
liabilities as of the Chapter 11 filing.
INSIGHT GLOBAL: Moody's Affirms 'B1' CFR; Outlook Positive
----------------------------------------------------------
Moody's Investors Service changed Insight Global, Inc.'s ratings
outlook to positive from stable. Concurrently, Moody's affirmed
the B1 corporate family rating, B2 probability of default rating,
and the B1 rating on the senior secured credit facilities.
The outlook revision reflects Insight Global's strong organic
revenue/earnings growth trends that have resulted in improved
leverage and interest coverage metrics and Moody's expectation
that this trend will continue.
Ratings affirmed:
Corporate family rating at B1
Probability of default rating at B2
$25 million senior secured revolving credit facility due 2016 at
B1 (LGD3, 34%)
$155 million senior secured term loan due 2017 at B1 (LGD3, 34%)
Ratings Rationale
Insight Global's revenue increased 42% in 2011, on top of a 49%
increase in 2010, owing to growth from new and existing locations.
Because of earnings growth, leverage (as measured by debt to
EBITDA) has declined to approximately 3.4 times as of March 31,
2012 from 4.2 times when the rating was last upgraded in July
2011. Moody's expects that Insight Global will sustain double-
digit revenue growth and maintain its current level of operating
margins such that debt to EBITDA declines below 3.0 times near-
term. Operating margins have declined due to higher compensation
costs and business investment.
The ratings could be upgraded if Insight Global maintains topline
momentum and stabilizes its operating margins such that debt to
EBITDA remains below 3.0 times, EBITDA less capex to interest is
above 4.0 times, and free cash flow as a percentage of debt
exceeds 5%. An upgrade would also require that the company augment
its liquidity profile through expanded free cash flow and/or
revolving credit facility capacity, and demonstrate continued
commitment to conservative financial policies.
The outlook could be revised to stable if a weak employment
environment causes Insight Global's growth trends to weaken, such
that debt to EBITDA remains above 3.0 times. The ratings could be
downgraded if debt to EBITDA increased to 4.5 times and/or if free
cash flow turns negative.
Additional information can be found in the Insight Global Credit
Opinion published on Moodys.com.
The principal methodology used in rating Insight Global 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.
Insight Global, headquartered in Atlanta, Georgia, is a
specialized provider of temporary and project professionals in the
field of information technology. Affiliates of Harvest Partners
purchased the company in 2010.
INTELLIGRATED INC: Moody's Says Permira Buyout Plan Credit Neg.
---------------------------------------------------------------
Moody's Investors Service said the announcement that
Intelligrated, Inc. (Corporate Family Rating B1, stable) has
agreed to be acquired by a unit of European private equity firm
Permira, in a transaction valued in excess of $500 million, is a
negative credit event.
The last rating action was May 22, 2012 at which time
Intelligrated's long-term ratings were upgraded to B1 from B2 and
the rating outlook was set at stable.
The principal methodology used in rating Intelligrated, Inc. was
the Global Heavy Manufacturing Industry Methodology published in
November 2009. Other methodologies used include Loss Given Default
for Speculative-Grade Non-Financial Companies in the U.S., Canada
and EMEA published in June 2009.
Intelligrated, Inc., headquartered in Mason, OH, manufactures high
speed automated material handling equipment and is currently owned
by affiliates of Gryphon Investors, Tudor Ventures, and members of
executive management. Annual revenues in 2011 were approximately
$435 million.
IRON MOUNTAIN: S&P Puts 'BB-' Corporate Credit Rating on Watch Neg
------------------------------------------------------------------
Standard & Poor's Rating Services placed all of its ratings,
including its 'BB-' corporate credit rating, on Boston-based Iron
Mountain Inc. on CreditWatch with negative implications.
"The CreditWatch placement results from Iron Mountain's
announcement that it plans to convert to a REIT," said Standard &
Poor's credit analyst Tulip Lim. "We believe this could reduce the
company's business and financial flexibility. Iron Mountain's
margin of compliance with its fixed charge covenant will likely
narrow as a result of additional tax expenditures related to the
conversion. In addition to existing covenants, we believe the
company will need to amend several aspects of its credit agreement
in order to execute its plan."
"Under our base-case scenario, we expect revenue to be flat or
decline at a low-single-digit percent rate because of unfavorable
exchange rates and lower paper prices. Excluding these items, we
expect low-single-digit percentage revenue growth. Iron Mountain's
operating performance has been steady, but growth has moderated.
Following several years of organic revenue growth averaging a
high-single-digit percent rate, Iron Mountain's revenue growth has
slowed. We expect near-term core revenue growth to remain at these
more mature rates because of the slow economic recovery. We expect
low- to mid-single-digit percent reported EBITDA declines, in part
because of lower high-margin recycled paper revenue, which
continued costs reductions only partly offset. Over the near term,
we expect leverage to rise as a result of additional tax payments,
distributions to shareholders, advisory fees, and system
investments. We expect these additional costs will also result in
negative discretionary cash flow over the next couple of years. If
Iron Mountain converts to a REIT, dividend payments will rise,
reducing discretionary cash flow available for debt reduction,
acquisitions, and overall financial flexibility," S&P said.
JEFFERSON COUNTY, AL: No Creditors Committee Formed Yet
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the bankruptcy judge in Birmingham, Alabama, ruled
last week that Jefferson County, Alabama, can't have an official
creditors' committee until enough eligible creditors are willing
to serve. The bankruptcy judge said that two of the three
creditors named to the panel by the bankruptcy administrator are
ineligible because they have been or will be paid in full.
Last week the Birmingham city council filed a $1.63 billion claim
in the county's bankruptcy on behalf of sewer system customers.
The alleged liability to ratepayers stems from what the claim
calls "dishonest, unlawful, and sometimes criminal conduct." The
claim states that $2.6 billion of fixed-rate bonds were
"collusively converted" into more than $5 billion of swaps and
$3.2 billion of variable-rate or auction-rate bonds. The claim
seeks to recover for "wrongful gain or unjust enrichment" by
financial institutions who acted "collusively" with the county.
The claim is designed to recover for overcharges to sewer
customers, including interest, principal and swap costs.
About Jefferson County
Jefferson County has its seat in Birmingham, Alabama. It has a
population of 660,000.
Jefferson County filed a bankruptcy petition under Chapter 9
(Bankr. N.D. Ala. Case No. 11-05736) on Nov. 9, 2011, after an
agreement among elected officials and investors to refinance
$3.1 billion in sewer bonds fell apart.
John S. Young Jr. LLC was appointed as receiver by Alabama Circuit
Court Judge Albert Johnson in September 2010.
Jefferson County's bankruptcy represents the largest municipal
debt adjustment of all time. The county said that long-term debt
is $4.23 billion, including about $3.1 billion in defaulted sewer
bonds where the debt holders can look only to the sewer system for
payment.
The county said it would use the bankruptcy court to put a value
on the sewer system, in the process fixing the amount bondholders
should be paid through Chapter 9.
Judge Thomas B. Bennett presides over the Chapter 9 case. Lawyers
at Bradley Arant Boult Cummings LLP and Klee, Tuchin, Bogdanoff &
Stern LLP, led by Kenneth Klee, represent the Debtor as counsel.
Kurtzman Carson Consultants LLC serves as claims and noticing
agent. Jefferson estimated more than $1 billion in assets. The
petition was signed by David Carrington, president.
The bankruptcy judge in January 2012 ruled that the state court-
appointed receiver for the sewer system largely lost control as a
result of the bankruptcy. Before deciding whether Jefferson County
is eligible for Chapter 9, the bankruptcy judge will allow the
Alabama Supreme Court to decide whether sewer warrants are the
equivalent of "funding or refunding bonds" required under state
law before a municipality can be in bankruptcy.
U.S. District Judge Thomas B. Bennett ruled in March 2012 that
Jefferson County is eligible under state law to pursue a debt
restructuring under Chapter 9. Holders of more than $3 billion in
defaulted sewer debt had challenged the county's right to be in
Chapter 9.
LANDSLIDE HOLDINGS: S&P Assigns 'B' Corporate Credit Rating
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'B' corporate credit
rating to Landslide Holdings Inc., the holding company for South
Jordan, Utah-based LANDesk Software, a provider of enterprise
device management software. The outlook is positive.
"At the same time, we assigned a 'B+' issue-level rating with a
recovery rating of '2' to the company's proposed $205 million term
loan due 2018 and $15 million revolving credit facility due 2017.
The '2' recovery rating indicates our expectation of substantial
(70%-90%) recovery in the event of default," S&P said.
"The ratings reflect LANDesk's 'vulnerable' business risk profile
marked by its narrow market focus and competitive operating
environment, and its 'aggressive' financial risk profile with pro
forma leverage in the mid-4x range. Its diverse customer base,
material recurring revenues, and strong channel partner
relationships partially offset these risks," S&P said.
"We expect that LANDesk will achieve low- to mid-signal-digit
revenue growth with modestly improved EBITDA margin over the next
year," said Standard & Poor's credit analyst Christian Frank.
"The positive outlook reflects our expectation that LANDesk will
generate low- to mid-single-digit revenue growth with modestly
improved EBITDA margins. We will consider an upgrade if the
company sustains low- to mid-single-digit organic growth,
maintains leverage at or below the mid-4x area with 20% covenant
headroom, and integrates Wavelink successfully. We could revise
the outlook to stable if competitive pressure, integration
challenges, the loss of a key channel partner, or a debt-financed
acquisition results in leverage approaching the 5x level," S&P
said.
LEGAL HELPERS: Gets Suit Over Fees Sent to Arbitration
------------------------------------------------------
Lisa Coryell at Bankruptcy Law360 reports that a New Jersey
federal court on Monday sent to arbitration class claims that a
debt settlement company violated state consumer protection laws
and federal bankruptcy provisions in the fees it charged
financially struggling customers, finding the plaintiffs'
contracts held valid arbitration provisions.
In June, Bankruptcy Law360 recalls, Mercer County resident Dora
Smith filed a putative class action against Legal Helpers Debt
Resolution ? also known as Macey Aleman Hyslip & Searns law firm ?
and Global Client Solutions LLC of Oklahoma.
Legal Helpers is a Nevada foreign corporation with its principal
place in Chicago, Illinois. Legal Helpers is owned, managed,
controlled, and supervised by Macey Bankruptcy. Christopher Tang,
Esq., is a resident of Fulton County, Georgia. Thomas G. Macey,
Esq., is also an owner, principal, incorporator, officer,
director, shareholder, agent, and manager of Macey Bankruptcy and
Legal Helpers.
LEHMAN BROTHERS: Dist. Court Rules Against Trustee in $2BB Dispute
------------------------------------------------------------------
Judge Katherine B. Forrest of the U.S. District Court for the
Southern District of New York, on June 6, ruled on appeals taken
by the liquidation trustee for Lehman Brothers Inc. and Barclays
Capital Inc. stemming from the Bankruptcy Court's opinion on
assets disputed by the parties related to the September 2008 sale
of LBI to Barclays.
Judge Forrest said Barclays is entitled to most of the $2.05
billion in margin assets, overturning Bankruptcy Judge James
Peck's ruling that said the trustee was entitled to the money.
Judge Forrest rejected Barclays' claim to $769 million in LBI's
Rule 15c3-3 customer reserve accounts and $507 million that is
considered part of LBI's required Reserve Bank Account. Judge
Forrest also ruled that the LBI estate is not entitled to
approximately $3.5 billion in margin and other assets used to
support LBI's derivatives trading and roughly $2 billion in
certain assets in LBI's clearance boxes at Depository Trust &
Clearing Corporation.
In his decision last year, Bankruptcy Judge Peck told Barclays to
return $2 billion in margin assets to James Giddens, the Lehman
brokerage's trustee under the U.S. Securities Investor Protection
Act of 1970, while the latter was ordered to give the bank at
least $1.1 billion and possibly another $769 million.
Judge Forrest said in a 59-page decision that the bankruptcy
judge erred in superimposing "terms of ambiguity" on the final
sale document called a clarification letter, which outlines the
terms of the 2008 sale of Lehman's assets to Barclays, The Wall
Street Journal reported.
Although Judge Peck found the clarification letter was
enforceable, he erred by interpreting only those parts that were
consistent with his impression that Lehman cash wouldn't be going
to Barclays in the sale, Judge Forrest pointed out.
"The bankruptcy court fully understood the letter's terms (and
the implications thereof) -- it just did not like them," Judge
Forrest said.
Judge Forrest also ruled that about $2 billion in "clearance box"
accounts at the Depository Trust & Clearing Corp. will also stay
with Barclays, affirming Judge Peck's decision, The Journal
reported.
Barclays' lawyer, Jonathan Schiller, Esq., at Boies, Schiller &
Flexner LLP, in New York, said, "We are gratified by the court's
decision . . . confirming that Barclays is entitled to the Lehman
assets it purchased in September 2008."
Meanwhile, Mr. Giddens said in a statement that he will appeal
Judge Forrest's ruling, Bloomberg News reported.
"We strongly believe that the former customers of Lehman Brothers
Inc. are entitled to these assets," the trustee said in an e-
mailed statement. "Our duty to customers mandates that we
continue to pursue all legal avenues to recover the assets."
Mr. Giddens also said he has reserved money for the Barclays
litigation and still aims to pay some money to the brokerage's
creditors before the end of the year, Bloomberg News reported.
The district court case is Giddens v. Barclays Capital Inc.,
11-cv-06052, U.S. District Court, Southern District of New York
(Manhattan).
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. Lehman is set to make its first payment to creditors
under its $65 billion payout plan on April 17, 2012.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to Lehman Brothers
International (Europe) on Sept. 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan
Inc. filed for bankruptcy in the Tokyo District Court on
Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4
trillion (US$33 billion) in liabilities in its petition.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: Closes Purchase of Remaining Archstone Stake
-------------------------------------------------------------
Lehman Brothers Holdings Inc. said it has completed, through its
commercial paper unit, the purchase of the entire remaining stake
in Archstone held by affiliates of Bank of America and Barclays
Bank PLC.
The deal, which gives Lehman full ownership of Archstone, follows
the company's purchase early this year of a 26.5% stake previously
held by the banks. Both acquisitions were made to protect and
preserve the value of the Archstone enterprise.
Prior to the acquisitions, Sam Zell's investment firm Equity
Residential offered to acquire the stake for $1.33 billion but
Lehman exercised its right to match other offers for the stake
and acquired it instead.
The remaining stake in Archstone is critical to Lehman because
under the ownership structure, a unanimous vote is required for
all important decisions regarding the apartment company.
Archstone, which Lehman acquired in a $22 billion leveraged
buyout with Tishman Speyer Properties LP, has ownership interests
in hundreds of apartment developments from Washington and New
York to San Francisco. Lehman and the banks made loans, which
they later converted to equity after Archstone faltered in the
2008 credit crisis.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. Lehman is set to make its first payment to creditors
under its $65 billion payout plan on April 17, 2012.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to Lehman Brothers
International (Europe) on Sept. 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan
Inc. filed for bankruptcy in the Tokyo District Court on
Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4
trillion (US$33 billion) in liabilities in its petition.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: Stipulation Signed Dismissing BTSX Lawsuit
-----------------------------------------------------------
The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage
entered into an agreement calling for the dismissal of his lawsuit
against BTSX Inc.
Under the deal, James Giddens, the court-appointed trustee, agreed
to dismiss the lawsuit in exchange for a payment of $300,000 from
BTSX, formerly known as Townsend Analytics, Ltd.
The lawsuit alleges that the Lehman brokerage holds a claim
against BTSX for the transfer of more than $3 million made by the
brokerage during the days leading up to Lehman's bankruptcy.
BTSX, which was once a subsidiary of Lehman, was sold to Barclays
Capital Inc. following the company's bankruptcy filing in 2008.
A full-text copy of the agreement is available without charge at
http://bankrupt.com/misc/LBHI_StipBTSX.pdf
Hughes Hubbard & Reed, the trustee's legal counsel, was to present
the agreement to Judge James Peck for signature on June 8, 2012.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. Lehman is set to make its first payment to creditors
under its $65 billion payout plan on April 17, 2012.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to Lehman Brothers
International (Europe) on Sept. 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan
Inc. filed for bankruptcy in the Tokyo District Court on
Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4
trillion (US$33 billion) in liabilities in its petition.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: Stipulation Signed Dismissing eClerx Suit
----------------------------------------------------------
The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage
reached an agreement with eClerx Services Limited to settle his
claim against the company.
The claim stemmed from the transfer of more than $1.05 million
made by the brokerage prior to Lehman's bankruptcy filing.
Under the deal, the trustee agreed not to pursue his claim in
exchange for a payment of $23,000 from eClerx. A full-text copy
of the agreement is available without charge at:
http://bankrupt.com/misc/LBHI_StipEclerx.pdf
The agreement was to be presented to Judge James Peck for
signature on June 8, 2012.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. Lehman is set to make its first payment to creditors
under its $65 billion payout plan on April 17, 2012.
International Operations Collapse
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, was placed into administration,
together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to Lehman Brothers
International (Europe) on Sept. 15, 2008. The joint
administrators have been appointed to wind down the business.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan
Inc. filed for bankruptcy in the Tokyo District Court on
Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4
trillion (US$33 billion) in liabilities in its petition.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LIGHTSQUARED INC: Has Commitment From US Bancorp Unit for DIP Loan
------------------------------------------------------------------
Joseph Checkler at Dow Jones Daily Bankruptcy Review reports
LightSquared has reached an agreement in principle on a bankruptcy
loan from a group of its lenders, as the company's fight with
another group of lenders over whether it can use the cash secured
by the loans continues.
According to the report, Judge Shelley C. Chapman of U.S.
Bankruptcy Court in Manhattan said LightSquared should take until
June 12 to negotiate with an ad hoc group of hedge funds holding
more than $1 billion in debt secured by LightSquared's assets; the
funds want severe restrictions placed on LightSquared's proposed
use of the $190 million of cash it has on hand.
The report relates Milbank, Tweed, Hadley & McCloy LLP's Matthew
S. Barr, a lawyer for LightSquared, said the company expects to
file within a few days details of the debtor-in-possession loan it
negotiated with a unit of U.S. Bancorp, which represents a
separate group of LightSquared's pre-bankruptcy lenders. That
group holds more than $320 million in loans that are secured by
the company's leases on wireless spectrum and equity interest in
that spectrum.
The report relates Mr. Barr didn't give details of the new DIP
loan in court, and a lawyer for U.S. Bank didn't immediately
respond to a request for comment.
Judge Chapman was set to decide whether LightSquared could use
cash collateral but postponed the hearing June 12. According to
the report, the judge called lawyers for the company and the
lenders into her chambers, where they emerged apparently in
agreement that discussions would continue outside the courtroom.
Mr. Barr said all objections to the company's request to use cash
collateral -- aside from those of the ad hoc group -- had been
satisfied.
The ad hoc group of lenders wants LightSquared to propose a strict
monthly budget of how the cash would be used, give the lenders
liens on LightSquared's assets, and pay the legal fees of the
lenders and monthly interest on the loans. In addition, the
lenders want the ability to ask the bankruptcy court to
investigate whether it can pursue claims against Phil Falcone and
his hedge-fund firm, Harbinger Capital Partners, which controls
the company's equity, according to the report.
The report says the lender group holds $1.1 billion of a $1.7
billion chunk of debt secured by LightSquared's assets and
includes hedge-fund managers Appaloosa Management LP, Fortress
Investment Group LLC and Silver Point Capital LP.
The report adds Judge Chapman also approved payments from
LightSquared's bankruptcy estate to the professionals working on
its Chapter 11 case, after the company satisfied objections of
creditors worried that the company wouldn't have to come back to
court to approve more payments if objections are made. She also
approved some of the company's so-called "second-day" motions,
including giving it the right to keep paying its employees and
paying utility bills.
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.
LIL' BIT OF CHICAGO: M.D. Pa. Court Dismisses Suit v. BB&T
----------------------------------------------------------
District Judge John E. Jones, III, granted the request of Branch
Banking & Trust Company, formerly known as Carroll County Bank and
Trust, seeking dismissal of the each count of an Amended Complaint
filed by Gerald Gesiorski, Dawn Gesiorski, and Lil' Bit of
Chicago.
Lil' Bit of Chicago, Inc., is a Pennsylvania business corporation
with a principal business address at 20 McKinley Avenue in
Hanover, York County, Pennsylvania. The Gesiorskis, residents of
Pennsylvania, were tenants by the entireties of a parcel known as
894 Hershey Heights Road, Penn Township, York County, and several
other properties identified in a mortgage. The Gesiorskis'
interest was subject to a mortgage lien given to BB&T, which was
the first lien on the Hershey Heights parcel in addition to being
the first lien on several of the Gesiorskis' other properties. The
mortgage lien secures a mortgage note which was executed
contemporaneously. It is dated Dec. 23, 1992 and is recorded in
York County. Lil' Bit of Chicago guaranteed the mortgage note.
In 1997, BB&T filed an action in assumpsit with confession of
judgment against the Gesiorskis and Lil' Bit of Chicago.
Plaintiffs each filed for Chapter 11 bankruptcy protection in the
United States Bankruptcy Court for the Middle District of
Pennsylvania that same year. During the pendency of the bankruptcy
proceedings, BB&T entered into a forbearance agreement with the
Gesiorskis. Both bankruptcies were later dismissed by the
Bankruptcy Court without discharging the BB&T mortgage debt.
In July 2003, BB&T filed a mortgage foreclosure action against the
Gesiorskis in the York County Court of Common Pleas. A hearing
for assessment of damages was conducted in May 2004, resulting in
a damages assessment of $349,793. Judgment for mortgage
foreclosure was entered in the face amount of $351,793, together
with interests and costs. A sheriff sale was conducted in
December 2004, and BB&T was the successful bidder with a bid
amount of $1,769. BB&T's purchase thus created a deficiency which
was not satisfied by the sale. BB&T did not commence an action
for deficiency judgment at any time after the sale.
In November 2007, the Plaintiffs filed a Praecipe for Writ of
Summons in the Court of Common Pleas, York County, Pennsylvania.
The writ was served on BB&T in February 2008. Thereafter, in
December 2009, counsel for the Plaintiffs made a written statutory
demand upon BB&T to satisfy the outstanding judgments and
mortgages. In April 2010, the Plaintiffs commenced an action in
the York County Court of Common Pleas to have the mortgages and
judgments marked satisfied and discharged. In July 2010, the
parties stipulated to an order in that matter which allowed either
party to have the mortgages and judgments marked satisfied.
In August 2010, the Gesiorskis provided documentation to the
Prothonotary of York County to have the judgments marked satisfied
and paid the filing fees in connection therewith. In October
2010, the Gesiorskis likewise provided documentation and paid
filing fees to the Recorder of Deeds of York County in connection
with satisfaction of the mortgages.
In February 2012, the Plaintiffs served a Complaint in the Court
of Common Pleas of York County. In March 2012, BB&T removed the
action to the District Court. In March 2012, BB&T filed its first
Motion to Dismiss, which was mooted by and terminated after the
filing of the Plaintiffs' First Amended Complaint. In Counts I
and IV, the Gesiorskis contend that the Defendant has failed to
satisfy the mortgage within 60 days of the presumptive receipt of
all sums due and owing to it in violation of the Mortgage
Satisfaction Act, 21 P.S. Sec.. 721-6(d). In Counts II, V, and
VII, all Plaintiffs seek liquidated damages pursuant to 42 Pa.C.S.
Sec. 8104 for the Defendant's failure to satisfy the judgments
within 30 days as required. And in Counts III, VI, and VIII, all
Plaintiffs seek an award of attorneys' fees for the Defendant's
"vexatious" conduct pursuant to 42 Pa.C.S. Sc. 2503(9) and 21 P.S.
Sec. 721-6(d).
In April 2012, BB&T sought dismissal of the Amended Complaint.
The case is GERALD GESIORSKI, DAWN GESIORSKI, and LIL' BIT OF
CHICAGO, INC., Plaintiffs, v. BRANCH BANKING & TRUST COMPANY,
f/n/a CARROLL COUNTY BANK & TRUST, Defendant, No. 1:12-CV-449
(M.D. Pa.). A copy of the Court's June 6, 2012 Memorandum is
available at http://is.gd/4cUVgyfrom Leagle.com.
LSP BATESVILLE: S&P Withdraws 'D' Ratings on $326MM Sr. Bonds
-------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'D' ratings on
U.S. electricity project LSP Batesville Funding Corp. "On Jan. 19,
2012, we lowered our rating on LSP Batesville Funding Corp.'s $150
million senior secured bonds due 2014 and $176 million senior
secured bonds due 2025 to 'D' from 'CC' following a missed debt
service payment of about $16.3 million on Jan. 17, 2012," S&P
said.
LSP MADISON: Moody's Rates $750MM Sr. Secured Term Loan at 'Ba2'
----------------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating to LSP Madison
Funding, LLC's $750 million senior secured term loan B due June
2019. The outlook is stable.
Proceeds of the term loan along with existing project level cash
will be used to recapitalize a portfolio of approximately 3,600 MW
of generating capacity. Proceeds of the term loan will principally
go toward repayment of approximately $319 million in existing
project level debt and fund a $384 million dividend to the
sponsor. The remaining proceeds will pay transaction fees and
expenses, swap breakage costs and to fund certain accounts. Total
consolidated leveraged incorporates $401 million in existing
project level debt.
Ratings Rationale
According to Moody's analyst, Charles Berckmann, "the assigned Ba2
rating reflects highly predictable contracted gross margins of
approximately 80% through mid-2016, low initial consolidated
leverage of $320/kW and meaningful sponsor-funded liquidity. This
helps mitigate substantial reliance on unknown merchant energy and
capacity payments beyond the 2016/2017 timeframe". According to
Berckmann, "the ability to reduce consolidated leverage by 60-70%
under extreme downside scenarios considered by Moody's
demonstrated the portfolio's robustness and is reflected in the
Ba2 rating, notwithstanding cash flow metrics more consistent with
high B-rated project financings under reasonable downside
scenarios".
The project incorporates typical project finance features such as
a cashflow waterfall of accounts administered by a collateral
agent, 100% cash flow sweep with allowance for tax distributions
post-debt service but prior to the cash sweep, a six-month non-
recourse debt service reserve fund LC, a 12-month look forward
major maintenance reserve funding mechanism, an independent
director and separateness covenants. Moody's notes the borrower is
able to sell any of its assets conditioned upon target term loan
reduction. "Based on our review of the provisions, the net result
is, at best, credit neutral given the potential loss of
operational diversification which appears to be offset by an
improvement in financial metrics", said Mr. Berckmann.
The generating facilities consist of eight generating projects
(nine units) including five peaking facilities totaling 2,170 MW
or roughly 60% of total megawatts, three combined cycle units
totaling 1,270 MW and 139 MW net ownership of a hydro facility.
The assets are located primarily in the Northeast, mid-Atlantic,
Midwest and California covering PJM, ISONE, CAISO and SERC market
regions. All of the assets have at least nine years of operating
history and are run by recognized operators in NAES, Wood Group
and NextEra Operating Services, and utilize commercially proven
technology such as Siemens, GE, and Pratt & Whitney combustion
turbines.
The stable outlook reflects near-term predictability of cash flows
and expectations of strong operating performance at the assets.
The rating could be revised upward if the borrower implemented
meaningful contracts on the non-contracted portion of the
portfolio resulting in substantially higher predictable cash flows
and improved cashflow metrics in the high "Ba" category or if debt
reduction occurs at levels significantly higher than scenarios
considered by Moody's.
The rating could face downward pressure should projects fail to
perform as expected which lowers cash flow metrics including
consolidated FFO/Debt falling below 10% or debt service coverage
falling below 1.5x on a sustained basis.
The ratings are predicated upon final documentation in accordance
with Moody's current understanding of the transaction and final
debt sizing consistent with initially projected credit metrics and
cash flows.
LSP Madison Funding, LLC is a holding company created by LS Power
for the purposes of recapitalizing a portion of its generation
business. These assets were acquired in four transactions
beginning in 2009. The assets are held in the LS Power's Fund II,
an approximate $3.1 billion fund. In aggregate between its Funds,
LS Power has acquired and operated over 15,000 MW of power
generation assets.
The principal methodology used in this rating was Power Generation
Projects published in December 2008.
M WAIKIKI: Marriott Claim Now Pegged at $20.6 Million
-----------------------------------------------------
Bankruptcy Judge Robert J. Faris amended his ruling estimating,
for purposes of voting and feasibility, Claim No. 79 filed by
Marriott Hotel Services, Inc. and Marriott International, Inc.
The judge said Marriott has a $20,665,787 against the estate.
Late last month, the judge pegged Marriott's claim at $18,473,805.
The Marriott claim includes $15,812,868 for the present value of
lost profits and $4,852,919 as reimbursement claim. A copy of the
Court's June 7, 2012 Amended Findings of Fact and Conclusions of
Law is available at http://is.gd/4r13M5from Leagle.com.
Marriott and the Debtor have filed competing plans in the case.
The bankruptcy judge was scheduled to hold confirmation trial
beginning June 1. If necessary, the confirmation trial would
continue June 4 to 8, and resume again July 9 to 13.
The hotel's plan would have the Davidson Family Trust from Incline
Village, Nevada, retain ownership.
Marriott is proposing a competing reorganization plan to wrest
control from the owners who are proposing to pay creditors in full
under their plan.
Third Amended Plan
M Waikiki LLC and the Davidson Family Trust dated Dec. 22, 1999,
as amended, filed a third amended plan of reorganization dated
June 4, 2012.
According to the Third Amended Plan, the Debtor will make
distributions required under the Plan, subject to the provisions
of the Plan. The sources of cash necessary for the Debtor to pay
allowed claims that are to be paid in cash by the Debtor under the
Plan will be: (a) the cash of the Debtor on hand as of the
effective date; (b) cash arising from the operation, ownership,
maintenance, and sale of the hotel and other assets owned, managed
and services by or at the direction of the Debtor on or after the
effective date; (c) cash in the approximate amount of
approximately $52.06 million to be provided to the Debtor by the
Davidson Trust on the effective date; (d) any cash generated or
received by the Debtor on or after the effective date from any
source, including, without limitation, any recoveries from the
prosecution of all causes of action; and (e) supplemental Marriott
Reserve.
A full-text copy of the Third Amended Plan is available for free
at http://bankrupt.com/misc/M_WAIKIKI_plan_3amendment.pdf
About M Waikiki
M Waikiki owns the Modern Honolulu, a world-class, luxury hotel
property located close to Waikiki Beach in Hawaii. The hotel is
being managed by Modern Management Services LLC, an affiliate of
Aqua Hotels and Resorts.
M Waikiki is a Hawaii limited liability company with its principal
place of business located in San Diego, California. It is a
special purpose entity, having roughly 75 indirect investors,
which was formed to acquire the Hotel.
The Company filed for Chapter 11 protection (Bankr. D. Hawaii Case
No. 11-02371) on Aug. 31, 2011. Judge Robert J. Faris presides
over the case. Patrick J. Neligan, Esq., and James P. Muenker,
Esq., at Neligan Foley LLP, in Dallas, Tex.; Simon Klevansky,
Esq., at Klevansky Piper, LLP, in Honolulu, Hawaii, are the
attorneys to the Debtor. Bickel & Brewer serves as special
litigation counsel. The Debtor tapped XRoads Solutions Group,
LLC, and Xroads Case Management Services, LLC, as its financial
and restructuring advisor. The Debtor disclosed $216,116,142 in
assets and $135,085,843 in liabilities as of the Chapter 11
filing.
Modern Management is represented by Christopher J. Muzzi, Esq.,
at Moseley Biehl Tsugawa Lau & Muzzi LLC.
Marriott Hotel Services, which used to provide management
services, is represented by Susan Tius, Esq., at Rush Moore LLP
LLP, and Carren B. Shulman, Esq., at Sheppard Mullin Richter &
Hampton LLP.
James A. Wagner, Esq., and Chuck C. Choi, Esq., at Wagner Choi &
Verbrugge, in Honolulu, serve as bankruptcy counsel for the
Creditors' Committee.
MERIT GROUP: National Patent Has Green Light to Withdraw Claim
--------------------------------------------------------------
Bankruptcy Judge Helen E. Burris granted the request of National
Patent Development Corporation to withdraw Proof of Claim Number
25-1 with prejudice, in the Chapter 11 case of The Merit Group
Inc. National Patent asserted a claim for $128,258. National
Patent is subject to a lawsuit filed Dec. 14, 2011, by the
Unsecured Creditors' Committee appointed in the case, captioned
Official Comm. of Unsecured Creditors v. Nat'l Patent Dev. Corp.,
et al., Adv. Pro. No. 11-80212-hb. The Lawsuit includes
allegations of fraudulent transfers and breach of fiduciary duty.
A copy of the Court's June 6, 2012 Order is available at
http://is.gd/lJOUzgfrom Leagle.com.
About The Merit Group
Based in Spartanburg, South Carolina, The Merit Group Inc.,
formerly Lancaster Distributing Company, served as one of the
leading paint sundries distributors in the United States. Its
markets also included Mexico, the Caribbean Islands, Central
America and South America.
Merit Group filed for Chapter 11 bankruptcy protection (Bankr. D.
S.C. Lead Case No. 11-03216) on May 17, 2011. Judge Helen E.
Burris presides over the case. Michael M. Beal, Esq., Elizabeth
(Lisa) J. Philp, Esq., Robin C. Stanton, Esq., and Michael H.
Weaver, Esq., at McNair Law Firm PA, represented the Debtors. The
Debtors selected Kurtzman Carson Consultants LLC as their claims
agent; and Morgan Joseph TriArtisan LLC, investment banker, and
Alvarez & Marsal North America, LLC, as financial advisors. Merit
Group disclosed $7,004,048 in assets and $66,609,946 in
liabilities as of the Chapter 11 filing.
DIP Lender Regions Bank was represented by lawyers at Nexsen Pruet
Jacobs & Pollard and Parker, Hudson, Rainer & Dobbs, LLP.
The Official Committee of Unsecured Creditors was represented by
Cole, Schotz, Meisel, Forman & Leonard, P.A. The Committee tapped
McCarthy Law Firm LLC as co-counsel, J.H. Cohn LLP as its
financial advisor.
On July 29, 2011, the Debtors consummated the sale of
substantially all of their assets to MG Distribution, LLC. The
Merit Group changed its name to TMG Liquidation Company following
the sale. MG Distribution LLC bought the business for
$44 million.
The Debtor's Chapter 11 liquidating plan was confirmed by the
Court on Dec. 16, 2011. The Committee was a co-proponent of the
Plan. The Plan provides certain payment terms for a class of
creditors, appoints J.H. Cohn, LLP, as Plan Administrator, and
provides separately that the Plan Administrator will pursue
lawsuit on behalf of creditors. The Plan Administrator hired
Cole, Schotz, Meisel, Forman & Leonard, P.A., and McCarthy Law
Firm, LLC, to prosecute causes of action on behalf of the estates.
NAVISTAR INTERNATIONAL: S&P Cuts Corporate Credit Rating to 'B+'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Navistar
International Corp., including the corporate credit rating to
'B+', from 'BB-'. At the same time, Standard & Poor's placed its
ratings on Navistar on CreditWatch with negative implications.
"The downgrade and CreditWatch placement reflect the company's
operational and financial setbacks in recent months," said
Standard & Poor's credit analyst Sol Samson.
"Quality issues relating to the frequency of large engine repairs
are worse than previously expected. EPA certification of
Navistar's engines with respect to emissions standards is taking
longer than anticipated. And even the usually reliable parts
business declined substantially," S&P said.
"Fiscal first-half before-tax results (as reported) dropped to a
loss from the first half of fiscal 2011, which we already
considered anemic. Funds from operations for the company's first
half were also negative," S&P said.
"Although Navistar has a historical pattern of better performance
in its second half, given the poor year-to-date performance, we
consider it increasingly unlikely that Navistar can avoid a full-
year loss," Mr. Samson said. "Deteriorating industry demand--
highlighted by increasing cancellation of existing orders--will
only exacerbate Navistar's company-specific challenges."
"The ratings on Navistar are on CreditWatch with negative
implications, pending discussions with the company's executives
regarding their strategies for reversing the recent trends.
Standard & Poor's expects that its additional review could occur
within the next few weeks," S&P said.
NEWELL RUBBERMAID: Moody's Affirms Ba1 Subordinated Debt Rating
---------------------------------------------------------------
Moody's Investors Service assigned a Baa3 rating to Newell
Rubbermaid, Inc.'s $500 million proposed offering of senior
unsecured notes. Moody's also affirmed Newell's Baa3 senior
unsecured rating and Prime-3 short-term rating. The outlook is
stable.
The offering is comprised of two separate equal notes with one
maturing in three years and the other due in 10 years. More than
$420 million of the proceeds will be used to repay the senior
subordinated notes with the remainder used to repay outstanding
short term borrowings. The Ba1 rating on the subordinated notes is
affirmed, but will be withdrawn when repaid. "Although this
transaction accelerates Newell's debt maturity profile, it will
save them more than $3 million in interest in 2012 and $8 million
a year for the next three years," said Kevin Cassidy, Senior
Credit Officer at Moody's Investors Service.
The following ratings were assigned:
$250 million senior unsecured notes due June 2015, rated Baa3;
$250 million senior unsecured notes due June 2022, rated Baa3;
The following ratings were affirmed:
Senior unsecured rating of Baa3;
Commercial paper rating of Prime-3;
The following ratings were affirmed but will be withdrawn when
repaid:
Subordinated debt rating of Ba1
Ratings Rationale
Newell's Baa3 rating reflects its good scale with revenue just
under $6 billion, broad portfolio of products that target
different price points, well-known brands, modest but growing
international presence, earnings growth expected in part from its
strategic realignment ("Project Renewal") and good operating
efficiency and earnings. The rating also reflects modest credit
metrics with EBITA margins over 12% and debt to EBITDA around 3.5
times. Moody's believes that credit metrics will improve in 2012
and beyond because of the benefits associated with Project Renewal
with debt to EBITDA approaching 3 times and retained cash flow to
net debt staying around 20%. The ratings are constrained by the
risks associated with the continuing macro economic uncertainty,
especially in Europe, which generates more than 10% of total
revenue.
The stable outlook reflects Moody's belief that the company's
revenue and earnings growth will be modest in 2012, but will
improve in 2013 and beyond, and that credit metrics will get
better as the company's earnings grow and it pays down debt. The
outlook also reflects Moody's expectation that the company will
refinance/repay the $500 million notes due in April 2013 well
before the maturity date.
The ratings could be upgraded if earnings grow more than Moody's
expects and the company repays debt resulting in better than
expected credit metrics. For example, debt to EBITDA (currently
over 3.5 times) would need to be sustained below 3 times and
retained cash flow to net debt (presently around 20%) should
approach 25%. For the debt to EBITDA upgrade threshold to be met,
EBITDA needs to increase by about $200 million from March 2012 LTM
levels or debt needs to decrease by around $640 million March 2012
levels.
The ratings could be downgraded if macroeconomic concerns
intensify and severely constrain consumer demand and damage
Newell's earnings. This could delay the company's plans to repay
debt and expand in emerging markets and its credit metrics would
suffer. Key credit metrics driving a potential downgrade would be
debt to EBITDA sustained around 4 times, low double digit retained
cash flow to net debt or single digit operating margins (EBITA to
revenue). In order for debt to EBITDA to rise above 4 times,
EBITDA needs to decrease by about $85 million from March 2012 LTM
levels or debt needs to increase by approximately $500 million
from March 2012 levels.
Subscribers can find further details in the Newell Rubbermaid
Credit Opinion published on Moodys.com.
The principal methodology used in this rating was the Global
Consumer Durables published in October 2010.
Newell Rubbermaid Inc., based in Atlanta, Georgia, is a global
marketer of consumer and commercial products utilized in the home,
office and commercial segments, with brands including Rubbermaid,
Sharpie and Dymo, as well as baby and youth products sold under
the Graco brand. Other key brands include Paper Mate, EXPO,
Waterman, Parker, Irwin, Lenox, Levolor and Goody. Revenue for the
twelve months ended March 31, 2012 was approximately $6 billion.
NIFTUS LLC: Files for Chapter 11 in Roanoke, Va.
------------------------------------------------
Niftus, LLC, filed a bare-bones Chapter 11 petition (Bankr. W.D.
Va. Case No. 12-71123) on June 11 in Roanoke, Virginia.
Niftus, a management consulting services provider from Bluefield,
Virginia, estimated assets of up to $50 million and debts of less
than $10 million.
On the petition date, the Debtor filed an application to employ
Robert T. Copeland and the law firm of Copeland & Bieger, P.C., as
counsel.
First Century Bank, N.A.'s counsel has filed a notice of
appearance in the Chapter 11 case.
NIFTUS LLC: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Niftus, LLC
P.O. Box 1046
Bluefield, VA 24605
Bankruptcy Case No.: 12-71123
Chapter 11 Petition Date: June 11, 2012
Court: U.S. Bankruptcy Court
Western District of Virginia (Roanoke)
Judge: William F. Stone Jr.
Debtor's Counsel: Robert Tayloe Copeland, Esq.
COPELAND & BIEGER, P.C.
P.O. Box 1296
Abingdon, VA 24212
Tel: (276) 628-9525
Fax: (276) 628-4711
E-mail: rcopeland@copelandbieger.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Company did not file a list of creditors together with its
petition.
The petition was signed by Charles P. Sutphin, managing member.
ODYSSEY IX: Stichter Riedel Approved as Bankruptcy Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
according to Odyssey (IX) DP I LLC's case docket, authorized the
Debtor to employ Stichter, Riedel, Blain & Prosser, P.A, as
bankruptcy counsel.
As reported in the Troubled Company Reporter on Jan. 3, 2012,
Edward J. Peterson, Esq., an attorney at the firm, disclosed that
Stichter Riedel received $200,000 from the Debtor on account of
prepetition services and as retainer for postpetition services.
Mr. Peterson attests that neither the firm nor its attorneys has
any connection with non-insider creditors of the Debtor, other
parties-in-interest, or their attorneys, and neither Stichter
Riedel nor its attorneys represent any interest adverse to the
Debtor or to the estate with respect to the matters upon which it
is to be employed by the Debtor.
About Odyssey (IX) DP I LLC
Lakeland, Florida-based Odyssey (IX) DP I LLC, owns the Ocean
Breeze Plaza, a shopping center in Jensen Beach Florida. Odyssey
(IX) DP I filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case
No. 11-22952) on Dec. 16, 2011, after its lender, U.S. Bank N.A.
declared a default on a $16 million construction loan. Judge
Catherine Peek McEwen presides over the case. Edward J. Peterson,
III, Esq., at Stichter, Riedel, Blain & Prosser PA, in Tampa,
Florida, serves as the Debtor's counsel. William Maloney and Bill
Maloney Consulting serves as chief restructuring officer. The
Debtor disclosed $20,318,253 in assets and $15,911,155 in
liabilities as of the Chapter 11 filing. The petition was signed
by Robert Madden, president of OC DIP LLC, the Debtor's manager.
Affiliates that previously filed separate Chapter 11 petitions are
Century/AG - Avondale LLC, Odyssey Properties III LLC, Century
(III) DP III LLC, Odyssey (III) DP III LLC, Odyssey (VI)
Commercial DP I LLC, Odyssey (III) DP IX LLC, Odyssey (III) DP III
LLC, and Odyssey DP III LLC.
OMAR BOTERO-PARAMO: BoNY Loses Subrogation Case in 4th Circuit
--------------------------------------------------------------
Sutton Funding LLC sued Tysons Financial, LLC, on Aug. 17, 2009,
during the pendency of Omar Botero-Paramo's bankruptcy. Sutton
sought to have the bankruptcy court either declare that its lien
against some of Mr. Botero-Paramo's property had priority over
Tysons's lien or to subrogate its lien into a prior position. As
reported by the Troubled Company Reporter on Feb. 9, 2011, the
bankruptcy court granted summary judgment and awarded attorneys'
fees in favor of Tysons. Bank of New York Mellon Trust Company,
N.A., which had by then purchased Sutton's interest in the
property, appealed both the bankruptcy court's grant of summary
judgment and its award of attorneys' fees in the U.S. District
Court for the Eastern District of Virginia. The district court
affirmed, and the appeal to the U.S. Court of Appeals for the
Fourth Circuit ensued.
In an opinion dated June 8, 2012, available at http://is.gd/wiQbXY
from Leagle.com, the Fourth Circuit said it agrees with the
bankruptcy court that because Tysons's lien was recorded before
BONY's, Tysons's lien has priority over BONY's unless BONY can
show that it is entitled to assume a prior position through
subrogation. The Fourth Circuit also said BONY has already
received more from the sale of the Debtors' property than it paid
for Sutton's interest, so the appeals Court finds no basis for
finding that the equities strongly favor BONY. The appeals court
held the bankruptcy court properly granted summary judgment in
favor of Tysons on BONY's claim for subrogation.
Counsel for BONY Mellon is David H. Cox, Esq., at JACKSON &
CAMPBELL, P.C. Counsel for defendants Tysons Financial, LLC, and
Steven A. Michael, PLLC, Trustee, is, Jennifer Larkin Kneeland,
Esq., at LINOWES & BLOCHER LLP.
The Circuit Court appeal BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., Plaintiff-Appellant, v. TYSONS FINANCIAL, LLC, Defendant-
Appellee, No. 11-1886 (4th Cir.).
Omar Botero-Paramo filed a voluntary Chapter 11 petition (Bankr.
E.D. Va. Case No. 08-17639) on Dec. 5, 2008. His wife, Maritza
Urdinola, filed her own chapter 11 petition on Aug. 3, 2009. They
owned two pieces of real property: 10447 New Ascot Drive, Great
Falls, Virginia; and 10511 Lawyers Road, Vienna, Virginia. A plan
has not yet been confirmed in either case, and the outcome of the
BONY Mellon litigation will determine, not only which of the
competing noteholders is entitled to payment from sales proceeds
that were escrowed in connection with a sale approved by the
Bankruptcy Court, but also which of the two has an unsecured claim
against the Debtors for the purpose of voting on a plan and
receiving distributions.
PERPETUAL ENERGY: S&P Cuts Corporate Credit Rating to 'B-'
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term corporate
credit ratings on Calgary, Alta.-based Perpetual Energy Inc. to
'B-' from 'B'. The outlook is negative. At the same time, Standard
& Poor's affirmed its 'B-' senior unsecured debt ratings on the
company, and revised its recovery rating on the notes to '4' from
'5'. "The '4' recovery rating reflects our expectation of average
(30%-50%) recovery in the event of a default," S&P said.
"The downgrade reflects our expectation that Perpetual's cash flow
will continue to deteriorate through 2012, due to sustained weak
natural gas prices, lack of high-priced gas hedges, and the
company's high leveraged costs," said Standard & Poor's credit
analyst Aniki Saha-Yannopoulos. "We are also aware that with
lowering natural gas liquids (NGL, especially the lighter end of
the barrel) prices, Perpetual will not be able to benefit from
liquids production as we had originally expected. At our price
deck, we expect the company to exit 2012 with debt-to-EBITDAX
about 7.3x and less-than-adequate liquidity. In addition, any
further reduction in the borrowing facility might stress the less-
than-adequate liquidity," Ms. Saha-Yannopoulos added.
"The revised recovery rating reflects our view of Perpetual's
reduced borrowing base (not rated) to C$140 million from C$170
million in April 2012. Because the senior ranking credit facility
now accounts for a lesser portion of our estimated enterprise
value, we believe there would be more potential recovery available
to the unsecured debtholders at the time of default," S&P said.
"The ratings on Perpetual reflect Standard & Poor's view of the
company's vulnerable business risk profile and highly leveraged
financial risk profile (as per our criteria). The ratings also
reflect what Standard & Poor's views as Perpetual's weak credit
measures, small and limited reserve base, meaningful exposure to
low natural gas prices, high-cost structure, and less-than-
adequate liquidity. As of March 31, 2012, the company had about
C$700 million in adjusted debt, which includes adjustments for
convertible debentures and asset-retirement obligations," S&P
said.
"Perpetual is a small exploration and production company with most
of its shallow gas production from Alberta. The company is
spending its 2012 capex on liquids play, especially the Mannville
heavy oil play. As of Dec. 31, 2011, the company had a reserve
base of 235 billion cubic feet equivalent and an average
production of 142.3 million cubic feet a day," S&P said.
"The negative outlook reflects Standard & Poor's concerns
regarding Perpetual's expected liquidity position during our 12-
month forecast period. Specifically, our cash flow and spending
forecasts for the company include our expectations that
Perpetual's debt-to-EBITDAX ratios will continue to deteriorate
through 2013 and the company's liquidity will remain less than
adequate. In particular, we believe that weak gas and NGL prices
could strain liquidity significantly. A further negative rating
action could occur if Perpetual's net liquidity decreases below
C$40 million on a sustained basis. Based on our 2013 forecast, we
have estimated this minimum liquidity requirement (C$40 million)
to be the funding shortfall for the year, because Perpetual will
generate about C$70 million in EBITDA but we expect fixed charges
to be higher at about C$110 million (capex and interest expenses)
in 2013. We would consider revising the outlook to stable if
Perpetual's debt-to-EBITDAX improves above 5.5x. This would be
possible if the company improves its cash flow through either
increasing its liquids production materially higher than forecast,
or generating revenues above C$80 per barrel for liquids. However,
given our assumptions about its near-term prospects, we believe
Perpetual will likely be challenged to improve its financial
measures within the next 12-18 months," S&P said.
PHILADELPHIA ORCHESTRA: Judge Frank Sets June 28 Plan Hearing
-------------------------------------------------------------
Peter Dobrin at Inquirer reports that Judge Eric L. Frank on
Monday said he would approve a timeline to bring Philadelphia
Orchestra Association before the court again on June 28, 2012, for
a confirmation hearing.
According to the report, because of the "aggressive scheduling,"
Judge Frank said, any objections to the orchestra's reorganization
plan would have to be heard at the confirmation hearing, which
could take a day or two. The judge, after reviewing a list of
procedural concerns, said he was approving the quicker-than-usual
schedule in recognition of the case's notoriety, suggesting that
any interested parties were already aware of the bankruptcy.
Ballots approving or objecting the plan are being sent to
creditors and are due back by June 26.
The report relates Lawrence G. McMichael, the orchestra's chief
bankruptcy lawyer, said he expected no objections. Judge Frank
said he agreed with the orchestra's argument that there was little
reason to believe that "any major dissident faction" would
surface.
The report notes the orchestra has spent 14 months negotiating new
contracts in an effort to reduce its operating costs. After
contentious talks with musicians, a new concessionary labor
agreement was reached. A merger in process with Peter Nero and
the Philly Pops was halted, and the groups split. The orchestra
withdrew its participation in the national musicians' pension fund
and moved participants to a defined-contribution plan. A new
lease agreement was agreed to by the orchestra's landlord for
Verizon Hall, the Kimmel Center. A new donor agreement between
the orchestra and the Annenberg Foundation (the orchestra's most
generous donor) was crafted.
The report says lawyers from these groups attended -- or in the
case of the Annenberg Foundation, listened -- at the June 11
hearing.
The report relates, in presenting his argument for an expedited
exit from bankruptcy, Mr. McMichael said the association wanted
creditors paid as soon as possible and to avoid an additional
month of legal and other professional fees.
About Philadelphia Orchestra
The Philadelphia Orchestra -- http://www.philorch.org/-- claims
to be among the world's leading orchestras. Bloomberg News says
the orchestra became the first major U.S. symphony to file for
bankruptcy protection, surprising the music world.
Previous conductors include Fritz Scheel (1900-07), Carl Pohlig
(1907-12), Leopold Stokowski (1912-41), Eugene Ormandy (1936-80),
Riccardo Muti (1980-92), Wolfgang Sawallisch (1993-2003), and
Christoph Eschenbach (2003-08). Charles Dutoit is currently chief
conductor, and Yannick Nezet-Seguin has assumed the title of music
director designate until he takes up the baton as The Philadelphia
Orchestra's next music director in 2012.
The Philadelphia Orchestra Association, Academy of Music of
Philadelphia, Inc., and Encore Series, Inc., filed separate
Chapter 11 petitions (Bankr. E.D. Pa. Case Nos. 11-13098 to
11-13100) on April 16, 2011. Judge Eric L. Frank presides over
the case. The Philadelphia Orchestra Association is being advised
by Dilworth Paxson LLP, its legal counsel, and Alvarez & Marsal,
its financial advisor. Curley, Hessinger & Johnsrud serves as its
special counsel. Philadelphia Orchestra disclosed $15,950,020 in
assets and $704,033 in liabilities as of the Chapter 11 filing.
Encore Series, Inc., tapped EisnerAmper LLP as accountants and
financial advisors.
Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed
seven members to the official committee of unsecured creditors in
the Debtors' case. Reed Smith LLP serves as the Committee's
counsel.
The orchestra postpetition signed a new contract with musicians
and authority to terminate the existing musicians' pension plan.
PILGRIM'S PRIDE: Texas Appeals Court Remands Henderson Ruling
-------------------------------------------------------------
Jerry R. Henderson alleges that his signature was forged in a
settlement of one of his claims and, therefore, a purportedly
agreed motion to dismiss was granted without his knowledge,
consent, or participation. He appeals the dismissal with
prejudice of the Estate of Melchor Guerrero and Texas Farm Bureau
Casualty Insurance Company. Mr. Henderson had sued the Estate,
Texas Farm, Pilgrim's Pride Corporation, and Leonardo Campos
Serafin for claims arising out of a multiple vehicle traffic
accident. In February 2010, Mr. Henderson's attorney filed a
joint motion to dismiss the Estate and Texas Farm pursuant to a
settlement agreement. The trial court dismissed the claims
against the Estate and Texas Farm with prejudice, leaving pending
the claims against Pilgrim's Pride and Mr. Serafin. The dismissals
were not severed from the pending claims. On Aug. 30, 2011, Mr.
Henderson filed a motion to set aside the orders of dismissal
alleging that his attorney had failed to give him notice of the
dismissal, that he had not consented to the settlement agreements
or the dismissals, that his signature had been forged on the
settlement agreement, and that he had not received any settlement
proceeds or otherwise ratified the agreement. On Oct. 14, 2011,
the trial court denied the motion, finding it lacked jurisdiction
to set aside the dismissal orders. On Nov. 2, 2011, the trial
court severed the dismissals from the pending claims against
Pilgrim's Pride and Mr. Serafin.
In his appeal, Mr. Henderson argues the trial court erred in
concluding it lacked plenary jurisdiction over parties that were
dismissed with prejudice when the dismissals were not severed from
the unadjudicated causes of action. He also argues the trial
court erred in not setting aside the dismissals.
Because the trial court had jurisdiction over the dismissals and
the record has not been fully developed, the Court of Appeals of
Texas, Sixth District, Texarkana, reversed and remanded for
further proceedings.
The case is JERRY R. HENDERSON, Appellant, v. SOUTHERN FARM BUREAU
INSURANCE COMPANY, ET AL., Appellees, No. 06-12-00014-CV (Tex.
App. Ct.). A copy of the June 8, 2012 Opinion by the Court of
Appeals of Texas, Sixth District, Texarkana, is available at
http://is.gd/6wKpabfrom Leagle.com.
About Pilgrim's Pride
Pilgrim's Pride Corporation -- http://www.pilgrimspride.com/-- is
one of the largest chicken companies in the United States, Mexico
and Puerto Rico. The Company's fresh chicken retail line is sold
throughout the US, throughout Puerto Rico, and in the northern and
central regions of Mexico. The Company exports commodity chicken
products to 90 countries. The Company operates feed mills,
hatcheries, processing plants and distribution centers in 15 U.S.
states, Puerto Rico and Mexico.
Pilgrim's Pride and six of its subsidiaries filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. N.D. Tex. Lead Case No. 08-45664) on Dec. 1, 2008. The
Company's subsidiaries in Mexico and certain subsidiaries in the
United States were not included in the filing and operated outside
of the Chapter 11 process.
Attorneys at Weil, Gotshal & Manges LLP served as bankruptcy
counsel. Lazard Freres & Co., LLC, was the Company's investment
bankers. Kurtzman Carson Consulting LLC served as claims and
notice agent. Kelly Hart and Brown Rudnick represented the
official equity committee. Attorneys at Andrews Kurth LLP
represented the official committee of unsecured creditors.
On Dec. 10, 2009, the Bankruptcy Court confirmed the Joint Plan of
Reorganization filed by the Debtors. The Plan was premised on the
sale of the business to JBS SA. Under the Plan, creditors are
paid in full. Existing owners retained 34% of the equity. The
Company emerged from Chapter 11 on Dec. 28, 2009.
POLYPORE INTERNATIONAL: S&P Rates $450MM Senior Debt 'BB'
---------------------------------------------------------
Standard & Poor's Ratings Services assigned a 'BB' issue rating to
North Carolina-based Polypore International Inc.'s proposed $450
million senior secured credit facility. The facility comprises a
$150 million revolver and a $300 million term loan A, both due
2017. Standard & Poor's assigned the facility a '1' recovery
rating indicating very high recovery (90%-100%) in a payment
default scenario. Polypore plans to use proceeds of the term loan
and revolver to pay down its existing term loan B.
"At the same time, we are placing our rating on Polypore's $365
million senior notes due 2017 on CreditWatch with positive
implications pending the completion of the proposed refinancing,"
S&P said.
"If the transaction closes as we expect, we likely would raise the
issue rating and revise the recovery rating on the note upward, to
reflect improved recovery prospects for the senior debt," said
Standard & Poor's credit analyst Carol Hom.
"The ratings on Polypore reflect the Charlotte, N.C.-based
filtration manufacturer's 'aggressive' financial risk profile and
its 'weak' business risk profile. The company's credit measures
are stronger than our expectations for the 'B+' corporate credit
rating, and we expect steady revenue and profit growth in its
business segments this year. However, high capital spending
currently constrains free cash flow generation, and a portion of
the company's future business prospects depends on customers
acceptance of new battery technology, the rate of which remains
uncertain," S&P said.
"Polypore is one of three major manufacturers operating in the
niche battery separator business. Polypore manufactures separators
for lead-acid and lithium batteries (accounting for slightly more
than two-thirds of revenues) primarily for transportation,
industrial, and consumer applications. It also manufactures
filtration membranes for various health care applications as well
as industrial processes," S&P said.
PRM REALTY: Has OK to Hire NHB Advisors as Financial Advisor
------------------------------------------------------------
PRM and PRM Realty Group, LLC, obtained permission from the U.S.
Bankruptcy Court for the Northern District of Texas to employ NHB
Advisors, Inc., as financial advisor.
As reported by the Troubled Company Reporter on May 14, 2012, NHB
will, among other things, assist in review and analysis of
proposed transactions for which the Debtors seek court approval.
About PRM Realty Group
Chicago, Illinois-based PRM Realty Group, LLC, filed for Chapter
11 bankruptcy protection (Bankr. N.D. Tex. Case No. 10-30241) on
Jan. 6, 2010. The Company's affiliates -- Peter R. Morris; Bon
Secour Partners, LLC; PM Transportation, LLC; Rangeline
Properties, LLC; PRS II, LLC; and Morris Radio Enterprises, LLC --
filed separate Chapter 11 bankruptcy petitions. Gerrit M.
Pronske, Esq., at Pronske & Patel, P.C., serves as bankruptcy
counsel to the Debtors. PRM Realty disclosed $34.05 million in
assets and $225.6 million in liabilities as of the Petition Date.
No committee of unsecured creditors has been appointed.
QUALTEQ INC: Can Use Amalgamated Bank Cash Collateral
-----------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
has entered a revised agreed amended final order authorizing
Qualteq, Inc., et al., to use the cash collateral in which
Amalgamated Bank of Chicago asserts an interest.
The motion has been agreed to in form and substance by both
Amalgamated Bank of Chicago and the Official Committee of
Unsecured Creditors appointed in the Debtors' Chapter 11 cases.
The parties have agreed to revise the Amended cash collateral
order to:
1) include an approved extended budget until June 15, 2012;
2) memorialize ABOC's acknowledgment that its prepetition liens
do not extend to certain assets and their respective
proceeds, if any;
3) extend the Committee's deadline with respect to the
prepetition ABOC liens on certain assets to the effective
date of any plan of reorganization that is confirmed by an
order of the Bankruptcy Court in the Chapter 11 Cases; and
4) incorporate the terms of the amended cash collateral order
As of the Petition Date, the principal amount outstanding from
Fulfillment Xcellence, Inc., and Versatile Card Technology, Inc.
(Cash Collateral Debtors) to ABOC was $3,983,982, plus accrued and
accruing interest, fees and costs. Also as of the Petition Date,
the total combined eligible collateral (excluding the pledged real
estate) under the Borrowing Base was $6,447,559, placing ABOC in
an oversecured position.
To secure the amount outstanding, pursuant to the CSAs, the Cash
Collateral Debtors each granted ABOC a first priority security
interest in substantially all of the Cash Collateral Debtors'
assets. To further secure the amount outstanding, FXI entered
into a Commercial Pledge Agreement pursuant to which it pledged
all of its rights and interests in two promissory notes, the first
for $150,000 from Unique Embossing Services and the second for
$970,000 from VCT.
About QualTeq Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, serve as local counsel to the
Debtors. K&L Gates LLP is the general bankruptcy counsel.
Eisneramper LLP is the accountants and financial advisors.
Scouler & Company is the restructuring advisors. Lowenstein
Sandler PC is counsel to the Committee. Avadamma LLC disclosed
$38,491,767 in assets and $36,190,943 in liabilities as of the
Petition Date.
As reported in the Troubled Company Reporter on Feb. 23, 2012,
Bankruptcy Judge Kevin J. Carey in Delaware granted the request of
Bank of America, N.A., to transfer the venue of the Chapter 11
cases of Qualteq, Inc., et al., to the U.S. Bankruptcy Court for
the Northern District of Illinois.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed four
unsecured creditors to serve on the Official Committee of
Unsecured Creditors.
QUALTEQ INC: Can Enter Into $38MM Bayside Vmark Exit Financing
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
authorized Qualteq, Inc., et al. to:
a) enter into a commitment letter with respect to exit
financing to be provided by Bayside Vmark Funding, LLC;
b) pay deposit and certain fees in connection therewith; and
c) honor all other obligations thereunder.
The Debtors explained that obtaining exit financing is a key
milestone in their successful emergence from bankruptcy and
consummation of the transactions contemplated under the Plan.
Under the Commitment Letter and the term sheet, Bayside has agreed
to provide the Debtors with exit financing consisting of a term
loan facility in the amount of up to $38 million.
The Exit Facility will be used to satisfy all obligations of and
claims against the Debtors, including without limitation:
(i) approximately $10 million of prepetition bank debt; (ii)
$10 million of prepetition unsecured claims; (iii) administrative
expense claims; (iv) transaction expenses; and (v) potential
fraudulent transfer liability.
The material terms of the Exit Facility include:
-- The Debtors agree to pay or reimburse Bayside for all
reasonable and documented expenses.
-- The Debtors agree that in the event they, or any of their
subsidiaries or their advisors or representatives, receives
any offer or proposal, whether oral or written, with respect
to the arrangement, sale, solicitation, syndication, or
issuance of any credit facilities, equity, or debt security,
they will promptly inform Bayside of the terms thereof.
-- The Commitment Letter further requires that and the Debtors
agree that the order entered by the Court authorizing the
Debtors to enter into the Commitment Letter, to pay the
Deposit, and to honor their other obligations under the
Commitment Letter will provide that all due diligence by
Bayside or at the direction of Bayside in connection with
the Senior Credit Facility and the other Transactions and
all Financing Documentation, whether in draft or final form,
shall be and remain the exclusive property of Bayside
without the Debtors having any rights to the information
until the Closing Date, regardless of whether the costs and
expenses incurred in connection with the due diligence and
Financing Documentation are reimbursed by the Debtors.
About QualTeq Inc.
South Plainfield, New Jersey-based QualTeq, Inc., engages in the
design, manufacture, and personalization of plastic cards in the
United States. The company manufactures magnetic, contact, and
dual interface smart cards.
Qualteq Inc. and 17 affiliated companies filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12572) on
Aug. 14, 2011. Eric Michael Sutty, Esq., and Jeffrey M. Schlerf,
Esq., at Fox Rothschild LLP, serve as local counsel to the
Debtors. K&L Gates LLP is the general bankruptcy counsel.
Eisneramper LLP is the accountants and financial advisors.
Scouler & Company is the restructuring advisors. Lowenstein
Sandler PC is counsel to the Committee. Avadamma LLC disclosed
$38,491,767 in assets and $36,190,943 in liabilities as of the
Petition Date.
As reported in the Troubled Company Reporter on Feb. 23, 2012,
Bankruptcy Judge Kevin J. Carey in Delaware granted the request of
Bank of America, N.A., to transfer the venue of the Chapter 11
cases of Qualteq, Inc., et al., to the U.S. Bankruptcy Court for
the Northern District of Illinois.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed four
unsecured creditors to serve on the Official Committee of
Unsecured Creditors.
RALPH ROBERTS: Court Won't Reschedule Sec. 341 Meeting
------------------------------------------------------
Bankruptcy Judge Thomas J. Tucker denied two motions jointly filed
by several creditors seeking (i) to reschedule or continue the
First Meeting of Creditors under 11 U.S.C. Sec. 341; and (ii)
expedited hearing on the request.
The Court said the setting of the date and time of the Sec. 341
first meeting of creditors, and whether to continue or conclude
the first meeting of creditors, are matters within the discretion
of the United States Trustee, subject to the time constraints
imposed on the United States Trustee by Fed.R.Bankr.P. 2003(a) and
the notice requirement of Fed.R.Bankr.P. 2002(a)(1). The Court
will not interfere with the U.S. Trustee's discretion in these
matters, except in extraordinary circumstances, which the
creditors have not demonstrated. The Court also held that, if the
creditors' counsel of choice cannot attend the Sec. 341 first
meeting of creditors, the creditors have available a completely
adequate remedy, in the form of (a) in order to fully question the
Debtors, the ability to conduct a Fed.R.Bankr.R. 2004 examination
of the Debtors, at a date and time that is mutually convenient for
creditors' counsel and the Debtors' counsel; and (b) to learn what
transpires at the Sec. 341 first meeting, the ability to send
other counsel to make notes of the questions and answers made at
the Sec. 341 meeting, and if desired the ability to obtain a
transcript of the Sec. 341 meeting.
A copy of the Court's June 5, 2012 Opinion and Order available at
http://is.gd/CHFcuGfrom Leagle.com.
About Ralph Roberts
Ralph Roberts and his namesake firm, Ralph Roberts Realty LLC, in
Sterling Heights, Michigan, filed for Chapter 11 bankruptcy
(Bankr. E.D. Mich. Case No. 12-53023) on May 25, 2012. Ralph
Roberts is a Clinton Township realtor who owns the giant nail from
the iconic Uniroyal tire near Detroit Metropolitan Airport.
According to Detroit News, the bankruptcy filing followed years of
disputes with real estate investors and fallout from a 2004
indictment stemming from the federal probe of Macomb County
Prosecutor Carl Marlinga.
Judge Thomas J. Tucker presides over the case. Hannah Mufson
McCollum, Esq., and John C. Lange, Esq., at Gold, Lange & Majoros,
PC, serve as the Debtors' counsel. Mr. Roberts listed more than
$1.86 million in assets and $73.2 million in liabilities in his
own Chapter 11 petition. The real estate firm scheduled assets of
$1,520,232 and liabilities of $108,381.
RIDGE MOUNTAIN: Hiring Harris Beach as Bankruptcy Counsel
---------------------------------------------------------
Ridge Mountain LLC seeks Bankruptcy Court permission to employ
Harris Beach PLLC as its Chapter 11 counsel. The attorneys likely
to work on the case and their normal hourly rates are:
Lee W. Woodard, Esq. $375
David M. Capriotti, Esq. $375
Wendy A. Kinsella, Esq. $375
Kevin W. Tompsett, Esq. $310
Kelly C. Griffith, Esq. $275
Paralegals $125
The firm attests it is disinterested in accordance with the
provisions of the Bankruptcy Code.
About Ridge Mountain
Ridge Mountain LLC filed a Chapter 11 petition (Bankr. N.D.N.Y.
Case No. 12-31090) in Syracuse on June 4, 2012. Ridge Mountain
operates that Mountain Brook Apartments in Chattanooga, Tennessee,
and the Ridgemont Apartments in Red Bank, Tennessee. Ridge
Mountain disclosed $16.5 million in assets and $23.6 million in
liabilities. The apartment secures a $22 million debt to U.S.
Bank, N.A.
Judge Margaret M. Cangilos-Ruiz presides over the case. Lee E.
Woodard, Esq., at Harris Beach PLLC, serves as the Debtor's
counsel. The petition was signed by Patrick Phelan, president of
First Salina Prop., managing member.
RIDGE MOUNTAIN: Sec. 341 Creditors' Meeting Set for July 5
----------------------------------------------------------
The U.S. Trustee for Region 2 will convene a meeting of creditors
under 11 U.S.C. Sec. 341(a) in the Chapter 11 case of Ridge
Mountain LLC on July 5, 2012, at 10:00 a.m. at First Meeting
Utica.
Proofs of claim are due Dec. 1, 2012. Government proofs of claim
are due by Dec. 3, 2012.
About Ridge Mountain
Ridge Mountain LLC filed a Chapter 11 petition (Bankr. N.D.N.Y.
Case No. 12-31090) in Syracuse on June 4, 2012. Ridge Mountain
operates that Mountain Brook Apartments in Chattanooga, Tennessee,
and the Ridgemont Apartments in Red Bank, Tennessee. Ridge
Mountain disclosed $16.5 million in assets and $23.6 million in
liabilities. The apartment secures a $22 million debt to U.S.
Bank, N.A.
Judge Margaret M. Cangilos-Ruiz presides over the case. Lee E.
Woodard, Esq., at Harris Beach PLLC, serves as the Debtor's
counsel. The petition was signed by Patrick Phelan, president of
First Salina Prop., managing member.
RIVERS PITTSBURGH: Moody's Upgrades CFR to 'B3'; Outlook Stable
---------------------------------------------------------------
Moody's Investors Service upgraded Rivers Pittsburgh Borrower,
L.P.'s (formerly known as Holdings Gaming Borrower, L.P.)
Corporate Family Rating and Probability of Default Rating to B3
from Caa1. Rivers Pittsburgh Borrower, L.P.'s ("RPB") $15.0
million senior secured revolver rating and $185 million first lien
term loan rating were both upgraded to Ba3 from B1. The company's
$275 million second lien senior secured notes were upgraded to B3
from Caa1. This rating action concludes the review process that
was initiated on May 22, 2012. The rating outlook is stable.
The upgrade of RPB's Corporate Family Rating to B3 from Caa1
reflects the recent closing of the company's $200 million senior
secured bank facilities and $275 million senior secured notes
which: (1) provides the company with a lower overall cost of
capital due to the elimination of the high coupon (27.5%) senior
preferred interests; and (2) allows the company to de-lever over
the next several years by using excess free cash flow to prepay up
to 10% of the second lien notes per year over the next 3 years in
addition to the mandatory principal amortization on the bank loan.
Ratings upgraded:
Corporate Family Rating to B3 from Caa1
Probability of Default Rating to B3 from Caa1
Ratings upgraded and LGD assessments revised:
$15 million first lien senior secured revolver due 2017 to Ba3
(LGD2, 11%) from B1 (LGD1, 9%)
$185 million first lien senior secured term loan due 2017 to Ba3
(LGD2, 11%) from B1 (LGD1, 9%)
$275 million second lien senior secured notes due 2019 to B3
(LGD4, 54%) from Caa1 (LGD4, 52%)
Rating withdrawn:
$303.5 million first lien senior secured term loan due 2015 at B1
(LGD2, 14%)
Ratings Rationale:
RPB's B3 Corporate Family Rating reflects Moody's view that the
company's adjusted debt/EBITDA leverage (incorporates Moody's 100%
debt treatment for holding company unsecured notes and 25% debt
treatment for holding company preferred interests) will remain
high at over 7.0 times despite the benefit of the company's recent
refinancing and Moody's expectation of absolute debt reduction and
earnings growth over the next two years. Pro-forma for its recent
refinancing, RPB's adjusted debt/EBITDA is around 8.5 times;
slightly lower at about 8.0 times excluding preferred adjustment.
Also considered is RPB's relatively small size in terms of revenue
-- annual net revenues are only about $390 million -- and single
asset profile. Combined, these two factors expose the company to
local, regional, and nationwide economic swings, and in Moody's
view, make it more vulnerable to promotional activity and earnings
compression than larger, more diversified gaming operators.
Positive rating consideration is given to Moody's expectation that
RPB's operating results will continue to benefit from favorable
demographic trends in Pittsburgh, PA, the company's primary market
area. Also considered is RPB's relaxed debt maturity profile.
There are no material scheduled debt maturities until 2017 when
the company's bank facility matures.
The assignment of a stable rating outlook considers Moody's view
that RPB will generate between $20 million and $30 million of
excess free cash flow annually over the next three years and apply
it towards the optional 10% prepayment feature on its second lien
notes. The stable outlook also incorporates Moody's view that
Rivers Casino's gaming revenue will continue to grow steadily over
the long run despite the increased competition coming from new
casinos in Ohio in the near term.
A higher rating would require that RPB demonstrate the ability and
willingness to achieve and maintain adjusted debt/EBITDA at/below
6.0 times. Ratings could be lowered if RPB's earnings or liquidity
deteriorate and/or if Moody's believes the company's adjusted
debt/EBITDA will remain above 7.5 times for any reason.
The principal rating methodology used in rating Rivers Pittsburgh
Borrower, L.P. was the Global Gaming Industry Methodology,
published December 2009. Other methodologies used include Loss
Given Default for Speculative Grade Issuers in the US, Canada, and
EMEA, published June 2009.
Rivers Pittsburgh Borrower, L.P. headquartered in Pittsburgh,
Pennsylvania, owns and operates the Rivers Casino located in
Pittsburgh, Pennsylvania.
RLD INC: Mikel Bryan OK'd to Handle General Business Matters
------------------------------------------------------------
The Hon. Alan Jaroslovsky of the U.S. Bankruptcy Court for the
Northern District of California authorized RLD, Inc. to employ
Mikel D. Bryan, Mikel D. Bryan, P.C., as its special counsel.
The firm is qualified to represent the Debtor in the proceeding as
special counsel in general business matters, unlawful detainers,
lease negotiations and enforcement, and contract preparation.
To the best of the Debtor's knowledge, the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
As reported in the Troubled Company Reporter on March 22, 2012,
the hourly rate of Mr. Bryan is $300.
Mr. Bryan and Mikel D. Bryan, P.C., hold an unsecured claim in the
estate for prepetition attorney's fees and costs, and the Mikel D.
Bryan, a Professional Corporation 401(k) Profit Sharing Plan holds
a secured claim against the estate, but none have any connection
with the creditors, or any other parties-in-interest.
About RLD Inc.
RLD, Inc., based in Santa Rosa, California, filed for Chapter 11
bankruptcy (Bankr. N.D. Calif. Case No. 11-14071) on Nov. 7, 2011.
Judge Alan Jaroslovsky presides over the case. The Law Offices of
Steven M. Olson serves as the Debtor's counsel. The Debtor
disclosed $10.82 million in assets and $19.30 million in
liabilities as of the Petition Date.
R.E. LOANS: Files Modified Fourth Amended Reorganization Plan
-------------------------------------------------------------
R.E. Loans, LLC, et al., submitted to the U.S. Bankruptcy Court
for the Northern District of Texas a Modified Fourth Amended Joint
Plan of Reorganization dated June 1, 2012.
The Modified Fourth Amended Joint Plan contemplates the
reorganization of the Debtors' businesses and the resolution of
outstanding Claims against and Interests in the Debtors through
the formation of a Liquidating Trust intended to hold and own the
equity in the Reorganized R.E. Loans, to pursue litigation
recoveries of claims owned by the Debtors and the Reorganized
Debtors, and distribute the proceeds to the holders of Allowed
Claims pursuant to the Plan and the Trust Agreement.
Generally, the Plan provides that: (1) all Notes Receivable and
REO Property, will re-vest in the Reorganized Debtors; and (2) all
Causes of Action that are not settled or released by the Plan and
the equity of the Reorganized R.E. Loans will vest in the
Liquidating Trust. All Causes of Action, including all Avoidance
Actions, will be transferred to the Liquidating Trust, except
Causes of Action against Wells Fargo and Causes of Action against
Holders of Allowed Claims in REL Class 8 if REL Class 8 votes to
accept the Plan and implement the Plan Compromise.
In addition, New Equity Interests in Reorganized R.E. Loans will
be issued to the Liquidating Trust and held by the Liquidating
Trustee for the benefit of holders of Allowed Claims.
Accordingly, the Liquidating Trustee will be the sole member of
Reorganized R.E. Loans.
The Plan will be financed through the secured Wells Fargo Exit
Facility, which will be provided by Wells Fargo in an amount
sufficient to (i) repay in full Wells Fargo's Prepetition Claims
and Wells Fargo's DIP Facility Claim; (ii) satisfy all Allowed
Administrative Expenses, Priority Tax Claims and Priority Non-Tax
Claims; and (iii) provide the Reorganized Debtors with sufficient
liquidity to administer and dispose of their Assets, exclusive of
the retained Causes of Action.
Net Cash proceeds from the sale or disposition of Notes Receivable
and REO Property will be used first to fund the operations of the
Reorganized Debtors and repay the Wells Fargo Exit Facility,
pursuant to the terms of the Wells Fargo Exit Facility.
A full-text copy of the Modified Fourth Amended Joint Plan is
available for free at:
http://bankrupt.com/misc/RE_LOANS_plan_modifie4amended.pdf
About R.E. Loans
R.E. Loans, LLC, was, for many years, in the business of providing
financing to home builders and developers of real property. R.E.
Future LLC and Capital Salvage own the real property obtained
following foreclosure proceedings initiated by R.E. Loans against
its borrowers. R.E. Loans is the sole shareholder of Capital
Salvage and the sole member of R.E. Future. B-4 Partners LLC is
the sole member of R.E. Loans. As a result of the multiple
defaults by R.E. Loans' borrowers, R.E. Loans has transitioned
from being a lender to becoming a property management company.
Lafayette, California-based R.E. Loans, R.E. Future and Capital
Salvage filed for Chapter 11 bankruptcy (Bankr. N.D. Tex. Case
Nos. 11-35865, 11-35868 and 11-35869) on Sept. 13, 2011. Judge
Barbara J. Houser presides over the case. Stutman, Treister &
Glatt Professional Corporation, in Los Angeles, and Gardere, Wynne
Sewell LLP, in Dallas, represent the Debtors as counsel. James A.
Weissenborn at Mackinac serves as R.E. Loans' chief restructuring
officer. The Debtors tapped Hines Smith Carder as their
litigation and outside general counsel. The Debtors tapped
Alixpartners, LLP as noticing agent, and Latham & Watkins LLP as
special counsel in real estate matters. R.E. Loans disclosed
$713.6 million in assets and $886.0 million in liabilities as of
the Chapter 11 filing.
Akin Gump Strauss Hauer & Feld LLP, in Dallas, represents
the Official Committee of Note Holders as counsel.
ROOMSTORE INC: To Sell Assets; Auction Set for June 25
------------------------------------------------------
The Associated Press reports that the Roomstore Inc. plans to sell
its assets at an auction, including the inventory at its stores.
According to AP, the Company has asked the Bankruptcy Court to
approve the asset sale. The auction would be held June 25.
President and CEO Stephen Giordano tells the Richmond Times-
Dispatch that the company is being offered for sale as a whole or
in parts. Bid packages were sent to potential buyers last week.
The report relates the RoomStore also plans to sell its 65% stake
in bedding chain Mattress Discounters. Proceeds from the sales
would be used to pay off creditors.
About RoomStore Inc.
Richmond, Virginia-based RoomStore, Inc., operates retail
furniture stores and offers home furnishings through
Furniture.com, a provider of Internet-based sales opportunities
for regional furniture retailers. RoomStore was founded in 1992
in Dallas, Texas, with four retail furniture stores. With more
than $300 million in net sales for its fiscal year ending 2010,
RoomStore was one of the 30 largest furniture retailers in the
United States.
RoomStore filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case
No. 11-37790) on Dec. 12, 2011, following store-closing sales at
four of its retail stores, located in Hoover, Alabama;
Fayetteville, North Carolina; Tallahassee, Florida; and Baltimore,
Maryland. When it filed for bankruptcy, the Company operated a
chain of 64 retail furniture stores, including both large-format
stores and clearance centers in eight states: Pennsylvania,
Maryland, Virginia, North Carolina, South Carolina, Florida,
Alabama, and Texas. It also had five warehouses and distribution
centers located in Maryland, North Carolina, and Texas that
service the Retail Stores.
RoomStore also owns 65% of Mattress Discounters Group LLC, which
operates 83 mattress stores (as of Aug. 31, 2011) in the states of
Delaware, Maryland and Virginia and in the District of Columbia.
RoomStore acquired the Mattress Discounters stake after it filed
its second bankruptcy in 2008. Mattress Discounters sought
Chapter 11 relief on Sept. 10, 2008 (Bankr. D. Md. Case Nos.
08-21642 and 08-21644). It filed the first Chapter 11 bankruptcy
on Oct. 23, 2002 (Bankr. D. Md. Case No. 02-22330), and emerged on
March 14, 2003.
Judge Douglas O. Tice, Jr., presides over RoomStore's case.
Lawyers at Lowenstein Sandler PC and Kaplan & Frank, PLC serve as
the Debtor's bankruptcy counsel. FTI Consulting, Inc., serves as
the Debtor's financial advisors and consultants.
RoomStore's balance sheet at Aug. 31, 2011, showed $70.4 million
in total assets, $60.3 million in total liabilities, and
stockholders' equity of $10.1 million. The petition was signed by
Stephen Girodano, president and chief executive officer.
Liquidator Hilco Merchant Resources, Inc., is represented in the
case by Gregg M. Galardi, Esq., at DLA Piper LLP (US); and Robert
S. Westermann, Esq., and Sheila de la Cruz, Esq., at Hirschler
Fleischer, P.C.
The U.S. Trustee for Region 4 named seven members to the official
committee of unsecured creditors in the case.
RYAN INTERNATIONAL: Hardin County Wants Turnover, Cash Restoration
------------------------------------------------------------------
Hardin County Savings Bank, by and through its attorneys, Barrick,
Switzer, Long, Balsley & Van Evera, LLP, asks the U.S. Bankruptcy
Court for the Northern District of Illinois to direct Ryan
International Airlines Inc. and its debtor-affiliates to:
-- turnover and restore cash collateral transferred
postpetition;
-- account and segregate the funds.
Hardin County is the owner and holder of the first priority
secured claims against the Debtor, Sundowner 102, LLC in the
amounts of approximately $2,107,425 and $312,129 respectively as
of March 17, 2012.
According to Hardin County, the motion for interim order
authorizing use of cash collateral and granting adequate
protection and administrative expense priority to INTRUST Bank,
N.A., misrepresented that INTRUST holds the first priority
security interest in the assets of Debtor Sundowner 102, LLC.
Hardin County has not at any time consented to the use of the cash
collateral of Debtor Sundowner 102.
Additionally, on May 10, Hardin County was advised that Sundowner
102 received and deposited $468,590 into INTRUST Bank account on
March 9. The transfer of the funds was done without Court
approval and without permission of Hardin County. Sundowner 102
and INTRUST Bank, are in violation of the terms of the orders that
recognized that the cash collateral of Sundowner 102 could not be
used without the consent of Hardin County.
Hardin County asserts that the turnover and restoration of the
funds is the proper remedy that the Court has authority to enter
into pursuant to Section 105 of the Bankruptcy Code and is the
proper sanction for violations of Section 363(c)(2).
In the alternative, Hardin County is requesting a replacement lien
on the Debtor's postpetition account receivables in the amount of
$468,590 for the funds improperly deposited.
Resolution to Hardin County's Previous Objection
As reported in the Troubled Company Reporter on May 23, 2012, the
Court, in consideration of Hardin County's motion to prohibit the
Debtors' use of cash collateral, ordered that:
1. Debtor Sundowner 102, LLC will provide to Hardin updated
financial statements, including: (i) a balance sheet with a date
as close as possible to the Petition Date of March 6, 2012; and
(ii) a profit and loss statement.
2. Debtor Sundowner 102 will open a new deposit account with
INTRUST Bank N.A. and will deposit the cash collateral in which
Hardin asserts a security interest consisting primarily of
prepetition accounts receivable, but also including all chattel
paper and general intangibles of Debtor Sundowner 102, held in the
approximate amount of $188,000, or received in the future, into
the said account.
About Ryan International
Ryan International Airlines, Inc., filed for Chapter 11 protection
(Bankr. N.D. Ill. Case No. 12-80802) in its hometown in Rockford,
Illinois, on March 6, 2012. Ryan International, which filed for
bankruptcy along with 10 affiliates, estimated assets and debts of
up to $100 million.
Ryan and its affiliates -- http://www.flyryan.com/-- provide
commercial air charter services, to a diverse mix of customers
including U.S., Canadian and British military entities, the
Department of Homeland Security, the U.S. Marshall Service,
leisure travelers, professional and college sports teams and an ad
hoc charter services. Ryan has 460 employees, with the cockpit
crew, flight attendants and dispatchers are represented by labor
unions.
Judge Manuel Barbosa presides over the case. Thomas J. Lester,
Esq., at Hinshaw & Culbertson LLP, serves as the Debtors' counsel.
Silverman Consulting serves as financial advisor. The petition
was signed by Mark A. Robertson, executive vice president.
INTRUST Bank, the prepetition lender owed $53.2 million, is
represented by Thomas P. Sandquist, Esq., of WilliamsMcCarthy LLP;
and Edward J. Nazar, Esq., at Redmond & Nazar LLP.
RYAN INTERNATIONAL: Deal Resolving Objection to Cash Use OK'd
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
approved a stipulation resolving objection of the Official
Committee of unsecured creditors in the Chapter 11 cases of Ryan
International Airlines Inc., et al., to the final order of
authorization to obtain postpetition financing of INTRUST Bank,
N.A., and final order authorizing use of cash collateral.
The stipulation entered among the Debtors, INTRUST Bank, the
Committee, provided for, among other things:
1. carve-out cost will also include all budgeted fees, costs
and expenses for counsel for the Committee;
2. a variation of 10% will be allowed in any line item and in
cumulative totals of the amended budget, a variation of
greater that both these percentages will be deemed an event
of default; and
3. the Committee will have the authority to seek standing to
prosecute, negotiate, settle or litigate all rights, claims,
suits, objections, arguments, counts and causes of action to
each and every of the Debtor's estates and arising under
Chapter 5 of the Bankruptcy Code.
A full-text copy of the stipulation is available for free at
http://bankrupt.com/misc/RYaNINTL_cashcoll_order.pdf
As reported in the Troubled Company Reporter on March 30, 2012,
the Debtors obtained final authority to up to $4.5 million under a
revolving advance note from INTRUST Bank N.A., the Debtor's
prepetition lender. The DIP facility includes credit card
commitments of $500,000.
The DIP Facility matures no later than July 9, 2012, but may be
extended for an additional three months upon INTRUST Bank's
consent.
As of the petition date, INTRUST Bank is owed $53.2 million under
a prepetition credit facility. The debt is secured by liens on
the Debtors' assets. The Debtors obtained a final court order
authorizing them to use cash collateral of INTRUST Bank and grant
adequate protection to the lender. The Debtors may use cash
collateral through July 9, 2012.
The DIP loan bears interest at 7% per annum. A loan origination
fee of 0.005% of the principal amount of DIP Facility will also be
charged. The DIP Lender will also be entitled to reimbursement of
attorney's fees of not more than $50,000.
About Ryan International
Ryan International Airlines, Inc., filed for Chapter 11 protection
(Bankr. N.D. Ill. Case No. 12-80802) in its hometown in Rockford,
Illinois, on March 6, 2012. Ryan International, which filed for
bankruptcy along with 10 affiliates, estimated assets and debts of
up to $100 million.
Ryan and its affiliates -- http://www.flyryan.com/-- provide
commercial air charter services, to a diverse mix of customers
including U.S., Canadian and British military entities, the
Department of Homeland Security, the U.S. Marshall Service,
leisure travelers, professional and college sports teams and an ad
hoc charter services. Ryan has 460 employees, with the cockpit
crew, flight attendants and dispatchers are represented by labor
unions.
Judge Manuel Barbosa presides over the case. Thomas J. Lester,
Esq., at Hinshaw & Culbertson LLP, serves as the Debtors' counsel.
Silverman Consulting serves as financial advisor. The petition
was signed by Mark A. Robertson, executive vice president.
INTRUST Bank, the prepetition lender owed $53.2 million, is
represented by Thomas P. Sandquist, Esq., of WilliamsMcCarthy LLP;
and Edward J. Nazar, Esq., at Redmond & Nazar LLP.
SALANDER-O'REILLY: Wells Fargo Barred From Pursuing Estate Claim
----------------------------------------------------------------
Chief Bankruptcy Judge Cecelia G. Morris granted the request of
First Republic Bank to compel Wells Fargo Bank to comply with the
automatic stay and prior bankruptcy court rulings in the Chapter 7
bankruptcy of Lawrence and Julie Salander, owners of the Salander-
O'Reilly Galleries, and directed Wells Fargo to withdraw state
court pleadings that assert the Salanders' forgery claim and other
claims of the estate. Wells Fargo argued it is free to assert a
claim of forgery in state court since it received no benefit from
a settlement agreement between the chapter 7 trustee and First
Republic and that its causes of action in state court are not
derivative. Wells Fargo argued it should not be precluded from
contesting the First Republic foreclosure litigation. According
to Judge Morris, Wells Fargo is precluded from asserting the
Salanders' claim of forgery, a derivative forgery claim, or any
other estate claims in the state court action. Subject to
allowance by the state court, Wells Fargo is entitled to assert
any direct cause of action that does not remain property of the
estate and that has not been settled (and its benefit realized) by
the estate, the judge said in her June 8, 2012 Memorandum Decision
available at http://is.gd/jjCYuifrom Leagle.com.
About Salander-O'Reilly
Established in 1976, New York-based Salander-O'Reilly Galleries
LLC -- http://www.salander.com/-- exhibits and manages fine art
from renaissance to contemporary. On Nov. 1, 2007, three
creditors filed an involuntary chapter 7 petition against the
gallery (Bankr. S.D.N.Y. Case Number 07-13476). The petitioners,
Carol F. Cohen of Two Swans Farm, Cavallon Family LP, and Richard
Ellenberg, disclosed total claims of more than $5 million. Amos
Alter, Esq., at Troutman Sanders LLP and John Koegel, Esq., at The
Koegel Group LLP represent the petitioners.
On Nov. 9, 2007, the Debtor's case was converted to a chapter 11
proceeding (Bankr. S.D.N.Y. Case No. 07-30005). Alan D. Halperin,
Esq., at Halperin Battaglia Raicht, LLP, represents the gallery.
Salander-O'Reilly Galleries is owned by Lawrence B. Salander and
his wife, Julie D. Salander, of Millbrook, New York. The couple
also has membership interests in galleries including non-debtor
entities, Renaissance Art Investors and Salander Decorative Arts
LLC. The couple filed for chapter 11 protection on Nov. 2, 2007
(Bankr. S.D.N.Y. Case No. 07-36735). Douglas E. Spelfogel, Esq.
and Richard J. Bernard, Esq. at Baker & Hostetler LLP and Susan P.
Persichilli, Esq. at Buchanan Ingersoll PC represent the Debtors
in their restructuring efforts. When they filed for bankruptcy,
Mr. and Mrs. Salander listed assets and debts between $50 million
and $100 million.
Prior to bankruptcy, Mr. Salander resigned as Salander-O'Reilly
Galleries' manager and turned over the control to Triax Capital
Advisors LLC, an independent turnaround firm.
In April 2008, Bankruptcy Judge Cecelia Morris ordered the couple
to surrender control of their finances to an independent trustee
and approved the conversion of the couple's chapter 11 case to a
chapter 7 liquidation at the behest of the U.S. Trustee.
SANTANDER BANCORP: Fitch Affirms 'BB+' Viability Rating
-------------------------------------------------------
Fitch Ratings has downgraded the long- and short-term Issuer
Default Ratings (IDRs) of Santander Bancorp (SBP) to 'BBB+/F2'
from 'A-/F1'.
The downgrade was a result of Fitch's downgrade of the long-term
IDR of SBP's parent company, Banco Santander, on June 11, 2012.
SBP's IDRs are correlated to Banco Santander's, and changes in
Banco Santander's IDRs result in changes to SBP's.
The Rating Outlook for SBP is Negative, which is in line with
Banco Santander's Outlook.
Fitch affirmed SBP's standalone rating, the Viability Rating (VR),
at 'bb+'. The affirmation is supported by the company's sound
operating performance and solid capital position while operating
in the challenging Puerto Rican market. Similarly to local peers,
asset quality has been a challenge given the macro environment in
Puerto Rico as evidenced by high unemployment of 16% and continued
negative Gross National Product (GNP).
Although Fitch is concerned with SBP's elevated levels of non-
performing assets (NPAs) at 7.24%, it compares well to local peers
with an average NPA of 13.95% at 1Q'12. SBP's loan portfolio
exhibits better credit performance due to more conservative
underwriting and overall risk management practices (including a
relatively low concentration in construction lending).
Additionally, the company continues to build its capital base
improving its tangible common equity ratio to 8.48% for 1Q'12
compared to 7.41% for 1Q'11 attributed to internal capital
generation.
Fitch believes there is limited upside to SBP's VR given the
concentration in its loan book by product and geography and
relatively small franchise. The VR could be negatively affected
if loan portfolio quality deteriorates, particularly if
significant operating losses emerge and the company's capital
position is eroded.
SBP's IDRs would be negatively affected if the parent bank's
ratings are downgraded or Fitch's view of support changes.
Although the Support Rating was downgraded to '2', Fitch believes
there is still a high probability of support for SBP by its parent
in the event of need.
SBP is the third largest bank in Puerto Rico by total assets and
by deposits with approximately an 11% share. SBP offers banking
and other financial services through its subsidiaries, Banco
Santander Puerto Rico, Santander Financial Services, Santander
Securities Corporation among other smaller subsidiaries. SBP is
wholly owned by Banco Santander following the completion of a
tender offer for remaining publicly owned shares in 2010.
Fitch has taken the following rating actions:
Santander Bancorp
-- Long-term IDR downgraded to 'BBB+' from 'A-'; Outlook
Negative;
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Viability Rating affirmed at 'bb+';
-- Support Rating downgraded to '2' from '1';
-- Subordinated debt downgraded to 'BBB' from 'BBB+'.
Banco Santander Puerto Rico
-- Long-term IDR downgraded to 'BBB+' from 'A-'; Outlook
Negative;
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Viability Rating affirmed at 'bb+';
-- Support Rating downgraded to '2' from '1';
-- Long-term deposit rating downgraded to 'A-' from 'A';
-- Short-term deposit rating downgraded to 'F2 from 'F1'.
Santander PR Capital Trust I
-- Preferred stock downgraded to 'BB' from 'BB+'.
SANTANDER CAPITAL: Fitch Lowers Rating on Preferred Stock to 'BB-'
------------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Ratings (IDRs) of
Santander Holdings USA, Inc. (SHUSA) to 'BBB/F2' from 'A-/F1'.
This action was taken as a result of the downgrade of the long-
term IDR of the parent company, Banco Santander. IDRs of SHUSA
are correlated to those of Banco Santander. The Rating Outlook
for SHUSA is Negative, in line with the Outlook for Banco
Santander.
SHUSA's VR reflects its sound overall financial condition
including profitable operations, manageable level of problem loans
and comfortable capital position. SHUSA's profitability has
benefited from its consumer finance operations, while bank level
profitability has been below average for the 'bbb' VR category.
Loan portfolio problems have diminished, but remain moderately
higher than the 'bbb' average. Capital ratios are generally in
line with the peer average on a risk weighted basis. In the
fourth quarter of 2011, the TCE ratio was boosted by the
deconsolidation of SHUSA's consumer finance operations following a
transaction with outside investors. SHUSA continues to have a
relatively higher reliance on non-depository funding compared with
many U.S. peers.
Fitch has taken the following rating actions:
Santander Holdings USA, Inc.
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Support Rating downgraded to '2' from '1';
-- Senior unsecured debt downgraded to 'BBB' from 'A-';
-- Commercial paper downgraded to 'F2' from 'F1';
-- Viability Rating affirmed at 'bbb'.
Sovereign Bank, N.A.
-- Long-term IDR downgraded to 'BBB' from 'A-';
-- Short-term IDR downgraded to 'F2' from 'F1';
-- Support Rating downgraded to '2' from '1';
-- Long-term deposit rating downgraded to 'BBB+' from 'A';
-- Short-term deposit rating downgraded to 'F2' from 'F1';
-- Subordinated debt downgraded to 'BBB-' from 'BBB+';
-- Viability Rating affirmed at 'bbb'.
Sovereign Capital Trust I
-- Preferred stock downgraded to 'BB-' from 'BB+'.
Sovereign Capital Trust IV
-- Preferred stock downgraded to 'BB-' from 'BB+'.
Sovereign Capital Trust VI
-- Preferred stock downgraded to 'BB-' from 'BB+'.
Sovereign Real Estate Investment Trust Holdings
-- Preferred stock downgraded to 'B+' from 'BB+'.
ML Capital Trust I
-- Preferred stock downgraded to 'BB-' from 'BB+'.
SDA INC: Strauss Auto to Sell Leases for Scarce Repair Bays
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Strauss Discount Auto will sell leases for the 46
stores as part of its fourth bankruptcy case. Many towns don't
allow building new auto service bays, according to Kenneth Rosen,
a lawyer from Lowenstein Sandler PC representing Strauss. There
won't be a fifth bankruptcy because the store leases will be sold,
Rosen said. If an auto-repair business wants to grow in the New
York-New Jersey area, it must do so through acquisition, Rosen
said. As a result, "competitors are likely to bid up the price of
the leases," Rosen told Bloomberg News. Mr. Rosen expects some
auto-repair chains to bid for the Strauss store leases "to get a
foothold." Those already with a presence in the area "will bid in
order to keep competitors from getting a leg up on them," Mr.
Rosen said.
About Strauss Discount Auto
155 Route 10 Associates, Inc., SDA, Inc., and Wayne Philadelphia
Associates, Inc., sought Chapter 11 protection (Bankr. D. N.J.
Case Nos. 12-24414 to 12-24416) on June 5, 2012, in Newark, New
Jersey.
SDA is a regional retailer of after-market automotive parts and
accessories and operator of automotive service centers and owns
commercial real estate located in Wayne, New Jersey. Subsidiaries
Route 10 Associates and Wayne Philadelphia own commercial real
estate located in East Hanover and Wayne, respectively.
The Debtors ceased operations before its filed for bankruptcy in
June 5, 2012.
This is the fourth bankruptcy filing by the Strauss Discount Auto
business. SDA's capital structure, for the most part, was formed
in late 2010 when SDA's predecessor, Autobacs Strauss, Inc.,
reorganized under Chapter 11 (Bankr. D. Del. Case No. 09-10358).
Autobacs Strauss Inc.'s plan of reorganization was confirmed on
Sept. 15, 2010, and became effective on Oct. 6, 2010.
Strauss had 111 stores in 1998, when it first filed for
bankruptcy.
Bankruptcy Judge Novalyn L. Winfield presides over the 2012
bankruptcy. Kenneth Rosen, Esq., at Lowenstein Sandler PC, serves
as the Debtors' counsel. PricewaterhouseCoopers LLP serves as
financial advisors. SDA estimated $10 million to $50 million in
both assets and debts. The petitions were signed by Joseph
Catalano, president.
SEJWAD HOTELS: Hearing on Liquidating Plan Outline on July 26
-------------------------------------------------------------
Sejwad Hotels & Development, LLC, filed a disclosure statement in
support of its plan of liquidation dated May 8, 2012.
The Debtor seeks to accomplish payment under the Plan by either a
sale or a refinancing of debt against its real estate property.
The Effective Date of the proposed Plan is Dec. 31, 2012. The
Debtor -- under the direction of its current president, James R.
Cunningham -- will act as the Disbursing Agent for the purpose of
making all distributions provided for under the Plan.
The classification and treatment of claims against and interests
in the Debtor under the plan are:
A. Unclassified claims, including administrative expenses and
priority tax claims, will be paid in full on the effective
date or on the confirmation date. Administrative expense
claims total $20,100 and priority tax claims total $2,515,
is expected to recover 100%.
B. Class 1 (Secured Claim of Evertrust Bank) will be paid in
full, with interest at the non-default rate, upon the sale
or refinancing of the Property. On or before the
Effective Date of the Plan, the Debtor will pay Evertrust
Bank in full on account of the Allowed Secured Claim of
Evertrust Bank. The amount of secured claim of Evertrust
Bank is $7,978,750.
C. Class 2 (Secured Claim of the LA County Tax Collector)
will be paid in full, with interest at the rate of 18% per
annum, upon the sale of the Property. The amount of
secured claim of the LA County Tax Collector is
$134,728.92.
D. Class 3 (General Unsecured Claim) will be paid in full,
within 30 days of the closing on the sale or refinancing
of the Property. The amount of Class 3 general unsecured
claims total $494,195.30.
E. Class 4 (Interest Holders) will retain their interests in
the Debtor.
The disclosure statement hearing is set for July 26, 2012, at
10:00 a.m. The deadline for filing proofs of claims is set on
June 25, 2012.
A full text copy of the disclosure statement is available for free
at http://bankrupt.com/misc/SEJWAD_HOTELS_ds.pdf
Headquartered in Artesia, California, Sejwad Hotels & Development,
LLC, owns a retail center in Artesia Boulevard. Its prior tenants
included Hollywood Video and Borders book store, both of which
have filed bankruptcy. The property is vacant. The Debtor was in
the process of redeveloping the property into a hotel/retail
property, but the redevelopment has been delayed. In the
meantime, the Debtor defaulted on its loan to Evertrust Bank, who
had scheduled a foreclosure sale for Feb. 9, 2012. On Feb. 8,
2012, the Debtor filed for Chapter 11 protection (Bankr. C. Calif.
Case No. 12-14521). The petition was signed by Ashvin Patel,
managing member. Judge Julia W. Brand presides over the case. In
its schedules, the Debtor disclosed $13,001,015 in total assets
and $8,728,483 in total liabilities.
No Creditor's Committee has been appointed.
SEDONA DEVELOPMENT: Specialty Mortgage Amends Plan Outline
----------------------------------------------------------
Specialty Mortgage Corporation, as servicer for Specialty Trust,
filed with the U.S. Bankruptcy Court for the District of Arizona a
Second Amended Disclosure Statement in support of its Second
Amended Creditor Plan of Liquidation for debtors Sedona
Development Partners, LLC, and The Club at Seven Canyons, LLC.
As reported in the Troubled Company Reporter on Dec. 9, 2011,
Judge Redfield Baum ordered that the approval of the Debtors'
disclosure statements is vacated. Judge ordered that both the
Debtors and Specialty Financial, Inc., are required to provide
significantly more specific information to get approval of any
disclosure statement. Specialty's amended disclosure statement
was also denied approval.
For purposes of the Liquidating Plan only, the Plan Proponent
adopts the valuations asserted by Debtors regarding their real and
personal property assets.
Under the Liquidating Plan, the various "auction lots" will be
separately sold at open auction through a series of 1129(b)
auctions.
Specialty will provide additional funding, if needed.
Under the Plan, secured creditors will receive distributions in
payment of their allowed secured claim from the net proceeds of
the 1129(b) auction of their collateral. To the extent that the
sale of the collateral does not generate net proceeds sufficient
to pay Allowed Claim in full, any deficiency will be treated as a
Class 4 general unsecured claim; or the creditor will have no
deficiency claim.
The Plan also provides that Non-Insider Club Members who hold
Allowed Claims will have the option of either: (i) opting to have
their claims included in, and treated as, Class 4 general
unsecured claims; or, (ii) to share pro rata in the proceeds of
the retained/assigned causes of action under Section XII of the
Liquidating Plan, including, but not limited to, all avoidance
actions, fraudulent conveyance actions, preference actions, and
other claims and causes of action of every kind and nature
whatsoever, including but not limited to all the claims against
Debtors' insiders and affiliates.
Holders of Allowed General Unsecured Claims will share, pro rata,
in a distribution of the Net Unencumbered Proceeds realized from
the 1129(b) auction of unencumbered estate assets. Distributions
to Allowed Class 4 Claims will be made within 90 days after all
1129(b) auctions are completed.
A full-text copy of the Second Amended Disclosure Statement is
available for free at:
http://bankrupt.com/misc/SEDONA_DEVELOPMENT_ds_2amended.pdf
About Sedona Development Partners
Sedona Development Partners owns an 18-hole golf course and
related properties, including luxury villas, a practice park,
range house, tennis courts and related facilities in Sedona,
Arizona, known generally as Seven Canyons. The Club at Seven
Canyons, LLC, operates the golf course and related facilities for
SDP. SDP is the manager and sole member of the Club.
Sedona Development Partners filed for Chapter 11 bankruptcy
protection (Bankr. D. Ariz. Case No. 10-16711) on May 27, 2010.
The Club At Seven Canyons filed a separate Chapter 11 petition
(Bankr. D. Ariz. Case No. 10-16714). John J. Hebert, Esq., Philip
R. Rudd, Esq., and Wesley D. Ray, Es., at Polsinelli Shughart PC,
in Phoenix, Ariz., assist the Debtors in their restructuring
efforts. Lender Specialty Trust is represented by Joseph E.
Cotterman, Esq., and Nathan W. Blackburn, Esq., at Gallagher &
Kennedy, P.A. Sedona disclosed $29,171,168 in assets and
$121,679,994 in liabilities.
Sedona Development Partners, LLC, and The Club at Seven Canyons,
LLC, filed with the U.S. Bankruptcy Court for the District of
Arizona on June 17, 2011, a second amended joint disclosure
statement in support of their second amended joint pan of
reorganization. The Debtors' disclosure statement was approved on
June 28, 2011.
SOLAR TRUST: Has Buyer for Desert Center Project
------------------------------------------------
BrightStone Energy Inc. signed a contract to buy Solar Millennium
Inc.'s 500-megawatt project under development in Desert Center,
California.
The stalking horse bid is $30 million if all contingent payments
are made, says Bill Rochelle, the bankruptcy columnist for
Bloomberg News.
Bankruptcy Law360 relates that Solar Trust asked a Delaware
bankruptcy court to schedule a June 15 hearing to approve
BrightSource as the stalking-horse bidder for its Palen Project
Under sale procedures previously approved by the bankruptcy court
in Delaware, bids are due June 18 and an auction will be conducted
June 21 if qualified competing bids are received. A hearing to
approve the sale will take place June 27. The Debtor doesn't
have a buyer under contract as yet for the two other projects.
About Solar Trust
Solar Trust of America LLC, Solar Millennium Inc., and nine
affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead
Case No. 12-11136) on April 2, 2012.
Solar Trust is a joint venture created by Solar Millennium AG and
Ferrostaal AG to develop solar projects at locations in California
and Nevada. Located in the "Solar Sun Belt" of the American
Southwest, the project sites have extremely high solar radiation
levels, and allow the Debtors' projects to harness high levels of
solar power generation. Projects include the rights to develop
one of the world's largest permitted solar plant facilities with
capacity of 1,000 MW in Blythe, California. Two other projects
contemplated 500 MW solar power facilities in Desert Center,
California and Amargosa Valley, Nevada.
Although the Debtors have obtained highly valuable transmission
right and permits, each project is only in the developmental phase
and does not generate revenue for the Debtors. Ferrostaal ceased
providing funding two years ago and SMAG, due to its own
deteriorating financial condition, stopped providing funding after
December 2011.
NextEra Energy Resources LLC has committed to provide a
postpetition secured credit facility and has expressed an interest
in serving as stalking horse purchaser for certain of the Debtors'
assets.
Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as
counsel to the Debtors. K&L Gates LLP is the special corporate
counsel.
Ridgecrest Solar Power Project, LLC, and two entities filed for
Chapter 11 protection (Bankr. D. Del. Case Nos. 12-11204 to
12-11206) on April 10, 2012.
Ridgecrest Solar, et al., are affiliates of Solar Trust of America
LLC. STA Development, LLC, one of the debtors that filed for
bankruptcy April 2, owns 100% of the interests in Ridgecrest, et
al.
Ridgecrest Solar Power estimated up to $50,000 in assets and
debts. Ridgecrest Solar I, LLC, estimated up to $50,000 in assets
and up to $10 million in liabilities.
ST. JOHNSBURY: Moody's Upgrades Rating on G.O. Bonds From 'Ba1'
---------------------------------------------------------------
Moody's Investors Service has upgraded to Baa3 from Ba1 the rating
on St. Johnsbury School District's (VT) outstanding $2 million of
outstanding long term general obligation debt.
Summary Rating Rationale
The Baa3 rating reflects the district's substantially improved
financial position over the past three years, limited tax base
with below-average wealth levels and low debt burden. The rating
also reflects improved financial management with regular oversight
of the district's budget, reliance on annual cashflow borrowing,
as well as the ability to pay off the deficit financing note from
2009 ahead of schedule.
Strengths
- Improved financial position
- Structurally balanced operations
Challenges
- Heavy reliance on state aid
- Annual issuance of tax anticipation notes for cash flow needs
- Large portion of annual expenses related to volatile high
school tuition
What Could Make The Rating Go Up
- Continued trend of structurally balanced financial operations
- Reduced reliance on annual issuance of tax anticipation notes
- Significant increase in the tax base and demographic profile
What Could Make The Rating Go Down
- Return to structurally imbalanced financial operations
- Inability to maintain cash flow management
- Deterioration of the district's tax base and demographic
profile costs
Rating Methodology
The principal methodology used in this rating was General
Obligation Bonds Issued by U.S. Local Governments published in
October 2009.
T-L BRYWOOD: Has Interim Okay to Use Cash Collateral
----------------------------------------------------
T-L Brywood LLC obtained interim authorization from the Hon.
Donald R. Cassling of the U.S. Bankruptcy Court for the Northern
District of Illinois to use cash collateral.
As reported by the Troubled Company Reporter on March 20, 2012,
the Debtor sought permission to use certain cash and cash
equivalents that allegedly serve as collateral for mortgage claims
asserted against the Debtor and its property by The PrivateBank
and Trust Company. The cash collateral relate to rents generated
at the Debtor's commercial shopping center and the funds on
deposit in accounts maintained by the Debtor. The Lender asserts
a senior position mortgage lien and claim against the property
which purportedly secures a senior mortgage debt of $11,800,000.
In addition to its mortgage liens on the property, the Lender
asserts a security interest in and lien upon the rents being
generated at the property.
In return for the Debtor's continued interim cash collateral use,
The Lender is granted adequate protection for its purported
secured interests. The Lender can inspect, upon reasonable
notice, the Debtor's books and records. The Debtor will maintain
and pay premiums for insurance to cover all of its assets from
fire, theft and water damage. The Debtor will, upon reasonable
request, make available to the Lender evidence of that which
constitutes its collateral or proceeds. The Debtor will reserve
sufficient funds for the payment of current real estate taxes
relating to the property. The Debtor will properly maintain the
properties in good repair and properly manage the property. The
Lender will be granted valid, perfected, enforceable security
interests in and to the Debtor's post-petition assets and related
proceeds to the extent and priority of its alleged pre-petition
liens, if valid, but only to the extent of any diminution in the
value of the assets.
About T-L Brywood
T-L Brywood LLC filed for Chapter 11 bankruptcy (Bankr. N.D. Ill.
Case No.12-09582) on March 12 , 2012. T-L Brywood owns and
operates a commercial shopping center known as the "Brywood
Centre" -- http://www.brywoodcentre.com/-- in Kansas City,
Missouri. The Property encompasses roughly 25.6 acres and
comprises 183,159 square feet of retail space that is occupied by
12 operating tenants. The occupancy rate for the Property is
approximately 80%.
The Debtor and lender The PrivateBank and Trust Company reached an
impasse over the terms and conditions of another extension of a
mortgage loan on the Property. As a result, the Debtor filed the
Chapter 11 case to protect the Property from foreclosure while the
Debtor formulates an exit strategy from the reorganization case.
As of the Petition Date, no foreclosure relating to the Property
had been filed by the Lender.
Judge Donald R. Cassling oversees the case. The Debtor is
represented by David K. Welch, Esq., Arthur G. Simon, Esq., and
Jeffrey C. Dan. Esq., at Crane, Heyman, Simon, Welch & Clar, in
Chicago.
The Debtor estimated $10 million to $50 million in assets and
debts. The petition was signed by Richard Dube, president of
Tri-Land Properties, Inc., manager.
PrivateBank is represented by William J. Connelly, Esq., at
Hinshaw & Culbertson LLP.
TANK HOLDING: Moody's Assigns 'B2' CFR/PDR; Outlook Stable
----------------------------------------------------------
Moody's Investors Service has assigned a first time Corporate
Family Rating and Probability of Default Rating of B2 to Roto
Acquisition Corp., doing business as Tank Holding Corp.
Concurrently, Moody's has assigned a B1 rating to the new $355
million first lien term loan and to its $50 million revolving
credit facility. The rating outlook is stable.
Proceeds from the transaction which include debt financing
totaling $550 million and are comprised of the $50 million
revolver, $355 million first lien term loan and $195 million in
senior unsecured notes (not rated) that are being combined to
finance the purchase of Tank Holdings Corp. through Roto
Acquisition Corp. The sponsor is Leonard Green & Partners, L.P.
The company's new revolving credit is expected to be unused at the
close of the transaction.
Rating Rationale
The B2 ratings reflect the company's small revenue base with 2011
revenues of approximately $242 million, commodity risk exposure,
and meaningful end market concentration into the agricultural
segment. The ratings reflect initial leverage of over 6.0 times
based on 2011 financial results, weighed against low capital
expenditures and strong margins. Although leverage is considered
high for the rating category, Moody's expectation is for the
company to delever to a level of Debt to EBITDA below 5.5 times
within the next 12 months through free cash flow generation. The
company's tank sales have experienced strength from strong
macroeconomic trends in the agricultural segment and overall
product competitiveness stemming from its ability to offer
competitively priced containers when compared to fiberglass or
aluminum. The company also benefits from multiple manufacturing
locations that reduce shipping costs. The company's liquidity
profile is good.
The following ratings/assessments have been assigned:
Corporate Family Rating, assigned B2
Probability of Default Rating, assigned B2
$50m revolving sr. sec. credit facility due 2018; assigned B1
(LGD3, 33%)
$355m Sr. sec. first lien term loan due 2019; assigned B1 (LGD3,
33%)
The rating outlook is stable.
The senior secured credit facilities are to be unconditionally
guaranteed jointly and severally on a senior secured first lien
basis by Roto Intermediate Holding Corp. and Tank Holding and by
each existing and subsequently acquired or organized direct or
indirect wholly-owned U.S. subsidiary of the borrower as detailed
in the credit agreement.
The stable outlook reflects Moody's view that the company's
performance is unlikely to be sufficiently strong over the
intermediate term so as to warrant a higher rating. Moreover, the
company has grown through acquisitions and is expected to continue
to acquire small companies to further build its customer lists and
overall footprint. As a result of its acquisition strategy, the
company's intermediate term credit metrics are only anticipated to
improve slowly and are therefore expected to remain consistent
with the B2 CFR over the intermediate term.
What could pressure the ratings
If the company's leverage was to increase to above 6.25 times on a
sustainable basis and EBIT coverage of interest was anticipated to
be sustained below 1.25 times, the ratings and/or outlook could be
downgraded. A decrease in year over year margins could also
pressure the ratings, particularly if it is accompanied by revenue
contraction. Additionally, a large debt financed acquisition could
also pressure the ratings or the rating outlook.
What could cause positive ratings traction
Sustained EBIT coverage of interest above 1.75 times along with
free cash flow to debt of over 7.5% and leverage under 4.5 times
would be necessary to upgrade the company's ratings.
Roto Acquisition Corp. is the acquisition vehicle owned by Leonard
Green & Partners, L.P. to purchase Tank Holdings Corp., and its
wholly owned subsidiaries, Tank Intermediate holding Corp., Snyder
Industries, Inc. and Norwesco, Inc. which are engaged in the
manufacturing and distribution of rotationally molded polyethylene
and steel tanks, containers and bins for agricultural, water,
industrial, food and beverage, and on-site water treatment
applications, among others. In addition, the company markets
valves, couplers, adapters, lids and other accessories related to
the use of its tanks. The company's 2011 revenues totaled $232
million and are primarily derived from its operations in U.S. and
Canada.
TCIM SERVICES: Meeting to Form Creditors' Panel on June 14
----------------------------------------------------------
Roberta A. DeAngelis, United States Trustee for Region 3, will
hold an organizational meeting on June 14, 2012, at 10:00 a.m. in
the bankruptcy cases of TCIM Services Inc. The meeting will be
held at:
J. Caleb Boggs Federal Building
844 King Street, Room 5209
Wilmington, DE 19801
The sole purpose of the meeting will be to form a committee or
committees of unsecured creditors in the Debtors' cases.
The organizational meeting is not the meeting of creditors
pursuant to Section 341 of the Bankruptcy Code. A representative
of the Debtor, however, may attend the Organizational Meeting, and
provide background information regarding the bankruptcy cases.
To increase participation in the Chapter 11 proceeding, Section
1102 of the Bankruptcy Code requires that the United States
Trustee appoint a committee of unsecured creditors as soon as
practicable. The Committee ordinarily consists of the persons,
willing to serve, that hold the seven largest unsecured claims
against the debtor of the kinds represented on the committee.
Section 1103 of the Bankruptcy Code provides that the Committee
may consult with the debtor, investigate the debtor and its
business operations and participate in the formulation of a plan
of reorganization. The Committee may also perform other services
as are in the interests of the unsecured creditors whom it
represents.
TCIM Services Inc., an operator of six call centers for the
banking and telecommunications industry, filed a Chapter 11
petition (Bankr. D. Del. Case No. 12-11711) on June 3, 2012.
TEXASBANC CAPITAL: Fitch Cuts Rating on Preferred Stock to 'BB-'
----------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Ratings (IDR) of
Compass Bancshares (CBSS) to 'BBB' from 'A-'. The Rating Outlook
is Negative. The action was prompted by the downgrade of the
parent company, Banco Bilbao Vizcaya Argentaria SA's (BBVA)
ratings to 'BBB+' from 'A' (refer to press release titled 'Fitch
Downgrades Santander & BBVA to 'BBB+'/Negative Outlook on
Sovereign Action', dated June 11, 2012 for additional information
on the BBVA rating action).
Since CBSS' ratings and Outlook are correlated with those of BBVA;
changes in BBVA's ratings result in changes to CBSS' IDRs and
Outlook. CBSS' support-driven IDR is currently notched one level
below those of its parent since it is strategically important to,
but not considered a core subsidiary of BBVA. Thus, with BBVA's
downgrade to 'BBB+', CBSS' support-driven IDR was downgraded to
'BBB'.
CBSS' IDR reflects the higher of its support-driven IDR or its
standalone rating, the Viability Rating (VR). With the recent
rating action on BBVA and a concurrent downgrade of CBSS' VR,
CBSS' support-driven IDR and VR are now the same.
CBSS' VR, which reflects the company's intrinsic creditworthiness
absent any extraordinary support, was downgraded reflecting the
company's modest earnings profile. Nonetheless, the company's
solid capital base, good liquidity profile, and improving asset
quality trends help to offset the weaker earnings profile.
CBSS' performance over the past several years has been pressured
by large goodwill impairment charges and high credit costs.
Excluding the goodwill charges, reported return metrics are
somewhat worse than similarly-rated peers. CBSS, as are others in
the industry, is faced with a difficult operating environment,
including increased regulatory costs, low interest rates, and weak
loan demand.
Providing support to the ratings at their current levels, CBSS has
reported moderating trends in asset quality. The bank's level of
nonaccrual assets has fallen approximately 45% since the March 31,
2010 peak level, though they remain elevated at approximately 3%
of loans. CBSS has also been able to reduce its concentration to
construction and land development loans (C&LD), a portfolio which
has exhibited considerable stress over the past several years.
C&LD loans as a percentage of capital have fallen to 51% of total
risk-based capital at March 31, 2012, down from 144% at YE2009.
CBSS has a good funding profile that does not rely excessively on
wholesale funds. Funding is aided by a large noninterest-bearing
deposit base that consistently represents approximately 28% of
total deposits. Holding company obligations are modest, and debt
service coverage is more than adequate.
The company's capital base remains sound with a Tier 1 common
equity ratio of 11.05% at March 31, 2012. Capital levels have
benefited through external capital support from BBVA, most notably
in 2009 and 2010, though Fitch assumes further support is not
forthcoming from BBVA, nor needed. Conversely, Fitch views the
ultimate divestiture of CBSS as an increasing possibility given
BBVA's weakening profile and the very strained Spanish economy.
Accordingly, Fitch has downgraded CBSS' support rating to '2' from
'1' suggesting a high probability of external support.
Fitch does not see upward momentum in the company's VR given the
relatively modest earnings profile. If operating metrics were to
continue to underperform peer averages, CBSS' VR could be further
pressured by a downgrade. Conversely, if CBSS were to improve its
earnings performance, the company's VR could be upgraded. If BBVA
were to be downgraded again, this could potentially pressure CBSS'
ratings as well.
The following ratings are downgraded:
Compass Bancshares, Inc.
-- Long-term IDR to 'BBB' from 'A-'; Rating Outlook Negative
-- VR to 'bbb' from 'bbb+';
-- Support to '2' from '1';
-- Short-term IDR to 'F2' from 'F1'.
Compass Bank
-- Long-term IDR to 'BBB' from 'A-'; Rating Outlook Negative;
-- Short-term IDR to 'F2' from 'F1;'
-- VR to 'bbb' from 'bbb+;
-- Support to '2' from '1';
-- Long-term deposits to 'A-' from 'A';
-- Short-term deposits to 'F2' from 'F1';
-- Senior unsecured to 'BBB+' from 'A-';
-- Subordinated debt to 'BBB' from 'BBB+'.
TexasBanc Capital Trust I
-- Preferred stock to 'BB-' from 'BB+'.
THINES LLC: M&T Bank's Response Deadline Moved to June 22
---------------------------------------------------------
Bankruptcy Judge Nancy V. Alquist signed off on a fifth
stipulation between Thines LLC and Manufacturers and Traders Trust
Company extending to June 22, 2012, M&T Bank's deadline to file a
response to the Debtor's objection to Proof of Claim No. 4 filed
by M&T Bank. The Stipulation dated June 8 is available at
http://is.gd/vplAFlfrom Leagle.com.
Thines LLC, based in Jessup, Maryland, filed for Chapter 11
bankruptcy (Bankr. D. Md. Case No. 11-28872) on Sept. 20, 2011.
Judge Nancy V. Alquist presides over the request. Marc Robert
Kivitz, Esq., in Baltimore, serves as the Debtor's counsel. The
Debtor scheduled $1,960,289 in assets and $2,685,032 in debts.
The petition was signed by Tyrone Hines, managing member.
Creditor Manufacturers and Traders Trust Company is represented in
the case by Michael C. Bolesta, Esq., at Gebhardt & Smith LLP.
TOUSA INC: Lenders Seek Rehearing on Fraudulent Transfer
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that former secured lenders to an affiliate of homebuilder
Tousa Inc. asked all active judges on the U.S. Court of Appeals in
Atlanta to rehear a three-judge panel's May ruling that the banks
received fraudulent transfers exceeding $400 million. Last month,
three judges on the 11th Circuit in Atlanta reversed the district
court and sided with the bankruptcy judge, who had ruled that the
lenders were liable for having received fraudulent transfers.
According to the report, in the request for rehearing, the lenders
claim that the bankruptcy judge wasn't entitled to make a final
ruling on a fraudulent transfer claim in view of a decision one
year ago by the U.S. Supreme Court in a case called Stern v.
Marshall. The lenders argue that the district court wasn't
obliged to give any deference to the bankruptcy judge's opinion.
Instead, the lenders say the district judge properly made his own
findings of fact, concluding that the lenders gave sufficient
value and can't be tagged for a fraudulent transfer. The lenders
seek rehearing on a second ground. Their argument focuses on the
fact that they didn't receive liens that were the fraudulently
transferred property. Instead, the banks claim they received cash
from Tousa to pay off existing loans they made.
The appeals court case 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 district court 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).
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.
TRIBUNE CO: Minor Claims in FitzSimons Suit Dropped
---------------------------------------------------
Judge Kevin Carey permitted the Official Committee of Unsecured
Creditors in Tribune Co.'s cases to dismiss the intentional
fraudulent transfer claims in count 13 of the Third Amended
Complaint against former Tribune shareholders who received less
than $50,000 in proceeds from the 2007 Tribune leveraged buy-out,
captioned as In re Official Committee of Unsecured Creditors of
Tribune Co. v. FitzSimons, Adv. Proc. No. 10-54010 (Bankr. D.
Del.).
The individual defendants, though, will continue to be members of
the putative shareholder class, as that term is defined in the
Complaint.
Upon review, the Creditors' Committee determined that the group
of LBO Shareholder Defendants under the FitzSimons Action who
received $50,000 or more in LBO Proceeds, along with the other
defendants, accounts for almost 98% of the total dollar amount of
LBO Proceeds (more than $7 billion).
In contrast, the more than 20,000 LBO Shareholder Defendants
specifically named as individual defendants in the Complaint who
received less than $50,000 in LBO Proceeds account for just over
2% of the identified LBO Proceeds, says the Creditors' Committee.
The Creditors' Committee estimates that the approximately 20,000
Sub-Threshold Defendants received on average, approximately
$8,000 in LBO Proceeds.
James S. Green, Jr., Esq., at Landis Rath & Cobb LLP, in
Wilmington, Delaware, asserts that dismissal of those claims will
conserve the resources of the Court and the Debtors' estates.
The potential benefits of the Creditors' Committee's prosecuting
claims against Sub-Threshold Defendants as individual defendants
are outweighed by the costs of doing so, he insists.
The Creditors' Committee proposes that the Sub-Threshold
Defendants, like the other Shareholder Defendants, will continue
to be members of the putative Shareholder Class. They will not,
however, be individually named defendants with respect to the
intentional fraudulent transfer claims and will not be
individually served (unless they are defendants on other claims.)
Mr. Green assures the Court that the collective amount of
identified LBO Proceeds that went to Shareholder Defendants who
received more than $50,000 if recovered, will far exceed the
amount necessary for full recovery to Tribune's non-bank
creditors on the Creditors' Committee's intentional fraudulent
transfer claims. Indeed, a $50,000 threshold for LBO Proceeds
strikes an appropriate balance to ensure that the costs do not
exceed case recoveries, he adds.
About Tribune Co.
Headquartered in Chicago, Illinois, Tribune Co. --
http://www.tribune.com/-- is a media company, operating
businesses in publishing, interactive and broadcasting, including
ten daily newspapers and commuter tabloids, 23 television
stations, WGN America, WGN-AM and the Chicago Cubs baseball team.
The Company and 110 of its affiliates filed for Chapter 11
protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8,
2008. The Debtors proposed Sidley Austin LLP as their counsel;
Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel;
Lazard Ltd. and Alvarez & Marsal North America LLC as financial
advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As
of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets
and $12,972,541,148 in total debts. Chadbourne & Parke LLP and
Landis Rath LLP serve as co-counsel to the Official Committee of
Unsecured Creditors. AlixPartners LLP is the Committee's
financial advisor. Landis Rath Moelis & Company serves as the
Committee's investment banker. Thomas G. Macauley, Esq., at
Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the
Committee in connection with the lawsuit filed against former
officers and shareholders for the 2007 LBO of Tribune.
Protracted negotiations and mediation efforts and numerous
proposed plans of reorganization filed by Tribune Co. and
competing creditor groups have delayed Tribune's emergence from
bankruptcy. Many of the disputes among creditors center on the
2007 leveraged buyout fraudulence conveyance claims, the
resolution of which is a key issue in the bankruptcy case. The
bankruptcy court has scheduled a May 16 hearing on Tribune's plan.
Tribune CRO Don Liebentritt said it is possible the media company
could emerge late in the third quarter of 2012.
Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Tribune Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TRIDENT MICROSYSTEMS: Court Schedules July 13 as Claims Bar Date
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware established
July 13, 2012, (Eastern Daylight Time) as the deadline for any
individual or entity to file proofs of claim against Trident
Microsystems, Inc., et al.
The government claim deadline is also set for July 13.
Proofs of claim must be received by the official claims agent in
the Debtors' cases at:
Trident Microsystems Claims Processing
c/o Kurtsman Carson Consultants LLC
2335 Alaska Avenue
El Segundo, CA 90245
About Trident Microsystems
Sunnyvale, California-based Trident Microsystems, Inc., currently
designs, develops, and markets integrated circuits and related
software for processing, displaying, and transmitting high quality
audio, graphics, and images in home consumer electronics
applications such as digital TVs, PC-TV, and analog TVs, and set-
top boxes. The Company has research and development facilities in
Beijing and Shanghai, China; Freiburg, Germany; Eindhoven and
Nijmegen, The Netherlands; Belfast, United Kingdom; Bangalore and
Hyderabad, India; Austin, Texas; and Sunnyvale, California. The
Company has sales offices in Seoul, South Korea; Tokyo, Japan;
Hong Kong and Shenzhen, China; Taipei, Taiwan; San Diego,
California; Mumbai, India; and Suresnes, France. The Company also
has operations facilities in Taipei and Kaoshiung, Taiwan; and
Hong Kong, China.
Trident Microsystems and its Cayman subsidiary, Trident
Microsystems (Far East) Ltd. filed for Chapter 11 bankruptcy
protection (Bankr. D. Del. Lead Case No. 12-10069) on Jan. 4,
2011. Trident said it expects to shortly file for protection in
the Cayman Islands.
Judge Christopher S. Sontchi presides over the case. Lawyers at
DLA Piper LLP (US) serve as the Debtors' counsel. FTI Consulting,
Inc., is the financial advisor. Union Square Advisors LLC serves
as the Debtors' investment banker. PricewaterhouseCoopers LLP
serves as the Debtors' tax advisor and independent auditor.
Kurtzman Carson Consultants is the claims and notice agent.
Trident had $310 million in assets and $39.6 million in
liabilities as of Oct. 31, 2011. The petition was signed by David
L. Teichmann, executive VP, general counsel & corporate secretary.
TRONOX INC: Trial Costing Anadarko $2 Billion in Market Cap
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the lawsuit by creditors of Tronox Inc. and the U.S.
government against Tronox's former parent Kerr-McGee Corp. has
lopped $2 billion off the market capitalization of Anadarko
Petroleum Corp., Kerr-McGee's owner. The trial began in May, with
the government and Tronox creditor seeking billions of dollars for
environmental liabilities. The lawsuit is Tronox Inc. v.
Anadarko Petroleum Corp. (In re Tronox Inc.), 09-1198, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).
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.
VANGUARD NATURAL: S&P Affirms 'B' Corporate Credit Rating
---------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Houston-based independent exploration and
production (E&P) company Vanguard Natural Resources LLC
(Vanguard). The outlook is stable.
"We also affirmed our 'B-' issue-level rating (one notch lower
than the corporate credit rating) on the company's $300 million
senior unsecured notes due 2020. The recovery rating on this debt
remains '5', indicating expectations of modest (10% to 30%)
recovery in the event of a payment default," S&P said.
"Vanguard is acquiring 420 billion cubic feet equivalent (Bcfe) of
reserves and related hedge positions in the Arkoma Basin from
Antero Resources for $445 million. The additional reserves improve
Vanguard's overall size, and the addition of the Arkoma basin adds
some geographic diversity to the reserve and production base,"
said Standard & Poor's credit analyst Marc D. Bromberg. "However,
the company will fund the entire acquisition through its $670
million borrowing base credit facility (Vanguard expects the
borrowing base to increase to $970 million with the acquired
reserves). Pro forma for the transaction, total debt, inclusive of
operating lease and asset retirement (ARO) adjustments, will
increase to more than $1.1 billion, resulting in projected
leverage at year-end 2012 in the low 4x range."
"Debt leverage could improve during 2012 to 2013 if Vanguard is
able to use cash flow above distributions for debt repayment. Of
note, Vanguard is acquiring existing hedges valued at
approximately $100 million. We believe the hedges could allow
Vanguard to generate cash flow above distributions that can be
used for debt repayment. Consistent with historical acquisitions,
the company could also issue equity to help deleverage," S&P said.
"The ratings on Vanguard Natural Resources LLC reflect the
company's 'vulnerable' business risk and 'aggressive' financial
risk. Its reserve replacement strategy relies heavily on
acquisitions, and the company distributes almost all of its excess
cash flow to unitholders, although near-term distribution coverage
should increase with the Antero acquisition. Our ratings also
reflect a decent hedge book over the next several years that
should mitigate hydrocarbon volatility, especially low natural gas
prices, a high percentage of lower-risk proved developed reserves,
and modest capital spending requirements," S&P said.
"The issue-level rating on Vanguard's $300 million senior
unsecured notes is 'B-' (one notch lower than the corporate credit
rating). The recovery rating is '5', indicating expectations of
modest (10% to 30%) recovery in the event of a payment default,"
S&P said.
"The stable outlook reflects our expectation that Vanguard will
maintain total adjusted debt to EBITDA in the 3.0x to 4.5x range.
We also expect the company to maintain adequate liquidity due to
its decent hedge book and to fund acquisitions prudently through a
combination of debt and equity, such that debt generally
represents no more than 40% to 45% of the acquisition cost," S&P
said.
"We will consider a downgrade if leverage breaches 5x, a level
that would require a 15% EBITDA decline based on our 2012
forecast. We consider a decline of this magnitude unlikely given
the company's hedges in place and the lower risk nature of
reserves. We could raise the rating to 'B+' if the company
sustains leverage near the 3.5x range, which we could foresee if
Vanguard pays down debt used to fund the Arkoma acquisition," S&P
said.
WASHINGTON MUTUAL: Unsecured Creditors Now Recovering 100%
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that a liquidating trust for Washington Mutual Inc. on
June 12 was set to make a second distribution which will pay 100%
of the claims of general unsecured creditors. In future
distributions, the trust will be paying interest to unsecured
creditors that accrued during the Chapter 11 case that began in
September 2008. The new distribution of $458 million was made
possible by rulings from the bankruptcy judge striking several
large claims, freeing up money that was being held in reserve were
the claims found to be valid. To reach 100%, general unsecured
creditors are receiving $22 million. Other groups getting
distributions are holders of senior notes and senior subordinated
notes. They will receive $90 million and $346 million,
respectively. First distributions were made in March.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- was the holding company for Washington
Mutual Bank as well as numerous non-bank subsidiaries.
Washington Mutual Bank was taken over on Sept. 25, 2008, by U.S.
government regulators. The next day, WaMu and its affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns
100% of the equity in WMI Investment. When WaMu filed for
protection from its creditors, it disclosed assets of
$32,896,605,516 and debts of $8,167,022,695. WMI Investment
estimated assets of $500 million to $1 billion with zero debts.
WaMu is represented by Brian Rosen, Esq., at Weil, Gotshal &
Manges LLP in New York City; Mark D. Collins, Esq., at Richards,
Layton & Finger P.A. in Wilmington, Del.; and Peter Calamari,
Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver &
Hedges, LLP. The Debtor tapped Valuation Research Corporation as
valuation service provider for certain assets.
Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Fled LLP in New
York, and David B. Stratton, Esq., at Pepper Hamilton LLP in
Wilmington, Del., represent the Official Committee of Unsecured
Creditors. Stephen D. Susman, Esq., at Susman Godfrey LLP and
William P. Bowden, Esq., at Ashby & Geddes, P.A., represent the
Equity Committee. The official committee of equity security
holders also tapped BDO USA as its tax advisor. Stacey R.
Friedman, Esq., at Sullivan & Cromwell LLP and Adam G. Landis,
Esq., at Landis Rath & Cobb LLP in Wilmington, Del., represent
JPMorgan Chase, which acquired the WaMu bank unit's assets prior
to the Petition Date.
In March 2012, the Debtors' Seventh Amended Joint Plan of
Affiliated, as modified, and as confirmed by order, dated Feb. 23,
2012, became effective, marking the successful completion of the
chapter 11 restructuring process.
The Plan is based on a global settlement that removed opposition
to the reorganization and remedy defects the judge identified in
September. The plan is designed to distribute $7 billion. Under
the reorganization plan, WaMu established a liquidating trust to
make distributions to parties-in-interest on account of their
allowed claims.
WESCHE JEWELERS: Files for Chapter 11 Bankruptcy in Orlando
-----------------------------------------------------------
Viera, Fla.-based Wesche Jewelers filed for Chapter 11 bankruptcy
protection (Bankr. M.D. Fla. Case No. 12-_____) in Orlando on
June 6, 2012.
JCKOnline.com reports that, to finance construction for a new
jewelry store in 2005-2006, the company took out several loans
totaling $4.8 million. Following that, the papers claim, a
contractor stole $900,000 in funds. The company was forced to
raise new money and the store opened in 2006. However, in 2008
and 2009, the store was hit by the recession, and revenue plunged.
Moreover, the company has been unable to sell other parts of the
property.
According to the report, the company said it filed for Chapter 11
"to reorganize its debts, which will enable it to maintain its
business, keep its employees, pay its creditors over time, and
operate with positive cash flow."
Wesche Jewelers -- http://www.weschejewelers.com/-- is a family-
owned company.
ZAYO GROUP: S&P Affirms 'B' Corp. Credit Rating; Outlook Stable
---------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Louisville, Colo.-based Zayo Group LLC and
removed all ratings from CreditWatch, where S&P placed them with
negative implications on March 19, 2012. The outlook is stable.
"At the same time, we assigned 'B' issue-level and '4' recovery
ratings to Zayo's proposed senior secured debt. The secured debt
consists of a $1.5 billion term loan B due 2019 and $750 million
of senior secured notes due 2019. The '4' recovery rating
indicates our expectation for average (30% to 50%) recovery in the
event of a payment default," S&P said.
"We also assigned 'CCC+' issue-level and '6' recovery ratings to
Zayo's proposed $500 million senior unsecured notes due 2020,
indicating our expectation of negligible (0% to 10%) recovery in
the event of a payment default," S&P said.
"The senior credit facilities rank equally in right of payment
with the senior secured notes. The company intends to use the
proceeds from the transaction, along with $470 million in equity,
to fund the purchase of AboveNet Inc. and refinance existing debt
at both companies. Our ratings are based on proposed terms and
conditions," S&P said.
"The ratings on Zayo reflect its highly leveraged capital
structure, aggressive acquisition and capital investment strategy,
and significant competition among fiber-based bandwidth
providers," said Standard & Poor's credit analyst Ketul Gondha.
"We expect Zayo's capital expenditures to remain high as it seeks
to expand its fiber-to-the-tower and dark fiber businesses,
leading to minimal free operating cash flow (FOCF) generation in
the near term. Tempering factors include our expectation for
continued strong demand for data transport services, a recurring
revenue stream with over $2.8 billion in committed revenue under
contracts, and the company's enhanced scale and geographic reach
resulting from acquisitions. We consider the financial risk
profile 'highly leveraged' and the business risk profile 'weak.'"
"Our stable outlook reflects the company's good growth prospects
balanced by what we consider a highly leveraged financial risk
profile and very aggressive expansion policies. We believe
leverage will remain elevated for the foreseeable future, with
EBITDA growth potentially offset by additional debt-financed
acquisitions or capital investments," S&P said.
"We could lower the rating if leverage remained above 7x on a
sustained basis. In our view, this could most likely occur if the
company made a poor debt-funded acquisition that resulted in a
loss of EBITDA or cash flow, or if the pricing environment were to
deteriorate due to increased competition. We view an upgrade as
unlikely over the next year. While our target for an upgrade is
sustained leverage below 5x with margins remaining at or above
current levels, our base expectation is that Zayo will continue to
pursue debt-financed acquisitions or capital investments that will
keep leverage in line with the current rating," S&P said.
* Moody's Says Offtakers' Default Can Drag PPP Projects' Ratings
----------------------------------------------------------------
The deteriorating credit quality of payment counterparties
(Offtakers) of availability-based Operating PFI/PPP/P3 Projects
(Projects) can affect Projects' ratings, says Moody's Investors
Service in a rating implementation guidance report published on
June 11.
The rating implementation guidance report is entitled titled "How
Offtakers' Default and Interference Risk Can Be a Drag on the
Ratings of PPP Projects.
The recent downgrades of certain sovereign and sub-sovereign
entities have prompted Moody's to clarify its methodology for
Projects ("Operating Risk in Privately Financed Public
Infrastructure (PFI/PPP/P3) Projects", published in December
2007), which notes that such Projects will generally be rated at
least two notches below their Offtakers. The guidance explains
that in some circumstances, Moody's may rate Projects at or just
below the Offtaker's rating (e.g., if a strong Project is
constrained by a lowly rated but otherwise well-performing
Offtaker), but in other instances, Projects may be rated several
notches below the Offtaker's rating (e.g., if an Offtaker is
actively prioritising debt service payments ahead of contractual
payments to a Project or managing the contract more aggressively
than before).
"Our guidance focuses specifically on how the deteriorating credit
quality of Offtakers can affect Projects' ratings," says Johan
Verhaeghe, a Moody's Vice President -- Senior Credit Officer and
main author of the report. "It uses a three-step approach,
starting with a Project's standalone credit quality, then
adjusting for exposure to Offtaker default risk, then for Offtaker
behaviour, i.e., interference risk.
"We will continue to cap Project ratings at the lower of their
standalone credit quality and the Offtaker's rating; and in cases
of interference risk, we may rate Projects significantly lower
still," continues Mr. Verhaeghe. "However, where there is no
evidence of interference risk or adverse payment prioritisation by
the Offtaker, and where the Project's standalone credit quality is
significantly above that of the Offtaker, the Project's rating may
be positioned only one notch below, or even on par with, the
Offtaker's rating."
This approach is consistent with Moody's rationales for recent
rating actions and no rating changes are expected to result from
publication of this guidance.
* S&P's Global Default Tally Hikes to 33 After PBG Woes
-------------------------------------------------------
Poland-based engineering and construction company PBG S.A. entered
into a standstill agreement with banks last week. S&P views the
agreement, which provides PBG with bilateral loans, as an event of
default under its criteria. This raises the 2012 global corporate
default tally to 33, said an article published Thursday by
Standard & Poor's Global Fixed Income Research, titled "Global
Corporate Default Update (May 31 - June 6, 2012)."
Of the total defaults this year, 20 were based in the U.S., seven
in the emerging markets, four in Europe, and two in the other
developed region (Australia, Canada, Japan, and New Zealand). In
comparison, last year, only 16 issuers -- 10 based in the U.S.,
two in New Zealand, two in the emerging markets, one in Europe,
and one in Canada -- defaulted during the same period (through
June 6).
So far this year, missed payments accounted for 12 defaults,
bankruptcy filings accounted for six, distressed exchanges
accounted for six, and five defaulters were confidential. The
remaining four entities defaulted for various other reasons.
In 2011, 21 issuers defaulted because of missed interest or
principal payments, and 13 because of bankruptcy filings -- both
of which were among the top reasons for defaults in 2010.
Distressed exchanges -- another top reason for default in 2010 --
followed with 11 defaults in 2011. Of the remaining defaults, two
issuers failed to finalize refinancing on bank loans, two were
subject to regulatory action, one had its banking license revoked
by its country's central bank, one was appointed a receiver, and
two were confidential.
* Higher Default Rate Owing on Mortgage Debt
--------------------------------------------
U.S. District Judge Jan E. Dubois in Philadelphia ruled on June 7
that it was a mistake for the bankruptcy court to deny interest to
a secured lender at a higher default rate when the property was
worth more than the claim. Judge Dubois took the "majority view"
and said that Section 506(b) of the U.S. Bankruptcy Code can't be
used to reduce the interest rate accrued before bankruptcy.
The case is In re 400 Wall Street Associates LP, 11-7439, U.S.
District Court, Eastern District of Pennsylvania (Philadelphia).
* No Rise in Bankruptcy on the Horizon, Statistics Show
-------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the small increase in the junk-bond default rate
last month isn't enough to portend significant new work for
underemployed bankruptcy professionals. The global default rate
on junk-rated debt rose 0.1 percentage point in May to 2.7% from
2.6% in April, according to a report from Moody's Investors
Service. In the U.S., the junk default rate inched up to 3.1%
from 3% in April. Worldwide, there were five defaults in May.
Four were in the U.S. Other statistics from Moody's indicate
there won't be any spike in junk-bond defaults. The liquidity-
stress index declined in May to 3.3%, a record low. In April, the
index was 3.9%.
Moody's liquidity-stress index measures the percentage of junk-
rated companies with the weakest liquidity. Moody's is predicting
that the junk default rate will rise to 3.1% by the end of the
year, before declining to 3% by May 2013.
In another report, Moody's exploded the notion that losses are
higher when companies default after being purchased in leveraged
buyouts. Going back to 1988, Moody's found that the average
recovery in 200 LBOs was 54%, virtually identical to the 55%
recovery rate in 800 non-LBO defaults.
Moody's attributed the LBO recoveries to the tendency of buyout
sponsors to deal with defaults through distressed exchanges or
prepackaged bankruptcies rather than by filing free-fall
bankruptcies with no reorganization negotiated in advance of a
Chapter 11 filing.
* Four Failed Banks Bring Year's Total to 28
--------------------------------------------
Banks in Oklahoma, South Carolina, Illinois and North Carolina
failed on June 8, bringing the year's total to 28.
The largest failure was Waccamaw Bank in Whiteville, North
Carolina, which had $472.7 million in deposits. The 16 branches
and deposits were transferred to another bank, at a cost of $51.1
million to the Federal Deposit Insurance Corp. In addition to
assuming all of the deposits of the failed bank, First Community
Bank agreed to purchase approximately $515.3 million of the failed
bank's asset.
The other three banks -- Farmers and Traders State Bank, Shabbona,
Illinois ; Carolina Federal Savings Bank, Charleston, South
Carolina,; and First Capital Bank, Kingfisher, Oklahoma -- each
had either one or two branches and about $50 million in deposits.
The FDIC was able to locate buyers for the three bunks. Their
failures cost the FDIC $29.7 million.
2012 Failed Banks List
The FDIC was appointed as receiver for the closed banks. To
protect the depositors, the FDIC entered into a purchase and
assumption agreement with various banks that agreed to assume the
deposits of most of the closed banks. The FDIC also entered into
loss-share transactions on assets bought by the banks.
For this year, the failed banks are:
Loss-Share
Transaction Party FDIC Cost
Assets of Bank That Assumed to Insurance
Closed Bank Deposits & Bought Fund
Closed Bank (millions) Certain Assets (millions)
----------- ----------- ----------------- ------------
Waccamaw Bank $533.1 First Community Bank $51.1
Farmers' and Traders' $43.1 First State Bank $8.9
First Capital Bank $46.1 F & M Bank $5.6
Carolina Federal $54.4 Bank of North Carolina $15.2
Alabama Trust Bank $51.6 Southern States Bank $8.9
Security Bank, N.A. $101.0 Banesco USA $10.8
Plantation Federal $486.4 First Federal Bank $76.0
Inter Savings Bank $473.0 Great Southern Bank $117.5
Bank of the Est. Shore $166.7 [No Acquirer] $41.8
Palm Desert Nat'l $125.8 Pacific Premier Bank $20.1
HarVest Bank of Md. $164.3 Sonabank $17.2
Fort Lee Federal $51.9 Alma Bank $14.0
Fidelity Bank $818.2 The Huntington Nat'l $92.8
Premier Bank $268.7 Int'l Bank of Chi. $64.1
Covenant Bank $95.7 Stearns Bank, N.A. $31.5
New City Bank $71.2 [No Acquirer] $17.4
Global Commerce Bank $143.7 Metro City Bank $17.9
Central Bank of Georgia $278.9 Ameris Bank $67.5
Home Savings of Amer. $434.1 [No Acquirer] $38.8
Charter National Bank $93.9 Barrington Bank $17.4
SCB Bank $182.6 First Merchants Bank $33.9
Patriot Bank $111.3 First Resource Bank $32.6
BankEast $272.6 U.S. Bank N.A. $75.6
Tennessee Commerce $1,185.0 Republic Bank & Trust $416.8
First Guaranty Bank $377.9 CenterState Bank $82.0
American Eagle $19.6 Capital Bank, N.A. $3.2
The First State Bank $416.8 Hamilton State Bank $416.8
Central Florida $79.1 CenterState Bank $24.4
In 2011 there were 92 failed banks, compared with 157 in 2010, 140
in 2009 and just 25 for 2008.
The failures in 2010 were the most since 1992, when 179
institutions were taken over by regulators.
A complete list of banks that failed since 2000 is available at:
http://www.fdic.gov/bank/individual/failed/banklist.html
813 Banks in Problem List
The FDIC's Quarterly Banking Profile for Dec. 31, 2011, says that
The number of institutions on the FDIC's "Problem List" declined
from 844 to 813 during the quarter, and total assets of "problem"
institutions fell from $339 billion to $319.4 billion. The number
of institutions in the "problem list" has decreased for the third
consecutive quarter.
The FDIC defines "problem" institutions as those with financial,
operational or managerial weaknesses that threaten their
viability.
The deposit insurance fund, which protects customer holdings up to
$250,000 per account in the event of a failure, saw its balance
increase in the fourth quarter to $9.2 billion (unaudited) from
$7.8 billion in the third quarter, the eighth consecutive
quarterly increase.
Problem Institutions Failed Institutions
-------------------- -------------------
Year Number Assets (Mil) Number Assets (Mil)
---- ------ ------------ ------ ------------
2011 813 $319,432 92 $34,923
2010 884 $390,017 157 $92,085
2009 702 $402,800 140 $169,700
2008 252 $159,405 25 $371,945
2007 76 $22,189 3 $2,615
2006 50 $8,265 0 $0
2005 52 $6,607 0 $0
2004 80 $28,250 4 $170
Federal regulators assign a composite rating to each financial
institution, based upon an evaluation of financial and operational
criteria. The rating is based on a scale of 1 to 5 in ascending
order of supervisory concern. "Problem" institutions are those
institutions with financial, operational, or managerial weaknesses
that threaten their continued financial viability. Depending upon
the degree of risk and supervisory concern, they are rated either
a "4" or "5." The number and assets of "problem" institutions are
based on FDIC composite ratings. Prior to March 31, 2008, for
institutions whose primary federal regulator was the OTS, the OTS
composite rating was used.
* Law Firms Sued for $2.3M Over Dumped Lease in Merger
------------------------------------------------------
Martin Bricketto at Bankruptcy Law360 reports that landlords have
hit Greenbaum Rowe Smith & Davis LLP and the founders of defunct
environmental and real estate law firm Farer Fersko PA with a
$2.3 million New Jersey lawsuit, alleging the two conspired to
merge and ditch Farer Fersko's lease obligations through
bankruptcy.
The 18,467 square feet that Farer Fersko leased in Westfield,
N.J., and the firm's roughly $517,000 in annual base rent for the
space as of January, were major obstacles for merging Woodbridge,
N.J.-based Greenbaum Rowe and Farer Fersko, according to the
lawsuit.
* Morgan Joseph's Quarterly Report Comments on M&A Activity
-----------------------------------------------------------
The Restructuring Investment Banking Group of Morgan Joseph
TriArtisan LLC, even with the summer still ahead and with more
than six months yet to go this year, is already starting to focus
on 2013.
As detailed in the Group's latest Restructuring Quarterly
Newsletter, it observes:
* The slower than expected pace of private equity acquisition
activity, if the trend remains prolonged, could have a "material
impact" on middle market companies. "A pullback in private equity
M&A activity would signal potentially hidden issues in capital
flows, but on a temporal basis has served to fuel competition in
the financing markets given the lack of M&A supply." Anecdotally
however, the Group observes that private equity funds have
witnessed increased deal flow from earlier this year, suggesting
the lull in the first quarter will reverse course, and M&A
activity, presuming stable capital markets, will increase in
advance of the year end expiration of the 2003 tax cuts.
* On the same note, with relatively modest fund raising
inflows to private equity, partially due to record sums of cash
still tied up in funds and investments, and pre-crisis vintage
capital beginning to return to investors, the Group looks at the
private equity reinvestment ratio as a key signal of investor
confidence in the sector.
* An exception to the now three-year rebuilding of leverage
levels to pre-bubble conditions has been cash flow lending to the
lower end of the middle market. The MJTA Group finds that smaller
asset light companies, or those requiring leverage beyond tangible
collateral, have struggled to find single digit pricing unless
they have the scale and proper fundamentals to attract syndicated
loan capital. Bank and finance company lenders have yet to return
to this space, which they once dominated, leaving the market to
more yield hungry lending funds. The silver lining for borrowers
is lending funds' increasing access to inexpensive capital, which
has allowed for contraction in pricing and increased competition
for smaller debt issuers.
* With the deadline for implementation of the first phase of
Basel III, scheduled for the end of 2012, looming large,
expectations are that asset based loans will fare well in the new
models, which are designed to shore up risk/return and capital
requirements, and that the shortening tenors of loans could have a
larger impact in lowering risk ratings than in prior iterations.
Although, it adds, this could spell contraction in pricing for
asset based borrowers, it's likely to come at a cost to other
lending products given the overall increased requirements to
liquidity and capital reserves.
* With loans made by CLOs, which represent half the
institutional leveraged loan market, being rapidly repaid and
their investment windows essentially closed, it remains uncertain
where the capital will flow to once returned to CLO investors.
"As long term committed funds with a specific investment mandate,
CLOs (or similar vehicles) will serve to stabilize the loan market
if capital round trips back into such vehicles. However, should
capital flow from CLOs to retail and hedge fund vehicles,
volatility will increase given their shorter investment windows
and broader investment mandates."
Among other issues covered in the newsletter, are recent financing
and restructuring trends, including how the lack of private equity
is spurring the credit market amidst decreasing new loan supply
due to a cool first quarter M&A market.
In addition, the Group is seeing an increase, though still a small
percentage of cases, where equity holders remain potentially "in
the money" in a Chapter 11 proceeding.
"In these cases, which are often precipitated by an unexpected
event (such as judgment, fraud or earnings restatement) rather
than significant overleverage, investors have at times been able
to generate outsize returns investing in Chapter 11 debtors that
reorganize in a manner to drive value to equity holders," observes
James D. Decker, a MJTA Managing Director who heads the
Restructuring Group. "But when value extends to equity -- in
other words, equity is the fulcrum security -- equity holders
cannot expect to solely drive an outcome and must organize and
actively engage with other classes in order to effectively drive
their desired form of recovery."
About Morgan Joseph TriArtisan LLC
Morgan Joseph TriArtisan LLC -- http://www.mjta.com-- is an
investment bank engaged in providing financial advice, capital
raising and private equity investing. The firm's services include
mergers, acquisitions and restructuring advice, in addition to
private placements and public offerings of equity and debt.
* Erich Eisenegger Joins McDermott's N.Y. Office as Partner
-----------------------------------------------------------
As part of the expansion of its Restructuring & Insolvency
practice, international law firm McDermott Will & Emery LLP on
June 12 announced the appointment of Erich Eisenegger as a partner
in its New York office.
Mr. Eisenegger, who joins the Firm from an AmLaw Top 5 corporate
law firm where he was a partner and has worked since 2002,
counsels U.S. and foreign financial institutions, project
developers and governmental authorities in a wide range of
restructurings and related transactions. Earlier in his career,
Mr. Eisenegger concentrated in international project finance at
another top international law firm.
Last month, the Firm announced the appointment of Timothy W. Walsh
as international head of its Restructuring & Insolvency practice.
Mr. Eisenegger will work closely with Mr. Walsh as he builds his
team and executes the Firm's strategy for growing this key
practice area. Previously, the two worked together at the same
law firm.
Mr. Eisenegger's notable recent engagements include: 1)
representing the Agent Bank on behalf of the senior secured
lenders for the restructuring of the $306 million private
financing of a privatized U.S. toll road and related intercreditor
issues with the $127 million Transportation Infrastructure Finance
and Innovation Act (TIFIA)-subordinated loan; 2) representing the
Illinois and Pennsylvania Lotteries in landmark, first-to-market,
multibillion-dollar public-private partnerships; 3) representing
the Second Lien Agent Bank in connection with the $720 million out
of court debt and equity restructuring of a global building
materials and recreational vehicle products company; and 4)
representing one of the largest title lending companies in the
United States in connection with its bankruptcy exit financing
during its successful chapter 11 reorganization.
"It is my great pleasure to welcome Erich to McDermott," said
Timothy W. Walsh, partner and international head of McDermott's
Restructuring and Insolvency practice. "We have worked closely
together for many years and I know that his reputation for
delivering top-notch counsel and solutions to clients is well-
earned. As we move to capture a greater share of transactions
involving U.S. and foreign projects and governmental entities,
having Erich on the team will be key. Additionally, Erich's
background in debtor-in-possession (DIP) financings and
refinancings, bankruptcy exit financings, out of court debt and
equity restructurings, as well as infrastructure asset and other
project restructurings gives the Firm important capabilities that
will be of great value to our clients."
McDermott's Restructuring & Insolvency practice, a part of its
Corporate Advisory Practice Group, is currently recognized by
Chambers, PLC Cross-Border and IFLR1000 for its outstanding team
of more than 40 lawyers around the world.
Mr. Eisenegger is a member of the American Bar Association and is
admitted to practice in New York State. He earned his law degree
from Boston College Law School and a Master of Arts in Law and
Diplomacy from The Fletcher School of International Law and
Diplomacy, jointly administered by Tufts and Harvard Universities.
Mr. Eisenegger received his Bachelor of Arts from Boston College.
About McDermott Will & Emery
McDermott Will & Emery is an international law firm with a
diversified business practice. Numbering more than 1,000 lawyers,
the Firm has offices in Boston, Brussels, Chicago, Dusseldorf,
Frankfurt, Houston, London, Los Angeles, Miami, Milan, Munich, New
York, Orange County, Paris, Rome, Silicon Valley and Washington,
D.C. Extending its reach to Asia, the firm has a strategic
alliance with MWE China Law Offices in Shanghai.
* Shaw Pittman Restructuring Attorneys Join Katten Muchin
---------------------------------------------------------
Rachel Feintzeig at Dow Jones' Daily Bankruptcy Review reports
that a five-person team of restructuring attorneys with decades of
experience representing financial institutions has moved to Katten
Muchin Rosenman LLP from Pillsbury Winthrop Shaw Pittman LLP.
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
Oct. 14, 2011
AMERICAN BANKRUPTCY INSTITUTE
NCBJ/ABI Educational Program
Tampa Convention Center, Tampa, Fla.
Contact: 1-703-739-0800 ;
http://www.abiworld.org/
Oct. __, 2011
AMERICAN BANKRUPTCY INSTITUTE
International Insolvency Symposium
Dublin, Ireland
Contact: 1-703-739-0800 ;
http://www.abiworld.org/
Oct. 25-27, 2011
TURNAROUND MANAGEMENT ASSOCIATION
Hilton San Diego Bayfront, San Diego, CA
Contact: http://www.turnaround.org/
Nov. 28, 2011
BEARD GROUP, INC.
18th Annual Distressed Investing Conference
The Helmsley Park Lane Hotel, New York City
Contact: 1-240-629-3300
Dec. 1-3, 2011
AMERICAN BANKRUPTCY INSTITUTE
23rd Annual Winter Leadership Conference
La Quinta Resort & Spa, La Quinta, Calif.
Contact: 1-703-739-0800 ;
http://www.abiworld.org/
April 3-5, 2012
TURNAROUND MANAGEMENT ASSOCIATION
TMA Spring Conference
Grand Hyatt Atlanta, Atlanta, Ga.
Contact: http://www.turnaround.org/
Apr. 19-22, 2012
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
Gaylord National Resort & Convention Center,
National Harbor, Md.
Contact: 1-703-739-0800 ;
http://www.abiworld.org/
July 14-17, 2012
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
The Ritz-Carlton Amelia Island, Amelia Island, Fla.
Contact: 1-703-739-0800 ;
http://www.abiworld.org/
Aug. 2-4, 2012
AMERICAN BANKRUPTCY INSTITUTE
Mid-Atlantic Bankruptcy Workshop
Hyatt Regency Chesapeake Bay, Cambridge, Md.
Contact: 1-703-739-0800 ;
http://www.abiworld.org/
November 1-3, 2012
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Westin Copley Place, Boston, Mass.
Contact: http://www.turnaround.org/
Nov. 29 - Dec. 2, 2012
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
JW Marriott Starr Pass Resort & Spa, Tucson, Ariz.
Contact: 1-703-739-0800 ;
http://www.abiworld.org/
April 10-12, 2013
TURNAROUND MANAGEMENT ASSOCIATION
TMA Spring Conference
JW Marriott Chicago, Chicago, Ill.
Contact: http://www.turnaround.org/
October 3-5, 2013
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Wardman Park, Washington, D.C.
Contact: http://www.turnaround.org/
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via
e-mail to conferences@bankrupt.com are encouraged.
*********
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
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herein is obtained from sources believed to be reliable, but is
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*** End of Transmission ***